VERMILLION, INC., 10-Q filed on 12 Nov 19
v3.19.3
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2019
Oct. 31, 2019
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Entity Registrant Name VERMILLION, INC.  
Entity Central Index Key 0000926617  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Title of 12(b) Security Common Stock, par value $0.001 per share  
Trading Symbol VRML  
Security Exchange Name NASDAQ  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   97,238,427
v3.19.3
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 14,636,000 $ 9,360,000
Accounts receivable, net 996,000 786,000
Prepaid expenses and other current assets 389,000 550,000
Inventories 29,000 92,000
Total current assets 16,050,000 10,788,000
Property and equipment, net 399,000 608,000
Other assets 84,000 12,000
Total assets 16,533,000 11,408,000
Current liabilities:    
Accounts payable 879,000 950,000
Accrued liabilities 2,403,000 1,825,000
Short-term debt 192,000 189,000
Other current liabilities 63,000  
Total current liabilities 3,537,000 2,964,000
Non-current liabilities:    
Long-term debt 1,148,000 1,292,000
Other non-current liabilities 21,000  
Total liabilities 4,706,000 4,256,000
Commitments and contingencies (Note 3)
Stockholders' equity:    
Common stock, par value $0.001 per share, 150,000,000 shares authorized at September 30, 2019 and December 31, 2018; 97,238,427 and 75,501,394 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively 97,000 75,000
Additional paid-in capital 430,504,000 414,001,000
Accumulated deficit (418,774,000) (406,924,000)
Total stockholders' equity 11,827,000 7,152,000
Total liabilities and stockholders' equity $ 16,533,000 $ 11,408,000
v3.19.3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2019
Dec. 31, 2018
Condensed Consolidated Balance Sheets [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 97,238,427 75,501,394
Common stock, shares outstanding 97,238,427 75,501,394
v3.19.3
Condensed Consolidated Statements Of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Revenue:        
Revenue $ 1,285 $ 774 $ 3,230 $ 2,131
Cost of revenue:        
Cost of revenue [1] 949 778 2,551 2,389
Gross profit (loss) 336 (4) 679 (258)
Operating expenses:        
Research and development [2] 340 129 774 425
Sales and marketing [3] 2,425 1,343 7,569 4,046
General and administrative [4] 1,421 1,167 4,210 3,780
Total operating expenses 4,186 2,639 12,553 8,251
Loss from operations (3,850) (2,643) (11,874) (8,509)
Interest income (expense), net 34 (6) 39 (25)
Other income (expense), net (4) (3) (15) (17)
Net loss $ (3,820) $ (2,652) $ (11,850) $ (8,551)
Net loss per share - basic and diluted $ (0.04) $ (0.04) $ (0.14) $ (0.13)
Weighted average common shares used to compute basic and diluted net loss per common share 97,144,586 75,306,074 83,017,019 68,288,216
Product [Member]        
Revenue:        
Revenue $ 1,241 $ 739 $ 3,120 $ 1,979
Cost of revenue:        
Cost of revenue [1] 736 477 1,950 1,538
Service [Member]        
Revenue:        
Revenue 44 35 110 152
Cost of revenue:        
Cost of revenue [1] $ 213 $ 301 $ 601 $ 851
[1] Non-cash stock-based compensation expense included in cost of revenue and operating expenses: Cost of revenue $20, $35, $57, $93
[2] Non-cash stock-based compensation expense included in cost of revenue and operating expenses: Research and development $-, $2, $4, $4
[3] Non-cash stock-based compensation expense included in cost of revenue and operating expenses: Sales and marketing $32, $14, $93, $85
[4] Non-cash stock-based compensation expense included in cost of revenue and operating expenses: General and administrative $243, $245, $738, $657
v3.19.3
Consolidated Statements Of Operations (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Cost Of Revenue [Member]        
Stock-based compensation expense $ 20 $ 35 $ 57 $ 93
Research And Development [Member]        
Stock-based compensation expense   2 4 4
Sales And Marketing [Member]        
Stock-based compensation expense 32 14 93 85
General And Administrative [Member]        
Stock-based compensation expense $ 243 $ 245 $ 738 $ 657
v3.19.3
Consolidated Statements Of Changes In Stockholders' Equity - USD ($)
$ in Thousands
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Deficit [Member]
Total
Balance (in shares) at Dec. 31, 2017 60,036,017      
Balance at Dec. 31, 2017 $ 60 $ 399,400 $ (396,053) $ 3,407
Net loss     (2,850) (2,850)
ASC 606 adjustment to retained earnings     500 500
Common stock issued for restricted stock awards (in shares) 3,321      
Common stock issued for restricted stock awards   6   6
Stock compensation charge   176   176
Balance (in shares) at Mar. 31, 2018 60,039,338      
Balance at Mar. 31, 2018 $ 60 399,582 (398,403) 1,239
Balance (in shares) at Dec. 31, 2017 60,036,017      
Balance at Dec. 31, 2017 $ 60 399,400 (396,053) 3,407
Net loss         (8,551)
Balance (in shares) at Sep. 30, 2018 75,382,684      
Balance at Sep. 30, 2018 $ 75 413,739 (404,104) 9,710
Balance (in shares) at Mar. 31, 2018 60,039,338      
Balance at Mar. 31, 2018 $ 60 399,582 (398,403) 1,239
Net loss     (3,049) (3,049)
Common stock issued in conjunction with public offering, net of issuance costs (in shares) 10,000,000      
Common stock issued in conjunction with public offering, net of issuance costs $ 10 8,981   8,991
Preferred stock issued in conjunction with public offering net of issuance costs (in shares) 50,000        
Preferred stock issued in conjunction with public offering net of issuance costs   4,496   4,496
