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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Edge Therapeutics, Inc. | NASDAQ:EDGE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.5036 | 0.50 | 0.53 | 0 | 01:00:00 |
☒ |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Edge Therapeutics, Inc.
|
||
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
26-4231384
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification No.)
|
300 Connell Drive, Suite 4000, Berkeley Heights, NJ 07922
|
||
(Address of principal executive offices)
|
(800) 208-3343
|
||
(Registrant’s telephone number)
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
☐
|
Accelerated filer
☐
|
Non-accelerated filer
☐
|
Smaller Reporting Company
☒
|
Emerging growth company
☒
|
|
|
|
Page
|
Part I —
|
Financial Information
|
||
|
|
|
|
|
Item 1.
|
Financial Statements (Unaudited):
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
Item 2.
|
15
|
|
|
|
|
|
|
Item 3.
|
22
|
|
|
|
|
|
|
Item 4.
|
22
|
|
|
|
|
|
Part II —
|
23
|
||
|
|
|
|
|
Item 1.
|
23
|
|
|
|
|
|
|
Item 1A.
|
23
|
|
|
|
|
|
|
Item 2.
|
24
|
|
|
|
|
|
|
Item 3.
|
24
|
|
|
|
|
|
|
Item 4.
|
24
|
|
|
|
|
|
|
Item 5.
|
24
|
|
|
|
|
|
|
Item 6.
|
24
|
|
|
|
|
|
25
|
|||
26
|
ITEM 1. |
FINANCIAL STATEMENTS
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development expenses
|
$
|
317,684
|
$
|
6,913,171
|
$
|
15,583,565
|
$
|
23,477,971
|
||||||||
General and administrative expenses
|
3,286,891
|
3,990,283
|
11,303,446
|
12,365,509
|
||||||||||||
Restructuring expenses
|
847,852
|
–
|
7,494,094
|
–
|
||||||||||||
Impairment charges
|
–
|
–
|
2,672,581
|
–
|
||||||||||||
|
||||||||||||||||
Total operating expenses
|
4,452,427
|
10,903,454
|
37,053,686
|
35,843,480
|
||||||||||||
|
||||||||||||||||
Loss from operations
|
(4,452,427
|
)
|
(10,903,454
|
)
|
(37,053,686
|
)
|
(35,843,480
|
)
|
||||||||
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
187,256
|
214,064
|
696,035
|
479,297
|
||||||||||||
Interest expense
|
–
|
(592,089
|
)
|
(1,425,255
|
)
|
(1,591,998
|
)
|
|||||||||
|
||||||||||||||||
Net loss and comprehensive loss
|
(4,265,171
|
)
|
(11,281,479
|
)
|
(37,782,906
|
)
|
(36,956,181
|
)
|
||||||||
|
||||||||||||||||
Loss per share basic and diluted
|
$
|
(0.14
|
)
|
$
|
(0.37
|
)
|
$
|
(1.21
|
)
|
$
|
(1.23
|
)
|
||||
|
||||||||||||||||
Weighted average common shares outstanding basic and diluted
|
31,328,128
|
30,852,514
|
31,198,804
|
30,091,640
|
|
Nine Months Ended September 30,
|
|||||||
|
2018
|
2017
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(37,782,906
|
)
|
$
|
(36,956,181
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Stock-based compensation expense
|
5,551,573
|
4,637,142
|
||||||
Stock-based 401K company common match
|
123,561
|
170,620
|
||||||
Depreciation expense
|
133,130
|
134,569
|
||||||
Impairment of machinery and equipment
|
2,672,581
|
–
|
||||||
Amortization of debt discount
|
1,039
|
28,871
|
||||||
Amortization of debt issuance costs
|
125,355
|
81,306
|
||||||
Non-cash interest expense
|
405,278
|
274,530
|
||||||
Changes in assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
889,497
|
627,848
|
||||||
Accounts payable
|
(3,778,439
|
)
|
(524,145
|
)
|
||||
Accrued expenses
|
(4,504,334
|
)
|
68,683
|
|||||
Restructuring reserve
|
5,179,722
|
–
|
||||||
|
||||||||
Net cash used in operating activities
|
(30,983,943
|
)
|
(31,456,757
|
)
|
||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
–
|
(160,751
|
)
|
|||||
|
||||||||
Net cash used in investing activities
|
–
|
(160,751
|
)
|
