What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-12 · 123 added, 151 removed, 279 unchanged (50% of the section changed)

3 unchanged sentences

(In $000s, except share, per share, and liquidation preference amounts)

September 30,

Current assets:

13 unchanged sentences

Preferred stock, $0.001 par value;

5,000,000 shares authorized at December 31, 2019 and September 30, 2020;

5,000,000 shares authorized at December 31, 2020 and March 31, 2021;

6% Convertible Exchangeable preferred stock;

335,273 shares issued and outstanding at December 31, 2019 and September 30, 2020.

Aggregate preference in liquidation of $4,006,512 as of December 31, 2019 and September 30, 2020.

335,273 shares issued and outstanding at December 31, 2020 and March 31, 2021.

Aggregate preference in liquidation of $4,006,512 as of December 31, 2020 and March 31, 2021.

Series A convertible preferred stock, $0.001 par value;

264 shares issued and outstanding at December 31, 2019 and September 30, 2020.

264 shares issued and outstanding at December 31, 2020 and March 31, 2021.

Series B convertible preferred stock, $0.001 par value;

237,745 shares issued and outstanding at December 31, 2020 and March 31, 2021.

Common stock, $0.001 par value;

100,000,000 shares authorized at December 31, 2019 and September 30, 2020;

859,998 and 4,863,984 shares issued and outstanding at December 31, 2019 and September 30, 2020.

100,000,000 shares authorized at December 31, 2020 and March 31, 2021;

6,246,896 and 9,234,110 shares issued and outstanding at December 31, 2020 and March 31, 2021.

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

19 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Translation adjustment

Unrealized foreign exchange gain on intercompany loans

Unrealized foreign exchange gain (loss) on intercompany loans

Comprehensive loss

7 unchanged sentences

Balances at December 31, 2019

Issue of common stock on At Market Issuance sales agreement, net of expenses

Stock-based compensation

4 unchanged sentences

Balances at March 31, 2020

Issue of common stock on At Market Issuance sales agreement, net of expenses

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at June 30, 2019

Issue of common stock on At Market Issuance sales agreement, net of expenses

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at September 30, 2019

Balances at December 31, 2020

Issuance of common stock in underwritten offering, net of issuance costs

Warrant Exercises

Stock-based compensation

4 unchanged sentences

Balances at March 31, 2021

Issue of common stock, pre-funded warrants and warrants on equity financing, net of expenses

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at June 30, 2020

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at September 30, 2020

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

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

Gain on disposal of property and equipment

Stock-based compensation

6 unchanged sentences

Purchase of property, plant and equipment

Proceeds from sale of property and equipment

Net cash provided by (used in) investing activities

Net cash used in investing activities

Financing activities:

Proceeds, net of issuance costs, from issuing common stock (issuance costs paid)

Proceeds from issuing common stock and warrant exercises, net of issuance costs

Payment of preferred stock dividend

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

Cash received during the period for:

Non cash activities on transition to ASC 842:

Lease liability

Right-of-use asset

Non cash financing activities:

6 unchanged sentences

Cyclacel Pharmaceuticals, Inc.

(“Cyclacel” or “the Company”) is a clinical-stage biopharmaceutical company using cell cycle control, transcriptional regulation and DNA damage response biology to develop innovative, targeted medicines for cancer and other proliferative diseases.

Cyclacel is a pioneer company in the field of cell cycle biology with a vision to improve patient healthcare by translating cancer biology into medicines.

As of September 30, 2020, substantially all efforts of the Company to date have been devoted to performing research and development, conducting clinical trials, developing and acquiring intellectual property, raising capital and recruiting and training personnel.

(“Cyclacel” or the “Company”) is a clinical-stage biopharmaceutical company developing innovative cancer medicines based on cell cycle, transcriptional regulation and mitosis control biology.

Cyclacel is a pioneer company in the field of cancer cell cycle biology with a vision to improve patient healthcare by translating insights in cancer biology into medicines that can overcome resistance, help reduce tumors and ultimately increase overall survival of cancer patients.

Through March 31, 2021, substantially all efforts of the Company to date have been devoted to performing research and development, conducting clinical trials, developing and acquiring intellectual property, raising capital and recruiting and training personnel.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet as of September 30, 2020, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2020 and 2019 and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019, and all related disclosures contained in the accompanying notes, are unaudited.