Common stock issued in conjuntion with exercise of stock options (in shares) 32,500      
Common stock issued in conjuntion with exercise of stock options   30   30
Preferred stock converted to common stock (in shares) (50,000) 5,000,000      
Preferred stock converted to common stock $ 5 (5)    
Common stock issued for restricted stock awards (in shares) 202,413      
Common stock issued for restricted stock awards   225   225
Stock compensation charge   136   136
Balance (in shares) at Jun. 30, 2018 75,274,251      
Balance at Jun. 30, 2018 $ 75 413,445 (401,452) 12,068
Net loss     (2,652) (2,652)
Common stock issued for restricted stock awards (in shares) 108,433      
Common stock issued for restricted stock awards   106   106
Issuance costs related to public offering   (2)   (2)
Stock compensation charge   190   190
Balance (in shares) at Sep. 30, 2018 75,382,684      
Balance at Sep. 30, 2018 $ 75 413,739 (404,104) 9,710
Balance (in shares) at Dec. 31, 2018 75,501,394      
Balance at Dec. 31, 2018 $ 75 414,001 (406,924) 7,152
Net loss     (3,716) (3,716)
Common stock issued in conjuntion with exercise of stock options (in shares) 19,687      
Common stock issued in conjuntion with exercise of stock options   17   17
Common stock issued for restricted stock awards (in shares) 11,667      
Common stock issued for restricted stock awards   3   3
Stock compensation charge   181   181
Balance (in shares) at Mar. 31, 2019 75,532,748      
Balance at Mar. 31, 2019 $ 75 414,202 (410,640) 3,637
Balance (in shares) at Dec. 31, 2018 75,501,394      
Balance at Dec. 31, 2018 $ 75 414,001 (406,924) 7,152
Net loss         (11,850)
Balance (in shares) at Sep. 30, 2019 97,238,427      
Balance at Sep. 30, 2019 $ 97 430,504 (418,774) 11,827
Balance (in shares) at Mar. 31, 2019 75,532,748      
Balance at Mar. 31, 2019 $ 75 414,202 (410,640) 3,637
Net loss     (4,314) (4,314)
Common stock issued in conjunction with public offering, net of issuance costs (in shares) 18,750,000      
Common stock issued in conjunction with public offering, net of issuance costs $ 19 13,611   13,630
Common stock issued for restricted stock awards (in shares) 95,452      
Common stock issued for restricted stock awards   123   123
Stock compensation charge   290   290
Balance (in shares) at Jun. 30, 2019 94,378,200      
Balance at Jun. 30, 2019 $ 94 428,226 (414,954) 13,366
Net loss     (3,820) (3,820)
Common stock issued in conjunction with public offering, net of issuance costs (in shares) 2,812,500      
Common stock issued in conjunction with public offering, net of issuance costs $ 3 2,089   2,092
Common stock issued for restricted stock awards (in shares) 47,727      
Common stock issued for restricted stock awards   62   62
Issuance costs related to public offering   (107)   (107)
Stock compensation charge   234   234
Balance (in shares) at Sep. 30, 2019 97,238,427      
Balance at Sep. 30, 2019 $ 97 $ 430,504 $ (418,774) $ 11,827
v3.19.3
Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Jun. 30, 2019
Jun. 30, 2018
Public Offering Of Common Stock [Member]      
Stock issued, issuance costs   $ 1,371 $ 1,006
Public Offering Of Common Stock In Conjunction With Exercise Of Underwriter's Option [Member]      
Stock issued, issuance costs $ 158    
Public Offering Of Preferred Stock [Member]      
Stock issued, issuance costs     $ 504
v3.19.3
Condensed Consolidated Statements Of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash flows from operating activities:    
Net loss $ (11,850) $ (8,551)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 276 527
Stock-based compensation expense 893 839
Loss on sale and disposal of property and equipment 54 11
Changes in operating assets and liabilities:    
Accounts receivable (210) 49
Prepaid expenses and other assets 173 228
Inventories 63 (13)
Accounts payable, accrued liabilities and other liabilities 507 (159)
Net cash used in operating activities (10,094) (7,069)
Cash flows from investing activities:    
Purchase of property and equipment (121) (58)
Net cash used in investing activities (121) (58)
Cash flows from financing activities:    
Proceeds from public offering of preferred stock, net of issuance costs   4,496
Proceeds from public offering of common stock, net of issuance costs 13,523 8,990
Principal repayment of DECD loan (141) (138)
Repayment of capital lease obligations   (29)
Proceeds from issuance of common stock in conjunction with the exercise of the underwriter’s option to purchase additional shares in connection with a public offering, net of issuance costs 2,092  
Proceeds from issuance of common stock from exercise of stock options 17 29
Net cash provided by financing activities 15,491 13,348
Net increase in cash and cash equivalents 5,276 6,221
Cash and cash equivalents, beginning of period 9,360 5,539
Cash and cash equivalents, end of period 14,636 11,760
Supplemental disclosure of cash flow information:    
Cash paid during the period for interest 31 33
Non-cash investing and financing activities [Abstract]    
Net increase in other assets/other liabilities for right of use assets $ 84  
50,000 shares of convertible preferred stock converted to 5,000,000 shares of common stock, net of issuance costs   $ 4,496
v3.19.3
Condensed Consolidated Statements Of Cash Flows (Parenthetical)
9 Months Ended
Sep. 30, 2019
shares
Condensed Consolidated Statements Of Cash Flows [Abstract]  
Shares converted 50,000
Conversion of new shares 5,000,000
v3.19.3
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies
9 Months Ended
Sep. 30, 2019
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies

