fs1_soligenix.htm
As
filed with the Securities and Exchange Commission on October 7, 2009
Registration
No. 333-__________
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________________________________________________
FORM S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
______________________________________________________
Soligenix,
Inc.
(Name of
registrant as specified in its charter)
________________________________________________________
| |
Delaware |
|
2834 |
|
41-1505029 |
|
| |
(State or other
jurisdiction of
incorporation or
organization)
|
|
(Primary Standard
Industrial
Classification Code
Number)
|
|
(I.R.S.
EmployerI
dentification
No.)
|
|
Soligenix,
Inc.
29
Emmons Drive Suite C-10
Princeton,
New Jersey 08540
(609)
538-8200
(Address,
including zip code, and telephone number, including area code,
of
registrant’s principal executive offices)
Christopher
J. Schaber, Ph.D.
President
and Chief Executive Officer
Soligenix,
Inc.
29
Emmons Drive Suite C-10
Princeton,
New Jersey 08540
(609)
538-8200
(Name,
address, including zip code, and telephone number,
including area code, of agent for
service)
______________________________________________________
with
copies to:
Leslie
J. Croland, Esq.
Edwards
Angell Palmer & Dodge LLP
One
North Clematis Street, Suite 400
West
Palm Beach, Florida 33401-5552
(561)
833-7700
______________________________________________________
Approximate date of
commencement of proposed sale to the public: From time to time, at the discretion of
the selling stockholders, after the effective date of this registration
statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box: ý
If this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
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
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer |
o |
Accelerated filer |
¨ |
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
¨ |
Smaller reporting
company |
x |
CALCULATION
OF REGISTRATION FEE
|
Title
of each class of
securities to be registered
|
|
Amount
to be registered (1)
|
|
Proposed
maximum offering price per unit (2)
|
|
Proposed
maximum aggregate offering price (2)
|
|
Amount
of registration fee(2)
|
|
Common
Stock,
$.001
par value per share
|
|
36,755,075 |
|
|
|
$12,129,174.75
|
|
$677.00
|
| (1) |
Includes 17,352,569 shares of the Registrant’s common stock and up to
19,402,506 shares of the Registrant’s common stock issuable upon exercise
of warrants issued to certain Selling Stockholders, as defined in the
accompanying prospectus, on September 28, 2009. Pursuant to
Rule 416 under the Securities Act of 1933, as amended (the “Securities
Act”), to the extent additional shares of Registrant’s common stock may be
issued or issuable as a result of a stock split, stock dividend or other
distribution declared at any time by the Registrant while this
registration statement is in effect, this registration statement is hereby
deemed to cover all such additional shares of common stock.
|
| (2) |
Estimated solely for purposes
of calculating the registration fee according to Rule 457(c) under the
Securities Act on the basis of the average of the high and low prices of
the Registrant’s common stock quoted on the Over-the-Counter Bulletin
Board on October 5, 2009. |
The Registrant
hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to Section 8(a), may
determine.
|
The
information in this prospectus is not complete and may be changed. The
Selling Stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
SUBJECT
TO COMPLETION, DATED OCTOBER 7, 2009
PROSPECTUS
Soligenix,
Inc.
36,755,075
Shares
of Common Stock
This prospectus relates to the sale from time to time of up to
36,755,075 shares of our common stock by the selling
stockholders named in this prospectus in the section “Selling
Stockholders,” including their pledgees, assignees and
successors-in-interest, whom we collectively refer to in this document as
the “Selling Stockholders.” On September, 28, 2009, we
completed a private placement in which we issued to certain of the
Selling Stockholders an aggregate of 17,352,569 shares of our common
stock, together with warrants to purchase up to 8,557,788 shares of our
common stock. As part of the compensation received for
its assistance in the private placement, the placement agent received
warrants to purchase 543,478 shares of our common stock. The common stock
offered by this prospectus shall be adjusted to cover any additional
securities as may become issuable to prevent dilution resulting from stock
splits, stock dividends or similar transactions. The prices at which the
Selling Stockholders may sell the shares will be determined by the
prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the
sale of any of the shares covered by this prospectus unless warrants are
exercised. References in this prospectus to the “Company,” “we,” “our,”
and “us” refer to Soligenix, Inc.
On September 28, 2009, we changed our name from “DOR BioPharma,
Inc.” to “Soligenix, Inc.” Our common stock is quoted on the
Over-the-Counter Bulletin Board (“OTCBB”) under the symbol " SNGX." On
October 5, 2009, the last reported sale price for our common stock as
quoted on the OTCBB was $0.33 per share.
Investing in our common stock
involves certain risks. See “Risk Factors” beginning on
page 4 for a discussion of these
risks.
Neither
the Securities and Exchange Commission nor any state securities commission
has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Soligenix,
Inc.
29
Emmons Drive, Suite C-10
Princeton,
New Jersey 08540
(609)
538-8200
|
|
Description
|
Page
|
|
|
|
|
|
1
|
|
|
2
|
|
|
4
|
|
|
14
|
|
|
30
|
|
|
42
|
|
|
45
|
|
|
49
|
|
|
51
|
|
|
54
|
|
|
54
|
|
|
56
|
|
|
57
|
|
|
58
|
|
|
58
|
|
|
58
|
|
|
59
|
You
should rely only on the information contained or incorporated by reference in
this prospectus and in any accompanying prospectus supplement. We
have not authorized anyone to provide you with different
information.
We have
not authorized the Selling Stockholders to make an offer of these shares of
common stock in any jurisdiction where the offer is not permitted.
You
should not assume that the information in this prospectus or prospectus
supplement is accurate as of any date other than the date on the front of this
prospectus.
The
information contained in this prospectus, including the information incorporated
by reference into this prospectus, includes forward-looking statements. These
forward-looking statements are often identified by words such as “may,” “will,”
“expect,” “intend,” “anticipate,” “believe,” “estimate,” “continue,” “plan” and
similar expressions. These statements involve estimates, assumptions and
uncertainties that could cause actual results to differ materially from those
expressed for the reasons described in this prospectus. You should not place
undue reliance on these forward-looking statements.
You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including:
|
·
|
our
ability to successfully complete the confirmatory Phase 3 clinical trial
of orBec®
for the treatment of gastrointestinal Graft-versus-Host
disease;
|
|
·
|
the
possibility that orBec®
may not show therapeutic effect or an acceptable safety profile in future
clinical trials, or could take a significantly longer time to gain
regulatory approval than we expect or may never gain
approval;
|
|
·
|
our
dependence on the expertise, effort, priorities and contractual
obligations of third parties in the clinical trials, manufacturing,
marketing, sales and distribution of our products;
|
|
·
|
significant
uncertainty inherent in developing vaccines against bioterror threats, and
manufacturing and conducting preclinical and clinical trials of
vaccines;
|
|
·
|
our
ability to obtain regulatory approvals;
|
|
·
|
uncertainty
as to whether our technologies will be safe and effective;
|
|
·
|
our
ability to make certain that our cash expenditures do not exceed projected
levels;
|
|
·
|
our
ability to obtain future financing or funds when needed;
|
|
·
|
that
product development and commercialization efforts will be reduced or
discontinued due to difficulties or delays in clinical trials or a lack of
progress or positive results from research and development
efforts;
|
|
·
|
our
ability to successfully obtain further grants and awards from the U.S.
Government and other countries, and maintenance of our existing
grants;
|
|
·
|
our
ability to enter into any biodefense procurement contracts with the U.S.
Government or other countries;
|
|
·
|
our
ability to patent, register and protect our technology from challenge and
our products from competition;
|
|
·
|
maintenance
or expansion of our license agreements with our current
licensors;
|
|
·
|
changes
in healthcare regulation;
|
|
·
|
changes
in the needs of biodefense procurement agencies;
|
|
·
|
maintenance
of a successful business strategy;
|
|
·
|
the
possibility that orBec® may not gain market acceptance; and
|
|
·
|
that
others may develop technologies or products superior to our
products.
|
You
should also consider carefully the statements under “Risk Factors” and other
sections of this prospectus, which address additional factors that could cause
our actual results to differ from those set forth in the forward-looking
statements and could materially and adversely affect our business, operating
results and financial condition. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the applicable cautionary
statements.
The
forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
About Our Company
We were
incorporated in Delaware in 1987. We are a research and development
biopharmaceutical company focused on developing products to treat
life-threatening side effects of cancer treatments and serious gastrointestinal
diseases where there remains an unmet medical need, as well as developing
several biodefense vaccines.
We
maintain two active business segments: BioTherapeutics and BioDefense. Our
business strategy can be outlined as follows:
|
(a)
|
complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute gastrointestinal Graft-versus-Host
disease (“GI GVHD”);
|
|
(b)
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau Pharmaceuticals, Inc. (“Sigma Tau”) to
commercialize orBec®
in the U.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty
(inclusive of drug supply) on net sales in these territories as well
as pay for commercialization expenses, including launch
activities;
|
|
(c)
|
conduct
and complete a Phase 2 clinical trial of orBec®
for the prevention of acute Graft-versus-Host disease
(“GVHD”);
|
|
(d)
|
evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal (“GI”) tract such as radiation
enteritis, radiation injury and Crohn’s disease;
|
|
(e)
|
make
orBec® available
worldwide through named patient access programs (“NPAPs”) for the
treatment of acute GI GVHD;
|
|
(f)
|
reinitiate
development of our other BioTherapeutics products, namely LPM™
Leuprolide;
|
|
(g)
|
continue
to secure additional government funding for each of our BioDefense
programs, RiVax™ and BT-VACC™, through grants, contracts and
procurements;
|
|
(h)
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense area;
|
|
(i)
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
(j)
|
explore
other business development and acquisition strategies under which we may
be considered to be an attractive acquisition candidate by another
company
|
The
following tables summarize the products that we are currently
developing:
BioTherapeutic
Products
|
Product
|
|
Therapeutic
Indication
|
|
Stage
of Development
|
|
|
|
|
|
|
|
|
|
orBec®
|
|
Treatment
of Acute GI GVHD
|
|
Pivotal
Phase 3 confirmatory trial enrollment
to be initiated in 2H 2009
|
|
|
orBec®
|
|
Prevention
of Acute GVHD
|
|
Phase
2 trial enrolling and expected to complete in 1H 2010
|
|
|
orBec®
|
|
Treatment
of Chronic GI GVHD
|
|
Phase
2 trial to be initiated in 2010
|
|
|
Oral
BDP
|
|
Radiation
Enteritis
|
|
Phase
1/2 trial to be initiated in 2009
|
|
|
LPMTM
– Leuprolide
|
|
Endometriosis
and Prostate Cancer
|
|
Phase
1 trial to be initiated in 2010
|
|
Biodefense
Products
|
Select
Agent
|
|
Currently
Available Countermeasure
|
|
Soligenix
Biodefense Product
|
|
|
|
|
|
|
|
|
|
Ricin
Toxin
|
|
No
vaccine or antidote currently FDA approved
|
|
Injectable
Ricin Vaccine
Phase
1 clinical trial Successfully Completed
Second
Phase 1 trial currently enrolling
|
|
| |
|
|
|
|
|
|
Botulinum
Toxin
|
|
No
vaccine or antidote currently FDA approved
|
|
Oral/Nasal
Botulinum Vaccine
|
|
Since
December 31, 2008, we have raised an additional $11,274,400 through equity
financings. We believe that this funding will allow us to continue operations
into the first quarter of 2011.
Our
principal executive offices are located at 29 Emmons Drive, Suite C-10,
Princeton, New Jersey 08550 and our telephone number is (609)
538-8200.
The Offering
This prospectus relates to the offer and sale,
from time to time, of up 36,755,075 shares of our common stock by the Selling
Stockholders. We are also registering for sale any additional shares of common
stock which may become issuable by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt of
consideration, which results in an increase in the number of outstanding shares
of our common stock.
The Selling Stockholders may sell these shares
in the over-the-counter market or otherwise, at market prices prevailing at the
time of sale or at negotiated prices. We will not receive any proceeds from the
sale of shares by the Selling Stockholders. See “Plan of
Distribution.”
As of October 5, 2009, there
were 185,501,158 shares outstanding, including 17,352,569 of the 36,755,075
shares of our common stock offered by the Selling Stockholders pursuant to this
prospectus. The number of shares offered by this prospectus represents
approximately 19.8% of the total common stock outstanding as of October 5,
2009.
You should carefully consider the
risks, uncertainties and other factors described below before you decide whether
to buy shares of our common stock. Any of the factors could materially and
adversely affect our business, financial condition, operating results and
prospects and could negatively impact the market price of our common stock.
Below are the significant risks and uncertainties of which we are aware.
Additional risks and uncertainties that we do not yet know of, or that we
currently think are immaterial, may also impair our business operations. You
should also refer to the other information contained in and incorporated by
reference into this prospectus, including our financial statements and the
related notes.
Risks Related to our
Industry
We
have had significant losses and anticipate future losses; if additional funding
cannot be obtained, we may reduce or discontinue our product development and
commercialization efforts.
We have
experienced significant losses since inception and have a significant
accumulated deficit. We expect to incur additional operating losses in the
future and expect our cumulative losses to increase. As of June 30, 2009, we had
$4,884,172 in cash available. Since June 30, 2009, we have issued a total of
18,136,816 shares of common stock and warrants to purchase up to 9,252,506
shares of common stock raising a sum of $4,330,200, net of
costs. Based on our projected budgetary needs and funding from
existing grants over the next 18 months, we expect to be able to maintain the
current level of our operations into the first quarter of 2011 and conduct the
pivotal Phase 3 confirmatory clinical trial of orBec® for the treatment of acute
GI GVHD.
We have
sufficient funds through our existing biodefense grant facilities from the
National Institute of Allergy and Infectious Diseases (“NIAID”), a division of
the National Institute of Health (“NIH”), to finance our biodefense projects. On
September 21, 2009, we announced that we had received an NIAID grant for
approximately $9,400,000 for the development of our biodefense programs. Our
biodefense grants have an overhead component that allows us an agency-approved
percentage over our incurred costs. We estimate that the overhead component,
which is approximately 22% above our subcontracted expenses, will finance
some fixed costs for direct employees working on the grants and other
administrative costs, from our existing NIH biodefense grants will cover
approximately $600,000 of such fixed overhead costs over the next
year.
Our
products are positioned for or are currently in clinical trials, and we have not
yet generated any significant revenues from sales or licensing of
them. From inception through June 30, 2009, we had expended
approximately $27,600,000 developing our current product candidates for
preclinical research and development and clinical trials, and we currently
expect to spend at least $10 million over the next two years in connection
with the development and commercialization of our therapeutic and vaccine
products, licenses, employment agreements, and consulting agreements. Unless and
until we are able to generate sales or licensing revenue from orBec®, our lead
product candidate, or another one of our product candidates, we will require
additional funding through our existing equity facility with Fusion Capital Fund
II, LLC (“Fusion Capital”) or another financing source to meet these
commitments, sustain our research and development efforts, provide for future
clinical trials, and continue our operations. There can be no assurance we can
raise such funds. If additional funds are raised through the issuance of equity
securities, stockholders may experience dilution of their ownership interests,
and the newly issued securities may have rights superior to those of the common
stock. If additional funds are raised by the issuance of debt, we may be subject
to limitations on our operations. If we cannot raise such additional funds, we
may have to delay or stop some or all of our drug development
programs.
If we are unsuccessful in developing
our products, our ability to generate revenues will be significantly
impaired.
To be
profitable, our organization must, along with corporate partners and
collaborators, successfully research, develop and commercialize our technologies
or product candidates. Our current product candidates are in various stages of
clinical and preclinical development and will require significant further
funding, research, development, preclinical and/or clinical testing, regulatory
approval and commercialization, and are subject to the risks of failure
inherent
in the development of products based on innovative or novel technologies.
Specifically, each of the following is possible with respect to any of our
product candidates:
|
·
|
we
may not be able to maintain our current research and development
schedules;
|
|
·
|
we
may be unsuccessful in our efforts to secure profitable procurement
contracts from the U.S. government or others for our biodefense
products;
|
|
·
|
we
may encounter problems in clinical trials or Named Patient Access programs
("NPAP"); or
|
|
·
|
the
technology or product may be found to be ineffective or
unsafe.
|
If any of
the risks set forth above occurs, or if we are unable to obtain the necessary
regulatory approvals as discussed below, we may not be able to successfully
develop our technologies and product candidates and our business will be
seriously harmed. Furthermore, for reasons including those set forth below, we
may be unable to commercialize or receive royalties from the sale of any other
technology we develop, even if it is shown to be effective, if:
|
·
|
it
is uneconomical or the market for the product does not develop or
diminishes;
|
|
·
|
we
are not able to enter into arrangements or collaborations to manufacture
and/or market the product;
|
|
·
|
the
product is not eligible for third-party reimbursement from government or
private insurers;
|
|
·
|
others
hold proprietary rights that preclude us from commercializing the
product;
|
|
·
|
others
have brought to market similar or superior products;
or
|
|
·
|
the
product has undesirable or unintended side effects that prevent or limit
its commercial use.
|
We received a
“not approvable letter” from the FDA for our lead product candidate
orBec®.
Our
business is subject to very stringent U.S., federal, foreign, state and local
government laws and regulations, including the Federal Food, Drug and Cosmetic
Act, the Environmental Protection Act, the Occupational Safety and Health Act,
and state and local counterparts to these acts. These laws and regulations may
be amended, additional laws and regulations may be enacted, and the policies of
the FDA and other regulatory agencies may change.
On
October 18, 2007, we received a not approvable letter from the FDA for our lead
product candidate, orBec®, for
the treatment of acute GI GVHD. The letter stated that the FDA
requested data from additional clinical trials to demonstrate the safety and
efficacy of orBec®. The
FDA also requested nonclinical and chemistry, manufacturing and controls
information as part of the not approvable letter. On October 19, 2007, we
requested an “End of Review Conference” with the FDA to further understand the
letter and gain clarity as to the next steps. On December 7, 2007, we announced
the following guidance from that meeting: (1) a single, confirmatory, Phase 3
clinical trial could provide sufficient evidence of efficacy provided that it is
well designed, well executed and provides clinically and statistically
meaningful findings; (2) we anticipated working quickly with the FDA to finalize
the design of the confirmatory trial under the Agency’s “Special Protocol
Assessment” process; and (3) the FDA would be agreeable to reviewing a plan for
a Treatment Investigational New Drug (“Treatment IND”) as long as it
does not interfere with patient accrual in a confirmatory trial, such as
potentially enrolling patients that would not be eligible for the Phase 3
study.
On
January 5, 2009, we reached an agreement with the FDA on the design of a
confirmatory, pivotal Phase 3 clinical trial evaluating our lead product
orBec®
for the treatment of acute GI GVHD. The agreement was made under the
FDA’s Special Protocol Assessment procedure. We expect
to begin enrollment in the new confirmatory Phase 3 clinical trial for the
treatment of acute GI GVHD in the second half of 2009.
Although
we intend to obtain FDA approval for orBec®,
there can be no assurances that the FDA will ever approve orBec® for
market launch. Furthermore, the FDA may mandate additional testing or data,
which may take additional time and expense to provide.
Our business is subject to extensive
governmental regulation, which can be costly, time consuming and subjects us to
unanticipated delays.
The
regulatory process applicable to our products requires pre-clinical and clinical
testing of any product to establish its safety and efficacy. This testing can
take many years and require the expenditure of substantial capital and other
resources. We may not be able to obtain, or we may experience difficulties and
delays in obtaining, necessary domestic and foreign governmental clearances and
approvals to market a product. Also, even if regulatory approval of a product is
granted, that approval may entail limitations on the indicated uses for which
the product may be marketed.
Following
any regulatory approval, a marketed product and its manufacturer are subject to
continual regulatory review. Later discovery of problems with a product or
manufacturer may result in restrictions on such product or manufacturer. These
restrictions may include withdrawal of the marketing approval for the product.
Furthermore, the advertising, promotion and export, among other things, of a
product are subject to extensive regulation by governmental authorities in the
U.S. and other countries. If we fail to comply with applicable regulatory
requirements, we may be subject to fines, suspension or withdrawal of regulatory
approvals, product recalls, seizure of products, operating restrictions and/or
criminal prosecution.
There
may be unforeseen challenges in developing our biodefense products.
For
development of biodefense vaccines and therapeutics, the FDA has instituted
policies that are expected to result in accelerated approval. This includes
approval for commercial use using the results of animal efficacy trials, rather
than efficacy trials in humans. However, we will still have to
establish that the vaccines we are developing are safe in humans at doses that
are correlated with the beneficial effect in animals. Such clinical trials will
also have to be completed in distinct populations that are subject to the
countermeasures; for instance, the very young and the very old, and in pregnant
women, if the countermeasure is to be licensed for civilian
use. Other agencies will have an influence over the risk benefit
scenarios for deploying the countermeasures and in establishing the number of
doses utilized in the Strategic National Stockpile. We may not be able to
sufficiently demonstrate the animal correlation to the satisfaction of the FDA,
as these correlates are difficult to establish and are often
unclear. Invocation of the animal rule may raise issues of confidence
in the model systems even if the models have been validated. For many of the
biological threats, the animal models are not available and we may have to
develop the animal models, a time-consuming research effort. There are few
historical precedents, or recent precedents, for the development of new
countermeasure for bioterrorism agents. Despite the animal rule, the FDA may
require large clinical trials to establish safety and immunogenicity before
licensure and it may require safety and immunogenicity trials in additional
populations. Approval of biodefense products may be subject to
post-marketing studies, and could be restricted in use in only certain
populations.
We will be dependent on government
funding, which is inherently uncertain, for the success of our biodefense
operations.
We are
subject to risks specifically associated with operating in the biodefense
industry, which is a new and unproven business area. We do not anticipate that a
significant commercial market will develop for our biodefense products. Because
we anticipate that the principal potential purchasers of these products, as well
as potential sources of research and development funds, will be the U.S.
government and governmental agencies, the success of our biodefense division
will be dependent in large part upon government spending decisions. The funding
of government programs is dependent on budgetary limitations, congressional
appropriations and administrative allotment of funds, all of which are
inherently uncertain and may be affected by changes in U.S. government policies
resulting from various political and military developments.
If
the parties we depend on for supplying our drug substance raw materials and
certain manufacturing-related services do not timely supply these products and
services, it may delay or impair our ability to develop, manufacture and market
our products.
We rely
on suppliers for our drug substance raw materials and third parties for certain
manufacturing-related services to produce material that meets appropriate
content, quality and stability standards, which material will be used in
clinical trials of our products and, after approval, for commercial
distribution. To succeed, clinical trials require adequate supplies of drug
substance and drug product, which may be difficult or uneconomical to procure or
manufacture. We and our suppliers and vendors may not be able to (i) produce our
drug substance or drug product to appropriate standards for use in clinical
studies, (ii) perform under any definitive manufacturing, supply or service
agreements with us or (iii) remain in business for a sufficient time to
successfully produce and market our product candidates. If we do not maintain
important manufacturing and service relationships, we may fail to find a
replacement supplier or required vendor or develop our own manufacturing
capabilities which could delay or impair our ability to obtain regulatory
approval for our products and substantially increase our costs or deplete profit
margins, if any. If we do find replacement manufacturers and vendors, we may not
be able to enter into agreements with them on terms and conditions favorable to
us and, there could be a substantial delay before a new facility could be
qualified and registered with the FDA and foreign regulatory
authorities.
The
manufacture of our products is a highly exacting process, and if we or one of
our materials suppliers encounter problems manufacturing our products, our
business could suffer.
The FDA
and foreign regulators require manufacturers to register manufacturing
facilities. The FDA and foreign regulators also inspect these facilities to
confirm compliance with current Good Manufacturing Practice (cGMP) or similar
requirements that the FDA or foreign regulators establish. We, or our materials
suppliers, may face manufacturing or quality control problems causing product
production and shipment delays or a situation where we or the supplier may not
be able to maintain compliance with the FDA’s cGMP requirements, or those of
foreign regulators, necessary to continue manufacturing our drug substance. Any
failure to comply with cGMP requirements or other FDA or foreign regulatory
requirements could adversely affect our clinical research activities and our
ability to market and develop our products.
We
do not have sales and marketing experience and our lack of experience may
restrict our success in commercializing some of our product
candidates.
We do not
have experience in marketing or selling pharmaceutical products whether in the
U.S. or internationally. Although we have a collaboration agreement with
Sigma-Tau for the sales and marketing of orBec® in
North America, we may be unable to establish additional satisfactory
arrangements for marketing, sales and distribution capabilities necessary to
commercialize and gain market acceptance for orBec® or
our other product candidates. In Addition, Sigma-Tau may not be able to
effectively commercialize orBec® if it
is approved. To obtain the expertise necessary to successfully market and sell
orBec®, or
any other product, potentially will require the development of our own
commercial infrastructure and/or collaborative commercial arrangements and
partnerships. Our ability to make that investment and also execute our current
operating plan is dependent on numerous factors, including, the performance of
third party collaborators with whom we may contract.
Our
products, if approved, may not be commercially viable due to change in health
care practice and third party reimbursement limitations.
Recent
initiatives to reduce the federal deficit and to change health care delivery are
increasing cost-containment efforts. We anticipate that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, price controls on pharmaceuticals, and other fundamental changes to
the health care delivery system.
Any
changes of this type could negatively impact the commercial viability of our
products, if approved. Our ability to successfully commercialize our product
candidates, if they are approved, will depend in part on the extent to which
appropriate reimbursement codes and authorized cost reimbursement levels of
these products and related treatment are obtained from governmental authorities,
private health insurers and other organizations, such as health maintenance
organizations. In the absence of national Medicare coverage determination, local
contractors that administer the Medicare program may make their own coverage
decisions. Any of our product candidates, if approved and when commercially
available, may not be included within the then current Medicare coverage
determination or the coverage determination of state Medicaid programs, private
insurance companies or other health care providers. In addition, third-party
payers are increasingly challenging the necessity and prices charged for medical
products, treatments and services.
We may not be able to retain rights
licensed to us by third parties to commercialize key products or to develop the
third party relationships we need to develop, manufacture and market our
products.
We
currently rely on license agreements from the University of Texas Southwestern
Medical Center, the University of Texas Medical Branch at Galveston, Thomas
Jefferson University, and George B. McDonald MD for the rights to commercialize
key product candidates. We may not be able to retain the rights granted under
these agreements or negotiate additional agreements on reasonable terms, or at
all.
Furthermore,
we currently have very limited product development capabilities and no
manufacturing, marketing or sales capabilities. For us to research, develop and
test our product candidates, we need to contract or partner with outside
researchers, in most cases with or through those parties that did the original
research and from whom we have licensed the technologies. If products are
successfully developed and approved for commercialization, then we will need to
enter into additional collaboration and other agreements with third parties to
manufacture and market our products. We may not be able to induce the third
parties to enter into these agreements, and, even if we are able to do so, the
terms of these agreements may not be favorable to us. Our inability to enter
into these agreements could delay or preclude the development, manufacture
and/or marketing of some of our product candidates or could significantly
increase the costs of doing so. In the future, we may grant to our development
partners rights to license and commercialize pharmaceutical and related products
developed under the agreements with them, and these rights may limit our
flexibility in considering alternatives for the commercialization of these
products. Furthermore, third-party manufacturers or suppliers may not be able to
meet our needs with respect to timing, quantity and quality for the
products.
Additionally,
if we do not enter into relationships with additional third parties for the
marketing of our products, if and when they are approved and ready for
commercialization, we would have to build our own sales force. If our
collaboration agreement with Sigma-Tau were to be terminated, we would need to
establish and build our own sales force in North America or enter into an
agreement for the commercialization of orBec® with
another company. Development of an effective sales force in any part of the
world would require significant financial resources, time and expertise. We may
not be able to obtain the financing necessary to establish a sales force in a
timely or cost effective manner, if at all, and any sales force we are able to
establish may not be capable of generating demand for our product candidates, if
they are approved.
We may suffer product and other
liability claims; we maintain only limited product liability insurance, which
may not be sufficient.
The
clinical testing, manufacture and sale of our products involves an inherent risk
that human subjects in clinical testing or consumers of our products may suffer
serious bodily injury or death due to side effects, allergic reactions or other
unintended negative reactions to our products. As a result, product and other
liability claims may be brought against us. We currently have clinical trial and
product liability insurance with limits of liability of $5 million, which may
not be sufficient to cover our potential liabilities. Because liability
insurance is expensive and difficult to obtain, we may not be able to maintain
existing insurance or obtain additional liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Furthermore, if any
claims are brought against us, even if we are fully covered by insurance, we may
suffer harm such as adverse publicity.
We may not be able to compete
successfully with our competitors in the biotechnology
industry.
The
biotechnology industry is intensely competitive, subject to rapid change and
sensitive to new product introductions or enhancements. Most of our existing
competitors have greater financial resources, larger technical staffs, and
larger research budgets than we have, as well as greater experience in
developing products and conducting clinical trials. Our competition is
particularly intense in the gastroenterology and transplant areas and is also
intense in the therapeutic area of inflammatory bowel diseases. We face intense
competition in the area of biodefense from various public and private companies
and universities as well as governmental agencies, such as the U.S. Army, which
may have their own proprietary technologies that may directly compete with our
technologies. In addition, there may be other companies that are currently
developing competitive technologies and products or that may in the future
develop technologies and products that are comparable or superior to our
technologies and products. We may not be able to compete successfully with our
existing and future competitors.
We may be unable to commercialize
our products if we are unable to protect our proprietary rights, and we may be
liable for significant costs and damages if we face a claim of intellectual
property infringement by a third party.
Our
success depends in part on our ability to obtain and maintain patents, protect
trade secrets and operate without infringing upon the proprietary rights of
others. In the absence of patent and trade secret protection, competitors may
adversely affect our business by independently developing and marketing
substantially equivalent or superior products and technology, possibly at lower
prices. We could also incur substantial costs in litigation and suffer diversion
of attention of technical and management personnel if we are required to defend
ourselves in intellectual property infringement suits brought by third parties,
with or without merit, or if we are required to initiate litigation against
others to protect or assert our intellectual property rights. Moreover, any such
litigation may not be resolved in our favor.
Although
we and our licensors have filed various patent applications covering the uses of
our product candidates, patents may not be issued from the patent applications
already filed or from applications that we might file in the future. Moreover,
the patent position of companies in the pharmaceutical industry generally
involves complex legal and factual questions, and recently has been the subject
of much litigation. Any patents we have obtained, or may obtain in the future,
may be challenged, invalidated or circumvented. To date, no consistent policy
has been developed in the U.S. Patent and Trademark Office regarding the breadth
of claims allowed in biotechnology patents.
In
addition, because patent applications in the U.S. are maintained in secrecy
until patents issue, and because publication of discoveries in the scientific or
patent literature often lags behind actual discoveries, we cannot be certain
that we and our licensors are the first creators of inventions covered by any
licensed patent applications or patents or that we or they are the first to
file. The Patent and Trademark Office may commence interference proceedings
involving patents or patent applications, in which the question of first
inventorship is contested. Accordingly, the patents owned or licensed to us may
not be valid or may not afford us protection against competitors with similar
technology, and the patent applications licensed to us may not result in the
issuance of patents.
It is
also possible that our patented technologies may infringe on patents or other
rights owned by others, licenses to which may not be available to us. We may not
be successful in our efforts to obtain a license under such patent on terms
favorable to us, if at all. We may have to alter our products or processes, pay
licensing fees or cease activities altogether because of patent rights of third
parties.
In
addition to the products for which we have patents or have filed patent
applications, we rely upon unpatented proprietary technology and may not be able
to meaningfully protect our rights with regard to that unpatented proprietary
technology. Furthermore, to the extent that consultants, key employees or other
third parties apply technological information developed by them or by others to
any of our proposed projects, disputes may arise as to the proprietary rights to
this information, which may not be resolved in our favor.
Our business could be harmed if we
fail to retain our current personnel or if they are unable to effectively run
our business.
We have
only 11 employees and we depend upon these employees to manage the day-to-day
activities of our business. Because we have such limited personnel, the loss of
any of them or our inability to attract and retain other qualified employees in
a timely manner would likely have a negative impact on our operations. Dr.
Christopher J. Schaber, our Chief Executive Officer, was hired in August 2006;
Evan Myrianthopoulos, our Chief Financial Officer, was hired in November 2004,
although he was a member of our Board of Directors for two years prior thereto;
Dr. Robert Brey, our Chief Scientific Officer was hired in 1996; Dr. Brian L.
Hamilton, our Chief Medical Officer, was hired in March 2009; and Christopher
Schnittker, our Controller, Vice President of Administration, and Corporate
Secretary was hired in July of 2009. In August 2006, Dr. James S. Kuo was
appointed Chairman of the Board. In June 2007, Cyrille F. Buhrman was
appointed to the Board of Directors. In March 2009, Gregg Lapointe was appointed
to the Board of Directors. We will not be successful if this management team
cannot effectively manage and operate our business. Several members of our board
of directors are associated with other companies in the biopharmaceutical
industry. Stockholders should not expect an obligation on the part of these
board members to present product opportunities to us of which they become aware
outside of their capacity as members of our board of
directors.
Instability
and volatility in the financial markets could have a negative impact on our
business, financial condition, results of operations, and cash
flows.
During
recent months, there has been substantial volatility and a decline in financial
markets due at least in part to the deteriorating global economic environment.
