• Filing Date: 2016-03-30
  • Form Type: 10-K
  • Description: Annual report
v3.3.1.900
Document And Entity Information - USD ($)
12 Months Ended
Dec. 31, 2015
Mar. 29, 2016
Jun. 30, 2015
Document Information [Line Items]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2015    
Document Fiscal Year Focus 2015    
Document Fiscal Period Focus FY    
Entity Registrant Name CAPRICOR THERAPEUTICS, INC.    
Entity Central Index Key 0001133869    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Smaller Reporting Company    
Entity Public Float     $ 32,449,891
Trading Symbol CAPR    
Entity Common Stock, Shares Outstanding   17,952,323  
v3.3.1.900
CONSOLIDATED BALANCE SHEETS - USD ($)
Dec. 31, 2015
Dec. 31, 2014
CURRENT ASSETS    
Cash and cash equivalents $ 5,568,306 $ 8,034,765
Marketable securities 7,999,010 0
Restricted cash 0 2,977,024
Grant receivable 211,938 360,233
Prepaid expenses and other current assets 210,603 235,523
TOTAL CURRENT ASSETS 13,989,857 11,607,545
PROPERTY AND EQUIPMENT, net 318,566 229,455
OTHER ASSETS    
Intangible assets, net of accumulated amortization of $98,679 and $49,930, respectively 191,003 239,752
In-process research and development, net of accumulated amortization of $0 1,500,000 1,500,000
Other assets 70,146 55,320
TOTAL ASSETS 16,069,572 13,632,072
CURRENT LIABILITIES    
Accounts payable and accrued expenses 2,530,500 1,699,254
Accounts payable and accrued expenses, related party 352,334 433,712
Deferred revenue, current 3,645,834 4,166,667
TOTAL CURRENT LIABILITIES 6,528,668 6,299,633
LONG-TERM LIABILITIES    
Deferred revenue, net of current portion 911,458 4,166,666
Loan payable 9,155,857 9,155,857
Accrued interest 505,363 258,639
TOTAL LONG-TERM LIABILITIES 10,572,678 13,581,162
TOTAL LIABILITIES $ 17,101,346 $ 19,880,795
COMMITMENTS AND CONTINGENCIES (NOTE 6)
STOCKHOLDERS' EQUITY (DEFICIT)    
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding $ 0 $ 0
Common stock, $0.001 par value, 50,000,000 shares authorized, 16,254,985 and 11,707,051 shares issued and outstanding, respectively 16,255 11,707
Additional paid-in capital 34,115,052 16,054,697
Accumulated other comprehensive income 9,385 0
Accumulated deficit (35,172,466) (22,315,127)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,031,774) (6,248,723)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 16,069,572 $ 13,632,072
v3.3.1.900
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
Dec. 31, 2015
Dec. 31, 2014
Net of accumulated amortization (in dollars) $ 98,679 $ 49,930
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred Stock, Shares Issued 0 0
Preferred Stock, Shares Outstanding 0 0
Common Stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 16,254,985 11,707,051
Common stock, shares outstanding 16,254,985 11,707,051
In Process Research and Development [Member]    
Net of accumulated amortization (in dollars) $ 0 $ 0
v3.3.1.900
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
INCOME    
Collaboration income $ 3,776,041 $ 4,166,667
Grant income 1,741,607 620,033
TOTAL INCOME 5,517,648 4,786,700
OPERATING EXPENSES    
Research and development 13,757,279 7,787,384
General and administrative 4,372,195 3,017,301
TOTAL OPERATING EXPENSES 18,129,474 10,804,685
LOSS FROM OPERATIONS (12,611,826) (6,017,985)
OTHER INCOME (EXPENSE)    
Investment income 3,113 1,898
Interest expense (248,626) (200,505)
TOTAL OTHER INCOME (EXPENSE) (245,513) (198,607)
NET LOSS (12,857,339) (6,216,592)
OTHER COMPREHENSIVE GAIN    
Net unrealized gain on marketable securities 9,385 980
COMPREHENSIVE LOSS $ (12,847,954) $ (6,215,612)
Net loss per share, basic and diluted (in dollars per share) $ (0.81) $ (0.53)
Weighted average number of shares, basic and diluted (in shares) 15,902,133 11,696,980
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Other Comprehensive Income (loss) [Member]
Accumulated Deficit [Member]
Balance at Dec. 31, 2013 $ (534,882) $ 11,687 $ 15,552,946 $ (980) $ (16,098,535)
Balance (in shares) at Dec. 31, 2013   11,687,747      
Stock-based compensation 496,939 $ 5 496,934 0 0
Stock-based compensation (in shares)   4,165      
Unrealized gain on marketable securities 980 $ 0 0 980 0
Stock awards, warrants and options exercised 4,832 $ 15 4,817 0 0
Stock awards, warrants and options exercised (in shares)   15,139      
Net loss (6,216,592) $ 0 0 0 (6,216,592)
Balance at Dec. 31, 2014 (6,248,723) $ 11,707 16,054,697 0 (22,315,127)
Balance (in shares) at Dec. 31, 2014   11,707,051      
Issuance of common stock, net of fees 16,446,218 $ 4,498 16,441,720 0 0
Issuance of common stock, net of fees (in shares)   4,497,867      
Stock-based compensation 1,573,224 $ 2 1,573,222 0 0
Stock-based compensation (in shares)   1,666      
Unrealized gain on marketable securities 9,385 $ 0 0 9,385 0
Stock awards, warrants and options exercised 45,461 $ 48 45,413 0 0
Stock awards, warrants and options exercised (in shares)   48,401      
Net loss (12,857,339) $ 0 0 0 (12,857,339)
Balance at Dec. 31, 2015 $ (1,031,774) $ 16,255 $ 34,115,052 $ 9,385 $ (35,172,466)
Balance (in shares) at Dec. 31, 2015   16,254,985      
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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (12,857,339) $ (6,216,592)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation and amortization 110,865 41,896
Stock-based compensation 1,573,224 496,939
Change in assets - (increase) decrease:    
Restricted cash 2,977,024 (1,575,165)
Receivables 148,295 (360,233)
Prepaid expenses and other current assets 24,920 (12,573)
Other assets (14,826) (29,592)
Change in liabilities - increase (decrease):    
Accounts payable and accrued expenses 831,246 70,329
Accounts payable and accrued expenses, related party (81,378) 9,715
Accrued interest 246,724 200,505
Deferred revenue (3,776,041) 8,333,333
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (10,817,286) 958,562
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of marketable securities (17,989,625) 0
Proceeds from sales and maturities of marketable securities 10,000,000 327,474
Purchases of property and equipment (129,697) (162,687)
Payments for leasehold improvements (21,530) (23,744)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (8,140,852) 141,043
CASH FLOWS FROM FINANCING ACTIVITIES:    
Net proceeds from sale of common stock 16,446,218 0
Proceeds from loan payable, net 0 5,200,791
Proceeds from stock awards, warrants and options 45,461 4,832
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,491,679 5,205,623
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,466,459) 6,305,228
Cash and cash equivalents balance at beginning of period 8,034,765 1,729,537
Cash and cash equivalents balance at end of period 5,568,306 8,034,765
SUPPLEMENTAL DISCLOSURES:    
Interest paid in cash 2,685 0
Income taxes paid in cash $ 0 $ 0
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2015
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
Description of Business
 
The mission of Capricor Therapeutics, Inc., a Delaware corporation (referred to herein as “Capricor Therapeutics” or the “Company”), is to improve the treatment of diseases by commercializing innovative therapies, with a primary focus on cardiovascular diseases. Capricor, Inc., a privately-held company and a wholly-owned subsidiary of Capricor Therapeutics (referred to herein as “Capricor”), was founded in 2005 as a Delaware corporation based on the innovative work of its founder, Eduardo Marbán, M.D., Ph.D. After completion of a merger between Capricor and a subsidiary of Nile Therapeutics, Inc., a Delaware corporation (“Nile”), on November 20, 2013, Capricor became a wholly-owned subsidiary of Nile and Nile formally changed its name to Capricor Therapeutics, Inc. Capricor Therapeutics, together with its subsidiary, Capricor, currently has six drug candidates in various stages of development.
 
Basis of Consolidation
 
Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary. All intercompany transactions have been eliminated in consolidation.
 
Liquidity
 
The Company has historically financed its research and development activities as well as operational expenses from equity financings, government grants, a payment from Janssen Biotech, Inc. (“Janssen”) pursuant to a Collaboration Agreement with Janssen and a loan award from the California Institute for Regenerative Medicine (“CIRM”).
 
Cash, cash equivalents and marketable securities as of December 31, 2015 were approximately $13.6 million, compared to $8.0 million as of December 31, 2014. In January 2015, the Company entered into a Share Purchase Agreement with select investors, pursuant to which the Company issued an aggregate of 2,839,045 shares of its common stock at a price per share of $3.523 for an aggregate purchase price of approximately $10,000,000. In February 2015, the Company entered into a Share Purchase Agreement with select investors, pursuant to which the Company issued an aggregate of 1,658,822 shares of its common stock at a price per share of $4.25 for an aggregate purchase price of approximately $7,050,000. In March 2016, the Company entered into a Subscription Agreement with certain investors pursuant to which the Company issued an aggregate of 1,692,151 shares of common stock at a price per share of $2.40 for an aggregate purchase price of approximately $4.1 million. Pursuant to the Subscription Agreement, the Company also issued to the Investors warrants to purchase up to an aggregate of 846,073 shares of Common Stock. Each warrant has an exercise price of $4.50 per share, will initially be exercisable on the date that is six months and one day from the date of issuance, and will expire on the date that is three years from the date of issuance. Furthermore, in March 2016, Capricor was informed by CIRM that it was approved for a grant award in the amount of approximately $3.4 million to fund in part Capricor’s Phase I/II HOPE-Duchenne clinical trial. The terms of the award and the disbursement schedule have not been determined as of the date of filing of this Annual Report on Form 10-K and the award is subject to the execution of definitive documents. The Company’s principal uses of cash are for research and development expenses, general and administrative expenses, capital expenditures and other working capital requirements.
 
The Company’s future expenditures and capital requirements may be substantial and will depend on many factors, including but not limited to the following:
 
the timing and costs associated with commercialization of its product candidates;
the timing and costs associated with its clinical trials and preclinical studies;
the number and scope of its research programs; and
the costs involved in prosecuting and enforcing patent claims and other intellectual property rights.
 
The Company’s cash requirements are expected to continue to increase as it advances its research, development and commercialization programs and the Company expects to seek additional financing primarily from, but not limited to, the sale and issuance of equity or debt securities, the licensing or sale of its technology and from government grants. The Company cannot provide assurances that financing will be available when and as needed or that, if available, financing will be available on favorable or acceptable terms or at all. If the Company is unable to obtain additional financing when and if required, it would have a material adverse effect on the Company’s business and results of operations and could include reducing expenses and curtailing operations. To the extent the Company issues additional equity securities, its existing stockholders could experience substantial dilution.
 
