Ocuphire Pharma(OCUP) - 2019 Q4 - Annual Report

PART I Item 1. Description of Business Rexahn Pharmaceuticals is a clinical-stage biopharmaceutical company developing innovative cancer therapies, exploring strategic alternatives and reducing headcount - Rexahn Pharmaceuticals is a clinical-stage biopharmaceutical company developing innovative therapies for difficult-to-treat cancers[15] - The company's pipeline includes two clinical-stage oncology product candidates (RX-3117, RX-5902) and additional compounds in preclinical development (RX-0301)[15] - The company commenced a process in September 2019 to explore strategic alternatives to enhance shareholder value, including potential acquisition, merger, or asset sales, and has reduced its headcount to five employees[17][230] Overview Rexahn Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing innovative therapies for difficult-to-treat cancers, aiming to maximize efficacy and minimize toxicity - Rexahn Pharmaceuticals is a clinical stage biopharmaceutical company focused on developing innovative therapies to improve patient outcomes in difficult-to-treat cancers[15] - The company's mission is to maximize efficacy and minimize toxicity/side effects of cancer treatments[15] - The pipeline includes two clinical-stage oncology product candidates and additional compounds in preclinical development[15] Pipeline Product Candidates The company's pipeline features RX-3117 for pancreatic cancer, RX-5902 for TNBC, and preclinical RX-0301, with ongoing development and strategic collaborations - RX-3117, an oral small molecule nucleoside compound, is in a Phase 2a clinical trial for metastatic pancreatic cancer, showing an overall response rate of 23% in 40 patients as of July 2019, and has received orphan drug designation[16][26] - RX-5902, a potential first-in-class small molecule modulator of the Wnt/beta-catenin pathway, is being evaluated in a proposed combination trial with KEYTRUDA for metastatic TNBC, with monotherapy enrollment ceased in December 2018[16][31] - RX-0301, a potential best-in-class Akt-1 inhibitor, is in preclinical development by HaiChang, which received an exclusive worldwide license for RX-0201 and RX-0301 in February 2020[17][33] Industry and Disease Markets Traditional cancer treatments face limitations, creating unmet needs for effective metastatic cancer therapies and favorable market opportunities for innovative new drugs - Traditional cancer treatments have limitations, including limited efficacy for metastatic disease, multi-drug resistance, and debilitating side effects[18] - Unmet needs include effective treatments for metastatic cancer, long-term management, overcoming multi-drug resistance, and reducing chemotherapy toxicity[20] - Favorable market opportunities exist for new cancer drugs, especially those that are first-in-class or market leaders, due to expedited regulatory pathways, favorable reimbursement, and lower marketing costs[20] Research and Development Process The company relies on third-party CROs and collaborators for R&D, which introduces risks of delays and increased expenses due to lack of direct control - The company relies on third-party Contract Research Organizations (CROs) and other collaborators for preclinical studies, toxicology studies, and clinical trials[34] - Reliance on third parties means that the completion of trials and studies is not within direct control and may lead to delays and additional expenses[34] Competition The biotechnology and pharmaceutical industries are intensely competitive, with the company's product candidates facing competition from larger companies and existing/developing drugs - The biotechnology and pharmaceutical industries are intensely competitive, with many larger companies having greater resources and experience[35][38] - RX-3117 could compete with other anti-metabolite compounds like NUC-1031, capecitabine, and gemcitabine[39] - RX-5902, if approved, could compete with drugs like LYNPARZA, sacituzumab govitecan, and various PD-1 inhibitors for TNBC[39] - RX-0301 could compete with other Akt-1 inhibitors under development by major pharmaceutical companies[39] Government Regulation Product development, manufacturing, and marketing are subject to rigorous U.S. and foreign governmental regulations, including lengthy FDA approval processes and post-approval compliance - Product development, manufacturing, and marketing are subject to rigorous U.S. and foreign governmental regulations, including preclinical, clinical, and post-approval testing[40] - The FDA approval process is lengthy, complex, and