In addition, there has been substantial uncertainty in the capital markets and
access to additional financing is uncertain. Moreover, customer spending habits
may be adversely affected by the current economic crisis. These conditions could
have an adverse effect on our industry and business, including our financial
condition, results of operations, and cash flows.
To the
extent that we do not generate sufficient cash from operations, we may need to
incur indebtedness to finance our plans for growth. Recent turmoil in the credit
markets and the potential impact on the liquidity of major financial
institutions may have an adverse effect on our ability to fund our business
strategy through borrowings, under either existing or newly created instruments
in the public or private markets on terms we believe to be reasonable, if at
all.
Risks
Related to our Common Stock
Our stock price is highly
volatile.
The
market price of our common stock, like that of many other research and
development public pharmaceutical and biotechnology companies, has been highly
volatile and may continue to be so in the future due to a wide variety of
factors, including:
|
·
|
announcements
by us or others of results of pre-clinical testing and clinical
trials;
|
|
·
|
announcements
of technological innovations, more important bio-threats or new commercial
therapeutic products by us, our collaborative partners or our present or
potential competitors;
|
|
·
|
our
quarterly operating results and
performance;
|
|
·
|
developments
or disputes concerning patents or other proprietary
rights;
|
|
·
|
litigation
and government proceedings;
|
|
·
|
changes
in government regulations;
|
|
·
|
our
available working capital;
|
|
·
|
economic
and other external factors; and
|
|
·
|
general
market conditions.
|
In
addition, potential dilutive effects of future sales of shares of common stock
by the Company, and subsequent sale of common stock by the holders of warrants
and options, could have an adverse effect on the market price of our
shares.
Our stock
price has fluctuated between January 1, 2005 through October 5, 2009 with the
per share price of our common stock ranging between a high of $0.95 per share to
a low of $0.04 per share. As of October 5, 2009, our common stock traded at
$0.33. The fluctuation in the price of our common stock has sometimes been
unrelated or disproportionate to our operating performance.
Our stock trades on the
Over-the-Counter Bulletin Board.
On April
18, 2006, our stock was delisted from the American Stock Exchange (“AMEX”) and
began trading on the OTCBB securities market on April 18, 2006 under the ticker
symbol “DORB.” On September 28, 2009, we changed our name from “DOR
BioPharma, Inc.” to “Soligenix, Inc.” and, on September 30, 2009, our stock
began trading under the ticker symbol “SNGX.” Our stock was delisted from the
AMEX because we did not maintain stockholder equity above $6,000,000, as
required under the maintenance requirement for continued listing. The OTCBB is a
decentralized market regulated by the Financial Industry Regulatory Authority in
which securities are traded via an electronic quotation system that serves more
than 3,000 companies. On the OTCBB, securities are traded by a network of
brokers or dealers who carry inventories of securities to facilitate the buy and
sell orders of investors, rather than providing the order matchmaking service
seen in specialist exchanges. OTCBB securities include national, regional, and
foreign equity issues. Companies traded on the OTCBB must be current in their
reports filed with the Securities and Exchange Commission (the “SEC”) and other
regulatory authorities.
If our
common stock is not listed on a national exchange or market, the trading market
for our common stock may become illiquid. Our common stock is subject to the
penny stock rules of the SEC, which generally are applicable to equity
securities with a price of less than $5.00 per share, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. The penny
stock rules require a broker-dealer, before a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with bid and ask quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer’s account. In addition, the penny stock rules require that, before
a transaction in a penny stock that is not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. As a result of these requirements, our common
stock could be priced at a lower price and our stockholders could find it more
difficult to sell their shares.
Shareholders may suffer substantial
dilution.
We have a
number of agreements or obligations that may result in dilution to investors.
These include:
|
·
|
warrants
to purchase a total of approximately 42,082,604 shares of our common stock
at a current weighted average exercise price of approximately $0.26;
and
|
|
·
|
options
to purchase approximately 19,172,539 shares of our common stock at a
current weighted average exercise price of approximately
$0.25.
|
To the
extent that warrants or options are exercised, our stockholders will experience
dilution and our stock price may decrease.
Shareholders
are also subject to the risk of substantial dilution to their interests as a
result of our issuance of shares under the common stock purchase agreement with
Fusion Capital. Under the agreement, we have the right, but not the
obligation, under certain conditions, to sell shares of common stock to Fusion
Capital up to an aggregate amount of $8.5 million from time to time over a 25
month period. The purchase price of the shares will be determined
based upon the market price of our shares without any fixed discount at the time
of each sale.
We
already have sold 4,419,414 shares of common stock to Fusion Capital (together
with a warrant to purchase 1,388,889 shares of our common stock) under the
agreement for total proceeds of $712,500. Additionally, we issued
Fusion Capital 1,275,000 shares of common stock as a commitment fee. In addition
to the shares already sold to Fusion Capital, we have filed a registration
statement with respect to approximately 18.8 million shares that are available
to be sold to Fusion Capital. We may ultimately sell all, some or
none of the 18.8 million shares of common stock. If such 18.8 million
shares were issued and outstanding as of October 5, 2009, the 18.8 million
shares would have represented approximately 10.1% of the total outstanding
common stock.
Pursuant
to the securities purchase agreement dated September 23, 2009 among the Company
and the investors named therein, we may not issue, enter into any agreement to
issue or announce the issuance or proposed issuance of any shares of our common
stock, including to Fusion Capital, prior to November 27, 2009.
The
sale of our common stock to Fusion Capital may cause dilution and the sale of
the shares of common stock acquired by Fusion Capital could cause the price of
our common stock to decline.
On February 14, 2008, we entered into an $8,500,000 common stock
purchase agreement with Fusion Capital. The Fusion Capital facility
allows us to require Fusion Capital to purchase between $80,000 and $1.0
million, depending on certain conditions, of our common stock up to an aggregate
of $8.5 million over approximately a 25-month period. As part of that agreement,
we issued Fusion Capital 1,275,000 shares of common stock as a commitment fee.
In connection with the execution of the common stock purchase agreement, Fusion
Capital purchased 2,777,778 common shares and a four year warrant to purchase
1,388,889 shares of common stock at $0.22 per share, for an aggregate price of
$500,000. To date, we have issued an additional 4,419,414 shares of
common stock and received an additional $712,500 from the Fusion Capital
facility.
In
connection with entering into the agreement, we authorized the sale to Fusion
Capital of up to 25,327,778 shares of our common stock. The number of
shares ultimately offered for sale by Fusion Capital is dependent upon the
number of shares purchased by Fusion Capital under the agreement. The purchase
price for the common stock to be sold to Fusion Capital pursuant to the common
stock purchase agreement will fluctuate based on the price of our common stock.
All 25,327,778 shares registered for sale by Fusion Capital are freely
tradable. It is anticipated that those shares will be sold over a
period of up to 25 months from the date of the prospectus pertaining to those
shares. Depending upon market liquidity at the time, a sale of shares
under the registration statement at any given time could cause the trading price
of our common stock to decline. Fusion Capital may ultimately purchase all, some
or none of the approximately 18.8 million shares of common stock not yet
issued. After it has acquired such shares, it may sell all, some or
none of such shares. Therefore, sales to Fusion Capital by us under the
agreement may result in substantial dilution to the interests of other holders
of our common stock. The sale of a substantial number of shares of our common
stock, or anticipation of such sales, could make it more difficult for us to
sell equity or equity-related securities in the future at a time and at a price
that we might otherwise wish to effect sales. However, we have the right to
control the timing and amount of any sales of our shares to Fusion Capital and
the agreement may be terminated by us at any time at our discretion without any
cost to us.
The common stock purchase agreement with Fusion Capital also may
be terminated in the event of a default under the agreement. In
addition, we cannot require Fusion Capital to purchase any shares of our common
stock if the purchase price is less than $0.10 per share. Thus, we
may be unable to sell shares of our common stock to Fusion Capital when we need
the funds, and that could severely harm our business and financial condition and
our ability to continue to develop and commercialize our
products. The closing price of our common stock on October 5, 2009
was $0.33.
Our
shares of common stock are thinly traded, so stockholders may be unable to sell
at or near ask prices or at all if they need to sell shares to raise money or
otherwise desire to liquidate their shares.
Our
common stock has from time to time been “thinly-traded,” meaning that the number
of persons interested in purchasing our common stock at or near ask prices at
any given time may be relatively small or non-existent. This situation is
attributable to a number of factors, including the fact that we are a small
company that is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we become more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give stockholders any
assurance that a broader or more active public trading market for our common
shares will develop or be sustained, or that current trading levels will be
sustained.
Fusion
Capital’s purchase and sale into the market of our common stock could cause our
common stock price to decline due to the additional shares available in the
market, particularly in light of the relatively thin trading volume of our
common stock. The market price of our common stock could decline given our
minimal average trading volume compared to the number of shares potentially
issuable to Fusion Capital, and the voting power and value of your investment
would be subject to continual dilution if Fusion Capital purchases the shares
and resells those shares into the market, although there is no obligation for
Fusion Capital to sell such shares. Any adverse affect on the market price of
our common stock would increase the number of shares issuable to Fusion Capital
which would increase the potential dilution of your investment.
Overview
We were
incorporated in Delaware in 1987. We are a research and development
biopharmaceutical company focused on developing products to treat
life-threatening side effects of cancer treatments and serious gastrointestinal
diseases where there remains an unmet medical need, as well as developing
several biodefense vaccines. We maintain two active business segments:
BioTherapeutics and BioDefense. Our business strategy is to:
|
(a)
|
complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute GI GVHD;
|
|
(b)
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau to commercialize orBec®
in the U.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty on net
sales in these territories as well as pay for commercialization expenses,
including launch activities;
|
|
(c)
|
conduct
a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
|
|
|
(d) evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal (“GI”) tract such as radiation
enteritis, radiation injury and Crohn’s disease;
|
|
(e)
|
reinitiate
development of our other biotherapeutics products, namely LPMTM
Leuprolide;
|
|
(f)
|
continue
to secure additional government funding for each of our biodefense
programs, RiVaxTM
and BT-VACCTM,
through grants, contracts and procurements;
|
|
(g)
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense and infectious disease
area;
|
|
(h)
|
make
orBec® available
worldwide through named patient access programs (“NPAPs”) for the
treatment of acute GI GVHD;
|
|
(i)
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
(j)
|
explore
other business development and acquisition strategies under which we may
be considered to be an attractive acquisition candidate by another
company.
|
On
September 28, 2009, we changed our name from “DOR BioPharma, Inc.” to
“Soligenix, Inc.” Our principal executive offices are located at 29
Emmons Drive, Suite C-10, Princeton, New Jersey 08550 and our telephone number
is (609) 538-8200.
Summary of Our Products in
Development
The
following tables summarize the products that we are currently
developing:
BioTherapeutic
Products
|
Product
|
|
Therapeutic
Indication
|
|
Stage
of Development
|
|
|
|
|
|
|
|
|
|
orBec®
|
|
Treatment
of Acute GI GVHD
|
|
Pivotal
Phase 3 confirmatory trial enrollment
to begin in 2H 2009
|
|
|
orBec®
|
|
Prevention
of Acute GVHD
|
|
Phase
2 trial enrolling And expected to complete in 1H 2010
|
|
|
orBec®
|
|
Treatment
of Chronic GI GVHD
|
|
Phase
2 trial potentially to be initiated in 2010
|
|
|
Oral
BDP
|
|
Radiation
Enteritis
|
|
Phase
1/2 trial to be initiated in 2009
|
|
|
LPMTM
– Leuprolide
|
|
Endometriosis
and Prostate Cancer
|
|
Phase
1 trial potentially to be initiated in 2010
|
|
BioDefense
Products
|
Select
Agent
|
|
Currently
Available Countermeasure
|
|
Soligenix
Biodefense Product
|
|
|
Ricin
Toxin
|
|
No
vaccine or antidote currently FDA approved
|
|
Injectable
Ricin Vaccine
Phase
1 Clinical Trial Successfully Completed
Second
Phase 1 trial enrolling
|
|
| |
|
|
|
|
|
|
Botulinum
Toxin
|
|
No
vaccine or antidote currently FDA approved
|
|
Oral/Nasal
Botulinum Vaccine
|
|
BioTherapeutics
Overview
orBec® and
Oral BDP
orBec®
represents a first-of-its-kind oral, locally acting
therapy tailored to treat the gastrointestinal manifestation of GI GVHD, the
organ system where GVHD is most frequently encountered and highly problematic.
orBec® is
intended to reduce the need for systemic immunosuppressive drugs to treat acute
GI GVHD. The active ingredient in orBec® is
BDP, a highly potent, topically active corticosteroid that has a local effect on
inflamed tissue. BDP has been marketed in the U.S. and worldwide since the early
1970’s as the active pharmaceutical ingredient in a nasal spray and in a
metered-dose inhaler for the treatment of patients with allergic rhinitis and
asthma. orBec® is
specifically formulated for oral administration as a single product consisting
of two tablets; one tablet is intended to release BDP in the upper sections of
the GI tract, and the other tablet is intended to release BDP in the lower
sections of the GI tract.
Based on
data from the prior Phase 3 study of orBec®, the
current confirmatory Phase 3 study is a highly powered, double-blind,
randomized, placebo-controlled, multi-center trial and will seek to enroll an
estimated 166 patients. The primary endpoint is the treatment failure
rate at Study Day 80. This endpoint was successfully measured as a secondary
endpoint (p-value 0.005) in the previous Phase 3 study as a key
measure of durability following a 50-day course of treatment with orBec®
(i.e., 30 days following cessation of treatment).
In
addition to issued patents and pending worldwide patent applications held by or
exclusively licensed to us, orBec® also
benefits from orphan drug designations in the U.S. and in Europe for the
treatment of GI GVHD, as well as an orphan drug designation in the U.S. for the
treatment of chronic GI GVHD. Orphan drug designations provide for 7
and 10 years of post-approval market exclusivity in the U.S., and Europe
respectively.
Historical
Background
Two prior
randomized, double-blind, placebo-controlled Phase 2 and 3
clinical trials support orBec®’s
ability to provide clinically meaningful outcomes when compared with the current
standard of care, including a lowered exposure to systemic corticosteroids
following allogeneic transplantation. Currently, there are no approved products
to treat GI GVHD. The first trial was a 60-patient Phase 2 single-center
clinical trial conducted at the Fred Hutchinson Cancer Research Center. The
second trial was a 129-patient pivotal Phase 3 multi-center clinical trial of
orBec®
conducted at 16 leading bone marrow/stem cell transplantation centers in the US
and France. Although orBec® did
not achieve statistical significance in the primary endpoint of its pivotal
trial, namely median time-to-treatment failure through Day 50 (p-value 0.1177),
orBec®
did achieve statistical significance in other key secondary endpoints
such as the proportion of patients free of GVHD at Day 50 (p-value 0.05) and Day
80 (p-value 0.005) and the median time-to-treatment failure through Day 80
(p-value 0.0226), as well as a 66% reduction in mortality among patients
randomized to orBec® at
200 days post-transplant with only 5 patient (8%) deaths in the orBec® group
compared to 16 patient (24%) deaths in the placebo group (p-value 0.0139).
Within one year after randomization in the pivotal Phase 3 trial, 18 patients
(29%) in the orBec® group
and 28 patients (42%) in the placebo group died (46% reduction in mortality,
p-value 0.04).
In the
Phase 2 study, the primary endpoint was the clinically relevant determination of
whether GI GVHD patients at Day 30 (the end of treatment) had a durable GVHD
treatment response as measured by whether or not they were able to consume at
least 70% of their estimated caloric requirement. The GVHD treatment response at
Day 30 was 22 of 31 (71%) vs. 12 of 29 (41%) in the orBec® and
placebo groups, respectively (p-value 0.02). Additionally, the GVHD treatment
response at Day 40 (10 days post cessation of therapy) was 16 of 31 (52%) vs. 5
of 29 (17%) in the orBec® and
placebo groups, respectively (p-value 0.007).
Based on
the data from Phase 2 and the Phase 3 studies, on September 21, 2006, we filed a
new drug application (“NDA”) for our lead product orBec® with
the U.S. Food and Drug Administration (“FDA”) for the treatment of acute GI
GVHD. On October 18, 2007, we received an action letter from the FDA in response
to our NDA for orBec® for
the treatment of acute GI GVHD. In the letter, the FDA requested additional
clinical trial data to demonstrate the safety and efficacy of orBec®. The
FDA also requested nonclinical and chemistry, manufacturing and controls
information as part of this letter.
We
recently reached agreement with the FDA on the design of a confirmatory, pivotal
Phase 3 clinical trial evaluating our lead product orBec® for
the treatment of acute GI GVHD. The agreement was made under the FDA’s Special
Protocol Assessment (“SPA”) procedure. An agreement via the SPA procedure is an
agreement with the FDA that a Phase 3 clinical trial design (e.g., endpoints,
sample size, control group and statistical analyses) is acceptable to support a
regulatory submission seeking new drug approval. After the study begins, the FDA
can only change a SPA for very limited reasons. If and/or when the confirmatory
Phase 3 trial is successful, we will file a complete response to the FDA action
letter. This response is expected to be designated a class II
response with a corresponding FDA review time frame of 6 months.
Further,
in June 2009, we received Protocol Assistance feedback from the European
Medicines Evaluation Agency (“EMEA”) on the design of the Phase 3 clinical trial
for orBec®. The
EMEA agreed that should the new confirmatory Phase 3 study produce positive
results, the data would be sufficient to support a marketing authorization in
all 27 European Union member states. In doing so, the EMEA agreed to the primary
endpoint and the other principal design features of the new study.
We have entered into a collaboration agreement with Numoda
Corporation (“Numoda”), for the execution of our confirmatory Phase 3 clinical
trial of orBec®. Collaborating with Numoda will allow us to take
advantage of a scope of services including using their industry benchmarking
capabilities to develop an operational and financial plan including the use of a
proprietary management and oversight capabilities process. Barring any
unforeseen modifications to the Phase 3 clinical program, Numoda will guarantee
the agreed clinical trial budget against cost overruns. As part of the
collaboration, Numoda has agreed to accept payment in our common stock in
exchange for a portion of its services in connection with the conduct of the
confirmatory Phase 3 clinical trial. To date, we have issued 2,847,222 shares of
common stock to Numoda in partial payment for its services. Working with Numoda,
we also will be able to take full advantage of early reporting of results to
potential licensing partners and others. We expect
to begin enrollment in the confirmatory Phase 3 trial in the second half of
2009.
On July
12, 2007, we announced that patient enrollment commenced in a randomized, double
blind, placebo-controlled, Phase 2 clinical trial of orBec® for
the prevention of acute GVHD after allogeneic HCT with myeloablative
conditioning regimens. The trial is being conducted by Paul Martin, M.D., at the
FHCRC in Seattle, Washington and is being supported, in large part, by an NIH
grant. We will not receive any direct monetary benefit from this grant, but if
successful, this funded trial could serve to increase the value of our
orBec®/oral
BDP program. The Phase 2 trial will seek to enroll up to 138 (92
orBec® and
46 placebo) patients. The primary endpoint of the trial is the proportion of
subjects who develop acute GVHD with severity sufficient to require systemic
immunosuppressive treatment on or before day 90 after
transplantation. Patients in this study will begin dosing at the
start of the conditioning regimen and continue through day 75 following HCT.
Enrollment
in this trial is expected to commence in the second half of
2009.
Mortality
Results
|
|
Phase
3 trial
|
Phase
2 trial
|
|
|
orBec®
|
Placebo
|
orBec®
|
Placebo
|
|
Number of patients randomized
|
62
|
67
|
31
|
29
|
|
Number (%) who died
|
5 (8%)
|
16 (24%)
|
3 (10%)
|
6 (21%)
|
|
Hazard ratio (95% confidence interval)
|
0.33 (0.12, 0.89)
|
0.47 (0.12, 1.87 )
|
|
Death with infection*
|
3 (5%)
|
9 (13%)
|
2 (6%)
|
5 (17%)
|
|
Death with relapse*
|
3 (5%)
|
9 (13%)
|
1 (3%)
|
4 (14%)
|
*Some
patients died with both infection and relapse of their underlying malignancy.
In this
Phase 3 clinical trial, survival at the pre-specified endpoint of 200 days
post-transplantation showed a clinically meaningful and statistically
significant result. According to the manuscript, “the risk of mortality during
the 200-day post-transplantation period was 67% lower with orBec®
treatment compared to placebo treatment (hazard ratio 0.33; 95% CI: 0.12, 0.89;
p-value 0.03, Wald chi-square test).” The most common proximate causes of death
by transplantation day-200 were relapse of the underlying malignancy and
infection. Relapse of the underlying hematologic malignancy had contributed to
the deaths of 9/67 patients (13.4%) in the placebo arm and 3/62 patients (4.8%)
in the BDP arm. Infection contributed to the deaths of 9/67 patients (13.4%) in
the placebo arm and 3/62 (4.8%) in the BDP arm. Acute or chronic GVHD was the
proximate cause of death in 3/67 patients (4.5%) in the placebo arm and in 1/62
(1.6%) in the BDP arm.
A
retrospective analysis of survival at 200 days post-transplantation in the
supportive Phase 2 clinical trial showed consistent response rates with the
Phase 3 trial; three patients (10%) who had been randomized to orBec® had
died, compared with six deaths (21%) among patients who had been randomized to
placebo, leading to a reduced hazard of day-200 mortality, although not
statistically significantly different. Detailed analysis of the
likely proximate cause of death showed that mortality with infection or with
relapse of underlying malignancy were both reduced in the same proportion after
treatment with orBec®
compared to placebo. By transplantation day-200, relapse of
hematologic malignancy had contributed to the deaths of 1 of 31 patients (3%) in
the orBec® arm
and 4 of 29 patients (14%) in the placebo arm. Infection contributed
to the deaths of 2 of 31 patients (6%) in the orBec® arm
and 5 of 29 patients (17%) in the placebo arm.
In this
Phase 3 trial, orBec®
achieved these mortality results despite the fact that there were more “high
risk of underlying cancer relapse” patients in the orBec® group
than in the placebo group: 40, or 65%, versus 29, or 43%, respectively. There
was also an imbalance of non-myeloablative patients in the orBec®
treatment group, 26, or 42%, in the orBec® group
versus 15, or 22%, in the placebo group, putting the orBec® group
at a further disadvantage. In addition, a subgroup analysis also
revealed that patients dosed with orBec® who
had received stem cells from unrelated donors had a 94% reduction in the risk of
mortality 200 days post-transplantation.
Among the
data reported in the January 2007 issue of Blood, the peer-reviewed
Journal of the American Society of Hematology, orBec®
showed continued survival benefit when compared to placebo one year after
randomization in the pivotal Phase 3 clinical trial. Overall, 18 patients (29%)
in the orBec® group
and 28 patients (42%) in the placebo group died within one year of randomization
(46% reduction in mortality, p-value 0.04). Results from the Phase 2
trial also demonstrated enhanced long-term survival benefit with orBec®
versus placebo. In that study, at one year after randomization, 6 of 31 patients
(19%) in the orBec® group
had died while 9 of 29 patients (31%) in the placebo group had died (45%
reduction in mortality, p-value 0.26). Pooling the survival data from both
trials demonstrated that the survival benefit of orBec®
treatment was sustained long after orBec® was
discontinued and extended well beyond 3 years after the transplantation. As of
September 25, 2005, median follow-up of patients in the two trials was 3.5 years
(placebo patients) and 3.6 years (orBec®
patients), with a range of 10.6 months to 11.1 years. The risk of mortality was
37% lower for patients randomized to orBec®
compared with placebo (p-value 0.03).
Safety
and Adverse Events
The
frequencies of severe adverse events, adverse events related to study drug, and
adverse events resulting in study drug discontinuation were all comparable to
that of the placebo group in both trials. Patients who remained on orBec® until
Day 50 in the Phase 3 study had a higher likelihood of having biochemical
evidence of abnormal hypothalamic-pituitary-adrenal axis function compared to
patients on placebo. This effect was far less pronounced than those seen in
patients on high dose prednisone.
Commercialization
and Market
We
anticipate the market potential for orBec® for
the treatment of acute GI GVHD to be approximately 50 percent of the more than
10,000 allogeneic bone marrow and stem cell transplantations that occur each
year in the U.S.
On February 11, 2009, we entered into a collaboration and supply
agreement with Sigma-Tau for the commercialization of orBec®. Sigma-Tau is a
pharmaceutical company that develops novel therapies for the unmet needs of
patients with rare diseases. Pursuant to this agreement, Sigma-Tau has an
exclusive license to commercialize orBec® in the U.S., Canada and Mexico (the
“Territory”). Sigma-Tau is obligated to make payments upon the attainment of
significant milestones, as set forth in the agreement. The first milestone
payment of $1 million will be made upon the enrollment of the first patient
in our confirmatory Phase 3 clinical trial of orBec® for the treatment of
acute GI GVHD, which is expected to occur in the second half of
2009.Total milestone payments due from Sigma-Tau for orBec® under the
agreement could reach up to $10 million. Sigma-Tau will pay us a 35% royalty
(inclusive of drug supply) on net sales in the Territory as well as pay for
commercialization expenses, including launch activities. In connection with the
execution of the collaboration and supply agreement, we entered into a common
stock purchase agreement with Sigma-Tau pursuant to which we sold 25 million
shares of our common stock to Sigma-Tau for $0.18 per share, for an aggregate
price of $4,500,000. The purchase price is equal to one hundred fifty
percent (150%) of the average trading price of our common stock over the five
trading days prior to February 11, 2009. On November 26, 2008, prior
to entering the collaboration agreement, we sold Sigma-Tau 16,666,667 common
shares at $0.09 per share (the market price at the time) for proceeds of
$1,500,000 in exchange for the exclusive right to negotiate a collaboration deal
with us until March 1, 2009.
Research and Development Analysis for
orBec®
Since 2000, we have incurred expenses of approximately $18,000,000 in the
development of orBec®. Research and development costs for orBec®
totaled $2,224,617 for the six months ended June 30, 2009 and $933,561 and
$2,288,615 for the years ended December 31, 2008 and 2007, respectively.
About
GVHD
GVHD
occurs in patients following allogeneic bone marrow transplantation in which
tissues of the host, most frequently the gut, liver, and skin, are attacked by
lymphocytes from the donor (graft) marrow. Patients with mild to moderate GI
GVHD present to the clinic with early satiety, anorexia, nausea, vomiting and
diarrhea. If left untreated, symptoms of GI GVHD persist and can progress to
necrosis and exfoliation of most of the epithelial cells of the intestinal
mucosa, frequently a fatal condition. Approximately 50% of the more than 10,000
annual allogeneic transplantation patients in the U.S. will develop some form of
acute GI GVHD.
GI GVHD
is one of the most common causes for the failure of bone marrow transplantation.
These procedures are being increasingly utilized to treat leukemia and other
cancer patients with the prospect of eliminating residual disease and reducing
the likelihood of relapse. orBec®
represents a first-of-its-kind oral, locally acting therapy tailored to
treat the gastrointestinal manifestation of GVHD, the organ system where GVHD is
most frequently encountered and highly problematic. orBec® is
intended to reduce the need for systemic immunosuppressives to treat acute GI
GVHD. Currently used systemic immunosuppressives utilized to control GI GVHD
substantially inhibit the highly desirable Graft-versus-Leukemia (“GVL”) effect
of bone marrow transplantations, leading to high rates of aggressive forms of
relapse, as well as substantial rates of mortality due to opportunistic
infection.
About
Allogeneic Bone Marrow/Stem Hematopoietic Cell Transplantation
(HCT)
Allogeneic
HCT is considered a potentially curative option for many leukemias as well as
other forms of blood cancer. In an allogeneic HCT procedure,
hematopoietic stem cells are harvested from a closely matched relative or
unrelated person, and are transplanted into the patient following either
high-dose chemotherapy or intense immunosuppressive conditioning
therapy. The curative potential of allogeneic HCT is now partly
attributed to the GVL or Graft-versus-Tumor effects of the newly transplanted
donor cells to recognize and destroy malignant cells in the recipient
patient.
The use
of allogeneic HCT has grown substantially over the last decade due to advances
in human immunogenetics, the establishment of unrelated donor programs, the use
of cord blood as a source of hematopoietic stem cells and the advent of
non-myeloablative conditioning regimens, or mini-transplants, that avoid the
side effects of high-dose chemotherapy. Based on the latest
statistics available, it is estimated that there are more than 10,000 allogeneic
HCT procedures annually in the U.S. and a comparable number in
Europe. Estimates as to the current annual rate of increase in these
procedures are as high as 20%. High rates of morbidity and mortality occur in
this patient population. Clinical trials are also underway testing allogeneic
HCT for treatment of some metastatic solid tumors such as breast cancer, renal
cell carcinoma, melanoma and ovarian cancer. Allogeneic transplantation has also
been used as curative therapy for several genetic disorders, including
immunodeficiency syndromes, inborn errors of metabolism, thalassemia and sickle
cell disease. The primary toxicity of allogeneic HCT, however, is GVHD in which
the newly transplanted donor cells damage cells in the recipient’s
gastrointestinal tract, liver and skin.
Future
Potential Indications of orBec® and
Oral BDP
Based on
its pharmacological characteristics, orBec® may
have utility in treating other conditions of the gastrointestinal tract having
an inflammatory component. We have an issued U.S. patent 6,096,731 claiming the
use of oral BDP as a method for preventing and treating the tissue damage that
is associated with both GI GVHD following HCT, as well as GVHD which also occurs
following organ allograft transplantation. We initiated a Phase 2 trial of
orBec® in
the prevention of acute GVHD in the third quarter of 2007. In addition, we are
exploring the possibility of testing oral BDP (the active ingredient in
orBec®) for
local inflammation associated with Crohn’s Disease, Lymphocytic Colitis,
Irritable Bowel Syndrome, Ulcerative Colitis, among other
indications.
SGX201
On
December 8, 2008, we announced that the FDA has completed its review and cleared
the Investigational New Drug (“IND”) application for SGX201, a time-release
formulation of oral BDP, for the prevention of acute radiation enteritis.
Consequently, we are able to initiate a Phase 1/2 clinical trial in acute
radiation enteritis, expected to occur in the second half of 2009. On
January 6, 2009, we also announced that SGX201 also received “Fast Track”
designation from the FDA. Fast Track is a designation that the FDA reserves for
a drug intended to treat a serious or life-threatening condition and one that
demonstrates the potential to address an unmet medical need for the condition.
Fast track designation is designed to facilitate the development and expedite
the review of new drugs. For instance, should events warrant, we will be
eligible to submit an NDA for SGX201 on a rolling basis, permitting the FDA to
review sections of the NDA prior to receiving the complete submission.
Additionally, NDAs for Fast Track development programs ordinarily will be
eligible for priority review, which implies an abbreviated review time of six
months.
SGX201
contains BDP, a highly potent, topically active corticosteroid that has a local
effect on inflamed tissue. BDP has been marketed in the U.S. and worldwide since
the early 1970s as the active pharmaceutical ingredient in inhalation products
for the treatment of patients with allergic rhinitis and asthma. BDP is
also the active ingredient in orBec®,
currently in Phase 3 and Phase 2 development by Soligenix for the treatment and
prevention of GI GVHD, respectively. SGX201 is time-release
formulation of BDP specifically designed for oral use. We plan to initiate a
Phase 1/2 clinical trial in acute radiation enteritis in the second half of
2009.
About
Acute Radiation Enteritis
External
radiation therapy is used to treat most types of cancer, including cancer of the
bladder, uterine, cervix, rectum, prostate, and vagina. During
delivery of treatment, some level of radiation will also be delivered to healthy
tissue, including the bowel, leading to acute and chronic
toxicities. The large and small bowels are very sensitive to
radiation and the larger the dose of radiation the greater the damage to normal
bowel tissue. Radiation enteritis is a condition in which the lining of the
bowel becomes swollen and inflamed during or after radiation therapy to the
abdomen, pelvis, or rectum. Most tumors in the abdomen and pelvis
need large doses, and almost all patients receiving radiation to the abdomen,
pelvis, or rectum will show signs of acute enteritis.
Patients
with acute enteritis may have nausea, vomiting, abdominal pain and bleeding,
among other symptoms. Some patients may develop dehydration and
require hospitalization. With diarrhea, the gastrointestinal tract does not
function normally, and nutrients such as fat, lactose, bile salts, and vitamin
B12
are not well absorbed.
Symptoms
will usually resolve within 2-6 weeks after therapy has
ceased. Radiation enteritis is often not a self-limited illness, as
over 80% of patients who receive abdominal radiation therapy complain of a
persistent change in bowel habits. Moreover, acute radiation injury
increases the risk of development of chronic radiation enteropathy, and overall
5% to 15% of the patients who receive abdominal or pelvic irradiation will
develop chronic radiation enteritis.
There are
over 100,000 patients in the U.S. annually who receive abdominal or pelvic
external beam radiation treatment for cancer who are at risk of developing acute
and chronic radiation enteritis.
