What changed in this filing

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Item 1. Financial Statements

2021-05-10 compared with 2020-11-05 · 119 added, 215 removed, 297 unchanged (53% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

Current assets:

3 unchanged sentences

Equipment, net

Right-of-use asset - operating lease

Liabilities and stockholders’ equity

2 unchanged sentences

Accrued expenses and other current liabilities

Loan payable, current portion

Operating lease liability, current portion

Total current liabilities

Loan payable, long-term

Operating lease liability, long-term

Total liabilities

Stockholders’ equity:

Preferred stock, $ 0.0001 par value per share ( 10,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019, respectively)

Common stock, $ 0.0001 par value per share ( 150,000,000 shares authorized, 37,344,201 and 36,933,217 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively)

Preferred stock, $ 0.0001 par value per share ( 10,000,000 shares authorized, none issued and outstanding at March 31, 2021 and December 31, 2020, respectively)

Common stock, $ 0.0001 par value per share ( 150,000,000 shares authorized, 37,563,882 and 37,374,088 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively)

Additional paid-in capital

7 unchanged sentences

Consolidated Statements of Operations

Three months ended

Nine months ended

September 30,

Operating expenses:

3 unchanged sentences

Loss from operations

( 21,126,801 )

( 18,947,235 )

( 71,397,092 )

( 42,816,927 )

Interest income (expense)

( 1,091,849 )

Loss on extinguishment of debt

( 1,247,012 )

( 22,924,815 )

( 19,135,612 )

( 73,735,953 )

( 43,538,202 )

Interest and amortization of debt discount (expense) income

Net loss per common share, basic and diluted

3 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Total stockholders’

stockholders’

paid-in capital

3 unchanged sentences

Issuance of common stock upon exercise of options

Issuance of warrants upon debt financing

Issuance of common stock upon financing

( 10,640,376 )

Issuance of common stock related to license agreement

Balance at March 31, 2020

( 208,379,639

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon exercise of warrants

Issuance of warrants upon debt financing

Issuance of common stock upon financing

( 13,762,214 )

Balance at June 30, 2019

( 131,952,897 )

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon exercise of warrants

( 19,135,612 )

Balance at September 30, 2019

( 151,088,509 )

Balance at December 31, 2020

2 unchanged sentences

Issuance of common stock upon exercise of options

Issuance of common stock related to license agreement

( 32,484,146 )

Balance at March 31, 2020

( 208,379,639 )

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon exercise of warrants

Issuance of common stock upon vesting of RSUs

Issuance of common stock upon financing

( 18,326,992 )

Balance at June 30, 2020

( 226,706,631 )

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon exercise of warrants

Issuance of warrants upon debt financing

( 22,924,815 )

Balance at September 30, 2020

Balance at March 31, 2021

( 308,056,063

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine months ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

( 73,735,953 )

( 43,538,202 )

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

2 unchanged sentences

Amortization of debt discount

Loss on extinguishment of debt

Amortization of operating lease right-of-use asset

Change in operating lease liability

Changes in operating assets and liabilities:

2 unchanged sentences

Accrued expenses and other current liabilities

( 1,922,716 )

Net cash used in operating activities

( 57,903,052 )

( 28,807,908 )

Cash flows from investing activities

3 unchanged sentences

Proceeds from issuance of common stock upon financing, net

Proceeds from issuance of term loan

Payment of debt financing costs

( 1,102,609 )

Repayment of principal on term loan

( 21,660,000 )

( 7,238,889 )

Proceeds from issuance of common stock upon exercise of options

Proceeds from issuance of common stock upon exercise of warrants

Net cash (used in) provided by financing activities

Net (decrease) increase in cash

( 17,605,875 )

Cash at beginning of period

2 unchanged sentences

Interest paid

Supplemental disclosures of non-cash financing activity:

Issuance of warrants in connection with debt financing

Shares of common stock issued in connection with license agreement with Pfizer, Inc.

The accompanying notes are an integral part of the consolidated financial statements.

14 unchanged sentences

In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, which are normal recurring adjustments, necessary for the fair presentation of the financial information for the interim periods.

The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period.

Liquidity and Capital Resources

The Company has incurred operating losses since its inception, and expects to continue to incur operating losses for the foreseeable future and may never become profitable.

As of September 30, 2020, the Company had an accumulated deficit of $ 249.6 million.

As of March 31, 2021, the Company had an accumulated deficit of $ 308.1 million.

The Company’s primary sources of cash have been proceeds from the issuance and sale of its common stock in public offerings.

