You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included elsewhere in this report. The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the audited financial statements contained in this report, which we have prepared in accordance withUnited States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto. Basis of Presentation The audited financial statements for the fiscal years and quarters endedDecember 31, 2019 and 2018 include a summary of our significant accounting policies and should be read in conjunction with the discussion below and our financial statements and related notes included elsewhere in this annual report. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in the financial statements. All such adjustments are of a normal recurring nature. Overview
We are a biopharmaceutical company with product candidates in pre-clinical and clinical development. Neurotrope BioScience began operations inOctober 2012 . We are principally focused on developing a product platform based upon a drug candidate called bryostatin for the treatment of Alzheimer's disease ("AD"), which is in the clinical testing stage. We are also evaluating bryostatin for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, Multiple Sclerosis, and Niemann-Pick Type C disease, which have undergone pre-clinical testing. In addition, we are also in the early stages of testing bryostatin activity which may lead to applications in Leukemia and Lymphoma.Neurotrope has been a party to a technology license and services agreement with the originalBlanchette Rockefeller Neurosciences Institute ("BRNI") (which has been known asCognitive Research Enterprises, Inc. ("CRE") sinceOctober 2016 ), and its affiliateNRV II, LLC , which we collectively refer to herein as "CRE," pursuant to which we now have an exclusive non-transferable license to certain patents and technologies required to develop our proposed products. Neurotrope BioScience was formed for the primary purpose of commercializing the technologies initially developed by BRNI for therapeutic applications for AD or other cognitive dysfunctions. These technologies have been under development by BRNI since 1999 and, untilMarch 2013 , had been financed through funding from a variety of non-investor sources (which include not-for-profit foundations, theNational Institutes of Health , which is part of theU.S. Department of Health and Human Services , and individual philanthropists). FromMarch 2013 forward, development of the licensed technology has been funded principally through the Company in collaboration
with CRE.
Review of Strategic Alternatives
OnOctober 8, 2019 , following our announcement of top-line results from our Phase 2 study of bryostatin-1 in moderate to severe AD (as described below), we announced our plans to explore strategic alternatives to maximize shareholder value. Our Board has formed a strategic alternatives committee to aid in evaluating our alternatives. There can be no assurance that our formal strategic review of alternatives will result in any successful transaction or other outcome. We are continuing to determine how to proceed with respect to our current development programs for bryostatin-1 in our effort to maximize shareholder value.
Results of Phase 2 Clinical Trial
OnMay 1, 2017 , we reported certain relevant top-line results from our Phase 2 exploratory clinical trial based on a preliminary analysis of a limited portion of the complete data set generated. A comprehensive analysis of these data from the Phase 2 exploratory trial evaluating Bryostatin-1 as a treatment of cognitive deficits in moderate to severe Alzheimer's disease were recently published in theJournal of Alzheimer's Disease, vol. 67, no. 2, pp. 555-570, 2019. A total of 147 patients were enrolled into the study; 135 patients in the mITT population (as defined below) and 113 in the Completer population (as defined below). This study was the first repeat dose study of bryostatin-1 in patients with late stage AD (defined as a Mini Mental State Exam 2 ("MMSE-2") of 4-15), in which two dose levels of bryostatin-1 were compared with placebo to assess safety and preliminary efficacy (p < 0.1, one-tailed) after 12 weeks of treatment. The pre-specified primary endpoint, the Severe Impairment Battery (the "SIB") (used to evaluate cognition in severe dementia), compared each dose of bryostatin-1 with placebo at Week 13 in two sets of patients: (1) the modified intent-to-treat (the "mITT") population, consisting of all patients who received study drug and had at least one efficacy/safety evaluation, and (2) the Completer population, consisting of those patients within the mITT population who completed the 13-week dosing protocol and cognitive assessments. 