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ANNUAL 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 For the transition period from to
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Delaware
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20-4427682
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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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4105 Hopson Road
Morrisville, North Carolina
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27560
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Common Stock, $0.0001 par value
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NOVN
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Nasdaq Global Market
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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(1)
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Novan’s Nitricil technology enables us to store large amounts of nitric oxide gas in a stable, solid form by chemically loading it on a macromolecule, or polymer. The advantages of our proprietary Nitricil technology include tunability, stability, high storage capacity, targeted delivery and what we believe is an attractive safety profile. Our ability to select from several nitric oxide-loaded materials has created our proprietary library of Nitricil compositions, each of which possesses a unique nitric oxide release profile.
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(2)
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Our formulation science and expertise allow us to customize the drug delivery method for the relevant anatomical location of a variety of diseases. With our dermatological indications, the topical semi-solid formulations enable us to further tune the release of nitric oxide when applied by using proprietary combinations of inactive ingredients. This additional level of control enables us to use one NCE for multiple indications by altering the nitric oxide pharmacology with the composition of the topical formulation. This component of our nitric oxide platform creates an additional barrier to entry, which we believe positions us to prolong the period of market exclusivity for each of our product candidates.
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SB204 is a once-daily, topical monotherapy for the treatment of acne vulgaris, a multi-factorial disease with multiple aspects of the disease pathology (anti-inflammatory and anti-bacterial) potentially treatable with SB204.
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SB206 is a topical anti-viral gel for the treatment of viral skin infections, with a current focus on the treatment of molluscum contagiosum, a contagious skin infection caused by the molluscipoxvirus, and external genital and perianal warts caused by human papillomavirus, or HPV.
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SB208 is a topical broad-spectrum anti-fungal gel for the treatment of fungal infections of the skin and nails, including athlete’s foot (tinea pedis) and fungal nail infections (onychomycosis).
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SB414 is a topical cream-based product candidate for the treatment of inflammatory skin diseases, with a current focus on the treatment of atopic dermatitis and psoriasis.
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Novan retained exclusive development and commercialization rights in all fields for any products containing certain specified particles, referred to as the Novan Particles, including those in our NVN1000 API and in other NCEs we are developing for the GI therapeutic area.
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Novan retained exclusive rights to develop and commercialize products utilizing the licensed technology in the Retained Dermatology Field, which is defined as the diagnosis, treatment, prevention, and palliation of diseases, conditions, or disorders of the skin, nails, hair or scalp in humans or animals, and all cosmetic uses for the skin, nails, hair or scalp, other than (i) for wound care through formulations of therapeutic product specifically designed to treat chronic wounds, thermal burns, radiation injury, accidental injury, surgical sites or scars, and (ii) therapeutic uses for treating cancer, excluding basal cell carcinoma, squamous cell carcinoma, precancerous conditions of the skin, actinic keratosis, actinic cheilitis, cutaneous horn, Bowen disease, radiation dermatosis, and dysplastic nevi. The Retained Dermatology Field was amended in 2017 as described in the section entitled “2017 Amendments to KNOW Bio Licensing Arrangements.”
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KNOW Bio received exclusive rights to develop and commercialize products utilizing the licensed technology, excluding products containing the Novan Particles, in the KNOW Bio Field, which is defined as all fields of use except for the Retained Dermatology Field. The KNOW Bio Field was amended in 2017 as described in the section entitled “2017 Amendments to KNOW Bio Licensing Arrangements.”
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completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s Good Laboratory Practice, or GLP, regulations;
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submission to the FDA of an IND which must become effective before human clinical trials may begin;
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approval by an independent Institutional Review Board, or IRB, at each clinical site before each trial may be initiated;
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performance of adequate and well-controlled human clinical trials in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug product for each indication;
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submission to the FDA of an NDA after completion of all pivotal clinical trials;
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satisfactory completion of an FDA advisory committee review, if applicable;
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and
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FDA review and approval of the NDA to permit marketing of the product for particular indications for uses in the United States.
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Phase 1 clinical trial: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.
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Phase 2 clinical trial: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
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Phase 3 clinical trials: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product and to provide adequate information for the labeling of the product.
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Phase 4 clinical trials: In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product. In some cases, these Phase 4 studies are made a condition of approval of the NDA.
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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
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fines, warning letters or holds on post-approval clinical trials;
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refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals;
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product seizure or detention, or refusal to permit the import or export of products; or
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injunctions or the imposition of civil or criminal penalties.
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the initiation, progress, timing, costs, results, and evaluation of results of trials for our clinical-stage product candidates, including trials conducted by us or potential future partners;
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the progress, timing, costs and results of development and preclinical study activities relating to other potential applications of our nitric oxide platform;
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the number and characteristics of product candidates that we pursue;
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our ability to enter into strategic relationships to support the continued development of certain product candidates and the success of those arrangements;
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our success in optimizing the size and capability of our current manufacturing facility and related processes to meet our strategic objectives;
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our success in the technical transfer of methods and processes related to our drug substance and drug product manufacturing with our current and/or potential future contract manufacturing partners;
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the outcome, timing and costs of seeking regulatory approvals;
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the occurrence and timing of potential development and regulatory milestones achieved by Sato, our licensee for SB204 and SB206 in Japan;
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the terms and timing of any future collaborations, licensing, consulting, financing or other arrangements that we may enter into;
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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;
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the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights;
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defending against intellectual property related claims;
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the costs associated with any potential future securities litigation, and the outcome of that litigation;
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the extent to which we in-license or acquire other products and technologies; and
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subject to receipt of marketing approval, revenue received from commercial sales or out licensing of our product candidates.
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potential uncertainty in the marketplace concerning our ongoing viability as a business;
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the possibility of disruption to our business and operations, including diversion of significant management time and resources towards the pursuit of funding and strategic alternatives;
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impairment of our ability to attract and retain key personnel who are necessary to the operation of the business and the development of its product candidates;
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restrictions on our business operations and ability to explore other strategic alternatives under any definitive agreement we may enter into as a result of this process; and
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potential future stockholder litigation relating to the strategic process that could prevent or delay the strategic process, and the related costs of such litigation.
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cause you difficulty in selling your shares without depressing the market price for the shares or sell your shares at all;
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substantially impair our ability to raise additional funds;
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result in a loss of institutional investor interest and fewer financing opportunities for us; and/or
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result in potential breaches of representations or covenants of agreements pursuant to which we made representations or covenants relating to our compliance with applicable listing requirements. Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations.
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the FDA disagreeing as to the design or implementation of our clinical trials;
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reaching agreement on acceptable terms with prospective CROs, clinical trial sites and prospective strategic partners, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, trial sites and partners;
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obtaining institutional review board, or IRB, approval at each site;
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the safety profiles of our product candidates;
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recruiting suitable patients to participate in a trial;
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having patients complete a trial or return for post-treatment follow-up;
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clinical sites deviating from trial protocol;
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addressing patient safety concerns that arise during the course of a trial;
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adding a sufficient number of clinical trial sites;
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manufacturing sufficient quantities of product candidate for use in clinical trials;
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utilizing an adequate container and delivery device for the product candidate; or
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changes to our financial priorities or insufficient capital available to fund clinical trials.
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we face significant competition in seeking appropriate strategic partners, and the negotiation process is likely to be time-consuming and complex;
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strategic partners who take over development of a product candidate may fail to secure sufficient capital resources to fund planned development activities;
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strategic partners may not devote the necessary resources to complete development activities because of limited financial or scientific resources or the belief that other product candidates may have a higher likelihood of obtaining approval or potentially generate a greater return on investment;
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strategic partners may fail to properly protect, maintain or defend our intellectual property rights, where applicable, or may use proprietary information in a way that may expose us to potential loss or liability;
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we are likely to have limited control over decisions of strategic partners that may result in significant delays or the termination of development and commercialization of our product candidates;
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strategic partners may develop a product that competes, directly or indirectly, with our product candidates, or may choose to pursue alternative technologies, including those of our competitors;
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disputes between us and our strategic partners concerning the research, development or commercialization of our product candidates or our arrangements with respect to our product candidates could lead to ligation or arbitration that would be costly and detract time from development; and
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we or our strategic partners may realize one or more of the risks described within this Item 1A related to the development, regulatory approval and commercialization of our current and future product candidates.
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the patient eligibility criteria defined in the protocol;
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the size of the patient population required for analysis of the trial’s primary endpoints;
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the proximity of patients to trial sites;
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the design of the trial;
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our ability to recruit clinical trial investigators with the appropriate competencies and experience;
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clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating;
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our ability to obtain patient consents; and
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the risk that patients enrolled in clinical trials will drop out of the trials before completion.
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the FDA’s disagreement with the design or implementation of our clinical trials;
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unfavorable or ambiguous results from our clinical trials;
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results that may not meet the level of statistical significance required by the FDA for approval;
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serious and unexpected drug-related adverse events experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates;
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our inability to demonstrate to the satisfaction of the FDA that our product candidates are safe and effective for the proposed indication;
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the FDA’s disagreement with the interpretation of data from preclinical studies or clinical trials;
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our inability to demonstrate that the clinical and other benefits of our product candidates outweigh any safety or other perceived risks;
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the FDA’s requirement for additional preclinical studies or clinical trials;
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the FDA’s disagreement regarding the formulation, container, dosing delivery device, labeling or the specifications of our product candidates;
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the FDA’s failure to approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or
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the potential for approval policies or regulations of the FDA to significantly change in a manner rendering our clinical data insufficient for approval.
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withdrawal of clinical trial participants;
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decreased enrollment rates of clinical trial participants;
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termination of clinical trial sites or entire trial programs;
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the inability to commercialize our product candidates;
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decreased demand for our product candidates;
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impairment of our business reputation;
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product recall or withdrawal from the market or labeling, marketing or promotional restrictions;
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substantial costs of any related litigation or similar disputes;
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distraction of management’s attention and other resources from our primary business;
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substantial monetary awards to patients or other claimants against us that may not be covered by insurance; or
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loss of revenue.
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the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation.
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the federal false claims and civil monetary penalties laws, including the civil False Claims Act, which impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
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the federal Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to certain payments or other ‘‘transfers of value’’ made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals beginning in 2022, and teaching hospitals, and requires applicable manufacturers to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other ‘‘transfers of value’’ to such physician owners; and
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or report marketing expenditures and pricing information.
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the clinical indications for which the product is approved and patient demand for approved products that treat those indications;
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the effectiveness of our product as compared to other available therapies;
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the availability of coverage and adequate reimbursement from managed care plans and other healthcare payors for any of our product candidates that may be approved;
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the cost of treatment with our product candidates in relation to alternative treatments and willingness to pay for the product, if approved, on the part of patients;
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acceptance by physicians, major operators of clinics and patients of the product as a safe and effective treatment;
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physician and patient willingness to adopt a new therapy over other available therapies to treat approved indications;
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overcoming any biases physicians or patients may have toward particular therapies for the treatment of approved indications;
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patient satisfaction with the results and administration of our product candidates and overall treatment experience;
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the willingness of patients to pay for certain of our product candidates relative to other discretionary items, especially during economically challenging times;
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the revenue and profitability that our product candidates may offer a physician as compared to alternative therapies;
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the prevalence and severity of adverse events;
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limitations or warnings contained in the FDA-approved labeling for our product candidates;
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any FDA requirement to undertake a REMS;
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the effectiveness of our sales, marketing and distribution efforts;
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adverse publicity about our product candidates or favorable publicity about competitive products; and
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potential product liability claims.
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regulatory authorities may withdraw their approval of the product;
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we may be required to recall a product or change the way such product is administered to patients;
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additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;
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regulatory authorities may require the addition of labeling statements, such as a ‘‘black box’’ warning or a contraindication;
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we may be required to implement a REMS or create a Medication Guide outlining the risks of such adverse events for distribution to patients;
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we could be sued and held liable for harm caused to patients;
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the product may become less competitive; and
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our reputation may suffer.
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our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;
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the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future products;
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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
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unforeseen costs and expenses associated with creating an independent sales and marketing organization.
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restrictions on the marketing or manufacturing of our product candidates, withdrawal of the product from the market, or voluntary or mandatory product recalls;
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fines, warning letters or holds on clinical trials;
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refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of approvals;
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product seizure or detention, or refusal to permit the import or export of our product candidates; and
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injunctions or the imposition of civil or criminal penalties.
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others may be able to make formulations or compositions that are the same as or similar to certain of our product candidates but that are not covered by the claims of the patents that we own or license;
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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our trade secret or similar rights;
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issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges;
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our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; and
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we may not develop additional proprietary technologies that are patentable.
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continue to conduct clinical trials for our existing clinical stage product candidates;
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initiate clinical trials for other future product candidates and new chemical entities;
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seek regulatory approvals for our product candidates that complete clinical trials;
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qualify contract manufacturing organizations for the manufacture of drug product for the commercial launch of our product candidates;
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establish a sales, marketing and distribution infrastructure or partnership to commercialize products for which we may obtain regulatory approval;
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maintain, expand and protect our intellectual property portfolio;
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continue our research and development efforts;
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exercise any development or commercialization rights we may have under any arrangements with collaborators or partners;
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hire additional scientific, clinical and management personnel;
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add, modify or enhance executive, operational, financial and management information systems and personnel;
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incur costs associated with any potential future securities litigation, and the outcome of that litigation; and
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incur additional legal, accounting and other expenses in operating as a public company.