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. 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 consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. The most sensitive estimates relate to the period over which the collaboration revenue is recognized and the stock-based compensation. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates.
 
Cash and Cash Equivalents
 
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.
 
Restricted Cash
 
As of December 31, 2014, restricted cash represented funds received under Capricor’s Loan Agreement with CIRM (see Note 2 – “Loan Payable”), which are to be allocated to the ALLSTAR clinical trial research costs as incurred. Generally, a reduction of restricted cash occurs when the Company deems certain costs are attributable to the ALLSTAR clinical trial.
 
Marketable Securities
 
The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. All of the Company’s marketable securities are considered as available-for-sale and carried at estimated fair values. Realized gains and losses on the sale of debt and equity securities are determined using the specific identification method. Unrealized gains and losses on available-for-sale securities are excluded from net income and reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity.
 
Property and Equipment
 
Property and equipment are stated at cost. Repairs and maintenance costs are expensed in the period incurred. Depreciation is computed using the straight-line method over the related estimated useful life of the asset, which such estimated useful lives range from five to seven years. Leasehold improvements are depreciated on a straight-line basis over the shorter of the useful life of the asset or the lease term. Depreciation was approximately $62,116 and $32,163 for the years ended December 31, 2015 and 2014, respectively.
 
  Property and equipment consisted of the following at December 31:
 
 
 
2015
 
2014
 
Furniture and fixtures
 
$
59,128
 
$
38,850
 
Laboratory equipment
 
 
387,872
 
 
278,453
 
Leasehold improvements
 
 
45,274
 
 
23,744
 
 
 
 
492,274
 
 
341,047
 
Less accumulated depreciation
 
 
(173,708)
 
 
(111,592)
 
Property and equipment, net
 
$
318,566
 
$
229,455
 
 
Intangible Assets
 
Amounts attributable to intellectual property consist primarily of the costs associated with the acquisition of certain technologies, patents, pending patents and related intangible assets with respect to research and development activities. Intellectual property assets are stated at cost and are amortized on a straight-line basis over the respective estimated useful lives of the assets ranging from five to fifteen years. Also, the Company recorded capitalized loan fees as a component of intangible assets on the consolidated balance sheet (see Note 2 – “Loan Payable”). Total amortization expense was approximately $48,749 and $10,733 for the years ended December 31, 2015 and 2014, respectively. A summary of future amortization expense as of December 31, 2015 is as follows:
 
Years ended
 
Amortization Expense
 
2016
 
$
48,749
 
2017
 
 
48,749
 
2018
 
 
43,733
 
2019
 
 
43,277
 
2020
 
 
4,330
 
Thereafter
 
 
2,165
 
 
As a result of the merger in 2013 between Capricor and Nile, the Company recorded $1.5 million as in-process research and development in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations. The in-process research and development asset is subject to impairment testing until completion or abandonment of research and development efforts associated with the project. Upon successful completion of the project, the Company will make a determination as to the then remaining useful life of the intangible asset and begin amortization.
 
The Company reviews indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. As of December 31, 2015, the Company deemed the assets to not be impaired and did not begin amortizing the in-process research and development.
 
Long-Lived Assets
 
The Company accounts for the impairment and disposition of long-lived assets in accordance with guidance issued by the FASB. Long-lived assets to be held and used are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable, or annually. No impairment was recorded for the years ended December 31, 2015 and 2014.
 
Government Research Grants
 
Generally, government research grants that provide funding for research and development activities are recognized as income when the related expenses are incurred, as applicable. In August 2013, Capricor was approved for a Phase IIB Bridge grant through the NIH Small Business Innovation Research, or SBIR, program for continued development of its CAP-1002 product candidate. Under the terms of the grant, disbursements are being made to Capricor over a period of approximately three years, in an aggregate amount of approximately $2.9 million, subject to annual and quarterly reporting requirements. As of December 31, 2015, approximately $2.4 million had been incurred under the terms of the award.
 
Income from Collaborative Agreement
 
Revenue from nonrefundable, up-front license or technology access payments under license and collaborative arrangements that are not dependent on any future performance by the Company is recognized when such amounts are earned. If the Company has continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of the continuing performance obligation.
 
The Company accounts for multiple element arrangements, such as license and development agreements in which a customer may purchase several deliverables, in accordance with FASB ASC Subtopic 605-25, Multiple Element Arrangements. For new or materially amended multiple element arrangements, the Company identifies the deliverables at the inception of the arrangement and each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met: (1) the delivered item or items have value to the customer on a standalone basis and (2) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control. The Company allocates revenue to each non-contingent element based on the relative selling price of each element. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, then the Company uses the best estimated selling price for that deliverable. Revenue allocated to each element is then recognized based on when the basic four revenue recognition criteria are met for each element.
 
The Company determined the deliverables under its Collaboration Agreement with Janssen (see Note 7 – “License Agreements”) did not meet the criteria to be considered separate accounting units for the purposes of revenue recognition. As a result, the Company recognized revenue from non-refundable, upfront fees ratably over the term of its performance under the agreement with Janssen. The upfront payments received, pending recognition as revenue, are recorded as deferred revenue and are classified as a short-term or long-term liability on the condensed consolidated balance sheets of the Company and amortized over the estimated period of performance. The Company periodically reviews the estimated performance period of its contract based on the estimated progress of its project.
 
Income Taxes
 
Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company's financial statements or tax returns. A valuation allowance is provided when it is more likely than not that some portion or the entire deferred tax asset will not be realized.
 
The Company uses guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position, and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. The Company incurred no interest or penalties for the years ended December 31, 2015 and 2014. The Company files income tax returns with the Internal Revenue Service (“IRS”) and the California Franchise Tax Board. The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized and such tax years are closed.
 
Loan Payable
 
The Company accounts for the funds advanced under its Loan Agreement with CIRM (see Note 2 – “Loan Payable”) as a loan payable as the eventual repayment of the loan proceeds or forgiveness of the loan is contingent upon certain future milestones being met and other conditions. As the likelihood of whether or not the Company will ever achieve these milestones or satisfy these conditions cannot be reasonably predicted at this time, the Company records these amounts as a loan payable.
 
Rent
 
Rent expense for the Company's leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. The difference between the rent expense and rent paid has been recorded as deferred rent in the accounts payable and accrued expenses, related party in the consolidated balance sheet. Rent is amortized on a straight-line basis over the term of the applicable lease, without consideration of renewal options.
 
Research and Development
 
Costs relating to the design and development of new products are expensed as research and development as incurred in accordance with FASB ASC 730-10, Research and Development. Research and development costs amounted to approximately $13.8 million and $7.8 million for the years ended December 31, 2015 and 2014, respectively.
 
Comprehensive Income (Loss)
 
Comprehensive income (loss) generally represents all changes in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders. The Company’s comprehensive loss was approximately $12.8 million and $6.2 million for the years ended December 31, 2015 and 2014, respectively. The Company’s other comprehensive income is related to a net unrealized gain on marketable securities. For the years ended December 31, 2015 and 2014, the Company’s other comprehensive gain was $9,385 and $980, respectively.
  
Stock-Based Compensation
 
The Company accounts for stock-based employee compensation arrangements in accordance with guidance issued by the FASB, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values.
 
The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statements of operations.
 
The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options; all of which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected stock option exercise behavior. The Company calculates an average of historical volatility of similar companies as a basis for its expected volatility. Expected term is computed using the simplified method provided within Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 110. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options.
 
Basic and Diluted Loss per Share
 
Basic loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares, which primarily consist of stock options issued to employees, consultants and directors as well as warrants issued to third parties, have been excluded from the diluted loss per share calculation because their effect is anti-dilutive.
 
For the years ended December 31, 2015 and 2014, warrants and options to purchase 6,233,153 and 5,308,581 shares, respectively, have been excluded from the computation of potentially dilutive securities.
 
Fair Value Measurements
 
Assets and liabilities recorded at fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories are as follows:
  
Level Input:
 
Input Definition:
 
 
 
Level I
 
Inputs are unadjusted, quoted prices for identical assets or liabilities in 
 
 
active markets at the measurement date.
Level II
 
Inputs, other than quoted prices included in Level I, that are observable 
 
 
for the asset or liability through corroboration with market data at the 
 
 
measurement date.
Level III
 
Unobservable inputs that reflect management’s best estimate of what
 
 
market participants would use in pricing the asset or liability at the 
 
 
measurement date.
 
The following table summarizes fair value measurements by level at December 31, 2015 for assets and liabilities measured at fair value on a recurring basis:
 
 
December 31, 2015
 
 
 
Level I
 
Level II
 
Level III
 
Total
 
Marketable securities
 
$
7,999,010
 
$
-
 
$
-
 
$
7,999,010
 
 
Carrying amounts reported in the balance sheet of cash and cash equivalents, grants receivable, accounts payable and accrued expenses approximate fair value due to their relatively short maturity. The carrying amounts of the Company’s marketable securities are based on market quotations from national exchanges at the balance sheet date. Interest and dividend income are recognized separately on the income statement based on classifications provided by the brokerage firm holding the investments. The fair value of borrowings is not considered to be significantly different than its carrying amount because the stated rates for such debt reflect current market rates and conditions.
 
Warrant Liability
 
The Company accounts for some of its warrants issued in accordance with the guidance on Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which provides that the Company must classify the warrant instrument as a liability at its fair value and adjust the instrument to fair value at each reporting period. The fair value of warrants is estimated by management using the Black-Scholes option-pricing model. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized as a component of other income or expense. Management has determined the value of the warrant liability to be insignificant at December 31, 2015, and no such liability has been reflected on the balance sheet.
 
Recent Accounting Pronouncements
 
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current generally accepted accounting principles in the United States of America (“U.S. GAAP”) and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
 
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Topic 915): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which states that in connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The adoption of this update is not expected to have a material effect on our financial statements.
 
In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements, as well as the available transition methods.
 
In February 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This update changes the presentation of debt issuance costs in the balance sheet. ASU 2015-03 requires debt issuance costs related to a recognized debt obligation to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements.” This ASU clarified guidance in ASC 2015-03 stating that the SEC staff would not object to a company presenting debt issuance costs related to a line-of-credit arrangement on the balance sheet as a deferred asset, regardless of whether there were any outstanding borrowings at period-end. This update is effective for annual and interim periods beginning after December 15, 2015, which will require us to adopt these provisions in the first quarter of 2016. This update will be applied on a retrospective basis, wherein the balance sheet of each period presented will be adjusted to reflect the effects of applying the new guidance.
 