1.   ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Organization

Vermillion, Inc. (“Vermillion”; Vermillion and its wholly-owned subsidiaries are collectively referred to as the “Company,” “we,” “our,” or “us”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company sells OVA1 and Overa risk of malignancy tests for ovarian cancer (“OVA1” and “Overa,” respectively) through Vermillion’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified clinical laboratory, ASPiRA LABS, Inc. (“ASPiRA LABS”). The Company also recently launched genetic testing for specific women’s health diseases, called ASPiRA GenetiX, with a core focus on ovarian cancer.

The Company has also offered in-vitro diagnostic (“IVD”) trial services to third-party customers through its wholly-owned subsidiary, ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced operations in June 2016. ASPiRA IVD is a specialized, CLIA certified, laboratory provider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays. The Company has decided to discontinue pursuing contracts for ASPiRA IVD and is completing contractual commitments which are expected to be concluded in the fourth quarter of 2019.

Liquidity

The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has an accumulated deficit of approximately $418,774,000 at September 30, 2019. The Company also expects to incur a net loss and negative cash flows from operations for 2019. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations. However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next 12 months.

As discussed in Note 4, on June 28, 2019, the Company completed a public offering (the “Offering”), pursuant to which certain investors purchased Vermillion common stock for net proceeds of approximately $13,800,000 after deducting underwriting discounts, commissions and other expenses related to the offering  but before deducting other expenses payable by us. On July 2, 2019, William Blair & Company, L.L.C., the sole underwriter of the Offering, exercised its option to purchase additional shares of Vermillion common stock for net proceeds of $2,092,500,  after deducting underwriting discounts, commissions and other expenses related to the offering but before deducting other expenses payable by us.

As discussed in Note 4, on April 17, 2018, the Company completed two public offerings (the “2018 Offerings”), pursuant to which certain investors purchased Vermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately $13,500,000 after deducting offering expenses.

As discussed in Note 3, in March 2016, the Company entered into an agreement (the “Loan Agreement”) pursuant to which it may borrow up to $4,000,000 from the State of Connecticut Department of Economic and Community Development (the “DECD”). An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain future milestones. The loan may be prepaid at any time without premium or penalty.



Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The condensed consolidated balance sheet at December 31, 2018 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included in Vermillion’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 28, 2019 (the “2018 Annual Report”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.



Significant Accounting and Reporting Policies

Revenue Recognition

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), which it adopted on January 1, 2018 using the modified retrospective method. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.



Product Revenue

The Company's product revenue is generated by performing diagnostic services using its OVA1 and Overa tests, and the service is completed upon the delivery of the test result to the prescribing physician. The entire transaction price is allocated to the single performance obligation contained in a contract with a patient. All revenue is recognized upon completion of the OVA1 or Overa test based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year.    

The Company also reviewed its patient account population and determined an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. There were no impairment losses on accounts receivable recorded during the nine months ended September 30, 2019.



Service Revenue

The Company’s service revenue was generated by performing IVD trial services for third-party customers. Measurement of progress on contracts with customers was generally based on the input measurement of cost incurred relative to the total expected costs to satisfy the performance obligation. We do not expect to have any significant service revenue going forward as we wind down the ASPiRA IVD subsidiary.



Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), Compensation - Stock Compensation (“ASU 2016-09”). The guidance simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that reporting period. The Company adopted this standard on January 1, 2018, and the adoption did not have a material impact on the consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Base Payment Accounting. This new guidance expands the scope of Topic 718 to include share-based payment transactions from acquiring goods and services from nonemployees, which was previously codified under Topic 505, where this change will modify the measurement requirements of nonemployee awards. This amendment is effective for annual periods after December 15, 2018. The Company adopted this standard on January 1, 2019, and its impact was not material.

In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU 2016-2”). This guidance is intended to make leasing activities more transparent and comparable, and requires substantially all leases to be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-2 is effective for interim and annual periods beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited, and early adoption was permitted. The Company adopted ASU 2016-02 effective January 1, 2019 and elected the package of practical expedients and the new transition approach permitted by ASU 2018-11. ASU 2018-11 allows the Company not to reassess existing identification of leases, classification of leases or any initial direct costs. The Company has also elected to use the hindsight practical expedient. The Company has two office leases which are required to be recorded as Right of Use (“ROU”) assets and corresponding lease liabilities on the balance sheet. The Company had no short term leases with terms of less than twelve months as of the adoption date. The Company recognized ROU assets and a lease liability of approximately $178,000 related to its leases on its consolidated balance sheet as of January 1, 2019. The Company did not have a cumulative adjustment impacting retained earnings.

In May 2014, the FASB issued ASC 606, which superseded existing revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. Please see the above “Revenue Recognition” section for a discussion of the Company’s revenue recognition under ASC 606.

 

v3.19.3
Agreements With Quest Diagnostics Incorporated
9 Months Ended
Sep. 30, 2019
Agreements With Quest Diagnostics Incorporated [Abstract]  
Agreements With Quest Diagnostics Incorporated

2.   AGREEMENTS WITH QUEST DIAGNOSTICS INCORPORATED



In March 2015, the Company entered into a commercial agreement with Quest Diagnostics, Incorporated (“Quest Diagnostics”). Pursuant to this agreement, all OVA1 U.S. testing services for Quest Diagnostics customers were transferred to Vermillion’s wholly-owned subsidiary, ASPiRA LABS, as of August 2015. Pursuant to this agreement, as amended as of March 1, 2018, Quest Diagnostics is continuing to provide blood draw and logistics support by transporting specimens from its clients to ASPiRA LABS for testing through at least March 11, 2019 in exchange for a market value fee. As of the date of this Quarterly Report on Form 10-Q, Quest continues to perform under the Agreement and we are in the process of negotiating its renewal.

v3.19.3
Commitments And Contingencies
9 Months Ended
Sep. 30, 2019
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

3.   COMMITMENTS AND CONTINGENCIES



Development Loan

On March 22, 2016, the Company entered into the Loan Agreement with the DECD, pursuant to which the Company may borrow up to $4,000,000 from the DECD. Proceeds from the loan were utilized primarily to fund the build-out, information technology infrastructure and other costs related to the Company’s Trumbull, Connecticut facility and operations. The loan bears interest at a fixed rate of 2.0% per annum and requires equal monthly payments of principal and interest until maturity, which occurs on April 15, 2026. As security for the loan, the Company has granted the DECD a blanket security interest in the Company’s personal and intellectual property. The DECD’s security interest in the Company’s intellectual property may be subordinated to a qualified institutional lender. Under the terms of the Loan Agreement, as amended, the Company may be eligible for forgiveness of up to $2,000,000 of the principal amount of the loan if the Company achieves certain job creation and retention milestones by March 1, 2021 (the “Measurement Date”). Conversely, if the Company is either unable to meet these job creation and retention milestones, namely, hiring and retaining for a consecutive two-year period 40 full-time employees with a specified average annual salary by the Measurement Date, or does not maintain the Company’s Connecticut operations for a period of 10 years, the DECD may require early repayment of a portion or all of the loan depending on job attainment as compared to the required amount plus a penalty of 5% of the total funded loan.  

