INSPYR THERAPEUTICS, INC., S-1 filed on 13 Jan 17
Document And Entity Information
9 Months Ended
Sep. 30, 2016
Document Information [Line Items]
 
Entity Registrant Name
Inspyr Therapeutics, Inc. 
Entity Central Index Key
0001421204 
Entity Filer Category
Smaller Reporting Company 
Document Type
S-1 
Amendment Flag
false 
Document Period End Date
Sep. 30, 2016 
CONDENSED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Dec. 31, 2014
Current assets:
 
 
 
Cash and cash equivalents
$ 330 
$ 2,465 
$ 2,316 
Prepaid expenses
131 
114 
197 
Total current assets
461 
2,579 
2,513 
Office equipment, net of accumulated depreciation of $0 and $27
12 
12 
Intangible assets, net of accumulated amortization of $140 and $128
72 
84 
101 
Other assets
Total assets
540 
2,678 
2,629 
Current liabilities:
 
 
 
Accounts payable
1,097 
977 
989 
Accrued expenses
2,726 
2,432 
1,438 
Derivative liability
756 
1,177 
Convertible notes - stockholder
 
105 
Total current liabilities
4,579 
4,586 
2,532 
Total liabilities
4,579 
4,586 
2,532 
Commitments and contingencies
   
   
   
Stockholders’ (deficit) equity:
 
 
 
Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized, 1,853 issued and outstanding, respectively
Common Stock, Value, Issued
Additional paid-in capital
43,426 
43,356 
39,475 
Accumulated deficit
(47,466)
(45,265)
(39,379)
Total stockholders’ deficit
(4,039)
(1,908)
97 
Total liabilities and stockholders’ deficit
$ 540 
$ 2,678 
$ 2,629 
CONDENSED BALANCE SHEETS [Parenthetical] (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Dec. 31, 2014
Office equipment, accumulated depreciation (in dollars)
$ 0 
$ 27 
$ 23 
Intangible assets, accumulated amortization (in dollars)
$ 140 
$ 128 
$ 111 
Preferred stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
$ 0.0001 
Preferred stock, shares authorized
30,000,000 
30,000,000 
30,000,000 
Preferred stock, shares issued
1,853 
1,853 
Preferred stock, shares outstanding
1,853 
1,853 
Common stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
$ 0.0001 
Common stock, shares authorized
150,000,000 
150,000,000 
150,000,000 
Common stock, shares issued
1,392,079 
1,392,079 
1,106,040 
Common Stock, Shares, Outstanding
1,392,079 
1,392,079 
1,106,040 
CONDENSED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Operating expenses:
 
 
 
 
 
 
Research and development
$ 379 
$ 459 
$ 1,025 
$ 1,885 
$ 2,303 
$ 3,691 
General and administrative
509 
915 
1,600 
2,864 
3,764 
3,307 
Total operating expenses
888 
1,374 
2,625 
4,749 
6,067 
6,998 
Loss from operations
(888)
(1,374)
(2,625)
(4,749)
(6,067)
(6,998)
Other income (expense):
 
 
 
 
 
 
Gain (loss) on change in fair value of derivative liability
(334)
421 
181 
Interest income (expense), net
Loss before provision for income taxes
(1,221)
(1,373)
(2,201)
(4,749)
(5,886)
(6,994)
Provision for income taxes
Net loss
$ (1,221)
$ (1,373)
$ (2,201)
$ (4,749)
$ (5,886)
$ (6,994)
Net loss per common share, basic and diluted (in dollars per share)
$ (0.88)
$ (1.12)
$ (1.58)
$ (4.12)
$ (4.99)
$ (6.90)
Weighted average shares outstanding (in shares)
1,392,079 
1,228,542 
1,392,079 
1,152,308 
1,179,278 
1,013,768 
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT (USD $)
In Thousands, except Share data
Total
Convertible Preferred Stock
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Balance at Dec. 31, 2013
$ 1,260 
$ 0 
$ 1 
$ 33,644 
$ (32,385)
Balance (in shares) at Dec. 31, 2013
 
908,432 
 
 
Stock-based compensation
1,319 
1,319 
Common stock and warrants issued as payment of services and consulting fees
735 
735 
Common stock and warrants issued as payment of services and consulting fees (in shares)
 
26,601 
 
 
Sale of common stock and warrants at $24.00 per share (Registered Offering)
3,331 
3,331 
Sale of common stock and warrants at $24.00 per share (Registered Offering) (in shares)
 
138,799 
 
 
Sale of common stock and warrants at $24.00 per share (Private Placement)
773 
773 
Sale of common stock and warrants at $24.00 per share (Private Placement) (in shares)
 
32,208 
 
 
Issuance cost of sales of common stock and warrants
(327)
(327)
Net loss
(6,994)
(6,994)
Balance at Dec. 31, 2014
97 
39,475 
(39,379)
Balance (in shares) at Dec. 31, 2014
 
1,106,040 
 
 
Stock-based compensation
138 
138 
Common stock and warrants issued as payment of services and consulting fees
175 
175 
Common stock and warrants issued as payment of services and consulting fees (in shares)
 
4,257 
 
 
Common stock issued upon conversion of note payable
139 
139 
Common stock issued upon conversion of note payable (in shares)
 
8,750 
 
 
Sale of common stock and warrants at $21.00 per share
2,514 
2,514 
Sale of common stock and warrants at $21.00 per share (in shares)
 
119,709 
 
 
Exercise of warrants
926 
926 
Exercise of warrants (in shares)
 
153,323 
 
 
Sale of preferred stock and warrants at $4.50 per share
1,853 
1,853 
Sale of preferred stock and warrants at $4.50 per share (in shares)
 
1,853 
 
 
Issuance cost of sales of common stock and warrants
(506)
(506)
Derivative liability
(1,358)
(1,358)
Net loss
(5,886)
(5,886)
Balance at Dec. 31, 2015
(1,908)
43,356 
(45,265)
Balance (in shares) at Dec. 31, 2015
 
1,853 
1,392,079 
 
 
Stock-based compensation
70 
70 
Net loss
(2,201)
(2,201)
Balance at Sep. 30, 2016
$ (4,039)
$ 0 
$ 1 
$ 43,426 
$ (47,466)
Balance (in shares) at Sep. 30, 2016
 
1,853 
1,392,079 
 
 
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT [Parenthetical]
Dec. 31, 2014
Private Placement [Member]
Dec. 31, 2014
Registered Offering [Member]
Dec. 31, 2015
Warrants 21.00
Dec. 31, 2015
Warrants 4.50
Shares Issued, Price Per Share
$ 24.00 
$ 24.00 
$ 21.00 
$ 4.50 
CONDENSED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Cash flows from operating activities:
 
 
 
 
Net loss
$ (2,201)
$ (4,749)
$ (5,886)
$ (6,994)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
16 
15 
21 
23 
Stock-based compensation
70 
265 
313 
2,054 
Loss on sale of assets
 
 
Gain on change in fair value of derivative liability
(421)
(181)
Decrease (increase) in operating assets:
 
 
 
 
Prepaid expenses
(17)
70 
83 
(34)
Increase (decrease) in operating liabilities:
 
 
 
 
Accounts payable and accrued expenses
414 
779 
1,017 
(93)
Cash used in operating activities
(2,135)
(3,620)
(4,633)
(5,044)
Cash flows from investing activities:
 
 
 
 
Proceeds from sale of assets
 
 
 
Acquisition of office equipment
(4)
(4)
(4)
(4)
Cash used in investing activities
(4)
(4)
(4)
Cash flows from financing activities:
 
 
 
 
Proceeds from sale of common stock and warrants sold
2,514 
4,367 
4,104 
Cost of common stock and warrants sold
(253)
(506)
(327)
Proceeds from exercise of warrants
287 
925 
Cash provided by financing activities
2,548 
4,786 
3,777 
Net decrease in cash
(2,135)
(1,076)
149 
(1,271)
Cash and cash equivalents, beginning of period
2,465 
2,316 
2,316 
3,587 
Cash and cash equivalents, end of period
$ 330 
$ 1,240 
$ 2,465 
$ 2,316 
BACKGROUND
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Nature of Operations [Text Block]
NOTE 1 – BACKGROUND
 
Inspyr Therapeutics, Inc. (“we”, “us”, “our company”, “our”, “Inspyr” or the “Company”) was formed under the laws of the State of Delaware in November 2003, and has its principal office in Westlake Village, California. We are an early-stage, pre-revenue, pharmaceutical company focused on the discovery and development of prodrug cancer therapeutics for the treatment of solid tumors, including brain, liver, prostate and other cancers. We plan to develop a series of therapies based on our target-activated prodrug technology platform.
 
Effective August 1, 2016, pursuant to a certificate of amendment to our amended and restated certificate of incorporation, we changed our corporate name from GenSpera, Inc. to Inspyr Therapeutics, Inc. Effective August 1, 2016, our common stock ceased trading under the symbol “GNSZ” and began trading under the symbol NSPX on August 2, 2016.
 
Effective November 17, 2016 at 5:00 p.m. Eastern Time, we effected a one (1) for thirty (30) reverse stock split of our common stock. Accordingly, each of our shareholders received one (1) new share of common stock for every thirty (30) shares of common stock such shareholder held immediately prior to the effective time of the reverse split. The reverse stock split affected all of our issued and outstanding shares of common stock as well as the number of shares of common stock underlying stock options, warrants and other exercisable or convertible instruments outstanding at the effective time of the reverse split. The reverse split also has the effect of proportionately increasing the applicable conversion or exercise price of such convertible securities. The shareholders received no fractional shares and instead had every fractional share rounded up to the next whole number.
 