The consolidated balance sheet as of December 31, 2019 is derived from the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020.

The consolidated balance sheet as of March 31, 2021, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three months ended March 31, 2021 and 2020 and the consolidated statements of cash flows for the three months ended March 31, 2021 and 2020, and all related disclosures contained in the accompanying notes, are unaudited.

The consolidated balance sheet as of December 31, 2020 is derived from the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2021.

The consolidated financial statements are presented on the basis of accounting principles that are generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC.

Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements.

In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the consolidated balance sheet as of September 30, 2020, and the results of operations and comprehensive loss for the three and nine months ended September 30, 2020, and cash flows for the nine months ended September 30, 2020, have been made.

The interim results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other reporting period.

The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2019 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2020.

In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the consolidated balance sheet as of March 31, 2021, and the results of operations and comprehensive loss for the three months ended March 31, 2021, and cash flows for the three months ended March 31, 2021, have been made.

The interim results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other reporting period.

The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2020 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021.

Reverse Stock Split

On April 14, 2020 the Company completed a one-for-twenty reverse stock split, which reduced the number of shares of the Company’s common stock that were issued and outstanding immediately prior to the effectiveness of the reverse stock split.

On April 14, 2020 the Company completed a one-for-twenty reverse stock split, which reduced the number of shares of the Company’s common stock that were issued and outstanding at April 14, 2020, from 17,199,974 to 859,998 after the cancellation of 14 fractional shares, immediately prior to the effectiveness of the reverse stock split.

The number of shares of the Company’s authorized common stock was not affected by the reverse stock split and the par value of Cyclacel’s common stock remained unchanged at $0.001 per share.

The reverse stock split reduced the number of shares of the Company’s common stock that were outstanding at April 14, 2020 from 17,199,974 to 859,998, after the cancellation of 14 fractional shares.

No fractional shares were issued in connection with the reverse stock split.

3 unchanged sentences

Management considers that there are no conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern for a period of at least one year from the date the financial statements are issued.

The Company expects that its cash of approximately $23.1 million as of September 30, 2020 will be sufficient to fund its operating expenses and capital expenditure requirements through the end of 2022.

The Company expects that its cash of approximately $47.8 million as of March 31, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements to early 2023.

This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued, including:

3 unchanged sentences

Other conditions and events, when considered in conjunction with the above, that may adversely affect the Company’s ability to meet its obligations.

The future viability of the Company beyond the end of 2022 is dependent on its ability to raise additional capital to finance its operations.

The future viability of the Company beyond the beginning of 2023 is dependent on its ability to raise additional capital to finance its operations.

The Company does not currently have sufficient funds to complete development and commercialization of any of its drug candidates.

4 unchanged sentences

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China.

It has now spread to many other countries, including the United States and United Kingdom, where the Company has its primary bases of operation.

The World Health Organization has declared the coronavirus outbreak a pandemic, and during the nine-month period ending September 30, 2020, many governments issued “stay at home” orders.

It has now spread globally, including the United States and United Kingdom, where the Company has its operations.

The World Health Organization has declared the coronavirus outbreak a pandemic.

The extent to which the coronavirus impacts the Company’s financial condition and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the pandemic, the emergence of new geographic hotspots, the emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States, the United Kingdom and other countries, and the effectiveness of actions taken globally to contain and treat the disease .

1 unchanged sentence

Accounting standards adopted in the period

On January 1, 2019, the Company adopted the guidance on accounting for leases (“ASC 842”) in Accounting Standards Update No, 2016-02, Leases, as amended by subsequent updates issued in 2018 and 2019.

The guidance requires that lessees recognize both a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term at the commencement date.

The Company has elected the package of practical expedients permitted in ASC 842.

Accordingly, the Company accounted for its existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease under ASC 842, (b) whether classification of the operating leases would be different in accordance with ASC 842, or (c) whether any unamortized initial direct costs would have met the definition of initial direct costs in ASC 842 at lease commencement.

The Company transitioned to the new guidance on a cumulative catch-up basis effective January 1, 2019, recognizing a lease liability of $1.5 million for the present value of the remaining minimum rental payments, as defined under prior accounting rules, and a corresponding right-of-use asset.

In addition, the Company reclassified an existing deferred rent obligation of $120,000 created under prior accounting rules against the opening right-of-use asset.