expensive, involving preclinical testing, IND application, three phases of clinical trials, and NDA submission and review[43][44][45][46][50][51][52][54] - Regulatory exclusivities like Hatch-Waxman (5-year NCE, 3-year new clinical data) and Orphan Drug Act (7-year exclusivity) provide market protection[61][64] - Post-approval regulations include Good Manufacturing Practices (cGMP), strict sales and marketing rules, and compliance with fraud and abuse laws such as the Anti-Kickback Law and False Claims Act[71][72][73][76][77][80] - The company is also subject to federal, state, and foreign data privacy laws, including HIPAA and CCPA, governing the collection, use, disclosure, and protection of health-related and personal information[81] Coverage and Reimbursement Uncertainty surrounds coverage and reimbursement for new product candidates, with commercialization success dependent on timely and adequate payments from government and private payors amid cost containment trends - Significant uncertainty exists regarding coverage and reimbursement for new product candidates, which varies widely by country and can involve additional costs and delays[82] - Commercialization success depends on timely and adequate reimbursement from government (Medicare, Medicaid) and private third-party payors, who often limit coverage to specific formularies and challenge drug prices[83][85] - Cost containment is a primary trend in healthcare, leading to increased scrutiny of prices, medical necessity, and cost-effectiveness, potentially impacting demand and pricing for approved products[85] United States Healthcare Reform The Affordable Care Act (ACA) and other legislative changes create uncertainty for the pharmaceutical industry, potentially impacting product commercialization, coverage, payment, and profitability - The Affordable Care Act (ACA) has significantly changed healthcare financing, aiming to broaden access, constrain spending, and impose new taxes/fees on manufacturers[90] - The ACA has faced judicial challenges and efforts to repeal or replace it, creating uncertainty about its future impact on the pharmaceutical industry and the company's ability to commercialize products[90] - Other legislative changes, such as Medicare payment reductions (sequestration), could further pressure coverage, payment, and prices for approved products, potentially harming future revenues and profitability[91][92] Sales and Marketing The company lacks internal sales and marketing infrastructure and plans to seek strategic alliances and partnerships for product commercialization - The company currently lacks the internal sales and marketing infrastructure necessary to sell and market products[94] - Rexahn anticipates seeking strategic alliances and partnerships with third parties for commercialization, as building internal infrastructure is expensive, complicated, and time-consuming[94] Manufacturing and Distribution The company relies entirely on third-party contractors for all manufacturing, supply, storage, and distribution of its product candidates, with no plans for internal capacity - The company has no experience or internal capacity in drug formulation or manufacturing, relying entirely on third-party contractors for manufacturing, supply, storage, and distribution of product candidates[95] - There are no current plans to build internal manufacturing capacity or long-term supply arrangements[95] Intellectual Property The company seeks proprietary patent and IP protection for its product candidates, processes, and know-how, with patent portfolios for RX-3117 and RX-5902 expiring from 2025 to 2036 - The company seeks proprietary patent and intellectual property (IP) protection for its product candidates, processes, and know-how, relying on patents, trade secrets, and licensing[96] - The patent portfolio for RX-3117 consists of three families with patents expiring from 2025 to 2036, covering composition of matter, use, and process claims[98] - The patent portfolio for RX-5902 also consists of three families with patents expiring from 2025 to 2036, covering composition of matter, use, formulation, and process claims[99] Collaboration and License Arrangements The company has several key collaboration and license agreements, including with BioSense Global for RX-3117, HaiChang for RX-0201/RX-0301, and Merck for RX-5902 with KEYTRUDA - BioSense Global LLC was granted an exclusive license to develop and commercialize RX-3117 in specific Asian territories, with Rexahn eligible for up to $126 million in development/regulatory milestones and up to $100 million in