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reports of clinical trial results or steps in the regulatory approval process;
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actual or anticipated fluctuations in our financial condition and operating results;
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actual or anticipated changes in our growth rate relative to our competitors;
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potential competition from existing products or new products that may emerge;
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development of new technologies that may address our markets and may make our technology less attractive;
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changes in physician, hospital or healthcare provider practices that may make our product candidates less attractive;
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announcements by us, our partners or our competitors regarding significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
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developments or disputes concerning proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;
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the recruitment or departure of key personnel;
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failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;
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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
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variations in our financial results or those of companies that are perceived to be similar to us;
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changes to reimbursement levels by commercial third-party payors and government payors, including Medicare, and negative announcements relating to reimbursement levels;
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public market’s assessment of our ability to raise additional capital;
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general economic, industry and market conditions; and
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the other factors described in this “Risk Factors” section.
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delay, defer or prevent a change in control;
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entrench our management and the board of directors; or
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impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.
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a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors;
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the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
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the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;
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the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors;
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
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the requirement that a special meeting of stockholders may be called only by the chief executive officer, the chairman, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
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advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
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not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
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reduced disclosure obligations regarding executive compensation; and
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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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external research and development expenses incurred under agreements with contract research organizations, investigative sites and consultants to conduct our clinical trials and preclinical studies;
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costs to acquire, develop and manufacture supplies for clinical trials and preclinical studies at our facilities;
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costs to establish drug substance and drug product manufacturing capabilities with external contract manufacturing organizations and to enhance drug delivery device technologies through partnerships with technology manufacturing vendors;
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legal and other professional fees related to compliance with FDA requirements;
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licensing fees and milestone payments incurred under license agreements;
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salaries and related costs, including share-based compensation, for personnel in our research and development functions; and
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facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, utilities, equipment and other supplies.
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Year Ended December 31,
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2019
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2018
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(in thousands)
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External clinical programs:
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SB204
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$
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212
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$
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1,116
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SB206
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7,860
|
|
(1)
|
|
5,107
|
|
||
SB208
|
8
|
|
|
|
—
|
|
||
SB414
|
1,836
|
|
|
|
1,772
|
|
||
Other research and development
|
15,256
|
|
|
|
15,050
|
|
||
Total research and development expenses
|
$
|
25,172
|
|
|
|
$
|
23,045
|
|
|
(1)
|
Amount shown net of $8.2 million of contra-research and development expense recorded for the year ended December 31, 2019, respectively, related to the Funding Agreement with Ligand described in “Note 7—Research and Development Arrangements” to the accompanying consolidated financial statements included in this Annual Report.
|
|
Year Ended December 31,
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
|
(Restated)
|
|
|
|
|
|||||||
|
(in thousands, except percentages)
|
|||||||||||||
License and collaboration revenue
|
$
|
4,477
|
|
|
$
|
5,982
|
|
|
$
|
(1,505
|
)
|
|
(25
|
)%
|
Government research contracts and grants revenue
|
419
|
|
|
—
|
|
|
419
|
|
|
100
|
%
|
|||
Research and development services revenue
|
—
|
|
|
9
|
|
|
(9
|
)
|
|
(100
|
)%
|
|||
Total revenue
|
4,896
|
|
|
5,991
|
|
|
(1,095
|
)
|
|
(18
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Research and development
|
25,172
|
|
|
23,045
|
|
|
2,127
|
|
|
9
|
%
|
|||
General and administrative
|
10,412
|
|
|
11,507
|
|
|
(1,095
|
)
|
|
(10
|
)%
|
|||
Total operating expenses
|
35,584
|
|
|
34,552
|
|
|
1,032
|
|
|
3
|
%
|
|||
Operating loss
|
(30,688
|
)
|
|
(28,561
|
)
|
|
(2,127
|
)
|
|
7
|
%
|
|||
Other income (expense), net:
|
|
|
|
|
|
|
|
|||||||
Interest income
|
177
|
|
|
297
|
|
|
(120
|
)
|
|
(40
|
)%
|
|||
Interest expense
|
(2
|
)
|
|
(1,047
|
)
|
|
1,045
|
|
|
(100
|
)%
|
|||
Other income, net
|
136
|
|
|
72
|
|
|
64
|
|
|
89
|
%
|
|||
Total other income (expense), net
|
311
|
|
|
(678
|
)
|
|
989
|
|
|
(146
|
)%
|
|||
Net loss and comprehensive loss
|
$
|
(30,377
|
)
|
|
$
|
(29,239
|
)
|
|
$
|
(1,138
|
)
|
|
4
|
%
|
|
Current Period
|
|
Comparative Period
|
|
$ Change
|
|
% Change
|
|
Note
|
|||||||
|
(in thousands, except percentages)
|
|
|
|||||||||||||
Three months ended March 31, 2018 (current period) compared to three months ended March 31, 2017 (comparative period)
|
$
|
(218
|
)
|
|
$
|
(230
|
)
|
|
$
|
12
|
|
|
(5
|
)%
|
|
(1)
|
Three months ended June 30, 2018 (current period) compared to three months ended June 30, 2017 (comparative period)
|
(142
|
)
|
|
(233
|
)
|
|
91
|
|
|
(39
|
)%
|
|
(2)
|
|||
Three months ended September 30, 2018 (current period) compared to three months ended September 30, 2017 (comparative period)
|
(151
|
)
|
|
(239
|
)
|
|
88
|
|
|
(37
|
)%
|
|
(3)
|
|||
Six months ended June 30, 2018 (current period) compared to six months ended June 30, 2017 (comparative period)
|
(360
|
)
|
|
(463
|
)
|
|
103
|
|
|
(22
|
)%
|
|
(4)
|
|||
Nine months ended September 30, 2018 (current period) compared to nine months ended September 30, 2017 (comparative period)
|
(511
|
)
|
|
(702
|
)
|
|
191
|
|
|
(27
|
)%
|
|
(5)
|
|||
Year ended December 31, 2018 (current period) compared to year ended December 31, 2017 (comparative period)
|
(678
|
)
|
|
(942
|
)
|
|
264
|
|
|
(28
|
)%
|
|
(6)
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Three months ended March 31, 2019 (current period) compared to three months ended March 31, 2018 (comparative period)
|
84
|
|
|
(218
|
)
|
|
302
|
|
|
(139
|
)%
|
|
(7)
|
|||
Three months ended June 30, 2019 (current period) compared to three months ended June 30, 2018 (comparative period)
|
103
|
|
|
(142
|
)
|
|
245
|
|
|
(173
|
)%
|
|
(8)
|
|||
Three months ended September 30, 2019 (current period) compared to three months ended September 30, 2018 (comparative period)
|
76
|
|
|
(151
|
)
|
|
227
|
|
|
(150
|
)%
|
|
(9)
|
|||
Six months ended June 30, 2019 (current period) compared to six months ended June 30, 2018 (comparative period)
|
187
|
|
|
(360
|
)
|
|
547
|
|
|
(152
|
)%
|
|
(10)
|
|||
Nine months ended September 30, 2019 (current period) compared to nine months ended September 30, 2018 (comparative period)
|
263
|
|
|
(511
|
)
|
|
774
|
|
|
(151
|
)%
|
|
(11)
|
|
(1)
|
Other income (expense), net was $0.2 million in net other expense for both the three months ended March 31, 2018 and the comparative period of the three months ended March 31, 2017. There were no substantive changes in reported interest income or interest expense between the two periods.
|
(2)
|
Other income (expense), net was $0.1 million in net other expense for the three months ended June 30, 2018, compared to $0.2 million in net other expense for the three months ended June 30, 2017. The net expense decrease of approximately $0.1 million was primarily due to an increase in interest income of $0.1 million.
|
(3)
|
Other income (expense), net was approximately $0.2 million in net other expense for the three months ended September 30, 2018, compared to approximately $0.2 million expense for the three months ended September 30, 2017. The net expense decrease of approximately $0.1 million was primarily due to an increase in interest income of approximately $0.1 million.
|
(4)
|
Other income (expense), net was $0.4 million in net other expense for the six months ended June 30, 2018, compared to $0.5 million in net other expense for the six months ended June 30, 2017. The net expense decrease of approximately $0.1 million was primarily due to an increase in interest income of approximately $0.1 million.
|
(5)
|
Other income (expense), net was $0.5 million in net other expense for the nine months ended September 30, 2018, compared to $0.7 million in net other expense for the nine months ended September 30, 2017. The net expense decrease of approximately $0.2 million was primarily due to an increase in interest income of $0.2 million.
|
(6)
|
Other income (expense), net was $0.7 million in net other expense for the year ended December 31, 2018, compared to $0.9 million in net other expense for the year ended December 31, 2017. The net expense decrease of approximately $0.3 million was primarily due to an increase in interest income of $0.2 million.
|
(7)
|
Other income (expense), net was $0.1 million in net other income for the three months ended March 31, 2019, compared to $0.2 million in net other expense for the three months ended March 31, 2018. The net income increase of approximately $0.3 million was primarily due to a $0.3 million decrease in interest expense associated with our Morrisville, North Carolina facility lease. Following the adoption of Topic 842 on January 1, 2019, we no longer report a portion of our lease costs as interest expense as of the adoption date.
|
(8)
|
Other (expense) income, net was $0.1 million in net other income for the three months ended June 30, 2019, compared to $0.1 million in net other expense for the three months ended June 30, 2018. The net income increase of approximately $0.2 million was primarily due to a $0.3 million decrease in interest expense associated with our Morrisville, North Carolina facility lease due to the adoption of Topic 842 on January 1, 2019, whereby we no longer report a portion of our lease costs as interest expense as of the adoption date.
|
(9)
|
Other (expense) income, net was approximately $0.1 million in net other income for the three months ended September 30, 2019, compared to approximately $0.2 million in net other expense for the three months ended September 30, 2018. The net income increase of approximately $0.2 million was primarily due to a less than $0.3 million decrease in interest expense associated with our
|
(10)
|
Other (expense) income, net was approximately $0.2 million in net other income for the six months ended June 30, 2019, compared to approximately $0.4 million in net other expense for the six months ended June 30, 2018. The other income increase of approximately $0.5 million was primarily due to (i) a decrease in interest expense of approximately $0.5 million associated with our Morrisville, North Carolina facility lease due to the adoption of Topic 842 on January 1, 2019, whereby we no longer report a portion of our lease costs as interest expense as of the adoption date, and (ii) an increase in other income, net of approximately $0.1 million. These changes were partially offset by a decrease in interest income of approximately $0.1 million.
|
(11)
|
Other (expense) income, net was $0.3 million in net other income for the nine months ended September 30, 2019, compared to $0.5 million in net other expense for the nine months ended September 30, 2018. The other income increase of approximately $0.8 million was primarily due to (i) a decrease in interest expense of approximately $0.8 million associated with our Morrisville, North Carolina facility lease due to the adoption of Topic 842 on January 1, 2019, whereby we no longer report a portion of our lease costs as interest expense as of the adoption date, and (ii) an increase in other income, net of approximately $0.1 million. These changes were partially offset by a decrease in interest income of approximately $0.1 million.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Net cash (used in) provided by:
|
|
|
|
|
|
||
Operating activities
|
$
|
(19,876
|
)
|
|
$
|
(28,625
|
)
|
Investing activities
|
(422
|
)
|
|
(1,058
|
)
|
||
Financing activities
|
25,816
|
|
|
35,353
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
5,518
|
|
|
$
|
5,670
|
|
•
|
the initiation, progress, timing, costs, results, and evaluation of results of trials for our clinical-stage product candidates, including trials conducted by us or potential future partners;
|
•
|
the progress, timing, costs and results of development and preclinical study activities relating to other potential applications of our nitric oxide platform;
|
•
|
the number and characteristics of product candidates that we pursue;
|
•
|
our ability to enter into strategic relationships to support the continued development of certain product candidates and the success of those arrangements;
|
•
|
our success in optimizing the size and capability of our current manufacturing facility and related processes to meet our strategic objectives;
|
•
|
our success in the technical transfer of methods and processes related to our drug substance and drug product manufacturing with our current and/or potential future contract manufacturing partners;
|
•
|
the outcome, timing and costs of seeking regulatory approvals;
|
•
|
the occurrence and timing of potential development and regulatory milestones achieved by Sato, our licensee for SB204 and SB206 in Japan;
|
•
|
the terms and timing of any future collaborations, licensing, consulting, financing or other arrangements that we may enter into;
|
•
|
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;
|
•
|
the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights;
|
•
|
defending against intellectual property related claims;
|
•
|
the costs associated with any potential future securities litigation, and the outcome of that litigation;
|
•
|
the extent to which we in-license or acquire other products and technologies; and
|
•
|
subject to receipt of marketing approval, revenue received from commercial sales or out licensing of our product candidates.
|
o
|
A milestone payment upon the first time each Covered Product is approved by the FDA for marketing in the Oncovirus Field;
|
o
|
A royalty in the low single digits on net sales of Covered Products in the Oncovirus Field until the later of the expiration of the KNOW Bio patents covering the applicable Covered Product or the expiration of regulatory exclusivity on the applicable Covered Product; and
|
o
|
In the event we sublicense the rights to a Covered Product to a third party in the Oncovirus Field, the Company must pay KNOW Bio a low double-digit percentage of any clinical development or NDA approval milestones we receive from the sublicensee for the Covered Product in the Oncovirus Field.
|
•
|
Due to the lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. We also considered characteristics such as industry, stage of life cycle, financial leverage, enterprise value, risk profiles and position within the industry, along with historical share price information sufficient to meet the expected life of the stock-based awards. We compute the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.
|
•
|
We have estimated the expected term of our employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option.
|
•
|
The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of granted stock-based awards.
|
•
|
We have never declared or paid any cash dividends to common stockholders and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero.
