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Warrants to Acquire Shares of Common Stock | 9 Months Ended
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Sep. 30, 2018
Warrants and Rights Note Disclosure [Abstract] |
Warrants to Acquire Shares of Common Stock | Warrants to Acquire Shares of Common Stock The following is a summary of the Company's warrants to acquire shares of common stock activity for the nine months ended September 30, 2018 (in thousands):
Warrant Issuance | Outstanding, December 31, 2017 |  | Granted |  | Exercised |  | Canceled/Expired |  | Outstanding, September 30, 2018 |  | Expiration
July 2018 Offering | — |  |  | 15,268 |  |  | — |  |  | — |  |  | 15,268 |  |  | July 2023
Pre-funded July 2018 Offering | — |  |  | 4,675 |  |  | (2,525 | ) |  | — |  |  | 2,150 |  |  | July 2023
Series A Convertible Preferred | — |  |  | 1,384 |  |  | — |  |  |  |  | 1,384 |  |  | September 2023
2017 Equilibria | 316 |  |  | — |  |  | — |  |  |  |  | 316 |  |  | December 2022
Galena February 2017 | 567 |  |  | — |  |  | — |  |  | (535 | ) |  | 32 |  |  | February 2022
Galena Other | 80 |  |  | — |  |  | — |  |  | (6 | ) |  | 74 |  |  | January 2022
| 963 |  |  | 21,327 |  |  | (2,525 | ) |  | (541 | ) |  | 19,224 |  |  |
Warrants to acquire shares of common stock consist of warrants that may be settled in cash, which are liability-classified warrants, and equity-classified warrants. During the nine months ended September 30, 2018, a total of 534,333 of the Galena February 2017 liability-classified warrants to purchase shares of common stock were canceled under various warrant exchange agreements. The Company issued 54,613 shares of its common stock in exchange for the surrender and cancellation of warrants to acquire 121,667 shares of its common stock and $1.0 million in convertible promissory notes in exchange for the surrender and cancellation of warrants to acquire 412,667 shares of its common stock, as described in Note 7. The fair value of the common stock and promissory notes exchanged totaled $1.2 million, which exceeded the fair value of the warrant liability of the warrants canceled by $0.7 million and is recorded as loss on settlement of liability-classified warrants in the condensed consolidated statement of operations for the nine months ended September 30, 2018. In April 2018, $0.8 million of outstanding principal and accrued interest was converted into 118,644 shares of common stock. Warrants Classified as Liabilities Liability-classified warrants consist of warrants to acquire common stock issued in connection with previous equity financings for the Series A Convertible Preferred, Galena's February 2017 financing, and various other Galena equity financings that were assumed by the Company at the consummation of the Merger. These warrants may be settled in cash and were determined to not be indexed to the Company’s common stock. Prior to the consummation of the July 2018 Offering, the initial exercise price of the warrants to acquire shares of common stock in connection with the Series A Convertible Preferred was $6.59 per share of common stock, subject to standard adjustments for certain transactions affecting the Company’s securities (such as stock dividends, and stock splits). From the original issue date until the one-year anniversary of a qualified offering, the initial exercise price and number of warrants to acquire shares of common stock are subject to anti-dilution protection in the event of non-exempt equity issuances at a price per share lower than the then exercise price (the "Base Share Price"). Simultaneously with the consummation of each non-exempt equity issuance the exercise price shall be reduced to equal the Base Share Price. Such adjustment shall be made whenever such common stock or common stock equivalents are issued. The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the condensed consolidated statement of operations as change in fair value of warrant liability. The fair value of the warrants is estimated using a Black-Scholes pricing model with the following inputs:
As of September 30, 2018
Warrant Issuance | Outstanding (in thousands) |  | Strike price (per share) |  | Expected term (years) |  | Volatility % |  | Risk-free rate %
Series A Convertible Preferred | 1,384 |  |  | $ | 2.10 |  |  | 5.01 |  | 83.18 | % |  | 2.94 | %
Galena February 2017 | 32 |  |  | $ | 33.00 |  |  | 3.38 |  | 85.39 | % |  | 2.25 | %
Galena Other | 74 |  |  | $ | 888.22 |  |  | 2.68 |  | 85.96 | % |  | 2.32 | %
As of December 31, 2017
Warrant Issuance | Outstanding (in thousands) |  | Strike price (per share) |  | Expected term (years) |  | Volatility % |  | Risk-free rate %
Galena February 2017 | 567 |  |  | $ | 13.00 |  |  | 4.12 |  | 79.29 | % |  | 2.09 | %
Galena Other | 80 |  |  | $ | 28.40 |  |  | 3.19 |  | 74.05 | % |  | 2.09 | %
The expected volatility assumptions are based on the Company's implied volatility in combination with the implied volatilities of similar publicly traded entities. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero coupon rates in effect at the time of valuation. The dividend yield used in the pricing model is zero, because the Company has no present intention to pay cash dividends. The changes in fair value of the warrant liability for the nine months ended September 30, 2018 were as follows (in thousands):
Warrant Issuance | Warrant liability, December 31, 2017 |  | Fair value of warrants granted |  | Fair value of warrants canceled |  | Adjustment to exercise price of warrants |  | Change in fair value of warrants |  | Warrant liability, September 30, 2018
Series A Convertible Preferred | $ | — |  |  | $ | 5,039 |  |  | $ | — |  |  | $ | 491 |  |  | $ | (4,558 | ) |  | $ | 972 |
Galena February 2017 | 1,305 |  |  | — |  |  | (524 | ) |  | — |  |  | (778 | ) |  | 3 |
Galena Other | 4 |  |  | — |  |  | — |  |  | — |  |  | (4 | ) |  | — |
| $ | 1,309 |  |  | $ | 5,039 |  |  | $ | (524 | ) |  | $ | 491 |  |  | $ | (5,340 | ) |  | $ | 975 |
Warrants Classified as Equity The Company issued warrants to acquire 316,163 shares of the its common stock at an exercise price of $7.42 per share, maturing five years from issuance, to EQC Private Markets SAC Fund Ltd-EQC Biotech Sely I Fund on December 29, 2017. These warrants are recorded in equity at fair value upon issuance, and not as liabilities, and are not subject to adjustment to fair value in subsequent reporting periods. The fair value of the warrants granted was $5.60 per share using the Black-Scholes pricing model with the fair value assumptions for the grant including a volatility of 90.10%, expected term of five years, risk free rate of 2.20%, and a dividend rate of 0.00. The pre-funded warrants exercisable for shares of common stock and warrants to acquire shares of common stock issued during the July 2018 offering are recorded in equity upon issuance as described in Note 9.

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- Definition The entire disclosure for freestanding option contracts issued by an entity that are indexed to, and potentially settled in, an entity's own stock. Includes disclosure on the strike price and the number of shares to which the contract is indexed, the settlement date or dates of the contract, and the issuer's accounting for the contract. If the terms of the contract provide settlement alternatives, those settlement alternatives are disclosed, including who controls the settlement alternatives, and the maximum number of shares that could be required to be issued, to net share settle the contract, if applicable. If a contract does not have a fixed or determinable maximum number of shares that could be required to be issued, the fact that a potentially infinite number of shares that may be required to be issued to settle the contract is disclosed. Disclosure also includes the contract's current fair value for each settlement alternative and how changes in the price of the issuer's equity instruments affect those settlement amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2229355 + Details
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