SGX202
On
September 12, 2007, we announced that our academic partner, the Fred Hutchinson
Cancer Research Center (“FHCRC”), received a $1 million grant from the NIH to
conduct preclinical studies of oral beclomethasone dipropionate (oral BDP, also
the active ingredient in orBec®) for
the treatment of GI radiation injury. While we will not receive any monetary
benefit from this grant, we will benefit if this work is successful and it will
enhance the value of our oral BDP programs. The purpose of the studies funded by
the grant, entitled “Improving Gastrointestinal Recovery after Radiation,” is to
evaluate the ability of three promising clinical-grade drugs, including oral
BDP, given alone or in combination, that are likely to significantly mitigate
the damage to the gastrointestinal epithelium caused by exposure to high doses
of radiation using a well-established dog model. The GI tract is highly
sensitive to ionizing radiation and the destruction of epithelial tissue is one
of the first effects of radiation exposure.
The rapid
loss of epithelial cells leads to inflammation and infection that are often the
primary cause of death in acute radiation injury. This type of therapy, if
successful, would benefit cancer patients undergoing radiation, chemotherapy, or
victims of nuclear-terrorism. In most radiation scenarios, injury to the
hematopoietic (blood) system and gastrointestinal tract are the main
determinants of survival. The studies will compare overall survival and markers
of intestinal cell regeneration when the drug regimens are added to supportive
care intended to boost proliferation of blood cells. The principal investigator
of the study is George E. Georges, M.D., Associate Member of the
FHCRC. Our rights to the use of SGX 202 are through our license with
George McDonald.
BioDefense
Overview
RiVax™
RiVax™ is
our proprietary vaccine developed to protect against exposure to ricin toxin,
and is the first and only ricin toxin vaccine to be clinically tested in humans.
Ricin is a potent glycoprotein toxin derived from the beans of castor plants. It
can be cheaply and easily produced, is stable over long periods of time, is
toxic by several routes of exposure and thus has the potential to be used as a
biological weapon against military and/or civilian targets. As a bioterrorism
agent, ricin could be disseminated as an aerosol, by injection, or as a food
supply contaminant. The potential use of ricin toxin as a biological weapon of
mass destruction has been highlighted in a FBI Bioterror report released in
November 2007 entitled Terrorism 2002-2005, which states that “Ricin and the
bacterial agent anthrax are emerging as the most prevalent agents involved in
WMD investigations”
(http://www.fbi.gov/publications/terror/terrorism2002_2005.pdf). The Centers for
Disease Control (“CDC”) has classified ricin as a Category B biological agent.
Ricin works by first binding to glycoproteins found on the exterior of a cell,
and then entering the cell and inhibiting protein synthesis leading to cell
death. Once exposed to ricin toxin, there is no effective therapy available to
reverse the course of the toxin. Currently, there is no FDA approved vaccine to
protect against the possibility of ricin toxin being used in a terrorist attack,
or its use as a weapon on the battlefield, nor is there a known antidote for
ricin toxin exposure.
We have
announced positive Phase 1 clinical trial results for RiVax™ which demonstrated
that the vaccine is well tolerated and induces antibodies in humans that
neutralize the ricin toxin. The functional activity of the antibodies was
confirmed by animal challenge studies in mice which survived exposure to ricin
toxin after being injected with serum samples from the volunteers. The outcome
of the study was published in the Proceedings of the National Academy of
Sciences. A second Phase 1 trial is currently underway, utilizing an adjuvanted
formulation.
The
initial Phase 1 clinical trial was conducted by Dr. Ellen Vitetta at the
University of Texas Southwestern Medical Center (“UTSW”) at Dallas, Soligenix’s
academic partner on the RiVax™ program. The National Institutes of Health
(“NIH”) has awarded us two grants: one for $6.4 million and one for $5.2 million
for a total of $11.6 million for the development of RiVax™ covering process
development, scale-up and cGMP manufacturing, and preclinical toxicology testing
pursuant to the FDA’s “animal rule,” which has supported our research from 2004
to present.
The
development of RiVax™ has progressed significantly. In September 2006, in
addition to an earlier grant of $6.4 million, we received a grant of
approximately $5.2 million from NIAID, a division of the NIH, for the
continued development of RiVax™, a recombinant vaccine against ricin toxin. This
RiVax™ grant will provide approximately $5.2 million over a three year period to
fund the development of animal models which will be used to correlate human
immune response to the vaccine with protective efficacy in animals. This is
necessary for ultimate licensure by the FDA, when human efficacy vaccine trials
are not possible. This grant also supports the further biophysical
characterization of the vaccine containing a well-characterized adjuvant that is
needed to enhance the immune response to recombinant proteins. These studies
will be required to assure that the vaccine is stable and potent over a period
of years. A prototype version of RiVax™ has been evaluated in a Phase 1 clinical
trial and was shown to be safe and effective, while also inducing ricin
neutralizing antibodies as confirmed in subsequent animal studies.
On
September 21, 2009, we announced that we were awarded a $9.4 Million grant from
NIAID. The grant will fund, over a five-year period, the development
of formulation and manufacturing processes for vaccines, including
RiVaxTM,
that are stable at elevated temperatures. The grant will also fund
the development of improved thermostable adjuvants expected to result in rapidly
acting vaccines that can be given with fewer injections over shorter intervals.
The development of heat-stable vaccines will take advantage of combining several
novel formulation processes with well characterized adjuvants that have been
evaluated in numerous vaccine field trials.
The
formulation and process technology funded by the grant will be applied to the
further development of RiVaxTM, a
subunit vaccine for prevention of ricin toxin lethality and
morbidity. The grant will also address the development of
manufacturing processes and animal model systems necessary for the preclinical
characterization of vaccine formulations. Further, the grant will
fund the concurrent development of at least one other protein subunit vaccine,
which is currently expected to be an anthrax vaccine. This could lead
to new subunit vaccines that would bypass current cold chain requirements for
storage and distribution. Vaccines to be stored in the Strategic
National Stockpile (SNS) and used under emergency situations for biodefense are
expected to have long-term shelf life.
On April
29, 2008, we announced the initiation of a comprehensive program to evaluate the
efficacy of RiVax™, in non-human primates. This study is taking place at the
Tulane University Health Sciences Center and will provide data that will further
aid in the interpretation of immunogenicity data obtained in the human
vaccination trials. The study was initiated in the second quarter of
2008.
On
January 29, 2008, we announced that we successfully achieved a two-year
milestone in the long-term stability program of the key ingredient of RiVax™, a
recombinant subunit vaccine against ricin toxin. The results of the two-year
analysis, undertaken as part of the formal stability program, demonstrate that
the immunogen component of RiVax™, a recombinant derivative of the ricin A
chain, is stable under storage conditions for at least two years without loss of
its natural configuration or the appearance of any detectable degradation
products. A vaccine is considered by many to be the best way to prospectively
protect populations at risk of exposure against ricin toxin. As this vaccine
would potentially be added to the Strategic National Stockpile and dispensed in
the event of a terrorist attack, the activity of the vaccine must be maintained
over a period of years under stockpile storage conditions.
On
November 15, 2007, we announced that we entered into a Cooperative Research and
Development Agreement with the Walter Reed Army Institute of Research (“WRAIR”)
to provide additional means to characterize the immunogenic protein subunit
component of RiVax™, our preventive vaccine against ricin toxin. The agreement
will be carried out at the Division of Biochemistry at WRAIR and will encompass
basic studies to reveal the underlying protein structure that is important in
inducing human immune responses to ricin toxin. Ricin toxin is an easy to
manufacture toxin that poses a serious threat as a bioweapon, primarily by
inhalation. Some of the features that are critical to induce protective immune
responses by vaccination with RiVax™ include structural determinants in the core
and the surface of the protein. The purpose of the agreement is to obtain data
to correlate protein structure with induction of protective immunity and
long-term stability of the protein. These studies will involve comparison to
structures of similar natural and recombinant proteins. RiVax™ induces
antibodies that appear primarily in the blood of animals and humans. Some of
these antibodies recognize determinants on the protein that are dependent on the
conformation of the protein and may be involved in biological activity. Overall,
antibodies in the blood are correlated to protection against exposure when the
toxin enters the circulatory system or when it comes into contact with lung
surfaces, where the major effects lead to severe inflammation, tissue necrosis
and death. RiVax™ induces such antibodies in humans as well as other animal
species. Lieutenant Colonel Charles B. Millard, Ph.D., Director of the Division
of Biochemistry at WRAIR, will lead the studies to be conducted at WRAIR, which
will include X-ray crystal analysis to determine the structural parameters of
the RiVax™ vaccine. We will not receive any monetary benefits from this
agreement. We will take part in evaluating the data that is found by WRAIR’s
studies, which they are funding. If successful, this will enhance the value of
our RiVax™ product and assist with continuing the progression of the
program.
In July
2007, we announced that the Office of Orphan Products Development (“OOPD”) of
the FDA has awarded a development grant for the further clinical evaluation of
RiVax™. The grant was awarded to UTSW to further the development of RiVax™. We
will not receive any monetary benefits from this grant; however, the successful
completion of this work will enhance the value of our RiVax™ program and
continue to move it forward. The principal investigator for the project is Dr.
Vitetta, Director of the Cancer Immunobiology Center at UTSW. The award totals
approximately $940,000 for three years and is to be used for the evaluation of
an adjuvant for use with the vaccine. Typically, awards made by the OOPD are to
support clinical trials for development of products that address rare diseases
or medicines that would be used in numerically small populations. UTSW began a
second Phase 1 human clinical trial with an adjuvanted formulation of RiVax™ in
August of 2008.
Research and Development Analysis for RiVax™
The costs
that we have incurred to develop RiVax™ since 2002 total approximately
$7,200,000. Research and development costs for RiVax™ totaled $388,575 for the
six months ended June 30, 2009 and $312,486 and $1,350,369 for the years ended
December 31, 2008 and 2007, respectively. Of the amount spent during
the years ended December 31, 2008 and 2007, $1,681,274 and $897,470 were for
costs reimbursed under the NIH grant, respectively.
BT-VACC™
Our
botulinum toxin vaccine, called BT-VACC™, originated from the research of Dr.
Lance Simpson at Thomas Jefferson University in Philadelphia,
Pennsylvania. The vaccine is being developed as an oral or intranasal
formulation to be given as a primary immunization series or as oral or nasal
booster to individuals who have been primed with an injected
vaccine. Botulinum toxin is the product of the bacteria Clostridium botulinum.
Botulinum toxin is the most poisonous natural substance known to man. Botulinum
toxin causes acute, symmetric, descending flaccid paralysis due to its action on
peripheral cholinergic nerves. Paralysis typically presents 12 to 72 hours after
exposure. Death results from paralysis of the respiratory muscles. Current
treatments include respiratory support and passive immunization with antibodies
which must be administered before symptoms occur, which leaves little time
post-exposure for effective treatment.
In the
context of oral and nasal formulations, we are developing a multivalent vaccine
against botulinum neurotoxins serotypes A, B and E, which account for almost all
human cases of disease. We have identified lead antigens against Serotypes A, B
and E consisting of the Hc50 fragment of the botulinum toxin. Typically,
vaccines given by mucosal routes are not immunogenic because they do not attach
to immune inductive sites. In the case of the combination BT-VACC™, both the A
and the B antigens were capable of attaching to cells in the mucosal epithelium
and inducing an immune response with similar magnitude to the injected vaccine.
Our preclinical data suggests that a bivalent formulation of serotypes A and B
is completely effective at low, mid and high doses as an intranasal vaccine and
completely effective at the higher dose level orally in animal models. The
animals were given a small quantity of the bivalent combination vaccine
containing each of the type A and type B antigens (10 micrograms) three times a
day at two week intervals. All of the animals developed equivalent immune
responses to A and B types in the serum. Importantly, they were then protected
against exposure to each of the native toxin molecules given at 1000 fold the
dose that causes lethality. The immune responses were also comparable to the
same vaccines when given by intramuscular injection.
In July
2007, we announced that the first results from testing of a multivalent form of
BT-VACC™ were published in the journal Infection and Immunity
(Ravichandran et al., 2007, Infection and Immunity, v.
75, p. 3043). These results are the first to describe the protective immunity
elicited by a multivalent vaccine that is active by the mucosal route. The
vaccine consists of a combination of three non-toxic subunits of botulinum toxin
that induced protection against the corresponding versions of the natural
toxins. The results published in Infection and Immunity show
that non-toxic subunits (protein components of the natural toxin) of three of
the serotypes of botulinum toxin that cause almost all instances of human
disease, namely serotypes A, B, and E, can be combined and delivered via nasal
administration. The combination vaccine induced antibodies in the serum of mice
and protected against subsequent exposure to high doses of a combination of the
natural A, B, and E serotype neurotoxins. The combination vaccine also can
induce protection when given mucosally as a booster to animals that have been
given a primary vaccine injection.
Research and Development Analysis for
BT-VACC™
The costs that we have incurred to develop
BT-VACC™ from 2002 total approximately $2,100,000. Research and
development costs for BT-VACC™ totaled $104,567 for the six months ended June
30, 2009 and $201,529 and $360,997 for the years ended December 31, 2008 and
2007, respectively. Of the amount spent during the years ended
December 31, 2008 and 2007, $82,606 and $45,915 were for costs reimbursed under
the under the SBIR grant, respectively.
Additional
Programs
LPMTM -
Leuprolide
Our Lipid
Polymer Micelle (“LPM™”) oral drug delivery system is a proprietary platform
technology designed to allow for the oral administration of peptide drugs that
are water-soluble but poorly permeable through the gastrointestinal tract. We
have previously demonstrated in preclinical animal models that the LPM™
technology is adaptable to oral delivery of peptide drugs and that high systemic
levels after intestinal absorption can be achieved with the peptide hormone drug
leuprolide. The LPM™ system utilizes a lipid based delivery system that can
incorporate the peptide of interest in a thermodynamically stable configuration
called a “reverse micelle” that, through oral administration, can promote
intestinal absorption. Reverse micelles are structures that form when certain
classes of lipids come in contact with small amounts of water. This
results in a drug delivery system in which a stable clear dispersion of the
water soluble drug can be evenly dispersed within the lipid phase. LPM™ is
thought to promote intestinal absorption due to the ability of the micelles to
open up small channels through the epithelial layer of the intestines that allow
only molecules of a certain dimension to pass through while excluding extremely
large molecules such as bacteria and viruses. The reverse micelles
also structurally prevent the rapid inactivation of peptides by enzymes in the
upper gastrointestinal tract via a non-specific enzyme inhibition by
surfactant(s) in the formulation.
In
preclinical studies, the LPM™ delivery technology significantly enhanced the
ability of leuprolide to pass through the intestinal epithelium in comparison to
leuprolide alone. Leuprolide is a synthetic peptide agonist of gonadotropin
releasing hormone, which is used in the treatment of prostate cancer in men and
endometriosis in women. Leuprolide exhibits poor intestinal absorption from an
aqueous solution with the oral bioavailability being less than 5%. Utilizing
LPM™ in rats and dogs, the bioavailability of leuprolide averaged 30% compared
to 2.2% for the control oral solution. Based on these promising preclinical
data, we anticipate preparing for a Phase 1 study in humans in first half of
2010 to confirm these findings.
An oral
version of leuprolide may provide a significant advantage over the currently
marketed “depot” formulations. Leuprolide is one of the most widely used
anti-cancer agents for advanced prostate cancer in men. Injectable
forms of leuprolide marketed under trade names such as Lupron® and
Eligard® had
worldwide sales of approximately $1.8 billion in 2006. Injectable leuprolide is
also widely used in non-cancer indications, such as endometriosis in women (a
common condition in which cells normally found in the uterus become implanted in
other areas of the body), uterine fibroids in women (noncancerous growths in the
uterus) and central precocious puberty in children (a condition causing children
to enter puberty too soon). Leuprolide is currently available only in
injectable, injectable depot and subcutaneous implant routes of delivery which
limits its use and utility.
Research and Development Analysis
for LPM™ Leuprolide
The costs that we have incurred to develop
LPM™-Leuprolide since 2000 total approximately $1,405,000. Research and
development costs for LPM™-Leuprolide totaled $5,154 for the six months ended
June 30, 2009 and $112,246 and $38,254 for the years ended December 31,
2008 and 2007, respectively. These costs are mainly legal costs in
connection with maintenance of our patent positions and for preclinical
formulation work. The next steps for this program are to finish
formulation work and advance into a Phase 1 human pharmacokinetics study which
will seek to replicate in humans the bioavailability we have seen in our animal
models.
The
Drug Approval Process
General
Before
marketing, each of our products must undergo an extensive regulatory approval
process conducted by the FDA and applicable agencies in other countries.
Testing, manufacturing, commercialization, advertising, promotion, export and
marketing, among other things, of the proposed products are subject to extensive
regulation by government authorities in the U.S. and other countries. All
products must go through a series of tests, including advanced human clinical
trials, which the FDA is allowed to suspend as it deems necessary to protect the
safety of subjects.
Our
products will require regulatory clearance by the FDA and by comparable agencies
in other countries, prior to commercialization. The nature and extent of
regulation differs with respect to different products. In order to test, produce
and market certain therapeutic products in the U.S., mandatory procedures and
safety standards, approval processes, manufacturing and marketing practices
established by the FDA must be satisfied.
An IND
application is required before human clinical testing in the U.S. of a new drug
compound or biological product can commence. The INDA includes results of
pre-clinical animal studies evaluating the safety and efficacy of the drug and a
detailed description of the clinical investigations to be
undertaken.
Clinical
trials are normally done in three Phases, although the phases may overlap. Phase
1 trials are smaller trials concerned primarily with metabolism and
pharmacologic actions of the drug and with the safety of the product. Phase 2
trials are designed primarily to demonstrate effectiveness and safety in
treating the disease or condition for which the product is indicated. These
trials typically explore various doses and regimens. Phase 3 trials are expanded
clinical trials intended to gather additional information on safety and
effectiveness needed to clarify the product’s benefit-risk relationship and
generate information for proper labeling of the drug, among other things. The
FDA receives reports on the progress of each phase of clinical testing and may
require the modification, suspension or termination of clinical trials if an
unwarranted risk is presented to patients. When data is required from long-term
use of a drug following its approval and initial marketing, the FDA can require
Phase 4, or post-marketing, studies to be conducted.
With
certain exceptions, once successful clinical testing is completed, the sponsor
can submit an NDA for approval of a drug. The process of completing clinical
trials for a new drug is likely to take a number of years and require the
expenditure of substantial resources. Furthermore, the FDA or any foreign health
authority may not grant an approval on a timely basis, if at all. The FDA may
deny the approval of an NDA, in its sole discretion, if it determines that its
regulatory criteria have not been satisfied or may require additional testing or
information. Among the conditions for marketing approval is the requirement that
the prospective manufacturer’s quality control and manufacturing procedures
conform to good manufacturing practice regulations. In complying with standards
contained in these regulations, manufacturers must continue to expend time,
money and effort in the area of production, quality control and quality
assurance to ensure full technical compliance. Manufacturing facilities, both
foreign and domestic, also are subject to inspections by, or under the authority
of, the FDA and by other federal, state, local or foreign agencies.
Even
after initial FDA or foreign health authority approval has been obtained,
further studies, including Phase 4 post-marketing studies, may be required to
provide additional data on safety and will be required to gain approval for the
marketing of a product as a treatment for clinical indications other than those
for which the product was initially tested. Also, the FDA or foreign regulatory
authority will require post-marketing reporting to monitor the side effects of
the drug. Results of post-marketing programs may limit or expand the further
marketing of the products. Further, if there are any modifications to the drug,
including any change in indication, manufacturing process, labeling or
manufacturing facility, an application seeking approval of such changes will
likely be required to be submitted to the FDA or foreign regulatory
authority.
In the
U.S., the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act,
the Federal Trade Commission Act, and other federal and state statutes and
regulations govern or influence the research, testing, manufacture, safety,
labeling, storage, record keeping, approval, advertising and promotion of drug,
biological, medical device and food products.
Noncompliance
with applicable requirements can result in, among other things, fines, recall or
seizure of products, refusal to permit products to be imported into the U.S.,
refusal of the government to approve product approval applications or to allow
the Company to enter into government supply contracts, withdrawal of previously
approved applications and criminal prosecution. The FDA may also assess civil
penalties for violations of the Federal Food, Drug, and Cosmetic Act involving
medical devices.
For the
development of biodefense vaccines such as RiVaxTM and
BT-VACCTM, the
FDA has instituted policies that are expected to result in shorter pathways to
market. This potentially includes approval for commercial use using the results
of animal efficacy trials, rather than efficacy trials in humans. However, the
Company will still have to establish that the vaccine and countermeasures it is
developing are safe in humans at doses that are correlated with the beneficial
effect in animals. Such clinical trials will also have to be completed in
distinct populations that are subject to the countermeasures; for instance, the
very young and the very old, and in pregnant women, if the countermeasure is to
be licensed for civilian use. Other agencies will have an influence over the
risk benefit scenarios for deploying the countermeasures and in establishing the
number of doses utilized in the Strategic National Stockpile. We may not be able
to sufficiently demonstrate the animal correlation to the satisfaction of the
FDA, as these correlates are difficult to establish and are often
unclear. Invocation of the animal rule may raise issues of confidence
in the model systems even if the models have been validated. For many of the
biological threats, the animal models are not available and the Company may have
to develop the animal models, a time-consuming research effort. There are few
historical precedents, or recent precedents, for the development of new
countermeasure for bioterrorism agents. Despite the animal rule, the FDA may
require large clinical trials to establish safety and immunogenicity before
licensure and it may require safety and immunogenicity trials in additional
populations. Approval of biodefense products may be subject to post-marketing
studies, and could be restricted in use in only certain
populations.
Marketing
Strategies
Pursuant to the collaboration and supply
agreement with Sigma-Tau, we granted an exclusive license to Sigma-Tau to
commercialize orBec® in the U.S., Canada and Mexico.
We are
actively seeking a commercialization partner for orBec® and
oral BDP outside of North America as well as a worldwide partner for our
LPMTM
Leuprolide program.
We have
had and are having strategic discussions with a number of pharmaceutical
companies regarding the partnering or sale of our biodefense vaccine products.
We may market our biodefense vaccine products directly to government agencies.
We believe that both military and civilian health authorities of the U.S. and
other countries will increase their stockpiling of therapeutics and vaccines to
treat and prevent diseases and conditions that could ensue following a
bioterrorism attack.
Competition
Our
competitors are pharmaceutical and biotechnology companies, most of whom have
considerably greater financial, technical, and marketing resources than we
currently have. Another source of competing technologies is universities and
other research institutions, including the U.S. Army Medical Research Institute
of Infectious Diseases, and we face competition from other companies to acquire
rights to those technologies.
orBec®
Competition
Competition
is intense in the gastroenterology and transplant areas. Companies are
attempting to develop technologies to treat GVHD by suppressing the immune
system through various mechanisms. Some companies, including Sangstat, Abgenix,
and Protein Design Labs, Inc., are developing monoclonal antibodies to treat
GVHD. Novartis, Medimmune, and Ariad are developing both gene therapy products
and small molecules to treat GVHD. All of these products are in various stages
of development. For example, Novartis currently markets Cyclosporin, and
Sangstat currently markets Thymoglobulin for transplant related therapeutics. We
face potential competition from Osiris Therapeutics if their product Prochymal
for the treatment of GVHD is successful in Phase 3 clinical trials and reaches
market. Kiadis Pharma is also developing products for the treatment of
GVHD.
In
addition, there are investigator-sponsored clinical trials exploring the use of
approved drugs such as Enbrel®,
which has been approved by the FDA for the treatment of rheumatoid arthritis, in
the treatment of GVHD. We believe that orBec®’s
unique release characteristics, intended to deliver topically active therapy to
both the upper and lower gastrointestinal systems, should make orBec® an
attractive alternative to existing therapies for inflammatory diseases of the
gastrointestinal tract.
Competition
is also intense in the therapeutic area of inflammatory bowel disease. Several
companies, including Centocor, Immunex, and Celgene, have products that are
currently FDA approved. For example, Centocor, a subsidiary of Johnson &
Johnson, markets the drug product RemicadeTM for
Crohn’s disease. Other drugs used to treat inflammatory bowel disease include
another oral locally active corticosteroid called budesonide, which is being
marketed by AstraZeneca in Europe and Canada and by Prometheus Pharmaceuticals
in the U.S. under the tradename of Entocort®. Entocort®
is structurally similar to beclomethasone dipropionate, and the FDA approved
Entocort for Crohn’s disease late in 2001. In addition, Salix Pharmaceuticals,
Inc. markets an FDA approved therapy for ulcerative colitis called Colazal®.
Chiesi Pharmaceuticals (“Chiesi”) markets a delayed release oral formulation of
beclomethasone dipropionate, the active ingredient of orBec®,
called CLIPPERTM for
ulcerative colitis and may seek marketing approval in Italy and other European
countries. In the U.S., Eurand N.V. (“Eurand”) has licenses from Chiesi to the
same formulation as CLIPPERTM and
is developing it for ulcerative colitis. Eurand has also received Orphan Drug
Designation for the compound in pediatric ulcerative colitis
patients.
Several
companies have also established various colonic drug delivery systems to deliver
therapeutic drugs to the colon for treatment of Crohn’s disease. These companies
include Ivax Corporation, Inkine Pharmaceutical Corporation, and Elan
Pharmaceuticals, Inc. Other approaches to treat gastrointestinal disorders
include antisense and gene therapy. Isis Pharmaceuticals, Inc. is in the process
of developing antisense therapy to treat Crohn’s disease.
Biodefense
Vaccine Competition
We face
competition in the area of biodefense vaccines from various public and private
companies, universities and governmental agencies, such as the U.S. Army, some
of whom may have their own proprietary technologies which may directly compete
with the our technologies. Acambis, Inc., Dynavax, Emergent Biosolutions
(formerly Bioport Corporation), VaxGen, Inc., Chimerix, Inc., Human Genome
Sciences, Inc., Coley Pharmaceuticals, Inc., Avanir Pharmaceuticals, Inc.,
Dynport Vaccine Company, LLC., Pharmathene, SIGA Pharmaceuticals and
others have announced vaccine or countermeasure development programs for
biodefense. Some of these companies have substantially greater human and
financial resources than we do, and many of them have already received grants or
government contracts to develop anti-toxins and vaccines against bioterrorism.
For example, Avecia Biotechnology, Inc. has received NIH contracts to develop a
next generation injectable anthrax vaccine. VaxGen received an approximately
$900 million procurement order from the U.S. government to produce and deliver
75 million doses of Anthrax vaccine. This contract was rescinded in January 2007
by the HHS because of the inability of Vaxgen to enter into Phase 2 clinical
trials according to contract timelines. Several companies have received
development grants from the NIH for biodefense products. For example, Coley
Pharmaceuticals, Inc. has received a $6 million Department of Defense grant to
develop vaccine enhancement technology. Dynport Vaccine Company, LLC, a prime
contractor with the DOD, currently has a $200 million contract to develop
vaccines for the U.S. Military, including a multivalent botulinum toxin vaccine.
Although we have received significant grant funding to date for product
development, we have not yet been obtained contract awards for government
procurement of products.
Patents and Other Proprietary
Rights
Our goal
is to obtain, maintain and enforce patent protection for our products,
formulations, processes, methods and other proprietary technologies, preserve
our trade secrets, and operate without infringing on the proprietary rights of
other parties, both in the U.S. and in other countries. Our policy is to
actively seek to obtain, where appropriate, the broadest intellectual property
protection possible for our product candidates, proprietary information and
proprietary technology through a combination of contractual arrangements and
patents, both in the U.S. and elsewhere in the world.
We also
depend upon the skills, knowledge and experience of our scientific and technical
personnel, as well as that of our advisors, consultants and other contractors,
none of which is patentable. To help protect our proprietary knowledge and
experience that is not patentable, and for inventions for which patents may be
difficult to enforce, we rely on trade secret protection and confidentiality
agreements to protect our interests. To this end, we require all employees,
consultants, advisors and other contractors to enter into confidentiality
agreements, which prohibit the disclosure of confidential information and, where
applicable, require disclosure and assignment to us of the ideas, developments,
discoveries and inventions important to our business.
We are
the exclusive licensee of an issued U.S. patent that covers the use of
orBec® for
the prevention and treatment of GI GVHD. We also have “Orphan Drug” designations
for orBec® in
the U.S. and in Europe. Our Orphan Drug designations provide for seven years of
post approval marketing exclusivity in the U.S. and ten years exclusivity in
Europe for the use of orBec® in
the treatment of GI GVHD. We have pending patent applications for this
indication that, if granted, may extend our anticipated marketing exclusivity
beyond the seven year post-approval exclusivity provided by the Orphan Drug Act
of 1983.
orBec® License
Agreement
In
November 1998, our wholly-owned subsidiary, Enteron Pharmaceuticals, Inc.
(“Enteron”), entered into an exclusive, worldwide, royalty bearing license
agreement with George B. McDonald, M.D., including the right to grant
sublicenses, for the rights to the intellectual property and know-how relating
to orBec®. In
addition, Dr. McDonald receives $80,000 per annum as a consultant.
Enteron
also executed an exclusive license to patent applications for “Use of
Anti-Inflammatories to Treat Irritable Bowel Syndrome” from the University of
Texas Medical Branch-Galveston. Under the license agreements, we will be
obligated to make performance-based milestone payments, as well as royalty
payments on any net sales of oral BDP.
RiVaxTM Intellectual
Property
In
January 2003, we executed a worldwide exclusive option to license patent
applications with UTSW for the nasal, pulmonary and oral uses of a non-toxic
ricin vaccine. In June 2004, we entered into a license agreement with UTSW for
the injectable rights to the ricin vaccine for initial license fees of $200,000
of our common stock and $100,000 in cash. Subsequently, in October 2004, we
negotiated the remaining oral rights to the ricin vaccine for additional license
fees of $150,000 in cash. Our license obligates us to pay $50,000 in
annual license fees.
We have
sponsored research agreements with UTSW funded by two NIH grants. On December 7,
2006, we announced that the U.S. Patent and Trademark Office issued a Notice of
Allowance of patent claims based on U.S. Patent Application #09/698,551 entitled
“Ricin A chain mutants lacking enzymatic activity as vaccines to protect against
aerosolized ricin.” This patent includes methods of use and composition claims
for RiVax™.
BT-VACCTM Intellectual Property
In 2003,
we executed an exclusive license agreement with Thomas Jefferson University for
issued U.S. Patent No. 6,051,239 and corresponding international patent
applications broadly claiming the oral administration of nontoxic modified
botulinum toxins as vaccines. The intellectual property also includes patent
applications covering the inhaled and nasal routes of delivery of the vaccine.
This license agreement required that we pay a license fee of $160,000, payable
in $130,000 of common stock and $30,000 in cash. In 2003, we entered into a
one-year sponsored research agreement with the execution of the license
agreement with Thomas Jefferson University, renewable on an annual basis, under
which we have provided $300,000 in annual research support. In addition, we also
executed a consulting agreement with Dr. Lance Simpson, the inventor of the
botulinum toxin vaccine for a period of three years. Under this agreement, Dr.
Simpson received options to purchase 100,000 shares of our common stock, vesting
over two years. We are also required to pay a $10,000 non-refundable license
royalty fee no later than January 1 of each calendar year, which increased to
$15,000 in 2006 and every year thereafter.
Description
of Property
We
currently lease approximated 5,250 square feet of office space at 29 Emmons
Drive, Suite C-10, Princeton, New Jersey 08550. This office space
currently serves as our corporate headquarters. Pursuant to the lease
dated April 1, 2009, we will pay rent of approximately $7,450 per month, or
$17.00 per square foot per year, through October 2010. From November
2010 until the lease expires on March 31, 2012, we will pay rent of
approximately $7,650, or $17.50 per square foot per year.
Employees
As of
September 30, 2009, we had 11 full-time employees, five of whom are
Ph.D.s.
Research and Development
Spending
We spent
approximately $1,600,000 and $3,100,000 in the years ended December 31, 2008 and
2007, respectively, on research and development.
Legal
Proceedings
From
time-to-time, we are a party to claims and legal proceedings arising in the
ordinary course of business. Our management evaluates our exposure to these
claims and proceedings individually and in the aggregate and allocates
additional monies for potential losses on such litigation if it is possible to
estimate the amount of loss and if the amount of the loss is
probable.
AND
RESULTS OF OPERATION
The following discussion and
analysis provides information that we believe is relevant to an assessment and
understanding of our results of operation and financial condition. You should
read this analysis in conjunction with our audited consolidated financial
statements and related notes and our unaudited consolidated interim financial
statements and their notes. This discussion and analysis contains statements of
a forward-looking nature relating to future events or our future financial
performance. These statements are only predictions, and actual events or results
may differ materially. In evaluating such statements, you should carefully
consider the various factors identified in this prospectus, which could cause
actual results to differ materially from those expressed in, or implied by, any
forward-looking statements, including those set forth in “Risk Factors” in this
prospectus. See “Forward-Looking Statements.”
Business Overview and
Strategy
We were
incorporated in Delaware in 1987. We are a late-stage research and development
biopharmaceutical company focused on developing products to treat
life-threatening side effects of cancer treatments and serious gastrointestinal
diseases where there remains an unmet medical need, as well as developing
several biodefense vaccines. We maintain two active business segments:
BioTherapeutics and BioDefense. Our BioTherapeutics business segment
intends to develop orBec® (oral
beclomethasone dipropionate, or oral BDP) and other biotherapeutic products,
namely LPMTM-Leuprolide.
