Delaware
|
11-3516358
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
15245 Shady Grove Road, Suite 455
Rockville, MD
|
20850
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
Common Stock, $.0001 par value
|
REXN
|
Nasdaq Capital Market
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☑
|
Smaller reporting company
|
☑
|
Emerging growth company
|
☐
|
Page
|
||||
PART I
|
1
|
|||
Item 1
|
1
|
|||
1)
|
Condensed Balance Sheet as of June 30, 2020 and December 31, 2019 |
1
|
||
2)
|
Condensed Statement of Operations for the three and six months ended June 30, 2020 and 2019 |
2
|
||
3)
|
Condensed Statement of Comprehensive Loss for the three and six months ended June 30, 2020 and 2019 |
3
|
||
4)
|
Condensed Statement of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019 |
4
|
||
5)
|
Condensed Statement of Cash Flows for the six months ended June 30, 2020 and 2019 |
6
|
||
6)
|
Notes to the Condensed Financial Statements |
7
|
||
Item 2
|
24
|
|||
Item 3
|
37
|
|||
Item 4
|
37
|
|||
PART II
|
38
|
|||
Item 1
|
38
|
|||
Item 1A
|
38
|
|||
Item 6
|
45
|
|||
45
|
June 30, 2020
|
December 31, 2019
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
9,208,951
|
$
|
9,219,547
|
||||
Marketable securities
|
-
|
2,997,220
|
||||||
Prepaid expenses and other current assets
|
817,653
|
447,206
|
||||||
Total Current Assets
|
10,026,604
|
12,663,973
|
||||||
Security Deposits
|
25,681
|
25,681
|
||||||
Operating Lease Right-of-Use Assets
|
139,477
|
203,348
|
||||||
Equipment, Net
|
57,312
|
75,770
|
||||||
Total Assets
|
$
|
10,249,074
|
$
|
12,968,772
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
2,190,753
|
$
|
1,265,731
|
||||
Deferred revenue
|
650,000
|
1,500,000
|
||||||
Operating lease liabilities, current
|
136,197
|
139,765
|
||||||
Total Current Liabilities
|
2,976,950
|
2,905,496
|
||||||
Operating Lease Liabilities, non-current
|
-
|
63,605
|
||||||
Warrant Liabilities
|
268,811
|
41,717
|
||||||
Total Liabilities
|
3,245,761
|
3,010,818
|
||||||
Commitments and Contingencies (Note 12)
|
||||||||
Stockholders’ Equity:
|
||||||||
Preferred stock, par value $0.0001, 10,000,000 authorized shares, none issued and outstanding
|
-
|
-
|
||||||
Common stock, par value $0.0001, 75,000,000 authorized shares, 4,019,141 issued and outstanding
|
402
|
402
|
||||||
Additional paid-in capital
|
173,423,515
|
173,278,144
|
||||||
Accumulated other comprehensive income
|
-
|
2,084
|
||||||
Accumulated deficit
|
(166,420,604
|
)
|
(163,322,676
|
)
|
||||
Total Stockholders’ Equity
|
7,003,313
|
9,957,954
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
10,249,074
|
$
|
12,968,772
|
For the Three Months
Ended June 30,
|
For the Six Months
Ended June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
1,150,000
|
$
|
-
|
||||||||
Expenses:
|
||||||||||||||||
General and administrative
|
2,116,891
|
1,340,016
|
3,372,898
|
3,035,538
|
||||||||||||
Research and development
|
231,607
|
1,648,401
|
688,397
|
3,890,631
|
||||||||||||
Total Expenses
|
2,348,498
|
2,988,417
|
4,061,295
|
6,926,169
|
||||||||||||
Loss from Operations
|
(2,348,498
|
)
|
(2,988,417
|
)
|
(2,911,295
|
)
|
(6,926,169
|
)
|
||||||||
Other Income
|