All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:30 reverse stock split as if it had taken place as of the beginning of the earliest period presented.
 
Our primary focus at the present time is the clinical development of our lead compound, mipsagargin (formerly referred to as G-202), a novel therapeutic agent with a unique mechanism of action. We have completed a Phase 1a/1b dose escalation, safety, tolerability and dose refinement study of mipsagargin, in which we treated a total of 44 patients, including two patients with hepatocellular carcinoma (HCC), or liver cancer, who experienced prolonged stabilization of disease of up to eleven months after initiation of treatment.
 
In addition, we have completed an open label single arm Phase II clinical trial of mipsagargin in subjects with liver cancer, in which twenty-five patients were treated. In May 2015, we received a final clinical study report, and consider the results of the study to be positive, with 63% of treated patients having stable disease at two (2) months and a median time to progression of 4.5 months.
 
In the first quarter of 2014, we entered into a collaborative arrangement to conduct a Phase 2 clinical trial entitled, “G-202-004: An Open-Label, Single-Arm, Phase II Study to Evaluate the Efficacy, Safety and CNS Exposure of G-202 in Patients with Recurrent or Progressive Glioblastoma.” In May 2015, we announced that based on preliminary data obtained in the first stage of the trial, we were expanding the trial to a potential 34 patients. In September 2015 we announced interim Phase 2 data from 11 patients with glioblastoma with demonstrated clinical benefit in a subset of patients with high levels of PSMA expression in the primary tumor. As of October 20, 2016, we have treated twenty-six patients in the trial.
 
During the first quarter of 2016, we initiated a Phase II clinical trial pilot study in patients with prostate cancer entitled, “G-202-005: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202 Administered in the Neoadjuvant Setting Followed by Radical Prostatectomy in Patients with Adenocarcinoma of the Prostate”, via a collaborative agreement with a single site in the U.S., in which one patient has been enrolled as of October 20, 2016.
 
During the second quarter of 2016, we initiated a Phase 2 clinical trial pilot study in patients with clear cell renal cell carcinoma entitled, “G-202-006: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202 in Patients with Clear Cell Renal Cell Carcinoma that Expresses PSMA”, via a collaborative agreement with a single site in the U.S. As of October 20, 2016, two patients have been enrolled.
 
While we believe that the data from the completed trials appear promising, the outcome of our ongoing or future trials may ultimately be unsuccessful.
Nature of Operations [Text Block]
NOTE 1 — BACKGROUND
 
GenSpera, Inc. (“we”, “us”, “our company”, “our”, “GenSpera” or the “Company”) was formed under the laws of the State of Delaware in November 2003, and has its principal office in San Antonio, Texas. We are an early-stage, pre-revenue, pharmaceutical company focused on the discovery and development of prodrug cancer therapeutics for the treatment of solid tumors, including liver, brain, prostate and other cancers. We plan to develop a series of therapies based on our target-activated prodrug technology platform.
 
Our primary focus at the present time is the clinical development of our lead compound, mipsagargin (formerly referred to as G-202), a novel therapeutic agent with a unique mechanism of action. We have completed a Phase Ia/Ib dose escalation, safety, tolerability and dose refinement study of mipsagargin, in which we treated a total of 44 patients (includes Phase Ia and Ib), including two patients with hepatocellular carcinoma (HCC), or liver cancer, who experienced prolonged stabilization of disease up to eleven months after initiation of treatment. We have completed a Phase II clinical trial of mipsagargin in patients with liver cancer, in which twenty-five patients were treated. In May 2015, we received a final clinical study report. We consider the study outcome achieved positive results, with 63% of treated patients having stable disease at two (2) months, and with a median time to progression of 4.5 months. These results support our plans to continue the development of mipsagargin for patients with liver cancer, as well as proceed with our clinical development strategy in other indications including glioblastoma and prostate cancer trials. Although the data from our completed trials appear promising, the outcome of our ongoing or future trials may ultimately be unsuccessful.
 
We are currently conducting a Phase II clinical trial in glioblastoma (a type of brain cancer), in which twenty patients have been treated as of March 11, 2016. We have elected to defer opening enrollment for our Phase II prostate clinical trial with mispsagargin until the second quarter of 2016.
MANAGEMENT'S PLANS TO CONTINUE AS A GOING CONCERN
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Management Plans to Continue as Going Concern Disclosure [Text Block]
NOTE 2 – MANAGEMENT’S PLANS TO CONTINUE AS A GOING CONCERN
 
Basis of Presentation
 
We have prepared our financial statements on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. We have incurred losses since inception and have an accumulated deficit of $47.5 million as of September 30, 2016. We anticipate incurring additional losses for the foreseeable future until such time, if ever, that we can generate significant sales from our therapeutic product candidates which are currently in development or we enter into cash flow positive business development transactions.
 
To date, we have generated no sales or revenues, have incurred significant losses and expect to incur significant additional losses as we advance mipsagargin through clinical studies. Consequently, our operations are subject to all the risks inherent in the establishment of a pre-revenue business enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds. 
  
Our cash and cash equivalents balance at September 30, 2016 was $0.3 million, representing 61% of our total assets. Based on our current expected level of operating expenditures, we expect to be able to fund our operations into the fourth quarter of 2016. We will require additional cash to fund and continue our operations beyond that point. This period could be shortened if there are any unanticipated increases in planned spending on development programs or other unforeseen events. We anticipate raising additional funds through collaborative arrangements, licensing agreements, public or private sales of debt or equity securities, or some combination thereof. There is no assurance that any such arrangement will be entered into or that financing will be available when needed in order to allow us to continue our operations, or if available, on terms favorable or acceptable to us.
 
In the event financing is not obtained, we may pursue cost cutting measures as well as explore the sale of selected assets to generate additional funds. If we are required to significantly reduce operating expenses and delay, reduce the scope of, or eliminate any of our development programs or clinical trials, these events could have a material adverse effect on: our business, results of operations, and financial condition. These factors raise significant doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
 
Our auditors’ report issued in connection with our December 31, 2015 financial statements expressed an opinion that our capital resources as of the date of their audit report were not sufficient to sustain operations or complete our planned activities for the upcoming year unless we raised additional funds. Accordingly, our current cash level raises substantial doubt about our ability to continue as a going concern past December 2016. If we do not obtain additional funds by such time, we may no longer be able to continue as a going concern and will cease operation which means that our shareholders will lose their entire investment.
Management Plans to Continue as Going Concern Disclosure [Text Block]
Note 2 — Management’s Plans to Continue as a Going Concern
 
Basis of Presentation
 
The opinion of our independent registered accounting firm on our financial statements contains explanatory going concern language. We have prepared our financial statements on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. As of December 31, 2015, we have incurred losses since inception and have a deficit accumulated of $45.3 million. We anticipate incurring additional losses for the foreseeable future until such time, if ever, that we can generate significant sales from our product candidates currently in development or we enter into cash flow positive business development transactions.
 
To date, we have generated no sales or revenues, have incurred significant losses and expect to incur significant additional losses as we advance mipsagargin through clinical studies. Consequently, our operations are subject to all the risks inherent in the establishment of a pre-revenue business enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds.
 
Our cash and cash equivalents balance at December 31, 2015 was $2.5 million, representing 92% of our total assets. Based upon our current expected level of operating expenditures, we expect to be able to fund our operations for the next six to nine months. We will require additional cash to fund and continue our operations beyond that point. This period could be shortened if there are any unanticipated increases in planned spending on development programs or other unforeseen events. We anticipate raising additional funds through collaborative arrangements, public or private sales of debt or equity securities, or some combination thereof. There is no assurance that any such collaborative arrangement will be entered into or that financing will be available when needed in order to allow us to continue our operations, or if available, on terms acceptable to us.
 
In the event financing is not obtained, we may pursue cost cutting measures as well as explore the sale of selected assets to generate additional funds. If we are required to significantly reduce operating expenses and delay, reduce the scope of, or eliminate any of our development programs or clinical trials, these events could have a material adverse effect on: our business, results of operations, and financial condition. These factors raise significant doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Significant Accounting Policies [Text Block]
NOTE 3 – SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
 
Use of estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results may differ from those estimates.
 
Research and Development
 
Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for manufacturing, clinical trials, employee compensation and consulting costs and expenses.
 
We incurred research and development expenses of approximately $0.4 million and $0.5 million for the three months ended September 30, 2016 and 2015, respectively. We incurred research and development expenses of approximately $1.0 million and $1.9 million for the nine months ended September 30, 2016 and 2015, respectively.
 
Loss per Share
 
Basic loss per share is calculated by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of September 30, 2016 and 2015, as they would be anti-dilutive:
 
 
 
Nine months ended
 
 
 
September 30,
 
 
 
2016
 
2015
 
Shares underlying options outstanding
 
 
265,863
 
 
297,390
 
Shares underlying warrants outstanding
 
 
1,335,466
 
 
867,319
 
Shares underlying convertible preferred stock outstanding
 
 
411,806
 
 
 
Shares underlying convertible notes outstanding
 
 
 
 
9,231
 
 
 
 
2,013,135
 
 
1,173,940
 
 
Derivative Liability
 
The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding preferred stock.
 
Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to December 25, 2015 are classified as derivative liabilities. The Company values these derivative liabilities using the Black-Scholes option pricing model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
 
Fair Value of Financial Instruments
 
Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.
 