An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain other future milestones. The loan may be prepaid at any time without premium or penalty.



Operating Leases

The Company leases facilities to support its business of discovering, developing and commercializing diagnostic tests in the fields of gynecologic disease. The Company’s principal facility, including the CLIA laboratory used by ASPiRA LABS, is located in Austin, Texas, and the CLIA laboratory used by ASPiRA IVD is located in Trumbull, Connecticut. The Austin, Texas lease expires on January 31, 2020 with no automatic renewal or renewal option.    

In October 2015, the Company entered into a lease agreement for a facility in Trumbull, Connecticut. The lease required initial payments for the buildout of leasehold improvements to the office space, which were approximately $596,000. The term of the lease is five years beginning after the initial date of occupancy in January 2016 and a rent abatement period of five months, with two subsequent five-year renewal options at a rate equal to 90% of the then current fair market rate.

As of the date of the implementation of the new lease standard, ASU 2016-2, the Company was not reasonably certain to exercise the renewal option for its Trumbull, Connecticut lease due to the uncertain nature of its pricing.

The expense associated with these operating leases for the three months ended September 30, 2019 and 2018 is shown in the table below (in thousands).







 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended September 30

Lease Cost

Classification

2019

 

2018

Operating rent expense

 

 

 

 

 

 



Cost of revenue

$

 

$

25 



Research and development

 

 

 



Sales and marketing

 

 

 

12 



General and administrative

 

11 

 

 

22 



 

 

 

 

 

 

Variable rent expense

 

 

 

 

 

 



Cost of revenue

$

13 

 

$



Research and development

 

 

 



Sales and marketing

 

12 

 

 



General and administrative

 

16 

 

 



The expense associated with these operating leases for the nine months ended September 30, 2019 and 2018 is shown in the table below (in thousands).





 

 

 

 

 

 



 

 

 

 

 

 



 

Nine Months Ended September 30

Lease Cost

Classification

2019

 

2018

Operating rent expense

 

 

 

 

 

 



Cost of revenue

$

27 

 

$

75 



Research and development

 

 

 

21 



Sales and marketing

 

26 

 

 

36 



General and administrative

 

33 

 

 

67 



 

 

 

 

 

 

Variable rent expense

 

 

 

 

 

 



Cost of revenue

$

37 

 

$



Research and development

 

 

 



Sales and marketing

 

32 

 

 



General and administrative

 

44 

 

 



Based on our leases as of September 30, 2019, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands).





 

 

 

2019

 

$

31 

2020

 

 

40 

2021

 

 

14 

Total Operating Lease Payments

 

 

85 

Less: Interest

 

 

-1

Present Value of Lease Liabilities

 

$

84 





Weighted-average lease term and discount rate were as follows:



 

 



 

 

Weighted-average remaining lease term (in years)

 

Weighted-average discount rate

 

2.50% 



Non-cancelable Royalty Obligations

The Company is a party to an amended research collaboration agreement with The Johns Hopkins University School of Medicine under which the Company licenses certain of its intellectual property. Under the terms of the amended research collaboration agreement, Vermillion is required to pay the greater of 4% royalties on net sales of diagnostic tests using the assigned patents or annual minimum royalties of $57,500. Royalty expense for the three months ended September 30, 2019 and 2018 totalled $50,000 and $30,000, respectively. Royalty expense for the nine months ended September 30, 2019 and 2018 totalled $125,000 and $78,000, respectively.

  

v3.19.3
Stockholders' Equity
9 Months Ended
Sep. 30, 2019
Stockholders' Equity:  
Stockholders' Equity

4.   STOCKHOLDERS’ EQUITY



2019 Offering

On June 26, 2019, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with William Blair & Company, L.L.C., as the sole underwriter (the “Underwriter”), in connection with an underwritten public offering of Vermillion common stock.

Pursuant to the Underwriting Agreement, the Company agreed to issue and sell an aggregate of 18,750,000 shares of Vermillion common stock offered by the Underwriter in a public offering at a price of $0.80 per share (the “Offering”). The Offering closed on June 28, 2019 and resulted in proceeds to the Company, after deducting underwriting discounts, commissions and other expenses related to the offering but before deducting other expenses payable by us, of approximately $13,800,000. Under the Underwriting Agreement, the Company granted the Underwriter an option to purchase up to an additional 2,812,500 shares of Vermillion common stock at the public offering price, less underwriting discounts and commissions. On July 2, 2019, the Underwriter exercised its option to purchase 2,812,500 shares of Vermillion common stock at a price of $0.80 per share and resulted in proceeds to the Company, after deducting underwriting discounts, commissions and other expenses related to the offering but before deducting other expenses payable by us, of $2,092,500.



2018 Offerings    

On April 13, 2018, the Company entered into two underwriting agreements (each, a “2018 Underwriting Agreement”) with Piper Jaffray & Co., as the sole underwriter (the “2018 Underwriter”), in connection with separate but concurrent public offerings of the Company’s securities.

Pursuant to the first 2018 Underwriting Agreement, the Company agreed to issue and sell an aggregate of 10,000,000 shares of Vermillion common stock offered by the 2018 Underwriter in a public offering at a price to the public of $1.00 per share (the “2018 Common Stock Offering”). Under this 2018 Underwriting Agreement, the Company granted the 2018 Underwriter an option to purchase up to an additional 1,500,000 shares of Vermillion common stock at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any. The 2018 Underwriter did not exercise this option. The 2018 Common Stock Offering closed on April 17, 2018 and resulted in proceeds, net of 7% underwriting costs and other offering costs, to the Company of $8,990,000.