In February 2016, the FASB issued 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires all leases to be recognized in the consolidated balance sheet. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
 
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission, did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.
v3.3.1.900
LOAN PAYABLE
12 Months Ended
Dec. 31, 2015
LOAN PAYABLE
2.
LOAN PAYABLE
 
On February 5, 2013, Capricor entered into a Loan Agreement with CIRM (the “CIRM Loan Agreement”), pursuant to which CIRM agreed to disburse $19,782,136 to Capricor over a period of approximately three and one-half years to support Phase II of Capricor’s ALLSTAR clinical trial. Because the Company is decreasing the number of patients to be enrolled in the ALLSTAR clinical trial, it is undetermined at this time how much of the remaining CIRM loan award will ultimately be disbursed under the CIRM Loan Agreement.
 
Under the CIRM Loan Agreement, Capricor is required to repay the CIRM loan with interest at the end of the loan period. The loan also provides for the payment of a risk premium whereby Capricor is required to pay CIRM a premium of up to 500% of the loan amount upon the achievement of certain revenue thresholds. The loan has a term of five years and is extendable annually up to ten years at Capricor’s option if certain conditions are met. The interest rate for the initial term is set at the one-year LIBOR rate plus 2% (“base rate”), compounded annually, and becomes due at the end of the fifth year. After the fifth year, if the term of the loan is extended and if certain conditions are met, the interest rate will increase by 1% over the base rate each sequential year thereafter, with a maximum increase of 5% over the base rate in the tenth year. CIRM has the right to cease disbursements if a no-go milestone occurs or certain other conditions are not met. The Company is also required to meet certain progress milestones set forth in the CIRM Notice of Loan Award with respect to the progress of the ALLSTAR clinical trial and manufacturing of the product. There is no assurance that CIRM will continue the disbursement of funds. Capricor and CIRM have agreed to adjust future disbursements of loan proceeds to align with actual patient enrollment.
 
Under the terms of the CIRM Loan Agreement, if Capricor is not in default, the loan may be forgiven during the term of the project period if Capricor abandons the trial due to the occurrence of a no-go milestone. After the end of the project period, the loan may also be forgiven if Capricor elects to abandon the project under certain circumstances. Under the terms of the CIRM Loan Agreement, Capricor is required to meet certain financial milestones by demonstrating to CIRM prior to each disbursement of loan proceeds that it has sufficient funds available to cover all costs and expenses anticipated to be required to continue Phase II of the ALLSTAR trial for at least the following 12-month period, less the costs budgeted to be covered by planned loan disbursements. Capricor did not issue stock, warrants or other equity to CIRM in connection with this award. Additionally, on September 30, 2015, the Company entered into a Joinder Agreement with Capricor, Inc. and CIRM, pursuant to which, among other things, the Company agreed to become a loan party under the CIRM Loan Agreement and to be jointly and severally responsible with Capricor for the performance of, and to be bound by the obligations and liabilities under, the CIRM Loan Agreement, subject to the rights and benefits afforded to a loan recipient thereunder.
 
In addition to the foregoing, the timing of the distribution of funds pursuant to the CIRM Loan Agreement shall be contingent upon the availability of funds in the California Stem Cell Research and Cures Fund in the California State Treasury, as determined by CIRM in its sole discretion. Disbursements from time to time may be delayed or suspended in order to coincide with projected expenditures and patient estimated enrollment of Capricor’s ALLSTAR clinical trial.
 
The due diligence costs are recorded as a discount on the loan and amortized to general and administrative expenses over the remaining term of the loan. As of December 31, 2015, $30,000 of loan costs were capitalized with the balance of $11,402 to be amortized over approximately 2.1 years.
 
In 2013, Capricor received loan proceeds of $3,925,066, net of loan costs. The disbursements carried an initial interest rate of approximately 2.5% - 2.8% per annum.
 
In April 2014, Capricor received the third disbursement under the loan award of $4,679,947. This disbursement carries interest at the initial rate of approximately 2.6% per annum.
 
In July 2014, Capricor received the fourth disbursement under the loan award of $514,177, which includes previously deducted due diligence costs that were refunded. This disbursement carries interest at the initial rate of approximately 2.6% per annum. For the years ended December 31, 2015 and 2014, interest expense under the CIRM loan was $246,724 and $200,505, respectively. The principal balance outstanding under the CIRM loan was $9,155,857 at each of December 31, 2015 and December 31, 2014. The balance of the loan with accrued interest is due in 2018, unless extended pursuant to the terms of the CIRM Loan Agreement.
v3.3.1.900
STOCKHOLDERS' EQUITY
12 Months Ended
Dec. 31, 2015
STOCKHOLDER'S EQUITY
3.    STOCKHOLDER’S EQUITY
 
Private Placements
 
On January 9, 2015, the Company entered into a Share Purchase Agreement with select investors, pursuant to which the Company agreed to issue and sell to the investors, in a private placement (“PIPE 1”), an aggregate of 2,839,045 shares of its common stock at a price per share of $3.523 for an aggregate purchase price of approximately $10,000,000.
 
On February 3, 2015, the Company entered into a Share Purchase Agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell to the investors, in a private placement (“PIPE 2”), an aggregate of 1,658,822 shares of its common stock at a price per share of $4.25 for an aggregate purchase price of approximately $7,050,000.
 
Fees paid in conjunction with PIPE 1 and PIPE 2 amounted to $605,736 in the aggregate and were recorded as a reduction to additional paid-in capital.
 
Outstanding Shares
 
At December 31, 2015, the Company had 16,254,985 shares of common stock issued and outstanding.
v3.3.1.900
STOCK AWARDS, WARRANTS AND OPTIONS
12 Months Ended
Dec. 31, 2015
STOCK AWARDS, WARRANTS AND OPTIONS
4.    STOCK AWARDS, WARRANTS AND OPTIONS
 
Warrants
 
The following table summarizes all warrant activity for the years ended December 31, 2015 and 2014:
 
 
 
Warrants
 
Weighted Average 
Exercise Price
 
Outstanding at January 1, 2014
 
 
332,281
 
$
17.20
 
Expired
 
 
(28,400)
 
 
94.00
 
Outstanding at December 31, 2014
 
 
303,881
 
$
10.02
 
Exercised
 
 
(15,401)
 
 
2.27
 
Expired
 
 
(52,650)
 
 
47.00
 
Outstanding at December 31, 2015
 
 
235,830
 
$
2.27
 
 
The following table summarizes all outstanding warrants to purchase shares of the Company’s common stock as of December 31, 2015:
 
At December 31, 2015
 
Grant Date
 
Warrants
Outstanding
 
Weighted
Average
Exercise Price
 
Expiration
Date
 
4/4/2012
 
 
187
 
$
2.27
 
4/4/2017
 
11/20/2013
 
 
235,643
 
$
2.27
 
11/20/2018
 
 
 
 
235,830
 
 
 
 
 
 
 
Restricted Stock
 
In August 2014, the Company granted 10,000 shares of restricted stock to one of its consultants in consideration of services to be rendered. This restricted stock grant was to vest monthly over a period of one year. In February 2015, the Company terminated the agreement with the consultant effective March 2015 and therefore, no additional shares will be issued pursuant to the restricted stock grant. For the year ended December 31, 2015, the Company issued 1,666 shares of that restricted common stock grant, which were valued at approximately $8,588 in the aggregate. The fair value of the restricted stock was determined using the Company’s closing stock price on the vesting date.
 
Stock Options
 
The Company’s Board of Directors (the “Board”) has approved four stock option plans: (i) the Amended and Restated 2005 Stock Option Plan, (the “2005 Plan”), (ii) the 2006 Stock Option Plan, (iii) the 2012 Restated Equity Incentive Plan (which has superseded the 2006 Stock Option Plan) (the “2012 Plan”), and (iv) the 2012 Non-Employee Director Stock Option Plan (the “2012 Non-Employee Director Plan”).
 
On August 10, 2005, the Company adopted the 2005 Plan. On July 26, 2010, the Company’s stockholders approved an amendment to the 2005 Plan increasing the total number of shares authorized for issuance thereunder to 190,000. Under the 2005 Plan, incentives may be granted to officers, employees, directors, consultants and advisors. Incentives under the 2005 Plan may be granted in any one or a combination of the following forms: (i) incentive stock options and non-statutory stock options, (ii) stock appreciation rights, (iii) stock awards, (iv) restricted stock, and (v) performance shares.
 
At the time the merger between Capricor and Nile became effective, 4,149,710 shares of common stock were reserved under the 2012 Plan for the issuance of stock options, stock appreciation rights, restricted stock awards and performance unit/share awards to employees, consultants and other service providers. Included in the 2012 Plan are the shares of common stock that were originally reserved under the 2006 Stock Option Plan. Under the 2012 Plan, each stock option granted will be designated in the award agreement as either an incentive stock option or a nonstatutory stock option. Notwithstanding such designation, however, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the participant during any calendar year (under all plans of the Company and any parent or subsidiary) exceeds $100,000, such options will be treated as nonstatutory stock options.
 
At the time the merger between Capricor and Nile became effective, 2,697,311 shares of common stock were reserved under the 2012 Non-Employee Director Plan for the issuance of stock options to members of the Board whom are not employees of the Company.
 
Each of the Company’s stock option plans are administered by the Board, or a committee appointed by the Board, which determines the recipients and types of awards to be granted, as well as the number of shares subject to the awards, the exercise price and the vesting schedule. Currently, stock options are granted with an exercise price equal to the closing price of the Company’s common stock on the date of grant, and generally vest over a period of one to four years. The term of stock options granted under each of the plans cannot exceed ten years.
 
The estimated weighted average fair value of the options granted during 2015 and 2014 were approximately $3.84 and $4.40 per share, respectively.
 
The Company estimates the fair value of each option award using the Black-Scholes option-pricing model. The Company used the following assumptions to estimate the fair value of stock options issued in the years ended December 31, 2015 and 2014:
 
 
 
December 31, 2015
 
December 31, 2014
 
Expected volatility
 
 
76% - 82%
 
 
112% - 117%
 
Expected term
 
 
5-7 years
 
 
7 years
 
Dividend yield
 
 
0%
 
 
0%
 
Risk-free interest rates
 
 
0.3% - 2.1%
 
 
2.2%
 
 
Employee and non-employee stock-based compensation expense for the years ended December 31, 2015 and 2014 was as follows:
 
 
2015
 
2014
 
 
 
 
 
 
 
General and administrative
 
$
1,276,370
 
$
345,682
 
Research and development
 
 
288,265
 
 
134,555
 
Total
 
$
1,564,635
 
$
480,237
 
 
The following table summarizes information about stock options outstanding and exercisable at December 31, 2015:
 
Shares Outstanding
 
 
 
 
 
Weighted Average
 
Weighted Average
 
Range of Ex. Prices
 
Shares Outstanding
 
Term (yrs.)
 
