Form 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2008
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TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For the transition period from to
Commission File No. 001-32157
ADVENTRX Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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84-1318182 |
| (State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.) |
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| 6725 Mesa Ridge Road, Ste 100 San Diego, CA
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92121 |
| (Address of principal executive offices)
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(Zip Code) |
(858) 552-0866
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class:
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Name of each exchange on which registered: |
| Common Stock, par value $0.001 per share
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NYSE Amex |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes
o No
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter periods that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statement incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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Accelerated filer o
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Non-accelerated filer o
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Smaller Reporting Company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). YES o NO þ
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the
registrant as of June 30, 2008 was approximately $30,087,567 based upon the closing price on the
NYSE Amex ( formerly the American Stock Exchange) reported for such date. Shares of common stock
held by each officer and director and by each person or entity who is known to own beneficially 5%
or more of the registrant’s outstanding common stock have been excluded in that such persons and
entities may be deemed to be affiliates of the registrant. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
90,252,572 shares of the registrant’s common stock were issued and outstanding as of March 2, 2009.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required to be disclosed in Part III of this report is incorporated by
reference from the registrant’s definitive proxy statement, which will be filed with the Securities
and Exchange Commission in connection with the registrant’s 2009 Annual Meeting of Stockholders.
Forward-Looking Statements
This Annual Report on Form 10-K, particularly in Item 1 “Business,” and Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and the documents
incorporated by reference, includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical fact, are statements that could be
deemed forward-looking statements, including, but not limited to, statements regarding our business
strategy, expectations and plans, our objectives for future operations, including product
development and strategic transactions, and our future financial position. When used in this
report, the words “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,”
“intend,” “expect,” “indicate” and similar expressions are intended to identify forward-looking
statements.
We have based these forward-looking statements on our current expectations and projections
about future events and trends that we believe may affect our financial condition, results of
operations, business strategy, short-term and long-term business operations and objectives, and
financial needs, including our ability to consummate a strategic transaction or otherwise satisfy
our immediate need for additional capital. These forward-looking statements are subject to risks
and uncertainties that could cause our actual results to differ materially from those reflected in
these forward-looking statements. Factors that could cause or contribute to such differences
include, but are not limited to: the risk that we will be unable to consummate a strategic or
partnering transaction or otherwise raise sufficient capital on a timely basis, or at all, to
continue as a going concern; the risk that our recent cost-containment measures, including the
discontinuation of substantially all of our development activities and fundamental business
operations and reduction in force to five full-time employees, will negatively impact our ability
to consummate a strategic transaction; the risk that the departure of our former Chief Executive
Officer and President and our former Executive Vice President and Chief Financial Officer and/or
our reduced workforce and leadership by officers who do not have substantial previous experience in
executive leadership roles will negatively impact our ability to attract a strategic or other
partner, raise capital or maintain effective disclosure controls and procedures or internal control
over financial reporting; the risk the FDA will determine that ANX-530 and Navelbine® are not
bioequivalent, including as a result of performing pharmacokinetic equivalence analysis based on a
patient population other than the population on which we based our analysis; the risk that the
bioequivalence study of ANX-514 does not demonstrate pharmacokinetic equivalence or bioequivalence
to Taxotere®; the risk of investigator bias in reporting adverse events as a result of the
open-label nature of the ANX-530 bioequivalence study, including bias that increased the reporting
of adverse events associated with Navelbine and/or that decreased the reporting of adverse events
associated with ANX-530; difficulties or delays in manufacturing, obtaining regulatory approval for
and marketing ANX-530 and ANX-514, including validating commercial manufacturers and suppliers and
the potential for automatic injunctions regarding FDA approval of ANX-514; the potential for
regulatory authorities to require additional preclinical work or other clinical requirements to
support regulatory filings, including prior to the submission or the approval of a New Drug
Application for ANX-530 and ANX-514; the risk that the performance of third parties on whom we rely
to conduct our studies or evaluate the data, including clinical investigators, expert data
monitoring committees, contract laboratories and contract research organizations, may be
substandard, or they may fail to perform as expected; and other risks and uncertainties discussed
in other reports and documents we file with the Securities and Exchange Commission. Except as
required by law, we do not intend to update these forward-looking statements publicly or to update
the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
In light of these risks and uncertainties and our assumptions, the forward-looking events and
circumstances discussed in this report and in the documents incorporated in this report may not
occur and actual results could differ materially and adversely from those anticipated or implied in
such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on such
forward-looking statements.
1
Item 1. Business
Overview
We are a development-stage biopharmaceutical company whose fundamental business is focused on
in-licensing, developing and commercializing proprietary product candidates for the treatment of
cancer. We seek to improve the performance and commercial potential of existing treatments by
addressing limitations associated principally with their safety and use. We have not yet marketed
or sold any products or generated any significant revenue.
Our lead product candidates, ANX-530 and ANX-514, are novel emulsion formulations of currently
marketed chemotherapy drugs. We believe ANX-530 and ANX-514 may improve the safety of and have
greater commercial potential than the currently marketed reference products, Navelbine and
Taxotere, respectively, by:
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Reducing the incidence and severity of adverse effects; and |
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Increasing their pharmacoeconomics and convenience to healthcare practitioners and
patients. |
Currently, we are focused primarily on evaluating strategic options, including the sale or
exclusive license of one or more of our product candidate programs, a strategic business merger and
other similar transactions. In October 2008, we announced a restructuring designed to reduce
operating costs while continuing advancement towards our near-term goals and that we had
discontinued active work on all product candidates other than ANX-530 and ANX-514, including our
ANX-510, or CoFactor, program. With respect to ANX-530 and ANX-514, we announced that, until we
secured additional funding, we would focus primarily on those activities relating to submitting New
Drug Applications, or NDAs, to obtain the approval of the United States Food and Drug
Administration, or FDA, for marketing ANX-530 and ANX-514 in the U.S., and that we may delay or
significantly reduce spending on other work, including activities related to product launches. In
December 2008, we announced that we were exploring a range of strategic options, including the sale
or disposition of one or more of our product candidate programs, a strategic business merger and
other similar transactions that maximize the value of our assets. In January 2009, we announced
further cost-cutting measures in an effort to extend our remaining cash as we continued to evaluate
strategic options, as well as conduct activities related to submitting an NDA for ANX-530 and
continue our bioequivalence trial of ANX-514. In February 2009, we announced that we had received
written indications of interest from numerous companies representing a range of strategic
transactions and currently are evaluating all proposals and options. We also indicated that
continued cost-containment measures could impact the timeline of our regulatory filings.
In
March 2009, we announced that, effective April 3, 2009, we
will reduce our full-time workforce to five employees
consisting of our chief business officer, our general counsel, our senior vice president of
operations, our vice president of regulatory affairs and quality and
our manager of accounting. In
addition, we announced that we will discontinue substantially all of our development activities and fundamental business
operations to provide additional time to consummate a strategic transaction or otherwise obtain
financing. If we are unable to consummate a strategic transaction on a timeline that we believe is
acceptable, we may divest our assets on best-available terms, entirely wind-down our operations and
distribute any remaining cash to our stockholders. However, based on our current working capital
and the estimated costs associated with seeking approval for and implementing a liquidation plan,
we expect our remaining cash, if any, to be insignificant.
We are unable to predict when, if ever, we will consummate a strategic transaction, or the
form, structure or terms of any potential strategic transaction, including whether we will continue
as a going concern. As a result, our future plans and strategy are uncertain.
Throughout 2008, we experienced substantial turn-over in our executive and management ranks.
In January and April 2008, our employment relationship with our former president and chief medical
officer and former chief financial officer and senior vice president, respectively, ended. In April
2008, Mark N.K. Bagnall, the former chair of the audit committee of our board of directors, who was
also a member of the compensation and nominating and governance committees of our board of
directors, joined our management team as executive vice president and chief financial officer and,
in December 2008, Mr. Bagnall stepped down as executive vice president and chief financial officer
and resumed his role as solely a member of our board of directors but also serves as a consultant
to us. In October 2008, as part of a reduction in our workforce, we ended our employment
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relationship
with our former chief scientific officer and senior vice president, our former vice president of medical affairs and
our former vice president of research and development and promoted our former vice president of
commercialization to senior vice president of operations. At the same time, our former chief
executive officer and president resigned his management positions, though remained on our board of
directors until December 2008, at which time he resigned his position on our board of directors. In
January 2009, as part of an additional reduction in our work force, we ended our employment
relationship with our vice president of manufacturing. Beginning in October 2008, our company was
led by a committee of executive officers. In February 2009, our board of directors appointed Brian
M. Culley, our chief business officer and senior vice president, to additionally serve as our
principal executive officer and appointed Mr. Bagnall to additionally serve as our principal
financial officer and principal accounting officer. It is unclear whether the departure of our
former executives and management personnel, including specifically our former chief executive
officer and president and our former executive vice president and chief financial officer and/or
our reduced workforce, or our leadership by officers who do not have substantial previous
experience in executive leadership roles, will negatively impact our ability to execute our
business plan or to maintain effective disclosure controls and procedures or internal control over
financial reporting.
Our business was incorporated in Delaware in December 1995. In October 2000, we merged our
wholly-owned subsidiary, Biokeys Acquisition Corp., with and into Biokeys, Inc. and changed our
name to Biokeys Pharmaceuticals, Inc. In May 2003, we merged Biokeys, Inc., our wholly-owned
subsidiary, with and into us and changed our name to ADVENTRX Pharmaceuticals, Inc. In July 2004,
we formed a wholly-owned subsidiary, ADVENTRX (Europe) Ltd., in the United Kingdom primarily to
facilitate conducting clinical trials in the European Union and to obtain favorable pricing for
discussions with the European Medicines Agency. In April 2006, we acquired SD Pharmaceuticals, Inc.
as a wholly-owned subsidiary. Our executive offices are located at 6725 Mesa Ridge Road, Suite 100,
San Diego, California 92121, and our telephone number is (858) 552-0866. Our corporate website is
located at www.adventrx.com.
Our trademark CoFactor® is registered in the United States Patent and Trademark
Office (in the Supplemental Register) under Registration No. 2,946,934, for use in connection with
chemotherapy modulators derived from folic acid. We are developing commercial names for our other
product candidates. All other trademarks, service marks or trade names appearing in this report,
including but not limited to Navelbine®, Taxol® and Taxotere® are
the property of their respective owners. Use or display by us of other parties’ trademarks, service
marks, trade names, trade dress or products is not intended to and does not imply a relationship
with, or endorsements or sponsorship of, us by the trademark, service mark, trade name, trade dress
or product owners.
Oncology Focus
Our lead product candidates are designed to improve treatments for cancer patients. Each year,
almost 11 million people worldwide are diagnosed with and nearly 7 million people die from cancer.
According to the American Cancer Society, cancer is the second most common cause of death in the
U.S., accounting for 1 of every 4 deaths. It is estimated that over 1.4 million new cancer cases
were diagnosed and over 550,000 people died from cancer in the U.S. in 2007.
Treatment choices for cancer patients depend on the type, stage and progression of the cancer,
along with the number and types of prior therapies, if any. Treatment options include surgery,
radiation, chemotherapy, hormone therapy and immunotherapy, both alone and in combination with each
other. Treatment of cancer with chemicals is referred to as chemotherapy. Adjuvant therapy refers
to additional treatment, typically chemotherapy or radiation, following removal of detectable
cancerous growths, typically by surgery. In 2006, cancer chemotherapies generated over $40 billion
in revenues.
Our Lead Product Candidates (ANX-530 and ANX-514)
Opportunities for New Formulations
Reformulating existing pharmaceutical products is an increasingly common product
lifecycle-management technique. Between 2002 and 2005, nearly 40% of the products launched by the
top 50 pharmaceutical manufacturers were reformulations. Finding new markets for and ways to modify
and improve existing products is often an essential element of pharmaceutical companies’ efforts to
maintain or grow revenues in the face of patent expirations and competitive pressures.
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Navelbine and Taxotere are intravenously-injected chemotherapy drugs commonly used to treat
solid tumors. We believe the current formulations of these drugs have limitations that present
opportunities for improvement. We are developing novel ways to formulate the active ingredient
underlying each of these drugs that we believe may improve their safety profiles without adversely
affecting efficacy. In addition, we believe our formulations may provide benefits to patients and
practioners that do not manifest themselves in traditional measures of safety or efficacy.
Regulatory Strategy
The regulatory strategy for our lead product candidates has been to demonstrate the
bioequivalence of each of ANX-530 and ANX-514 to the currently marketed reference product. The
bioequivalence of two drugs can be demonstrated in a single trial of as few as 28 patients,
typically in an open-label, single-dose, cross-over comparison of the drugs. For each of ANX-530
and ANX-514, the FDA has indicated that data from a single study of approximately 28 patients that
demonstrates the bioequivalence of our product candidates to the reference product may be
sufficient to support a Section 505(b)(2) NDA. Accordingly, we view these bioequivalence trials as
registrational studies in that they have the potential to support a marketing application. If
approved, the drug prescribing information, or “label,” for our products may reflect data generated
during the bioequivalence trials, including comparative adverse event information.
The relatively low number of required patients and the single-dose treatment cycles associated
with these bioequivalence trials can decrease study timelines and costs relative to typical pivotal
studies. Accordingly, with relatively modest financial investment, we are able to assess the
pharmacokinetic equivalence of each of our product candidates to the reference product in as little
as 12 to 18 months from initiation of the trial, which information should provide the data
necessary to support an NDA. By securing in advance clarity from the FDA regarding our planned
regulatory pathway, as we have done for ANX-530 and ANX-514, we mitigate aspects of the regulatory
risk associated with drug development. Furthermore, after we obtain marketing approval, we can
conduct clinical studies while marketing our products to expand product labels in ways that might
increase their commercial value.
Furthermore, if any clinical studies we conduct, in addition to our bioequivalence studies,
are essential to the FDA’s approval of an application to use our products or product candidates to
treat a new indication, or to support a label change in product use, the product may be eligible
for three years of marketing exclusivity for that indication or use. Marketing exclusivity means
that the FDA will not approve an abbreviated NDA, or ANDA (an ANDA is for a generic drug product)
or Section 505(b)(2) NDA during the exclusivity period based on the conditions of approval of our
product.
Commercialization Strategy
HCPCS Product Codes and Reimbursement
In the U.S. and elsewhere, healthcare providers, including hospitals, nursing homes and
physician offices, typically purchase and administer to patients the drugs that patients are
restricted from self-administering and then seek reimbursement, primarily from third party payors
such as Medicare, Medicaid and private insurance companies. As a result, sales of
physician-administered prescription pharmaceuticals are dependent in large part on the availability
and rate of reimbursement to healthcare providers from third party payors.
The Healthcare Common Procedure Coding System, or HCPCS, was established to identify and
provide unique codes for healthcare goods and procedures, including codes for injectable oncology
drugs such as ANX-530 and ANX-514, should they be approved. Ultimately, the Centers for Medicare
and Medicaid Services, or CMS, is responsible for reviewing and approving applications for new
HCPCS codes for healthcare goods. Generic equivalents of drugs are assigned the same HCPCS code as
the original drug. Virtually all U.S. payors, including Medicare and private insurance plans, use
the Healthcare Common Procedure Coding System, including the product codes assigned by CMS.
In determining a specific reimbursement rate for a drug, CMS publishes an average sales price
for the drug based on manufacturer-reported sales data for all drugs within the same HCPCS product
code, including applicable discounts and rebates, as well as a reimbursement rate, expressed as a
percentage of the average sales price. Because generic equivalents of drugs are assigned the same
HCPCS code as the original drug, generic competition can be
expected to decrease the level of reimbursement for all drugs with the same HCPCS product code
(both the original drug and its generic equivalents) until price equilibrium is reached. Most
private payors use similar methods for determining reimbursement rates, sometimes based on average
wholesale prices or CMS’ published average sales price.
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Our fundamental commercial strategy in the U.S. for ANX-530 and ANX-514 has been to seek HCPCS
product codes that are distinct from those for Navelbine and Taxotere, respectively. If our
products are provided unique HCPCS codes, they will be reimbursed based on their own sales prices,
without including sales prices of the applicable reference product or its generic competition. We
believe this would provide greater freedom to price our products at a premium to competitive
products, thereby enhancing their value, and our plans included pricing ANX-530 at a premium to
competitive products. If we are successful in consummating a strategic transaction, we cannot be
certain whether or how our reimbursement and pricing strategy may change.
Group Purchasing Organizations
Group purchasing organizations, or GPOs, including provider networks, are entities that help
health care providers, such as hospitals, nursing homes and physician offices, realize savings and
efficiencies by aggregating purchasing volume and using that scale to negotiate discounts with
manufacturers and other vendors. The U.S. healthcare industry spends more than $200 billion
annually in medical and non-medical products, with more than 70% allocated through GPOs.
We believe up to 80% of the U.S. markets for ANX-530 and ANX-514 are concentrated within eight
to ten GPOs and that a focused, specialized sales force may be able to effectively market and sell
our products, if approved, through these organizations. As consolidation within the industry and
attempts to further enhance economies of scale and marketing advantages continue, we believe these
markets will concentrate further. If our products demonstrate equivalent efficacy and superior
tolerability or pharmacoeconomic benefits relative to the reference product, we believe the
well-established utility of the reference product should enable GPOs to enact broad and rapid
shifts among their constituents from the reference product to our novel emulsion formulations.
In October 2008, we announced that, until we secured additional funding, we may delay or
significantly reduce spending on activities related to product launches. Since then, we have
deferred conducting most activities related to further acquiring or developing sales, marketing and
distribution capabilities and building the associated regulatory compliance infrastructure. If we
are successful in consummating a strategic transaction, we cannot be certain whether or how our
sales and marketing strategy may change.
ANX-530 (vinorelbine emulsion)
Background; Limitations of Current Formulations
ANX-530 is a novel emulsion formulation of the chemotherapy drug vinorelbine. Navelbine, a
branded formulation of vinorelbine, is approved in the U.S. to treat advanced non-small cell lung
cancer as a single agent or in combination with cisplatin, and approved in the European Union, or
EU, to treat non-small cell lung cancer and advanced or metastatic breast cancer. Since February
2003, generic equivalents of Navelbine have been available in the U.S.
Navelbine and its generic equivalents are often associated with injection site reactions,
including phlebitis, erythema and pain at the site of injection. Studies have shown these reactions
occur in approximately one-third of patients, with 5% of the reactions categorized as severe.
ANX-530 is designed to reduce the incidence and severity of these injection site reactions.
Our formulation emulsifies vinorelbine into a homogeneous suspension of nanoparticles that is
designed protect the venous endothelium during administration into a peripheral vein, thereby
reducing irritation associated with administration of the drug.
Clinical and Regulatory Developments
In November 2007, we announced positive results from a bioequivalence study of ANX-530.
Pharmacokinetic equivalence, the primary endpoint of the study, was observed between ANX-530 and
Navelbine. Based on federal
regulations and FDA guidance regarding bioequivalence studies, pharmacokinetic equivalence was
demonstrated by a statistical comparison of both the areas under the curve (AUC) and maximum plasma
concentrations (Cmax).
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In January 2008, we announced safety results from the study. In post hoc analyses, relative to
Navelbine, ANX-530 demonstrated a statistically significant reduction in injection site reactions.
Notably, the incidence of injection site reactions attributed to Navelbine was consistent with its
product label. Furthermore, ANX-530 was determined to be safe and well-tolerated with no
significant differences observed in any other safety parameters.
Throughout 2008, we conducted various activities related to our ANX-530 NDA submission. In
particular, we engaged a new contract manufacturer and met with the FDA regarding our NDA
submission. At this meeting, the FDA requested additional information regarding our new contract
manufacturer and material manufactured by our new contract manufacturer. In February 2009, we
announced that our continued cost-containment measures could impact the timeline of our regulatory
filings. Currently, because of the uncertainty surrounding our ability to consummate a strategic
transaction and the form, structure and terms of any potential strategic transaction, including
whether we will continue as a going concern, as well as uncertainty surrounding our plans if we are
unable to consummate a strategic transaction on a timeline that we believe is acceptable, we cannot
predict if or when an NDA for ANX-530 may be filed.
Market and Opportunity
Worldwide sales of Navelbine and generic formulations of vinorelbine in 2006 were in excess of
$200 million, with approximately 13% of these revenues generated in the U.S. Between 2004 and 2007,
U.S. unit sales of Navelbine and its generic equivalents grew at a compounded annual rate of
approximately 9%. If ANX-530 is granted a separate HCPCS code and is sold at a price-premium to
Navelbine and its generic equivalents, the potential dollar value of this market could increase
substantially.
Additionally, based in part on recent clinical studies, we believe the market for
vinorelbine-based treatments, both in the U.S. and abroad, will grow in the coming years. In 2005,
the New England Journal of Medicine published a study reporting a statistically significant
improvement in overall survival among patients with early-stage lung cancer who received adjuvant
therapy consisting of vinorelbine plus cisplatin following tumor resection relative to patients
receiving no adjuvant therapy. In addition, a second study presented at the 2005 annual meeting of
the American Society of Clinical Oncology reported similarly positive results. Research involving
vinorelbine to treat other cancer types, including breast and ovarian cancer, is ongoing. We
believe that if ongoing research yields additional positive results, demand may increase for
vinorelbine-based treatments, including ANX-530.
We believe ANX-530 is well-positioned as an alternative to Navelbine and its generic
equivalents. In post hoc analyses, relative to Navelbine, ANX-530 demonstrated a statistically
significant reduction in injection site reactions in our registrational bioequivalence study while
maintaining comparable pharmacokinetics. We believe an improved safety profile of ANX-530 will be
compelling to healthcare practitioners and patients.
Our market research, conducted among practicing oncologists and oncology nurses, suggests that
healthcare practitioners prefer and would use a formulation of vinorelbine that reduced or
eliminated injection site reactions while providing comparable efficacy, provided the financial
impact to the practitioner of using such a formulation, relative to alternative formulations, is
neutral or positive. Furthermore, for a variety of reasons, including anticipated frequent
intravenous drug delivery and to avoid injection site reactions and loss of venous access,
Navelbine often is administered through a central line, a more invasive procedure in which a
catheter is inserted into and left for a period of time in a large vein in the neck, chest or
groin. We believe ANX-530 may provide an alternative to placing a central line for those patients
for whom central lines are used primarily to avoid injection site reactions.
ANX-514 (docetaxel emulsion)
Background; Limitations of Taxotere
ANX-514 is a novel emulsion formulation of the chemotherapy drug docetaxel. Taxotere, a
branded formulation of docetaxel, is approved to treat breast, non-small cell lung, prostate,
gastric and head and neck cancers. In the U.S., aspects of Taxotere are covered by patents through
November 2013.
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According to Taxotere’s label, patients should be observed closely for hypersensitivity, or
allergic, reactions, which may occur within a few minutes following initiation of Taxotere
administration. These reactions generally are believed to be associated with polysorbate 80, which
is present in Taxotere, and range from mild, including flushing, rash, breathing difficulty and
drop in blood pressure, to severe, including generalized rash/erythema, hypotension and, in rare
cases, fatal anaphylaxis. Taxotere’s label recommends that all patients should be premedicated with
oral corticosteroids for three days starting one day prior to Taxotere administration to reduce the
severity of hypersensitivity reactions, among other reasons. Even following premedication,
hypersensitivity reactions have been observed, including, very rarely, fatal anaphylaxis.
ANX-514 is formulated without polysorbate 80 or other detergents and is designed to reduce the
incidence and severity of hypersensitivity reactions.
Preclinical Efficacy and Safety; Enrollment in Bioequivalence Study Complete
In preclinical testing, we demonstrated that ANX-514 reduced hypersensitivity reactions
without impacting pharmacokinetics or antitumor activity when compared to Taxotere. In an animal
model, we observed anaphylactic reactions following Taxotere administration, including decreased
respiration, swelling and tremors. Furthermore, decreases in blood pressure and increases in
histamine levels were observed within 10-20 minutes of Taxotere administration. In contrast, we did
not observe hypersensitivity reactions following administration of ANX-514. Specifically, we did
not observe treatment-related changes in blood pressure or increases in histamine levels. On
rechallenge at three weeks, hypersensitivity reactions were observed only in the Taxotere-treated
animals.
In addition, in two separate studies in different animal species, ANX-514 showed equivalent
pharmacokinetics to Taxotere. In animal models, ANX-514 demonstrated dose-dependent inhibition of
tumor growth with equivalent antitumor activity when compared to Taxotere at equal dose levels.
In April 2008, we initiated enrollment in a registrational bioequivalence study of ANX-514
and, in February 2009, we announced that enrollment in the study was complete. The study will
compare the blood levels of docetaxel following a single dose of ANX-514 or Taxotere in patients
with advanced cancers. In addition, we will analyze the safety of ANX-514. The FDA has indicated
that this single study, should it demonstrate bioequivalence between ANX-514 and Taxotere, may
provide sufficient human data to support a Section 505(b)(2) NDA. We anticipate announcing
preliminary pharmacokinetic results of this study in the second quarter of 2009.
In February 2009, we announced that our continued cost-containment measures could impact the
timeline of our regulatory filings. Currently, because of the uncertainty surrounding our ability
to consummate a strategic transaction and the form, structure and terms of any potential strategic
transaction, including whether we will continue as a going concern, as well as uncertainty
surrounding our plans if we are unable to consummate a strategic transaction on a timeline that we
believe is acceptable, we cannot predict if or when an NDA for ANX-514 may be filed.
Market and Opportunity
Worldwide annual sales of Taxotere in 2007 were approximately $2.9 billion, making it one of
the top-selling anti-cancer agents in the world. Based on its early success, substantial investment
into researching the use of Taxotere in new indications, has led to numerous label expansions in
the U.S. and abroad.
We believe ANX-514 is well-positioned as an alternative to Taxotere and any of its future
generic equivalents. In established animal models, we demonstrated ANX-514 reduces hypersensitivity
reactions relative to Taxotere. Our market research, conducted among practicing oncologists and
oncology nurses, suggests a preference for a formulation of docetaxel that reduces hypersensitivity
reactions, which are perceived as a significant issue. In addition, patients with a history of
allergic reactions to Taxotere, but for whom docetaxel is the best or only therapeutic option, may
benefit from ANX-514, particularly as Taxotere’s label recommends against rechallenging patients
with a history of severe hypersensitivity reactions.
If clinical studies validate our preclinical work, the need to premedicate patients, which is
intended to reduce the severity of hypersensitivity reactions, may be reduced or eliminated. Many
patients prefer to avoid premedication and the side effects often associated with steroids, which
include agitation, altered mental state, sleeplessness and
altered blood/sugar levels. In addition, ANX-514 may be well-suited for patients for whom
steroid premedication causes other complications, such as diabetics.
7
In addition to the improved safety and comparable efficacy observed in preclinical testing,
ANX-514 may provide nonclinical benefits to patients and healthcare practitioners. ANX-514 is
formulated without polysorbate 80, which can present practical problems during administration.
Taxotere’s label indicates foaming may occur when mixing Taxotere and the accompanying diluent due
to the presence of polysorbate 80. Our market research suggests foaming is frequent, which can
cause delays in administering the drug or disruption during administration if too much foam is
present during administration. Practitioners have also expressed concern that foaming, as well as
the physical process of extracting the initially diluted Taxotere mixture from the mixing vial, may
result in patient underdosing.