45 These announced top-line results indicated that the 20 µg dose, administered after two weekly 20 µg doses during the first two weeks and every other week thereafter, met the pre-specified primary endpoint in the Completer population, but not in the mITT population. Among the patients who completed the protocol (n = 113), the patients on the 20 µg dose at 13 weeks showed a mean increase on the SIB of 1.5 vs. a decrease in the placebo group of -1.1 (net improvement of 2.6, p < 0.07), whereas, in the mITT population, the 20 µg group had a mean increase on the SIB of 1.2 vs. a decrease in the placebo group of -0.8 (net improvement of 2.0, p < 0.134). At the pre-specified 5 week secondary endpoint, the Completer patients in the 20 µg group showed a net improvement of 4.0 SIB (p < .016), and the mITT population showed a net improvement of 3.0 (p < .056). Unlike the 20 µg dose, there was no therapeutic signal observed with the 40 µg dose. The Alzheimer Disease Cooperative Study Activities of Daily Living Inventory Severe Impairment version (the "ADCS-ADL-SIV") was another pre-specified secondary endpoint. The p values for the comparisons between 20 µg and placebo for the ADCS-ADL endpoint at 13 weeks were 0.082 for the Completers and 0.104 for the mITT population. Together, these initial results after preliminary analysis of this exploratory trial, provided signals that bryostatin-1, at the 20 µg dose, caused sustained improvement in important functions that are impaired in patients with moderate to severe Alzheimer's disease, i.e., cognition and the ability to care for oneself. Since many of the patients in this study were already taking donepezil and/or memantine, the efficacy of bryostatin-1 was evaluated in the Top Line results over and above the standard of care therapeutics. The safety profile of bryostatin-1 20 µg was minimally different from the placebo group except for a higher incidence of diarrhea and infusion reactions (11% versus 2% for diarrhea and 17% versus 6% for infusion reactions). Fewer adverse events were reported in patients in the 20 µg group, compared to the 40 µg group. Patients dosed with 20 µg had a dropout rate less than or identical to placebo, while patients dosed at 40 µg experienced poorer safety and tolerability, and had a higher dropout rate. Treatment emergent adverse events ("TEAEs") were mostly mild or moderate in severity. TEAEs, including serious adverse events, were more common in the 40 µg group, as compared to the 20 µg and placebo groups. The mean age of patients in the study was 72 years and similar across all three treatment groups. Following presentation of the top line results inJuly 2017 at the Alzheimer'sAssociation International Conference inLondon , a much more extensive analysis of a complete set of the Phase 2 trial data was conducted. OnJanuary 5, 2018 , we announced that a pre-specified exploratory analysis of the comprehensive data set from our recent Phase 2 trial in patients with advanced AD found evidence of sustained improvement in cognition in patients receiving the 20 ?g bryostatin regimen. As specified in the Statistical Analysis Plan ("SAP"), analysis of patients who did not receive memantine, an approved AD treatment, as baseline therapy showed greater SIB improvement. These findings suggested that this investigational drug could potentially treat Alzheimer's disease itself and help reduce and/or reverse the progression of AD, in addition to alleviating its symptoms.
Comprehensive follow-on analyses found that patients in the 20 ?g treatment arm showed a sustained improvement in cognition over baseline compared to the placebo group at an exploratory endpoint week 15 (30 days after last dose at week 11). These data were observed in the study population as a whole as well as in the Completers study group. This follow-on analysis of the data evaluated SIB scores of patients at 15 weeks, 30 days after all dosing had been completed - a pre-specified exploratory endpoint. For the 20 ?g group, patients in the mITT population (n=34) showed an overall improvement compared to controls (n=33) of 3.59 (p=0.0503) and in the Completers population (n=34) showed an overall improvement compared to controls (n=33) of 4.09 (p=0.0293). In summary, patients on the 20 ?g dose showed a persistent SIB improvement 30 days after all dosing had been completed. These p-values and those below are one-tailed. 46 Additional analyses compared 20 µg dose patients who were on baseline therapy of Aricept vs. patients off Aricept. No significant differences were observed. Another analysis compared the 20 µg dose patients who were on or off baseline therapy of memantine. The secondary analysis comparing SIB scores in non-memantine versus memantine patients found the following:
· At week 15, non-memantine patients in the mITT Group treated with 20 ?g (n=14)
showed an SIB improvement of 5.88, while the placebo patients (n=11) showed a
decline in their SIB scores of -0.05 for an overall treatment ? of 5.93 from
baseline (p=0.0576).
· At week 15, non-memantine patients in the Completers Group treated with 20 ?g
(n=14) showed an SIB improvement of 6.24, while the placebo patients (n=11)
showed a decline in their SIB scores of -0.12 for an overall treatment ? of
6.36 from baseline (p=0.0488).