On January 1, 2020, the Company adopted the guidance issued in ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” As permitted by the ASU, the Company will apply the new guidance on a prospective basis to any new cloud computing arrangements.

1 unchanged sentence

There has been no impact of this pronouncement on the Company’s consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) has issued ASU 2020-04, “Reference Rate Reform (Topic 848)”.

This standard provides optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform initiatives that would replace interbank offered rates, including the London Interbank Offered Rate (LIBOR).

For example, modifications of lease contracts within the scope of ASC 842 solely for changes in reference rates would be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate.

The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company does not currently have any contracts affected by this guidance.

The FASB has issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

1 unchanged sentence

This standard simplifies the accounting for convertible instruments, such as convertible debt or convertible preferred stock, by eliminating two potential methods in accounting for the embedded conversion feature.

The standard also removes certain conditions previously used to evaluate whether a freestanding financial instrument, or certain types of embedded features, are considered to be settled in the issuer’s own equity.

The standard also removes certain conditions previously used to evaluate whether a freestanding

financial instrument, or certain types of embedded features, are considered to be settled in the issuer’s own equity.

Finally, ASU 2020-06 requires that an entity use the if-converted method in calculating the effects of convertible instruments on diluted earnings per share, with one limited exception.

1 unchanged sentence

Early adoption is permitted, but no earlier than for fiscal years beginning after December 15, 2020.

The Company does not currently have any contracts affected by this guidance, but has nonetheless elected to early adopt ASU 2020-06 as of January 1, 2021.

There was no impact of early adopting this pronouncement on the Company’s consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) has issued ASU 2020-04, “Reference Rate Reform (Topic 848)”.

The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company does not currently have any contracts affected by this guidance.

7 unchanged sentences

No taxes were recorded on items of other comprehensive income (loss).

There were no reclassifications out of other comprehensive income (loss) during the three months ended September 30, 2019 and 2020.

There were no reclassifications out of other comprehensive income (loss) during the three months ended March 31, 2020 and 2021.

Revenue recognition

18 unchanged sentences

Grant revenue received from organizations that are not the Company’s customers, such as charitable foundations or government agencies, is presented as a reduction against the related research and development expenses.

Effective from January 1, 2019, the Company accounts for lease contracts in accordance with ASC 842.

As of September 30, 2020, all of the Company’s leases are classified as operating leases.

The Company accounts for lease contracts in accordance with ASC 842.

As of March 31, 2021, all of the Company’s leases are classified as operating leases.

The Company recognizes an asset for the right to use an underlying leased asset for the lease term and records lease liabilities based on the present value of the Company’s obligation to make lease payments under the lease.

14 unchanged sentences

The Company has elected an accounting policy to account for the lease and non-lease components as a single lease component.

Revenue recognized in the three and nine months ended September 30, 2019 and 2020 was $0.

Revenue recognized in the three months ended March 31, 2020 and 2021 was $0.

Net Loss per Common Share

1 unchanged sentence

Basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

The weighted average number of shares of common stock for nine months ended September 30, 2020 reflects pre-funded warrants to purchase up to 2,090,000 shares of common stock issued in April 2020 (see Note 9) as outstanding from the date of issuance through exercise.

The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three and nine months ended September 30, 2019 and 2020, as the result would be anti-dilutive:

September 30,

The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three months ended March 31, 2020 and 2021, as the result would be anti-dilutive:

Stock options

1 unchanged sentence

Series A preferred stock

Series B preferred stock

Common stock warrants

2 unchanged sentences

Prepaid expenses and other current assets consisted of the following (in $000s):

September 30,

Research and development tax credit receivable

1 unchanged sentence

Other current assets

Receivables of $56,000 are included in other current assets as at September 30, 2020.

Receivables of $126,000 are included in other current assets as at March 31, 2021.

This relates to royalty payments receivable under a December 2005 Asset Purchase Agreement, or APA, whereby Xcyte Therapies, Inc., or Xcyte (a business acquired by the Company in March 2006), sold certain assets and intellectual property to ThermoFisher Scientific Company, or TSC (formerly Invitrogen Corporation), through the APA and other related agreements.

The assets and technology were not part of the Company’s product development plan following the transaction between Xcyte and Cyclacel in March 2006.

Accordingly, the company recognized $891,000 of other income related to this transaction during the nine months ended September 30, 2020.

