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 September 30, 2023

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)

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ALDX

The Nasdaq Stock Market LLC

 

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

 

As of November 1, 2023, there were 58,822,083 shares of the registrant’s common stock issued and outstanding.

 

 

 


 

Aldeyra Therapeutics, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2023

INDEX

 

 

Page

PART I – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements:

3

 

Consolidated Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022

3

 

Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

4

 

Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

5

 

Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited)

8

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

ITEM 2.

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

20

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

28

ITEM 4.

Controls and Procedures

29

PART II – OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

30

ITEM 1A.

Risk Factors

30

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

ITEM 3.

Defaults Upon Senior Securities

77

ITEM 4.

Mine Safety Disclosures

77

ITEM 5.

Other Information

77

ITEM 6.

Exhibits

78

Signatures

79

 

2


 

Part I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

September 30,

 

 

 

 

 

 

2023

 

 

December 31,

 

 

 

(unaudited)

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

143,334,888

 

 

$

144,419,364

 

Marketable securities

 

 

 

 

 

29,881,520

 

Prepaid expenses and other current assets

 

 

3,875,126

 

 

 

6,722,229

 

Total current assets

 

 

147,210,014

 

 

 

181,023,113

 

Right-of-use assets

 

 

64,459

 

 

 

249,265

 

Fixed assets, net

 

 

7,774

 

 

 

19,279

 

Total assets

 

$

147,282,247

 

 

$

181,291,657

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

247,194

 

 

$

133,625

 

Accrued expenses

 

 

7,843,389

 

 

 

14,065,885

 

Current portion of long-term debt

 

 

13,461,108

 

 

 

911,763

 

Operating lease liabilities

 

 

65,628

 

 

 

249,265

 

Total current liabilities

 

 

21,617,319

 

 

 

15,360,538

 

Long-term debt, net of current portion

 

 

2,657,189

 

 

 

14,923,090

 

Total liabilities

 

 

24,274,508

 

 

 

30,283,628

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 15,000,000 shares authorized, none
   issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 150,000,000 authorized and 59,187,326
   and
58,560,078 shares issued and outstanding, respectively

 

 

59,187

 

 

 

58,560

 

Additional paid-in capital

 

 

512,454,738

 

 

 

507,770,045

 

Accumulated other comprehensive loss

 

 

 

 

 

(103,938

)

Accumulated deficit

 

 

(389,506,186

)

 

 

(356,716,638

)

Total stockholders’ equity

 

 

123,007,739

 

 

 

151,008,029

 

Total liabilities and stockholders’ equity

 

$

147,282,247

 

 

$

181,291,657

 

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 September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

6,961,669

 

 

$

11,539,620

 

$

25,160,437

 

 

$

38,344,594

 

General and administrative

 

 

2,588,701

 

 

 

3,244,936

 

 

11,535,868

 

 

 

10,638,602

 

Loss from operations

 

 

(9,550,370

)

 

 

(14,784,556

)

 

(36,696,305

)

 

 

(48,983,196

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,902,242

 

 

 

648,242

 

 

5,463,928

 

 

 

1,094,001

 

Interest expense

 

 

(538,743

)

 

 

(416,917

)

 

(1,557,171

)

 

 

(1,233,279

)

Total other income (expense), net

 

 

1,363,499

 

 

 

231,325

 

 

3,906,757

 

 

 

(139,278

)

Net loss

 

$

(8,186,871

)

 

$

(14,553,231

)

$

(32,789,548

)

 

$

(49,122,474

)

Net loss per share - basic and diluted

 

$

(0.14

)

 

$

(0.25

)

$

(0.56

)

 

$

(0.84

)

Weighted average common shares outstanding - basic and diluted

 

 

58,990,189

 

 

 

58,457,863

 

 

58,858,631

 

 

 

58,352,991

 

 

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(8,186,871

)

 

$

(14,553,231

)

 

$

(32,789,548

)

 

$

(49,122,474

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities, net of tax

 

 

 

 

 

30

 

 

 