||||||||||||||||
Interest income
|
6,042
|
96,650
|
40,461
|
178,035
|
||||||||||||
Unrealized (loss) gain on fair value of warrants
|
(168,702
|
)
|
427,483
|
(227,094
|
)
|
1,940,854
|
||||||||||
Total Other (Loss) Income
|
(162,660
|
)
|
524,133
|
(186,633
|
)
|
2,118,889
|
||||||||||
Net Loss Before Provision for Income Taxes
|
(2,511,158
|
)
|
(2,464,284
|
)
|
(3,097,928
|
)
|
(4,807,280
|
)
|
||||||||
Provision for Income Taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Net Loss
|
$
|
(2,511,158
|
)
|
$
|
(2,464,284
|
)
|
$
|
(3,097,928
|
)
|
$
|
(4,807,280
|
)
|
||||
Net loss per share, basic and diluted
|
$
|
(0.62
|
)
|
$
|
(0.61
|
)
|
$
|
(0.77
|
)
|
$
|
(1.23
|
)
|
||||
|
||||||||||||||||
Weighted average number of shares outstanding, basic and diluted
|
4,019,141
|
4,019,141
|
4,019,141
|
3,900,208
|
For the Three Months
Ended June 30,
|
For the Six Months
Ended June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Net Loss
|
$
|
(2,511,158
|
)
|
$
|
(2,464,284
|
)
|
$
|
(3,097,928
|
)
|
$
|
(4,807,280
|
)
|
||||
Unrealized gain (loss) on available-for-sale securities
|
-
|
19,781
|
(2,084
|
)
|
25,015
|
|||||||||||
Comprehensive Loss
|
$
|
(2,511,158
|
)
|
$
|
(2,444,503
|
)
|
$
|
(3,100,012
|
)
|
$
|
(4,782,265
|
)
|
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders’
Equity
|
|||||||||||||||||||
Balances at April 1, 2020
|
4,019,141
|
$
|
402
|
$
|
173,354,446
|
$
|
(163,909,446
|
)
|
$
|
-
|
$
|
9,445,402
|
||||||||||||
Stock-based compensation
|
-
|
-
|
69,069
|
-
|
-
|
69,069
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(2,511,158
|
)
|
-
|
(2,511,158
|
)
|
||||||||||||||||
Balances at June 30, 2020
|
4,019,141
|
$
|
402
|
$
|
173,423,515
|
$
|
(166,420,604
|
)
|
$
|
-
|
$
|
7,003,313
|
||||||||||||
Balances at April 1, 2019
|
4,019,141
|
$
|
402
|
$
|
172,982,394
|
$
|
(157,030,238
|
)
|
$
|
(12,602
|
)
|
$
|
15,939,956
|
|||||||||||
Stock-based compensation
|
-
|
-
|
127,653
|
-
|
-
|
127,653
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(2,464,284
|
)
|
-
|
(2,464,284
|
)
|
||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
19,781
|
19,781
|
||||||||||||||||||
Balances at June 30, 2019
|
4,019,141
|
$
|
402
|
$
|
173,110,047
|
$
|
(159,494,522
|
)
|
$
|
7,179
|
$
|
13,623,106
|
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit |
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders’
Equity
|
|||||||||||||||||||
Balances at January 1, 2020
|
4,019,141
|
$
|
402
|
$
|
173,278,144
|
$
|
(163,322,676
|
)
|
$
|
2,084
|
$
|
9,957,954
|
||||||||||||
Stock-based compensation
|
-
|
-
|
145,371
|
-
|
-
|
145,371
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(3,097,928
|
)
|
-
|
(3,097,928
|
)
|
||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(2,084
|
)
|
(2,084
|
)
|
||||||||||||||||
Balances at June 30, 2020
|
4,019,141
|
$
|
402
|
$
|
173,423,515
|
$
|
(166,420,604
|
)
|
$
|
-
|
$
|
7,003,313
|
||||||||||||
Balances at January 1, 2019
|
3,122,843
|
$
|
312
|
$
|
165,267,656
|
$
|
(154,687,242
|
)
|
$
|
(17,836
|
)
|
$
|
10,562,890
|
|||||||||||
Issuance of common stock and units, net of issuance costs
|
895,834
|
90
|
7,553,738
|
-
|
-
|
7,553,828
|
||||||||||||||||||
