10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                to                               

Commission File Number: 001-36332

 

ALDEYRA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-1968197

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

131 Hartwell Avenue, Suite 320

 

 

Lexington, MA

 

02421

(Address of principal executive offices)

 

(Zip Code)

 

(781) 761-4904

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes   ☒      No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes   ☒      No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company or an emerging growth company. See the definitions of the “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes   ☐      No  

Securities registered pursuant to 12(b) of the Act:

 

Title of Class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.001 par value per share

ALDX

The Nasdaq Stock Market LLC

 

As of August 3, 2021, there were 57,864,035 shares of the registrant’s common stock issued and outstanding.

 

 

 

 


 

Aldeyra Therapeutics, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2021

INDEX

 

 

Page

PART I – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements:

3

 

Consolidated Balance Sheets at June 30, 2021 (Unaudited) and December 31, 2020

3

 

Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (Unaudited)

4

 

Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2021 and 2020 (Unaudited)

5

 

Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)

8

 

Notes to Condensed Consolidated Financial Statements

9

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

25

ITEM 4.

Controls and Procedures

25

PART II – OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

26

ITEM 1A.

Risk Factors

26

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

63

ITEM 3.

Defaults Upon Senior Securities

63

ITEM 4.

Mine Safety Disclosures

63

ITEM 5.

Other Information

63

ITEM 6.

Exhibits

64

Signatures

65

 

2


 

Part I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

 

 

 

 

 

2021

 

 

December 31,

 

 

 

(unaudited)

 

 

2020

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

124,739,010

 

 

$

52,858,311

 

Cash equivalent - reverse repurchase agreements

 

 

125,000,000

 

 

 

25,000,000

 

Prepaid expenses and other current assets

 

 

6,521,718

 

 

 

5,200,957

 

Total current assets

 

 

256,260,728

 

 

 

83,059,268

 

Right-of-use assets

 

 

118,401

 

 

 

233,310

 

Fixed assets, net

 

 

48,083

 

 

 

59,925

 

Total assets

 

$

256,427,212

 

 

$

83,352,503

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,094,461

 

 

$

381,638

 

Accrued expenses

 

 

6,196,300

 

 

 

8,134,765

 

Current portion of credit facility

 

 

 

 

 

3,659,776

 

Current portion of operating lease liabilities

 

 

118,401

 

 

 

233,310

 

Total current liabilities

 

 

7,409,162

 

 

 

12,409,489

 

Long-term debt

 

 

15,338,105

 

 

 

11,434,456

 

Total liabilities

 

 

22,747,267

 

 

 

23,843,945

 

Commitments and contingencies (Notes 14 and 15)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, voting, $0.001 par value; 150,000,000 authorized and 57,997,345
   and
38,667,491 shares issued and outstanding, respectively

 

 

57,997

 

 

 

38,667

 

Additional paid-in capital

 

 

496,764,448

 

 

 

296,385,619

 

Accumulated other comprehensive income

 

 

 

 

 

 

Accumulated deficit

 

 

(263,142,500

)

 

 

(236,915,728

)

Total stockholders’ equity

 

 

233,679,945

 

 

 

59,508,558

 

Total liabilities and stockholders’ equity

 

$

256,427,212

 

 

$

83,352,503

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

11,474,446

 

 

$

4,885,875

 

 

$

19,200,788

 

 

$

11,519,478

 

General and administrative

 

 

3,068,652

 

 

 

2,220,003

 

 

 

6,173,355

 

 

 

5,224,844

 

Loss from operations

 

 

(14,543,098

)

 

 

(7,105,878

)

 

 

(25,374,143

)

 

 

(16,744,322

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

39,665

 

 

 

71,710

 

 

 

63,427

 

 

 

281,809

 

Interest expense

 

 

(433,477

)

 

 

(486,048

)

 

 

(916,056

)

 

 

(925,863

)

Total other income (expense), net

 

 

(393,812

)

 

 

(414,338

)

 

 

(852,629

)

 

 

(644,054

)

Net loss

 

$

(14,936,910

)

 