103,938

 

 

 

(285,733

)

Total other comprehensive income (loss)

 

$

 

 

$

30

 

 

$

103,938

 

 

$

(285,733

)

Comprehensive loss

 

$

(8,186,871

)

 

$

(14,553,201

)

 

$

(32,685,610

)

 

$

(49,408,207

)

 

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 Stock

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in Capital

 

 

Other
Comprehensive
Income/(Loss),
net of tax

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity

 

Balance, December 31, 2022

 

 

58,560,078

 

 

$

58,560

 

 

$

507,770,045

 

 

$

(103,938

)

 

$

(356,716,638

)

 

$

151,008,029

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,943,228

 

 

 

 

 

 

 

 

 

4,943,228

 

Issuance of common stock, exercise
   of stock options

 

 

297,703

 

 

 

298

 

 

 

163,643

 

 

 

 

 

 

 

 

 

163,941

 

Issuance of common stock, employee
   stock purchase plan

 

 

26,168

 

 

 

26

 

 

 

111,076

 

 

 

 

 

 

 

 

 

111,102

 

Issuance of common stock, vested
   restricted stock awards

 

 

377,184

 

 

 

377

 

 

 

(377

)

 

 

 

 

 

 

 

 

 

Common stock withheld for tax obligations on
  option exercise

 

 

(73,807

)

 

 

(74

)

 

 

(532,877

)

 

 

 

 

 

 

 

 

(532,951

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

103,938

 

 

 

 

 

 

103,938

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,789,548

)

 

 

(32,789,548

)

Balance, September 30, 2023

 

 

59,187,326

 

 

$

59,187

 

 

$

512,454,738

 

 

$

 

 

$

(389,506,186

)

 

$

123,007,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

58,081,215

 

 

$

58,081

 

 

$

500,369,444

 

 

$

 

 

$

(294,692,002

)

 

$

205,735,523

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,646,241

 

 

 

 

 

 

 

 

 

4,646,241

 

Release of restrictions on Helio
   founders’ shares

 

 

10,890

 

 

 

11

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, exercise
   of stock options

 

 

236,962

 

 

 

237

 

 

 

1,123,190

 

 

 

 

 

 

 

 

 

1,123,427

 

Issuance of common stock, employee
   stock purchase plan

 

 

28,485

 

 

 

29

 

 

 

96,636

 

 

 

 

 

 

 

 

 

96,665

 

Issuance of common stock, vested
   restricted stock awards

 

 

202,526

 

 

 

202

 

 

 

(202

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(285,733

)

 

 

 

 

 

(285,733

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,122,474

)

 

 

(49,122,474

)

Balance, September 30, 2022

 

 

58,560,078

 

 

$

58,560

 

 

$

506,235,298

 

 

$

(285,733

)

 

$

(343,814,476

)

 

$

162,193,649

 

 

6


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

Stockholders' Equity

 

 

 

Common Stock

 

 

 

 

 

Accumulated
Other

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in Capital

 

 

Comprehensive
Income/(Loss),
net of tax

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity

 

Balance, June 30, 2023

 

 

58,801,207

 

 

$

58,801

 

 

$

511,143,713

 

 

$

 

 

$

(381,319,315

)

 

$

129,883,199

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,627,170

 

 

 

 

 

 

 

 

 

1,627,170

 

Issuance of common stock, exercise
   of stock options

 

 

288,099

 

 

 

288

 

 

 

158,360

 

 

 

 

 

 

 

 

 

158,648

 

Issuance of common stock, employee
   stock purchase plan

 

 

9,896

 

 

 

10

 

 

 

58,534

 

 

 

 

 

 

 

 

 

58,544

 

Issuance of common stock, vested
   restricted stock awards

 

 

161,931

 

 

 

162

 

 

 

(162

)

 

 

 

 

 

 

 

 

 

Common stock withheld for tax obligations on
  option exercise

 

 

(73,807

)

 

 

(74

)

 

 

(532,877

)

 

 

 

 

 

 

 

 