Common stock issued from vested restricted stock units
|
464
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Stock-based compensation
|
-
|
-
|
288,653
|
-
|
-
|
288,653
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(4,807,280
|
)
|
-
|
(4,807,280
|
)
|
||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
25,015
|
25,015
|
||||||||||||||||||
Balances at June 30, 2019
|
4,019,141
|
$
|
402
|
$
|
173,110,047
|
$
|
(159,494,522
|
)
|
$
|
7,179
|
$
|
13,623,106
|
For the Six Months Ended
June 30,
|
||||||||
2020
|
2019
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(3,097,928
|
)
|
$
|
(4,807,280
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
18,458
|
22,077
|
||||||
Loss on sale of equipment
|
-
|
9,594
|
||||||
Amortization of premiums and discounts on marketable securities, net
|
(4,864
|
)
|
(56,019
|
)
|
||||
Stock-based compensation
|
145,371
|
288,653
|
||||||
Unrealized loss (gain) on fair value of warrants
|
227,094
|
(1,940,854
|
)
|
|||||
Changes in assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
(370,447
|
)
|
22,308
|
|||||
Accounts payable and accrued expenses
|
925,022
|
(1,231,816
|
)
|
|||||
Deferred revenue
|
(850,000
|
)
|
1,500,000
|
|||||
Other, net
|
(3,302
|
)
|
6,706
|
|||||
Net Cash Used in Operating Activities
|
(3,010,596
|
)
|
(6,186,631
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Purchase of equipment
|
-
|
(19,383
|
)
|
|||||
Sale of equipment
|
-
|
5,500
|
||||||
Purchase of marketable securities
|
-
|
(8,887,566
|
)
|
|||||
Redemption of marketable securities
|
3,000,000
|
6,000,000
|
||||||
Net Cash Provided by (Used in) Investing Activities
|
3,000,000
|
(2,901,449
|
)
|
|||||
Cash Flows from Financing Activities:
|
||||||||
Issuance of common stock and units, net of issuance costs
|
-
|
7,653,828
|
||||||
Net Cash Provided by Financing Activities
|
-
|
7,653,828
|
||||||
Net Decrease in Cash and Cash Equivalents
|
(10,596
|
)
|
(1,434,252
|
)
|
||||
Cash and Cash Equivalents - Beginning of Period
|
9,219,547
|
8,744,301
|
||||||
Cash and Cash Equivalents - End of Period
|
$
|
9,208,951
|
$
|
7,310,049
|
||||
Supplemental Cash Flow Information
|
||||||||
Operating cash flows paid for amounts included in the measurement of lease liabilities
|
$
|
76,843
|
$
|
120,700
|
||||
Non-cash financing and investing activities:
|
||||||||
Warrants issued
|
$
|
-
|
$
|
4,735,913
|
||||
Operating lease right-of-use assets obtained in exchange for lease obligations
|
$
|
-
|
$
|
380,935
|
December 31, 2019
|
||||||||||||||||
Cost
Basis
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
Commercial Paper
|
$
|
1,996,216
|
$
|
1,184
|
$
|
-
|
$
|
1,997,400
|
||||||||
Corporate Bonds
|
998,920
|
900
|
-
|
999,820
|
||||||||||||
Total Marketable Securities
|
$
|
2,995,136
|
$
|
2,084
|
$
|
-
|
$
|
2,997,220
|
June 30,
2020
|
December 31,
2019
|
|||||||
Furniture and fixtures
|
$
|
67,650
|
$
|
67,650
|
||||
Office and computer equipment
|
163,440
|
163,440
|
||||||
Leasehold improvements
|
116,403
|
116,403
|
||||||
Total equipment
|
347,493
|
347,493
|
||||||
Less: Accumulated depreciation and amortization
|
(290,181
|
)
|
(271,723
|
)
|
||||
Net carrying amount
|
$
|
57,312
|