sales milestones[101] - Zhejiang HaiChang Biotechnology Co., Ltd. entered an exclusive worldwide license agreement for RX-0201, RX-0301, and RX-0047, including a $250,000 upfront payment and up to $96 million in development milestones[104][105] - Merck Sharp & Dohme B.V. entered a clinical trial collaboration and supply agreement in August 2018 to evaluate RX-5902 with KEYTRUDA in metastatic TNBC, with Rexahn sponsoring the trial and Merck supplying KEYTRUDA[107] - Next BT had its exclusive license to RX-0201 in Asia reinstated in June 2018, while Rexahn retained rights to RX-0301 in Asia and elsewhere[109] - Korea Research Institute of Chemical Technology (KRICT) licensed IP related to quinoxaline-piperazine derivatives, including RX-5902, with a one-time $1,000,000 milestone payment due upon FDA marketing approval[111] Employees As of February 21, 2020, the company employed five full-time individuals - As of February 21, 2020, the company employed five full-time individuals[112] Corporate Information Rexahn Pharmaceuticals, Inc. is a Delaware corporation with principal executive offices located in Rockville, Maryland - Rexahn Pharmaceuticals, Inc. is a Delaware corporation with principal executive offices in Rockville, Maryland[113] Item 1A. Risk Factors The company faces significant risks, including uncertainties in strategic alternatives, capital needs, clinical trial failures, reliance on third parties, intense competition, regulatory complexities, and intellectual property challenges - The evaluation of strategic alternatives may not result in a definitive transaction, could distract management, and may adversely affect operating results and business[116] - The company has no product revenues, incurred negative cash flows since inception, and will need to raise additional capital, which may not be available on favorable terms or at all, potentially leading to reduced or discontinued R&D activities[117][120] - Clinical trials for product candidates are expensive, time-consuming, and difficult, with no guarantee of success or regulatory approval, and may be delayed or terminated[127][128][131] - Undesirable side effects from product candidates could delay or prevent regulatory approval, limit commercial viability, or lead to significant negative consequences post-approval[140][141] - The company relies heavily on third-party CROs and manufacturers, exposing it to risks of delays, substandard performance, and higher costs if these third parties fail to meet obligations or comply with regulations[191][196][197] - The biotechnology and pharmaceutical industries are intensely competitive, with larger competitors possessing greater resources, potentially rendering the company's products obsolete or non-competitive[176][177][180] - Protecting intellectual property rights globally is challenging due to varying patent laws and enforcement, and the company faces risks of infringement claims from third parties[210][212] Item 1B. Unresolved Staff Comments The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[219] Item 2. Description of Property The company's corporate headquarters in Rockville, Maryland, consists of 5,466 square feet of leased office space under a lease expiring in June 2024 - Corporate headquarters are in Rockville, Maryland, occupying 5,466 square feet of leased office space[220] - The current lease for the office space expires in June 2024[220] - Management considers the current facilities adequate for present needs[220] Item 3. Legal Proceedings The company is not currently involved in any litigation or legal proceedings that management believes would have a material adverse effect on its business - The company is not currently party to any litigation or legal proceedings that are likely to have a material adverse effect on its business[221] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to Rexahn Pharmaceuticals, Inc[222] PART II Item 5. Market for Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Capital Market under 'REXN', with approximately 22 stockholders of record as of February 21, 2020 - Common stock is traded on Nasdaq Capital Market under the ticker symbol "REXN"[225] - As of February 21, 2020, there were approximately 22 stockholders of record[225] Item 6. Selected Financial Data The company is not required to provide selected financial data for this report - Selected Financial Data is not required for this report[226] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Rexahn Pharmaceuticals, a clinical-stage biopharmaceutical company, reported a net loss of $8.6 million in 2019, an improvement