The derivative liability consists of our convertible preferred stock with anti-dilution provisions, and related warrants. The Company uses the Black-Scholes option pricing model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
 
Fair Value Measurements
 
Valuation Hierarchy - GAAP establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:
 
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3: Unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
 
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company has recorded a derivative liability for convertible preferred stock with anti-dilution provisions, and related warrants, as of September 30, 2016. The table below summarizes the fair values of our financial liabilities as of September 30, 2016 (in thousands):
 
 
 
Fair Value at
 
Fair Value Measurement Using
 
 
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liability
 
$
756
 
$
 
$
 
$
756
 
 
The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
 
 
 
September 30, 2016
 
Balance at beginning of year
 
$
1,177
 
Additions to derivative instruments
 
 
 
Gain on change in fair value of derivative liability
 
 
(421)
 
Balance at end of year
 
$
756
 
 
Stock-Based Compensation
 
We measure the cost of employee services received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).
 
Compensation expense for options granted to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured on each accounting period.
 
Determining the appropriate fair value of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation grant/award and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
 
Recent Accounting Pronouncements
 
In March 2016, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The amendments in this update simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the effect that the adoption of this standard will have on our financial statements.
 
In February 2016, the FASB issued FASB ASU 2016-02, “Leases (Topic 842)”. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. For operating leases, a lessee would be required to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the effect that the adoption of this ASU will have on our financial statements.
 
In August 2014, the FASB issued Accounting Standards Update ASU 2014-15 “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments contained in this update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We are currently assessing the impact of the adoption of ASU 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.
 
There are various other recently issued updates, most of which represented technical corrections to the accounting literature or application to specific industries, and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Significant Accounting Policies [Text Block]
NOTE 3 — Summary of Critical Accounting Policies and Use of Estimates
 
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Significant estimates include the fair value of derivative instruments, stock-based compensation, recognition of clinical trial costs and other accrued liabilities. Actual results may differ from those estimates.
 
Research and Development
 
Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for toxicology and other studies, manufacturing, clinical trials, compensation and consulting costs.  
 
We incurred research and development expenses of $2.3 and $3.7 million for the years ended December 31, 2015 and 2014, respectively.
 
Cash Equivalents
 
For purposes of the statements of cash flows, we consider all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. We maintain our cash in bank deposit accounts which, at times, may exceed applicable government mandate insurance limits. We have not experienced any losses in our accounts.
 
Concentrations of Credit Risk
 
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may exceed applicable government mandated insurance limits. Cash and cash equivalents were $2.5 million and $2.3 million at December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, there was approximately $2.1 million and $1.9 million in cash over the federally insured limit, respectively.
 
We currently outsource all manufacturing of our clinical supplies to single source manufactures. We also have a single source supplier for the active ingredient in our prodrug compounds, including mipsagargin. A change in these suppliers could cause a delay in manufacturing and/or clinical trials, which would adversely affect our Company.
 
Intangible Assets
 
Intangible assets consist of licensed technology, patents, and patent applications (see Note 5). The assets associated with licensed technology are recorded at cost and are being amortized on the straight line basis over their estimated useful lives of twelve to seventeen years.
 
Office Equipment
 
Office equipment is stated at cost less accumulated depreciation.  Depreciation is calculated on the straight line basis over the estimated useful lives of the assets of three to five years. Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to expense. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its office equipment for impairment.
 
Depreciation expense was approximately $4,000 and $7,000 for the years ended December 31, 2015 and 2014, respectively.
 
Loss per Share
 
Basic loss per share is calculated by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.
 
The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of December 31, 2015 and 2014, as they would be anti-dilutive:
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Shares underlying options outstanding
 
 
292,140
 
 
289,503
 
Shares underlying warrants outstanding
 
 
1,409,248
 
 
663,264
 
Shares underlying convertible preferred stock outstanding
 
 
411,806
 
 
 
Shares underlying convertible notes outstanding
 
 
 
 
9,012
 
 
 
 
2,113,194
 
 
961,779
 
 
Derivative Liability
 
The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding preferred stock. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to December 25, 2015 are derivative liabilities. The Company values these derivative liabilities using the Black-Scholes option valuation model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
 
Fair Value of Financial Instruments
 
Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.
 
The derivative liability consists of our convertible preferred stock with anti-dilution provisions, and related warrants. The Company uses the Black-Scholes option-pricing model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
 
Fair Value Measurements
 
The U.S. GAAP Valuation Hierarchy establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
 
The Company has recorded a derivative liability for convertible preferred stock with anti-dilution provisions, and related warrants, as of December 31, 2015. The table below summarizes the fair values of our financial liabilities as of December 31, 2015 (in thousands):
 
 
 
Fair Value at
 
 
 
 
 
December 31,
 
Fair Value Measurement Using
 
 
 
2015
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
Derivative liability
 
$
1,177
 
$
 
$
 
$
1,177
 
 
The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
 
 
 
2015
 
Balance at beginning of year
 
$
 
Additions to derivative instruments
 
 
1,358
 
Loss (gain) on change in fair value of derivative liability
 
 
(181)
 
Balance at end of year
 
$
1,177
 
 
Income Taxes
 
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference becomes deductible.
 
Stock-Based Compensation
 
We measure the cost of employee services received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).
 
Compensation expense for options granted to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured on each accounting period.
 
Determining the appropriate fair value of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
 
Recent Accounting Pronouncements
 
In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments contained in this update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We are currently assessing the impact of the adoption of ASU 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.
 
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, simplifying the income statement presentation. The guidance does not change the requirement to disclose items that are unusual in nature and occur infrequently. ASU No. 2015-01 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, although early adoption is permitted. Exclusive of a material transaction that would qualify for extraordinary item presentation in future periods, we do not expect the adoption of this standard to materially impact our financial statements.
 
In April 2015, the Financial Accounting Standard Board issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2015, and early adoption is permitted. We do not expect the adoption of this standard to materially impact our consolidated financial statements.
 
There are various other recently issued updates, most of which represented technical corrections to the accounting literature or application to specific industries, and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
SUPPLEMENTAL CASH FLOW INFORMATION
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Cash Flow, Supplemental Disclosures [Text Block]
NOTE 4 – SUPPLEMENTAL CASH FLOW INFORMATION
 
There was no cash paid for interest and income taxes for the nine months ended September 30, 2016 and 2015.
Cash Flow, Supplemental Disclosures [Text Block]
NOTE 4 – SUPPLEMENTAL CASH FLOW INFORMATION
 
The following table contains additional information for the periods reported (in thousands).
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Non-cash financial activities:
 
 
 
 
 
 
 
Common stock options issued as payment of accrued compensation
 
$
 
$
962
 
Common stock and warrants issued for consulting fees
 
 
175
 
 
735
 
Common stock issued on conversion of notes payable
 
 
139
 
 
 
 
There was no cash paid for interest and income taxes for the years ended December 31, 2015 and 2014.
INTELLECTUAL PROPERTY
Goodwill and Intangible Assets Disclosure [Text Block]
NOTE 5 – INTELLECTUAL PROPERTY
 
We solely own or have exclusive licenses to all of our patents and patent applications. Between 2008 and 2011, we entered into license and assignment agreements with Johns Hopkins University (JHU), the University of Copenhagen (UC) and certain co-inventors (Assignee Co-Founders), in which we paid $212,000 in cash and common stock. As a result of these payments and pursuant to the agreements, we acquired worldwide, exclusive, fully paid up rights in know-how, pre-clinical data, development data and certain patent portfolios that relate to, and form the basis of, our technology. Under these agreements, we are not required to make any other future payments, including fees or other reimbursements, milestones, or royalties, to JHU, UC, or the Assignee Co-Founders.
 
Amortization expense recorded during the years ended December 31, 2015 and 2014 was approximately $17,000 for both years. Amortization expense is estimated to be approximately $17,000 for each one of the next five fiscal years.
ACCRUED EXPENSES
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Accounts Payable and Accrued Liabilities Disclosure [Text Block]
NOTE 5 – ACCRUED EXPENSES
 
Accrued expenses consist of the following (in thousands):
 
 
 
September 30, 2016
 
December 31, 2015
 
Accrued compensation and benefits
 
$
2,438
 
$
2,134
 
Accrued research and development
 
 
129
 
 
152
 
Accrued other
 
 
159
 
 
146
 
Total accrued expenses
 
$
2,726
 
$
2,432
 
Accounts Payable and Accrued Liabilities Disclosure [Text Block]
NOTE 6 – ACCRUED EXPENSES
 
Accrued expenses consist of the following (in thousands):
 
 
 
December 31,
 
 
 
2015
 
2014
 
 
 
 
 
 
 
Accrued compensation and benefits
 
$
2,134
 
$
1,108
 
Accrued research and development
 
 
152
 
 
163
 
Accrued other
 
 
146
 
 
167
 
Total accrued expenses
 
$
2,432
 
$
1,438
 
CONVERTIBLE NOTES PAYABLE
Notes Payable Disclosure [Text Block]
NOTE 7 — CONVERTIBLE NOTES PAYABLE
 
We issued convertible notes to our former chief executive officer pursuant to which we borrowed an aggregate of $0.2 million, with an interest rate of 4.2%, and maturities at various dates through December 6, 2011. The notes and accrued interest were convertible, at the option of the holder, into shares of our common stock at a conversion price of $15.00 per share.
 
