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General (Policies) | 6 Months Ended
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Jun. 30, 2023
Accounting Policies [Abstract] |
Risks and Uncertainties | Risks and Uncertainties The Company is subject to risks common to companies in the development stage including, but not limited to, dependency on the clinical and commercial success of its drug/device combination products, its ability to obtain regulatory approval of its such products in the United States and other geography markets, uncertainty of broad adoption of its approved products, if any, by physicians and consumers, and significant competition. In addition, inflation rates have increased recently to levels not seen in decades. As a result, the U.S. Federal Reserve has raised interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks. Furthermore, if, in addition to the recent bank failures of Silicon Valley Bank, Signature Bank and First Republic Bank, other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our or our partners’ ability to access existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition. If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our ability to pursue our business strategy.
Liquidity and Going Concern | Liquidity and Going Concern On June 30, 2023, the Company had cash, cash equivalents and restricted cash totaling $14.6 million, as compared to cash, cash equivalents and restricted cash totaling $11.8 million at December 31, 2022. During the six months ended June 30, 2023, the Company used $13.9 million of cash in its operating activities and $6.3 million for principal payments. The Company’s future results are subject to substantial risks and uncertainties. The Company has operated at a loss for its entire history and there can be no assurance that it will ever achieve or maintain profitability. The Company has historically funded its operations primarily with proceeds from sales of common stock, warrants and prefunded warrants for the purchase of common stock, sales of preferred stock, proceeds from the issuance of convertible debt and borrowings under loan and security agreements. The Company believes that current cash and cash equivalents will enable the Company to have sufficient cash past our anticipated PDUFA date of August 14, 2023. If there is a substantial delay in the approval of HEPZATO, the Company expects to need to raise additional capital under structures available to the Company, including debt and/or equity offerings, which may not be on favorable terms. In a delayed approval scenario, the Company will not have sufficient funds to meet its obligations within twelve months from the issuance date of these condensed consolidated financial statements. The Company’s capital commitments over the next twelve months include (a) $6.6 million to satisfy accounts payable, accrued expenses and lease liabilities and (b) $5.1 million of loan principal payments. Additional capital commitments beyond the next twelve months include (a) $0.1 million of lease liabilities; (b) $1.0 million for settlement of litigation with medac; (c) $0.5 million of loan principal payments; and (d) $5.0 million of convertible note principal payments, if the holders do not elect to convert the notes into equity.
Basis of Presentation | Basis of Presentation These interim condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (GAAP) and with the SEC’s instructions to Form 10-Q and Article 10 of Regulation S-X. They include the accounts of all wholly owned subsidiaries and all significant inter-company accounts and transactions have been eliminated in consolidation. The preparation of interim condensed consolidated financial statements requires management to make assumptions and estimates that impact the amounts reported. These interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company’s results of operations, financial position and cash flows for the interim periods ended June 30, 2023 and 2022; however, certain information and footnote disclosures normally included in our audited consolidated financial statements included in our Annual Report have been condensed or omitted as permitted by GAAP. It is important to note that the Company’s results of operations and cash flows for interim periods are not necessarily indicative of the results of operations and cash flows to be expected for a full fiscal year or any interim period.
Warrant Liabilities | Warrant Liabilities The Company determined the warrant liability was not in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, which classifies and measures certain financial instruments with characteristics of both liability and equity. Entities must consider whether to classify contracts that may be settled in its own stock, such as warrants, as equity of the entity or as an asset or liability. If an event that is not within the entity’s control could require net cash settlement, then the contract should be classified as an asset or a liability at their fair value at issuance with subsequent changes in fair value recorded in earnings. The Company has accounted for the Preferred Warrants as derivative instruments in accordance with ASC 815, Derivatives and Hedging. The Company classified the Preferred Warrants issued in conjunction with the Preferred Purchase Agreement (defined below) and the Common Warrants issued in conjunction with the Common Purchase Agreement as a liability due to the existence of a pre-specified volatility input to the Black-Scholes calculation which would be used to calculate the repurchase price of the Preferred Warrants and Common Warrants in the event of a Fundamental Transaction, as defined. The valuations of the warrant liability and Series F-1 Preferred Stock (defined below) were determined using option pricing models. These models use inputs such as the underlying price of the shares issued at the measurement date, volatility, risk free interest rate and expected life of the instrument. In addition, the Company used probabilities of the FDA approval of the HEPZATO KIT (“FDA Approval”) and of recording at least $10 million in quarterly U.S. revenue from the commercialization of HEPZATO as inputs to determine the fair value of warrants liability and Series F-1 Preferred Stock. The Company intends to adjust the fair value of the warranty liability at the end of each reporting period.