Polysorbate 80 also is incompatible with plasticized polyvinyl chloride, or PVC, which is used
in making the IV bags and tubing commonly used to infuse chemotherapy drugs. Polysorbate 80 can
leach diethylhexyl phthalate, a potentially hepatotoxic and carcinogenic acid, from plasticized PVC
bags and tubing, resulting in the addition of diethylhexyl phthalate into the infusion solution.
Taxotere’s label warns against contact between Taxotere and plasticized PVC equipment and
recommends storing the fully-prepared Taxotere mixture in glass or polypropylene bottles or
polypropylene or polyolefin plastic bags and administering through polyethylene-lined
administration sets. As a result, healthcare providers must have available and remember to use more
costly non-PVC supplies to prepare and administer Taxotere, the costs of which generally are not
separately reimbursed.
Finally, infusion of the fully-prepared Taxotere mixture should begin within three hours of
preparation. Our stability testing suggests fully-prepared ANX-514 is stable for up to 48 hours. In
hospital settings, where a central pharmacy may prepare products for administration, the limited
stability of the fully-prepared Taxotere mixture may result in expired doses. In addition to wasted
product, patients must wait while additional Taxotere is prepared for administration and additional
stress is placed on hospital resources, including room availability.
While in the U.S. aspects of Taxotere retain patent protection through November 2013, the
active ingredient, docetaxel, loses its patent protection in May 2010; however, if an outstanding
request for pediatric exclusivity is granted, this date would be extended by six months. This
creates a significant opportunity to develop a formulation of docetaxel that does not infringe any
of the remaining Taxotere patents. Without challenging the remaining Taxotere patents, a generic
equivalent of Taxotere cannot be approved in the U.S. until November 2013, which could provide
other formulations of docetaxel, including ANX-514, over three years (less any period of pediatric
exclusivity that may be granted in the future) of marketing in the U.S. before the introduction of
Taxotere generic equivalents. We believe this potential lead time over generic competition will be
attractive to potential strategic partners as it provides an additional opportunity to establish
ANX-514 as an alternative to Taxotere and to establish pricing for ANX-514 prior to the
introduction of Taxotere generic equivalents.
Other Product Candidates and Potential Product Candidates
In addition to ANX-530 and ANX-514, we hold rights to a number of other compounds. These
include:
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ANX-015, a novel formulation of clarithromycin. An intravenous formulation of
clarithromycin is approved to treat mild to moderate bacterial infections (such as
community-acquired pneumonia). ANX-015 is intended to reduce injection site reactions
associated with intravenous delivery of clarithromycin; |
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ANX-016, a novel formulation of vancomycin. An intravenous formulation of vancomycin
is approved to treat Gram-positive bacterial infections. ANX-016 is intended to reduce
injection site reactions associated with intravenous delivery of vancomycin; |
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ANX-201, a member of a new class of reverse transcriptase inhibitor, that in
preclinical studies has shown broad-spectrum antiviral activity against human
immunodeficiency virus (HIV), human and avian influenza viruses and herpes simplex viruses
(HSV); |
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ANX-211, a broad spectrum antiviral agent that is a natural product formulated to
provide antiviral activity against multiple strains of virus using excipients that are
generally regarded as safe (GRAS); |
8
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ANX-510 (CoFactor), a folate-based biomodulator designed to replace leucovorin as the
preferred method to enhance the activity and reduce associated toxicity of the widely used
cancer chemotherapeutic agent 5-fluorouracil, or 5-FU. CoFactor bypasses the metabolic
pathway required by leucovorin to deliver the active form of folate, potentially allowing
5-FU to work more effectively; |
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ANX-513, a novel formulation of paclitaxel. Taxol, a branded formulation of
paclitaxel, is approved to treat breast, ovarian, Kaposi’s sarcoma and non-small cell lung
cancers. ANX-513 is intended to be non-allergenic and to reduce the need for
immunosuppressant premedication associated with administration of Taxol; and |
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ANX-575, a novel formulation of alpha-tocopheryl succinate, which has been shown in
preclinical studies to selectively facilitate cell death in cancer cells. |
In October 2008, we announced that we had discontinued active work on all product candidates
other than ANX-530 and ANX-514. Prior to that time, we spent significant resources on the
development of CoFactor, including a phase 2b and a discontinued phase 3 clinical trial of CoFactor
in the first line treatment of metastatic colorectal cancer, and a phase 2 clinical trial of
CoFactor in advanced breast cancer.
Competition
If regulatory authorities approve the marketing and selling of any of our product candidates,
they will face significant and long-term competition from pharmaceutical companies, pharmaceutical
divisions of companies and biotechnology, biopharmaceutical and specialty pharmaceuticals
companies, among others. This competition likely will become more intense if any of our products or
competitor products achieve commercial success. Most of our competitors, particularly large
pharmaceutical companies, have greater clinical, regulatory, manufacturing, marketing,
distribution, compliance and financial resources and experience than we have. Many of these
companies have commercial arrangements with other companies to supplement their internal
capabilities.
ANX-530 and ANX-514, if approved, may compete against Navelbine and Taxotere, respectively, as
well as their generic equivalents and other formulations of vinorelbine and docetaxel. In addition
to Navelbine, currently there are at least 6 generic versions of vinorelbine on the market. In the
U.S., in May 2010 (but subject to any period of pediatric exclusivity that may be granted in the
future), patent protection ends for docetaxel and, in November 2013, patent protection ends for
Taxotere. We are aware of two leading generics companies that each have developed or acquired a
formulation of docetaxel and have certified that, after May 2010, their respective formulations of
docetaxel will not infringe any unexpired Taxotere patents.
Under our current regulatory strategy, because we anticipate submitting Section 505(b)(2) NDAs
with only bioequivalence data, the ability to differentiate our products from competitor products
will be limited. Even if we believe our products demonstrate clinical or pharmacoeconomic benefits,
we may be unable to market our products based on these benefits. If our products fail to obtain
separate HCPCS codes, we may be required to price our products at levels that do not cover our
costs to manufacture, market and distribute the products or provide any profit, or to price our
products at levels at which they are not competitive.
In addition, numerous companies are focused on reformulating currently marketed drugs. In
particular, the taxanes, the class of drugs of which Taxotere is a member, have experienced
substantial commercial success, in part as a result of their effectiveness in treating a wide
variety of cancers. This commercial success has generated significant interest in reformulating
Taxotere and other taxanes. In addition to our approach of emulsifying docetaxel, other companies
are pursuing alternative delivery vehicles, including the use of albumin nanoparticles, prodrugs,
polyglutamates, analogs, co-solvents, liposomes and microspheres. Many of these or similar
approaches could be applied to vinorelbine. Relative to our formulations, formulations based on one
or more of these other methods may result in greater efficacy or safety, provide better drug
delivery to tumor sites or otherwise improve benefits to patients and healthcare providers. For
instance, there is an oral formulation of vinorelbine approved for use in the EU against which we
would compete if our emulsion formulation of vinorelbine were approved for use in the EU.
9
Over the longer term, our ability, independently or with a strategic or other partner, to
successfully manufacture, market, distribute and sell any of our or their approved products, expand
their usage and bring new products to the
marketplace will depend on many factors, including, but not limited to, the effectiveness and
safety of those products, FDA and foreign regulatory agencies’ approvals of new products and
indications, the degree of patent protection afforded to particular products and the rates at which
those products are reimbursed.
Manufacturing
We do not have our own manufacturing facilities. We meet our preclinical and clinical trial
manufacturing requirements (including manufacturing active pharmaceutical ingredient, or API,
formulating and assembling final drug product, labeling, testing and release, packaging, storing
API and finished drug product and similar activities) by establishing relationships with
third-party manufacturers and other service providers to perform these services for us. In the
past, we relied on individual proposals and purchase orders to meet our needs and typically relied
on terms and conditions proposed by the third party or us to govern our rights and obligations
under each order (including provisions with respect to intellectual property, if any). In 2008, we
entered into a master services agreement with a new contract manufacturer, as well as individual
work orders that are governed by the master services agreement, under which the manufacturer will
provide process development and scale-up activities for ANX-530 and ANX-514. We do not have any
long-term agreements or commitments for these services. Likewise, we do not have any long-term
agreements or commitments with vendors to supply the underlying component materials of our product
candidates, some of which are available from only a single supplier. In January 2009, we announced
that, as part of on-going cost-containment measures, we had substantially reduced or delayed
spending on third-party consulting and vendor services, including contract manufacturing.
Should any of our product candidates obtain marketing approval, relationships with third-party
manufacturers and other service providers in connection with the commercial production of our
products would need to be established. There is some flexibility in securing other manufacturers to
produce our product candidates; however, our alternatives may be limited due to proprietary
technologies or methods used in the manufacture of some of our product candidates. In addition, if
we seek to make certain changes to an approved product, such as changing vendors who supply the
underlying component materials of our product candidates, we may need FDA review and approval
before the change can be implemented.
Intellectual Property
ANX-530 (vinorelbine emulsion)
We own world-wide rights (excluding China, Hong Kong, Macau and Taiwan) to patents and patent
applications covering the composition and use of our vinorelbine emulsion product candidate,
subject to the exclusive license we granted to Latitude Pharmaceuticals (described below under
“Licensing Agreements”). Patent applications, entitled “Compositions for Delivering Highly Water
Soluble Drugs,” currently are pending in the U.S., Canada and 20 additional countries, and regional
patent applications are also pending in the European Patent Office and the Eurasian Patent Office.
These applications have a priority date of July 12, 2004, and any patents granted thereon will
expire in July 2025.
ANX-514 (docetaxel emulsion)
We own world-wide rights (excluding China, Hong Kong, Macau and Taiwan) to patent and patent
applications covering the composition and use of our docetaxel emulsion product candidate for the
treatment of cancer, subject to the exclusive license we granted to Latitude Pharmaceuticals
(described below under “Licensing Agreements”). Patent applications, entitled “Low Oil Emulsion
Compositions for Delivering Taxoids and Other Insoluble Drugs,” currently are pending in the U.S.,
Canada and 11 additional countries, and a regional patent application is also pending in the
European Patent Office. These applications have a priority date of September 28, 2004, and any
patents granted thereon will expire in September 2025. Patent applications, entitled “Vitamin E
Succinate Stabilized Pharmaceutical Compositions, Methods for the Preparation and Use Thereof,” are
also currently pending in the U.S., Canada and 10 additional countries, and regional patent
applications are also pending in the European Patent Office and the Eurasion Patent Office. These
applications have a priority date of February 1, 2006, and any patents granted on these
applications will expire in February 2027.
We also hold rights to a number of other compounds, which compounds are described above under
“Other Product Candidates and Potential Product Candidates.”
10
We are aware of a substantial number of patents issued and patent applications filed in our
technical areas or fields. There is a risk that third parties may allege that they have patent
rights encompassing our product candidates or methods and no assurance can be given that patents do
not exist, have not been filed, or could not be filed or issued, which contain claims covering our
product candidates or methods.
We cannot provide assurance that our pending patent applications will issue as patents, that
any issued patents will provide us with significant competitive advantages, or that the validity or
enforceability of any of our patents will not be challenged or, if instituted, that these
challenges will not be successful. The cost of litigation to uphold the validity and prevent
infringement of our patents could be substantial. Furthermore, we cannot provide assurance that
others will not independently develop similar technologies or duplicate our technologies or design
around the patented aspects of our technologies. We can provide no assurance that our proposed
technologies will not infringe patents or rights owned by others, the licenses to which might not
be available to us.
In addition, the approval process for patent applications in different countries may differ
significantly. The patent authorities in each country administer that country’s laws and
regulations relating to patents independently of the laws and regulations of any other country and
the patents must be sought and obtained separately, which can add substantial cost and expense. In
addition, a favorable outcome or approval in one country does not necessarily indicate that a
favorable outcome or approval can be obtained in other countries.
Research and Development
Our research and development expenses were $17.9 million in 2008 and $15.9 million in 2007.
Our research and development expenses consist primarily of salaries and related employee benefits,
costs associated with bioequivalence and clinical trials managed by contract research
organizations, or CROs, and costs associated with non-clinical activities, such as research-related
manufacturing, preclinical research studies, quality assurance and regulatory activities. In 2007,
our most significant costs were for bioequivalence and clinical trials and, in 2008 our most
significant costs were for research-related manufacturing, including the cost of API and other raw
materials and components. Our bioequivalence and clinical trial expenses include payments to
vendors such as CROs, investigators, clinical suppliers and related consulting. Our
research-related manufacturing expenses include purchasing API, manufacturing materials for
bioequivalence and clinical trials and stability testing to support regulatory filings and related
labeling, testing and release, packaging and storing.
Licensing Agreements
SD Pharmaceuticals
In April 2006, we acquired SD Pharmaceuticals, Inc. in exchange for shares of our common
stock. Under a prior license agreement between SD Pharmaceuticals, Latitude Pharmaceuticals, Inc.
and Andrew X. Chen, the sole owner of Latitude Pharmaceuticals, Dr. Chen had assigned to SD
Pharmaceuticals all rights and interests of Dr. Chen and Latitude Pharmaceuticals to certain
patents throughout the world other than in China, Hong Kong, Macau and Taiwan. Under this
agreement, SD Pharmaceuticals granted back to Latitude Pharmaceuticals a worldwide, exclusive,
royalty-free and irrevocable license to use the assigned patents in all fields of use other than
certain excluded fields as specified in the agreement. Our rights in ANX-530 (vinorelbine emulsion)
and ANX-514 (docetaxel emulsion), as well as several other product candidates and potential product
candidates to which we have rights, arise through our interest in SD Pharmaceuticals. Accordingly,
we have no rights in these product candidates in China, Hong Kong, Macau and Taiwan, and our rights
under the assigned patents in the rest of the world are limited to the following fields:
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For ANX-530, vinca alkaloid intravenous emulsion formulation for cancer treatment and
any other disease indication. |
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For ANX-514, docetaxel intravenous emulsion formulation for cancer treatment and any
other disease indication. |
11
Government Regulations
Governmental authorities in the U.S. and other countries extensively regulate the testing,
manufacturing, labeling, storage, recordkeeping, advertising, promotion, export, marketing and
distribution, among other things, of pharmaceutical products. In the U.S., the FDA, under the
Federal Food, Drug and Cosmetic Act, or FDCA, and other federal statutes and regulations, subjects
pharmaceutical products to rigorous review. If we do not comply with applicable requirements, we
may be fined, the government may refuse to approve our marketing applications or allow us to
manufacture or market our products, and we may be criminally prosecuted.
We and our third-party manufacturers, distributors and CROs may also be subject to regulations
under other federal, state, and local laws, including the Occupational Safety and Health Act, the
Environmental Protection Act, the Clean Air Act, the Health Insurance Portability and
Accountability Act, privacy laws and import, export and customs regulations as well as the laws and
regulations of other countries.
FDA Approval Process
To obtain approval of a new product from the FDA, we must, among other requirements, submit
data supporting safety and efficacy as well as detailed information on the manufacture and
composition of the product and proposed labeling. The testing and collection of data and the
preparation of necessary applications are expensive and time-consuming. The FDA may not act quickly
or favorably in reviewing these applications, and we may encounter significant difficulties or
costs in our efforts to obtain FDA approvals that could delay or preclude us from marketing our
products.
The process required by the FDA before a new drug may be marketed in the U.S. generally
involves the following: completion of preclinical laboratory and animal testing in compliance with
FDA regulations; submission of an investigational new drug application, or IND, which must become
effective before human clinical trials may begin; performance of adequate and well-controlled human
clinical trials to establish the safety and efficacy of the proposed drug for its intended use; and
submission and approval of an NDA by the FDA. The sponsor typically conducts human clinical trials
in three sequential phases, but the phases may overlap. In phase 1 clinical trials, the product is
tested in a small number of patients or healthy volunteers, primarily for safety at one or more
doses. In phase 2, in addition to safety, the sponsor evaluates the efficacy of the product on
targeted indications, and identifies possible adverse effects and safety risks, in a patient
population somewhat larger than phase 1 clinical trials. Phase 3 clinical trials typically involve
additional testing for safety and clinical efficacy in an expanded population at
geographically-dispersed test sites.
As a product candidate moves through the clinical phases, manufacturing processes are further
defined, refined, controlled and validated. The level of control and validation required by the FDA
increases as clinical studies progress.
Clinical trials must be conducted in accordance with the FDA’s good clinical practices
requirements. The FDA may order the temporary or permanent discontinuation of a clinical trial at
any time or impose other sanctions if it believes that the clinical trial is not being conducted in
accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients.
An institutional review board, or IRB, generally must approve the clinical trial design and patient
informed consent at each clinical site and may also require the clinical trial at that site to be
halted, either temporarily or permanently, for failure to comply with the IRB’s requirements, or
may impose other conditions.
The applicant must submit to the FDA the results of the preclinical and clinical trials,
together with, among other things, detailed information on the manufacture and composition of the
product and proposed labeling, in the form of an NDA, including payment of a user fee. The FDA
reviews all NDAs submitted before it accepts them for filing and may request additional information
rather than accepting an NDA for filing. Once the submission is accepted for filing, the FDA begins
an in-depth review of the NDA. Under PDUFA, the FDA ordinarily has 10 months in which to complete
its initial review of the NDA and respond to the applicant. However, the PDUFA goal dates are not
legal mandates and the FDA response often occurs several months beyond the original goal date. The
review process and the target response date under PDUFA may be extended if the FDA requests or the
NDA sponsor otherwise provides additional information or clarification regarding information
already provided in the submission. Following completion of the FDA’s initial review of the NDA and
the clinical and manufacturing procedures and facilities, the
FDA will issue an action letter, which will either include an approval authorizing commercial
marketing of the drug for certain indications or contain the conditions that must be met in order
to secure final approval of the NDA. If the FDA’s evaluation of the NDA submission and the clinical
and manufacturing procedures and facilities is not favorable, the FDA may refuse to approve the
NDA.
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Section 505(b)(2) New Drug Applications
As an alternate path to FDA approval for new or improved formulations of previously approved
products, a company may file a Section 505(b)(2) NDA. Section 505(b)(2) of the FDCA was enacted as
part of the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the
Hatch-Waxman Act. Section 505(b)(2) permits the submission of an NDA where at least some of the
information required for approval comes from studies not conducted by or for the applicant and for
which the applicant has not obtained a right of reference. The Hatch-Waxman Act permits the
applicant to rely upon certain published preclinical or clinical studies conducted for an approved
product or the FDA’s conclusions from prior review of such studies. The FDA may also require
companies to perform additional studies or measurements to support the change from the approved
product. The FDA may then approve the new product for all or some of the label indications for
which the referenced product has been approved, as well as for any new indication sought by the
Section 505(b)(2) applicant. While references to preclinical and clinical data not generated by the
applicant or for which the applicant does not have a right of reference are allowed, all
development, process, stability, qualification and validation data related to the manufacturing and
quality of the new product must be included in a Section 505(b)(2) NDA.
To the extent that the Section 505(b)(2) applicant is relying on the FDA’s conclusions
regarding studies conducted for an already approved product, the applicant is required to certify
to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book
publication. Specifically, the applicant must certify that: (i) the required patent information has
not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but
will expire on a particular date and approval is sought after patent expiration; or (iv) the listed
patent is invalid or will not be infringed by the new product. A certification that the new product
will not infringe the already approved product’s listed patents or that such patents are invalid is
called a paragraph IV certification. If the applicant does not challenge the listed patents, the
Section 505(b)(2) application will not be approved until all the listed patents claiming the
referenced product have expired. The Section 505(b)(2) application also will not be approved until
any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity,
listed in the Orange Book for the referenced product has expired.
If the applicant has provided a paragraph IV certification to the FDA, the applicant must also
send notice of the paragraph IV certification to the NDA and patent holders for the referenced
product once the applicant’s NDA has been accepted for filing by the FDA. The NDA and patent
holders may then initiate a legal challenge to the paragraph IV certification. The filing of a
patent infringement lawsuit within 45 days of their receipt of a paragraph IV certification
automatically prevents the FDA from approving the Section 505(b)(2) NDA until the earlier of 30
months, expiration of the patent, settlement of the lawsuit or a decision in the infringement case
that is favorable to the Section 505(b)(2) applicant. Thus, the Section 505(b)(2) applicant may
invest a significant amount of time and expense in the development of its products only to be
subject to significant delay and patent litigation before its products may be commercialized.
Alternatively, if the listed patent holder does not file a patent infringement lawsuit within the
required 45-day period, the applicant’s NDA will not be subject to the 30-month stay. A paragraph
IV certification would be required in connection with a Section 505(b)(2) NDA for ANX-514 that is
filed before November 2013.
Notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), over
the last few years, certain brand-name pharmaceutical companies and others have objected to the
FDA’s interpretation of Section 505(b)(2). Our regulatory strategy for both ANX-530 and ANX-514
involves submitting NDAs under Section 505(b)(2).
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Other Regulatory Requirements
Even if the FDA approves one or more of our product candidates, we will continue to be subject
to a number of post-approval regulatory requirements. If we seek to make certain changes to an
approved product, such as the addition of a new labeled indication or making certain manufacturing
changes or product enhancements, we will need FDA review and approval before the change can be
implemented. While physicians may use products for
indications that have not been approved by the FDA, we may not label or promote the product
for an indication that has not been approved. Securing FDA approval for new indications or product
enhancements and, in some cases, for labeling claims or changes in manufacturing, is generally a
time-consuming and expensive process that may require us to conduct clinical studies under the
FDA’s investigational new drug regulations. Even if such studies are conducted, the FDA may not
approve any change in a timely fashion, or at all. In addition, adverse experiences associated with
use of the products must be reported to the FDA, and FDA rules govern how we can label, advertise
or otherwise commercialize our products. The FDA also may, in its discretion, require
post-marketing testing and surveillance to monitor the effects of approved products or place
conditions on any approvals that could restrict the commercial applications of these products.
In addition to FDA restrictions on marketing of pharmaceutical products, several other types
of state and federal laws have been applied to restrict certain marketing practices in the
pharmaceutical industry in recent years. These laws include anti-kickback statutes and false claims
statutes. The federal healthcare program anti-kickback statute prohibits, among other things,
knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in
return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any
healthcare item or service reimbursable under Medicare, Medicaid or other federally financed
healthcare programs. This statute has been interpreted to apply to arrangements between
pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on
the other. Violations of the anti-kickback statute are punishable by imprisonment, criminal fines,
civil monetary penalties and exclusion from participation in federal healthcare programs. Although
there are a number of statutory exemptions and regulatory safe harbors protecting certain common
activities from prosecution or other regulatory sanctions, the exemptions and safe harbors are
drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases
or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe
harbor.
Federal false claims laws prohibit any person from knowingly presenting, or causing to be
presented, a false claim for payment to the federal government, or knowingly making, or causing to
be made, a false statement to have a false claim paid. Recently, several pharmaceutical and other
healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they
report to pricing services, which in turn are used by the government to set Medicare and Medicaid
reimbursement rates, and for allegedly providing free product to customers with the expectation
that the customers would bill federal programs for the product. In addition, certain marketing
practices, including off-label promotion, may also violate false claims laws. The majority of
states also have statutes or regulations similar to the federal anti-kickback law and false claims
laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in
several states, apply regardless of the payor.
In addition, we and the third-party manufacturers on which we rely for the manufacture of our
products or their respective underlying components (including API) are subject to requirements that
drugs be manufactured, packaged and labeled in conformity with current Good Manufacturing Practices
promulgated by the FDA, or cGMP. To comply with cGMP requirements, manufacturers must continue to
spend time, money and effort to meet requirements relating to personnel, facilities, equipment,
production and process, labeling and packaging, quality control, recordkeeping and other
requirements. The FDA periodically inspects drug manufacturing facilities to evaluate compliance
with cGMP requirements.
Also, as part of the sales and marketing process, pharmaceutical companies frequently provide
samples of approved drugs to physicians. This practice is regulated by the FDA and other
governmental authorities, including, in particular, requirements concerning recordkeeping and
control procedures.
Outside of the U.S., the ability to market our products will also depend on receiving
marketing authorizations from the appropriate regulatory authorities. The foreign regulatory
approval process includes all of the risks associated with the FDA approval described above. In
addition, the requirements governing the conduct of clinical trials and marketing authorization
vary widely from country to country.
Employees
As of March 2, 2009 we employed 14 persons, all of whom are full-time employees, including 9
engaged in research and development activities, including preclinical research, clinical
development, research-related manufacturing and regulatory affairs, and 5 in selling, general and
administrative functions such as marketing, accounting, legal and investor relations. On March 20,
2009, we announced that, effective April 3, we will reduce our full-time workforce to five
employees consisting of our chief business officer, our general counsel, our senior vice president
of operations, our vice president of regulatory affairs and quality and our manager of accounting.
None of our employees are unionized and we believe that our relationship with our employees is
good.
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Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 are available free of charge on our corporate website
(www.adventrx.com) as soon as reasonably practicable after they are filed with, or furnished to,
the Securities and Exchange Commission, or SEC.
Item 1A. Risk Factors
Not required.
Item 1B. Unresolved Staff Comments
Not required.
Item 2. Properties
Our offices are located at 6725 Mesa Ridge Road, San Diego, California 92121. Our offices
consist of 12,038 square feet of office and lab space, which we use pursuant to a lease which will
expire on August 31, 2009. The base rent for this space is currently $258,000 annually, excluding
incremental operating cost adjustments. We have not commenced negotiations to extend this lease nor
begun considering alternative office space.
Item 3. Legal Proceedings
In the normal course of business, we may become subject to lawsuits and other claims and
proceedings. Such matters are subject to uncertainty and outcomes are often not predictable with
assurance.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities |
Market Information
Our common stock trades under the symbol “ANX” on NYSE Amex (formerly, the American Stock
Exchange). The following table sets forth the high and low closing prices for our common stock in
each of the quarters over the past two years, as reported by NYSE Amex.
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2008 |
|
|
2007 |
|
| |
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
First Quarter |
|
$ |
0.64 |
|
|
$ |
0.36 |
|
|
$ |
2.84 |
|
|
$ |
1.98 |
|
Second Quarter |
|
$ |
0.54 |
|
|
$ |
0.33 |
|
|
$ |
2.90 |
|
|
$ |
2.31 |
|
Third Quarter |
|
$ |
0.38 |
|
|
$ |
0.18 |
|
|
$ |
2.80 |
|
|
$ |
2.07 |
|
Fourth Quarter |
|
$ |
0.21 |
|
|
$ |
0.07 |
|
|
$ |
0.88 |
|
|
$ |
0.43 |
|
As of March 2, 2009, we had approximately 188 holders of record of our common stock. We
believe that the number of beneficial owners is substantially greater than the number of record
holders because a large portion of our common stock is held of record through brokerage firms in
“street name.”
Dividend Policy
We have never declared or paid any cash dividends on our capital stock and do not anticipate
paying any cash dividends on our capital stock in the foreseeable future. We expect to retain all
available funds and future earnings, if any, to support operations and fund the development and
growth of our business. Our board of directors will determine whether we pay and the amount of
future dividends (including cash dividends), if any.
Recent Sales of Unregistered Securities
During the fiscal year ended December 31, 2008, we did not issue any securities that were not
registered under the Securities Act of 1933, as amended.
