0001558370-22-013086 | 10-Q | XBRL Viewer

Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

3. Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the accompanying unaudited interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2022 and its results of operations for the three and nine months ended June 30, 2022 and 2021, cash flows for the nine months ended June 30, 2022 and 2021, and stockholders’ equity (deficit) for the three and nine months ended June 30, 2022 and 2021. Operating results for the nine months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year ending September 30, 2022. The unaudited interim consolidated financial statements presented herein do not contain all of the required disclosures under GAAP for annual consolidated financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended September 30, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 23, 2021.

Use of estimates

The preparation of the unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the unaudited interim consolidated financial statements, including as a result of the ongoing COVID-19 pandemic, actual results may materially vary from these estimates. Estimates and assumptions are periodically reviewed, and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary.

Fair value option

As permitted under ASC 825, Financial Instruments (“ASC 825") the Company has elected the fair value option to account for its convertible promissory note (Note 8). In accordance with ASC 825, the Company records the convertible promissory note at fair value with changes in fair value recorded in the consolidated statements of operations.

Net loss per share

Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

For purposes of calculating diluted loss per common share, the denominator includes both the weighted average common shares outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. Potentially dilutive securities include warrants, performance-based stock options and units, stock options and non-vested restricted stock unit (“RSU”) awards using the treasury stock method. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares due to the Company’s loss.

The following table sets forth the computation of basic loss per share and diluted loss per share:


		Three months ended June 30,			Nine months ended June 30,
	2022		2021		2022		2021
Net loss attributable to common stockholders	$	(17,539,961)	$	(12,196,547)	$	(51,707,239)	$	(39,758,982)
Common stock shares outstanding (weighted average)		220,497,826		168,420,675		209,108,090		146,860,652
Basic and diluted net loss per share	$	(0.08)	$	(0.07)	$	(0.25)	$	(0.27)

The following potentially dilutive securities (in common stock equivalents) have been excluded from the computation of diluted weighted-average shares outstanding as of June 30, 2022, and 2021, as they would be antidilutive:


	As of June 30,
	2022	2021
Performance-based stock units	2,470	2,470
Performance-based stock options	700,000	—
Stock options	20,099,581	12,010,781
Common stock warrants	6,812,794	5,129,460

Recently issued accounting pronouncements

In January 2020, FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), which, generally, provides guidance for investments in entities accounted for under the equity method of accounting. ASU 2020-01 is effective for public companies with fiscal years beginning after December 15, 2020 and for all other entities the amendments are effective for fiscal years beginning after December 15, 2021, including interim periods therein. The Company adopted ASU 2020-01 on October 1, 2021 and the adoption of this standard did not have a material impact on the Company’s consolidated financial condition, results of operations, cash flows and financial statement disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) — Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the new standard, but adoption is not expected to have a material impact on its consolidated financial condition, results of operations, cash flows and financial statement disclosures.

Stock-Based Compensation

9 Months Ended

Jun. 30, 2022

Stock-Based Compensation

Stock-Based Compensation

11. Stock-Based Compensation

2011 Equity Incentive Plan

The Company’s 2011 Equity Compensation Plan (the “2011 Plan”) provided for the Company to sell or issue restricted common stock, RSUs, performance-based awards (“PSUs”), cash-based awards or to grant stock options for the purchase of common stock to officers, employees, consultants and directors of the Company. The 2011 Plan was administered by the board of directors or, at the discretion of the board of directors, by a committee of the board. As of June 30, 2022, PSUs representing 2,470 shares of the Company’s common stock were outstanding under the 2011 Plan. Effective with the December 2015 adoption of the 2015 Equity Incentive Plan, (the “2015 Plan”), no future awards under the 2011 Plan will be granted.

2015 Equity Incentive Plan

In December 2015, the Company adopted the 2015 Plan. The 2015 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 2015 Plan is 34,565,837. As of June 30, 2022, 13,571,604 shares remained available for grant under the 2015 Plan.

Stock options and RSUs are granted under the Company’s 2015 Plan and generally vest over a period of one to four years from the date of grant and, in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and share of RSU over its vesting period.

The Company recorded stock-based compensation expense in the following expense categories of its statements of operations for the three and nine months ended June 30, 2022 and 2021:


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Research and development	$	205,410	$	239,231	$	2,278,067	$	707,442
General and administrative		1,162,464		959,153		4,056,650		2,775,330
	$	1,367,874	$	1,198,384	$	6,334,717	$	3,482,772

Stock options

As of June 30, 2022 options to purchase common stock of the Company outstanding under the 2015 Plan were as follows:


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	16,110,015	$	1.46
Granted	4,014,566		1.60
Exercised	(25,000)		0.71		$	38,960
Balance at June 30, 2022	20,099,581		1.49	8.5	$	2,768,083
Exercisable	6,748,589		1.35	8.0	$	1,275,638
Vested and expected to vest at June 30, 2022	20,099,581	$	1.49	8.5	$	2,768,083

The aggregate intrinsic value represents the total amount by which the fair value of the common stock subject to options exceeds the exercise price of the related options.

The weighted average grant date fair value of the options awarded to employees for the nine months ended June 30, 2022 and 2021 was $1.23 and $0.57 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	Nine months ended June 30,
	2022		2021
Risk-free interest rate	1.77	%	0.40	%
Expected term (years)	6.0		6.0
Expected volatility	95.2	%	95.4	%
Expected dividend yield	—		—

As of June 30, 2022, there was $12,368,234 of unrecognized compensation expense that is expected to be recognized over a weighted-average period of 2.85 years.

Performance-based stock options

The Company granted certain officers of the Company option awards whose vesting is contingent upon meeting company-wide performance goals. The performance stock options were granted “at-the-money” and have a term of 10 years.

The fair value of each option grant under the performance share option plan was estimated on the date of grant using the same option valuation model used for non-statutory options above. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest. A summary of the activity under the performance share option plan as of June 30, 2022 and changes during the nine months then ended are presented below.


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	1,000,000	$	2.42
Granted	1,900,000		1.44
Forfeited or expired	(2,200,000)		1.89
Balance at June 30, 2022	700,000	$	1.44	9.48	$	—
Exercisable	700,000	$	1.44	9.48	$	—
Vested and expected to vest at June 30, 2022	700,000	$	1.44	9.48	$	—

The weighted average grant date fair value of the performance stock options awarded during the nine months ended June 30, 2022 was $1.03 per option. During the nine months ended June 30, 2022, an aggregate of 700,000 performance-based stock options vested as a result of achieving one of the set performance conditions related to the Company’s BLA submission that resulted in the Company recognizing stock-based compensation expense of $718,950 during the nine months ended June 30, 2022. During the nine months ended June 30, 2022, an aggregate of 2,200,000 performance-based stock options were forfeited because certain performance conditions were not achieved. As of June 30, 2022, there were no remaining performance conditions. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	Nine months ended June 30, 2022
Risk-free interest rate	1.26	%
Expected term (years)	5.22
Expected volatility	91.46	%
Expected dividend yield	—

There were no performance-based stock options granted during the nine months ended June 30, 2021.

Performance-based stock units

The Company has issued PSUs, which generally have a ten-year term from the date of grant. Upon exercise, the PSU holder receives common stock or cash at the Company’s discretion.

The following table summarizes the activity related to PSUs during the nine months ended June 30, 2022:


				Weighted
				Average
	Number	Base		Remaining
	of	Price		Contractual	Aggregate
	PSUs	Per PSU		Term (Years)	Intrinsic Value
Balance at October 1, 2021	2,470	$	49.97
Forfeitures	—		—
Balance at June 30, 2022	2,470		49.97	3.0	$	—
Vested and exercisable at June 30, 2022	2,470		49.97	3.0	$	—
Vested and expected to vest at June 30, 2022	2,470	$	49.97	3.0	$	—

Restricted stock

In connection with the consulting agreements entered into by the Company and four former principals of MTTR, in March 2020, the Company issued an aggregate of 7,244,739 shares of its common stock. Refer to Note 12 for further details on the consulting agreements and terminated strategic partnership agreement. These shares may not be sold until the earlier of (i) six months following FDA approval of ONS-5010, (ii) the date the Company publicly announces not to pursue development of ONS-5010, (iii) a change in control or (iv) January 2025. In addition, the Company has the right to repurchase the shares for $0.01 per share if the consultant terminates his agreement other than for good reason or the Company terminates the agreement for cause. The repurchase right lapses, in tiered percentages, based upon the completion of enrollment of the Company’s NORSE TWO clinical trial of ONS-5010 by certain dates. The repurchase right may also lapse as to 50% or 100% of the shares if the Company enters into certain agreements pertaining to ONS-5010 that meet certain value thresholds or the Company’s share price meets certain predefined targets. The repurchase right also lapses as to 100% of the shares upon the earliest to occur of (i) filing of the BLA for ONS-5010, (ii) termination of the agreement by the consultant for good reason or by the Company other than for cause, (iii) in the event of disability, or (iv) upon a change in control.