Our BioDefense business segment intends to convert its ricin toxin, botulinum
toxin, and anthrax vaccine programs from early stage development to advanced
development and manufacturing.
Our
business strategy can be outlined as follows:
|
(a)
|
complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute GI GVHD;
|
|
(b)
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau to commercialize orBec®
in the U.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty on net
sales in these territories as well as pay for commercialization expenses,
including launch activities;
|
|
(c)
|
conduct
a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
|
|
(d)
|
evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal (“GI”) tract such as radiation
enteritis, radiation injury and Crohn’s disease;
|
|
(e)
|
reinitiate
development of our other biotherapeutics products, namely LPMTM
Leuprolide;
|
|
(f)
|
continue
to secure additional government funding for each of our biodefense
programs, RiVaxTM
and BT-VACCTM,
through grants, contracts and procurements;
|
|
(g)
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense and infectious disease
area;
|
|
(h)
|
make
orBec® available
worldwide through NPAPs for the treatment of acute GI GVHD;
|
|
(i)
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
(j)
|
explore
other business development and acquisition strategies under which we may
be considered to be an attractive acquisition candidate by another
company.
|
On
September 28, 2009, we changed our name from "DOR BioPharma, Inc." to
"Soligenix, Inc." Our principal executive offices are located at 29
Emmons Drive, Suite C-10, Princeton, New Jersey 08550 and our telephone number
is (609) 538-8200.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the U.S. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities and expenses,
and related disclosure of contingent assets and liabilities. We evaluate these
estimates and judgments on an on-going basis.
Intangible
Assets
One of
the most significant estimates or judgments that we make is whether to
capitalize or expense patent and license costs. We make this judgment based on
whether the technology has alternative future uses, as defined in SFAS 2, Accounting for Research and
Development Costs. Based on this consideration, we capitalized all
outside legal and filing costs incurred in the procurement and defense of
patents.
These
intangible assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable or if the
underlying program is no longer being pursued. If the sum of the expected
undiscounted cash flows is less than the carrying value of the related asset or
group of assets, a loss is recognized for the difference between the fair value
and the carrying value of the related asset or group of assets.
We
capitalize and amortize intangibles over a period of 11 to 16 years. We
capitalize legal costs associated with the protection and maintenance of our
patents and rights for our current products in both the domestic and
international markets. As a late stage research and development company with
drug and vaccine products in an often lengthy clinical research process, we
believe that patent rights are one of our most valuable assets. Patents and
patent applications are a key currency of intellectual property, especially in
the early stage of product development, as their purchase and maintenance gives
us access to key product development rights from our academic and industrial
partners. These rights can also be sold or sub-licensed as part of our strategy
to partner our products at each stage of development. The legal costs incurred
for these patents consist of work designed to protect, preserve, maintain and
perhaps extend the lives of the patents. Therefore, our policy is to capitalize
these costs and amortize them over the remaining useful life of the patents. We
capitalize intangible assets’ alternative future use as referred to in SFAS
No.142 and in paragraph 11 c. of SFAS No. 2.
Research
and Development Costs
Research
and Development costs are charged to expense when incurred. Research and
development includes costs such as clinical trial expenses, contracted research
and license agreement fees with no alternative future use, supplies and
materials, salaries and employee benefits, equipment depreciation and allocation
of various corporate costs. Purchased in-process research and development
expense represents the value assigned or paid for acquired research and
development for which there is no alternative future use as of the date of
acquisition.
Revenue
Recognition
Our
revenues are generated from U.S. government grants and from NPAP sales of
orBec®. The
revenue from government grants are based upon subcontractor costs and internal
costs covered by the grant, plus a facilities and administrative rate that
provides funding for overhead expenses. These revenues are recognized when
expenses have been incurred by subcontractors or when we incur internal expenses
that are related to the grant. The NPAP revenues are recorded when the product
is shipped.
Stock-Based
Compensation
Stock
compensation expense for options granted to non-employees has been determined in
accordance with SFAS 123R and Emerging Issues Task Force (“EITF”) 96-18, and
represents the fair value of the consideration received, or the fair value of
the equity instruments issued, whichever may be more reliably measured. For
options that vest over future periods, the fair value of options granted to
non-employees is amortized as the options vest. The option’s price is
re-measured using the Black-Scholes model at the end of each quarterly reporting
period.
As stock
options are exercised, common stock share certificates are issued via electronic
transfer or physical share certificates by our transfer agent. Upon exercise,
shares are issued from the amended 2005 equity incentive plan and increase the
number of shares we have outstanding. There were no stock option exercises
during the six months ended June 30, 2009 or during the year ended December 31,
2008. There were no forfeitures during the six months ended June 30, 2009 and
forfeitures of 779,800 stock options during the year ended December 31, 2008.
The intrinsic value of the stock options was zero.
From time
to time, we issue common stock to vendors, consultants, and employees as
compensation for services performed. These shares are typically issued as
restricted stock, unless issued to non-affiliates under the 2005 Equity
Incentive Plan, where the stock may be issued as unrestricted. The restricted
stock can only have the restrictive legend removed if the shares underlying the
certificate are sold pursuant to an effective registration statement, which we
must file and have approved by the SEC, if the shares underlying the certificate
are sold pursuant to Rule 144, provided certain conditions are satisfied, or if
the shares are sold pursuant to another exemption from the registration
requirements of the Securities Act of 1933, as amended.
Stock-based
compensation expense recognized during the period is based on the value of the
portion of share-based payment awards that is ultimately expected to vest during
the period.
Stock
options are issued with an exercise price equal to the market price on the date
of issuance. Stock options issued to directors are fully vested upon issuance.
Stock options issued to employees generally vest 25% upfront, then 25% each year
for a period of three years. Stock options vest over each three month period
from the date of issuance to the end of the three year period. These options
have a ten year life for as long as the individuals remain employees or
directors. In general, when an employee or director terminates their position
the options will expire within six months.
The
intrinsic value was calculated as the difference between our common stock
closing price on the OTC BB at June 30, 2009 and the exercise price of the stock
option issued multiplied by the number of shares underlying the stock options.
Our common stock price at June 30, 2009 was $0.18.
Material Changes in Results
of Operations
Three
and Six Months Ended June 30, 2009 Compared to 2008.
For the
three months ended June 30, 2009, we had a net loss of $1,784,904 as compared to
a net loss of $1,271,706 for the three months ended June 30, 2008, representing
an increase of $513,198, or 40%. For the six months ended June 30, 2009, we had
a net loss of $3,930,000 as compared to a net loss of $2,627,878 for the six
months ended June 30, 2008, representing an increase of $1,302,122, or 50%.
These increases are primarily attributed to increased spending of $391,313 and
$1,382,310 in research and development for the three and six months ended
June 30, 2009, respectively, over the same periods in 2008 related to the
initiation of the confirmatory Phase 3 clinical trial of orBec® for
the treatment of acute GI GVHD.
For the
three and six months ended June 30, 2009 revenues and associated expenses relate
mostly to NIH Grants awarded in September 2004 and September 2006 and from NPAP
sales of orBec®. The
NIH grants support the research and development of our ricin and botulinum
vaccines.
For the
three months ended June 30, 2009, we had revenues of $332,315 as compared to
$488,244 in the three months ended June 30, 2008, for a decrease of $155,929, or
32%. For the six months ended June 30, 2009, we had revenues of $862,632 as
compared to $1,165,884 in the six months ended June 30, 2008, representing a
decrease of $303,252, or 26%. During the three and six months ended June 30,
2009, we recorded $12,000 and $28,000, respectively, from our NPAP sales of
orBec®. Our
overall revenue was slightly lower during 2009 due to lower draw-downs from our
NIH grants, which correlates with lower spending on costs associated with those
grants. We incurred costs related to that revenue for the three months ended
June 30, 2009 and 2008 of $253,865 and $391,845, respectively, representing a
decrease of $137,979, or 35%. Such costs for the six months ended
June 30, 2009 and 2008 were $671,174 and $921,024, respectively, representing a
decrease of $249,849, or 27%. These costs relate to payments made to
subcontractors and universities in connection with research performed in support
of the grants.
Our gross
profit for the three months ended June 30, 2009 was $78,450 as compared to
$96,399 in the three months ended June 30, 2008, representing a decrease of
$17,949, or 19%. Our gross profit for the six months ended June 30, 2009 was
$191,458 as compared to $244,860 in the six months ended June 30, 2008,
representing a decrease of $53,402, or 22%. The decrease was primarily due to a
decrease in subcontracted reimbursed costs related to the NIH
grants.
Research
and development spending increased by $391,313, or 53%, to $1,134,914 for the
three months ended June 30, 2009 as compared to $743,601 for the same period in
2008. Research and development spending increased by $1,382,310, or 103%, to
$2,725,913 for the six months ended June 30, 2009 as compared to $1,343,603 for
the same period in 2008. During the first six months of 2009, we incurred
expenses of $2,224,616 in connection with clinical preparation for the
confirmatory Phase 3 clinical trial of orBec® for
the treatment of GI GVHD. Our primary vendor for such services was Numoda
Corporation, which accounted for approximately $1,552,000 of these
expenses.
General
and administrative expenses increased only marginally by $24,002, or 4%, to
$578,528 for the three months ended June 30, 2009, as compared to $554,526 for
the same period in 2008. General and administrative expenses decreased by
$291,972, or 21%, to $1,110,665 for the six months ended June 30, 2009, as
compared to $1,402,637 for the same period in 2008. The decrease for the six
month period was primarily due to the nonrecurring $270,000 charge in March 2008
resulting from the Fusion Capital equity transaction commitment
shares.
Stock-based
compensation expenses related to research and development increased $19,104, or
48%, to $58,687 for the three months ended June 30, 2009, as compared to $39,583
for the same period in 2008. Stock-based compensation expenses related to
research and development increased $52,911, or 67%, to $132,077 for the six
months ended June 30, 2009, as compared to $79,166 for the same period in 2008.
These increases were related to stock options that were issued to newly-hired
employees and for options issued in the last quarter of 2008 that began vesting
in 2009.
Stock-based
compensation expenses related to general and administrative increased $61,166,
or 166%, to $97,959 for the three months ended June 30, 2009, as compared to
$36,793 for the same period in 2008. Stock-based compensation expenses related
to general and administrative increased $96,823, or 132%, to $170,409 for the
six months ended June 30, 2009, as compared to $73,586 for the same period in
2008. These increases were related to stock options that were issued to
newly-hired employees and for options issued in the last quarter of 2008 that
began vesting in 2009.
Net
interest income for the three months ended June 30, 2009 was $6,734 as compared
to $6,398 for the three months ended June 30, 2008, representing a marginal
increase of $336, or 5%. Net interest income for the six months ended June 30,
2009 was $17,606 as compared to $26,254 for the six months ended June 30, 2008,
representing a decrease of $8,648, or 33%. This decrease is due to lower
prevailing interest rates available on our cash balances in 2009 as compared to
2008.
Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007.
For the
12 months ended December 31, 2008, we had a net loss of $3,422,027 as compared
to a net loss of $6,164,643 for the 12 months ended December 31, 2007, for a
decrease of $2,742,616, or 44%. This decrease is primarily attributed to lower
research and development costs and lower costs associated with preparation of
FDA and European regulatory matters as well as a reduction in general and
administrative expenses, such as, public and investor relation expenses, a
reduction in employee, travel and consultant expenses, lower expenses for stock
based compensation in the amount of $291,785, and the dilution expense taken for
stock issued to investors from the April 2006 private placement in the amount of
$308,743 in 2007.
The 2008
revenues and associated expenses were from NIH Grants awarded in September 2004
and September 2006 and from Orphan Australia for NPAP sales of orBec®. The
NIH grants support the research and development of our ricin and botulinum
vaccines.
For the
12 months ended December 31, 2008, we had revenues of $2,310,265 as compared to
$1,258,017 in the 12 months ended December 31, 2007, for an increase of
$1,052,248, or 84%. During 2008, we progressed with our September 2006 NIH grant
and achieved certain research and development milestones with our
subcontractors. In addition, we had revenue of $40,618 from Orphan Australia for
NPAP sales of orBec®. We
also incurred expenses related to that revenue in the 12 months ended December
31, 2008 and 2007 of $1,886,431 and $943,385, respectively, for an increase of
$943,046, or 100%. This difference is in part due to the increased
payments made to subcontractors and universities in connection with the grants,
which allowed us to draw down a higher level of reimbursement. Costs of goods
associated with NPAP sales of orBec® were
$10,551. We also recorded a $100,000 allowance as a reserve for our orBec®
inventory.
Our gross
profit for the 12 months ended December 31, 2008 was $423,834 as compared to
$314,632 in the 12 months ended December 31, 2007, for an increase of $109,202,
or 35%. In the third quarter of 2008, we capitalized inventory in the
net amount of $147,545, as compared to $60,311 in 2007, for certain orBec® costs
that had been previously expensed as research and development expenses before we
had a commercial use for the inventory and, in 2008 we recorded a $100,000
allowance as a reserve for our orBec®
inventory.
Research
and development spending decreased by $1,547,621, or 50%, to $1,552,323, for the
12 months ended December 31, 2008 as compared to $3,099,944 for the year ended
December 31, 2007. During 2008, we incurred expenses for FDA and European
regulatory matters, for clinical preparation of orBec® and
LPMTM
formulation work. The majority of research and development expenses in 2007 were
related to FDA and European regulatory matters with respect to the FDA ODAC
meeting and the EMEA applications for orBec®,
which we did not have in 2008.
General
and administrative expenses decreased $922,651, or 32%, to $1,941,719 for the 12
months ended December 31, 2008, as compared to $2,864,370 for the
corresponding period ended December 31, 2007. The decrease was primarily
due to the dilution expense taken in the first quarter of 2007 for stock issued
to investors in the April 2006 private placement in the amount of $308,743.
Additionally, the decrease was due to a reduction in employee and consultant
expenses, travel expenses and expenses for public and investor relations of
approximately $230,000.
Stock-based
compensation expenses for research and development decreased $48,500, or 21%, to
$182,168 for the 12 months ended December 31, 2008, as compared to $230,668 for
the corresponding period ended December 31, 2007. The stock-based compensation
expense for the 12 months ended December 31, 2008 for BioDefense was $92,822 and
for BioTherapeutics was $89,346, compared to $69,591 and $161,077, for the
corresponding 12 month period in 2007, respectively.
Stock-based
compensation expenses for general and administrative decreased $243,285, or 54%,
to $203,448 for the 12 months ended December 31, 2008, as compared to $446,733
for the corresponding period ended December 31, 2007. This decrease was due to
having more initial option grants in 2007 requiring a larger expenditure for the
initially vested options.
Interest
income for the 12 months ended December 31, 2008 was $37,073 as compared to
$164,847 for the 12 months ended December 31, 2007, representing a decrease of
$127,774, or 78%. This decrease was due to lower cash balances in 2008 as
compared to 2007.
Interest
expense for the 12 months ended December 31, 2008 was $3,276 as compared to
$1,020 for the 12 months ended December 31, 2007. This increase was the result
of higher balances that were short-term financed for insurance premiums
due.
We had
two active segments for the year ended December 31, 2008 and December 31,
2007: BioDefense and BioTherapeutics. Loss from operations for
BioDefense for the 12 months ended December 31, 2008 was $132,272 as compared to
$109,698 for the 12 months ended December 31, 2007, representing an increase of
$22,574. Loss from operations for BioTherapeutics for the 12 months ended
December 31, 2008 was $1,556,429 as compared to $2,748,764 for the 12 months
ended December 31, 2007, representing a decrease of $1,192,335. This decrease is
primarily attributed to lower research and development costs and lower costs
associated with preparation of FDA and European regulatory matters as well as a
reduction in general and administrative expenses, such as, public and investor
relation expenses, a reduction in employee, travel and consultant expenses,
lower expenses for stock based compensation in the amount of $291,785, and the
dilution expense taken for stock issued to investors from the April 2006 private
placement in the amount of $308,743 in 2007. Loss from operations for Corporate
for the 12 months ended December 31, 2008 was $1,767,123 as compared to
$3,468,621 for the 12 months ended December 31, 2007, representing a decrease of
$1,701,498.
Revenues
for BioDefense for the 12 months ended December 31, 2008 were $2,269,647 as
compared to $1,258,017 for the 12 months ended December 31, 2007, representing
an increase of $1,011,630. During 2008, we progressed with our September 2006
NIH grant and achieved certain research and development milestones with our
subcontractors, which allowed us to draw down additional amounts under our
grant. Revenues for BioTherapeutics for the 12 months ended December 31, 2008
were $40,618 as compared to zero for the 12 months ended December 31,
2007.
Amortization
and depreciation expense for BioDefense for the 12 months ended December 31,
2008 was $85,354 as compared to $90,185 for the 12 months ended December 31,
2007, representing a decrease of $4,831. Amortization and depreciation expense
for BioTherapeutics for the 12 months ended December 31, 2008 was $58,829 as
compared to $24,312 for the 12 months ended December 31, 2007, representing a
decrease of $34,517. Amortization and depreciation expense for Corporate for the
12 months ended December 31, 2008 was $5,000 as compared to $5,068 for the 12
months ended December 31, 2007, representing a decrease of $68.
Financial
Condition
Cash
and Working Capital
As of
June 30, 2009, we had cash and cash equivalents of $4,844,172 as compared to
$1,475,466 as of December 31, 2008, representing a $3,368,706, or 228%,
increase. As of June 30, 2009, we had working capital of $3,987,289 as compared
to working capital of $537,183 as of December 31, 2008, representing an increase
of $3,450,106, or 642%. The increase was the result of the execution of our
collaboration agreement and ensuing sale of our common stock to our
commercialization partner Sigma-Tau of $4.5 million, plus the approximately
$2.3 million in proceeds from the sale of our common stock and warrants to
accredited investors, less cash used in operating activities over the period. We
have used equity instruments to provide a portion of the compensation due to our
employees, vendors and collaboration partners, and expect to continue to do so
in the foreseeable future.
For the
six months ended June 30, 2009, our cash used in operating activities was
approximately $3,200,000, compared to $1,740,000 for the same period in 2008,
representing an increase of $1,460,000 or 84%. This increase primarily relates
to the initiation of the confirmatory Phase 3 clinical trial of orBec® for
the treatment of acute GI GVHD.
Since
June 30, 2009, we have issued a total of 18,136,816 shares of common stock and
warrants to purchase 9,252,506 shares of common stock for gross proceeds of
$4,330,200, net of costs.
Our
business strategy is to:
|
(a)
|
complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute GI GVHD;
|
|
(b)
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau to commercialize orBec®
in the U.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty on net
sales in these territories as well as pay for commercialization expenses,
including launch activities;
|
|
(c)
|
conduct
a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
|
|
(d)
|
evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal (“GI”) tract such as radiation
enteritis, radiation injury and Crohn’s disease;
|
|
(e)
|
reinitiate
development of our other biotherapeutics products, namely LPMTM
Leuprolide;
|
|
(f)
|
continue
to secure additional government funding for each of our biodefense
programs, RiVaxTM
and BT-VACCTM,
through grants, contracts and procurements;
|
|
(g)
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense and infectious disease
area;
|
|
(h)
|
make
orBec® available
worldwide through named patient access programs (NPAPs) for the treatment
of acute GI GVHD;
|
|
(i)
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
(j)
|
explore
other business development and acquisition strategies under which we may
be considered to be an attractive acquisition candidate by another
company.
|
Based on
our current rate of cash outflows, cash on hand, the timely collection of
milestone payments under collaboration agreements, proceeds from our grant
programs and potential proceeds from the Fusion Capital transaction, we
believe that our current cash will be sufficient to meet our anticipated cash
needs for working capital and capital expenditures into the first quarter of
2011.
Management’s
plan is as follows:
|
·
|
We
have approximately $10 million in active grant funding still available to
support our ricin and botulinum toxin vaccine programs in 2009 and
beyond. Additionally, we have submitted additional grant
applications for further support of these programs and others with various
funding agencies, and have received encouraging feedback to date on the
likelihood of funding.
|
|
·
|
We
are exploring out-licensing opportunities for orBec®
and oral BDP in territories outside North America, and for LPMTM
-Leuprolide and BioDefense programs in the U.S. and in
Europe.
|
|
·
|
We
have and will utilize NPAPs wherever possible in countries outside the
U.S. to generate revenues from orBec®.
|
|
·
|
We
have continued to use equity instruments to provide a portion of the
compensation due to vendors and collaboration partners and expect to
continue to do so for the foreseeable future.
|
|
·
|
We
have approximately $7.8 million in available capacity under our Fusion
Capital equity facility. Although we have historically drawn
amounts in modest amounts under this agreement, we could draw more within
certain contractual parameters.
|
|
·
|
We
may seek additional capital in the private and/or public equity markets to
continue our operations, respond to competitive pressures, develop
new products and services, and to support new strategic
partnerships. However, there can be no assurances that we can
consummate such transactions, or consummate such transactions at favorable
pricing.
|
|
·
|
We
expect to receive new government grants intended to support existing and
new research and development over the next twelve months. In addition to
research and development funding, these grants would provide additional
support for our overhead expenditures as well as defray certain costs
intended to cover portions of our confirmatory Phase 3 trial of our lead
product orBec®. Therefore
these grants would have the effect of extending our cash resources. We
routinely file for government grants which support our biotherapeutic and
biodefense programs.
|
If we
obtain additional funds through the issuance of equity or equity-linked
securities, shareholders may experience significant dilution and these equity
securities may have rights, preferences or privileges senior to those of our
common stock. The terms of any debt financing may contain restrictive covenants
which may limit our ability to pursue certain courses of action. We may not be
able to obtain such financing on acceptable terms if at all. If we are unable to
obtain such financing when needed, or to do so on acceptable terms, we may be
unable to develop our products, take advantage of business opportunities,
respond to competitive pressures or continue our operations.
Unless
and until we are able to generate sales or licensing revenue from orBec®, our
lead product candidate, or another one of our product candidates, we will
require additional funding through our existing equity facility with Fusion
Capital or another financing source to meet our commitments, sustain our
research and development efforts, provide for future clinical trials, and
continue our operations.
Expenditures
Under
existing product development agreements and license agreements pursuant to
letters of intent and option agreements, we expect our expenditures for the next
12 months to be approximately $4,100,000, not inclusive of BioDefense programs,
or programs covered under existing NIH or orphan grants. We anticipate
grant revenues in the next 12 months to offset research and development expenses
for the development of our ricin and botulinum toxin vaccines in the amount of
approximately $2,113,000, with $733,000 of that total amount contributing
towards our overhead expenses.
The table
below details our costs for research and development by program for the six
months ended June 30:
|
|
|
2009
|
|
|
2008
|
|
|
Program
- Research & Development Expenses
|
|
|
|
|
|
|
|
orBec®
|
|
$ |
2,224,617 |
|
|
$ |
941,302 |
|
|
RiVax™
|
|
|
388,575 |
|
|
|
183,710 |
|
|
BT-VACC™
|
|
|
104,567 |
|
|
|
106,663 |
|
|
Oraprine™
|
|
|
3,000 |
|
|
|
3,500 |
|
|
LPM™-Leuprolide
|
|
|
5,154 |
|
|
|
108,428 |
|
|
Research
& Development Expense
|
|
$ |
2,725,913 |
|
|
$ |
1,343,603 |
|
|
|
|
|
|
|
|
|
|
|
|
Program
- Reimbursed under Grants
|
|
|
|
|
|
|
|
|
|
orBec®
|
|
$ |
30,911 |
|
|
$ |
- |
|
|
RiVax™
|
|
|
640,263 |
|
|
|
865,802 |
|
|
BT-VACC™
|
|
|
- |
|
|
|
55,222 |
|
|
Reimbursed
under Grants
|
|
$ |
671,174 |
|
|
$ |
921,024 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$ |
3,397,087 |
|
|
$ |
2,264,627 |
|
Commitments
We had
commitments of approximately $4.1 million at June 30, 2009 in connection with a
collaboration agreement with Numoda for the
execution of our confirmatory Phase 3 clinical trial of orBec®
that will
begin enrollment in second half of 2009.
We have
several licensing agreements with consultants and universities, which may
require payment upon satisfaction of certain milestones and/or payment of
royalties upon commercialization. However, there can be no assurance
that clinical or commercialization success will occur.
On April
1, 2009, we entered into a sub-lease agreement to occupy office space in
Princeton, New Jersey. This lease expires on March 31,
2012. We were required to provide 4 months of rent as a security
deposit. The rent for the first 18 months will be approximately $7,500 per
month, or $17.00 per square foot. This rent increases to approximately $7,650
per month, or $17.50 per square foot, for the remaining 18 months.
On April
24, 2008, we signed a three year lease for a copier.
On March 4, 2007, we entered into an investment
banking agreement with RBC Capital Markets (“RBC”). As a result of
our transactions with Sigma-Tau, RBC claims that it is entitled to certain
compensation under such agreement. Although RBC has indicated that it
is willing to settle the matter for approximately $1.6 million, we dispute that
RBC is entitled to any compensation for the Sigma-Tau transactions and will
vigorously defend any lawsuit filed by RBC against us.
On
February 2007, our Board of Directors authorized the issuance of the following
shares to Dr. Schaber, Mr. Myrianthopoulos, Dr. Brey and certain other employees
and a consultant, upon the completion of a transaction, or series or a
combination of related transactions negotiated by our Board of Directors
whereby, directly or indirectly, a majority of our capital stock or a majority
of its assets are transferred from us and/or our stockholders to a third
party: 1,000,000 shares of common stock to Dr. Schaber; 750,000 shares of
common stock to Mr. Myrianthopoulos; 200,000 shares of common stock to Dr. Brey;
and 450,000 shares of common stock to certain other employees and a
consultant.
Employees
with employment contracts have severance agreements that would require us to pay
separation benefits if they are involuntarily terminated.
The
Company has future obligations over the next five years as follows:
|
Year
|
|
Research
and Development
|
|
|
Property
and Other Leases
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
2009
|
|
$ |
1,481,820 |
|
|
$ |
47,024 |
|
|
$ |
1,528,844 |
|
|
2010
|
|
|
2,775,420 |
|
|
|
95,398 |
|
|
|
2,870,818 |
|
|
2011
|
|
|
155,000 |
|
|
|
92,699 |
|
|
|
247,699 |
|
|
2012
|
|
|
155,000 |
|
|
|
22,950 |
|
|
|
177,950 |
|
|
2013
|
|
|
75,000 |
|
|
|
- |
|
|
|
75,000 |
|
|
Total
|
|
$ |
4,642,240 |
|
|
$ |
258,071 |
|
|
$ |
4,900,311 |
|
Equity
Transactions
On
September 28, 2009, we received approximately $4,400,000 from the private
placement of common stock and warrants to accredited investors. Under the terms
of the agreements, we sold 17,352,569 common shares at $0.253 per share,
together with a five-year warrant to purchase up to 8,676,285 shares of common
stock, which warrants are exercisable at $0.278 per share. The price per share,
$0.253, represents the market price of our common stock as measured by its five
day trailing average as of September 22, 2009. The expiration date of the
warrants will be accelerated if our common stock meets certain price
thresholds. We would receive additional gross proceeds of $2,412,007
if the warrants exercised. Also, as part of the compensation received for its
assistance in the private placement, the placement agent received $137,500 cash
and 543,478 warrants to purchase shares of our common stock.
On February 11, 2009, in connection with a collaboration and
supply agreement, we entered into a common stock purchase agreement with
Sigma-Tau pursuant to which we sold 25 million shares of our common stock to
Sigma-Tau for $0.18 per share, for an aggregate price of
$4,500,000. The purchase price was equal to one hundred fifty percent
(150%) of the average trading price of our common stock over the five trading
days prior to February 11, 2009.
On
January 20, 2009, we received $2,384,200 from the completed private placement of
common stock and warrants to accredited investors. Under the terms of the
agreement, we sold 20,914,035 shares at $0.114, together with five year warrants
to purchase up to 20,914,035 shares of our common stock at $0.14 per share. The
expiration date of the warrants will be accelerated if the Company’s common
stock meets certain price thresholds, and we would receive additional gross
proceeds of approximately $2.9 million if exercised.
During
the 12 months ended December 31, 2008, we issued 758,082 shares of common stock
as payment to vendors for consulting services. An expense of $111,500 was
recorded which approximated the shares’ fair market value on the date of
issuance, respectively.
During
the 12 months ended December 31, 2008, we issued 993,084 shares of common stock
under its existing Fusion Capital Equity facility. The Company received $127,500
in proceeds which approximated the shares’ fair market value on the date of
issuance.
During
the 12 months ended December 31, 2008, we issued 168,309 shares of common stock
as compensation and severance for employees. An expense of $26,000 was recorded
which approximated the shares’ fair market value on the date of issuance,
respectively.
On
December 1, 2008, we entered into a non-binding letter of intent with Sigma-Tau,
which granted Sigma-Tau an exclusive right to negotiate terms and conditions for
a possible business transaction or strategic alliance regarding orBec® and
potentially other pipeline compounds until March 1, 2009. Under the terms of the
letter of intent, Sigma-Tau purchased $1.5 million of our common stock at the
market price of $0.09 per share, representing 16,666,667 shares.
On
February 14, 2008, we entered into a common stock purchase agreement with Fusion
Capital. The Fusion Capital facility allows us to require Fusion Capital to
purchase between $80,000 and $1.0 million depending on certain conditions of our
common stock up to an aggregate of $8.0 million over approximately a 25-month
period. As part of that agreement, we issued Fusion Capital 1,275,000 shares of
common stock as a commitment fee. In connection with the execution of the common
stock purchase agreement, Fusion Capital purchased 2,777,778 shares and a four
year warrant to purchase 1,388,889 shares of common stock for $0.22 per share,
for an aggregate price of $500,000. We issued 75,000 shares as a pro rata
commitment fee in connection with the purchase of $500,000 of our common stock.
If our stock price exceeds $0.15, then the amount required to be purchased may
be increased under certain conditions as the price of our common stock
increases. We cannot require Fusion Capital to purchase any shares of our common
stock on any trading days that the market price of our common stock is less than
$0.10 per share. Furthermore, for each additional purchase by Fusion, additional
commitment shares in commensurate amounts up to a total of 1,275,000 shares will
be issued based upon the relative proportion of purchases compared to the total
commitment maximum of 18.5 million shares.
On
February 14, 2008, we sold 881,112 shares of our common stock to accredited
investors for an aggregate purchase price of approximately $158,600. The
investors also received four year warrants to purchase an aggregate of 440,556
shares of our common stock at an exercise price of $0.22 per share.
The total
issuance of common stock from private placement for 2008 was 3,658,890 shares,
which consisted of the 881,112 shares sold to an institutional investor and
other accredited investors for $158,600 and the 2,777,778 shares sold to Fusion
Capital for $500,000.
The total
issuance of common stock for commitment shares for 2008 was 1,369,125 shares,
which were issued to Fusion Capital and consisted of 1,275,000 shares as a
commitment fee, 75,000 shares as a commitment fee for the $500,000 invested, and
19,125 shares for the commitment fee on the equity line draws of
$127,500.
During
2007, the Company issued 373,607 shares of common stock as part of severance
payments to employees. An expense of $85,000 was recorded, which approximated
the shares’ fair market value on the date of issuance.
For the
12 months ended December 31, 2007, 1,737,200 stock options were exercised to
purchase shares of common stock which provided $633,895.
For the
year ended December 31, 2007, 6,458,287 common stock warrants were exercised to
purchase of common stock which provided $1,592,264.
The total
issuance of common stock upon exercise of options and warrants for 2007 was
8,195,487 shares, which consisted of the 1,737,200 stock option exercises and
6,458,287 warrant exercises.
On
February 9, 2007, we sold 11,680,850 shares of our common stock to institutional
investors and certain of our officers and directors for a purchase price of
$5,490,000. These shares have been registered.
On
January 3, 2007, in consideration for entering into an exclusive letter of
intent, Sigma-Tau agreed to purchase $1,000,000 of the Company’s common stock at
the market price of $0.246 per share, representing 4,065,041 shares of common
stock, and contributed an additional $2 million in cash. The $2 million
contribution was to be considered an advance payment to be deducted from future
payments due to the Company by Sigma-Tau pursuant to any future orBec®
commercialization arrangement reached between the two parties. Because of this
transaction’s dilutive nature, all investors in the April 2006 private placement
had their warrants repriced to $0.246. Additionally, certain shareholders who
still held shares of the Company’s common stock from that placement were issued
additional shares as a cost basis adjustment from $0.277 to $0.246 per share of
the Company’s common stock. Neither these investors, nor any other investors,
hold any further anti-dilution rights. Because no agreement was reached by
March 1, 2007, we were obligated to return the $2 million to Sigma-Tau by
April 30, 2007, which was completed on June 1, 2007.
The total
issuance of common stock from private placement for 2007 was 15,745,891 shares,
which consisted of the 11,860,850 shares sold to institutional investors and
certain of our officers and directors for $5,490,000, less the $254,596 payable
as placement agent fees, and 4,065,041 shares to Sigma-Tau for $1,000,000. The
total net proceeds from the private placement were $6,235,404.
Off-Balance Sheet Arrangements
We
currently have no off-balance sheet arrangements.