In October 2015, the board of directors approved amending the conversion price of the convertible notes from a price of $15.00 per share to $12.00 per share, in exchange for our chief executive officer waiving approximately $33,000 of outstanding accrued interest. Accordingly, our chief executive elected to convert the outstanding notes into 8,750 shares of common stock. Accrued interest at December 31, 2014 was approximately $30,000.
DERIVATIVE LIABILITY
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Text Block]
NOTE 6 – DERIVATIVE LIABILITY
 
We account for equity-linked financial instruments, such as our convertible preferred stock, and our common stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the respective agreement. Equity-linked financial instruments are accounted for as derivative liabilities, in accordance with ASC Topic 815 – Derivatives and Hedging, if the instrument allows for cash settlement or provide for modification of the exercise price in the event subsequent sales of our common stock are at a lower price per share than the then-current warrant exercise price. Additionally, financial instruments are classified as derivative liabilities if, as a result of the anti-dilution protection, there is no limit on the number of shares that may be subsequently issued and we conclude there are not adequate authorized shares available to provide for subsequent issuances. We classify derivative liabilities on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant.
 
In December 2015, we issued shares of convertible preferred stock which contain anti-dilution protection for subsequent equity sales which occur within 18 months, and related warrants. As a result, the Company assessed its outstanding equity-linked financial instruments and concluded that this series of preferred stock, and related warrants, is subject to derivative accounting. The fair value of these shares is classified as a liability in the financial statements, with the change in fair value during the periods presented recorded in the statement of operations.
 
During the nine months ended September 30, 2016, we recorded a gain of $0.4 million related to the change in fair value of the derivative liability during the period. For purpose of determining the fair market value of the derivative liability, the Company used the Black Scholes option pricing model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
 
 
 
2016
 
Volatility
 
 
85
%
Expected term (years)
 
 
10 months
 
Risk-free interest rate
 
 
0.64
%
Dividend yield
 
 
None
 
 
As of September 30, 2016, the derivative liability recognized in the financial statements was approximately $0.8 million.
Derivative Instruments and Hedging Activities Disclosure [Text Block]
NOTE 8 — DERIVATIVE LIABILITY
 
We account for equity-linked financial instruments, such as our convertible preferred stock, and our common stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the respective agreement. Equity-linked financial instruments are accounted for as derivative liabilities, in accordance with ASC Topic 815 – Derivatives and Hedging, if the instrument allows for cash settlement or provide for modification of the exercise price in the event subsequent sales of common stock are at a lower price per share than the then-current warrant exercise price. Additionally, financial instruments are classified as derivative liabilities if, as a result of the anti-dilution protection, there is no limit on the number of shares that may be subsequently issued and we conclude there are not adequate authorized shares available to provide for subsequent issuances. We classify derivative liabilities on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant.
 
In December 2015, we issued shares of convertible preferred stock which contain anti-dilution protection for subsequent equity sales for a period of 18 months, and related warrants. As a result, the Company assessed its outstanding equity-linked financial instruments and concluded that this series of preferred stock, and related warrants, is subject to derivative accounting. The fair value of these shares are classified as a liability in the financial statements, with the change in fair value during the periods presented recorded in the statement of operations.
 
During the year ended December 31, 2015, we recorded a gain of $0.2 million related to the change in fair value of the derivative liability during the period. For purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
 
 
 
2015
 
Volatility
 
84%-85
%
Expected term (years)
 
18 months
 
Risk-free interest rate
 
0.75
%
Dividend yield
 
None
 
 
As of December 31, 2015, the derivative liability recognized in the financial statements as of December 31, 2015 was approximately $1.2 million.
COMMITMENTS AND CONTINGENCIES
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Commitments and Contingencies Disclosure [Text Block]
NOTE 7 – COMMITMENTS AND CONTINGENCIES
 
On March 16, 2016, Dr. Craig Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice of termination alleges that such termination was for “Good Reason” as a result of a purported material change in his authority, functions, duties and responsibilities as chief executive officer. In the event that termination was for “Good Reason”, Dr. Dionne would be entitled to certain severance payments as well as other benefits. His notice of termination, in addition to requesting such severance, also requests the payment of Dr. Dionne’s annual and long term bonus for 2014 and 2015. On April 11, 2016, we received a letter from Dr. Dionne demanding approximately $2.3 million as a result of the foregoing.
 
The Company vigorously disputes that the termination of his employment was for “Good Reason,” as that term is defined in his employment agreement and under applicable law. This matter is at the early stages. While no litigation is pending at this time, there can be no assurance that this matter will be resolved in such a manner as to avoid litigation. Accordingly, the Company is unable at this time to predict the outcome of this matter, and any views formed as to the viability of these claims or the costs to the Company which could result from these claims may change from time to time as the matter proceeds through its course.
Commitments and Contingencies Disclosure [Text Block]
NOTE 9 — COMMITMENTS AND CONTINGENCIES
 
Operating Leases
 
The Company leases its corporate offices under an operating lease that expires on October 14, 2018.  Rent expense for office space amounted to approximately $57,000 and $56,000 for the years ended December 31, 2015 and 2014, respectively. The following table summarizes future minimum lease payments as of December 31, 2015 (in thousands):
 
2016
 
$
58
 
2017
 
 
60
 
2018
 
 
48
 
Thereafter
 
 
 
Total minimum lease payments
 
$
166
 
 
Employment Agreements
 
We employed our Chief Executive Officer and employ our Chief Operating Officer (who is also our principal executive and accounting officer) pursuant to written employment agreements. On March 16, 2016, Dr. Craig Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer (See Legal Matters below). The employment agreements contain severance provisions and indemnification clauses. The indemnification agreement provides for the indemnification and defense of the executive officers, in the event of litigation, to the fullest extent permitted by law. As part of the agreements, the executives potentially shall be entitled to the following (in thousands):      
 
 
 
Chief Executive
 
Chief Operating
 
 
 
Officer
 
Officer
 
Terminated without cause
 
$
1,798
 
$
971
 
Terminated, change of control without good reason
 
 
1,798
 
 
 
Terminated for cause, death, disability and by executive without good reason
 
 
381
 
 
325
 
 
Legal Matters
 
On March 16, 2016, Dr. Craig Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice of termination states that such termination was for “Good Reason” as a result of a material change in his authority, functions, duties and responsibilities as chief executive officer. In the event that termination was for “Good Reason”, Dr. Dionne would be entitled to certain severance payments as well as other benefits. The notice of termination, in additional to requesting such severance, also requests the payment of Dr. Dionne’s annual and long term bonus for 2014 and 2015. While the Company disputes that the termination was for “Good Reason,” as well as the amount of the bonuses due Dr. Dionne, if any, at this time the Company is unable to predict the financial outcome of this matter, and any views formed as to the viability of these claims or the financial liability which could result may change from time to time as the matter proceeds through its course. The Company is uncertain whether any litigation may result from the foregoing and the outcome of any such litigation is uncertain.
 
On July 16, 2015, the U.S. Court of Appeals for the Federal Circuit entered judgment in GenSpera, Inc. v. Annastasiah Mudiwa Mhaka in favor of GenSpera. In a per curiam order without an opinion, the Federal Circuit affirmed the decision of the U.S. District Court for the District of Maryland granting summary judgment in GenSpera's favor in two consolidated cases relating to the inventorship of two patents owned by GenSpera. The district court had issued a declaratory judgment that Dr. Annastasiah Mhaka should not be added as an inventor to the two patents at issue, and had also granted summary judgment with respect to state law tort claims brought by Dr. Mhaka against the company and two of its founders, Dr. John Isaacs and Dr. Sam Denmeade. The U.S. Court of Appeals for the Fourth Circuit previously dismissed another appeal brought by Dr. Mhaka from the same district court judgments.
CAPITAL STOCK AND STOCKHOLDER'S EQUITY
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Stockholders' Equity Note Disclosure [Text Block]
NOTE 8 – CAPITAL STOCK AND STOCKHOLDER’S EQUITY
 
Common Stock
 
In September 2015, our board of directors approved amending our certificate of incorporation to effect a reverse stock split, subject to shareholder approval, at a ratio of not less than one-for-two (1 for 2), and not more than one-for thirty (1 for 30) at the discretion of the board. On November 15, 2015, our shareholders approved the reverse stock split at the discretion of the board. Effective November 4, 2016 at 5:00 p.m. Eastern Time, the Company’s board of directors effected a one (1) for thirty (30) reverse stock split.
 
During the nine months ended September 30, 2016, no warrants were exercised into common shares. During the nine months ended September 30, 2015, 11,239 warrants were exercised into an equivalent number of common shares for which we received approximately $287,000 in proceeds.
Stockholders' Equity Note Disclosure [Text Block]
NOTE 10 — CAPITAL STOCK AND STOCKHOLDER’S EQUITY
 
Preferred Stock
 
In December 2015, we issued 1,853 shares of our Series A 0% Convertible Preferred Stock, with a stated value of $1,000 per share and the common shares are issuable pursuant to conversion of the preferred stock at a conversion price of $4.50 per share, subject to a 9.99% beneficial ownership limitation and subject to adjustment pursuant to stock splits and dividends, and subject to adjustment pursuant to customary anti-dilution protection for subsequent equity sales for a period of 18 months from the effective date of this registration statement. See “December 2015 Offering” below for further discussion.
 
