Annual report pursuant to Section 13 and 15(d)

Cash and Cash Equivalents and Liquidity

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Cash and Cash Equivalents and Liquidity
12 Months Ended
Jul. 31, 2017
Cash and Cash Equivalents [Abstract]  
Cash and Cash Equivalents and Liquidity

Note 3—Cash and Cash Equivalents and Liquidity

 

The Company considers all liquid investments with maturities of three months or less when purchased to be cash equivalents. As of July 31, 2017 and 2016, cash and cash equivalents were principally comprised of cash in savings and checking accounts.

 

The Company does not believe it has sufficient cash on-hand to support its operations for the next 12 months, and the Company does not generate any cash from its operations and its does not currently have any firm commitments for future capital. Consequently, the Company will need significant additional capital to continue operating its business and fund its planned operations, including research and development, clinical trials and, if regulatory approval is obtained, commercialization of its potential product candidates. In addition, the Company will require additional financing if it desires to in-license or acquire new assets, research and develop new compounds or new technologies and pursue related patent protection, or obtain any other intellectual property rights or other assets.

 

Historically, the Company has raised the majority of the funding for its business through offerings of its common stock and warrants to purchase its common stock. Although the Company is exploring other ways of funding its operations that involve less dilution to its existing stockholders’, including, among others, technology licensing or other collaboration arrangements, debt financings or grants, the Company has not successfully established or raised any funds through any of these types of arrangements, and it may need to continue to seek funding for its operations through additional dilutive public or private equity financings. If the Company issues equity or convertible debt securities to raise additional funds, its existing stockholders would experience further dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of its existing stockholders. If the Company incurs debt, its fixed payment obligations, liabilities and leverage relative to our equity capitalization would increase, which could increase the cost of future capital. Further, the terms of any debt securities the Company issues or borrowings it incurs, if available, could impose significant restrictions on its operations, such as limitations on its ability to incur additional debt or issue additional equity or other operating restrictions that could adversely affect its ability to conduct its business, and any such debt could be secured by any or all of the Company’s assets pledged as collateral. Additionally, the Company may incur substantial costs in pursuing future capital, including investment banking, legal and accounting fees, printing and distribution expenses and other costs.

 

Moreover, equity or debt financings or any other source of capital may not be available when needed or at all, or, if available, may not be available on commercially reasonable terms. Weak economic and capital market conditions generally or uncertain conditions in the Company’s industry could increase the challenges it faces in raising capital for its operations. In recent periods, the capital and financial markets for early and development-stage biotechnology and life science company stocks have been volatile and uncertain. If the Company cannot raise the funds that it needs, it could be forced to delay or scale down some or all of its development activities or cease all operations, and its stockholders could lose all of their investment in the Company.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on the going concern basis of accounting, which assumes the Company will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has sustained substantial losses of $21.4 million and $26.9 million for the years ended July 31, 2017 and 2016, respectively, and cumulative losses since inception of $94.9 million. In addition, as of July 31, 2017, the Company had cash and cash equivalents of approximately $11.4 million and, as of that date, the Company estimated its cash requirements for the following 12 months to be approximately $21.0 million. Based on the Company’s cash levels (taking into account the expected aggregate net proceeds from the Company’s recent October 2017 equity offerings, (see Note 13) and the current rate of cash consumption and expectations regarding future expenses, as well as its lack of any revenue-generating activities or firm commitments for future capital, the Company estimates it will need additional capital by the third calendar quarter of 2018 and its prospects for obtaining that capital are uncertain. The Company may seek to pursue debt or equity financings or alternative sources of funding to raise additional capital, but no such capital may be available when needed, on acceptable terms or at all. As a result of the Company’s historical losses and financial condition, there is substantial doubt about its ability to continue as a going concern.