Pursuant to the second 2018 Underwriting Agreement, the Company agreed to issue and sell an aggregate of 50,000 shares of Vermillion Series B Convertible Preferred Stock, par value $0.001 per share, offered by the 2018 Underwriter in a public offering at a price to the public of $100.00 per share (the “Series B Offering”). The Series B Offering closed on April 17, 2018 and resulted in proceeds, net of 7% underwriting costs and other offering costs, to the Company of $4,496,000.

Upon obtaining Company stockholder approval at the annual meeting of Company stockholders on June 21, 2018, each of the 50,000 shares of Vermillion Series B Convertible Preferred Stock was automatically converted into shares of Vermillion common stock, at a conversion rate of 100 shares of Vermillion common stock per one share of Vermillion Series B Convertible Preferred Stock, including shares issuable pursuant to customary anti-dilution provisions.

2010 Stock Incentive Plan

The Company’s employees, directors, and consultants were eligible to receive awards under the Vermillion, Inc. Second Amended and Restated 2010 Stock Incentive Plan (the “2010 Plan”), which was replaced by the 2019 Plan (as defined below) with respect to future equity grants. As of September 30, 2019, a total of 6,985,007 shares of Vermillion common stock were reserved with respect to outstanding stock options and unvested restricted stock awards. 



2019 Stock Incentive Plan

At the Company’s annual meeting of stockholders on June 18, 2019, the Company’s stockholders approved the Vermillion, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The purposes of the 2019 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2019 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.  The 2019 Plan allows the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants.

Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is 10,492,283. To the extent an equity award granted under the 2019 Plan or the 2010 Plan expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares of common stock subject to such award will become available for future grant under the 2019 Plan.  As of September 30, 2019, a total of 10,492,283 shares of common stock had been reserved for issuance under the 2019 Plan, of which 195,000 shares of common stock are subject to outstanding stock options.



Stock-Based Compensation

During the nine months ended September 30, 2019, the Company awarded the Company’s non-employee directors an aggregate of 190,909 shares of restricted stock under the 2010 Plan, having a grant date of March 26, 2019 and a grant date fair value of approximately $252,000. The vesting of these shares of restricted stock is as follows: 25% on April 1, 2019; 25% on June 1, 2019; 25% on September 1, 2019; and 25% on December 1, 2019. During the nine months ended September 30, 2019, the Company also granted the Company’s non-employee directors options to purchase an aggregate of 402,584 shares of Vermillion common stock with an exercise price of $1.29 per share.

During the nine months ended September 30, 2019, the Company awarded certain consultants 11,667 shares of restricted stock under the 2010 Plan having a grant date fair value of approximately $10,000.  During the nine months ended September 30, 2019, the Company also granted certain consultants options to purchase 50,000 shares of Vermillion common stock with an exercise price of $0.47 per share. These stock options have performance-based vesting conditions based on certain metrics through March 31, 2020.  The Company also granted certain consultants options to purchase an aggregate of 100,000 shares of Vermillion common stock with an exercise price of $1.29 per share. During the nine months ended September 30, 2019, the Company also granted certain consultants options to purchase an aggregate of 35,001 shares of Vermillion common stock with an exercise price of $1.28 per share. These stock options were granted under the 2010 Plan and were fully vested at the time of the grant.

During the nine months ended September 30, 2019, the Company granted certain officers and employees options to purchase an aggregate of 575,000 shares of Vermillion common stock with an exercise price of $0.47 per share. These stock options were granted under the 2010 Plan and have performance-based vesting conditions based on certain metrics through March 31, 2020.  

During the nine months ended September 30, 2019, the Company granted certain officers and employees options to purchase an aggregate of 55,000 shares of Vermillion common stock with an exercise price of $0.71 per share, 125,000 shares of Vermillion common stock with an exercise price of $0.77 per share and 1,073,000 shares of Vermillion common stock with an exercise price of $1.29 per share. The Company granted certain officers and employees options to purchase an aggregate of 14,000 shares of Vermillion common stock with an exercise price of $1.28 per share and 20,000 shares of Vermillion common stock with an exercise price of $1.13 per share. These stock options were granted under the 2010 Plan and vest 25% on each of the four anniversaries of the vesting commencement date for each such stock option. 

During the nine months ended September 30, 2019, the Company granted certain officers and employees options to purchase an aggregate of 100,000 shares of Vermillion common stock with an exercise price of $1.01 per share. The Company also granted certain officers and employees options to purchase an aggregate of 95,000 shares of Vermillion common stock with an exercise price of $0.52 per share. These stock options were granted under the 2019 Plan and vest 25% on each of the four anniversaries of the vesting commencement date for each such stock option.

During the three months ended September 30, 2019, the Company granted certain officers and employees options to purchase an aggregate of 95,000 shares of Vermillion common stock with an exercise price of $0.52 per share. These stock options were granted under the 2019 Plan and vest 25% on each of the four anniversaries of the vesting commencement date for each such stock option. 

The allocation of employee stock-based compensation expense by functional area for the three and nine months ended September 30, 2019 and 2018 was as follows:

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

 

2019

 

2018

 

2019

 

2018

Cost of revenue

 

$

18 

 

$

22 

 

$

49 

 

$

69 

Research and development

 

 

 -

 

 

 

 

 

 

Sales and marketing

 

 

33 

 

 

14 

 

 

91 

 

 

95 

General and administrative

 

 

185 

 

 

233 

 

 

598 

 

 

727 

Total

 

$

236 

 

$

271 

 

$

742 

 

$

895 



 

 

 

 

 

 

 

 

 

 

 

 



v3.19.3
Loss Per Share
9 Months Ended
Sep. 30, 2019
Loss Per Share [Abstract]  
Loss Per Share

5.   LOSS PER SHARE

The Company calculates basic loss per share using the weighted average number of shares of Vermillion common stock outstanding during the period. Because the Company is in a net loss position, diluted loss per share is calculated using the weighted average number of shares of Vermillion common stock outstanding and excludes the effects of 9,795,345 and 7,414,053 potential shares of Vermillion common stock as of September 30, 2019 and 2018, respectively, that are anti-dilutive. Potential shares of Vermillion common stock include incremental shares of Vermillion common stock issuable upon the exercise of outstanding warrants, stock options and unvested restricted stock units.

