869047
3.15
119047
3.38
24880421
0.30
0.70
2500000
2500000
130000
1.88
10000000
14784341
0.50
24637921
220000
3083019
4.70
4096969
0.01
220000
5.21
100000000
0.001
3000000
24637921
1694163
853029
-101622
346023
333818184
110381
20946331
-312797069
2200
396625
4521512
24638
25467843
1956000
9600241
10699
683732
35680
25467843
9073449
1409113
1812522
1800000
1264042
10337491
15000
18320
4800000
3.56
2576500
1710825
9000000
869047
300000
8250000
6700493
6000000
24436317
220000
5.00
3447969
0.01
220000
100000000
0.001
3000000
24436317
1694163
1593994
-100977
786494
332666935
461970
22010589
-310582006
2200
345530
5262905
24437
27273494
1956000
9600241
10699
684789
44844
27273494
11669435
463486
12132921
18748
4800000
11500000
1158730
3.15
0.070
50000
1.29
680000
2500000
P5Y
12000000
3.00
2800666
6000000
45000
700000
197500
200000
200000
4768420
23697626
0
9073352
-0.10
-1690
3523
0
12934
2701
-2350922
-2352465
2669
0
-399738
-2349796
-2363733
-6008553
-2352465
3318838
125811
1615815
255098
8083848
-3523
2363733
100000
1543
113
304380
123
2984049
10278
600000
30409
319717
747918
2200000
3197785
3675567
0
P0Y
MNOV
MEDICINOVA INC
false
Smaller Reporting Company
2015
10-Q
2015-03-31
0001226616
--12-31
Q1
<div>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Potentially dilutive outstanding securities excluded from diluted
net loss per common share because of their anti-dilutive
effect:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="76%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>March 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>2015</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>2014</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Convertible preferred stock, as converted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,200,000</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,200,000</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Stock options</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,096,969</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,197,785</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,658,567</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,675,567</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Total</p>
</td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9,955,536</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9,073,352</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
P6Y5M19D
<div>
<p style="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Revenue Recognition Policy</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Revenues consist of milestone payments and research and development
services. Milestone payments are recognized as revenue upon
achievement of pre-defined clinical development and regulatory
events, which require substantive effort, and for which achievement
of the milestone was not readily assured at the inception of the
agreement. Milestones that do not meet the criteria for accounting
under the milestone method because the payments are solely
contingent upon the performance of a third party are accounted for
as contingent revenue. Research and development services are
recognized as research costs are incurred over the period the
services are performed. For all other revenue the Company
recognizes revenues when all four of the following criteria are
met: (1) persuasive evidence that an arrangement exists;
(2) delivery of the products and/or services has occurred;
(3) the selling price is fixed or determinable; and
(4) collectability is reasonably assured.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
A summary of stock option activity and related information as of
March 31, 2015 is as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="46%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of<br />
Option Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted Average<br />
Exercise Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted Average<br />
Contractual Life</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Aggregate<br />
Intrinsic Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Outstanding at December 31, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,447,969</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.00</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">649,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3.09</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Cancelled</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Outstanding at March 31, 2015</p>
</td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,096,969</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4.70</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.47</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,812,522</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Exercisable at March 31, 2015</p>
</td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,083,019</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.21</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.51</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,409,113</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>3. Fair Value Measurements</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Fair value is an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair
value is a market-based measurement that should be determined based
on assumptions that market participants would use in pricing an
asset or liability. As a basis for considering such assumptions, a
three-tier fair value hierarchy has been established, which
prioritizes the inputs used in measuring fair value as follows:</p>
<p style="font-size:6pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="92%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="6%"></td>
<td valign="bottom" width="3%"></td>
<td width="91%"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">Level 1:</td>
<td valign="bottom"></td>
<td valign="bottom">Observable inputs such as quoted prices in
active markets;</td>
</tr>
<tr style="font-size:1pt">
<td height="8"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">Level 2:</td>
<td valign="bottom"></td>
<td valign="bottom">Inputs are quoted prices for similar items in
active markets or inputs are quoted prices for identical or similar
items in markets that are not active near the measurement date;
and</td>
</tr>
<tr style="font-size:1pt">
<td height="8"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">Level 3:</td>
<td valign="bottom"></td>
<td valign="bottom">Unobservable inputs due to little or no market
data, which require the reporting entity to develop its own
assumptions</td>
</tr>
</table>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Cash and cash equivalents, including money market accounts, of $9.0
million and $11.5 million measured at fair value as of
March 31, 2015 and December 31, 2014, respectively, are
classified within Level 1.</p>
</div>
3.09
-3233516
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>4. Joint Venture</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The Company entered into an agreement to form a joint venture
company with Zhejiang Medicine Co., Ltd. and Beijing Medfron
Medical Technologies Co., Ltd. (formerly Beijing Make-Friend
Medicine Technology Co., Ltd.) effective September 27, 2011.
