Cellectar Biosciences, Inc. 10-K

Item 8. Financial Statements. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS FOR CELLECTAR BIOSCIENCES, INC. Page Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP, Philadelphia, Pennsylvania, PCAOB ID No. 23 ) 59 Consolidated Balance Sheets as of December 31, 2021 and 2020 60 Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020 61 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020 62 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 63 Notes to Consolidated Financial Statements 64 ​ ​ 58 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Cellectar Biosciences, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Cellectar Biosciences, Inc. and Subsidiary (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters. /s/ Baker Tilly US, LLP We have served as the Company's auditor since 2016. Philadelphia, Pennsylvania March 21, 2022 ​ 59 Table of Contents ​ CELLECTAR BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 ASSETS ​ ​ CURRENT ASSETS: ​ ​ Cash and cash equivalents ​ $ 35,703,975 ​ $ 57,165,377 Prepaid expenses and other current assets ​ 867,485 ​ 774,432 Total current assets ​ 36,571,460 ​ 57,939,809 Fixed assets, net ​ 344,491 ​ 355,982 Right-of-use asset, net ​ 204,644 ​ 282,365 Long-term assets ​ 75,000 ​ 75,000 Other assets ​ 6,214 ​ 6,214 TOTAL ASSETS ​ $ 37,201,809 ​ $ 58,659,370 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ CURRENT LIABILITIES: ​ ​ Accounts payable and accrued liabilities ​ $ 3,854,914 ​ $ 3,443,197 Lease liability ​ ​ 135,449 ​ ​ 119,904 Total current liabilities ​ 3,990,363 ​ 3,563,101 Lease liability, net of current portion ​ ​ 166,292 ​ ​ 301,740 TOTAL LIABILITIES ​ 4,156,655 ​ 3,864,841 COMMITMENTS AND CONTINGENCIES (Note 10) ​ ​ STOCKHOLDERS’ EQUITY: ​ ​ Preferred stock, $ 0.00001 par value; 7,000 shares authorized; Series C preferred stock: 0 and 215 shares issued and outstanding as of December 31, 2021 and 2020, respectively ​ — ​ 1,148,204 Series D preferred stock: 111 and 1,519 shares issued and outstanding as of December 31, 2021 and 2020, respectively ​ ​ 1,382,023 ​ ​ 18,887,645 Common stock, $ 0.00001 par value; 160,000,000 and 80,000,000 shares authorized; 61,101,263 and 45,442,729 shares issued and outstanding as of December 31, 2021 and 2020, respectively ​ 611 ​ 454 Additional paid-in capital ​ 182,560,309 ​ 161,533,653 Accumulated deficit ​ (150,897,789) ​ ( 126,775,427 ) Total stockholders’ equity ​ 33,045,154 ​ 54,794,529 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 37,201,809 ​ $ 58,659,370 ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ ​ 60 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ COSTS AND EXPENSES: ​ ​ Research and development ​ $ 17,586,469 ​ $ 10,140,681 General and administrative ​ 6,544,811 ​ 5,149,668 Total costs and expenses ​ 24,131,280 ​ 15,290,349 ​ ​ ​ ​ ​ ​ ​ LOSS FROM OPERATIONS ​ ( 24,131,280 ) ​ ( 15,290,349 ) ​ ​ ​ ​ ​ ​ ​ OTHER INCOME: ​ ​ ​ ​ Other income ​ 6,634 ​ — Gain on extinguishment of debt ​ ​ — ​ ​ 185,280 Interest income, net ​ 2,284 ​ 10,897 Total other income, net ​ 8,918 ​ 196,177 NET LOSS ​ $ ( 24,122,362 ) ​ $ ( 15,094,172 ) BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE ​ $ ( 0.43 ) ​ $ ( 0.76 ) SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE ​ 55,515,727 ​ 19,812,659 ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ ​ 61 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Common Stock ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Par ​ Additional ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares Amount Paid-In Capital Deficit Equity BALANCE AT DECEMBER 31, 2019 215 ​ $ 1,148,204 9,386,689 ​ $ 94 ​ $ 119,592,366 ​ $ ( 111,681,255 ) ​ $ 9,059,409 Issuance of common stock, preferred stock, pre-funded warrants and warrants, net of issuance costs 1,519 ​ 18,887,645 32,749,764 ​ 327 ​ 40,831,284 ​ — ​ 59,719,256 Stock-based compensation — ​ — — ​ — ​ 467,541 ​ — ​ 467,541 Vested restricted stock — ​ — 9,334 ​ — ​ — ​ — ​ — Retired shares — ​ — ( 133 ) ​ — ​ — ​ — ​ — Conversion of warrants into common shares — ​ — 3,297,075 ​ 33 ​ 642,462 ​ — ​ 642,495 Net loss — ​ — — ​ — ​ — ​ ( 15,094,172 ) ​ ( 15,094,172 ) BALANCE AT DECEMBER 31, 2020 1,734 ​ $ 20,035,849 45,442,729 ​ $ 454 ​ $ 161,533,653 ​ $ ( 126,775,427 ) ​ $ 54,794,529 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Conversion of preferred into common shares ​ ( 1,623 ) ​ ​ ( 18,653,826 ) ​ 14,611,569 ​ ​ 146 ​ ​ 18,653,680 ​ ​ — ​ ​ — Conversion of warrants into common shares ​ — ​ ​ — ​ 1,005,320 ​ ​ 10 ​ ​ 1,213,914 ​ ​ — ​ ​ 1,213,924 Issuance of common stock, net of issuance costs — ​ — 41,692 ​ 1 ​ 34,872 ​ — ​ 34,873 Stock-based compensation — ​ — — ​ — ​ 1,124,190 ​ — ​ 1,124,190 Retired shares — ​ — ( 47 ) ​ — ​ — ​ — ​ — Net loss — ​ — — ​ — ​ — ​ ( 24,122,362 ) ​ ( 24,122,362 ) BALANCE AT DECEMBER 31, 2021 111 ​ $ 1,382,023 61,101,263 ​ $ 611 ​ $ 182,560,309 ​ $ ( 150,897,789 ) ​ $ 33,045,154 ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ ​ 62 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ Net loss ​ $ ( 24,122,362 ) ​ $ ( 15,094,172 ) Adjustments to reconcile net loss to cash used in operating activities: ​ ​ Depreciation and amortization ​ 149,915 ​ 141,453 Stock-based compensation ​ 1,124,190 ​ 467,541 Gain on extinguishment of debt ​ ​ — ​ ​ ( 185,280 ) Loss on disposal of asset ​ ​ 2,937 ​ ​ — Noncash lease expense ​ ​ 77,721 ​ ​ 66,476 Changes in: ​ ​ Prepaid expenses and other current assets ​ ( 93,053 ) ​ ( 3,480 ) Accounts payable and accrued liabilities ​ 411,717 ​ 780,604 Lease liability ​ ​ ( 119,903 ) ​ ​ ( 105,885 ) Cash used in operating activities ​ ( 22,568,838 ) ​ ( 13,932,743 ) CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ Purchases of fixed assets ​ ( 141,361 ) ​ ( 62,353 ) Cash used in investing activities ​ ( 141,361 ) ​ ( 62,353 ) CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ Proceeds from long-term obligations ​ — ​ 184,000 Proceeds from issuance of common stock, net of underwriting issuance costs ​ 34,873 ​ 59,719,256 Proceeds from exercise of warrants ​ 1,213,924 ​ 642,495 Cash provided by financing activities ​ 1,248,797 ​ 60,545,751 INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ​ ( 21,461,402 ) ​ 46,550,655 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD ​ 57,165,377 ​ 10,614,722 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD ​ $ 35,703,975 ​ $ 57,165,377 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION ​ ​ Cash paid for interest expense ​ $ — ​ $ 1,584 Gain on extinguishment of debt ​ $ — ​ $ 185,280 Conversion of preferred stock to common stock ​ $ 18,653,826 ​ $ — ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ 63 Table of Contents CELLECTAR BIOSCIENCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF BUSINESS AND ORGANIZATION Cellectar Biosciences, Inc. (the Company, our, we) is a late-stage clinical biopharmaceutical company focused on the discovery, development and commercialization of drugs for the treatment of cancer leveraging our proprietary phospholipid drug conjugate™ (PDCs™) delivery platform that specifically targets cancer cells and deliver improved efficacy and better safety as a result of fewer off-target effects. The Company has incurred losses since inception in devoting substantially all of its efforts toward research and development and has an accumulated deficit of approximately $150,898,000 as of December 31, 2021. During the year ended December 31, 2021, the Company generated a net loss of approximately $24,122,000 and the Company expects that it will continue to generate operating losses for the foreseeable future. However, the Company believes that its cash balance as of December 31, 2021 is adequate to fund its basic budgeted operations for at least 12 months from the filing of these financial statements. The Company’s ability to execute its current operating plan depends on its ability to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction or otherwise. The Company plans to continue to actively pursue financing alternatives, but there can be no assurance that it will obtain the necessary funding. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements reflect the application of certain accounting policies, as described in this note and elsewhere in the notes to the consolidated financial statements. Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. On an on-going basis, management evaluates its estimates including those related to unbilled vendor amounts and share-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from those estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Cash and Cash Equivalents — All short-term investments purchased with original maturities of three months or less are considered to be cash equivalents. Fixed Assets — Property and equipment are stated at cost. Depreciation on property and equipment is provided using the straight-line method over the estimated useful lives of the assets ( 3 to 10 years ). Due to the significant value of leasehold improvements, leasehold improvements are depreciated over 64 months (their estimated useful life), which represents the full term of the lease. Our only long-lived assets are property and equipment. The Company periodically, and at a minimum annually, evaluates long-lived assets for potential impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Such analyses necessarily involve judgement. The Company did not experience any events or changes in circumstances that indicate the carrying amount of the assets may not be recoverable as of December 31, 2021. There were no fixed asset impairment charges recorded during the years ended December 31, 2021 or 2020. Right-of-Use Asset and Lease Liability — The Company accounts for all material leases in accordance with FASB Accounting Standards Codification (ASC) Topic 842, Leases . Right-of-use (ROU) assets are amortized over their estimated useful life, which represents the full term of the lease. See Note 11. Stock-Based Compensation — The Company uses the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The resulting compensation expense, net of expected forfeitures, for awards that are not performance-based, is 64 Table of Contents recognized on a straight-line basis over the service period of the award, which for 2021 and 2020 ranged from twelve months to three years . Research and Development — Research and development costs are expensed as incurred. The Company recognizes revenue and cost reimbursements from government grants when it is probable that the Company will comply with the conditions attached to the grant arrangement and the grant proceeds will be received. Government grants are recognized in the Consolidated Statements of Operations on a systematic basis over the periods in which the Company recognizes the related costs for which the government grant is intended to compensate. Specifically, when government grants are related to reimbursements for cost of revenues or operating expenses, the government grants are recognized as a reduction of the related expense in the Consolidated Statements of Operations. Income Taxes — Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement basis and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some portion of the deferred tax assets will not be realized. Management has provided a full valuation allowance against the Company’s gross deferred tax asset. Tax positions taken or expected to be taken in the course of preparing tax returns are required to be evaluated to determine whether the tax positions are “more likely than not” to be sustained by the applicable tax authority. Tax positions deemed to not meet a more-likely-than-not threshold would be recorded as tax expense in the current year. There were no uncertain tax positions that require accrual to or disclosure in the consolidated financial statements as of December 31, 2021 and 2020. Fair Value of Financial Instruments — The guidance under FASB ASC Topic 825, Financial Instruments , requires disclosure of the fair value of certain financial instruments. Financial instruments in the accompanying consolidated financial statements consist of cash equivalents, prepaid expenses and other assets, accounts payable and long-term obligations. The carrying amount of cash equivalents, prepaid expenses and accounts payable approximate their fair value due to their short-term nature. See Note 11 regarding long-term obligations. Concentration of Credit Risk — Financial instruments that subject the Company to credit risk consist of cash and equivalents on deposit with financial institutions. The Company’s excess cash as of December 31, 2021 and 2020 is on deposit in interest-bearing accounts with well-established financial institutions. At times, such amounts may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. As of December 31, 2021, uninsured cash balances totaled approximately $ 35,200,000 . Recently Adopted Accounting Pronouncements — For the fiscal year beginning January 1, 2021, management adopted ASU 2020-06 using the modified retrospective method. ASU 2020-06 simplifies entities’ accounting for convertible instruments by eliminating the cash conversion and beneficial conversion feature (BCF) models outlined in ASC 470-20. Under ASU 2020-06, convertible instruments that would have previously been subject to the BCF or cash conversion guidance no longer require separate accounting for the conversion feature. Entities may elect to early adopt ASU 2020-06 for fiscal years beginning after December 15, 2020. New Accounting Pronouncements – Issued but Not Yet Adopted — In December 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832), which aims to provide increased transparency by requiring business entities to disclose information about certain type of government assistance they receive in the notes to the financial statements. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 3. FAIR VALUE In accordance with Fair Value Measurements and Disclosures Topic of the FASB ASC 820, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. ● Level 1: Input prices quoted in an active market for identical financial assets or liabilities. ● Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets, and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. ● Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market. 65 Table of Contents To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. 4. FIXED ASSETS Fixed assets consisted of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Office and laboratory equipment ​ $ 575,370 ​ $ 445,758 Computer software ​ 4,000 ​ 4,000 Leasehold improvements ​ 309,897 ​ 309,897 Total fixed assets ​ 889,267 ​ 759,655 Less– accumulated depreciation and amortization ​ ( 544,776 ) ​ ( 403,673 ) Fixed assets, net ​ $ 344,491 ​ $ 355,982 ​ For the years ended December 31, 2021 and 2020, the Company recorded approximately $150,000 and $141,000 of depreciation and amortization expense, respectively. 