The grant date fair value of the restricted shares was $0.54 per share and equal to the closing stock price of the Company’s common stock at the time of grant. Compensation expense is recognized over the shorter of the explicit service period or derived service period, which was determined to be 4.8 years at the time of grant. The compensation expense was accelerated during the nine months ended June 30, 2022 as a result of the Company achieving certain performance conditions related to the Company’s BLA submission that make it probable that the repurchase rights will lapse. During the three months ended 2021, the Company recognized compensation expense related to the restricted stock of $151,764. During the nine months ended June 30, 2022 and 2021, the Company recognized compensation expense related to the restricted stock of $2,003,946 and $455,293, respectively. As of June 30, 2022, there was no unrecognized compensation expense related to the restricted stock.

Common Stock and Stockholders' Equity (Deficit) - Common Stock (Details) - USD ($)		1 Months Ended	9 Months Ended
	Mar. 26, 2021	Nov. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Convertible Preferred Stock And Stockholders' Equity (Deficit) [Line Items]
Shares of common stock issuable upon exercise of warrants			6,812,794
Proceeds from issuance of stock			$ 60,675,552	$ 42,514,237
Warrants exercise term		5 years
Underwritten Public Offering
Convertible Preferred Stock And Stockholders' Equity (Deficit) [Line Items]
Number of share issued		46,000,000
Shares of common stock issuable upon exercise of warrants		2,100,000
Shares issued price (in dollars per share)		$ 1.25
Proceeds from issuance of stock		$ 53,968,057
Exercise price per share		$ 1.5625
GMS Ventures & Investments
Convertible Preferred Stock And Stockholders' Equity (Deficit) [Line Items]
Number of share issued		16,000,000
ATM Offering
Convertible Preferred Stock And Stockholders' Equity (Deficit) [Line Items]
Number of share issued			3,440,416
Proceeds from issuance of stock			$ 6,929,743
Aggregate offering price	$ 40,000,000
Amount reclassified on additional paid in capital	$ 197,654
Deferred costs			127,763
Percentage of commission on sale of common stock	3.00%
Payment of fees to sales agent			$ 222,249

Debt (Tables)

9 Months Ended

Jun. 30, 2022

Debt

Schedule of debt


	June 30, 2022		September 30, 2021
Unsecured promissory note	$	10,847,966		10,938,145
Paycheck Protection Program term loan		—		904,200
Total debt		10,847,966		11,842,345
Less: unamortized loan costs		(388,594)		(52,291)
Total debt, net of unamortized loan costs		10,459,372		11,790,054
Less: current portion		(10,459,372)		(904,200)
Long-term debt	$	—	$	10,885,854

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Basic and diluted earnings per share:
Net loss attributable to common stockholders	$ (17,539,961)	$ (12,196,547)	$ (51,707,239)	$ (39,758,982)
Basic Earnings Per Share
Weighted average shares outstanding, basic (in shares)	220,497,826	168,420,675	209,108,090	146,860,652
Net loss per share of common stock, basic (in dollars per share)	$ (0.08)	$ (0.07)	$ (0.25)	$ (0.27)
Diluted Earnings Per Share
Weighted average shares outstanding, diluted (in shares)	220,497,826	168,420,675	209,108,090	146,860,652
Net loss per share of common stock, diluted (in dollars per share)	$ (0.08)	$ (0.07)	$ (0.25)	$ (0.27)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Commitments and Contingencies - Lease balance sheet (Details) - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Leases
Operating leases, Right-of-use asset	$ 80,924	$ 111,429
Operating leases, Lease obligation	38,203	69,849
Finance leases, Lease obligation	$ 21,703	$ 42,482
Operating leases, Weighted-average remaining lease term	1 year 9 months 18 days	2 years 7 months 6 days
Finance leases, Weighted-average remaining lease term	1 year 3 months 18 days	1 year 8 months 12 days
Operating leases, Weighted-average discount rate (as a percent)	7.50%	7.50%
Finance leases, Weighted-average discount rate (as a percent)	11.80%	9.50%

Liquidity

9 Months Ended

Jun. 30, 2022

Liquidity

Liquidity

2. Liquidity

The Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of $394,590,493 as of June 30, 2022. As of June 30, 2022, the Company had $10,847,966 of principal and accrued interest due under an unsecured promissory note maturing on January 1, 2023. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited interim consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Management believes that the Company’s existing cash and cash equivalents as of June 30, 2022 will be sufficient to fund its operations into the first calendar quarter of 2023. Additional financing will be needed by the Company to fund its operations in the future and to commercially develop ONS-5010 and any other product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations such as continuing to access capital through the current ATM Offering (as defined below) and negotiating a potential extension of maturity for notes that are scheduled to mature in January 2023. Refer to Note 10 for further details on the ATM Offering. These strategies may also include, but are not limited to, proceeds from potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, the issuance of equity securities, the issuance of additional debt, and revenues from potential future product sales, if any. There can be no assurance that these future funding efforts will be successful.

The Company’s future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of additional financing discussed above; (ii) the Company’s ability to successfully begin marketing of its product candidates or complete revenue-generating partnerships with other companies; (iii) the success of its research and development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately, (v) regulatory approval and market acceptance of the Company’s proposed future products.

Commitments and Contingencies (Tables)

9 Months Ended

Jun. 30, 2022

Commitments and Contingencies.

Schedule of lease information

The components of lease cost for the three and nine months ended June 30, 2022 and 2021 are as follows:


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Lease cost:
Amortization of right-of-use assets	$	—	$	—	$	—	$	—
Interest on lease liabilities		723		1,210		2,547		3,997
Total finance lease cost		723		1,210		2,547		3,997
Operating lease cost		11,217		8,413		33,650		95,663
Total lease cost	$	11,940	$	9,623	$	36,197	$	99,660

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee are as follows:



	June 30, 2022		September 30, 2021
Operating leases:
Right-of-use asset	$	80,924	$	111,429
Operating lease liabilities		38,203		69,849
Finance leases:
Right-of-use asset	$	—	$	—
Financing lease liabilities		21,703		42,482
Weighted-average remaining lease term (years):
Operating leases		1.8		2.6
Finance leases		1.3		1.7
Weighted-average discount rate:
Operating leases		7.5%		7.5%
Finance leases		11.8%		9.5%

Other information related to leases for the nine months ended June 30, 2022 and 2021 are as follows:


	Nine months ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from finance leases	$	2,547	$	3,997
Operating cash flows from operating leases		34,791		147,187
Financing cash flows from finance leases		20,779		23,098
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	128,473

Schedule of operating lease future minimum payments

Future minimum lease payments under non-cancelable leases as of June 30, 2022 are as follows for the years ending September 30:


	Operating leases		Finance leases
2022 (remaining three months)	$	11,861	$	6,279
2023		27,675		13,149
2024		—		4,383
Total undiscounted lease payments	$	39,536	$	23,811
Less: Imputed interest		1,333		2,108
Total lease obligations	$	38,203	$	21,703

Schedule of finance lease future minimum payments


	Operating leases		Finance leases
2022 (remaining three months)	$	11,861	$	6,279
2023		27,675		13,149
2024		—		4,383
Total undiscounted lease payments	$	39,536	$	23,811
Less: Imputed interest		1,333		2,108
Total lease obligations	$	38,203	$	21,703

Basis of Presentation and Summary of Significant Accounting Policies - Dilutive (Details) - shares	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Performance-based stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	2,470	2,470
Performance-based stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	700,000
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	20,099,581	12,010,781
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	6,812,794	5,129,460

Fair Value Measurements - Additional Information (Details) - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Fair value
Carrying value	$ 10,459,372	$ 11,790,054
Unsecured promissory note (2021)
Fair value
Debt fair value	10,647,000
Carrying value	$ 10,459,372

Accrued Expenses (Details) - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Accrued Expenses
Compensation	$ 1,324,246	$ 753,808
Research and development	1,455,024	808,780
Interest payable		12,909
Professional fees	586,649
Other accrued expenses	214,616	150,224
Accrued expenses, total	$ 3,580,535	$ 1,725,721

Common Stock and Stockholders' Equity (Deficit) (Tables)

9 Months Ended

Jun. 30, 2022

Common Stock and Stockholders' Equity (Deficit)

Schedule of warrants outstanding

As of June 30, 2022, shares of common stock issuable upon the exercise of outstanding warrants were as follows:


		Shares of
		common stock
		issuable upon
		exercise of	Exercise Price
Expiration Date		warrants	Per Share
December 22, 2024	(i)	277,128	$	12.00
April 13, 2025	(i)	145,686	$	12.00
May 31, 2025	(i)	62,437	$	12.00
February 24, 2025		172,864	$	1.27
February 26, 2024		1,747,047	$	0.9535
June 22, 2025		191,268	$	1.51875
January 28, 2026		2,116,364	$	1.25000
November 23, 2026		2,100,000	$	1.56250
		6,812,794

(i)

The warrants were issued in connection with the convertible senior secured notes originally issued pursuant to the certain Note and Warrant Purchase Agreement dated December 22, 2017 and are classified as liabilities on the accompanying consolidated balance sheets, as the warrants include cash settlement features at the option of the holders under certain circumstances. Refer to Note 4 for fair value measurements disclosures.