$
|
75,770
|
June 30,
2020 |
December 31,
2019 |
|||||||
Trade payables
|
$
|
1,651,659
|
$
|
488,285
|
||||
Accrued expenses
|
454,850
|
471,700
|
||||||
Accrued research and development contract costs
|
-
|
221,170
|
||||||
Payroll liabilities
|
84,244
|
84,576
|
||||||
$
|
2,190,753
|
$
|
1,265,731
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Operating lease cost
|
$
|
36,770
|
$
|
47,129
|
$
|
73,541
|
$
|
127,407
|
||||||||
Variable lease cost
|
6,110
|
6,659
|
11,803
|
22,672
|
||||||||||||
Total Lease Cost
|
$
|
42,880
|
$
|
53,788
|
$
|
85,344
|
$
|
150,079
|
Year Ending December 31:
|
||||
2020 (excluding the six months ended June 30, 2020)
|
$
|
78,437
|
||
2021
|
65,364
|
|||
Minimum lease payments
|
143,801
|
|||
Less: Imputed interest
|
(7,604
|
)
|
||
Present value of minimum lease payments
|
$
|
136,197
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Statement of operations line item:
|
||||||||||||||||
General and administrative
|
$
|
66,351
|
$
|
119,719
|
$
|
138,771
|
$
|
236,398
|
||||||||
Research and development
|
2,718
|
7,934
|
6,600
|
52,255
|
||||||||||||
Total
|
$
|
69,069
|
$
|
127,653
|
$
|
145,371
|
$
|
288,653
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
WeightedAverage
Remaining
Contractual Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding, January 1, 2020
|
204,574
|
$
|
35.60
|
7.3 years
|
$
|
-
|
|||||||
Granted
|
-
|
$
|
-
|
||||||||||
Exercised
|
-
|
$
|
-
|
||||||||||
Expired
|
(2,996
|
)
|
$
|
156.41
|
|||||||||
Cancelled
|
(55,354
|
)
|
$
|
59.54
|
|||||||||
Outstanding, June 30, 2020
|
146,224
|
$
|
24.06
|
7.6 years
|
$
|
-
|
|||||||
Exercisable, June 30, 2020
|
98,834
|
$
|
28.65
|
7.3 years
|
$
|
-
|
2020
|
||||||||
Number of
Options
|
Weighted Average Fair
Value at Grant Date
|
|||||||
Unvested at January 1, 2020
|
81,311
|
$
|
7.90
|
|||||
Granted
|
-
|
$
|
-
|
|||||
Vested
|
(33,127
|
)
|
$
|
5.53
|
||||
Cancelled
|
(794
|
)
|
$
|
9.12
|
||||
Unvested at June 30, 2020
|
47,390
|
$
|
9.55
|
Number of Warrants:
|
|||||||||||||
Warrant Issuance
|
June 30, 2020
|
December 31, 2019
|
Exercise Price
|
Expiration Date
|
|||||||||
Liability-classified Warrants
|
|||||||||||||
November 2015 Investors
|
104,168
|
104,168
|
$
|
63.60
|
May 2021
|
||||||||
November 2015 Placement Agent
|
279
|
279
|
$
|
63.60
|
Nov. 2020
|
||||||||
March 2016 Investors
|
50,651
|
50,651
|
$
|
50.40
|
Sept. 2021
|
||||||||
September 2016 Investors
|
67,084
|
67,084
|
$
|
36.00
|
Mar. 2022
|
||||||||
June 2017 Investors
|
126,264
|
126,264
|
$
|
48.00
|
Dec. 2022
|
||||||||
June 2017 Placement Agent
|
15,153
|
15,153
|
$
|
49.50
|
June 2022
|
||||||||
October 2017 Investors
|
136,058
|
136,058
|
$
|
34.20
|
Apr. 2023
|
||||||||
October 2017 Placement Agent
|
16,327
|
16,327
|
$
|
36.72
|
Oct. 2022
|
||||||||
Total liability classified warrants
|
515,984
|
515,984
|
|||||||||||
Equity-classified Warrants
|
|||||||||||||
October 2018 Investors
|
480,771
|
480,771
|
$
|
20.04
|
Apr. 2024
|
||||||||
October 2018 Placement Agent
|
28,848
|
28,848
|
$
|
19.50
|
Oct. 2023
|
||||||||
January 2019 Investors
|
895,886
|
895,886
|
$
|
9.60
|
Jan. 2024
|
||||||||
Total equity-classified warrants
|
1,405,505