Effects of Inflation and Foreign
Currency Fluctuations
We do not
believe that inflation or foreign currency fluctuations significantly affected
our financial position and results of operations as of and for the fiscal year
ended December 31, 2008 or the fiscal year ended December 31, 2007.
The
following table contains information regarding the current members of the Board
of Directors and executive officers:
|
|
|
|
|
|
|
James
S. Kuo, M.D., M.B.A.
|
|
45
|
|
Chairman
of the Board
|
| |
|
|
|
|
|
Cyrille
F. Buhrman
|
|
36
|
|
Director
|
| |
|
|
|
|
|
Gregg
A. Lapointe, C.P.A., M.B.A.
|
|
50
|
|
Director
|
| |
|
|
|
|
|
Christopher J. Schaber,
Ph.D.
|
|
43
|
|
Chief
Executive Officer, President, and Director
|
| |
|
|
|
|
|
Evan
Myrianthopoulos
|
|
44
|
|
Chief
Financial Officer, Senior Vice President and Director
|
| |
|
|
|
|
|
Brian
L. Hamilton, M.D., Ph.D.
|
|
61
|
|
Chief
Medical Officer and Senior Vice President
|
| |
|
|
|
|
|
Robert
N. Brey, Ph.D.
|
|
58
|
|
Chief
Scientific Officer and Senior Vice President
|
| |
|
|
|
|
|
Christopher
P. Schnittker, C.P.A.
|
|
41
|
|
Vice
President of Administration, Controller and Corporate
Secretary
|
James S. Kuo, M.D., M.B.A.,
has been a director since 2004 and currently serves as the non-executive
Chairman of the Board. He has served as Chairman of the Board of Directors of
Cordex Pharma, Inc. (formerly Duska Therapeutics, Inc.), a public
biopharmaceutical company, since June 2007 and has been Chief Executive Officer
since September 2007. From 2006 to September 2007, he served as Chairman and
Chief Executive Officer of Cysteine Pharma, Inc. From 2003 to 2006,
he served as founder, Chairman and Chief Executive Officer of BioMicro Systems,
Inc., a private venture-backed microfluidics company. Prior to that time, Dr.
Kuo was co-founder, President and Chief Executive Officer of Discovery
Laboratories, Inc., a public specialty pharmaceutical company developing
respiratory therapies, where he raised over $22 million in initial private
funding and took the company public. He further has been a founder and a Board
Director of Monarch Labs, LLC, a private medical device company. Dr. Kuo is the
former Managing Director of Venture Analysis for HealthCare Ventures, LLC, which
managed $378 million in venture funds. He has also been a senior licensing and
business development executive at Pfizer, Inc., where he was directly
responsible for cardiovascular licensing and development. Dr. Kuo is also a
director of Adeona Pharmaceuticals, Inc. (formerly Pipex Pharmaceuticals, Inc.),
a public company. After studying molecular biology and receiving his B.A. degree
at Haverford College, Dr. Kuo simultaneously received his M.D. degree from The
University of Pennsylvania School of Medicine and his M.B.A. degree from The
Wharton School of Business at the University of Pennsylvania.
Cyrille F. Buhrman has been a
director since June 2007. Mr. Buhrman is Chairman of the Pacific Healthcare
Group of Companies, a full-service regulatory affairs, commercialization and
distribution company, focusing on specialty pharmaceuticals, medical supplies,
medical technology, OTC and consumer health products across the Asian
region. In addition to serving on the Board of Soligenix, Mr. Buhrman
also serves on the Boards of Canyon Pharmaceuticals, a privately-held company
specialty pharmaceutical company based in Basel, Switzerland, and several other
pharmaceutical and medical technology companies in the Asia Pacific
region. Mr. Buhrman also heads up his own private investment fund
that specializes in the biotechnology and pharmaceutical industries.
Mr.
Buhrman is also one of our largest shareholders.
Gregg Lapointe, C.P.A.,
M.B.A., has been a director since March 10, 2009. Mr. Lapointe also
serves on the Board of Directors of the Pharmaceuticals Research and
Manufacturers of America (PhRMA) and is a member of the Corporate Council of the
National Organization for Rare Diseases (NORD). He has served in varying roles
for Sigma-Tau, a private biopharmaceutical company, since September 2001,
including Chief Operating Officer from November 2003 to April 2008 and Chief
Executive Officer since April 2008. From May, 1996 to August, 2001, he served as
Vice President of Operations and Vice President, Controller of AstenJohnson,
Inc. (formerly JWI Inc.). Prior to that Mr. Lapointe spent several years
in the Canadian medical products industry in both distribution and
manufacturing. Mr. Lapointe began his career at Price Waterhouse. From his
extensive background, Mr. Lapointe has significant experience in the areas of
global strategic planning and implementation, business development, corporate
finance, and acquisitions. Mr. Lapointe received his B.A. degree in
Commerce from Concordia University in Montreal, Canada, a graduate diploma in
Accountancy from McGill University and his M.B.A. degree from Duke University.
He is a C.P.A. in the state of Illinois and a Chartered Accountant in Ontario,
Canada.
Christopher J. Schaber, Ph.D.,
has been our President and Chief Executive Officer and a director since August
2006. Dr. Schaber also currently serves on the boards of both the Alliance for
BioSecurity and BioNJ. Prior to joining Soligenix, Dr. Schaber served from
1998 to 2006 as Executive Vice President and Chief Operating Officer of
Discovery Laboratories, Inc., where he was responsible for overall pipeline
development and key areas of commercial operations, including regulatory
affairs, quality control and assurance, manufacturing and distribution,
preclinical and clinical research, and medical affairs, as well as coordination
of commercial launch preparation activities. During his tenure at Discovery
Laboratories, Inc., Dr. Schaber played a significant role in raising in excess
of $150 million through both public offerings and private placements. From 1996
to 1998, Dr. Schaber was a co-founder of Acute Therapeutics, Inc., and served as
its Vice President of Regulatory Compliance and Drug Development. From 1994 to
1996, Dr. Schaber was employed by Ohmeda PPD, Inc., as Worldwide Director of
Regulatory Affairs and Operations. From 1989 to 1994, Dr. Schaber held a variety
of regulatory, development and operations positions with The Liposome Company,
Inc., and Elkins-Sinn Inc., a division of Wyeth-Ayerst Laboratories. Dr. Schaber
received his B.A. degree from Western Maryland College, his M.S. degree in
Pharmaceutics from Temple University School of Pharmacy and his Ph.D. degree in
Pharmaceutical Sciences from the Union Graduate School.
Evan Myrianthopoulos has been
a director since 2002 and is currently our Chief Financial Officer and Senior
Vice President, after joining us in November of 2004 as President and Acting
Chief Executive Officer. From November 2001 to November 2004, he was President
and founder of CVL Advisors Group Inc., a financial consulting firm specializing
in the biotechnology sector. Prior to founding CVL Advisors Group, Inc., Mr.
Myrianthopoulos was a co-founder of Discovery Laboratories, Inc. During his
tenure at Discovery Laboratories, Inc. from June 1996 to November 2001, Mr.
Myrianthopoulos held the positions of Chief Financial Officer and Vice President
of Finance, where he was responsible for raising approximately $55 million in
four private placements. He also helped negotiate and manage Discovery
Laboratories, Inc.’s mergers with Ansan Pharmaceuticals and Acute Therapeutics,
Inc. Prior to co-founding Discovery Laboratories, Inc., Mr. Myrianthopoulos was
a Technology Associate at Paramount Capital Investments, L.L.C., a New York City
based biotechnology venture capital and investment banking firm. Prior to
joining Paramount Capital Investments, LLC, Mr. Myrianthopoulos was a managing
partner at a hedge fund and also held senior positions in the treasury
department at the National Australia Bank where he was employed as a spot and
derivatives currency trader. Mr. Myrianthopoulos holds a B.S. degree in
Economics and Psychology from Emory University.
Brian L. Hamilton, M.D.,
Ph.D., has been Chief Medical Officer and Senior Vice President since
March 11, 2009. His academic career at the University of Washington
and the University of Miami focused on the use of bone marrow transplantation to
treat children with congenital immune deficiency, with research in the
immunobiology of GVHD. In the pharmaceutical industry, he has worked with both
large pharmaceutical companies (Astra, USA and Wyeth) and several biotechnology
companies. From December 2001 to June 2004, he was Senior Director of Clinical
Research with Wyeth Research. From June 2004 to March 2006, he was
Vice President for Clinical and Regulatory Affairs at Merrimack
Pharmaceutical.
He was
Chief Medical Officer with BioVex from September 2006 to March
2007. He was a consultant in clinical development as Medical Director
with Biopharm Solutions, Inc. from March 2007 to October 2008. From
October 2008 to March 2009, he was Acting Vice President of Medical Affairs with
Ziopharm Oncology. He has expertise in clinical development and
regulatory affairs with small molecules, biologics, vaccines, and genetically
modified oncolytic viruses in oncology, hematology, rheumatology, and
immunology. At Astra, USA, he had a significant role in the clinical
development and registration of both Pulmicort Turbuhaler for the treatment of
patients with asthma and Rhinocort Aqua for the treatment of patients with
allergic rhinitis. Dr. Hamilton received his M.D. and Ph.D. degrees
from the University of Washington, with post-graduate training in Pediatrics,
Allergy, Immunology, and Oncology.
Robert N. Brey, Ph.D., has
been with the Company since January 1996, and is currently our Chief Scientific
Officer and Senior Vice President. He has also held the positions of Vice
President Vaccine Development and Vice President of Research and
Development. He also has held Scientific, Management and Project
Management positions in the Lederle-Praxis division of American Cyanamid, now a
division of Wyeth, in which he participated in the successful development a of a
vaccine for Haemophilius
influenzae meningitis, and a vaccine for pneumonia. While at
Lederle-Praxis, Dr. Brey was Manager of Molecular Biology Research for vaccines
and Project Manager for development of oral vaccines from 1985 through 1993.
From 1993 through 1994, Dr. Brey served as Director of Research and Development
of Vaxcel, in which he was responsible for developing adjuvant technology and
formulations for improved vaccines. From 1994 through 1996, Dr. Brey established
an independent consulting group, Vaccine Design Group, to identify and develop
novel vaccine technologies and platforms. Before entering into drug and vaccine
delivery, he held senior scientific positions at Genex Corporation from 1982
through 1986. Dr. Brey received a B.S. degree in Biology from Trinity College in
Hartford, Connecticut, his Ph.D. degree in Microbiology from the University of
Virginia and performed postdoctoral studies at MIT with Nobel Laureate Salvador
Luria.
Christopher P. Schnittker, C.P.A.
has been our Vice President of Administration, Controller and Corporate
Secretary since July 2009. He has more than 18 years of financial
management experience primarily in publicly-held life science
companies. From June 2000 until joining Soligenix, Mr. Schnittker was
a Vice President and Chief Financial Officer of several publicly-held
biotechnology and specialty pharmaceutical companies, including: VioQuest
Pharmaceuticals Inc. (from July 2008 until joining Soligenix); Micromet, Inc.
(from October 2006 through December 2007); Cytogen Corporation (from September
2003 through May 2006); and Genaera Corporation (from June 2000 through August
2003). From December 1997 through June 2000, he was Director of
Finance and Controller of GSI Commerce, an e-commerce technology company. From
June 1995 through December 1997, he served in various financial reporting and
internal control manager roles with Rhône-Poulenc Rorer Pharmaceuticals Inc.
(now part of the Sanofi Aventis Group). From September 1990 through
June 1995 he was a member of the Audit and Assurance Services division at Price
Waterhouse LLP (now PricewaterhouseCoopers LLP), working largely with the firm’s
pharmaceutical and technology clients. Mr. Schnittker received his
Bachelor’s degree in Economics and Business, with a concentration in Accounting,
from Lafayette College in 1990 and is a currently-licensed Certified Public
Accountant in the State of New Jersey.
The
following table contains information concerning the compensation paid during our
fiscal years ended December 31, 2008 and 2007 to the persons who served as our
Chief Executive Officer, and each of the two other most highly compensated
executive officers during 2008 (collectively, the “Named Executive
Officers”).
Summary
Compensation
|
Name
|
Position
|
Year
|
|
Salary
|
|
Bonus
|
|
Option
Awards
|
|
All
Other Compensation
|
|
Total
|
|
|
Christopher
J. Schaber (1)
|
CEO
& President
|
2008
|
|
$ |
300,000 |
|
$ |
100,000 |
|
$ |
185,721 |
|
$ |
24,844 |
|
$ |
610,565 |
|
|
|
|
2007
|
|
$ |
300,000 |
|
$ |
100,000 |
|
$ |
155,409 |
|
$ |
47,798 |
|
$ |
603,207 |
|
|
Evan
Myrianthopoulos (2)
|
CFO
& Senior VP
|
2008
|
|
$ |
200,000 |
|
$ |
50,000 |
|
$ |
66,033 |
|
$ |
23,474 |
|
$ |
339,507 |
|
|
|
|
2007
|
|
$ |
200,000 |
|
$ |
50,000 |
|
$ |
146,938 |
|
$ |
44,786 |
|
$ |
441,724 |
|
|
Robert
N. Brey (3)
|
CSO
& Senior VP
|
2008
|
|
$ |
190,000 |
|
$ |
20,000 |
|
$ |
55,133 |
|
$ |
18,405 |
|
$ |
283,538 |
|
|
|
|
2007
|
|
$ |
190,000 |
|
$ |
15,000 |
|
$ |
48,252 |
|
$ |
18,325 |
|
$ |
271,577 |
|
(1) Dr.
Schaber deferred payment of his 2008 annual bonus of $100,000 until February 28,
2009. Option Awards include the value of stock option awards of vested shares of
common stock as required by FASB No. 123R. Other Compensation for 2008 includes
$24,844 for insurance costs. Other Compensation for 2007 includes $19,000 for
insurance costs, $2,301 for transportation costs, $7,263 for travel expenses and
$19,234 for lodging costs.
(2) Mr.
Myrianthopoulos deferred payment of his 2008 annual bonus of $50,000 until
February 28, 2009. Option Awards include the value of stock option awards of
vested shares of common stock as required by FASB No. 123R. Other Compensation
for 2008 includes $23,474 for insurance costs. Other Compensation for 2007
includes $17,000 for insurance costs, $2,895 for transportation costs, $6,787
for travel expenses and $18,104 for lodging costs.
(1) Dr. Brey
deferred payment of his 2008 annual bonus of $20,000 until January 31, 2009.
Option Awards include the value of stock option awards of vested shares of
common stock as required by FASB No. 123R. Other Compensation for 2008 includes
$18,405 for insurance costs. Other Compensation for 2007 includes $18,325
for insurance costs.
Potential
Issuance of Shares
On
February 28, 2007, our Board of Directors approved the issuance of 2,700,000
shares of our common stock to certain employees and a consultant to be issued
immediately prior to the completion of a transaction, or series or combination
of related transactions, negotiated by our Board of Directors whereby, directly
or indirectly, a majority of our capital stock or a majority of our assets are
transferred from us and/or our stockholders to a third party (an “Acquisition
Event”). Of the shares of common stock to be issued upon an Acquisition Event,
1,000,000 shares will be issued to Christopher J. Schaber, a director and our
Chief Executive Officer and President; 750,000 shares will be issued to Evan
Myrianthopoulos, a director and our Chief Financial Officer; and 200,000 shares
will be issued to Robert N. Brey, our Chief Scientific Officer and Senior
Vice President.
Employment
and Severance Agreements
During
August 2006, we entered into a three-year employment agreement with Christopher
J. Schaber, Ph.D. Pursuant to this employment agreement we agreed to pay Dr.
Schaber a base salary of $300,000 per year and a minimum annual bonus of
$100,000. This employment agreement was renewed in December 27, 2007 for a term
of three years. We agreed to issue him options to purchase 2,500,000 shares of
our common stock, with one third immediately vesting and the remainder vesting
over three years.
Upon
termination without “Just Cause” as defined by this agreement, we would pay Dr.
Schaber nine months of severance, as well as any accrued bonuses, accrued
vacation, and we would provide health insurance and life insurance benefits for
Dr. Schaber and his dependants. No unvested options shall vest beyond the
termination date. Upon a change in control of the Company due to
merger or acquisition, all of Dr. Schaber’s options shall become fully vested,
and be exercisable for a period of five years after such change in control
(unless they would have expired sooner pursuant to their terms). In
the event of his death during term of the agreement, all of his unvested options
shall immediately vest and remain exercisable for the remainder of their term
and become the property of Dr. Schaber’s immediate family.
In
December 2004, we entered into a three-year employment agreement with Mr.
Myrianthopoulos. Pursuant to this employment agreement we agreed to pay Mr.
Myrianthopoulos a base salary of $185,000 per year. After one year of service
Mr. Myrianthopoulos would be entitled to a minimum annual bonus of $50,000. This
employment agreement was renewed in December 27, 2007 for a term of three years.
We agreed to issue him options to purchase 500,000 shares of our common stock,
with the options vesting over three years. Mr. Myrianthopoulos also
received 150,000 options, vested immediately when he was hired in November 2004,
as President and Acting Chief Executive Officer.
Upon
termination without “Just Cause” as defined by this agreement, we would pay Mr.
Myrianthopoulos six months of severance subject to set off, as well as any
unpaid bonuses and accrued vacation would become payable. No unvested options
shall vest beyond the termination date. Upon a change in control of the Company
due to merger or acquisition, all of Mr. Myrianthopoulos’ options shall become
fully vested, and be exercisable for a period of three years after such change
in control (unless they would have expired sooner pursuant to their
terms). In the event of his death during term of contract, all of his
unvested options shall immediately vest and remain exercisable for the remainder
of their term and become property of Mr. Myrianthopoulos’ immediate
family.
On March
27, 2009, the Compensation Committee approved the increase in salaries for: Dr.
Schaber from $300,000 to $350,000; Mr. Myrianthopoulos from $200,000 to
$230,000; and Dr. Brey from $190,000 to $200,000. Dr. Brey does not
have an employment agreement.
In
February 2007, our Board of Directors authorized the issuance of the following
number of shares to each of Dr. Schaber, Mr. Myrianthopoulos and Dr. Brey
immediately prior to the completion of a transaction, or series or a combination
of related transactions negotiated by our Board of Directors whereby, directly
or indirectly, a majority of our capital stock or a majority of our assets are
transferred from the Company and/or our stockholders to a third party: 1,000,000
common shares to Dr. Schaber; 750,000 common shares to Mr. Myrianthopoulos; and
200,000 common shares to Dr. Brey. The amended agreements for Messrs.
Schaber and Myrianthopoulos include our obligation to issue such shares if such
event occurs.
Outstanding
Equity Awards at Fiscal Year-End
The
following table contains information concerning unexercised options, stock that
has not vested, and equity incentive plan awards for the Named Executive
Officers outstanding at October 1, 2009. We have never issued Stock Appreciation
Rights.
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned
|
|
|
|
|
|
|
|
Number
of Securities Underlying Unexercised
Options
(#)
|
|
|
|
Option
Exercise Price
|
|
Option
Expiration
|
|
Name
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
Options (#)
|
|
|
($)
|
|
Date
|
|
Christopher
J. Schaber
|
|
|
2,500,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.27
|
|
8/28/2016
|
|
|
|
|
675,000
|
|
|
|
225,000
|
|
|
|
225,000
|
|
$
|
0.47
|
|
8/29/2017
|
|
|
|
|
1,225,000
|
|
|
|
1,575,000
|
|
|
|
1,575,000
|
|
$
|
0.06
|
|
12/17/2018
|
|
Evan
Myrianthopoulos
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.35
|
|
11/14/2012
|
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.90
|
|
9/15/2013
|
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.58
|
|
6/11/2014
|
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.47
|
|
11/10/2014
|
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.49
|
|
12/13/2014
|
|
|
|
|
400,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.35
|
|
5/10/2016
|
|
|
|
|
412,500
|
|
|
|
137,500
|
|
|
|
137,500
|
|
$
|
0.47
|
|
8/29/2017
|
|
|
|
|
525,000
|
|
|
|
675,000
|
|
|
|
675,000
|
|
$
|
0.06
|
|
12/17/2018
|
|
Robert
N. Brey
|
|
|
9,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
3.94
|
|
2/08/2010
|
|
|
|
|
600,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.33
|
|
5/10/2016
|
|
|
|
|
150,000
|
|
|
|
50,000
|
|
|
|
50,000
|
|
$
|
0.47
|
|
8/29/2017
|
|
|
|
|
350,000
|
|
|
|
450,000
|
|
|
|
450,000
|
|
$
|
0.06
|
|
12/17/2018
|
Compensation of
Directors
The
following table contains information concerning the compensation of the
non-employee directors during the fiscal year ended December 31,
2008.
Director
Compensation
|
Name
|
|
Fees
Earned Paid in Cash ($) (1)
|
|
|
Option
Awards ($) (2)
|
|
|
Total
($)
|
|
|
James
S. Kuo
|
|
$ |
16,000 |
|
|
$ |
- |
|
|
$ |
16,000 |
|
|
Cyrille
F. Buhrman
|
|
$ |
9,000 |
|
|
$ |
- |
|
|
$ |
9,000 |
|
|
(1)
|
Directors
who are compensated as full-time employees receive no additional
compensation for service on our Board of Directors. Each independent
director who is not a full-time employee is paid $2,000 for each board or
committee meeting attended ($1,000 if such meeting was attended
telephonically).
|
|
(2)
|
We
maintain a stock option grant program pursuant to the nonqualified stock
option plan, whereby members of our Board of Directors or its committees
who are not full-time employees receive an initial grant of fully vested
options to purchase 300,000 shares of common stock, and subsequent
prorated annual grants of fully vested options to purchase 150,000 shares
of common stock after re-election to our Board of Directors. During 2008,
we did not hold an annual meeting. As a result there were no stock options
granted to the Board of Directors in 2008. Option Awards include the value
of stock option awards of vested shares of Common Stock as required by
FASB No. 123R.
|
The table
below provides information regarding the beneficial ownership of the common
stock as of October 5, 2009 of (1) each person or entity who owns
beneficially 5% or more of the shares of our outstanding common stock, (2) each
of our directors, (3) each of the Named Executive Officers, and (4) our
directors and officers as a group. Except as otherwise indicated, and subject to
applicable community property laws, we believe the persons named in the table
have sole voting and investment power with respect to all shares of common stock
held by them.
|
Name
of Beneficial Owner
|
|
Shares
of Common Stock
Beneficially
Owned
|
|
Percent
of Class
|
|
Sigma-Tau
Pharmaceuticals, Inc. (1)
|
|
47,595,521
|
|
25.39%
|
|
Biotex
Pharma Investments, LLC (2)
|
|
39,000,000
|
|
18.98%
|
|
Cyrille
F. Buhrman (3)
|
|
5,375,020
|
|
2.89%
|
|
Christopher
J. Schaber (4)
|
|
4,911,343
|
|
2.59%
|
|
Evan
Myrianthopoulos (5)
|
|
2,462,280
|
|
1.31%
|
|
Robert
N. Brey (6)
|
|
1,109,000
|
|
*
|
|
Christopher
Schnittker (7)
|
|
234,375
|
|
*
|
|
James
S. Kuo (8)
|
|
875,000
|
|
*
|
|
Gregg
A. Lapointe (9)
|
|
337,500
|
|
*
|
|
Brian
L. Hamilton (10)
|
|
375,000
|
|
*
|
|
All
directors and executive officers as a group (8 persons)
|
|
15,679,518
|
|
8.02%
|
*
Indicates less than 1%.
**
Beneficial ownership is determined in accordance with the rules of the SEC.
Shares of common stock subject to options or warrants currently exercisable or
exercisable within 60 days of October 5, 2009 are deemed outstanding for
computing the percentage ownership of the stockholder holding the options or
warrants, but are not deemed outstanding for computing the percentage ownership
of any other stockholder. Percentage of ownership is based on 185,501,158 shares
of common stock outstanding as of October 5, 2009.
(1) Includes 45,619,236 shares of common stock and
warrants to purchase 1,976,289 shares of common stock exercisable within 60 days
of October 5, 2009. The amount does not include 1,546,870 shares of common stock
held by Paolo Cavazza, one of the principal owners of Sigma-Tau. The address of
Sigma-Tau Pharmaceuticals, Inc. is c/o Sigma-Tau Pharmaceuticals, Inc., 800
South Frederick Avenue, Suite 300, Gaithersburg, Maryland 20877.
(2) Includes 19,000,000 shares of common stock and
warrants to purchase 20,000,000 shares of common stock exercisable within 60
days of October 5, 2009. The address of Biotex Pharma Investments, LLC is c/o
Biotex Pharma Investments, LLC, 220 West 42nd
Street 6th
Floor New York, NY 10036.
(3) Includes 4,900,020 shares of common stock and
options to purchase 475,000 shares of common stock exercisable within 60 days of
October 5, 2009. The address of Mr. Buhrman is c/o Soligenix, 29 Emmons Drive,
Suite C-10, Princeton, New Jersey 08550.
(4) Includes
471,817 shares of common stock owned by Dr. Schaber, options to purchase
4,400,000 shares of common stock exercisable within 60 days of October 5, 2009,
and warrants to purchase 39,526 shares of common stock exercisable within 60
days of October 5, 2009. The address of Dr. Schaber is c/o Soligenix, 29 Emmons
Drive, Suite C-10, Princeton, New Jersey 08550.
(5) Includes
224,780 shares of common stock owned by Mr. Myrianthopoulos and his wife and
options to purchase 2,237,500 shares of common stock exercisable within 60 days
of October 5, 2009. The address of Mr. Myrianthopoulos is c/o Soligenix, 29
Emmons Drive, Suite C-10, Princeton, New Jersey 08550.
(6) Includes
options to purchase 1,109,000 shares of common stock exercisable within 60 days
of October 5, 2009. The address of Dr. Brey is c/o Soligenix, 29 Emmons Drive,
Suite C-10, Princeton, New Jersey 08550.
(7) Includes
options to purchase 224,375 shares of common stock owned by Mr. Schnittker
exercisable within 60 days of October 5, 2009. The address of Mr. Schnittker is
c/o Soligenix, 29 Emmons Drive, Suite C-10, Princeton, New Jersey
08550.
(8) Includes
options to purchase 875,000 shares of common stock exercisable within 60 days of
October 5, 2009. The address of Dr. Kuo is c/o Soligenix, 29 Emmons Drive, Suite
C-10, Princeton, New Jersey 08550.
(9) Includes
options to purchase 337,500 shares of common stock exercisable within 60 days of
October 5, 2009. The address of Mr. Lapointe is c/o Soligenix, 29 Emmons Drive,
Suite C-10, Princeton, New Jersey 08550.
(10) Includes
options to purchase 375,000 shares of common stock exercisable within 60 days of
October 5, 2009. The address of Dr. Hamilton is c/o Soligenix, 29 Emmons Drive,
Suite C-10, Princeton, New Jersey 08550.
Equity Compensation Plan
Information
In
December 2005, our Board of Directors approved the 2005 Equity Incentive Plan,
which was approved by stockholders on December 29, 2005. In September 2007, our
stockholders approved an amendment to the 2005 Equity Incentive Plan to increase
the maximum number of shares of our common stock available for issuance under
the plan by 10,000,000 shares, bringing the total shares reserved for issuance
under the plan to 20,000,000 shares. The following table provides information,
as of December 31, 2008, with respect to options outstanding under our 1995
Amended and Restated Omnibus Incentive Plan and our 2005 Equity Incentive
Plan.
|
Plan
Category
|
|
Number
of Securities to be issued upon exercise of outstanding options, warrants
and rights
|
|
|
Weighted-Average
Exercise Price Outstanding options, warrants and rights
|
|
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (excluding securities reflected in the first
column)
|
|
|
Equity
compensation plans approved by security holders (1)
|
|
|
19,172,539 |
|
|
$ |
0.25 |
|
|
|
552,500 |
|
|
Equity
compensation plans not approved by security holders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
19,172,539 |
|
|
$ |
0.25 |
|
|
|
552,500 |
|
(1)
Includes our 1995 Amended and Restated Omnibus Incentive Plan and our 2005
Equity Incentive Plan. Our 1995 Plan expired in 2005 and thus no
securities remain available for future issuance under that plan. Under the
amended 2005 equity incentive plan, we have issued 1,482,669 shares to
individuals as payment for services in the amount of $380,342 as allowed in the
plan.
The
following table presents information as of October 5, 2009 and sets forth the
number of shares of common stock beneficially owned by each of the Selling
Stockholders. We are not able to estimate the amount of shares that will be held
by each Selling Stockholder after the completion of this offering because: (1)
the Selling Stockholders may sell less than all of the shares registered under
this prospectus; (2) the Selling Stockholders may exercise less than all of
their warrants; and (3) to our knowledge, the Selling Stockholders currently
have no agreements, arrangements or understandings with respect to the sale of
any of their shares. The following table assumes that all of the shares being
registered pursuant to this prospectus will be sold. The Selling Stockholders
are not making any representation that any shares covered by this prospectus
will be offered for sale. Except as otherwise indicated, based on information
provided to us by each Selling Stockholder, the Selling Stockholders have sole
voting and investment power with respect to their shares of common
stock. Except as otherwise noted, none of the Selling Stockholders
nor any of their affiliates have held a position or office, or had any other
material relationship, with us.
On
February 11, 2009, we entered into a collaboration and supply agreement with
Sigma-Tau for the commercialization of orBec®. Pursuant to this agreement,
Sigma-Tau has an exclusive license to commercialize orBec® in the U.S., Canada
and Mexico (the “Territory”). The first milestone payment of $1 million will be
made upon the enrollment of the first patient in our confirmatory Phase 3
clinical trial of orBec® for the treatment of acute GI GVHD, which is expected
to occur in the second half of 2009. Total milestone payments due from Sigma-Tau
for orBec® under the agreement could reach up to $10 million. Sigma-Tau will pay
us a 35% royalty (inclusive of drug supply) on net sales in the Territory as
well as pay for commercialization expenses, including launch activities. On
November 26, 2008, prior to entering the collaboration agreement, we sold
Sigma-Tau 16,666,667 common shares at $0.09 per share (the market price at the
time) for proceeds of $1,500,000 in exchange for the exclusive right to
negotiate a collaboration deal with us until March 1, 2009.