v3.19.3
Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

6.   RELATED PARTY TRANSACTIONS

On December 18, 2017, the Company entered into a consulting agreement for a term of up to five months with the Company’s former Senior Vice President, Finance and Chief Accounting Officer. Pursuant to the terms of the consulting agreement through May 15, 2018, the consultant provided accounting and finance services related to the transition of financial leadership. The Company agreed to pay $150 per hour for such consulting services. The consultant also remained eligible for payout under the Company’s 2017 Corporate Incentive Plan after he satisfactorily met certain performance obligations as outlined in the consulting agreement. During the nine months ended September 30, 2019 and 2018, the consultant was paid an aggregate of none and $53,925 for services provided pursuant to the consulting agreement. 



v3.19.3
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Policy)
9 Months Ended
Sep. 30, 2019
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Organization

Organization

Vermillion, Inc. (“Vermillion”; Vermillion and its wholly-owned subsidiaries are collectively referred to as the “Company,” “we,” “our,” or “us”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company sells OVA1 and Overa risk of malignancy tests for ovarian cancer (“OVA1” and “Overa,” respectively) through Vermillion’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified clinical laboratory, ASPiRA LABS, Inc. (“ASPiRA LABS”). The Company also recently launched genetic testing for specific women’s health diseases, called ASPiRA GenetiX, with a core focus on ovarian cancer.

The Company has also offered in-vitro diagnostic (“IVD”) trial services to third-party customers through its wholly-owned subsidiary, ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced operations in June 2016. ASPiRA IVD is a specialized, CLIA certified, laboratory provider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays. The Company has decided to discontinue pursuing contracts for ASPiRA IVD and is completing contractual commitments which are expected to be concluded in the fourth quarter of 2019.

Liquidity

Liquidity

The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has an accumulated deficit of approximately $418,774,000 at September 30, 2019. The Company also expects to incur a net loss and negative cash flows from operations for 2019. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations. However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next 12 months.

As discussed in Note 4, on June 28, 2019, the Company completed a public offering (the “Offering”), pursuant to which certain investors purchased Vermillion common stock for net proceeds of approximately $13,800,000 after deducting underwriting discounts, commissions and other expenses related to the offering  but before deducting other expenses payable by us. On July 2, 2019, William Blair & Company, L.L.C., the sole underwriter of the Offering, exercised its option to purchase additional shares of Vermillion common stock for net proceeds of $2,092,500,  after deducting underwriting discounts, commissions and other expenses related to the offering but before deducting other expenses payable by us.

As discussed in Note 4, on April 17, 2018, the Company completed two public offerings (the “2018 Offerings”), pursuant to which certain investors purchased Vermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately $13,500,000 after deducting offering expenses.

As discussed in Note 3, in March 2016, the Company entered into an agreement (the “Loan Agreement”) pursuant to which it may borrow up to $4,000,000 from the State of Connecticut Department of Economic and Community Development (the “DECD”). An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain future milestones. The loan may be prepaid at any time without premium or penalty.



Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The condensed consolidated balance sheet at December 31, 2018 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included in Vermillion’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 28, 2019 (the “2018 Annual Report”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.

Revenue Recognition

Revenue Recognition

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), which it adopted on January 1, 2018 using the modified retrospective method. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.



Product Revenue

The Company's product revenue is generated by performing diagnostic services using its OVA1 and Overa tests, and the service is completed upon the delivery of the test result to the prescribing physician. The entire transaction price is allocated to the single performance obligation contained in a contract with a patient. All revenue is recognized upon completion of the OVA1 or Overa test based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year.    

The Company also reviewed its patient account population and determined an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. There were no impairment losses on accounts receivable recorded during the nine months ended September 30, 2019.



Service Revenue

The Company’s service revenue was generated by performing IVD trial services for third-party customers. Measurement of progress on contracts with customers was generally based on the input measurement of cost incurred relative to the total expected costs to satisfy the performance obligation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), Compensation - Stock Compensation (“ASU 2016-09”). The guidance simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that reporting period. The Company adopted this standard on January 1, 2018, and the adoption did not have a material impact on the consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Base Payment Accounting. This new guidance expands the scope of Topic 718 to include share-based payment transactions from acquiring goods and services from nonemployees, which was previously codified under Topic 505, where this change will modify the measurement requirements of nonemployee awards. This amendment is effective for annual periods after December 15, 2018. The Company adopted this standard on January 1, 2019, and its impact was not material.

In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) (“ASU 2016-2”). This guidance is intended to make leasing activities more transparent and comparable, and requires substantially all leases to be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-2 is effective for interim and annual periods beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited, and early adoption was permitted. The Company adopted ASU 2016-02 effective January 1, 2019 and elected the package of practical expedients and the new transition approach permitted by ASU 2018-11. ASU 2018-11 allows the Company not to reassess existing identification of leases, classification of leases or any initial direct costs. The Company has also elected to use the hindsight practical expedient. The Company has two office leases which are required to be recorded as Right of Use (“ROU”) assets and corresponding lease liabilities on the balance sheet. The Company had no short term leases with terms of less than twelve months as of the adoption date. The Company recognized ROU assets and a lease liability of approximately $178,000 related to its leases on its consolidated balance sheet as of January 1, 2019. The Company did not have a cumulative adjustment impacting retained earnings.

In May 2014, the FASB issued ASC 606, which superseded existing revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. Please see the above “Revenue Recognition” section for a discussion of the Company’s revenue recognition under ASC 606.

v3.19.3
Commitments And Contingencies (Tables)
9 Months Ended
Sep. 30, 2019
Commitments And Contingencies [Abstract]  
Expense Associated with Operating Leases

The expense associated with these operating leases for the three months ended September 30, 2019 and 2018 is shown in the table below (in thousands).







