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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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56-2181648
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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101 Hudson Street
Suite 3610
Jersey City, New Jersey
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07302-6548
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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ý
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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September 30, 2015
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December 31, 2014
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||||
Assets
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Current assets:
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||||
Cash and cash equivalents
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$
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53,766
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$
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32,243
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Prepaid expenses and other current assets
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2,157
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703
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Assets of discontinued operations, net (Note 13)
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—
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6,701
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Total current assets
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55,923
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39,647
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Other assets
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86
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25
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Deferred offering costs
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86
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—
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Total assets
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$
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56,095
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$
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39,672
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Liabilities and stockholders’ equity
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||||
Current liabilities:
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Accounts payable
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$
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796
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$
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426
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Accrued expenses
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1,539
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2,245
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Accrued severance and retention costs, current portion (Note 12)
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2,801
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—
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Deferred revenue, current portion
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257
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257
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Liabilities related to assets of discontinued operations (Note 13)
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—
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2,420
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Total current liabilities
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5,393
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5,348
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Deferred revenue, net of current portion
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699
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893
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Deferred rent
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25
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—
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Accrued severance and retention costs, net of current portion (Note 12)
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8
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—
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Total liabilities
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6,125
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6,241
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Commitments and contingencies (Note 4)
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||||
Stockholders’ equity:
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Common stock, $0.001 par value, 125,000,000 shares authorized as of September 30, 2015, and December 31, 2014; 13,905,599 and 8,512,103 shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively
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14
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8
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Additional paid-in capital
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191,702
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150,934
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Accumulated deficit
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(141,746
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)
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(117,511
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)
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Total stockholders’ equity
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49,970
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33,431
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Total liabilities and stockholders’ equity
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$
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56,095
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$
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39,672
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Three months ended September 30,
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Nine months ended September 30,
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2015
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2014
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2015
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2014
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Total revenue
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$
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64
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$
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61
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$
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193
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$
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192
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Operating expenses:
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Research and development
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3,458
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2,478
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10,525
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5,621
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Selling, general and administrative
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4,143
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2,121
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9,628
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5,582
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Total operating expenses
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7,601
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4,599
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20,153
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11,203
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Loss from operations
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(7,537
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)
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(4,538
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)
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(19,960
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)
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(11,011
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)
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Other (income) expense:
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||||||||
Amortization of deferred financing costs and debt discount
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—
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—
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—
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755
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||||
Loss on extinguishment of debt
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—
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—
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—
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1,389
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Interest (income) expense
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(8
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)
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—
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(10
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)
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49
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Derivative fair value adjustment
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—
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—
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—
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(10,080
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)
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Other expense
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—
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—
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—
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10
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Total other (income) expense
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(8
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)
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—
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(10
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)
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(7,877
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)
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Loss from continuing operations before tax
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(7,529
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)
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(4,538
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)
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(19,950
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)
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(3,134
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)
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Income tax benefit
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—
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338
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—
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909
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Loss from continuing operations
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(7,529
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)
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(4,200
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)
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(19,950
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)
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(2,225
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)
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Discontinued operations (Note 13):
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Income (loss) from discontinued operations, net of income tax expense of $0 and $338 for the three months ended September 30, 2015 and 2014, respectively, and $0 and $909 for the nine months ended September 30, 2015 and 2014, respectively
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(826
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)
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396
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(4,285
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)
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1,066
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Net loss
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(8,355
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)
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(3,804
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)
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(24,235
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)
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(1,159
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)
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Deemed dividends, accretion, and allocation of net income to convertible preferred stockholders (Note 5)
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—
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—
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—
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(1,633
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)
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Net loss attributable to common stockholders - basic
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(8,355
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(3,804
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(24,235
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)
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(2,792
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)
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Derivative fair value adjustment
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—
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—
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—
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(10,080
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)
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Net loss attributable to common stockholders - diluted
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$
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(8,355
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)
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$
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(3,804
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)
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$
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(24,235
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)
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$
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(12,872
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)
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Income (loss) per share attributable to common stockholders - basic
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Continuing operations
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$
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(0.54
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)
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$
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(0.50
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)
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$
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(1.72
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)
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$
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(0.82
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)
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Discontinued operations
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(0.06
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)
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0.05
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(0.37
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)
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0.23
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Net loss per share - basic
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$
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(0.60
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)
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$
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(0.45
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)
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$
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(2.09
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)
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$
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(0.59
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)
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Income (loss) per share attributable to common stockholders - diluted
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|
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Continuing operations
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$
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(0.54
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)
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$
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(0.50
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)
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$
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(1.72
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)
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$
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(2.80
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)
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Discontinued operations
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(0.06
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)
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0.05
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(0.37
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)
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0.21
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Net loss per share - diluted
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$
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(0.60
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)
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$
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(0.45
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)
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$
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(2.09
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)
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$
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(2.59
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)
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Weighted average common shares outstanding:
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Basic
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13,904,331
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8,504,785
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11,576,498
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4,703,278
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Diluted
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13,904,331
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8,504,785
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11,576,498
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4,976,965
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Nine months ended
September 30, |
||||||
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2015
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|
2014
|
||||
Cash flows from operating activities:
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Net loss
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$
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(24,235
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)
|
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$
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(1,159
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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|
||||
Non-cash component of impairment loss on classification of assets as held for sale (Note 13)
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586
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|
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—
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|
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Loss on disposal of Services Business (Note 13)
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73
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|
|
—
|
|
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Gain on insurance recovery
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—
|
|
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(165
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)
|
||
Loss on extinguishment of debt
|
—
|
|
|
1,389
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|
||
Recovery of bad debt
|
—
|
|
|
(75
|
)
|
||
Depreciation
|
447
|
|
|
918
|
|
||
Stock-based compensation expense
|
2,656
|
|
|
837
|
|
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Amortization of deferred financing costs and debt discount
|
—
|
|
|
755
|
|
||
Change in fair value of derivative liability
|
—
|
|
|
(10,080
|
)
|
||
Changes in deferred rent
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(108
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)
|
|
(97
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable and unbilled services
|
(523
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)
|
|
(252
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)
|
||
Prepaid expenses, other assets, and deferred costs
|
(855
|
)
|
|
(876
|
)
|
||
Accounts payable and accrued expenses
|
(431
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)
|
|
907
|
|
||
Accrued severance and retention cost obligations
|
2,809
|
|
|
—
|
|
||
Deferred revenue
|
1,018
|
|
|
147
|
|
||
Net cash used in operating activities
|
(18,563
|
)
|
|
(7,751
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from insurance recovery
|
—
|
|
|
216
|
|
||
Proceeds from sale of Services Business (Note 13)
|
2,549
|
|
|
—
|
|
||
Purchases of property and equipment
|
(547
|
)
|
|
(632
|
)
|
||
Net cash provided by (used in) investing activities
|
2,002
|
|
|
(416
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from public offerings
|
41,400
|
|
|
62,000
|
|
||
Proceeds from sale of preferred stock
|
—
|
|
|
544
|
|
||
Repayment of debt
|
—
|
|
|
(15,000
|
)
|
||
Payments of deferred offering costs and underwriting discounts and commissions
|
(3,422
|
)
|
|
(6,875
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)
|
||
Proceeds from employee stock purchase plan issuance
|
106
|
|
|
68
|
|
||
Proceeds from exercise of stock warrants
|
—
|
|
|
55
|
|
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Proceeds from exercise of stock options
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—
|
|
|
9
|
|
||
Net cash provided by financing activities
|
38,084
|
|
|
40,801
|
|
||
Net increase in cash and cash equivalents
|
21,523
|
|
|
32,634
|
|
||
Cash and cash equivalents, beginning of period
|
32,243
|
|
|
1,402
|
|
||
Cash and cash equivalents, end of period
|
$
|
53,766
|
|
|
$
|
34,036
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
—
|
|
|
$
|
49
|
|
Noncash financing and investing activities:
|
|
|
|
||||
Beneficial conversion feature on sale of Series D-2 preferred stock
|
$
|
—
|
|
|
$
|
909
|
|
Beneficial conversion feature for antidilution adjustment
|
$
|
—
|
|
|
$
|
214
|
|
Adjustment of preferred stock to redemption value
|
$
|
—
|
|
|
$
|
510
|
|
Deferred offering costs included in accounts payable and accrued expenses
|
$
|
52
|
|
|
$
|
—
|
|
Equipment purchases in accounts payable and accrued expenses
|
$
|
12
|
|
|
$
|
11
|
|
Impairment of fixed asset
|
$
|
—
|
|
|
$
|
51
|
|
Deferred offering costs reclassified to additional paid-in capital
|
$
|
3,388
|
|
|
$
|
4,127
|
|
Warrant derivative liability reclassified to additional paid-in capital
|
$
|
—
|
|
|
$
|
2,701
|
|
Conversion of convertible preferred stock to common stock
|
$
|
—
|
|
|
$
|
88,790
|
|
1.