Item 6. Selected Financial Data
Not required.
16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with the consolidated financial statements and related notes
appearing elsewhere in this report. In addition to historical information, this discussion and
analysis contains forward-looking statements that involve risks, uncertainties, and assumptions.
Our actual results may differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including but not limited to those identified under
“Forward-Looking Statements” above in this report.
OVERVIEW
We are a development-stage biopharmaceutical company whose fundamental business is focused on
in-licensing, developing and commercializing proprietary product candidates for the treatment of
cancer. We seek to improve the performance and commercial potential of existing treatments by
addressing limitations associated principally with their safety and use. We have devoted
substantially all of our resources to R&D or to acquisition of our product candidates. We have not
yet marketed or sold any products or generated any significant revenue.
We have an immediate need to raise additional capital to support our operations. We have
incurred annual net losses since inception. We had a net loss of $26.6 million in 2008 and cash and
cash equivalents of approximately $9.8 million and working capital of $5.7 million at December 31,
2008. These factors raise substantial doubt about our ability to continue as a going concern. Our
consolidated financial statements for the year ended December 31, 2008 have been prepared assuming
we will continue as a going concern. This basis of accounting contemplates the recovery of our
assets and the satisfaction of liabilities in the normal course of business and does not include
any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary should we be unable
to continue as a going concern.
Currently, we are focused primarily on evaluating strategic options, including the sale or
exclusive license of one or more of our product candidate programs, a strategic business merger and
other similar transactions. In March 2009, we announced that we
will eliminate all but a select, small number of
personnel and will discontinue substantially all of our development activities and fundamental business
operations to provide additional time to consummate a strategic transaction or otherwise obtain
financing. There can be no assurances that we will be able to consummate a strategic transaction on
a timely basis or at all. Further, the restructuring and cost-cutting measures we have taken may
not be successful. If we are unable to consummate a strategic transaction on a timeline that we
believe is acceptable, we may divest our assets on best-available terms, entirely wind-down our
operations and distribute any remaining cash to our stockholders. However, based on our current
working capital and the estimated costs associated with seeking approval for and implementing a
liquidation plan, we expect our remaining cash, if any, to be insignificant.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations is based upon
consolidated financial statements that we have prepared in accordance with accounting principles
generally accepted in the U.S. The preparation of these consolidated financial statements requires
management to make a number of assumptions and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses in our consolidated financial statements and
accompanying notes. On an on-going basis, we evaluate these estimates and assumptions, including
those related to recognition of expenses in service contracts, license agreements and stock-based
compensation. Management bases its estimates on historical information and assumptions believed to
be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or conditions.
Revenue Recognition. We recognize revenue in accordance with the SEC’s Staff Accounting
Bulletin Topic 13, “Revenue Recognition,” or Topic 13, and Emerging Issues Task Force Issue, or
EITF, No. 00-21, “Revenue Arrangements with Multiple Deliverables,” or EITF 00-21. Revenue is
recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the
buyer is fixed and determinable; and (4) collectibility is reasonably assured.
17
Revenue from licensing agreements is recognized based on the performance requirements of the
agreement. Revenue is deferred for fees received before earned. Nonrefundable upfront fees that are
not contingent on any future performance by us are recognized as revenue when revenue recognition
criteria under Topic 13 and EITF 00-21 are met and the license term commences. Nonrefundable
upfront fees, where we have ongoing involvement or performance obligations, are recorded as
deferred revenue and recognized as revenue over the life of the contract, the period of the
performance obligation or the development period, whichever is appropriate in light of the
circumstances.
Payments related to substantive, performance-based milestones in an agreement are recognized
as revenue upon the achievement of the milestones as specified in the underlying agreement when
they represent the culmination of the earnings process. Royalty revenue from licensed products will
be recognized when earned in accordance with the terms of the applicable license agreements.
R&D Expenses. R&D expenses consist of expenses incurred in performing R&D activities,
including salaries and benefits, facilities and other overhead expenses, bioequivalence and
clinical trials, research-related manufacturing services, contract services and other outside
expenses. R&D expenses are charged to operations as they are incurred. Advance payments, including
nonrefundable amounts, for goods or services that will be used or rendered for future R&D
activities are deferred and capitalized. Such amounts will be recognized as an expense as the
related goods are delivered or the related services are performed. If the goods will not be
delivered, or services will not be rendered, then the capitalized advance payment is charged to
expense.
Milestone payments that we make in connection with in-licensed technology or product
candidates are expensed as incurred when there is uncertainty in receiving future economic benefits
from the licensed technology or product candidates. We consider the future economic benefits from
the licensed technology or product candidates to be uncertain until such licensed technology or
product candidates are approved for marketing by the FDA or when other significant risk factors are
abated. For expense accounting purposes, management has viewed future economic benefits for all of
our licensed technology or product candidates to be uncertain.
Payments in connection with our bioequivalence and clinical trials are often made under
contracts with multiple CROs that conduct and manage these trials on our behalf. The financial
terms of these agreements are subject to negotiation and vary from contract to contract and may
result in uneven payment flows. Generally, these agreements set forth the scope of work to be
performed at a fixed fee or unit price or on a time-and-material basis. Payments under these
contracts depend on factors such as the successful enrollment or treatment of patients or the
completion of other milestones. Expenses related to bioequivalence and clinical trials are accrued
based on our estimates and/or representations from service providers regarding work performed,
including actual level of patient enrollment, completion of patient studies, and trials progress.
Other incidental costs related to patient enrollment or treatment are accrued when reasonably
certain. If the contracted amounts are modified (for instance, as a result of changes in the
bioequivalence or clinical trial protocol or scope of work to be performed), we modify our accruals
accordingly on a prospective basis. Revisions in scope of contract are charged to expense in the
period in which the facts that give rise to the revision become reasonably certain. Because of the
uncertainty of possible future changes to the scope of work in bioequivalence and clinical trials
contracts, we are unable to quantify an estimate of the reasonably likely effect of any such
changes on our consolidated results of operations or financial position. Historically, we have had
no material changes in our bioequivalence and clinical trial expense accruals that would have had a
material impact on our consolidated results of operations or financial position.
Purchased In-Process Research and Development. In accordance with SFAS No. 141, “Business
Combinations,” we immediately charge the costs associated with purchased in-process research and
development, or IPR&D, to statement of operations upon acquisition. These amounts represent an
estimate of the fair value of purchased IPR&D for projects that, as of the acquisition date, had
not yet reached technological feasibility, had no alternative future use, and had uncertainty in
generating future economic benefits. We determine the future economic benefits from the purchased
IPR&D to be uncertain until such technology is incorporated into products approved for marketing by
the FDA or when other significant risk factors are abated.
18
Stock-based Compensation Expenses. Effective January 1, 2006, we accounted for stock-based
compensation awards granted to employees, including members of our board of directors, in
accordance with the revised SFAS No. 123, “Share-Based Payment,” or SFAS 123R, including the
provisions of Staff Accounting Bulletins No. 107 and No. 110. Share-based compensation cost is
measured at the grant date, based on the estimated fair value of the
award, and is recognized as expense over the employee’s requisite service period. As of
December 31, 2008, we had no awards with market or performance conditions. As stock-based
compensation expense is based on awards ultimately expected to vest, it has been reduced for
estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and
revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Forfeitures were estimated based on historical experience. Although estimates of stock-based
compensation expenses are significant to our consolidated financial statements, they are not
related to the payment of any cash by us. Prior to January 1, 2006, we accounted for stock-based
compensation under the recognition and measurement principles of SFAS 123, “Accounting for
Stock-Based Compensation.”
We estimate the fair value of stock option awards on the date of grant using the Black-Scholes
option-pricing model, or Black-Scholes model. The determination of the fair value of stock-based
payment awards on the date of grant using an option-pricing model is affected by our stock price as
well as assumptions regarding a number of complex and subjective variables. These variables
include, but are not limited to, our expected stock price volatility over the term of the awards,
actual and projected employee stock option exercise behaviors, a risk-free interest rate and
expected dividends. We may elect to use different assumptions under the Black-Scholes model in the
future, which could materially affect our net income or loss and net income or loss per share.
We account for stock-based compensation awards granted to non-employees in accordance with
EITF No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services,” or EITF 96-18. Under EITF 96-18, we
determine the fair value of the stock-based compensation awards granted as either the fair value of
the consideration received or the fair value of the equity instruments issued, whichever is more
reliably measurable. If the fair value of the equity instruments issued is used, it is measured
using the stock price and other measurement assumptions as of the earlier of either of (1) the date
at which a commitment for performance by the counterparty to earn the equity instruments is reached
or (2) the date at which the counterparty’s performance is complete.
Income Taxes. In July 2006, FASB issued Financial Interpretation No., or FIN, 48, “Accounting
for Uncertainty in Income Taxes-an Interpretation of FASB Statement 109,” which clarifies the
accounting for uncertainty in tax positions. FIN 48 provides that the tax effects from an uncertain
tax position can be recognized in our consolidated financial statements only if the position is
more likely than not of being sustained upon an examination by tax authorities. An uncertain income
tax position will not be recognized if it has less than a 50% likelihood of being sustained.
Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. The provisions of FIN 48 were effective
for us as of January 1, 2007, with the cumulative effect of the change in accounting principle
recorded as an adjustment to opening retained earnings in the year of adoption. We adopted FIN 48
on January 1, 2007, which did not have a material impact on our consolidated results of operations
or financial position.
Costs Associated with Exit or Disposal Activities. In accordance with SFAS No. 146,
“Accounting for Costs Associated with Exit or Disposal Activities,” as part of a restructuring to
reduce operating costs, on October 14, 2008, we completed a work force reduction of nine employees.
As a result of the reduction in force, we recorded severance-related charges of $403,000, of which
approximately $384,000 was recorded in research and development and the remainder in selling,
general and administrative expenses. Severance payments and related employer taxes were $372,000
of the severance-related charges and $31,000 relates to health benefit allowance payments, which
the eligible former employees may use, at their discretion, to pay the premiums required to
continue their group health care coverage under COBRA or any other health care related expenses.
Severance-related charges of $244,000 were recorded in the fourth quarter of 2008 and the remainder
will be recorded in the first and second quarters of 2009. We may also incur other charges not
currently contemplated due to events that may occur as a result of, or associated with, the
restructuring.
The above listing is not intended to be a comprehensive list of all of our accounting
policies. In most cases, the accounting treatment of a particular transaction is specifically
dictated by accounting principles generally accepted in the U.S.
19
RESULTS OF OPERATIONS
A general understanding of the drug development process is critical to understanding our
results of operations. Drug development in the U.S. and most countries throughout the world is a
process that includes several steps defined by the FDA and similar regulatory authorities in
foreign countries. The FDA approval processes relating to new drugs differ, depending on the nature
of the particular drug for which approval is sought. With respect to any drug product with active
ingredients not previously approved by the FDA, a prospective drug manufacturer is required to
submit an NDA, which includes complete reports of pre-clinical, clinical and laboratory studies and
extensive manufacturing information to prove such product’s safety and effectiveness. The NDA
process generally requires, before the submission of the NDA, filing of an IND, pursuant to which
permission is sought to begin clinical testing of the new drug product. An NDA based on published
safety and effectiveness studies conducted by others, or previous findings of safety and
effectiveness by the FDA, may be submitted under Section 505(b)(2) of the FDCA. Development of new
formulations of pharmaceutical products under Section 505(b)(2) of the FDCA may have shorter
timelines than those associated with developing new chemical entities.
Generally, with respect to any drug product with active ingredients not previously approved by
the FDA, an NDA must be supported by data from at least phase 1, phase 2 and phase 3 clinical
trials. Phase 1 clinical trials can be expected to last from 6 to 18 months, phase 2 clinical
trials can be expected to last from 12 to 24 months and phase 3 clinical trials can be expected to
last from 18 to 36 months. However, clinical development timelines vary widely, as do the total
costs of clinical trials and the likelihood of success. We anticipate that we will make
determinations as to which R&D programs to pursue and how much funding to direct to each program on
an ongoing basis in response to the scientific and clinical success of each product candidate, our
ongoing assessment of its market potential and our available
resources. In March 2009, we announced that we will discontinue
substantially all of our development activities and fundamental
business operations to provide additional time to consummate a
strategic transaction or otherwise obtain financing.
If we are successful in consummating a strategic transaction, future expenditures on R&D
programs are subject to many uncertainties, including whether our product candidates will be
further developed with a partner or independently. At this time, due to such uncertainties and the
risks inherent in drug development and the associated regulatory process, we cannot estimate with
reasonable certainty the duration of or costs to complete our R&D programs or whether or when or to
what extent revenues will be generated from the commercialization and sale of any of our product
candidates. The duration and costs of our R&D programs, in particular those associated with
bioequivalence trials and research-related manufacturing, can vary significantly among programs as
a result of a variety of factors, including:
| |
• |
|
the number and location of sites included in trials and the rate of site approval for
the trial; |
| |
• |
|
the rates of patient recruitment and enrollment; |
| |
• |
|
the ratio of randomized to evaluable patients; |
| |
• |
|
the availability and cost of reference product in the jurisdiction of each site; |
| |
• |
|
the time and cost of process development activities related to our product
candidates; |
| |
• |
|
the costs of manufacturing our product candidates; and |
| |
• |
|
the costs, requirements, timing of and the ability to secure regulatory approvals. |
20
We operate our business on the basis of a single reportable segment, which, fundamentally, is
the business of in-licensing, developing and commercializing proprietary product candidates for the
treatment of cancer. We evaluate our company as a single operating segment. The majority of our
operating activities and work performed by our employees are currently conducted from a single
location in the U.S. We recognized revenues of $0.5 million in each of 2008 and 2007, which
revenues were derived solely from license fees under a license agreement with Theragenex, LLC,
which we terminated in August 2007.
| |
|
|
|
|
|
|
|
|
| |
|
Operating Expenses |
|
| |
|
Years Ended |
|
| |
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
Research and development |
|
|
64 |
% |
|
|
64 |
% |
In-process research and development |
|
|
0 |
% |
|
|
0 |
% |
Selling, general and administrative |
|
|
35 |
% |
|
|
35 |
% |
Depreciation and amortization |
|
|
1 |
% |
|
|
1 |
% |
|
|
|
|
|
|
|
Total operating expenses |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
Comparison of 2008 and 2007
Revenue. We recognized revenue of $0.5 million for each of the years ended December 31, 2008
and 2007. Revenue in 2007 represents nonrefundable licensing fees paid under our license agreement
with Theragenex LLC, which we terminated in August 2007 as a result of Theragenex’s breach of the
agreement. Revenue in 2008 represents a portion of a settlement payment from Theragenex. In May
2008, we settled our dispute with Theragenex arising out of its breach of the license agreement
and, in accordance with such settlement, Theragenex paid us $0.6 million. We recognized $0.5
million as revenue in 2008, which represents a portion of the $0.6 million settlement payment,
because under the license agreement Theragenex was required to pay a total nonrefundable, up front
licensing fee of $1.0 million ($0.5 million of which we received in January 2007 and $0.5 million
of which was due in June 2007) and because we met the criteria for revenue recognition. The
remainder of the settlement payment, $0.1 million, was recorded as other income.
We have not generated any revenue from product sales to date, and we do not expect to generate
revenue from product sales until such time that we have obtained approval from a regulatory agency
to sell one of our product candidates, which we cannot predict will occur.
R&D
Expenses. We maintain and evaluate our R&D expenses by the type of cost incurred rather
than by project. We maintain and evaluate R&D expenses by type primarily because we out-source a
substantial portion of our work and our R&D personnel work across multiple programs rather than
dedicating their time to one particular program. We began maintaining such expenses by type on
January 1, 2005. The following table summarizes our consolidated R&D expenses by type for each of
the periods listed:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
January 1, 2005 |
|
| |
|
|
|
|
|
|
|
|
|
through |
|
| |
|
Years Ended December 31, |
|
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
|
2008 |
|
External bioequivalence and
clinical trial fees and
expenses |
|
$ |
3,373,865 |
|
|
$ |
7,535,923 |
|
|
$ |
23,199,479 |
|
External non-clinical study
fees and expenses (1) |
|
|
10,585,695 |
|
|
|
4,346,397 |
|
|
|
18,945,474 |
|
Personnel costs |
|
|
3,237,158 |
|
|
|
2,997,852 |
|
|
|
9,511,188 |
|
Stock-based compensation expense |
|
|
725,465 |
|
|
|
1,054,237 |
|
|
|
2,884,161 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
17,922,183 |
|
|
$ |
15,934,409 |
|
|
$ |
54,540,302 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| (1) |
|
External non-clinical study fees and expenses include preclinical, research-related
manufacturing, quality assurance and regulatory expenses. |
21
R&D expenses increased by $2.0 million, or 12%, to $17.9 million for the year ended December
31, 2008, compared to $15.9 million in 2007. The increase in R&D expenses was primarily due to a
$6.2 million increase in expenses related to external research-related manufacturing and regulatory
and quality assurance activities related to ANX-530 and ANX-514, a $1.3 million increase in
external clinical trial expenses related to ANX-514 and a $0.2 million increase in personnel costs,
offset by a $5.4 million decrease in external clinical trial expenses related to CoFactor and
ANX-530 and a $0.3 million decrease in non-cash, stock-based compensation expenses.
Because of the uncertainty surrounding our ability to consummate a strategic transaction and
the form, structure and terms of any potential strategic transaction, including whether we will
continue as a going concern, as well as uncertainty surrounding our plans if we are unable to
consummate a strategic transaction on a timeline that we believe is acceptable, we cannot predict
our future R&D expenditures. However, in January 2009, we entered into retention and incentive
agreements with seven employees, including our executive officers, pursuant to which, in certain
circumstances, we may be obligated to make severance payments, though our obligation to make and
the amount of such payments will be based on factors that are not yet known. In March 2009, we
terminated two employees with whom we had entered into retention and incentive agreements. In
addition, in the event we implement future workforce reductions or restructurings, we likely will
incur charges. See also “Management Outlook.”
Selling,
General and Administrative Expenses. Selling, general and administrative, or SG&A,
expenses increased by $1.0 million, or 12%, to $9.7 million for 2008, compared to $8.7 million in
2007. The increase was substantially due to a $0.7 million increase for severance expenses, a $0.4
million increase for consulting expenses related to market research, a $0.3 million increase in
personnel expenses and a $0.1 million increase in professional services, offset by a decrease of
$0.5 million in non-cash, stock-based compensation expenses. Because of the uncertainty surrounding
our ability to consummate a strategic transaction and the form, structure and terms of any
potential strategic transaction, including whether we will continue as a going concern, as well as
uncertainty surrounding our plans if we are unable to consummate a strategic transaction on a
timeline that we believe is acceptable, we cannot predict our future SG&A expenditures. However, in
January 2009, we entered into retention and incentive agreements with seven employees, including
our executive officers, pursuant to which, in certain circumstances, we may be obligated to make
severance payments, though our obligation to make and the amount of such payments will be based on
factors that are not yet known. In March 2009, we terminated two employees with whom we had entered
into retention and incentive agreements. In addition, in the event we implement future workforce
reductions or restructurings, we likely will incur charges. See also “Management Outlook.”
Interest
Income and Other Income. Interest income and other income for 2008 decreased by $1.5
million, or 69%, to $0.7 million in 2008, compared to $2.2 million in 2007. The decrease was
primarily attributable to lower interest income based on lower invested balances. The decrease was
partially offset by $0.1 million received as part of the Theragenex settlement, which was recorded
as other income. We expect that interest income will decline in future quarters as forecasted
interest rates decline along with lower invested balances.
Net Loss. Net loss was $26.6 million or $0.30 per share in 2008, compared to a net loss of
$22.1 million or $0.25 per share in 2007.
LIQUIDITY AND CAPITAL RESOURCES
We have a history of recurring losses from operations and we have funded our operations
primarily through sales of our equity securities. We had a net loss of $26.6 million in 2008 and
cash and cash equivalents of approximately $9.8 million and working capital of $5.7 million at
December 31, 2008. We have an immediate need to raise additional capital to support our operations,
though in the current financial and economic environment it is uncertain that we can obtain funding
through our traditional sources of capital. These factors raise substantial doubt about our
ability to continue as a going concern.
We are evaluating strategic options that may improve our liquidity and provide us with working
capital to fund continuing business operations or that may result in the divestiture of future
development and commercialization activities and related expenses, including the sale or exclusive
license of one or more of our product candidate programs, a strategic business merger and other
similar transactions. However, there can be no assurances that we will be successful in
consummating a strategic transaction on a timely basis or at all. We likely will not be able to
continue as a going concern, unless, as part of a strategic transaction or otherwise, we raise
adequate capital. We announced that we will eliminate all but a
select, small number of personnel and will discontinue substantially all of our development activities and fundamental business operations and our ability
to further curtail expenses to provide additional time to consummate a strategic transaction or
otherwise obtain financing is limited.
22
Explanations of cash flow from operating, investing and financing activities are provided
below.
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31, |
|
|
Decrease |
|
|
December 31, |
|
| |
|
2008 |
|
|
During 2008 |
|
|
2007 |
|
Cash and cash equivalents and investments in securities |
|
$ |
9,849,904 |
|
|
$ |
(23,613,252 |
) |
|
$ |
33,463,156 |
|
Net working capital |
|
$ |
5,735,519 |
|
|
$ |
(24,922,542 |
) |
|
$ |
30,658,061 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended |
|
|
Change |
|
|
Year Ended |
|
| |
|
December 31, |
|
|
Between |
|
|
December 31, |
|
| |
|
2008 |
|
|
Periods |
|
|
2007 |
|
Net cash used in operating activities |
|
$ |
(23,787,604 |
) |
|
$ |
(4,144,414 |
) |
|
$ |
(19,643,190 |
) |
Net cash provided by investing activities |
|
|
18,856,769 |
|
|
|
10,848,497 |
|
|
|
8,008,272 |
|
Net cash provided by financing activities |
|
|
— |
|
|
|
(441,616 |
) |
|
|
441,616 |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
$ |
(4,930,835 |
) |
|
$ |
6,262,467 |
|
|
$ |
(11,193,302 |
) |
|
|
|
|
|
|
|
|
|
|
Operating
activities. Net cash used in operating activities was $23.8 million in 2008,
compared to $19.6 million in 2007. The increase in cash used in operating activities in 2008 was
mainly due to the increase in our R&D and SG&A expenses.
Investing
activities. Net cash provided by investing activities was $18.9 million in 2008,
compared to net cash used in investing activities of $8.0 million in 2007. Net cash provided by
investing activities in 2008 and 2007 was mainly net proceeds from sales of short-term investments.
Financing
activities. There was no net cash provided by financing activities in 2008. In 2007,
net cash provided by financing activities was $0.4 million, consisting of proceeds from option
exercises.
Management Outlook
We have an immediate need to raise additional capital to support our operations. Our ability
to raise capital has been materially and adversely affected by current credit conditions and the
downturn in the financial markets and overall economy. In addition, our ability to timely raise
capital on commercially reasonable terms may be limited by requirements, rules and regulations of
the Securities and Exchange Commission and NYSE Amex (formerly the American Stock Exchange).
Currently, we are focused primarily on evaluating strategic options, including the sale or
exclusive license of one or more of our product candidate programs, a strategic business merger and
other similar transactions. We implemented restructuring and cost-cutting measures in October 2008,
January 2009 and March 2009 and will eliminate all but a select, small number of personnel and
discontinue substantially all of our development activities and fundamental business operations to
provide additional time to consummate a strategic transaction or otherwise obtain financing. There
can be no assurances that we will be able to consummate a strategic or other transaction on a
timely basis or at all. Further, the restructuring and cost-cutting measures we have taken may not
be successful. If we are unable to consummate a strategic transaction on a timeline that we
believe is acceptable, we may divest our assets on best-available terms, entirely wind-down our
operations and distribute any remaining cash to our stockholders. However, based on our current
working capital and the estimated costs associated with seeking approval for and implementing a
liquidation plan, we expect our remaining cash, if any, to be insignificant.
We are unable to predict when, if ever, we will consummate a strategic transaction or the
form, structure or terms of any potential strategic transaction, including whether we will continue
as a going concern, or whether we will entirely wind-down our operations. As a result, the duration
that our existing cash and cash equivalents will sustain our current operations is uncertain.
23
Recent Accounting Pronouncements
See Note 3, “Summary of Significant Accounting Policies — Recent Accounting Pronouncements,”
of the Notes to Consolidated Financial Statements for a discussion of recent accounting
pronouncements and their effect, if any, on us.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements and supplementary financial information required by this
item are filed with this report as described under Item 15.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A(T). Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or
the Exchange Act, is recorded, processed, summarized and reported within the timelines specified in
the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including our principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognized that any controls and procedures, no
matter how well designed and operated, can only provide reasonable assurance of achieving the
desired control objectives, and in reaching a reasonable level of assurance, management necessarily
was required to apply its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.
Under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we have evaluated the effectiveness of our
disclosure controls and procedures (as defined under Exchange Act Rule 13a-15(e)), as of December
31, 2008. Based on that evaluation, our principal executive officer and principal financial officer
have concluded that these disclosure controls and procedures were effective as of December 31,
2008.
As discussed in Note 3, “Summary of Significant Accounting Policies, under “Change in
Accounting Principle for Registration Payment Arrangements and Correction of Error,” to the Notes
to Consolidated Financial Statements contained herein, we have restated our financial statements
for the year ended December 31, 2007 and for the quarters ended March 31, June 30 and September 30,
2007 and March 31, June 30 and September 30, 2008 to reflect an error in the application of
Financial Accounting Standards Board Staff Position No. EITF 00-19-2, “Accounting for Registration
Payment Arrangements,” (“FSP EITF 00-19-2”). In light of our determination that it was not correct
in connection with our adoption on January 1, 2007 of FSP EITF 00-19-2 to retrospectively apply FSP
EITF 00-19-2 to the years ended December 31, 2005 and December 31, 2006, we have reconsidered,
under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, the adequacy of our assertions concerning the
effectiveness of our disclosure controls and procedures in our annual report on Form 10-K for the
year ended December 31, 2007 and our quarterly reports on Form 10-Q for the periods ended March 31,
June 30 and September 30, 2007 and March 31, June 30 and September 30, 2008.
24
Following such reconsideration, we have concluded that we did not correctly apply generally
accepted accounting principles as they related to accounting for warrant liability under FSP EITF
00-19-2 because our accounting staff did not have adequate training or expertise on the proper
application of FSP EITF 00-19-2 at the
time the financial statements contained in the 2007 10-K were prepared and filed. As a result
of this inadequacy, we have further concluded that there was a material weakness in our internal
control over financial reporting with respect to the application of generally accepted accounting
principles as they related to accounting for warrant liability under FSP EITF 00-19-2 and, as a
result, our disclosure controls and procedures and our internal control over financial reporting
were not effective as of December 31, 2007. However, we have concluded that the lack of adequate
training or expertise of our accounting staff was limited to the application of FSP EITF 00-19-2
and the material weakness in our internal control over financial reporting and related inadequacy
of our disclosure controls and procedures did not otherwise affect the preparation of our financial
statements in accordance with generally accepted accounting principles. In addition, because we did
not identify the above-described material weakness until the fourth quarter of 2008, we have
concluded that our disclosure controls and procedures were not effective in the periods covered by,
and as asserted in, our quarterly reports on Form 10-Q for the periods ended March 31, June 30, and
September 30, 2007 and March 31, June 30, and September 30, 2008.