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
(Restated)
|
|||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
13,711
|
|
|
$
|
8,194
|
|
Contracts and grants receivable
|
419
|
|
|
—
|
|
||
Deferred offering costs
|
49
|
|
|
49
|
|
||
Prepaid expenses and other current assets
|
1,545
|
|
|
1,107
|
|
||
Total current assets
|
15,724
|
|
|
9,350
|
|
||
Restricted cash
|
540
|
|
|
539
|
|
||
Intangible assets
|
75
|
|
|
75
|
|
||
Other assets
|
419
|
|
|
530
|
|
||
Property and equipment, net
|
10,506
|
|
|
15,868
|
|
||
Right-of-use lease assets
|
1,833
|
|
|
—
|
|
||
Total assets
|
$
|
29,097
|
|
|
$
|
26,362
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,602
|
|
|
$
|
1,250
|
|
Accrued compensation
|
437
|
|
|
1,467
|
|
||
Accrued outside research and development services
|
1,013
|
|
|
563
|
|
||
Accrued legal and professional fees
|
616
|
|
|
498
|
|
||
Other accrued expenses
|
553
|
|
|
871
|
|
||
Deferred revenue, current portion
|
4,428
|
|
|
4,401
|
|
||
Research and development service obligation liability, current portion
|
3,088
|
|
|
—
|
|
||
Lease liabilities, current portion
|
1,162
|
|
|
11
|
|
||
Total current liabilities
|
12,899
|
|
|
9,061
|
|
||
Deferred revenue, net of current portion
|
7,076
|
|
|
2,566
|
|
||
Lease liabilities, net of current portion
|
5,100
|
|
|
10
|
|
||
Research and development service obligation liability, net of current portion
|
727
|
|
|
—
|
|
||
Research and development funding arrangement liability, related party
|
25,000
|
|
|
—
|
|
||
Other long-term liabilities
|
578
|
|
|
289
|
|
||
Facility financing obligation
|
—
|
|
|
7,998
|
|
||
Total liabilities
|
51,380
|
|
|
19,924
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
||
Stockholders’ equity (deficit)
|
|
|
|
||||
Common stock $0.0001 par value; 200,000,000 shares authorized as of December 31, 2019 and 2018; 26,744,300 and 26,066,235 shares issued as of December 31, 2019 and 2018, respectively; 26,734,800 and 26,056,735 shares outstanding as of December 31, 2019 and 2018, respectively
|
3
|
|
|
3
|
|
||
Additional paid-in-capital
|
197,853
|
|
|
195,483
|
|
||
Treasury stock at cost, 9,500 shares as of December 31, 2019 and 2018
|
(155
|
)
|
|
(155
|
)
|
||
Accumulated deficit
|
(219,984
|
)
|
|
(188,893
|
)
|
||
Total stockholders' (deficit) equity
|
(22,283
|
)
|
|
6,438
|
|
||
Total liabilities and stockholders’ (deficit) equity
|
$
|
29,097
|
|
|
$
|
26,362
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
(Restated)
|
||||
License and collaboration revenue
|
$
|
4,477
|
|
|
$
|
5,982
|
|
Government research contracts and grants revenue
|
419
|
|
|
—
|
|
||
Research and development services revenue
|
—
|
|
|
9
|
|
||
Total revenue
|
4,896
|
|
|
5,991
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
25,172
|
|
|
23,045
|
|
||
General and administrative
|
10,412
|
|
|
11,507
|
|
||
Total operating expenses
|
35,584
|
|
|
34,552
|
|
||
Operating loss
|
(30,688
|
)
|
|
(28,561
|
)
|
||
Other income (expense), net:
|
|
|
|
||||
Interest income
|
177
|
|
|
297
|
|
||
Interest expense
|
(2
|
)
|
|
(1,047
|
)
|
||
Other income, net
|
136
|
|
|
72
|
|
||
Total other income (expense), net
|
311
|
|
|
(678
|
)
|
||
Net loss and comprehensive loss
|
$
|
(30,377
|
)
|
|
$
|
(29,239
|
)
|
Net loss per share, basic and diluted
|
$
|
(1.16
|
)
|
|
$
|
(1.13
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,254,119
|
|
|
25,795,721
|
|
|
|
Additional
Paid-In
Capital
|
|
Treasury
Stock
|
|
|
|
|
||||||||||||||
|
Common Stock
|
|
|
Accumulated
|
|
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Deficit
|
|
Total
|
|||||||||||||
Balance as of December 31, 2017
|
16,005,408
|
|
|
$
|
2
|
|
|
$
|
158,091
|
|
|
$
|
(155
|
)
|
|
$
|
(159,654
|
)
|
|
$
|
(1,716
|
)
|
Share-based compensation
|
—
|
|
|
—
|
|
|
2,139
|
|
|
—
|
|
|
—
|
|
|
2,139
|
|
|||||
Exercise of stock options
|
51,327
|
|
|
—
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|||||
Common stock and warrants issued through public
offering, net of underwriting discounts, commissions and offering costs |
10,000,000
|
|
|
1
|
|
|
35,193
|
|
|
—
|
|
|
—
|
|
|
35,194
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,239
|
)
|
|
(29,239
|
)
|
|||||
Balance as of December 31, 2018 (Restated)
|
26,056,735
|
|
|
$
|
3
|
|
|
$
|
195,483
|
|
|
$
|
(155
|
)
|
|
$
|
(188,893
|
)
|
|
$
|
6,438
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
1,188
|
|
|
—
|
|
|
—
|
|
|
1,188
|
|
|||||
Exercise of stock options
|
32,443
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Adoption of new accounting standards (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(714
|
)
|
|
(714
|
)
|
|||||
Liability-based awards reclassified to additional paid-in capital
|
—
|
|
|
—
|
|
|
366
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|||||
Common stock issued pursuant to common stock purchase agreement
|
645,622
|
|
|
—
|
|
|
747
|
|
|
—
|
|
|
—
|
|
|
747
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,377
|
)
|
|
(30,377
|
)
|
|||||
Balance as of December 31, 2019
|
26,734,800
|
|
|
$
|
3
|
|
|
$
|
197,853
|
|
|
$
|
(155
|
)
|
|
$
|
(219,984
|
)
|
|
$
|
(22,283
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
(Restated)
|
||||
Cash flow from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(30,377
|
)
|
|
$
|
(29,239
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,033
|
|
|
1,664
|
|
||
Share-based compensation
|
1,838
|
|
|
2,204
|
|
||
Loss on disposal and write-offs of property and equipment
|
36
|
|
|
154
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Contracts and grants receivable
|
(419
|
)
|
|
—
|
|
||
Prepaid expenses and other current assets
|
(438
|
)
|
|
(224
|
)
|
||
Accounts payable
|
352
|
|
|
777
|
|
||
Accrued compensation
|
(1,030
|
)
|
|
(701
|
)
|
||
Accrued outside research and development services
|
450
|
|
|
(829
|
)
|
||
Accrued legal and professional fees
|
159
|
|
|
132
|
|
||
Other accrued expenses
|
(397
|
)
|
|
(615
|
)
|
||
Deferred revenue
|
4,537
|
|
|
(1,610
|
)
|
||
Advanced payment for research and development service obligation
|
12,000
|
|
|
—
|
|
||
Research and development service obligation liabilities
|
(8,185
|
)
|
|
—
|
|
||
Other long-term assets and liabilities
|
(435
|
)
|
|
(338
|
)
|
||
Net cash used in operating activities
|
(19,876
|
)
|
|
(28,625
|
)
|
||
Cash flow from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(422
|
)
|
|
(1,107
|
)
|
||
Proceeds from the sale of property and equipment
|
—
|
|
|
49
|
|
||
Net cash used in investing activities
|
(422
|
)
|
|
(1,058
|
)
|
||
Cash flow from financing activities:
|
|
|
|
||||
Proceeds from research and development funding arrangement
|
25,000
|
|
|
—
|
|
||
Proceeds from issuance of common stock, net of underwriting fees and commissions
|
747
|
|
|
35,625
|
|
||
Payments related to public offering costs
|
—
|
|
|
(321
|
)
|
||
Proceeds from exercise of stock options
|
69
|
|
|
60
|
|
||
Payments on capital lease obligation
|
—
|
|
|
(11
|
)
|
||
Net cash provided by financing activities
|
25,816
|
|
|
35,353
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
5,518
|
|
|
5,670
|
|
||
Cash, cash equivalents and restricted cash as of beginning of period
|
8,733
|
|
|
3,063
|
|
||
Cash, cash equivalents and restricted cash as of end of period
|
$
|
14,251
|
|
|
$
|
8,733
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
2
|
|
|
$
|
1,043
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Purchases of property and equipment with accounts payable and accrued expenses
|
$
|
79
|
|
|
$
|
—
|
|
Right of use assets obtained in exchange for lease liabilities
|
$
|
1,827
|
|
|
$
|
—
|
|
Liability-based awards reclassified to additional paid-in capital
|
$
|
366
|
|
|
$
|
—
|
|
Common stock issued for payment of commitment fee
|
$
|
750
|
|
|
$
|
—
|
|
Deferred offering costs reclassified to additional paid-in capital
|
$
|
—
|
|
|
$
|
431
|
|
|
|
|
|
||||
Reconciliation to consolidated balance sheets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
13,711
|
|
|
$
|
8,194
|
|
Restricted cash included in noncurrent assets
|
540
|
|
|
539
|
|
||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
14,251
|
|
|
$
|
8,733
|
|
•
|
The Company has reported a net loss in all fiscal periods since inception and, as of December 31, 2019, the Company had an accumulated deficit of $219,984.
|
•
|
As described in Note 10—Stockholders’ Equity (Deficit), in August 2019 the Company entered into a common stock purchase agreement (the “Aspire Common Stock Purchase Agreement”) with Aspire Capital Fund, LLC, (“Aspire Capital”) which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $25,000 of shares of the Company’s common stock at the Company’s request from time to time during the 30-month term of the Aspire Common Stock Purchase Agreement. The aggregate amount available to the Company through sales of common stock under the Aspire Common Stock Purchase Agreement is subject to certain limitations including, but not limited to: (i) the number of shares that may be sold will be limited to 5,211,339 shares, representing 19.99% of the Company’s outstanding shares of common stock on August 30, 2019, if the average price paid for all shares issued under the agreement is less than $2.17; and (ii) on any purchase date, the closing sale price of the
|
•
|
As of December 31, 2019, the Company had a total cash and cash equivalents balance of $13,711.
