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Financial Condition

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Financial Condition

2. FINANCIAL CONDITION

Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and development programs, clinical trials conducted in connection with the Company’s product candidates, and applications and submissions to the U.S. Food and Drug Administration. We have not generated significant revenue and have incurred significant net losses in each year since our inception. We have incurred approximately $291 million of cumulated net losses. As of December 31, 2019, we had approximately $16.7 million in cash, investment securities, interest receivable and deferred income tax asset. We have substantial future capital requirements to continue our research and development activities and advance our product candidates through various development stages. The Company believes these expenditures are essential for the commercialization of its technologies.

The Company expects its operating losses to continue for the foreseeable future as it continues its product development efforts, and when it undertakes marketing and sales activities. The Company’s ability to achieve profitability is dependent upon its ability to obtain governmental approvals, manufacture, and market and sell its new product candidates. There can be no assurance that the Company will be able to commercialize its technology successfully or that profitability will ever be achieved. The operating results of the Company have fluctuated significantly in the past. We have substantial future capital requirements associated with our continued research and development activities and to advance our product candidates through various stages of development. The Company believes these expenditures are essential for the commercialization of its technologies. In January 2020, the World Health Organization (WHO) declared an outbreak of coronavirus, COVID-19, to be a “Public Health Emergency of International Concern,” and the U.S. Department of Health and Human Services declared a public health emergency to aid the U.S. healthcare community in responding to COVID-19. This virus continues to spread globally and, as of late March 2020, has spread to over 100 countries, including the United States. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic.

The disruptions caused by COVID-19 may also disrupt the clinical trials process and enrollment of patients. This may delay commercialization efforts. The Company is currently monitoring its operating activities in light of these events and it is reasonably possible that the virus could have a negative effect on the Company’s financial condition and results of operations, the specific impact is not readily determinable as of the date of these financial statements.

The actual amount of funds the Company will need to operate is subject to many factors, some of which are beyond the Company’s control. These factors include the following:

	●	the progress of research activities;

	●	the number and scope of research programs;

	●	the progress of preclinical and clinical development activities;

	●	the progress of the development efforts of parties with whom the Company has entered into research and development agreements;

	●	the costs associated with additional clinical trials of product candidates;

	●	the ability to maintain current research and development licensing arrangements and to establish new research and development and licensing arrangements;

	●	the ability to achieve milestones under licensing arrangements;

	●	the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

	●	the costs and timing of regulatory approvals.

The Company has based its estimate on assumptions that may prove to be wrong. The Company may need to obtain additional funds sooner or in greater amounts than it currently anticipates. Potential sources of financing include strategic relationships, public or private sales of the Company’s shares or debt, the additional sales from the sale of its State of New Jersey net operating losses in the future and other sources. If the Company raises funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of existing stockholders may be diluted.

During 2019 and 2018, the Company submitted an application to sell a portion of the Company’s New Jersey NOLs as part of the Technology Business Tax Certificate Program sponsored by The New Jersey Economic Development Authority. Under the program, emerging biotechnology companies with unused NOLs and unused research and development credits are allowed to sell these benefits to other companies. As more fully discussed in Note 9, the Company received approval from the New Jersey Economic Development Authority to sell $1.9 million of its New Jersey net operating losses recognizing a tax benefit for the year ended December 31, 2019 for the net proceeds (approximately $1.8 million) by reducing the deferred income tax valuation allowance. In early 2020, the Company entered into an agreement to sell these net operating losses and expects to receive net proceeds of approximately $1.8 million in the second quarter of 2020. In 2018, the Company completed the sale of a portion of its New Jersey net operating losses for 2011 - 2017 totaling approximately $11.1 for net proceeds of approximately $10.4 million in December 2018. The proceeds of $10.4 million were reflected as a tax benefit for the year ended December 31, 2018. The Company has approximately $2.1 million in future tax benefits remaining under the NOL Program for future years.

With $16.7 million in cash, investment securities, interest receivable and deferred income tax asset at December 31, 2019, as well as the $6.4 million raised in equity financings so far in 2020 (Note 10), the Company believes it has sufficient capital resources to fund its operations and financial commitments thru mid-2021. The Company will be required to obtain additional funding to continue development of its current product candidates within the anticipated time periods, if at all, and to continue to fund operations. As more fully discussed in Note 10, the Company has approximately $15 million available for future sale of equity securities under the common stock sales agreement with JonesTrading International Services LLC.