Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.21.2
Stockholders' Equity
9 Months Ended
Sep. 30, 2021
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 6 - STOCKHOLDERS’ EQUITY

 

Common Stock

 

During the nine months ended September 30, 2021, the Company issued 356,385 shares of common stock for cash exercises of warrants for proceeds of $2,116,969.

 

During the nine months ended September 30, 2021, the Company issued 160,556 shares of common stock for the exercise of options for proceeds of $569,427.

 

On May 15, 2020, the Company entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of the Company’s common stock, having an aggregate offering price of up to $75,000,000. The Company is not obligated to sell any shares under the agreement. During the nine months ended September 30, 2021, the Company issued 651,674 shares of common stock for net cash proceeds of $23,416,036 under the agreement. During the nine months ended September 30, 2020, the Company issued shares of common stock for net cash proceeds of $19,816,597.

 

Options and Warrants

 

In December 2014, the Board of Directors adopted and the Company’s shareholders approved Relmada’s 2014 Stock Option and Equity Incentive Plan, as amended (the “Plan”), which allows for the granting of common stock awards, stock appreciation rights, and incentive and nonqualified stock options to purchase shares of the Company’s common stock to designated employees, non-employee directors, and consultants and advisors.

 

In May 2021, the Company’s shareholders approved Relmada’s Board of Director approved 2021 Equity Incentive Plan which allows for the granting of 1,500,000 options or stock awards.

 

These combined plans allow for the granting of up to 6,652,942 options or stock awards. 

 

Stock options are exercisable generally for a period of 10 years from the date of grant and generally vest over four years. As of September 30, 2021, 1,609,011 shares were available for future grants under the Plan.

 

As of September 30, 2021, no stock appreciation rights have been issued.

 

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options and warrants. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The expected volatility was based on historical volatility. The Company routinely reviews its calculation of volatility changes in future volatility, the Company’s life cycle, its peer group, and other factors.

 

The Company uses the simplified method for share-based compensation to estimate the expected term for equity awards for share-based compensation in its option-pricing model.

 

On January 6, 2021, the Company awarded a total of 1,490,000 options to employees and directors with an exercise price of $33.43 and a 10-year term vesting over a 4-year period. The options granted include time based vesting grants and performance vesting based on the Company’s achievement of performance metrics. The options have an aggregate fair value of $39.7 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.59% (2) expected life of 6.25 years, (3) expected volatility of 101%, and (4) zero expected dividends. As of September 30, 2021, five performance metrics for 468,000 options were met. Vesting of such options is subject to the passage of time. At September 30, 2021, the Company incurred expense of $2,268,562 related to these options.

 

On February 18, 2021, the Company awarded a total of 25,000 options to an employee with an exercise price of $35.15 and a 10-year term, vesting over a 4-year period. The options have an aggregate fair value of $701,000 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.75% (2) expected life of 6.25 years, (3) expected volatility of 101%, and (4) zero expected dividends.

 

At September 30, 2021, the Company has unrecognized stock-based compensation expense of approximately $67.6 million related to unvested stock options over the weighted average remaining service period of 2.76 years.

 

Options

 

A summary of the changes in options during the nine months ended September 30, 2021 is as follows:

 

    Number
of
Options
    Weighted
Average
Exercise
Price
Per
Share
    Weighted
Average
Remaining
Contractual
Term
(Years)
    Aggregate
Intrinsic
Value
 
Outstanding and expected to vest at December 31, 2020     3,905,737     $ 24.32       8.40     $ 48,952,339  
Granted     1,515,000     $ 33.46       9.28     $  
Exercised     (160,556 )   $ 3.56      
    $
 
Forfeited     (216,250 )   $ 39.61      
    $
 
Outstanding  at September 30, 2021     5,043,931     $ 27.07       8.18     $ 33,664,009  
Options exercisable at September 30, 2021     2,079,396     $ 22.59       7.54     $ 21,827,709  

 

Warrants

 

A summary of the changes in outstanding warrants during the nine months ended September 30, 2021 is as follows:

 

    Number of
Shares
    Weighted
Average
Exercise
Price Per
Share
 
Outstanding and vested at December 31, 2020     2,670,633     $ 9.11  
Granted     930,000     $ 32.21  
Exercised     (356,385 )   $ 5.94  
Outstanding at September 30, 2021     3,244,248     $ 16.08  
Warrants Vested at September 30, 2021     2,829,873     $ 8.13  

At September 30, 2021, the Company had approximately $12.5 million of unrecognized compensation expense related to outstanding warrants.

 

On January 6, 2021, the Company awarded a total of 400,000 warrants to consultants with an exercise price of $33.43 and a 10-year term, vesting over 4-year period. The warrants granted include time based vesting grants and performance vesting based on the Company’s achievement of performance metrics. The warrants have an aggregate fair value of $10.6 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.59% (2) expected life of 6.25 years, (3) expected volatility of 101%, and (4) zero expected dividends. As of September 30, 2021, five performance metrics for 180,000 warrants were met. Vesting of such options is subject to the passage of time. At September 30, 2021, the Company incurred expense of $872,524 related to these warrants.

 

On June 18, 2021, the Company awarded a total of 10,000 warrants to a consultant with an exercise price of $30.90 and a 5-year term, vesting over a 1-year period. The warrants granted are time based vesting. The warrants have an aggregate fair value of $190,401 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.47% (2) expected life of 3.00 years, (3) expected volatility of 100%, and (4) zero expected dividends.

 

On June 25, 2021, the Company awarded a total of 10,000 warrants to a consultant with an exercise price of $34.35 and a 5-year term, vesting over a 1-year period. The warrants granted are time based vesting. The warrants have an aggregate fair value of $211,653 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.43% (2) expected life of 3.00 years, (3) expected volatility of 100%, and (4) zero expected dividends.

 

On July 12, 2021, the Company awarded a total of 10,000 warrants to a consultant with an exercise price of $34.77 and a 5-year term, vesting over a 1-year period. The warrants granted are time based vesting. The warrants have an aggregate fair value of $212,219 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.43% (2) expected life of 3.00 years, (3) expected volatility of 99%, and (4) zero expected dividends.

 

On July 16, 2021, the Company awarded a total of 500,000 warrants to Arbormentis, LLC with an exercise price of $31.17 and a 7-year term, vesting immediately. The warrants have an aggregate fair value of $10,241,599 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.48% (2) expected life of 3.50 years, (3) expected volatility of 101%, and (4) zero expected dividends.

 

At September 30, 2021, the aggregate intrinsic value of warrants vested and outstanding was approximately $40.0 million and $40.1 million, respectively.

 

At December 31, 2020, the aggregate intrinsic value of warrants vested and outstanding was approximately $61.0 million and $61.2 million, respectively.

 

The following table summarizes the components of stock-based compensation expense which includes stock options and warrants in the unaudited consolidated statements of operations for the nine months ended September 30, 2021 and 2020 (rounded to nearest $00):

 

    Nine
Months
Ended
September 30,
2021
    Nine
Months
Ended
September 30,
2020
 
Research and development   $ 14,341,700     $ 4,635,300  
General and administrative     18,033,500       12,951,200  
Total   $ 32,375,200     $ 17,586,500