 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended September 30

Lease Cost

Classification

2019

 

2018

Operating rent expense

 

 

 

 

 

 



Cost of revenue

$

 

$

25 



Research and development

 

 

 



Sales and marketing

 

 

 

12 



General and administrative

 

11 

 

 

22 



 

 

 

 

 

 

Variable rent expense

 

 

 

 

 

 



Cost of revenue

$

13 

 

$



Research and development

 

 

 



Sales and marketing

 

12 

 

 



General and administrative

 

16 

 

 



The expense associated with these operating leases for the nine months ended September 30, 2019 and 2018 is shown in the table below (in thousands).





 

 

 

 

 

 



 

 

 

 

 

 



 

Nine Months Ended September 30

Lease Cost

Classification

2019

 

2018

Operating rent expense

 

 

 

 

 

 



Cost of revenue

$

27 

 

$

75 



Research and development

 

 

 

21 



Sales and marketing

 

26 

 

 

36 



General and administrative

 

33 

 

 

67 



 

 

 

 

 

 

Variable rent expense

 

 

 

 

 

 



Cost of revenue

$

37 

 

$



Research and development

 

 

 



Sales and marketing

 

32 

 

 



General and administrative

 

44 

 

 



Future Lease Payments Related to Operating Leases



 

 

 

2019

 

$

31 

2020

 

 

40 

2021

 

 

14 

Total Operating Lease Payments

 

 

85 

Less: Interest

 

 

-1

Present Value of Lease Liabilities

 

$

84 



Weighted-Average Lease Term and Discount Rate



 

 



 

 

Weighted-average remaining lease term (in years)

 

Weighted-average discount rate

 

2.50% 



v3.19.3
Stockholders' Equity (Tables)
9 Months Ended
Sep. 30, 2019
Stockholders' Equity:  
Allocation of Stock-Based Compensation Expense by Functional Area



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

 

2019

 

2018

 

2019

 

2018

Cost of revenue

 

$

18 

 

$

22 

 

$

49 

 

$

69 

Research and development

 

 

 -

 

 

 

 

 

 

Sales and marketing

 

 

33 

 

 

14 

 

 

91 

 

 

95 

General and administrative

 

 

185 

 

 

233 

 

 

598 

 

 

727 

Total

 

$

236 

 

$

271 

 

$

742 

 

$

895 



 

 

 

 

 

 

 

 

 

 

 

 