Accordingly, the company presented the $126,000 as other income during the three months ended March 31, 2021.

Accrued and Other Liabilities

Accrued and other current liabilities consisted of the following (in $000s):

September 30,

Accrued research and development

2 unchanged sentences

The Company currently has two leases relating to its facilities in Dundee, Scotland and Berkeley Heights, New Jersey.

As of and for the nine months ended September 30, 2020:

As of and for the three months ended March 31, 2021:

The Company recognized operating lease expenses of $97,660.

Cash payments made during the nine months ended September 30, 2020 totaled $284,936 and were presented as cash outflows from operating activities.

The remaining lease term as of September 30, 2020 is approximately 5.1 years for the Dundee facility and approximately 1.8 years for the Berkeley Heights facility.

The discount rate used by the Company in determining the lease liability was 12% for both outstanding leases.

Remaining lease payments under the leases are:

Cash payments made during the three months ended March 31, 2021 totaled $102,348 and were presented within cash outflows from operating activities.

The remaining lease term as of March 31, 2021 is approximately 4.6 years for the Dundee facility (see Note 10 for a subsequent event related to this lease) and approximately 1.3 years for the Berkeley Heights facility.

The discount rate used by the Company in determining the lease liability was 12% for both leases.

Remaining payments for these two facilities are as follows:

Stock Based Compensation

ASC 718 requires compensation expense associated with share-based awards to be recognized over the requisite service period, which for the Company is the period between the grant date and the date the award vests or becomes exercisable.

Most of the awards granted by the Company (and still outstanding) vest ratably over one to four years.

The Company recognizes all share-based awards under the straight-line attribution method, assuming that all granted awards will vest.

Forfeitures are recognized in the periods when they occur.

Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three and nine months ended September 30, 2019 and 2020 as shown in the following table (in $000s):

Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three months ended March 31, 2020 and 2021 as shown in the following table (in $000s):

Three Months Ended

Nine Months Ended

September 30,

Research and development

2 unchanged sentences

In May 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), under which Cyclacel may make equity incentive grants to its officers, employees, directors and consultants.

The 2018 Plan replaced the 2015 Equity Incentive Plan (the “2015 Plan”).

The 2018 Plan replaces the 2015 Equity Incentive Plan (the “2015 Plan”).

The 2018 Plan allows for the issuance of up to 775,000 shares of the Company’s common stock pursuant to various types of award grants, including stock options and restricted stock units.

In addition, the 2018 Plan allows up to 35,494 additional shares to be issued if awards outstanding under the 2018 Plan are cancelled or expire on or after the date of the Company’s 2018 annual meeting of stockholders.

As of September 30, 2020, the Company has reserved 656,124 shares of the Company’s common stock under the 2018 Plan for future issuances, including shares that were available under the 2015 Plan and carried forward to the 2018 Plan.

As of March 31, 2021, the Company has reserved 254,366 shares of the Company’s common stock under the 2018 Plan, including shares that were available under the 2015 Plan and carried forward to the 2018 Plan.

Stock option awards granted under the Company’s equity incentive plans have a maximum life of 10 years and generally vest over a one to four-year period from the date of grant.

There were 56,400 options granted during the nine months ended September 30, 2020.

These options had a grant date fair value ranging between $2.48-$3.95 per option.

There were 77,513 options granted during the nine months ended September 30, 2019.

2020 Inducement Equity Incentive Plan

In October 2020, the Inducement Equity Incentive Plan (the “Inducement Plan”), became effective.

Under the Inducement Plan, Cyclacel may make equity incentive grants to new senior level Employees (persons to whom the Company may issue securities without stockholder approval).

The Inducement Plan allows for the issuance of up to 200,000 shares of the Company’s common stock (or the equivalent of such number).

As of March 31, 2021, 120,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 80,000 shares.

Option Grants

There were no options granted during the three months ended March 31, 2020.

There were 73,669 options granted during the three months ended March 31, 2021.

These options had a grant date fair value ranging between $5.40-$6.14 per option.

There were no stock options exercised during each of the nine months ended September 30, 2019 and 2020, respectively.

The fair value of the stock options granted is calculated using the Black-Scholes option-pricing model as prescribed by ASC 718 using the following assumptions:

Three Months Ended

March 31, 2021

Expected term (years)

Risk free interest rate

0.420% – 0.585%

Expected dividend yield over expected term

Resulting weighted average grant date fair value

There were no stock options exercised during each of the three months ended March 31, 2020 and 2021, respectively.