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Description of Business and Basis of Preparation
|
2.
|
Summary of Significant Accounting Policies
|
|
|
Three months ended September 30,
|
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Nine months ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||
Research and development expense, gross
|
|
$
|
3,553
|
|
|
$
|
2,478
|
|
|
11,352
|
|
|
5,621
|
|
Less: Reimbursement of research and development expense
|
|
95
|
|
|
—
|
|
|
827
|
|
|
—
|
|
||
Research and development expense, net of reimbursements
|
|
$
|
3,458
|
|
|
$
|
2,478
|
|
|
10,525
|
|
|
5,621
|
|
3.
|
Debt Obligations
|
4.
|
Commitments and Contingencies
|
|
|
||
2015 (remaining three months)
|
$
|
97
|
|
2016
|
298
|
|
|
2017
|
307
|
|
|
2018
|
182
|
|
|
2019
|
—
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
884
|
|
5.
|
Convertible Preferred Stock
|
6.
|
Common Stock
|
|
Shares of
Common Stock
|
|
Balance, December 31, 2014
|
8,512,103
|
|
Common stock issued through April 2015 Offering
|
5,376,622
|
|
Common stock issued through employee stock purchase plan
|
16,874
|
|
Balance, September 30, 2015
|
13,905,599
|
|
|
As of
|
|
As of
|
||
|
September 30,
2015 |
|
December 31,
2014 |
||
Outstanding stock options
|
1,207,697
|
|
|
615,322
|
|
Outstanding Series C-1 Preferred warrants
|
14,033
|
|
|
14,033
|
|
For possible future issuance under 2014 Equity Incentive Plan (Note 7)
|
564,445
|
|
|
180,610
|
|
For possible future issuance under Employee Stock Purchase Plan (Note 7)
|
50,283
|
|
|
37,746
|
|
For possible future issuance under 2015 Inducement Plan (Note 7)
|
325,000
|
|
|
—
|
|
Total common shares reserved for future issuance
|
2,161,458
|
|
|
847,711
|
|
7.
|
Stock-based Compensation
|
•
|
On June 4, 2015, the Company's board of directors approved an extension to the existing
90
-day post-employment option exercise period to a period ranging from
36
to
48
months for
three
directors who resigned from the board effective June 4, 2015. The directors held outstanding options to purchase
48,283
shares of the Company's common stock at a weighted average exercise price of
$9.01
per share. All outstanding options were fully vested prior to June 4, 2015.
|
•
|
In connection with the Company's sale of its Services Business (see Note 13), the Company designed a compensatory plan to promote the retention of services of non-executive employees supporting that business (the "Services Business Plan"). The complete terms of the Service Business Plan are described in Note 12. The Company terminated certain employees in June 2015 (the "June 2015 Terminated Employees") who became eligible for severance benefits pursuant to the terms of the Services Business Plan. The outstanding stock options held by the June 2015 Terminated Employees were modified to provide: (i) accelerated vesting of all unvested stock options as of the termination date and (ii) an extension to the existing 90-day post-employment option exercise period, which varies for each employee based upon years of service, with a maximum exercise period of
48
months. As of June 30, 2015, the June 2015 Terminated Employees held outstanding options to purchase
17,715
shares of the Company's common stock at a weighted average exercise price of
$9.64
per share, including aggregate unvested options to purchase
8,331
shares at a weighted average exercise price of
$9.64
per share.
|
•
|
As described in Note 12, Charles F. Osborne, Jr., the Company’s former chief financial officer, resigned from the Company effective June 30, 2015. The Company's compensation committee of the board of directors approved the following modifications to Mr. Osborne's outstanding options to purchase the Company's common stock: (i) accelerated vesting of all unvested stock options as of June 30, 2015, and (ii) an extension to the existing 90-day post-employment option exercise period to
36
months. As of June 30, 2015, Mr. Osborne held outstanding options to purchase an aggregate of
74,490
shares of the Company's common stock at a weighted average exercise price of
$9.53
per share, including unvested options to purchase
50,814
shares at a weighted average exercise price of
$9.49
per share.
|
•
|
As described in Note 12, the Company designed a compensatory plan for its non-executive employees in connection with the relocation of its operations to Jersey City, New Jersey (the "Retention Plan"). Pursuant to the terms of the Retention Plan, all stock options held by non-executive employees eligible under the Retention Plan were modified to provide: (i) accelerated vesting of all unvested stock options as of December 31, 2015, and (ii) an extension to the existing 90-day post-employment option exercise period, which varies for each employee based upon years of service, with a maximum exercise period of
48
months. As of September 30, 2015, the retained employees eligible for participation in the Retention Plan held outstanding options to purchase
121,550
shares of the Company's common stock at a weighted average exercise price of
$9.13
per share, including aggregate unvested options to purchase
85,990
shares at a weighted average exercise price of
$8.95
per share.
|
•
|
In July 2015, pursuant to the Service Business Plan described in Note 12, the stock options held by each non-executive employee of the Services Business were modified immediately prior to the closing of the sale transaction in July 2015 to provide: (i) accelerated vesting of all unvested stock options as of the closing of the sale transaction and (ii) an extension to the existing
90
-day post-employment option exercise period, which varies for each employee based upon years of service, with a maximum exercise period of
48
months. As of July 16, 2015, the non-executive employees of the Services Business held outstanding options to purchase
37,517
shares of the Company's common stock at a weighted average exercise price of
$9.62
per share, including aggregate unvested options to purchase
23,052
shares at a weighted average exercise price of
$9.61
per share.