51 unchanged sentences

The Company’s cash equivalents, which are money market funds held in a sweep account, are measured at fair value on a recurring basis.

As of September 30, 2020, the balance of cash and cash equivalents was $ 202.4 million, which approximates fair value and was determined based upon Level 1 inputs.

As of March 31, 2021, the balance of cash and cash equivalents was $ 164.7 million, which approximates fair value and was determined based upon Level 1 inputs.

The sweep account is valued using quoted market prices with no valuation adjustments applied.

3 unchanged sentences

The Company maintains its cash at financial institutions, which at times, exceed federally insured limits.

At September 30, 2020, the majority of the Company’s cash was held by one financial institution and the amount on deposit was in excess of Federal Deposit Insurance Corporation insurance limits.

At March 31, 2021, the majority of the Company’s cash was held by one financial institution and the amount on deposit was in excess of Federal Deposit Insurance Corporation insurance limits.

The Company has not recognized any losses from credit risks on such accounts since inception.

13 unchanged sentences

The carrying values for cash, accounts payable and accrued liabilities reported in the accompanying consolidated financial statements approximate their respective fair values due to their short-term maturities.

The carrying value of debt on the Company’s balance sheet, the Hercules Term Loan (see Note 4 – Loan and Security Agreement), is estimated to approximate its fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics.

The carrying value of debt on the Company’s balance sheet (see Note 6 – Loan and Security Agreement), is estimated to approximate its fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics.

Debt Issuance Costs

6 unchanged sentences

Research and Development Costs

Research and development expenses primarily consist of costs incurred in performing research and development activities, including preclinical studies, clinical trials, manufacturing costs, regulatory costs, employee salaries and benefits, stock-based compensation expense, contract services, including external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CROs”), facilities costs, overhead costs, depreciation, and other related costs.

Generally, research and development costs are expensed as incurred.

Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment of recoverability.

The Company makes estimates of costs incurred in relation to clinical site costs.

The Company analyzes the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability.

Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period.

The Company reviews and accrues clinical trial study expenses based on work performed and relies upon estimates of those costs applicable to the stage of completion of a study.

With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract.

Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar conditions.

The objective of the Company’s policy is to match the recording of expenses in its financial statements to the actual services received and efforts expended.

As such, expense accruals related to clinical site costs are recognized based on the Company’s estimate of the degree of completion of the event or events specified in the specific clinical study or trial contract.

Research and development costs are expensed as incurred.

Research and development expenses consist primarily of personnel costs for our research and development employees, costs incurred to third-party service providers for the conduct of research, preclinical and clinical studies, laboratory supplies, product license fees, consulting and other related expenses.

We estimate research, preclinical and clinical study expenses based on services performed, pursuant to contracts with third-party research and development organizations that conduct and manage research, preclinical and clinical activities on our behalf.

We estimate these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services.

If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly.

Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred.

Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.

Income taxes are accounted for under the asset and liability method.

3 unchanged sentences

Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company estimates an annual effective tax rate of 0 % for the year ending December 31, 2020 and has not recorded an income tax benefit for the nine months ended September 30, 2020 and 2019 since it determined that a full valuation allowance is required against the Company’s deferred tax assets.

The Company estimates an annual effective tax rate of 0 % for the year ending December 31, 2021 and has no t recorded an income tax benefit for the three months ended March 31, 2021 and 2020 since it determined that a full valuation allowance is required against the Company’s deferred tax assets.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position as well as consideration of the available facts and circumstances.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.

As of September 30, 2020, the Company does not believe any material uncertain tax positions are present.

As of March 31, 2021, the Company does not believe any material uncertain tax positions are present.

In the event the Company determines that accrual of interest or penalties are necessary in the future, the amount will be presented as a component of income tax expense.

1 unchanged sentence

For stock options issued, the Company estimates the grant date fair value of each option using the Black‑Scholes option pricing model.

The Black-Scholes model takes into account the expected volatility of the Company’s common stock, expected dividends of the Company’s common stock, the risk-free interest rate, the estimated life of the option, the closing market price of the Company’s common stock and the exercise price.

The Black-Scholes model takes into account the expected volatility of the Company’s common stock, the risk-free interest rate, the estimated life of the option, the closing market price of the Company’s common stock and the exercise price.

The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management’s judgment.

In addition, the Company recognizes expense for equity awards forfeitures as they occur.

For restricted stock units (“RSUs”) issued, the Company issues them in the form of Company common stock.

The fair value of these awards is based on the market close price per share on the grant date.

In addition, the Company recognizes expense for equity award forfeitures as they occur.

For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period, which is generally the vesting term.