Common Stock
 
In September 2015, the board of directors approved amending the Company’s certificate of incorporation to effect a reverse stock split, subject to shareholder approval, of the Company’s issued and outstanding common stock at a ratio of not less than one-for-two (1 for 2), and not more than one-for thirty (1 for 30). Accordingly, the company was given the authority to take the action necessary to obtain shareholder approval at the shareholder meeting scheduled to be held on November 13, 2015. At the meeting, the shareholders approved the amendment. As of December 31, 2015, the Company had not determined the degree, if any, of a potential stock split.
 
In July 2015, we granted an aggregate of 4,167 shares of common stock, valued at approximately $95,000, to a consultant for business advisory services to be provided to the Company. In March 2015, we granted an aggregate of 1,000 shares of common stock, valued at approximately $27,000, to a consultant for business advisory services to be provided to the Company. In August 2015, we cancelled and retired an aggregate of 910 shares of common stock, with a value of approximately $25,000, upon the termination of an agreement for business advisory services.
 
During the year ended December 31, 2015, 11,239 warrants were exercised into an equivalent number of common shares for which we received approximately $287,000 in proceeds. During the year ended December 31, 2014, no warrants were exercised into common shares.
 
Equity Financing
 
December 2015 Offering
 
In December 2015, we offered and sold 1,853 shares of our Series A 0% Convertible Preferred Stock and 649,901 common stock purchase warrants to certain accredited investors with whom we had a prior relationship or who were shareholders. From this sale and the exercise of 153,322 outstanding warrants, we received gross proceeds of approximately $2.5 million. The warrants include (i) 205,903 Series F common stock purchase warrants with a price per share of $9.00 and a term of five years from the date in which the shares underlying the warrants are registered, (ii) 205,903 Series G common stock purchase warrants with a price per share of $9.00 and a term of eighteen months from the date in which the shares underlying the warrants are registered, (iii) 119,048 Series H common stock purchase warrants issued pursuant to a contractually obligated exercise of prior outstanding warrants, with a price per share of $9.00 and a term of five years from the issuance date, and (iv) 119,048 Series I common stock purchase warrants issued pursuant to a contractually obligated exercise of prior outstanding warrants, with a price per share of $9.00 and a term of eighteen months from the issuance date. The preferred stock has a stated value of $1,000 per share and the common shares are issuable pursuant to conversion of the preferred stock at a conversion price of $4.50 per share, subject to a 9.99% beneficial ownership limitation and subject to adjustment pursuant to stock splits and dividends, and subject to adjustment pursuant to customary anti-dilution protection for subsequent equity sales for a period of 18 months from the effective date of this registration statement. In connection with the offering, we issued our placement agent 32,944 common stock purchase warrants with substantially the same terms as our Series F warrants, except that they have an expiration date of December 29, 2020.
 
July 2015 Offering
 
In July 2015, we offered and sold 119,709 units, in a private placement to certain accredited investors with whom we had a prior relationship or who were shareholders. Each unit consists of: (i) one share of common stock, (ii) one Series D common stock purchase warrant, and (iii) one Series E common stock purchase warrant. The price was $21.00 per unit, and resulted in gross proceeds of approximately $2.5 million. The Series D warrants have a term of five years and entitle the holder to purchase our common stock at a price per share of $24.00 per share. The Series E warrants have a term of eighteen months and entitle the holder to purchase our common stock at a price per share of $21.00 per share. In the event that the shares underlying the warrants are not subject to a registration statement at the time of exercise, the warrants may be exercised on a cashless basis after 30 days from the issuance date. In connection with the offering, we issued our placement agent 9,577 common stock purchase warrants with substantially the same terms as our Series D warrants.
STOCK OPTIONS
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE 9 – STOCK OPTIONS
 
Our 2009 Executive Compensation Plan (“2009 Plan”) and our 2007 Equity Compensation Plan (“2007 Plan”) each allow for the issuance of up to 6,000,000 shares of common stock, or 12,000,000 in the aggregate. Collectively, the 2009 Plan and 2007 Plan are referred to as “the Plans.”
 
On July 17, 2016, our board of directors adopted the GenSpera, Inc. Inducement Award Stock Option Plan. The plan is to be used in connection with the recruiting and inducement of senior management and employees. We did not seek approval of the plan by our stockholders. Pursuant to the plan, we may grant stock options for up to a total of 9,000,000 shares of common stock to new employees.
 
Total stock-based compensation expense recognized for stock options issued using the straight-line method in the statement of operations for the nine months ended September 30, 2016 and 2015 was as follows:
 
 
 
Nine months ended September 30,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Research and development
 
$
21
 
$
28
 
General and administrative
 
 
49
 
 
73
 
 
 
$
70
 
$
101
 
 
The following table summarizes stock option activity under the Plans:
 
 
 
 
 
Weighted-
 
Weighted-average
 
Aggregate
 
 
 
 
 
average
 
remaining
 
intrinsic
 
 
 
Number of
 
exercise
 
contractual term
 
value (in
 
 
 
shares
 
price
 
(in years)
 
thousands)
 
Outstanding at December 31, 2015
 
 
292,140
 
$
48.00
 
 
 
 
 
 
 
Granted
 
 
121,759
 
$
4.50
 
 
 
 
 
 
 
Expired
 
 
(32,500)
 
$
47.10
 
 
 
 
 
 
 
Forfeited
 
 
(115,536)
 
$
52.20
 
 
 
 
 
 
 
Outstanding at September 30, 2016
 
 
265,863
 
$
26.40
 
 
5.3
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at September 30, 2016
 
 
154,384
 
$
42.00
 
 
2.2
 
$
 
 
As of September 30, 2016, there was approximately $199,000 of total unrecognized compensation cost related to non-vested stock options which vest over a weighted-average period of approximately 1.5 years. As of September 30, 2016, there was no unrecognized compensation expense related to performance-based, non-vested employee stock options.
 
During the nine months ended September 30, 2016, we issued options to purchase 5,300 shares of common stock to non-employee directors under the Plans pursuant to our non-employee director compensation policy. We also issued options to purchase 104,626 shares of common stock to employees. Additionally, we issued options to purchase 11,833 shares of common stock to consultants and advisors. During the nine months ended September 30, 2015, we issued options to purchase 5,300 shares of common stock to non-employee directors, respectively, under the Plans pursuant to our non-employee director compensation policy. Additionally, we issued options to purchase 7,253 shares of common stock to consultants and advisors. The weighted-average fair value of the options granted during 2016 and 2015 was estimated at $2.10 and $9.60 per share, respectively, on the date of grant. During the nine months ended September 30, 2016 and 2015, no options were exercised.
 
On August 2, 2016, and August 8, 2016, respectively, we entered into employment agreements with Christopher Lowe and Ronald Shazer to serve as our chief executive officer and chief medical officer, respectively. In conjunction with the employment agreement of Christopher Lowe, we issued Mr. Lowe 72,155 common stock purchase options. The options have a term of 7 years, an exercise price of $4.35 per share and (i) 18,039 shares vest monthly over a 12-month period and (ii) the remaining 54,116 shares vest upon achievements of certain milestones and time. In conjunction with the employment agreement of Ronald Shazer, we issued Dr. Shazer 32,470 common stock purchase options. The options have a term of 7 years, an exercise price of $4.50 per share and (i) 8,118 shares vest monthly over a 12-month period and (ii) the remaining 24,352 shares vest upon achievements of certain milestones and time. Both options were granted pursuant to our Inducement Award Stock Option Plan.
 
The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued during the nine months ended September 30, 2016 and 2015:
 
 
 
Nine months ended September 30,
 
 
 
2016
 
2015
 
Volatility
 
 
90.9
%
 
58.4
%
Expected term (years)
 
 
1.9
 
 
3.4
 
Risk-free interest rate
 
 
0.76
%
 
1.0
%
Dividend yield
 
 
0
%
 
0
%
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE 11 — STOCK OPTIONS
 
Deferred Compensation Plan
 
In July of 2011, we adopted Executive Deferred Compensation Plan (the Deferred Plan). The Deferred Plan is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the Code). The Deferred Plan is intended to be an unfunded “top hat” plan which is maintained primarily to provide deferred compensation benefits for a select group of our “management or highly compensated employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and to therefore be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. The Deferred Plan is intended to help build a supplemental source of savings and retirement income through pre-tax deferrals of eligible compensation, which may include cash, option and stock bonus awards, discretionary cash, option and stock awards and/or any other payments which may be designated by the Deferred Plan administrator, as eligible, for deferral under the Deferred Plan from time to time. As administered, the Deferred Plan is used to defer compensation of stock awards granted under our other equity compensation plans and does not by its terms approve any grants or awards.
 
GenSpera’s Compensation Plans
 
The Company’s 2007 Equity Compensation Plan (2007 Plan) and 2009 Executive Compensation Plan (2009 Plan) (together, the Plans) provide for the awarding of stock grants, nonqualified and incentive stock options, restricted stock units, performance units or other stock-based awards to officers, directors, employees and consultants of the Company. The purpose of the Plans is to advance the interests of GenSpera and our stockholders by attracting, retaining and rewarding persons performing services for us and to motivate such persons to contribute to our growth and profitability. Our Plans are administered by a committee of non-employee directors (the Committee). The Committee determines: who shall be granted awards; the vesting periods; the exercise price; and any other terms deemed appropriate for any award.
 
As of December 31, 2015, our 2009 Plan authorized up to 200,000 shares of common stock to be reserved for issuance upon exercise of stock options or other stock-based awards, and the Company has awarded 164,862 stock options, and 35,138 shares of common stock were available for future grants under the 2009 Plan. All option awards granted under the 2009 Plan are fully vested.
 