|
•
|
On July 21, 2015, Yves J. Ribeill, Ph.D., President and a member of the Company’s board of directors, resigned as President. The Company and Dr. Ribeill entered into a Separation Agreement which included the following modifications to Dr. Ribeill's outstanding options to purchase the Company's common stock: (i) accelerated vesting of all unvested stock options as of July 21, 2015, and (ii) an extension to the existing
90
-day post-employment option exercise period to
48
months. As of July 23, 2015, Dr. Ribeill held
84,613
vested options and
183,268
unvested options to purchase shares of the Company’s common stock at a weighted average exercise price of
$9.61
and
$9.41
per share, respectively.
|
•
|
On September 24, 2015, Edward E. Penhoet, Ph.D. resigned from the Company's board of directors. The Company's board of directors approved the following modifications to Dr. Penhoet's outstanding options to purchase the Company's common stock: (i) accelerated vesting of all unvested stock options as of September 24, 2015, and (ii) an extension to the existing
90
-day post-employment option exercise period to
36
months. As of September 24, 2015, Dr. Penhoet held outstanding options to purchase
12,280
shares of the Company's common stock at a weighted average exercise price of
$8.64
per share, including aggregate unvested options to purchase
8,800
shares at a weighted average exercise price of
$8.65
per share.
|
8.
|
Income Taxes
|
9.
|
Net Loss Per Share
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Income (loss) attributable to common stock - basic:
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations
|
$
|
(7,529
|
)
|
|
$
|
(4,200
|
)
|
|
$
|
(19,950
|
)
|
|
$
|
(2,225
|
)
|
Deemed dividend for beneficial conversion feature on Series D-2 Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
(909
|
)
|
||||
Deemed dividend for antidilution adjustments to convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
||||
Accretion of convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(510
|
)
|
||||
Allocation of net income to convertible preferred stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Loss from continuing operations attributable to common stock - basic
|
(7,529
|
)
|
|
(4,200
|
)
|
|
(19,950
|
)
|
|
(3,858
|
)
|
||||
Income (loss) from discontinued operations, net of income tax expense, attributable to common stock - basic
|
(826
|
)
|
|
396
|
|
|
(4,285
|
)
|
|
1,066
|
|
||||
Net loss attributable to common stock - basic
|
$
|
(8,355
|
)
|
|
$
|
(3,804
|
)
|
|
$
|
(24,235
|
)
|
|
$
|
(2,792
|
)
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) attributable to common stock - diluted:
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations attributable to common stock - basic
|
$
|
(7,529
|
)
|
|
$
|
(4,200
|
)
|
|
$
|
(19,950
|
)
|
|
$
|
(3,858
|
)
|
Derivative fair value adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,080
|
)
|
||||
Loss from continuing operations attributable to common stock - diluted
|
(7,529
|
)
|
|
(4,200
|
)
|
|
(19,950
|
)
|
|
(13,938
|
)
|
||||
Loss from discontinued operations, net of income tax expense, attributable to common stock - diluted
|
(826
|
)
|
|
396
|
|
|
(4,285
|
)
|
|
1,066
|
|
||||
Net loss attributable to common stock - diluted
|
$
|
(8,355
|
)
|
|
$
|
(3,804
|
)
|
|
$
|
(24,235
|
)
|
|
$
|
(12,872
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding - basic
|
13,904,331
|
|
|
8,504,785
|
|
|
11,576,498
|
|
|
4,703,278
|
|
||||
Allocation of common stock warrants as participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
273,687
|
|
||||
Weighted-average common shares outstanding - diluted
|
13,904,331
|
|
|
8,504,785
|
|
|
11,576,498
|
|
|
4,976,965
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) per share - basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.54
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.72
|
)
|
|
$
|
(0.82
|
)
|
Discontinued operations
|
(0.06
|
)
|
|
0.05
|
|
|
(0.37
|
)
|
|
0.23
|
|
||||
Net loss per share - basic
|
$
|
(0.60
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(2.09
|
)
|
|
$
|
(0.59
|
)
|
Income (loss) per share - diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.54
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.72
|
)
|
|
$
|
(2.80
|
)
|
Discontinued operations
|
(0.06
|
)
|
|
0.05
|
|
|
(0.37
|
)
|
|
0.21
|
|
||||
Net income (loss) per share - diluted
|
$
|
(0.60
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(2.09
|
)
|
|
$
|
(2.59
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Convertible preferred stock:
|
|
|
|
|
|
|
|
||||
Series A Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
6,149
|
|
Series B Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
131,685
|
|
Series C Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
783,515
|
|
Series C-2 Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
173,213
|
|
Series D-1 Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
296,773
|
|
Series D-2 Preferred
|
—
|
|
|
—
|
|
|
—
|
|
|
300,549
|
|
Series C-1 Preferred warrants
|
14,033
|
|
|
14,033
|
|
|
14,033
|
|
|
14,033
|
|
Stock options
|
1,207,697
|
|
|
625,627
|
|
|
1,207,697
|
|
|
625,627
|
|
ESPP
|
—
|
|
|
59,203
|
|
|
—
|
|
|
59,203
|
|
10.
|
Related-Party Transactions
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenue
|
$
|
165
|
|
|
$
|
1,822
|
|
|
$
|
2,140
|
|
|
$
|
5,466
|
|
Selling, general and administrative expense
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
11.
|
Fair Value Measurements
|
|
|
Nine months ended
|
||
|
|
September 30, 2014
|
||
Balance at beginning of period
|
|
$
|
12,237
|
|
Issuance of warrants
|
|
544
|
|
|
Excess of fair value of warrants over proceeds
|
|
362
|
|
|
Adjustment to fair value
|
|
(10,442
|
)
|
|
Reclassification to additional paid-in capital upon exercise of warrants
|
|
(2,701
|
)
|
|
Balance at end of period
|
|
$
|
—
|
|
12.
|
Compensatory Plan Obligations
|
13.
