What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 67 added, 45 removed, 371 unchanged (23% of the section changed)

18 unchanged sentences

Stockholders’ equity:

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)

Preferred stock, $ 0.0001 par value per share ( 10,000,000 shares authorized, none issued and outstanding at June 30, 2021 and December 31, 2020, respectively)

Common stock, $ 0.0001 par value per share ( 150,000,000 shares authorized, 37,648,948 and 37,374,088 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively)

Additional paid-in capital

7 unchanged sentences

Consolidated Statements of Operations

Three Months Ended

Six Months Ended

Operating expenses:

18 unchanged sentences

( 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 financing

Balance at June 30, 2020

( 226,706,631

Balance at December 31, 2020

6 unchanged sentences

( 308,056,063

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon vesting of RSUs

Issuance of common stock upon financing

Shares tendered for withholding taxes

Balance at June 30, 2021

( 340,340,272

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

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

16 unchanged sentences

Proceeds from issuance of common stock upon exercise of options

Proceeds from issuance of common stock upon exercise of warrants

Payments of tax withholdings on stock award

Net cash (used in) provided by financing activities

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

The results of operations for the three and six months ended June 30, 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 March 31, 2021, the Company had an accumulated deficit of $ 308.1 million.

As of June 30, 2021, the Company had an accumulated deficit of $ 340.3 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 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.

As of June 30, 2021, the balance of cash and cash equivalents was $ 141.2 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 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.

At June 30, 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.

34 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, 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 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 six months ended June 30, 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 March 31, 2021, the Company does not believe any material uncertain tax positions are present.

As of June 30, 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.

16 unchanged sentences

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 months ended March 31, 2021 and 2020.

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 six months ended June 30, 2021 and 2020.

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

12 unchanged sentences

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.

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 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

10 unchanged sentences

Accrued Expenses and Other Current Liabilities

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

At June 30, 2021 and December 31, 2020 accrued expenses and other current liabilities consisted of the following:

Accrued research and development

27 unchanged sentences

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

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.

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, neither of which have occurred yet, 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 per the board of directors approved forecast 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.

7 unchanged sentences

Loan Interest Expense and Amortization

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 Company incurred interest expense of $ 1,156,458 and $ 2,300,208 for the three and six months ended June 30, 2021 and 379,167 and 758,334 three and six months ended June 30, 2020, respectively.

In addition, amortization of the final payment fee was $ 149,281 and $ 292,870 for the three and six months ended June 30, 2021 and $ 119,014 and $ 238,028 three and six months ended June 30, 2020, respectively.

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

6 unchanged sentences

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 $ 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:

Amortization of the debt discount in relation to warrants issued as described above was $ 132,508 and $ 267,882 for the three and six months ended June 30, 2021 and $ 59,998 and $ 118,636 for the three and six months ended June 30, 2020, respectively.

Scheduled Principal Payments on Outstanding Debt, as of June 30, 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 three months ended March 31, 2021.

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the six months ended June 30, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Basic and diluted net loss per common share:

1 unchanged sentence

Net loss per common share—basic and diluted

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:

The following potentially dilutive securities outstanding at June 30, 2021 and 2020 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

Stock options

2 unchanged sentences

Operating Leases

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

For the three and six months ended June 30, 2021, the Company had the following operating lease expense:

Three Months Ended June 30,

Six Months Ended June 30,

Statement of Operations Location

Three Months Ended

March 31, 2021

Operating lease expense

1 unchanged sentence

Total operating lease expense

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

Future minimum lease payments of the Company’s operating leases as of June 30, 2021 were as follows:

Total lease payments

1 unchanged sentence

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 %.

As of June 30, 2021, the remaining lease term for our operating lease was 1.1 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.

6 unchanged sentences

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.

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.

For the six months ended June 30, 2021, the Company received approximately $ 7.4 million in gross proceeds through the sale of 110,296 shares, of which net proceeds were approximately $ 7.2 million.

For the six months ended June 30, 2020, 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.

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.

9 unchanged sentences

Equity Incentive Plans

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.

There were 4,572,808 shares available for the issuance of stock options or stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan at June 30, 2021.

Stock Options

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

The following table sets forth the stock option activity for the six months ended June 30, 2021:

exercise price

contractual term

Outstanding at December 31, 2020

Outstanding at March 31, 2021

Vested and expected to vest at March 31, 2021

Exercisable at March 31, 2021

Outstanding at June 30, 2021

Vested and expected to vest at June 30, 2021

Exercisable at June 30, 2021

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

6 unchanged sentences

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 $ 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.

The weighted average grant date fair value of options granted was $ 48.74 per option for the six months ended June 30, 2021.

As of June 30, 2021, there was $ 57.0 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted average period of 3.3 years.

These amounts do not include 8,647 options outstanding as of June 30, 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.

3 unchanged sentences

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

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:

As of June 30, 2021, total compensation cost not yet recognized related to unvested RSUs was $ 11.5 million, which is expected to be recognized over a weighted-average period of 3.4 years.

The following table sets forth the RSU activity for the six months ended June 30, 2021:

Weighted average

grant date fair value

Outstanding at December 31, 2020

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,

Outstanding at June 30, 2021

Stock-based compensation expense recognized for the three and six months ended June 30, 2021 and 2020 was allocated as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

General and administrative

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

The following table summarizes warrant activity for the six months ended June 30, 2021:

Number of warrants

exercise price

Outstanding at December 31, 2020

Outstanding at March 31, 2021

Outstanding at June 30, 2021

Outstanding Warrants

13 unchanged sentences

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

During the three months ended June 30, 2021, no milestone payments or royalties were paid to Pfizer by the Company.

Exclusive License Agreements with Antecip

9 unchanged sentences

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