Our 2007 Plan authorizes up to 200,000 shares of common stock to be reserved for the issuance upon exercise of stock options or other stock-based awards, subject to an annual award limitation of 50,000 shares. Under the 2007 Plan, vesting schedules for stock options vary, but generally vest for a period of not more than five years and at a rate of not less than 20% per year. The maximum term of an option granted under the 2007 Plan is ten years. As of December 31, 2015, the Company has awarded 151,694 stock options, and 67,056 shares of common stock were available for future grants under the 2007 Plan. The Company has recorded aggregate stock-based compensation expense related to the issuance of stock option awards in the following line items in the accompanying consolidated statement of losses (in thousands):
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Research and development
 
$
45
 
$
891
 
General and administrative
 
 
93
 
 
1,164
 
Total stock-based compensation expense
 
$
138
 
$
2,055
 
 
As of December 31, 2015, there was $36,000 of total unrecognized compensation cost related to non-vested stock options which vest over time, and is expected to be recognized over a weighted-average period of 0.7 of a year. As of December 31, 2014, there was $43,000 of total unrecognized compensation cost related to non-vested stock options which vest over time, and is expected to be recognized over a weighted-average period of 1.2 years.
 
The following table summarizes stock option activity under the Plans:
 
 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
Weighted-
 
average
 
Aggregate
 
 
 
 
 
average
 
remaining
 
intrinsic
 
 
 
Number of
 
exercise
 
contractual term
 
value (in
 
 
 
shares
 
price
 
(in years)
 
thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2013
 
 
201,688
 
$
54.60
 
 
 
 
 
 
 
Granted
 
 
91,982
 
$
37.80
 
 
 
 
 
 
 
Exercised
 
 
 
 
 
 
 
 
 
 
 
Forfeited
 
 
(4,167)
 
$
45.00
 
 
4.0
 
$
46
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2014
 
 
289,503
 
$
48.60
 
 
 
 
 
 
 
Granted
 
 
12,553
 
$
23.70
 
 
 
 
 
 
 
Forfeited
 
 
(9,916)
 
$
62.40
 
 
 
 
 
 
 
Outstanding at December 31, 2015
 
 
292,140
 
$
48.00
 
 
3.2
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at December 31, 2015
 
 
288,573
 
$
48.30
 
 
3.2
 
$
 
 
During 2015 and 2014, the Company issued options to purchase 5,300 and 70,263 shares of common stock, respectively, to employees, and non-employee directors under the Plans. The weighted-average fair value of the options granted to employees and non-employee directors during 2015 and 2014 was estimated at $9.00 and $14.40 per share, respectively, on the date of grant.
 
During 2015 and 2014, the Company issued options to purchase 7,253 and 21,719 shares of common stock, respectively, to consultants under the Plan. The per-share weighted-average fair value of the options granted to consultants during 2015 and 2014 was estimated at $10.20 and $11.40, respectively, on the date of grant.
 
The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued for the years ended December 31, 2015 and 2014:
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Volatility
 
 
58.4
%
 
55.8
%
Expected term (years)
 
 
3.4
 
 
3.5
 
Risk-free interest rate
 
 
1.0
%
 
0.7
%
Dividend yield
 
 
None
 
 
None
 
 
No options were exercised during the years ended December 31, 2015 and 2014.
WARRANTS
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Derivatives and Fair Value [Text Block]
NOTE 10 – WARRANTS
 
In December 2015, in connection with a private placement of our securities, we issued an aggregate of 682,845 common stock purchase warrants, including 649,901 to investors; and 32,944 to placement agents. The warrants were issued with an exercise price of $9.00 per share. The Company assessed these outstanding equity-linked financial instruments and concluded that the warrants are subject to derivative accounting (see Note 6). Transactions involving our equity-classified warrants are summarized as follows:
 
 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
Weighted-
 
average
 
Aggregate
 
 
 
 
 
average
 
remaining
 
intrinsic
 
 
 
Number of
 
exercise
 
contractual
 
value (in
 
 
 
shares
 
price
 
term (in years)
 
thousands)
 
Outstanding at December 31, 2015
 
 
1,409,248
 
$
23.70
 
 
 
 
 
 
 
Forfeited
 
 
(73,782)
 
$
96.90
 
 
 
 
 
 
 
Outstanding at September 30, 2016
 
 
1,335,466
 
$
19.80
 
 
2.1
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at September 30, 2016
 
 
1,335,466
 
$
19.80
 
 
2.1
 
$
 
 
During the nine months ended September 30, 2016, no warrants were exercised. During the nine months ended September 30, 2015, 11,239 warrants were exercised into an equivalent number of common shares for which we received approximately $287,000 in proceeds. The following table summarizes outstanding common stock purchase warrants as of September 30, 2016:
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
average
 
 
 
 
 
Number of
 
exercise
 
 
 
 
 
shares
 
price
 
Expiration
 
 
 
 
 
 
 
 
 
 
 
Issued to consultants
 
 
27,200
 
$
40.20
 
December 2016 through November 2020
 
Issued pursuant to 2012 financings
 
 
9,879
 
$
90.00
 
December 2017
 
Issued pursuant to 2013 financings
 
 
145,874
 
$
59.10
 
December 2017 through August 2018
 
Issued pursuant to 2014 financings
 
 
362,756
 
$
24.60
 
December 2016 through June 2019
 
Issued pursuant to 2014 financings
 
 
789,757
 
$
8.70
 
January 2017 through December 2020
 
 
 
 
1,335,466
 
 
19.80
 
 
 
 
During the nine months ended September 30, 2016, no warrants were issued to consultants. During the nine months ended September 30, 2015, we issued warrants to consultants to purchase 7,500 shares of common stock as compensation for business and advisory services. The common stock purchase warrants have an exercise price of $19.50 per share, are immediately exercisable and expire on the five-year anniversary of the date of issuance. The per share weighted-average fair value of the warrants granted to consultants during 2015 was estimated at $9.00 per share on the date of grant.
 
Total stock-based compensation expense of approximately $0 and $67,000 was recognized for warrants and included in the statement of operations for the nine months ended September 30, 2016 and 2015, respectively.
 
The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued during the nine months ended September 30, 2015:
 
Volatility
 
 
72.7
%
Expected term (years)
 
 
1.7
 
Risk-free interest rate
 
 
0.6
%
Dividend yield
 
 
0
%
Derivatives and Fair Value [Text Block]
NOTE 12 — WARRANTS
 
Transactions involving our warrants are summarized as follows:
 
 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
Weighted-
 
average
 
Aggregate
 
 
 
 
 
average
 
remaining
 
intrinsic
 
 
 
Number of
 
exercise
 
contractual term
 
value (in
 
 
 
shares
 
price
 
(in years)
 
thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2013
 
 
340,553
 
$
76.80
 
 
 
 
 
 
 
Granted
 
 
382,262
 
$
28.50
 
 
 
 
 
 
 
Forfeited
 
 
(59,551)
 
$
85.50
 
 
2.8
 
$
8.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2014
 
 
663,264
 
$
48.30
 
 
 
 
 
 
 
Granted
 
 
941,841
 
$
8.10
 
 
 
 
 
 
 
Exercised
 
 
(153,322)
 
$
5.70
 
 
 
 
 
 
 
Forfeited
 
 
(42,535)
 
$
93.60
 
 
 
 
 
 
 
Outstanding at December 31, 2015
 
 
1,409,248
 
$
23.70
 
 
2.7
 
$
14.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at December 31, 2015
 
 
1,409,248
 
$
23.70
 
 
2.7
 
$
14.6
 
 
During the year ended December 31, 2015, 153,322 warrants were exercised into an equivalent number of common shares for which we received approximately $926,000 in proceeds. During the year ended December 31, 2014, no warrants were exercised into common shares.
 
The following table summarizes outstanding warrants to purchase common stock as of December 31, 2015:
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
Number of
 
Exercise
 
 
 
 
 
shares
 
price
 
Expiration
 
Issued to consultants
 
 
36,422
 
$
54.00
 
March 2016 through November 2020
 
Issued pursuant to 2011 financings
 
 
64,560
 
$
97.20
 
January 2016 through April 2016
 
Issued pursuant to 2012 financings
 
 
9,879
 
$
90.00
 
December 2017
 
Issued pursuant to 2013 financings
 
 
145,874
 
$
59.10
 
December 2017 through August 2018
 
Issued pursuant to 2014 financings
 
 
362,756
 
$
27.90
 
December 2016 through June 2019
 
Issued pursuant to 2015 financings
 
 
789,757
 
$
8.70
 
January 2017 through December 2020
 
 
 
 
1,409,248
 
 
 
 
 
 
 
During 2015, the Company issued warrants to consultants to purchase 10,000 at a weighted-average fair value of $7.80 per share on the date of grant. The common stock purchase warrants have exercise prices of between $10.50 and $19.50 per share, are immediately exercisable and expire on the five-year anniversary of the date of issuance. During 2015, total stock-based compensation expense of approximately $78,000, was recognized using the straight-line method in the statement of losses for warrants issued to consultants.
 
During 2014, the Company issued warrants to consultants to purchase 8,267 at a weighted-average fair value of $10.80 per share on the date of grant. During 2014, total stock-based compensation expense of approximately $89,000, was recognized using the straight-line method in the statement of losses for warrants issued to consultants. The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the equity-classified warrants issued for services:
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Volatility
 
 
72.6
%
 
51.1
%
Expected term (years)
 
 
1.8
 
 
2.0
 
Risk-free interest rate
 
 
0.6
%
 
0.5
%
Dividend yield
 
 
None
 
 
None
 
 
In December 2015, in connection with a private placement, we issued an aggregate of 682,845 common stock purchase warrants, including 649,901 to investors; and 32,944 to placement agents. The warrants were issued with an exercise price of $9.00 per share. The Company assessed these outstanding equity-linked financial instruments and concluded that the warrants are subject to derivative accounting (see Note 8).
 