|
Sale of the Services Business, Discontinued Operations
|
|
|
July 16, 2015
|
||
Net proceeds from sale of the Services Business
|
|
|
||
Net cash consideration received at closing
|
|
$
|
2,549
|
|
Consideration in escrow
|
|
500
|
|
|
Total consideration
|
|
3,049
|
|
|
Less: selling costs
|
|
764
|
|
|
Proceeds from sale, net of selling costs
|
|
$
|
2,285
|
|
|
|
|
||
Services Business assets and liabilities disposed of on July 16, 2015
|
|
|
||
Accounts and unbilled receivables, net
|
|
$
|
1,470
|
|
Prepaid expenses and other current assets
|
|
713
|
|
|
Property and equipment, net of accumulated depreciation
|
|
4,900
|
|
|
Other assets
|
|
59
|
|
|
Assets of Services Business, net
|
|
$
|
7,142
|
|
|
|
|
||
Accounts payable and accrued expenses
|
|
$
|
616
|
|
Deferred revenue
|
|
1,657
|
|
|
Deferred rent
|
|
1,161
|
|
|
Liabilities related to assets of the Services Business
|
|
$
|
3,434
|
|
|
|
|
||
Assets of the Services Business, net of liabilities
|
|
$
|
3,708
|
|
Less: Impairment charge recognized upon classification as held for sale
|
|
1,350
|
|
|
Less: Loss on disposal
|
|
73
|
|
|
Assets of the Services Business, net of liabilities and impairment charges
|
|
$
|
2,285
|
|
|
|
December 31, 2014
|
||
Carrying amounts of assets included as part of discontinued operations:
|
|
|
||
Accounts and unbilled receivables, net
|
|
$
|
1,501
|
|
Prepaid expenses and other current assets
|
|
289
|
|
|
Property and equipment, net
|
|
4,835
|
|
|
Other assets
|
|
76
|
|
|
Assets of discontinued operations, net
|
|
$
|
6,701
|
|
|
|
|
||
Carrying amounts of liabilities included as part of discontinued operations:
|
|
|
||
Accounts payable and accrued expenses
|
|
$
|
681
|
|
Deferred revenue
|
|
445
|
|
|
Deferred rent
|
|
1,294
|
|
|
Liabilities related to assets of discontinued operations
|
|
$
|
2,420
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Major line items constituting income (loss) of discontinued operations:
|
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
|
$
|
560
|
|
|
$
|
4,319
|
|
|
$
|
7,408
|
|
|
$
|
13,535
|
|
Cost of revenue
|
|
(466
|
)
|
|
(3,660
|
)
|
|
(7,296
|
)
|
|
(11,800
|
)
|
||||
Research and development
|
|
(7
|
)
|
|
—
|
|
|
(860
|
)
|
|
—
|
|
||||
Selling, general, and administrative
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
||||
Gain on insurance recovery
|
|
—
|
|
|
—
|
|
|
—
|
|
|
165
|
|
||||
Severance and exit costs (Note 12)
|
|
(1,061
|
)
|
|
—
|
|
|
(2,114
|
)
|
|
—
|
|
||||
Impairment charge from classification of assets as held for sale
|
|
—
|
|
|
—
|
|
|
(1,350
|
)
|
|
—
|
|
||||
Gain (loss) on disposal, net of associated transaction costs of $764 for the three and nine month periods ended September 30, 2015
|
|
148
|
|
|
—
|
|
|
(73
|
)
|
|
—
|
|
||||
Income tax expense
|
|
—
|
|
|
(338
|
)
|
|
—
|
|
|
(909
|
)
|
||||
Income (loss) from discontinued operations, net of income tax expense
|
|
$
|
(826
|
)
|
|
$
|
396
|
|
|
$
|
(4,285
|
)
|
|
$
|
1,066
|
|
|
Nine months ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Depreciation expense
|
$
|
391
|
|
|
$
|
841
|
|
Purchases of property and equipment
|
(547
|
)
|
|
(632
|
)
|
||
Stock-based compensation
|
208
|
|
|
139
|
|
||
Changes in deferred rent
|
(133
|
)
|
|
(97
|
)
|
||
Equipment purchases in accounts payable and accrued expenses
|
—
|
|
|
11
|
|
14.
|
Subsequent Events
|
•
|
On October 1, 2015, the Company granted options to purchase
60,000
shares of common stock to a newly hired vice president under the 2015 Inducement Plan at a per share exercise price of
$6.64
. The options have a
ten
-year term, with one-fourth of the shares subject to the option vesting on the one-year anniversary of the date of grant and the remainder vesting in equal monthly installments for
36
months thereafter, provided the vice president continues to provide service to the Company.
|
•
|
On November 2, 2015, the Company granted options to purchase
100,000
shares of common stock to a newly hired Chief Financial Officer under the 2015 Inducement Plan at a per share exercise price of
$6.53
. The options have a
ten
-year term, with one-fourth of the shares subject to the option vesting on the one-year anniversary of the date of grant and the remainder vesting in equal monthly installments for
36
months thereafter, provided the vice president continues to provide service to the Company.
|
•
|
a base prospectus which covers the offering, issuance and sale by the Company of up to a maximum aggregate offering price of
$150,000
of the Company's common stock, preferred stock, debt securities and warrants, including common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon the exercise of warrants, and
|
•
|
a prospectus covering the offering, issuance and sale by the Company of up to a maximum aggregate offering price of
$40,000
of the Company's common stock that may be issued and sold under a sales agreement with Cowen and Company, LLC (the "Sales Agreement Prospectus").
|
•
|
On October 1, 2015, we granted options to purchase
60,000
shares of common stock to a newly hired vice president under the 2015 Inducement Plan. The options have a ten-year term, with one-fourth of the shares subject to the option vesting on the one-year anniversary of the date of grant and the remainder vesting in equal monthly installments for 36 months thereafter, provided the vice president continues to provide service to us.
|
•
|
On November 2, 2015, we granted options to purchase
100,000
shares of common stock to a newly hired Chief Financial Officer under the 2015 Inducement Plan. The options have a ten-year term, with one-fourth of the shares subject to the option vesting on the one-year anniversary of the date of grant and the remainder vesting in equal monthly installments for 36 months thereafter, provided the officer continues to provide service to us.
|
•
|
a base prospectus which covers the offering, issuance and sale by us of up to a maximum aggregate offering price of $150 million of our common stock, preferred stock, debt securities and warrants, including common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon the exercise of warrants
|
•
|
a prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $40 million of our common stock that may be issued and sold under a sales agreement with Cowen and Company, LLC (the "Sales Agreement Prospectus").
|
•
|
costs related to executing preclinical and clinical trials, including related drug formulation, manufacturing and other development;
|
•
|
salaries and personnel-related costs, including benefits and any stock-based compensation for personnel in research and development functions;
|
•
|
fees paid to consultants and other third parties who support our product candidate development and intellectual property protection;
|
•
|
other costs in seeking regulatory approval of our products; and
|
•
|
allocated overhead.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(dollars in thousands)
|
|
(dollars in thousands)
|
||||||||||||
SCY-078
|
$
|
3,434
|
|
|
$
|
2,383
|
|
|
$
|
10,360
|
|
|
$
|
4,422
|
|
Cyclophilin Inhibitor Platform
|
24
|
|
|
95
|
|
|
165
|
|
|
1,199
|
|
||||
Total research and development
|
$
|
3,458
|
|
|
$
|
2,478
|
|
|
$
|
10,525
|
|
|
$
|
5,621
|
|
•
|
a related party guarantee of our outstanding credit facility;
|
•
|
fair value adjustments to our derivative liability for warrants issued in conjunction with the related party convertible debt; and
|
•
|
a loss on extinguishment of debt.
|
•
|
Revenue
included in discontinued operations comprises revenue from the provision of our contract research and development services, which were provided by our Services Business. Our revenue recognition policy is described within Note 2 to our unaudited interim financial statements in Item 1 of this quarterly report.
|
•
|
Cost of revenue
included in discontinued operations primarily consists of salaries and personnel-related costs, including employee benefits and any stock-based compensation, incurred to generate our contract research and development services revenues. Additional expenses include facilities and equipment costs directly associated with generating revenue, allocated overhead, materials, contracted consultants and other direct costs. We allocate expenses associated with our facilities, information technology costs, and depreciation and amortization, between cost of revenue and operating expenses. Allocations are based on employee headcount or facility square footage utilization, and are determined by the nature of work performed.
|
•
|
Research and development expense
included in discontinued operations consists of expenses incurred under an animal health research and development project being conducted by our Services Business to advance and secure intellectual property protection for certain existing proprietary technology in the field of animal health. Research and development expense incurred under this project totaled $
0.0 million
and $
0.9 million
for the three and nine months ended September 30, 2015, respectively, and
$0.0 million
for both the three and nine months ended September 30, 2014. The nature of and accounting for research and development expenses included in discontinued operations is consistent with the research and development expenses included in continuing operations, as described above.