|||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of debt
|
–
|
5,000,000
|
||||||
Proceeds from exercise of stock options
|
721,195
|
91,982
|
||||||
Proceeds from exercise of warrants
|
–
|
50,922
|
||||||
Payments for debt back-end fees
|
(990,000
|
)
|
–
|
|||||
Repayment of debt
|
(20,000,000
|
)
|
–
|
|||||
Proceeds from issuance of common stock, net of issuance costs
|
–
|
17,382,943
|
||||||
|
||||||||
Net cash (used in) provided by financing activities
|
(20,268,805
|
)
|
22,525,847
|
|||||
|
||||||||
Net decrease in cash
|
(51,252,748
|
)
|
(9,091,661
|
)
|
||||
Cash and cash equivalents at beginning of period
|
88,067,647
|
106,398,919
|
||||||
|
||||||||
Cash and cash equivalents at end of period
|
$
|
36,814,899
|
$
|
97,307,258
|
||||
|
||||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
1,051,167
|
$
|
1,172,979
|
||||
Supplemental cash flow information:
|
||||||||
Accrued capital expenditures included in accrued expenses and accounts payable
|
$
|
–
|
$
|
18,084
|
Restructuring reserve at December 31, 2017
|
$
|
–
|
||
Initial restructuring charge
|
6,276,563
|
|||
Incurred legal fees
|
334,212
|
|||
Retention compensation
|
618,349
|
|||
Restructuring expenses to date (1)
|
7,229,124
|
|||
Payment of legal fees
|
(191,976
|
)
|
||
Payment of retention compensation
|
(56,925
|
)
|
||
Payment of severance benefits
|
(1,800,501
|
)
|
||
Restructuring reserve as of September 30, 2018
|
$
|
5,179,722
|
(1)
|
Excludes non-cash stock based retention compensation of $264,970 expensed to date through restructuring expenses.
|
(A) |
Unaudited interim financial statements:
|
(B) |
Use of estimates:
|
(C) |
Significant risks and uncertainties:
|
(D) |
Cash equivalents and concentration of cash balance:
|
(E) |
Research and development:
|
(F) |
Patent costs:
|
(G) |
Stock-based compensation:
|
(H) |
Net loss per common share:
|
|
As of September 30,
|
|||||||
|
2018
|
2017
|
||||||
Stock options to purchase Common Stock
|
7,149,374
|
6,387,495
|
||||||
Unvested Restricted Stock Units
|
601,394
|
–
|
||||||
Warrants to purchase Common Stock
|
78,596
|
376,682
|
||||||
Total
|
7,829,364
|
6,764,177
|
(I) |
Accounting standards not yet adopted:
|
(J) |
Accounting standards adopted:
|
● |
The Company recognized $84,786 of tax benefit along with a full valuation allowance as of the adoption date related to the historical excess tax benefits from historical option exercises related to employee equity award activity.
|
● |
The Company elected to recognize forfeitures as they occur. The cumulative effect adjustment as a result of the adoption of this amendment on a modified retrospective basis was not material.
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||
|
Total
|
Quoted Prices in
Active Markets
(Level 1)
|
Quoted Prices in
Inactive Markets
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||||
As of September 30, 2018: (unaudited)
|
||||||||||||||||
Cash and cash equivalents
|
$
|
36,814,899
|
$
|
36,814,899
|
$
|
–
|
$
|
–
|
||||||||
|
||||||||||||||||
As of December 31, 2017:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
88,067,647
|
$
|
88,067,647
|
$
|
–
|
$
|
–
|
|
As of
September 30, 2018
|
As of
December 31, 2017
|
||||||
Accrued research and development costs (1)
|
$
|
224,786
|
$
|
2,857,025
|
||||
Accrued professional fees
|
404,940
|
267,646
|
||||||
Accrued compensation
|
41,605
|
1,886,638
|
||||||
Accrued other
|
214,615
|
385,896
|
||||||
Deferred rent
|
31,925
|
25,000
|
||||||
Total
|
$
|
917,871
|
$
|
5,422,205
|
(1)
|
Balance as of September 30, 2018 represents estimated close down NEWTON 2 trial costs.