The joint venture agreement provides for the joint venture company,
Zhejiang Sunmy Bio-Medical Co., Ltd. (Zhejiang Sunmy), to develop
and commercialize MN-221 in China and pursue additional compounds
to develop. A sublicense agreement would be required under which
Zhejiang Sunmy would license MN-221 from the Company and, as of the
date of this filing, no such sublicense agreement has been entered
into. In accordance with the joint venture agreement, in March 2012
the Company paid $680,000 for a 30% interest in Zhejiang Sunmy. The
other parties to the joint venture agreement provided funding for
their combined 70% interest. In December 2013, the Board of
Directors of Zhejiang Sunmy agreed to amend the joint venture
agreement to allow for the departure of Zhejiang Medicine Co., Ltd.
subject to the approval of the government of the People’s
Republic of China. In August 2014, the Chinese government approved
the amendment to the joint venture agreement to allow for the
departure of Zhejiang Medicine Co., Ltd. and for Beijing Medfron
Medical Technologies Co., Ltd. and MediciNova to each have a 50%
interest in Zhejiang Sunmy. No additional capital was contributed
by either remaining party.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Zhejiang Sunmy is a variable interest entity for which the Company
is not the primary beneficiary as the Company does not have a
majority of the board seats and does not have power to direct or
significantly influence the actions of the entity. The activities
of Zhejiang Sunmy are accounted for under the equity method whereby
the Company absorbs any loss or income generated by Zhejiang Sunmy
according to the Company’s percentage ownership. At
March 31, 2015, the investment is reflected as a long-term
asset on the Company’s consolidated balance sheet which
represents the investment in Zhejiang Sunmy, net of the
Company’s portion of any generated loss or income.</p>
</div>
P10Y
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
<b>1. Interim Financial Information</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
<b><i>Organization and Business</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company was incorporated in the state of Delaware in September
2000 and is a public company. The Company’s common stock is
listed in both the U.S. and Japan and trades on The NASDAQ Global
Market and the JASDAQ Market of the Tokyo Stock Exchange. The
Company is a biopharmaceutical company focused on acquiring and
developing novel, small molecule therapeutics for the treatment of
serious diseases with unmet medical needs with a commercial focus
on the U.S. market. The Company’s current strategy is to
focus its development activities on MN-166 (ibudilast) for
neurological disorders such as progressive multiple sclerosis (MS),
amyotrophic lateral sclerosis (ALS) and substance dependence (e.g.,
methamphetamine dependence, opioid dependence and alcohol
dependence), and MN-001 (tipelukast) for fibrotic diseases such as
nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary
fibrosis (IPF). The Company’s pipeline also includes MN-221
(bedoradrine) for the treatment of acute exacerbations of asthma
and MN-029 (denibulin) for solid tumor cancers.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Basis of Presentation</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The accompanying unaudited consolidated financial statements have
been prepared in accordance with accounting principles generally
accepted in the United States (GAAP) for interim financial
information and with the instructions of the Securities and
Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and
disclosures required by GAAP for complete financial statements. In
the opinion of management, the consolidated financial statements
include all adjustments necessary, which are of a normal and
recurring nature, for the fair presentation of the Company’s
financial position and of the results of operations and cash flows
for the periods presented. The accompanying unaudited consolidated
financial statements include the accounts of the Company and its
wholly owned subsidiaries.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for the
year ended December 31, 2014 included in the Company’s
Annual Report on Form 10-K filed with the SEC. The results of
operations for the interim period shown in this report are not
necessarily indicative of the results that may be expected for any
other interim period or for the full year. The balance sheet at
December 31, 2014 has been derived from the audited financial
statements at that date, but does not include all of the
information and footnotes required by GAAP for complete financial
statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Vendor Payment</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
During the three months ended March 31, 2015, the Company
received a $100,000 payment from a vendor to offset the costs of
manufactured drug product that was inadvertently destroyed by the
vendor. The vendor payment has been recorded as an offset to
general and administrative expense.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Research, Development and Patents</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Research and development costs are expensed in the period incurred.