|
•
|
Gain on insurance recovery
included in discontinued operations relates to a reimbursement received from our insurance carrier in the quarter ended June 30, 2014, for the replacement cost of a fixed asset that was damaged by severe weather. The asset’s net book value was reduced upon occurrence of the damage. The proceeds received from the insurance recovery exceeded the net book value of the asset in the amount of $0.2 million, which we recognized as a gain during the quarterly period ended June 30, 2014. This asset was directly associated with our Services Business and, as a result, the gain was included in discontinued operations.
|
•
|
Severance costs
included in discontinued operations are exit and disposal costs directly attributable to the sale of the Services Business and incurred pursuant to the Services Business Plan, as described in "Recent Developments" above.
|
•
|
Impairment charge from classification of assets as held for sale
included in discontinued operations relates to the carrying value of Services Business property and equipment, net that was in excess of fair value less cost to sell. As described in Note 13 to our unaudited interim financial statements in Item 1, we met the relevant criteria for reporting the Services Business as held for sale and in discontinued operations as of June 30, 2015, pursuant to FASB Topic 205-20,
Presentation of Financial Statements--Discontinued Operations
, and FASB Topic 360,
Property, Plant, and Equipment
. As a result, we were required to assess the Services Business asset group for impairment pursuant to FASB Topic 360. Our assessment identified an impairment charge of
$1.4 million
that we recorded in the quarterly period ended June 30, 2015. To determine the impairment charge, pursuant to FASB Topic 360, the net carrying value of the Services Business asset group was compared to its fair value as of May 4, 2015. We determined that the selling price paid by Accuratus to acquire the Services Business asset group was the best estimate of fair value. Our valuation methodology is described further in Note 11 of the accompanying unaudited interim financial statements in Item I. We subsequently recorded a
$0.1 million
loss on disposal in the quarterly period ended September 30, 2015,
due to (i) a difference between estimated and final direct selling costs and (ii) a change in estimated working capital of the Services Business between June 30, 2015 and the effective date of the sale on July 17, 2015.
|
•
|
Income tax expense
included in discontinued operations consists of U.S. federal and state income taxes. To date, we have not been required to pay U.S. federal income taxes because of our current and accumulated net operating losses. However, in accordance with U.S. GAAP, for periods in which we reported pre-tax income from discontinued operations for financial reporting purposes and pre-tax loss from continuing operations, we presented income from discontinued operations net of income tax expense attributable to our discontinued operations using the estimated annual effective tax rate of the Services Business. We also recognized a corresponding income tax benefit on our loss from continuing operations for the same affected period.
|
|
Three Months Ended
|
|||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
|
Period-to-Period
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|||||||
Total revenue
|
$
|
64
|
|
|
$
|
61
|
|
|
$
|
3
|
|
|
4.9
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Research and development
|
3,458
|
|
|
2,478
|
|
|
980
|
|
|
39.5
|
%
|
|||
Selling, general and administrative
|
4,143
|
|
|
2,121
|
|
|
2,022
|
|
|
95.3
|
%
|
|||
Total operating expenses
|
7,601
|
|
|
4,599
|
|
|
3,002
|
|
|
65.3
|
%
|
|||
Loss from operations
|
(7,537
|
)
|
|
(4,538
|
)
|
|
(2,999
|
)
|
|
66.1
|
%
|
|||
Other (income) expense:
|
|
|
|
|
|
|
|
|||||||
Interest (income) expense
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
*
|
|
|||
Total other (income) expense
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
*
|
|
|||
Loss from continuing operations before income tax
|
(7,529
|
)
|
|
(4,538
|
)
|
|
(2,991
|
)
|
|
65.9
|
%
|
|||
Income tax benefit
|
—
|
|
|
338
|
|
|
(338
|
)
|
|
(100.0
|
)%
|
|||
Loss from continuing operations
|
(7,529
|
)
|
|
(4,200
|
)
|
|
(3,329
|
)
|
|
79.3
|
%
|
|||
Income (loss) from discontinued operations, net of income tax expense
|
(826
|
)
|
|
396
|
|
|
(1,222
|
)
|
|
(308.6
|
)%
|
|||
Net loss
|
$
|
(8,355
|
)
|
|
$
|
(3,804
|
)
|
|
$
|
(4,551
|
)
|
|
119.6
|
%
|
|
Nine Months Ended
|
|||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
|
Period-to-Period
Change
|
|||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
|
|||||||
Total revenue
|
$
|
193
|
|
|
$
|
192
|
|
|
$
|
1
|
|
|
0.5
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Research and development
|
10,525
|
|
|
5,621
|
|
|
4,904
|
|
|
87.2
|
%
|
|||
Selling, general and administrative
|
9,628
|
|
|
5,582
|
|
|
4,046
|
|
|
72.5
|
%
|
|||
Total operating expenses
|
20,153
|
|
|
11,203
|
|
|
8,950
|
|
|
79.9
|
%
|
|||
Loss from operations
|
(19,960
|
)
|
|
(11,011
|
)
|
|
(8,949
|
)
|
|
81.3
|
%
|
|||
Other (income) expense:
|
|
|
|
|
|
|
|
|||||||
Amortization of deferred financing costs and debt discount
|
—
|
|
|
755
|
|
|
(755
|
)
|
|
(100.0
|
)%
|
|||
Loss on extinguishment of debt
|
—
|
|
|
1,389
|
|
|
(1,389
|
)
|
|
(100.0
|
)%
|
|||
Interest (income) expense
|
(10
|
)
|
|
49
|
|
|
(59
|
)
|
|
(120.4
|
)%
|
|||
Derivative fair value adjustment
|
—
|
|
|
(10,080
|
)
|
|
10,080
|
|
|
(100.0
|
)%
|
|||
Other expense
|
—
|
|
|
10
|
|
|
(10
|
)
|
|
(100.0
|
)%
|
|||
Total other (income) expense
|
(10
|
)
|
|
(7,877
|
)
|
|
7,867
|
|
|
(99.9
|
)%
|
|||
Loss from continuing operations before income tax
|
(19,950
|
)
|
|
(3,134
|
)
|
|
(16,816
|
)
|
|
536.6
|
%
|
|||
Income tax benefit
|
—
|
|
|
909
|
|
|
(909
|
)
|
|
(100.0
|
)%
|
|||
Loss from continuing operations
|
(19,950
|
)
|
|
(2,225
|
)
|
|
(17,725
|
)
|
|
796.6
|
%
|
|||
Income (loss) from discontinued operations, net of income tax expense
|
(4,285
|
)
|
|
1,066
|
|
|
(5,351
|
)
|
|
(502.0
|
)%
|
|||
Net loss
|
$
|
(24,235
|
)
|
|
$
|
(1,159
|
)
|
|
$
|
(23,076
|
)
|
|
1,991.0
|
%
|
|
For the Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
|
(dollars in thousands)
|
||||||
Cash and cash equivalents, January 1
|
$
|
32,243
|
|
|
$
|
1,402
|
|
Net cash used in operating activities
|
(18,563
|
)
|
|
(7,751
|
)
|
||
Net cash provided by (used in) investing activities
|
2,002
|
|
|
(416
|
)
|
||
Net cash provided by financing activities
|
38,084
|
|
|
40,801
|
|
||
Net increase in cash and cash equivalents
|
21,523
|
|
|
32,634
|
|
||
Cash and cash equivalents, September 30
|
$
|
53,766
|
|
|
$
|
34,036
|
|
•
|
the progress, costs, and the clinical development of SCY-078;
|
•
|
the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals;
|
•
|
the ability of product candidates to progress through clinical development successfully;
|
•
|
our need to expand our research and development activities;
|
•
|
the costs associated with the divestiture of our Services Business, including the costs associated with the Services Business Plan described in the "Recent Developments" section above;
|
•
|
the costs associated with the relocation of our corporate headquarters and operating activities to Jersey City, New Jersey, including the costs associated with the Retention Plan described in the "Recent Developments" section above;
|
•
|
the costs associated with securing, establishing and maintaining commercialization and manufacturing capabilities;
|
•
|
our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
|
•
|
our need and ability to hire additional management and scientific and medical personnel;
|
•
|
our need to implement additional internal systems and infrastructure, including financial and reporting systems associated with our relocation to New Jersey; and
|
•
|
the economic and other terms, timing and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future.