|
Computer and office equipment
|
3 years
|
Furniture and fixtures
|
5-7 years
|
Laboratory equipment
|
7 years
|
Building asset under facility lease
|
25 years
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||
Warrants to purchase common stock associated with January 2018 public offering (Note 10)
|
10,000,000
|
|
|
10,000,000
|
|
Stock options outstanding under the 2008 and 2016 Plans (Note 11)
|
1,663,803
|
|
|
1,671,666
|
|
Stock appreciation rights outstanding under the 2016 Plan (Note 11)
|
1,000,000
|
|
|
—
|
|
Inducement options outstanding (Note 11)
|
125,500
|
|
|
100,500
|
|
|
Year Ended December 31, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Change in fair value of warrant liability
|
$
|
(264
|
)
|
|
$
|
264
|
|
|
$
|
—
|
|
Total other income (expense), net
|
47
|
|
|
264
|
|
|
311
|
|
|||
Net loss and comprehensive loss
|
(30,641
|
)
|
|
264
|
|
|
(30,377
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(1.17
|
)
|
|
$
|
0.01
|
|
|
$
|
(1.16
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,254,119
|
|
|
—
|
|
|
26,254,119
|
|
|
December 31, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Warrant liability
|
$
|
1,504
|
|
|
$
|
(1,504
|
)
|
|
$
|
—
|
|
Total liabilities
|
52,884
|
|
|
(1,504
|
)
|
|
51,380
|
|
|||
Additional paid-in-capital
|
180,047
|
|
|
17,806
|
|
|
197,853
|
|
|||
Accumulated deficit
|
(203,682
|
)
|
|
(16,302
|
)
|
|
(219,984
|
)
|
|||
Total stockholders' (deficit) equity
|
(23,787
|
)
|
|
1,504
|
|
|
(22,283
|
)
|
|
Year Ended December 31, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Net loss
|
$
|
(30,641
|
)
|
|
$
|
264
|
|
|
$
|
(30,377
|
)
|
Change in fair value of warrant liability
|
264
|
|
|
(264
|
)
|
|
—
|
|
|
Three Months Ended September 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
1,160
|
|
|
$
|
(1,160
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
1,236
|
|
|
(1,160
|
)
|
|
76
|
|
|||
Net loss and comprehensive loss
|
(8,336
|
)
|
|
(1,160
|
)
|
|
(9,496
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.32
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.36
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,189,454
|
|
|
—
|
|
|
26,189,454
|
|
|
Nine Months Ended September 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
(9,030
|
)
|
|
$
|
9,030
|
|
|
$
|
—
|
|
Total other income (expense), net
|
(8,767
|
)
|
|
9,030
|
|
|
263
|
|
|||
Net loss and comprehensive loss
|
(33,459
|
)
|
|
9,030
|
|
|
(24,429
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(1.28
|
)
|
|
$
|
0.34
|
|
|
$
|
(0.94
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,108,870
|
|
|
—
|
|
|
26,108,870
|
|
|
September 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
10,270
|
|
|
$
|
(10,270
|
)
|
|
$
|
—
|
|
Total liabilities
|
64,322
|
|
|
(10,270
|
)
|
|
54,052
|
|
|||
Additional paid-in-capital
|
179,047
|
|
|
17,806
|
|
|
196,853
|
|
|||
Accumulated deficit
|
(206,500
|
)
|
|
(7,536
|
)
|
|
(214,036
|
)
|
|||
Total stockholders' (deficit) equity
|
(27,605
|
)
|
|
10,270
|
|
|
(17,335
|
)
|
|
Nine Months Ended September 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(33,459
|
)
|
|
$
|
9,030
|
|
|
$
|
(24,429
|
)
|
Change in fair value of warrant liability
|
9,030
|
|
|
(9,030
|
)
|
|
—
|
|
|
Three Months Ended June 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
(9,802
|
)
|
|
$
|
9,802
|
|
|
$
|
—
|
|
Total other income (expense), net
|
(9,699
|
)
|
|
9,802
|
|
|
103
|
|
|||
Net loss and comprehensive loss
|
(18,098
|
)
|
|
9,802
|
|
|
(8,296
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.69
|
)
|
|
$
|
0.37
|
|
|
$
|
(0.32
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,069,734
|
|
|
—
|
|
|
26,069,734
|
|
|
Six Months Ended June 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
(10,190
|
)
|
|
$
|
10,190
|
|
|
$
|
—
|
|
Total other income (expense), net
|
(10,003
|
)
|
|
10,190
|
|
|
187
|
|
|||
Net loss and comprehensive loss
|
(25,123
|
)
|
|
10,190
|
|
|
(14,933
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.96
|
)
|
|
$
|
0.39
|
|
|
$
|
(0.57
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,067,909
|
|
|
—
|
|
|
26,067,909
|
|
|
June 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
11,430
|
|
|
$
|
(11,430
|
)
|
|
$
|
—
|
|
Total liabilities
|
67,725
|
|
|
(11,430
|
)
|
|
56,295
|
|
|||
Additional paid-in-capital
|
178,100
|
|
|
17,806
|
|
|
195,906
|
|
|||
Accumulated deficit
|
(198,164
|
)
|
|
(6,376
|
)
|
|
(204,540
|
)
|
|||
Total stockholders' (deficit) equity
|
(20,216
|
)
|
|
11,430
|
|
|
(8,786
|
)
|
|
Six Months Ended June 30, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(25,123
|
)
|
|
$
|
10,190
|
|
|
$
|
(14,933
|
)
|
Change in fair value of warrant liability
|
10,190
|
|
|
(10,190
|
)
|
|
—
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
(388
|
)
|
|
$
|
388
|
|
|
$
|
—
|
|
Total other income (expense), net
|
(304
|
)
|
|
388
|
|
|
84
|
|
|||
Net loss and comprehensive loss
|
(7,025
|
)
|
|
388
|
|
|
(6,637
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.27
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.25
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,066,064
|
|
|
—
|
|
|
26,066,064
|
|
|
March 31, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
1,628
|
|
|
$
|
(1,628
|
)
|
|
$
|
—
|
|
Total liabilities
|
24,156
|
|
|
(1,628
|
)
|
|
22,528
|
|
|||
Additional paid-in-capital
|
177,855
|
|
|
17,806
|
|
|
195,661
|
|
|||
Accumulated deficit
|
(180,066
|
)
|
|
(16,178
|
)
|
|
(196,244
|
)
|
|||
Total stockholders' (deficit) equity
|
(2,363
|
)
|
|
1,628
|
|
|
(735
|
)
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(7,025
|
)
|
|
$
|
388
|
|
|
$
|
(6,637
|
)
|
Change in fair value of warrant liability
|
388
|
|
|
(388
|
)
|
|
—
|
|
|
Year Ended December 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
16,566
|
|
|
$
|
(16,566
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
15,888
|
|
|
(16,566
|
)
|
|
(678
|
)
|
|||
Net loss and comprehensive loss
|
(12,673
|
)
|
|
(16,566
|
)
|
|
(29,239
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.49
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(1.13
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
25,795,721
|
|
|
—
|
|
|
25,795,721
|
|
|
December 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
1,240
|
|
|
$
|
(1,240
|
)
|
|
$
|
—
|
|
Total liabilities
|
21,164
|
|
|
(1,240
|
)
|
|
19,924
|
|
|||
Additional paid-in-capital
|
177,677
|
|
|
17,806
|
|
|
195,483
|
|
|||
Accumulated deficit
|
(172,327
|
)
|
|
(16,566
|
)
|
|
(188,893
|
)
|
|||
Total stockholders' equity
|
5,198
|
|
|
1,240
|
|
|
6,438
|
|
|
Year Ended December 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(12,673
|
)
|
|
$
|
(16,566
|
)
|
|
$
|
(29,239
|
)
|
Change in fair value of warrant liability
|
(16,566
|
)
|
|
16,566
|
|
|
—
|
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
1,464
|
|
|
$
|
(1,464
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
1,313
|
|
|
(1,464
|
)
|
|
(151
|
)
|
|||
Net loss and comprehensive loss
|
(7,031
|
)
|
|
(1,464
|
)
|
|
(8,495
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.27
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.33
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,046,666
|
|
|
—
|
|
|
26,046,666
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
5,733
|
|
|
$
|
(5,733
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
5,222
|
|
|
(5,733
|
)
|
|
(511
|
)
|
|||
Net loss and comprehensive loss
|
(19,826
|
)
|
|
(5,733
|
)
|
|
(25,559
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.77
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.99
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
25,707,978
|
|
|
—
|
|
|
25,707,978
|
|
|
September 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
12,073
|
|
|
$
|
(12,073
|
)
|
|
$
|
—
|
|
Total liabilities
|
31,991
|
|
|
(12,073
|
)
|
|
19,918
|
|
|||
Additional paid-in-capital
|
177,336
|
|
|
17,806
|
|
|
195,142
|
|
|||
Accumulated deficit
|
(179,480
|
)
|
|
(5,733
|
)
|
|
(185,213
|
)
|
|||
Total stockholders' (deficit) equity
|
(2,296
|
)
|
|
12,073
|
|
|
9,777
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(19,826
|
)
|
|
$
|
(5,733
|
)
|
|
$
|
(25,559
|
)
|
Change in fair value of warrant liability
|
(5,733
|
)
|
|
5,733
|
|
|
—
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
711
|
|
|
$
|
(711
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
569
|
|
|
(711
|
)
|
|
(142
|
)
|
|||
Net loss and comprehensive loss
|
(7,578
|
)
|
|
(711
|
)
|
|
(8,289
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.29
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.32
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,039,169
|
|
|
—
|
|
|
26,039,169
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
4,269
|
|
|
$
|
(4,269
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
3,909
|
|
|
(4,269
|
)
|
|
(360
|
)
|
|||
Net loss and comprehensive loss
|
(12,795
|
)
|
|
(4,269
|
)
|
|
(17,064
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.50
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.67
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
25,535,827
|
|
|
—
|
|
|
25,535,827
|
|
|
June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
13,537
|
|
|
$
|
(13,537
|
)
|
|
$
|
—
|
|
Total liabilities
|
34,359
|
|
|
(13,537
|
)
|
|
20,822
|
|
|||
Additional paid-in-capital
|
176,953
|
|
|
17,806
|
|
|
194,759
|
|
|||
Accumulated deficit
|
(172,449
|
)
|
|
(4,269
|
)
|
|
(176,718
|
)
|
|||
Total stockholders' equity
|
4,352
|
|
|
13,537
|
|
|
17,889
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(12,795
|
)
|
|
$
|
(4,269
|
)
|
|
$
|
(17,064
|
)
|
Change in fair value of warrant liability
|
(4,269
|
)
|
|
4,269
|
|
|
—
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Change in fair value of warrant liability
|
$
|
3,558
|
|
|
$
|
(3,558
|
)
|
|
$
|
—
|
|
Total other income (expense), net
|
3,340
|
|
|
(3,558
|
)
|
|
(218
|
)
|
|||
Net loss and comprehensive loss
|
(5,217
|
)
|
|
(3,558
|
)
|
|
(8,775
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(0.21
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.35
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
25,026,890
|
|
|
—
|
|
|
25,026,890
|
|
|
March 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Warrant liability
|
$
|
14,248
|
|
|
$
|
(14,248
|
)
|
|
$
|
—
|
|
Total liabilities
|
34,923
|
|
|
(14,248
|
)
|
|
20,675
|
|
|||
Additional paid-in-capital
|
176,402
|
|
|
17,806
|
|
|
194,208
|
|
|||
Accumulated deficit
|
(164,871
|
)
|
|
(3,558
|
)
|
|
(168,429
|
)
|
|||
Total stockholders' equity
|
11,379
|
|
|
14,248
|
|
|
25,627
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Net loss
|
$
|
(5,217
|
)
|
|
$
|
(3,558
|
)
|
|
$
|
(8,775
|
)
|
Change in fair value of warrant liability
|
(3,558
|
)
|
|
3,558
|
|
|
—
|
|
•
|
An upfront payment of 1.25 billion Japanese Yen, or “JPY”, payable in installments of 0.25 billion JPY, 0.5 billion JPY and 0.5 billion JPY on October 5, 2018, February 14, 2019 and September 13, 2019, respectively. This is in addition to the 1.25 billion JPY (approximately $10,813 USD) paid on January 19, 2017 following the execution of the Sato Agreement on January 12, 2017. On October 23, 2018, the Company received the first installment from the Amended Sato Agreement of 0.25 billion JPY (approximately $2,224 USD). On March 14, 2019, the Company received the second installment payment related to the Amended Sato Agreement of 0.5 billion JPY (approximately
|
•
|
Up to an aggregate of 1.75 billion JPY (adjusted from 2.75 billion JPY in the Sato Agreement) upon the achievement of various development and regulatory milestones, including (i) a 0.25 billion JPY (approximately $2,162 USD) milestone payment received during the fourth quarter of 2018 following Sato’s initiation of a Phase 1 trial in Japan and (ii) an aggregate of 1.0 billion JPY that becomes payable upon the earlier occurrence of specified fixed future dates or the achievement of milestone events.
|
•
|
Up to an aggregate of 3.9 billion JPY (adjusted from 0.9 billion JPY in the Sato Agreement) upon the achievement of various commercial milestones.
|
•
|
A tiered royalty ranging from a mid-single digit to a low-double digit percentage (adjusted from a mid-single digit percentage in the Sato Agreement) of net sales of licensed products in the licensed territory, subject to a reduction in the royalty payments in certain circumstances.
|
•
|
The 1.25 billion JPY (approximately $10,813 USD) original upfront payment received on January 19, 2017 following the execution of the Sato Agreement on January 12, 2017.
|
•
|
A milestone payment of 0.25 billion JPY (approximately $2,162 USD) received during the fourth quarter of 2018 following Sato’s initiation of a Phase 1 trial in Japan.
|
•
|
The Sato Amendment upfront payment of 1.25 billion JPY, payable in installments of 0.25 billion JPY, 0.5 billion JPY and 0.5 billion JPY on October 5, 2018, February 14, 2019 and September 13, 2019, respectively. On October 23, 2018, the Company received the first installment from the Amended Sato Agreement of 0.25 billion JPY (approximately $2,224 USD). On March 14, 2019, the Company received the second installment payment related to the Amended Sato Agreement of 0.5 billion JPY (approximately $4,460 USD). On November 7, 2019, the Company received the third installment payment related to the Amended Sato Agreement of 0.5 billion JPY (approximately $4,554 USD).
|
•
|
An aggregate of 1.0 billion JPY in non-contingent milestone payments that become payable upon the earlier occurrence of specified fixed dates in the future or the achievement of specified milestone events.
|
|
Contract Asset
|
|
Contract Liability
|
|
Net Deferred Revenue
|
||||||
December 31, 2018
|
$
|
17,790
|
|
|
$
|
24,757
|
|
|
$
|
6,967
|
|
|
|
|
|
|
|
||||||
December 31, 2019
|
$
|
8,974
|
|
|
$
|
20,478
|
|
|
$
|
11,504
|
|
|
|
|
|
|
|
||||||
|
Short-term Deferred Revenue
|
|
Long-term Deferred Revenue
|
|
Net Deferred Revenue
|
||||||
December 31, 2018
|
$
|
4,401
|
|
|
$
|
2,566
|
|
|
$
|
6,967
|
|
|
|
|
|
|
|
||||||
December 31, 2019
|
$
|
4,428
|
|
|
$
|
7,076
|
|
|
$
|
11,504
|
|
•
|
The Company entered into an agreement with a third party to assist the Company in exploring the licensing opportunity which led to the execution of the Sato Agreement. The Company is obligated to pay the third party a low-single-digit percentage of all upfront and milestone payments the Company receives from Sato under the Amended Sato Agreement.