Accrued Expenses (Tables)

9 Months Ended

Jun. 30, 2022

Accrued Expenses

Schedule of accrued expenses


	June 30, 2022		September 30, 2021
Compensation	$	1,324,246	$	753,808
Research and development		1,455,024		808,780
Interest payable		—		12,909
Professional fees		586,649		—
Other accrued expenses		214,616		150,224
	$	3,580,535	$	1,725,721

Commitments and Contingencies - Lease termination (Details)	Mar. 31, 2021
Corporate Office Lease, Iselin, New Jersey
Commitment
Lease term	3 years

Debt - Information (Details)					3 Months Ended		9 Months Ended
Debt - Information (Details)	Jun. 30, 2022 USD ($)	Nov. 16, 2021 USD ($) D	Nov. 05, 2020 USD ($)	May 04, 2020 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Sep. 30, 2021 USD ($)
Debt Instrument [Line Items]
Proceeds from loan							$ 10,000,000	$ 10,000,000
Unamortized discount	$ 388,594				$ 388,594		388,594		$ 52,291
Gain (loss) on extinguishment of debt							(1,025,402)
Payment of lender fees							600,000
Debt outstanding	$ 10,459,372				10,459,372		10,459,372		$ 11,790,054
Unsecured convertible promissory note
Debt Instrument [Line Items]
Interest rate (as a percent)		10.00%
Redemption price (as a percent)	105.00%	75.00%
Trading day threshold \| D		3
Repayments of unsecured debt	$ 12,934,484
Interest expense	1,546,038
Unsecured convertible promissory note \| Maximum
Debt Instrument [Line Items]
Carrying value of notes exchanged		$ 2,000,000
Unsecured promissory notes-aggregate
Debt Instrument [Line Items]
Interest expense					436,593	$ 242,816	1,199,697	640,215
Amortization of debt issuance costs					179,228	48,801	457,208	125,229
Unsecured promissory note (2020)
Debt Instrument [Line Items]
Proceeds from loan			$ 10,000,000
Original principal amount			10,220,000
Unamortized discount		26,488	$ 228,032
Debt Instrument, term			14 months
Interest rate (as a percent)			7.50%
Gain (loss) on extinguishment of debt		(1,025,402)
Payment of lender fees		552,633
Unsecured promissory note (2021)
Debt Instrument [Line Items]
Proceeds from loan		10,000,000
Original principal amount		10,220,000
Unamortized discount		$ 820,000
Interest rate (as a percent)		9.50%
Redemption price (as a percent)		105.00%
Debt outstanding	$ 10,459,372				10,459,372		10,459,372
Paycheck Protection Program
Debt Instrument [Line Items]
Proceeds from loan				$ 904,200
Debt Instrument, term				2 years
Interest rate (as a percent)				1.00%
Interest expense					$ 131	$ 2,279	$ 2,726	$ 6,763

Stock-Based Compensation - Information (Details) - 2015 Equity Incentive Plan	9 Months Ended
	Jun. 30, 2022 shares
Share-based Compensation
Aggregate number of common stock authorized for issuance	34,565,837
Number of shares available for grant	13,571,604
Term of award	10 years
Minimum
Share-based Compensation
Vesting period	1 year
Maximum
Share-based Compensation
Vesting period	4 years

Fair Value Measurements - Assumptions (Details)	Jun. 30, 2022 $ / shares Y	Sep. 30, 2021 $ / shares Y
Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant inputs	2.96	0.62
Remaining contractual term of warrant
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant inputs \| Y	2.6	3.4
Expected volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant inputs	100.3	124.7
Annual dividend yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant inputs	0	0
Fair value of common stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant inputs \| $ / shares	1.02	2.17

Commitments and Contingencies - Lease minimum payments (Details) - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Operating leases
2022 (remaining three months)	$ 11,861
2023	27,675
Total undiscounted lease payments	39,536
Less: Imputed interest	1,333
Total lease obligations	38,203	$ 69,849
Finance leases
2022 (remaining three months)	6,279
2023	13,149
2024	4,383
Total undiscounted lease payments	23,811
Less: Imputed interest	2,108
Total lease obligations	$ 21,703	$ 42,482

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Jun. 30, 2022	Jun. 30, 2021
OPERATING ACTIVITIES
Net loss	$ (51,707,239)	$ (39,758,982)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	153,224	211,466
Loss on extinguishment of debt	1,025,402
Non-cash interest expense	1,199,697	640,215
Stock-based compensation	6,334,717	3,482,772
Change in fair value of unsecured convertible promissory note	882,903
Change in fair value of warrant liability	(454,599)	363,476
Gain on settlement of lease termination obligation		(552,340)
Loss on equity method investment	41,504	435,346
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(4,461,133)	(6,904,417)
Other assets		298,523
Operating lease liability	(31,646)	(140,272)
Accounts payable	284,522	194,029
Accrued expenses	308,776	(3,532,940)
Net cash used in operating activities	(46,423,872)	(45,263,124)
FINANCING ACTIVITIES
Proceeds from the sale of common stock, net of issuance costs	60,675,552	42,514,237
Proceeds from debt	10,000,000	10,000,000
Payment of debt issuance costs		(8,032)
Proceeds from exercise of common stock warrants	188,100	3,585,809
Proceeds from exercise of stock options	17,750
Payments of finance lease obligations	(20,779)	(23,098)
Repayment of debt	(12,292,646)	(3,649,743)
Payment of financing costs	(600,000)
Net cash provided by financing activities	57,967,977	52,419,173
Net increase in cash and cash equivalents	11,544,105	7,156,049
Cash and cash equivalents at beginning of period	14,477,324	12,535,986
Cash and cash equivalents at end of period	26,021,429	19,692,035
Supplemental disclosure of cash flow information
Cash paid for interest	1,556,088	17,915
Supplemental schedule of non-cash financing activities:
Deferred offering costs amortization	$ 34,234	$ 82,654

Stock-Based Compensation - Non-options (Details) - Performance-based stock units	9 Months Ended
	Jun. 30, 2022 $ / shares shares
Share-based Compensation
Term of award	10 years
Number of PSUs
Balance, Beginning \| shares	2,470
Balance, Ending \| shares	2,470
Vested and exercisable \| shares	2,470
Vested and expected to vest \| shares	2,470
Weighted Average Base Price Per Unit
Balance, Beginning \| $ / shares	$ 49.97
Balance, Ending \| $ / shares	49.97
Vested and exercisable \| $ / shares	49.97
Vested and expected to vest \| $ / shares	$ 49.97
Weighted average remaining contractual term, Outstanding	3 years
Weighted average remaining contractual term, Vested and exercisable	3 years
Weighted average remaining contractual term, Vested and expected to vest	3 years

Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2022

Fair Value Measurements

Schedule of assets and liabilities measured at fair value on a recurring basis


	June 30, 2022
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Warrant liability	$	—	$	—	$	68,319


	September 30, 2021
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Warrant liability	$	—	$	—	$	522,918

Schedule of changes in the fair value of Level 3 valuation for the warrant liability


	Unsecured Convertible
	Promissory Note		Warrants
Balance at October 1, 2021	$	—	$	522,918
Fair value at issuance date		12,051,581		—
Change in fair value		882,903		(454,599)
Repayment		(12,934,484)		—
Balance at June 30, 2022	$	—	$	68,319

Schedule of fair value of the warrant liability


	June 30, 2022			September 30, 2021
Risk-free interest rate		2.96	%		0.62	%
Remaining contractual term of warrant (years)		2.6			3.4
Expected volatility		100.3	%		124.7	%
Annual dividend yield		—	%		—	%
Fair value of common stock (per share)	$	1.02		$	2.17

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

Use of estimates

Fair value option

Fair value option

Net loss per share

The following table sets forth the computation of basic loss per share and diluted loss per share:


		Three months ended June 30,			Nine months ended June 30,
	2022		2021		2022		2021
Net loss attributable to common stockholders	$	(17,539,961)	$	(12,196,547)	$	(51,707,239)	$	(39,758,982)
Common stock shares outstanding (weighted average)		220,497,826		168,420,675		209,108,090		146,860,652
Basic and diluted net loss per share	$	(0.08)	$	(0.07)	$	(0.25)	$	(0.27)