In
connection with the private placement of common stock and warrant, on September
23, 2009, we granted BAM Opportunity Fund, L.P. and Iroquois Capital Management,
LLC the right to participate in our next equity financing within 12 months from
September 28, 2009.
|
Name
of Selling
Stockholder
|
Number
of Shares of Common Stock Owned Before the Offering (1)
|
|
|
Percent
of
Common
Stock Owned Before
the
Offering
|
|
|
Shares
Available for Sale Under This Prospectus (2)
|
|
|
Number
of Shares of Common Stock To Be Owned After Completion
of
the Offering
|
|
|
Percent
of Common Stock to be Owned After Completion
of
the Offering
|
|
|
BAM
Opportunity Fund, L.P.
|
|
9,328,090 |
(3) |
|
|
4.9 |
% |
|
|
11,857,707 |
|
|
|
-- |
|
|
|
* |
|
|
Sigma-Tau
Pharmaceuticals, Inc.
|
|
47,595,521 |
(4) |
|
|
25.4 |
% |
|
|
5,928,854 |
|
|
|
41,666,667 |
|
|
|
22.5 |
% |
|
Iroquois
Capital Management, LLC
|
|
4,446,640 |
(5) |
|
|
2.4 |
% |
|
|
4,446,640 |
|
|
|
-- |
|
|
|
* |
|
|
JW
Partners, LP
|
|
296,442 |
(6) |
|
|
* |
|
|
|
296,442 |
|
|
|
-- |
|
|
|
* |
|
|
Revach
Fund LP
|
|
1,152,985 |
(7) |
|
|
* |
|
|
|
355,731 |
|
|
|
797,254 |
|
|
|
* |
|
|
Christopher
J. Schaber
|
|
4,911,343 |
|
|
|
2.6 |
% |
|
|
118,577 |
|
|
|
4,792,766 |
|
|
|
2.5 |
% |
|
Vasili
Myrianthopoulos/Elisabeth Myrianthopoulos JTWROS
|
|
445,831 |
|
|
|
* |
|
|
|
118,577 |
|
|
|
327,254 |
|
|
|
* |
|
|
Richard
Molinsky
|
|
300,660 |
|
|
|
* |
|
|
|
148,221 |
|
|
|
152,439 |
|
|
|
* |
|
|
John
Raphael
|
|
300,000 |
|
|
|
* |
|
|
|
300,000 |
|
|
|
-- |
|
|
|
* |
|
|
John
Raphael, Trustee of the Tara Raphael 2005 Trust
|
|
150,000 |
|
|
|
* |
|
|
|
150,000 |
|
|
|
-- |
|
|
|
* |
|
|
John
Raphael, Trustee of the Michael Raphael 2008 Trust
|
|
|
150,000 |
|
|
|
* |
|
|
|
150,000 |
|
|
|
-- |
|
|
|
* |
|
|
John
J. Gorman, Trustee of the Tejas Securities Group, Inc. 401K Plan and Trust
FBO John J. Gorman
|
|
|
450,000 |
|
|
|
* |
|
|
|
450,000 |
|
|
|
-- |
|
|
|
* |
|
|
Michelle
Whalen
|
|
|
300,000 |
|
|
|
* |
|
|
|
300,000 |
|
|
|
-- |
|
|
|
* |
|
|
Hal
Tunick
|
|
|
750,000 |
|
|
|
* |
|
|
|
750,000 |
|
|
|
-- |
|
|
|
* |
|
|
Symmetry
Parallax Fund
|
|
|
355,731 |
(8) |
|
|
* |
|
|
|
355,731 |
|
|
|
-- |
|
|
|
* |
|
|
Alison
Bawden
|
|
|
12,676 |
|
|
|
* |
|
|
|
5,930 |
|
|
|
6,746 |
|
|
|
* |
|
|
Joseph
Rosen
|
|
|
296,442 |
|
|
|
* |
|
|
|
296,442 |
|
|
|
-- |
|
|
|
* |
|
|
Moody
Capital, LLC
|
|
|
54,348 |
(9) |
|
|
* |
|
|
|
54,348 |
|
|
|
-- |
|
|
|
* |
|
| BioMed
Cap, LLC |
|
|
489,130 |
(10) |
|
|
* |
|
|
|
489,130 |
|
|
|
-- |
|
|
|
* |
|
|
Little
Gem Life Sciences Fund LLC
|
|
|
32,743 |
(11) |
|
|
* |
|
|
|
32,743 |
|
|
|
-- |
|
|
|
* |
|
|
Griffin
Securities, Inc.
|
|
|
150,000 |
(12) |
|
|
* |
|
|
|
150,000 |
|
|
|
-- |
|
|
|
-- |
|
|
Biotex
Pharma Investments, LLC
|
|
|
39,000,000 |
(13) |
|
|
19.0 |
% |
|
|
10,000,000 |
|
|
|
29,000,000 |
|
|
|
14.8 |
% |
_____________________
|
*
|
Less
than 1%.
|
|
|
|
|
**
|
Beneficial
ownership is determined in accordance with the rules of the SEC. Shares of
common stock subject to options or warrants currently exercisable or
exercisable within 60 days of October 5, 2009, are deemed outstanding for
computing the percentage ownership of the stockholder holding the options
or warrants, but are not deemed outstanding for computing the percentage
ownership of any other stockholder. Percentage of ownership is based on
185,501,158 shares of common stock outstanding as of October 5,
2009.
|
|
|
|
|
(1)
|
The
shares of common stock issuable upon the exercise of warrants are as
follows: BAM Opportunity Fund, LP - 3,952,569; Sigma-Tau Pharmaceuticals,
Inc. - 1,976,285; Iroquois Capital Management, LLC - 1,482,213; JW
Partners, LP - 98,814; Revach Fund LP - 118,577; Christopher Schaber -
39,526; Vasili Myrianthopoulos/Elisabeth Myrianthopoulos JTWROS - 39,526;
Richard Molinsky - 49,407; John Raphael - 100,000; John Raphael, Trustee
of the Tara Raphael 2005 Trust - 50,000; John Raphael, Trustee of the
Michael Raphael - 50,000; John J. Gorman, Trustee of the Tejas Securities
Group, Inc. 401K Plan and Trust FBO John J. Gorman - 150,000; Michelle
Whalen - 100,000; Hal Tunick - 250,000; Symmetry Parallax Fund - 118,577;
Alison Bawden - 1,977; Joseph Rosen - 98,814; Moody Capital, LLC -
543,478; Little Gem Life Sciences Fund LLC - 32,743; Griffin Securities,
Inc. - 150,000; and Biotex Pharma Investments, LLC -
20,000,000.
|
|
|
|
|
(2)
|
The
shares of common stock issuable upon the exercise of warrants are as
follows: BAM Opportunity Fund, LP - 3,952,569; Sigma-Tau Pharmaceuticals,
Inc. - 1,976,285; Iroquois Capital Management, LLC - 1,482,213; JW
Partners, LP - 98,814; Revach Fund LP - 118,577; Christopher Schaber -
39,526; Vasili Myrianthopoulos/Elisabeth Myrianthopoulos JTWROS - 39,526;
Richard Molinsky - 49,407; John Raphael - 100,000; John Raphael, Trustee
of the Tara Raphael 2005 Trust - 50,000; John Raphael, Trustee of the
Michael Raphael - 50,000; John J. Gorman, Trustee of the Tejas Securities
Group, Inc. 401K Plan and Trust FBO John J. Gorman - 150,000; Michelle
Whalen - 100,000; Hal Tunick - 250,000; Symmetry Parallax Fund - 118,577;
Alison Bawden - 1,977; Joseph Rosen - 98,814; Moody Capital, LLC -
543,478; Little Gem Life Sciences Fund LLC - 32,743; Griffin Securities,
Inc. - 150,000; and Biotex Pharma Investments, LLC -
10,000,000.
|
|
(3)
|
Includes
1,422,952 shares of common stock underlying warrants that are presently
exercisable and does not include 2,529,617 shares of common stock
underlying warrants that can only be exercised if the exercise of such
warrants does not give BAM Opportunity Fund, L.P. beneficial ownership of
more than 4.99% of the Company’s issued and outstanding shares of common
stock at the time the warrants are exercised or BAM Opportunity Fund, L.P.
provides the Company with 61 days prior notice of its desire to waive the
4.99% ownership restriction. BAM Capital, LLC, BAM Management,
LLC, Ross Berman and Hal Mintz exercise voting or dispositive power with
respect to the shares held of record by BAM Opportunity Fund,
L.P. Each of the foregoing disclaims beneficial ownership
except to the extent of its or his pecuniary interest.
|
|
|
|
|
(4)
|
Gregg
Lapointe, Paolo Cavazza and Claudio Cavazza exercise voting or dispositive
power with respect to the shares held of record by Sigma-Tau
Pharmaceuticals, Inc. The amount does not include 1,546,870
shares of common stock held by Paolo Cavazza.
|
|
|
|
|
(5)
|
Joshua
Silverman exercises voting or dispositive power with respect to the shares
held of record by Iroquois Capital Management, LLC.
|
|
|
|
|
(6)
|
Jason
Wild exercises voting or dispositive power with respect to the shares held
of record by JW Partners, LP.
|
|
|
|
|
(7)
|
Chaim
Davis exercises sole voting or dispositive power with respect to the
shares held of record by Revach Fund LP.
|
|
|
|
|
(8)
|
Kellie
Seringer exercises voting or dispositive power with respect to the shares
held of record by Symmetry Parallax Fund.
|
|
|
|
|
(9)
|
Timothy
Moody exercises sole voting or dispositive power with respect to the
shares held of record by Moody Capital, LLC.
|
| |
|
| (10) |
David
Coherd exercises sole voting or dispositive power with respect to the
shares held of record by BioMed Cap, LLC. |
|
|
|
|
(11)
|
Jeffrey
Benison is the principal of Little Gem Life Sciences Fund LLC, and is
deemed to be the beneficial owner of all of the shares of common stock
owned by Little Gem Life Sciences Fund LLC. Mr. Benison
exercises voting or dispositive power with respect to the shares held of
record by Little Gem Life Sciences Fund LLC.
|
|
|
|
|
(12)
|
Adrian
Stecyk exercises voting or dispositive power with respect to the shares
held of record by Griffin Securities, Inc.
|
|
|
|
|
(13)
|
Robert
Kessler exercises voting or dispositive power with respect to the shares
held of record by Biotex Pharma Investments,
LLC.
|
This
prospectus relates to shares of our common stock that may be offered and sold
from time to time by the Selling Stockholders. We will receive no proceeds from
the sale of shares of common stock in this offering. However, we may receive up
to approximately $5,399,196 in proceeds from the
exercise of the warrants to purchase our common stock. We intend to
use the net proceeds from the exercise of the warrants as working capital to
cover costs associated with the completion of the confirmatory phase 3 clinical
trial for orBec®, other research and development expenses, and general overhead
costs including salaries until such time, if ever, as we are able to generate a
positive cash flow from operations.
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The Selling Stockholders may
use any one or more of the following methods when selling shares:
|
|
•
|
ordinary
brokerage transactions and transactions in which the broker dealer
solicits investors;
|
|
|
•
|
block
trades in which the broker dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
•
|
purchases
by a broker dealer as principal and resale by the broker dealer for its
account;
|
|
|
•
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
•
|
privately
negotiated transactions;
|
|
|
•
|
to
cover short sales and other hedging transactions made after the date that
the registration statement of which this prospectus is a part is declared
effective by the Securities and Exchange Commission;
|
|
|
•
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share;
|
|
|
•
|
a
combination of any such methods of sale; and
|
|
|
•
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker
dealers engaged by the Selling Stockholders may arrange for other brokers
dealers to participate in sales. Broker dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker dealer
acts as agent for the investor of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of common stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of Selling
Stockholders to include the pledgee, transferee or other successors in interest
as Selling Stockholders under this prospectus.
Upon our
being notified in writing by a Selling Stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing
(i) the name of each such Selling Stockholder and of the participating
broker-dealer(s), (ii) the number of shares involved, (iii) the price at which
such shares of common stock were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus, and (vi) other facts
material to the transaction. In addition, upon our being notified in
writing by a Selling Stockholder that a donee or pledge intends to sell more
than 500 shares of common stock, a supplement to this prospectus will be filed
if then required in accordance with applicable securities law.
The
Selling Stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
Selling Stockholders and any broker dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any
commissions received by such broker dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, that can be
attributed to the sale of securities will be paid by the Selling Stockholders
and/or the purchasers of the securities.
Each
Selling Stockholder that is affiliated with a registered broker-dealer has
confirmed to us that, at the time it acquired the securities subject to the
registration statement of which this prospectus is a part, it did not have any
agreement or understanding, directly or indirectly, with any person to
distribute any of such securities. The Company has advised each
Selling Stockholder that it may not use shares registered on the registration
statement of which this prospectus is a part to cover short sales of our common
stock made prior to the date on which such registration statement was declared
effective by the SEC.
We are
required to pay certain fees and expenses incident to the registration of the
shares. We have agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act. We agreed to keep this prospectus effective until the
earlier of (i) the date on which the shares may be resold by the Selling
Stockholders without registration and without regard to any volume limitations
by reason of Rule 144(e) under the Securities Act or any other rule of similar
effect and (ii) such time as all of the shares have been publicly
sold.
Our
authorized capital stock consists of 405,000,000 shares of capital stock, of
which 400,000,000 shares are common stock, par value $0.001 per share, 4,600,000
shares are preferred stock, par value $0.001 per share, 200,000 are Series B
Convertible Preferred Stock, par value $0.05 per share, and 200,000 shares are
Series C Convertible Preferred Stock, par value $0.05 per share. As of
October 5, 2009, there were issued and outstanding 185,501,158 shares of
common stock, options to purchase approximately 19,172,539 shares of common
stock and warrants to purchase approximately 42,082,604 shares of common stock.
The amount outstanding includes the 17,352,569 shares of common stock issued to
the Selling Stockholders. There are no preferred shares issued or
outstanding.
Common
Stock
Holders
of our common stock are entitled to one vote for each share held in the election
of directors and in all other matters to be voted on by the
stockholders. There is no cumulative voting in the election of
directors. Holders of common stock are entitled to receive dividends
as may be declared from time to time by our board of directors out of funds
legally available therefor. In the event of liquidation, dissolution or winding
up of the corporation, holders of common stock are to share in all assets
remaining after the payment of liabilities. Holders of common stock
have no pre-emptive or conversion rights and are not subject to further calls or
assessments. There are no redemption or sinking fund provisions
applicable to the common stock. The rights of the holders of the
common stock are subject to any rights that may be fixed for holders of
preferred stock. All of the outstanding shares of common stock are
fully paid and non-assessable.
Preferred
Stock
Our
Certificate of Incorporation authorizes the issuance of 4,600,000 shares of
preferred stock with designations, rights, and preferences as may be determined
from time to time by the board of directors. The board of directors
is empowered, without stockholder approval, to designate and issue additional
series of preferred stock with dividend, liquidation, conversion, voting or
other rights, including the right to issue convertible securities with no
limitations on conversion, which could adversely affect the voting power or
other rights of the holders of our common stock, substantially dilute a common
stockholder’s interest and depress the price of our common stock.
No shares
of the Series B Convertible Preferred Stock or the Series C Convertible
Preferred Stock are outstanding.
Our
common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under
the symbol “SNGX.” On September 28, 2009, we changed our name
from "DOB BioPharma, Inc." to "Soligenix, Inc." On September 30,
2009, the trading symbol for our common stock was changed from "DORB" to
"SNGX". The amounts represent inter-dealer quotations without
adjustment for retail markup, markdowns or commissions and do not represent the
prices of actual transactions.
| |
|
Price
Range
|
|
|
Period
|
|
High
|
|
|
Low
|
|
|
Fiscal
Year Ended December 31, 2007:
|
|
|
|
|
|
|
|
First
Quarter
|
|
$ |
0.71 |
|
|
$ |
0.23 |
|
|
Second
Quarter
|
|
$ |
0.95 |
|
|
$ |
0.20 |
|
|
Third
Quarter
|
|
$ |
0.40 |
|
|
$ |
0.26 |
|
|
Fourth
Quarter
|
|
$ |
0.61 |
|
|
$ |
0.15 |
|
|
Fiscal
Year Ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$ |
0.25 |
|
|
$ |
0.16 |
|
|
Second
Quarter
|
|
$ |
0.19 |
|
|
$ |
0.11 |
|
|
Third
Quarter
|
|
$ |
0.15 |
|
|
$ |
0.09 |
|
|
Fourth
Quarter
|
|
$ |
0.12 |
|
|
$ |
0.04 |
|
|
Fiscal
Year Ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$ |
0.18 |
|
|
$ |
0.06 |
|
|
Second
Quarter
|
|
$ |
0.24 |
|
|
$ |
0.09 |
|
As of
October 5, 2009, the last reported price of our common stock quoted on the OTCBB
was $0.33 per share. We have approximately 1,081 registered holders
of record.
Dividend
Policy
We have
never declared nor paid any cash dividends, and currently intend to retain all
our cash and any earnings for use in our business and, therefore, do not
anticipate paying any cash dividends in the foreseeable future. Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon our consolidated financial
condition, results of operations, capital requirements and such other factors as
the Board of Directors deems relevant.
ACT
LIABILITIES
Section 102(b)(7) of the Delaware
General Corporation Law allows companies to limit the personal liability of its
directors to the company or its stockholders for monetary damages for breach of
a fiduciary duty. Article
IX of the Company’s Certificate of Incorporation, as amended, provides for the
limitation of personal liability of the directors of the Company as
follows:
“A
Director of the Corporation shall have no personal liability to the Corporation
or its stockholders for monetary damages for breach of his fiduciary duty as a
Director; provided, however, this Article shall not eliminate or limit the
liability of a Director (i) for any breach of the Director’s duty of loyalty to
the Corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) for the unlawful payment of dividends or unlawful stock repurchases under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the Director derived an improper personal benefit. If
the General Corporation Law is amended after approval by the stockholders of
this Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so
amended.”
Article
VIII of the Company’s Bylaws, as amended and restated, provide for
indemnification of directors and officers to the fullest extent permitted by the
Delaware General Corporation Law.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
The audited consolidated financial
statements of Soligenix, Inc. and subsidiaries included in the Registration
Statement have been audited by Sweeney, Matz & Co., LLC (formerly Sweeney, Gates & Co.), an
independent registered public accounting firm, for the year ended December 31,
2007 and by Amper, Politziner & Mattia, LLP, an independent registered
public accounting firm, for the year ended December 31, 2008 as set forth in
their reports appearing herein. Such financial statements have been so
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
The
validity of the shares of our common stock offered by the Selling Stockholders
will be passed upon by the law firm of Edwards Angell Palmer & Dodge LLP,
West Palm Beach, Florida.
SOLIGENIX,
INC. AND SUBSIDIARIES
(formerly
known as DOR BioPharma, Inc. and Subsidiaries)
CONSOLIDATED
FINANCIAL STATEMENTS
Table
of Contents
| |
Page |
|
Quarter
Ended June 30, 2009 (unaudited):
|
|
|
|
|
|
Consolidated
Balance Sheet as of June 30, 2009
|
F-1 |
|
|
|
|
Consolidated
Statements of Operations for the three months ended June
30, 2009 and 2008
|
F-2 |
|
|
|
|
Consolidated
Statements of Operations for the six months ended June
30, 2009 and 2008
|
F-3 |
|
|
|
|
Consolidated
Statements of Changes in Shareholders’ Equity for the six
months ended June 30, 2009 and 2008
|
F-4 |
| |
|
|
Consolidated
Statements of Cash Flows for the six months ended June
30, 2009 and 2008
|
F-5 |
|
|
|
|
Notes
to Financial Statements
|
F-6 |
|
|
|
|
Consolidated
Financial Statements-December 31, 2008 and 2007:
|
|
|
|
|
|
Reports
of Independent Registered Public Accounting Firms
|
F-20
|
| |
|
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-22
|
| |
|
|
Consolidated
Statements of Operations for the years ended December 31, 2008 and
2007
|
F-23
|
| |
|
|
Consolidated
Statements of Changes in Shareholders’ Equity for the years ended December
31, 2008 and 2007
|
F-24
|
| |
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and
2007
|
F-25
|
| |
|
|
Notes
to Financial Statements
|
F-26
|
Soligenix,
Inc.
Consolidated
Balance Sheet
|
|
|
June 30, 2009
(Unaudited)
|
|
|
December 31,
2008
|
|
| Assets |
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
4,844,172 |
|
|
$ |
1,475,466 |
|
|
Grants
receivable
|
|
|
152,392 |
|
|
|
278,316 |
|
|
Inventory,
net
|
|
|
113,261 |
|
|
|
82,182 |
|
|
Prepaid
expenses
|
|
|
199,784 |
|
|
|
86,837 |
|
|
Total
current assets
|
|
|
5,309,609 |
|
|
|
1,922,801 |
|
|
|
|
|
|
|
|
|
|
|
|
Office
and laboratory equipment, net
|
|
|
23,336 |
|
|
|
21,217 |
|
|
Intangible
assets, net
|
|
|
1,451,890 |
|
|
|
1,418,717 |
|
|
Total
assets
|
|
$ |
6,784,835 |
|
|
$ |
3,362,735 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
1,076,004 |
|
|
$ |
1,015,005 |
|
|
Accrued
compensation
|
|
|
246,316 |
|
|
|
370,614 |
|
|
Total
current liabilities
|
|
|
1,322,320 |
|
|
|
1,385,619 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
|
Preferred
stock; 5,000,000 shares authorized; none issued or
outstanding
Common
stock, $.001 par value; 400,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
|
167,364,342 shares and 118,610,704 shares issued and
outstanding
in
2009 and 2008, respectively
|
|
|
167,364 |
|
|
|
118,610 |
|
|
Additional
paid-in capital
|
|
|
111,542,898 |
|
|
|
104,176,253 |
|
|
Accumulated
deficit
|
|
|
(106,247,747 |
|
|
|
(102,317,747 |
|
|
Total
shareholders’ equity
|
|
|
5,462,515 |
|
|
|
1,977,116 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity
|
|
$ |
6,784,835 |
|
|
$ |
3,362,735 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Consolidated
Statements of Operations
For
the Three Months Ended June 30,
(Unaudited)
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Revenues,
principally from grants
|
|
$ |
332,315 |
|
|
$ |
488,244 |
|
|
Cost
of revenues
|
|
|
(
253,865 |
) |
|
|
(
391,845 |
) |
|
Gross profit
|
|
|
78,450 |
|
|
|
96,399 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
1,134,914 |
|
|
|
743,601 |
|
|
General
and administrative
|
|
|
578,528 |
|
|
|
554,526 |
|
|
Stock-based compensation-research and development
|
|
|
58,687 |
|
|
|
39,583 |
|
|
Stock-based compensation-general and administrative
|
|
|
97,959 |
|
|
|
36,793 |
|
|
Total operating expenses
|
|
|
1,870,088 |
|
|
|
1,374,503 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(1,791,638 |
) |
|
|
(1,278,104 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
6,734 |
|
|
|
6,398 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(1,784,904 |
) |
|
$ |
(1,271,706 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share
|
|
$ |
(
0.01 |
) |
|
$ |
(
0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic Basic
and diluted weighted average common shares outstanding
|
|
|
167,125,183 |
|
|
|
100,877,708 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Consolidated
Statements of Operations
For
the Six Months Ended June 30,
(Unaudited)
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Revenues,
principally from grants
|
|
$ |
862,632 |
|
|
$ |
1,165,884 |
|
|
Cost
of revenues
|
|
|
(
671,174 |
) |
|
|
(
921,024 |
) |
|
Gross profit
|
|
|
191,458 |
|
|
|
244,860 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
2,725,913 |
|
|
|
1,343,603 |
|
|
General
and administrative
|
|
|
1,110,665 |
|
|
|
1,402,637 |
|
|
Stock based compensation-research and development
|
|
|
132,077 |
|
|
|
79,166 |
|
|
Stock based compensation-general and administrative
|
|
|
170,409 |
|
|
|
73,586 |
|
|
Total operating expenses
|
|
|
4,139,064 |
|
|
|
2,898,992 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(3,947,606 |
) |
|
|
(2,654,132 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
17,606 |
|
|
|
26,254 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(3,930,000 |
) |
|
$ |
(2,627,878 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share
|
|
$ |
(
0.02 |
) |
|
$ |
(
0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic Basic
and diluted weighted average common shares outstanding
|
|
|
158,068,464 |
|
|
|
99,328,191 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Consolidated
Statements of Changes in Shareholders’ Equity
For
the Six Months Ended June 30, 2009
(Unaudited)
| |
|
Common
Stock
|
|
|
Additional
Paid-In Capital
|
|
|
Accumulated
Deficit
|
|
| |
|
Shares
|
|
|
Par Value |
|
|
|
|
|
|
Balance, January 1, 2009
|
|
|
118,610,704 |
|
|
$ |
118,610 |
|
|
$ |
104,176,253 |
|
|
$ |
(102,317,747) |
|
|
Issuance of common stock from private placement, net of expenses of
$144,000
|
|
|
20,914,035 |
|
|
|
|
|
|
|
2,219,287 |
|
|
|
- |
|
|
Issuance of common stock for collaboration and supply agreement to
Sigma Tau
|
|
|
25,000,000 |
|
|
|
|
|
|
|
4,375,000 |
|
|
|
- |
|
|
Issuance of common stock pursuant to equity line agreement
|
|
|
339,603 |
|
|
|
|
|
|
|
44,660 |
|
|
|
- |
|
|
Issuance of common stock to vendors
|
|
|
2,500,000 |
|
|
|
|
|
|
|
297,500 |
|
|
|
- |
|
|
Issuance of common stock warrants to vendors
|
|
|
- |
|
|
|
|
|
|
|
127,712 |
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
- |
|
|
|
|
|
|
|
302,486 |
|
|
|
- |
|
|
Net loss
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(3,930,000) |
|
|
Balance, June 30, 2009
|
|
|
167,364,342 |
|
|
$ |
167,364 |
|
|
$ |
111,542,898 |
|
|
$ |
(106,247,747) |
|
The accompanying notes are an integral part of
these financial statements.
Soligenix,
Inc.
Consolidated
Statements of Cash Flows
For
the Six Months Ended June 30,
(Unaudited)
|
|
|
2009
|
|
|
2008
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(3,930,000 |
) |
|
$ |
(2,627,878 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Amortization and depreciation
|
|
|
80,035 |
|
|
|
70,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued in exchange for services
|
|
|
427,712 |
|
|
|
384,526 |
|
|
Stock-based
compensation
|
|
|
302,486 |
|
|
|
152,752 |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Grants receivable
|
|
|
125,924 |
|
|
|
(2,084 |
) |
|
Inventory
|
|
|
(31,079 |
) |
|
|
- |
|
|
Prepaid expenses
|
|
|
(112,947 |
) |
|
|
(56,627 |
) |
|
Accounts payable
|
|
|
60,999 |
|
|
|
458,795 |
|
|
Accrued compensation
|
|
|
(124,298 |
) |
|
|
(121,149
|
) |
|
Total
adjustments
|
|
|
728,832 |
|
|
|
886,262 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(3,201,168 |
) |
|
|
(1,741,616
|
) |
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of intangible assets
|
|
|
(108,996 |
) |
|
|
(131,142
|
) |
|
Proceeds
from sale of equipment
|
|
|
- |
|
|
|
500 |
|
|
Purchase
of office equipment
|
|
|
(6,330 |
) |
|
|
(3,900
|
) |
|
Net cash used in investing activities
|
|
|
(115,326 |
) |
|
|
(134,542
|
) |
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
Net
proceeds from sale of common stock
|
|
|
6,640,200 |
|
|
|
658,600 |
|
|
Proceeds
from sale of common stock pursuant to equity line
|
|
|
45,000 |
|
|
|
75,000 |
|
|
Net cash provided by financing activities
|
|
|
6,685,200 |
|
|
|
733,600 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
3,368,706 |
|
|
|
(1,142,558
|
) |
|
Cash and cash equivalents at beginning of period
|
|
|
1,475,466 |
|
|
|
2,220,128 |
|
|
Cash and cash equivalents at end of period
|
|
$ |
4,844,172 |
|
|
$ |
1,077,570 |
|
|
Non-cash transactions: |
|
|
|
|
|
|
|
|
| Non-cash
stock payment to an institutional investor |
|
$
|
- |
|
|
$ |
270,000 |
|
The
accompanying notes are an integral part of these financial statements
Soligenix,
Inc.
Notes
to Consolidated Financial Statements
Note 1. Nature of
Business
Basis of
Presentation
The
Company is a biopharmaceutical company that was incorporated in 1987 and is
focused on developing products to treat the life-threatening side effects of
cancer treatments and serious gastrointestinal diseases where there remains an
unmet medical need, as well as developing several biodefense vaccines. We
maintain two active business segments: BioTherapeutics and BioDefense. Our
BioTherapeutics business segment intends to develop orBec® (oral
beclomethasone dipropionate, or oral BDP) and other biotherapeutic products,
namely LPMTM-Leuprolide.
Our BioDefense business segment intends to convert its ricin toxin and botulinum
toxin vaccine programs from early stage development to advanced development and
manufacturing.
During
the six months ended June 30, 2009, the Company generated revenues from the U.S.
Federal Government and Named Patient Access Program (“NPAP”) partners for
orBec®. Revenues
from the U.S. Federal Government were generated from three active grants
supporting the Company’s BioDefense programs. As of June 30, 2009, outstanding
grant receivables of $152,392 were due from the U.S. Federal Government, the
National Institutes of Health and Orphan Australia.
The
Company is subject to risks common to companies in the biotechnology industry
including, but not limited to, development of new technological innovations,
dependence on key personnel, protections of proprietary technology, compliance
with FDA regulations, litigation, and product liability.
The
consolidated financial statements are presented on the basis of accounting
principles generally accepted in the United States of America. The accompanying
consolidated financial statements included herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
have been condensed or omitted from this report, as is permitted by such rules
and regulations; however, the Company believes that the disclosures are adequate
to make the information presented not misleading. The unaudited consolidated
financial statements and related disclosures have been prepared with the
presumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited consolidated financial statements and the related notes thereto included
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2008. Results for interim periods are not necessarily indicative of results
for the full year. The Company has experienced significant quarterly
fluctuations in operating results and it expects those fluctuations will
continue.
Liquidity
As of
June 30, 2009, the Company had cash and cash equivalents of $4,844,172 as
compared to $1,475,466 as of December 31, 2008, representing an increase of
$3,368,706. As of June 30, 2009, the Company had working capital of $3,987,289
as compared to working capital of $537,182 as of December 31, 2008, representing
an increase of $3,450,107.
For the
six months ended June 30, 2009, the Company’s cash used in operating activities
was $3,201,168, as compared to $1,741,616 for the same period in 2008. The
increase in spending was attributable to clinical trial preparation for the
confirmatory Phase 3 clinical trial of orBec® in
the treatment of acute gastrointestinal Graft-versus-Host disease (“GI
GVHD”).
Management’s
business strategy can be outlined as follows:
|
·
|
initiate
and execute the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute GI GVHD;
|
|
·
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau to commercialize orBec®
in the U.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty
(inclusive of drug supply) on net sales in these territories as well
as pay for commercialization expenses, including launch
activities;
|
|
·
|
conduct
and complete a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
|
|
·
|
evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal (“GI”) tract such as radiation
enteritis, radiation injury and Crohn’s disease;
|
|
·
|
make
orBec® available
worldwide through NPAP for the treatment of acute GI GVHD;
|
|
·
|
reinitiate
development of our other BioTherapeutics products, namely LPM™
Leuprolide;
|
|
·
|
continue
to secure additional government funding for each of our BioDefense
programs, RiVax™ and BT-VACC™, through grants, contracts and
procurements;
|
|
·
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense area;
|
|
·
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
·
|
explore
other business development and acquisition strategies under which we may
be considered to be an attractive acquisition candidate by another
company.
|
Based on
the Company’s current rate of cash outflows, cash on hand, the timely collection
of milestone payments under collaboration agreements, proceeds from our grant
programs, and potential minimal proceeds from the Fusion Capital
transaction, management believes that its current cash will be sufficient to
meet the anticipated cash needs for working capital and capital expenditures
into the third quarter of 2010.
The
Company’s plans with respect to its liquidity management include the
following:
|
·
|
The
Company has $1.1 million in active grant funding still available to
support its ricin and botulinum toxin vaccine programs in 2009 and
beyond. Additionally, the Company has submitted additional
grant applications for further support of these programs and others with
various funding agencies, and received encouraging feedback to date on the
likelihood of funding.
|
|
·
|
The
Company has continued to use equity instruments to provide a portion of
the compensation due to vendors and collaboration partners and expects to
continue to do so for the foreseeable
future.
|
|
·
|
As
discussed further in Note 5, the Company has approximately $7.8 million in
available capacity under its Fusion Capital equity
facility. Although the Company has historically drawn amounts
in modest amounts under this agreement, the Company could draw more within
certain contractual parameters.
|
|
·
|
The
Company may seek additional capital in the private and/or public equity
markets to continue its operations, respond to competitive pressures,
develop new products and services, and to support new strategic
partnerships. The Company is currently evaluating additional equity
financing opportunities and may execute them when
appropriate. However, there can be no assurances that the
Company can consummate such a transaction, or consummate a transaction at
favorable pricing.
|
In the
event that such growth is less than forecasted in the Company’s 2009-2010
operating plan, management has developed contingency plans to reduce the
Company’s operating expenses. In the event the Company cannot maintain adequate
liquidity, it could be compelled to implement further cost saving measures
including headcount reductions.
Note 2. Summary of Significant Accounting
Policies
Principles of
Consolidation
The
consolidated financial statements include Soligenix, Inc., and its wholly- and
majority-owned subsidiaries (the “Company”). All significant intercompany
accounts and transactions have been eliminated as a result of
consolidation.
Segment
Information
Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated on a regular basis by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources to an individual segment and in assessing the performance of
the segment.
Grants
Receivable
Receivables
consist of unbilled amounts due from grants from the National Institute of
Health of the U.S. Federal Government for costs incurred prior to the period
end. The amounts were billed in the month subsequent to period end
and collected shortly thereafter.
Intangible
Assets
One of
the most significant estimates or judgments that the Company makes is whether to
capitalize or expense patent and license costs. The Company makes this judgment
based on whether the technology has alternative future uses, as defined in SFAS
2, Accounting for Research and
Development Costs. Based on this consideration, the Company capitalizes
payments made to legal firms that are engaged in filing and protecting rights to
intellectual property and rights for our current products in both the domestic
and international markets. The Company believes that patent rights are one of
its most valuable assets. Patents and patent applications are a key component of
intellectual property, especially in the early stage of product development, as
their purchase and maintenance gives the Company access to key product
development rights from the Company’s academic and industrial partners. These
rights can also be sold or sub-licensed as part of its strategy to partner its
products at each stage of development as the intangible assets have alternative
future use. The legal costs incurred for these patents consist of work designed
to protect, preserve, maintain and perhaps extend the lives of the patents. The
Company capitalizes such costs and amortizes intangibles over a period of 11 to
16 years.
The Company capitalized $108,996 and $131,142 in patent related costs
during the six months ended June 30, 2009 and 2008, respectively.
Impairment of Long-Lived
Assets
Office
and laboratory equipment and intangible assets are evaluated and reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The Company recognizes impairment of
long-lived assets in the event the net book value of such assets exceeds the
estimated future undiscounted cash flows attributable to such assets. If the sum
of the expected undiscounted cash flows is less than the carrying value of the
related asset or group of assets, a loss is recognized for the difference
between the fair value and the carrying value of the related asset or group of
assets. Such analyses necessarily involve significant judgment.
The
Company did not record any impairment of intangible assets for the six months
ended June 30, 2009 or 2008.
Inventory
Inventories
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method and includes the cost of materials and
overhead. All inventory for this period is finished goods and consists of
orBec®
treatments. The Company records an allowance as needed for excess
inventory. During the year ended December 31, 2008 an allowance of
$100,000 was provided. This allowance will be evaluated on a quarterly basis and
adjustments will be made as required. The Company did not make an adjustment to
this allowance during the six months ended June 30, 2009.
Fair Value of Financial
Instruments
Accounting
principles generally accepted in the U.S. require that fair values be disclosed
for the Company’s financial instruments. The carrying amounts of the Company’s
financial instruments, which include grants receivable and current liabilities,
are considered to be representative of their respective fair
values.
