Quarterly report pursuant to Section 13 or 15(d)

7. STOCKHOLDERS' EQUITY

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7. STOCKHOLDERS' EQUITY
9 Months Ended
Sep. 30, 2019
STOCKHOLDERS' EQUITY  
7. STOCKHOLDERS' EQUITY

Preferred Stock

The Company is currently authorized to issue up to 10 million shares of preferred stock, $0.0001, par value per share. There were no shares of preferred stock outstanding at September 30, 2019 and December 31, 2018.

 

Common Stock

As of September 30, 2019 and December 31, 2018, the Company was authorized to issue 150,000,000 and 75,000,000 shares, respectively, of its common stock, $0.0001 par value per share, and 59,318,355 and 46,353,068 shares of common stock were outstanding as of September 30, 2019 and December 31, 2018, respectively. On August 23, 2019, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of shares of common stock that the Company is authorized to issue from 75,000,000 to 150,000,000. After giving effect to shares reserved for the issuance of warrants and stock options, as of September 30, 2019, there were 82,903,946 shares of common stock available for issuance. On May 21, 2019, the Company issued 12,937,500 shares of its common stock in an underwritten public offering for gross proceeds of approximately $51.8 million. After deducting underwriters’ commissions and other expenses associated with the offering, the Company received net proceeds of $48.4 million.

 

Warrants

On the Perceptive Closing Date, the Company issued the Perceptive Warrant, whereby Perceptive may purchase an aggregate of 1,360,000 shares of common stock at an exercise price of $3.28 per share. The Perceptive Warrant became exercisable on the Perceptive Closing Date, and was valued at $2.7 million. The Perceptive Warrant was valued using the Black-Scholes option-pricing model assuming an expected term of 10 years, a volatility of 61.2%, a dividend yield of 0% and a risk-free interest rate of 2.65%.

 

On May 3, 2019, the Company issued the Perceptive Tranche III Warrant, whereby Perceptive may purchase an aggregate of 250,000 shares of common stock at an exercise price of $4.64 per share. The Perceptive Tranche III was exercisable on the date of issuance and was valued at $0.9 million. The Perceptive Tranche III Warrant was valued using the Black-Scholes option-pricing model assuming an expected term of 10 years, a volatility of 62.3%, a dividend yield of 0% and a risk-free interest rate of 2.54%. At September 30, 2019, the Company had outstanding warrants to purchase an aggregate of 2,138,160 shares of common stock, with a weighted average exercise price of $3.81 per share and expiration dates ranging between June 2022 and May 2029.

 

Equity Incentive Plans

The fair value of stock options granted under the Company’s 2007 Employee Stock Option Plan (the “2007 Plan”) and the ADMA Biologics, Inc. 2014 Omnibus Incentive Compensation Plan, as amended and restated (the “2014 Plan”), was determined on the date of grant using the Black-Scholes option valuation model. The Black-Scholes model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of certain subjective assumptions including the expected stock price volatility. The stock options granted to employees and directors have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. The following assumptions were used to determine the fair value of options granted during the nine months ended September 30, 2019 and 2018:

 

    Nine Months Ended September 30,
    2019   2018
         
Expected term     5.8 - 6.3 years       5.8-6.3 years  
Volatility     54.2-62.9%       54-57%  
Dividend yield     0.0       0.0  
Risk-free interest rate     1.36-2.92%       2.40-2.97%  

 

During the nine months ended September 30, 2019 and 2018, the Company granted options to purchase an aggregate of 1,493,100 and 1,064,700 shares of common stock, respectively, to its directors, employees and certain third party service providers.

 

The weighted average remaining contractual life of stock options outstanding and expected to vest at September 30, 2019 is 7.4 years. The weighted average remaining contractual life of stock options exercisable at September 30, 2019 is 6.2 years.

 

A summary of the Company’s option activity under the 2007 Plan and 2014 Plan and related information is as follows:

 

    Shares   Weighted Average Exercise Price
Balance at December 31, 2018     4,342,231     $ 5.16  
Forfeited     (152,903 )   $ 3.94  
Expired     (12,985 )   $ 4.88  
Granted     1,493,100     $ 3.49  
Exercised     (29,904 )   $ 2.84  
Balance at September 30, 2019     5,639,539     $ 4.76  
                 
Options exercisable     3,036,543     $ 5.67  

 

During the nine months ended September 30, 2019, 29,904 options were exercised, and the Company received cash proceeds of $0.1 million.

 

Stock-based compensation expense for the three and nine months ended September 30, 2019 and 2018 is as follows:

 

    Three Months Ended September 30,   Nine Months Ended September 30,
    2019   2018   2019   2018
                 
Research and development   $ 95,757     $ 84,588     $ 271,823     $ 246,231  
Plasma centers     13,333       7,836       38,086       22,682  
Selling, general and administrative     491,710       444,651       1,559,530       1,245,702  
Cost of product revenue     49,870       40,506       145,230       113,141  
Total stock-based compensation expense   $ 650,670     $ 577,581     $ 2,014,669     $ 1,627,756  

 

As of September 30, 2019, the Company had $5.0 million of unrecognized compensation expense related to options granted under the Company’s equity incentive plans, which is expected to be recognized over a weighted-average period of 2.6 years.