$

(7,520,216

)

 

$

(26,226,772

)

 

$

(17,388,376

)

Net loss per share - basic and diluted

 

$

(0.28

)

 

$

(0.25

)

 

$

(0.52

)

 

$

(0.59

)

Weighted average common shares outstanding - basic and diluted

 

 

54,280,393

 

 

 

30,118,456

 

 

 

49,979,545

 

 

 

29,586,148

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(14,936,910

)

 

$

(7,520,216

)

 

$

(26,226,772

)

 

$

(17,388,376

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities, net of tax

 

 

 

 

 

(52,840

)

 

 

 

 

 

(1,112

)

Total other comprehensive income

 

$

 

 

$

(52,840

)

 

$

 

 

$

(1,112

)

Comprehensive loss

 

$

(14,936,910

)

 

$

(7,573,056

)

 

$

(26,226,772

)

 

$

(17,389,488

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

Stockholders' Equity

 

 

 

Common Voting Stock

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in Capital

 

 


Other
Comprehensive
Income/(Loss),
net of tax

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity

 

Balance, December 31, 2020

 

 

38,667,491

 

 

$

38,667

 

 

$

296,385,619

 

 

$

 

 

$

(236,915,728

)

 

$

59,508,558

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,465,555

 

 

 

 

 

 

 

 

 

3,465,555

 

Release of restrictions on Helio
   founders’ shares

 

 

70,398

 

 

 

70

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection
with Helio Vision, Inc. acquisition milestone

 

 

246,562

 

 

 

247

 

 

 

2,499,744

 

 

 

 

 

 

 

 

 

2,499,991

 

Issuance of common stock, net of
   issuance costs

 

 

18,091,947

 

 

 

18,092

 

 

 

189,793,519

 

 

 

 

 

 

 

 

 

189,811,611

 

Issuance of common stock, exercise
   of stock options

 

 

631,217

 

 

 

631

 

 

 

4,610,496

 

 

 

 

 

 

 

 

 

4,611,127

 

Issuance of common stock, employee
   stock purchase plan

 

 

2,786

 

 

 

3

 

 

 

9,872

 

 

 

 

 

 

 

 

 

9,875

 

Issuance of common stock, vested
   restricted stock awards

 

 

286,944

 

 

 

287

 

 

 

(287

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,226,772

)

 

 

(26,226,772

)

Balance, June 30, 2021

 

 

57,997,345

 

 

$

57,997

 

 

$

496,764,448

 

 

$

 

 

$

(263,142,500

)

 

$

233,679,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

28,656,832

 

 

$

28,657

 

 

$

247,409,793

 

 

$

5,866

 

 

$

(199,361,999

)

 

$

48,082,317

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,696,041

 

 

 

 

 

 

 

 

 

3,696,041

 

Release of restrictions on Helio
   founders’ shares

 

 

202,051

 

 

 

202

 

 

 

(202

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of
   issuance costs

 

 

3,974,068

 

 

 

3,974

 

 

 

18,266,514

 

 

 

 

 

 

 

 

 

18,270,488

 

Issuance of common stock,
exercise of stock options

 

 

14,448

 

 

 

14

 

 

 

60,405

 

 

 

 

 

 

 

 

 

60,419

 

Issuance of common stock, employee
   stock purchase plan

 

 

14,151

 

 

 

14

 

 

 

69,875

 

 

 

 

 

 

 

 

 

69,889

 

Issuance of common stock, vested
   restricted stock awards

 

 

135,796

 

 

 

136

 

 

 

(136

)

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(1,112

)

 

 

 

 

 

(1,112

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,388,376

)

 

 

(17,388,376

)

Balance, June 30, 2020

 

 

32,997,346

 

 

$

32,997

 

 

$

269,502,290

 

 

$

4,754

 

 

$

(216,750,375

)

 

$

52,789,666

 

 

6


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

Stockholders' Equity

 

 

 

Common Voting Stock

 

 

 

 

 

Accumulated
Other

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in Capital

 

 

Comprehensive
Income/(Loss),
net of tax

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity

 