Revenue
Recognition
The
Company’s revenues are generated from government grants and NPAP sales of
orBec®. The
revenue from government grants are based upon subcontractor costs and internal
costs incurred that are specifically covered by the grants, plus a facilities
and administrative rate that provides funding for overhead expenses. Revenues
are recognized when expenses have been incurred by subcontractors or when the
Company incurs internal expenses that are related to the grant. Revenue from the
NPAP sales of orBec® are
recognized when the product is shipped. The NPAP revenues are recorded when the
product is shipped.
Research and Development
Costs
Research
and development costs are charged to expense when incurred. Research and
development includes costs such as clinical trial expenses, contracted research
and license agreement fees with no alternative future use, supplies and
materials, salaries and employee benefits, equipment depreciation and allocation
of various corporate costs. Purchased in-process research and development
expense represents the value assigned or paid for acquired research and
development for which there is no alternative future use as of the date of
acquisition.
Stock-Based
Compensation
The fair
value of options in accordance with SFAS 123R was estimated using the
Black-Scholes option-pricing model and the following weighted-average
assumptions: a dividend yield of 0%, an expected life of 4 years, volatilities
of 125% and 120% for 2009 and 2008, respectively, and average risk-free interest
rates of 3.8% and 3.7% in 2009 and 2008, respectively. The Company estimates
these values based on the assumptions that have been historically available. The
fair value of each option grant made during 2009 and 2008 was estimated on the
date of each grant using the Black-Scholes option pricing model and amortized
ratably over the option’s vesting periods, which approximates the service
period. The Company awarded 2,062,500 stock options for the six months
ended June 30, 2009, while 6,800,000 stock options were granted during the
six months ended June 30, 2008.
Stock
compensation expense for options granted to non-employees has been determined in
accordance with SFAS 123R and Emerging Issues Task Force (EITF) 96-18, and
represents the fair value of the consideration received, or the fair value of
the equity instruments issued, whichever may be more reliably measured. For
options that vest over future periods, the fair value of options granted to
non-employees is amortized as the options vest. The option’s price is
re-measured using the Black-Scholes model at the end of each three month
reporting period.
Upon
exercise, shares are issued from the amended 2005 equity incentive plan and
increase the number of shares the Company has outstanding. There were no stock
option exercises during the six months ended June 30, 2009 or during the year
ended December 31, 2008. There were no forfeitures during the six months ended
June 30, 2009 and forfeitures of 779,800 stock options during the year ended
December 31, 2008. The intrinsic value of the stock options outstanding at June
30, 2009 was zero.
From time
to time, the Company issues common stock to vendors, consultants, and employees
as compensation for services performed. These shares are typically issued as
restricted stock, unless issued to non-affiliates under the 2005 Equity
Incentive Plan, where the stock may be issued as unrestricted. The restricted
stock can only have the restrictive legend removed if the shares underlying the
certificate are sold pursuant to an effective registration statement, which the
Company must file and have approved by the SEC, if the shares underlying the
certificate are sold pursuant to Rule 144, provided certain conditions are
satisfied, or if the shares are sold pursuant to another exemption from the
registration requirements of the Securities Act of 1933, as
amended.
Stock-based
compensation expense recognized during the period is based on the value of the
portion of share-based payment awards that is ultimately expected to vest during
the period.
Stock
options are issued with an exercise price equal to the market price on the date
of issuance. Stock options issued to directors are fully vested upon issuance.
Stock options issued to employees generally vest 25% upfront, then 25% each year
for a period of three years. Stock options vest over each three month period
from the date of issuance to the end of the three year period. These options
have a ten year life for as long as the individuals remain employees or
directors. In general when an employee or director terminates their position the
options will expire within six months.
The
intrinsic value was calculated as the difference between the Company’s common
stock closing price on the OTC BB at June 30, 2009 and the exercise price of the
stock option issued multiplied by the number of shares underlying the stock
options. The Company’s common stock price at June 30, 2009 was
$0.18.
Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. A valuation
allowance is established when it is more likely than not that all or a portion
of a deferred tax asset will not be realized. A review of all available positive
and negative evidence is considered, including the Company’s current and past
performance, the market environment in which the Company operates, the
utilization of past tax credits, and the length of carryback and carryforward
periods. Deferred tax assets and liabilities are measured utilizing
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. No current or
deferred income taxes have been recognized through June 30, 2009 due to the net
operating losses incurred by the Company since its inception. Additionally, the
Company has not recorded a liability for unrecognized tax benefits or uncertain
tax positions at June 30, 2009 or 2008.
Earnings Per
Share
Basic
earnings per share (EPS) excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that shared in the earnings of the entity. Since there is a large number
of options and warrants outstanding, fluctuations in the actual market price can
have a variety of results for each period presented.
|
|
|
Three
Months Ended
|
|
|
Three
Months Ended
|
|
|
|
|
June 30,
2009
|
|
|
June 30,
2008
|
|
|
|
|
Loss
|
|
|
Shares
|
|
|
EPS
|
|
|
Loss
|
|
|
Shares
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
& Diluted EPS
|
|
$ |
(1,784,904 |
) |
|
|
167,125,183 |
|
|
$ |
(0.01 |
) |
|
$ |
(1,271,706 |
) |
|
|
100,877,708 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
|
June 30,
2009
|
|
|
June 30,
2008
|
|
|
|
|
Loss
|
|
|
Shares
|
|
|
EPS
|
|
|
Loss
|
|
|
Shares
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
& Diluted EPS
|
|
$ |
(3,930,000 |
) |
|
|
158,068,464 |
|
|
$ |
(0.02 |
) |
|
$ |
(2,627,878 |
) |
|
|
99,328,191 |
|
|
$ |
(0.03 |
) |
Options
and warrants outstanding at June 30, 2009 and 2008 were 19,172,539 and 9,620,039
of options, and 32,830,369 and 28,818,522 of warrants, respectively. The
weighted average exercise price of the Company’s stock options and warrants
outstanding at June 30, 2009 were $0.25 and $0.13, respectively. No options and
warrants were included in the 2009 and 2008 computations of diluted earnings per
share because their effect would be anti-dilutive as a result of losses in the
respective years.
Use of Estimates and
Assumptions
The
preparation of financial statements in conformity with accounting principles
generally accepted in the U.S. requires management to make estimates and
assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
New Accounting
Pronouncements
In June
2009, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting. SFAS 168
represents the last numbered standard to be issued by the FASB under the old
(pre-Codification) numbering system, and amends the GAAP hierarchy. On July 1,
2009, the FASB launched a new FASB Codification (full name: the FASB Accounting Standards
Codification™). The Codification will supersede existing GAAP for
nongovernmental entities. The implementation of this standard did not have any
effect on the Company’s consolidated financial statements.
In June
2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R). SFAS No. 167 is a revision to FASB Interpretation No. 46
(Revised December 2003), Consolidation of Variable Interest
Entities, and changes how a reporting entity determines when an entity
that is insufficiently capitalized or is not controlled through voting (or
similar rights) should be consolidated. The determination of whether a reporting
entity is required to consolidate another entity is based on, among other
things, the other entity’s purpose and design and the reporting entity’s ability
to direct the activities of the other entity that most significantly impact the
other entity’s economic performance. SFAS No. 167 will require a
reporting entity to provide additional disclosures about its involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement. A reporting entity will be required to disclose how its
involvement with a variable interest entity affects the reporting entity’s
financial statements. SFAS No. 167 will be effective at the start of a reporting
entity’s first fiscal year beginning after November 15, 2009, or January 1,
2010, for a calendar year-end entity. Early application is not permitted. The
Company is evaluating if the adoption of this standard will have a material
impact on its financial statements.
In May
2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No.
165 incorporates into authoritative accounting literature certain guidance that
already existed within generally accepted auditing standards, but the rules
concerning recognition and disclosure of subsequent events will remain
essentially unchanged. Subsequent events guidance addresses events which occur
after the balance sheet date but before the issuance of financial statements.
Under SFAS No. 165 as under current practice, an entity must record the effects
of subsequent events that provide evidence about conditions that existed at the
balance sheet date and must disclose but not record the effects of subsequent
events which provide evidence about conditions that did not exist at the balance
sheet date. The Company adopted SFAS No. 165 and it did not have an impact on
the Company’s consolidated financial statements. There were no recognized or
non-recognized subsequent events occurring after June 30, 2009 that required
accounting or disclosure in accordance with SFAS No. 165. Subsequent events were
evaluated to August 14, 2009, the date the financial statements of the Company
were issued.
In April
2009, the FASB issued FASB Staff Position (FSP) SFAS No. 141(R)-1, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies, to amend and clarify the initial recognition and
measurement, subsequent measurement and accounting, and related disclosures
arising from contingencies in a business combination under SFAS No. 141(R).
Under the new guidance, assets acquired and liabilities assumed in a business
combination that arise from contingencies should be recognized at fair value on
the acquisition date if fair value can be determined during the measurement
period. If fair value cannot be determined, companies should typically account
for the acquired contingencies using existing guidance. The implementation of
this standard did not have a material effect on the Company’s consolidated
financial statements.
In April
2009, the FASB issued FASB Staff Position No. 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly (FSP SFAS No.
157-4). This FSP:
|
·
|
Affirms
that the objective of fair value when the market for an asset is not
active is the price that would be received to sell the asset in an orderly
transaction.
|
|
·
|
Clarifies
and includes additional factors for determining whether there has been a
significant decrease in market activity for an asset when the market for
that asset is not active.
|
|
·
|
Eliminates
the proposed presumption that all transactions are distressed (not
orderly) unless proven otherwise. The FSP instead requires an entity to
base its conclusion about whether a transaction was not orderly on the
weight of the evidence.
|
|
·
|
Includes
an example that provides additional explanation on estimating fair value
when the market activity for an asset has declined
significantly.
|
|
·
|
Requires
an entity to disclose a change in valuation technique (and the related
inputs) resulting from the application of the FSP and to quantify its
effects, if practicable.
|
|
·
|
Applies
to all fair value measurements when
appropriate.
|
FSP SFAS
No. 157-4 must be applied prospectively and retrospective application is not
permitted. FSP SFAS No. 157-4 is effective for interim and annual periods ending
after June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. An entity early adopting FSP SFAS No. 157-4 must also early
adopt FSP SFAS No. 115-2 and SFAS No. 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. The implementation of this standard did
not have a material effect on the Company’s consolidated financial
statements.
In
April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting
Principles Board (APB) Opinion 28-1, Interim Disclosures About Fair Value
of Financial Instruments (FSP SFAS No. 107-1 and APB
No. 28-1”). FSP SFAS No. 107-1 and APB No. 28-1 amend SFAS
No. 107, Disclosures
About Fair Value of Financial Instruments, to require disclosures about
the fair value of financials in interim as well as in annual financial
statements, and APB No. 28, Interim Financial Reporting,
to require those disclosures in all interim financial statements. FSP SFAS
No. 107-1 and APB No. 28-1 are effective for periods ending after
June 15, 2009. The implementation of these standards did not have a
material effect on the Company’s consolidated financial statements.
Note 3. Intangible
Assets
The
following is a summary of intangible assets which consists of licenses and
patents:
|
|
|
Weighted
Average Amortization Period
(years)
|
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net Book Value
|
|
|
June
30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
11.5 |
|
|
$ |
462,234 |
|
|
$ |
152,210 |
|
|
$ |
310,024 |
|
|
Patents
|
|
|
8.8 |
|
|
|
1,979,597 |
|
|
|
837,731 |
|
|
|
1,141,866 |
|
|
Total
|
|
|
9.3 |
|
|
$ |
2,441,831 |
|
|
$ |
989,941 |
|
|
$ |
1,451,890 |
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
11.7 |
|
|
$ |
462,234 |
|
|
$ |
142,994 |
|
|
$ |
319,240 |
|
|
Patents
|
|
|
9.0 |
|
|
|
1,870,603 |
|
|
|
771,126 |
|
|
|
1,099,477 |
|
|
Total
|
|
|
9.5 |
|
|
$ |
2,332,837 |
|
|
$ |
914,120 |
|
|
$ |
1,418,717 |
|
Amortization
expense was $38,002 and $75,824 for the three and six ended June 30, 2009,
respectively. Amortization expense was $33,243 and $64,422 for the three and six
months ended June 30, 2008, respectively.
Based on
the balance of licenses and patents at June 30, 2009, the annual amortization
expense for each of the succeeding five years is estimated to be as
follows:
|
|
|
Amortization Amount
|
|
|
2010
|
|
$ |
160,000 |
|
|
2011
|
|
|
165,000 |
|
|
2012
|
|
|
170,000 |
|
|
2013
|
|
|
175,000 |
|
|
2014
|
|
|
180,000 |
|
License
fees and royalty payments are expensed annually as incurred as the Company does
not attribute any future benefits to them other than within that
period.
Note 4. Income
Taxes
Deferred
tax assets consist of the following:
| |
|
June 30, 2009 |
|
|
December
31, 2008 |
|
|
Net
Operating loss carry forwards
|
|
$ |
30,230,000 |
|
|
$ |
26,300,000 |
|
|
Orphan
drug and research and development credit carry forwards
|
|
|
2,000,000 |
|
|
|
2,000,000 |
|
|
Other
|
|
|
3,300,000 |
|
|
|
3,300,000 |
|
|
Total
|
|
|
35,530,000 |
|
|
|
31,600,000 |
|
|
Valuation
allowance
|
|
|
(35,530,000 |
) |
|
|
(31,600,000 |
) |
|
Net
deferred tax assets
|
|
$ |
- |
|
|
$ |
- |
|
At
December 31, 2008, the Company had net operating loss carry forwards (NOLs) of
approximately $76,000,000 for Federal and state tax purposes, portions of which
are currently expiring each year until 2028. In addition, the Company had
$2,000,000 of various tax credits that start expiring from December 2009 to
December 2028. The Company may be able to utilize its NOLs to reduce future
federal and state income tax liabilities. However, these NOLs are
subject to various limitations under Internal Revenue Code (IRC) Section
382. IRC Section 382 limits the use of NOLs to the extent there has
been an ownership change of more than 50 percentage points. In addition, the NOL
carryforwards are subject to examination by the taxing authority and could be
adjusted or disallowed due to such exams. Although the Company has
not undergone an IRC Section 382 analysis, it is possible that the utilization
of the NOLs may be limited.
The
Company and one or more of its subsidiaries files income tax returns in the U.S.
Federal jurisdiction, and various state and local jurisdictions. The Company is
no longer subject to income tax assessment for years before 2004. However, since
the Company has incurred net operating losses in every tax year since inception,
all its income tax returns are subject to examination by the Internal Revenue
Service and state authorities for purposes of determining the amount of net
operating loss carryforward that can be used to reduce taxable
income.
The net
changes in the valuation allowance for six months ended June 30, 2009 and the
year ended December 31, 2008 were an increase of approximately $3,900,000 and
decrease of $1,600,000, respectively, resulting primarily from net operating
losses generated. As a result of the Company’s continuing tax losses, it has
recorded a full valuation allowance against its net deferred tax
assets.
The
Company has no tax provision for the periods ended June 30, 2009 and 2008 due to
losses and full valuation allowances against deferred tax assets.
Effective
January 1, 2007, the Company adopted Financial Interpretation (FIN) No. 48,
Accounting for Uncertainty in
Income Taxes – An Interpretation of FASB Statement No. 109. This
interpretation prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. The implementation of this standard did
not have a material effect on the Company’s consolidated financial
statements.
Note 5. Shareholders’
Equity
Preferred
Stock
The
Company has 5,000,000 shares of preferred stock authorized, none of which are
issued or outstanding.
Common
Stock
The
following items represent transactions in the Company’s common stock for the six
months ended June 30, 2009:
|
·
|
In
five separate transactions during the six months ended June 30, 2009, the
Company issued an aggregate of 339,603 shares of common stock under its
existing Fusion Capital equity facility. The Company received an aggregate
of $45,000 in proceeds which approximated the shares’ fair market value on
the date of issuance.
|
|
·
|
On
March 6, 2009, the Company issued 2,500,000 shares of common stock
pursuant to the $400,000 ($300,000 of which was issued on this date)
common stock equity investment agreement with its clinical trials
management partner, Numoda. These shares were priced at the then current
market price of $0.12 per share. The remaining $100,000 investment will be
completed in January 2010 and will either be paid in cash or in 833,334
shares of common if the market price falls below $0.12. The
investment follows the collaboration between the Company and Numoda
announced on June 30, 2008 and represents partial payment by the Company
under its collaboration agreement. The Company recognized $400,000 of
research and development costs during March 2009 as a result of this
transaction.
|
|
·
|
On February 11, 2009, the Company entered into a collaboration and
supply agreement with Sigma-Tau for the commercialization of orBec®.In
connection with the execution of the collaboration agreement, the Company
entered into a common stock purchase agreement with Sigma-Tau pursuant to
which the Company sold 25,000,000 shares of common stock to Sigma-Tau for
$0.18 per share, representing an aggregate price of $4,500,000. The
purchase price was equal to one hundred fifty percent (150%) of the
average trading price of the Company’s common stock over the five trading
days prior to February 11, 2009. As part of the transaction, the Company
granted Sigma-Tau certain demand and piggy-back registration
rights.
|
|
·
|
On
January 20, 2009, the Company received $2,384,200 from the completed
private placement of common stock and warrants to accredited investors.
Under the terms of the agreement, the Company sold 20,914,035 common
shares together with five year warrants to purchase up to 20,914,035
shares of the Company’s common stock at $0.14 per share, for an aggregate
price of $2,384,200, or $0.114 per share, representing a premium to the
Company’s common stock market price on the date of the agreements. The
expiration date of the warrants can be accelerated if the Company's common
stock meets certain price thresholds and the Company would receive
additional gross proceeds of approximately $2,900,000 if they are all
exercised.
|
In
February 2008, the Company entered into a common stock purchase agreement with
Fusion Capital Fund II, LLC (“Fusion Capital”). The Fusion Capital equity
facility allows the Company to require Fusion Capital to purchase between
$80,000 and $1.0 million of the Company’s common stock every two business days,
up to an aggregate of $8.0 million over approximately a 25-month period
depending on certain conditions, including the quoted market price of the
Company’s common stock on such date. As part of the agreement, the Company
issued Fusion Capital 1,275,000 shares of common stock as a commitment fee.
In
connection with the execution of the common stock purchase agreement, Fusion
Capital made an initial purchase of 2,777,778 common shares and received a four
year warrant to purchase 1,388,889 shares of common stock for $0.22 per share,
representing an aggregate price of $500,000. The Company issued an additional
75,000 shares of common stock as a commitment fee in connection with this
$500,000 purchase.
If the
Company’s stock price exceeds $0.15, then the amount required to be purchased
may be increased under certain conditions as the price of the Company’s common
stock increases. The Company cannot require Fusion Capital to purchase any
shares of the Company’s common stock on any trading days that the market price
of the Company’s common stock is less than $0.10 per share. Furthermore, for
each additional purchase by Fusion, additional commitment shares in commensurate
amounts up to a total of 1,275,000 shares will be issued based upon the relative
proportion of purchases compared to the total commitment maximum of 18.5 million
shares. The total issuance of common stock related to commitment shares for 2008
was 1,369,125 shares, which were issued to Fusion Capital and consisted of
1,275,000 shares as a commitment fee, 75,000 shares as a commitment fee for the
$500,000 invested, and 19,125 shares for the commitment fee shares on the equity
line draws totaling $127,500.
During
the year ended December 31, 2008, the Company issued 993,084 shares of common
stock under the Fusion Capital equity facility. In connection with these
issuances the Company received $127,500 in proceeds which approximated the
shares’ fair market value on the dates of issuance.
Warrants
During
2009, the Company issued 1,200,000 warrants to purchase common stock shares to
consultants in exchange for their services. In January 2009, 50,000 warrants
were issued to Strategic Outsourcing Solutions, LLC which had an exercise price
of $0.10. In February 2009, 1,000,000 warrants were issued to George B.
McDonald, M.D. which had an exercise price of $0.11. In June 2009, 150,000
warrants were issued to Griffin Securities Inc. which had an exercise price of
$0.198. Expense charges of $37,485 and $127,712 were recorded during the three
and six months ended June 30, 2009, respectively.
Note
6. Commitments and Contingencies
The Company has commitments of approximately $4.1 million at June
30, 2009 in connection with a collaboration agreement with Numoda for the
execution of our confirmatory, Phase 3 clinical trial of orBec®.
The
Company has several licensing agreements with consultants and universities,
which upon clinical or commercialization success may require the payment of
milestones and/or royalties if and when achieved. However, there can be no
assurance that clinical or commercialization success will occur.
On March 4, 2007, the Company entered into an investment banking
agreement with RBC Capital Markets (“RBC”). As a result of the
Company’s transactions with Sigma-Tau, RBC claims that it is entitled to certain
compensation under such agreement up to $1.6 million. The Company disputes that
RBC is entitled to any compensation for the Sigma-Tau transactions and will
vigorously defend any lawsuit filed by RBC.
On
February 2007, the Company’s Board of Directors authorized the issuance of the
following shares to Dr. Schaber, Mr. Myrianthopoulos, Dr. Brey and certain other
employees and a consultant, upon the completion of a transaction, or series or a
combination of related transactions negotiated by the Company’s Board of
Directors whereby, directly or indirectly, a majority of the Company’s capital
stock or a majority of its assets are transferred from the Company and/or its
stockholders to a third party: 1,000,000 common shares to Dr. Schaber;
750,000 common shares to Mr. Myrianthopoulos; 200,000 common shares to Dr. Brey;
and 450,000 common shares to employees and a consultant shall be
issued.
Employees
with employment contracts have severance agreements that will provide separation
benefits from the Company if they are involuntarily separated from
employment.
Note
7. Business Segments
The
Company maintains two active business segments: BioTherapeutics and
BioDefense. Each segment includes an element of overhead costs
specifically associated with its operations, with its corporate shared services
group responsible for support functions generic to both operating
segments.
|
|
|
Three
Months Ended June 30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Net
Revenues
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
320,315 |
|
|
$ |
488,244 |
|
|
BioTherapeutics
|
|
|
12,000 |
|
|
|
- |
|
|
Total
|
|
$ |
332,315 |
|
|
$ |
488,244 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
(51,237) |
|
|
$ |
(70,268
|
) |
|
BioTherapeutics
|
|
|
(1,089,111) |
|
|
|
(645,378
|
) |
|
Corporate
|
|
|
(651,290) |
|
|
|
(562,458
|
) |
|
Total
|
|
$ |
(1,791,638) |
|
|
$ |
(1,278,104
|
) |
| |
|
|
|
|
|
|
|
|
|
Amortization
and Depreciation Expense
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
22,525 |
|
|
|
15,381 |
|
|
BioTherapeutics
|
|
|
16,525 |
|
|
|
19,224 |
|
|
Corporate
|
|
|
1,051 |
|
|
|
1,361 |
|
|
Total
|
|
$ |
40,101 |
|
|
$ |
35,966 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Income, Net
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
$ |
6,734 |
|
|
$ |
6,398 |
|
|
Total
|
|
$ |
6,734 |
|
|
$ |
6,398 |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
24,887 |
|
|
$ |
19,517 |
|
|
BioTherapeutics
|
|
|
33,800 |
|
|
|
20,066 |
|
|
Corporate
|
|
|
97,959 |
|
|
|
36,793 |
|
|
Total
|
|
$ |
156,646 |
|
|
$ |
76,376 |
|
|
|
|
Six
Months Ended June 30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Net
Revenues
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
834,632 |
|
|
$ |
1,165,884 |
|
|
BioTherapeutics
|
|
|
28,000 |
|
|
|
- |
|
|
Total
|
|
$ |
862,632 |
|
|
$ |
1,165,884 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
(117,176 |
) |
|
$ |
(104,383 |
) |
|
BioTherapeutics
|
|
|
(2,626,883
|
) |
|
|
(1,077,623
|
) |
|
Corporate
|
|
|
(1,203,547
|
) |
|
|
(1,472,126
|
) |
|
Total
|
|
$ |
(3,947,606 |
) |
|
$ |
(2,654,132 |
) |
|
|
|
|
|
|
|
|
|
|
|
Amortization
and Depreciation Expense
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
44,566 |
|
|
$ |
29,598 |
|
|
BioTherapeutics
|
|
|
33,363 |
|
|
|
37,637 |
|
|
Corporate
|
|
|
2,106 |
|
|
|
2,814 |
|
|
Total
|
|
$ |
80,035 |
|
|
$ |
70,049 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Income, Net
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
$ |
17,606 |
|
|
$ |
26,254 |
|
|
Total
|
|
$ |
17,606 |
|
|
$ |
26,254 |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
51,418 |
|
|
$ |
39,034 |
|
|
BioTherapeutics
|
|
|
80,659 |
|
|
|
40,132 |
|
|
Corporate
|
|
|
170,409 |
|
|
|
73,586 |
|
|
Total
|
|
$ |
302,486 |
|
|
$ |
152,752 |
|
| |
|
|
|
| |
|
As of
June 30,
|
|
|
As of
December 31,
|
|
| |
|
2009
|
|
|
2008
|
|
|
Identifiable Assets
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
950,931 |
|
|
$ |
1,221,901 |
|
|
BioTherapeutics
|
|
|
683,352 |
|
|
|
310,535 |
|
|
Corporate
|
|
|
5,150,552 |
|
|
|
1,830,299 |
|
|
Total
|
|
$ |
6,784,835 |
|
|
$ |
3,362,735 |
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors of Soligenix, Inc.,
We have
audited the accompanying consolidated balance sheet of Soligenix, Inc. (formerly
known as DOR BioPharma, Inc.) and subsidiaries as of December 31, 2008 and
the related consolidated statements of operations, changes in shareholders’
equity and cash flows for the year ended 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 audit.
We
conducted our audit 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
December 31, 2008, and the results of its operations and its cash
flows for the year ended December 31, 2008, in conformity with U.S.
generally accepted accounting principles.
/s/
Amper, Politziner & Mattia, LLP
Edison,
New Jersey
March 27,
2009
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors of Soligenix, Inc.,
We have
audited the accompanying consolidated balance sheet of Soligenix, Inc. (formerly
known as DOR BioPharma, Inc.) and subsidiaries as of December 31, 2007 and
the related consolidated statements of operations, changes in shareholders’
equity and cash flows for the year ended December 31, 2007. 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 audit in accordance with standards of the Public Company
Accounting Oversight Board (U.S.). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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
audit provides a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
December 31, 2007, and the results of its operations and its cash
flows for the year ended December 31, 2007, in conformity with U.S.
generally accepted accounting principles.
/s/
Sweeney, Matz & Co., LLC
Pompano
Beach, Florida
March 8,
2008
Soligenix,
Inc.
Consolidated
Balance Sheets
December
31,
|
|
|
2008 |
|
|
2007 |
|
| Assets |
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
1,475,466 |
|
|
$ |
2,220,128 |
|
|
Grants
receivable
|
|
|
278,316 |
|
|
|
97,845 |
|
|
Inventory,
net
|
|
|
82,182 |
|
|
|
- |
|
|
Prepaid
expenses
|
|
|
86,837 |
|
|
|
119,178 |
|
|
Total
current assets
|
|
|
1,922,801 |
|
|
|
2,437,151 |
|
|
|
|
|
|
|
|
|
|
|
|
Office
and laboratory equipment, net
|
|
|
21,217 |
|
|
|
25,941 |
|
|
Intangible
assets, net
|
|
|
1,418,717 |
|
|
|
1,320,787 |
|
|
Total
assets
|
|
$ |
3,362,735 |
|
|
$ |
3,783,879 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
1,015,005 |
|
|
$ |
847,610 |
|
|
Accrued
compensation
|
|
|
370,614 |
|
|
|
345,903 |
|
|
Total
current liabilities
|
|
|
1,385,619 |
|
|
|
1,193,513 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
|
Common
stock, $.001 par value. Authorized 250,000,000
|
|
|
|
|
|
|
|
|
|
shares; 118,610,704
and 94,996,547, respectively issued and outstanding
|
|
|
118,610 |
|
|
|
94,996 |
|
|
Additional
paid-in capital
|
|
|
104,176,253 |
|
|
|
101,391,090 |
|
|
Accumulated
deficit
|
|
|
(102,317,747) |
|
|
|
(98,895,720
|
) |
|
Total
shareholders’ equity
|
|
|
1,977,116 |
|
|
|
2,590,366 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity
|
|
$ |
3,362,735 |
|
|
$ |
3,783,879 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Consolidated
Statements of Operations
For
the years ended December 31,
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
2,310,265 |
|
|
$ |
1,258,017 |
|
|
Cost
of revenues
|
|
|
( 1,886,431 |
) |
|
|
( 943,385 |
) |
|
Gross
profit
|
|
|
423,834 |
|
|
|
314,632 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
1,552,323 |
|
|
|
3,099,944 |
|
|
General
and administrative
|
|
|
1,941,719 |
|
|
|
2,864,370 |
|
|
Stock
based compensation research and development
|
|
|
182,168 |
|
|
|
230,668 |
|
|
Stock
based compensation general and administrative
|
|
|
203,448 |
|
|
|
446,733 |
|
|
Total
operating expenses
|
|
|
3,879,658 |
|
|
|
6,641,715 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
( 3,455,824 |
) |
|
|
( 6,327,083 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
37,073 |
|
|
|
164,847 |
|
|
Interest
(expense)
|
|
|
( 3,276 |
|
|
|
( 1,020 |
) |
|
Other
(expense)
|
|
|
- |
|
|
|
( 1,387 |
) |
|
Total
other income (expense)
|
|
|
33,797 |
|
|
|
162,440 |
|
|
Net
loss
|
|
$ |
( 3,422,027 |
) |
|
$ |
( 6,164,643 |
) |
|
Basic
and diluted net loss per share
|
|
$ |
( 0.03 |
) |
|
$ |
( 0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average common shares outstanding
|
|
|
101,881,991 |
|
|
|
90,687,677 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Consolidated
Statements of Changes in Shareholders’ Equity (Deficiency)
For
the years ended December 31, 2008 and 2007
|
|
|
Common
Stock
|
|
|
Additional
Paid-
|
|
|
Accumulated
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
In Capital
|
|
|
Deficit
|
|
|
Balance,
January
1, 2007
|
|
|
68,855,794 |
|
|
$ |
68,855 |
|
|
$ |
91,553,766 |
|
|
$ |
(92,731,077 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
|
15,745,891 |
|
|
|
15,746 |
|
|
|
6,219,658 |
|
|
|
- |
|
|
Issuance
of common stock upon exercise of options and
warrants
|
|
|
8,195,487 |
|
|
|
8,195 |
|
|
|
2,218,088 |
|
|
|
- |
|
|
Issuance
of common stock to vendors
|
|
|
829,821 |
|
|
|
830 |
|
|
|
329,670 |
|
|
|
- |
|
|
Issuance
of stock to investors by contract as dilution protection
|
|
|
995,947 |
|
|
|
996 |
|
|
|
307,747 |
|
|
|
- |
|
|
Issuance
of common stock as payment to employees
|
|
|
373,607 |
|
|
|
374 |
|
|
|
84,759 |
|
|
|
- |
|
|
Stock
option expense
|
|
|
- |
|
|
|
- |
|
|
|
677,401 |
|
|
|
- |
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,164,643 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December
31, 2007
|
|
|
94,996,547 |
|
|
$ |
94,996 |
|
|
$ |
101,391,090 |
|
|
$ |
(98,895,720 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock from private placement
|
|
|
3,658,890 |
|
|
|
3,659 |
|
|
|
654,940 |
|
|
|
- |
|
|
Issuance
of common stock for commitment shares
|
|
|
1,369,125 |
|
|
|
1,369 |
|
|
|
(1,369 |
) |
|
|
- |
|
|
Issuance
of common stock for execution of letter of intent
|
|
|
16,666,667 |
|
|
|
16,667 |
|
|
|
1,483,333 |
|
|
|
- |
|
|
Issuance
of common stock for equity line
|
|
|
993,084 |
|
|
|
993 |
|
|
|
126,507 |
|
|
|
- |
|
|
Issuance
of common stock to vendors
|
|
|
758,082 |
|
|
|
758 |
|
|
|
110,440 |
|
|
|
- |
|
|
Issuance
of common stock as payment to employees
|
|
|
168,309 |
|
|
|
168 |
|
|
|
25,696 |
|
|
|
- |
|
|
Stock
option expense
|
|
|
- |
|
|
|
- |
|
|
|
385,616 |
|
|
|
- |
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,422,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December
31, 2008
|
|
|
118,610,704 |
|
|
$ |
118,610 |
|
|
$ |
104,176,253 |
|
|
$ |
(102,317,747 |
) |
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Consolidated
Statements of Cash Flows
For
the years ending December 31,
| |
|
2008
|
|
|
2007
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
( 3,422,027 |
) |
|
$ |
( 6,164,643 |
) |
|
|
|
|
|
|
|
|
|
|
| Adjustments
to reconcile net loss to net cash used by operating activities: |
|
|
|
|
|
|
|
|
|
Amortization
and depreciation
|
|
|
149,183 |
|
|
|
119,565 |
|
|
Inventory
reserve
|
|
|
100,000 |
|
|
|
- |
|
|
Non-cash
stock compensation
|
|
|
522,678 |
|
|
|
1,401,777 |
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Grants
receivable
|
|
|
( 180,471 |
) |
|
|
( 7,912 |
) |
|
Inventory
|
|
|
( 182,182 |
|
|
|
- - |
|
|
Prepaid
expenses
|
|
|
32,341 |
|
|
|
( 24,708 |
) |
|
Accounts
payable
|
|
|
167,396 |
|
|
|
(
1,264,868 |
) |
|
Accrued
compensation
|
|
|
24,710 |
|
|
|
(57,044 |
) |
|
Total
adjustments
|
|
|
633,655 |
|
|
|
166,810 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used by operating activities
|
|
|
( 2,788,372) |
|
|
|
( 5,997,833 |
) |
| |
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
Purchases
of office and laboratory equipment
|
|
|
( 5,277 |
) |
|
|
( 7,170 |
) |
|
Acquisition
of intangible assets
|
|
|
( 237,113 |
) |
|
|
( 356,192 |
) |
|
Net
cash used by investing activities
|
|
|
( 242,390 |
) |
|
|
( 363,362 |
) |
| |
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
Net
proceeds from issuance of common stock
|
|
|
2,158,600 |
|
|
|
6,235,404 |
|
|
Proceeds
from equity line
|
|
|
127,500 |
|
|
|
- |
|
|
Proceeds
from exercise of warrants
|
|
|
- |
|
|
|
1,592,263 |
|
|
Proceeds
from exercise of stock options
|
|
|
- |
|
|
|
634,020 |
|
|
Net
cash provided by financing activities
|
|
|
2,286,100 |
|
|
|
8,461,687 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
(744,662
|
) |
|
|
2,100,492 |
|
|
Cash
and cash equivalents at beginning of period
|
|
|
2,220,128 |
|
|
|
119,636 |
|
|
Cash
and cash equivalents at end of period
|
|
$ |
1,475,466 |
|
|
$ |
2,220,128 |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow:
|
|
|
|
|
|
|
|
|
| Cash
paid for interest |
|
$ |
3,276 |
|
|
$ |
1,020 |
|
| |
|
|
|
|
|
|
|
|
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
|
Issuance
of commitment shares
|
|
$ |
272,484 |
|
|
$ |
- |
|
|
Issuance
of shares for anti-dilution
|
|
$ |
- |
|
|
$
|
308,743 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc.