For restricted stock units (“RSUs”), the Company issues them in the form of Company common stock.

The fair market value of these awards is based on the market closing price per share on the grant date.

Prior to January 1, 2020, the Company only granted stock options.

3 unchanged sentences

The expense related to the stock-based compensation is recorded within the same financial statement line item as the grantee’s cash compensation.

The Company’s policy upon exercise of stock options and RSUs is that shares will be issued as new shares from the Company’s 2015 Omnibus Incentive Compensation Plan available share pool.

The Company’s policy upon exercise of stock options and RSUs is that shares will be issued as new shares drawing on the Company’s 2015 Omnibus Incentive Compensation Plan share pool that was adopted by the stockholders in November 2015.

Basic and Diluted Net Loss per Common Share

1 unchanged sentence

Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options, and RSUs, which would result in the issuance of incremental shares of common stock.

As the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of common stock for the three and nine months ended September 30, 2020 and 2019.

As the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of common stock for the three months ended March 31, 2021 and 2020.

The Company determines if an arrangement is a lease at contract inception.

Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

When evaluating whether a contract contains a lease, the Company considers whether (1) the contract explicitly or implicitly identifies assets that are contractually defined and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract.

The Company’s lease agreement contains lease and non-lease components.

Non-lease components primarily include payments for maintenance and utilities.

The Company has applied the practical expedient to combine fixed payments for non-lease components with lease payments and account for them together as a single lease component, which increases the amount of lease assets and corresponding liabilities.

Payments under the Company’s lease arrangement are primarily fixed, however variable payments, are expensed as incurred and not included in the operating lease asset and liability.

Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term.

When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

The Company uses the implicit interest rate when readily determinable and uses the Company’s incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the commencement date in determining the present value of the lease payments.

The Company’s operating leases are reflected in the right-of-use operating asset;

operating lease liability, current portion;

and operating lease liability, long-term portion in the Company’s consolidated balance sheets.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Short-term leases, defined as leases that have a lease term of 12 months or less at the commencement date, and do not include an option to extend the term or purchase the underlying asset that that the Company is reasonably certain to exercise, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.

Recent Accounting Pronouncements

3 unchanged sentences

Early adoption is permitted, including adoption in an interim period.

The Company is currently evaluating the expected impact of this standard, but does not expect it to have a material impact on its consolidated financial statements upon adoption.

The Company adopted this standard on January 1, 2021 , and the standard did not have a significant impact on its consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which clarifies various topics in the Accounting Standards Codification, including the addition of existing disclosure requirements to the relevant disclosure sections.

The amendments in ASU 2020-10 do not change GAAP and, therefore, are not expected to result in a significant change in practice.

ASU 2020-10 should be applied retrospectively to the beginning of the period that includes the adoption date.

ASU 2020-10 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company adopted this standard on January 1, 2021 , and the standard did not have a significant impact on its consolidated financial statements.

Accrued Expenses and Other Current Liabilities

At September 30, 2020 and December 31, 2019 accrued expenses and other current liabilities consisted of the following:

September 30,

Research and development

At March 31, 2021 and December 31, 2020 accrued expenses and other current liabilities consisted of the following:

Accrued research and development

Accrued compensation

Accrued general and administrative

Accrued Interest

Loan and Security Agreement

Silicon Valley Bank

In November 2016, the Company entered into an initial term loan agreement with Silicon Valley Bank (“SVB”) for a total of $ 20.0 million (“2016 Original Term Loan”).

The three -tranche term loan consisted of an initial $ 10.0 million tranche funded upon closing, and the remaining tranches were not drawn upon as the Company did not achieve the conditional criteria to access the second and third tranches before the specified dates and the $ 10.0 million in additional term loan advances subsequently expired.

Therefore, the Company amended the 2016 Original Term Loan to provide an additional $ 4.0 million growth capital loan (“2016 Amended Term Loan”).

The Company’s obligations under the 2016 Amended Term Loan, along with the ability to draw down on the additional $ 4.0 million tranche, were considered to be performed and completed in connection with the establishment of the 2019 Term Loan (as defined below).

In March 2019, the Company entered into a $ 24.0 million growth capital term facility (the “2019 Term Loan”) with SVB and WestRiver Innovation Lending Fund VIII, L.P.

(“WestRiver”).

The 2019 Term Loan consisted of an initial $ 20.0 million tranche, which was funded upon closing, and a second tranche of $ 4.0 million, which was available to be drawn subject to completion of a clinical milestone prior to August 15, 2019.

