Medicinova Inc 10-K for FY2020

Medicinova Inc (MNOV)

10-K 2021-02-19 For: 2020-12-31

Added on April 06, 2026

About this 10-K

Medicinova Inc filed this 10-K on February 19, 2021, covering the fiscal year ended December 31, 2020 (FY2020).

Headline figures

Fiscal year ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $13.85M; compared with a net loss of $12.94M a year earlier

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Delaware		33-0927979
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

4275 Executive Square, Suite 300, La Jolla, CA		92037
(Address of Principal Executive Offices)		(Zip Code)

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	MNOV	The NASDAQ Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

		Page
PART I
Item 1	Business	5
Item 1A	Risk Factors	32
Item 1B	Unresolved Staff Comments	54
Item 2	Properties	54
Item 3	Legal Proceedings	54
Item 4	Mine Safety Disclosures	54

PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	55
Item 6	Selected Financial Data	55
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	56
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	60
Item 8	Financial Statements and Supplementary Data	60
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	80
Item 9A	Controls and Procedures	80
Item 9B	Other Information	82

PART III
Item 10	Directors, Executive Officers and Corporate Governance	83
Item 11	Executive Compensation	83
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	83
Item 13	Certain Relationships and Related Transactions, and Director Independence	83
Item 14	Principal Accountant Fees and Services	84

PART IV
Item 15	Exhibits and Financial Statement Schedules	85

Signatures		88

	•	Inability to raise additional capital if needed;
	•	Inability to generate revenues from product sales to continue business operations;
	•	Inability to develop and commercialize our product candidates;
	•	Failure or delay in completing clinical trials or obtaining FDA or foreign regulatory approval for our product candidates in a timely manner;
	•	Unsuccessful clinical trials stemming from clinical trial designs, failure to enroll a sufficient number of patients, undesirable side effects and other safety concerns;
	•	Inability to demonstrate sufficient efficacy of product candidates;
	•	Reliance on the success of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates;
	•	Delays in commencement or completion of clinical trials or suspension or termination of clinical trials;
	•	Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;
	•	Competitors may develop products rendering our product candidates obsolete and noncompetitive;
	•	The widespread outbreak of an illness or any other communicable disease, such as COVID-19, or any other public health crisis, could adversely affect our business, results of operations and financial condition;
	•	Inability to successfully attract partners and enter into collaborations on acceptable terms;
	•	Dependence on third parties to conduct clinical trials and to manufacture product candidates;
	•	Dependence on third parties to market and distribute products;
	•	Our product candidates, if approved, may not gain market acceptance or obtain adequate coverage for third party reimbursement;
	•	Disputes or other developments concerning our intellectual property rights;

	•	Actual and anticipated fluctuations in our quarterly or annual operating results;
	•	Price and volume fluctuations in the overall stock markets;
	•	Litigation or public concern about the safety of our potential products;
	•	International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange;
	•	High quality material for our products may become difficult to obtain or expensive;
	•	Strict government regulations on our business;
	•	Regulations governing the production or marketing of our product candidates;
	•	Loss of, or inability to attract, key personnel; and
	•	Economic, political, foreign exchange and other risks associated with international operations.

	Year Ended December 31,
	2020		2019
External development expense:
MN-166	$	4,250	$	3,193
BC-PIV vaccine for COVID-19		240		—
MN-001		197		149
MN-221		2		22
MN-029		3		3
Total external development expense		4,692		3,367
R&D personnel expense		2,149		2,118
R&D facility expense		47		47
Patent expense		357		345
Other R&D expense		240		202
Total research, development and patent expense	$	7,485	$	6,079

	2020			2019
Net cash (used in) provided by:
Operating activities		(10,826	)		(9,125	)
Investing activities		(36	)		(11	)
Financing activities		7,106			10,616
Total	$	(3,756	)	$	1,480

	December 31,
	2020			2019
Assets:
Current assets:
Cash and cash equivalents	$	60,036,763		$	63,792,657
Prepaid expense and other current assets		680,171			511,916
Total current assets		60,716,934			64,304,573
Goodwill		9,600,240			9,600,240
In-process research and development		4,800,000			4,800,000
Property and equipment, net		55,700			40,550
Other long-term assets		246,236			459,811
Total assets	$	75,419,110		$	79,205,174