|
1,405,505
|
|||||||||||
Total outstanding warrants
|
1,921,489
|
1,921,489
|
Number of Warrants
|
||||||||||||||||
Liability-
classified
|
Equity-
classified
|
Total
|
Weighted
average
exercise price
|
|||||||||||||
Balance, January 1, 2020
|
515,984
|
1,405,505
|
1,921,489
|
$
|
22.10
|
|||||||||||
Issued during the period
|
-
|
-
|
-
|
$
|
-
|
|||||||||||
Exercised during the period
|
-
|
-
|
-
|
$
|
-
|
|||||||||||
Expired during the period
|
-
|
-
|
-
|
$
|
-
|
|||||||||||
Balance, June 30, 2020
|
515,984
|
1,405,505
|
1,921,489
|
$
|
22.10
|
Fair Value as of:
|
||||||||
Warrant Issuance:
|
June 30, 2020
|
December 31, 2019
|
||||||
November 2015 Investors
|
$
|
3,286
|
$
|
55
|
||||
November 2015 Placement Agent
|
-
|
-
|
||||||
March 2016 Investor
|
6,362
|
439
|
||||||
September 2016 Investors
|
28,765
|
3,196
|
||||||
June 2017 Investors
|
83,463
|
11,736
|
||||||
June 2017 Placement Agent
|
6,348
|
845
|
||||||
October 2017 Investors
|
129,299
|
23,772
|
||||||
October 2017 Placement Agent
|
11,288
|
1,674
|
||||||
Total:
|
$
|
268,811
|
$
|
41,717
|
June 30, 2020
|
December 31, 2019
|
|||||||
Trading market prices
|
$
|
2.84
|
$
|
1.91
|
||||
Fundamental transaction volatility
|
134
|
%
|
102
|
%
|
||||
Dividend
|
-
|
-
|
||||||
Fundamental transaction risk-free rate
|
0.17-0.21
|
%
|
1.57-1.72
|
%
|
||||
Equivalent volatility
|
92-103%
|
%
|
85-94
|
%
|
||||
Equivalent risk-free rate
|
0.16
|
%
|
1.57-1.59
|
%
|
||||
Fundamental transaction likelihood
|
90
|
%
|
50
|
%
|
||||
Fundamental transaction timing
|
September 2020
|
April 2020
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
November 2015 Investors
|
$
|
(2,315
|
)
|
$
|
27,069
|
$
|
(3,231
|
)
|
$
|
224,153
|
||||||
November 2015 Placement Agent
|
-
|
55
|
-
|
435
|
||||||||||||
March 2016 Investors
|
(5,122
|
)
|
32,874
|
(5,923
|
)
|
147,673
|
||||||||||
September 2016 Investors
|
(14,126
|
)
|
72,213
|
(25,569
|
)
|
290,082
|
||||||||||
June 2017 Investors
|
(53,099
|
)
|
129,559
|
(71,727
|
)
|
517,950
|
||||||||||
June 2017 Placement Agent
|
(3,774
|
)
|
14,553
|
(5,503
|
)
|
56,464
|
||||||||||
October 2017 Investors
|
(83,121
|
)
|
135,125
|
(105,527
|
)
|
631,626
|
||||||||||
October 2017 Placement Agent
|
(7,145
|
)
|
16,035
|
(9,614
|
)
|
72,471
|
||||||||||
Total:
|
$
|
(168,702
|
)
|
$
|
427,483
|
$
|
(227,094
|
)
|
$
|
1,940,854
|
June 30,
2020 |
December 31,
2019 |
|||||||
Net Operating Loss Carryforwards
|
$
|
44,843,000
|
$
|
43,844,000
|
||||
Stock Compensation Expense
|
540,000
|
1,191,000
|
||||||
Book Tax Differences on Assets and Liabilities
|
227,000
|
464,000
|
||||||
Valuation Allowance
|
(45,610,000
|
)
|
(45,499,000
|
)
|
||||
Net Deferred Tax Assets
|
$
|
-
|
$
|
-
|
a) |
The Company has contracted with various vendors for services, with terms that require payments over the terms of the agreements, usually ranging from two to 36 months. The costs to be incurred are estimated and
are subject to revision. As of June 30, 2020, the total estimated cost to complete these agreements was approximately $210,000. All of these agreements may be terminated by either party upon appropriate notice as stipulated in the
respective agreements.
