UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
File Number:
(Exact name of registrant as specified in its charter)
| No.
| ||
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer | ☐ | Accelerated filer | ☒ | |
| Non-accelerated filer | ☐ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of November 3, 2020, there were shares of the registrant’s common stock, $0.0001 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
MATINAS BIOPHARMA HOLDINGS, INC.
Form 10-Q
Quarter Ended September 30, 2020
Table of Contents
| Page | ||
| PART - I FINANCIAL INFORMATION | ||
| Item 1. | FINANCIAL STATEMENTS | 1 |
| Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 14 |
| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 21 |
| Item 4. | CONTROLS AND PROCEDURES | 21 |
| PART - II OTHER INFORMATION | ||
| Item 1. | LEGAL PROCEEDINGS | 22 |
| Item 1A. | RISK FACTORS | 22 |
| Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 22 |
| Item 3. | DEFAULTS UNDER SENIOR SECURITIES | 22 |
| Item 4. | MINE SAFETY DISCLOSURES | 22 |
| Item 5. | OTHER INFORMATION | 22 |
| Item 6. | EXHIBITS | 22 |
| i |
Matinas BioPharma Holdings Inc.
Condensed Consolidated Balance Sheets
| September 30, 2020 | December 31, 2019 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Restricted cash | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Leasehold improvements and equipment - net | ||||||||
| Operating lease right-of-use assets - net | ||||||||
| Finance lease right-of-use assets - net | ||||||||
| In-process research and development | ||||||||
| Goodwill | ||||||||
| Restricted cash - security deposits | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Operating lease liabilities - current | ||||||||
| Financing lease liabilities - current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Deferred tax liability | ||||||||
| Operating lease liabilities - net of current portion | ||||||||
| Financing lease liabilities - net of current portion | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Series
B Convertible preferred stock, stated value $per share, shares authorized as of September
30, 2020 and December 31, 2019;
and shares issued and outstanding as of
September 30, 2020 and December 31, 2019, respectively; (liquidation preference - $ |
||||||||
| Common stock par value $ per share, shares authorized at September 30, 2020 and December 31, 2019; and issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive income/(loss) | ( |
) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 1 |
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
Unaudited
| Three
Months Ended September 30, |
Nine
Months Ended September 30, |
|||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue: | ||||||||||||||||
| Contract research revenue | $ | $ | $ | $ | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total costs and expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Sale of New Jersey net operating loss | - | - | ||||||||||||||
| Other income, net | ||||||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Preferred stock series A accumulated dividends | - | ( |
) | - | ( |
) | ||||||||||
| Preferred stock series B accumulated dividends | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss attributable to common shareholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss available for common shareholders per share - basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
| Other comprehensive (loss)/income, net of tax | ||||||||||||||||
| Net unrealized (loss)/gain on securities available-for-sale | ( |
) | - | - | ||||||||||||
| Reclassifications to net loss | - | - | ( |
) | - | |||||||||||
| Other comprehensive (loss)/income, net of tax | ( |
) | - | - | ||||||||||||
| Comprehensive loss attributable to shareholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 2 |
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Unaudited
| Redeemable
Convertible Preferred Stock A |
Redeemable
Convertible Preferred Stock B |
Common Stock | Additional Paid - in |
Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | - | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred stock | - | ( |
) | ( |
) | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance
of common stock in public offering, net of stock issuance costs ($ |
- | - | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for Options | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock from the exercise of Warrants | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Stock dividend | - | - | ( |
) | - | - | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||||||||||
Redeemable
Convertible |
Redeemable
Convertible Preferred Stock B |
Common Stock | Additional Paid - in |
Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ |
||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | - | $ | - | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock from the exercise of Options | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||||||||||
Redeemable
Convertible |
Redeemable
Convertible Preferred Stock B |
Common Stock | Additional
Paid – in |
Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ |
||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||||||||||||||
| Balance, December 31, 2018 | $ | $ | $ | $ | $ | ( |
) | $ | - | $ | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred shares A | ( |
) | ( |
- | - | - | - | |||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred shares B | - | ( |
) | ( |
) | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance
of common stock in public offering, net of stock issuance costs ($ |
- | - | - | - | ||||||||||||||||||||||||||||||||||||
| Stock dividend | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||
| Balance, September 30, 2019 | $ | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||||||||||
Redeemable
Convertible |
Redeemable
Convertible Preferred Stock B |
Common Stock | Additional
Paid – in |
Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ |
||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||||||||||||||
| Balance, June 30, 2019 | $ | $ | $ | $ | $ | ( |
) | $ | - | $ | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred shares A | ( |
) | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred shares B | - | ( |
) | ( |
) | - | - | - | ||||||||||||||||||||||||||||||||
| Stock dividend | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||
| Balance, September 30, 2019 | $ | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 3 |
Matinas BioPharma Holdings Inc.