During 2008, we made a number of improvements to our internal accounting resources and
retained outside accounting experts in an effort to minimize financial reporting deficiencies in
the future. Therefore, our management, including our principal executive officer and principal
financial officer, have determined that the material weakness in our internal control over
financial reporting and the related inadequacy in our disclosure controls and procedures were
remedied as of December 31, 2008.
The misapplication of FSP EITF 00-19-2 to prior periods and our correction of this error have
had no impact on our current assets (e.g., cash and cash equivalents and short-term investments) or
our operating expenses and do not affect any loan covenants or other contractual requirements.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the
fiscal quarter ended December 31, 2008 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting, other than the changes described
above under “Disclosure Controls and Procedures.”
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision
and with the participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our
evaluation under the framework in Internal Control — Integrated Framework, our management
concluded that our internal control over financial reporting was effective as of December 31, 2008.
Pursuant to temporary rules of the Securities and Exchange Commission, our management’s report
on internal control over financial reporting is furnished with this annual report and shall not be
deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference
in any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.
This annual report does not include an attestation report of our independent registered public
accounting firm regarding our internal control over financial reporting. Management’s report on
internal control over financial reporting was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only our management’s report on internal control over
financial reporting in this annual report.
Item 9B. Other Information
Not applicable.
25
PART III
Certain information required by Part III is omitted from this report because we will file a
definitive proxy statement within 120 days after the end of our fiscal year pursuant to Regulation
14A, or the Proxy Statement, for our 2009 annual meeting of stockholders, and such information
included in the Proxy Statement is incorporated herein by reference.
Item 10. Directors, Executive Officers and Corporate Governance
Code of Ethics
We have adopted a code of ethics that applies to our principal executive officer, principal
financial officer, principal accounting officer or persons performing similar functions, as well as
all of our other officers, directors and employees. This code of ethics is a part of our code of
business conduct and ethics and available on our corporate website at www.adventrx.com. We intend
to disclose future amendments to, or waivers of, certain provisions of our code of ethics that
apply to our principal executive officer, principal financial officer, principal accounting officer
or persons performing similar functions on the above website within four business days following
such amendment or waiver.
The other information required by this item will be set forth in the Proxy Statement and is
incorporated into this report by reference.
Item 11. Executive Compensation
The information required by this item will be set forth in the Proxy Statement and is
incorporated into this report by reference.
|
|
|
| Item 12. |
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters |
The information required by this item will be set forth in the Proxy Statement and is
incorporated into this report by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be set forth in the Proxy Statement and is
incorporated into this report by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be set forth in the Proxy Statement and is
incorporated into this report by reference.
26
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Documents Filed. The following documents are filed as part of this report:
(1) Financial Statements. The following report of J.H. Cohn LLP and financial statements:
| |
• |
|
Report of J.H. Cohn LLP, Independent Registered Public Accounting Firm |
| |
| |
• |
|
Consolidated Balance Sheets as of December 31, 2008 and 2007 |
| |
| |
• |
|
Consolidated Statements of Operations for the years ended December 31, 2008 and
2007 and from inception through December 31, 2008 |
| |
| |
• |
|
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive
Loss from inception through December 31, 2008 |
| |
| |
• |
|
Consolidated Statements of Cash Flows for the years ended December 31, 2008 and
2007 and from inception through December 31, 2008 |
| |
| |
• |
|
Notes to Consolidated Financial Statements |
(2) Financial Statement Schedules. See subsection (c) below.
(3) Exhibits. See subsection (b) below.
(b) Exhibits.
| |
|
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| Exhibit |
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Description |
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| |
2.1 |
(1) |
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Agreement and Plan of Merger, dated April 7, 2006, among the registrant, Speed Acquisition,
Inc., SD Pharmaceuticals, Inc. and certain individuals named therein (including exhibits
thereto) |
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3.1 |
(2) |
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Amended and Restated Certificate of Incorporation of the registrant |
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3.2 |
(3) |
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Amended and Restated Bylaws of the registrant (formerly known as Biokeys Pharmaceuticals, Inc.) |
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4.1 |
(4) |
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Form of Registration Rights Agreement entered into in October and November 2001 (including the
original schedule of holders) |
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4.2 |
(5) |
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$2.50 Warrant to Purchase Common Stock issued on April 12, 2002 to Emisphere Technologies, Inc. |
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4.3 |
(4) |
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Form of $0.60 Warrant to Purchase Common Stock issued May 28, 2003 (including the original
schedule of holders) |
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4.4 |
(4) |
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Form of $1.25 Warrant to Purchase Common Stock issued between October 15, 2003 and December 29,
2003 (including the original schedule of holders) |
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4.5 |
(4) |
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Common Stock and Warrant Purchase Agreement, dated as of April 5, 2004, among the registrant
and the Investors (as defined therein) |
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4.6 |
(4) |
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Registration Rights Agreement, dated April 5, 2004, among the registrant and the Investors (as
defined therein) |
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4.7 |
(4) |
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Form of $2.00 A-1 Warrant to Purchase Common Stock issued April 8, 2004 (including the original
schedule of holders) |
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4.8 |
(4) |
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Form of $2.50 A-2 Warrant to Purchase Common Stock issued April 8, 2004 (including the original
schedule of holders) |
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4.9 |
(6) |
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Common Stock and Warrant Purchase Agreement, dated April 8, 2004, between the registrant and CD
Investment Partners, Ltd. |
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4.10 |
(6) |
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Registration Rights Agreement, dated April 8, 2004, between the registrant and CD Investment
Partners, Ltd. |
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4.11 |
(6) |
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$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to CD Investment Partners,
Ltd. |
27
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| Exhibit |
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Description |
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4.12 |
(6) |
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$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to Burnham Hill Partners |
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4.13 |
(6) |
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$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to Ernest Pernet |
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4.14 |
(6) |
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$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to W.R. Hambrecht + Co., LLC |
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4.15 |
(7) |
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Common Stock and Warrant Purchase Agreement, dated April 19, 2004, between the registrant and
Franklin M. Berger |
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4.16 |
(7) |
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Registration Rights Agreement, dated April 19, 2004, between the registrant and Franklin M.
Berger |
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4.17 |
(7) |
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$2.00 A-1 Warrant to Purchase Common Stock issued on April 19, 2004 to Franklin M. Berger |
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4.18 |
(8) |
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Securities Purchase Agreement, dated July 21, 2005, among the registrant and the Purchasers (as
defined therein) |
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4.19 |
(8) |
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Rights Agreement, dated July 27, 2005, among the registrant, the Icahn Purchasers and Viking
(each as defined therein) |
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4.20 |
(9) |
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First Amendment to Rights Agreement, dated September 22, 2006, among the registrant and the
Icahn Purchasers (as defined therein) |
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4.21 |
(10) |
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Second Amendment to Rights Agreement, dated February 25, 2008, among the registrant and the
Icahn purchasers (as defined therein) |
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4.22 |
(8) |
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Form of $2.26 Common Stock Warrant issued on July 27, 2005 (including the original schedule of
holders) |
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4.23 |
(8) |
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Form of $2.26 Common Stock Warrant issued on July 27, 2005 (including the original schedule of
holders) |
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4.24 |
(12) |
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$0.50 Warrant (WC-291) to Purchase Common Stock transferred on June 15, 2005 to S. Neborsky and
R Neborsky TTEE Robert J. Neborsky MD Inc Comb Retirement Trust |
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4.25 |
(11) |
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$0.50 Warrant (WC-292) to Purchase Common Stock transferred on June 15, 2005 to S. Neborsky and
R Neborsky TTEE Robert J. Neborsky MD Inc Comb Retirement Trust |
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4.26 |
(11) |
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$2.50 Warrant to Purchase Common Stock issued on October 22, 2004 to Thomas J. DePetrillo |
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10.1 |
#(12) |
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2005 Equity Incentive Plan |
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10.2 |
#(13) |
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Form of Stock Option Agreement under the 2005 Equity Incentive Plan |
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10.3 |
#(14) |
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Form of Stock Option Agreement under the 2005 Equity Incentive Plan (for director option grants
beginning in 2008 |
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10.4 |
#(15) |
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Form of Stock Option Agreement under the 2005 Equity Incentive Plan (for option grants to
employees approved in March 2008) |
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10.5 |
#(2) |
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Form of Restricted Share Award Agreement under the 2005 Equity Incentive Plan |
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10.6 |
#(13) |
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2005 Employee Stock Purchase Plan |
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10.7 |
#(13) |
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Form of Subscription Agreement under the 2005 Employee Stock Purchase Plan |
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10.8 |
#(16) |
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2008 Omnibus Incentive Plan |
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10.9 |
#(17) |
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Form of Non-Statutory Stock Option Grant Agreement (for directors) under the 2008 Omnibus
Incentive Plan |
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10.10 |
#(17) |
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Form of Non-Statutory/Incentive Stock Option Grant Agreement (for consultants / employees)
under the 2008 Omnibus Incentive Plan |
28
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| Exhibit |
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Description |
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10.11 |
#(15) |
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2008 Incentive Plan |
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10.12 |
*(18) |
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Option and License Agreement, dated January 23, 1998, between the registrant and the University
of Southern California |
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10.13 |
(3) |
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First Amendment to License Agreement, dated August 16, 2000, between the registrant and the
University of Southern California |
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10.14 |
*(18) |
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Option and License Agreement, dated August 17, 2000, between the registrant and the University
of Southern California |
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10.15 |
*(19) |
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Amendment to Option and License Agreement, dated April 21, 2003, between the registrant and the
University of Southern California |
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10.16 |
*(20) |
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Second Amendment to Option and License Agreement, dated January 25, 2007, between the
registrant and the University of Southern California |
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10.17 |
*(2) |
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Agreement, effective as of May 1, 2005, between the registrant and Pharm-Olam International Ltd. |
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10.18 |
(2) |
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Amendment dated July 19, 2005 to the Agreement between the registrant and Pharm-Olam
International Ltd. |
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10.19 |
(21) |
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License Agreement, dated October 20, 2006, between the registrant, through its wholly-owned
subsidiary SD Pharmaceuticals, Inc., and Theragenex, LLC |
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10.20 |
(14) |
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License Agreement, dated December 10, 2005, between SD Pharmaceuticals, Latitude
Pharmaceuticals and Andrew Chen, including a certain letter, dated November 20, 2007,
clarifying the scope of rights thereunder |
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10.21 |
(22) |
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Standard Multi-Tenant Office Lease — Gross, dated June 3, 2004, between the registrant and
George V. Casey & Ellen M. Casey, Trustees of the Casey Family Trust dated June 22, 1998 |
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10.22 |
(2) |
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First Amendment to the Standard Multi-Tenant Office Lease — Gross, dated June 3, 2004 between
the registrant and George V. & Ellen M. Casey, Trustees of the Casey Family Trust dated June
22, 1998 |
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10.23 |
#(23) |
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Offer letter, dated March 5, 2003, to Joan M. Robbins |
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10.24 |
# |
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Confidential Separation Agreement and General Release of All Claims, effective December 4,
2008, between the registrant and Joan M. Robbins |
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10.25 |
#(24) |
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Offer letter, dated November 15, 2004, to Brian M. Culley |
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10.26 |
#(25) |
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Severance Agreement and Release of All Claims, dated September 7, 2006, with Carrie Carlander |
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10.27 |
#(25) |
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Consulting Agreement, dated September 7, 2006, with Carrie Carlander |
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10.28 |
#(25) |
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Offer letter, dated September 7, 2006, to James A. Merritt |
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10.29 |
#(14) |
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Letter agreement regarding terms of separation with James A. Merritt, effective as of February
12, 2008 |
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10.30 |
#(25) |
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Form of Stock Option Agreement between the registrant and James A. Merritt (included in Exhibit
10.28) |
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10.31 |
#(26) |
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Offer letter, dated December 13, 2006, to Gregory P. Hanson |
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10.32 |
#(26) |
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Stock Option Agreement, effective December 20, 2006, between the registrant and Gregory P.
Hanson |
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10.33 |
#(27) |
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Letter Agreement regarding terms of separation with Gregory P. Hanson, dated April 2, 2008 |
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10.34 |
#(27) |
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Consulting Agreement, dated April 2, 2008, with Gregory P. Hanson |
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10.35 |
#(17) |
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Offer letter, dated April 1, 2008, to Mark N.K. Bagnall (including Exhibits A, B and C thereto) |
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10.36 |
# |
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Confidential Separation Agreement and General Release of All Claims, effective December 31,
2008, between the registrant and Evan M. Levine, including letter, dated November 7, 2008,
related thereto |
29
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| Exhibit |
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Description |
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10.37 |
(21) |
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Form of Director and Officer Indemnification Agreement |
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10.38 |
#(28) |
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Director compensation policy |
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10.39 |
(29) |
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Placement Agency Agreement, dated November 2, 2006, among the registrant, ThinkEquity Partners
LLC and Fortis Securities LLC |
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21.1 |
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List of Subsidiaries |
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23.1 |
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Consent of J.H. Cohn LLP, Independent Registered Public Accounting Firm |
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31.1 |
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Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) |
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31.2 |
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Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) |
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32.1 |
± |
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Certification of principal executive officer and principal financial officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| * |
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Indicates that confidential treatment has been requested or granted to certain portions,
which portions have been omitted and filed separately with the SEC |
| |
| # |
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Indicates management contract or compensatory plan |
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| ± |
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These certifications are being furnished solely to accompany this
report pursuant to 18 U.S.C. 1350, and are not being filed for
purposes of Section 18 of the Securities Exchange Act of 1934 and are
not to be incorporated by reference into any filing of the registrant,
whether made before or after the date hereof, regardless of any
general incorporation language in such filing. |
| |
| (1) |
|
Filed with the registrant’s Amendment No. 1 to Current Report on Form 8-K/A on May 1, 2006
(SEC file number 001-32157-06796248) |
| |
| (2) |
|
Filed with the registrant’s Annual Report on Form 10-K on March 16, 2006 (SEC file number
001-32157-06693266) |
| |
| (3) |
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Filed with the registrant’s Current Report on Form 8-K on December 15, 2008 (SEC file number
001-32157-081249921) |
| |
| (4) |
|
Filed with the registrant’s Registration Statement on Form S-3 on June 30, 2004 (SEC file
number 333-117022-03848890) |
| |
| (5) |
|
Filed with the registrant’s Amendment No. 1 to Quarterly Report on Form 10-Q/A on October 30,
2006 (SEC file number 001-32157-061170484) |
| |
| (6) |
|
Filed with the registrant’s Current Report on Form 8-K/A on April 13, 2004 (SEC file number
000-33219-04730584) |
| |
| (7) |
|
Filed with the registrant’s Quarterly Report on Form 10-QSB on May 12, 2004 (SEC file number
001-32157-04797806) |
| |
| (8) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on August 12, 2005 (SEC file number
001-32157-051022046) |
| |
| (9) |
|
Filed with the registrant’s Current Report on Form 8-K on September 22, 2006 (SEC file number
001-32157-061103268) |
| |
| (10) |
|
Filed with the registrant’s Current Report on Form 8-K on February 25, 2008 (SEC file number
001-32157-08638638) |
| |
| (11) |
|
Filed with the registrant’s Registration Statement on Form S-3 on August 26, 2005 (SEC file
number 333-127857-051050073) |
| |
| (12) |
|
Filed with the registrant’s Annual Report on Form 10-K on March 15, 2007 (SEC file number
001-32157-07697283) |
| |
| (13) |
|
Filed with the registrant’s Registration Statement on Form S-8 on July 13, 2005 (SEC file
number 333-126551-05951362) |
| |
| (14) |
|
Filed with registrant’s Annual Report on Form 10-K on March 17, 2008 (SEC file number
001-32157-08690952) |
| |
| (15) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on May 12, 2008 (SEC file number
001-32157-08820541) |
30
| |
|
|
| (16) |
|
Filed with the registrant’s Current Report on Form 8-K on June 7, 2008 (SEC file number
001-32157-08874724) |
| |
| (17) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on August 11, 2008 (SEC file number
001-32157-081005744) |
| |
| (18) |
|
Filed with the registrant’s Registration Statement on Form 10SB/A on January 14, 2002 (SEC
file number 000-33219-2508012) |
| |
| (19) |
|
Filed with the registrant’s Quarterly Report on Form 10-QSB on August 14, 2003 (SEC file
number 000-33219-03848890) |
| |
| (20) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on May 8, 2007 (SEC file number
001-32157-07829156) |
| |
| (21) |
|
Filed with the registrant’s Current Report on Form 8-K on October 23, 2006 (SEC file number
001-32157-061156993) |
| |
| (22) |
|
Filed with the registrant’s Quarterly Report on Form 10-QSB on August 10, 2004 (SEC file
number 001-32157-04963741) |
| |
| (23) |
|
Filed with the registrant’s Annual Report on Form 10-KSB on April 16, 2003 (SEC file number
000-33219-03651464) |
| |
| (24) |
|
Filed with the registrant’s Annual Report on Form 10-KSB on March 31, 2005 (SEC file number
001-32157-05719975) |
| |
| (25) |
|
Filed with the registrant’s Current Report on Form 8-K on September 8, 2006 (SEC file number
001-32157-061082484) |
| |
| (26) |
|
Filed with the registrant’s Current Report on Form 8-K on December 20, 2006 (SEC file number
001-32157-061290689) |
| |
| (27) |
|
Filed with the registrant’s Current Report on Form 8-K on April 16, 2008 (SEC file number
001-32157-08760483) |
| |
| (28) |
|
Filed with the registrant’s Current Report on Form 8-K on June 23, 2006 (SEC file number
001-32157-06922676) |
| |
| (29) |
|
Filed with the registrant’s Current Report on Form 8-K on November 3, 2006 (SEC file number
001-32157-061184445) |
31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
|
|
|
|
| |
ADVENTRX Pharmaceuticals, Inc.
|
|
| |
By: |
/s/ Brian M. Culley
|
|
| |
|
Brian M. Culley |
|
| |
|
Chief Business Officer & Senior Vice President |
|
Date: March 27, 2009
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Brian M. Culley and Mark N.K. Bagnall, jointly and severally, as his true and lawful
attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all amendments to this
Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Brian M. Culley
Brian M. Culley
|
|
Chief Business Officer and Sr. Vice President
(Principal Executive Officer)
|
|
March 27, 2009 |
|
|
|
|
|
/s/ Mark N.K. Bagnall
Mark N.K. Bagnall
|
|
Director
(Principal
Financial and Accounting Officer)
|
|
March 27, 2009 |
|
|
|
|
|
|
|
Chair of the Board
|
|
March 27, 2009 |
Jack Lief |
|
|
|
|
|
|
|
|
|
|
|
Director |
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael M. Goldberg
Michael M. Goldberg
|
|
Director
|
|
March 27, 2009 |
|
|
|
|
|
/s/ Mark J. Pykett
Mark J. Pykett
|
|
Director
|
|
March 27, 2009 |
|
|
|
|
|
/s/ Eric K. Rowinsky
Eric K. Rowinsky
|
|
Director
|
|
March 27, 2009 |
32
Index to Consolidated Financial Statements
| |
|
|
|
|
| |
|
Page |
|
|
|
|
F-2 |
|
|
|
|
|
|
Financial Statements: |
|
|
|
|
|
|
|
|
|
|
|
|
F-3 |
|
|
|
|
|
|
|
|
|
F-4 |
|
|
|
|
|
|
|
|
F-5 – F-8 |
|
|
|
|
|
|
|
|
|
F-9 – F-10 |
|
|
|
|
|
|
|
|
|
F-11 – F-33 |
|
|
|
|
|
|
Financial Statement Schedules: |
|
|
|
|
|
|
|
|
|
Financial statement schedules have been omitted for the reason that the
required information is presented in financial statements or notes thereto, the
amounts involved are not significant or the schedules are not applicable. |
|
|
|
|
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
ADVENTRX Pharmaceuticals, Inc.
We have audited the accompanying consolidated balance sheets of ADVENTRX Pharmaceuticals, Inc. and
Subsidiaries (a development stage enterprise) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, stockholders’ equity (deficit) and comprehensive loss and
cash flows for the years then ended and for the period from January 1, 2002 through December 31,
2008. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects,
the financial position of ADVENTRX Pharmaceuticals, Inc. and Subsidiaries (a development stage
enterprise) as of December 31, 2008 and 2007, and the results of operations and their cash flows
for years then ended and for the period from January 1, 2002 through December 31, 2008, in
conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 3 to the consolidated financial statements, effective January 1, 2007,
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries adopted the Financial Accounting Standards Board
Staff Position on No. EITF 00-19-2, Accounting for Registration Payment Arrangements.
As discussed in Note 3 to the consolidated financial statements, certain prior year amounts have
been restated.