A portion of the first tranche was used to satisfy the Company’s existing obligations under and fully extinguish the 2016 Amended Term Loan, which at the commencement of the 2019 Term Loan consisted of $ 5.6 million in outstanding principal balance and $ 0.85 million as a final payment fee.

The 2019 Term Loan was subsequently amended in July 2019 (the “First Amendment to the 2019 Term Loan”) to extend the interest-only monthly payment period for 18 months from the date of the 2019 Term Loan and the Company’s ability to draw down on the second tranche of $ 4.0 million was extended until December 31, 2019.

The second tranche of $ 4.0 million was not drawn down by the Company.

The 2019 Term Loan accrued interest at a fixed rate of 7.5 %.

Interest on the 2019 Term Loan and the First Amendment to the 2019 Term Loan was payable monthly beginning April 1, 2019 and principal was due starting on October 1, 2020.

In addition, the Company was required to make a final payment of $ 1.26 million on February 1, 2023, the maturity date of the 2019 Term Loan.

However, the Company subsequently entered into the 2020 Term Loan (as defined below), the proceeds of which were used in part to fully satisfy and extinguish the 2019 Term Loan, as amended.

In connection with the 2019 Term Loan, the Company issued SVB and WestRiver a warrant to purchase shares of common stock.

These warrants were fully exercised and no longer outstanding as of September 30, 2020 (see Note 6 – Stockholders’ Equity under “Warrants” section for further discussion).

In September 2020, the Company terminated and repaid all amounts outstanding under the 2019 Term Loan and recorded a loss on extinguishment of the loan (see further discussion below).

Hercules Capital, Inc.

7 unchanged sentences

The Company intends to use the proceeds of the Term Loan Advances for working capital and general corporate purposes.

In addition, approximately $ 21.5 million of the proceeds from the First Advance was used to satisfy in full and retire the Company’s indebtedness under the 2019 Term Loan, as amended.

In addition, approximately $ 21.5 million of the proceeds from the First Advance was used to satisfy in full and retire the Company’s indebtedness under the 2019 Term Loan (as defined below), as amended.

The outstanding principal balance of the term loans bears interest at an annual rate equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 5.90 % or (ii) 9.15 %, subject to an ability by the Company, during certain periods (each, a “PIK Deferral Period”), to request a reduction of the then-effective cash-pay interest rate by up to 1.00 % per annum (the “Cash Interest Reduction Amount”).

7 unchanged sentences

Antecip consented to the collateral assignment of the License Agreement, among other things, under a direct agreement (the “Direct Agreement”) with the Company and Hercules.

T he Loan Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens (including a negative pledge on intellectual property and other assets), guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes.

The Loan Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens (including a negative pledge on intellectual property and other assets), guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes.

At the initial closing, there were no applicable financial covenants contained in the Loan Agreement.

Only after additional amounts are drawn down by the Company in the future, if the Company decides to do so, under the terms set forth in the Loan Agreement, there will be certain limited financial covenants that will apply, including:

● E ffective upon the date the outstanding principal amount of the advances under the Loan Agreement equals or exceeds $ 55.0 million, which has not yet occurred, the Company at all times thereafter must maintain cash in an account or accounts in which Hercules has a first priority security interest, in an aggregate amount greater than or equal to $ 15.0 million, plus the amount of the Company’s accounts payable under U.S.

Effective upon the date the outstanding principal amount of the advances under the Loan Agreement equals or exceeds $ 55.0 million, which has not yet occurred, the Company at all times thereafter must maintain cash in an account or accounts in which Hercules has a first priority security interest, in an aggregate amount greater than or equal to $ 15.0 million, plus the amount of the Company’s accounts payable under U.S.

GAAP not paid after the 180th day following the invoice for such account payable (such amount, the “Qualified Cash A/P Amount”).

● E ffective upon the later of (i) the last calendar month of the calendar quarter that is twelve months following the earlier of (x) the date that the First Milestone is achieved and (y) the date that the Second Milestone is achieved, or (ii) the date on which the outstanding principal amount of the term loan advances under the Loan Agreement is equal to or greater than $ 65.0 million, the Company is required to (A) ensure that at all times its market capitalization exceeds $ 2.0 billion, and that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 65 % of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, (B) ensure that at all times that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 100 % of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, or (C) achieve at least 60 % of the net product revenue solely from the sale of AXS-05 and AXS-07 (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but will not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing six-month basis as of the date of the Company’s most recent quarterly financial statement, determined on a quarterly basis.

● R estrictions on the Company’s ability to incur additional indebtedness, pay dividends, encumber its intellectual property, or engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses, with certain exceptions.