The Company does not expect to be able to benefit from the deduction for stock option exercises that may occur because the company has tax loss carryforwards from prior periods that would be expected to offset any potential taxable income.

In September 2020, the Company modified certain outstanding stock option awards for two of its former longstanding directors, both of whose service terminated in September 2020.

Specifically, a total of 10,400 options that otherwise would have been forfeited were accelerated.

In addition, the Company extended the period during which these directors’ outstanding vested awards could be exercised from ninety (90) days to three years (but not beyond the contractual term of the awards).

The Company recognized a charge of approximately $20,000 during the three months ended September 30, 2020 related to these modifications.

Outstanding Options

3 unchanged sentences

Cancelled/forfeited

Options outstanding at September 30, 2020

Unvested at September 30, 2020

Vested and exercisable at September 30, 2020

Options outstanding at March 31, 2021

Unvested at March 31, 2021

Vested and exercisable at March 31, 2021

Restricted Stock Units

1 unchanged sentence

The Company issued 3,938 additional restricted stock units to employees during the quarter ended March 31, 2020, of which 1,414 units have been forfeited.

The vesting of the remaining 17,088 outstanding restricted stock units is dependent upon the fulfillment of certain clinical study objectives.

The Company determined that the satisfaction of the clinical conditions was not probable at September 30, 2020 and, as a result, recorded no compensation expense related to restricted stock units for the quarter ended September 30, 2020.

The vesting of the remaining 16,524 outstanding restricted stock units is dependent upon the fulfillment of certain clinical conditions.

The Company determined that the satisfaction of the clinical conditions was not probable at March 31, 2021 and, as a result, recorded no compensation expense related to restricted stock units for the quarter ended March 31, 2021.

The restricted stock units were valued based on their fair value at the date of grant, which is equivalent to the market price of a share of the Company’s common stock.

Summarized information for restricted stock unit activity for the quarter ended September 30, 2020 is as follows:

Restricted Stock

Weighted Average

Date Value Per Share

Restricted Stock Units outstanding at September 30, 2020

Unvested at September 30, 2020

Vested and exercisable at September 30, 2020

Summarized information for restricted stock units’ activity for the quarter ended March 31, 2021 is as follows:

Value Per Share

Restricted Stock Units outstanding at March 31, 2021

Unvested at March 31, 2021

Vested and exercisable at March 31, 2021

Stockholders Equity

March 2021 equity financing

On March 12, 2021, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Oppenheimer & Co.

Inc., as representative of the underwriters identified therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell 1,807,143 shares of common stock, $0.001 par value per share, at a public offering price of $7.00 per share (the “Offering”) along with a 30-day overallotment option to purchase up to an additional 271,071 shares of common stock at the public offering price, less underwriting discounts and commissions.

The closing of the offering occurred on March 16, 2021, and the net proceeds to the Company (including exercise of the over-allotment option) were approximately $13.5 million, after deducting placement agent fees and other offering expenses payable by the Company.

December 2020 equity financing

On December 18, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Acorn Bioventures, LP (the “Purchaser”), pursuant to which the Company agreed to offer, issue and sell to the Purchaser, (i) in a registered direct offering, (a) an aggregate of 485,912 shares (the “Common Shares”) of common stock, par value $0.001 per share (“Common Stock”), and (b) an aggregate of 237,745 shares of Series B Convertible Preferred Stock (the “Preferred Shares,” and collectively with the Common Shares, the “Shares”), par value $0.001 per share (“Series B Preferred Stock”), and (ii) in a concurrent private placement, warrants (the “Warrants”) to purchase up to an aggregate of 669,854 shares (the “Warrant Shares”) of Common Stock.

The combined purchase price for each Share, together with one Warrant to purchase 0.4 shares of Common Stock, is $4.18.

Each Warrant shall be exercisable beginning on the 12-month anniversary of the date of issuance for a period of five years after the date of issuance, at an exercise price of $4.13 per Warrant Share.

The exercise price of the Warrants will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants.

The Warrants may be exercised on a “cashless” basis.

Each share of Series B Convertible Preferred Stock will convert into five shares of Common Stock.