	As of June 30,
	2022	2021
Performance-based stock units	2,470	2,470
Performance-based stock options	700,000	—
Stock options	20,099,581	12,010,781
Common stock warrants	6,812,794	5,129,460

Recently issued accounting pronouncements

Stock-Based Compensation - Stock option activity (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Other option information
Stock-based compensation expense	$ 1,367,874	$ 1,198,384	$ 6,334,717	$ 3,482,772
Stock options
Number of Shares
Balance, Beginning (in shares)			16,110,015
Granted (in shares)			4,014,566
Exercised (in shares)			(25,000)
Balance, Ending (in shares)	20,099,581		20,099,581
Exercisable (in shares)	6,748,589		6,748,589
Vested and expected to vest (in shares)	20,099,581		20,099,581
Weighted Average Exercise Price
Balance, Beginning (in dollars per share)			$ 1.46
Granted (in dollars per share)			1.60
Exercised (in dollars per share)			0.71
Balance, Ending (in dollars per share)	$ 1.49		1.49
Exercisable (in dollars per share)	1.35		1.35
Vested and expected to vest (in dollars per share)	$ 1.49		$ 1.49
Other option information
Balance-Remaining contractual term			8 years 6 months
Exercisable-Remaining contractual term			8 years
Vested and expected to vest-Remaining contractual term			8 years 6 months
Aggregate intrinsic value, Exercised			$ 38,960
Aggregate intrinsic value, Outstanding	$ 2,768,083		2,768,083
Aggregate intrinsic value, Exercisable	1,275,638		1,275,638
Aggregate intrinsic value, Vested and expected to vest	$ 2,768,083		$ 2,768,083
Grant date fair value of options (in dollars per share)			$ 1.23	$ 0.57
Performance-based stock options
Share-based Compensation
Term of award			10 years
Number of Shares
Balance, Beginning (in shares)			1,000,000
Granted (in shares)			1,900,000	0
Forfeited or expired (in shares)			(2,200,000)
Forfeited			(2,200,000)
Balance, Ending (in shares)	700,000		700,000
Exercisable (in shares)	700,000		700,000
Vested and expected to vest (in shares)	700,000		700,000
Weighted Average Exercise Price
Balance, Beginning (in dollars per share)			$ 2.42
Granted (in dollars per share)			1.44
Forfeited or expired (in dollars per share)			1.89
Balance, Ending (in dollars per share)	$ 1.44		1.44
Exercisable (in dollars per share)	1.44		1.44
Vested and expected to vest (in dollars per share)	$ 1.44		$ 1.44
Other option information
Balance-Remaining contractual term			9 years 5 months 23 days
Exercisable-Remaining contractual term			9 years 5 months 23 days
Vested and expected to vest-Remaining contractual term			9 years 5 months 23 days
Grant date fair value of options (in dollars per share)			$ 1.03
Stock-based compensation expense			$ 718,950
Number of stock options vested			700,000
Stock options forfeited			2,200,000

Stock-Based Compensation - Option Assumptions (Details) - USD ($)	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Stock options
Share-based Compensation
Risk-free interest rate	1.77%	0.40%
Expected term (years)	6 years	6 years
Expected volatility	95.20%	95.40%
Expected dividend yield	0.00%	0.00%
Unrecognized compensation expense	$ 12,368,234
Unrecognized compensation exercise period	2 years 10 months 6 days
Performance-based stock options
Share-based Compensation
Risk-free interest rate	1.26%
Expected term (years)	5 years 2 months 19 days
Expected volatility	91.46%
Expected dividend yield	0.00%

Related-Party Transactions (Details)			3 Months Ended		9 Months Ended
Related-Party Transactions (Details)	Dec. 21, 2021 USD ($) shares	Jan. 27, 2020 USD ($) individual item shares	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($) shares	Sep. 30, 2021 USD ($)
Performance-based stock options
Related Party Transaction [Line Items]
Number of shares granted					1,900,000	0
Number of stock options vested					700,000
MTTR, LLC ("MTTR")
Related Party Transaction [Line Items]
Number of principals \| item		4
Number Of Executive Officers \| individual		2
Shares issued during period		7,244,739
Contract termination settlement fee \| $		$ 110,000
Related party expense \| $			$ 58,069	$ 271,583	$ 471,435	$ 812,808
Due to related party, current \| $			$ 18,333		$ 18,333		$ 89,762
Employment agreement \| Performance-based stock options
Related Party Transaction [Line Items]
Number of stock options vested					200,000
Employment agreement \| Terry Dagnon
Related Party Transaction [Line Items]
Base salary \| $	$ 450,000
Percentage of cash bonus	50.00%
Employment agreement \| Terry Dagnon \| Stock option
Related Party Transaction [Line Items]
Number of shares granted	800,000
Employment agreement \| Terry Dagnon \| Performance-based stock options
Related Party Transaction [Line Items]
Number of shares granted	200,000
Employment agreement \| Jeff Evanson
Related Party Transaction [Line Items]
Base salary \| $	$ 450,000
Percentage of cash bonus	50.00%
Employment agreement \| Jeff Evanson \| Stock option
Related Party Transaction [Line Items]
Number of shares granted	800,000
Employment agreement \| Jeff Evanson \| Performance-based stock options
Related Party Transaction [Line Items]
Number of shares granted	200,000

Organization and Description of Business

9 Months Ended

Jun. 30, 2022

Organization and Description of Business

Organization and Description of Business

1. Organization and Description of Business

Outlook Therapeutics, Inc. (“Outlook” or the “Company”) was incorporated in New Jersey on January 5, 2010, started operations in July 2011, reincorporated in Delaware by merging with and into a Delaware corporation in October 2015 and changed its name to “Outlook Therapeutics, Inc.” in November 2018. The Company is a pre-commercial biopharmaceutical company focused on developing and commercializing ONS-5010, an ophthalmic formulation of bevacizumab for use in retinal indications. The Company is based in Iselin, New Jersey.

The Company has been actively monitoring the ongoing COVID-19 pandemic and its impact globally. Given the Company’s current infrastructure needs and current strategy, the Company was able to transition to remote working with limited impact on productivity as shelter-in-place and similar government orders were imposed. All development activities are currently active in support of the Company’s Biologics License Application (“BLA”) registration program for ONS-5010 for wet age-related macular degeneration (“wet AMD”).

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are highly uncertain, including any new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19. Management believes the financial results for the nine months ended June 30, 2022 were not significantly impacted by COVID-19.

Equity Method Investment

9 Months Ended

Jun. 30, 2022

Equity Method Investment

Equity Method Investment

6. Equity Method Investment

In connection with the execution of a stock purchase agreement with Syntone Ventures LLC (“Syntone Ventures”), the U.S. based affiliate of Syntone Technologies Group Co. Ltd. (“Syntone PRC”) on May 22, 2020, the Company and Syntone PRC entered into a joint venture agreement pursuant to which they agreed to form a People’s Republic of China (“PRC”) joint venture, Beijing Syntone Biopharma Ltd (“Syntone”), that is 80% owned by Syntone PRC and 20% owned by the Company. As the Company can exert significant influence over, but does not control, Syntone’s operations through voting rights or representation on Syntone’s board of directors, the Company accounts for this investment using the equity method of accounting. Upon formation of Syntone in April 2021, the Company entered into a royalty-free license with Syntone for the development, commercialization and manufacture of ONS-5010 in the greater China market, which includes Hong Kong, Taiwan and Macau.

The Company made the initial investment of $900,000 in June 2020 and expects to be required to make an additional capital contribution to Syntone of approximately $2,100,000, which will be made within four years after the establishment date in accordance with the development plan contemplated in the license agreement or on such other terms within such four-year period. The maximum exposure to a loss as a result of the Company’s involvement in Syntone is limited to the initial investment and the future capital contributions of approximately $2,100,000.

Fair Value Measurements

9 Months Ended

Jun. 30, 2022

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1 - Quoted prices in active markets for identical assets or liabilities.

●

Level 2 - Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table presents the Company’s liabilities that are measured at fair value on a recurring basis:


	June 30, 2022
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Warrant liability	$	—	$	—	$	68,319


	September 30, 2021
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Warrant liability	$	—	$	—	$	522,918

The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrant liability and unsecured convertible promissory note for the nine months ended June 30, 2022:


	Unsecured Convertible
	Promissory Note		Warrants
Balance at October 1, 2021	$	—	$	522,918
Fair value at issuance date		12,051,581		—
Change in fair value		882,903		(454,599)
Repayment		(12,934,484)		—
Balance at June 30, 2022	$	—	$	68,319

As further described in Note 8, the Company elected the fair value option to account for its amended unsecured convertible promissory note. The fair value of the amended unsecured convertible promissory note at issuance was estimated using a discounted cash flow model. Significant estimates in the cash flow model include the discount rate and the probability and timing of redemption.