from $14.4 million in 2018, with $12.2 million in cash and equivalents for future operations - Rexahn Pharmaceuticals is a clinical stage biopharmaceutical company with no product sales to date, relying on financings and licensing for working capital[229][230] - The company is exploring strategic alternatives to enhance shareholder value and has reduced its headcount to five employees[230] - Key Financial Results (2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :----------- | :--------- | | Total Revenues | $0 | $0 | $0 | 0% | | General and Administrative Expenses | $5,738 | $7,429 | $(1,691) | -22.8% | | Research and Development Expenses | $5,477 | $13,109 | $(7,632) | -58.2% | | Interest Income | $314 | $254 | $59 | 23.3% | | Other Income | $0 | $369 | $(369) | -100% | | Unrealized Gain on Fair Value of Warrants | $2,266 | $5,546 | $(3,280) | -59.1% | | Net Loss | $(8,635) | $(14,369) | $5,733 | -39.9% | | Net Loss per Share (basic and diluted) | $(2.18) | $(5.25) | $3.07 | -58.5% | | Weighted Average Shares Outstanding | 3,960,163 | 2,738,506 | 1,221,657 | 44.6% | - Cash, cash equivalents, and marketable securities totaled approximately $12.2 million as of December 31, 2019, believed sufficient for at least the next 12 months[254][306] - Cash Flow Summary (2019 vs. 2018) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Cash Used in Operating Activities | $(10,277) | $(18,839) | | Net Cash Provided By Investing Activities | $3,099 | $11,911 | | Net Cash Provided by Financing Activities | $7,654 | $6,773 | | Net Increase (Decrease) in Cash and Cash Equivalents | $475 | $(155) | - Financing activities included an underwritten public offering in January 2019, generating gross proceeds of $8.6 million, and a registered direct public offering in October 2018, generating gross proceeds of $7.5 million[259][260] Overview Rexahn Pharmaceuticals is a clinical-stage biopharmaceutical company developing innovative cancer therapies, with no product sales, funding operations through financings and licensing, and exploring strategic alternatives - Rexahn Pharmaceuticals is a clinical stage biopharmaceutical company developing innovative therapies for difficult-to-treat cancers, with a pipeline of clinical-stage and preclinical product candidates[229] - The company has no product sales and funds operations through financings and licensing agreements[230] - A process to explore strategic alternatives was initiated in September 2019, leading to a reduction in headcount to five employees[230] Critical Accounting Policies Critical accounting policies involve significant management judgments and estimates, particularly for stock-based compensation, warrant liabilities, marketable securities, and R&D contract costs - Critical accounting policies involve significant management judgments and estimates, particularly for stock-based compensation, warrant liabilities, marketable securities, and research and development contract costs[231] - Research and development costs, including third-party service costs and costs to acquire product rights, are expensed as incurred[232][233] - Warrants are classified as either equity or liabilities at fair value, with changes in liability-classified warrants recorded as unrealized gains or losses in the statement of operations[238] Recently Issued Accounting Standards The company adopted ASU 2016-02, Leases, on January 1, 2019, recognizing lease assets and liabilities for operating leases with no material financial impact - The company adopted ASU 2016-02, Leases, on January 1, 2019, requiring recognition of lease assets and liabilities for operating leases[324] - Adoption resulted in recognition of additional net right-of-use assets and lease liabilities, but had no material impact on financial statements or liquidity[325] Results of Operations The company reported a net loss of $8.6 million in 2019, a 39.9% improvement from 2018, primarily due to significant reductions in R&D and G&A expenses - Revenue and Expense Comparison (2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :----------- | :--------- | | Total Revenues | $0 | $0 | $0 | 0% | | General and Administrative Expenses | $5,738 | $7,429 | $(1,691) | -22.8% | | Research and Development Expenses | $5,477 | $13,109 | $(7,632) | -58.2% | | Interest Income | $314 | $254 | $59 | 23.3% | | Other Income | $0 | $369 | $(369) | -100% | | Unrealized Gain on Fair Value of Warrants | $2,266 | $5,546 | $(3,280) | -59.1% | | Net Loss | $(8,635) | $(14,369) | $5,733 | -39.9% | - The decrease in General and Administrative expenses was primarily due to lower