The conversion feature within the Series B Convertible Preferred Stock was determined to be beneficial as of the offering date.

A beneficial conversion feature is defined as a nondetachable conversion feature that is "in-the-money"

The Company calculated the value of the beneficial conversion feature based on its intrinsic value, which is the difference between the “effective conversion price” (after allocating the proceeds of the offering between the Series B Convertible Preferred Stock, the Warrants and Common Stock issued) and the market price of the Company's common shares, multiplied by the number of shares into which the Series B Convertible Preferred Stock is convertible.

The effective conversion price of $3.18 per share is different from the $4.18 per share contractual conversion price.

As the series B Preferred Stock contained no stated redemption date and the conversion feature could be exercised at any time, the discount associated with the beneficial conversion feature was immediately charged against additional paid-in-capital and treated as a deemed dividend for both financial reporting and earnings per share purposes.

The common stock, Warrants and Series B Preferred Stock are freestanding financial instruments.

The Warrants are classified within equity (as a component of additional paid-in capital) in the consolidated balance sheet and are not remeasured on a recurring basis.

The Series B Preferred Stock is classified within permanent equity in the consolidated balance sheet.

The closing of the offering occurred on December 22, 2020 and the net proceeds to the Company were approximately $6.9 million, after deducting offering expenses payable by the Company.

As of March 31, 2021, 237,745 shares of the Series B Preferred Stock remained issued and outstanding.

April 2020 equity financing

10 unchanged sentences

The closing of the offering occurred on April 24, 2020, and the net proceeds to the Company were approximately $18.3 million, after deducting placement agent fees and other offering expenses payable by the Company.

Subsequent to the closing of the offering and within the nine months ended September 30, 2020, all of the pre-funded warrants issued in connection therewith were converted into 2,090,000 shares of common stock.

Following such conversions, 4,863,984 shares of common stock are outstanding as of November 11, 2020.

October 2018 At Market Issuance

On October 4, 2018, the Company entered into a Common Stock Sales Agreement, or the Sales Agreement, with H.C.

Wainwright & Co., LLC, or Wainwright, as sales agent, pursuant to which Wainwright was authorized to sell shares of common stock, par value $0.001 per share, having an aggregate offering price of up to $5,000,000, by any method that is deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

Shares sold under the Sales Agreement were offered and sold pursuant to the Company’s previously filed and effective Registration Statement on Form S-3 and a prospectus supplement and accompanying base prospectus.

The Company paid Wainwright a commission of 3.0% of the gross sales price per share sold.

The Sales Agreement was terminated automatically by its terms during the first quarter of 2019, pursuant to which the Company sold 235,126 shares for gross proceeds of approximately $4.3 million.

Aggregate net proceeds to the Company were approximately $4.7 million, after deducting commissions and other expenses.

Subsequent to the closing of the offering, all of the pre-funded warrants issued in connection therewith were converted into 2,090,000 shares of common stock.

December 2020 Warrants

As of March 31, 2021, warrants to purchase 669,854 remained outstanding.

Each warrant shall be exercisable beginning on the 12-month anniversary of the date of issuance for a period of five years after the date of issuance, at an exercise price of $4.13 per Warrant Share.

The warrants may be exercised on a “cashless” basis.

There were no exercises of these warrants during the three months ended March 31, 2021.

April 2020 Warrants

As of September 30, 2020, 3,996,000 warrants issued in the April 2020 offering remained outstanding, each with an exercise price of $5.00.

As of March 31, 2021, 2,190,000 warrants issued in connection with the April 2020 equity financing remained outstanding, each with an exercise price of $5.00.

All such warrants were issued in connection with the April 2020 co-placement agency agreement.

7 unchanged sentences

In lieu of fractional shares, the Company will round down to the next whole share.

A total of 4,000 warrants were exercised during the nine months ended September 30, 2020.

A total of 909,000 warrants were exercised during the three months ended March 31, 2021.

July 2017 Warrants

As of September 30, 2020, 374,525 warrants issued in connection with the July 2017 underwritten public offering remained outstanding, each with an exercise price of $40.00.

As of March 31, 2021, 374,525 warrants issued in connection with the July 2017 underwritten public offering remained outstanding, each with an exercise price of $40.00.

All such warrants were issued in connection with the July 2017 underwritten public offering and are immediately exercisable.