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities approximately consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Incentive compensation $ 504,000 ​ $ 850,000 Accounts payable ​ ​ 1,415,000 ​ ​ 1,429,000 Clinical project costs ​ ​ 1,881,000 ​ ​ 787,000 Professional fees ​ ​ 54,000 ​ ​ 221,000 Other ​ ​ 1,000 ​ ​ 156,000 ​ $ 3,855,000 ​ $ 3,443,000 ​ ​ ​ 6. STOCKHOLDERS’ EQUITY Authorized Share Increase At a special meeting held on February 25, 2021, the Company’s stockholders approved the amendment of the Company’s Second Amended and Restated Certificate of Incorporation, as amended, to increase the authorized common stock from 80,000,000 shares to 160,000,000 shares. Equity Distribution Agreement On August 11, 2020, the Company entered into an equity distribution agreement (the Sales Agreement) with Oppenheimer & Co. Inc. (the Sales Agent). Pursuant to the Sales Agreement, the Company may offer and sell from time-to-time through the Sales Agent, up to $ 14.5 million of shares of the Company’s common stock, par value $ 0.00001 per share (the ATM Shares). The Sales Agent will receive from the Company a commission of 3.0 % of the gross proceeds from the sales of the ATM Shares pursuant to the terms of the Sales Agreement. The offering of the ATM Shares pursuant to the Sales Agreement will terminate upon the earliest of (i) the sale of all ATM Shares subject to the Sales Agreement, and (ii) the termination of the Sales Agreement by the Company or the Sales Agent. Net proceeds from the sale of the ATM Shares will be used for general corporate purposes, including working capital. The ATM Shares issued under the Sales Agreement are offered pursuant to a registration statement on Form S-3, which was declared effective by the U.S. Securities and Exchange Commission (SEC) on August 20, 2020. 66 Table of Contents In June 2021, the Company issued and sold an aggregate of 41,692 ATM Shares pursuant to the Sales Agreement and received gross proceeds of approximately $ 69,000 and net proceeds of $ 35,000 after deducting commissions to the Sales Agent and other offering expenses. December 2020 Public Offering and Private Placement On December 23, 2020, the Company issued and sold 18,148,136 shares of common stock, par value $ 0.00001 per share, of the at a public offering price of $ 1.35 per share of common stock, prior to deducting underwriting discounts and commissions and estimated offering expenses. In a concurrent private placement, the Company issued and sold 1,518.5180 shares of Series D convertible preferred stock. The preferred shares are convertible into a number of shares of common stock equal to $ 13,500 divided by $ 1.35 (or 10,000 shares of common stock for each share of Series D preferred stock converted) and were issued at a price of $ 13,500 per share of Series D preferred stock. The preferred shares would only be convertible into common stock upon receipt of stockholder approval of the issuance of the underlying shares of common stock as required by Nasdaq Marketplace Rule 5635(d) at a special stockholder meeting to be called for that purpose. At a special meeting of stockholders held on February 25, 2021, the stockholders approved, in accordance with Nasdaq Listing Rule 5635(d), the issuance of shares of the Company’s common stock upon the conversion of the Series D preferred stock. During the twelve months ended December 31, 2021, the total Series D convertible preferred stock converted into 14,074,069 Common Stock at a rate of 1 to 10,000 shares. The net proceeds of the offerings to the Company, after deducting the underwriting discounts and commissions, placement agency fees and estimated offering expenses payable by the Company, were approximately $ 41.4 million. The common stock issued in the public offering was offered by the Company pursuant to a registration statement on Form S-3, which was declared effective by the SEC on August 20, 2020. The common stock issuable upon conversion of the Series D preferred stock in the private placement was offered by the Company pursuant to a registration statement on Form S-3, which was declared effective by the SEC on February 1, 2021. In accordance with the concept of ASC 820 regarding the December 2020 public offering, the Company allocated the value of the proceeds to the common stock and preferred stock utilizing a relative fair value basis. Using the Nasdaq closing trading price for our stock on December 23, 2020, the Company computed the fair value of the shares sold. The fair value of the preferred stock was estimated on a relative fair value basis. This valuation did not impact total Stockholders’ Equity but is an internal proportionate calculation allocating gross proceeds of approximately $ 24.5 million