|
•
|
The intellectual property rights granted to Sato under the Sato Agreement include certain intellectual property rights which the Company has licensed from UNC. Under the UNC License Agreement described in Note 4—Research and Development Licenses, the Company is obligated to pay UNC a running royalty percentage in the low single digits on net sales of licensed products, including net sales that may be generated by Sato. Additionally, the Company is obligated to make payments to UNC that represent the portion of the Sato upfront and milestone payments that were estimated to be directly attributable to the UNC intellectual property rights included in the license to Sato.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Computer equipment
|
$
|
575
|
|
|
$
|
577
|
|
Furniture and fixtures
|
305
|
|
|
312
|
|
||
Laboratory equipment
|
7,898
|
|
|
7,442
|
|
||
Office equipment
|
339
|
|
|
400
|
|
||
Building related to facility lease obligation
|
—
|
|
|
10,557
|
|
||
Leasehold improvements
|
7,068
|
|
|
1,168
|
|
||
Property and equipment, gross
|
16,185
|
|
|
20,456
|
|
||
Less: Accumulated depreciation and amortization
|
(5,679
|
)
|
|
(4,588
|
)
|
||
Total property and equipment, net
|
$
|
10,506
|
|
|
$
|
15,868
|
|
|
Operating Leases
|
||
2020
|
$
|
1,215
|
|
2021
|
1,241
|
|
|
2022
|
1,278
|
|
|
2023
|
1,317
|
|
|
2024
|
1,356
|
|
|
Thereafter
|
2,111
|
|
|
Total minimum lease payments
|
$
|
8,518
|
|
Less imputed interest
|
$
|
(2,256
|
)
|
Total lease liability
|
$
|
6,262
|
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||
Outstanding stock options (Note 11)
|
1,789,303
|
|
|
1,671,666
|
|
Warrants to purchase common stock issued in January 2018 Offering
|
10,000,000
|
|
|
10,000,000
|
|
Outstanding stock appreciation rights (Note 11)
|
1,000,000
|
|
|
—
|
|
For possible future issuance under 2016 Stock Plan (Note 11)
|
388,463
|
|
|
699,376
|
|
|
13,177,766
|
|
|
12,371,042
|
|
|
July 31, 2019
|
|
December 31, 2018
|
||||
Estimated dividend yield
|
—
|
|
|
—
|
|
||
Expected volatility
|
115.82
|
%
|
|
86.71
|
%
|
||
Risk-free interest rate
|
2.07
|
%
|
|
2.63
|
%
|
||
Expected term (years)
|
0.51
|
|
|
1.09
|
|
||
Fair value per share of common stock underlying the SAR
|
$
|
2.66
|
|
|
$
|
0.83
|
|
SAR exercise price
|
$
|
3.80
|
|
|
$
|
3.80
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Research and development
|
$
|
710
|
|
|
$
|
1,144
|
|
General and administrative
|
1,128
|
|
|
1,060
|
|
||
|
$
|
1,838
|
|
|
$
|
2,204
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Estimated dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
||
Expected volatility
|
102.14
|
%
|
|
81.73
|
%
|
||
Risk-free interest rate
|
1.87
|
%
|
|
2.75
|
%
|
||
Expected life of options (in years)
|
5.20
|
|
|
5.68
|
|
||
Weighted-average fair value per share
|
$
|
1.77
|
|
|
$
|
2.06
|
|
|
Shares
Available
for Grant
|
|
Shares
Subject to
Outstanding
Options
|
|
Weighted-
Average
Exercise
Price Per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic
Value
|
||||||
Options outstanding as of December 31, 2017
|
1,023,378
|
|
|
1,399,484
|
|
|
$
|
7.17
|
|
|
|
|
|
||
Additional shares reserved under plan
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||
Options granted
|
(626,757
|
)
|
|
727,257
|
|
|
2.97
|
|
|
|
|
|
|||
Options forfeited
|
302,755
|
|
|
(403,748
|
)
|
|
7.61
|
|
|
|
|
|
|||
Options exercised
|
—
|
|
|
(51,327
|
)
|
|
1.16
|
|
|
|
|
|
|||
Options outstanding as of December 31, 2018
|
699,376
|
|
|
1,671,666
|
|
|
$
|
5.42
|
|
|
|
|
|
||
Options granted
|
(633,030
|
)
|
|
658,030
|
|
|
2.36
|
|
|
|
|
|
|||
Options forfeited
|
322,117
|
|
|
(507,950
|
)
|
|
7.07
|
|
|
|
|
|
|||
Options exercised
|
—
|
|
|
(32,443
|
)
|
|
2.12
|
|
|
|
|
|
|||
Options outstanding as of December 31, 2019
|
388,463
|
|
|
1,789,303
|
|
|
$
|
3.89
|
|
|
8.03
|
|
$
|
638
|
|
Vested and expected to vest as of
December 31, 2018 |
|
|
1,585,689
|
|
|
$
|
5.53
|
|
|
8.11
|
|
$
|
2
|
|
|
Exercisable as of December 31, 2018
|
|
|
1,007,870
|
|
|
$
|
6.58
|
|
|
7.54
|
|
$
|
2
|
|
|
Vested and expected to vest as of
December 31, 2019 |
|
|
1,731,437
|
|
|
$
|
3.94
|
|
|
7.99
|
|
$
|
597
|
|
|
Exercisable as of December 31, 2019
|
|
|
1,032,801
|
|
|
$
|
4.81
|
|
|
7.20
|
|
$
|
190
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Estimated dividend yield
|
—
|
|
|
—
|
|
||
Expected volatility
|
128.30
|
%
|
|
87.19
|
%
|
||
Risk-free interest rate
|
1.53
|
%
|
|
2.47
|
%
|
||
Expected term (years)
|
2.17
|
|
|
3.17
|
|
||
Fair value per share of common stock underlying the Performance Plan
|
$
|
0.86
|
|
|
$
|
0.83
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
(Restated)
|
||||
Income tax benefit at federal statutory rate
|
$
|
(6,379
|
)
|
|
$
|
(6,140
|
)
|
State income taxes, net of federal benefit
|
(582
|
)
|
|
(570
|
)
|
||
Non-deductible expenses
|
193
|
|
|
154
|
|
||
Federal rate impact
|
—
|
|
|
—
|
|
||
Research and development tax credits
|
(1,225
|
)
|
|
(1,254
|
)
|
||
Other
|
330
|
|
|
380
|
|
||
Change in valuation allowance
|
7,663
|
|
|
7,430
|
|
||
Total income tax provision
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued compensation
|
$
|
13
|
|
|
$
|
184
|
|
Accrued liabilities
|
235
|
|
|
149
|
|
||
Tax loss carryforwards
|
38,042
|
|
|
37,986
|
|
||
Intangible assets
|
268
|
|
|
286
|
|
||
Share-based compensation
|
666
|
|
|
814
|
|
||
Tax credits
|
8,141
|
|
|
6,917
|
|
||
Facility financing lease obligation
|
—
|
|
|
1,847
|
|
||
Research and development service obligation
|
6,620
|
|
|
—
|
|
||
Right-of-use lease liabilities
|
1,436
|
|
|
—
|
|
||
Deferred revenue
|
572
|
|
|
588
|
|
||
Other
|
54
|
|
|
10
|
|
||
Total deferred tax assets
|
56,047
|
|
|
48,781
|
|
||
Less valuation allowance
|
(54,430
|
)
|
|
(46,604
|
)
|
||
Net deferred tax asset
|
1,617
|
|
|
2,177
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Fixed assets
|
(1,014
|
)
|
|
(2,032
|
)
|
||
Right-of-use lease assets
|
(421
|
)
|
|
—
|
|
||
Other
|
(182
|
)
|
|
(145
|
)
|
||
Net noncurrent deferred tax asset (liability)
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
||||||||||||
|
March 31, 2019
|
|
June 30, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||||||
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
|
||||||||||||
License and collaboration revenue
|
$
|
1,100
|
|
|
$
|
1,101
|
|
|
$
|
2,201
|
|
|
$
|
1,100
|
|
|
$
|
3,301
|
|
|
$
|
1,176
|
|
Government research contracts and grants revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
216
|
|
|
216
|
|
|
203
|
|
||||||
Total revenue
|
1,100
|
|
|
1,101
|
|
|
2,201
|
|
|
1,316
|
|
|
3,517
|
|
|
1,379
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
4,827
|
|
|
6,189
|
|
|
11,016
|
|
|
8,598
|
|
|
19,614
|
|
|
5,558
|
|
||||||
General and administrative
|
2,994
|
|
|
3,311
|
|
|
6,305
|
|
|
2,290
|
|
|
8,595
|
|
|
1,817
|
|
||||||
Total operating expenses
|
7,821
|
|
|
9,500
|
|
|
17,321
|
|
|
10,888
|
|
|
28,209
|
|
|
7,375
|
|
||||||
Operating loss
|
(6,721
|
)
|
|
(8,399
|
)
|
|
(15,120
|
)
|
|
(9,572
|
)
|
|
(24,692
|
)
|
|
(5,996
|
)
|
||||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
28
|
|
|
68
|
|
|
96
|
|
|
53
|
|
|
149
|
|
|
28
|
|
||||||
Interest expense
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Other income, net
|
56
|
|
|
36
|
|
|
92
|
|
|
23
|
|
|
115
|
|
|
21
|
|
||||||
Total other income (expense), net
|
84
|
|
|
103
|
|
|
187
|
|
|
76
|
|
|
263
|
|
|
48
|
|
||||||
Net loss and comprehensive loss
|
$
|
(6,637
|
)
|
|
$
|
(8,296
|
)
|
|
$
|
(14,933
|
)
|
|
$
|
(9,496
|
)
|
|
$
|
(24,429
|
)
|
|
$
|
(5,948
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.25
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.22
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
26,066,064
|
|
|
26,069,734
|
|
|
26,067,909
|
|
|
26,189,454
|
|
|
26,108,870
|
|
|
26,685,133
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||||||
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
|
||||||||||||
License and collaboration revenue
|
$
|
649
|
|
|
$
|
649
|
|
|
$
|
1,298
|
|
|
$
|
648
|
|
|
$
|
1,946
|
|
|
$
|
4,036
|
|
Research and development services revenue
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||||
Total revenue
|
658
|
|
|
649
|
|
|
1,307
|
|
|
648
|
|
|
1,955
|
|
|
4,036
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
6,335
|
|
|
6,176
|
|
|
12,511
|
|
|
5,697
|
|
|
18,208
|
|
|
4,837
|
|
||||||
General and administrative
|
2,880
|
|
|
2,620
|
|
|
5,500
|
|
|
3,295
|
|
|
8,795
|
|
|
2,712
|
|
||||||
Total operating expenses
|
9,215
|
|
|
8,796
|
|
|
18,011
|
|
|
8,992
|
|
|
27,003
|
|
|
7,549
|
|
||||||
Operating loss
|
(8,557
|
)
|
|
(8,147
|
)
|
|
(16,704
|
)
|
|
(8,344
|
)
|
|
(25,048
|
)
|
|
(3,513
|
)
|
||||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
44
|
|
|
115
|
|
|
159
|
|
|
83
|
|
|
242
|
|
|
55
|
|
||||||
Interest expense
|
(262
|
)
|
|
(261
|
)
|
|
(523
|
)
|
|
(262
|
)
|
|
(785
|
)
|
|
(262
|
)
|
||||||
Other income, net
|
—
|
|
|
4
|
|
|
4
|
|
|
28
|
|
|
32
|
|
|
40
|
|
||||||
Total other income (expense), net
|
(218
|
)
|
|
(142
|
)
|
|
(360
|
)
|
|
(151
|
)
|
|
(511
|
)
|
|
(167
|
)
|
||||||
Net loss and comprehensive loss
|
$
|
(8,775
|
)
|
|
$
|
(8,289
|
)
|
|
$
|
(17,064
|
)
|
|
$
|
(8,495
|
)
|
|
$
|
(25,559
|
)
|
|
$
|
(3,680
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.35
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.99
|
)
|
|
$
|
(0.14
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
25,026,890
|
|
|
26,039,169
|
|
|
25,535,827
|
|
|
26,046,666
|
|
|
25,707,978
|
|
|
26,056,504
|
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
6,077
|
|
|
$
|
22,438
|
|
|
$
|
15,549
|
|
|
$
|
13,711
|
|
Restricted cash
|
—
|
|
|
8,286
|
|
|
5,651
|
|
|
—
|
|
||||
Contracts and grants receivable
|
—
|
|
|
—
|
|
|
216
|
|
|
419
|
|
||||
Deferred offering costs
|
49
|
|
|
49
|
|
|
49
|
|
|
49
|
|
||||
Prepaid expenses and other current assets
|
1,062
|
|
|
1,237
|
|
|
982
|
|
|
1,545
|
|
||||
Total current assets
|
7,188
|
|
|
32,010
|
|
|
22,447
|
|
|
15,724
|
|
||||
Restricted cash
|
539
|
|
|
2,060
|
|
|
1,345
|
|
|
540
|
|
||||
Intangible assets
|
75
|
|
|
75
|
|
|
75
|
|
|
75
|
|
||||
Other assets
|
501
|
|
|
473
|
|
|
444
|
|
|
419
|
|
||||
Property and equipment, net
|
11,657
|
|
|
11,054
|
|
|
10,569
|
|
|
10,506
|
|
||||
Right-of-use lease assets
|
1,833
|
|
|
1,837
|
|
|
1,837
|
|
|
1,833
|
|
||||
Total assets
|
$
|
21,793
|
|
|
$
|
47,509
|
|
|
$
|
36,717
|
|
|
$
|
29,097
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
1,510
|
|
|
$
|
957
|
|
|
$
|
2,495
|
|
|
$
|
1,602
|
|
Accrued compensation
|
2,082
|
|
|
1,412
|
|
|
1,507
|
|
|
437
|
|
||||
Accrued outside research and development services
|
817
|
|
|
789
|
|
|
1,382
|
|
|
1,013
|
|
||||
Accrued legal and professional fees
|
258
|
|
|
295
|
|
|
168
|
|
|
616
|
|
||||
Other accrued expenses
|
516
|
|
|
633
|
|
|
878
|
|
|
553
|
|
||||
Deferred revenue, current portion
|
4,401
|
|
|
4,401
|
|
|
4,401
|
|
|
4,428
|
|
||||
Research and development service obligation liability, current portion
|
—
|
|
|
8,286
|
|
|
5,651
|
|
|
3,088
|
|
||||
Lease liabilities, current portion
|
1,139
|
|
|
1,151
|
|
|
1,156
|
|
|
1,162
|
|
||||
Total current liabilities
|
10,723
|
|
|
17,924
|
|
|
17,638
|
|
|
12,899
|
|
||||
Deferred revenue, net of current portion
|
5,926
|
|
|
4,825
|
|
|
3,725
|
|
|
7,076
|
|
||||
Lease liabilities, net of current portion
|
5,544
|
|
|
5,395
|
|
|
5,249
|
|
|
5,100
|
|
||||
Research and development service obligation liability, net of current portion
|
—
|
|
|
1,521
|
|
|
806
|
|
|
727
|
|
||||
Research and development funding arrangement liability, related party
|
—
|
|
|
25,000
|
|
|
25,000
|
|
|
25,000
|
|
||||
Other long-term liabilities