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted and Issued Accounting Pronouncements We have not been required to adopt any accounting standards that had a significant impact on our consolidated financial statements in the two years ended December 31, 2022. We do not expect any recently issued accounting standards to have a significant impact on our consolidated financial statements.
Revision of Previously Issued Quarterly Financial Statements | Revision of Previously Issued Quarterly Financial Statements In preparation of the Company’s audited financial statements as of and for year ended December 31, 2022, the Company determined it needed to correct previously reported share-based compensation expense for each quarter during 2022. The correction for share-based compensation increased the net loss in amount of $0.8 million for the first quarter of 2022, $0.5 million for the second quarter of 2022 and $0.4 million for the third quarter of fiscal 2022. The share-based compensation adjustment is a non-cash adjustment and did not have any impact on the cash balances for the Company. The following tables contain the financial information for the periods previously reported and have been updated to reflect the revisions of the Company’s financial statements. The revisions do not have an impact on the Company’s cash position. The Company has not amended its previously filed Quarterly Reports on Form 10-Q for the three quarterly periods ended September 30, 2022. The impact of the revision on the Company’s financial statements for the three and six months ended June 30, 2022 is reflected in the following table:
(In thousands) | As previously reported |  | Adjustment |  | As revised
Balance Sheet for June 30, 2022 (unaudited) |  |  |  |  |
Additional paid-in capital | $ | 435,922 |  |  | $ | 1,299 |  |  | $ | 437,221 |
Accumulated deficit | $ | (438,836) |  |  | $ | (1,299) |  |  | $ | (440,135) |
Consolidated Statement of Operations and Comprehensive Loss for the three months ended June 30, 2022 (unaudited) |  |  |  |  |
Research and development expenses | $ | 5,456 |  |  | $ | 150 |  |  | $ | 5,606 |
Selling, general and administrative expenses | 4,145 |  |  | 352 |  |  | 4,497 |
Total operating expenses | 9,601 |  |  | 502 |  |  | 10,103 |
Operating loss | (8,984) |  |  | (502) |  |  | (9,486) |
Net loss | (9,657) |  |  | (502) |  |  | (10,159) |
Total other comprehensive loss | (9,688) |  |  | (502) |  |  | (10,190) |
Basic and diluted loss per common share | $ | (1.18) |  |  | $ | (0.06) |  |  | $ | (1.24) |
Consolidated Statement of Operations and Comprehensive Loss for the six months June 30, 2022 (unaudited) |  |  |  |  |
Research and development expenses | $ | 9,696 |  |  | $ | 391 |  |  | $ | 10,087 |
Selling, general and administrative expenses | 7,791 |  |  | 908 |  |  | 8,699 |
Total operating expenses | 17,487 |  |  | 1,299 |  |  | 18,786 |
Operating loss | (16,527) |  |  | (1,299) |  |  | (17,826) |
Net loss | (17,860) |  |  | (1,299) |  |  | (19,159) |
Total other comprehensive loss | (17,889) |  |  | (1,299) |  |  | (19,188) |
Basic and diluted loss per common share | $ | (2.18) |  |  | $ | (0.16) |  |  | $ | (2.34) |
Consolidated statement of Stockholders’ Equity (Deficit) for the three months ended June 30, 2022 (unaudited) |  |  |  |  |
Compensation expense for issuance of stock options | $ | 1,617 |  |  | $ | 502 |  |  | $ | 2,119 |
Net loss | $ | (9,657) |  |  | $ | (502) |  |  | $ | (10,159) |
Consolidated statement of Stockholders’ Equity (Deficit) for the six months ended June 30, 2022 (unaudited) |  |  |  |  |
Compensation expense for issuance of stock options | $ | 3,091 |  |  | $ | 1,299 |  |  | $ | 4,390 |
Net loss | $ | (17,860) |  |  | $ | (1,299) |  |  | $ | (19,159) |
Consolidated Statement of Cash Flows for the six months ended June 30, 2022 (unaudited) |  |  |  |  |
Net loss | $ | (17,860) |  |  | $ | (1,299) |  |  | $ | (19,159) |
Stock option compensation expense | $ | 3,091 |  |  | $ | 1,299 |  |  | $ | 4,390 |

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