|
•
|
In May 2015, our board of directors approved, and we communicated, the material terms of our compensatory plan for the non-executive employees of our Services Business.
The compensatory plan is designed to promote the retention of services of such non-executive employees in connection with such a potential sale.
Our obligations under the compensatory plan were contingent upon the successful closing of the sale of the Services Business, which occurred in July 2015.
The material terms of the compensatory plan are described in the "Recent Developments" section above.
|
•
|
In May 2015, in connection with our planned relocation of our continuing operations to Jersey City, New Jersey, we designed a compensatory plan to promote the retention of services of non-executive employees supporting our continuing operations, which we refer to as the Retention Plan. The Retention Plan terms provide for certain cash compensation payments and severance payments, as well as modifications to the terms of currently outstanding stock options held by such non-executive employees. The material terms of the compensatory plan are described in the "Recent Developments" section above.
|
•
|
In May 2015, o
ur compensation committee of the board of directors approved a compensatory arrangement for our former chief financial officer that provided for certain payments and benefits in connection with his resignation effective June 30, 2015. The material terms of the compensatory arrangement are described in the "Recent Developments" section above.
|
•
|
In July 2015, we entered into a compensatory arrangement for our former president that provided for certain payments and benefits in connection with his resignation effective July 21, 2015. The material terms of the compensatory arrangement are described in the "Recent Developments" section above.
|
•
|
In July 2015, we entered into a Commitment to Services Agreement with Accuratus pursuant to which Accuratus shall provide us with certain contract research and development services for eighteen months following the closing of the sale of the Services Business for a minimum, non-cancellable purchase price obligation on the part of us of at least $3.3 million over the initial term of the Services Agreement.
|
•
|
In July 2015, as a condition to the execution of the Asset Purchase Agreement, Accuratus assumed our post-closing obligation under our facility lease in Durham, North Carolina. Certain of our employees will continue to operate from the Durham facility for a period of up to six months following the sale closing pursuant to a facility license and a transition services agreement. In addition, under a Transition Services Agreement, Accuratus will provide accounting, IT, payroll, personnel and human resources support, and equity compensation plan administration support services to us at rates ranging from
one hundred
to
two hundred
dollars per hour for a period of time not to extend beyond December 31, 2015.
|
•
|
In July 2015, in connection with the sale of the Services Business and our relocation of our continuing operations to Jersey City, New Jersey, we entered into the Sublease that became effective July 22, 2015, to sublet certain premises consisting of 10,141 square feet of space located at 101 Hudson Street, Jersey City, New Jersey from Optimer Pharmaceutical, Inc. The material terms of the Sublease are described in the "Recent Developments" section above.
|
•
|
In July 2015, in connection with the sale of the Services Business, contracts to provide services to Merial Limited and Elanco Animal Health, along with all other contracts directly associated with the Services Business, were assigned to Accuratus.
|
Item 3.
|
Quantitative and Qualitative Disclosure about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1A.
|
Risk Factors
|
•
|
continue the development of SCY-078;
|
•
|
conduct ongoing and initiate new clinical trials for SCY-078;
|
•
|
seek marketing approvals for SCY-078;
|
•
|
establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
|
•
|
maintain, expand and protect our intellectual property portfolio;
|
•
|
hire additional clinical, quality control and scientific personnel; and
|
•
|
maintain and create additional infrastructure to support our operations as a public company.
|
•
|
the costs associated with developing SCY-078, which are difficult for us to predict;
|
•
|
any delays in regulatory review and approval of SCY-078;
|
•
|
delays in the timing of submission of a new drug application, or NDA, as well as commencement, enrollment and the timing of clinical testing, of SCY-078 or any other product candidates we may seek to develop;
|
•
|
our ability to commercialize product candidates, both in the United States and overseas, if we are able to obtain regulatory approval to do so;
|
•
|
the costs associated with obtaining and maintaining regulatory approval and ongoing company compliance and product compliance for SCY-078;
|
•
|
market acceptance of SCY-078 and any future product candidates we may seek to develop;
|
•
|
changes in regulations and regulatory policies;
|
•
|
competition from existing products or new products that may emerge;
|
•
|
the ability of patients or healthcare providers to obtain coverage of, or sufficient reimbursement for, any products we are able to develop;
|
•
|
our ability to establish or maintain collaborations, licensing or other arrangements;
|
•
|
costs related to, and outcomes of, potential litigation;
|
•
|
potential product liability claims; and
|
•
|
potential liabilities associated with hazardous materials.
|
•
|
significantly delay, scale back or discontinue the development or commercialization of SCY-078 and any future product candidates we may seek to develop;
|
•
|
seek strategic alliances for research and development programs at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or
|
•
|
relinquish or license on unfavorable terms our rights to any product candidates that we otherwise would seek to develop or commercialize ourselves.
|
•
|
inability to reach agreements on acceptable terms with prospective clinical research organizations, or CROs, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
|
•
|
difficulty identifying and engaging qualified clinical investigators;
|
•
|
regulatory objections to commencing a clinical trial or proceeding to the next phase of investigation, including inability to reach agreement with the FDA or non-U.S. regulators regarding the scope or design of our clinical trials or for other reasons such as safety concerns that might be identified during preclinical development or early stage clinical trials;
|
•
|
inability to identify and maintain a sufficient number of eligible trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication as our product candidates;
|
•
|
withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care;
|
•
|
inability to obtain institutional review board (or ethics review committee) approval to conduct a clinical trial at prospective sites;
|
•
|
difficulty identifying, recruiting and enrolling eligible patients to participate in clinical trials for a variety of reasons, including meeting the enrollment criteria for our study and competition from other clinical trial programs for the same indication as product candidates we seek to commercialize;
|
•
|
inability to retain patients in clinical trials due to the treatment protocol, personal issues, side effects from the therapy or lack of efficacy; and
|
•
|
inability to obtain sufficient funding to commence a clinical trial.