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	616,629		$	451,326
Accrued liabilities and other current liabilities		1,577,321			1,776,912
Total current liabilities		2,193,950			2,228,238
Long-term deferred revenue		1,694,163			1,694,163
Deferred tax liability		201,792			201,792
Other long-term liabilities		2,705			186,358
Total liabilities		4,092,610			4,310,551
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at December 31, 2020 and December 31, 2019; 45,024,560 and 43,908,065 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively		45,025			43,908
Additional paid-in capital		454,296,536			444,016,341
Accumulated other comprehensive loss		(88,219	)		(92,681	)
Accumulated deficit		(382,926,842	)		(369,072,945	)
Total stockholders’ equity		71,326,500			74,894,623
Total liabilities and stockholders’ equity	$	75,419,110		$	79,205,174

	Years ended December 31,
	2020			2019
Operating expenses:
Research, development and patents	$	7,484,835		$	6,079,042
General and administrative		6,693,488			7,952,035
Total operating expenses		14,178,323			14,031,077
Operating loss		(14,178,323	)		(14,031,077	)
Interest income		361,182			1,148,242
Other expense, net		(38,404	)		(46,163	)
Loss before income taxes		(13,855,545	)		(12,928,998	)
Income tax benefit (expense)		1,648			(12,660	)
Net loss applicable to common stockholders	$	(13,853,897	)	$	(12,941,658	)
Basic and diluted net loss per common share	$	(0.31	)	$	(0.30	)
Shares used to compute basic and diluted net loss per common share		44,413,441			43,158,830
Net loss applicable to common stockholders	$	(13,853,897	)	$	(12,941,658	)
Other comprehensive income, net of tax:
Foreign currency translation adjustments		4,462			469
Comprehensive loss	$	(13,849,435	)	$	(12,941,189	)

	Common stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		income (loss)			deficit			equity
Balance at December 31, 2018		42,081,306	$	42,081	$	429,289,968	$	(93,150	)	$	(356,131,287	)	$	73,107,612
Share-based compensation		—		—		4,112,649		—			—			4,112,649
Issuance of shares under an employee stock purchase plan (ESPP)		3,942		4		27,316		—			—			27,320
Issuance of common stock under at-the-market equity distribution and sales agreements, net of offering costs		804,963		805		6,468,705		—			—			6,469,510
Issuance of common stock for option exercises		1,017,854		1,018		4,117,703		—			—			4,118,721
Net loss		—		—		—		—			(12,941,658	)		(12,941,658	)
Foreign currency translation adjustments		—		—		—		469			—			469
Balance at December 31, 2019		43,908,065		43,908		444,016,341		(92,681	)		(369,072,945	)		74,894,623
Share-based compensation		—		—		3,175,553		—			—			3,175,553
Issuance of shares under an employee stock purchase plan (ESPP)		3,834		4		11,704		—			—			11,708
Issuance of common stock under at-the-market equity distribution and sales agreements, net of offering costs		824,798		825		6,187,254		—			—			6,188,079
Issuance of common stock for option exercises		287,863		288		905,684		—			—			905,972
Net loss		—		—		—		—			(13,853,897	)		(13,853,897	)
Foreign currency translation adjustments		—		—		—		4,462			—			4,462
Balance at December 31, 2020		45,024,560	$	45,025	$	454,296,536	$	(88,219	)	$	(382,926,842	)	$	71,326,500

Level 1:		Observable inputs such as quoted prices in active markets;

Level 2:		Inputs are quoted prices for similar items in active markets or inputs are quoted prices for identical or similar items in markets that are not active near the measurement date; and

Level 3:		Unobservable inputs due to little or no market data, which require the reporting entity to develop its own assumptions

	Year Ended December 31,
	2020			2019

Cash paid for operating lease liabilities	$	248,648		$	229,450
Operating lease costs		240,467			226,766
Right-of-use assets obtained in exchange for new operating lease obligations		—			534,605

Maturities of operating lease liabilities as of December 31, 2020 were as follows:
2021		192,563
Less imputed interest		(7,809	)
Total lease liabilities	$	184,754

Current operating lease liabilities	$	184,754		$	216,768
Long-term operating lease liabilities		—			182,579
Total operating lease liabilities	$	184,754		$	399,347