Effective upon the later of (i) the last calendar month of the calendar quarter that is twelve months following the earlier of (x) the date that the First Milestone is achieved and (y) the date that the Second Milestone is achieved, or (ii) the date on which the outstanding principal amount of the term loan advances under the Loan Agreement is equal to or greater than $ 65.0 million, the Company is required to (A) ensure that at all times its market capitalization exceeds $ 2.0 billion, and that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 65 % of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, (B) ensure that at all times that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 100 % of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, or (C) achieve at least 60 % of the net product revenue solely from the sale of AXS-05 and AXS-07 (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but will not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing six-month basis as of the date of the Company’s most recent quarterly financial statement, determined on a quarterly basis.

Restrictions on the Company’s ability to incur additional indebtedness, pay dividends, encumber its intellectual property, or engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses, with certain exceptions.

The Company’s obligations under the Loan Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, insolvency and a material adverse change in the Borrower’s business, operations or financial or other condition.

2 unchanged sentences

The Company may, at its option prepay the term loans in full or in part, subject to a prepayment penalty equal to (i) 2.0 % of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the Closing Date, (ii) 1.5 % of the principal amount prepaid if the prepayment occurs on or after the first anniversary and prior to the second anniversary of the Closing Date, and (iii) 1.0 % of the principal amount prepaid if the prepayment occurs on or after the second anniversary and prior to the third anniversary of the Closing Date.

The Company evaluated whether the Hercules Term Loan entered into in September 2020 represented a debt modification or extinguishment in accordance with ASC 470-50, Debt – Modifications and Extinguishments .

As a result of the repayment and retirement of the SVB Loan, the loan was accounted for by the Company under the extinguishment accounting model.

The Company recorded a loss on extinguishment of debt of approximately $ 1.2 million on the Company’s statement of operations for the nine months ended September 30, 2020, representing a prepayment premium, the unamortized discount of the SVB Loan and the write-off of deferred financing costs.

Silicon Valley Bank

In March 2019, the Company entered into a $ 24.0 million growth capital term loan facility (the “2019 Term Loan”) with Silicon Valley Bank, or SVB and West River Innovation Lending Fund VIII, L.P., or WestRiver.

In September 2020, the Company used a portion of the 2020 Term Loan to terminate and repay all amounts outstanding under the 2019 Term Loan and recorded a loss on extinguishment of the 2019 Term Loan.

Loan Interest Expense and Amortization

The Company incurred interest expense of $ 421,004 and $ 1,179,338 for the three and nine months ended September 30, 2020, respectively, as compared to $ 383,334 and $ 979,167 for the three and nine months ended September 30, 2019, respectively.

In addition, amortization of the final payment fee was $ 87,425 and $ 325,453 for the three and nine months ended September 30, 2020, respectively, as compared to $ 120,322 and $ 316,246 for the three and nine months ended September 30, 2019, respectively.

The Company incurred interest expense of $ 1,143,750 and $ 379,167 for the three months ended March 31, 2021 and 2020, respectively.

In addition, amortization of the final payment fee was $ 143,589 and $ 119,014 for the three months ended March 31, 2021 and 2020, respectively.

The outstanding debt and unamortized debt discount balances are as follows:

September 30,

Total Outstanding Debt

1 unchanged sentence

unamortized debt discount, long-term

( 1,981,582 )

current portion of long-term debt

( 2,666,667 )

Loan payable, long-term

Current portion of long-term debt

current portion of unamortized debt discount

Loan payable, current portion

In connection with the entry into the Hercules Term Loan, the Company issued to Hercules a warrant to purchase a number of shares of the Company’s common stock equal to 2.5 % of the aggregate amount of the Term Loan Advances that are funded.

Further information on warrants issued related to this loan and prior debt financings and amendments are disclosed in Note 7 - Stockholders’ Equity under the “Warrants” section.

Amortization of the debt discount in relation to warrants issued as described above was $ 46,920 and $ 165,556 for the three and nine months ended September 30, 2020, as compared to $ 56,602 and $ 155,496 for the three and nine months ended September 30, 2019, respectively.

Scheduled Principal Payments on Outstanding Debt, as of September 30, 2020, are as follows:

Amortization of the debt discount in relation to warrants issued as described above was $ 132,508 and $ 58,638 for three months ended March 31, 2021 and 2020, respectively.

Scheduled Principal Payments on Outstanding Debt, as of March 31, 2021, are as follows:

Total principal payments outstanding

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the nine months ended September 30, 2020.

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three months ended March 31, 2021.