|
b) |
On June 22, 2009, the Company entered into a License Agreement with Korea Research Institute of Chemical Technology (“KRICT”) to acquire the rights to all intellectual property related to quinoxaline-piperazine
derivatives that were synthesized under a Joint Research Agreement. The agreement with KRICT calls for a one-time milestone payment of $1,000,000 within 30 days after the first achievement of marketing approval of the first commercial
product arising out of or in connection with the use of KRICT’s intellectual property. As of June 30, 2020, the milestone has not occurred.
|
c) |
The Company has established a 401(k) plan for its employees. The Company has elected to match 100% of the first 3% of an employee’s compensation plus 50% of an additional 2% of the employee’s deferral.
Expense related to this matching contribution aggregated to $9,785 and $18,506 for the three months ended June 30, 2020 and 2019, respectively, and $21,014 and $46,385 for the six months ended June 30,
2020 and 2019, respectively.
|
d) |
On February 5, 2018, the Company and Next BT terminated a research collaboration agreement between the Company and Rexgene Biotech Co., Ltd, a predecessor in interest to Next BT. The Company agreed to pay Next BT
a royalty in the low single digits of any net sales of RX-0201 the Company makes in Asia and 50% of the Company’s licensing revenue related to licensing of RX-0201 in Asia, up to an aggregate of $5,000,000. On June 18, 2018, the Company
reinstated the exclusive license to RX-0201 in Asia, which had no effect on the potential royalty payments granted to Next BT in February 2018. As of June 30, 2020, the Company has not made any royalty payments to Next BT.
|
Level 1 Inputs
|
—
|
Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by the Company;
|
|
Level 2 Inputs
|
—
|
Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
|
|
Level 3 Inputs
|
—
|
Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
|
Fair Value Measurements at June 30, 2020
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant Liabilities
|
$
|
268,811
|
$
|
-
|
$
|
-
|
$
|
268,811
|
Fair Value Measurements at December 31, 2019
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Commercial Paper
|
$
|
1,997,400
|
$
|
-
|
$
|
1,997,400
|
$
|
-
|
||||||||
Corporate Bonds
|
999,820
|
-
|
999,820
|
-
|
||||||||||||
Total Assets:
|
$
|
2,997,220
|
$
|
-
|
$
|
2,997,220
|
$
|
-
|
||||||||
Liabilities:
|
||||||||||||||||
Warrant Liabilities
|
$
|
41,717
|
$
|
-
|
$
|
-
|
$
|
41,717
|
Warrant Liabilities
|
||||
Balance at January 1, 2020
|
$
|
41,717
|
||
Unrealized losses, net
|
227,094
|
|||
Balance at June 30, 2020
|
$
|
268,811
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
• |
uncertainties about the Merger (as defined below), including but not limited to our ability to close the Merger, our ability to obtain adequate liquidity to fund our operations,
meet our obligations, and continue as a going concern if the Merger is not completed, and that the Merger may not enhance shareholder value and may create a distraction or uncertainty that may
adversely affect our operating results, business, or investor perceptions;
|
• |
our ability to control and correctly estimate our operating expenses, our estimated warrant liabilities and our expenses associated with the Merger, including litigation expenses, which could
result in us having significantly less net cash than currently anticipated, which may prevent us from consummating the Merger or result in our stockholders owning significantly less of the combined company than currently estimated;
|
• |
conditions to payment under the CVRs may not be met and the CVRs may never deliver any value to our stockholders;
|
• |
uncertainties about the paths of our programs and our ability to evaluate and identify a path forward for those programs, particularly given the constraints we have as a small company with limited financial,
personnel and other operating resources;
|
• |
the impact of the COVID-19 pandemic on the economy, our industry, and our financial condition and results of operations, as well as our ability to consummate the Merger;
|
• |
our understandings and beliefs regarding the role of certain biological mechanisms and processes in cancer;
|
• |