The warrants issued in connection with the convertible senior secured notes originally issued pursuant to a certain Note and Warrant Purchase Agreement dated December 22, 2017 are classified as liabilities on the accompanying consolidated balance sheets as the warrants include cash settlement features at the option of the holders under certain circumstances. The warrant liability is revalued each reporting period with the change in fair value recorded in the accompanying

consolidated statements of operations until the warrants are exercised or expire. The fair value of the warrant liability is estimated using the Black-Scholes option pricing model using the following assumptions:


	June 30, 2022			September 30, 2021
Risk-free interest rate		2.96	%		0.62	%
Remaining contractual term of warrant (years)		2.6			3.4
Expected volatility		100.3	%		124.7	%
Annual dividend yield		—	%		—	%
Fair value of common stock (per share)	$	1.02		$	2.17

Fair Value of Other Financial Instruments

At June 30, 2022, the fair value and carrying value of the unsecured promissory note included in long-term debt on the consolidated balance sheet on June 30, 2022 was $10,647,000 and $10,459,372, respectively. The estimated fair value was based on discounted expected future cash flows using the prevailing interest rate that is a Level 3 input under the fair value hierarchy.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Related-Party Transactions

9 Months Ended

Jun. 30, 2022

Related-Party Transactions

Related-Party Transactions

12. Related-Party Transactions

MTTR - strategic partnership agreement (ONS-5010)

In February 2018, the Company entered into a strategic partnership agreement with MTTR to advise on regulatory, clinical and commercial strategy and assist in obtaining approval of ONS-5010.

In November 2018, the board of directors of the Company appointed Mr. Terry Dagnon as Chief Operating Officer and Mr. Jeff Evanson as Chief Commercial Officer. Both Mr. Dagnon and Mr. Evanson initially provided services to the Company pursuant to the February 2018 strategic partnership agreement with MTTR, as amended. Mr. Dagnon and Mr. Evanson were both principals in MTTR. Both Mr. Dagnon and Mr. Evanson were compensated directly by MTTR for services provided to the Company as the Company's Chief Operating Officer and Chief Commercial Officer, respectively, pursuant to the strategic partnership agreement until such agreement, as amended, was terminated effective March 19,

2020. The Company began compensating Mr. Dagnon and Mr. Evanson directly as consultants effective March 19, 2020 pursuant to their respective consulting agreements with the Company, which became effective March 19, 2020 following stockholder approval of the share issuances contemplated therein.

On January 27, 2020, the Company entered into a termination agreement and mutual release with MTTR to terminate the strategic partnership agreement. Pursuant to the agreement, the Company agreed (x) to issue to the four principals of MTTR (who include two of its named executive officers, Messrs. Dagnon and Evanson) an aggregate of 7,244,739 shares of its common stock, subject to stockholder approval, (y) to enter into consulting agreements with each of the four principals setting forth the terms of his respective compensation arrangement, and (z) to pay MTTR a one-time settlement fee of $110,000 upon effectiveness of the agreement.

Concurrently, the Company also entered into consulting agreements directly with each of the four principals of MTTR setting forth the terms of his respective compensation arrangement, as well as providing for certain transfer restrictions and repurchase rights applicable to the shares of common stock to be issued pursuant hereto. The termination agreement and the consulting agreements became effective upon stockholder approval of the share issuance on March 19, 2020. Refer to Note 11 for the accounting of the restricted stock issued and compensation expense recognized.

During the three months ended June 30, 2022 and 2021, MTTR and its four principals under the strategic partnership agreement and the subsequent individual consulting agreements earned an aggregate $58,069 and $271,583, respectively, and $471,435 and $812,808 during the nine months ended June 30, 2022 and 2021, respectively, which includes monthly consulting fees and expense reimbursement, but excludes stock-based compensation related to restricted stock (Note 11). As of June 30, 2022 and September 30, 2021, an aggregate $18,333 and $89,762, respectively, was due to the former MTTR principals as consultants, which is included in accounts payable in the accompanying consolidated balance sheets.

On December 21, 2021, the Company entered into employment agreements with each of Mr. Dagnon and Mr. Evanson, which superseded and replaced their prior consulting agreements. Pursuant to their new employment agreements, each of Mr. Dagnon and Mr. Evanson will receive a base salary of $450,000 and a discretionary annual cash bonus with a target amount equal to 50% of his respective base salary. In connection with their entry into the employment agreements, each of Mr. Dagnon and Mr. Evanson received a grant of 800,000 options to purchase common stock, one quarter of which will vest on the first anniversary of the grant and the remainder of which will vest in monthly installments over the succeeding three years, subject to their continued service through each vesting date. In addition, each of Mr. Dagnon and Mr. Evanson received a performance grant of 200,000 options to purchase common stock, which will vest upon the Company’s achievement of certain milestones. An aggregate of 200,000 performance-based stock options vested as a result of achieving the performance condition related to the Company’s BLA submission.

Fair Value Measurements - Changes in fair value (Details) - USD ($)	3 Months Ended	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in fair value	$ (376,963)	$ (882,903)
Unsecured convertible promissory note
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at issuance date		12,051,581
Change in fair value		882,903
Repayment		(12,934,484)
Warrant liability
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning		522,918
Change in fair value		(454,599)
Balance, ending	$ 68,319	$ 68,319

Common Stock and Stockholders' Equity (Deficit) - Warrants (Details)	9 Months Ended
	Jun. 30, 2022 $ / shares shares
Warrants
Shares of common stock issuable upon exercise of warrants	6,812,794
February 18, 2022
Warrants
Exercise price per share \| $ / shares	$ 12.00
Warrant expired (in shares)	400,360
Warrants expired (in dollars per share) \| $ / shares	$ 12.00
Issuance of common stock in connection with exercise of warrants (in shares)	15,675
December 22, 2024
Warrants
Shares of common stock issuable upon exercise of warrants	277,128
Exercise price per share \| $ / shares	$ 12.00
April 13, 2025
Warrants
Shares of common stock issuable upon exercise of warrants	145,686
Exercise price per share \| $ / shares	$ 12.00
May 31, 2025
Warrants
Shares of common stock issuable upon exercise of warrants	62,437
Exercise price per share \| $ / shares	$ 12.00
February 24, 2025
Warrants
Shares of common stock issuable upon exercise of warrants	172,864
Exercise price per share \| $ / shares	$ 1.27
February 26, 2024
Warrants
Shares of common stock issuable upon exercise of warrants	1,747,047
Exercise price per share \| $ / shares	$ 0.9535
June 22, 2025
Warrants
Shares of common stock issuable upon exercise of warrants	191,268
Exercise price per share \| $ / shares	$ 1.51875
January 28, 2026
Warrants
Shares of common stock issuable upon exercise of warrants	2,116,364
Exercise price per share \| $ / shares	$ 1.25000
November 23, 2026
Warrants
Shares of common stock issuable upon exercise of warrants	2,100,000
Exercise price per share \| $ / shares	$ 1.56250

Fair Value Measurements (Details) - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Fair value measurements recurring basis \| Level 3
Liabilities
Warrant liability	$ 68,319	$ 522,918

Commitments and Contingencies - Lease cashflow (Details) - USD ($)	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Leases
Operating cash flows from finance leases	$ 2,547	$ 3,997
Operating cash flows from operating leases	34,791	147,187
Financing cash flows from finance leases	$ 20,779	23,098
Right-of-use assets obtained in exchange for operating lease obligations		$ 128,473

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
Consolidated Statements of Operations - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Operating expenses:
Research and development	$ 11,249,191	$ 8,545,279	$ 33,341,333	$ 29,023,253
General and administrative	5,774,769	2,929,717	15,741,888	9,267,962
Loss from operations	(17,023,960)	(11,474,996)	(49,083,221)	(38,291,215)
Loss on equity method investment	11,805	435,346	41,504	435,346
Interest expense, net	356,947	256,873	1,126,808	666,945
Loss on extinguishment of debt			1,025,402
Change in fair value of unsecured convertible promissory note	376,963		882,903
Change in fair value of warrant liability	(229,714)	29,332	(454,599)	363,476
Loss before income taxes	(17,539,961)	(12,196,547)	(51,705,239)	(39,756,982)
Income tax expense			2,000	2,000
Net loss	$ (17,539,961)	$ (12,196,547)	$ (51,707,239)	$ (39,758,982)
Per share information:
Net loss per share of common stock, basic (in dollars per share)	$ (0.08)	$ (0.07)	$ (0.25)	$ (0.27)
Net loss per share of common stock, diluted (in dollars per share)	$ (0.08)	$ (0.07)	$ (0.25)	$ (0.27)
Weighted average shares outstanding, basic (in shares)	220,497,826	168,420,675	209,108,090	146,860,652
Weighted average shares outstanding, diluted (in shares)	220,497,826	168,420,675	209,108,090	146,860,652