|
Issue Date
|
25% Vesting Date
|
Executive
|
Number of Options
|
|||
November 16, 2015
|
October 30, 2016
|
SVP, General Counsel and Secretary
|
80,000
|
|||
March 1, 2017
|
February 28, 2018
|
SVP, Regulatory Affairs
|
80,000
|
|||
November 1, 2017
|
October 31, 2018
|
Chief Financial Officer
|
200,000
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||||
Stock-Based Compensation
|
||||||||||||||||
Research and development
|
$
|
612,218
|
$
|
702,284
|
$
|
2,041,070
|
$
|
2,090,076
|
||||||||
General and administrative
|
1,029,980
|
868,630
|
3,245,533
|
2,547,066
|
||||||||||||
Retention Compensation
|
264,970
|
–
|
264,970
|
–
|
||||||||||||
Total
|
$
|
1,907,168
|
$
|
1,570,914
|
$
|
5,551,573
|
$
|
4,637,142
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
|
Weighted Average
|
Weighted Average
|
Weighted Average
|
Weighted Average
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||||
Volatility
|
0.00
|
%
|
86.98
|
%
|
89.06
|
%
|
88.82
|
%
|
||||||||
Risk-Free Interest Rate
|
0.00
|
%
|
1.83
|
%
|
2.31
|
%
|
1.89
|
%
|
||||||||
Expected Term in Years
|
–
|
6.03
|
4.24
|
5.99
|
||||||||||||
Dividend Rate
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
||||||||
Fair Value of Option on Grant Date
|
$
|
–
|
$
|
7.22
|
$
|
5.54
|
$
|
6.76
|
|
Number
of Shares
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining Contractual
Life in Years
|
Aggregate
Intrinsic Value
|
||||||||||||
Options outstanding at December 31, 2017
|
6,462,795
|
$
|
6.50
|
|||||||||||||
Granted
|
2,322,906
|
7.52
|
||||||||||||||
Exercised
|
(198,300
|
)
|
3.64
|
|
||||||||||||
Forfeited
|
(1,438,027
|
)
|
10.13
|
|||||||||||||
Options outstanding at September 30, 2018
|
7,149,374
|
$
|
6.18
|
6.13
|
$
|
42,723
|
||||||||||
Vested and expected to vest at September 30, 2018
|
7,149,374
|
$
|
6.18
|
6.13
|
$
|
42,723
|
||||||||||
Exercisable at September 30, 2018
|
4,120,549
|
$
|
5.54
|
5.73
|
$
|
42,723
|
|
Number
of RSUs
|
Weighted Average
Grant Price
|
||||||
RSUs outstanding at December 31, 2017
|
–
|
$
|
–
|
|||||
Granted
|
601,394
|
0.85
|
||||||
Released
|
–
|
–
|
||||||
Forfeited
|
–
|
–
|
||||||
RSUs outstanding at September 30, 2018
|
601,394
|
$
|
0.85
|
Year ended December 31,
|
||||
2018 (remaining)
|
$
|
151,572
|
||
2019
|
604,541
|
|||
2020
|
603,371
|
|||
2021
|
530,385
|
|||
2022 and after
|
–
|
|||
Total minimum payments required
|
$
|
1,889,869
|
● |
our plans to explore strategic alternatives for the Company and our ability to successfully complete a strategic transaction;
|
● |
the timing of completion of any strategic transaction, sale and/or liquidation, if any;
|
● |
our ability to reduce operating expenses and conserve cash resources;
|
● |
timing and amount of termination costs incurred in connection with our workforce reduction plan;
|
● |
the accuracy of estimates of our expenses, future revenue, capital requirements and our needs for additional financing;
|
● |
our ability to obtain funding for our operations in the event we determine to raise additional capital;
|
● |
our ability to retain key management personnel;
|
● |
the accuracy of our estimates regarding expenses, future revenues and capital requirements;
|
● |
the possibility of dissolving our Company;
|
● |
the pending class action civil litigation against the Company;
|
● |
our ability to maintain our listing on the Nasdaq Stock Market;
|
● |
regulatory developments in the United States and foreign countries;
|
● |
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”); and
|
● |
other risks and uncertainties, including those listed under Part II, Item 1A. Risk Factors.