In July 2015, also in connection with a private placement, we issued an aggregate of 248,995 common stock purchase warrants, including 239,419 to investors; and 9,577 to placement agents. The warrants were issued with exercise prices between $21.00 and $24.00 per share.
 
In June 2014, in connection with a registered offering, we issued an aggregate of 357,891 common stock purchase warrants, including 346,997 issued to investors and 10,894 issued to the placement agents. The warrants were issued with exercise prices between $25.50 and $34.50 per share. In 2015, we amended 127,560 of the Series B and 138,799 of the Series C warrants in order to extend their respective term to December 31, 2016, and reduce their exercise price to $21.00 per share. Additionally, we issued 16,104 common stock purchase warrants to investors in a June 2014 private placement. The warrants have an exercise price of $34.50 per share.
 
In June 2014, in connection with our registered offering, we issued an aggregate of 357,891 common stock purchase warrants, including 346,997 issued to investors and 10,894 issued to the placement agents. The warrants were issued with exercise prices between $25.50 and $34.50 per share. Additionally, we also issued 16,104 common stock purchase warrants to investors in our June 2014 private placement. The warrants have an exercise price of $34.50 per share.
INCOME TAXES
Income Tax Disclosure [Text Block]
NOTE 13 — INCOME TAXES
 
The Company had, subject to limitation, $32.5 million of net operating loss carryforwards at December 31, 2015, which will expire at various dates beginning in 2016 through 2026. In addition, the Company has research and development tax credits of approximately $456,000 at December 31, 2015 available to offset future taxable income, which will expire from 2028 through 2036. We have provided a 100% valuation allowance for the deferred tax benefits resulting from the net operating loss carryover and our tax credits due to our lack of earnings history. In addressing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance increased by $2.0 and $2.4 million for the year ended December 31, 2015 and 2014, respectively. Significant components of deferred tax assets and liabilities are as follows (in thousands): 
 
 
 
2015
 
2014
 
Deferred tax assets:
 
 
 
 
 
 
 
Net operating loss carryover
 
$
11,066
 
$
9,466
 
Stock-based compensation
 
 
3,768
 
 
3,372
 
Other
 
 
(60)
 
 
 
Tax credits
 
 
456
 
 
443
 
Total deferred tax assets
 
 
15,230
 
 
13,281
 
Less: valuation allowance
 
 
(15,230)
 
 
(13,281)
 
Net deferred tax assets
 
$
 
$
 
 
The actual tax benefit differs from the expected tax benefit for the years ended December 31, 2015 and 2014 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before taxes) are as follows:
 
 
 
2015
 
2014
 
Statutory federal income tax rate
 
 
-34.0
%
 
-34.0
%
Non-deductible items
 
 
0.1
%
 
0.0
%
Adjustment for R&D Credit
 
 
-0.2
%
 
0.2
%
Valuation allowance
 
 
34.1
%
 
33.8
%
Effective income tax rate
 
 
%
 
%
 
The Company’s tax returns for the previous three years remain open for audit by the respective tax jurisdictions.
SUBSEQUENT EVENTS
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Subsequent Events [Text Block]
NOTE 11 – SUBSEQUENT EVENTS
 
On October 1, 2016 we entered into an employment agreement with Michael Elliot to serve as our vice president of clinical operations. In conjunction with the employment agreement, we issued Mr. Elliot 18,039 common stock purchase options. The options have a term of 7 years, an exercise price of $4.20 per share and (i) 4,510 shares vest monthly over a 12-month period and (ii) the remaining 13,529 shares vest upon achievements of certain milestones and time. The options were granted pursuant to our Inducement Award Stock Option Plan.
 
On October 12, 2016 and October 13, 2016, respectively, in connection with the appointment of Claire M. Thom and Richard E. Buller, M.D. Ph.D to our Board of Directors, we granted each of them 2,500 common stock purchase options. The options vest on the first year anniversary of the grants. The options have a term of 5 years and exercise prices of $3.90 and $4.05 per share, respectively. The options both vest fully on November 1, 2017 provided their continued services to the Company. The options were issued as compensation for Board services to be performed in accordance with Company’s amended non-executive Board compensation policy and were granted pursuant to our 2007 Equity Compensation Plan.
 
Effective November 17, 2016 at 5:00 p.m. Eastern Time, we effected a one (1) for thirty (30) reverse stock split of our common stock. Accordingly, each of our shareholders received one (1) new share of common stock for every thirty (30) shares of common stock such shareholder held immediately prior to the effective time of the reverse split. The reverse stock split affected all of our issued and outstanding shares of common stock as well as the number of shares of common stock underlying stock options, warrants and other exercisable or convertible instruments outstanding at the effective time of the reverse split. The reverse split also has the effect of proportionately increasing the applicable conversion or exercise price of such convertible securities. The shareholders received no fractional shares and instead had every fractional share rounded up to the next whole number.
 
On November 10, 2016, the Company issued 5,556 common shares to a shareholder pursuant to the conversion of 25.00005 shares of Series A 0% Convertible Preferred Stock at a conversion price of $4.50 per common share.
Subsequent Events [Text Block]
NOTE 14 -- SUBSEQUENT EVENTS
 
Effective November 17, 2016, the Company effected a one (1) for thirty (30) reverse stock split of their common stock. Accordingly, each of their shareholders received one (1) new share of common stock for every thirty (30) shares of common stock such shareholder held immediately prior to the effective time of the reverse split. The reverse stock split affected all of the Company’s issued and outstanding shares of common stock as well as the number of shares of common stock underlying stock options, warrants and other exercisable or convertible instruments outstanding at the effective time of the reverse split.
 
The reverse split also has the effect of proportionately increasing the applicable conversion or exercise price of such convertible securities. The shareholders received no fractional shares and instead had every fractional share rounded up to the next whole number. All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:30 reverse stock split as if it had taken place as of the beginning of the earliest period presented. On January 13, 2017, the financial statements were reissued to reflect the reverse stock split.
 
On March 16, 2016, Dr. Craig Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer (See Note 9).
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Policies)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Accounting Policies [Abstract]
 
 
Use of Estimates, Policy [Policy Text Block]
Research and Development Expense, Policy [Policy Text Block]
Cash and Cash Equivalents, Policy [Policy Text Block]
 
Concentration Risk, Credit Risk, Policy [Policy Text Block]
 
Goodwill and Intangible Assets, Policy [Policy Text Block]
 
Property, Plant and Equipment, Policy [Policy Text Block]
 
Earnings Per Share, Policy [Policy Text Block]
Derivatives, Policy [Policy Text Block]
Fair Value of Financial Instruments, Policy [Policy Text Block]
Fair Value Measurement, Policy [Policy Text Block]
Income Tax, Policy [Policy Text Block]
 
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
New Accounting Pronouncements, Policy [Policy Text Block]
Use of estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results may differ from those estimates.
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Significant estimates include the fair value of derivative instruments, stock-based compensation, recognition of clinical trial costs and other accrued liabilities. Actual results may differ from those estimates.
Research and Development
 
Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for manufacturing, clinical trials, employee compensation and consulting costs and expenses.
 
We incurred research and development expenses of approximately $0.4 million and $0.5 million for the three months ended September 30, 2016 and 2015, respectively. We incurred research and development expenses of approximately $1.0 million and $1.9 million for the nine months ended September 30, 2016 and 2015, respectively.
Research and Development
 
Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for toxicology and other studies, manufacturing, clinical trials, compensation and consulting costs.  
 
We incurred research and development expenses of $2.3 and $3.7 million for the years ended December 31, 2015 and 2014, respectively.
Cash Equivalents
 
For purposes of the statements of cash flows, we consider all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. We maintain our cash in bank deposit accounts which, at times, may exceed applicable government mandate insurance limits. We have not experienced any losses in our accounts.
Concentrations of Credit Risk
 
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may exceed applicable government mandated insurance limits. Cash and cash equivalents were $2.5 million and $2.3 million at December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, there was approximately $2.1 million and $1.9 million in cash over the federally insured limit, respectively.
 
We currently outsource all manufacturing of our clinical supplies to single source manufactures. We also have a single source supplier for the active ingredient in our prodrug compounds, including mipsagargin. A change in these suppliers could cause a delay in manufacturing and/or clinical trials, which would adversely affect our Company.
Intangible Assets
 
Intangible assets consist of licensed technology, patents, and patent applications (see Note 5). The assets associated with licensed technology are recorded at cost and are being amortized on the straight line basis over their estimated useful lives of twelve to seventeen years.
Office Equipment
 
Office equipment is stated at cost less accumulated depreciation.  Depreciation is calculated on the straight line basis over the estimated useful lives of the assets of three to five years. Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to expense. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its office equipment for impairment.
 
Depreciation expense was approximately $4,000 and $7,000 for the years ended December 31, 2015 and 2014, respectively.
Loss per Share
 
Basic loss per share is calculated by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of September 30, 2016 and 2015, as they would be anti-dilutive:
 
 
 
Nine months ended
 
 
 
September 30,
 
 
 
2016
 
2015
 
Shares underlying options outstanding
 
 
265,863
 
 
297,390
 
Shares underlying warrants outstanding
 
 
1,335,466
 
 
867,319
 
Shares underlying convertible preferred stock outstanding
 
 
411,806
 
 
 
Shares underlying convertible notes outstanding
 
 
 
 
9,231
 
 
 
 
2,013,135
 
 
1,173,940
 
Loss per Share
 
Basic loss per share is calculated by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share.
 
