Preferred Stock

The board of directors (the “Board”) of the Company is authorized to issue, from time-to-time, up to 5,000,000 shares of preferred stock in one or more series. The Board is authorized to fix the rights and designation of each series, including dividend rights and rates, conversion rights, voting rights, redemption terms and prices, liquidation preferences and the number of shares of each series. As of December 31, 2018 and 2017, there were no issued and outstanding shares of preferred stock.

Public Equity Offerings

During the year ended December 31, 2017, the Company closed on various equity offerings and a warrant issuance raising net proceeds of $29.9 million. The details are as follows:

First Registered Direct Offering - On January 6, 2017, the Company sold 630,000 shares of its common stock at a price of $6.81 per share to certain institutional investors, which resulted in gross proceeds to the Company of approximately $4.3 million.

Second Registered Direct Offering - On January 25, 2017, the Company completed the sale of 855,000 shares of common stock and a concurrent private placement of warrants to purchase 855,000 shares of its common stock, (the “Warrants”), to the same investors in the First Registered Direct Offering. The Warrants and shares of the Company’s common stock issuable upon the exercise of the Warrants were not registered under the Securities Act and were sold pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) of Regulation D. The shares of common stock and Warrants were issued separately but sold together at a combined purchase price of $4.69 per share of common stock and accompanying Warrant and resulted in gross proceeds to the Company of approximately $4 million. The fair value of these warrants issued was $1.67 million (determined using the Black-Scholes Option Pricing Model) and are recorded within stockholders’ equity. The following table sets forth the assumptions used in the Black-Scholes Option Pricing Model to estimate the fair value of the warrants upon issuance:

Confidentially Marketed Public Offering (CMPO) - On February 8, 2017, the Company sold 1,200,000 shares of common stock at a price of $3.00 per share and an additional 9% of the total number of shares of common stock for the purpose of covering over-allotments which was exercised by the Underwriter in full. The CMPO resulted in gross proceeds to us of approximately $3.9 million.

Redpath Warrants - On March 22, 2017, the Company entered into a termination agreement with the existing RedPath equity holder representative which terminated all of their royalty and milestone rights under the existing contingent consideration agreement in exchange for 5 year warrants to acquire an aggregate of 100,000 shares of the Company’s common stock at a price of $4.69 per share. The fair value of the warrants issued was $0.19 million (determined using the Black-Scholes Option Pricing Model) and is recorded within stockholders’ equity. The following table sets forth the assumptions used in the Black-Scholes Option Pricing Model to estimate the fair value of the warrants upon issuance:

Senior Secured Convertible Note - Between March 23, 2017 and April 18, 2017, the Company converted its existing outstanding senior secured convertible note in the principal amount of $3,547,775 for 3,795,429 shares of our common stock and recorded a loss of $4.3 million.

Underwriting Agreement - On June 16, 2017, the Company entered into an underwriting agreement to sell an aggregate of (i) 9,900,000 shares (“Firm Shares”) of the Company’s common stock, (ii) Base Warrants to purchase 12,500,000 shares of common stock at an exercise price equal to $1.25 per share, and (iii) Pre-Funded Warrants to purchase 2,600,000 shares of common stock at an exercise price equal to $0.01 per share in the Offering pursuant to the Underwriting Agreement. Each Firm Share and accompanying Base Warrant was sold for a combined effective price of $1.10, and each Pre-Funded Warrant and accompanying Base Warrant was sold for a combined effective price of $1.09. The underwriters were entitled to receive an underwriting discount equal to 7.5% of the offer price of the aggregate number of Firm Shares and Pre-Funded Warrants sold in the Offering and Over-Allotment and reasonable out-of-pocket expenses of $0.1 million. The Company also granted the underwriters a 45-day option to purchase up to an additional 1,875,000 Firm Shares and/or 1,875,000 Base Warrants to cover over-allotments, if any (the “Overallotment Warrants”). Additionally, the Company agreed to issue to the underwriters warrants (the “Underwriter Warrant”) to purchase a number of Firm Shares of common stock equal to an aggregate of 4% of the total number of shares of common stock, Pre-Funded Warrants, and base warrants to cover overallotments sold in the Offering.

On June 21, 2017, the Company successfully closed this offering (see Note 3, Liquidity) and, in summary, issued 9,900,000 shares of common stock as well as Base Warrants, Overallotment Warrants, Pre-Funded Warrants and Underwriters Warrants to purchase 12,500,000, 1,875,000, 2,600,000 and 575,000 shares of the Company’s common stock, respectively. The Pre-Funded and Underwriters Warrants were classified as liabilities because in certain circumstances they could require cash settlement. The Base and Overallotment Warrants are recorded within stockholders’ equity. The fair value at the date of issuance of the Base and Overallotment Warrants was determined using the Black-Scholes Option Pricing Model and amounted to $5.3 million and $0.8 million, respectively.

The following table sets forth the assumptions used in the Black-Scholes Option Pricing Model to estimate the fair value of the Base Warrants and Overallotment Warrants upon issuance:

As of July 7, 2017, all of the 2,600,000 Pre-Funded Warrants were exercised for $0.01 per warrant exercise price and all 2,600,000 common shares related to the warrants were issued for $26,000. The corresponding fair value of the warrants as of the date of exercise was $2.3 million and this amount was reclassified from liabilities to additional paid-in capital upon exercise. On July 31, the Underwriters exercised their right to purchase 875,000 Firm Shares for $960 thousand net of $72 thousand in underwriter discounts.

Warrant for Investor Relations Services - On July 5, 2017, the Company entered into an agreement for investor relations services and, in consideration for these services, paid a fee and agreed to issue a warrant expiring in August 2020, exercisable into 150,000 shares of common stock with an exercise price of $1.25. The warrant issuance is considered a share-based payment award issued to a nonemployee in exchange for services and falls within the scope of ASC 505-50. The fair value of the warrant was determined to be $0.2 million and was fully expensed during the quarter ended September 30, 2017.

The following table sets forth the assumptions used in the Black-Scholes Option Pricing Model to estimate the fair value of the share- based warrant upon issuance:

Base Warrant Exercise - On October 12, 2017 the Company entered into an agreement with certain holders of Base Warrants to exercise 4 million Base Warrants at the exercise price of $1.25 in exchange for the issuance of 3.2 million additional private placement warrants with an exercise price of $1.80, resulting in gross proceeds to the Company of $5.0 million. The Company recorded a $2.0 million charge within Other (expense) income, net in the consolidated statement of operations as such transaction was deemed to be an inducement to the existing warrant holders. The following table sets forth the assumptions used in the Black-Scholes Option Pricing Model to estimate the fair value of the share- based warrant upon issuance:

Other Exercises- Additionally, approximately 1.7 million base warrants were exercised during 2017, which totaled approximately $2.1 million in gross proceeds.

Additionally, during 2018 we issued 833,000 shares of common stock in connection with contracts for consulting services.