our product candidates being in early stages of development, including in preclinical development;
|
• |
our ability to successfully and timely complete clinical trials for our drug candidates in clinical development;
|
• |
uncertainties related to the timing, results and analyses related to our drug candidates in preclinical development;
|
• |
our ability to obtain the necessary U.S. and international regulatory approvals for our drug candidates;
|
• |
our reliance on third-party contract research organizations and other investigators and collaborators for certain research and development services;
|
• |
our ability to maintain or engage third-party manufacturers to manufacture, supply, store and distribute supplies of our drug candidates for our clinical trials;
|
• |
our ability to form strategic alliances and partnerships with pharmaceutical companies and other partners for development, sales and marketing of certain of our product candidates;
|
• |
demand for and market acceptance of our drug candidates;
|
• |
the scope and validity of our intellectual property protection for our drug candidates and our ability to develop our candidates without infringing the intellectual property rights of others;
|
• |
our lack of profitability and the need for additional capital to operate our business; and
|
• |
other risks and uncertainties, including those set forth herein and in the 2019 Form 10-K under the caption “Risk Factors” and those detailed from time to time in our filings with the
Securities and Exchange Commission.
|
• |
RX-3117 is a novel, investigational oral, small molecule nucleoside compound. Once intracellularly activated (phosphorylated) by the enzyme UCK2, it is incorporated into the DNA or RNA of cells and inhibits both DNA and RNA synthesis,
which induces apoptotic cell death of tumor cells. RX-3117 has been the subject of a Phase 2a clinical trial in combination with Celgene’s ABRAXANE® (paclitaxel protein-bound particles for injectable suspension) as a first-line treatment
in patients newly diagnosed with metastatic pancreatic cancer. The trial reached its target enrollment in February 2019. As of July 24, 2019, an overall response rate of 23% had been observed in 40 patients that had at least one scan on
treatment. Preliminary and unaudited data indicates that the median progression free survival for patients in the study is approximately 5.4 months. Complete data from the trial is expected to be available in 2020. We do not plan to
conduct or sponsor any additional trials with RX-3117.
|
• |
RX-5902 is a potential first-in-class small molecule modulator of the Wnt/beta-catenin pathway which plays a key role in cancer cell proliferation and tumor growth. In August 2018, we entered into a Clinical Trial Collaboration and
Supply Agreement (the “Collaboration Agreement”) with Merck Sharp & Dohme B.V. (“Merck”) to evaluate the combination of RX-5902 and Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab) in a Phase 2 trial in patients with
metastatic triple negative breast cancer (“TNBC”). On April 7, 2020, we notified Merck that we were terminating the Collaboration Agreement, effective immediately, in connection with our determination to discontinue development of RX-5902
for the treatment of TNBC. We do not plan to conduct or sponsor any additional trials with RX-5902.
|
• |
RX-0301 is a potential best-in-class, potent inhibitor of the synthesis of the protein kinase Akt-1, which we believe plays a critical role in cancer cell proliferation, survival, angiogenesis, metastasis, and drug resistance. RX-0301
is currently in preclinical development by Zhejiang HaiChang Biotechnology Co., Ltd. (“HaiChang”) as a nano-liposomal formulation of RX-0201 (Archexin®) using HaiChang’s proprietary QTsome™ technology. On February 8, 2020, we
entered into an exclusive license agreement with HaiChang (the “HaiChang License Agreement”) pursuant to which we granted HaiChang an exclusive (even as to us), royalty-bearing, sublicensable worldwide license to research, develop and
commercialize RX-0201 and RX-0301. The HaiChang License Agreement supersedes a prior agreement with HaiChang to develop RX-0301 under which HaiChang was to conduct certain preclinical and clinical activities through completion of a Phase 2a
proof-of-concept clinical trial in hepatocellular carcinoma.