|
•
|
failure by us, CROs or clinical investigators to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
|
•
|
failed inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities;
|
•
|
unforeseen safety or efficacy issues or any determination that a clinical trial presents unacceptable health risks; or
|
•
|
lack of adequate funding to continue the clinical trial due to unforeseen costs resulting from enrollment delays, requirements to conduct additional trials and studies, increased expenses associated with the services of our CROs and other third parties, or other reasons.
|
•
|
limitations or warnings contained in the FDA-approved labeling;
|
•
|
changes in the standard of care for the targeted indications;
|
•
|
limitations in the approved indications;
|
•
|
availability of alternative therapies with potentially advantageous results, or other products with similar results at similar or lower cost, including generics and over-the-counter products;
|
•
|
lower demonstrated clinical safety or efficacy compared to other products;
|
•
|
occurrence of significant adverse side effects;
|
•
|
ineffective sales, marketing and distribution support;
|
•
|
lack of availability of reimbursement from managed care plans and other third-party payors;
|
•
|
timing of market introduction and perceived effectiveness of competitive products;
|
•
|
lack of cost-effectiveness;
|
•
|
adverse publicity about our product candidates or favorable publicity about competitive products;
|
•
|
lack of convenience and ease of administration; and
|
•
|
potential product liability claims.
|
•
|
regulatory authorities may require the addition of labeling statements, specific warnings, precautions, contraindications or field alerts to physicians and pharmacies;
|
•
|
we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product;
|
•
|
we may have limitations on how we promote the product;
|
•
|
sales of the product may decrease significantly;
|
•
|
regulatory authorities may require us to take our approved product off the market;
|
•
|
we may be subject to litigation or product liability claims; and
|
•
|
our reputation may suffer.
|
•
|
resources, including capital, personnel and technology;
|
•
|
research and development capability;
|
•
|
clinical trial expertise;
|
•
|
regulatory expertise;
|
•
|
intellectual property portfolios;
|
•
|
expertise in prosecution of intellectual property rights;
|
•
|
manufacturing and distribution expertise; and
|
•
|
sales and marketing expertise.
|
•
|
SCY-078 and any future product candidates we may seek to develop may not generate preclinical or clinical data that are deemed sufficient by regulators in a given jurisdiction;
|
•
|
SCY-078 may not be approved for all indications requested, or any indications at all, in a given jurisdiction which could limit the uses of SCY-078 and any future product candidates we may seek to develop and have an adverse effect on product sales and potential royalties; and
|
•
|
such approval in a given jurisdiction may be subject to limitations on the indicated uses for which the product may be marketed or require costly post-marketing follow-up studies.
|
•
|
issue warning letters;
|
•
|
mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;
|
•
|
require us or our partners to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;
|
•
|
impose other civil or criminal penalties;
|
•
|
suspend regulatory approval;
|
•
|
suspend any ongoing clinical trials;
|
•
|
refuse to approve pending applications or supplements to approved applications filed by us, our partners or our potential future partners;
|
•
|
impose restrictions on operations, including costly new manufacturing requirements; or
|
•
|
seize or detain products or require a product recall.
|
•
|
the possible breach of the manufacturing agreements or violation of regulatory standards by the third parties because of factors beyond our control; and
|
•
|
the possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on their own business priorities.
|
•
|
others may be able to make compounds that are similar to SCY-078 and any future product candidates we may seek to develop but that are not covered by the claims of our patents;
|
•
|
if we encounter delays in our clinical trials, the period of time during which we could market our drug candidates under patent protection would be reduced;
|
•
|
we might not have been the first to conceive, make or disclose the inventions covered by our patents or pending patent applications;
|
•
|
we might not have been the first to file patent applications for these inventions;
|
•
|
any patents that we obtain may be invalid or unenforceable or otherwise may not provide us with any competitive advantages; or
|
•
|
the patents of others may have a material adverse effect on our business.
|
•
|
successfully attract and recruit new employees with the expertise and experience we will require;
|
•
|
manage our clinical programs effectively, which we anticipate being conducted at numerous clinical sites;
|
•
|
develop a marketing and sales infrastructure; and
|
•
|
continue to develop our operational, financial and management controls, reporting systems and procedures.
|
•
|
withdrawal of clinical trial participants;
|
•
|
termination of clinical trial sites or entire trial programs;
|
•
|
costs of related litigation;
|
•
|
substantial monetary awards to patients or other claimants;
|
•
|
decreased demand for product candidates and loss of revenue;
|
•
|
impairment of our business reputation;
|
•
|
diversion of management and scientific resources from our business operations; and
|
•
|
the inability to commercialize product candidates.
|
•
|
the results of our preclinical testing or clinical trials;
|
•
|
the ability to obtain additional funding;
|
•
|
any delay in filing an NDA or similar foreign applications for SCY-078 and any future product candidate we may seek to develop or any adverse development or perceived adverse development with respect to the FDA’s review of that NDA or a foreign regulator’s review of a similar applications;
|
•
|
maintenance of our existing collaborations or ability to enter into new collaborations;
|
•
|
our collaboration partners’ election to develop or commercialize product candidates under our collaboration agreements or the termination of any programs under our collaboration agreements;
|
•
|
any intellectual property infringement actions in which we or our licensors and collaboration partners may become involved;
|
•
|
our ability to successfully develop and commercialize future product candidates;
|
•
|
changes in laws or regulations applicable to future products;
|
•
|
adverse regulatory decisions;
|
•
|
introduction of new products, services or technologies by our competitors;
|
•
|
achievement of financial projections we may provide to the public;
|
•
|
achievement of the estimates and projections of the investment community;
|
•
|
the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;
|
•
|
announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our collaboration partners or our competitors;
|
•
|
disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;
|
•
|
legislation or regulation that mandates or encourages the use of generic products;
|
•
|
additions or departures of key scientific or management personnel;
|
•
|
significant lawsuits, including patent or stockholder litigation;
|
•
|
changes in the market valuations of similar companies;
|
•
|
general economic and market conditions and overall fluctuations in the U.S. equity markets;
|
•
|
sales of our common stock by us, our executive officers and directors or our stockholders in the future; and
|
•
|
trading volume of our common stock.
|
•
|
the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;
|
•
|
the obligation to provide three years of audited financial statements;
|
•
|
the “say on pay” provisions, requiring a non-binding stockholder vote to approve compensation of certain executive officers, and the “say on golden parachute” provisions, requiring a non-binding stockholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations, of the Dodd-Frank Act and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of our chief executive officer;
|
•
|
the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act, and instead provide a reduced level of disclosure concerning executive compensation; and
|
•
|
any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
SCYNEXIS, INC.
|
||
|
|
|
By:
|
|
/s/ Marco Taglietti, M.D.
|
|
|
Marco Taglietti, M.D.
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Chief Executive Officer
(Principal Executive Officer)
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Date:
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November 13, 2015
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By:
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/s/ Eric Francois
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Eric Francois
Chief Financial Officer
(Principal Financial and Accounting Officer)
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Date:
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November 13, 2015
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Exhibit
Number
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Description of Document
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2.1
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Asset Purchase Agreement, dated July 17, 2015, between the Company and Accuratus Lab Services, Inc. (Filed with the SEC as Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on July 23, 2015, SEC File No. 001-36365, and incorporated by reference here)
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3.1
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Amended and Restated Certificate of Incorporation (Filed with the SEC as Exhibit 3.1 to our current report on Form 8-K, filed with the SEC on May 12, 2014, SEC File No. 001-36365, and incorporated by reference here).
