|
Warrants to Purchase Common Stock
|
12 Months Ended | |||
|---|---|---|---|---|
|
Dec. 31, 2013
|
||||
| Warrants To Purchase Common Stock [Abstract] | ||||
| Warrants to Purchase Common Stock |
12. Warrants to Purchase Common Stock
Debt Placement Agent Warrants
In connection with the issuance of the Senior Convertible Notes (see Note 10), the Company issued seven-year warrants to purchase the Company’s common stock to PBC as partial consideration for its services as the placement agent. The number of warrants and the exercise price were dependent upon i) the lowest price paid in a qualified financing, ii) consideration received in a sale of the company, or iii) consideration received in a reverse merger. If none of these events occurred before the second anniversary of the issuance date, the Debt Placement Warrants would be exercisable for a number of shares of common stock equal to 10% of the principal amount of the Senior Convertible Notes divided by $1.00, at a per share exercise price of $1.00.
In connection with the Series A Shares offering on April 26, 2010, a qualified financing, both the number of warrants and the exercise price became known. The placement agent received warrants for shares of the Company’s common stock equal to 10% of the principal amount of the Senior Convertible Notes divided by the lowest price paid for securities in the Series A Shares offering, at an exercise price of 110% of the lowest price paid for securities in a qualified financing. Pursuant to the Series A Shares offering, PBC was issued warrants for an aggregate of 48,510 shares of common stock at an exercise price of $9.23 per share with a fair value of $0.1 million related to the 2008 Senior Convertible Notes and warrants for an aggregate of 41,716 shares of common stock at an exercise price of $9.23 per share with a fair value of $0.1 million related to the 2009 Senior Convertible Notes. In April 2010, the total fair value $0.2 million of the warrants was reclassified from a liability to additional paid-in capital.
PCP Warrants
In connection with the issuance of the PCP Notes in 2009 (see Note 10), the Company also issued to PCP warrants to purchase shares of the Company’s common stock. The number of warrants and the exercise five-year price were dependent upon i) the lowest price paid in a qualified financing or ii) consideration received in a reverse merger. If none of these events occurred before the second anniversary of the issuance date, the number of warrants would equal 40% of the principal amount of the PCP Notes divided by $1.00, at a per share exercise price of $1.00.
The fair value of the warrants was measured on the date of issuance using a Black-Scholes option pricing model and was not material to the consolidated financial statements.
In connection with the Series A Shares offering, a qualified financing, both the number of PCP warrants and the exercise price became known. The placement agent received warrants for the number of shares of the Company’s common stock equal to 40% of the principal amount of the PCP Notes divided by the lowest price paid for securities in the Series A Shares offering, at an exercise price of 110% of the lowest price paid for securities in the offering. The Company issued warrants to purchase an aggregate of 27,175 shares of common stock at an exercise price of $9.23 per share for a fair value of $47,000 which was reclassified as additional paid-in capital. In 2011, due to a lowest price paid provision, the original warrants converted to warrants for 40,787 shares exercisable at $6.15.
Preferred Stock Placement Warrants
In connection with the issuance of the Company’s Series A Shares, the Company issued seven-year warrants to purchase an aggregate of 258,421 shares of the Company’s common stock at an exercise price of $8.39 per share to PBC as partial consideration for its services as the placement agent.
The fair value of the warrants was $0.6 million measured on the respective date of issuance and were recorded as a reduction in the carrying value of the Preferred Stock and an increase to additional paid in capital. The fair values were determined using an option pricing model assuming 92.0% 94.4% volatility, a 2.0% 3.3% risk-free rate of interest, a term of seven years and an estimated fair value of the Company’s common stock of $3.45 per share. The warrants were accounted for as stock issuance costs; and the fair value was recorded as a reduction to the carrying amount of the Series A Shares with a corresponding increase to additional paid-in capital.
Non-Employee Warrants
On November 22, 2010, the Company issued five-year warrants to purchase 41,716 shares of the Company’s common stock at an exercise price of $9.23 per share to a non-employee for consulting services. The fair value of the warrants on the date of issuance was $38,000 and was determined using an option pricing model assuming 93.7% volatility, a 1.4% risk-free rate of interest, a contractual life of five years and an estimated fair value of the Company’s common stock of $1.96 per share. The fair value of the warrants was recorded as research and development expense, with a corresponding increase to additional paid in capital, in the consolidated statements of operations on the grant date as the warrant was fully vested and no future service was required.
In February 2011, the Company issued fully-vested five-year warrants to purchase 50,000 shares of the Company’s common stock at an exercise price of $1.37 per share to a non-employee for consulting services. The initial fair value of the warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: five-year contractual term; 93.2% volatility; 0% dividend rate; and a risk-free rate of 2.65%. The fair value of the warrants was determined to be $69,000 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of research and development expense in the consolidated statements of operations.
In March 2011, the Company issued 10-year warrants to purchase 60,000 shares of the Company’s common stock at an exercise price of $1.37 per share for consulting services provided by a non-employee. The warrants vest over six months. The initial fair value of the warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: ten-year contractual term; 95.4% volatility; 0% dividend rate; and a risk-free rate of 3.58%. The fair value of the warrants was determined to be $98,000 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of research and development expense in the consolidated statements of operations. This warrant was marked to market at each reporting date until it was fully vested in September 2011.