· Patients taking memantine as background therapy in the 20 ?g (n=20) and control
(n=22) groups showed no improvement in SIB scores. Memantine, an NMDA receptor antagonist, is marketed under the brand names Namenda®, Namenda® XR, and Namzaric® (a combination of memantine and donepezil) for the treatment of dementia in patients with moderate-to-severe AD. It has been shown to delay cognitive decline and help reduce disease symptoms.
Further follow-on analyses used trend analyses (testing the dependence of treatment effect on repeated doses).
In the trend analyses, we found that the SIB values did not increase over time for the placebo patients resulting in slopes that were non-significantly different from zero (e.g. 'zero-slopes'). In contrast, the SIB slopes for the 20 ?g bryostatin patients who did not receive baseline memantine were found to be statistically significant (p<.001), giving a slope (95% CI) = 0.38 (0.18, 0.57) SIB points per week in the random intercept model, and a slope (95% CI) = 0.38 (0.18, 0.59) points per week in the random intercept and slope model. These results provided evidence that SIB improvement (drug benefit) increased as the number of successive bryostatin doses increased for the 20 ?g patient cohort.
Confirmatory Phase 2 Clinical Trial
OnMay 4, 2018 , we announced a confirmatory, 100 patient, double-blinded clinical trial for the safe, effective 20 ?g dose protocol for advanced AD patients not taking memantine as background therapy to evaluate improvements in SIB scores with an increased number of patients. We engagedWorldwide Clinical Trials, Inc. ("WCT"), in conjunction with consultants and investigators at leading academic institutions, to collaborate on the design and conduct of the trial, which began inApril 2018 . DuringJuly 2018 , the first patient was enrolled in this study. Pursuant to a new Services Agreement (the "New Services Agreement") with WCT dated as ofMay 4, 2018 , WCT provided services relating to the trial. The total estimated budget for the services, including pass-through costs, drug supply and other statistical analyses, was approximately$7.8 million . Of the total estimated study costs, as ofDecember 31, 2019 , we have incurred approximately$7.6 million in expenses of which WCT has represented a total of approximately$7.2 million and approximately$400,000 of expenses have been incurred to other trial-related vendors and consultants. Of the approximately$7.2 million of expenses incurred with WCT, approximately$7.1 million has been paid with the remaining$0.1 million payable as ofDecember 31, 2019 . In addition, we paid$1.2 million to WCT as prepaid deposits of which we have utilized the entire amount. We believe that we have incurred substantially all of the expenses associated with WCT as ofDecember 31, 2019 , resulting in a savings of approximately$500,000 in total.
On
An average increase in SIB total score of 1.3 points and 2.1 points was observed for the bryostatin-1 and placebo groups, respectively, at Week 13. There were multiple secondary outcome measures in this trial, including the changes from baseline at Weeks 5, 9 and 15 in the SIB total score. No statistically significant difference was observed in the change from baseline in SIB total score between the bryostatin -1 and placebo treatment groups. 47 The confirmatory Phase 2 multicenter trial was designed to assess the safety and efficacy of bryostatin-1 as a treatment for cognitive deficits in patients with moderate to severe AD - defined as a Mini Mental State Exam 2 ("MMSE-2") score of 4-15 - who are not currently taking memantine. Patients were randomized 1:1 to be treated with either bryostatin -1 20?g or placebo, receiving 7 doses over 12 weeks. Patients on memantine, an NMDA receptor antagonist, were excluded unless they had been discontinued from memantine treatment for a 30-day washout period prior to study enrollment. The primary efficacy endpoint was the change in the SIB score between the baseline and week 13. Secondary endpoints included repeated SIB changes from baseline SIB at weeks 5, 9, 13 and 15. OnJanuary 22, 2020 , we announced the completion of an additional analysis in connection with the confirmatory Phase 2 study, which examined moderately severe to severe AD patients treated with byrostatin-1 in the absence of memantine. To adjust for the baseline imbalance observed in the study, a post-hoc analysis was conducted using paired data for individual patients, with each patient as his/her own control. For the pre-specified moderate stratum (i.e., MMSE-2 baseline scores 10-15), the baseline value and the week 13 value were used, resulting in pairs of observations for each patient. The changes from baseline for each patient were calculated and a paired t-test was used to compare the mean change from baseline to week 13 for each patient. A total of 65 patients had both baseline and week 13 values, from which there were 32 patients in the bryostatin-1 treatment group and 33 patients in the placebo group. There was a statistically significant improvement over baseline (4.8 points) in the mean SIB at week 13 for subjects in the bryostatin-1 treatment