Net Loss per Common Share

The following table sets forth the computation of basic and diluted net loss per common share:

Three months ended September 30,

Nine months ended September 30,

Three Months Ended March 31,

Basic and diluted net loss per common share:

( 22,924,815 )

( 19,135,612 )

( 73,735,953 )

( 43,538,202 )

Weighted average common shares outstanding—basic and diluted

Net loss per common share—basic and diluted

The following potentially dilutive securities outstanding at September 30, 2020 and 2019 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

September 30,

The following potentially dilutive securities outstanding at March 31, 2021 and 2020 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

Stock options

Restricted stock units

Commitments and Contingencies

Operating Leases

For the three months ended March 31, 2021, the Company had the following operating lease expense:

Statement of Operations Location

Three Months Ended

March 31, 2021

Operating lease expense

General and administrative and Research and development

Total operating lease expense

Future minimum lease payments of our operating leases as of March 31, 2021 were as follows:

Total lease payments

Less imputed interest

Present value of operating lease liabilities

As of March 31, 2021, the remaining lease term for our operating lease was 1.3 years with a discount rate of 6.0 %.

The interest rate implicit in lease contracts is typically not readily determinable and as such, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.

Stockholders’ Equity

Capital Structure

In May 2019, the Company entered into a Sales Agreement with SVB Leerink (the “May 2019 Sales Agreement”), pursuant to which the Company could sell up to $ 50 million in shares of its common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2016 Shelf Registration Statement (as defined below).

SVB Leerink was entitled to receive a commission of 3.0 % of the gross proceeds for any shares sold under the May 2019 Sales Agreement.

The shares that were unsold under the May 2019 Sales Agreement at the time of the expiration of the 2016 Shelf Registration Statement were rolled over to the December 2019 Sales Agreement (see below).

In December 2019, the Company entered into a new Sales Agreement with SVB Leerink (the “December 2019 Sales Agreement”), pursuant to which the Company may sell up to $ 80 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement.

In May 2019, the Company entered into the May 2019 Sales Agreement with SVB Leerink, pursuant to which the Company may sell up to $ 50 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2016 Shelf Registration Statement.

SVB Leerink is entitled to receive a commission of 3.0 % of the gross proceeds for any shares sold under the May 2019 Sales Agreement.

Due to expiration of the 2016 Shelf Registration Statement, at the Company’s option, the shares that were unsold of approximately $ 29.9 million under the May 2019 Sales Agreement, may be rolled over to the December 2019 Sales Agreement (see below).

In December 2019, the Company entered into the December 2019 Sales Agreement with SVB Leerink, pursuant to which the Company may sell up to $ 80 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement.

SVB Leerink is entitled to receive a commission of 3.0 % of the gross proceeds for any shares sold under the December 2019 Sales Agreement.

The Company received approximately $ 12.4 million in gross proceeds through the sale of 141,678 shares, of which net proceeds were approximately $ 12.1 million during the nine months ended September 30, 2020.

In December 2019, the Company completed an underwritten public offering, whereby the Company sold 2,300,000 shares of common stock at a public offering price of $ 87.00 per share.

The Company received gross proceeds of approximately $ 200.1 million and net proceeds of approximately $ 187.1 million, after deducting underwriting discounts and offering expenses.

For the three months ended March 31, 2021, the Company received approximately $ 6.3 million in gross proceeds through the sale of 93,877 shares, of which net proceeds were approximately $ 6.1 million.

For the three months ended March 31, 2020, the Company did no t issue any shares of common stock pursuant to the December 2019 Sales Agreement.

In December 2019, the Company completed an underwritten public offering, whereby the Company sold 2,300,000 shares of our common stock at a public offering price of $ 87.00 per share.

The Company received gross proceeds of approximately $ 200.1 million and net proceeds of approximately $ 187.1 million, net of underwriting discounts and offering expenses.

The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings.

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Shelf Registration Statement

On December 5, 2019, the Company filed an automatic shelf registration statement (“2019 Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”) for the issuance of common stock, preferred stock, warrants, rights, debt securities and units.

The 2019 Shelf Registration Statement was automatically effective upon filing with the SEC and is currently the Company’s only active shelf registration statement.

The 2019 Shelf Registration Statement was filed in part to replace the Company’s previous non-automatic shelf registration statement, which became effective on December 16, 2016, and provided for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $ 150.0 million (the “2016 Shelf Registration Statement”).

The 2016 Shelf Registration Statement expired on December 16, 2019.

Through the date of this report, the Company has issued common stock of approximately $ 219.8 million pursuant to the 2019 Shelf Registration Statement.

