NVUS 2018 Annual Report

payments upon the completion of milestones or receipt of deliverables. Non-refundable advance payments under agreements are capitalized and expensed as the related goods are delivered or services are performed. 7KH &RPSDQ\¶V FRQWUDFWV ZLWK WKLUG SDUWLHV WR SHUIRUP YDULRXV FOLQLFDO WULDO DFWLYLWLHV LQ WKH RQ -going development of potential products. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows to its vendors. Payments under the contracts depend on factors such as the achievement of certain events, successful enrollment of patients, and completion of portions of the clinical trial or similar conditions. The &RPSDQ\¶V DFFUXDO IRU FOLQLFDO WULDOV LV EDVHG RQ HVWLPDWHV RI WKH VHUYLFHV UHFHLYHG DQG HIIRUWV H[SHQGHG SXUVXDQW WR FRQWUDF ts with clinical trial centers and clinical research organizations. These contracts may be terminated by the Company upon written notice and the Company is generally only liable for actual effort expended by the organizations to the date of termination, although in certain instances the Company may be further responsible for termination fees and penalties. The Company estimates its research and development expenses and the related accrual as of each balance sheet date based on the facts and circumstances known to the Company at that time. There have been no material adjustments to the Comp DQ\¶V SULRU period accrued estimates for clinical trial activities through December 31, 2018. Net Loss Per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, preferred stock, and stock options and warrants are considered to be potentially dilutive securities and are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. Therefore, basic and diluted net loss per share was the same for WKH SHULRGV SUHVHQWHG GXH WR WKH &RPSDQ\¶V QHW ORVV position.

Year Ended December 31,

2018 2017 p (In thousands, exce t share and per share data) $ (14,065) $ (13,116)

Net loss available to stockholders of the company Interest accumulated on preferred shares and on preferred shares contingently issuable for little or no cash Net loss attributable to stockholders of preferred shares and to stockholders of preferred shares contingently issuable for little or no cash Net loss used in the calculation of basic and diluted loss per share

Ͷ

(328)

Ͷ

2,666

$ (14,065) $ (10,778)

Net loss per share, basic and diluted

$

(1.56) $ (2.30)

Weighted-average number of common shares

9,005,352 4,677,610

The computation of diluted earnings per share excludes stock options, warrants, and restricted stock units that are anti- dilutive. For the year ended December 31, 2018, common share equivalents of 974,817 shares were anti-dilutive. For the year ended December 31, 2017, common share equivalents of 782,340 shares were anti-dilutive. Stock-based Compensation For stock options granted to employees, the Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair value. The fair value of stock options is determined using the Black-Scholes option pricing model, using assumptions which are subjective and require significant judgment and estimation by management. The risk-free rate assumption was based on observed yields from governmental zero-coupon bonds with an equivalent term. The expected volatility assumption was based on historical volatilities of a group of comparable industry companies whose share prices are publicly available. The peer group was developed based on companies in the pharmaceutical industry. The expected term of stock options represents the weighted-average period that the stock options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determined the expected life assumption using the simplified method, which is an average of the options ordinary vesting period and the contractual term. The expected

F-11