to common stock and $ 20.5 million to preferred stock. June 2020 Public Offering On June 5, 2020, the Company issued and sold 14,601,628 shares of common stock, 2,789,700 pre-funded warrants exercisable for one share of our common stock at an exercise price of $ 0.00001 per share and 8,695,664 Series H warrants to purchase 8,695,664 shares of common stock. The public offering price of a share of common stock, together with one -half of a Series H warrant to purchase one share of common stock, was $ 1.15 . The public offering price of a pre-funded warrant together with one -half of a Series H Warrant was $ 1.1499 . The Series H warrants have an exercise price of $ 1.2075 per share and are exercisable for five years from the date of issuance. During the year ended December 31, 2020, all 2,789,700 pre-funded warrants and 482,375 Series H warrants were exercised. During the year ended December 31, 2021, 1,005,320 Series H warrants were exercised. In accordance with the concept of ASC 820 regarding the June 2020 public offering, the Company allocated value of the proceeds to the common stock and warrants utilizing a relative fair value basis. Using the Nasdaq closing trading price for our stock on June 5, 2020, the Company computed the fair value of the shares sold. The fair value of the warrants was estimated using the Black-Scholes option-pricing model at that same date. This valuation did not impact total Stockholders’ Equity but is an internal proportionate calculation allocating the gross proceeds of approximately $ 12.1 million to common stock and $ 7.9 million to warrants. Gross offering proceeds to the Company were $ 20.0 million, with net proceeds to the Company of approximately $ 18.3 million after deducting placement agent fees and related offering expenses. The Company intends to use the net proceeds from the offering for research and development, funding clinical studies, working capital and general corporate purposes. 67 Table of Contents The common stock, pre-funded warrants and Series H warrants were offered by the Company pursuant to a registration statement on Form S-1 filed on May 8, 2020 with the SEC under the Securities Act of 1933 (the Act) and an additional registration statement filed on June 2, 2020 pursuant to Rule 462(b) under the Act. Common Stock Warrants The following table summarizes information with regard to outstanding warrants to purchase common stock as of December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Shares ​ ​ ​ ​ ​ ​ ​ Issuable Upon ​ ​ ​ ​ ​ ​ ​ Exercise of ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Exercise ​ ​ Offering Warrants Price Expiration Date June 2020 Series H Warrants 7,207,969 ​ $ 1.2075 ​ June 5, 2025 May 2019 Series F Warrants 1,957,000 ​ $ 2.40 ​ May 20, 2024 May 2019 Series G Warrants ​ 2,018,000 ​ $ 2.40 ​ May 20, 2024 July 2018 Series E Warrants ​ 4,140,000 ​ $ 4.00 ​ July 31, 2023 October 2017 Series D Warrants ​ 310,856 ​ $ 17.80 ​ October 14, 2024 Total 15,633,825 ​ ​ ​ ​ ​ 7. STOCK-BASED COMPENSATION Accounting for Stock-Based Compensation 2021 Stock Incentive Plan The 2021 Stock Incentive Plan (the “2021 Plan”) was adopted on June 23, 2021, authorizing an aggregate of 6,000,000 shares of common stock for grants of incentive or nonqualified stock options, rights to purchase restricted and unrestricted shares of common stock, stock appreciation rights and performance share grants. The Compensation Committee determines exercise prices, vesting periods and any performance requirements on the date of grant, subject to the provisions of the 2021 Plan. Options are granted at or above the fair market value of the common stock at the grant date and expire on the tenth anniversary of the grant date. Vesting periods are generally between one and three years . Options granted pursuant to the 2021 Plan generally will become fully vested upon a termination event occurring within one year following a change in control, as defined. A termination event is defined as either termination of employment or services other than for cause or constructive termination of employees or consultants resulting from a significant reduction in either the nature or scope of duties and responsibilities, a reduction in compensation or a required relocation. All outstanding awards under the 2015 Stock Incentive Plan (the “2015 Plan”) remained in effect according to the terms of the 2015 Plan and the respective agreements relating to such awards. In addition, any shares that are currently available under the 2015 Plan and any shares underlying awards under the 2015 Plan which are forfeited, cancelled, reacquired by the Company or otherwise terminated will be added to the number of shares available for grant under the 2021 Plan. As of December 31, 2021, there are an aggregate of 3,521,949 shares available for future grants under the 2021 Plan. During the twelve-months ended December 31, 2021 and 2020, stock options granted