personnel and operating costs from streamlining operations[245] - The significant decrease in Research and Development expenses resulted from the completion of enrollment in RX-3117 and RX-5902 clinical trials, reduced drug manufacturing costs, elimination of certain preclinical activities, and headcount reductions[246] - Research and Development Project Expenses (2019 vs. 2018) | Project | 2019 (in thousands) | 2018 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | RX-3117 | $3,088.9 | $6,126.2 | | RX-5902 | $887.2 | $3,104.4 | | RX-0201 | $175.6 | $651.2 | | Preclinical, Personnel and Overhead | $1,325.1 | $3,227.3 | | Total R&D Expenses | $5,476.8 | $13,109.1 | - Unrealized gains on fair value of warrants decreased due to a significant decrease in the underlying common stock price[251] Liquidity and Capital Resources The company has incurred negative operating cash flow since inception but projects its $12.2 million in cash and equivalents as of December 31, 2019, will cover requirements for at least the next 12 months - The company has incurred negative cash flow from operations since inception and expects this to continue while exploring strategic alternatives[254] - Cash, cash equivalents, and marketable securities of approximately $12.2 million as of December 31, 2019, are projected to cover cash flow requirements for at least the next 12 months[254] - Cash Flow Activities (2019 vs. 2018) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Cash Used in Operating Activities | $(10,277) | $(18,839) | | Net Cash Provided By Investing Activities | $3,099 | $11,911 | | Net Cash Provided by Financing Activities | $7,654 | $6,773 | | Net Increase (Decrease) in Cash and Cash Equivalents | $475 | $(155) | - Operating cash flow improved in 2019 due to a lower net loss and reduced unrealized gain on warrants[255] - Financing activities in 2019 included $7.65 million from an underwritten offering, and in 2018, $6.77 million from a registered direct public offering[258][259][260] - The company has no off-balance sheet arrangements or holdings in variable interest entities[261] Item 7A. Qualitative and Quantitative Disclosures About Market Risk The company is not required to provide qualitative and quantitative disclosures about market risk - Qualitative and Quantitative Disclosures About Market Risk are not required[263] Item 8. Financial Statements and Supplementary Data The company's financial statements and the Report of the Independent Registered Public Accounting Firm are included in this Annual Report starting on page F-1 - Financial statements and the Report of the Independent Registered Public Accounting Firm are included in the Annual Report starting on page F-1[264] Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[265] Item 9A. Controls and Procedures Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2019, with no material changes during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2019[266] - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2019[267] - Management concluded that internal control over financial reporting was effective as of December 31, 2019, based on the COSO Internal Control-Integrated Framework (2013)[271] Item 9B. Other Information The company reported no other information required under this item - There is no other information to report under this item[273] PART III Item 10. Directors, Executive Officers, and Corporate Governance Information regarding directors, executive officers, and corporate governance will be incorporated by reference from the company's 2020 Proxy Statement - Information for this item will be incorporated by reference from the 2020 Proxy Statement[274] Item 11. Executive Compensation Information regarding executive compensation will be incorporated by reference from the company's 2020 Proxy Statement - Information for this item will be incorporated by reference from the 2020 Proxy Statement[275] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, will be incorporated by reference from the company's 2020 Proxy Statement - Information for this item will be incorporated by reference from the 2020 Proxy Statement[276] Item 13. Certain Relationships and Related Transactions; and Director Independence Information regarding certain relationships and related transactions, and director independence, will be incorporated by reference from the company's 2020 Proxy Statement - Information for this item will be incorporated by reference from the 2020 Proxy Statement[277] Item 14. Principal Accounting Fees and Services Information regarding principal accounting fees and