Weighted-average remaining lease term		0.86			1.81
Discount rate		8.8	%		8.8	%

	Number of Option Shares			Weighted Average Exercise Price
Outstanding at December 31, 2018		6,609,647		$	4.61
Granted		1,337,000		$	9.67
Exercised		(1,017,854	)	$	4.05
Cancelled		(126,700	)	$	8.84
Outstanding at December 31, 2019		6,802,093		$	5.61
Granted		1,382,000		$	6.67
Exercised		(287,863	)	$	3.15
Cancelled		(494,843	)	$	8.73
Outstanding at December 31, 2020		7,401,387		$	5.70
Exercisable at December 31, 2020		6,120,887		$	5.48

	Number of Option Shares			Weighted Average Grant-Date Fair Value
Non-vested at December 31, 2019		1,202,000		$	2.65
Granted		1,382,000		$	3.70
Vested		(965,500	)	$	5.24
Forfeitures		(338,000	)	$	5.17
Non-vested at December 31, 2020		1,280,500		$	3.74

Common Stock reserved for issuance under the ESPP			214,102
Common stock reserved for issuance upon exercise of options outstanding (under the 2004 Plan and 2013 Plan)			7,401,387
Common stock reserved for future equity awards (under the 2013 Plan)			2,897,135
			10,512,624

	Year Ended December 31,
Current:	2020		2019
Federal	$	—	$	—
State		—		—
Foreign		1,648		(12,660	)
Total current income tax benefit (expense)		1,648		(12,660	)
Deferred:
Federal		—		—
State		—		—
Foreign		—		—
Total deferred income tax benefit (expense)		—		—
Total income tax benefit (expense)	$	1,648	$	(12,660	)

	Year Ended December 31,
Deferred tax assets:	2020			2019
Net operating loss carryforwards	$	67,403,329		$	64,600,662
Capitalized licenses		98,411			175,831
Research tax credits		8,980,935			8,690,484
Stock options		2,902,963			3,119,991
Other, net		770,293			601,210
Right-of-use asset		39,615			74,380
Total deferred tax assets		80,195,546			77,262,558
Deferred tax liabilities
Right-of-use liability		(35,726	)		(68,202	)
In process R&D		(1,343,213	)		(1,343,213	)
Total deferred tax liabilities		(1,378,939	)		(1,411,415	)
Net deferred tax assets		78,816,607			75,851,143
Valuation allowance		(79,018,206	)		(76,052,742	)
Net deferred tax liability	$	(201,599	)	$	(201,599	)

		Page
Report of Independent Registered Public Accounting Firm		61
Consolidated Balance Sheets		63
Consolidated Statements of Operations and Comprehensive Loss		64
Consolidated Statements of Stockholders’ Equity		65
Consolidated Statements of Cash Flows		66
Notes to Consolidated Financial Statements		67

Exhibit Number		Description

3.1		Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33185) filed August 9, 2012).

3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 of the Registrant’s Registration Statement on Form S-1 (File No. 333-119433) filed October 1, 2004).

4.1		Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Annual Report on Form 10-K (File No. 001-33185) filed February 15, 2007).

4.2		Amended and Restated Registration Rights Agreement, dated September 2, 2004, by and among the Registrant, its founders and the investors named therein (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1 (File No. 333-119433) filed October 1, 2004).

4.3		Description of Capital Stock

10.1*		Amended and Restated 2004 Stock Incentive Plan of the Registrant (incorporated by reference to Exhibit 10.2 of the Registrant’s Annual Report on Form 10-K (File No. 001-33185) filed March 29, 2012).

10.2*		Form of Indemnity Agreement between the Registrant and its officers and directors (incorporated by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K (File No. 001-33185) filed March 28, 2013).

10.3†		License Agreement, dated March 14, 2002, between the Registrant and Kyorin Pharmaceutical Co., Ltd. (incorporated by reference to Exhibit 10.4 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004).

10.4†		License Agreement, dated June 19, 2002, between the Registrant and Angiogene Pharmaceuticals, Ltd. (incorporated by reference to Exhibit 10.5 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004).

10.5†		Exclusive License Agreement, dated February 25, 2004, between the Registrant and Kissei Pharmaceutical Co., Ltd. (incorporated by reference to Exhibit 10.7 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004).

Exhibit Number		Description


10.6†		License Agreement, dated October 22, 2004, between the Registrant and Kyorin Pharmaceutical Co., Ltd., (incorporated by reference to Exhibit 10.18 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004).


10.7†		License Agreement, dated October 31, 2006, by and between the Registrant and Meiji Seika Kaisha, Ltd. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 000-51133) filed November 2, 2006).