Liquidity (Details) - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Liquidity
Accumulated deficit	$ 394,590,493	$ 342,883,254
Total debt	10,847,966	$ 11,842,345
Unsecured promissory notes-aggregate
Liquidity
Total debt	$ 10,847,966

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

Stock-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2022

Share-based Compensation

Schedule of stock-based compensation expense


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Research and development	$	205,410	$	239,231	$	2,278,067	$	707,442
General and administrative		1,162,464		959,153		4,056,650		2,775,330
	$	1,367,874	$	1,198,384	$	6,334,717	$	3,482,772

Schedule of performance-based stock units activity


				Weighted
				Average
	Number	Base		Remaining
	of	Price		Contractual	Aggregate
	PSUs	Per PSU		Term (Years)	Intrinsic Value
Balance at October 1, 2021	2,470	$	49.97
Forfeitures	—		—
Balance at June 30, 2022	2,470		49.97	3.0	$	—
Vested and exercisable at June 30, 2022	2,470		49.97	3.0	$	—
Vested and expected to vest at June 30, 2022	2,470	$	49.97	3.0	$	—

Stock options

Share-based Compensation

Schedule of stock option activity


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	16,110,015	$	1.46
Granted	4,014,566		1.60
Exercised	(25,000)		0.71		$	38,960
Balance at June 30, 2022	20,099,581		1.49	8.5	$	2,768,083
Exercisable	6,748,589		1.35	8.0	$	1,275,638
Vested and expected to vest at June 30, 2022	20,099,581	$	1.49	8.5	$	2,768,083

Schedule of option assumptions


	Nine months ended June 30,
	2022		2021
Risk-free interest rate	1.77	%	0.40	%
Expected term (years)	6.0		6.0
Expected volatility	95.2	%	95.4	%
Expected dividend yield	—		—

Performance-based stock options

Share-based Compensation

Schedule of stock option activity


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	1,000,000	$	2.42
Granted	1,900,000		1.44
Forfeited or expired	(2,200,000)		1.89
Balance at June 30, 2022	700,000	$	1.44	9.48	$	—
Exercisable	700,000	$	1.44	9.48	$	—
Vested and expected to vest at June 30, 2022	700,000	$	1.44	9.48	$	—

Schedule of option assumptions


	Nine months ended June 30, 2022
Risk-free interest rate	1.26	%
Expected term (years)	5.22
Expected volatility	91.46	%
Expected dividend yield	—

Property and Equipment, Net (Tables)

9 Months Ended

Jun. 30, 2022

Property and Equipment, Net

Schedule of property and equipment


	June 30, 2022		September 30, 2021
Laboratory equipment	$	1,067,351	$	1,067,351
Less: accumulated depreciation		(1,026,445)		(903,726)
	$	40,906	$	163,625

Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2022	Sep. 30, 2021
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	7,300,000	7,300,000
Preferred stock, shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	325,000,000	325,000,000
Common stock, shares issued	225,942,719	176,461,628
Common stock, shares outstanding	225,942,719	176,461,628
Series A convertible preferred stock
Convertible stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	1,000,000	1,000,000
Convertible preferred stock, shares issued	0	0
Convertible preferred stock outstanding	0	0
Convertible Preferred Stock Series A-1
Convertible stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	200,000	200,000
Convertible preferred stock, shares issued	0	0
Convertible preferred stock outstanding	0	0
Series B convertible preferred stock
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,500,000	1,500,000
Preferred stock, shares issued	0	0
Preferred stock shares outstanding	0	0

Commitments and Contingencies (Details) - USD ($)		1 Months Ended
Commitments and Contingencies (Details) - USD ($)	Jul. 20, 2020	Apr. 30, 2022	Apr. 30, 2021	Jun. 30, 2022
Commitments and Contingencies.
Loss contingency damages due to third party	$ 3,000,000
Settlement payment		$ 750,000	$ 625,000
Settlement payable				$ 0

Common Stock and Stockholders' Equity (Deficit)

9 Months Ended

Jun. 30, 2022

Common Stock and Stockholders' Equity (Deficit)

Common Stock and Stockholders' Equity (Deficit)

10. Common Stock and Stockholders’ Equity (Deficit)

Common stock

In November 2021, the Company issued 46,000,000 shares of common stock in an underwritten public offering at a purchase price per share of $1.25 for $53,968,057 in net proceeds after payment of underwriter discounts and commissions and other underwriter offering costs. GMS Ventures and Investments (“GMS Ventures”), the Company’s largest stockholder and strategic partner, purchased an aggregate of 16,000,000 shares of common stock in the public offering at the public offering price per share. In connection with the underwritten public offering, the Company issued the underwriter warrants to purchase up to an aggregate of 2,100,000 shares of common stock at an exercise price of $1.5625 per share, which warrants have a five-year term.

H.C. Wainwright & Co. At-the-Market Offering Agreement

On March 26, 2021, the Company entered into an At-the-Market Offering Agreement (the “Agreement”) with H.C. Wainwright & Co., as sales agent (“Wainwright” or the “Agent”), under which the Company may issue and sell shares of its common stock from time to time through Wainwright as sales agent (the “ATM Offering”). The Company filed a prospectus supplement, dated March 26, 2021, with the Securities and Exchange Commission pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to up to $40,000,000 from time to time through Wainwright. The Company incurred financing costs of $197,654, which were capitalized and are being reclassified to additional paid in capital on a pro rata basis when the Company sells common stock under the ATM Offering. As of June 30, 2022, $127,763 of such deferred costs are included in other assets on the consolidated balance sheets.

Under the Agreement, the Company pays Wainwright a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the Agreement. The offering of common stock pursuant to the Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Agreement or (ii) termination of the Agreement in accordance with its terms.

During the nine months ended June 30, 2022, the Company sold 3,440,416 shares of common stock under the ATM Offering and generated $6,929,743 in gross proceeds. The Company paid fees to the Agent and other issuance costs of $222,249.

Common stock warrants

As of June 30, 2022, shares of common stock issuable upon the exercise of outstanding warrants were as follows:


		Shares of
		common stock
		issuable upon
		exercise of	Exercise Price
Expiration Date		warrants	Per Share
December 22, 2024	(i)	277,128	$	12.00
April 13, 2025	(i)	145,686	$	12.00
May 31, 2025	(i)	62,437	$	12.00
February 24, 2025		172,864	$	1.27
February 26, 2024		1,747,047	$	0.9535
June 22, 2025		191,268	$	1.51875
January 28, 2026		2,116,364	$	1.25000
November 23, 2026		2,100,000	$	1.56250
		6,812,794

(i)

During the nine months ended June 30, 2022, warrants to purchase an aggregate of 400,360 shares of common stock with a weighted average exercise price of $12.00 expired; and warrants to purchase an aggregate of 15,675 shares of common stock with a weighted average exercise price of $12.00 were exercised for cash.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
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-Subparagraph (b)
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+ Details

Accrued Expenses

9 Months Ended

Jun. 30, 2022

Accrued Expenses

Accrued Expenses

7. Accrued Expenses

Accrued expenses consists of:


	June 30, 2022		September 30, 2021
Compensation	$	1,324,246	$	753,808
Research and development		1,455,024		808,780
Interest payable		—		12,909
Professional fees		586,649		—
Other accrued expenses		214,616		150,224
	$	3,580,535	$	1,725,721

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Jun. 30, 2022	Aug. 08, 2022
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-37759
Entity Registrant Name	OUTLOOK THERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-3982704
Entity Address, Address Line One	485 Route 1 South
Entity Address, Address Line Two	Building F, Suite 320
Entity Address, City or Town	Iselin
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08830
City Area Code	609
Local Phone Number	619-3990
Title of 12(b) Security	Common Stock
Trading Symbol	OTLK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		226,144,634
Entity Central Index Key	0001649989
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

Stock-Based Compensation - Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
Stock-Based Compensation - Expense (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,367,874	$ 1,198,384	$ 6,334,717	$ 3,482,772
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	205,410	239,231	2,278,067	707,442
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,162,464	$ 959,153	$ 4,056,650	$ 2,775,330

Stock-Based Compensation - Restricted stock (Details)		1 Months Ended	3 Months Ended		9 Months Ended
Stock-Based Compensation - Restricted stock (Details)	Jan. 27, 2020 item shares	Mar. 31, 2020 item $ / shares shares	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 1,367,874	$ 1,198,384	$ 6,334,717	$ 3,482,772
MTTR, LLC ("MTTR")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of principals \| item	4
Shares issued during period \| shares	7,244,739
Restricted Stock \| MTTR, LLC ("MTTR")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of principals \| item		4
Shares issued during period \| shares		7,244,739
Share repurchase price \| $ / shares		$ 0.01
Grant date fair value of share \| $ / shares		$ 0.54
Explicit service period		4 years 9 months 18 days
Stock-based compensation expense				$ 151,764	2,003,946	$ 455,293
Unamortized expense to be recognized of stock awards other than options			$ 0		$ 0
Restricted Stock \| MTTR, LLC ("MTTR") \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase right lapses on shares (as a percent)		50.00%
Restricted Stock \| MTTR, LLC ("MTTR") \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase right lapses on shares (as a percent)		100.00%