|
|
Three Months Ended September 30,
|
Increase (Decrease)
|
||||||||||||||
|
2018
|
2017
|
$ |
%
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development expenses
|
$
|
317
|
$
|
6,913
|
$
|
(6,596
|
)
|
(95
|
)%
|
|||||||
General and administrative expenses
|
3,287
|
3,990
|
(703
|
)
|
(18
|
)%
|
||||||||||
Restructuring expenses
|
848
|
–
|
848
|
100
|
%
|
|||||||||||
Total operating expenses
|
4,452
|
10,903
|
(6,451
|
)
|
(59
|
)%
|
||||||||||
Loss from operations
|
(4,452
|
)
|
(10,903
|
)
|
6,451
|
(59
|
)%
|
|||||||||
Interest income (expense), net
|
187
|
(378
|
)
|
565
|
(149
|
)%
|
||||||||||
Net loss and comprehensive loss
|
$
|
(4,265
|
)
|
$
|
(11,281
|
)
|
$
|
7,016
|
(62
|
)%
|
|
Nine Months Ended September 30,
|
Increase (Decrease)
|
||||||||||||||
|
2018
|
2017
|
$ |
%
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development expenses
|
$
|
15,584
|
$
|
23,478
|
$
|
(7,894
|
)
|
(34
|
)%
|
|||||||
General and administrative expenses
|
11,303
|
12,365
|
(1,062
|
)
|
(9
|
)%
|
||||||||||
Restructuring expenses
|
7,494
|
–
|
7,494
|
100
|
%
|
|||||||||||
Impairment charges
|
2,673
|
–
|
2,673
|
100
|
%
|
|||||||||||
Total operating expenses
|
37,054
|
35,843
|
1,211
|
3
|
%
|
|||||||||||
Loss from operations
|
(37,054
|
)
|
(35,843
|
)
|
(1,211
|
)
|
3
|
%
|
||||||||
Interest (expense), net
|
(729
|
)
|
(1,113
|
)
|
384
|
(35
|
)%
|
|||||||||
Net loss and comprehensive loss
|
$
|
(37,783
|
)
|
$
|
(36,956
|
)
|
$
|
(827
|
)
|
2
|
%
|
|
Nine Months Ended September 30,
|
|||||||
|
2018
|
2017
|
||||||
Net cash used in operating activities
|
$
|
(30,984
|
)
|
$
|
(31,457
|
)
|
||
Net cash used in investing activities
|
–
|
(161
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(20,269
|
)
|
22,526
|
|||||
Net (decrease) increase in cash
|
$
|
(51,253
|
)
|
$
|
(9,092
|
)
|
● |
our plans to explore strategic alternatives for the Company and our ability to execute on those plans;
|
● |
our ability to manage costs associated with winding down our current research and development activities and restructuring our organization;
|
● |
the timing and nature of any strategic transactions that we undertake;
|
● |
personnel-related expenses, including salaries, benefits, severance, stock-based compensation expense and other compensation costs related to implementing our restructuring plan;
|
● |
the scope and nature of activities we may pursue to advance clinical development for our product candidates, if any;
|
● |
the number and characteristics of product candidates that we develop or may acquire or in-license;
|
● |
the costs incurred in defending the class action civil litigation; and
|
● |
the costs incurred in responding to disruptive actions by activist stockholders.
|
As of September 30, 2018
|
Total
|
Less than
one year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
|||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
Operating lease obligations
|
$
|
1,890
|
$
|
607
|
$
|
1,212
|
$
|
71
|
$
|
–
|
||||||||||
Total contractual obligations
|
$
|
1,890
|
$
|
607
|
$
|
1,212
|
$
|
71
|
$
|
–
|
● |
a limited availability of market quotations for our common stock;
|
● |
reduced liquidity with respect to our common stock;
|
● |
a determination that our shares are “penny stock,” which will require brokers trading in our shares to adhere to more stringent standards, and which may limit demand for our common stock among certain investors;
|
● |
a limited amount of news and analyst coverage for our company; and
|
● |
a decreased ability to issue additional securities or obtain additional financing in the future.
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
3.1
|
|
Eighth Amended and Restated Certificate of Incorporation of Edge Therapeutics, Inc.
(
filed as Exhibit 3.1 to the
Company’s Current Report on Form 8-K filed on October 6, 2015, and incorporated by reference herein).
|
|
|
|
3.2
|
Second Amended and Restated Bylaws of Edge Therapeutics, Inc.
(
filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on October 6, 2015, and incorporated by reference herein).
|
|
|
Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
|
Principal Financial Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1) |
This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
|
Edge Therapeutics, Inc.
|
|
|
|
|
November 1, 2018
|
By:
|
/s/ Brian A. Leuthner
|
|
Brian A. Leuthner
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
November 1, 2018
|
By:
|
/s/
Andrew Saik
|
|
Andrew Saik
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1 Year EDGE THERAPEUTICS, INC. Chart |
1 Month EDGE THERAPEUTICS, INC. Chart |
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