Research and development costs primarily consist of salaries and
related expenses for personnel, facilities and depreciation,
research and development supplies, licenses and outside services.
Such research and development costs totaled $0.6 million for the
three months ended March 31, 2015 and 2014, respectively.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Costs related to filing and pursuing patent applications are
expensed as incurred, as recoverability of such expenditures is
uncertain. The Company includes all external costs related to the
filing of patents on developments in Research, Development and
Patents expenses. Such patent-related expenses totaled $0.1 million
for the three months ended March 31, 2015 and 2014.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
<b><i>Use of Estimates</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and the accompanying notes. Actual results
could differ from those estimates.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Recently Issued Accounting Pronouncements</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In May 2014, the Financial Accounting Standards Board
(“FASB”) and the International Accounting Standards
Board “(IASB”) jointly issued Accounting Standards
Update (“ASU”) No. 2014-09, Revenue from Contracts
from Customers, which supersedes the revenue recognition
requirements in ASC 605, Revenue Recognition. ASU 2014-09 is a
comprehensive new revenue recognition standard that will supersede
nearly all existing revenue recognition guidance under US GAAP
and IFRS. The standard’s core principle is that a company
will recognize revenue when it transfers promised goods or services
to customers in an amount that reflects the consideration to which
the company expects to be entitled in exchange for those goods or
services. In doing so, companies will need to use more judgment and
make more estimates than under current authoritative guidance.
These may include identifying performance obligations in the
contract, estimating the amount of variable consideration to
include in the transaction price and allocating the transaction
price to each separate performance obligation. The standard is
effective for public entities for annual and interim periods
beginning after December 15, 2016. Early adoption is not
permitted under US GAAP. The adoption of this guidance is not
expected to have a material impact on the Company.</p>
</div>
24538539
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>6. Stockholders’ Equity</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>At-The-Market Issuance Sales Agreements</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On October 16, 2013, the Company entered into an at-the-market
equity distribution agreement with MCUSA pursuant to which the
Company may sell common stock through MCUSA from time to time up to
an aggregate offering price of $10.0 million. Under the terms of
this agreement, unless otherwise mutually agreed, no daily sale of
an amount of shares of the Company’s common stock is to
exceed the lower of $50,000 or 10% of the lower of the 5-day or
3-month average daily traded value of the Company’s common
stock on NASDAQ (unless 10% of the lower of the 5-day or 3-month
average daily traded value of the Company’s common stock on
the JASDAQ Market of the Tokyo Stock Exchange (“TSE”)
is greater, in which case the value from the TSE will be used) as
of the date of the applicable issuance notice. The price per share
is not to be less than the greater of $1.29 or the last available
closing price of a share of the Company’s common stock on
NASDAQ. MCUSA agreed to use its commercially reasonable efforts
consistent with its customary trading and sales practices and
applicable laws, rules and regulations to sell shares of the
Company’s common stock and is to sell such shares by any
method permitted by law deemed to be “at the market.”
