GNPX 2017 Annual Report

80 including the quality of our current and potential product candidates, early clinical data, investment in our clinical program, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our current and potential product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our current and potential product candidates. General and administrative . General and administrative expense consists of personnel related costs, which include salaries, as well as the costs of professional services, such as accounting and legal, facilities, information technology and other administrative expenses. We expect our general and administrative expense to increase following our initial public offering due to the anticipated growth of our business and related infrastructure as well as accounting, insurance, investor relations, and other costs associated with being a public company. Depreciation . Depreciation expense consists of depreciation on our property and equipment. We depreciate our assets over their estimated useful life. We estimate computer and office equipment to have a 5-year life. Results of Operations Comparison of the Years Ended December 31, 2017 and 2016 The following summarizes our results of operations for the years ended December 31, 2017 and 2016. Research and Development Expense. Research and development expense consists primarily of the discovery and development of our current and potential product candidates; costs related to production of clinical supplies, including fees paid to contract manufacturers, fees paid to clinical consultants, clinical trial sites and vendors, including clinical research organizations in conjunction with implementing and monitoring our clinical trials and acquiring and evaluating clinical trial data; and costs related to compliance with drug development regulatory requirements. Research and development expense was $289,934 for the year ended December 31, 2017 as compared to $354,883 for the year ended December 31, 2016. This slight decrease of $64,949 was primarily due to the Company’s greater emphasis on completing the initial public offering in 2017. We expect research and development expense to increase significantly in future periods as we expand our clinical and research programs. General and Administrative Expense. General and administrative expense primarily consists of personnel costs, travel, information technology, facilities, and professional service fees. Professional services fees primarily consist of legal, accounting and consulting costs. General and administrative expense for the year ended December 31, 2017 was $3,019,171 as compared to $3,776,414 for the year ended December 31, 2016. The $757,243 decrease in general and administrative expense is related primarily to a larger than normal equity-based compensation amount issued in 2016 to recruit leadership and technical talent to our team. Excluding this expense, an increase of $576,283 for the year ended December 31, 2017 versus December 31, 2016 was primarily due to increased headcount, associated employee-related expenses, and expenses related to the Company’s initial public offering. We expect general and administrative expense to increase in future periods due to additional legal, accounting, insurance, investor relations and other costs associated with being a public company. Interest Expense. Interest expense was $1,890 and $0 for the years ended December 31, 2017 and 2016, respectively. This increase of $1,890 was entirely due to increase in utilization of debt in 2017 compared to the prior year. Depreciation Expense. Depreciation expense was $3,242 and $862 for the years ended December 31, 2017 and 2016, respectively. Depreciation is generated from our fixed assets, which consist only of computer equipment at this time. The slight increase of $2,380 in depreciation is due to additional equipment purchased and utilized by new employees during the year ended in 2017.