The accompanying consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the consolidated financial statements,
the Company has suffered recurring losses from operations and negative cash flows from operations
that raise substantial doubt about its ability to continue as a going concern. Management’s plans
in regards to these matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ J.H. COHN LLP
San Diego, California
March 25, 2009
F-2
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Balance Sheets
| |
|
|
|
|
|
|
|
|
| |
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,849,904 |
|
|
$ |
14,780,739 |
|
Short-term investments |
|
|
— |
|
|
|
18,682,417 |
|
Interest and other receivables |
|
|
121,736 |
|
|
|
72,029 |
|
Prepaid expenses |
|
|
477,902 |
|
|
|
615,691 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
10,449,542 |
|
|
|
34,150,876 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
199,052 |
|
|
|
332,444 |
|
Other assets |
|
|
60,664 |
|
|
|
58,305 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
10,709,258 |
|
|
$ |
34,541,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,721,376 |
|
|
$ |
552,143 |
|
Accrued liabilities |
|
|
2,077,188 |
|
|
|
2,317,910 |
|
Accrued compensation and payroll taxes |
|
|
915,459 |
|
|
|
622,762 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
4,714,023 |
|
|
|
3,492,815 |
|
Long-term liabilities |
|
|
— |
|
|
|
14,270 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
4,714,023 |
|
|
|
3,507,085 |
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 200,000,000 shares
authorized; 90,252,572 shares issued and outstanding
at December 31, 2008 and 2007 |
|
|
90,254 |
|
|
|
90,254 |
|
Additional paid-in capital |
|
|
131,751,439 |
|
|
|
130,140,549 |
|
Deficit accumulated during the development stage |
|
|
(125,846,458 |
) |
|
|
(99,198,965 |
) |
Accumulated other comprehensive income |
|
|
— |
|
|
|
2,702 |
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
5,995,235 |
|
|
|
31,034,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
10,709,258 |
|
|
$ |
34,541,625 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-3
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Operations
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Inception |
|
| |
|
|
|
|
|
|
|
|
|
(June 12, 1996) |
|
| |
|
|
|
|
|
|
|
|
|
Through |
|
| |
|
Years Ended December 31, |
|
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
|
2008 |
|
| |
|
|
|
|
|
|
|
|
|
(as restated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensing revenue |
|
$ |
500,000 |
|
|
$ |
500,000 |
|
|
$ |
1,000,000 |
|
Net sales |
|
|
— |
|
|
|
— |
|
|
|
174,830 |
|
Grant revenue |
|
|
— |
|
|
|
— |
|
|
|
129,733 |
|
|
|
|
|
|
|
|
|
|
|
Total net revenue |
|
|
500,000 |
|
|
|
500,000 |
|
|
|
1,304,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
— |
|
|
|
— |
|
|
|
51,094 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
500,000 |
|
|
|
500,000 |
|
|
|
1,253,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
17,922,183 |
|
|
|
15,934,409 |
|
|
|
62,014,556 |
|
Selling, general and administrative |
|
|
9,719,613 |
|
|
|
8,678,853 |
|
|
|
42,969,202 |
|
Depreciation and amortization |
|
|
168,039 |
|
|
|
197,783 |
|
|
|
10,798,071 |
|
In-process research and development |
|
|
— |
|
|
|
— |
|
|
|
10,422,130 |
|
Impairment loss — write-off of
goodwill |
|
|
— |
|
|
|
— |
|
|
|
5,702,130 |
|
Equity in loss of investee |
|
|
— |
|
|
|
— |
|
|
|
178,936 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
27,809,835 |
|
|
|
24,811,045 |
|
|
|
132,085,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(27,309,835 |
) |
|
|
(24,311,045 |
) |
|
|
(130,831,556 |
) |
Loss on fair value of warrants |
|
|
— |
|
|
|
— |
|
|
|
(12,239,688 |
) |
Interest income |
|
|
549,964 |
|
|
|
2,169,005 |
|
|
|
4,582,028 |
|
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
(179,090 |
) |
Other income |
|
|
112,378 |
|
|
|
— |
|
|
|
112,378 |
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(26,647,493 |
) |
|
|
(22,142,040 |
) |
|
|
(138,555,928 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Loss before cumulative effect of
change in accounting principle |
|
|
(26,647,493 |
) |
|
|
(22,142,040 |
) |
|
|
(138,555,928 |
) |
Cumulative effect of change in
accounting principle |
|
|
— |
|
|
|
— |
|
|
|
(25,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(26,647,493 |
) |
|
|
(22,142,040 |
) |
|
|
(138,581,749 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
(621,240 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stock |
|
$ |
(26,647,493 |
) |
|
$ |
(22,142,040 |
) |
|
$ |
(139,202,989 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share — basic and
diluted |
|
$ |
(0.30 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
—basic and diluted |
|
|
90,252,572 |
|
|
|
89,912,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-4
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
accumulated |
|
|
|
|
|
|
Total |
|
|
|
|
| |
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
other |
|
|
during the |
|
|
Treasury |
|
|
stockholders’ |
|
|
|
|
| |
|
preferred stock, series A |
|
|
preferred stock, series B |
|
|
preferred stock, series C |
|
|
Common stock |
|
|
paid-in |
|
|
comprehensive |
|
|
development |
|
|
stock, |
|
|
equity |
|
|
Comprehensive |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
income (loss) |
|
|
stage |
|
|
at cost |
|
|
(deficit) |
|
|
loss |
|
Balances at June 12, 1996 (date of
incorporation) |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
Sale of common stock without par value |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
503 |
|
|
|
5 |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
|
|
Change in par value of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of common stock and net
liabilities assumed in acquisition |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,716,132 |
|
|
|
1,716 |
|
|
|
3,224 |
|
|
|
— |
|
|
|
(18,094 |
) |
|
|
— |
|
|
|
(13,154 |
) |
|
|
|
|
Issuance of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,010,111 |
|
|
|
2,010 |
|
|
|
456 |
|
|
|
— |
|
|
|
(2,466 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(259,476 |
) |
|
|
— |
|
|
|
(259,476 |
) |
|
$ |
(259,476 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 1996 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,726,746 |
|
|
|
3,727 |
|
|
|
3,689 |
|
|
|
— |
|
|
|
(280,036 |
) |
|
|
— |
|
|
|
(272,620 |
) |
|
$ |
(259,476 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock, net of offering
costs of $9,976 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,004,554 |
|
|
|
1,004 |
|
|
|
1,789,975 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,790,979 |
|
|
|
|
|
Issuance of common stock in acquisition |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
375,891 |
|
|
|
376 |
|
|
|
887,874 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
888,250 |
|
|
|
|
|
Minority interest deficiency at
acquisition charged to the Company |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(45,003 |
) |
|
|
— |
|
|
|
(45,003 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,979,400 |
) |
|
|
— |
|
|
|
(1,979,400 |
) |
|
$ |
(1,979,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 1997 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,107,191 |
|
|
|
5,107 |
|
|
|
2,681,538 |
|
|
|
— |
|
|
|
(2,304,439 |
) |
|
|
— |
|
|
|
382,206 |
|
|
$ |
(1,979,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rescission of acquisition |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(375,891 |
) |
|
|
(376 |
) |
|
|
(887,874 |
) |
|
|
— |
|
|
|
561,166 |
|
|
|
— |
|
|
|
(327,084 |
) |
|
|
|
|
Issuance of common stock at conversion
of notes payable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
450,264 |
|
|
|
451 |
|
|
|
363,549 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
364,000 |
|
|
|
|
|
Expense related to stock warrants issued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
260,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
260,000 |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,204,380 |
) |
|
|
— |
|
|
|
(1,204,380 |
) |
|
$ |
(1,204,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 1998 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,181,564 |
|
|
|
5,182 |
|
|
|
2,417,213 |
|
|
|
— |
|
|
|
(2,947,653 |
) |
|
|
— |
|
|
|
(525,258 |
) |
|
$ |
(1,204,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
678,412 |
|
|
|
678 |
|
|
|
134,322 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
135,000 |
|
|
|
|
|
Expense related to stock warrants issued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
212,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
212,000 |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,055,485 |
) |
|
|
— |
|
|
|
(1,055,485 |
) |
|
$ |
(1,055,485 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 1999 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,859,976 |
|
|
|
5,860 |
|
|
|
2,763,535 |
|
|
|
— |
|
|
|
(4,003,138 |
) |
|
|
— |
|
|
|
(1,233,743 |
) |
|
$ |
(1,055,485 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of preferred stock, net of
offering costs of $76,500 |
|
|
3,200 |
|
|
|
32 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,123,468 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,123,500 |
|
|
|
|
|
Issuance of common stock at conversion
of notes and interest payable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
412,487 |
|
|
|
412 |
|
|
|
492,085 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
492,497 |
|
|
|
|
|
Issuance of common stock at conversion
of notes payable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
70,354 |
|
|
|
70 |
|
|
|
83,930 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
84,000 |
|
|
|
|
|
Issuance of common stock to settle
obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
495,111 |
|
|
|
496 |
|
|
|
1,201,664 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,202,160 |
|
|
|
|
|
Issuance of common stock for
acquisition |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,999,990 |
|
|
|
7,000 |
|
|
|
9,325,769 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,332,769 |
|
|
|
|
|
Issuance of warrants for acquisition |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,767,664 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,767,664 |
|
|
|
|
|
Stock issued for acquisition costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
150,000 |
|
|
|
150 |
|
|
|
487,350 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
487,500 |
|
|
|
|
|
Expense related to stock warrants issued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
140,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
140,000 |
|
|
|
|
|
Dividends payable on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(85,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(85,000 |
) |
|
|
|
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
599,066 |
|
|
|
599 |
|
|
|
(599 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,701,084 |
) |
|
|
— |
|
|
|
(3,701,084 |
) |
|
$ |
(3,701,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2000 |
|
|
3,200 |
|
|
|
32 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,586,984 |
|
|
|
14,587 |
|
|
|
22,299,866 |
|
|
|
— |
|
|
|
(7,704,222 |
) |
|
|
— |
|
|
|
14,610,263 |
|
|
$ |
(3,701,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-5
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
accumulated |
|
|
|
|
|
|
Total |
|
|
|
|
| |
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
other |
|
|
during the |
|
|
Treasury |
|
|
stockholders’ |
|
|
|
|
| |
|
preferred stock, series A |
|
|
preferred stock, series B |
|
|
preferred stock, series C |
|
|
Common stock |
|
|
paid-in |
|
|
comprehensive |
|
|
development |
|
|
stock, |
|
|
equity |
|
|
Comprehensive |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
income (loss) |
|
|
stage |
|
|
at cost |
|
|
(deficit) |
|
|
loss |
|
Dividends payable on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(256,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(256,000 |
) |
|
|
|
|
Repurchase of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(55,279 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(55,279 |
) |
|
|
|
|
Sale of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
47,741 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
47,741 |
|
|
|
|
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
218,493 |
|
|
|
219 |
|
|
|
(219 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of common stock to pay preferred
dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
93,421 |
|
|
|
93 |
|
|
|
212,907 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
213,000 |
|
|
|
|
|
Detachable warrants issued with notes
payable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
450,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
450,000 |
|
|
|
|
|
Issuance of warrants to pay operating
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
167,138 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
167,138 |
|
|
|
|
|
Issuance of common stock to pay operating
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
106,293 |
|
|
|
106 |
|
|
|
387,165 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
387,271 |
|
|
|
|
|
Issuance of preferred stock to pay
operating expenses |
|
|
137 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
136,499 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
136,500 |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,339,120 |
) |
|
|
— |
|
|
|
(16,339,120 |
) |
|
$ |
(16,339,120 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2001 |
|
|
3,337 |
|
|
|
33 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,005,191 |
|
|
|
15,005 |
|
|
|
23,389,818 |
|
|
|
— |
|
|
|
(24,043,342 |
) |
|
|
— |
|
|
|
(638,486 |
) |
|
$ |
(16,339,120 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends payable on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(242,400 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(242,400 |
) |
|
|
|
|
Repurchase of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Sale of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
240,000 |
|
|
|
240 |
|
|
|
117,613 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
117,853 |
|
|
|
|
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
100,201 |
|
|
|
100 |
|
|
|
(100 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
344,573 |
|
|
|
345 |
|
|
|
168,477 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
168,822 |
|
|
|
|
|
Sale of preferred stock at $1.50 per share |
|
|
— |
|
|
|
— |
|
|
|
200,000 |
|
|
|
2,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
298,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
300,000 |
|
|
|
|
|
Sale of preferred stock at $10.00 per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
70,109 |
|
|
|
701 |
|
|
|
— |
|
|
|
— |
|
|
|
700,392 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
701,093 |
|
|
|
|
|
Conversion of preferred stock into common
stock |
|
|
(3,000 |
) |
|
|
(30 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,800,000 |
|
|
|
1,800 |
|
|
|
(1,770 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Preferred stock dividends forgiven |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
335,440 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
335,440 |
|
|
|
|
|
Issuance of warrants to pay operating
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
163,109 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
163,109 |
|
|
|
|
|
Issuance of common stock to pay operating
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,292 |
|
|
|
6 |
|
|
|
12,263 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,269 |
|
|
|
|
|
Issuance of preferred stock to pay
operating expenses |
|
|
136 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,001 |
|
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
329,296 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
329,296 |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,105,727 |
) |
|
|
— |
|
|
|
(2,105,727 |
) |
|
$ |
(2,105,727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2002 |
|
|
473 |
|
|
|
4 |
|
|
|
200,000 |
|
|
|
2,000 |
|
|
|
70,109 |
|
|
|
701 |
|
|
|
17,496,257 |
|
|
|
17,496 |
|
|
|
25,276,138 |
|
|
|
— |
|
|
|
(26,149,069 |
) |
|
|
— |
|
|
|
(852,730 |
) |
|
$ |
(2,105,727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-6
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
accumulated |
|
|
|
|
|
|
Total |
|
|
|
|
| |
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
other |
|
|
during the |
|
|
Treasury |
|
|
stockholders’ |
|
|
|
|
| |
|
preferred stock, series A |
|
|
preferred stock, series B |
|
|
preferred stock, series C |
|
|
Common stock |
|
|
paid-in |
|
|
comprehensive |
|
|
development |
|
|
stock, |
|
|
equity |
|
|
Comprehensive |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
income (loss) |
|
|
stage |
|
|
at cost |
|
|
(deficit) |
|
|
loss |
|
Dividends payable on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(37,840 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(37,840 |
) |
|
|
|
|
Conversion of Series C preferred stock
into common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(70,109 |
) |
|
|
(701 |
) |
|
|
14,021,860 |
|
|
|
14,022 |
|
|
|
(13,321 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of common stock to pay
interest on Bridge Notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
165,830 |
|
|
|
165 |
|
|
|
53,326 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53,491 |
|
|
|
|
|
Sale of common stock at $0.40 per
share, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,640,737 |
|
|
|
6,676 |
|
|
|
2,590,656 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,597,332 |
|
|
|
|
|
Sale of common stock at $1.00 per
share, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,701,733 |
|
|
|
3,668 |
|
|
|
3,989,181 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,992,849 |
|
|
|
|
|
Exchange of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
235,291 |
|
|
|
235 |
|
|
|
49,486 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49,721 |
|
|
|
|
|
Issuance of common stock to pay
operating expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
230,000 |
|
|
|
230 |
|
|
|
206,569 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
206,799 |
|
|
|
|
|
Issuance of warrants to pay operating
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
156,735 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
156,735 |
|
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
286,033 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
286,033 |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,332,077 |
) |
|
|
— |
|
|
|
(2,332,077 |
) |
|
$ |
(2,332,077 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2003 |
|
|
473 |
|
|
|
4 |
|
|
|
200,000 |
|
|
|
2,000 |
|
|
|
— |
|
|
|
— |
|
|
|
42,491,708 |
|
|
|
42,492 |
|
|
|
32,556,963 |
|
|
|
— |
|
|
|
(28,481,146 |
) |
|
|
— |
|
|
|
4,120,313 |
|
|
$ |
(2,332,077 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extinguishment of dividends payable on
preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
72,800 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
72,800 |
|
|
|
|
|
Conversion of Series A cumulative
preferred stock |
|
|
(473 |
) |
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
236,500 |
|
|
|
236 |
|
|
|
(232 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Conversion of Series B preferred stock |
|
|
— |
|
|
|
— |
|
|
|
(200,000 |
) |
|
|
(2,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
200,000 |
|
|
|
200 |
|
|
|
1,800 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
464,573 |
|
|
|
465 |
|
|
|
(465 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,832 |
|
|
|
23 |
|
|
|
27,330 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27,353 |
|
|
|
|
|
Issuance of warrants in settlement of
a claim |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
86,375 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
86,375 |
|
|
|
|
|
Sale of common stock at $1.50 per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,417,624 |
|
|
|
10,419 |
|
|
|
15,616,031 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,626,450 |
|
|
|
|
|
Payment of financing and offering costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,366,774 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,366,774 |
) |
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
524,922 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
524,922 |
|
|
|
|
|
Acquisition of treasury stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,747 |
|
|
|
— |
|
|
|
— |
|
|
|
(34,747 |
) |
|
|
— |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,701,048 |
) |
|
|
— |
|
|
|
(6,701,048 |
) |
|
$ |
(6,701,048 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2004 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53,834,237 |
|
|
|
53,835 |
|
|
|
47,553,497 |
|
|
|
— |
|
|
|
(35,182,194 |
) |
|
|
(34,747 |
) |
|
|
12,390,391 |
|
|
$ |
(6,701,048 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-7
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss
Inception (June 12, 1996) Through December 31, 2008
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
accumulated |
|
|
|
|
|
|
Total |
|
|
|
|
| |
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
Cumulative convertible |
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
other |
|
|
during the |
|
|
Treasury |
|
|
stockholders’ |
|
|
|
|
| |
|
preferred stock, series A |
|
|
preferred stock, series B |
|
|
preferred stock, series C |
|
|
Common stock |
|
|
paid-in |
|
|
comprehensive |
|
|
development |
|
|
stock, |
|
|
equity |
|
|
Comprehensive |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
income (loss) |
|
|
stage |
|
|
at cost |
|
|
(deficit) |
|
|
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,782,646 |
) |
|
|
— |
|
|
|
(24,782,646 |
) |
|
$ |
(24,782,646 |
) |
Effect of change in fair value of
available- for- sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,722 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,722 |
) |
|
|
(1,722 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Par value of shares issued in conjunction
with mezzanine financing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,810,809 |
|
|
|
10,811 |
|
|
|
(10,811 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
149,613 |
|
|
|
149 |
|
|
|
(149 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,258,703 |
|
|
|
2,259 |
|
|
|
3,071,179 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,073,438 |
|
|
|
|
|
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
185,000 |
|
|
|
185 |
|
|
|
144,815 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
145,000 |
|
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
994,874 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
994,874 |
|
|
|
|
|
Issuance of stock options to non-employee |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
93,549 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
93,549 |
|
|
|
|
|
Issuance of common stock to vendor |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
125,000 |
|
|
|
125 |
|
|
|
258,375 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
258,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2005, as restated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
67,363,362 |
|
|
|
67,364 |
|
|
|
52,105,329 |
|
|
|
(1,722 |
) |
|
|
(59,964,840 |
) |
|
|
(34,747 |
) |
|
|
(7,828,616 |
) |
|
$ |
(24,784,368 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(29,331,773 |
) |
|
|
— |
|
|
|
(29,331,773 |
) |
|
$ |
(29,331,773 |
) |
Effect of change in fair value of
available- for- sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(368 |
) |
|
|
— |
|
|
|
— |
|
|
|
(368 |
) |
|
|
(368 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
420,161 |
|
|
|
420 |
|
|
|
(420 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Exercise of warrants, net of financing costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,103,746 |
|
|
|
5,104 |
|
|
|
7,686,486 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,691,590 |
|
|
|
|
|
Acquisition of SD Pharmaceuticals. Inc. |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,099,990 |
|
|
|
2,100 |
|
|
|
10,161,852 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,163,952 |
|
|
|
|
|
Sale of common stock at $2.75 per share,
net of offering costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,545,000 |
|
|
|
14,545 |
|
|
|
37,055,666 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37,070,211 |
|
|
|
|
|
Issuance of stock for severance agreement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
60,145 |
|
|
|
60 |
|
|
|
196,614 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
196,674 |
|
|
|
|
|
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
92,500 |
|
|
|
93 |
|
|
|
125,658 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
125,751 |
|
|
|
|
|
Issuance of restricted stock to
non-employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,000 |
|
|
|
15 |
|
|
|
68,635 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
68,650 |
|
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,697,452 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,697,452 |
|
|
|
|
|
Issuance of stock options to non-employee |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
104,225 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
104,225 |
|
|
|
|
|
Cancellation of treasury stock shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,165 |
) |
|
|
(23 |
) |
|
|
(34,724 |
) |
|
|
— |
|
|
|
— |
|
|
|
34,747 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2006, as restated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
89,676,739 |
|
|
|
89,678 |
|
|
|
109,166,773 |
|
|
|
(2,090 |
) |
|
|
(89,296,613 |
) |
|
|
— |
|
|
|
19,957,748 |
|
|
$ |
(29,332,141 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative-effect adjustment of adopting
FASB Staff Position No. EITF 00-19-2 (see
Note 3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,116,751 |
|
|
|
— |
|
|
|
12,239,688 |
|
|
|
— |
|
|
|
30,356,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(22,142,040 |
) |
|
|
— |
|
|
|
(22,142,040 |
) |
|
$ |
(22,142,040 |
) |
Effect of change in fair value of
available- for -sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,792 |
|
|
|
— |
|
|
|
— |
|
|
|
4,792 |
|
|
|
4,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
575,833 |
|
|
|
576 |
|
|
|
441,040 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
441,616 |
|
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,414,077 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,414,077 |
|
|
|
|
|
Issuance of stock options to non-employee |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,908 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2007 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
90,252,572 |
|
|
|
90,254 |
|
|
|
130,140,549 |
|
|
|
2,702 |
|
|
|
(99,198,965 |
) |
|
|
— |
|
|
|
31,034,540 |
|
|
$ |
(22,137,248 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26,647,493 |
) |
|
|
— |
|
|
|
(26,647,493 |
) |
|
$ |
(26,647,493 |
) |
Effect of change in fair value of
available-for -sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,702 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,702 |
) |
|
|
(2,702 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Issuance of stock options to employees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,605,908 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,605,908 |
|
|
|
|
|
Issuance of stock options to non-employee |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,982 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2008 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
90,252,572 |
|
|
$ |
90,254 |
|
|
|
131,751,439 |
|
|
$ |
— |
|
|
$ |
(125,846,458 |
) |
|
$ |
— |
|
|
$ |
5,995,235 |
|
|
$ |
(26,650,195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-8
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Inception |
|
| |
|
|
|
|
|
|
|
|
|
(June 12, 1996) |
|
| |
|
|
|
|
|
|
|
|
|
Through |
|
| |
|
Years Ended December 31, |
|
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
|
2008 |
|
| |
|
|
|
|
|
|
|
(as restated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(26,647,493 |
) |
|
$ |
(22,142,040 |
) |
|
$ |
(138,581,749 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net
cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
168,039 |
|
|
|
197,783 |
|
|
|
10,348,071 |
|
Gain on disposal of fixed assets |
|
|
(3,598 |
) |
|
|
— |
|
|
|
(3,598 |
) |
Loss on fair value of warrants |
|
|
— |
|
|
|
— |
|
|
|
12,239,688 |
|
Amortization of debt discount |
|
|
— |
|
|
|
— |
|
|
|
450,000 |
|
Forgiveness of employee receivable |
|
|
— |
|
|
|
— |
|
|
|
30,036 |
|
Impairment loss — write-off of goodwill |
|
|
— |
|
|
|
— |
|
|
|
5,702,130 |
|
Expenses related to employee stock
options and restricted stock issued |
|
|
1,605,907 |
|
|
|
2,414,077 |
|
|
|
7,852,562 |
|
Expenses related to options issued to
non-employees |
|
|
4,983 |
|
|
|
1,908 |
|
|
|
204,664 |
|
Expenses paid by issuance of common
stock |
|
|
|
|
|
|
78,333 |
|
|
|
1,341,372 |
|
Expenses paid by issuance of warrants |
|
|
— |
|
|
|
— |
|
|
|
573,357 |
|
Expenses paid by issuance of preferred
stock |
|
|
— |
|
|
|
— |
|
|
|
142,501 |
|
Expenses related to stock warrants
issued |
|
|
— |
|
|
|
— |
|
|
|
612,000 |
|
Equity in loss of investee |
|
|
— |
|
|
|
— |
|
|
|
178,936 |
|
In-process research and development |
|
|
— |
|
|
|
— |
|
|
|
10,422,130 |
|
Write-off of license agreement |
|
|
— |
|
|
|
— |
|
|
|
152,866 |
|
Write-off assets available-for-sale |
|
|
— |
|
|
|
— |
|
|
|
108,000 |
|
Cumulative effect of change in
accounting principle |
|
|
— |
|
|
|
— |
|
|
|
25,821 |
|
Accretion of discount |
|
|
(208,103 |
) |
|
|
(1,041,750 |
) |
|
|
(1,249,853 |
) |
Accretion of discount on investments in
securities |
|
|
— |
|
|
|
— |
|
|
|
(354,641 |
) |
Changes in assets and liabilities, net
of effect of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Increase in prepaid and other assets |
|
|
85,723 |
|
|
|
(174,388 |
) |
|
|
(907,671 |
) |
Increase in accounts payable and
accrued liabilities |
|
|
1,221,208 |
|
|
|
1,044,291 |
|
|
|
4,890,731 |
|
Decrease in long-term liabilities |
|
|
(14,270 |
) |
|
|
(21,404 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(23,787,604 |
) |
|
|
(19,643,190 |
) |
|
|
(85,822,647 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales and maturities
of short-term investments |
|
|
33,243,602 |
|
|
|
59,240,000 |
|
|
|
112,788,378 |
|
Purchases of short-term investments |
|
|
(14,355,784 |
) |
|
|
(51,104,469 |
) |
|
|
(111,183,884 |
) |
Purchases of property and
equipment |
|
|
(64,955 |
) |
|
|
(127,259 |
) |
|
|
(1,030,354 |
) |
Proceeds from sale of property and
equipment |
|
|
33,906 |
|
|
|
— |
|
|
|
33,906 |
|
Purchase of certificate of deposit |
|
|
— |
|
|
|
— |
|
|
|
(1,016,330 |
) |
F-9
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Consolidated
Statements of Cash Flows
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Inception |
|
| |
|
|
|
|
|
|
|
|
|
(June 12, 1996) |
|
| |
|
|
|
|
|
|
|
|
|
Through |
|
| |
|
Years Ended December 31, |
|
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
|
2008 |
|
| |
|
|
|
|
|
|
|
(as restated) |
|
| |
Maturity of certificate of deposit |
|
|
— |
|
|
|
— |
|
|
|
1,016,330 |
|
Cash paid for acquisitions, net of
cash acquired |
|
|
— |
|
|
|
— |
|
|
|
32,395 |
|
Payment on obligation under license
agreement |
|
|
— |
|
|
|
— |
|
|
|
(106,250 |
) |
Issuance of note receivable — related
party |
|
|
— |
|
|
|
— |
|
|
|
(35,000 |
) |
Payments on note receivable |
|
|
— |
|
|
|
— |
|
|
|
405,993 |
|
Advance to investee |
|
|
— |
|
|
|
— |
|
|
|
(90,475 |
) |
Cash transferred in rescission of
acquisition |
|
|
— |
|
|
|
— |
|
|
|
(19,475 |
) |
Cash received in rescission of
acquisition |
|
|
— |
|
|
|
— |
|
|
|
230,000 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing
activities |
|
|
18,856,769 |
|
|
|
8,008,272 |
|
|
|
1,025,234 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock |
|
|
— |
|
|
|
— |
|
|
|
84,151,342 |
|
Proceeds from exercise of stock options |
|
|
— |
|
|
|
441,616 |
|
|
|
712,367 |
|
Proceeds from sale or exercise of
warrants |
|
|
— |
|
|
|
— |
|
|
|
11,382,894 |
|
Proceeds from sale of preferred stock |
|
|
— |
|
|
|
— |
|
|
|
4,200,993 |
|
Repurchase of warrants |
|
|
— |
|
|
|
— |
|
|
|
(55,279 |
) |
Payments for financing and offering
costs |
|
|
— |
|
|
|
— |
|
|
|
(6,483,809 |
) |
Payments on notes payable and long
-term debt |
|
|
— |
|
|
|
— |
|
|
|
(605,909 |
) |
Proceeds from issuance of notes payable
and detachable warrants |
|
|
— |
|
|
|
— |
|
|
|
1,344,718 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities |
|
|
— |
|
|
|
441,616 |
|
|
|
94,647,317 |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash
equivalents |
|
|
(4,930,835 |
) |
|
|
(11,193,302 |
) |
|
|
9,849,904 |
|
Cash and cash equivalents at beginning of
period |
|
|
14,780,739 |
|
|
|
25,974,041 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
9,849,904 |
|
|
$ |
14,780,739 |
|
|
$ |
9,849,904 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-10
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
December 31, 2008
| (1) |
|
Description of Business |
ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (“ADVENTRX,” “we” or the “Company”), is a
development-stage biopharmaceutical company whose fundamental business is focused on in-licensing,
developing and commercializing proprietary product candidates for the treatment of cancer. Through
our acquisition of SD Pharmaceuticals, Inc. (“SDP”) in 2006 and our license agreements with the
University of Southern California, we have rights to product candidates in varying stages of
development. We have not yet marketed or sold any products or generated any significant revenue.
In October 2000, we merged our wholly-owned subsidiary, Biokeys Acquisition Corp., with and into
Biokeys, Inc. and changed our name to Biokeys Pharmaceuticals, Inc. In May 2003, we merged Biokeys
Inc., our wholly-owned subsidiary, with and into us and changed our name to ADVENTRX
Pharmaceuticals, Inc. The merger had no effect on our financial statements. In July 2004, we formed
a wholly-owned subsidiary, ADVENTRX (Europe) Ltd., in the United Kingdom primarily to facilitate
conducting clinical trials in the European Union. In April 2006, we acquired all of the outstanding
capital stock of SDP through a merger with our newly created wholly-owned subsidiary, Speed
Acquisition, Inc. (the “Merger Sub”) and changed the name of the Merger Sub to SD Pharmaceuticals,
Inc.
Currently, we are focused primarily on evaluating strategic options, including the sale or
exclusive license of one or more of our product candidate programs, a strategic business merger and
other similar transactions. We implemented restructuring and cost-cutting measures in October 2008,
January 2009 and March 2009 and will eliminate all but a select, small number of personnel and
discontinue substantially all of our development activities and fundamental business operations to
provide additional time to consummate a strategic transaction or otherwise obtain financing.
The accompanying consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable length of time.
However, as a result of the Company’s continued losses and current cash and financing position,
such realization of assets or satisfaction of liabilities, without substantial adjustments is
uncertain. The future of the Company is dependent upon its ability to obtain additional funding.
Management is evaluating various strategic options, including the sale or exclusive license of one
or more of the Company’s product candidate programs, a strategic business merger and other similar
transactions, certain of which may result in a change of control of the Company. There can be no
assurances that the Company will be successful in consummating a strategic transaction on a timely
basis or at all. The Company likely will not be able to continue as a going concern, unless, as
part of a strategic transaction or otherwise, it raises adequate
capital. The Company will eliminate all but a select, small number of
personnel and discontinue substantially all of its
development activities and fundamental business operations and its ability to further curtail
expenses to provide additional time to consummate a strategic transaction or otherwise obtain
financing is limited. Given this uncertainty, there is significant doubt as to the Company’s
ability to continue as a going concern.
The Company’s consolidated financial statements for the year ended December 31, 2008 do not include
any adjustments related to the recovery and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company cannot continue as a
going concern.
F-11
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
| (3) |
|
Summary of Significant Accounting Policies |
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries, SDP and ADVENTRX (Europe) Ltd. All intercompany accounts and transactions have been
eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America (“U.S.”) requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.
Change in Accounting Principle for Registration Payment Arrangements and Correction of Error
On January 1, 2007, we adopted the provisions of the Financial Accounting Standards Board (“FASB”)
Staff Position on No. EITF 00-19-2, “Accounting for Registration Payment Arrangements"(“FSP EITF
00-19-2”). In December 2007, management determined that it was not probable that we would have any
payment obligation under the July 2005 Registration Payment Arrangement; therefore, no accrual for
contingent obligation was required under the provisions of FSP EITF 00-19-2. Accordingly, the
warrant liability account was eliminated and the comparative condensed consolidated financial
statements of the prior periods and as of December 31, 2006 were adjusted to apply the new method
retrospectively.
The Company accounted for FSP EITF 00-19-2 appropriately by eliminating the warrant liability as of
December 31, 2007, but upon further review in 2008, management determined that it was not correct
to adjust the prior period comparative financial statements. Accordingly, the Company has made the
appropriate adjustments to reinstate the warrant liability accounting as originally recorded.