The Company agreed to pay MCUSA an aggregate commission rate of
7.0% of the gross proceeds of any common stock sold under this
agreement. MCUSA is under no obligation to purchase shares pursuant
to this agreement and there are no assurances that MCUSA will be
successful in selling shares. Proceeds from sales of common stock
will depend on the number of shares of common stock sold to MCUSA
and the per share purchase price of each transaction. The agreement
with MCUSA provides both MCUSA and the Company the right to
terminate the agreement in their discretion upon giving five
business days written notice. For the three months ended
March 31, 2015, the Company has generated gross and net
proceeds of $0.7 million and $0.6 million, respectively, under this
agreement on sales of 180,000 shares of the Company’s common
stock at prices ranging from $3.24 to $4.22 per share.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Common Stock Warrants</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
In 2011, the Company consummated a firm-commitment underwritten
public offering of 2,800,666 units at a price to the public of
$3.00 per unit for gross proceeds of $8.25 million. Each unit
consists of one share of common stock, and a warrant to purchase
one share of common stock. The shares of common stock and warrants
are immediately separable and were issued separately. The warrants
are exercisable immediately upon issuance, have a five-year term
and an exercise price of $3.56 per share. None of these
warrants were exercised during the three months ended
March 31, 2015. As of March 31, 2015, 2,576,500 of these
warrant remain outstanding and exercisable.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
In August 2012, the Company issued a warrant in exchange for
investor relations services to purchase up to 130,000 of common
stock of the Company at a price of $1.88 per share, the closing
price of the Company’s common stock on that date. As of
March 31, 2015, the warrant was exercisable for 15,000 shares,
and no further shares will vest. The warrant expires five years
from the date of issuance.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
In May 2013, the Company entered into a securities purchase
agreement with certain accredited investors pursuant to which the
Company agreed to sell to investors 1,158,730 shares of the
Company’s common stock at a price of $3.15 per share and
warrants to purchase an aggregate of 869,047 shares of the
Company’s common stock with an exercise price of $3.15 per
share. On May 29, 2013, 119,047 of the warrants were amended
to reflect an exercise price of $3.38 per share. The warrants will
expire on May 9, 2018. As of March 31, 2015, 869,047 of
these warrants remain outstanding and exercisable.</p>
</div>
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>7. Net Loss Per Share</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The Company computes basic net loss per share using the weighted
average number of common shares outstanding during the period.
Diluted net income per share is based upon the weighted average
number of common shares and potentially dilutive securities (common
share equivalents) outstanding during the period. Common share
equivalents outstanding, determined using the treasury stock
method, are comprised of shares that may be issued under the
Company’s stock option agreements and warrants. Common share
equivalents are excluded from the diluted net loss per share
calculation because of their anti-dilutive effect.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Potentially dilutive outstanding securities excluded from diluted
net loss per common share because of their anti-dilutive
effect:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="76%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>March 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>2015</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>2014</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Convertible preferred stock, as converted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,200,000</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,200,000</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Stock options</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,096,969</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,197,785</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,658,567</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,675,567</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Total</p>
</td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9,955,536</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9,073,352</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
0
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>8. Related Party Transactions</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On October 13, 2011, the Company entered into a services
agreement with Kissei to perform two separate studies relating to
MN-221 in exchange for $2.5 million paid to the Company in October
2011. The Company is responsible for all costs to be incurred in
the performance of these studies. The amount received from Kissei,
net of the amount recorded as revenue through March 31, 2015,
is included on the balance sheet at March 31, 2015 as deferred
revenue and will be recognized as revenue in future periods as the
Company performs the remaining services.</p>
</div>
0
9955536
<div>
<p style="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Use of Estimates</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and the accompanying notes. Actual results
could differ from those estimates.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The following table provides the assumptions used in the
Black-Scholes valuation model for the three months ended
March 31, 2015 and 2014. There were no ESPP grants during the
three months ended March 31, 2015 and 2014.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="61%"></td>
<td valign="bottom" width="16%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="16%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Three Months Ended<br />
March 31, 2015</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Three Months Ended<br />
March 31, 2014</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