Exercise Price
 
$0.16 - $0.19
 
 
100,627
 
 
2.80
 
$
0.17
 
$0.30 - $0.37
 
 
4,360,116
 
 
6.36
 
 
0.36
 
$0.87
 
 
56,021
 
 
2.95
 
 
0.87
 
$3.58 - $5.78
 
 
1,443,948
 
 
9.25
 
 
5.15
 
$9.14 - $12.00
 
 
33,011
 
 
8.38
 
 
11.34
 
$18.50 - $28.50
 
 
3,600
 
 
0.28
 
 
28.08
 
 
 
 
5,997,323
 
 
6.97
 
$
1.59
 
 
Shares Exercisable
 
 
 
 
 
Weighted Average
 
Weighted Average
 
Range of Ex. Prices
 
Shares Exercisable
 
Term (yrs.)
 
Exercise Price
 
$0.16 - $0.19
 
 
100,627
 
 
2.80
 
$
0.17
 
$0.30 - $0.37
 
 
3,999,627
 
 
6.28
 
 
0.36
 
$0.87
 
 
56,021
 
 
2.95
 
 
0.87
 
$3.58 - $5.78
 
 
346,586
 
 
9.04
 
 
5.32
 
$9.14 - $12.00
 
 
6,341
 
 
8.12
 
 
12.00
 
$18.50 - $28.50
 
 
3,600
 
 
0.28
 
 
28.08
 
 
 
 
4,512,802
 
 
6.37
 
$
0.78
 
 
As of December 31, 2015, the total unrecognized fair value compensation cost related to non-vested stock options was approximately $4.2 million, which is expected to be recognized over approximately 3.0 years.
 
Common stock, stock options or other equity instruments issued to non-employees (including consultants) as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued (unless the fair value of the consideration received can be more reliably measured). The fair value of stock options is determined using the Black-Scholes option-pricing model and is periodically re-measured as the underlying options vest. The fair value of any options issued to non-employees is recorded as an expense over the applicable vesting periods.
 
The following is a schedule summarizing employee and non-employee stock option activity for the years ended December 31, 2015 and 2014:
 
 
 
Number of 
Options
 
Weighted Average 
Exercise Price
 
Aggregate
Intrinsic Value
 
Outstanding at January 1, 2014
 
 
4,888,519
 
$
0.51
 
 
 
 
Granted
 
 
368,154
 
 
5.01
 
 
 
 
Exercised
 
 
(15,139)
 
 
0.32
 
 
 
 
Expired/Cancelled
 
 
(236,834)
 
 
2.39
 
 
 
 
Outstanding at December 31, 2014
 
 
5,004,700
 
$
0.75
 
$
15,014,100
 
Granted
 
 
1,311,137
 
 
5.31
 
 
 
 
Exercised
 
 
(33,000)
 
 
0.32
 
 
 
 
Expired/Cancelled
 
 
(285,514)
 
 
4.03
 
 
 
 
Outstanding at December 31, 2015
 
 
5,997,323
 
$
1.59
 
$
8,876,038
 
Exercisable at December 31, 2015
 
 
4,512,802
 
$
0.78
 
$
10,334,317
 
 
The aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock for each of the respective periods.
 
The aggregate intrinsic value of options exercised was $131,708 and $82,058 for the years ended December 31, 2015 and 2014, respectively.
v3.3.1.900
CONCENTRATIONS
12 Months Ended
Dec. 31, 2015
CONCENTRATIONS
5.    CONCENTRATIONS
 
Cash Concentration
 
The Company has historically maintained checking accounts at two financial institutions. These accounts are each insured by the Federal Deposit Insurance Corporation for up to $250,000. Historically, the Company has not experienced any significant losses in such accounts and believes it is not exposed to any significant credit risk on cash, cash equivalents and marketable securities. As of December 31, 2015, the Company maintained approximately $13.6 million of uninsured deposits.
v3.3.1.900
COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2015
COMMITMENTS AND CONTINGENCIES
6.
COMMITMENTS AND CONTINGENCIES
 
Leases
 
Capricor leases space for its corporate offices pursuant to a lease that is effective for a two year period beginning July 1, 2013 with an option to extend the lease for an additional twelve months. The monthly lease payment was $16,620 per month for the first twelve months of the term and increased to $17,285 per month for the second twelve months of the term. On March 3, 2015, Capricor executed a Second Amendment to Lease with The Bubble Real Estate Company, LLC, pursuant to which (i) additional space was added to the Company’s corporate office lease and (ii) the Company exercised its option to extend the lease term through June 30, 2016. Under the terms of the Second Amendment, commencing February 2, 2015, the base rent was $17,957 for one month, and, commencing March 2, 2015, the base rent increased to $21,420 per month for four months. Commencing July 1, 2015, the base rent increased to $22,111 per month for the remainder of the lease term.
 
On May 14, 2014, Capricor entered into a facilities lease with Cedars-Sinai Medical Center (“CSMC”), a shareholder of the Company, for two research labs (the “Facilities Lease”). The Facilities Lease is for a term of three years commencing June 1, 2014 and replaces the month-to-month lease that was previously in effect between CSMC and Capricor. The monthly lease payment under the Facilities Lease was approximately $15,461 per month for the first six months of the term and increased to approximately $19,350 per month for the remainder of the term. The amount of rent expense is subject to annual adjustments according to increases in the Consumer Price Index.
 
Unless renewed, each of the leases described above will not be in effect for fiscal year 2018. A summary of future minimum rental payments required under operating leases as of December 31, 2015 is as follows:
 
Years ended
 
Operating Leases
 
2016
 
$
364,866
 
2017
 
 
96,750
 
Total minimum lease payments
 
$
461,616
 
 
Expenses incurred under operating leases to unrelated parties for the years ended December 31, 2015 and 2014 were approximately $255,942 and $203,430, respectively. Expenses incurred under operating leases to related parties for the years ended December 31, 2015 and 2014 were approximately $224,421 and $153,682, respectively.
 
Legal Contingencies
 
Periodically, the Company may become involved in certain legal actions and claims arising in the ordinary course of business. There were no material legal actions or claims reported at December 31, 2015.
v3.3.1.900
LICENSE AGREEMENTS
12 Months Ended
Dec. 31, 2015
LICENSE AGREEMENTS
7.    LICENSE AGREEMENTS
 
Capricor’s Technology - CAP-1002, CAP-1001, CSps and Exosomes
 
Capricor has entered into exclusive license agreements for intellectual property rights related to cardiac-derived cells with Università Degli Studi Di Roma at la Sapienza (the “University of Rome”), The Johns Hopkins University (“JHU”) and CSMC. In addition, Capricor has filed patent applications related to enhancements or validation of the technology developed by its own scientists.
 
University of Rome License Agreement
 
Capricor and the University of Rome entered into a License Agreement, dated June 21, 2006 (the “Rome License Agreement”) which provides for the grant of an exclusive, world-wide, royalty-bearing license by the University of Rome to Capricor (with the right to sublicense) to develop and commercialize licensed products under the licensed patent rights in all fields. With respect to any new or future patent applications assigned to the University of Rome utilizing cardiac stem cells in cardiac care, Capricor has a first right of negotiation for a certain period of time to obtain a license thereto.
 
Pursuant to the Rome License Agreement, Capricor paid the University of Rome a license issue fee, is currently paying minimum annual royalties in the amount of 20,000 Euros per year, and is obligated to pay a lower-end of a mid-range double-digit percentage on all royalties received as a result of sublicenses granted, which are net of any royalties paid to third parties under a license agreement from such third party to Capricor. The minimum annual royalties are creditable against future royalty payments.
 
The Rome License Agreement will, unless extended or sooner terminated, remain in effect until the later of the last claim of any patent or until any patent application comprising licensed patent rights has expired or been abandoned. Under the terms of the Rome License Agreement, either party may terminate the agreement should the other party become insolvent or file a petition in bankruptcy. Either party will have up to 90 days to cure its material breach.
 
The Johns Hopkins University License Agreement
 
Capricor and JHU entered into an Exclusive License Agreement, effective June 22, 2006 (the “JHU License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by JHU to Capricor (with the right to sublicense) to develop and commercialize licensed products and licensed services under the licensed patent rights in all fields and a nonexclusive right to the know-how. In May 2009, the JHU License Agreement was amended to add additional patent rights to the JHU License Agreement in consideration of a payment to JHU and reimbursement of patent costs. Capricor and JHU executed a Second Amendment to the JHU License Agreement, effective as of December 20, 2013, pursuant to which, among other things, certain definitions were added or amended, the timing of certain obligations was revised and other obligations of the parties were clarified.
 
Pursuant to the JHU License Agreement, JHU was paid an initial license fee and, thereafter, Capricor is required to pay minimum annual royalties on the anniversary dates of the JHU License Agreement. The minimum annual royalties range from $5,000 on the first and second anniversary dates to $20,000 on the tenth anniversary date and thereafter. The minimum annual royalties are creditable against a low single-digit running royalty on net sales of products and net service revenues, which Capricor is also required to pay under the JHU License Agreement, which running royalty may be subject to further reduction in the event that Capricor is required to pay royalties on any patent rights to third parties in order to make or sell a licensed product. In addition, Capricor is required to pay a low double-digit percentage of the consideration received by it from sublicenses granted, and is required to pay JHU certain defined development milestone payments upon the successful completion of certain phases of its clinical studies and upon receiving approval from the U.S. Food and Drug Administration (the “FDA”). The development milestones range from $100,000 upon successful completion of a full Phase I clinical study to $1,000,000 upon full FDA market approval and are fully creditable against payments owed by Capricor to JHU on account of sublicense consideration attributable to milestone payments received from a sublicensee. The maximum aggregate amount of milestone payments payable under the JHU License Agreement, as amended, is $1,850,000. As of December 31, 2014, $100,000 was recorded within accounts payable and accrued expenses as a development milestone due to the fact that Phase I of the ALLSTAR study enrollment had been completed. In May 2015, Capricor paid the development milestone related to Phase I that was owed to JHU pursuant to the terms of the JHU License Agreement.
 
The JHU License Agreement will, unless sooner terminated, continue in effect in each applicable country until the date of expiration of the last to expire patent within the patent rights, or, if no patents are issued, then for twenty years from the effective date. Under the terms of the JHU License Agreement, either party may terminate the agreement should the other party become insolvent or file a petition in bankruptcy, or fail to cure a material breach within 30 days after notice. In addition, Capricor may terminate for any reason upon 60 days’ written notice.
  
Cedars-Sinai Medical Center License Agreements
 
License Agreement for CDCs
 
On January 4, 2010, Capricor entered into an Exclusive License Agreement with CSMC (the “CSMC License Agreement”), for certain intellectual property rights. In 2013, the CSMC License Agreement was amended twice resulting in, among other things, a reduction in the percentage of sublicense fees which would have been payable to CSMC. Effective December 30, 2013, Capricor entered into an Amended and Restated Exclusive License Agreement with CSMC (the “Amended CSMC License Agreement”), pursuant to which, among other things, certain definitions were added or amended, the timing of certain obligations was revised and other obligations of the parties were clarified.
 