were 3,537,500 and 653,750 , respectively. The following table summarizes amounts charged to expense for stock-based compensation related to employee and director stock option grants: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ December 31, ​ 2021 2020 Employee and director stock option grants: ​ ​ ​ ​ Research and development ​ $ 117,805 ​ $ 72,579 General and administrative ​ 1,006,385 ​ 394,962 Total stock-based compensation ​ $ 1,124,190 ​ $ 467,541 ​ On March 4, 2021, we granted 2,810,000 contingent non-statutory stock option awards at an exercise price of $ 1.74 per share to our employees. Each of these grants was contingent on approval of the 2021 Plan that was voted on and approved by the stockholders 68 Table of Contents at the Annual Meeting of Stockholders held on June 23, 2021. In accordance with the timing of the stockholder approval, the Company recognized the compensation expense of the contingent non-statutory stock option awards issued in March 2021 beginning in June 2021 and continuing through the vesting period. ​ Assumptions Used in Determining Fair Value Valuation and amortization method . The fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model. The estimated fair value of employee stock options is amortized to expense using the straight-line method over the required service period which is generally the vesting period. The estimated fair value of the non-employee options is amortized to expense over the period during which a non-employee is required to provide services for the award (usually the vesting period). Volatility. The Company estimates volatility based on the Company’s historical volatility since its common stock has been publicly traded. Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. Expected term . The expected term of stock options granted is based on an estimate of when options will be exercised in the future. The Company applied the simplified method of estimating the expected term of the options, as described in the SEC’s Staff Accounting Bulletins 107 and 110, as the historical experience is not indicative of the expected behavior in the future. The expected term, calculated under the simplified method, is applied to groups of stock options that have similar contractual terms. Using this method, the expected term is determined using the average of the vesting period and the contractual life of the stock options granted. The Company applied the simplified method to non-employees who have a truncation of term based on termination of service and utilizes the contractual life of the stock options granted for those non-employee grants which do not have a truncation of service. Forfeitures. The Company records stock-based compensation expense only for those awards that are expected to vest. The Company accounts for forfeitures as they occur. Dividends. The Company has not historically recorded dividends related to stock options. Summary. The following table summarizes the weighted-average values and assumptions used for stock options granted to employees and directors in the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Volatility ​ 102.19 - 104.73 % ​ 96 - 106 % Risk-free interest rate ​ 0.81 - 1.04 % ​ 0.42 - 1.67 % Expected life (years) ​ 6 ​ 6 ​ Dividend ​ 0 % ​ 0 % Weighted-average exercise price ​ $ 1.66 ​ $ 1.84 ​ Weighted-average grant-date fair value ​ $ 0.94 ​ $ 1.42 ​ ​ Exercise prices for all grants made during the twelve months ended December 31, 2021 and 2020 were equal to the market value of the Company’s common stock on the date of grant. There were 3,537,500 stock options granted during the twelve months ended December 31, 2021. ​ 69 Table of Contents Stock Option Activity A summary of stock option activity is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ Average ​ ​ ​ ​ ​ Issuable Upon ​ Weighted ​ Remaining ​ ​ ​ ​ ​ Exercise of ​ Average ​ Contracted ​ Aggregate ​ Outstanding ​ Exercise Term in ​ Intrinsic ​ Options Price Years Value Outstanding as of December 31, 2019 610,714 ​ $ 6.78 ​ Granted 653,750 ​ $ 1.84 ​ Forfeited ( 80,000 ) ​ $ 2.46 ​ Outstanding as of December 31, 2020 1,184,464 ​ $ 4.34 8.57 $ 316,688 Granted ​ 3,537,500 ​ $ 1.66 ​ ​ ​ ​ ​ Expired ​ ( 41,097 ) ​ $ 15.48 ​ ​ ​ ​ ​ Forfeited ​ ( 442,667 ) ​ $ 1.71 ​ ​ ​ ​ ​ Outstanding as of December 31, 2021 ​ 4,238,200 ​ $ 2.27 ​ 8.79 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable as of December 31, 2021 798,238 ​ $ 4.82 7.24 ​ $ — Unvested as of December 31, 2021 3,439,962 ​ $ 1.68 9.15 ​ $ — ​ The aggregate intrinsic value of options outstanding is calculated based on the positive difference between the estimated per-share fair value of common stock at the end of the respective period and the exercise price of the underlying options. Shares of common stock issued upon the exercise of options are from authorized but unissued shares. The weighted-average grant-date fair value of options granted during the