<b>Stock Option assumptions:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Risk-free interest rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.47</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Expected volatility of common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">79.24</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Dividend yield</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Expected term (in years)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.5</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
</table>
</div>
-0.09
21604
0
649000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
<b>9. Subsequent Events</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company has generated gross and net proceeds of $0.2 million
under the at-the-market equity distribution agreement with MCUSA on
the sale of 45,000 shares of the Company’s common stock
subsequent to March 31, 2015.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company has generated gross proceeds of $0.7 million from the
exercise of 197,500 warrants subsequent to March 31, 2015.</p>
</div>
P1Y2M12D
0
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Basis of Presentation</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The accompanying unaudited consolidated financial statements have
been prepared in accordance with accounting principles generally
accepted in the United States (GAAP) for interim financial
information and with the instructions of the Securities and
Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and
disclosures required by GAAP for complete financial statements. In
the opinion of management, the consolidated financial statements
include all adjustments necessary, which are of a normal and
recurring nature, for the fair presentation of the Company’s
financial position and of the results of operations and cash flows
for the periods presented. The accompanying unaudited consolidated
financial statements include the accounts of the Company and its
wholly owned subsidiaries.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for the
year ended December 31, 2014 included in the Company’s
Annual Report on Form 10-K filed with the SEC. The results of
operations for the interim period shown in this report are not
necessarily indicative of the results that may be expected for any
other interim period or for the full year. The balance sheet at
December 31, 2014 has been derived from the audited financial
statements at that date, but does not include all of the
information and footnotes required by GAAP for complete financial
statements.</p>
</div>
P5Y6M4D
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>5. Stock-based Compensation</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
<b><i>Stock Incentive Plans</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In June 2013, the Company adopted the 2013 Equity Incentive Plan,
or 2013 Plan, under which the Company may grant stock options,
stock appreciation rights, restricted stock, restricted stock units
and other awards to individuals who are then employees, officers,
non-employee directors or consultants of the Company or its
subsidiaries. The 2013 Plan is the successor to the Company’s
Amended and Restated 2004 Stock Incentive Plan, or 2004 Plan. A
total of 2,500,000 shares of common stock were initially
reserved for issuance under the 2013 Plan, plus “returning
shares” that may become available from time to time.
“Returning shares” are shares that are subject to
outstanding awards granted under the 2004 Plan that expire or
terminate prior to exercise or settlement, are forfeited because of
the failure to vest, are repurchased, or are withheld to satisfy
tax withholding or purchase price obligations in connection with
such awards. Although the Company no longer grants equity awards
under the 2004 Plan, all outstanding stock awards granted under the
2004 Plan will continue to be subject to the terms and conditions
as set forth in the agreements evidencing such stock awards and the
terms of the 2004 Plan. As of March 31, 2015, 1,710,825
options remain available for future grant under the 2013 Plan.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Stock Options</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Options granted under the 2013 Plan and Prior Plans have terms of
ten years from the date of grant and generally vest over a three or
four year period.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The exercise price of all options granted was equal to the market
value of the Company’s common stock on the date of grant.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
A summary of stock option activity and related information as of
March 31, 2015 is as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="46%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of<br />
Option Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted Average<br />
Exercise Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted Average<br />
Contractual Life</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Aggregate<br />
Intrinsic Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Outstanding at December 31, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,447,969</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.00</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">649,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3.09</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Cancelled</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Outstanding at March 31, 2015</p>
</td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,096,969</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4.70</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.47</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,812,522</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Exercisable at March 31, 2015</p>
</td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,083,019</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.21</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.51</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,409,113</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
No options were exercised during the three months ended
March 31, 2014 and 2015.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Employee Stock Purchase Plan</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Under the Company’s 2007 Employee Stock Purchase Plan, or
ESPP, 300,000 shares of common stock were originally reserved for
issuance. In addition, the shares reserved automatically increase
each year by a number equal to the lesser of: (i) 15,000
shares; (ii) 1% of the outstanding shares of common stock on
the last day of the immediately preceding fiscal year; or