The Amended CSMC License Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by CSMC to Capricor (with the right to sublicense) to conduct research using the patent rights and know-how and develop and commercialize products in the field using the patent rights and know-how. In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC. In the event the parties fail to agree upon the terms of an exclusive license, Capricor will have a non-exclusive license to such future rights, subject to royalty obligations.
 
Pursuant to the CSMC License Agreement, CSMC was paid a license fee and Capricor was obligated to reimburse CSMC for certain fees and costs incurred in connection with the prosecution of certain patent rights. Additionally, Capricor is required to meet certain spending and development milestones. The annual spending requirements range from $350,000 to $800,000 each year between 2010 and 2017 (with the exception of 2014, for which there was no annual spending requirement). Pursuant to the Amended CSMC License Agreement, Capricor remains obligated to pay low single-digit royalties on sales of royalty-bearing products as well as a low double-digit percentage of the consideration received from any sublicenses or other grant of rights. The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty-bearing product. In 2010, Capricor discontinued its research under some of the patents.
 
The Amended CSMC License Agreement will, unless sooner terminated, continue in effect on a country by country basis until the last to expire of the patents covering the patent rights or future patent rights. Under the terms of the Amended CSMC License Agreement, unless waived by CSMC, the agreement shall automatically terminate: (i) if Capricor ceases, dissolves or winds up its business operations; (ii) in the event of the insolvency or bankruptcy of Capricor or if Capricor makes an assignment for the benefit of its creditors; (iii) if performance by either party jeopardizes the licensure, accreditation or tax exempt status of CSMC or the agreement is deemed illegal by a governmental body; (iv) within 30 days for non-payment of royalties; (v) within 90 days if Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights; (vi) if a material breach has not been cured within 90 days; or (vii) if Capricor challenges any of the CSMC patent rights. Capricor may terminate the agreement if CSMC fails to cure any material breach within 90 days after notice.
 
On March 20, 2015, Capricor and CSMC entered into a First Amendment to the Amended CSMC License Agreement, pursuant to which the parties agreed to delete certain patent applications from the list of Scheduled Patents which Capricor determined not to be material to the portfolio.
 
License Agreement for Exosomes
 
On May 5, 2014, Capricor entered into an Exclusive License Agreement with CSMC (the “Exosomes License Agreement”), for certain intellectual property rights related to exosomes technology. The Exosomes License Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by CSMC to Capricor (with the right to sublicense) in order to conduct research using the patent rights and know-how and to develop and commercialize products in the field using the patent rights and know-how. In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC. In the event the parties fail to agree upon the terms of an exclusive license, Capricor shall have a non-exclusive license to such future rights, subject to royalty obligations.
 
Pursuant to the Exosomes License Agreement, CSMC was paid a license fee and Capricor reimbursed CSMC for certain fees and costs incurred in connection with the prosecution of certain patent rights. Additionally, Capricor is required to meet certain non-monetary development milestones and is obligated to pay low single-digit royalties on sales of royalty-bearing products as well as a single-digit percentage of the consideration received from any sublicenses or other grant of rights. The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty bearing product.
 
The Exosomes License Agreement will, unless sooner terminated, continue in effect on a country by country basis until the last to expire of the patents covering the patent rights or future patent rights. Under the terms of the Exosomes License Agreement, unless waived by CSMC, the agreement shall automatically terminate: (i) if Capricor ceases, dissolves or winds up its business operations; (ii) in the event of the insolvency or bankruptcy of Capricor or if Capricor makes an assignment for the benefit of its creditors; (iii) if performance by either party jeopardizes the licensure, accreditation or tax exempt status of CSMC or the agreement is deemed illegal by a governmental body; (iv) within 30 days for non-payment of royalties; (v) within 90 days if Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights; (vi) if a material breach has not been cured within 90 days; or (vii) if Capricor challenges any of the CSMC patent rights. Capricor may terminate the agreement if CSMC fails to cure any material breach within 90 days after notice.
 
On February 27, 2015, Capricor and CSMC entered into a First Amendment to Exclusive License Agreement, thereby amending the Exosomes License Agreement (the “Exosomes License Amendment”). Under the Exosomes License Amendment, (i) the description of patent rights in Schedule A has been replaced by a Revised Schedule A that includes four additional patent applications; (ii) Capricor was required to pay CSMC an upfront fee of $20,000; (iii) Capricor is required to reimburse CSMC approximately $34,000 for attorneys’ fees and filing fees that were incurred in connection with the additional patent rights; and (iv) Capricor is required to pay CSMC certain defined product development milestone payments upon reaching certain phases of its clinical studies and upon receiving approval for a product from the FDA. The product development milestones range from $15,000 upon the dosing of the first patient in a Phase I clinical trial of a product to $75,000 upon receipt of FDA approval for a product.  The maximum aggregate amount of milestone payments payable under the Exosomes License Agreement, as amended, is $190,000.  On June 10, 2015, Capricor and CSMC entered into a Second Amendment to Exclusive License Agreement, thereby amending the Exosomes License Agreement further to add an additional patent application to the Schedule of Patent Rights.
 
As noted above, Capricor is party to lease agreements with CSMC, which holds more than 10% of the outstanding capital stock of Capricor Therapeutics (see Note 6 – “Commitments and Contingencies”). Additionally, Dr. Eduardo Marbán, who holds more than 10% of the outstanding capital stock of Capricor Therapeutics, is the Director of the Cedars-Sinai Heart Institute, the Co-Founder of Capricor and Chairman of Capricor’s Scientific Advisory Board.
 
Collaboration Agreement with Janssen Biotech, Inc.
 
On December 27, 2013, Capricor entered into a Collaboration Agreement and Exclusive License Option (the “Janssen Agreement”) with Janssen, a wholly-owned subsidiary of Johnson & Johnson. Under the terms of the Janssen Agreement, Capricor and Janssen agreed to collaborate on the development of Capricor’s cell therapy program for cardiovascular applications, including its lead product candidate, CAP-1002. Capricor and Janssen further agreed to collaborate on the development of cell manufacturing in preparation for future clinical trials. Under the Janssen Agreement, Capricor was paid $12.5 million, and Capricor will contribute to the development of a chemistry, manufacturing and controls (“CMC”) package. In addition, Janssen has the exclusive right to enter into an exclusive license agreement pursuant to which Janssen would receive a worldwide, exclusive license to exploit CAP-1002 as well as certain allogeneic cardiospheres and cardiosphere-derived cells in the field of cardiology. Janssen has the right to exercise the option at any time until 60 days after the delivery by Capricor of the six-month follow-up results from Phase II of Capricor’s ALLSTAR clinical trial for CAP-1002. If Janssen exercises its option rights, Capricor would receive an upfront license fee and additional milestone payments, which may total up to $325.0 million. In addition, a royalty ranging from a low double-digit percentage to a lower-end of a mid-range double-digit percentage would be paid on sales of licensed products.
 
Company Technology – Cenderitide and CU-NP
 
The Company has entered into an exclusive license agreement for intellectual property rights related to natriuretic peptides with the Mayo Foundation for Medical Education and Research (“Mayo”), a Clinical Trial Funding Agreement with Medtronic, Inc. (“Medtronic”), and a Transfer Agreement with Medtronic, all of which also include certain intellectual property licensing provisions.
 
Mayo License Agreement
 
The Company and Mayo previously entered into a Technology License Agreement with respect to Cenderitide on January 20, 2006, which was filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on September 21, 2007, and which was amended on June 2, 2008 (as so amended, the “CD-NP Agreement”). On June 13, 2008, the Company and Mayo entered into a Technology License Agreement with respect to CU-NP (the “CU-NP Agreement”), which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2008. On November 14, 2013, the Company entered into an Amended and Restated License Agreement with Mayo (the “Amended Mayo Agreement”). The Amended Mayo Agreement amends and restates in its entirety each of the CD-NP Agreement and the CU-NP Agreement, and creates a single amended and restated license agreement between the Company and Mayo with respect to CD-NP and CU-NP.
 
The Amended Mayo Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by Mayo to the Company (with the right to sublicense) under the Mayo patents, patent applications and improvements, and a nonexclusive right under the know-how, for the development and commercialization of CD-NP and CU-NP in all therapeutic indications. With respect to any future patents and any improvements related to Cenderitide and CU-NP owned by or assigned to Mayo, the Company has the exclusive right of first negotiation for the exclusive or non-exclusive rights (at the Company’s option) thereto. Such exclusive right of negotiation shall be effective as of June 1, 2016, or such earlier date when the Company has satisfied certain payment obligations to Mayo.
 
Under each of the previous CD-NP Agreement and CU-NP Agreement, the Company paid Mayo up-front cash payments and the Company agreed to make certain performance-based cash payments to Mayo upon successful completion of certain milestones. Additionally, the Company issued certain amounts of common stock of the Company to Mayo under each agreement. The Amended Mayo Agreement restructured the economic arrangements of the CD-NP Agreement and the CU-NP Agreement by, among other things, eliminating certain milestone payments and decreasing the royalty percentages payable upon the commercial sale of the products to low single-digit royalties on sales of CD-NP and CU-NP products. The Company is also obligated to pay to Mayo a low single-digit percentage on any upfront consideration or milestone payment received in connection with a sublicense. The Company is further obligated to pay to Mayo a low single-digit percentage on any consideration received in connection with an assignment of rights under the Amended Mayo Agreement. Pursuant to the terms of the Amended Mayo Agreement, the Company agreed to pay to Mayo an annual license maintenance fee and to issue to Mayo an additional 18,000 shares of the Company’s common stock as additional consideration for the grant of certain rights. Mayo also agreed to waive or defer the payment of certain fees owed to Mayo. All breaches and defaults by the Company under the terms of the CD-NP Agreement and CU-NP Agreement were waived by Mayo in the Amended Mayo Agreement.
 
The Amended Mayo Agreement will, unless sooner terminated, expire on the later of (a) the expiration of the last to expire valid claim contained in the Mayo patents, or (b) the 20th anniversary of the Amended Mayo Agreement. Under the terms of the Amended Mayo Agreement, Mayo may terminate the agreement earlier (i) for the Company’s material breach of the agreement that remains uncured for 90 days’ after written notice to the Company, (ii) for the Company’s insolvency or bankruptcy, (iii) if the Company challenges the validity or enforceability of any of the patent rights in any manner, or (iv) if the Company has not initiated either the next clinical trial of Cenderitide within two years of the effective date of the Amended Mayo Agreement or a clinical trial of CU-NP within two and one-half years of the effective date. Such condition was satisfied when the Company initiated its clinical trial of Cenderitide in January 2015. The Company may terminate the Amended Mayo Agreement without cause upon 90 days’ written notice.
 