|
335
|
|
|
1,630
|
|
|
1,634
|
|
|
578
|
|
||||
Total liabilities
|
22,528
|
|
|
56,295
|
|
|
54,052
|
|
|
51,380
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
|
|
|
|
||||||||
Common stock $0.0001 par value
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
||||
Additional paid-in-capital
|
195,661
|
|
|
195,906
|
|
|
196,853
|
|
|
197,853
|
|
||||
Treasury stock at cost
|
(155
|
)
|
|
(155
|
)
|
|
(155
|
)
|
|
(155
|
)
|
||||
Accumulated deficit
|
(196,244
|
)
|
|
(204,540
|
)
|
|
(214,036
|
)
|
|
(219,984
|
)
|
||||
Total stockholders' (deficit) equity
|
(735
|
)
|
|
(8,786
|
)
|
|
(17,335
|
)
|
|
(22,283
|
)
|
||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
21,793
|
|
|
$
|
47,509
|
|
|
$
|
36,717
|
|
|
$
|
29,097
|
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
28,100
|
|
|
$
|
20,984
|
|
|
$
|
12,173
|
|
|
$
|
8,194
|
|
Deferred offering costs
|
49
|
|
|
49
|
|
|
49
|
|
|
49
|
|
||||
Prepaid expenses and other current assets
|
889
|
|
|
576
|
|
|
584
|
|
|
1,107
|
|
||||
Total current assets
|
29,038
|
|
|
21,609
|
|
|
12,806
|
|
|
9,350
|
|
||||
Restricted cash
|
539
|
|
|
539
|
|
|
539
|
|
|
539
|
|
||||
Intangible assets
|
75
|
|
|
75
|
|
|
75
|
|
|
75
|
|
||||
Other assets
|
176
|
|
|
161
|
|
|
146
|
|
|
530
|
|
||||
Property and equipment, net
|
16,474
|
|
|
16,327
|
|
|
16,129
|
|
|
15,868
|
|
||||
Total assets
|
$
|
46,302
|
|
|
$
|
38,711
|
|
|
$
|
29,695
|
|
|
$
|
26,362
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
828
|
|
|
$
|
1,056
|
|
|
$
|
386
|
|
|
$
|
1,250
|
|
Accrued compensation
|
977
|
|
|
1,380
|
|
|
1,689
|
|
|
1,467
|
|
||||
Accrued outside research and development services
|
1,258
|
|
|
1,408
|
|
|
1,571
|
|
|
563
|
|
||||
Accrued legal and professional fees
|
458
|
|
|
267
|
|
|
305
|
|
|
498
|
|
||||
Other accrued expenses
|
1,194
|
|
|
1,443
|
|
|
1,247
|
|
|
871
|
|
||||
Deferred revenue, current portion
|
2,638
|
|
|
2,595
|
|
|
2,595
|
|
|
4,401
|
|
||||
Capital lease obligation, net of current portion
|
11
|
|
|
11
|
|
|
11
|
|
|
11
|
|
||||
Total current liabilities
|
7,364
|
|
|
8,160
|
|
|
7,804
|
|
|
9,061
|
|
||||
Deferred revenue, net of current portion
|
5,294
|
|
|
4,648
|
|
|
4,000
|
|
|
2,566
|
|
||||
Capital lease obligation, net of current portion
|
19
|
|
|
16
|
|
|
13
|
|
|
10
|
|
||||
Other long-term liabilities
|
—
|
|
|
—
|
|
|
103
|
|
|
289
|
|
||||
Facility financing obligation
|
7,998
|
|
|
7,998
|
|
|
7,998
|
|
|
7,998
|
|
||||
Total liabilities
|
20,675
|
|
|
20,822
|
|
|
19,918
|
|
|
19,924
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
|
|
|
|
||||||||
Common stock $0.0001 par value
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
||||
Additional paid-in-capital
|
194,208
|
|
|
194,759
|
|
|
195,142
|
|
|
195,483
|
|
||||
Treasury stock at cost
|
(155
|
)
|
|
(155
|
)
|
|
(155
|
)
|
|
(155
|
)
|
||||
Accumulated deficit
|
(168,429
|
)
|
|
(176,718
|
)
|
|
(185,213
|
)
|
|
(188,893
|
)
|
||||
Total stockholders' (deficit) equity
|
25,627
|
|
|
17,889
|
|
|
9,777
|
|
|
6,438
|
|
||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
46,302
|
|
|
$
|
38,711
|
|
|
$
|
29,695
|
|
|
$
|
26,362
|
|
Name of Director
|
|
Age
|
|
Principal Occupation
|
|
Director Since
|
Class I Directors:
|
|
|
|
|
|
|
John Palmour, Ph.D. (1)(3)
|
|
59
|
|
Vice President and Chief Technology Officer, Wolfspeed, a Cree, Inc. company
|
|
2010
|
Paula Brown Stafford
|
|
55
|
|
President and Chief Executive Officer, Novan, Inc.
|
|
2017
|
|
|
|
|
|
|
|
Class II Directors:
|
|
|
|
|
|
|
Robert A. Ingram (3)
|
|
77
|
|
General Partner, Hatteras Venture Advisors III, LLC
|
|
2011
|
Machelle Sanders (2)
|
|
56
|
|
Secretary of the N.C. Department of Administration
|
|
2017
|
Class III Directors:
|
|
|
|
|
|
|
W. Kent Geer (1)(2)
|
|
65
|
|
Managing Director—Finance and Investor Relations, Med1 Ventures, LLC
|
|
2015
|
Robert J. Keegan (1)(2)
|
|
72
|
|
Retired Chief Executive Officer, Goodyear Tire and Rubber Co.
|
|
2016
|
(1)
|
Member of our audit committee
|
(2)
|
Member of our compensation committee
|
(3)
|
Member of our nominating and corporate governance committee
|
Name
|
|
Age
|
|
Position(s)
|
Paula Brown Stafford
|
|
55
|
|
President, Chief Executive Officer and Director
|
John M. Gay
|
|
43
|
|
Vice President, Finance and Corporate Controller
|
•
|
Paula Brown Stafford, President and Chief Operating Officer (currently our Chief Executive Officer);
|
•
|
John M. Gay, Vice President, Finance and Corporate Controller; and
|
•
|
G. Kelly Martin, Chief Executive Officer (through February 1, 2020)
|
Name and Principal Position
|
|
Fiscal Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock Awards
($)(1)
|
|
Option Awards
($)(2)
|
|
Non-Equity Incentive Plan Compensation
($)(3)
|
|
All Other Compensation
($)(4)
|
|
Total
($)
|
||||||||||||||
Paula Brown Stafford (5)
|
|
2019
|
|
$
|
443,326
|
|
|
$
|
—
|
|
|
|
$
|
17,364
|
|
|
$
|
322,880
|
|
|
—
|
|
|
$
|
7,155
|
|
|
$
|
790,725
|
|
President and Chief Executive Officer; Former Chief Operating Officer
|
|
2018
|
|
288,000
|
|
|
134,400
|
|
(6)
|
|
7,021
|
|
|
25,513
|
|
|
—
|
|
|
—
|
|
|
454,934
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
John M. Gay (7)
|
|
2019
|
|
245,753
|
|
|
—
|
|
|
|
8,103
|
|
|
45,457
|
|
|
—
|
|
|
10,059
|
|
|
309,372
|
|
||||||
Vice President, Finance and Corporate Controller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
G. Kelly Martin
|
|
2019
|
|
480,000
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,571
|
|
|
539,571
|
|
||||||
Former Chief Executive Officer
|
|
2018
|
|
170,909
|
|
|
560,000
|
|
(8)
|
|
105,534
|
|
|
593,010
|
|
|
—
|
|
|
30,522
|
|
|
1,459,975
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts reflect the grant-date fair value of minimum bonus amounts established by our compensation committee for our named executive officers under our Tangible Stockholder Return Plan, which is a performance-based long-term incentive plan (the “Performance Plan”) that directly ties compensation to the performance of our common stock. Minimum bonus amounts under the Performance Plan are contingent and only become payable if the Company achieves the Performance Plan’s established share price targets of $11.17 and $25.45. See the section entitled “Narrative to Summary Compensation Table—Performance Plan” for a further description of the Performance Plan. Performance Plan minimum bonus award fair values are estimated using a Monte Carlo simulation approach in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718, rather than the amounts payable to or realized by the named individual. For a discussion of the assumptions used to estimate the value of the Performance Plan awards made to our named executive officers, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates—Share-Based Compensation” and Notes 1 and 12 to the accompanying consolidated financial statements included in this Annual Report.
|
(2)
|
Amounts reflect the grant-date fair value of equity-based awards granted to our named executive officers, as applicable, including: (i) stock options in 2019 and 2018; and (ii) SARs in 2018. Both stock option and SARs fair values are estimated using the Black Scholes Option Pricing Model in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. For a discussion of the assumptions used to estimate the value of the options and SARs made to our named executive officers, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates—Share-Based Compensation” and Notes 1 and 11 to the accompanying consolidated financial statements included in this Annual Report.
|
(3)
|
The Company did not award performance-based cash bonuses under the Company’s Senior Executive Annual Incentive Plan in 2019 or 2018. For a description of the named executive officers’ annual bonus opportunities, please review the section entitled “Executive Compensation—Narrative to Summary Compensation Table—Annual Bonuses.”
|
(4)
|
All other compensation includes matching contributions made under our 401(k) plan for Ms. Stafford and Mr. Gay, payout of accrued vacation in lieu of time-off for Mr. Martin and Mr. Gay and premiums for executive life insurance and a housing allowance for Mr. Martin. In addition, in 2018 Mr. Martin’s amount includes compensation paid pursuant to our non-employee director compensation policy through the second quarter of 2018.
|
(5)
|
Ms. Stafford served as our Chief Development Officer on a part-time basis in 2018 and received base compensation at a rate of $288,000, equivalent to 75% of $384,000 on a full-time basis. Ms. Stafford became our President and Chief Operating Officer on a full-time basis effective January 2, 2019 and entered into a new employment agreement effective January 29, 2019, or the Stafford COO Employment Agreement, as described in further detail within the section entitled “Executive Compensation—Arrangements with our Named Executive Officers—Arrangements with Paula Brown Stafford.” Ms. Stafford entered into the Amended and Restated Stafford Employment Agreement in connection with becoming our Chief Executive Officer effective February 2, 2020.
|
(6)
|
The amount disclosed as bonus represents bonus compensation paid to Ms. Stafford in accordance with the terms of her executed 2017 offer letter, as amended, for her service as our Chief Development Officer in 2018.
|
(7)
|
Mr. Gay was appointed as our Principal Financial Officer effective January 31, 2019, and assumed the role of Vice, President Finance while continuing in the role of Corporate Controller.
|
(8)
|
The amount disclosed as bonus represents a one-time signing bonus in August 2018 in conjunction with the execution of Mr. Martin’s employment agreement following his April 2018 appointment as our Chief Executive Officer. In determining the amount of the one-time signing bonus, our compensation committee considered the fact that Mr. Martin received no executive compensation while serving as our interim Chief Executive Officer from June 2017 through April 2018, nor did he receive executive compensation from April 2018 until his employment agreement became effective in August 2018.
|
•
|
Mr. Martin was entitled to $480,000 pursuant to his employment agreement.
|
•
|
Ms. Stafford was entitled to $443,326, which reflects the prorated amounts of (i) Ms. Stafford’s $590,000 annual salary for services rendered from the date of December 17, 2019 (the effective date of the Amended and Restated Stafford Employment Agreement) through December 31, 2019, (ii) Ms. Stafford’s $450,000 annual salary for services rendered from January 29, 2019 (the effective date of her COO Employment Agreement) through December 16, 2019, and (iii) prior to January 29, 2019, the prorated amount of the $288,000 part-time equivalent to a full-time annual salary of $384,000; and
|
•
|
Mr. Gay was entitled to $245,753 which reflects the prorated amount of Mr. Gay’s $250,000 annual salary for services rendered from January 31, 2019 (the effective date of his appointment as our principal financial officer by our Board of Directors) through December 31, 2019, and prior to January 31, 2019, the prorated amount of Mr. Gay’s $200,000 annual salary.
|
•
|
In 2019, Ms. Stafford’s employment agreement provides for an annual target cash bonus opportunity of up to 50% of her base salary, payable based on performance criteria. Our compensation committee has determined that Ms. Stafford will
|
•
|
Mr. Gay was eligible for a 2019 target bonus opportunity equal to 25% of his base salary, payable based on performance criteria. Our compensation committee has determined that Mr. Gay will not receive any bonus for 2019 after determining that the associated corporate performance objectives were not achieved during 2019.