(iii) such lesser amount as determined by the Board. The ESPP
permits full-time employees to purchase common stock through
payroll deductions (which cannot exceed 15% of each
employee’s compensation) at the lower of 85% of fair market
value at the beginning of the offering period or the end of each
six-month offering period.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
For the three months ended March 31, 2015, an aggregate of
21,604 shares were issued under the ESPP, leaving 209,349 shares
available for future issuance.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Compensation Expense</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
During the three months ended March 31, 2015, options to
purchase 649,000 shares of common stock were granted. The Company
did not grant any stock options or employee stock purchase rights
during the three months ended March 31, 2014. Stock-based
compensation expense for stock option awards and ESPP shares are
reflected in total operating expenses for each respective year. For
the three months ended March 31, 2015 and 2014, stock-based
compensation expense related to stock options and the ESPP was
$513,000 and $255,000, respectively.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company uses the Black-Scholes valuation model for determining
the estimated fair value and the stock-based compensation for
stock-based awards to employees. The following table provides the
assumptions used in the Black-Scholes valuation model for the three
months ended March 31, 2015 and 2014. There were no ESPP
grants during the three months ended March 31, 2015 and
2014.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="61%"></td>
<td valign="bottom" width="16%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="16%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Three Months Ended<br />
March 31, 2015</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Three Months Ended<br />
March 31, 2014</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
<b>Stock Option assumptions:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Risk-free interest rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.47</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Expected volatility of common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">79.24</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Dividend yield</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.0</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Expected term (in years)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.5</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
As of March 31, 2015, there was $1.8 million of unamortized
compensation cost related to unvested stock option awards which is
expected to be recognized over a remaining weighted-average vesting
period of 1.2 years, on a straight-line basis.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Recently Issued Accounting Pronouncements</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In May 2014, the Financial Accounting Standards Board
(“FASB”) and the International Accounting Standards
Board “(IASB”) jointly issued Accounting Standards
Update (“ASU”) No. 2014-09, Revenue from Contracts
from Customers, which supersedes the revenue recognition
requirements in ASC 605, Revenue Recognition. ASU 2014-09 is a
comprehensive new revenue recognition standard that will supersede
nearly all existing revenue recognition guidance under US GAAP
and IFRS. The standard’s core principle is that a company
will recognize revenue when it transfers promised goods or services
to customers in an amount that reflects the consideration to which
the company expects to be entitled in exchange for those goods or
services. In doing so, companies will need to use more judgment and
make more estimates than under current authoritative guidance.
These may include identifying performance obligations in the
contract, estimating the amount of variable consideration to
include in the transaction price and allocating the transaction
price to each separate performance obligation. The standard is
effective for public entities for annual and interim periods
beginning after December 15, 2016. Early adoption is not
permitted under US GAAP. The adoption of this guidance is not
expected to have a material impact on the Company.</p>
</div>
-1057
0
6992
4387
-2212117
-2215063
-645
0
800373
-2215708
-2214955
-2215063
638146
4014
-440471
1495227
513305
-2595986
2214955
100000
2946
-616
140
580679
9180
600000
100000
57467
Cannot exceed 15%
-301151
P6M
0.85
209349
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>2. Revenue Recognition</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Revenue Recognition Policy</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Revenues consist of milestone payments and research and development
services. Milestone payments are recognized as revenue upon
achievement of pre-defined clinical development and regulatory
events, which require substantive effort, and for which achievement
of the milestone was not readily assured at the inception of the
agreement. Milestones that do not meet the criteria for accounting
under the milestone method because the payments are solely
contingent upon the performance of a third party are accounted for
as contingent revenue. Research and development services are
recognized as research costs are incurred over the period the
services are performed. For all other revenue the Company
recognizes revenues when all four of the following criteria are
met: (1) persuasive evidence that an arrangement exists;
(2) delivery of the products and/or services has occurred;
(3) the selling price is fixed or determinable; and
(4) collectability is reasonably assured.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Genzyme Corporation</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
In December 2005, Avigen, Inc. and Genzyme Corporation entered into
an Assignment Agreement (Genzyme Agreement) in which Genzyme
acquired certain gene therapy intellectual property, programs and
other related assets from Avigen in exchange for an initial $12.0
million payment, and Avigen could receive additional development
milestone payments, sublicensing fees and royalty payments based on
the successful development of products by Genzyme utilizing
technologies previously developed by Avigen. Avigen was
subsequently acquired by the Company in December 2009 along with
Avigen’s rights and obligations under the Genzyme Agreement.