Commitments and Contingencies - Lease cost (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Lease cost
Interest on lease liabilities	$ 723	$ 1,210	$ 2,547	$ 3,997
Total finance lease cost	723	1,210	2,547	3,997
Operating lease cost	11,217	8,413	33,650	95,663
Total lease cost	$ 11,940	$ 9,623	$ 36,197	$ 99,660
Minimum
Leases
Finance lease term	12 months		12 months
Finance lease interest (as a percent)	4.00%		4.00%
Maximum
Leases
Finance lease term	36 months		36 months
Finance lease interest (as a percent)	13.00%		13.00%

Property and Equipment, Net (Details) - USD ($)	3 Months Ended		9 Months Ended
Property and Equipment, Net (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Property and Equipment, Net
Laboratory equipment	$ 1,067,351		$ 1,067,351		$ 1,067,351
Less: accumulated depreciation	(1,026,445)		(1,026,445)		(903,726)
Property and equipment, net	40,906		40,906		$ 163,625
Depreciation expense	$ 40,906	$ 40,906	$ 122,719	$ 122,718

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Sep. 30, 2020	$ 1,271,831	$ 291,274,366	$ (289,719,906)	$ 2,826,291
Balance, beginning (in shares) at Sep. 30, 2020	127,183,109
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense		1,154,641		1,154,641
Net loss			(14,455,914)	(14,455,914)
Balance at Dec. 31, 2020	$ 1,271,831	292,429,007	(304,175,820)	(10,474,982)
Balance, ending (in shares) at Dec. 31, 2020	127,183,109
Balance at Sep. 30, 2020	$ 1,271,831	291,274,366	(289,719,906)	2,826,291
Balance, beginning (in shares) at Sep. 30, 2020	127,183,109
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss				(39,758,982)
Balance at Jun. 30, 2021	$ 1,748,133	340,479,991	(329,478,888)	12,749,236
Balance, ending (in shares) at Jun. 30, 2021	174,813,326
Balance at Dec. 31, 2020	$ 1,271,831	292,429,007	(304,175,820)	(10,474,982)
Balance, beginning (in shares) at Dec. 31, 2020	127,183,109
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with exercise of warrants	$ 38,153	3,547,656		3,585,809
Issuance of common stock in connection with exercise of warrants (in shares)	3,815,304
Sale of common stock, net of issuance costs	$ 426,074	39,091,045		39,517,119
Sale of common stock, net of issuance costs (in shares)	42,607,394
Stock-based compensation expense		1,129,747		1,129,747
Net loss			(13,106,521)	(13,106,521)
Balance at Mar. 31, 2021	$ 1,736,058	336,197,455	(317,282,341)	20,651,172
Balance, ending (in shares) at Mar. 31, 2021	173,605,807
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Sale of common stock, net of issuance costs	$ 12,075	3,084,152		3,096,227
Sale of common stock, net of issuance costs (in shares)	1,207,519
Stock-based compensation expense		1,198,384		1,198,384
Net loss			(12,196,547)	(12,196,547)
Balance at Jun. 30, 2021	$ 1,748,133	340,479,991	(329,478,888)	12,749,236
Balance, ending (in shares) at Jun. 30, 2021	174,813,326
Balance at Sep. 30, 2021	$ 1,764,616	345,726,087	(342,883,254)	4,607,449
Balance, beginning (in shares) at Sep. 30, 2021	176,461,628
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with exercise of stock options	$ 250	17,500		17,750
Issuance of common stock in connection with exercise of stock options (in shares)	25,000
Sale of common stock, net of issuance costs	$ 477,740	56,979,163		57,456,903
Sale of common stock, net of issuance costs (in shares)	47,773,974
Stock-based compensation expense		1,204,048		1,204,048
Net loss			(14,462,729)	(14,462,729)
Balance at Dec. 31, 2021	$ 2,242,606	403,926,798	(357,345,983)	48,823,421
Balance, ending (in shares) at Dec. 31, 2021	224,260,602
Balance at Sep. 30, 2021	$ 1,764,616	345,726,087	(342,883,254)	4,607,449
Balance, beginning (in shares) at Sep. 30, 2021	176,461,628
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss				(51,707,239)
Balance at Jun. 30, 2022	$ 2,259,427	412,413,161	(394,590,493)	20,082,095
Balance, ending (in shares) at Jun. 30, 2022	225,942,719
Balance at Dec. 31, 2021	$ 2,242,606	403,926,798	(357,345,983)	48,823,421
Balance, beginning (in shares) at Dec. 31, 2021	224,260,602
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with exercise of warrants	$ 157	187,943		188,100
Issuance of common stock in connection with exercise of warrants (in shares)	15,675
Sale of common stock, net of issuance costs	$ 15,164	2,877,750		2,892,914
Sale of common stock, net of issuance costs (in shares)	1,516,465
Stock-based compensation expense		3,762,795		3,762,795
Net loss			(19,704,549)	(19,704,549)
Balance at Mar. 31, 2022	$ 2,257,927	410,755,286	(377,050,532)	35,962,681
Balance, ending (in shares) at Mar. 31, 2022	225,792,742
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Sale of common stock, net of issuance costs	$ 1,500	290,001		291,501
Sale of common stock, net of issuance costs (in shares)	149,977
Stock-based compensation expense		1,367,874		1,367,874
Net loss			(17,539,961)	(17,539,961)
Balance at Jun. 30, 2022	$ 2,259,427	$ 412,413,161	$ (394,590,493)	$ 20,082,095
Balance, ending (in shares) at Jun. 30, 2022	225,942,719

Property and Equipment, Net

9 Months Ended

Jun. 30, 2022

Property and Equipment, Net

Property and Equipment, Net

5. Property and Equipment, Net

Property and equipment, net, consists of:


	June 30, 2022		September 30, 2021
Laboratory equipment	$	1,067,351	$	1,067,351
Less: accumulated depreciation		(1,026,445)		(903,726)
	$	40,906	$	163,625

Depreciation expense was $40,906 for the three months ended June 30, 2022 and 2021, and $122,719 and $122,718 for the nine months ended June 30, 2022 and 2021, respectively.

Debt

9 Months Ended

Jun. 30, 2022

Debt

Debt

8. Debt

Debt consists of:


	June 30, 2022		September 30, 2021
Unsecured promissory note	$	10,847,966		10,938,145
Paycheck Protection Program term loan		—		904,200
Total debt		10,847,966		11,842,345
Less: unamortized loan costs		(388,594)		(52,291)
Total debt, net of unamortized loan costs		10,459,372		11,790,054
Less: current portion		(10,459,372)		(904,200)
Long-term debt	$	—	$	10,885,854

Unsecured convertible promissory note

On November 5, 2020, the Company received $10,000,000 in net proceeds from the issuance of an unsecured promissory note with a face amount of $10,220,000, which was amended in November 2021 and became convertible. Debt issuance costs totaling $228,032 were recorded as debt discount and were deducted from the principal in the accompanying consolidated balance sheets. The debt discount was amortized as a component of interest expense over the 14-month term of the underlying debt using the effective interest method. The note bore interest at a rate of 7.5% per annum and was due to mature January 1, 2022. On November 16, 2021, the Company entered into a note amendment, which, among other things, (i) extended the maturity date to January 1, 2023, (ii) increased the interest rate from 7.5% per annum to 10% per annum beginning on January 1, 2022, and (iii) provided for the lender’s right to redeem some or all of the outstanding balance of the note for shares of the Company’s common stock beginning July 1, 2022, subject to certain limitations. The amendment was accounted for as an extinguishment of the old promissory note. As a result, the Company recorded a loss on debt extinguishment of $1,025,402, which is the difference between the fair value of the amended promissory note and the net carrying value of the old promissory note, which includes $26,488 of unamortized debt discount and lender fees of $552,633. The amended promissory note included redemption options whereby beginning on July 1, 2022, the holder had the option to redeem up to $2,000,000 of outstanding principal and accrued and unpaid interest per calendar month for shares of the Company’s common stock at a redemption price equal to 75% of the lowest closing bid price in the three trading days immediately preceding the date the holder delivers written notice. The Company elected to account for the amended promissory note at fair value (Note 4) and was not required to bifurcate the redemption options as derivatives.

The Company prepaid the note in full on June 30, 2022 by paying 105% of the outstanding balance. The total payment was $12,934,484, which included interest of $1,546,038.

