Quarterly report pursuant to Section 13 or 15(d)

Capital Structure

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Capital Structure
6 Months Ended
Jun. 30, 2019
Federal Home Loan Banks [Abstract]  
Capital Structure
8. Capital Structure
Common Stock
As of June 30, 2019, the Company was authorized to issue 200,000,000 shares of common stock at $0.0001 par value per share.
Follow-on
Offerings
On August 3, 2018, the Company completed an underwritten public offering of 5,750,000 shares of its common stock, including shares sold pursuant to the fully exercised overallotment option granted to the underwriters in connection with the offering, at a public offering price of $2.00 per share, resulting in net proceeds to the Company of approximately $10.4 million after underwriting discounts and commissions and offering expenses payable by the Company.
On July 25, 2017, the Company sold 32,000,000 shares of its common stock and warrants to purchase an additional 16,000,000 shares of its common stock in an underwritten
follow-on
offering for gross proceeds of $40.0 million (the “2017 Offering”). The Company received net proceeds of approximately $37.1 million after underwriting discounts, commissions and offering expenses payable by the Company. The warrants issued in the 2017 Offering have an exercise price of $1.55 per share and expire five years from the date of issuance (the “2017 Warrants”). No 2017 Warrants were exercised in the three and six months ended June 30, 2019. 2017 Warrants to purchase 1,050 and 3,550 shares of common stock were exercised in the three and six months ended June 30, 2018, respectively.
On July 27, 2016, the Company sold 14,000,000 shares of its common stock and warrants to purchase an additional 14,000,000 shares of its common stock in an underwritten
follow-on
offering for gross proceeds of $35.0 million (the “2016 Offering”). The Company received net proceeds of approximately $32.0 million after underwriting discounts, commissions and offering expenses payable by the Company. The warrants issued in the 2016 Offering have an exercise price of $3.00 per share and expire five years from the date of issuance (the “2016 Warrants”). No 2016 Warrants were exercised in the three and six months ended June 30, 2019 or 2018.
The 2017 Warrants and 2016 Warrants contain a fundamental transaction provision that obligates the Company to cash settle the warrants under a limited set of conditions not entirely within the Company’s control. Due to this conditional obligation, the Company determined that both the 2017 Warrants and the 2016 Warrants should be classified as liabilities in the Company’s consolidated balance sheet. At issuance, the Company determined the fair value of the 2017 Warrants and 2016 Warrants to be $12.4 million and $18.6 million, respectively, and reclassified these balances from stockholders’ equity to warrant liability. The fair value of these warrants is
re-measured
at each reporting period and changes in fair value are recognized in the consolidated statement of operations (see Note 4, “Fair Value Measurements”). Additionally, the Company allocated approximately $0.9 million and $1.6 million of issuance costs to the 2017 Warrants and 2016 Warrants, respectively, based on the proportion of the proceeds allocated to the fair value of the warrants. The allocated issuance costs were expensed as other expense in the Company’s consolidated statement of operations.
Private Placement
On June 12, 2015, the Company closed a private placement of its securities with a group of institutional investors (the “PIPE”). Each investor received one share of common stock and a warrant to purchase
one-half
share of common stock at a price of $4.23 per common share purchased. The closing of the PIPE resulted in the issuance of an aggregate of 4,728,128 common shares and warrants to purchase an additional 2,364,066 shares of common stock at an exercise price of $8.00 per full share (the “PIPE Warrants”). None of the PIPE Warrants were exercised prior to expiration on June 12, 2018 and therefore have been terminated and are no longer exercisable. The Company received net proceeds from the PIPE of $18.3 million, after deducting expenses payable by the Company.
The placement agents in the PIPE received warrants to purchase 4% of the total number of shares of common stock sold in the PIPE (the “Placement Agent Warrants”), for a total of 189,126 shares of common stock underlying the Placement Agent Warrants. The Placement Warrants became exercisable upon issuance at an exercise price of $4.65 per share and expire on June 11, 2020.
The common stock and accompanying PIPE Warrants and Placement Agent Warrants were classified to stockholders’ equity in the Company’s balance sheet.
Representative’s Warrant
The Maxim Group, LLC, the representative of the underwriter in the Company’s initial public offering (“IPO”), received the Representative’s Warrant to purchase 3% of the total number of shares of common stock sold in the IPO, including those shares sold upon the exercise of the over-allotment option, for a total of 206,410 shares of common stock underlying the Representative’s Warrant. The Representative’s Warrant is exercisable at an exercise price of $7.50 per share beginning 180 days after the effective date of the Company’s registration statement (January 24, 2015) and expiring on July 28, 2019. The Company classified the Representative’s Warrant as a liability since it did not meet the requirements to be included in equity. The fair value of the Representative’s warrant is
re-measured
at each reporting period and changes in fair value are recognized in the consolidated statement of operations (see Note 4, “Fair Value Measurements”).
Convertible Notes
The Company issued approximately $15.0 million aggregate principal amount of its 8.00% Convertible Notes due
May 31, 2015
(the “Convertible Notes”) from June 2013 through June 2014. On August 1, 2014, in conjunction with the closing of the Company’s IPO, the principal amount of the Convertible Notes, and all accrued and unpaid interest thereon, automatically converted into 5,109,988 shares of common stock. Each purchaser of the Convertible Notes also received a warrant which included an exercise price “cap” that was analogous to “down round protection” (the “Note Warrants”). Upon the closing of the IPO and based on the terms of the Note Warrants, the Company determined the total number of shares of the Company’s common stock underlying the Note Warrants to be 3,321,416 at an exercise price of $3.00 per share. There were 2,645,176, 414,790 and 670,702 Note Warrants that expired during 2018 and the three and six months ended June 30, 2019, respectively, and therefore have been terminated and are no longer exercisable. There are no Note Warrants outstanding as of June 30, 2019.
Voting
The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings.
Dividends
The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors. As of June 30, 2019, no dividends have been declared or paid on the Company’s common stock since inception.
 
 
Reserved for Future Issuance
The Company has reserved for future issuance the following number of shares of common stock as of June 30, 2019 and December 31, 2018:
 
   
June 30,

2019
   
December 31,

2018
 
Options to purchase common stock
    12,364,994       7,187,885  
Warrants to purchase common stock
    30,572,324       31,243,026  
   
 
 
   
 
 
 
      42,937,318       38,430,911