|
•
|
In August 2018, our compensation committee established that Mr. Martin would receive the following minimum bonus amounts:
|
o
|
If the Performance Plan’s first share price target of $11.17 per share is achieved, Mr. Martin would receive a minimum bonus amount under the Performance Plan of $5,250,000. If the Performance Plan’s first share price target is not achieved, no bonus award would be disbursed.
|
o
|
If the Performance Plan’s second share price target of $25.45 per share is achieved and Mr. Martin is serving as our Chief Executive Officer, he would receive a minimum bonus amount of $10,500,000 or, if the Performance Plan’s second share price target of $25.45 per share is achieved and he is serving as a director but is no longer serving as our Chief Executive Officer, he would instead receive a minimum bonus amount of $8,000,000.
|
o
|
If the Performance Plan’s second share price target is not achieved or if Mr. Martin is not serving as either Chief Executive Officer or a director at the time the target is achieved, no bonus award would be disbursed. Following his resignation in February 2020, Mr. Martin is no longer entitled to any bonus amount under the Performance Plan.
|
o
|
Mr. Martin’s minimum bonus amount under the Performance Plan was a contingent, performance-based award that, together with Mr. Martin’s SAR Award (as defined below), was implemented by our compensation committee in lieu of a stock option or other form of equity grant and targeted to be commensurate with an equity position typically granted to the chief executive officer of comparable life sciences companies.
|
•
|
In November 2018, our compensation committee established that, if the Performance Plan’s first share price target of $11.17 per share is achieved, Ms. Stafford would receive a minimum bonus amount under the Performance Plan of $500,000. If the Performance Plan’s first share price target is not achieved, no bonus award will be disbursed. In January 2019, our compensation committee established that Ms. Stafford would be entitled to an additional minimum bonus amount of $250,000, bringing her total potential minimum bonus amount upon achievement of the first share price of $11.17 per share of common stock to $750,000. In June 2019, our compensation committee established that Ms. Stafford would be entitled to an additional minimum bonus amount of $500,000, bringing her total potential minimum bonus amount upon achievement of the first share price of $11.17 per share of common stock to $1,250,000.
|
•
|
In January 2019, our compensation committee established that Mr. Gay would be entitled to an additional minimum bonus amount of $100,000, bringing his total potential minimum bonus amount upon achievement of the first share price of $11.17 per share of common stock to $250,000. In June 2019, our compensation committee established that Mr. Gay would be entitled to an additional minimum bonus amount of $250,000, bringing his total potential minimum bonus amount upon achievement of the first share price of $11.17 per share of common stock to $500,000.
|
•
|
medical, dental and vision benefits;
|
•
|
medical and dependent care flexible spending accounts;
|
•
|
short-term and long-term disability insurance; and
|
•
|
life insurance.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||||||||||
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($/Share)
|
|
Option
Expiration
Date
|
|
Equity Incentive Plan Awards: Number of unearned shares, units or other right that have not vested (#)
|
|
Equity Incentive Plan Awards: Payout value of unearned shares, units or other right that have not vested ($)
|
|
||||||
Paula Brown Stafford
|
|
03/20/17
|
(1)
|
|
54,000
|
|
|
—
|
|
|
$
|
6.53
|
|
|
03/20/27
|
|
|
|
|
|
||
President and Chief Executive Officer; Former Chief Operating Officer
|
|
08/25/17
|
(2)
|
|
30,500
|
|
|
—
|
|
|
4.27
|
|
|
08/14/27
|
|
|
|
|
|
|||
|
|
10/12/17
|
(3)
|
|
68,401
|
|
|
—
|
|
|
5.03
|
|
|
09/14/27
|
|
|
|
|
|
|||
|
|
02/12/18
|
(4)
|
|
7,760
|
|
|
4,386
|
|
|
3.03
|
|
|
02/11/28
|
|
|
|
|
|
|||
|
|
01/28/19
|
(5)
|
|
50,417
|
|
|
4,583
|
|
|
1.35
|
|
|
01/01/29
|
|
|
|
|
|
|||
|
|
09/06/19
|
(6)
|
|
—
|
|
|
130,000
|
|
|
2.68
|
|
|
09/05/29
|
|
|
|
|
|
|||
|
|
11/13/18
|
(7)
|
|
|
|
|
|
|
|
|
|
(8)
|
|
$
|
1,250,000
|
|
(7)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
John M. Gay
|
|
05/31/18
|
(9)
|
|
4,168
|
|
|
8,332
|
|
|
3.15
|
|
|
05/20/28
|
|
|
|
|
|
|||
Vice President, Finance and Corporate Controller
|
|
11/16/18
|
(10)
|
|
834
|
|
|
1,666
|
|
|
2.43
|
|
|
11/12/28
|
|
|
|
|
|
|||
|
01/28/19
|
(11)
|
|
—
|
|
|
35,000
|
|
|
1.35
|
|
|
01/27/29
|
|
|
|
|
|
||||
|
|
09/06/19
|
(6)
|
|
—
|
|
|
5,000
|
|
|
2.68
|
|
|
09/05/29
|
|
|
|
|
|
|||
|
|
01/30/19
|
(12)
|
|
|
|
|
|
|
|
|
|
(8)
|
|
500,000
|
|
(12)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
G. Kelly Martin
|
|
09/20/16
|
(13)
|
|
14,484
|
|
|
—
|
|
|
11.00
|
|
|
09/19/26
|
|
|
|
|
|
|||
Former Chief Executive Officer
|
|
06/05/17
|
(14)
|
|
34,014
|
|
|
—
|
|
|
4.64
|
|
|
06/04/27
|
|
|
|
|
|
|||
|
|
08/16/18
|
(15)
|
|
—
|
|
|
1,000,000
|
|
|
3.80
|
|
|
02/01/20
|
|
|
|
|
|
|||
|
|
08/08/18
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
15,750,000
|
|
(16)
|
|
(1)
|
The option was granted under the 2016 Plan and vested six months from March 20, 2017.
|
(2)
|
The option was granted under the 2016 Plan and vested in four equal quarterly installments, with the first installment vesting on September 5, 2017.
|
(3)
|
The option was granted under the 2016 Plan and vested six months from vesting commencement date of September 15, 2017.
|
(4)
|
The option was granted under the 2016 Plan and vests in thirty-six equal monthly installments on the first day of each month following February 12, 2018.
|
(5)
|
This option was granted under the 2016 Plan, one-half vested six months from the January 2, 2019 vesting commencement date, and subsequent to the six-month anniversary of the vesting commencement date, one-twelfth vests each successive monthly anniversary following July 2, 2019.
|
(6)
|
The option was granted under the 2016 Plan and vests in its entirety on June 25, 2020.
|
(7)
|
The amount reflects the minimum bonus amount payable to Ms. Stafford as of December 31, 2019 under the Performance Plan if the first share price target of $11.17 per share is achieved. If the Performance Plan’s first share price target is not achieved, no bonus award will be disbursed. See the section entitled “Executive Compensation—Narrative to Summary Compensation Table—Long-term Performance-based Compensation—Performance Plan” for further information regarding the Performance Plan. In November 2018, our compensation committee established a minimum bonus amount under the Performance Plan of $500,000. In January 2019, our compensation committee established that Ms. Stafford would be entitled to an additional minimum bonus amount of $250,000 and in June 2019, our compensation committee established that Ms.
|
(8)
|
Minimum bonus amounts established by our compensation committee under the Performance Plan—the Performance Plan provides for the bonus pool to generally be paid in the form of cash, and awards are denominated in cash. Our compensation committee has discretion to pay any bonus award under the Performance Plan in the form of cash, shares of our common stock or a combination thereof, provided that our board and stockholders have approved the reservation of shares of our common stock for such payment.
|
(9)
|
The option was granted as an inducement grant in accordance with Nasdaq Listing Rule 5635(c)(4), and vests in three equal annual installments with the first installment vesting on May 21, 2019.
|
(10)
|
The option was granted under the 2016 Plan and vests in three equal annual installments with the first installment vesting on November 13, 2019.
|
(11)
|
The option was granted under the 2016 Plan and vests in three equal annual installments with the first installment vesting on January 28, 2020.
|
(12)
|
The amount reflects the minimum bonus amount payable to Mr. Gay as of December 31, 2019 under the Performance Plan if the first share price target of $11.17 per share is achieved. See the section entitled “Executive Compensation—Narrative to Summary Compensation Table—Long-term Performance-based Compensation—Performance Plan” for further information regarding the Performance Plan. In November 2018, our compensation committee established a minimum bonus amount under the Performance Plan of $150,000. In January 2019, our compensation committee established that Mr. Gay would be entitled to an additional minimum bonus amount of $100,000 and in June 2019, our compensation committee established that Mr. Gay would be entitled to an additional minimum bonus amount of $250,000, bringing his total potential minimum bonus amount upon achievement of the first share price of $11.17 per share of common stock to $500,000.
|
(13)
|
The option was granted under the 2016 Plan and vested in four equal quarterly installments, with the first installment vesting on December 20, 2016.
|
(14)
|
The option was granted under the 2016 Plan and vested in four equal quarterly installments, with the first installment vesting on September 5, 2017.
|
(15)
|
The SARs were granted on a contingent basis by our board under the 2016 Plan and were subject to stockholder approval of an amendment to the 2016 Plan. On July 31, 2019, at the Company’s 2019 Annual Meeting of Stockholders, stockholders approved an amendment to the 2016 Plan authorizing underlying common shares for the SARs, and the SARs were no longer considered to be granted on a contingent basis. The SARs vested in full and expired unexercised on February 1, 2020. See the section entitled “ Executive Compensation—Narrative to Summary Compensation Table—Long-term Performance-based Compensation—2016 Incentive Award Plan” for further details regarding the SARs’ terms.
|
(16)
|
The amount reflects the minimum bonus amount payable to Mr. Martin as of December 31, 2019 under the Performance Plan if the first share price target of $11.17 and second share price target of $25.45 per share is achieved. If the Performance Plan’s first share price target is not achieved, no bonus award will be disbursed under the Performance Plan. See the section entitled “Executive Compensation—Narrative to Summary Compensation Table—Long-term Performance-based Compensation—Performance Plan” for further information regarding the Performance Plan. Following his resignation in February 2020, Mr. Martin is no longer entitled to any bonus amount under the Performance Plan.
|
Name
|
|
Fees Earned or
Paid in Cash
|
|
Option Awards (1)
|
|
Total
|
|||
W. Kent Geer
|
|
$
|
76,250
|
|
$
|
41,799
|
|
$
|
118,049
|
Robert A. Ingram
|
|
|
70,000
|
|
|
41,799
|
|
|
111,799
|
Robert J. Keegan
|
|
|
57,500
|
|
|
41,799
|
|
|
99,299
|
John Palmour
|
|
|
47,500
|
|
|
41,799
|
|
|
89,299
|
Machelle Sanders
|
|
|
47,250
|
|
|
41,799
|
|
|
89,049
|
Eugene Sun
|
|
|
60,000
|
|
|
41,799
|
|
|
101,799
|
|
(1)
|
Amounts reflect the grant-date Black-Scholes value of stock awards and stock options granted during 2019, computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. For a discussion of the assumptions used to calculate the value of all stock awards and option awards made to our directors, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates—Share-Based Compensation” and Notes 1 and 11 to the accompanying consolidated financial statements included in this Annual Report. These amounts do not necessarily correspond to the actual value that may be recognized from the option awards by the applicable directors.
|
Name
|
|
Options Outstanding at Fiscal
Year End December 31, 2019
|
W. Kent Geer
|
|
103,748
|
Robert A. Ingram
|
|
88,498
|
Robert J. Keegan
|
|
88,498
|
John Palmour
|
|
88,498
|
Machelle Sanders
|
|
59,240
|
Eugene Sun
|
|
53,078
|
Plan Category
|
Number of Securities
to be Issued upon
Exercise of
Outstanding Options and SARs
|
|
|
Weighted Average
Exercise Price of
Outstanding Options and SARs
|
|
|
Number of Securities
Remaining Available
for Future Issuances
under Equity
Compensation Plans
(excluding securities
reflected in column (a))
|
|
|||
|
(a)
|
|
|
($)(b)
|
|
|
(c)
|
|
|||
Equity Compensation Plans approved by security holders (4)
|
2,663,803
|
(1)
|
|
$
|
3.90
|
|
(2)
|
|
388,463
|
(3)
|
|
Equity Compensation Plans not approved by security holders (5)
|
125,500
|
|
|
3.04
|
|
|
|
-
|
|
||
Total
|
2,789,303
|
|
|
|
3.86
|
|
|
|
388,463
|
|
|
(1)
|
Includes shares of common stock issuable upon exercise of outstanding options under the 2008 Plan – 45,077 shares; and outstanding options and SARs under the 2016 Plan – 2,618,726 shares.
|
(2)
|
The weighted-average remaining contractual term (in years) was 8.58.
|
(3)
|
Includes shares remaining for future issuance under the 2016 Plan.
|
(4)
|
During the first quarter of 2020, Mr. Martin’s SARs expired unexercised, we issued 600,000 SARs to Ms. Stafford, we issued equity compensation awards to certain employees, and certain equity compensation awards were forfeited or expired. As a result, as of February 14, 2020, there were 2,646,803 securities to be issued upon exercise of outstanding options and SARs, including 45,077 shares under the 2008 Plan and 2,601,726 shares under the 2016 Plan. The weighted average exercise price of outstanding options and SARs as of February 14, 2020, was $2.74, and the weighted average remaining contractual term (in years) was 8.50. As of February 14, 2020, there were 405,463 shares remaining for future issuance under the 2016 Plan.