group (32 subjects), paired t-test p < 0.0076, 2-tailed. In the placebo group (33 subjects), there was also a statistically significant increase from baseline in the mean SIB at week 13, for paired t-test p < 0.0144, consistent with the placebo effect seen in the overall 203 study. Although there was a signal of bryostatin-1's benefit for the moderately severe stratum, the difference between the bryostatin-1 and placebo treatment groups was not statistically significant (p=0.2727). As a further test of the robustness of this Moderate Stratum benefit signal, a pre-specified trend analysis (measuring increase of SIB improvement as a function of successive drug doses) was performed on the repeated SIB measures over time (Weeks 0, 5, 9, and 13). These trend analyses showed a significant positive slope of improvement for the treatment groups in the 203 study that was significantly greater than for the placebo group (p<.01). In connection with the additional analysis, we also announced the receipt of a$2.7 million award from theNational Institutes of Health to support an additional Phase 2 clinical study focused on the moderate stratum for which we saw improvement in the 203 study. We are planning to meet with theFood and Drug Administration ("FDA") to present the totality of the clinical data for bryostatin-1. We are continuing to determine how to proceed with respect to our current development programs for bryostatin-1. Other Development Projects To the extent resources permit, we may pursue development of selected technology platforms with indications related to the treatment of various disorders, including neurodegenerative disorders such as AD, based on our currently licensed technology and/or technologies available from third party licensors or collaborators. For example, we have entered into aCooperative Research and Development Agreement ("CRADA") with theNational Cancer Institute (NCI) for the research and clinical development of Bryostatin-1. Under the CRADA,Neurotrope will collaborate with theNCI's Center for Cancer Research , Pediatric Oncology Branch (POB) to develop a Phase I clinical trial testing the safety and toxicity of Bryostatin-1 in children and young adults with CD22 + leukemia and B-cell lymphoma. In the growing era of highly effective immunotherapies targeting cell-surface antigens (e.g., CAR-T cell therapy), and the recognition that antigen modulation plays a critical role in evasion of response to immunotherapy, the ability for Bryostatin-1 to upregulate CD22 may serve a synergistic role in enhancing the response to a host of CD22 targeted therapies. Under the CRADA, Bryostatin-1 is expected to be tested in the clinic to evaluate its ability to modulate CD22 in patients with relapsed/refractory CD22+ disease, while evaluating safety, toxicity and overall response. Nemours Agreement OnSeptember 5, 2018 , we announced a collaboration with The Nemours / Alfred I. duPontHospital for Children ("Nemours"), a premierU.S. children's hospital, to initiate a clinical trial in children with Fragile X syndrome ("Fragile X"). In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. The total estimated cost of this proposed trial to us is approximately$100,000 . Recent Developments Registered Direct Offering OnJanuary 22, 2020 , we entered into a securities purchase agreement with certain institutional investors and certain pre-existing high net worth individual investors. Pursuant to the terms of the purchase agreement, we issued to the purchasers in a registered offering an aggregate of 18,000 shares of our newly designated Series D Convertible Preferred Stock, par value$0.0001 per share (the "Series D Preferred Stock") (which are convertible into a total of 10,909,100 shares of common stock) and Series H warrants to purchase up to an aggregate of 10,909,100 shares of common stock for an aggregate purchase price of approximately$18 million . The warrants are exercisable at a price of$1.65 per share immediately upon issuance. They feature a five-year term and a right by us, in certain circumstances, to call for the cancellation of up to 50% of the shares of common stock underlying such warrants for consideration equal to$0.0001 per share of underlying common stock in the event the value weighted average price of our common stock exceeds$5.00 for each of 10 consequence trading days in a 30-day calendar period. The Series D Preferred Stock and the Series H warrants are immediately separable and were issued separately. The net proceeds to us from the offering were approximately$16.4 million , after deducting financial advisory fees and estimated offering expenses payable by us. 48 Director Resignations
OnFebruary 21, 2020 ,James Gottlieb resigned as a member of our Board and from all committees thereof, effective immediately. OnFebruary 25, 2020 ,Shana Phares resigned as a member of the Board and from all committees thereof, effective immediately.Mr. Gottlieb andMs. Phares served as the two Board designees of the licensor of the patents and technologies utilized by us in our attempts to develop therapeutic applications for Alzheimer's disease and other cognitive dysfunctions.