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3.2
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Amended and Restated By-Laws (Filed with the SEC as Exhibit 3.4 to our Registration Statement on Form S-1, filed with the SEC on February 27, 2014, SEC File No. 333-194192, and incorporated by reference here).
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4.1
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Reference is made to Exhibits 3.1 and 3.2.
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4.2
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Fifth Amended and Restated Investor Rights Agreement, dated December 11, 2013 (Filed with the SEC as Exhibit 10.21 to our Registration Statement on Form S-1, filed with the SEC on February 27, 2014, SEC File No. 333-194192).
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10.1
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Compensation arrangement with non-employee directors.
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10.2*
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Commitment to Services Agreement, dated July 17, 2015, between the Company and Accuratus Lab Services, Inc.
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10.3
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Employment Agreement, effective November 1, 2015, between the SCYNEXIS, Inc. and Eric Francois (Filed with the SEC as Exhibit 99.1 to our current report on Form 8-K, filed with the SEC on November 2, 2015, SEC File No. 001-36365, and incorporated by reference here).
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10.4
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Sublease Agreement, dated July 13, 2015, between the Company and Optimer Pharmaceuticals, Inc. (Filed with the SEC as Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on July 23, 2015, SEC File No. 001-36365, and incorporated by reference here).
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10.5
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Release And Settlement Agreement, dated July 21, 2015, between the Company and Yves Ribeill (Filed with the SEC as Exhibit 10.3 to our current report on Form 8-K, filed with the SEC on July 23, 2015, SEC File No. 001-36365, and incorporated by reference here).
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10.6
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Engagement Letter, dated July 7, 2015, between CMF Associates, LLC, and SCYNEXIS pursuant to which Jonathan Sears Woodall served as SCYNEXIS’s Interim Chief Financial Officer.
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31.1
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Certification of Chief Executive Officer pursuant to Rule 13-a-14(a) or Rule 15(d)-14(a) of the Exchange Act
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31.2
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to 13a-14(b) or 15d-14(b) of the Exchange Act
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Schema Linkbase Document
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101.CAL
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XBRL Taxonomy Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Labels Linkbase Document
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101.PRE
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XBRL Taxonomy Presentation Linkbase Document
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1.
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Each non-employee director receives an annual base cash retainer of $35,000 for such service, to be paid quarterly. In addition, the chairman of the Board receives an additional annual base cash retainer of
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2.
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In addition, each member of a committee receives compensation for service on a committee as follows:
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a.
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The chairperson of the audit committee receives an annual cash retainer of $15,000 for this service, paid quarterly, and each of the other members of the audit committee receives an annual cash retainer of $7,500, paid quarterly.
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b.
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The chairperson of the compensation committee receives an annual cash retainer of $11,000 for this service, paid quarterly, and each of the other members of the compensation committee receive an annual cash retainer of $5,500, paid quarterly.
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c.
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The chairperson of the nominating and corporate governance committee receive an annual cash retainer of $7,500 for this service, paid quarterly, and each of the other members of the nominating and corporate governance committee receive an annual cash retainer of $3,750, paid quarterly.
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3.
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Each year on the date of the SCYNEXIS annual meeting of stockholders, each non-employee director will automatically be granted an option to purchase 8,800 shares of common stock. If a new board member joins the Board, the director will be granted an initial option to purchase 11,700 shares of common stock. Annual option grants to board members and initial option grants to new board members will have an exercise price per share equal to the fair market value of a share of common stock on the date of grant and will vest in full on the earlier of the next annual meeting of stockholders to occur in the year following the date of grant and the one year anniversary of the date of grant; provided, that the non-employee director is providing continuous services on the applicable vesting date.
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ACCURATUS LAB SERVICES, INC.
By:
/s/ Patrick Walsh
Name:
Patrick Walsh
Title:
President and Chief Executive Officer
Date:
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SCYNEXIS, INC.
By:
/s/ Marco Taglietti
Name:
Marco Taglietti, M.D.
Title:
Chief Executive Officer
Date:
, 2015
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F.
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Special Terms – Terms applicable to this specific effort not addressed by the Agreement
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Role
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Initial Rate*
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Unit
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Full Time Equivalent (FTE)
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$[*]
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1 hour
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Regulatory Support
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$[*]
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1 hour
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[*]
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$[*]
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1 month
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Pass-Thoughs
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[*]
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•
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In connection with the Company’s decision to divest the contract research services business segment, a decision was made to relocate SCYNEXIS, Inc. from Durham, North Carolina to Jersey City, New Jersey in the near future
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The Company’s Chief Financial Officer made the decision not to relocate to New Jersey and has resigned effective June 30, 2015
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While the Company’s Director of Financial Reporting will remain with the Company; the remainder of the current accounting and finance team will stay with the contract research services business (the ‘Services Business”), which will remain in North Carolina
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It is intended that a Transition Services Agreement will be negotiated and executed pursuant to which the Services Business will provide accounting and finance services to SCYNEXIS, Inc. for a period of time
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SCYNEXIS, Inc. has commenced its search for a permanent Chief Financial Officer to be based in New Jersey
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The Company has elected to be characterized as an Emerging Growth Company pursuant to the JOBS Act for purposes of reporting with the U.S. Securities and Exchange Commission
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Deloitte & Touche LLP is the Company’s auditor
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Daily operation and management of financial activities
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Producing a rolling 13-weeks cash flow forecast
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Responsibility for maintaining an accurate set of primary financial statements in accordance with accounting principles generally accepted in the U.S. as a basis for certain SEC filings
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The Interim CFO will serve in the capacity of Principal Accounting Officer; supporting and be an executing signature on SEC filings
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Represent SCYNEXIS is investor relations activities
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Direct communication and coordination with the Audit Committee and the external auditors
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Support, advise and participate in the design of an effective system of internal controls over financial reporting
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Support and advise the relocation to New Jersey, including transition to stand-alone operations in the new location and building an appropriate accounting and finance team
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Provide budgeting and forward-looking analyses to the Executive Team and the Board of Directors; acting in the capacity as a trusted business advisor
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Travel as required
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Accomplishments in the prior week
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Expected accomplishments in the coming week
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Issues for the attention of the committee
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Name
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Title
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Role
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Seth Goldblum
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Managing Director
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Project Oversight
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Rob Rostron
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Director
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Deep Dive & Project Management
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Jon Woodall
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Director
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Full Time Project Execution as Interim Chief Financial Officer
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1.
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I have reviewed this Form 10-Q of SCYNEXIS, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our 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;
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b)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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
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c)
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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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our 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):
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a)
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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
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b)
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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.
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/s/ Marco Taglietti, M.D.
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Marco Taglietti, M.D.
Chief Executive Officer
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1.
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I have reviewed this Form 10-Q of SCYNEXIS, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our 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;
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b)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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
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c)
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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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our 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):
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a)
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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
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b)
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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.
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/s/ Eric Francois
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Eric Francois
Chief Financial Officer
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1.
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The Company’s Quarterly Report on Form 10-Q for the period ended
September 30, 2015
, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and
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2.
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The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Marco Taglietti, M.D.
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/s/ Eric Francois
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Marco Taglietti, M.D.
Chief Executive Officer
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Eric Francois
Chief Financial Officer
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