Medtronic Clinical Trial Funding Agreement
 
In February 2011, the Company entered into a Clinical Trial Funding Agreement with Medtronic. Pursuant to the agreement, Medtronic provided funding and equipment necessary for the Company to conduct a Phase I clinical trial to assess the pharmacokinetics and pharmacodynamics of Cenderitide when delivered to heart failure patients through continuous subcutaneous infusion using Medtronic’s pump technology.
 
The agreement provided that intellectual property conceived in or otherwise resulting from the performance of the Phase I clinical trial will be jointly owned by the Company and Medtronic (the “Joint Intellectual Property”), and that the Company is to pay royalties to Medtronic based on the net sales of a product covered by the Joint Intellectual Property.  The agreement further provided that, if the parties fail to enter into a definitive commercial license agreement with respect to Cenderitide, each party will have a right of first negotiation to license exclusive rights to any Joint Intellectual Property.
 
Pursuant to its terms, the agreement expired in February 2012, following the completion of the Phase I clinical trial and the delivery of data and reports related to such study. Although the Medtronic agreement expired, there are certain provisions that survive the expiration of the agreement, including the obligation to pay royalties on products that might be covered by the Joint Intellectual Property. The Company and Medtronic have subsequently entered into a Transfer Agreement, described below. 
 
Medtronic Transfer Agreement
 
On October 8, 2014, the Company entered into a Transfer Agreement (the “Transfer Agreement”) with Medtronic to acquire patent rights relating to the formulation and pump delivery of natriuretic peptides. Pursuant to the Transfer Agreement, Medtronic has assigned to the Company all of its right, title and interest in all natriuretic peptide patents and patent applications previously owned by Medtronic or co-owned by Medtronic and the Company (“Natriuretic Peptide Patents”). Under the Transfer Agreement, the Company received all rights to the Natriuretic Peptide Patents, including the right to grant licenses and to make assignments without approval from Medtronic.
 
The Transfer Agreement became effective on October 8, 2014 and will expire simultaneously at the expiration of the last to expire of the valid claims. Both parties have the right to terminate the Transfer Agreement upon 30 days written notice to the other party in the event of a default which has not been cured within such 30-day period. In addition, Medtronic had the right to terminate the Transfer Agreement and to have the rights to the Natriuretic Peptide Patents reassigned to it by the Company if either the Company, an affiliate, or a non-party licensee failed to commence a clinical trial of a CD-NP product within 18 months from the effective date. Such condition was satisfied when the Company initiated its clinical trial of Cenderitide in January 2015.
 
In the event of a termination of the Transfer Agreement, (i) the Natriuretic Peptide Patents which were not owned or co-owned by the Company prior to the effective date of the Transfer Agreement shall be assigned back to Medtronic; (ii) the Company’s rights in the Natriuretic Peptide Patents that were co-owned by Capricor pursuant to the Clinical Trial Funding Agreement will remain with the Company, subject to the surviving terms and provisions thereof; and (iii) the Company shall assign back to Medtronic those rights that were co-owned by Medtronic pursuant to the Clinical Trial Funding Agreement.
 
Pursuant to the Transfer Agreement, Medtronic was paid an upfront payment of $100,000, and the Company is obligated to pay Medtronic a mid-single-digit royalty on net sales of products, a low double-digit percentage of any consideration received from any sublicenses or other grant of rights, and a mid-double-digit percentage of any monetary awards or settlements received by the Company as a result of enforcement of the Natriuretic Peptide Patents against a non-party entity, less the costs and attorney’s fees incurred to enforce the Natriuretic Peptide Patents. In addition, there are additional payments that may become due from the Company upon the achievement of certain defined milestones, which payments, in the aggregate, total up to $7.0 million.
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RELATED PARTY TRANSACTIONS
12 Months Ended
Dec. 31, 2015
RELATED PARTY TRANSACTIONS
8.    RELATED PARTY TRANSACTIONS
 
Lease and Sub-Lease Agreement
 
As noted above, Capricor Therapeutics is party to lease agreements with CSMC, which holds more than 10% of the outstanding capital stock of Capricor Therapeutics (see Note 6 – “Commitments and Contingencies”). Additionally, Dr. Eduardo Marbán, who holds more than 10% of the outstanding capital stock of Capricor Therapeutics, is the Director of the Cedars-Sinai Heart Institute, the Co-Founder of Capricor and the Chairman of Capricor’s Scientific Advisory Board.
 
Beginning May 1, 2012, pursuant to a sublease agreement, Capricor subleased part of its office space to Frank Litvack, the Company’s Executive Chairman and a member of its Board of Directors, for $2,500 per month. On April 1, 2013, Capricor entered into a sublease with Reprise Technologies, LLC, a limited liability company which is wholly owned by Dr. Litvack, for $2,500 per month. The sublease is on a month-to-month basis. For both the years ended December 31, 2015 and 2014, Capricor recognized $30,000 in sublease income from the related party. Sublease income is recorded as a reduction to general and administrative expenses.
 
Consulting Agreements
 
Effective January 1, 2013, Frank Litvack, the Company’s Executive Chairman and a member of its Board of Directors, entered into an oral Consulting Agreement with Capricor whereby Capricor agreed to pay Dr. Litvack fees of $10,000 per month for consulting services. On March 24, 2014, Capricor entered into a written Consulting Agreement with Dr. Litvack memorializing the $10,000 per month compensation arrangement described above. The agreement is terminable upon 30 days’ notice.
 
Payables to Related Party
 
At December 31, 2015 and 2014, the Company had accounts payable and accrued expenses to related parties totaling $352,334 and $433,712, respectively. CSMC accounts for approximately $352,334 and $421,328 of the total accounts payable and accrued expenses to related parties as of December 31, 2015 and 2014, respectively. CSMC expenses relate to the ongoing clinical trials costs and deferred rent on our research lab space.
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SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2015
SUBSEQUENT EVENTS
9.    SUBSEQUENT EVENTS
 
March 2016 Financing
 
On March 14, 2016, the Company entered into a Subscription Agreement with certain investors pursuant to which, on March 16, 2016, the Company issued and sold to the investors an aggregate of approximately $4.1 million of registered and unregistered securities of the Company. On March 16, 2016, in accordance with the Subscription Agreement, the Company issued and sold to the investors, and the investors purchased from the Company, an aggregate of 1,692,151 shares of the Company’s common stock at a purchase price of $2.40 per share. The shares were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-207149), which was initially filed with the Securities and Exchange Commission (the “SEC”) on September 28, 2015 and declared effective by the SEC on October 26, 2015. A prospectus supplement relating to the Public Offering was filed with the SEC on March 15, 2016.
 
Pursuant to the Subscription Agreement, the Company also issued and sold to the investors, in a concurrent private placement, warrants to purchase up to an aggregate of 846,073 shares of the Company’s common stock. Each warrant has an exercise price of $4.50 per share, will initially be exercisable on the date that is six months and one day from the date of issuance, and will expire on the date that is three years from the date of issuance.
 
The Company received net proceeds of approximately $3.9 million from the sale of the securities in the offerings, after deducting the placement agent fees and estimated offering expenses payable by the Company.
 
In connection with the private placement of the warrants, the Company entered into a Registration Rights Agreement with the investors on March 14, 2016, pursuant to which the Company agreed to (i) prepare and file with the SEC a registration statement to register for resale the shares of common stock  issuable upon exercise of the warrants within 90 calendar days following the closing of the private placement, and (ii) use its reasonable efforts to cause such registration statement to be declared effective by the SEC as soon as practicable.
 
Additional CIRM Disbursement
 
On March 11, 2016, Capricor received an additional disbursement from CIRM for $1.0 million pursuant to the achievement of an enrollment milestone in connection with the ALLSTAR project.
 
CIRM Grant Award
 
On March 16, 2016, Capricor was informed by CIRM that its Application Review Subcommittee of the Independent Citizens’ Oversight Committee approved a grant award in the amount of approximately $3.4 million to fund in part Capricor’s Phase I/II HOPE-Duchenne clinical trial investigating CAP-1002 for the treatment of Duchenne muscular dystrophy-related cardiomyopathy. The terms of the award and the disbursement schedule have not yet been determined and the award is subject to the execution of definitive documents. 
v3.3.1.900
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Dec. 31, 2015
Description of Business
Description of Business
 
The mission of Capricor Therapeutics, Inc., a Delaware corporation (referred to herein as “Capricor Therapeutics” or the “Company”), is to improve the treatment of diseases by commercializing innovative therapies, with a primary focus on cardiovascular diseases. Capricor, Inc., a privately-held company and a wholly-owned subsidiary of Capricor Therapeutics (referred to herein as “Capricor”), was founded in 2005 as a Delaware corporation based on the innovative work of its founder, Eduardo Marbán, M.D., Ph.D. After completion of a merger between Capricor and a subsidiary of Nile Therapeutics, Inc., a Delaware corporation (“Nile”), on November 20, 2013, Capricor became a wholly-owned subsidiary of Nile and Nile formally changed its name to Capricor Therapeutics, Inc. Capricor Therapeutics, together with its subsidiary, Capricor, currently has six drug candidates in various stages of development.
Basis of Consolidation
Basis of Consolidation
 
Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary. All intercompany transactions have been eliminated in consolidation.
Liquidity
Liquidity
 
The Company has historically financed its research and development activities as well as operational expenses from equity financings, government grants, a payment from Janssen Biotech, Inc. (“Janssen”) pursuant to a Collaboration Agreement with Janssen and a loan award from the California Institute for Regenerative Medicine (“CIRM”).
 
Cash, cash equivalents and marketable securities as of December 31, 2015 were approximately $13.6 million, compared to $8.0 million as of December 31, 2014. In January 2015, the Company entered into a Share Purchase Agreement with select investors, pursuant to which the Company issued an aggregate of 2,839,045 shares of its common stock at a price per share of $3.523 for an aggregate purchase price of approximately $10,000,000. In February 2015, the Company entered into a Share Purchase Agreement with select investors, pursuant to which the Company issued an aggregate of 1,658,822 shares of its common stock at a price per share of $4.25 for an aggregate purchase price of approximately $7,050,000. In March 2016, the Company entered into a Subscription Agreement with certain investors pursuant to which the Company issued an aggregate of 1,692,151 shares of common stock at a price per share of $2.40 for an aggregate purchase price of approximately $4.1 million. Pursuant to the Subscription Agreement, the Company also issued to the Investors warrants to purchase up to an aggregate of 846,073 shares of Common Stock. Each warrant has an exercise price of $4.50 per share, will initially be exercisable on the date that is six months and one day from the date of issuance, and will expire on the date that is three years from the date of issuance. Furthermore, in March 2016, Capricor was informed by CIRM that it was approved for a grant award in the amount of approximately $3.4 million to fund in part Capricor’s Phase I/II HOPE-Duchenne clinical trial. The terms of the award and the disbursement schedule have not been determined as of the date of filing of this Annual Report on Form 10-K and the award is subject to the execution of definitive documents. The Company’s principal uses of cash are for research and development expenses, general and administrative expenses, capital expenditures and other working capital requirements.
 