services will be incorporated by reference from the company's 2020 Proxy Statement - Information for this item will be incorporated by reference from the 2020 Proxy Statement[278] Item 15. Exhibits, Financial Statement Schedules Item 15. Exhibits, Financial Statement Schedules This section lists documents filed as part of the Annual Report, including financial statements, corporate documents, and collaboration/license agreements, with all financial statement schedules omitted - The Annual Report includes financial statements, corporate documents, common stock purchase warrants, and collaboration/license agreements as exhibits[280][285][286][287] - All financial statement schedules are omitted because they are not applicable, not required, or the information is included elsewhere[283] Item 16. Form 10-K Summary Item 16. Form 10-K Summary The company did not provide a Form 10-K Summary - No Form 10-K Summary is provided[281] SIGNATURES SIGNATURES The Annual Report on Form 10-K was duly signed by Douglas J. Swirsky, President, CEO, and Director, and other directors on February 21, 2020 - The report was signed by Douglas J. Swirsky, President, Chief Executive Officer, and Director, and other directors on February 21, 2020[291][292] Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Baker Tilly Virchow Krause, LLP issued an unqualified opinion on Rexahn Pharmaceuticals, Inc.'s financial statements for 2019 and 2018, confirming fair presentation in conformity with U.S. GAAP - Baker Tilly Virchow Krause, LLP audited the financial statements for December 31, 2019 and 2018[294] - The auditors issued an unqualified opinion, confirming that the financial statements fairly present the company's financial position and results of operations in accordance with U.S. GAAP[294] - The audit was conducted in accordance with PCAOB standards, including assessing risks of material misstatement and evaluating accounting principles and estimates[296][297] Balance Sheet Total assets decreased from $16.04 million to $12.97 million in 2019, while total liabilities significantly decreased from $5.48 million to $3.01 million, primarily due to reduced warrant liabilities - Balance Sheet Summary (December 31, 2019 vs. 2018) | Category | December 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change (YoY) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------- | :--------- | | ASSETS | | | | | | Cash and cash equivalents | $9,220 | $8,744 | $476 | 5.4% | | Marketable securities | $2,997 | $5,982 | $(2,985) | -49.9% | | Prepaid expenses and other current assets | $447 | $1,174 | $(727) | -61.9% | | Total Current Assets | $12,664 | $15,900 | $(3,236) | -20.4% | | Total Assets | $12,969 | $16,043 | $(3,074) | -19.2% | | LIABILITIES | | | | | | Accounts payable and accrued expenses | $1,266 | $3,153 | $(1,887) | -59.8% | | Deferred revenue | $1,500 | $0 | $1,500 | N/A | | Warrant Liabilities | $42 | $2,308 | $(2,266) | -98.2% | | Total Liabilities | $3,011 | $5,480 | $(2,469) | -45.1% | | STOCKHOLDERS' EQUITY | | | | | | Additional paid-in capital | $173,278 | $165,268 | $8,010 | 4.8% | | Accumulated deficit | $(163,323) | $(154,687) | $(8,636) | 5.6% | | Accumulated Other Comprehensive Income (Loss) | $2 | $(18) | $20 | -111.1% | | Total Stockholders' Equity | $9,958 | $10,563 | $(605) | -5.7% | - The significant decrease in total liabilities was primarily driven by a substantial reduction in warrant liabilities and accounts payable and accrued expenses[299] - The accumulated deficit increased to $163.3 million as of December 31, 2019, reflecting ongoing net losses[299] Statement of Operations Net loss significantly decreased by 39.9% from $14.37 million in 2018 to $8.64 million in 2019, primarily due to substantial reductions in R&D and G&A expenses - Statement of Operations Summary (2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :----------- | :--------- | | Revenues | $0 | $0 | $0 | 0% | | General and administrative | $5,738 | $7,429 | $(1,691) | -22.8% | | Research and development | $5,477 | $13,109 | $(7,632) | -58.2% | | Total Expenses | $11,215 | $20,538 | $(9,323) | -45.4% | | Loss from Operations | $(11,215) | $(20,538) | $9,323 | -45.4% | | Interest income | $314 | $254 | $59 | 23.3% | | Other income | $0 | $369 | $(369) | -100% | | Unrealized gain on fair value of warrants | $2,266 | $5,546 | $(3,280) | -59.1% | | Total Other Income | $2,580 | $6,169 | $(3,589) | -58.2% | | Net Loss | $(8,635) | $(14,369) | $5,733 | -39.9% | | Net loss per share, basic and diluted | $(2.18) | $(5.25) | $3.07 | -58.5% | - The decrease in net loss was primarily