Quarterly report pursuant to Section 13 or 15(d)

Equity

v3.19.1
Equity
3 Months Ended
Mar. 31, 2019
Equity [Abstract]  
Equity Equity
 
The Company is authorized to issue 80,000,000 shares of which 5,000,000 shares of preferred stock are authorized and 75,000,000 shares of common stock are authorized.
  
Preferred Stock
 
The Company is authorized to issue up to 5,000,000 shares of preferred stock. Its certificate of incorporation authorizes the board to issue these shares in one or more series, to determine the designations and the powers, preferences and relative, participating, optional or other special rights and the qualifications, limitations and restrictions thereof, including the dividend rights, conversion or exchange rights, voting rights (including the number of votes per share), redemption rights and terms, liquidation preferences, sinking fund provisions and the number of shares constituting the series. As of March 31, 2019, there was no preferred stock issued.

Common Stock

Lincoln Park Transaction

On October 4, 2018, the Company entered into a purchase agreement (the "Purchase Agreement") and a registration rights agreement (the "Registration Rights Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"). Pursuant to the terms of the Purchase Agreement, Lincoln Park has agreed to purchase from us up to $20.0 million of our common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement. Pursuant to the terms of the Registration Rights Agreement, we filed with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, at the time we signed the Purchase Agreement and the Registration Rights Agreement, we issued 243,013 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the Purchase Agreement and may issue an additional 121,507 commitment shares pro-rata when and if Lincoln Park purchases (at the Company's discretion) the $20.0 million aggregate commitment. The commitment shares were valued at $337,788, recorded as an addition to equity for the issuance of common stock and treated as a reduction to equity as a cost of capital to be raised under the Purchase Agreement. During the three months ended December 31, 2018, the Company issued 1,399,153 shares to Lincoln
Park which included 10,918 commitment shares for $1.8 million. During the first quarter of 2019, the Company issued 605,367 shares, which included 5,367 commitment shares for $0.9 million.

At Market Issuance Sales Agreement (ATM)
   During September 2017, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with Roth Capital Partners, LLC and National Securities Corporation (collectively, the “Agents”). Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through the Agents shares of the Company’s common stock with an aggregate sales price of up to $13 million. Sales of shares pursuant to the Agreement will be made under its effective “shelf” registration statement on Form S-3 (File No. 333-219434) which became effective on August 21, 2017 and the related prospectus supplement and the accompanying prospectus, as filed with the SEC on September 15, 2017. Under the ATM Agreement, the Company may sell shares through an Agent by any method that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. Sales of the shares may be made at market prices prevailing at the time of sale, subject to such other terms as may be agreed upon at the time of sale, including a minimum sales price that may be stipulated by MBI's Board of Directors or a duly authorized committee thereof. The Company or the Agents, under certain circumstances and upon notice to the other, may suspend the offering of the shares under the Agreement. The Company agreed to pay a commission to the Agents of 3.0% of the gross proceeds of the sale of the shares sold under the Agreement and to reimburse the Agents for certain expenses. The Company has also provided the Agents with customary indemnification rights. During the three months ended March 31, 2019, the Company did not sell any shares under this ATM Agreement.

Adoption of 2015 Stock Plan
 
In 2015, the Board of Directors of the Company approved the Company’s 2015 Stock Plan, which was amended in 2017 and 2018. The expiration date of the plan is December 5, 2025 and the total number of underlying shares of the Company’s common stock available for grant to employees, directors and consultants under the plan is currently 4,500,000 shares. The awards under the 2015 Stock Plan can be in the form of stock options, stock awards, stock unit awards or stock appreciation rights.

The following is a summary of option activities for the three months ended March 31, 2019:

Number of
Shares
Weighted
Average
Grant Date
Fair Value
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
(in years) #
Aggregate
Intrinsic
Value
Outstanding, December 31, 2018 2,794,000  $ 1.78  $ 2.61  9.43 $ 21,200 
Granted —  $ —  $ — 
Exercised (25,000) $ 0.13  $ 0.20 
Outstanding, March 31, 2019 2,769,000  $ 1.81  $ 2.65  8.49 $ — 
Exercisable, March 31, 2019 535,833  $ 2.58  $ 3.35  7.91 $ — 
 
During March 2019, 25,000 stock options were exercised at $0.20 per share with the Company receiving $5,000 in gross proceeds. In 2018, the Company granted each of the two new members of its science advisory board options to purchase 10,000 shares of the Company’s common stock with an exercise price of $1.39 per share, a term of 10 years, and a vesting period of 4 years. 