v3.19.3
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Details)
9 Months Ended
Jul. 02, 2019
USD ($)
Jun. 28, 2019
USD ($)
item
Jan. 01, 2019
USD ($)
contract
Apr. 17, 2018
USD ($)
item
Apr. 15, 2016
USD ($)
Sep. 30, 2019
USD ($)
Dec. 31, 2018
USD ($)
Mar. 22, 2016
USD ($)
Organization Consolidation And Summary Of Significant Accounting Policies [Line Items]                
Accumulated deficit           $ (418,774,000) $ (406,924,000)  
Number of completed public offerings | item   1   2        
Proceeds from public offering $ 2,092,500 $ 13,800,000   $ 13,500,000        
Impairment losses           0    
Operating lease liability           $ 84,000    
DECD [Member]                
Organization Consolidation And Summary Of Significant Accounting Policies [Line Items]                
DECD maximum borrowing capacity               $ 4,000,000
DECD initial disbursement         $ 2,000,000      
DECD remaining borrowing capacity               $ 2,000,000
Accounting Standards Update 2016-02 [Member]                
Organization Consolidation And Summary Of Significant Accounting Policies [Line Items]                
Number of operating office leases | contract     2          
Operating lease right-of-use Assets     $ 178,000          
Operating lease liability     $ 178,000          
v3.19.3
Commitments And Contingencies (Narrative) (Details)
3 Months Ended 9 Months Ended
Apr. 15, 2016
USD ($)
Mar. 22, 2016
USD ($)
employee
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Oct. 31, 2015
USD ($)
Commitments And Contingencies [Line Items]              
Percent of royalty paid         4.00%    
Minimum royalty payment         $ 57,500    
Royalty expense     $ 50,000 $ 30,000 $ 125,000 $ 78,000  
Trumbull, Connecticut Facility [Member]              
Commitments And Contingencies [Line Items]              
Leasehold improvements             $ 596,000
Lease term     5 years   5 years    
Rent abatement period         5 months    
Lease renewal term     5 years   5 years    
DECD [Member]              
Commitments And Contingencies [Line Items]              
DECD maximum borrowing capacity   $ 4,000,000          
Fixed rate per annum   2.00%          
Maturity date         Apr. 15, 2026    
Amount eligible for forgiveness   $ 2,000,000          
Job creation, consecutive period of hiring and retaining   2 years          
Job creation, number of employees | employee   40          
Debt, maturity term         10 years    
Debt penalty percentage         5.00%    
DECD initial disbursement $ 2,000,000            
DECD remaining borrowing capacity   $ 2,000,000          
v3.19.3
Commitments And Contingencies (Expense Associated with Operating Leases) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Cost Of Revenue [Member]        
Operating rent expense $ 9 $ 25 $ 27 $ 75
Variable rent expense 13 0 37 0
Research And Development [Member]        
Operating rent expense 2 7 9 21
Variable rent expense 3 0 9 0
Sales And Marketing [Member]        
Operating rent expense 9 12 26 36
Variable rent expense 12 1 32 0
General And Administrative [Member]        
Operating rent expense 11 22 33 67
Variable rent expense $ 16 $ 1 $ 44 $ 4
v3.19.3
Commitments And Contingencies (Future Lease Payments Related to Operating Leases) (Details)
$ in Thousands
Sep. 30, 2019
USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]  
2019 $ 31
2020 40
2021 14
Total Operating Lease Payments 85
Less: Interest (1)
Present Value of Lease Liabilities $ 84
v3.19.3
Commitments And Contingencies (Weighted-Average Lease Term and Discount Rate) (Details)
Sep. 30, 2019
Leases [Abstract]  
Weighted-average remaining lease term (in years) 1 year
Weighted-average discount rate 2.50%
v3.19.3
Stockholders' Equity (Narrative) (Details)
3 Months Ended 9 Months Ended
Jul. 02, 2019
USD ($)
$ / shares
shares
Jun. 28, 2019
USD ($)
Jun. 21, 2018
shares
Apr. 17, 2018
USD ($)
Apr. 13, 2018
agreement
$ / shares
shares
Sep. 30, 2019
$ / shares
shares
Sep. 30, 2019
USD ($)
$ / shares
shares
Jun. 26, 2019
$ / shares
shares
Dec. 31, 2018
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Common stock, shares issued           97,238,427 97,238,427   75,501,394
Proceeds from public offering | $ $ 2,092,500 $ 13,800,000   $ 13,500,000          
Preferred stock, shares issued           0 0   0
Preferred stock, par value | $ / shares           $ 0.001 $ 0.001   $ 0.001
Shares converted             50,000    
2019 Stock Incentive Plan [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Share based compensation shares reserved for issuance           10,492,283 10,492,283    
Share based compensation shares authorized for grants           10,492,283 10,492,283    
2019 Stock Incentive Plan [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             195,000    
2019 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $0.52 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted           95,000 95,000    
Stock options granted, average exercise price | $ / shares           $ 0.52 $ 0.52    
2019 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $0.52 [Member] | Stock Option [Member] | Year Four Anniversary [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage           25.00%      
2019 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.01 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             100,000    
Stock options granted, average exercise price | $ / shares           $ 1.01 $ 1.01    
2019 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.01 [Member] | Stock Option [Member] | Year Four Anniversary [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage             25.00%    
2010 Stock Incentive Plan [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Share based compensation shares reserved for issuance           6,985,007 6,985,007    
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Restricted shares granted             190,909    
Fair value of restricted share units | $             $ 252,000    
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | April 1, 2019 [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage             25.00%    
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | June 1, 2019 [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage             25.00%    
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | September 1, 2019 [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage             25.00%    
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | Restricted Stock [Member] | December 1, 2019 [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage             25.00%    
2010 Stock Incentive Plan [Member] | Non-Employee Directors [Member] | $1.29 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             402,584    
Stock options granted, average exercise price | $ / shares           $ 1.29 $ 1.29    
2010 Stock Incentive Plan [Member] | Certain Consultants [Member] | Restricted Stock [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Restricted shares granted             11,667    
Fair value of restricted share units | $             $ 10,000    
2010 Stock Incentive Plan [Member] | Certain Consultants [Member] | $0.47 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             50,000    
Stock options granted, average exercise price | $ / shares           0.47 $ 0.47    
2010 Stock Incentive Plan [Member] | Certain Consultants [Member] | $1.29 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             100,000    
Stock options granted, average exercise price | $ / shares           1.29 $ 1.29    
2010 Stock Incentive Plan [Member] | Certain Consultants [Member] | $1.28 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             35,001    
Stock options granted, average exercise price | $ / shares           1.28 $ 1.28    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $0.47 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             575,000    
Stock options granted, average exercise price | $ / shares           0.47 $ 0.47    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $0.71 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             55,000    
Stock options granted, average exercise price | $ / shares           0.71 $ 0.71    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $0.77 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             125,000    
Stock options granted, average exercise price | $ / shares           0.77 $ 0.77    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.29 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             1,073,000    
Stock options granted, average exercise price | $ / shares           1.29 $ 1.29    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.29 [Member] | Stock Option [Member] | Year Four Anniversary [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Vesting percentage             25.00%    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.28 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             14,000    
Stock options granted, average exercise price | $ / shares           1.28 $ 1.28    
2010 Stock Incentive Plan [Member] | Certain Officers And Employees [Member] | $1.13 [Member] | Stock Option [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Granted             20,000    
Stock options granted, average exercise price | $ / shares           $ 1.13 $ 1.13    
2019 Offerings [Member] | Common Stock [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Common stock, shares issued 2,812,500             18,750,000  
Price per share | $ / shares $ 0.80                
Underwriting agreement, per share | $ / shares               $ 0.80  
Underwriting agreement               2,812,500  
Proceeds from public offering | $ $ 2,092,500 $ 13,800,000              
2018 Offerings [Member] | Series B Convertible Preferred Stock [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Underwriting agreement, per share | $ / shares         $ 100.00        
Proceeds from public offering | $       $ 4,496,000          
Preferred stock, shares issued         50,000        
Preferred stock, par value | $ / shares         $ 0.001        
Percentage of underwriting costs and other offering costs       7.00%          
Shares converted     50,000            
2018 Offerings [Member] | Common Stock [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                  
Number of underwriting agreements | agreement         2        
Common stock, shares issued         10,000,000        
Underwriting agreement, per share | $ / shares         $ 1.00        
Underwriting agreement         1,500,000        
Proceeds from public offering | $       $ 8,990,000          
Common stock issuable per preferred share     100            
Percentage of underwriting costs and other offering costs       7.00%          
v3.19.3
Stockholders' Equity (Allocation of Stock-Based Compensation Expense by Functional Area) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Cost Of Revenue [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense $ 20 $ 35 $ 57 $ 93
Research And Development [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense   2 4 4
Sales And Marketing [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 32 14 93 85
General And Administrative [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 243 245 738 657
Employee Stock-Based Compensation [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 236 271 742 895
Employee Stock-Based Compensation [Member] | Cost Of Revenue [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 18 22 49 69
Employee Stock-Based Compensation [Member] | Research And Development [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense   2 4 4
Employee Stock-Based Compensation [Member] | Sales And Marketing [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 33 14 91 95
Employee Stock-Based Compensation [Member] | General And Administrative [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense $ 185 $ 233 $ 598 $ 727
v3.19.3
Loss Per Share (Details) - shares
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Loss Per Share [Abstract]    
Antidilutive securities excluded from computation of earnings per share 9,795,345 7,414,053
v3.19.3
Related Party Transactions (Details) - Former Senior Vice President, Finance And Chief Accounting Officer [Member] - USD ($)
9 Months Ended
Dec. 18, 2017
Sep. 30, 2019
Sep. 30, 2018
Related Party Transaction [Line Items]      
Term of consulting agreement 5 months    
Payment per hour $ 150    
Payments to related party   $ 0 $ 53,925