F-12
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
December 31, 2008
The following consolidated financial statement line items were affected by the correction of the
error:
Consolidated Statement of Operations
Inception (June 12, 1996) through December 31, 2008
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As previously |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on fair value of warrants |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Condensed Consolidated Statements of Operations (Unaudited) |
|
| |
| |
|
Inception (June 12, 1996) through: |
|
| |
|
March 31, 2007 |
|
|
June 30, 2007 |
|
|
September 30, 2007 |
|
| |
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
| |
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
Loss on fair value of warrants |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
Loss before cumulative effect of change in accounting principle |
|
|
(82,650,521 |
) |
|
|
(94,890,209 |
) |
|
|
(12,239,688 |
) |
|
|
(88,373,349 |
) |
|
|
(100,613,037 |
) |
|
|
(12,239,688 |
) |
|
|
(94,287,473 |
) |
|
|
(106,527,161 |
) |
|
|
(12,239,688 |
) |
Net loss |
|
|
(82,676,342 |
) |
|
|
(94,916,030 |
) |
|
|
(12,239,688 |
) |
|
|
(88,399,170 |
) |
|
|
(100,638,858 |
) |
|
|
(12,239,688 |
) |
|
|
(94,313,294 |
) |
|
|
(106,552,982 |
) |
|
|
(12,239,688 |
) |
Net loss applicable to common stock |
|
|
(83,297,582 |
) |
|
|
(95,537,270 |
) |
|
|
(12,239,688 |
) |
|
|
(89,020,410 |
) |
|
|
(101,260,098 |
) |
|
|
(12,239,688 |
) |
|
|
(94,934,534 |
) |
|
|
(107,174,222 |
) |
|
|
(12,239,688 |
) |
| |
| |
|
Inception (June 12, 1996) through: |
|
| |
|
March 31, 2008 |
|
|
June 30, 2008 |
|
|
September 30, 2008 |
|
| |
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
| |
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
Loss on fair value of warrants |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
— |
|
|
$ |
(12,239,688 |
) |
|
$ |
(12,239,688 |
) |
Loss before cumulative effect of change in accounting principle |
|
|
(105,601,819 |
) |
|
|
(117,841,507 |
) |
|
|
(12,239,688 |
) |
|
|
(112,027,349 |
) |
|
|
(124,267,037 |
) |
|
|
(12,239,688 |
) |
|
|
(118,804,212 |
) |
|
|
(131,043,900 |
) |
|
|
(12,239,688 |
) |
Net loss |
|
|
(105,627,640 |
) |
|
|
(117,867,328 |
) |
|
|
(12,239,688 |
) |
|
|
(112,053,170 |
) |
|
|
(124,292,858 |
) |
|
|
(12,239,688 |
) |
|
|
(118,830,033 |
) |
|
|
(131,069,721 |
) |
|
|
(12,239,688 |
) |
Net loss applicable to common stock |
|
|
(106,248,880 |
) |
|
|
(118,488,568 |
) |
|
|
(12,239,688 |
) |
|
|
(112,674,410 |
) |
|
|
(124,914,098 |
) |
|
|
(12,239,688 |
) |
|
|
(119,451,273 |
) |
|
|
(131,690,961 |
) |
|
|
(12,239,688 |
) |
| |
| Consolidated Statements of Stockholders’ Equity (Deficit) |
|
| |
| |
|
As previously |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,202,986 |
) |
|
$ |
(24,782,646 |
) |
|
$ |
(11,579,660 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in-capital |
|
|
70,222,080 |
|
|
|
52,105,329 |
|
|
|
(18,116,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit accumulated during the development stage |
|
|
(48,385,180 |
) |
|
|
(59,964,840 |
) |
|
|
(11,579,660 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
21,867,795 |
|
|
|
(7,828,616 |
) |
|
|
(29,696,411 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2006: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(28,671,745 |
) |
|
|
(29,331,773 |
) |
|
|
(660,028 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in-capital |
|
|
127,283,254 |
|
|
|
109,166,773 |
|
|
|
(18,116,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit accumulated during the development stage |
|
|
(77,056,925 |
) |
|
|
(89,296,613 |
) |
|
|
(12,239,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
50,314,187 |
|
|
|
19,957,748 |
|
|
|
(30,356,439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative-effect of adopting FASB Staff Position No. EITF 00-19-2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in-capital |
|
|
— |
|
|
|
18,116,751 |
|
|
|
18,116,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit accumulated during the development stage |
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
— |
|
|
|
30,356,439 |
|
|
|
30,356,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inception (June 12, 1996) through December 31, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on fair value of warrants |
|
$ |
— |
|
|
$ |
12,239,688 |
|
|
$ |
12,239,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-13
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
December 31, 2008
Condensed Consolidated Statements of Cash Flow (Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Inception (June 12, 1996) through: |
|
| |
|
March 31, 2007 |
|
|
June 30, 2007 |
|
|
September 30, 2007 |
|
| |
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
| |
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
Net loss |
|
$ |
(82,676,342 |
) |
|
$ |
(94,916,030 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
(88,399,170 |
) |
|
$ |
(100,638,858 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
(94,313,294 |
) |
|
$ |
(106,552,982 |
) |
|
$ |
(12,239,688 |
) |
Loss on fair value of warrants |
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
| |
| |
|
Inception (June 12, 1996) through: |
|
| |
|
March 31, 2008 |
|
|
June 30, 2008 |
|
|
September 30, 2008 |
|
| |
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
|
|
|
As previously |
|
|
|
|
|
|
|
| |
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
|
reported |
|
|
As restated |
|
|
Effect of change |
|
Net loss |
|
$ |
(105,627,640 |
) |
|
$ |
(117,867,328 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
(112,053,170 |
) |
|
$ |
(124,292,858 |
) |
|
$ |
(12,239,688 |
) |
|
$ |
(118,830,033 |
) |
|
$ |
(131,069,721 |
) |
|
$ |
(12,239,688 |
) |
Loss on fair value of warrants |
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
|
|
— |
|
|
|
12,239,688 |
|
|
|
12,239,688 |
|
F-14
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or
less at the date of purchase.
Short-term Investments
We account for and report our investments in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Investments are comprised of marketable securities
consisting primarily of certificates of deposit, federal, state and municipal government
obligations and corporate bonds. Short-term investments are marketable securities with maturities
of less than one year from the balance sheet date. All marketable securities are held in our name
and primarily under the custodianship of two major financial institutions. Our policy is to protect
the principal value of our investment portfolio and minimize principal risk.
Our marketable securities are classified as “available-for-sale” and stated at fair value, with net
unrealized gains or losses recorded as a component of accumulated other comprehensive income
(loss). The amortized cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity with all amortization and accretion included in interest income.
Realized gains and losses on available-for-sale securities are included in other income (loss). The
cost of securities sold is based on the specific identification method. Interest on securities
classified as available-for-sale is included in interest income. Marketable securities are
evaluated periodically for impairment. If it is determined that a decline of any investment is
other than temporary, then the investment basis would be written down to fair value and the
write-down would be included in earnings as a loss.
Concentrations
Financial instruments that potentially subject us to concentrations of credit risk consist
principally of cash and cash equivalents and investment securities. We maintain our cash and cash
equivalents in high-credit quality financial institutions. At times, such balances may exceed
Federally insured limits. At December 31, 2008, our cash and cash equivalents were in excess of
the Federal Deposit Insurance Corporation limit.
During 2008, approximately 12% or $2.3 million of our total vendor payments were made to a
manufacturer that provided process development and scale-up manufacturing services. If we were to
lose this vendor, our progress in completing a New Drug Application (“NDA”) would be severely
impeded. During 2007, approximately 14% or $2.3 million of our total vendor payments were made to
a contract research organization (“CRO”) that was assisting us in our clinical trial administration
and data management.
Fair Value of Financial Instruments
At December 31, 2008, our financial instruments included cash and cash equivalents, accounts
payable, accrued expenses and accrued compensation and payroll taxes. At December 31, 2007, our
financial instruments also included short-term investments. The carrying amounts of cash and cash
equivalents, accounts payable, accrued expenses and accrued compensation and payroll taxes
approximate fair value due to the short-term maturities of these instruments. Our short-term
investments in securities are carried at fair value based on quoted market prices.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are calculated using the
straight-line method over the estimated useful lives of the assets. The costs of improvements that
extend the lives of the assets are capitalized. Repairs and maintenance are expensed as incurred.
F-15
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
Impairment of Long-Lived Assets
Long-lived assets with finite lives are evaluated for impairment whenever events or changes in
circumstances indicate that their carrying value may not be recoverable. If the evaluation
indicates that intangibles or long-lived assets are not recoverable (i.e., carrying amount is less
than the future projected undiscounted cash flows), their carrying amount would be reduced to fair
value. Since inception through December 31, 2008, we recognized an impairment loss of the value of
goodwill in the amount of $5.7 million, which was recorded in the year ended December 31, 2001.
Revenue Recognition
We recognize revenue in accordance with the Securities and Exchange Commission’s (“SEC”) Staff
Accounting Bulletin Topic 13, Revenue Recognition (“Topic 13”), and Emerging Issues Task Force
Issue (“EITF”) No. 00-21, Revenue Arrangements with Multiple Deliverables, or EITF 00-21. Revenue
is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the
buyer is fixed and determinable; and (4) collectibility is reasonably assured.
Revenue from licensing agreements is recognized based on the performance requirements of the
agreement. Revenue is deferred for fees received before earned. Nonrefundable upfront fees that are
not contingent on any future performance by us are recognized as revenue when revenue recognition
criteria under Topic 13 and EITF 00-21 are met and the license term commences. Nonrefundable
upfront fees, where we have ongoing involvement or performance obligations, are recorded as
deferred revenue and recognized as revenue over the life of the contract, the period of the
performance obligation or the development period, whichever is appropriate in light of the
circumstances.
Payments related to substantive, performance-based milestones in an agreement are recognized as
revenue upon the achievement of the milestones as specified in the underlying agreement when they
represent the culmination of the earnings process. Royalty revenue from licensed products will be
recognized when earned in accordance with the terms of the applicable license agreements.
Research and Development Expenses
Research and development (“R&D”) expenses consist of expenses incurred in performing R&D
activities, including salaries and benefits, facilities and other overhead expenses, bioequivalence
and clinical trials, research-related manufacturing services, contract services and other outside
expenses. R&D expenses are charged to operations as they are incurred. Advance payments, including
nonrefundable amounts, for goods or services that will be used or rendered for future R&D
activities are deferred and capitalized. Such amounts will be recognized as an expense as the
related goods are delivered or the related services are performed. If the goods will not be
delivered, or services will not be rendered, then the capitalized advance payment is charged to
expense.
Milestone payments that we make in connection with in-licensed technology or product candidates are
expensed as incurred when there is uncertainty in receiving future economic benefits from the
licensed technology or product candidates. We consider the future economic benefits from the
licensed technology or product candidates to be uncertain until such licensed technology or product
candidates are approved for marketing by the U.S. Food and Drug Administration (“FDA”) or when
other significant risk factors are abated. For expense accounting purposes, management has viewed
future economic benefits for all of our licensed technology or product candidates to be uncertain.
F-16
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
Payments in connection with our bioequivalence and clinical trials are often made under contracts
with multiple CROs that conduct and manage these trials on our behalf. The financial terms of these
agreements are subject to negotiation and vary from contract to contract and may result in uneven
payment flows. Generally, these agreements set forth the scope of work to be performed at a fixed
fee or unit price or on a time-and-material basis. Payments under these contracts depend on factors
such as the successful enrollment or treatment of patients or the completion of other milestones.
Expenses related to bioequivalence and clinical trials are accrued based on our estimates and/or
representations from service providers regarding work performed, including actual level of patient
enrollment, completion of patient studies, and trials progress. Other incidental costs related to
patient enrollment and treatment
are accrued when reasonably certain. If the contracted amounts are modified (for instance, as a
result of changes in the bioequivalence or clinical trial protocol or scope of work to be
performed), we modify our accruals accordingly on a prospective basis. Revisions in scope of
contract are charged to expense in the period in which the facts that give rise to the revision
become reasonably certain. Because of the uncertainty of possible future changes to the scope of
work in bioequivalence and clinical trials contracts, we are unable to quantify an estimate of the
reasonably likely effect of any such changes on our consolidated results of operations or financial
position. Historically, we have had no material changes in our bioequivalence or clinical trial
expense accruals that would have had a material impact on our consolidated results of operations or
financial position.
Purchased In-Process Research and Development
In accordance with SFAS No. 141, Business Combinations, we immediately charge the costs associated
with purchased IPR&D to statement of operations upon acquisition. These amounts represent an
estimate of the fair value of purchased IPR&D for projects that, as of the acquisition date, had
not yet reached technological feasibility, had no alternative future use, and had uncertainty in
receiving future economic benefits from the purchased IPR&D. We determine the future economic
benefits from the purchased IPR&D to be uncertain until such technology is approved by the FDA or
when other significant risk factors are abated. In the year ended December 31, 2006, we recorded
approximately $10.4 million of IPR&D expense related to our acquisition of SD Pharmaceuticals, Inc.
in April 2006.
Accounting for Stock-Based Compensation
Effective January 1, 2006, we adopted the provisions of revised SFAS No. 123, “Share-Based Payment”
(“SFAS 123(R)”), including the provisions of Staff Accounting Bulletins No. 107 (“SAB 107”) and No.
110 (“SAB 110”). Under SFAS 123(R), stock-based compensation cost is measured at the grant date,
based on the estimated fair value of the award, and is recognized as expense over the employee’s
requisite service period. We have no awards with market or performance conditions. We adopted the
provisions of SFAS 123(R) using the modified prospective transition method. Accordingly, prior
periods were not revised for comparative purposes.
On November 10, 2005, the FASB issued FASB Staff Position No. SFAS 123(R)-3, “Transition Election
Related to Accounting for Tax Effects of Share-Based Payment
Awards”. We elected to adopt the
alternative transition method provided in SFAS 123(R). The alternative transition method included a
simplified method to establish the beginning balance of the additional paid-in capital pool (“APIC
pool”) related to the tax effects of employee stock-based compensation, which is available to
absorb tax deficiencies recognized subsequent to the adoption of SFAS 123(R).
The valuation provisions of SFAS 123(R) apply to new awards and to awards that are outstanding on
the effective date, January 1, 2006, which are subsequently modified or cancelled. Prior to 2006,
we accounted for stock-based compensation under the recognition and measurement principles of SFAS
No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Estimated compensation expense for
awards outstanding at January 1, 2006 is recognized over the remaining service period using the
compensation cost calculated for recognition purposes under SFAS 123.
Stock-based compensation expense recognized in our consolidated statement of operations for the
years ended December 31, 2008 and 2007 included compensation expense for stock-based payment awards
granted prior to, but not yet vested as of, December 31, 2005 based on the grant date fair value
estimated in accordance with the recognition provisions of SFAS 123 and stock-based payment awards
granted subsequent to December 31, 2005 based on the grant date fair value estimated in accordance
with SFAS 123(R). For share awards granted during the year ended December 31, 2008 and 2007,
expenses are amortized under the straight-line method. For share awards granted prior to 2006,
expenses are amortized under the straight-line method prescribed by SFAS 123. As stock-based
compensation expense recognized in the consolidated statement of operations for the years ended
December 31, 2008 and 2007 is based on awards ultimately expected to vest, it has been reduced for
estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and
revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In
the year ended December 31, 2005, we accounted for forfeitures as they occurred in accordance with
the recognition provisions of SFAS 123.
F-17
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
We account for stock-based compensation awards granted to non-employees in accordance with EITF No.
96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services” (“EITF 96-18”). Under EITF 96-18, we determine the
fair value of the stock-based compensation awards granted as either the fair value of the
consideration received or the fair value of the equity instruments issued, whichever is more
reliably measurable. If the fair value of the equity instruments issued is used, it is measured
using the stock price and other measurement assumptions as of the earlier of either of (1) the date
at which a commitment for performance by the counterparty to earn the equity instruments is reached
or (2) the date at which the counterparty’s performance is complete.
Patent Costs
Legal costs in connection with approved patents and patent applications are expensed as incurred
and classified as selling, general and administrative expense in our consolidated statement of
operations.
Income Taxes
We account for income taxes and the related accounts under the liability method. Deferred tax
assets and liabilities are determined based on the differences between the financial statement
carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is
applied against any net deferred tax asset if, based on available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In July 2006, FASB issued
Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an Interpretation of
FASB Statement 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. FIN
48 provides that the tax effects from an uncertain tax position can be recognized in our
consolidated financial statements only if the position is more likely than not of being sustained
upon an examination by tax authorities. An uncertain income tax position will not be recognized if
it has less than a 50% likelihood of being sustained. Additionally, FIN 48 provides guidance on
derecognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition. The provisions of FIN 48 were effective for us as of January 1, 2007, with the
cumulative effect of the change in accounting principle recorded as an adjustment to opening
retained earnings in the year of adoption. We adopted FIN 48 on January 1, 2007, which did not have
a material impact on our consolidated results of operations or financial position. See Note 13,
Income Taxes.
Comprehensive Loss
Comprehensive income or loss is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner sources, including
foreign currency translation adjustments and unrealized gains and losses on marketable securities.
We present comprehensive loss in our consolidated statements of stockholders’ equity (deficit) and
comprehensive loss.
Computation of Net Loss per Common Share
We calculate basic and diluted net loss per share in accordance with the SFAS No. 128, “Earnings
Per Share”. Basic net loss per share was calculated by dividing the net loss by the
weighted-average number of common shares outstanding during the period. Diluted net loss per share
was calculated by dividing the net loss by the weighted-average number of common stock equivalents
outstanding during the period. For purposes of this calculation, options and warrants are
considered to be common stock equivalents and are only included in the calculation of diluted
earnings per share when their effect is dilutive.
F-18
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
We have excluded the following options and warrants from the calculation of diluted net loss per
common share for 2008 and 2007 because their effect is anti-dilutive:
| |
|
|
|
|
|
|
|
|
| |
|
2008 |
|
|
2007 |
|
Warrants |
|
|
13,373,549 |
|
|
|
13,373,549 |
|
Options |
|
|
4,364,833 |
|
|
|
4,020,940 |
|
|
|
|
|
|
|
|
|
|
|
17,738,382 |
|
|
|
17,394,489 |
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Inception |
|
| |
|
|
|
|
|
|
|
|
|
(June 12, 1996)
Through |
|
| |
|
Years Ended December 31, |
|
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
|
2008 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
179,090 |
|
Income taxes paid |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Supplemental disclosures of non-cash investing and
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants, common stock and preferred
stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable and accrued
interest |
|
|
— |
|
|
|
— |
|
|
|
1,213,988 |
|
Prepaid services to consultants |
|
|
— |
|
|
|
— |
|
|
|
1,482,781 |
|
Conversion of preferred stock |
|
|
— |
|
|
|
— |
|
|
|
2,705 |
|
Acquisitions |
|
|
— |
|
|
|
— |
|
|
|
24,781,555 |
|
Payment of dividends |
|
|
— |
|
|
|
— |
|
|
|
213,000 |
|
Financial advisor services in conjunction
with private placement |
|
|
— |
|
|
|
— |
|
|
|
1,137,456 |
|
Acquisition of treasury stock in settlement of a
claim |
|
|
— |
|
|
|
— |
|
|
|
34,737 |
|
Cancellation of treasury stock |
|
|
— |
|
|
|
— |
|
|
|
(34,737 |
) |
Assumptions of liabilities in acquisitions |
|
|
— |
|
|
|
— |
|
|
|
1,235,907 |
|
Acquisition of license agreement for long-term
debt |
|
|
— |
|
|
|
— |
|
|
|
161,180 |
|
Cashless exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
4,312 |
|
Dividends accrued |
|
|
— |
|
|
|
— |
|
|
|
621,040 |
|
Trade asset converted to available for sale asset |
|
|
— |
|
|
|
— |
|
|
|
108,000 |
|
Dividends extinguished |
|
|
— |
|
|
|
— |
|
|
|
408,240 |
|
Trade payable converted to note payable |
|
|
— |
|
|
|
— |
|
|
|
83,948 |
|
Issuance of warrants for return of common
stock |
|
|
— |
|
|
|
— |
|
|
|
50,852 |
|
Detachable warrants issued with notes payable |
|
|
— |
|
|
|
— |
|
|
|
450,000 |
|
Unrealized (gain) loss on short-term
investments |
|
|
2,702 |
|
|
|
(4,792 |
) |
|
|
— |
|
New Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141(R)”), “Business
Combinations,” which replaces SFAS No. 141. SFAS 141(R) retains the purchase method of accounting
for acquisitions, but requires a number of changes, including changes in the way assets and
liabilities are recognized in purchase accounting. It also changes the recognition of assets
acquired and liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS 141(R) is effective for financial statements issued for
fiscal year 2009 and will apply prospectively to business combinations completed on or after
January 1, 2009. We do not expect the adoption of SFAS 141(R) to have a material effect on our
consolidated financial statements.
F-19
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
Effective January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). In
February 2008, the FASB issued FASB Staff Position (“FSP”) No. SFAS 157-2, “Effective Date of FASB
Statement No. 157,” which provides a one year deferral of the effective date of SFAS 157 for
non-financial assets and non-financial liabilities, except those that are recognized or disclosed
in the financial statements at fair value at least annually. As a result, we only partially adopted
SFAS 157 as it relates to our financial assets and liabilities until we are required to apply this
pronouncement to our non-financial assets and liabilities beginning with fiscal year 2009. The
adoption of SFAS 157 did not have a material impact on our consolidated results of operations or
financial condition.
In February 2008, the FASB issued FSP. No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP
157-2”). FSP 157-2 delays, for one year, the effective date of SFAS 157 for all nonfinancial
assets and liabilities, except those that are recognized or disclosed in the consolidated financial
statements on at least an annual basis.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting
Principles.” SFAS No. 162 is intended to improve financial reporting by identifying a consistent
hierarchy for selecting accounting principles to be used in preparing financial statements that are
prepared in conformance with accounting principles generally accepted in the United States of
America. Unlike Statement on Auditing Standards (SAS) No. 69, “The Meaning of Present Fairly in
Conformity With GAAP,” SFAS No. 162 is directed to the entity rather than the auditor. SFAS No.
162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight
Board (“PCAOB”) amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with
GAAP,” and is not expected to have any impact on the Company’s consolidated results of operations,
financial condition or liquidity.
In October 2008, the FASB issued FSP No. SFAS 157-3 “Determining the Fair Value of a Financial
Asset When the Market for That Asset Is Not Active” (“FSP SFAS 157-3”). FSP SFAS 157-3 clarifies
the application of SFAS No. 157, in a market that is not active and provides an example to
illustrate key considerations in determining the fair value of a financial asset when the market
for that financial asset is not active. FSP SFAS 157-3 is effective upon issuance, including prior
periods for which financial statements have not been issued. The adoption of FSP SFAS 157-3 had no
impact on our consolidated results of operations, financial position or cash flows.
SFAS 157 was effective for the Company beginning January 1, 2008 for financial assets and
liabilities recognized or disclosed in the Company’s consolidated financial statements. SFAS 157
defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances
disclosures about fair value measurements. Fair value is defined under SFAS 157 as the exchange
price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. Valuation techniques used to measure fair value under
SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs.
SFAS 157 describes a fair value hierarchy based on three levels of inputs, of which the first two
are considered observable and the last unobservable, that may be used to measure fair value which
are the following:
| |
|
|
Level 1 —
|
|
Quoted prices
in active markets for identical assets or liabilities. |
|
|
|
Level 2 —
|
|
Inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities. |
|
|
|
Level 3 —
|
|
Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities. |
F-20
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
The following table represents our fair value hierarchy for our financial assets (which consisted
solely of cash equivalents) measured at fair value based on quoted market prices on a recurring
basis as of December 31, 2008:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
9,849,904 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,849,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
9,849,904 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,849,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective January 1, 2008, we adopted SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities” (“SFAS 159”). SFAS 159 allows an entity the irrevocable option to elect to
measure specified financial assets and liabilities in their entirety at fair value on a
contract-by-contract basis. If an entity elects the fair value option for an eligible item, changes
in the item’s fair value must be reported as unrealized gains and losses in earnings at each
subsequent reporting date. In adopting SFAS 159, we did not elect the fair value option for any of
our financial assets or financial liabilities.
| (4) |
|
Investments in Securities |
The following table summarizes our investments in securities, all of which are classified as
available- for- sale:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2008 |
|
| |
|
|
|
|
|
Gross Unrealized |
|
|
|
|
| |
|
Cost |
|
|
Gains (Losses) |
|
|
Fair Value |
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
9,849,904 |
|
|
$ |
— |
|
|
$ |
9,849,904 |
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents |
|
$ |
9,849,904 |
|
|
$ |
— |
|
|
$ |
9,849,904 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2007 |
|
| |
|
|
|
|
|
Gross Unrealized |
|
|
|
|
| |
|
Cost |
|
|
Gains (Losses) |
|
|
Fair Value |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
$ |
9,494,050 |
|
|
$ |
2,420 |
|
|
$ |
9,496,470 |
|
Government debt securities |
|
|
7,438,669 |
|
|
|
(1,617 |
) |
|
|
7,437,052 |
|
Corporate bonds |
|
|
1,748,504 |
|
|
|
391 |
|
|
|
1,748,895 |
|
|
|
|
|
|
|
|
|
|
|
Total short-term investments |
|
$ |
18,681,223 |
|
|
$ |
1,194 |
|
|
$ |
18,682,417 |
|
|
|
|
|
|
|
|
|
|
|
| (5) |
|
Property and Equipment |
Property and equipment at December 31, 2008 and 2007 were as follows:
| |
|
|
|
|
|
|
|
|
|
|
| |
|
Useful Lives |
|
2008 |
|
|
2007 |
|
Office furniture, computer and lab equipment |
|
3 - 5 years |
|
$ |
720,257 |
|
|
$ |
754,990 |
|
Computer software |
|
3 years |
|
|
103,306 |
|
|
|
122,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
823,563 |
|
|
|
877,152 |
|
Less accumulated depreciation and amortization |
|
|
|
|
(624,511 |
) |
|
|
(544,708 |
) |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
$ |
199,052 |
|
|
$ |
332,444 |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense was $168,039 and $197,783 for the years ended December 31,
2008 and 2007, respectively.
F-21
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
Accrued liabilities at December 31, 2008 and 2007 were as follows:
| |
|
|
|
|
|
|
|
|
| |
|
2008 |
|
|
2007 |
|
Accrued contracts and study expenses |
|
$ |
1,620,988 |
|
|
$ |
1,953,472 |
|
Other accrued liabilities |
|
|
434,172 |
|
|
|
326,428 |
|
Deferred rent |
|
|
22,028 |
|
|
|
38,010 |
|
|
|
|
|
|
|
|
Accrued liabilities |
|
$ |
2,077,188 |
|
|
$ |
2,317,910 |
|
|
|
|
|
|
|
|
| (7) |
|
Capital Stock and Warrants |
Common Stock
During 2008, we issued no new additional common stock.
During 2007, we issued an aggregate of 575,833 shares of our common stock in connection with the
exercises of employee stock options at a weighted average price of $0.77 per share for cash in the
aggregate amount of approximately $442,000.
Warrants
In July 2005, we issued warrants to purchase 10,810,809 shares of common stock at an exercise price
of $2.26 per share in connection with the sale of 10,810,809 shares of common stock in July 2005.
See Note 11, Registration Payment Arrangement, for a detailed discussion.