(532,951

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,186,871

)

 

 

(8,186,871

)

Balance, September 30, 2023

 

 

59,187,326

 

 

$

59,187

 

 

$

512,454,738

 

 

$

 

 

$

(389,506,186

)

 

$

123,007,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

 

58,301,491

 

 

$

58,301

 

 

$

503,517,715

 

 

$

(285,763

)

 

$

(329,261,245

)

 

$

174,029,008

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,521,074

 

 

 

 

 

 

 

 

 

1,521,074

 

Issuance of common stock, exercise
   of stock options

 

 

236,962

 

 

 

237

 

 

 

1,123,190

 

 

 

 

 

 

 

 

 

1,123,427

 

Issuance of common stock, employee
stock purchase plan

 

 

21,625

 

 

 

22

 

 

 

73,319

 

 

 

 

 

 

 

 

 

73,341

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,553,231

)

 

 

(14,553,231

)

Balance, September 30, 2022

 

 

58,560,078

 

 

$

58,560

 

 

$

506,235,298

 

 

$

(285,733

)

 

$

(343,814,476

)

 

$

162,193,649

 

 

7


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(32,789,548

)

 

$

(49,122,474

)

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

 

 

 

 

 

 

Stock-based compensation

 

 

6,553,112

 

 

 

5,467,684

 

Non-cash interest expense

 

 

283,444

 

 

 

248,397

 

Net amortization of premium on marketable securities

 

 

(14,542

)

 

 

(26,380

)

Depreciation and amortization expense

 

 

196,311

 

 

 

192,064

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

2,847,103

 

 

 

(1,191,940

)

Accounts payable

 

 

113,569

 

 

 

287,224

 

Accrued expenses and other liabilities

 

 

(8,016,017

)

 

 

(1,260,585

)

Net cash used in operating activities

 

 

(30,826,568

)

 

 

(45,406,010

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisitions of fixed assets

 

 

 

 

 

(16,317

)

Purchases of marketable securities

 

 

 

 

 

(92,938,213

)

Maturities of marketable securities

 

 

30,000,000

 

 

 

36,000,000

 

Net cash provided by (used in) investing activities

 

 

30,000,000

 

 

 

(56,954,530

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

163,941

 

 

 

1,123,427

 

Tax withholding payments for net share-settled equity awards

 

 

(532,951

)

 

 

 

Proceeds from employee stock purchase plan

 

 

111,102

 

 

 

96,665

 

Net cash (used in) provided by financing activities

 

 

(257,908

)

 

 

1,220,092

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(1,084,476

)

 

 

(101,140,448

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

144,419,364

 

 

 

229,790,989

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

143,334,888

 

 

$

128,650,541

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

1,262,354

 

 

$

981,833

 

 

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 discovering innovative therapies designed to treat immune-mediated diseases.

The Company’s principal activities to date include research and development activities along with related general business planning, including raising capital.

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, 2022, which was filed with the Securities and Exchange Commission on March 9, 2023 (2022 Form 10-K).

The financial information as of September 30, 2023, and the three and nine months ended September 30, 2023 and 2022, 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, 2022 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, which excludes any potential revenue of reproxalap and any impact of the Option Agreement or the potential exercise of the Option (each as defined and further discussed in Note 15), the Company believes that its cash and cash equivalents as of September 30, 2023, will be sufficient to fund the Company's currently projected operating expenses into the first quarter of 2025, including the initial commercialization and launch plans for reproxalap if approved during the second half of 2023; and continued early and late-stage development of our product candidates in ocular and systemic immune-mediated diseases. The Company’s assessment of its liquidity and capital resources includes an estimate of the financial impacts of these changes. The Company has based its projections of operating capital requirements on its current operating plan, which includes several assumptions that may prove to be incorrect, and the Company may use all of its available capital resources sooner than the Company expects. 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; commence or continue ongoing commercialization activities, including manufacturing, sales, marketing and distribution, for any of our product candidates for which the Company may receive marketing approval; or conduct any substantial, additional development requirements requested by the Food and Drug Administration (FDA). Additional funding may not be available to the Company on acceptable terms, or at all. If the Company is unable to secure additional funding, it could be forced to delay, reduce or eliminate its research and development programs and its reproxalap commercialization efforts.