In September 2011, the Company issued warrants to purchase 75,000 shares of the Company’s common stock at an exercise price of $2.95 per share as compensation for services provided by consultants. The warrants expire on the third or fifth anniversaries of their issuance dates and vest at various times over two years. The initial fair value of the warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: three to five years; 90.8% 96.3% volatility; 0% dividend rate; and a risk-free rate of 0.4% to 0.9%. The initial fair value of the warrants was determined to be $144,000 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of research and development expense in the consolidated statements of operations. The fair value of these awards was marked-to-market on each valuation date using the Black Scholes pricing model until such time that these awards were fully vested.
In December 2011, the Company issued warrants to purchase 5,000 shares of the Company’s common stock at an exercise price of $6.00 per share for consulting services provided by a non-employee. The warrants expire on the third anniversary of its issuance date and vest over two years. The initial fair value of the warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: three-year term; 91.1% volatility; 0% dividend rate; and a risk-free rate of 0.4%. The initial fair value of the warrants was determined to be approximately $19,100 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of research and development expense in the consolidated statements of operations. The fair value of this award was marked-to-market on each valuation date using the Black Scholes pricing model until such time that the award was fully vested.
On April 2, 2012, pursuant to a cashless exercise of 25,000 warrants the Company issued 20,970 shares of common. The warrants were granted at $1.37 per share and the fair value on the date of exercise was $8.50.
On August 16, 2012, the Company issued a fully vested warrant to purchase 25,000 shares of common stock at a purchase price of $5.72 as compensation for consulting services provided by a non-employee. The warrant expires on the fifth anniversary of its issuance date. The fair value of the warrant was calculated using a Black-Scholes option-pricing model with the following assumptions: five-year contractual term; 110.3% volatility; 0% dividend rate; and a risk-free interest rate of 0.83%. The fair value of the warrants was determined to be $113,000 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of general and administrative expense in the consolidated statements of operations. On August 16, 2012, the Company issued a fully vested warrant to purchase 20,000 shares of common stock at an exercise price of $5.72 as compensation for consulting services provided by a non-employee. The warrant expires on the sixth anniversary of its issuance date. The fair value of the warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: six-year contractual term; 104.51% volatility; 0% dividend rate; and a risk-free interest rate of 1.06%. The fair value of the warrant was determined to be $92,000 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of general and administrative expense in the consolidated statements of operations.
On August 28, 2012, the Company issued a fully vested warrant to purchase 73,009 shares of common stock at an exercise price of $5.65 per share to Hercules in connection with the Loan Agreement. (See Note 10.)
On December 18, 2012 the Company issued two fully vested warrants to purchase 35,000 shares of common stock at an exercise price of $4.88 as compensation for consulting services provided by two non-employees. The warrant expires on the third anniversary of its issuance date. The fair value of the warrants was calculated using a Black-Scholes option-pricing model with the following assumptions: three-year contractual term; 97.45% volatility; 0% dividend rate; and a risk-free interest rate of 0.28%. The fair value of the warrants was determined to be $103,000 and was recorded as additional paid-in capital in the consolidated balance sheets and as a component of general and administrative expense in the consolidated statements of operations.
In 2013, the Company issued 78,710 shares of common stock pursuant to cashless exercises of 153,415 warrants to consultants for a weighted average exercise price of $5.00 per share.
Warrants to Purchase Series C Shares
In connection with the Company’s Series C Share offering, the Company (i) paid to NSC, a related party, as consideration for its services as the placement agent, a fee equal to 10% of the gross proceeds of the issuance, or $2.6 million, and (ii) issued five-year warrants to NSC to purchase an aggregate of 461,263 Series C Shares at an exercise price of $5.59 per share. The fair value of these warrants was $1.3 million as measured on the date of issuance and was recorded as a reduction in the carrying value of the Series C Shares and a warrant liability. The warrants were marked-to-market each reporting period until November 15, 2011.
Upon the effectiveness of the Company’s Form S-1 on November 15, 2011, these warrants became exercisable for common stock and a final marked-to-market valuation was performed resulting in a charge of $1.4 million as of this date. The final fair value of $2.7 million was then reclassed to additional paid in capital. The fair value was determined using an option pricing model assuming a 92.4% volatility, 0.93% risk-free rate of interest, a term of five years and a fair value of the Company’s common stock of $8.00 per share, based upon the price of the first trade of the Company’s stock in the public market.
On April 2, 2012 pursuant to the cashless exercise provision the Company issued 534 shares of common stock in exchange for the exercise of 2,986 shares of common stock. The fair market value of common stock on the date of exercise was $6.81 and the exercise price of the warrants was $5.59.
In 2013, the Company issued 78,636 shares of Common Stock pursuant to the cashless exercise of 328,510 warrants at a weighted average exercise price of $5.45, and 340 shares of Common Stock for cash proceeds of $1,098.
At December 31, 2013, the Company had outstanding warrants of 711,895.
|