Unsecured promissory note

On November 16, 2021, the Company received $10,000,000 in net proceeds from the issuance of an unsecured promissory note with a face amount of $10,220,000. Debt issuance costs totaling $820,000 were recorded as debt discount and are

deducted from the principal in the accompanying consolidated balance sheets. The debt discount is amortized as a component of interest expense over the term of the underlying debt using the effective interest method. The note bears interest at a rate of 9.5% per annum compounding daily and matures January 1, 2023. The Company may prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-payment.

During the three months ended June 30, 2022 and 2021, the Company recognized $436,593 and $242,816, respectively, of interest expense related to the unsecured promissory notes of which $179,228 and $48,801, respectively, are related to the amortization of debt discount. During the nine months ended June 30, 2022 and 2021, the Company recognized $1,199,697 and $640,215, respectively, of interest expense related to the unsecured promissory notes of which $457,208 and $125,229, respectively, are related to the amortization of debt discount.

Paycheck Protection Program term loan

On May 4, 2020, the Company received $904,200 in proceeds from a loan granted pursuant to the PPP of the CARES Act. The PPP term loan is evidenced by a promissory note containing the terms and conditions for repayment of the PPP term loan. The PPP term loan provides for an initial six-month deferral of payments and any amount owed on the loan has a two-year maturity (May 2022), with an interest rate of 1% per annum. Commencing October 15, 2021, the Company began to pay the lender equal monthly payments of principal and interest as required to fully amortize any principal amount outstanding on the PPP term loan as of October 15, 2021 by May 2, 2022. The loan was fully repaid on May 2, 2022. Aggregate interest expense on the PPP loan for the three months ended June 30, 2022 and 2021 was $131 and $2,279, respectively, and for the nine months ended June 30, 2022 and 2021 was $2,726 and $6,763, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Commitments and Contingencies

9 Months Ended

Jun. 30, 2022

Commitments and Contingencies.

Commitments and Contingencies

9. Commitments and Contingencies

Litigation

On July 20, 2020, Laboratorios Liomont S.A. de C.V. (“Liomont”), filed a complaint against the Company in the U.S. District Court of the Southern District of New York alleging certain breach of contract claims under the June 25, 2014 strategic development, license and supply agreement relating to the biosimilar development program for ONS-3010 and ONS-1045 claiming $3,000,000 in damages. On March 30, 2021, the Company entered into a confidential settlement agreement with Liomont, and the complaint was dismissed on April 11, 2021. The Company agreed to make an initial settlement payment of $625,000 that was paid in April 2021; and an additional payment of $750,000, which was accrued at March 31, 2022 and paid in April 2022. There are no remaining future financial obligations.

Leases

Corporate office

In March 2021, the Company assigned its Monmouth Junction, New Jersey corporate office lease to a third party and does not have remaining future obligations. In March 2021, the Company entered into a new three-year term corporate office lease in Iselin, New Jersey that commenced on April 23, 2021.

Equipment leases

The Company has equipment leases, with terms between 12 and 36 months, recorded as finance leases. The equipment leases bear interest between 4.0% and 13.0% per annum.

Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include minimum payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option. Lease expense is recorded as research and development or general and administrative based on the use of the leased asset.

The components of lease cost for the three and nine months ended June 30, 2022 and 2021 are as follows:


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022		2021
Lease cost:
Amortization of right-of-use assets	$	—	$	—	$	—	$	—
Interest on lease liabilities		723		1,210		2,547		3,997
Total finance lease cost		723		1,210		2,547		3,997
Operating lease cost		11,217		8,413		33,650		95,663
Total lease cost	$	11,940	$	9,623	$	36,197	$	99,660

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee are as follows:



	June 30, 2022		September 30, 2021
Operating leases:
Right-of-use asset	$	80,924	$	111,429
Operating lease liabilities		38,203		69,849
Finance leases:
Right-of-use asset	$	—	$	—
Financing lease liabilities		21,703		42,482
Weighted-average remaining lease term (years):
Operating leases		1.8		2.6
Finance leases		1.3		1.7
Weighted-average discount rate:
Operating leases		7.5%		7.5%
Finance leases		11.8%		9.5%

Other information related to leases for the nine months ended June 30, 2022 and 2021 are as follows:


	Nine months ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from finance leases	$	2,547	$	3,997
Operating cash flows from operating leases		34,791		147,187
Financing cash flows from finance leases		20,779		23,098
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	128,473

Future minimum lease payments under non-cancelable leases as of June 30, 2022 are as follows for the years ending September 30:


	Operating leases		Finance leases
2022 (remaining three months)	$	11,861	$	6,279
2023		27,675		13,149
2024		—		4,383
Total undiscounted lease payments	$	39,536	$	23,811
Less: Imputed interest		1,333		2,108
Total lease obligations	$	38,203	$	21,703

Consolidated Balance Sheets - USD ($)	Jun. 30, 2022	Sep. 30, 2021
Current assets:
Cash and cash equivalents	$ 26,021,429	$ 14,477,324
Prepaid expenses and other current assets	11,491,956	7,030,823
Total current assets	37,513,385	21,508,147
Property and equipment, net	40,906	163,625
Operating lease right-of-use assets, net	80,924	111,429
Equity method investment	812,156	853,660
Other assets	140,356	174,590
Total assets	38,587,727	22,811,451
Current liabilities:
Current portion of long-term debt	10,459,372	904,200
Current portion of finance lease liabilities	14,354	26,464
Current portion of operating lease liabilities	38,203	42,854
Accounts payable	2,480,871	2,196,349
Accrued expenses	3,580,535	1,725,721
Income taxes payable	1,856,629	1,856,629
Total current liabilities	18,429,964	6,752,217
Long-term debt		10,885,854
Finance lease liabilities	7,349	16,018
Operating lease liabilities		26,995
Warrant liability	68,319	522,918
Total liabilities	18,505,632	18,204,002
Commitments and contingencies (Note 9)
Convertible preferred stock:
Total convertible preferred stock
Stockholders' equity:
Preferred stock, value
Common stock, par value $0.01 per share; 325,000,000 shares authorized; 225,942,719 and 176,461,628 shares issued and outstanding at June 30, 2022 and September 30, 2021, respectively	2,259,427	1,764,616
Additional paid-in capital	412,413,161	345,726,087
Accumulated deficit	(394,590,493)	(342,883,254)
Total stockholders' equity	20,082,095	4,607,449
Total liabilities, convertible preferred stock and stockholders' equity	38,587,727	22,811,451
Series A convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock
Convertible Preferred Stock Series A-1
Convertible preferred stock:
Total convertible preferred stock
Series B convertible preferred stock
Stockholders' equity:
Preferred stock, value

Debt - Summary (Details) - USD ($)	Jun. 30, 2022	Nov. 16, 2021	Sep. 30, 2021	Nov. 05, 2020
Debt Instrument [Line Items]
Total debt	$ 10,847,966		$ 11,842,345
Less: unamortized loan costs	(388,594)		(52,291)
Total debt, net of unamortized loan costs	10,459,372		11,790,054
Less: current portion	(10,459,372)		(904,200)
Long-term debt			10,885,854
Unsecured promissory note (2021)
Debt Instrument [Line Items]
Total debt	10,847,966
Less: unamortized loan costs		$ (820,000)
Total debt, net of unamortized loan costs	$ 10,459,372
Unsecured promissory note (2020)
Debt Instrument [Line Items]
Total debt			10,938,145
Less: unamortized loan costs		$ (26,488)		$ (228,032)
Paycheck Protection Program
Debt Instrument [Line Items]
Total debt			$ 904,200

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Jun. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies

Schedule of computation of basic earnings per share and diluted earnings per share


		Three months ended June 30,			Nine months ended June 30,
	2022		2021		2022		2021
Net loss attributable to common stockholders	$	(17,539,961)	$	(12,196,547)	$	(51,707,239)	$	(39,758,982)
Common stock shares outstanding (weighted average)		220,497,826		168,420,675		209,108,090		146,860,652
Basic and diluted net loss per share	$	(0.08)	$	(0.07)	$	(0.25)	$	(0.27)

Schedule of dilutive securities excluded from the computation weighted-average shares


	As of June 30,
	2022	2021
Performance-based stock units	2,470	2,470
Performance-based stock options	700,000	—
Stock options	20,099,581	12,010,781
Common stock warrants	6,812,794	5,129,460

Equity Method Investment - Syntone (Details) - PRC Joint Venture - USD ($)		1 Months Ended
	May 22, 2020	Jun. 30, 2020
Schedule of Equity Method Investments [Line Items]
Ownership percentage	20.00%
Investment in joint venture		$ 900,000
Expected future investment	$ 2,100,000
Contract period	4 years
Syntone
Schedule of Equity Method Investments [Line Items]
Ownership percentage	80.00%