10.8†		License Agreement, dated October 31, 2006, by and between the Registrant and Meiji Seika Kaisha, Ltd. (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K (File No. 000-51133) filed November 2, 2006).

10.9*		Executive Employment Agreement, dated April 1, 2007, between the Registrant and Yuichi Iwaki, M.D., Ph.D. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed April 4, 2007).

10.10*		2007 Employee Stock Purchase Plan of the Registrant (incorporated by reference to Appendix A of the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-33185) filed March 13, 2007).

10.11†		Development and Supply Agreement, dated as of March 26, 2009, between the Registrant and Hospira Worldwide, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed March 30, 2009).

10.12†		Assignment Agreement, dated December 19, 2005, between Genzyme Corporation and Avigen, Inc. (incorporated by reference to Exhibit 10.58 of Avigen, Inc.’s Annual Report on Form 10-K (File No. 000-51133) filed February 16, 2006).

10.13†		Asset Purchase Agreement, dated December 17, 2008, between Baxter Healthcare Corporation, Baxter International Inc., and Baxter Healthcare S.A. and Avigen, Inc. (incorporated by reference to Exhibit 2.2 of Avigen, Inc.’s Annual Report on Form 10-K (File No. 001-33185) filed March 31, 2009).

10.14*		Form of Amendment to Employment Agreement, dated December 31, 2011, between the Registrant and Yuichi Iwaki, M.D., Ph.D. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed January 4, 2011).

10.15		Sublease, by and between MediciNova, Inc. and Cardinal Health 127 Inc., dated August 31, 2017 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 001-33185) filed with the SEC on September 7, 2017).

10.16*		2013 Equity Incentive Plan of the Registrant (incorporated by reference to Exhibit 10.23 of the Registrant’s Annual Report on Form 10-K (File No. 001-33185) filed March 27, 2014).

Exhibit Number	Description


10.17*	Amended and Restated 2013 Equity Incentive Plan of the Registrant.* (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33185) filed July 26, 2017).

10.18*	Form of Notice of Stock Option Grant and Stock Option Agreement for awards pursuant to the 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33185) filed November 7, 2013).

10.19*	Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Dr. Yuichi Iwaki (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33185) filed August 13, 2014).


10.20*	Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Dr. Kazuko Matsuda (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33185) filed August 13, 2014).

10.21*	Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Geoffrey O’Brien (incorporated by reference to Exhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33185) filed August 13, 2014).

10.22	At-the-Market Issuance Sales Agreement, dated May 22, 2015, by and between MediciNova, Inc. and MLV & Co. LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed May 22, 2015).

10.23	Services Agreement, effective March 31, 2016, by and between MediciNova, Inc. and Signature Analytics San Diego, LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed March 31, 2016).

10.24		Amendment No. 1 to At-the Market Issuance Sales Agreement, dated September 16, 2016, by and among MediciNova, Inc., MLV & Co. LLC and FBR Capital Markets & Co. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed September 16, 2016).

10.25	At Market Issuance Sales Agreement, dated August 23, 2019, by and between MediciNova, Inc. and B. Riley FBR, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed August 23, 2019). Inc.

23.1	Consent of Independent Registered Public Accounting Firm.

24.1	Powers of Attorney (see signature page).

31.1	Certification of the Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Act of 1933.

31.2	Certification of the Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Act of 1933.

32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following financial statements from MediciNova, Inc. on Form 10-K as of and for the year ended December 31, 2020 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Loss; (iii) Consolidated Statements of Stockholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) the notes to the consolidated financial statements.

	MEDICINOVA, INC.
	A Delaware Corporation

Date: February 18, 2021	By:	/s/ Yuichi Iwaki
		Yuichi Iwaki, M.D., Ph.D.
		President & Chief Executive Officer

Signature	Title	Date

/s/ Yuichi Iwaki Yuichi Iwaki, M.D., Ph.D.	Director, President and Chief Executive Officer (Principal executive officer)	February 18, 2021

/s/ Edward Stepanow Edward Stepanow	Chief Financial Officer (Principal financial and accounting officer)	February 18, 2021

/s/ Jeff Himawan Jeff Himawan, Ph.D.	Chairman of the Board of Directors	February 18, 2021


/s/ Carolyn Beaver Carolyn Beaver	Director	February 18, 2021

/s/ Kazuko Matsuda Kazuko Matsuda	Director	February 18, 2021
/s/ Hideki Nagao Hideki Nagao	Director	February 18, 2021