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 condensed consolidated 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 condensed 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 condensed consolidated financial statements include, but are not limited to, clinical trial accruals, deferred and accrued research and development costs, stock-based compensation, and accounting for income taxes and related valuation allowance. Although these estimates and

9


 

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.

Summary of Significant Accounting Policies

There were no changes to significant accounting policies during the nine months ended September 30, 2023, as compared to those identified in the 2022 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 were effective for interim and annual fiscal periods beginning after December 15, 2022. The Company adopted this standard as of January 1, 2023, and there was no material impact to the Company's financial statements.

3.
Helio Vision Acquisition

On January 28, 2019 (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 were subject to vesting based on continued service to the Company through January 28, 2022. The Company recognized the expense associated with the founders’ restricted shares as research and development compensation expense on a straight-line basis as the shares vested over the three-year period. For the nine months ended September 30, 2022 the Company recorded $0.1 million, of research and development compensation expense, for the founders’ restricted shares. There are no further obligations related to 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 (January Shares). 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 an NDA 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 an NDA for an indication (other than proliferative vitreoretinopathy or a substantially similar label) 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 in connection with the Helio acquisition. 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 in the aggregate.

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 September 30, 2023. 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 issue the Milestone Shares becomes probable. At such time, the Company will record the cost of the Milestone Shares issued to the Helio founders as a compensation expense and to the Helio non-founders as an in-process research and development (IPR&D) expense if there is no alternative future use. At December 31, 2020, the issuance of the January Shares was considered probable and $2.5 million was accrued as contingent consideration payable in stock and the Company recorded $1.8 million to IPR&D (Milestone IPR&D), which included a $0.5 million income tax benefit, and $1.2 million of compensation expense related to the January Shares, which amounted to 246,562 shares and were issued during the quarter ended March 31, 2021. No other milestones related to the remaining Milestone Shares are considered probable of being achieved as of September 30, 2023.

10


 

4.
NET LOSS PER SHARE

For the three and nine months ended September 30, 2023 and 2022, diluted weighted average common shares outstanding is equal to basic weighted average common shares due to the Company’s net loss position.

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:

 

 

 

For the Three and Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Options to purchase common stock

 

 

6,174,419

 

 

 

5,403,982

 

Nonvested restricted stock units

 

 

1,026,273

 

 

 

1,184,603

 

Total of common stock equivalents

 

 

7,200,692

 

 

 

6,588,585

 

 

5.
CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

At September 30, 2023, cash and cash equivalents were comprised of:

 

 

 

Carrying
Amount

 

 

Unrecognized
Gain

 

 

Unrecognized
Loss

 

 

Estimated
Fair Value

 

 

Cash and Cash
Equivalents

 

 

Current
Marketable
Securities

 

Cash

 

$

96,803,484

 

 

$

 

 

$

 

 

$

96,803,484

 

 

$

96,803,484

 

 

$

 

Money market funds

 

 

46,531,404

 

 

 

 

 

 

 

 

$

46,531,404

 

 

 

46,531,404

 

 

 

 

Total cash and cash equivalents

 

$

143,334,888

 

 

$

 

 

$

 

 

$

143,334,888

 

 

$

143,334,888

 

 

$

 

 

There were no marketable securities held at September 30, 2023.

 

At December 31, 2022, cash, cash equivalents, and marketable securities were comprised of:

 

 

Carrying
Amount

 

 

Unrecognized
Gain

 

 

Unrecognized
Loss

 

 

Estimated
Fair Value

 

 

Cash and Cash
Equivalents

 

 

Current
Marketable
Securities

 

Cash

 

$

135,151,081

 

 

$

 

 

$

 

 

$

135,151,081

 

 

$

135,151,081

 

 

$

 

Money market funds

 

 

9,268,283