Balance, March 31, 2021

 

 

47,651,035

 

 

$

47,651

 

 

$

374,232,411

 

 

 

 

 

$

(248,205,590

)

 

$

126,074,472

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,173,385

 

 

 

 

 

 

 

 

 

2,173,385

 

Release of restrictions on Helio
   founders’ shares

 

 

35,393

 

 

 

35

 

 

 

(35

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of
   issuance costs

 

 

10,223,526

 

 

 

10,224

 

 

 

119,751,937

 

 

 

 

 

 

 

 

 

119,762,161

 

Issuance of common stock, exercise
   of stock options

 

 

87,391

 

 

 

87

 

 

 

606,750

 

 

 

 

 

 

 

 

 

606,837

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,936,910

)

 

 

(14,936,910

)

Balance, June 30, 2021

 

 

57,997,345

 

 

$

57,997

 

 

$

496,764,448

 

 

$

 

 

$

(263,142,500

)

 

$

233,679,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

 

 

29,506,829

 

 

$

29,507

 

 

$

252,615,578

 

 

$

57,594

 

 

$

(209,230,159

)

 

$

43,472,520

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,742,389

 

 

 

 

 

 

 

 

 

1,742,389

 

Release of restrictions on Helio
   founders’ shares

 

 

59,896

 

 

 

60

 

 

 

(60

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of
   issuance costs

 

 

3,411,399

 

 

 

3,411

 

 

 

15,094,253

 

 

 

 

 

 

 

 

 

15,097,664

 

Issuance of common stock, exercise
   of stock options

 

 

12,448

 

 

 

12

 

 

 

50,137

 

 

 

 

 

 

 

 

 

50,149

 

Issuance of common stock, vested
   restricted stock awards

 

 

6,774

 

 

 

7

 

 

 

(7

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(52,840

)

 

 

 

 

 

(52,840

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,520,216

)

 

 

(7,520,216

)

Balance, June 30, 2020

 

 

32,997,346

 

 

$

32,997

 

 

$

269,502,290

 

 

$

4,754

 

 

$

(216,750,375

)

 

$

52,789,666

 

 

7


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

Six Months Ended June 30,

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(26,226,772

)

 

$

(17,388,376

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

4,705,218

 

 

 

3,696,041

 

Non-cash interest expense

 

 

243,873

 

 

 

283,010

 

Net amortization of premium on debt securities available for sale

 

 

 

 

 

(87,452

)

Depreciation and amortization expense

 

 

134,557

 

 

 

144,687

 

Change in assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(1,254,761

)

 

 

(705,371

)

Accounts payable

 

 

712,823

 

 

 

(591,613

)

Accrued expenses

 

 

(859,046

)

 

 

(8,289,732

)

Net cash used in operating activities

 

 

(22,544,108

)

 

 

(22,938,806

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisitions of fixed assets

 

 

(7,806

)

 

 

 

Purchases of marketable securities

 

 

 

 

 

(5,776,090

)

Sales and maturities of marketable securities

 

 

 

 

 

29,300,000

 

Net cash (used in) provided by investing activities

 

 

(7,806

)

 

 

23,523,910

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

189,811,611

 

 

 

15,547,592

 

Proceeds from exercise of stock options

 

 

4,611,127

 

 

 

60,419

 

Proceeds from employee stock purchase plan

 

 

9,875

 

 

 

69,889

 

Net cash provided by financing activities

 

 

194,432,613

 

 

 

15,677,900

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

171,880,699

 

 

 

16,263,004

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

77,858,311

 

 

 

44,425,830

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

249,739,010

 

 

$

60,688,834

 

SUPPLEMENTAL INFORMATION AND DISCLOSURES OF NONCASH ACTIVITIES:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

681,333

 

 

$

693,875

 

SUPPLEMENTAL INFORMATION AND DISCLOSURES OF NONCASH ACTIVITIES:

 

 

 

 

 

 

Offering costs not yet paid

 

$

66,000

 

 

$

 

Common stock issued in connection with Helio Vision, Inc. acquisition milestone

 

$

2,499,991

 

 

$

 

Receivable for proceeds from the issuance of common stock, net of issuance costs

 

$

 

 

$

2,722,896

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8


 

ALDEYRA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. NATURE OF BUSINESS

Aldeyra Therapeutics, Inc., together with its wholly-owned subsidiaries (the “Company” or “Aldeyra”), a Delaware corporation, is a clinical-stage biotechnology company devoted to developing and commercializing next-generation medicines to improve the lives of patients with immune-mediated diseases.