At December 31, 2008, outstanding warrants to purchase shares of common stock are as follows:
| |
|
|
|
|
|
|
|
|
|
|
| Warrants |
|
|
Exercise Price |
|
|
Expiration Date |
| |
1,872,693 |
* |
|
$ |
1.98 |
|
|
Apr-09 |
| |
117,000 |
* |
|
$ |
2.38 |
|
|
Apr-09 |
| |
573,047 |
* |
|
$ |
1.98 |
|
|
Jun-09 |
| |
10,810,809 |
|
|
$ |
2.26 |
|
|
Jul-12 |
| |
|
|
|
|
|
|
|
|
|
| |
13,373,549 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
| * |
|
These warrants contain price-based anti-dilution protection. Among
other things, this protection lowers the exercise price of these warrants in
the event we issue common stock at a price per share that is less than the
warrants’ then-effective exercise price, thereby allowing the warrant holders
to receive the same number of shares of our common stock for less
consideration. |
F-22
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
| (8) |
|
Equity Incentive Plans |
At December 31, 2008, we had the 2005 Equity Incentive Plan (the “2005 Plan”), the 2005 Employee
Stock Purchase Plan (the “Purchase Plan”), and the 2008 Omnibus Incentive Plan (the “2008 Plan”)
which are described below. The stock-based compensation expense from all stock-based awards that
has been charged to our consolidated statements of operations in the years ended December 31, 2008
and 2007 was comprised of the following:
| |
|
|
|
|
|
|
|
|
| |
|
Years Ended December 31. |
|
| |
|
2008 |
|
|
2007 |
|
Selling, general and administrative expense |
|
$ |
885,427 |
|
|
$ |
1,440,081 |
|
Research and development expense |
|
|
725,464 |
|
|
|
1,054,237 |
|
|
|
|
|
|
|
|
Stock-based compensation expense before taxes |
|
|
1,610,891 |
|
|
|
2,494,318 |
|
Related income tax benefits |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
$ |
1,610,891 |
|
|
$ |
2,494,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net stock-based compensation expense per common
share — basic and diluted |
|
$ |
0.02 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense from: |
|
|
|
|
|
|
|
|
Stock options |
|
$ |
1,610,890 |
|
|
$ |
2,415,985 |
|
Share grant |
|
|
— |
|
|
|
78,333 |
|
Restricted stock awards |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
| |
|
|
$ |
1,610,890 |
|
|
$ |
2,494,318 |
|
|
|
|
|
|
|
|
Since we accounted for employee stock-based awards using the recognition method under the
provisions of SFAS 123 prior to 2006, the adoption of SFAS 123(R) did not have a material impact on
our consolidated results of operations. Since we have net operating losses carry forward as of
December 31, 2008, no excess tax benefits for the tax deductions related to stock-based awards were
recognized in the consolidated statement of operations. Additionally, no incremental tax benefits
were recognized from stock options exercised in the years ended December 31, 2008 and 2007 that
would have resulted in a reclassification to reduce net cash provided by operating activities with
an offsetting increase in net cash provided by financing activities.
2005 Equity Incentive Plan and 2008 Omnibus Incentive Plan
The 2005 and the 2008 Plans, which are stockholder-approved, are intended to encourage ownership of
shares of common stock by our directors, officers, employees, consultants and advisors and to
provide additional incentive for them to promote the success of our business through the grant of
stock-based awards. Both plans provide for the grant of incentive and non-statutory stock options
as well as share appreciation rights, restricted shares, restricted share units, performance units,
shares and other stock-based awards. Stock-based awards are subject to terms and conditions
established by the Board of Directors or the Compensation Committee of our Board of Directors. Our
policy is to issue new common shares upon the exercise of stock options, conversion of share units
or issuance of shares or restricted stock.
Since the 2008 Plan was approved by the Company’s stockholders in May 2008, no awards have been or
will be granted under the 2005 Plan. As of December 31, 2008, the maximum aggregate number of
shares of common stock which may be issued pursuant to or subject to the foregoing types of awards
granted under the 2008 Plan is 13,097,500 shares. Any shares of common stock that are subject to
options or stock appreciation rights granted under the 2008 Plan shall be counted against this
limit as one (1) share of common stock for every one (1) share of common stock granted. Any shares
of common stock that are subject to awards other than options or stock appreciation rights granted
under the 2008 Plan shall be counted against this limit as 1.2 shares of common stock for every one
(1) share of common stock granted. If any shares of common stock subject to an award under the
2008 Plan or the 2005 Plan are forfeited, expire or are settled for cash pursuant to the terms of
an award, the shares subject to the award may be used again for awards under the 2008 Plan to the
extent of the forfeiture, expiration or settlement. The shares of common stock will be added back
as one (1) share for every share of common stock if the shares were subject to options or stock
appreciation rights granted under the 2008 Plan or under the 2005 Plan, and as 1.2 shares for every
share of common stock if the shares were subject to awards other than
F-23
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
options
or stock appreciation rights granted under the 2008 Plan or the 2005 Plan. The following shares of common
stock will not be added to the shares issuable under the 2008 Plan: (i) shares tendered by the
participant or withheld by the Company in payment of the purchase price of an option, (ii) shares
tendered by the participant or withheld by the Company to satisfy tax withholding with respect to
an award, and (iii) shares subject to a stock appreciation right that are not issued in connection
with the stock settlement of the stock appreciation right on exercise. Shares of common stock under
awards made in substitution or exchange for awards granted by a company acquired by the Company, or
with which the Company combines, do not reduce the maximum number of shares that may be issued
under the 2008 Plan. In addition, if a company acquired by the Company, or with which the Company
combines, has shares remaining available under a plan approved by its stockholders, the available
shares (adjusted to reflect the exchange or valuation ratio in the acquisition or combination) may
be used for awards under the 2008 Plan and will not reduce the maximum number of shares of common
stock that may be issued under the 2008 Plan; provided, however that awards using such available
shares shall not be made after the date awards or grants could have been made under the
pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who
were not our employees or directors prior to the acquisition or combination.
Under the 2008 Plan, the purchase price of shares of common stock covered by a stock option cannot
be less than 100% of the fair market value of the common stock on the date the option is granted.
Fair market value of the common stock is generally equal to the closing price for the common stock
on the principal securities exchange on which the common stock is traded on the date the option is
granted (or if there was no closing price on that date, on the last preceding date on which a
closing price is reported). Option awards generally have ten-year contractual terms and vest over
four years based on continuous service; however, the 2005 Plan and the 2008 Plan allow for other
vesting periods and we have granted employees options where the requisite service period is three
years and we grant our directors options where the requisite service period is one year.
We cancelled 2,536,607 and 341,063 options in the years ended December 31, 2008 and 2007,
respectively, related to terminated employees and board directors. The shares underlying such
options were returned to and are available for re-issuance under the 2008 Plan pursuant to the
terms described above.
The only types of awards granted under the 2005 Plan and the 2008 Plan in the years ended December
31, 2008 and 2007 were stock options. A summary of all of our option activity as of December 31,
2008 and 2007 and of changes in options outstanding under the plans during the years then ended are
as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
| |
|
|
|
|
|
Weighted- |
|
|
Remaining |
|
|
Aggregate |
|
| |
|
|
|
|
|
Average |
|
|
Contractual |
|
|
Intrinsic |
|
| |
|
Shares |
|
|
Exercise Price |
|
|
Years |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2006 |
|
|
3,767,103 |
|
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
1,170,733 |
|
|
$ |
2.63 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(575,833 |
) |
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
Canceled/forfeited/expired |
|
|
(341,063 |
) |
|
$ |
3.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2007 |
|
|
4,020,940 |
|
|
$ |
2.60 |
|
|
|
6.90 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
2,880,500 |
|
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Cancelled/forfeited/expired |
|
|
(2,536,607 |
) |
|
$ |
1.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Options outstanding at December 31, 2008 |
|
|
4,364,833 |
|
|
$ |
1.77 |
|
|
|
7.09 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2008 |
|
|
2,126,952 |
|
|
$ |
2.67 |
|
|
|
5.82 |
|
|
|
— |
|
Options exercisable at December 31, 2007 |
|
|
2,153,968 |
|
|
$ |
2.29 |
|
|
|
5.30 |
|
|
|
— |
|
F-24
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
The weighted-average grant-date fair value of options granted during the years ended December 31,
2008 and 2007 was $0.49 and $2.63, respectively. As of December 31, 2008, there was approximately
$2.0 million of unamortized
compensation cost related to unvested stock option awards, which is expected to be recognized over
a weighted-average remaining period of approximately 3.0 years.
There were no options exercised during the year ended December 31, 2008. The total intrinsic value
of options exercised during the year ended December 31, 2007 was approximately $865,000, based on
the difference in the market price on the dates of exercise and the applicable option exercise
price. During the year ended December 31, 2007, we received $442,000 in cash from exercised
options under all stock-based payment arrangements. No tax benefit was realized for the tax
deductions from option exercises of the stock-based payment arrangements in the years ended
December 31, 2008 and 2007.
Our determination of fair value is affected by our stock price as well as a number of assumptions
that require judgment. The fair value of each option award is estimated on the date of grant using
the Black-Scholes option-valuation model. The assumptions used in the Black-Scholes
option-valuation model for option grants during the years ended December 31, 2008 and 2007 are as
follows:
| |
|
|
|
|
|
|
|
|
| |
|
Years Ended December 31, |
|
| |
|
2008 |
|
|
2007 |
|
Risk-free interest rate |
|
|
2.75 – 3.3 |
% |
|
|
4.6 – 4.8 |
% |
Dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
Expected volatility |
|
|
125 – 149 |
% |
|
|
137% – 138 |
% |
Weighted-average volatility |
|
|
146 |
% |
|
|
138 |
% |
Expected term (in
years) |
|
6.2 years |
|
|
6.1 years |
|
The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent
with the expected term of the option in effect at the time of the grant. We have not paid any
dividends on common stock since our inception and do not anticipate paying dividends on our common
stock in the foreseeable future. The expected option term is computed using the “simplified” method
as permitted under the provisions of SAB 107 and SAB 110. The expected volatility is based on the
historical volatility of our common stock and other factors. In 2006, we began using an alternative
historical volatility based on the daily close price of our common stock, which we determined was a
better indicator of volatility than the method used in the prior years. The effect of this change
on stock-based compensation was immaterial.
In 2007, we granted 15,000 options to consultants. No options were granted to consultants in 2008.
These option grants were valued as of the date at which the consultants’ performance is complete
using the Black-Scholes pricing model. The assumptions used in the Black-Scholes model for
non-employee option grants for the years ended December 31, 2008 and 2007 are as follows:
| |
|
|
|
|
|
|
|
|
| |
|
2008 |
|
|
2007 |
|
Risk-free interest rate |
|
|
3.3 – 3.7 |
% |
|
|
4.0 – 4.8 |
% |
Dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
Expected volatility |
|
|
147 |
% |
|
|
125% – 147 |
% |
Contractual term (in
years) |
|
6.5 – 7.3 years |
|
|
2.5 – 8.3 years |
|
We recognized approximately $5,000 and $2,000 in stock-based compensation expense associated with
non-employee options in the years ended December 31, 2008 and 2007, respectively.
F-25
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
The following table summarizes information concerning our outstanding and exercisable stock options
as of December 31, 2008:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Options Outstanding |
|
|
Options Exercisable |
|
| |
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Average |
|
|
Weighted- |
|
|
|
|
|
|
Weighted- |
|
| |
|
Number |
|
|
Remaining |
|
|
Average |
|
|
Number |
|
|
Average |
|
| |
|
Outstanding |
|
|
Contractual |
|
|
Exercise |
|
|
Exercisable |
|
|
Exercise |
|
| Range of Exercise Price |
|
in 000’s |
|
|
Life |
|
|
Price |
|
|
in 000’s |
|
|
Price |
|
$0.19 to $0.54 |
|
|
2,196 |
|
|
|
8.63 |
|
|
|
0.46 |
|
|
|
338 |
|
|
|
0.44 |
|
$2.28 to $2.75 |
|
|
1,442 |
|
|
|
5.65 |
|
|
|
2.52 |
|
|
|
1,171 |
|
|
|
2.50 |
|
$2.86 to $4.89 |
|
|
727 |
|
|
|
5.29 |
|
|
|
4.20 |
|
|
|
618 |
|
|
|
4.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,365 |
|
|
|
7.09 |
|
|
|
1.77 |
|
|
|
2,127 |
|
|
|
2.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan
The Purchase Plan was approved by our stockholders in 2005; however, we have not implemented the
Purchase Plan. The Purchase Plan allows all eligible employees to purchase shares of common stock
at 85% of the lower of the fair market value on the first or the last day of each offering period.
Employees may authorize us to withhold up to 15% of their compensation during any offering period,
subject to certain limitations. The maximum aggregate number of shares of common stock which may be
issued under the Purchase Plan is 3,173,634 as of December 31, 2008. This maximum number is subject
to an annual automatic increase beginning on January 1, 2006 equal to the lesser of (i) 1% of the
number of outstanding shares of common stock on such day, (ii) 750,000 or (iii) such other amount
as our board of directors may specify. At December 31, 2008, no shares of common stock have been
issued under the Purchase Plan. On January 1, 2009, the number of shares of common stock available
for issuance under the Purchase Plan increased by 750,000 in accordance with the provisions for
annual increases under the Purchase Plan.
Operating Leases
We are obligated under operating leases for office space and equipment. In July 2004, we entered
into a lease for our current office space in San Diego, California. In June 2005, we leased
additional space in the same facility. At December 31, 2008, the office lease requires a monthly
payment of approximately $21,000, excluding common area maintenance charges. The lease expires in
August 2009. We lease copiers and an automobile, which leases expire in 2010 and 2011,
respectively.
Rent expense was approximately $258,000 and $246,000 during the years ended December 31, 2008 and
2007, respectively. Future rental commitments under all operating leases are as follows:
| |
|
|
|
|
| Year Ending December 31, |
|
|
|
|
|
|
|
|
|
2009 |
|
$ |
192,731 |
|
2010 |
|
|
10,375 |
|
2011 |
|
|
2,452 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
205,558 |
|
|
|
|
|
F-26
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
| (10) |
|
Material License Agreements |
Theragenex Agreement
In October 2006, we entered into a license agreement with Theragenex, LLC. Under the agreement, we
granted Theragenex exclusive rights to develop and commercialize ANX-211 in the U.S. in exchange
for a licensing fee of $1.0 million ($0.5 million of which we received in January 2007 and $0.5
million of which was due in June 2007),
milestone payments and royalties. In May 2007, we received a letter from TRx Pharma, a subsidiary
of Theragenex, that we believed was intended to constitute notice of termination of the agreement
with Theragenex, though the letter did not explicitly state that it constituted notice of
termination. In its letter, TRx Pharma requested a refund of the initial $0.5 million payment and,
in subsequent discussions, indicated that it did not intend to pay the remaining $0.5 million. On
July 3, 2007, we notified Theragenex that, among other things, its failure to make the final $0.5
million payment constituted a material breach of the agreement. On August 9, 2007, we delivered a
letter to Theragenex confirming our termination of the agreement as a result of Theragenex’s
breach, pursuant to the terms of the agreement. On October 11, 2007, we filed a demand for
arbitration against Theragenex (doing business as TRx Pharma, LLC and/or TRx Pharmaceuticals, LLC)
and David M. Preston, founder, Chairman, President and Chief Executive Officer of Theragenex in his
individual capacity as the alter ego of Theragenex, seeking damages of up to $10 million with
respect to breach of the agreement. On November 8, 2007, Theragenex responded to our demand,
asserting numerous affirmative defenses counterclaiming intentional misrepresentation, negligent
misrepresentation and rescission and seeking a refund of its $0.5 million payment, plus interest,
rescission of the agreement and that we pay its reasonable attorneys fees and costs associated with
the action. Also on November 8, 2007, Mr. Preston objected to his participation and being named as
a respondent in the arbitration. In May 2008, we settled our dispute with Theragenex. In
consideration of and conditioned upon Theragenex paying us $0.6 million, we and Theragenex agreed
to jointly move to dismiss the underlying arbitration action, and in connection with dismissing the
arbitration, we and Theragenex agreed to release each other from any and all claims related to our
past relationship, including Theragenex’s license rights to the product.
We recognized revenue of $0.5 million for each of the years ended December 31, 2008 and 2007.
Revenue in 2007 represents nonrefundable licensing fees paid under the agreement with Theragenex.
Revenue in 2008 represents a portion of a settlement payment from Theragenex. We recognized $0.5
million as revenue in 2008, which represents a portion of the $0.6 million settlement payment,
because under the agreement Theragenex was required to pay a total nonrefundable, up front
licensing fee of $1.0 million ($0.5 million of which we received in January 2007 and $0.5 million
of which was due in June 2007) and because we met the criteria for revenue recognition. The
remainder of the settlement payment, $0.1 million, was recorded as other income.
| (11) |
|
Registration Payment Arrangement |
On July 21, 2005, we entered into a securities purchase agreement (the “Agreement”) with certain
accredited institutional investors (the “Purchasers”) for the sale of 10,810,809 shares of our
common stock (the “Shares”) at a purchase price of $1.85 per share for aggregate gross proceeds of
$19,999,997. In connection with this financing, we issued the Purchasers seven-year warrants to
purchase 10,810,809 shares of our common stock (the “Warrant Shares”) at an exercise price of $2.26
per share. We received net proceeds of $18,116,751, after deducting commissions and offering fees
and expenses, which included cash payments of $1,403,000 to placement agents and $283,246 in legal
and accounting fees.
Pursuant to the terms of the Agreement, if (i) a registration statement covering (A) all of the
Shares and the Warrant Shares and (B) any other shares of common stock issued or issuable in
respect to the Shares and the Warrant Shares because of stock splits, stock dividends,
reclassifications, recapitalizations or similar events (together, the “Registrable Shares”)
required to be covered thereby and required to be filed by us is (A) not filed with the SEC on or
before 45 days after the closing of such financing (a “Filing Failure”) or (B) if such registration
statement is not declared effective by the SEC on or before 90 days after the closing of such
financing (an “Effectiveness Failure”) or (ii) on any day after the effective date of the
registration statement sales of all the Registrable Shares required to be included on such
registration statement cannot be made (other than as permitted during a suspension pursuant to the
Agreement) pursuant to such registration statement (including, without limitation, because of a
failure to keep the registration statement effective, to disclose such information as is necessary
for sales to be made pursuant to such registration statement or to register sufficient number of
Shares) (a “Maintenance Failure”), then, we will be obligated, without limiting any other remedies
of any Purchaser, to pay as liquidated damages (the “Liquidated Damages”) for such failure and not
as a penalty to any Purchaser an amount in cash determined in accordance with the formula set forth
below:
| |
• |
|
For each 30-day period that a Filing Failure, Effectiveness Failure or
Maintenance Failure remains uncured, we will pay an amount equal to the purchase price
paid to us for all Shares then held by such Purchaser multiplied by 1% for the first
30-day period or any portion thereof and increasing by an
additional 1% with regard to each additional 30-day period until such Filing Failure,
Effectiveness Failure or Maintenance Failure is cured. |
F-27
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
| |
• |
|
For any partial 30-day period in which a Filing Failure, Effectiveness Failure
or Maintenance Failure exists but is cured prior to the end of the 30-day period, we
will pay the Purchasers a pro rata portion of the amount which would be due if the
failure continued for the entire 30-day period. For example, if the purchase price paid
for all Shares then held by a Purchaser is $5,000,000, then, (a) at the end of the 30th
day, the Liquidated Damages would be 1% or $50,000, (b) at the end of the 60th day, the
Liquidated Damages for the first 30-day period would have been 1% or $50,000 and for
the second 30-day period would be 2% or $100,000, and (c) at the end of the 105th day,
the Liquidated Damages for the first 30-day period would have been 1% or $50,000, for
the second 30-day period 2% or $100,000, for the third 30-day period 3% or $150,000,
and for the final 15-day period, 4% applied pro rata to such 15 days, or $100,000. |
There is no cap to the amount of Liquidated Damages that we may be obligated to pay. Payments to be
made pursuant to the July 2005 Registration Payment Arrangement will be due and payable to the
Purchasers at the end of each calendar month during which Liquidated Damages will have accrued. No
Liquidated Damages will be due or payable to a Purchaser in any event if as of the date of the
Filing Failure, Effectiveness Failure or Maintenance Failure such Purchaser could sell all of the
Registrable Shares such Purchaser then holds without registration by reason of subsection (k) of
Rule 144 under the Securities Act of 1933, as amended. Recent changes to Rule 144 eliminated
subsection (k) of Rule 144. These changes liberalized the rules governing the resale of securities
issued in private transactions; however, resales of securities held by affiliates are still subject
to the current public information, volume, manner of sale and notice requirements contained in Rule
144 and, as a result, we do not expect such changes to Rule 144 to necessarily reduce the potential
length of our payment obligations in the event of a Maintenance Failure.
The registration statement was filed and declared effective by the SEC on September 2, 2005, which
was within the allowed time. We have not incurred nor paid any Liquidated Damages in connection
with the July 2005 Registration Payment Arrangement.
On January 1, 2007, we adopted the provisions of FSP EITF 00-19-2. In December 2007, management
determined that it was not probable that we would have any payment obligation under the July 2005
Registration Payment Arrangement; therefore, no accrual for contingent obligation was required
under the provisions of FSP EITF 00-19-2. Accordingly, the warrant liability account was
eliminated and the comparative condensed consolidated financial statements of the prior periods and
as of December 31, 2006 were adjusted to apply the new method retrospectively.
The Company accounted for FSP EITF 00-19-2 appropriately by eliminating the warrant liability as of
December 31, 2007, but upon further review in 2008, management determined that it was not correct
to adjust the prior period comparative financial statements. Accordingly, the Company has made the
appropriate adjustments to reinstate the warrant liability accounting as originally recorded.
Due to our net loss for the years ended December 31, 2008 and 2007, and as we have recorded a full
valuation allowance against deferred tax assets, there was no provision or benefit for income taxes
recorded. There were no components of current or deferred federal, state or foreign tax provisions
for the years ended December 31, 2008 and 2007.
F-28
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
The income tax provision is different from that which would be obtained by applying the statutory
Federal income tax rate (34%) to income before income tax expense. The items causing this
difference for the periods are as follows:
| |
|
|
|
|
|
|
|
|
| |
|
2008 |
|
|
2007 |
|
Income tax expense at federal statutory rate |
|
$ |
9,060,000 |
|
|
$ |
7,503,000 |
|
State taxes |
|
|
(2,000 |
) |
|
|
(2,000 |
) |
R & D Credit |
|
|
310,000 |
|
|
|
628,000 |
|
Stock options |
|
|
(542,000 |
) |
|
|
(432,000 |
) |
Net operating true-ups |
|
|
1,600,000 |
|
|
|
— |
|
Other |
|
|
49,000 |
|
|
|
(152,000 |
) |
Change in federal valuation allowance |
|
|
(10,475,000 |
) |
|
|
(7,545,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tax Expense/(Benefit) on Continuing Operations |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
On July 13, 2006, the FASB issued FIN 48. Under FIN 48, the impact of an uncertain income tax
position on the income tax return must be recognized at the largest amount that is
more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain
income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
Additionally, FIN 48 provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. We adopted the provisions of FIN 48 on January 1, 2007. There
were no unrecognized tax benefits as of the date of adoption. As of December 31, 2008 we continue
to have no unrecognized tax benefits. As a result of the implementation of FIN 48, we did not
recognize an increase in the liability for unrecognized tax benefits. There are no unrecognized tax
benefits included in the balance sheet that would, if recognized, affect the effective tax rate.
Our policy is to recognize interest and/or penalties related to income tax matters in income tax
expense. We had no accrual for interest or penalties on our balance sheets at December 31, 2008 and
2007, and has not recognized interest and/or penalties in the statement of operations for the year
ended December 31, 2008.
We are subject to taxation in the United States and the state of California. All of our tax years
are subject to examination by the United States and California tax authorities due to the carry
forward of unutilized net operating losses and R&D credits.
The adoption of FIN 48 did not impact our consolidated financial condition, results of operations
or cash flows. At December 31, 2008, we had net deferred tax assets of approximately $39.6 million.
Due to uncertainties surrounding our ability to generate future taxable income to realize these
assets, a full valuation has been established to offset the net deferred tax asset.
Subsequent to the filing of our 2007 Form 10K, we completed an Internal Revenue Code Section 382
study. As a result of this study, we determined that based upon ownership changes, only $158,000 of
the $4.5 million net operating losses we had previously removed from the deferred tax assets in
2007 would expire unused. Accordingly, we have re-established approximately $1.6 million of the
deferred tax assets related to these net operating losses with a corresponding increase to the
valuation allowance.
F-29
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
Deferred income taxes reflect the net tax effect of temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes. Significant components of deferred tax assets and liabilities at December 31, 2008
and 2007 are as follows:
| |
|
|
|
|
|
|
|
|
| |
|
December 31, |
|
| |
|
2008 |
|
|
2007 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Accrued expenses |
|
$ |
248,776 |
|
|
$ |
150,210 |
|
Stock options expense under SFAS No. 123 |
|
|
1,677,809 |
|
|
|
1,675,824 |
|
Net operating loss carryforwards |
|
|
33,102,741 |
|
|
|
22,338,915 |
|
Income tax credit carryforwards |
|
|
2,262,374 |
|
|
|
1,729,194 |
|
Property, plant and equipment |
|
|
41,056 |
|
|
|
38,065 |
|
Intangibles |
|
|
2,285,263 |
|
|
|
1,535,487 |
|
Other |
|
|
6,553 |
|
|
|
577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
|
39,624,572 |
|
|
|
27,468,272 |
|
|
|
|
|
|
|
|
|
|
Less: valuation allowance |
|
|
(39,624,572 |
) |
|
|
(27,468,272 |
) |
|
|
|
|
|
|
|
Total deferred tax assets, net of valuation allowance |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
We have established a valuation allowance against our deferred tax asset due to the uncertainty
surrounding the realization of such assets. Management periodically evaluates the recoverability of
the deferred tax asset. At such time as it is determined that it is more likely than not that the
deferred tax assets are realizable, the valuation allowance will be reduced. We have recorded a
valuation allowance of approximately $39.6 million as of December 31, 2008 to reflect the estimated
amount of deferred taxes that may not be realized. We increased the valuation allowance by
approximately $12.1 million for the year ended December 31, 2008. The deferred tax asset for the
net operating losses and the related valuation allowance includes approximately $47,000 related to
stock option deductions, the benefit of which may eventually be credited to equity. As a result of
our subsequent adoption of SFAS 123(R), we recognize windfall tax benefits associated with the
exercise of stock options directly to stockholders’ equity only when realized. Accordingly, as we
are in a cumulative loss position, deferred tax assets have not been recognized for net operating
loss carryforwards resulting from windfall tax benefits generated under SFAS 123(R). At December
31, 2008, we do not have any windfall tax benefits under SFAS 123(R).
At December 31, 2008, we had Federal and California tax loss carryforwards of approximately $90.4
million and $41.4 million, respectively. The Federal and California net operating loss
carryforwards begin to expire in 2020 and 2012 respectively, if unused. At December 31, 2008, we
had Federal and state tax credit carryforwards of approximately $1.6 million and $973,000,
respectively. The federal credits will begin to expire in 2024. The California research and
experimentation credit does not expire.
In the normal course of business, we may become subject to lawsuits and other claims and
proceedings. Such matters are subject to uncertainty and outcomes are often not predictable with
assurance.