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Clinical Candidates:
|
||||||||||||||||
RX-3117
|
$
|
86,000
|
$
|
1,058,000
|
$
|
412,900
|
$
|
2,136,400
|
||||||||
RX-5902
|
7,500
|
187,800
|
11,700
|
530,200
|
||||||||||||
RX-0201
|
-
|
55,300
|
1,800
|
171,100
|
||||||||||||
|
||||||||||||||||
Preclinical, Personnel and Overhead
|
138,107
|
347,301
|
261,997
|
1,052,931
|
||||||||||||
Total Research and Development Expenses
|
$
|
231,607
|
$
|
1,648,401
|
$
|
688,397
|
$
|
3,890,631
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
PART II. |
Item 1. |
Item 1A. |
• |
our ability to consummate the Merger;
|
• |
the level of development and commercialization efforts of BioSense and HaiChang and the receipt of milestone and other payments, if any, from such parties under their respective agreements with us;
|
• |
the scope, rate of progress and cost of our preclinical and clinical trials for any product candidate in our future pipeline and results of future clinical trials;
|
• |
the cost and timing of regulatory filings and approvals for any product candidates that successfully complete clinical trials;
|
• |
the timing and nature of any additional strategic transactions that we undertake, including potential partnerships, if the Merger is not consummated;
|
• |
the effect of competing technological and market developments;
|
• |
the cost incurred in responding to actions by activist stockholders; and
|
• |
the cost of filing, prosecuting, defending and enforcing our intellectual property rights.
|
• |
general business, economic or political conditions affecting the industries in which we or Ocuphire, as applicable, operate;
|
• |
any natural disaster or any acts of war, armed hostilities or terrorism;
|
• |
changes in financial, banking or securities markets;
|
• |
any change in our stock price or trading volume excluding any underlying effect that may have caused such change, unless such effect is otherwise exempt from causing a material adverse effect under the Merger
Agreement;
|
• |
any change in, or any compliance with or action taken for the purpose of complying with, applicable laws or U.S. GAAP, or interpretations thereof;
|
• |
continued losses from operations or decreases in our cash balances; and
|
• |
the taking of any action, or failure to take action, by us or Ocuphire required to comply with the terms of the Merger Agreement.
|
• |
investors react negatively to the prospects of the combined company’s product candidates, business and financial condition following the Merger;
|
• |
the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or
|
• |
the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.
|
• |
the attention of our remaining management and employees may be directed toward the completion of the Merger and related matters and may be diverted from our day-to-day business operations; and
|
• |
third parties may seek to terminate or renegotiate their relationships with us as a result of the Merger, whether pursuant to the terms of their existing agreements with us or otherwise.
|
Item 6. |
Exhibit No.
|
Description
|
*2.1 | Agreement and Plan of Merger, dated as of June 17, 2020, by and among the Company, Merger Sub and Ocuphire. |
2.2
|
|
4.1 | Form of Series A/B Warrants, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 1, 2020 is incorporated herein by reference. |
*10.1
|
Form of CVR Agreement, by and among the Company, the CVR Representative, and the Rights Agent, as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 19, 2020 is incorporated herein by reference. |
*10.2
|
|
10.3
|
|
*10.4
|
|
10.5
|
|
10.6
|
|
*10.7
|
|
31.1
|
|
32.1
|
|
101
|
The following materials from Rexahn Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Balance Sheet; (ii) Condensed Statement of
Operations; (iii) Condensed Statement of Comprehensive Loss; (iv) Condensed Statement of Stockholders’ Equity; (v) Condensed Statement of Cash Flows; and (vi) Notes to the Financial Statements.
|
*
|
Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
|
A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
|
REXAHN PHARMACEUTICALS, INC.
|
||
(Registrant)
|
||
By:
|
/s/ Douglas J. Swirsky
|
|
Date: August 14, 2020
|
Douglas J. Swirsky
|
|
Chief Executive Officer and President
(principal executive, financial and accounting
officer)
|