|
(5)
|
During the years ended December 31, 2019 and 2018, we awarded nonstatutory stock options to purchase shares of common stock to newly-hired employees, not previously employees or directors of Novan, as inducements material to the individuals’ entering into employment with us within the meaning of Nasdaq Listing Rule 5635(c)(4) (the “Inducement Grants”). On May 31, 2018, the Company awarded 100,500 Inducement Grants with an exercise price of $3.15 per share, and on September 6, 2019, the Company awarded 25,000 Inducement Grants with an exercise price of $2.62 per share. The Inducement Grants were awarded outside of the 2016 Plan, pursuant to Nasdaq Listing Rule 5635(c)(4), but have terms and conditions generally consistent with our 2016 Plan and vest over three years, subject to the employee’s continued service as an employee or consultant through the vesting period. All 125,500 Inducement Grants were outstanding as of December 31, 2019. As of February 14, 2020, there were 100,500 Inducement Grants outstanding.
|
•
|
each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
|
•
|
each of our directors;
|
•
|
each of our named executive officers; and
|
•
|
all of our directors and executive officers as a group.
|
Name of Beneficial Owner
|
|
Number of Shares
Beneficially
Owned
|
|
Percentage of
Outstanding Shares |
5% Stockholders:
|
|
|
|
|
Reedy Creek Investments LLC (1)
|
|
7,894,736
|
|
25.16%
|
Malin Life Sciences Holdings Limited (2)
|
|
2,598,485
|
|
9.47%
|
Directors and Named Executive Officers:
|
|
|
|
|
G. Kelly Martin (3)
|
|
153,498
|
|
*
|
Paula Brown Stafford (4)
|
|
372,366
|
|
1.34%
|
John Gay (5)
|
|
56,671
|
|
*
|
Robert A. Ingram (6)
|
|
248,275
|
|
*
|
W. Kent Geer (7)
|
|
109,576
|
|
*
|
Robert J. Keegan (8)
|
|
141,533
|
|
*
|
John Palmour (9)
|
|
646,941
|
|
2.35%
|
Machelle Sanders (10)
|
|
49,240
|
|
*
|
All current directors and executive officers, as a group (7 persons) (11)
|
|
1,624,602
|
|
5.06%
|
*
|
Represents beneficial ownership of less than one percent.
|
(1)
|
Reedy Creek Investments LLC (“Reedy Creek”) is the direct owner of 3,947,368 shares of common stock and 3,947,368 shares of common stock issuable upon exercise of outstanding warrants. Mr. Donald R. Parker is the sole member of the board of managers and the president and chief executive officer, treasurer and chief financial officer of Reedy Creek. The James H. Goodnight Management Trust (the “Trust”) owns a majority of the equity interests in Reedy Creek and has the right to appoint a majority of the members of the board of managers of Reedy Creek. Dr. James H. Goodnight is the sole trustee of the Trust and directs the voting and investment activities of the Trust. Each of Mr. Parker, the Trust and Dr. Goodnight may be deemed to share voting and dispositive power with respect to the securities owned by Reedy Creek. As such, Mr. Parker, the Trust and Dr. Goodnight may be deemed to be the indirect beneficial owners of the securities owned by Reedy Creek. Each of Mr. Parker, the Trust and Dr. Goodnight disclaims beneficial ownership of the securities owned by Reedy Creek, except to the extent of his and, with respect to the Trust, its, pecuniary interest therein, if any. The mailing address of Reedy Creek, the Trust and each of the foregoing individuals is 100 SAS Campus Drive, Cary, NC 27513.
|
(2)
|
Malin Life Sciences Holdings Limited is a wholly owned subsidiary of Malin Corporation plc. Malin Corporation plc may be deemed to beneficially own the shares and may be deemed to share voting and dispositive power over these shares. The mailing address of Malin Life Sciences Holdings Limited is 2 Harbour Square, Crofton Road, Dun Laoghaire, Co., Dublin, Ireland.
|
(3)
|
Consists of (i) 105,000 shares of common stock, of which 45,000 are held by the George Kelly Martin IRRA FBO George Kelly Martin and (ii) options to purchase 48,498 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(4)
|
Consists of (i) 80,693 shares of common stock held by Ms. Stafford (ii) options to purchase 216,673 shares of common stock that are exercisable within 60 days of February 3, 2020 and (iii) 75,000 SARs exercisable within 60 days of February 3, 2020.
|
(5)
|
Consists of (i) 15,000 shares of common stock held by Mr. Gay, (ii) warrants to purchase 25,000 shares of common stock that are exercisable within 60 days of February 3, 2020 and (iii) options to purchase 16,671 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(6)
|
Consists of (i) 169,777 shares of common stock held by Mr. Ingram and (ii) options to purchase 78,498 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(7)
|
Consists of (i) 15,828 shares of common stock held by Mr. Geer and (ii) options to purchase 93,748 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(8)
|
Consists of (i) 63,035 shares of common stock held by the Robert J. Keegan Trust, with Mr. Keegan as trustee, and (ii) options to purchase 78,498 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(9)
|
Consists of (i) 568,443 shares of common stock, of which 274,875 are held by the Palmour 2012 Irrevocable Children’s Trust, with Dr. Palmour as trustee, and (ii) options to purchase 78,498 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(10)
|
Consists of options to purchase 49,240 shares of common stock that are exercisable within 60 days of February 3, 2020.
|
(11)
|
Consists of (i) 912,776 common shares held by our current executive officers and current directors, (ii) warrants to purchase 25,000 shares of common stock that are exercisable within 60 days of February 3, 2020, and (iii) options and SARs to purchase 686,826 shares of common stock exercisable within 60 days of February 3, 2020.
|
(1)
|
Audit fees consist of fees billed, or expected to be billed, for professional services rendered for the audit of our consolidated annual financial statements, review of the interim consolidated financial statements, the issuance of consent and comfort letters in connection with registration statement filings with the SEC and all services that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements.
|
(a)
|
The following financial statements are included in this Annual Report on Form 10-K/A:
|
(1)
|
List of Financial Statements:
|
(2)
|
List of Financial Statement Schedules:
|
(3)
|
List of Exhibits.
|
|
|
|
|
|
|
INCORPORATED BY REFERENCE
|
||||||
EXHIBIT NO.
|
|
DESCRIPTION
|
|
Filed Herewith
|
|
FORM
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
3.1
|
|
|
|
|
8-K
|
|
001-37880
|
|
3.1
|
|
September 27, 2016
|
|
3.2
|
|
|
|
|
8-K
|
|
001-37880
|
|
3.2
|
|
September 27, 2016
|
|
4.1
|
|
|
|
|
S-1
|
|
333-213276
|
|
4.1
|
|
September 8, 2016
|
|
4.2
|
|
|
|
|
10-K
|
|
001-37880
|
|
4.2
|
|
February 24, 2020
|
|
4.3
|
|
|
|
|
8-K
|
|
001-37880
|
|
4.1
|
|
January 9, 2018
|
|
4.4
|
|
|
|
|
8-K
|
|
001-378880
|
|
4.1
|
|
September 5, 2019
|
|
10.1
|
#
|
|
|
|
S-1
|
|
333-213276
|
|
10.1
|
|
August 24, 2016
|
|
10.2
|
#
|
|
|
|
S-1
|
|
333-213276
|
|
10.2
|
|
August 24, 2016
|
|
10.3
|
#
|
|
|
|
8-K
|
|
001-37880
|
|
10.1
|
|
September 5, 2019
|
|
10.4
|
#
|
|
|
|
10-K
|
|
001-37880
|
|
10.4
|
|
March 20, 2017
|
|
10.5
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.4
|
|
November 8, 2018
|
|
10.6
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.1
|
|
November 14, 2016
|
|
10.7
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.2
|
|
November 14, 2016
|
|
10.8
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.3
|
|
November 14, 2016
|
|
10.9
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.3
|
|
August 8, 2018
|
|
|
|
|
|
|
INCORPORATED BY REFERENCE
|
||||||
EXHIBIT NO.
|
|
DESCRIPTION
|
|
Filed Herewith
|
|
FORM
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
10.10
|
#
|
|
|
|
10-K
|
|
001-37880
|
|
10.16
|
|
March 27, 2018
|
|
10.11
|
#
|
|
|
|
10-K
|
|
001-37880
|
|
10.14
|
|
March 27, 2019
|
|
10.12
|
#
|
|
|
|
10-K
|
|
001-37880
|
|
10.12
|
|
February 24, 2020
|
|
10.13
|
#
|
|
|
|
10-K
|
|
001-37880
|
|
10.13
|
|
February 24, 2020
|
|
10.14
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.2
|
|
November 8, 2018
|
|
10.15
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.3
|
|
November 8, 2018
|
|
10.16
|
#
|
|
|
|
10-Q
|
|
001-37880
|
|
10.1
|
|
August 8, 2018
|
|
10.17
|
†
|
|
|
|
S-1/A
|
|
333-213276
|
|
10.7
|
|
September 8, 2016
|
|
10.18
|
†
|
|
|
|
10-Q
|
|
001-37880
|
|
10.4
|
|
November 14, 2016
|
|
10.19
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.23
|
|
March 27, 2019
|
|
10.20
|
†
|
|
|
|
S-1
|
|
333-213276
|
|
10.8
|
|
August 24, 2016
|
|
10.21
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.21
|
|
March 27, 2018
|
|
|
|
|
|
|
INCORPORATED BY REFERENCE
|
||||||
EXHIBIT NO.
|
|
DESCRIPTION
|
|
Filed Herewith
|
|
FORM
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
10.22
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.26
|
|
March 27, 2019
|
|
10.23
|
†
|
|
|
|
S-1
|
|
333-213276
|
|
10.9
|
|
August 24, 2016
|
|
10.24
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.23
|
|
March 27, 2018
|
|
10.25
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.29
|
|
March 27, 2019
|
|
10.26
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.17
|
|
March 20, 2017
|
|
10.27
|
†
|
|
|
|
10-K
|
|
001-37880
|
|
10.18
|
|
March 20, 2017
|
|
10.28
|
†
|
|
|
|
10-Q
|
|
001-37880
|
|
10.1
|
|
November 5, 2018
|
|
10.29
|
|
|
|
|
S-1
|
|
333-213276
|
|
10.11
|
|
August 24, 2016
|
|
10.30
|
|
|
|
|
10-Q
|
|
001-37880
|
|
10.7
|
|
November 14, 2016
|
|
10.31
|
†
|
|
|
|
|
10-Q
|
|
001-37880
|
|
10.1
|
|
August 13, 2019
|
|
|
|
|
|
|
INCORPORATED BY REFERENCE
|
||||||
EXHIBIT NO.
|
|
DESCRIPTION
|
|
Filed Herewith
|
|
FORM
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
10.32
|
†
|
|
|
|
10-Q
|
|
001-37880
|
|
10.2
|
|
August 13, 2019
|
|
10.33
|
|
|
|
|
8-K
|
|
001-37880
|
|
10.1
|
|
September 5, 2019
|
|
23.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
X
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
X
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Document.
|
|
X
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
†
|
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
|
#
|
Indicates management contract or compensatory plan.
|
|
|
Novan, Inc.
|
|
|
|
|
|
Date: May 20, 2020
|
|
By:
|
/s/ Paula Brown Stafford
|
|
|
|
Paula Brown Stafford
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Name
|
|
Title
|
|
Date
|
/s/ Paula Brown Stafford
|
|
President, Chief Executive Officer and Director
|
|
May 20, 2020
|
Paula Brown Stafford
|
|
|
|
|
/s/ John M. Gay
|
|
Vice President, Finance and Corporate Controller (Principal Financial Officer)
|
|
May 20, 2020
|
John M. Gay
|
|
|
|
|
/s/ Andrew J. Novak
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Vice President, Accounting and Business Operations (Principal Accounting Officer)
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May 20, 2020
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Andrew J. Novak
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/s/ Robert A. Ingram
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Chairman of the Board
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May 20, 2020
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Robert A. Ingram
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/s/ W. Kent Geer
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Director
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May 20, 2020
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W. Kent Geer
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/s/ Robert J. Keegan
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Director
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May 20, 2020
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Robert J. Keegan
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/s/ John Palmour
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Director
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May 20, 2020
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John Palmour
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/s/ Machelle Sanders
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Director
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May 20, 2020
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Machelle Sanders
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1.
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I have reviewed this annual report on Form 10-K/A of Novan, Inc. (the “registrant”);
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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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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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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(d)
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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 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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By:
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/s/ Paula Brown Stafford
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May 20, 2020
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Paula Brown Stafford
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Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this annual report on Form 10-K/A of Novan, Inc. (the “registrant”);
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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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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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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(d)
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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 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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By:
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/s/ John M. Gay
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May 20, 2020
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John M. Gay
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Vice President, Finance and Corporate Controller
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(Principal Financial Officer)
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(1)
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the Annual Report on Form 10-K/A of the Company for the year ended December 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
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Date:
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May 20, 2020
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/s/ Paula Brown Stafford
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Paula Brown Stafford
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Chief Executive Officer
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(Principal Executive Officer)
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(1)
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the Annual Report on Form 10-K/A of the Company for the year ended December 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
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Date:
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May 20, 2020
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/s/ John M. Gay
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John M. Gay
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Vice President, Finance and Corporate Controller
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(Principal Financial Officer)
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