The Company’s principal activities to date include raising capital and research and development activities.

2. BASIS OF PRESENTATION

The accompanying interim condensed consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on March 11, 2021 (the “2020 Form 10-K”).

The financial information as of June 30, 2021, and the three and six months ended June 30, 2021 and 2020, respectively, is unaudited. In the opinion of management all adjustments, consisting only of normal recurring adjustments considered necessary for the fair presentation of financial position, results of operations, and cash flows at the dates and for the periods presented, have been included. The balance sheet data as of December 31, 2020 was derived from audited consolidated financial statements. The results of the Company’s operations for any interim periods are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year.

 

Based on its current operating plan, the Company believes that its cash and cash equivalents, as of June 30, 2021, will be sufficient to fund currently projected operating expenses through the end of 2023, including potential new drug application (“NDA”) submission for reproxalap; initial commercialization of reproxalap, if approved; and continued early and late-stage development of our product candidates in ocular and systemic immune-mediated diseases. As a result of the COVID-19 pandemic, clinical site availability, staffing, and patient recruitment have been negatively affected and the timelines to complete the Company’s clinical trials may be delayed. The Company’s assessment of its liquidity and capital resources includes an estimate of the financial impacts of these changes. The Company will need to secure additional funding in the future, from one or more equity or debt financings, collaborations, or other sources, in order to carry out all of the Company’s planned research and development activities and regulatory activities; commercialize product candidates; or conduct any substantial, additional development requirements requested by the FDA. Additional funding may not be available to the Company on acceptable terms, or at all. If the Company is unable to secure additional capital, it will be required to significantly decrease the amount of planned expenditures and may be required to cease operations.

Curtailment of operations would cause significant delays in the Company’s efforts to develop and introduce its products to market, which is critical to the realization of its business plan and the future operations of the Company.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, including fair value estimates for investments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. The Company’s management evaluates its estimates and assumptions on an ongoing basis. Management’s most significant estimates in the Company’s consolidated financial statements include, but are not limited to, estimates related to clinical trial accruals, estimates related to prepaid and accrued research and development costs, acquired in-process research and development (“IPR&D”) expense, contingent liabilities, and accounting for income taxes and related valuation allowance. Although these estimates and assumptions are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

9


 

Summary of Significant Accounting Policies

There were no changes to significant accounting policies during the six months ended June 30, 2021, as compared to the those identified in the 2020 Form 10-K.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires that credit losses be reported as an allowance using an expected losses model, representing the entity’s current estimate of credit losses expected to be incurred. The accounting guidance currently in effect is based on an incurred loss model. For available-for-sale debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. The amendments under ASU 2016-13 are effective for interim and annual fiscal periods beginning after December 15, 2022. The Company is continuing to evaluate the impact of ASU 2016-13 but does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. 

3. Helio Vision Acquisition

On January 28, 2019 (the “Closing Date”), the Company acquired Helio Vision, Inc. (“Helio”). As a result of the acquisition, the Company initially issued an aggregate of 1,160,444 shares of common stock to the former securityholders and an advisor of Helio. The founders of Helio were issued 568,627 shares and non-founders were issued 591,817 shares. The Helio founders’ shares are subject to vesting based on continued service to the Company over three years from the Closing Date, of which, 85% are vested as of June 30, 2021. The Company recognizes the expense associated with the founders’ restricted shares as research and development compensation expense on a straight-line basis as the shares vest over the three-year period. For the six months ended June 30, 2021 and June 30, 2020, the Company recorded $0.6 million and $0.7 million of research and development compensation expense, respectively, for the founders’ restricted shares.