The Company’s future expenditures and capital requirements may be substantial and will depend on many factors, including but not limited to the following:
 
the timing and costs associated with commercialization of its product candidates;
the timing and costs associated with its clinical trials and preclinical studies;
the number and scope of its research programs; and
the costs involved in prosecuting and enforcing patent claims and other intellectual property rights.
 
The Company’s cash requirements are expected to continue to increase as it advances its research, development and commercialization programs and the Company expects to seek additional financing primarily from, but not limited to, the sale and issuance of equity or debt securities, the licensing or sale of its technology and from government grants. The Company cannot provide assurances that financing will be available when and as needed or that, if available, financing will be available on favorable or acceptable terms or at all. If the Company is unable to obtain additional financing when and if required, it would have a material adverse effect on the Company’s business and results of operations and could include reducing expenses and curtailing operations. To the extent the Company issues additional equity securities, its existing stockholders could experience substantial dilution.
Use of Estimates
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. 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 consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. The most sensitive estimates relate to the period over which the collaboration revenue is recognized and the stock-based compensation. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates.
Cash and Cash Equivalents
Cash and Cash Equivalents
 
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.
Restricted Cash
Restricted Cash
 
As of December 31, 2014, restricted cash represented funds received under Capricor’s Loan Agreement with CIRM (see Note 2 – “Loan Payable”), which are to be allocated to the ALLSTAR clinical trial research costs as incurred. Generally, a reduction of restricted cash occurs when the Company deems certain costs are attributable to the ALLSTAR clinical trial.
Marketable Securities
Marketable Securities
 
The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. All of the Company’s marketable securities are considered as available-for-sale and carried at estimated fair values. Realized gains and losses on the sale of debt and equity securities are determined using the specific identification method. Unrealized gains and losses on available-for-sale securities are excluded from net income and reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity.
Property and Equipment
Property and Equipment
 
Property and equipment are stated at cost. Repairs and maintenance costs are expensed in the period incurred. Depreciation is computed using the straight-line method over the related estimated useful life of the asset, which such estimated useful lives range from five to seven years. Leasehold improvements are depreciated on a straight-line basis over the shorter of the useful life of the asset or the lease term. Depreciation was approximately $62,116 and $32,163 for the years ended December 31, 2015 and 2014, respectively.
 
Property and equipment consisted of the following at December 31:
 
 
 
2015
 
2014
 
Furniture and fixtures
 
$
59,128
 
$
38,850
 
Laboratory equipment
 
 
387,872
 
 
278,453
 
Leasehold improvements
 
 
45,274
 
 
23,744
 
 
 
 
492,274
 
 
341,047
 
Less accumulated depreciation
 
 
(173,708)
 
 
(111,592)
 
Property and equipment, net
 
$
318,566
 
$
229,455
 
Intangible Assets
Intangible Assets
 
Amounts attributable to intellectual property consist primarily of the costs associated with the acquisition of certain technologies, patents, pending patents and related intangible assets with respect to research and development activities. Intellectual property assets are stated at cost and are amortized on a straight-line basis over the respective estimated useful lives of the assets ranging from five to fifteen years. Also, the Company recorded capitalized loan fees as a component of intangible assets on the consolidated balance sheet (see Note 2 – “Loan Payable”). Total amortization expense was approximately $48,749 and $10,733 for the years ended December 31, 2015 and 2014, respectively. A summary of future amortization expense as of December 31, 2015 is as follows:
 
Years ended
 
Amortization Expense
 
2016
 
$
48,749
 
2017
 
 
48,749
 
2018
 
 
43,733
 
2019
 
 
43,277
 
2020
 
 
4,330
 
Thereafter
 
 
2,165
 
 
As a result of the merger in 2013 between Capricor and Nile, the Company recorded $1.5 million as in-process research and development in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations. The in-process research and development asset is subject to impairment testing until completion or abandonment of research and development efforts associated with the project. Upon successful completion of the project, the Company will make a determination as to the then remaining useful life of the intangible asset and begin amortization.
 
The Company reviews indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. As of December 31, 2015, the Company deemed the assets to not be impaired and did not begin amortizing the in-process research and development.
Long-Lived Assets
Long-Lived Assets
 
The Company accounts for the impairment and disposition of long-lived assets in accordance with guidance issued by the FASB. Long-lived assets to be held and used are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable, or annually. No impairment was recorded for the years ended December 31, 2015 and 2014.
Government Research Grants
Government Research Grants
 
Generally, government research grants that provide funding for research and development activities are recognized as income when the related expenses are incurred, as applicable. In August 2013, Capricor was approved for a Phase IIB Bridge grant through the NIH Small Business Innovation Research, or SBIR, program for continued development of its CAP-1002 product candidate. Under the terms of the grant, disbursements are being made to Capricor over a period of approximately three years, in an aggregate amount of approximately $2.9 million, subject to annual and quarterly reporting requirements. As of December 31, 2015, approximately $2.4 million had been incurred under the terms of the award.
Income from Collaborative Arrangements
Income from Collaborative Agreement
 
Revenue from nonrefundable, up-front license or technology access payments under license and collaborative arrangements that are not dependent on any future performance by the Company is recognized when such amounts are earned. If the Company has continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of the continuing performance obligation.
 
The Company accounts for multiple element arrangements, such as license and development agreements in which a customer may purchase several deliverables, in accordance with FASB ASC Subtopic 605-25, Multiple Element Arrangements. For new or materially amended multiple element arrangements, the Company identifies the deliverables at the inception of the arrangement and each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met: (1) the delivered item or items have value to the customer on a standalone basis and (2) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control. The Company allocates revenue to each non-contingent element based on the relative selling price of each element. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, then the Company uses the best estimated selling price for that deliverable. Revenue allocated to each element is then recognized based on when the basic four revenue recognition criteria are met for each element.
 
The Company determined the deliverables under its Collaboration Agreement with Janssen (see Note 7 – “License Agreements”) did not meet the criteria to be considered separate accounting units for the purposes of revenue recognition. As a result, the Company recognized revenue from non-refundable, upfront fees ratably over the term of its performance under the agreement with Janssen. The upfront payments received, pending recognition as revenue, are recorded as deferred revenue and are classified as a short-term or long-term liability on the condensed consolidated balance sheets of the Company and amortized over the estimated period of performance. The Company periodically reviews the estimated performance period of its contract based on the estimated progress of its project.
Income Taxes
Income Taxes
 
Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company's financial statements or tax returns. A valuation allowance is provided when it is more likely than not that some portion or the entire deferred tax asset will not be realized.
 
The Company uses guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position, and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. The Company incurred no interest or penalties for the years ended December 31, 2015 and 2014. The Company files income tax returns with the Internal Revenue Service (“IRS”) and the California Franchise Tax Board. The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized and such tax years are closed.
Loan Payable
Loan Payable
 
The Company accounts for the funds advanced under its Loan Agreement with CIRM (see Note 2 – “Loan Payable”) as a loan payable as the eventual repayment of the loan proceeds or forgiveness of the loan is contingent upon certain future milestones being met and other conditions. As the likelihood of whether or not the Company will ever achieve these milestones or satisfy these conditions cannot be reasonably predicted at this time, the Company records these amounts as a loan payable.
Rent
Rent
 
Rent expense for the Company's leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. The difference between the rent expense and rent paid has been recorded as deferred rent in the accounts payable and accrued expenses, related party in the consolidated balance sheet. Rent is amortized on a straight-line basis over the term of the applicable lease, without consideration of renewal options.
Research and Development
Research and Development
 
Costs relating to the design and development of new products are expensed as research and development as incurred in accordance with FASB ASC 730-10, Research and Development. Research and development costs amounted to approximately $13.8 million and $7.8 million for the years ended December 31, 2015 and 2014, respectively.
Comprehensive Income (Loss)
Comprehensive Income (Loss)
 
Comprehensive income (loss) generally represents all changes in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders. The Company’s comprehensive loss was approximately $12.8 million and $6.2 million for the years ended December 31, 2015 and 2014, respectively. The Company’s other comprehensive income is related to a net unrealized gain on marketable securities. For the years ended December 31, 2015 and 2014, the Company’s other comprehensive gain was $9,385 and $980, respectively.
Stock-Based Compensation
Stock-Based Compensation
 
The Company accounts for stock-based employee compensation arrangements in accordance with guidance issued by the FASB, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values.
 
The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statements of operations.
 
The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options; all of which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected stock option exercise behavior. The Company calculates an average of historical volatility of similar companies as a basis for its expected volatility. Expected term is computed using the simplified method provided within Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 110. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options.
Basic and Diluted Loss per Share
Basic and Diluted Loss per Share
 
Basic loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares, which primarily consist of stock options issued to employees, consultants and directors as well as warrants issued to third parties, have been excluded from the diluted loss per share calculation because their effect is anti-dilutive.
 
For the years ended December 31, 2015 and 2014, warrants and options to purchase 6,233,153 and 5,308,581 shares, respectively, have been excluded from the computation of potentially dilutive securities.
Fair Value Measurements
Fair Value Measurements
 
Assets and liabilities recorded at fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories are as follows:
  
Level Input:
 
Input Definition:
 
 
 
Level I
 
Inputs are unadjusted, quoted prices for identical assets or liabilities in 
 
 
active markets at the measurement date.
Level II
 
Inputs, other than quoted prices included in Level I, that are observable 
 
 
for the asset or liability through corroboration with market data at the 
 
 
measurement date.
Level III
 
Unobservable inputs that reflect management’s best estimate of what
 
 
market participants would use in pricing the asset or liability at the 
 
 
measurement date.
 
The following table summarizes fair value measurements by level at December 31, 2015 for assets and liabilities measured at fair value on a recurring basis:
 
 
December 31, 2015
 
 
 
Level I
 
Level II
 
Level III
 
Total
 
Marketable securities
 
$
7,999,010
 
$
-
 
$
-
 
$
7,999,010
 
 
Carrying amounts reported in the balance sheet of cash and cash equivalents, grants receivable, accounts payable and accrued expenses approximate fair value due to their relatively short maturity. The carrying amounts of the Company’s marketable securities are based on market quotations from national exchanges at the balance sheet date. Interest and dividend income are recognized separately on the income statement based on classifications provided by the brokerage firm holding the investments. The fair value of borrowings is not considered to be significantly different than its carrying amount because the stated rates for such debt reflect current market rates and conditions.
Warrant Liability
Warrant Liability
 
The Company accounts for some of its warrants issued in accordance with the guidance on Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which provides that the Company must classify the warrant instrument as a liability at its fair value and adjust the instrument to fair value at each reporting period. The fair value of warrants is estimated by management using the Black-Scholes option-pricing model. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized as a component of other income or expense. Management has determined the value of the warrant liability to be insignificant at December 31, 2015, and no such liability has been reflected on the balance sheet.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
 
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current generally accepted accounting principles in the United States of America (“U.S. GAAP”) and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
 
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Topic 915): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which states that in connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The adoption of this update is not expected to have a material effect on our financial statements.
 