Critical Accounting Policies, Estimates, and Judgments
Our financial statements are prepared in accordance with accounting principles that are generally accepted inthe United States . The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to accounting for equity compensation, research and development accruals, and our commitments to strategic alliance partners and the timing of the achievement of collaboration milestones. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical. As required by Section 404, management has conducted an evaluation of the effectiveness of our internal control over financial reporting atDecember 31, 2019 . We identified a number of material weaknesses in our internal control over financial reporting and concluded that, as ofDecember 31, 2019 , we did not maintain effective control over financial reporting based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of theTreadway Commission . We are in the process of remedying all of the identified material weaknesses, and this work will continue during fiscal 2020 and beyond. For a detailed description of our remedial efforts, see Item 9A, "Controls and Procedures."
Recent Accounting Pronouncements
InAugust 2018 , theSEC issued a final rule Release No. 33-10532, "Disclosure Update and Simplification," to amend certain disclosure requirements now seen as redundant, duplicative, overlapping, outdated or superseded in wake of recent accounting pronouncements. The amended rules became effectiveNovember 5, 2018 . The Company analyzed the release in preparation of this Form 10-K, which resulted in the additional disclosure of changes to stockholders' equity during interim periods, as presented within this Form 10-K within the condensed consolidated statements of stockholders' equity. Many of the amended requirements under this Release are not applicable to the Company. InNovember 2018 , the FASB issued ASU-2018-18, Collaborative Arrangements (Topic 808). InNovember 2018 , the FASB issued new guidance to clarify the interaction between the authoritative guidance for collaborative arrangements and revenue from contracts with customers. The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company will assess the impact of the adoption of this guidance on its consolidated financial statements once the Company
begins to generate revenue. 49
Accounting Pronouncements Adopted During the Period:
InFebruary 2016 , the FASB issued new guidance related to how an entity should account for lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for the Company beginning in the first quarter of 2019. 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. The adoption of this standard did not have a material impact to its financial statements based upon the de minimis amount of short-term lease commitments.
Comparison of the years ended
The following table summarizes our results of operations for the years endedDecember 31, 2019 and 2018: Years ended December 31, Dollar 2018 2017 Change % Change Revenue $ - $ - $ - 0 % Operating Expenses: Research and development expenses - Related Party $ -$ 262,012 $ (262,012 ) (100.0 )% Research and development expenses - Other$ 4,540,947 $ 4,623,551 $ (82,604 ) (1.8 )% General and administrative expenses - Related party$ 50,000 $ 50,000 $ - 0 % General and administrative expenses - Other$ 6,740,510 $ 3,997,222 $ 2,743,288 68.6 % Stock based compensation expenses - Related Party$ 220,856 $ 291,577 $ (70,721 ) (24.3 )% Stock based compensation expenses - Other$ 3,961,144 $ 1,925,034 $ 2,036,110 105.8 % Other income, net$ 378,707 $ 127,110 $ 251,597 197.9 % Net loss$ 15,134,750 $ 11,022,286 $ 4,112,464 37.3 % Revenues
We did not generate any revenues for the years ended
Operating Expenses Overview Total operating expenses for the year endedDecember 31, 2019 were$15,513,457 as compared to$11,149,396 for the year endedDecember 31, 2018 , an increase of approximately 39%. The increase in total operating expenses is due primarily to an increase in our general and administrative and stock-based, non-cash, compensation expenses.