The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of December 31, 2015 and 2014, as they would be anti-dilutive:
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Shares underlying options outstanding
 
 
292,140
 
 
289,503
 
Shares underlying warrants outstanding
 
 
1,409,248
 
 
663,264
 
Shares underlying convertible preferred stock outstanding
 
 
411,806
 
 
 
Shares underlying convertible notes outstanding
 
 
 
 
9,012
 
 
 
 
2,113,194
 
 
961,779
 
Derivative Liability
 
The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding preferred stock.
 
Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to December 25, 2015 are classified as derivative liabilities. The Company values these derivative liabilities using the Black-Scholes option pricing model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
Derivative Liability
 
The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding preferred stock. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to December 25, 2015 are derivative liabilities. The Company values these derivative liabilities using the Black-Scholes option valuation model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.
Fair Value of Financial Instruments
 
Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.
 
The derivative liability consists of our convertible preferred stock with anti-dilution provisions, and related warrants. The Company uses the Black-Scholes option pricing model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
Fair Value of Financial Instruments
 
Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.
 
The derivative liability consists of our convertible preferred stock with anti-dilution provisions, and related warrants. The Company uses the Black-Scholes option-pricing model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
Fair Value Measurements
 
Valuation Hierarchy - GAAP establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:
 
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3: Unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
 
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company has recorded a derivative liability for convertible preferred stock with anti-dilution provisions, and related warrants, as of September 30, 2016. The table below summarizes the fair values of our financial liabilities as of September 30, 2016 (in thousands):
 
 
 
Fair Value at
 
Fair Value Measurement Using
 
 
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liability
 
$
756
 
$
 
$
 
$
756
 
 
The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
 
 
 
September 30, 2016
 
Balance at beginning of year
 
$
1,177
 
Additions to derivative instruments
 
 
 
Gain on change in fair value of derivative liability
 
 
(421)
 
Balance at end of year
 
$
756
 
Fair Value Measurements
 
The U.S. GAAP Valuation Hierarchy establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
 
The Company has recorded a derivative liability for convertible preferred stock with anti-dilution provisions, and related warrants, as of December 31, 2015. The table below summarizes the fair values of our financial liabilities as of December 31, 2015 (in thousands):
 
 
 
Fair Value at
 
 
 
 
 
December 31,
 
Fair Value Measurement Using
 
 
 
2015
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
Derivative liability
 
$
1,177
 
$
 
$
 
$
1,177
 
 
The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
 
 
 
2015
 
Balance at beginning of year
 
$
 
Additions to derivative instruments
 
 
1,358
 
Loss (gain) on change in fair value of derivative liability
 
 
(181)
 
Balance at end of year
 
$
1,177
 
Income Taxes
 
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference becomes deductible.
Stock-Based Compensation
 
We measure the cost of employee services received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).
 
Compensation expense for options granted to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured on each accounting period.
 
Determining the appropriate fair value of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation grant/award and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
Stock-Based Compensation
 
We measure the cost of employee services received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).
 
Compensation expense for options granted to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured on each accounting period.
 
Determining the appropriate fair value of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
Recent Accounting Pronouncements
 
In March 2016, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The amendments in this update simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the effect that the adoption of this standard will have on our financial statements.
 
In February 2016, the FASB issued FASB ASU 2016-02, “Leases (Topic 842)”. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. For operating leases, a lessee would be required to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the effect that the adoption of this ASU will have on our financial statements.
 
In August 2014, the FASB issued Accounting Standards Update ASU 2014-15 “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments contained in this update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We are currently assessing the impact of the adoption of ASU 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.
 
There are various other recently issued updates, most of which represented technical corrections to the accounting literature or application to specific industries, and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Recent Accounting Pronouncements
 
In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments contained in this update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We are currently assessing the impact of the adoption of ASU 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.
 
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, simplifying the income statement presentation. The guidance does not change the requirement to disclose items that are unusual in nature and occur infrequently. ASU No. 2015-01 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, although early adoption is permitted. Exclusive of a material transaction that would qualify for extraordinary item presentation in future periods, we do not expect the adoption of this standard to materially impact our financial statements.
 
In April 2015, the Financial Accounting Standard Board issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2015, and early adoption is permitted. We do not expect the adoption of this standard to materially impact our consolidated financial statements.
 
There are various other recently issued updates, most of which represented technical corrections to the accounting literature or application to specific industries, and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of September 30, 2016 and 2015, as they would be anti-dilutive:
 
 
 
Nine months ended
 
 
 
September 30,
 
 
 
2016
 
2015
 
Shares underlying options outstanding
 
 
265,863
 
 
297,390
 
Shares underlying warrants outstanding
 
 
1,335,466
 
 
867,319
 
Shares underlying convertible preferred stock outstanding
 
 
411,806
 
 
 
Shares underlying convertible notes outstanding
 
 
 
 
9,231
 
 
 
 
2,013,135
 
 
1,173,940
 
The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of December 31, 2015 and 2014, as they would be anti-dilutive:
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Shares underlying options outstanding
 
 
292,140
 
 
289,503
 
Shares underlying warrants outstanding
 
 
1,409,248
 
 
663,264
 
Shares underlying convertible preferred stock outstanding
 
 
411,806
 
 
 
Shares underlying convertible notes outstanding
 
 
 
 
9,012
 
 
 
 
2,113,194
 
 
961,779
 
The table below summarizes the fair values of our financial liabilities as of September 30, 2016 (in thousands):
 
 
 
Fair Value at
 
Fair Value Measurement Using
 
 
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liability
 
$
756
 
$
 
$
 
$
756
 
The table below summarizes the fair values of our financial liabilities as of December 31, 2015 (in thousands):
 
 
 
Fair Value at
 
 
 
 
 
December 31,
 
Fair Value Measurement Using
 
 
 
2015
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
Derivative liability
 
$
1,177
 
$
 
$
 
$
1,177
 
The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
 
 
 
September 30, 2016
 
Balance at beginning of year
 
$
1,177
 
Additions to derivative instruments
 
 
 
Gain on change in fair value of derivative liability
 
 
(421)
 
Balance at end of year
 
$
756
 
The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
 
 
 
2015
 
Balance at beginning of year
 
$
 
Additions to derivative instruments
 
 
1,358
 
Loss (gain) on change in fair value of derivative liability
 
 
(181)
 
Balance at end of year
 
$
1,177
 
SUPPLEMENTAL CASH FLOW INFORMATION (Tables)
Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]
The following table contains additional information for the periods reported (in thousands).
 
 
 
Year Ended December 31,
 
 
 
2015
 
2014
 
Non-cash financial activities:
 
 
 
 
 
 
 
Common stock options issued as payment of accrued compensation
 
$
 
$
962
 
Common stock and warrants issued for consulting fees
 
 
175
 
 
735
 
Common stock issued on conversion of notes payable
 
 
139
 
 
 
ACCRUED EXPENSES (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Schedule of Accrued Liabilities [Table Text Block]
Accrued expenses consist of the following (in thousands):
 
 
 
September 30, 2016
 
December 31, 2015
 
Accrued compensation and benefits
 
$
2,438
 
$
2,134
 
Accrued research and development
 
 
129
 
 
152
 
Accrued other
 
 
159
 
 
146
 
Total accrued expenses
 
$
2,726
 
$
2,432
 
Schedule of Accrued Liabilities [Table Text Block]
Accrued expenses consist of the following (in thousands):
 
 
 
December 31,
 
 
 
2015
 
2014
 
 
 
 
 
 
 
Accrued compensation and benefits
 
$
2,134
 
$
1,108
 
Accrued research and development
 
 
152
 
 
163
 
Accrued other
 
 
146
 
 
167
 
Total accrued expenses
 
$
2,432
 
$
1,438
 
DERIVATIVE LIABILITY (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]
The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
 
 
 
2016
 
Volatility
 
 
85
%
Expected term (years)
 
 
10 months
 
Risk-free interest rate
 
 
0.64
%
Dividend yield
 
 
None
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]
The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
 
 
 
2015
 
Volatility
 
84%-85
%
Expected term (years)
 
18 months
 
Risk-free interest rate
 
0.75
%
Dividend yield
 
None
 
COMMITMENTS AND CONTINGENCIES (Tables)
The following table summarizes future minimum lease payments as of December 31, 2015 (in thousands):
 
2016
 
$
58
 
2017
 
 
60
 
2018
 
 
48
 
Thereafter
 
 
 
Total minimum lease payments
 
$
166
 
As part of the agreements, the executives potentially shall be entitled to the following (in thousands):      
 
 
 
Chief Executive
 
Chief Operating
 
 
 
Officer
 
Officer
 
Terminated without cause
 
$
1,798
 
$
971
 
Terminated, change of control without good reason
 
 
1,798
 
 
 
Terminated for cause, death, disability and by executive without good reason
 
 
381
 
 
325
 
STOCK OPTIONS (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Total stock-based compensation expense recognized for stock options issued using the straight-line method in the statement of operations for the nine months ended September 30, 2016 and 2015 was as follows:
 
 
 
Nine months ended September 30,
 
 
 
2016
 
2015