years ended December 31, 2021 and 2020 was $ 0.94 and $ 1.42 , respectively. The total fair value of shares vested during the years ended December 31, 2021 and 2020 was $ 537,453 and $ 389,398 , respectively. The weighted-average grant-date fair value of vested and unvested options outstanding at December 31, 2021 was $ 1.39 and $ 0.98 , respectively. The weighted-average grant-date fair value of vested and unvested options outstanding at December 31, 2020 was $ 6.62 and $ 1.44 , respectively. The weighted average grant date fair value of options forfeited during the years ended December 31, 2021 and 2020 was $ 1.02 and $ 1.90 , respectively. The number of options vested during the years ended December 31, 2021 and December 31, 2020 was 381,010 and 209,354 , respectively. The number of options unvested at January 1, 2021 and January 1, 2020 was 726,139 and 361,743 , respectively. The weighted average grant date fair value of options unvested at January 1, 2021 and January 1, 2020 was $ 1.44 and $ 1.82 , respectively. As of December 31, 2021, there was approximately $ 2,536,428 of total unrecognized compensation cost related to unvested stock-based compensation arrangements. Of this total amount, the Company expects to recognize approximately $ 1,359,075 , $ 1,001,776 , and $ 175,577 during 2022, 2023 and 2024, respectively. The Company’s expense estimates are based upon the expectation that all unvested options will vest in the future. ​ ​ ​ 70 Table of Contents 8. INCOME TAXES ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Tax provision (benefit) ​ ​ Current ​ ​ Federal ​ $ — ​ $ — State ​ — ​ — Total current ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Deferred ​ ​ Federal ​ ( 7,102,248 ) ​ ( 3,481,764 ) State ​ ( 1,071,157 ) ​ ( 1,416,877 ) Total deferred ​ ( 8,173,405 ) ​ ( 4,898,641 ) ​ ​ ​ ​ ​ ​ ​ Change in valuation allowance ​ 8,173,405 ​ 4,898,641 Total ​ $ — ​ $ — ​ Deferred tax assets consisted of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets ​ ​ Federal net operating loss ​ $ 32,696,266 ​ $ 30,179,562 Federal research and development tax credit carryforwards ​ 9,599,756 ​ 7,063,702 State net operating losses and tax credit carryforwards ​ 5,305,170 ​ 4,393,526 Capitalized research and development expenses ​ 12,089,171 ​ 9,911,446 Stock-based compensation expense ​ 2,627,881 ​ 2,459,336 Depreciable assets ​ — ​ — Other ​ 231,586 ​ 419,597 Total deferred tax assets ​ 62,549,830 ​ 54,427,169 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities ​ ​ Depreciable assets ​ ( 59,961 ) ​ ( 110,705 ) Total deferred tax liabilities ​ ( 59,961 ) ​ ( 110,705 ) ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets ​ 62,489,869 ​ 54,316,463 Less- valuation allowance ​ ( 62,489,869 ) ​ ( 5,416,463 ) Total deferred tax assets ​ $ — ​ $ — ​ A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2021 2020 Income tax benefit using U.S. federal statutory rate ( 21.00 ) % ( 21.00 ) % State income taxes ( 3.51 ) % ( 7.42 ) % Permanent nondeductible items 0.01 % 0.00 % Federal tax credits ( 10.51 ) % ( 6.13 ) % Change in valuation allowance 33.88 % 34.81 % Other 1.13 % ( 10.26 ) % Total 0.00 % 0.00 % ​ As of December 31, 2021, the Company had federal net operating loss (NOL) carryforwards of approximately $ 155,697,000 . Federal NOLs generated as of December 31, 2017 will expire in 2021 through 2037 , while NOLs generated during 71 Table of Contents 2018 and later will be carried forward indefinitely until utilized. As of December 31, 2021, the Company had state NOL carryforwards of approximately $ 66,743,000 . State NOL carryforwards will expire in 2028 through 2040 . As of December 31, 2021, the Company had federal research and development (R&D) and orphan drug credit carryforwards of approximately $ 9,600,000 which will expire in 2022 through 2041 . As of December 31, 2021, the Company also had state credit carryforwards of approximately $ 883,000 which will expire in 2024 through 2035 . As of December 31, 2021, the Company had federal NOLs and R&D credit carryforwards of $ 1,300,575 and $ 42,355 , respectively, that expired in 2021 . The NOL and R&D credit carryforwards may be, or may become subject to, an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to an ownership change. Subsequent ownership changes may further affect the limitation in future years. If and when the Company utilizes the NOL carryforwards in a future period, it will perform an analysis to determine the effect, if any, of these loss limitation rules on the NOL carryforward balances. The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against all of its net deferred tax assets. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made. The Company did not have unrecognized tax benefits or accrued interest and penalties at any time during the years ended December 31, 2021 or 2020 and does not anticipate having unrecognized tax benefits over the next twelve months. The Company is subject to audit by the Internal Revenue Service and state taxing authorities for tax periods commencing January 1, 2017 as a result of its NOLs. However, any adjustment related to these periods would be limited to the amount of the NOL generated in the year(s) under examination. 9. NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss attributable to common stockholders per share is computed by dividing net loss attributable to common stockholders, as adjusted, by the sum of the weighted average number of shares of common stock and the dilutive potential common stock equivalents then outstanding. Potential common stock equivalents consist of stock options, warrants, preferred shares convertible into common stock, and pre-funded warrants. Since there is a net loss attributable to common stockholders for the years ended December 31, 2021 and 2020, the inclusion of common stock equivalents in the computation for those periods would be antidilutive. Accordingly, basic and diluted net loss per share is the same for all periods presented. The following potentially dilutive securities have been excluded from the computation of diluted net loss per share since their inclusion would be antidilutive: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Warrants 15,633,825 17,456,266 Stock options 4,238,200 1,184,464 Preferred shares convertible to common 1,111,111 15,722,680 Total potentially dilutive shares 20,983,136 34,363,410 ​ ​ ​ 72 Table of Contents 10. COMMITMENTS AND CONTINGENCIES Legal The Company may be involved in legal matters and disputes in the ordinary course of business. We do not anticipate that the outcome of such matters and disputes will materially affect the Company’s financial statements. 11. LEASES Operating Lease Liability In June 2018, the Company executed an agreement for office space in the Borough of Florham Park, Morris County, New Jersey to be used as its headquarters (HQ Lease). The HQ Lease commenced upon completion of certain improvements in October 2018 and terminates in February 2024 with an option to extend the term of the lease for one additional 60 -month period. During 2018, the landlord made certain improvements to the facility. As of December 31, 2018, the Company recorded a deferred lease liability of approximately $ 176,000 for the improvements funded by the landlord in the consolidated balance sheet which is being amortized as a reduction to rent expense in the consolidated statement of operations over the term of the lease. Under the HQ Lease, the Company will pay monthly fixed rent based on approximate rate per rentable square foot which ranges between approximately $ 12,400 to $ 13,600 over the lease period. In addition, the Company received certain rent abatements and lease incentives subject to the limitations in the HQ Lease. The HQ Lease’s net ROU asset and lease liability are approximately $205,000 and ($ 302,000 ), respectively, as of December 31, 2021 and rental expense for the twelve months ended December 31, 2021 was approximately $ 113,000 . The Company has not entered into any leases with related parties. Discount Rate The Company has determined the interest rate implicit in the lease considering factors such as the Company’s credit rating, borrowing terms offered by the U.S. Small Business Administration, amount of lease payments, quality of collateral and alignment of the borrowing term and lease term. The Company considers 10 % per annum as reasonable to use as the incremental borrowing rate for purposes of the calculation of lease liabilities. Maturity Analysis of Short-Term and Operating Leases The following table approximates the dollar maturity of the Company’s undiscounted payments for its short-term leases and operating lease liabilities as of December 31, 2021: ​ ​ ​ ​ Years ending December 31, 2022 ​ $ 158,000 2023 ​ 161,000 2024 ​ 14,000 Total undiscounted lease payments ​ 333,000 Less: Imputed interest ​ ( 31,000 ) Present value of lease liabilities $ 302,000 ​ ​ 12. EMPLOYEE RETIREMENT PLAN The Company has a defined contribution plan under Section 401(k) of the Internal Revenue Code that allows eligible employees who meet minimum age requirements to contribute a portion of their annual compensation on a pre-tax basis. The Company has not made any matching contributions under this plan. 73 Table of Contents 13. LOAN PAYABLE On April 21, 2020, the Company received loan proceeds in the amount of approximately $ 184,000 under the Paycheck Protection Program (PPP). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the 24-week period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1 %, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP requirements. On December 30, 2020, the principal loan amount of $ 184,000 and accrued interest of $ 1,280 were forgiven and recognized as a gain on extinguishment of debt in the fourth quarter of 2020. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.