Research and Development Expenses
For the year endedDecember 31, 2019 , we incurred$0 of research and development expenses with a related party as compared to$262,012 for the year endedDecember 31, 2018 . The total amounts incurred for the year endedDecember 31, 2018 consisted of patent expenses and lab testing of drug materials. We have discontinued utilizing our licensing partner CRE for patent expense and lab
testing assistance. 50 For the year endedDecember 31, 2019 , we incurred$4,540,947 in research and development expenses with non-related parties as compared to$4,623,551 for the year endedDecember 31, 2018 . These expenses were incurred pursuant to developing the potential AD therapeutic product, specifically expenses relating to the recently concluded confirmatory Phase 2 clinical trial for AD. Of these expenses, for the year endedDecember 31, 2019 ,$3,862,697 was incurred principally relating to our confirmatory clinical trial and related storage of drug product,$622,911 for clinical consulting services,$28,291 of amortization of prepaid licensing fees relating to theStanford andMount Sinai license agreements and$27,048 for development of alternative drug supply withStanford University as compared to, for the year endedDecember 31, 2018 , a credit of$163,400 was reflected related to closing out our AD Phase 2 clinical trial, which was substantially completed in 2017, plus$4,417,361 incurred relating to our recently concluded confirmatory clinical trial, and related storage of drug product,$306,842 for clinical consulting services,$36,194 of amortization of prepaid licensing fees relating to theStanford andMount Sinai license agreements and$26,554 for development of alternative drug supply withStanford University . We expect our research and development expenses to substantially decrease, in the short term, as our confirmatory Phase 2 clinical trial was recently concluded. Other development might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our current development programs for bryostatin-1.
General and Administrative Expenses
We incurred related party general and administrative expenses totaling$50,000 for the years endedDecember 31, 2019 and 2018. The amounts for both years are attributable to director fees paid to certain members of the Board that are affiliates of CRE. We incurred$6,740,510 and$3,997,222 of general and administrative expenses for the years endedDecember 31, 2019 and 2018, respectively, an increase of approximately 69%. Of the amounts for the years endedDecember 31, 2019 , as compared to the comparable 2018 period:$2,172,287 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus$1,657,701 for the 2018 comparable period. The increase for the year endingDecember 31, 2019 is principally based upon contractual bonus payments made to certain officers of$210,000 and the hiring of a new Chief Operating Officer;$701,433 was incurred for ongoing legal expenses versus$536,168 for the 2018 comparable period;$1,771,850 was incurred for outside operations consulting services, versus$481,525 for the 2018 comparable period as we incurred additional cash and non-cash expenses for investment banking consulting;$184,749 was incurred for travel expenses, versus$190,753 for the 2018 comparable period;$1,038,730 was incurred for investor relations services which included adding outside service providers to replace our internal investor relations staff person paid both in cash and non-cash stock compensation, versus$356,075 for the 2018 comparable period;$129,355 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services, versus$141,217 for the 2018 comparable period;$515,634 was incurred for insurance, versus$430,217 for the 2018 comparable period; and$226,472 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other versus$203,566 for the 2018 comparable period.
Stock Based Compensation Expenses
We incurred related party non-cash expenses totaling
We incurred$3,961,144 and$1,925,034 of non-related party non-cash expenses for the years endedDecember 31, 2019 and 2018, respectively. The increase for the comparable period is primarily attributable to newly issued stock options during 2019, which included awards with accelerated vesting terms. Other Income, net
We earned$378,707 of interest income for the year endedDecember 31, 2019 as compared to$127,110 for the year endedDecember 31, 2018 on funds deposited in interest bearing money market accounts which were received from ourDecember 2018 capital raise.