In January 2021, pursuant to the terms of the acquisition agreement, the Company issued 246,562 shares of its common stock to the former securityholders of Helio. In addition, the Company, subject to the conditions of the acquisition agreement, is contingently obligated to make additional payments to the former securityholders of Helio as follows:(a) $10.0 million of common stock following approval by the FDA of a new drug approval application for the prevention and/or treatment of proliferative vitreoretinopathy or a substantially similar label prior to the 10th anniversary of the Closing Date; and (b) $2.5 million of common stock following FDA approval of a new drug application for an indication (other than proliferative vitreoretinopathy) prior to the 12th anniversary of the Closing Date (the shares of common stock issuable pursuant to the preceding clauses (a) and (b) are referred to herein as the “Milestone Shares”), provided that in no event shall the Company be obligated to issue more than an aggregate of 5,248,885 shares of common stock (including the shares issued in January 2021). Additionally, in the event of certain change of control or divestitures by the Company, certain former convertible noteholders of Helio will be entitled to a tax gross-up payment in an amount not to exceed $1.0 million.

The Company determined that liability accounting is not required for the Milestone Shares under FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company also determined that the Milestone Shares meet the scope exception as a derivative under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), from inception of the Milestone Shares through June 30, 2021. Accordingly, the Milestone Shares are evaluated under FASB ASC Topic 450, Contingencies (“ASC 450”) and the Company will record a liability related to the Milestone Shares if the milestones are achieved, and the obligation to make additional payment(s) becomes probable. At that time, the Company will record the cost of the Milestone Shares issued to the founders as compensation expense and to the Helio non-founders as IPR&D expense if there is no alternative future use. At December 31, 2020, the Milestones Shares associated with the preceding clause (a) were considered probable of issuance and $2.5 million was accrued as contingent consideration payable in stock and the Company recorded $1.8 million to IPR&D (the “Milestone IPR&D”), which included a $0.5 million income tax benefit, and $1.2 million of compensation expense related to these Milestone Shares, which amounted to 246,562 shares and were issued during the quarter ended March 31, 2021. No other milestones related to the Milestone Shares are probable of being achieved as of June 30, 2021.

4. NET LOSS PER SHARE

As of June 30, 2021 and 2020, diluted weighted average common shares outstanding is equal to basic weighted average common shares due to the Company’s net loss position.

10


 

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact:

 

 

 

Three and Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Options to purchase common stock

 

 

4,490,867

 

 

 

5,147,065

 

Restricted stock units

 

 

501,254

 

 

 

929,817

 

Nonvested founder shares (1)

 

 

82,458

 

 

 

224,422

 

Total of common stock equivalents

 

 

5,074,579

 

 

 

6,301,304

 

 

(1) Represents 82,458 and 224,422 shares of common stock that are issued and outstanding but that were subject to future vesting based on service requirements at June 30, 2021 and 2020, respectively, and are, accordingly, not included in stockholders’ equity.

 

5. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

Cash and cash equivalents, were comprised of:

 

 

 

June 30, 2021

 

 

 

Carrying
Amount

 

 

Unrecognized
Gain

 

 

Unrecognized
Loss

 

 

Estimated
Fair Value

 

 

Cash and Cash
Equivalents

 

Cash

 

$

120,354,749

 

 

$

 

 

$

 

 

$

120,354,749

 

 

$

120,354,749

 

Money market funds

 

 

4,384,261

 

 

 

 

 

 

 

 

 

4,384,261

 

 

 

4,384,261

 

Reverse repurchase agreements

 

 

125,000,000

 

 

 

 

 

 

 

 

 

125,000,000

 

 

 

125,000,000

 

Total Cash and cash equivalents

 

$

249,739,010

 

 

$

 

 

$

 

 

$

249,739,010

 

 

$

249,739,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

Carrying
Amount

 

 

Unrecognized
Gain

 

 

Unrecognized
Loss

 

 

Estimated
Fair Value

 

 

Cash and Cash
Equivalents