If Genzyme fails to diligently pursue the commercialization or
marketing of products using the assigned technology, as specified
in the Genzyme Agreement, some of the rights assigned could revert
back to the Company at a future date.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The development milestones outlined in the Genzyme Agreement do not
meet the definition of a substantive milestone obligation under
authoritative guidance on revenue recognition for milestone
payments, as Genzyme is responsible for the development of the
product and there is no further substantive service effort required
by the Company. The Company determined that a non-substantive
milestone in the Genzyme Agreement had been earned, and license
revenue and a receivable of $6.0 million was recorded during 2013,
as no future performance obligations exist. The Company received
payment of the amount receivable in January 2014.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Kissei Pharmaceutical Co., Ltd.</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
In October 2011, the Company entered into an agreement with Kissei
Pharmaceutical Co., Ltd., or Kissei, to perform research and
development services relating to MN-221 in exchange for a
non-refundable upfront payment of $2.5 million. Under the
terms of the agreement, the Company is responsible for all costs to
be incurred in the performance of these services. Certain of these
research and development services were completed in 2013 and 2012,
and the remaining services are expected to be delivered and
completed at a future date. The Company assessed the deliverables
in accordance with the authoritative guidance and concluded the
existence of one deliverable, research and development services. As
such, revenue is being recognized as the research and development
services are performed. The amount received from Kissei, net of the
amount recorded as revenue, is included on the balance sheet as
long-term deferred revenue and will be recognized as revenue as the
remaining services are performed. Revenue recorded in the three
months ended March 31, 2015 and 2014 was zero.</p>
</div>
Shares reserved automatically increase each year by a number equal to the lesser of (i) 15,000 shares; (ii) 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year; or (iii) such lesser amount as determined by the Board.
719728
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Research, Development and Patents</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Research and development costs are expensed in the period incurred.
Research and development costs primarily consist of salaries and
related expenses for personnel, facilities and depreciation,
research and development supplies, licenses and outside services.
Such research and development costs totaled $0.6 million for the
three months ended March 31, 2015 and 2014, respectively.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Costs related to filing and pursuing patent applications are
expensed as incurred, as recoverability of such expenditures is
uncertain. The Company includes all external costs related to the
filing of patents on developments in Research, Development and
Patents expenses. Such patent-related expenses totaled $0.1 million
for the three months ended March 31, 2015 and 2014.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Vendor Payment</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