5 unchanged sentences

Prior to the exercise of any warrants to purchase common stock, holders of the warrants will not have any of the rights of holders of the common stock purchasable upon exercise, including the right to vote, except as set forth therein.

There was no exercise of warrants during the three and nine months ended September 30, 2020.

There were no exercises of these warrants during the three months ended March 31, 2021 or March 31, 2020.

Series A Preferred Stock

1 unchanged sentence

During the year ended December 31, 2017, 8,608 shares of the Series A Preferred Stock were converted into 215,200 shares of common stock.

As of September 30, 2020, 264 shares of the Series A Preferred Stock remained issued and outstanding.

As of March 31, 2021, 264 shares of the Series A Preferred Stock remained issued and outstanding.

Each share of Series A Preferred Stock is convertible at any time at the option of the holder thereof, into a number of shares of common stock determined by dividing $1,000 by the initial conversion price of $40.00 per share, subject to a 4.99% blocker provision, or, upon election by a holder prior to the issuance of shares of Series A Preferred Stock, 9.99%, and is subject to adjustment for stock splits, stock dividends, distributions, subdivisions and combinations.

The 264 shares of Series A Preferred Stock issued and outstanding at September 30, 2020, are convertible into 6,600 shares of common stock.

The 264 shares of Series A Preferred Stock issued and outstanding at March 31, 2021, are convertible into 6,600 shares of common stock.

In the event of a liquidation, the holders of shares of the Series A Preferred Stock shall be permitted to participate on an as-converted-to-common-stock basis in any distribution of assets of the Company.

6 unchanged sentences

6% Convertible Exchangeable Preferred Stock

As of September 30, 2020, there were 335,273 shares of the Company’s 6% Convertible Exchangeable Preferred Stock (the “6% Preferred Stock”) issued and outstanding at an issue price of $10.00 per share.

As of March 31, 2021, there were 335,273 shares of the Company’s 6% Convertible Exchangeable Preferred Stock (the “6% Preferred Stock”) issued and outstanding at an issue price of $10.00 per share.

Dividends on the 6% Preferred Stock are cumulative from the date of original issuance at the annual rate of 6% of the liquidation preference of the 6% Preferred Stock, payable quarterly on the first day of February, May, August and November, commencing February 1, 2005.

1 unchanged sentence

The 6% Preferred Stock has a liquidation preference of $10.00 per share, plus accrued and unpaid dividends.

As of September 30, 2020, accrued and unpaid dividends amounted to $50,291.

As of March 31, 2021, accrued and unpaid dividends amounted to $50,291.

The Company may automatically convert the 6% Preferred Stock into common stock if the per share closing price of the Company’s common stock has exceeded $59,220, which is 150% of the conversion price of the 6% Preferred Stock, for at least 20 trading days during any 30 day trading period, ending within five trading days prior to notice of automatic conversion.

6 unchanged sentences

Dividends on 6% Preferred Stock

On September 10, 2020, the board of directors declared a quarterly cash dividend in the amount of $0.15 per share on the Company’s 6% Preferred Stock.

The cash dividend was paid on November 1, 2020 to the holders of record of the 6% Preferred Stock as of the close of business on October 16, 2020.

2020 Inducement Plan

On October 22, 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Inducement Plan”) pursuant to which it reserved an aggregate of 200,000 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company as a material inducement to such individuals’ entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

The terms and conditions of the 2020 Inducement Plan are substantially similar to those of the 2018 Plan.

Unless otherwise stated in an applicable stock option agreement, one -third of the shares subject to an option grant under the 2020 Inducement Plan will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of twenty-four successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date, subject to the new employee’s continued service with the Company through the applicable vesting dates.

Stock options generally terminate 10 years from the date of grant.

On March 10, 2021, the board of directors declared a quarterly cash dividend in the amount of $0.15 per share on the Company’s 6% Preferred Stock.

The cash dividend was paid on May 1, 2021 to the holders of record of the 6% Preferred Stock as of the close of business on April 16, 2021.

Assignation of Lease relating to facility in Dundee, Scotland

On May 4, 2021, the Company assigned the operating lease relating to its facility in Dundee, Scotland to the University of Dundee.

As part of the assignation, a reverse premium of approximately $400,000 was payable by the Company to the University of Dundee.

Following assignation, the Company has no further obligations, liabilities or commitments in relation to this facility.

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