driven by a substantial reduction in research and development expenses (down $7.6 million) and general and administrative expenses (down $1.7 million)[245][246][300] - Interest income increased by 23.3% due to higher interest rates on cash and marketable securities[249][300] Statement of Comprehensive Loss Comprehensive loss decreased by 39.9% to $8.62 million in 2019 from $14.33 million in 2018, primarily reflecting the reduced net loss - Statement of Comprehensive Loss (2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Loss | $(8,635) | $(14,369) | | Unrealized gain on available-for-sale securities | $20 | $39 | | Comprehensive Loss | $(8,616) | $(14,329) | - Comprehensive loss decreased by 39.9% year-over-year, primarily reflecting the reduction in net loss[301] Statement of Stockholders' Equity Total stockholders' equity slightly decreased from $10.56 million in 2018 to $9.96 million in 2019, influenced by common stock issuances and stock-based compensation, offset by accumulated net loss - Stockholders' Equity Summary (December 31, 2019 vs. 2018) | Metric | December 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Common Stock (shares) | 4,019,141 | 3,122,843 | | Common Stock (amount) | $0.402 | $0.312 | | Additional Paid-in Capital | $173,278 | $165,268 | | Accumulated Deficit | $(163,323) | $(154,687) | | Accumulated Other Comprehensive Income (Loss) | $2 | $(18) | | Total Stockholders' Equity | $9,958 | $10,563 | - Issuance of common stock and units, net of issuance costs, contributed $7.55 million to additional paid-in capital in 2019 and $6.87 million in 2018[302] - Stock-based compensation added $0.46 million in 2019 and $1.23 million in 2018 to additional paid-in capital[302] - The accumulated deficit increased by $8.64 million in 2019 and $14.37 million in 2018 due to net losses[302] Statement of Cash Flows Net cash increased by $0.48 million in 2019, a reversal from a $0.15 million decrease in 2018, driven by reduced operating cash use and increased financing activities - Cash Flow Summary (2019 vs. 2018) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Cash Used in Operating Activities | $(10,277) | $(18,839) | | Net Cash Provided By Investing Activities | $3,099 | $11,911 | | Net Cash Provided by Financing Activities | $7,654 | $6,773 | | Net Increase (Decrease) in Cash and Cash Equivalents | $475 | $(155) | | Cash and Cash Equivalents – end of period | $9,220 | $8,744 | - Operating cash used decreased significantly in 2019, primarily due to a lower net loss and changes in working capital components, including a $1.5 million deferred revenue inflow[255][303] - Investing activities provided less cash in 2019 ($3.1 million) compared to 2018 ($11.9 million), mainly due to higher purchases of marketable securities in 2019[256][303] - Financing activities provided $7.65 million in 2019 from common stock and warrant issuances, an increase from $6.77 million in 2018[258][303] Notes to Financial Statements The Notes detail the company's accumulated deficit, reliance on external funding, fair value measurements, new accounting standards, collaboration agreements, stock-based compensation, and income tax provisions - The company had an accumulated deficit of $163.3 million as of December 31, 2019, and anticipates incurring losses, relying on $12.2 million in cash, cash equivalents, and marketable securities for at least the next 12 months[305][306] - Significant accounting policies include expensing research and development costs as incurred, classifying warrants as liabilities or equity, and establishing a full valuation allowance for deferred tax assets due to cumulative losses[314][315][317][318] - The company adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing right-of-use assets and lease liabilities for operating leases, with no material financial impact[324][325] - Collaboration agreements include BioSense Global LLC (exclusive license for RX-3117 in Asia, up to $226 million in milestones), Zhejiang HaiChang Biotechnology Co., Ltd. (exclusive worldwide license for RX-0201, RX-0301, RX-0047, up to $96 million in milestones), and Merck Sharp & Dohme B.V. (clinical trial collaboration for RX-5902 with KEYTRUDA)[333][341][345][394][395] - Stock-based compensation expense was $0.46 million in 2019 and $1.23 million in 2018, with 204,574 options outstanding as of December 31, 2019[362][360] - Warrant liabilities decreased significantly from $2.31 million in 2018 to $0.04 million in 2019, primarily due to a decrease in the underlying common stock price and the expiration of some warrants[374][382][383]