We have a defined contribution savings plan pursuant to Section 401(k) of the IRC. The plan is for
the benefit of all qualifying employees and permits voluntary contributions by employees up to 100%
of eligible compensation, subject to the Internal Revenue Service (“IRS”)-imposed maximum limits.
Up until January 1, 2008, we were required to make matching contributions in the amount of 100% of
employee contributions to 3% of eligible compensation and 50% of employee contributions between 3%
and 5% of eligible compensation. Effective January 1, 2008, our 401(k) Plan was amended, which
required us to make matching contributions equal to 100% of employee contributions up to 6% of
eligible compensation, limited by the IRS-imposed maximum. We incurred total expenses of
approximately $218,150 and $118,000 in employer matching contributions in 2008 and 2007,
respectively.
F-30
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
We operate our business on the basis of a single reportable segment, which, fundamentally, is the
business of in-licensing, developing and commercializing proprietary product candidates for the
treatment of cancer. We evaluate our company as a single operating segment. The majority of our
operating activities and work performed by our employees are currently conducted from a single
location in the U.S. We recognized revenues of $0.5 million in each of 2008 and 2007, which
revenues were derived solely from license fees under a license agreement with Theragenex, LLC,
which we terminated in August 2007.
| (16) |
|
Summary of Quarterly Financial Data (unaudited) |
The following is a summary of the unaudited quarterly results of operations for the years ended
December 31, 2008 and 2007:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarterly statement of operations data |
|
Quarters Ended |
|
| for 2008 (unaudited): |
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
Licensing revenue |
|
$ |
— |
|
|
$ |
500,000 |
|
|
$ |
— |
|
|
$ |
— |
|
Gross margin |
|
|
— |
|
|
|
500,000 |
|
|
|
— |
|
|
|
— |
|
Loss from operations |
|
|
(6,232,280 |
) |
|
|
(6,691,199 |
) |
|
|
(6,856,013 |
) |
|
|
(7,530,343 |
) |
Net loss |
|
|
(5,933,072 |
) |
|
|
(6,425,530 |
) |
|
|
(6,776,863 |
) |
|
|
(7,512,028 |
) |
Basic and diluted net loss per share |
|
$ |
(0.07 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.08 |
) |
Basic and diluted weighted average
number of shares of common stock
outstanding |
|
|
90,252,572 |
|
|
|
90,252,572 |
|
|
|
90,252,572 |
|
|
|
90,252,572 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarterly statement of operations data |
|
Quarters Ended |
|
| for 2007 (unaudited): |
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
Licensing revenue |
|
$ |
500,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Gross margin |
|
|
500,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss from operations |
|
|
(5,745,998 |
) |
|
|
(6,299,042 |
) |
|
|
(6,446,415 |
) |
|
|
(5,819,590 |
) |
Net loss |
|
|
(5,123,814 |
) |
|
|
(5,722,828 |
) |
|
|
(5,914,124 |
) |
|
|
(5,381,274 |
) |
Basic and diluted net income (loss) per share |
|
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.06 |
) |
Basic and diluted weighted average number of
shares of common stock outstanding |
|
|
89,676,739 |
|
|
|
89,706,739 |
|
|
|
90,007,509 |
|
|
|
90,252,572 |
|
| (17) |
|
Severance Related Expenses |
In February 2008, a letter agreement regarding terms of separation of employment with James A.
Merritt, our former president and chief medical officer, became effective. Dr. Merritt’s
employment relationship with us ended in January 2008. As a result of his separation, we recorded
$185,916 in severance payments and related employer taxes and $16,038 for payments to cover the
health, welfare and retirement benefits that we would have incurred had Dr. Merritt remained
employed by us for 6 months after the end of our employment relationship. Severance-related
charges were recorded in the first, second and third quarters of 2008.
In April 2008, a letter agreement regarding terms of separation of employment with Gregory P.
Hanson, our former chief financial officer, treasurer and senior vice president, became effective.
Mr. Hanson’s employment relationship with us ended in April 2008. As a result of his separation, we
recorded $128,157 in severance payments and related employer taxes and $20,997 for payments to
cover the health, welfare and retirement benefits that we would have incurred had Mr. Hanson
remained employed by us for 6 months after the end of our employment relationship. Total
severance-related charges were recorded in the second, third and fourth quarters of 2008.
In October 2008, as part of a restructuring to reduce operating costs, we completed a work force
reduction of nine employees in October 2008. As a result of the reduction in force, in accordance
with FAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” we recorded
severance-related charges of $403,000, of which $384,000 was recorded as research and development
expenses and the remainder as selling, general and administrative expenses. Of the
severance-related charges, $372,000 relates to severance payments and related employer taxes, and
$31,000 relates to health benefit allowance payments that eligible former employees may use, at
their discretion, to pay the premiums required to continue their group health care coverage under
COBRA or any other health care related expenses. Severance-related charges of $244,000 were
recorded in the fourth quarter of 2008 and the remainder will be recorded in the first and second
quarters of 2009.
F-31
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
In December 2008, the Confidential Separation Agreement and General Release of All Claims governing
the terms of separation of employment with Evan M. Levine, our former chief executive officer and
president and member of our Board of Directors, became effective. Mr. Levine’s employment
relationship with us ended in October 2008 and he resigned from our Board of Directors in December
2008. As a result of his separation, we recorded $275,752 in severance payments and related
employer taxes, $19,870 in health benefit allowance payments that Mr. Levine may use, at his
discretion, to pay the premiums required to continue his group health care coverage under COBRA or
any other health care related expenses and an additional payment of $110,650 in lieu of issuing
shares of stock. Severance-related charges were recorded in the fourth quarter of 2008.
In January 2009, the Confidential Separation Agreement and General Release of All Claims governing
the terms of separation of employment with Mark N.K. Bagnall, our former executive vice president
and chief financial officer, which was agreed to by Mr. Bagnall in December 2008, became effective.
Mr. Bagnall’s employment relationship with us ended in December 2008. As a result of his
separation, we recorded $174,787 in severance payments and related employer taxes and $18,352 in
health benefit allowance payments that Mr. Bagnall may use, at his discretion, to pay the premiums
required to continue his group health care coverage under COBRA or any other health care related
expenses. Severance-related charges were recorded in the fourth quarter of 2008.
In January 2009, in order to further reduce operating costs, we completed a work force reduction of
six employees. As a result of the reduction in force, we estimate recording severance-related
charges of approximately $192,000, of which we estimate approximately $95,000 will be recorded as
research and development and the remainder as selling, general and administrative expenses. Of the
severance-related charges, we estimate that approximately $173,000 will relate to severance
payments and related employer taxes and approximately $19,000 will relate to health benefit
allowance payments that eligible former employees may use, at their discretion, to pay the premiums
required to continue their group health care coverage under COBRA or any other health care related
expenses. We estimate that severance-related charges of approximately $132,000 will be recorded in
the first quarter of 2009 and the remainder will be recorded in the second quarter of 2009. The
severance-related charges that we expect to incur in connection with the reduction in force are
subject to a number of assumptions and actual results may differ. We may also incur other charges
not currently contemplated due to events that may occur as a result of, or associated with, the
restructuring.
In January 2009, we entered into retention and incentive agreements with seven employees, including
our executive officers, and granted under the 2008 Plan restricted stock units to these employees
that represented the right to receive in the aggregate 3,700,000 shares of our common stock,
including 1,200,000 units to our chief business officer and senior vice president, 850,000 units to
our general counsel, 650,000 units to our senior vice president of operations and 450,000 units to
our vice president of regulatory and quality. These units will vest immediately prior to a
strategic transaction (as defined in the documentation evidencing the grant of the units). The
retention and incentive agreements and associated restricted stock units awards are primarily
intended to reinforce and encourage these employees’ continued employment with and dedication to
our company without distraction from the possibility of involuntary termination or a change in
control and related events and circumstances.
In February 2009, our Board of Directors appointed Brian M. Culley, our chief business officer and
senior vice president, to additionally serve as our principal executive officer and appointed Mr.
Bagnall to additionally serve as our principal financial officer and principal accounting officer.
In February 2009, we announced that we have received written indications of interest from numerous
companies representing a range of strategic transactions and currently are evaluating all proposals
and options. We also indicated that continued cost-containment measures may impact the timeline of
our regulatory filings.
F-32
ADVENTRX Pharmaceuticals, Inc. and Subsidiaries
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
December 31, 2008
In
March 2009, we announced that, effective April 3, 2009, we
will reduce our full-time workforce to five employees and
will discontinue substantially all of our development activities and fundamental business operations to
provide additional time to consummate a strategic transaction or otherwise obtain financing. Our
remaining employees, which consist of our chief business officer and
senior vice president, our
general counsel, our senior vice president of operations, our vice president of regulatory affairs
and quality and our manager of accounting, will focus their efforts primarily on
continuing to evaluate and execute strategic options. We stated that, along with the reductions we
implemented in October 2008 and January 2009, and our prior cost-containment measures, the
reduction and other efforts will extend our cash cliff and increase the opportunity for us to close
a strategic transaction with one of the parties with whom we currently are in discussions or
another company that we identify in the future.
In
March 2009, we announced that we and SDP had entered into a license agreement (the “License
Agreement”) with Shin Poong Pharmaceutical Co., Ltd., a company organized under the laws of the
Republic of Korea (“Shin Poong”), pursuant to which we granted to Shin Poong an exclusive license,
including the right to sublicense, to research, develop, make, have made, use, offer for sale, sell
and import licensed products, in each case solely for the treatment of cancer by intravenous
administration of formulations of docetaxel as emulsified products and solely in South Korea. Under
the terms of the License Agreement, we will receive an upfront licensing fee of $300,000, a
regulatory milestone payment of either $200,000 or $400,000 (depending on whether Shin Poong is
required by the Korea Food and Drug Administration to conduct a bioequivalence or clinical study in
human subjects prior to receipt of regulatory approval) upon receipt of regulatory approval for
marketing a licensed product in South Korea, one-time commercial milestone payments tied to annual
net sales of licensed products in an aggregate amount of up to $1,500,000 and royalty payments on
net sales of licensed products. Shin Poong is responsible for all development and commercial
activities related to ANX-514 in South Korea. If Shin Poong is required by the Korea Food and Drug
Administration to conduct a bioequivalence or clinical trial in human subjects prior to receipt of
regulatory approval and we elect not to supply product to conduct such trial, which supply
obligation is subject to limitations, we will pay Shin Poong $100,000.
F-33
Exhibit Index
| |
|
|
|
|
| Exhibit |
|
Description |
| |
|
|
|
|
| |
2.1 |
(1) |
|
Agreement and Plan of Merger, dated April 7, 2006, among the registrant, Speed Acquisition,
Inc., SD Pharmaceuticals, Inc. and certain individuals named therein (including exhibits
thereto) |
| |
|
|
|
|
| |
3.1 |
(2) |
|
Amended and Restated Certificate of Incorporation of the registrant |
| |
|
|
|
|
| |
3.2 |
(3) |
|
Amended and Restated Bylaws of the registrant (formerly known as Biokeys Pharmaceuticals, Inc.) |
| |
|
|
|
|
| |
4.1 |
(4) |
|
Form of Registration Rights Agreement entered into in October and November 2001 (including the
original schedule of holders) |
| |
|
|
|
|
| |
4.2 |
(5) |
|
$2.50 Warrant to Purchase Common Stock issued on April 12, 2002 to Emisphere Technologies, Inc. |
| |
|
|
|
|
| |
4.3 |
(4) |
|
Form of $0.60 Warrant to Purchase Common Stock issued May 28, 2003 (including the original
schedule of holders) |
| |
|
|
|
|
| |
4.4 |
(4) |
|
Form of $1.25 Warrant to Purchase Common Stock issued between October 15, 2003 and December 29,
2003 (including the original schedule of holders) |
| |
|
|
|
|
| |
4.5 |
(4) |
|
Common Stock and Warrant Purchase Agreement, dated as of April 5, 2004, among the registrant
and the Investors (as defined therein) |
| |
|
|
|
|
| |
4.6 |
(4) |
|
Registration Rights Agreement, dated April 5, 2004, among the registrant and the Investors (as
defined therein) |
| |
|
|
|
|
| |
4.7 |
(4) |
|
Form of $2.00 A-1 Warrant to Purchase Common Stock issued April 8, 2004 (including the original
schedule of holders) |
| |
|
|
|
|
| |
4.8 |
(4) |
|
Form of $2.50 A-2 Warrant to Purchase Common Stock issued April 8, 2004 (including the original
schedule of holders) |
| |
|
|
|
|
| |
4.9 |
(6) |
|
Common Stock and Warrant Purchase Agreement, dated April 8, 2004, between the registrant and CD
Investment Partners, Ltd. |
| |
|
|
|
|
| |
4.10 |
(6) |
|
Registration Rights Agreement, dated April 8, 2004, between the registrant and CD Investment
Partners, Ltd. |
| |
|
|
|
|
| |
4.11 |
(6) |
|
$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to CD Investment Partners,
Ltd. |
| |
|
|
|
|
| |
4.12 |
(6) |
|
$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to Burnham Hill Partners |
| |
|
|
|
|
| |
4.13 |
(6) |
|
$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to Ernest Pernet |
| |
|
|
|
|
| |
4.14 |
(6) |
|
$2.00 A-1 Warrant to Purchase Common Stock issued on April 8, 2004 to W.R. Hambrecht + Co., LLC |
| |
|
|
|
|
| |
4.15 |
(7) |
|
Common Stock and Warrant Purchase Agreement, dated April 19, 2004, between the registrant and
Franklin M. Berger |
| |
|
|
|
|
| |
4.16 |
(7) |
|
Registration Rights Agreement, dated April 19, 2004, between the registrant and Franklin M.
Berger |
| |
|
|
|
|
| |
4.17 |
(7) |
|
$2.00 A-1 Warrant to Purchase Common Stock issued on April 19, 2004 to Franklin M. Berger |
| |
|
|
|
|
| |
4.18 |
(8) |
|
Securities Purchase Agreement, dated July 21, 2005, among the registrant and the Purchasers (as
defined therein) |
| |
|
|
|
|
| |
4.19 |
(8) |
|
Rights Agreement, dated July 27, 2005, among the registrant, the Icahn Purchasers and Viking
(each as defined therein) |
| |
|
|
|
|
| |
4.20 |
(9) |
|
First Amendment to Rights Agreement, dated September 22, 2006, among the registrant and the
Icahn Purchasers (as defined therein) |
| |
|
|
|
|
| |
4.21 |
(10) |
|
Second Amendment to Rights Agreement, dated February 25, 2008, among the registrant and the
Icahn purchasers (as defined therein) |
| |
|
|
|
|
| |
4.22 |
(8) |
|
Form of $2.26 Common Stock Warrant issued on July 27, 2005 (including the original schedule of
holders) |
| |
|
|
|
|
| Exhibit |
|
Description |
| |
|
|
|
|
| |
4.23 |
(8) |
|
Form of $2.26 Common Stock Warrant issued on July 27, 2005 (including the original schedule of
holders) |
| |
|
|
|
|
| |
4.24 |
(12) |
|
$0.50 Warrant (WC-291) to Purchase Common Stock transferred on June 15, 2005 to S. Neborsky and
R Neborsky TTEE Robert J. Neborsky MD Inc Comb Retirement Trust |
| |
|
|
|
|
| |
4.25 |
(11) |
|
$0.50 Warrant (WC-292) to Purchase Common Stock transferred on June 15, 2005 to S. Neborsky and
R Neborsky TTEE Robert J. Neborsky MD Inc Comb Retirement Trust |
| |
|
|
|
|
| |
4.26 |
(11) |
|
$2.50 Warrant to Purchase Common Stock issued on October 22, 2004 to Thomas J. DePetrillo |
| |
|
|
|
|
| |
10.1 |
#(12) |
|
2005 Equity Incentive Plan |
| |
|
|
|
|
| |
10.2 |
#(13) |
|
Form of Stock Option Agreement under the 2005 Equity Incentive Plan |
| |
|
|
|
|
| |
10.3 |
#(14) |
|
Form of Stock Option Agreement under the 2005 Equity Incentive Plan (for director option grants
beginning in 2008 |
| |
|
|
|
|
| |
10.4 |
#(15) |
|
Form of Stock Option Agreement under the 2005 Equity Incentive Plan (for option grants to
employees approved in March 2008) |
| |
|
|
|
|
| |
10.5 |
#(2) |
|
Form of Restricted Share Award Agreement under the 2005 Equity Incentive Plan |
| |
|
|
|
|
| |
10.6 |
#(13) |
|
2005 Employee Stock Purchase Plan |
| |
|
|
|
|
| |
10.7 |
#(13) |
|
Form of Subscription Agreement under the 2005 Employee Stock Purchase Plan |
| |
|
|
|
|
| |
10.8 |
#(16) |
|
2008 Omnibus Incentive Plan |
| |
|
|
|
|
| |
10.9 |
#(17) |
|
Form of Non-Statutory Stock Option Grant Agreement (for directors) under the 2008 Omnibus
Incentive Plan |
| |
|
|
|
|
| |
10.10 |
#(17) |
|
Form of Non-Statutory/Incentive Stock Option Grant Agreement (for consultants / employees)
under the 2008 Omnibus Incentive Plan |
| |
|
|
|
|
| |
10.11 |
#(15) |
|
2008 Incentive Plan |
| |
|
|
|
|
| |
10.12 |
*(18) |
|
Option and License Agreement, dated January 23, 1998, between the registrant and the University
of Southern California |
| |
|
|
|
|
| |
10.13 |
(3) |
|
First Amendment to License Agreement, dated August 16, 2000, between the registrant and the
University of Southern California |
| |
|
|
|
|
| |
10.14 |
*(18) |
|
Option and License Agreement, dated August 17, 2000, between the registrant and the University
of Southern California |
| |
|
|
|
|
| |
10.15 |
*(19) |
|
Amendment to Option and License Agreement, dated April 21, 2003, between the registrant and the
University of Southern California |
| |
|
|
|
|
| |
10.16 |
*(20) |
|
Second Amendment to Option and License Agreement, dated January 25, 2007, between the
registrant and the University of Southern California |
| |
|
|
|
|
| |
10.17 |
*(2) |
|
Agreement, effective as of May 1, 2005, between the registrant and Pharm-Olam International Ltd. |
| |
|
|
|
|
| |
10.18 |
(2) |
|
Amendment dated July 19, 2005 to the Agreement between the registrant and Pharm-Olam
International Ltd. |
| |
|
|
|
|
| |
10.19 |
(21) |
|
License Agreement, dated October 20, 2006, between the registrant, through its wholly-owned
subsidiary SD Pharmaceuticals, Inc., and Theragenex, LLC |
| |
|
|
|
|
| |
10.20 |
(14) |
|
License Agreement, dated December 10, 2005, between SD Pharmaceuticals, Latitude
Pharmaceuticals and Andrew Chen, including a certain letter, dated November 20, 2007,
clarifying the scope of rights thereunder |
| |
|
|
|
|
| |
10.21 |
(22) |
|
Standard Multi-Tenant Office Lease — Gross, dated June 3, 2004, between the registrant and
George V. Casey & Ellen M. Casey, Trustees of the Casey Family Trust dated June 22, 1998 |
| |
|
|
|
|
| |
10.22 |
(2) |
|
First Amendment to the Standard Multi-Tenant Office Lease — Gross, dated June 3, 2004 between
the registrant and George V. & Ellen M. Casey, Trustees of the Casey Family Trust dated June
22, 1998 |
| |
|
|
|
|
| Exhibit |
|
Description |
| |
|
|
|
|
| |
10.23 |
#(23) |
|
Offer letter, dated March 5, 2003, to Joan M. Robbins |
| |
|
|
|
|
| |
10.24 |
# |
|
Confidential Separation Agreement and General Release of All Claims, effective December 4,
2008, between the registrant and Joan M. Robbins |
| |
|
|
|
|
| |
10.25 |
#(24) |
|
Offer letter, dated November 15, 2004, to Brian M. Culley |
| |
|
|
|
|
| |
10.26 |
#(25) |
|
Severance Agreement and Release of All Claims, dated September 7, 2006, with Carrie Carlander |
| |
|
|
|
|
| |
10.27 |
#(25) |
|
Consulting Agreement, dated September 7, 2006, with Carrie Carlander |
| |
|
|
|
|
| |
10.28 |
#(25) |
|
Offer letter, dated September 7, 2006, to James A. Merritt |
| |
|
|
|
|
| |
10.29 |
#(14) |
|
Letter agreement regarding terms of separation with James A. Merritt, effective as of February
12, 2008 |
| |
|
|
|
|
| |
10.30 |
#(25) |
|
Form of Stock Option Agreement between the registrant and James A. Merritt (included in Exhibit
10.28) |
| |
|
|
|
|
| |
10.31 |
#(26) |
|
Offer letter, dated December 13, 2006, to Gregory P. Hanson |
| |
|
|
|
|
| |
10.32 |
#(26) |
|
Stock Option Agreement, effective December 20, 2006, between the registrant and Gregory P.
Hanson |
| |
|
|
|
|
| |
10.33 |
#(27) |
|
Letter Agreement regarding terms of separation with Gregory P. Hanson, dated April 2, 2008 |
| |
|
|
|
|
| |
10.34 |
#(27) |
|
Consulting Agreement, dated April 2, 2008, with Gregory P. Hanson |
| |
|
|
|
|
| |
10.35 |
#(17) |
|
Offer letter, dated April 1, 2008, to Mark N.K. Bagnall (including Exhibits A, B and C thereto) |
| |
|
|
|
|
| |
10.36 |
# |
|
Confidential Separation Agreement and General Release of All Claims, effective December 31,
2008, between the registrant and Evan M. Levine, including letter, dated November 7, 2008,
related thereto |
| |
|
|
|
|
| |
10.37 |
(21) |
|
Form of Director and Officer Indemnification Agreement |
| |
|
|
|
|
| |
10.38 |
#(28) |
|
Director compensation policy |
| |
|
|
|
|
| |
10.39 |
(29) |
|
Placement Agency Agreement, dated November 2, 2006, among the registrant, ThinkEquity Partners
LLC and Fortis Securities LLC |
| |
|
|
|
|
| |
21.1 |
|
|
List of Subsidiaries |
| |
|
|
|
|
| |
23.1 |
|
|
Consent of J.H. Cohn LLP, Independent Registered Public Accounting Firm |
| |
|
|
|
|
| |
31.1 |
|
|
Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) |
| |
|
|
|
|
| |
31.2 |
|
|
Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) |
| |
|
|
|
|
| |
32.1 |
± |
|
Certification of principal executive officer and principal financial officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
| * |
|
Indicates that confidential treatment has been requested or granted to certain portions,
which portions have been omitted and filed separately with the SEC |
| |
| # |
|
Indicates management contract or compensatory plan |
| |
| ± |
|
These certifications are being furnished solely to accompany this
report pursuant to 18 U.S.C. 1350, and are not being filed for
purposes of Section 18 of the Securities Exchange Act of 1934 and are
not to be incorporated by reference into any filing of the registrant,
whether made before or after the date hereof, regardless of any
general incorporation language in such filing. |
| |
| (1) |
|
Filed with the registrant’s Amendment No. 1 to Current Report on Form 8-K/A on May 1, 2006
(SEC file number 001-32157-06796248) |
| |
| (2) |
|
Filed with the registrant’s Annual Report on Form 10-K on March 16, 2006 (SEC file number
001-32157-06693266) |
| |
| (3) |
|
Filed with the registrant’s Current Report on Form 8-K on December 15, 2008 (SEC file number
001-32157-081249921) |
| |
|
|
| (4) |
|
Filed with the registrant’s Registration Statement on Form S-3 on June 30, 2004 (SEC file
number 333-117022-03848890) |
| |
| (5) |
|
Filed with the registrant’s Amendment No. 1 to Quarterly Report on Form 10-Q/A on October 30,
2006 (SEC file number 001-32157-061170484) |
| |
| (6) |
|
Filed with the registrant’s Current Report on Form 8-K/A on April 13, 2004 (SEC file number
000-33219-04730584) |
| |
| (7) |
|
Filed with the registrant’s Quarterly Report on Form 10-QSB on May 12, 2004 (SEC file number
001-32157-04797806) |
| |
| (8) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on August 12, 2005 (SEC file number
001-32157-051022046) |
| |
| (9) |
|
Filed with the registrant’s Current Report on Form 8-K on September 22, 2006 (SEC file number
001-32157-061103268) |
| |
| (10) |
|
Filed with the registrant’s Current Report on Form 8-K on February 25, 2008 (SEC file number
001-32157-08638638) |
| |
| (11) |
|
Filed with the registrant’s Registration Statement on Form S-3 on August 26, 2005 (SEC file
number 333-127857-051050073) |
| |
| (12) |
|
Filed with the registrant’s Annual Report on Form 10-K on March 15, 2007 (SEC file number
001-32157-07697283) |
| |
| (13) |
|
Filed with the registrant’s Registration Statement on Form S-8 on July 13, 2005 (SEC file
number 333-126551-05951362) |
| |
| (14) |
|
Filed with registrant’s Annual Report on Form 10-K on March 17, 2008 (SEC file number
001-32157-08690952) |
| |
| (15) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on May 12, 2008 (SEC file number
001-32157-08820541) |
| |
| (16) |
|
Filed with the registrant’s Current Report on Form 8-K on June 7, 2008 (SEC file number
001-32157-08874724) |
| |
| (17) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on August 11, 2008 (SEC file number
001-32157-081005744) |
| |
| (18) |
|
Filed with the registrant’s Registration Statement on Form 10SB/A on January 14, 2002 (SEC
file number 000-33219-2508012) |
| |
| (19) |
|
Filed with the registrant’s Quarterly Report on Form 10-QSB on August 14, 2003 (SEC file
number 000-33219-03848890) |
| |
| (20) |
|
Filed with the registrant’s Quarterly Report on Form 10-Q on May 8, 2007 (SEC file number
001-32157-07829156) |
| |
| (21) |
|
Filed with the registrant’s Current Report on Form 8-K on October 23, 2006 (SEC file number
001-32157-061156993) |
| |
| (22) |
|
Filed with the registrant’s Quarterly Report on Form 10-QSB on August 10, 2004 (SEC file
number 001-32157-04963741) |
| |
| (23) |
|
Filed with the registrant’s Annual Report on Form 10-KSB on April 16, 2003 (SEC file number
000-33219-03651464) |
| |
| (24) |
|
Filed with the registrant’s Annual Report on Form 10-KSB on March 31, 2005 (SEC file number
001-32157-05719975) |
| |
| (25) |
|
Filed with the registrant’s Current Report on Form 8-K on September 8, 2006 (SEC file number
001-32157-061082484) |
| |
| (26) |
|
Filed with the registrant’s Current Report on Form 8-K on December 20, 2006 (SEC file number
001-32157-061290689) |
| |
| (27) |
|
Filed with the registrant’s Current Report on Form 8-K on April 16, 2008 (SEC file number
001-32157-08760483) |
| |
| (28) |
|
Filed with the registrant’s Current Report on Form 8-K on June 23, 2006 (SEC file number
001-32157-06922676) |
| |
| (29) |
|
Filed with the registrant’s Current Report on Form 8-K on November 3, 2006 (SEC file number
001-32157-061184445) |