In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements, as well as the available transition methods.
 
In February 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This update changes the presentation of debt issuance costs in the balance sheet. ASU 2015-03 requires debt issuance costs related to a recognized debt obligation to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements.” This ASU clarified guidance in ASC 2015-03 stating that the SEC staff would not object to a company presenting debt issuance costs related to a line-of-credit arrangement on the balance sheet as a deferred asset, regardless of whether there were any outstanding borrowings at period-end. This update is effective for annual and interim periods beginning after December 15, 2015, which will require us to adopt these provisions in the first quarter of 2016. This update will be applied on a retrospective basis, wherein the balance sheet of each period presented will be adjusted to reflect the effects of applying the new guidance.
 
In February 2016, the FASB issued 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires all leases to be recognized in the consolidated balance sheet. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
 
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission, did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.
v3.3.1.900
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Dec. 31, 2015
Property And Equipment
Property and equipment consisted of the following at December 31:
 
 
 
2015
 
2014
 
Furniture and fixtures
 
$
59,128
 
$
38,850
 
Laboratory equipment
 
 
387,872
 
 
278,453
 
Leasehold improvements
 
 
45,274
 
 
23,744
 
 
 
 
492,274
 
 
341,047
 
Less accumulated depreciation
 
 
(173,708)
 
 
(111,592)
 
Property and equipment, net
 
$
318,566
 
$
229,455
 
Summary of future amortization expense
A summary of future amortization expense as of December 31, 2015 is as follows:
 
Years ended
 
Amortization Expense
 
2016
 
$
48,749
 
2017
 
 
48,749
 
2018
 
 
43,733
 
2019
 
 
43,277
 
2020
 
 
4,330
 
Thereafter
 
 
2,165
 
Fair Value Measurements
The following table summarizes fair value measurements by level at December 31, 2015 for assets and liabilities measured at fair value on a recurring basis:
 
 
December 31, 2015
 
 
 
Level I
 
Level II
 
Level III
 
Total
 
Marketable securities
 
$
7,999,010
 
$
-
 
$
-
 
$
7,999,010
 
v3.3.1.900
STOCK AWARDS, WARRANTS AND OPTIONS (Tables)
12 Months Ended
Dec. 31, 2015
Schedule Of Warrant Activity
The following table summarizes all warrant activity for the years ended December 31, 2015 and 2014:
 
 
 
Warrants
 
Weighted Average 
Exercise Price
 
Outstanding at January 1, 2014
 
 
332,281
 
$
17.20
 
Expired
 
 
(28,400)
 
 
94.00
 
Outstanding at December 31, 2014
 
 
303,881
 
$
10.02
 
Exercised
 
 
(15,401)
 
 
2.27
 
Expired
 
 
(52,650)
 
 
47.00
 
Outstanding at December 31, 2015
 
 
235,830
 
$
2.27
 
Outstanding Warrants to Purchase Shares of the Company's Common Stock
The following table summarizes all outstanding warrants to purchase shares of the Company’s common stock as of December 31, 2015:
 
At December 31, 2015
 
Grant Date
 
Warrants
Outstanding
 
Weighted
Average
Exercise Price
 
Expiration
Date
 
4/4/2012
 
 
187
 
$
2.27
 
4/4/2017
 
11/20/2013
 
 
235,643
 
$
2.27
 
11/20/2018
 
 
 
 
235,830
 
 
 
 
 
 
Stock Options, Valuation Assumptions
The Company used the following assumptions to estimate the fair value of stock options issued in the years ended December 31, 2015 and 2014:
 
 
 
December 31, 2015
 
December 31, 2014
 
Expected volatility
 
 
76% - 82%
 
 
112% - 117%
 
Expected term
 
 
5-7 years
 
 
7 years
 
Dividend yield
 
 
0%
 
 
0%
 
Risk-free interest rates
 
 
0.3% - 2.1%
 
 
2.2%
 
Employee Stock-based Compensation Costs
Employee and non-employee stock-based compensation expense for the years ended December 31, 2015 and 2014 was as follows:
 
 
2015
 
2014
 
 
 
 
 
 
 
General and administrative
 
$
1,276,370
 
$
345,682
 
Research and development
 
 
288,265
 
 
134,555
 
Total
 
$
1,564,635
 
$
480,237
 
Schedule of Summarizing Stock Option Activity
The following table summarizes information about stock options outstanding and exercisable at December 31, 2015:
 
Shares Outstanding
 
 
 
 
 
Weighted Average
 
Weighted Average
 
Range of Ex. Prices
 
Shares Outstanding
 
Term (yrs.)
 
Exercise Price
 
$0.16 - $0.19
 
 
100,627
 
 
2.80
 
$
0.17
 
$0.30 - $0.37
 
 
4,360,116
 
 
6.36
 
 
0.36
 
$0.87
 
 
56,021
 
 
2.95
 
 
0.87
 
$3.58 - $5.78
 
 
1,443,948
 
 
9.25
 
 
5.15
 
$9.14 - $12.00
 
 
33,011
 
 
8.38
 
 
11.34
 
$18.50 - $28.50
 
 
3,600
 
 
0.28
 
 
28.08
 
 
 
 
5,997,323
 
 
6.97
 
$
1.59
 
 
Shares Exercisable
 
 
 
 
 
Weighted Average
 
Weighted Average
 
Range of Ex. Prices
 
Shares Exercisable
 
Term (yrs.)
 
Exercise Price
 
$0.16 - $0.19
 
 
100,627
 
 
2.80
 
$
0.17
 
$0.30 - $0.37
 
 
3,999,627
 
 
6.28
 
 
0.36
 
$0.87
 
 
56,021
 
 
2.95
 
 
0.87
 
$3.58 - $5.78
 
 
346,586
 
 
9.04
 
 
5.32
 
$9.14 - $12.00
 
 
6,341
 
 
8.12
 
 
12.00
 
$18.50 - $28.50
 
 
3,600
 
 
0.28
 
 
28.08
 
 
 
 
4,512,802
 
 
6.37
 
$
0.78
 
Information about Stock Options Outstanding and Exercisable
The following is a schedule summarizing employee and non-employee stock option activity for the years ended December 31, 2015 and 2014:
 
 
 
Number of 
Options
 
Weighted Average 
Exercise Price
 
Aggregate
Intrinsic Value
 
Outstanding at January 1, 2014
 
 
4,888,519
 
$
0.51
 
 
 
 
Granted
 
 
368,154
 
 
5.01
 
 
 
 
Exercised
 
 
(15,139)
 
 
0.32
 
 
 
 
Expired/Cancelled
 
 
(236,834)
 
 
2.39
 
 
 
 
Outstanding at December 31, 2014
 
 
5,004,700
 
$
0.75
 
$
15,014,100
 
Granted
 
 
1,311,137
 
 
5.31
 
 
 
 
Exercised
 
 
(33,000)
 
 
0.32
 
 
 
 
Expired/Cancelled
 
 
(285,514)
 
 
4.03
 
 
 
 
Outstanding at December 31, 2015
 
 
5,997,323
 
$
1.59
 
$
8,876,038
 
Exercisable at December 31, 2015
 
 
4,512,802
 
$
0.78
 
$
10,334,317
 
v3.3.1.900
COMMITMENTS AND CONTINGENCIES (Tables)
12 Months Ended
Dec. 31, 2015
Schedule of Future Minimum Rental Payments for Operating Leases
A summary of future minimum rental payments required under operating leases as of December 31, 2015 is as follows:
 
Years ended
 
Operating Leases
 
2016
 
$
364,866
 
2017
 
 
96,750
 
Total minimum lease payments
 
$
461,616
 
v3.3.1.900
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
Dec. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment, Gross $ 492,274 $ 341,047
Less accumulated depreciation (173,708) (111,592)
Property and equipment, net 318,566 229,455
Furniture and fixtures [Member]    
Property, Plant and Equipment, Gross 59,128 38,850
Laboratory equipment [Member]    
Property, Plant and Equipment, Gross 387,872 278,453
Leasehold improvements [Member]    
Property, Plant and Equipment, Gross $ 45,274 $ 23,744
v3.3.1.900
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)
Dec. 31, 2015
USD ($)
Finite-Lived Intangible Assets [Line Items]  
2016 $ 48,749
2017 48,749
2018 43,733
2019 43,277
2020 4,330
Thereafter $ 2,165
v3.3.1.900
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2)
Dec. 31, 2015
USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Marketable Securities $ 7,999,010
Level 1[Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Marketable Securities 7,999,010
Level 2[Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Marketable Securities 0
Level 3[Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Marketable Securities $ 0
v3.3.1.900
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)
1 Months Ended 12 Months Ended
Feb. 03, 2015
Mar. 16, 2016
Jan. 09, 2015
Aug. 31, 2013
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Accounting Policies [Line Items]              
Research and Development in Process         $ 1,500,000    
Research and Development Expense, Total         13,757,279 $ 7,787,384  
Cash, Cash Equivalents, and Marketable Securities         $ 13,600,000 $ 8,000,000  
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount         6,233,153 5,308,581  
Comprehensive Income (Loss), Net of Tax, Attributable to Parent         $ (12,847,954) $ (6,215,612)  
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax         9,385 980  
Stock Issued During Period, Shares, New Issues 1,658,822   2,839,045        
Shares Issued, Price Per Share $ 4.25   $ 3.523        
Stock Issued During Period, Value, New Issues $ 7,050,000   $ 10,000,000   16,446,218    
Amortization of Intangible Assets         48,749 10,733  
Depreciation         $ 62,116 $ 32,163  
Class of Warrant or Right, Exercise Price of Warrants or Rights         $ 2.27 $ 10.02 $ 17.20
Research and Development Arrangement [Member]              
Accounting Policies [Line Items]              
Government Grants Received       $ 2,900,000      
Grants Receivable         $ 2,400,000    
Subsequent Event [Member] | Investor [Member]              
Accounting Policies [Line Items]              
Stock Issued During Period, Shares, New Issues   1,692,151          
Shares Issued, Price Per Share   $ 2.40          
Stock Issued During Period, Value, New Issues   $ 4,100,000          
Class of Warrant or Right, Number of Securities Called by Warrants or Rights   846,073          
Class of Warrant or Right, Exercise Price of Warrants or Rights   $ 4.50          
Subsequent Event [Member] | California Institute for Regenerative Medicine [Member]              
Accounting Policies [Line Items]              
CIRM Grant Award, Value   $ 3,400,000          
Maximum [Member]              
Accounting Policies [Line Items]              
Property, Plant and Equipment, Useful Life         7 years    
Minimum [Member]              
Accounting Policies [Line Items]              
Property, Plant and Equipment, Useful Life         5 years