The fair value of the option grants has been estimated, with the following weighted-average assumptions:

Three Months Ended March 31,
2019 2018
Risk-free interest rate 0.95%    to 2.24  % 1.3%    to 2.24  %
Volatility 70.18%    to 89.11  % 70.18%    to 89.11  %
Expected life (years) 5 to 6.25 5 to 6.25
Expected dividend yield —%    —%   
Stock-based compensation for the three months ended March 31, 2019 and 2018, are as follows (in thousands):
Three Months Ended March 31,
2019 2018
General and administrative
$ 302  $ 209 
Research and development
46  33 
Total
$ 348  $ 242 

There were no options granted during the three months ended March 31, 2019. The fair value of options is calculated using the Black-Scholes option-pricing model. As of March 31, 2019, total compensation cost not yet recognized was $2.9 million and the weighted average period over which this amount is expected to be recognized is 2.55 years.  

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the above paragraph and table. The expected term of the options was computed using the "plain vanilla" method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin 107 because the Company does not have sufficient data regarding employee exercise behavior to estimate the expected term. The volatility was determined by referring to the average historical volatility of a peer group of public companies because the Company does not have sufficient trading history to determine our historical volatility. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Consulting Agreement

In 2017, the Company entered into a consulting agreement for its investor relations operations. The consulting agreement initially covered a period of twelve months from the commencement date of July 29, 2017 and was extended in April 2018 until March 31, 2019. Pursuant to the original consulting agreement, in exchange for the consulting services, the Company issued two warrants (collectively, the “Warrants”) to purchase 100,000 and 50,000 shares of common stock at exercise prices of $2.41 and $3.00 per share. Each of the Warrants vested over a 12-month period in equal monthly installments starting July 29, 2017, provided that the consultant was providing services to the Company pursuant to the consulting agreement on each vesting date. The Warrants became initially exercisable on August 8, 2017 and expire five years from the initial exercise date. The Company recorded stock compensation expense for the non-employee consulting agreement of $2,219 and $36,000 for the three months ended March 31, 2019 and March 31, 2018, respectively. In connection with the extension of the consulting agreement, the Company issued the consultant a 3-year warrant to purchase 100,000 shares of common stock at an exercise price of $3.00 per share vesting in four quarterly installments. In addition, the Company paid $20,000 to the consultant per quarter pursuant to the amendment to the consulting agreement. 

$9 million Registered Direct Offering

In February 2018, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale of 4,290,000 shares of MBI's common stock, at a purchase price of $2.10 per share. Concurrently with the sale of the common stock, pursuant to the Purchase Agreement, the Company also sold warrants to purchase 2,145,000 shares of common stock. The Company sold the common stock and warrants for aggregate gross proceeds of approximately $9.0 million. The net proceeds from the transactions was approximately $8.2 million after deducting certain fees due to the placement agent and transaction expenses. Subject to certain beneficial ownership limitations, the warrants became exercisable on the six-month anniversary of the issuance date at an exercise price equal to $2.80 per share of common stock, subject to adjustments as provided under the terms of the warrants. The warrants are exercisable for five years from the initial exercise date. The closing of the sales of these securities under the Purchase Agreement occurred on February 21, 2018.

$2.3 million Registered Direct Offering

In June 2018, the Company entered into a definitive agreement with institutional investors for a registered direct offering of securities with gross proceeds of approximately $2.3 million. In connection with the offering, the Company issued 1,092,636 registered shares of common stock at a purchase price of $2.105 per share. Concurrently in a private placement, for each share of common stock purchased by an investor, such investor received from the Company an unregistered warrant to purchase 0.65 of a share of common stock. The warrants have an exercise price of $2.02 per share, became exercisable six
months from the date of issuance, and will expire five years from the initial exercise date. Roth served as sole placement agent for the offering. 


$5.25 million Registered Direct Offering

In March 2019, the Company entered into an Underwriting Agreement (the "Underwriting Agreement") with Oppenheimer & Co. Inc. (the "Underwriter") relating to an underwritten offering (the "Offering") of 5,250,000 units (each a "Unit"), each unit consisting of (i) one share of the Company's common stock, $0.001 par value per share ("Common Stock"), and (ii) 0.5 of a warrant to purchase one share of Common Stock (each a "Warrant"). The public offering price of the Units was $1.00 per Unit, and the Underwriter agreed to purchase the Units from the Company pursuant to the Underwriting Agreement at a price of $0.93 per Unit. The Warrants included in the Units are immediately exercisable at a price of $1.10 per share, subject to adjustments in certain circumstances, and will expire five years from the date of issuance. The net proceeds from the transaction was approximately $4.65 million after deducting the underwriting discount and estimated offering expenses payable by the Company.