On December 5, 2019, the Company filed an automatic shelf registration statement (“2019 Shelf Registration”) with the Securities and Exchange Commission (“SEC”) for the issuance of common stock, preferred stock, warrants, rights, debt securities and units.

It became effective upon filing with the SEC and is currently the Company’s only active shelf registration.

Through the date of this report, the Company has issued common stock of approximately $ 228.2 million pursuant to such shelf registration statement.

Under SEC rules, the 2019 Shelf Registration Statement allows for the potential future offer and sale by the Company, from time to time, in one or more public offerings, of an indeterminate amount of the Company’s common stock, preferred stock, debt securities, and units at indeterminate prices.

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Equity Incentive Plans

There were 4,134,138 shares available for the issuance of stock options or stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan at September 30, 2020.

There were 4,727,326 shares available for the issuance of stock options or stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan at March 31, 2021.

Stock Options

The following table sets forth the stock option activity for the nine months ended September 30, 2020:

The following table sets forth the stock option activity for the three months ended March 31, 2021:

exercise price

Outstanding at December 31, 2020

Outstanding at September 30, 2020

Vested and expected to vest at September 30, 2020

Exercisable at September 30, 2020

Outstanding at March 31, 2021

Vested and expected to vest at March 31, 2021

Exercisable at March 31, 2021

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model.

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Expected volatility is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption.

The weighted average grant date fair value of options granted was $ 34.73 per option for the nine months ended September 30, 2020.

As of September 30, 2020, there was $ 26.9 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted average period of 3.0 years.

These amounts do not include 11,222 options outstanding as of September 30, 2020, which are performance-based and vest upon the achievement of certain corporate milestones.

The weighted average grant date fair value of options granted was $ 49.26 per option for the three months ended March 31, 2021.

As of March 31, 2021, there was $ 54.8 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted average period of 3.5 years.

These amounts do not include 9,788 options outstanding as of March 31, 2021, which are performance-based and vest upon the achievement of certain corporate milestones.

Stock‑based compensation will be measured and recorded if and when it is probable that the milestone will occur.

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The fair value of the RSUs is recognized as an expense ratably over the vesting period of four years .

As of September 30, 2020, total compensation cost not yet recognized related to unvested RSUs was $ 4.7 million, which is expected to be recognized over a weighted-average period of 3.7 years.

The following table sets forth the RSU activity for the nine months ended September 30, 2020:

As of March 31, 2021, total

compensation cost not yet recognized related to unvested RSUs was $ 12.0 million, which is expected to be recognized over a weighted-average period of 3.7 years .

The following table sets forth the RSU activity for the three months ended March 31, 2021:

Outstanding at December 31, 2020

Outstanding at September 30, 2020

Stock-based compensation expense recognized for the three and nine months ended September 30, 2020 and 2019 was allocated as follows:

Three months ended September 30,

Nine months ended September 30,

Outstanding at March 31, 2021

Stock-based compensation expense recognized for the three months ended March 31, 2021 and 2020 was allocated as follows:

Three Months Ended March 31,

Research and development

General and administrative

The following table summarizes warrant activity for the nine months ended September 30, 2020:

The following table summarizes warrant activity for the three months ended March 31, 2021:

exercise price

Outstanding at December 31, 2020

Outstanding at September 30, 2020

Outstanding at March 31, 2021

Outstanding Warrants

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The warrants were classified as a component of stockholders’ equity.

T he relative fair value of the warrants of approximately $ 0.9 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt.

The discount on the debt is being amortized to interest expense over the term of the debt utilizing the effective interest rate method.

Fully Exercised Warrants

In connection with the 2016 Original Term Loan, SVB and Life Science Loans, LLC (“Life Science”) received warrants to purchase an aggregate of 65,228 shares of the Company’s common stock at an exercise price of $ 7.41 per share, which were exercisable for seven years from the date of issuance.

The warrants were classified as a component of stockholders’ equity.

In September 2019, SVB exercised in full the 32,614 warrants it received in connection with the 2016 Original Term Loan via a cashless exercise.

The Company issued SVB 24,328 shares of its common stock in connection with the warrant exercise, and did not receive any cash proceeds.

In addition, in May 2020, Life Science exercised in full the 32,614 warrants it received in connection with the 2016 Original Term Loan via a cashless exercise.

The Company issued Life Science 29,982 shares of its common stock in connection with the warrant exercise and did not receive any cash proceeds.

As of September 30, 2020, none of the warrants issued in connection with the 2016 Original Term Loan were outstanding.