Condensed Consolidated Statements of Cash Flow
Unaudited
| Nine
Months Ended September 30, |
||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss on disposal of equipment | - | |||||||
| Stock based compensation expense | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Amortization of finance lease right-of-use assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Operating lease liabilities | ( |
) | ( |
) | ||||
| Prepaid expenses and other current assets | ( |
) | ( |
) | ||||
| Accounts payable | ( |
) | ||||||
| Accrued expenses and other liabilities | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of marketable securities | ( |
) | - | |||||
| Proceeds from sales of marketable securities | - | |||||||
| Purchases of leasehold improvements and equipment | ( |
) | ( |
) | ||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from public offering of common stock | ||||||||
| Proceeds from exercise of warrants | - | |||||||
| Proceeds from exercise of options | - | |||||||
| Payments of capital lease liability - principal | ( |
) | ( |
) | ||||
| Payments of note payable | - | ( |
) | |||||
| Net cash provided by financing activities | ||||||||
| Net (decrease)/increase in cash, cash equivalents and restricted cash | ( |
) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplemental non-cash financing and investing activities: | ||||||||
| Unrealized gains on marketable securities | $ | $ | ||||||
| Preferred stock conversion into common stock - Series B | $ | $ | ||||||
| Cashless exercise of warrants | $ | $ | ||||||
| Unearned restricted stock grants | $ | $ | ||||||
| Stock dividends issued | $ | $ | ||||||
| Stock dividends accrual | $ | $ | ||||||
| Right-of-use assets obtained in exchange for liabilities | $ | $ | ||||||
| Preferred stock conversion into common stock - Series A | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 4 |
MATINAS
BIOPHARMA HOLDINGS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollars and shares in thousands, except per share data)
Note 1 – Description of Business
Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc. and together with “Holdings” and “BioPharma”, “the Company” or “we” or “our” or “us”). The Company is a clinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products.
Note 2 – Liquidity and Plan of Operations
The
Company has experienced net losses and negative cash flows from operations each period since its inception. Through September
30, 2020, the Company had an accumulated deficit of approximately $
The Company has been engaged in developing MAT-9001, its lead product candidate, as well as its lipid nano-crystal (“LNC”) platform delivery technology and a pipeline of associated product candidates since 2011. To date, the Company has not obtained regulatory approval for any of its product candidates nor generated any revenue from product sales and the Company expects to incur significant expenses to complete development of its product candidates. The Company may never be able to obtain regulatory approval for the marketing of any of its product candidates in any indication in the United States or internationally and there can be no assurance that the Company will generate revenues or ever achieve profitability.
If the Company obtains Food and Drug Administration (“FDA”) approval for one or more of its product candidates, the Company expects that its expenses will continue to increase once the Company reaches commercial launch. The Company also expects that its research and development expenses will continue to increase as it moves forward with additional clinical studies for its current product candidates and development of additional product candidates. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing.
To
continue to fund operations, on January 14, 2020, the Company completed an underwritten public offering of common stock, generating
gross cash proceeds of approximately $
As
of September 30, 2020, the Company had cash and cash equivalents of approximately $
Note 3 – Summary of Significant Accounting Policies
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma, and Nanotechnologies. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
The Company’s significant accounting policies are fully described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s 2019 Form 10-K.
| 5 |
In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economics, and financial markets globally, potentially leading to an economic downturn.
The Company has been actively monitoring the COVID-19 pandemic and its impact globally. The financial results for the three and nine months ended September 30, 2020 were not significantly impacted by COVID-19. However, the Company cannot predict the impact of the progression of the COVID-19 pandemic on future results or the Company’s ability to raise capital due to a variety of factors, including the continued good health of Company employees, the ability of suppliers to continue to operate and deliver, the ability of the Company to maintain operations, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic.
Recently adopted accounting pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Updated (“ASU”) 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim` periods within those fiscal years, beginning after December 15, 2019. The Company adopted the guidance on January 1, 2020. The adoption did not have a material impact on our condensed consolidated financial statements.
In November 2018, the FASB issued ASU 2018-18, “Collaboration Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606”, to clarify when ASC 606 should be used for collaborative arrangements when the counterparty is a customer. The guidance precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from the contracts with the customers if the counterparty is not a customer for that transaction. The guidance is effective for public entities in fiscal years beginning after December 15, 2019, and interim period therein. The Company adopted the guidance on January 1, 2020. The adoption did not have a material impact on our condensed consolidated financial statements.
Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities
The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash and cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable securities. Cash and cash equivalents consisted of cash in bank checking and savings accounts and money market funds.
Cash, Cash Equivalents and Restricted Cash
The Company presents restricted cash with cash and cash equivalents in the Condensed Consolidated Statements of Cash Flows. Restricted cash represents funds the Company is required to set aside to cover building operating leases and other purposes.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of September 30, 2020, December 31, 2019, September 30, 2019 and December 31, 2018:
| September
30, 2020 |
December
31, 2019 |
September
30, 2019 |
December
31, 2018 |
|||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted cash included in current/long term assets | ||||||||||||||||
| Cash, cash equivalents and restricted cash in the statement of cash flows | $ | $ | $ | $ | ||||||||||||
Marketable Securities
The
Company has classified its investments in marketable securities as available-for-sale and as a current asset. The Company’s
investments in marketable securities are carried at fair value, with unrealized gains and losses included as a separate component
of stockholders’ equity. Unrealized gains and losses are classified as other comprehensive income (loss) and costs are determined
on a specific identification basis. Realized gains and losses from our marketable securities are recorded in other income, net.
For the three and nine months ended September 30, 2020, the Company recorded unrealized losses of approximately $
| 6 |
The following tables summarizes the Company’s marketable securities as of September 30, 2020:
| Amortized | Unrealized | Unrealized | ||||||||||||||
| Cost | Gain | (Loss) | Fair Value | |||||||||||||
| U.S. Treasury Bonds | $ | $ | $ | $ | ||||||||||||
| U.S. Government Notes | ( |
) | ||||||||||||||
| Corporate Debt Securities | ||||||||||||||||
| State and Municipal Bonds | ||||||||||||||||
| Total marketable securities | $ | $ | $ | ( |
) | $ | ||||||||||
Maturities of debt securities classified as available-for-sale were as follows at September 30, 2020:
| Net Carrying | ||||||||
| Fair Value | Amount | |||||||
| Due within one year | $ | $ | ||||||
| Due after one year through five years | ||||||||
| $ | $ | |||||||
The following tables summarizes the Company’s cash, cash equivalents and marketable securities for the year ended December 31, 2019:
| Amortized | Unrealized | Unrealized | ||||||||||||||
| Cost | Gain | (Loss) | Fair Value | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bonds | $ | $ | $ | ( |
) | $ | ||||||||||
| Corporate Debt Securities | ( |
) | ||||||||||||||
| Total marketable securities | $ | $ | $ | ( |
) | $ | ||||||||||
| Total cash, cash equivalents and marketable securities | $ | $ | $ | ( |
) | $ | ||||||||||
Maturities of debt securities classified as available-for-sale were as follows at December 31, 2019:
| Net Carrying | ||||||||
| Fair Value | Amount | |||||||
| Due within one year | $ | $ | ||||||
| Due after one year through five years | ||||||||
| $ | $ | |||||||
The Company determined that the unrealized gains and (losses) are deemed to be temporary as of September 30, 2020. Unrealized gains and (losses) generally are the result of increases in the risk premiums required by market participants rather than an adverse change in cash flows for a fundamental weakness in the credit quality of the issuer or underlying assets. The Company has the ability and intent to hold these investments until maturity. The Company does not consider the investment in marketable securities to be other-than-temporarily impaired at September 30, 2020.
| 7 |
Note 5 - Fair Value Measurements
The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:
| ● | Level 1 – Quoted prices for identical assets or liabilities in active markets. |
| ● | Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable. |
| ● | Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates. |
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
The carrying amounts of certain cash and cash equivalents, current portion of restricted cash, prepaid expenses, accounts payable, current portion of lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments.
A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:
| Fair Value Hierarchy | ||||||||||||||||
| September 30, 2020 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets | ||||||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. Treasury Bonds | $ | $ | $ | $ | ||||||||||||
| U.S. Government Notes | ||||||||||||||||
| Corporate Debt Securities | ||||||||||||||||
| State and Municipal Bonds | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Fair Value Hierarchy | ||||||||||||||||
| December 31, 2019 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. Treasury Bonds | ||||||||||||||||
| Corporate Debt Securities | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and U.S. treasury bonds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical assets in active markets. Marketable securities consisting of U.S. government notes, corporate debt securities and state and municipal bonds are classified as Level 2 and are valued using quoted market prices in markets that are not active.
Note 6 – Leasehold Improvements and Equipment
Leasehold improvements and equipment, summarized by major category, consist of the following as of September 30, 2020 and December 31, 2019:
| September
30, 2020 |
December
31, 2019 |
|||||||
| Lab equipment | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: accumulated depreciation and amortization | ||||||||
| Leasehold improvements and equipment, net | $ | $ | ||||||
| 8 |
Depreciation
and amortization expense for the three and nine months ended September 30, 2020 was approximately $
Note 7 – Accrued Expenses
Accrued Expenses, summarized by major category, as of September 30, 2020 and December 31, 2019 consist of the following:
| September
30, 2020 |
December
31, 2019 |
|||||||
| Payroll and incentives | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Deferred revenue | ||||||||
| Other | - | |||||||
| Total | $ | $ | ||||||
Note 8 – Leases
The
Company has various lease agreements with original terms of up to
The assets and liabilities from operating and finance leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.
The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, the Company uses a discount rate based on its incremental borrowing rate, which is determined using the average of borrowing rates explicitly stated in the Company’s finance leases.
The
Company incurred lease expense for its operating leases of approximately $
The
Company incurred interest expense on its finance leases of approximately $
The following table presents information about the amount and timing of liabilities arising from the Company’s operating and finance leases as of September 30, 2020:
| Maturity of Lease Liabilities | Operating Lease Liabilities | Finance Lease Liabilities | ||||||
| Remainder of 2020 | $ | $ | ||||||
| 2021 | ||||||||
| 2022 | ||||||||
| 2023 | ||||||||
| 2024 | ||||||||
| Thereafter | $ | $ | ||||||
| Total undiscounted operating lease payments | $ | |||||||
| Less: Imputed interest | $ | |||||||
| Present value of operating lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term in years | ||||||||
| Weighted average discount rate | ||||||||
| 9 |