During the three months ended March 31, 2015, the Company
received a $100,000 payment from a vendor to offset the costs of
manufactured drug product that was inadvertently destroyed by the
vendor. The vendor payment has been recorded as an offset to
general and administrative expense.</p>
</div>
180000
10% of the lower of the 5-day or 3-month average daily traded value of the Company's common stock
600000
700000
3.24
4.22
0
P5Y
P3Y
P4Y
2200000
4096969
3658567
0
0.0147
0.7924
P5Y6M
0.000
May 9, 2018
0001226616
mnov:SecuritiesPurchaseAgreementMember
2015-01-01
2015-03-31
0001226616
us-gaap:EmployeeStockOptionMember
2015-01-01
2015-03-31
0001226616
us-gaap:EmployeeStockMember
2015-01-01
2015-03-31
0001226616
us-gaap:WarrantMember
2015-01-01
2015-03-31
0001226616
us-gaap:StockOptionMember
2015-01-01
2015-03-31
0001226616
us-gaap:ConvertiblePreferredStockMember
2015-01-01
2015-03-31
0001226616
us-gaap:MaximumMember
2015-01-01
2015-03-31
0001226616
us-gaap:MinimumMember
2015-01-01
2015-03-31
0001226616
mnov:CommonStockWarrantMember
2015-01-01
2015-03-31
0001226616
mnov:MacquarieCapitalIncorporatedMemberus-gaap:MaximumMembermnov:ScenarioTwoMember
2015-01-01
2015-03-31
0001226616
mnov:MacquarieCapitalIncorporatedMemberus-gaap:MinimumMembermnov:ScenarioTwoMember
2015-01-01
2015-03-31
0001226616
mnov:MacquarieCapitalIncorporatedMembermnov:ScenarioTwoMember
2015-01-01
2015-03-31
0001226616
2015-01-01
2015-03-31
0001226616
us-gaap:EmployeeStockOptionMember
2014-01-01
2014-03-31
0001226616
us-gaap:EmployeeStockMember
2014-01-01
2014-03-31
0001226616
us-gaap:WarrantMember
2014-01-01
2014-03-31
0001226616
us-gaap:StockOptionMember
2014-01-01
2014-03-31
0001226616
us-gaap:ConvertiblePreferredStockMember
2014-01-01
2014-03-31
0001226616
2014-01-01
2014-03-31
0001226616
mnov:MacquarieCapitalIncorporatedMembermnov:ScenarioThreeMemberus-gaap:SubsequentEventMember
2015-04-01
2015-05-11
0001226616
mnov:GenzymeMember
2013-01-01
2013-12-31
0001226616
2011-01-01
2011-12-31
0001226616
mnov:GenzymeMember
2005-12-01
2005-12-31
0001226616
2012-08-01
2012-08-31
0001226616
2011-10-01
2011-10-31
0001226616
2012-03-01
2012-03-31
0001226616
mnov:MacquarieCapitalIncorporatedMemberus-gaap:MinimumMembermnov:ScenarioTwoMember
2013-10-16
2013-10-16
0001226616
mnov:MacquarieCapitalIncorporatedMembermnov:ScenarioTwoMember
2013-10-16
2013-10-16
0001226616
mnov:SecuritiesPurchaseAgreementMember
2013-05-09
2013-05-09
0001226616
mnov:SecuritiesPurchaseAgreementMemberus-gaap:CommonStockMember
2013-05-09
2013-05-09
0001226616
us-gaap:FairValueInputsLevel1Member
2014-12-31
0001226616
2014-12-31
0001226616
mnov:GenzymeMember
2013-12-31
0001226616
2013-12-31
0001226616
2011-12-31
0001226616
us-gaap:EmployeeStockMember
2007-12-31
0001226616
mnov:SecuritiesPurchaseAgreementMember
2015-03-31
0001226616
us-gaap:FairValueInputsLevel1Member
2015-03-31
0001226616
mnov:TwoThousandThirteenPlanMember
2015-03-31
0001226616
mnov:CommonStockWarrantMember
2015-03-31
0001226616
2015-03-31
0001226616
2014-08-31
0001226616
2014-03-31
0001226616
mnov:MacquarieCapitalIncorporatedMembermnov:ScenarioTwoMember
2013-10-16
0001226616
2012-08-31
0001226616
2011-10-31
0001226616
mnov:TwoThousandThirteenPlanMember
2013-06-30
0001226616
2012-03-31
0001226616
2015-05-08
0001226616
mnov:SecuritiesPurchaseAgreementMemberus-gaap:InvestorMember
2013-05-29
0001226616
mnov:SecuritiesPurchaseAgreementMember
2013-05-09
shares
iso4217:USD
mnov:Warrants
pure
iso4217:USD
iso4217:USD
shares