Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

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Stockholders' Equity
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Stockholders' Equity

8. Stockholders’ Equity

The Company is authorized to issue 10,000,000 shares of preferred stock as of December 31, 2018 and 2017, respectively. The Company is authorized to issue 100,000,000 shares of common stock as of December 31, 2018 and 2017, respectively.  

Common Stock Issuances

On February 7, 2017, pursuant to a shelf registration statement on Form S-3, the Company completed the issuance of 5,181,348 shares of its common stock at $1.93 per share which the Company refers to as the February 2017 public offering. Net proceeds to the Company in connection with the February 2017 public offering were approximately $9.2 million after deducting underwriting discounts, commissions and other offering expenses.

On July 24, 2017, pursuant to a shelf registration statement on Form S-3, the Company completed the issuance of 14,950,000 shares of its common stock at $6.50 per share, which the Company refers to as the July 2017 public offering. Net proceeds to the Company in connection with the July 2017 public offering were approximately $91.1 million after deducting underwriting discounts, commissions and other offering expenses.

On February 1, 2018, pursuant to a new $200 million shelf registration statement on Form S-3, the Company completed the issuance of 13,340,000 shares of its common stock at $10.80 per share, which the Company refers to as the February 2018 public offering. Net proceeds in connection with the February 2018 public offering were approximately $135.5 million after deducting underwriting discounts, commissions and other offering expenses.

On December 28, 2018, the Company filed a new $200 million shelf registration statement on Form S-3 that was declared effective in February 2019. The Company’s existing $200 million shelf registration statement was also terminated on the effective date.

Common Stock Warrants

In connection with a 2013 financing and the Company’s private placement of common stock and warrants in September 2013, October 2013 and January 2014, the Company issued five-year warrants to purchase 1,741,788 shares of the Company’s common stock at an exercise price of $5.75 per share (referred to as the 2013 financing warrants). The Company also issued seven-year warrants to purchase 121,739 shares of the Company’s common stock to certain lenders at an exercise price of $5.00 per share in September 2013 and in connection with the 2015 loan facility, the Company issued ten-year warrants to purchase 114,436 shares of its common stock to its lenders at an exercise price of $2.84 per share (referred to as the lender warrants).

The 2013 financing warrants contain anti-dilution provisions that are contingent on the occurrence of a major transaction which precludes them from being indexed to the Company’s common stock and also do not meet other criteria for equity classification. Such provisions could also result in the settlement of the 2013 financing warrants for more shares of common stock than the Company has authorized. Due to these provisions, the Company is required to account for the 2013 financing warrants and the lender warrants as liabilities at fair value. Accordingly, the Company recorded the warrants at fair value upon issuance and remeasured them at fair value at each balance sheet date until they were exercised or expired.

 

As of December 31, 2018 and 2017, the Company’s warrants were remeasured using Level 3 inputs involving a Black-Scholes option pricing model, the inputs for which include: the exercise price of the warrants; the market price of the underlying common shares; a risk-free interest rate based on the rates for U.S. treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; an assumed dividend yield of zero based on the Company’s expectation that it will not pay dividends in the foreseeable future; an expected term based on the remaining contractual term of the warrants; and expected volatility based upon the Company’s historical volatility. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities is the expected volatility. Significant increases in volatility would result in a higher fair value measurement.

The resulting increases in warrant liability fair value of $3.7 million and $5.8 million for the years ended December 31, 2018 and 2017, respectively, were recorded as revaluation losses in other (expense) income, net in the Company’s consolidated statement of operations and comprehensive loss.

During the year ended December 31, 2018, 443,505 warrants were exercised for cash proceeds of $2.6 million and 938,300 warrants were cashless exercised for 513,340 shares of the Company’s common stock. During the year ended December 31, 2017, 40,250 warrants were exercised for cash proceeds of $0.2 million and 166,193 warrants were cashless exercised for 58,957 shares of the Company’s common stock.

On September 30, 2018, 79,150 of remaining unexercised warrants expired, resulting in the recognition of a $0.4 million gain on extinguishment of the related warrant liability. As of December 31, 2018, no warrants were outstanding.

 

Shares of Common Stock Authorized for Issuance

As of December 31, 2018 and 2017, the Company had reserved shares of authorized but unissued common stock as follows:

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

Common stock warrants

 

 

-

 

 

 

1,460,955

 

Equity incentive plan

 

 

6,991,570

 

 

 

4,021,983

 

Total reserved shares of common stock

 

 

6,991,570

 

 

 

5,482,938