Additionally, in connection with the 2016 Amended Term Loan, SVB and WestRiver received warrants to purchase an aggregate 15,750 shares of the Company’s common stock at an exercise price of $ 3.06 per share, which were exercisable for seven years from the date of issuance.

Both warrants issued in connection with the 2016 Original Term Loan and the 2016 Amended Term Loan were classified as a component of stockholders’ equity.

Prior to entering into the 2019 Term Loan, the fair value of these warrants and the closing costs were recorded as debt discounts and were being amortized using the effective interest rate method over the term of the loan.

In August 2019, SVB exercised in full the 7,875 warrants it received in connection with the 2016 Amended Term Loan via a cashless exercise.

The Company issued SVB 6,969 shares of its common stock in connection with the warrant exercise, and did not receive any cash proceeds.

In August 2020, WestRiver exercised in full the 7,875 warrants it received in connection with the 2016 Amended Term Loan via a cashless exercise.

The Company issued SVB 7,579 shares of its common stock in connection with the warrant exercise, and did not receive any cash proceeds.

As of September 30, 2020, none of the warrants issued in connection with the 2016 Amended Term Loan were outstanding.

Due to the debt modification upon entry of the 2019 Term Loan, the unamortized balance of the deferred debt issuance costs incurred with the 2016 Amended Term Loan continued to be amortized through maturity in February 2023 along with the debt issuance costs of the 2019 Term Loan utilizing the effective interest rate method.

In connection with the 2019 Term Loan, SVB and WestRiver received warrants to purchase an aggregate of 70,000 shares of the Company’s common stock at a price per share equal to $ 8.10 (the “March 2019 Warrants”).

The warrants would initially be earned based upon the usage of the facility and are exercisable until March 4, 2026.

The warrants were classified as a component of stockholder’s equity, of which 58,332 warrants were immediately exercisable and the remaining 11,668 warrants could be earned based on usage of the second tranche of the 2019 Term Loan.

The additional warrants were initially immediately exercisable if and when the Term B Loan Advance was funded (however, the March 2019 Warrants were amended in connection with the First Amendment to the 2019 Term Loan, as discussed below).

T he relative fair value of the warrants of approximately $ 0.4 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt.

The relative fair value of the warrants of approximately $ 0.9 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt.

The discount on the debt is being amortized to interest expense over the term of the debt utilizing the effective interest rate method.

In connection with the First Amendment to the 2019 Term Loan, the March 2019 Warrants were amended to fix the number of shares that may be issued upon exercise of each such March 2019 Warrant at 29,167 shares of common stock, and SVB and WestRiver were issued new warrants (the “July 2019 Warrants”), which were to become exercisable only upon funding of the Term B Loan Advance, to purchase 5,750 shares of the Company’s common stock at a price per share equal to $ 25.71 .

The July 2019 Warrants replaced the portion of the March 2019 Warrants that could originally be earned by SVB and WestRiver upon funding of the Term B Loan Advance.

Because the Company did not draw down on the Term B Loan Advance by December 31, 2019, the July 2019 Warrants have been terminated.

In December 2019, SVB exercised in full its portion of 29,167 warrants it received in connection with the 2019 Term Loan via a cashless exercise.

The Company issued SVB 24,185 shares of its common stock in connection with the warrant exercise and did not receive any cash proceeds.

In August 2020, WestRiver exercised in full its portion of 29,167 warrants it received in connection with the 2019 Term Loan via a cashless exercise.

The Company issued SVB 26,270 shares of its common stock in connection with the warrant exercise and did not receive any cash proceeds.

As of September 30, 2020, none of the warrants issued in connection with the First Amendment to the 2019 Term Loan were outstanding.

In relation to the retirement of the 2019 Term Loan, the unamortized portion of the debt issuance costs from the issuance of these warrants were fully extinguished and are included in the $ 1.2 million loss on extinguishment of debt on the statement of operations.

License Agreements

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The Company determined that the fair value of each share of common stock granted to Pfizer on the closing date of January 9, 2020 was $ 87.24 , based on the closing price of the Company’s stock on that date.

As a result, the fair value of the stock issued was $ 7.2 million and therefore, the total research and development expense recognized was $ 10.2 million related to the Pfizer license agreement during the nine months ended September 30, 2020.

Pfizer can also receive up to $ 323 million in regulatory and sales milestones, and tiered mid-single to low double-digit royalties on future sales.

Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.

During the nine months ended September 30, 2020, no milestone payments or royalties were paid to Pfizer by the Company.

During the three months ended March 31, 2021, no milestone payments or royalties were paid to Pfizer by the Company.

Exclusive License Agreements with Antecip

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements