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Stockholders' Equity | 3 Months Ended
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Mar. 31, 2023
Stockholders' Equity Note [Abstract] |
Stockholders' Equity |
(10) | Stockholders’ Equity
Equity Offerings and Placements Common Purchase Agreement On March 29, 2023, the Company closed the Common Offering. The aggregate exercise price of the Common Tranche A Warrants is approximately $0.1 million , exercisable for an aggregate of 31,110 shares of Common Stock commencing on the Exercisability Date until the earlier of 21 days following the Company’s announcement of receipt of FDA Approval and March 31, 2026. The aggregate exercise price of the Common Tranche B Warrants is approximately $0.1 mi llion , exercisable for an aggregate of 16,666 shares of Common Stock commencing on the Exercisability Date until the earlier of 21 days following the Company’s announcement of receipt of recording at least $10 million in quarterly U.S. revenue from the commercialization of HEPZATO and March 31, 2026; provided, however, that if the FDA Approval occurs on or before February 15, 2024 and the holder of the Common Tranche B Warrant has not exercised its Common Tranche A Warrant by or before March 7, 2024, then any warrants not yet exercised pursuant to the Common Tranche B Warrant at such time shall expire. The Company determined that the common warrants should be liability-classified because they had the same features that resulted in the preferred warrants being liability-classified. Registration Rights for Preferred and Common Offerings Pursuant to the Preferred Purchase Agreement and the Common Purchase Agreement (collectively, the “Purchase Agreements”), as soon as practicable following the receipt of the Stockholder Approval, the Company shall file a registration statement on Form S-3 providing for the resale by the investors party thereto of the common stock issuable upon conversion of the Registrable Shares (as defined in the Purchase Agreements”) and to use commercially reasonable efforts to have the registration statement declared effective within twenty-one (21) days following the filing date (or, in the event that the staff of the Securities and Exchange Commission reviews and has written comments to such registration statement, within forty-five (45) days following the filing date). The Company further agreed to take all steps necessary to keep such registration statement effective at all times until all Registrable Shares have been resold, or there remains no Registrable Shares. The securities issued in the Series F Preferred Offering and the Common Offering have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and until so registered the securities may not be offered or sold absent registration or availability of an applicable exemption from registration. There is no established public trading market for the Series F Preferred Stock, the Preferred Warrants, the Preferred Warrant Shares or the Common Warrants and the Company does not intend to list such securities on any national securities exchange or nationally recognized trading system. The Company concluded that the common warrants were in the scope of Accounting Standards Codification (ASC) 480, Distinguishing Liabilities from Equity ASC 480,) since the common warrants are not mandatorily redeemable; and do not have obligations to issue a variable number of shares of common stock, The Company determined the common warrants met the definition of a derivativ e and w ere not considered indexed to the Company’s stock common since the warrants require early settle by repurchasing the warrants for cash in an amount equal to the Black-Scholes Value in the event of a Fundamental Transaction at pre-specified volatility at 100% as an input to the Black-Scholes calculation. Since the common warrants uses a pre-specific volatility and needing stockholders’ approval, the Company determined to record the common warrants at fair value and will be marked-to-market at subsequent reporting dates. Other Private Placements On July 20, 2022, the Company closed a private placement for the issuance and sale of 690,954 shares of common stock and 566,751 pre-funded warrants to purchase common stock to certain investors. Each share of common stock was sold at a price per share of $3.98 and the pre-funded warrants were sold at a price of $3.97 per pre-funded warrant. The pre-funded warrants have an exercise price of $0.01 per share of common stock and are immediately exercisable. The Company received gross proceeds from the private placement of approximately $5.0 million before deducting offering expenses. On December 13, 2022, the Company closed a private placement for the issuance and sale of 1,448,889 shares of common stock and 692,042 pre-funded warrants to purchase common stock to certain investors. Each share of common stock was sold at a price per share of $2.90 and the pre-funded warrants were sold at a price of $2.89 per pre-funded warrant. The pre-funded warrants have an exercise price of $0.01 per share of common stock and are immediately exercisable. The Company received gross proceeds from the private placement of approximately $6.2 million before deducting offering expenses. At-the-Market Offering The Company has entered into the ATM Sales Agreement, pursuant to which the Company may offer and sell, at its sole discretion through the Sales Agent, shares of common stock having an aggregate offering price of up to $17.0 million. To date, the Company has sold approximately $4.0 million of its common stock, prior to issuance costs, under the ATM Sales Agreement. No sales were made during the three months ended March 31, 2023. The Company has no obligation to sell any shares of common stock under the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, the Sales Agent is required to use commercially reasonable efforts, consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Stock Market, to sell shares of common stock from time to time based upon the Company’s instructions, including any price, time or size limits specified by the Company. The Company will pay the Sales Agent a commission of 3.0% of the aggregate gross proceeds from each such sale, reimburse the Sales Agent’s legal fees and disbursements up to $50 and provide the Sales GENT with customary indemnification and contribution rights. The Sales Agreement may be terminated by the Sales Agent or the Company upon notice to the other party as provided in the sales agreement, or the Sales Agent at any time in certain circumstances, including the occurrence of a material and adverse change in the Company’s business or financial condition that makes it impractical or inadvisable to market common stock or to enforce contracts for the sale of common stock. Authorized Shares The Company is authorized to issue 40 million shares of common stock, $0.01 par value, and 10 million shares of preferred stock, $0.01 par value. To date, the Company has designated the following preferred stock: Series A (4,200 shares), Series B (2,360 shares), Series C (590 shares), Series D (10,000 shares), Series E (40,000 shares), Series E-1 (12,960 shares), Series F-1 ( 24,900 shares), Series F-2 (24,900 shares), Series F-3 (34,860 shares), and Series F-4 (24,900 shares). Preferred Stock As of March 31, 2023, there were an aggregate of 11,357 shares of Series E and Series E-1 Convertible Preferred Stock outstanding. Omnibus Equity Incentive Plan On September 30, 2020, the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”) was adopted by the Company’s Board of Directors. On November 23, 2020, the Company’s stockholders approved the 2020 Plan. The 2020 Plan will continue in effect until the tenth anniversary of the date of its adoption by the Board or until earlier terminated by the Board. The 2020 Plan is administered by the Board of Directors or a committee designated by the Board of Directors. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, as well as other stock-based awards or cash awards that are deemed to be consistent with the purposes of the plan to Company employees, directors and consultants. As of March 31, 2023, there are 2,475,000 shares of common stock reserved under the 2020 Plan, of which 195,167 remained available to be issued. Stock Options The Company values stock options using the Black-Scholes option pricing model and used the following assumptions during the reporting periods:
|  | Three Months Ended March 31,
|  | 2023 |  |  | 2022
Expected terms (years) |  |  | 5.8 | % |  | 5.5%-6.5%
Expected volatility |  |  | 172.8 | % |  | 174.8.% -177.1%
Risk-free interest rate |  |  | 4.08 | % |  | 1.75% - 1.90%
Expected dividends |  |  | — |  |  | 0.00%
The following is a summary of stock option activity for the three months ended March 31, 2023:
|  | Number of Options |  |  | Weighted Average Exercise Price Per Share |  |  | Weighted Average Remaining Contractual Term (in years) |  |  | Aggregate Intrinsic Value |
Outstanding at January 1, 2023 |  |  | 2,235,052 |  |  | $ | 10.30 |  |  |  |  |  |  |  |  |
Granted |  |  | 728,000 |  |  |  | 4.67 |  |  |  |  |  |  |  |  |
Expired |  |  | (51,073 | ) |  |  | 10.54 |  |  |  |  |  |  |  |  |
Cancelled/Forfeited |  |  | (17,586 | ) |  |  | 11.42 |  |  |  |  |  |  |  |  |
Outstanding at March 31, 2023 |  |  | 2,894,393 |  |  | $ | 8.87 |  |  |  | 8.4 |  |  | $ | 935 |
Exercisable at March 31, 2023 |  |  | 1,505,927 |  |  | $ | 10.81 |  |  |  | 7.7 |  |  | $ | 44 |
The following table summarizes information for stock option shares outstanding and exercisable at March 31, 2023:
|  |  |  |  | Options Exercisable |
Range of Exercise Prices |  | Outstanding Number of Options |  |  | Weighted Average Remaining Option Term (in years) |  |  | Number of Options |
$2.83 - $51.50 |  |  | 2,893,894 |  |  |  | 8.4 |  |  |  | 1,505,428 |
$51.50+ |  |  | 499 |  |  |  | 5.8 |  |  |  | 499 |
|  |  | 2,894,393 |  |  |  | 7.7 |  |  |  | 1,505,927 |
The following is a summary of share-based compensation expense in the statement of operations for the three months ended March 31, 2023 (in thousands):
|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Selling, general and administrative |  | $ | 1,118 |  |  | $ | 1,475 |
Research and development |  |  | 417 |  |  |  | 744 |
Cost of goods sold |  |  | 126 |  |  |  | 52 |
Total |  | $ | 1,661 |  |  | $ | 2,271 |
At March 31, 2023, there was $1.9 million of aggregate unrecognized compensation expense related employee and board stock option grants. The cost is expected to be recognized over a weighted average period of 1.4 years. Common Stock Warrants The following is a summary of common stock warrant activity for the three months ended March 31, 2023:
|  | Warrants |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Life (in years) |
Outstanding at January 1, 2023 |  |  | 5,153,291 |  |  | $ | 7.01 |  |  |  |  |
Warrants issued |  |  | 81,849 |  |  |  | 2.94 |  |  |  |  |
Outstanding at March 31, 2023 |  |  | 5,235,140 |  |  | $ | 6.95 |  |  |  | 2.6 |
Exercisable at March 31, 2023 |  |  | 5,187,363 |  |  | $ | 6.96 |  |  |  | 2.6 |
The following table presents information related to common stock warrants at March 31, 2023:
|  |  |  |  | Warrants Exercisable |
Range of Exercise Prices |  | Outstanding Number of Warrants |  |  | Weighted Average Remaining Warrant Term (in years) |  |  | Number of Warrants |
$0.01 |  |  | 1,576,620 |  |  |  | 4.2 |  |  |  | 1,576,620 |
$4.50-$6.00 |  |  | 47,777 |  |  |  |  |  |  |  |  |
$10.00 |  |  | 3,610,743 |  |  |  | 1.9 |  |  |  | 3,610,743 |
|  |  | 5,235,140 |  |  |  | 2.6 |  |  |  | 5,187,363 |
On April 18, 2023, there were 538,828 $0.01 warrants exercised for 538,828 common shares. Employee Stock Purchase Plan In August 2021, the Company’s Board of Directors, with shareholder approval in May 2022, adopted the Employee Stock Purchase Plan ( the “ESPP”). The ESPP provides for a maximum of 260,295 shares of common stock to be purchased by participating employees. Employees who elect to participate in the ESPP will be able to purchase common stock at the lower of 85% of the fair market value of common stock on the first or last day of the applicable six-month offering period. In January 2023, an aggregate of 15,417 shares were purchased by participating employees for the offering period of July 1, 2022 to December 31, 2022.

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