Net loss and loss per share
We incurred losses of$15,134,750 and$11,022,286 for the years endedDecember 31, 2019 and 2018, respectively. The increased loss was primarily attributable to the increase in our general and administrative expenses and stock-based compensation expense, offset by discontinuing our related party research and development activities. Earnings (losses) per common share were ($1.16 ) and ($1.37 ) for the years endedDecember 31, 2019 and 2018, respectively. The decrease in loss per share is primarily attributable to the increase in our net loss offset by an increase in weighted average common shares outstanding. The computation of diluted loss per share for the year endedDecember 31, 2019 excludes 10,482,158 warrants and options to purchase 2,366,519 shares of our common stock as they are anti-dilutive due to our net loss. For the year endedDecember 31, 2018 , the computation excludes 10,236,232 warrants and options to purchase 1,520,246 shares of our common stock, as they are anti-dilutive due to our net loss. 51
Financial Condition, Liquidity and Capital Resources
Cash and Working Capital Since inception, we have incurred negative cash flows from operations. As ofDecember 31, 2019 , we had an accumulated deficit of$88,816,843 and had working capital of$17,397,094 as compared to working capital of$26,500,467 as ofDecember 31, 2018 . The$9,103,373 decrease in working capital was primarily attributable to our net loss, excluding non-cash compensation, consulting expenses and depreciation, of$9,518,002 plus capital expenditures of$5,214 offset by proceeds received from exercise of warrants, by outside investors, to purchase shares of common stock totaling$419,843 . OnJanuary 22, 2020 , we entered into a securities purchase agreement with certain institutional investors and certain pre-existing high net worth individual investors, pursuant to which we sold in a registered offering an aggregate of 18,000 shares of Series D Convertible Preferred Stock (which are convertible into a total of 10,909,100 shares of common stock) and Series H warrants to purchase up to an aggregate of 10,909,100 shares of common stock, for an aggregate purchase price of approximately$18 million .See Footnote 9 to the Financials - Subsequent Events, for transaction details. Sources and Uses of Liquidity
Since inception, we have satisfied our operating cash requirements from the private placement of equity securities sold principally to outside investors. We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we may continue to develop AD and other therapeutic products. We anticipate that this development may include new clinical trials and additional research and development expenditures. We are continuing to determine how to proceed with respect to our current development programs for bryostatin-1. Years endedDecember 31, 2019 2018
Cash used in operating activities
(5,214 ) (3,186 )
Cash provided by financing activities 419,843 20,441,025
Cash used in operating activities was$11,886,809 for the year endedDecember 31, 2019 , compared to$7,696,771 for the year endedDecember 31, 2018 . The$4,190,038 increase primarily resulted from the increased net loss of approximately$4.1 million and decrease in payable of approximately$4.1 million , offset by the increase in non-cash stock-based compensation expenses of approximately$3.4 million offset by a utilization of prepaid expenses and other of approximately$0.6 million , for the year endedDecember 31, 2019 .
Net cash used in investing activities was$5,214 for the year endedDecember 31, 2019 compared to$3,186 for the year endedDecember 31, 2018 . The cash used in investing activities for both periods was for capital expenditures.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was$419,843 for the year endedDecember 31, 2019 compared to$20,436,598 for the year endedDecember 31, 2018 . Net cash provided for the year endedDecember 31, 2019 was the result of funds raised through exercise of warrants by investors in our historical private placements. Net cash provided for the year endedDecember 31, 2018 was the result of funds raised through the issuance of common stock and warrants and the exercise of warrants by investors in our historical private placements. OnJanuary 22, 2020 , we raised, through a registered direct offering, approximately$16.4 million in net proceeds. Pursuant to the terms of a purchase agreement, we issued to the purchasers an aggregate of 18,000 shares of Series D Preferred Stock (which are convertible into a total of 10,909,100 shares of common stock) and Series H warrants to purchase up to an aggregate of 10,909,100 shares of common stock for an aggregate purchase price of approximately$18 million . (See Footnote 9 to the Financials -Subsequent Events, for transaction details.) 52 As ofFebruary 20, 2020 , we had approximately$32.7 million in cash, cash equivalents and marketable investment securities. We expect that our existing capital resources will be sufficient to support our projected operating requirements over at least the next 12 months from the Form 10-K filing date, including the potential continued development of bryostatin, our novel drug targeting the activation of PKC epsilon. Projections beyond this are dependent upon our continuing effort to determine how to proceed with respect to our current development programs for bryostatin-1, which will affect how our financial resources are deployed. Currently, our funds are anticipated to be used to make final payments relating to our recently concluded Phase 2 confirmatory study treating moderate to severe Alzheimer's patients, and to potentially conduct other non-clinical and research activities for our existing and other potential therapeutic products. We currently expect that the balance of the funds will be used for general corporate and working capital purposes, but that is subject to change based on how we determine to proceed with respect to our current development programs for bryostatin-1 and if we pursue any strategic alternatives. We expect to require additional capital in order to initiate, pursue and complete all potential AD clinical trials, including the development of bryostatin for other potential product applications, or in connection with any strategic alternatives that we may pursue. Additional funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition and results of operations.
Off-Balance Sheet Arrangements
We did not engage in any "off-balance sheet arrangements" (as that term is
defined in Item 303(a)(4)(ii) of Regulation S-K) as of
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