Notes
to Consolidated Financial Statements
1. Nature of
Business
Basis of
Presentation
The
Company is a biopharmaceutical company incorporated in 1987, focused on the
development of biotherapeutic products and biodefense vaccines intended for
areas of unmet medical need. The Company’s biotherapeutic business segment
intends to develop orBec®, oral
BDP, and other biotherapeutic products namely LPMTM-Leuprolide.
The Company’s biodefense business segment intends to convert its ricin toxin,
botulinum toxin, and anthrax vaccine programs from early stage development to
advanced development and manufacturing.
During
the 12 months ended December 31, 2008, the Company had two customers, the U.S.
Federal Government and Orphan Australia Pty Ltd. (“Orphan Australia”), a
specialty pharmaceutical company based in Melbourne, Australia, through a Named
Patient Access Program (“NPAP”) for orBec®. Revenues
from the U.S. Federal Government were generated from three active grants. As of
December 31, 2008 outstanding receivables were from the U.S. Federal Government,
the National Institutes of Health and The U.S. Food and Drug Administration and
Orphan Australia.
The
Company is subject to risks common to companies in the biotechnology industry,
including, but not limited to, litigation, product liability, development of new
technological innovations, dependence on key personnel, protections of
proprietary technology, and compliance with FDA regulations.
Liquidity
As of
December 31, 2008, the Company had cash of $1,475,466 as compared to $2,220,128
as of December 31, 2007. As of December 31, 2008, the Company had working
capital of $537,183 as compared to working capital of $1,243,638 as of December
31, 2007, representing a decrease of $706,455.
As of
February 28, 2009, the Company had cash of approximately $7,100,000. The
increase was the result of the sale of the Company’s common stock to its
commercialization partner Sigma-Tau of $4.5 million and $2.3 million from the
sale of the Company’s common stock to accredited investors. For the 12 months
ended December 31, 2008, the Company’s cash used in operating activities was
approximately $2,800,000, compared to $6,000,000 for the corresponding period
ended December 31, 2007, reflecting both an increase in grant revenues and
reduced costs as the Company conscientiously slowed its spending in response to
difficult conditions in raising funding and regulatory progress. The Company
continues to use equity instruments to provide a portion of the compensation due
to employees, vendors and collaboration partners, and expect to continue to do
some in the future.
Based on
the Company’s current rate of cash outflows and cash in the bank, the
Company believes that its current cash will be sufficient to meet the
anticipated cash needs for working capital and capital expenditures into the
third quarter of 2010. The Company has $2.0 million in grant funding still
available to support its programs in 2009 and beyond. Additionally, the Company
has several grants for several of its programs that have been submitted for
government funding.
Management’s
plan is as follows:
|
|
The
Company is exploring out-licensing opportunities for orBec®
and oral BDP in territories outside North America, and for LPMTM-Leuprolide
and BioDefense programs in the United States and in Europe.
The
Company has and will utilize NPAPs wherever possible in countries outside
the United States to generate revenues from orBec®.
The
Company intends to utilize its existing $8 million equity line of credit
with Fusion Capital (approximately $7.8 million of which is still
available to the Company through June 2010) when it deems market
conditions to be appropriate.
The
Company expects to receive new government grants intended to support
existing and new research and development over the next twelve months. In
addition to research and development funding, these grants would provide
additional support for its overhead expenditures as well as defray certain
costs intended to cover portions of its confirmatory Phase 3 trial of its
lead product orBec®. Therefore
these grants would have the effect of extending its cash resources. The
Company routinely files for government grants which support its
biotherapeutic and biodefense programs.
|
| |
The Company may obtain additional funds through the issuance of
equity or equity-linked securities through private placements or rights
offerings. The Company is currently evaluating additional equity financing
opportunities and will continue to execute them when appropriate
|
It is
possible that the Company will seek additional capital in the private and/or
public equity markets to continue its operations, respond to competitive
pressures, and develop new products and services and to support new strategic
partnerships.
In the
event that such growth is less than forecasted in our 2009-2010 operating plan,
management has developed contingency plans to reduce the Company operating
expenses. However, in any case, there can be no assurance that the Company will
be able to maintain adequate liquidity to allow the Company to continue to
operate its business or prevent the possible impairment of its
assets.
2. Summary of Significant Accounting
Policies
Principles of
Consolidation
The
consolidated financial statements include Soligenix, Inc., and its wholly and
majority owned subsidiaries (the “Company”). All significant intercompany
accounts and transactions have been eliminated as a result of
consolidation.
Segment
Information
Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated on a regular basis by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources to an individual segment and in assessing the performance of
the segment.
Grants
Receivable
Receivables
consist of unbilled amounts due from grants from the National Institute of
Health of the U.S. Federal Government for costs incurred prior to the
period. The amounts were billed in the month subsequent to period end
and collected shortly thereafter. The Company considers the grants receivable to
be fully collectible; accordingly, no allowance for doubtful amounts has been
established. If amounts become uncollectible, they are charged to
operations.
Intangible
Assets
One of
the most significant estimates or judgments that the Company makes is whether to
capitalize or expense patent and license costs. The Company makes this judgment
based on whether the technology has alternative future uses, as defined in SFAS
2, “Accounting for Research and Development Costs”. Based on this consideration,
all outside legal and filing costs incurred in the procurement and defense of
patents are capitalized.
The
Company capitalizes and amortizes intangibles over a period of 11 to 16 years.
The Company capitalizes payments made to legal firms that are engaged in filing
and protecting rights to intellectual property and rights for our current
products in both the domestic and international markets. The Company believes
that patent rights are one of its most valuable assets. Patents and patent
applications are a key component of intellectual property, especially in the
early stage of product development, as their purchase and maintenance gives the
Company access to key product development rights from the Company’s academic and
industrial partners.
These
rights can also be sold or sub-licensed as part of its strategy to partner its
products at each stage of development. The legal costs incurred for these
patents consist of work designed to protect, preserve, maintain and perhaps
extend the lives of the patents. Therefore, the Company capitalizes these costs
and amortizes them over the remaining useful life of the patents. the Company
capitalizes intangible assets based on alternative future use.
The Company capitalized $237,113 and $356,192
in patent related costs during the year ended December 31, 2008 and the year
ended December 31, 2007, respectively. These amounts are represented
in the cash flow statements, in the section for investing activities presented
in the financial statements. On the balance sheet as of December 31, 2008 and
December 31, 2007, these amounts are presented on the line intangible assets,
net in the amount of $1,418,717 and $1,320,787, respectively.
Impairment of
Long-Lived Assets
Office
and laboratory equipment and intangible assets are evaluated and reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The Company recognizes impairment of
long-lived assets in the event the net book value of such assets exceeds the
estimated future undiscounted cash flows attributable to such assets. If the sum
of the expected undiscounted cash flows is less than the carrying value of the
related asset or group of assets, a loss is recognized for the difference
between the fair value and the carrying value of the related asset or group of
assets. Such analyses necessarily involve significant judgment.
The
Company did not record an impairment of intangible assets for the 12 months
ended December 31, 2008 or 2007.
Inventory
Inventories
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (“FIFO”) method and includes the cost of materials and
overhead. The Company records an allowance as needed for excess inventory. For
the three months ended December 31, 2008 an allowance of $100,000 was provided.
This allowance will be evaluated on a quarterly basis and adjustments will be
made as required. All inventory for this period is finished goods and consists
of orBec®
treatments.
Fair
Value of Financial Instruments
Accounting
principles generally accepted in the U.S. require that fair values be disclosed
for the Company’s financial instruments. The carrying amounts of the Company’s
financial instruments, which include grants receivable and current liabilities,
are considered to be representative of their respective fair
values.
Revenue
Recognition
The
Company’s revenues are from government grants and NPAP sales of orBec® from
Orphan Australia. The revenue from government grants are based upon
subcontractor costs and internal costs incurred that are specifically covered by
the grants, plus a facilities and administrative rate that provides funding for
overhead expenses. Revenues are recognized when expenses have been incurred by
subcontractors or when the Company incurs internal expenses that are related to
the grant. The revenues from the NPAP sales of orBec® are
recognized when the product is shipped. NPAP sales are FOB
shipping.
Research and Development
Costs
Research
and Development costs are charged to expense when incurred. Research and
development includes costs such as clinical trial expenses, contracted research
and license agreement fees with no alternative future use, supplies and
materials, salaries and employee benefits, equipment depreciation and allocation
of various corporate costs.
Stock Based
Compensation
The fair
value of options in accordance with SFAS 123 was estimated using the
Black-Scholes option-pricing model and the following weighted-average
assumptions: dividend yield 0%, expected life of four years, volatility of 115%
and 99% in 2008 and 2007, respectively, and average risk-free interest rates of
1.1% and 4.5% in 2008 and 2007, respectively. The Company estimates these values
based on the assumptions that have been historically available.
The fair
value of each option grant at the 12 months ended December 31, 2008 and December
31, 2007 was estimated on the date of each grant using the Black-Scholes option
pricing model and amortized ratably over the option’s vesting periods. The
Company awarded 6,800,000 stock options for the 12 months ended December
31, 2008 while 3,375,000 stock options were granted during the 12 months
ended December 31, 2007. The weighted average fair value of options granted with
an exercise price equal to the fair market value of the stock was $0.06, and
$0.27 for the 12 months ended December 31, 2008 and 2007,
respectively.
Stock
compensation expense for options granted to non-employees has been determined in
accordance with SFAS 123R and Emerging Issues Task Force (“EITF”) 96-18, and
represents the fair value of the consideration received, or the fair value of
the equity instruments issued, whichever may be more reliably measured. For
options that vest over future periods, the fair value of options granted to
non-employees is amortized as the options vest. The option’s price is
re-measured using the Black-Scholes model at the end of each three month
reporting period.
As stock
options are exercised, common stock share certificates are issued via electronic
transfer or physical share certificates by the Company’s transfer agent. Upon
exercise, shares are issued from the amended 2005 equity incentive plan and
increase the number of shares the Company has outstanding.
Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. A valuation
allowance is established when it is more likely than not that all or a portion
of a deferred tax asset will not be realized. A review of all available positive
and negative evidence is considered, including the Company’s current and past
performance, the market environment in which the Company operates, the
utilization of past tax credits, length of carryback and carryforward
periods. Deferred tax assets and liabilities are measured utilizing
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. No current or
deferred income taxes have been provided through December 31, 2008 due to the
net operating losses incurred by the Company since its
inception. Additionally, the Company has not recorded a liability for
unrecognized tax benefits for December 31, 2008 and 2007.
Earnings Per
Share
Basic
earnings per share (“EPS”) excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that shared in the earnings of the entity. Since there is a large number
of options and warrants outstanding, fluctuations in the actual market price can
have a variety of results for each period presented.
A
reconciliation of the applicable numerators and denominators of the income
statement periods presented is as follows (millions, except earnings per share
amounts):
|
|
|
Year Ended
December
31, 2008
|
|
|
Year Ended
December
31, 2007
|
|
|
|
|
Loss
|
|
|
Shares
|
|
|
EPS
|
|
|
Loss
|
|
|
Shares
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
$ |
(3.42 |
) |
|
|
101.88 |
|
|
$ |
(0.03 |
) |
|
$ |
(6.16 |
) |
|
|
90.69 |
|
|
$ |
(0.07 |
) |
| Dilutives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
and Warrants
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Diluted
EPS
|
|
$ |
(3.42 |
) |
|
|
101.88 |
|
|
$ |
(0.03 |
) |
|
$ |
(6.16 |
) |
|
|
90.69 |
|
|
$ |
(0.07 |
) |
Options
and warrants outstanding at December 31, 2008 and 2007 were 16,370,039 and
10,349,839 options, and 20,350,148 and 29,209,341 warrants, respectively. No
options and warrants were included in the 2008 and 2007 computations of diluted
earnings because the effect would be anti-dilutive due to losses in the
respective years.
Use of
Estimates and Assumptions
The
preparation of financial statements in conformity with accounting principles
generally accepted in the U.S. requires management to make estimates and
assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
New
Accounting Pronouncements
In
February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS 159 is effective for fiscal years
beginning after November 15, 2007. In January 2008 the Company adopted SFAS 159
to determine the fair value on its financial assets and financial liabilities.
This adoption had no material impact on the Company’s consolidated financial
position, results of operations or cash flows.
EITF
07-05, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity’s Own Stock,” addresses the first part of paragraph 11A of SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” as to
whether or not a derivative is indexed to an entity’s own stock. EITF 07-05 will
require many awards to be accounted for as liabilities under SFAS No. 133 that
may have previously been accounted for as equity. EITF 07-05 becomes
effective for fiscal years, including those interim periods, beginning after
December 15, 2008. The EITF is thus applicable starting January 1, 2009, for the
Company.
The EITF
is applicable to all instruments outstanding at the beginning of the period of
adoption. The Company is currently evaluating the applicability of the
guidance in EITF 07-05 and analyzing the impact on its financial
statements.
In
December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations” (“SFAS 141(R)”). This Statement provides greater consistency
in the accounting and financial reporting of business combinations. It requires
the acquiring entity in a business combination to recognize all assets acquired
and liabilities assumed in the transaction, establishes the acquisition-date
fair value as the measurement objective for all assets acquired and liabilities
assumed, and requires the acquirer to disclose the nature and financial effect
of the business combination. The Company will adopt SFAS 141(R) in conjunction
with SFAS No. 160
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements” (“SFAS 160”). This
Statement amends Accounting Research Bulletin No. 51, Consolidated
Financial Statements, to establish accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. The adoption of this standard is not expected to have a significant
impact on the Company’s consolidated financial position, results of operations
or cash flows.
In
January 2008, the Company adopted the provisions of SFAS No. 157,
“Fair Value Measurements,” for financial assets and financial liabilities.
SFAS 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles, and expands disclosures about
fair value measurements. The company will delay the application of
SFAS 157 for non-financial assets and non-financial liabilities, except
those recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), in accordance with Financial Accounting
Standards Board Staff Position (FSP) No. SFAS 157-2, “Effective Date
of FASB Statement No. 157,” until January 2009.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles in the United States.
SFAS No. 162 became effective in September 2008. The adoption of this statement
did not have a material effect on the Company’s financial
statements.
3. Office and Laboratory
Equipment
Office and laboratory equipment are stated at cost. Depreciation is
computed on a straight-line basis over five years. Office and laboratory
equipment consisted of the following at December 31:
| |
|
2007 |
|
|
2008
|
|
|
Office equipment
|
|
$ |
130,605 |
|
|
$ |
125,328 |
|
|
Laboratory equipment
|
|
|
23,212 |
|
|
|
23,212 |
|
|
Total
|
|
|
153,817 |
|
|
|
148,540 |
|
|
Accumulated depreciation
|
|
|
(132,600 |
) |
|
|
(122,599 |
) |
| |
|
$ |
21,217 |
|
|
$ |
25,941 |
|
Depreciation
expense was $10,001 and $10,781 for the years ended December 31, 2008 and
2007.
The
following is a summary of intangible assets which consists of licenses and
patents:
|
|
|
Weighted
Average Amortization Period
(years)
|
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net Book Value
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
11.7 |
|
|
$ |
462,234 |
|
|
$ |
142,994 |
|
|
$ |
319,240 |
|
|
Patents
|
|
|
9.0 |
|
|
|
1,870,603 |
|
|
|
771,126 |
|
|
|
1,099,477 |
|
|
Total
|
|
|
9.5 |
|
|
$ |
2,332,837 |
|
|
$ |
914,120 |
|
|
$ |
1,418,717 |
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
12.7 |
|
|
$ |
462,234 |
|
|
$ |
115,681 |
|
|
$ |
346,553 |
|
|
Patents
|
|
|
9.7 |
|
|
|
1,633,490 |
|
|
|
659,256 |
|
|
|
974,234 |
|
|
Total
|
|
|
10.4 |
|
|
$ |
2,095,724 |
|
|
$ |
774,937 |
|
|
$ |
1,320,787 |
|
Amortization
expense was $139,183 in 2008 compared to $108,784 for 2007.
Based on
the balance of licenses and patents at December 31, 2008, the annual
amortization expense for each of the succeeding five years is estimated to be as
follows:
|
|
|
Amortization Amount
|
|
|
2009
|
|
$ |
150,000 |
|
|
2010
|
|
|
151,000 |
|
|
2011
|
|
|
152,000 |
|
|
2012
|
|
|
153,000 |
|
|
2013
|
|
|
154,000 |
|
License
fees and royalty payments are expensed annually as incurred as the Company does
not attribute any future benefits other than within that period.
5. Inventory
In the
third quarter of 2008, the Company purchased and recorded inventory for the
first time, because of the development of the NPAP programs which provided the
Company the ability to sell orBec® for
the first time. Inventory consists of finished goods. For the 12
month period ended December 31, 2008 the Company also recorded an allowance for
excess inventory of $100,000.
6. Income
Taxes
Deferred
tax assets as of December 31:
|
Deferred tax assets:
|
|
2008 |
|
|
2007 |
|
|
Net
operating loss carry forwards
|
|
$ |
26,300,000 |
|
|
$ |
25,000,000 |
|
|
Orphan
drug and research and development credit carry forwards
|
|
|
2,000,000 |
|
|
|
2,000,000 |
|
|
Other
|
|
|
3,300,000 |
|
|
|
3,000,000 |
|
|
Total
|
|
|
31,600,000 |
|
|
|
30,000,000 |
|
|
Valuation
allowance
|
|
|
(31,600,000 |
) |
|
|
(30,000,000 |
) |
|
Net
deferred tax assets
|
|
$ |
- |
|
|
$ |
- |
|
At
December 31, 2008, the Company had net operating loss carry forwards of
approximately $76,000,000 for Federal and state tax purposes, portions of which
are currently expiring each year until 2028. In addition, the Company had
$2,000,000 of various tax credits that start expiring from December 2009 to
December 2028. The Company may be able to utilize their NOLs to reduce future
federal and state income tax liabilities. However, these NOLs are
subject to various limitations under Internal Revenue Code (“IRC”) Section
382. IRC Section 382 limits the use of NOLs to the extent there has
been an ownership change of more than 50 percentage points. In addition, the NOL
carryforwards are subject to examination by the taxing authority and could be
adjusted or disallowed due to such exams. Although the Company has
not undergone an IRC Section 382 analysis, it is possible that the utilization
of the NOLs may be limited.
The
Company and one or more of its subsidiaries files income tax returns in the U.S.
Federal jurisdiction, and various state and local jurisdictions. The Company is
no longer subject to income tax assessment for years before 2004. However, since
the Company has incurred net operating losses in every tax year since inception,
all its income tax returns are subject to examination by the Internal Revenue
Service and state authorities for purposes of determining the amount of net
operating loss carryforward that can be used to reduce taxable
income.
The net
change in the valuation allowance for the year ended December 31, 2008 and
December 31, 2007 was an increase of approximately $1,600,000 and a decrease of
$1,000,000, respectively, resulting primarily from net operating losses
generated. As a result of the Company’s continuing tax losses, the Company has
recorded a full valuation allowance against a net differed tax
asset.
Reconciliations
of the difference between income tax benefit computed at the federal and state
statutory tax rates and the provision for income tax benefit for the years ended
December 31, 2008 and 2007 was as follows:
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Income
tax loss at federal statutory rate
|
|
|
(34.00 |
)% |
|
|
(34.00 |
)% |
|
State
taxes, net of federal benefit
|
|
|
(6.50 |
) |
|
|
(4.29 |
) |
|
Valuation
allowance
|
|
|
40.50 |
|
|
|
38.29 |
|
|
Provision
for income taxes (benefit)
|
|
|
- |
% |
|
|
- |
% |
Effective
January 1, 2007, the Company adopted Financial Interpretation (“FIN”) No. 48,
Accounting for Uncertainty in
Income Taxes – An Interpretation of FASB Statement No. 109. This
interpretation prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. The adoption did not have an effect on the
consolidated financial statements.
7. Shareholders’
Equity
Preferred
Stock
The
Company has 5 million authorized shares of preferred stock, none are issued or
outstanding.
Common
Stock
During
the 12 months ended December 31, 2008, the Company issued 758,082 shares of
common stock as payment to vendors for consulting services. An expense of
$111,500 was recorded which approximated the shares’ fair market value on the
date of issuance, respectively.
During
the 12 months ended December 31, 2008 the Company also issued 993,084 shares of
common stock under its existing Fusion Capital Equity facility. The Company
received $127,500 in proceeds which approximated the shares’ fair market value
on the date of issuance.
During
the 12 months ended December 31, 2008, the Company issued 168,309 shares of
common stock as compensation and severance for employees. An expense of $26,000
was recorded which approximated the shares’ fair market value on the date of
issuance.
On
December 1, 2008, the Company entered into a non-binding letter of intent with
Sigma-Tau, which granted Sigma-Tau an exclusive right to negotiate terms and
conditions for a possible business transaction or strategic alliance regarding
orBec® and
potentially other pipeline compounds until March 1, 2009. Under the terms of the
letter of intent, Sigma-Tau purchased $1.5 million of the Company’s common stock
at the then market price of $0.09 per share, representing 16,666,667
shares.
On
February 14, 2008, the Company entered into a common stock purchase agreement
with Fusion Capital Fund II, LLC (“Fusion Capital”). The Fusion Capital facility
allows the Company to require Fusion Capital to purchase between $20,000 and
$1.0 million every two business days, of the Company’s common stock up to an
aggregate of $8.0 million over approximately a 25-month period depending on
certain conditions including the quoted market price of the Company’s common
stock on such date. As part of the agreement, the Company issued Fusion Capital
1,275,000 shares of common stock as a commitment fee. In connection with the
execution of the common stock purchase agreement, Fusion Capital made an initial
purchase of 2,777,778 common shares and received a four year warrant to purchase
1,388,889 shares of common stock for $0.22 per share, for an aggregate price of
$500,000.
The
Company issued an additional 75,000 shares of common stock as a commitment fee
in connection with this $500,000 purchase. If the Company’s stock price
exceeds $0.15, then the amount required to be purchased may be increased under
certain conditions as the price of the Company’s common stock increases. The
Company cannot require Fusion Capital to purchase any shares of the Company’s
common stock on any trading days that the market price of the Company’s common
stock is less than $0.10 per share. Furthermore, for each additional purchase by
Fusion, additional commitment shares in commensurate amounts up to a total of
1,275,000 shares will be issued based upon the relative proportion of purchases
compared to the total commitment maximum of 18.5 million shares.
On
February 14, 2008, the Company sold 881,112 shares of its common stock to an
institutional and other accredited investors for an aggregate purchase price of
approximately $158,600. The investors received four year warrants to purchase an
aggregate of 440,556 shares of our common stock at an exercise price of $0.22
per share.
The total
issuance of common stock from private placement for 2008 was 3,658,890; which
consisted of the 881,112 sold to an institutional investor and other accredited
investors for $158,600 and Fusion Capital of 2,777,778 for
$500,000.
The total
issuance of common stock for commitment shares for 2008 was 1,369,125; which
were issued to Fusion Capital and consisted of 1,275,000 as a commitment fee,
75,000 as a commitment fee for the $500,000 invested, and 19,125 for the
commitment fee shares on the equity line draws of $127,500.
During
the year ended December 31, 2007, the Company issued 829,821 shares of common
stock as payment to vendors for consulting services. An expense of $330,500 was
recorded, which approximated the shares’ fair market value on the date of
issuance.
During
2007 the Company issued 373,607 shares of common stock as part of severance
payments to employees. An expense of $85,000 was recorded, which approximated
the shares’ fair market value on the date of issuance.
For the
12 months ended December 31, 2007, 1,737,200 stock options were exercised to
purchase shares of common stock which provided $633,895.
For the
12 months ended December 31, 2007, 6,458,287 common stock warrants were
exercised to purchase of common stock which provided $1,592,264.
The total
issuance of common stock upon exercise of options and warrants for 2007 was
8,195,487; which consisted of the 1,737,000 stock option exercises and 6,458,287
warrant exercises.
On
February 9, 2007, the Company sold 11,680,850 shares of its common stock to
institutional investors and certain of the Company’s officers and directors for
a purchase price of $5,490,000.
On
January 3, 2007, in consideration for entering into an exclusive letter of
intent, Sigma-Tau agreed to purchase $1,000,000 of the Company’s common stock at
the market price of $0.246 per share, representing 4,065,041 shares of common
stock, and contributed an additional $2 million in cash. The $2 million
contribution was to be considered an advance payment to be deducted from future
payments due to the Company by Sigma-Tau pursuant to any future orBec®
commercialization arrangement reached between the two parties. Because of this
transaction’s dilutive nature, all investors in the April 2006 private placement
had their warrants repriced to $0.246. Additionally, certain shareholders in
that placement who still held shares of the Company’s common stock were issued
995,947 shares as a cost basis adjustment from $0.277 to $0.246 per share of the
Company’s common stock and the Company recorded dilution expense of $308,743.
The dilutive nature of the Sigma-Tau transaction on January 3, 2007 required
that all prior investors in the April 2006 private placement had their warrants
repriced to $0.246. Neither these investors, nor any others for that matter,
hold any further anti-dilution rights. Because no agreement was reached by
March 1, 2007, the Company was obligated to return the $2 million to Sigma-Tau
by April 30, 2007 and on June 1, 2007, the Company returned the $2 million to
Sigma-Tau.
The total
issuance of common stock from private placement for 2007 was 15,745,891; which
consisted of the 11,860,850 sold to institutional investors and certain
Company’s officers and directors for $5,490,000 less the $254,596 payable as
placement agent fees, and to 4,065,041 to Sigma-Tau for $1,000,000.
8. Stock
Option Plans and Warrants to Purchase Common Stock
Stock
Options
The 2005
Equity Incentive Plan is divided into four separate equity programs: 1) the
Discretionary Option Grant Program, under which eligible persons may, at the
discretion of the Plan Administrator, be issued common stock or granted options
to purchase shares of common stock, 2) the Salary Investment Option Grant
Program, under which eligible employees may elect to have a portion of their
base salary invested each year in options to purchase shares of common stock, 3)
the Automatic Option Grant Program, under which eligible nonemployee Board
members will automatically receive options at periodic intervals to purchase
shares of common stock, and 4) the Director Fee Option Grant Program, under
which non-employee Board members may elect to have all, or any portion, of their
annual retainer fee otherwise payable in cash applied to a special option grant.
In addition under the plan the Board may elect to pay certain consultants,
directors, and employees in common stock. The Plan was amended in September 2007
to increase the number of options available under the plan to 20,000,000. The
table below only accounts for transactions occurring as part of the amended 2005
Equity Incentive Plan.
| |
|
December
31, |
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Shares
available for grant at beginning of year
|
|
|
10,612,961 |
|
|
|
3,236,032 |
|
|
Increase
in shares available
|
|
|
- |
|
|
|
10,000,000 |
|
|
Options
granted
|
|
|
(6,800,000
|
) |
|
|
(3,375,000
|
) |
|
Options
forfeited or expired
|
|
|
100,000 |
|
|
|
1,140,000 |
|
|
Common
stock payment for services
|
|
|
(365,630
|
) |
|
|
(388,071
|
) |
|
Shares
available for grant at end of year
|
|
|
3,547,331 |
|
|
|
10,612,961 |
|
The
Amended and Restated 1995 Omnibus Plan is divided into four separate equity
programs: 1) the Discretionary Option Grant Program, under which eligible
persons may, at the discretion of the Plan Administrator, be granted options to
purchase shares of common stock, 2) the Salary Investment Option Grant Program,
under which eligible employees may elect to have a portion of their base salary
invested each year in options to purchase shares of common stock, 3) the
Automatic Option Grant Program, under which eligible nonemployee Board members
will automatically receive options at periodic intervals to purchase shares of
common stock, and 4) the Director Fee Option Grant Program, under which
non-employee Board members may elect to have all, or any portion, of their
annual retainer fee otherwise payable in cash applied to a special option
grant.
In 2008
there were no stock option exercises. In 2007, 1,487,200 stock options were
exercised under the 1995 plan and 250,000 stock options were exercised under the
2005 plan, for a total of 1,737,200 stock option exercises.
The total
option activity for the 1995 plan and the amended 2005 plan for the years ended
December 31, 2008 and 2007 was as follows:
|
|
|
Options
|
|
|
Weighted
Average
Options Exercise Price
|
|
|
Balance
at January 1, 2007
|
|
|
11,639,339 |
|
|
$ |
0.59 |
|
|
Granted
|
|
|
3,375,000 |
|
|
|
0.46 |
|
|
Forfeited
|
|
|
(2,927,300
|
) |
|
|
0.73 |
|
|
Exercised
|
|
|
(1,737,200
|
) |
|
|
0.36 |
|
|
Balance
at December 31, 2007
|
|
|
10,349,839 |
|
|
|
0.44 |
|
|
Granted
|
|
|
6,800,000 |
|
|
|
0.06 |
|
|
Forfeited
|
|
|
(779,800
|
) |
|
|
0.81 |
|
|
Balance
at December 31, 2008
|
|
|
16,370,039 |
|
|
$ |
0.27 |
|
The
weighted-average exercise price, by price range, for outstanding options at
December 31, 2008 was:
|
Price
Range
|
|
Weighted
Average Remaining
Contractual Life in Years
|
|
|
Outstanding
Options
|
|
|
Exercisable
Options
|
|
|
$0.06-$0.20
|
|
|
9.8 |
|
|
|
6,950,000 |
|
|
|
1,887,500 |
|
|
$0.22-$0.49
|
|
|
7.3 |
|
|
|
8,770,000 |
|
|
|
7,155,935 |
|
|
$0.50-$4.00
|
|
|
2.9 |
|
|
|
650,039 |
|
|
|
650,039 |
|
|
Total
|
|
|
8.2 |
|
|
|
16,370,039 |
|
|
|
9,693,474 |
|
Intrinsic
Value
Stock
options are issued at the market price on the date of issuance. Stock options
issued to directors are fully vested upon issuance. Stock options issued to
employees generally vest 25% upfront, then 25% each year for a period of three
years. Stock options vest over each three month period from the date of issuance
to the end of the three year period. These options have a ten year life for as
long as the individuals are employees or directors. In general when an employee
or director terminates employment the options will expire within six
months.
The
intrinsic value was zero and was calculated as the difference between the
Company’s common stock closing price on the OTC BB at December 31, 2008 and the
exercise price of the stock option issued multiplied by the number of stock
options. The Company’s common stock price at December 31, 2008 was
$0.06.
The
Company’s share-based compensation for the 12 months ended December 31, 2008 and
2007 was $385,616 and $677,401 respectively. For the 12 months ended December
31, 2008, $182,168 of the $385,616 was for Research and Development personnel
and $203,448 was for General and Administrative personnel. For the
same period in 2007, $230,668 of the $677,401 was for Research and Development
personnel and $446,733 was for General and Administrative personnel. At December
31, 2008, the total compensation cost for stock options not yet recognized was
approximately $490,000 and will be expensed over the next three
years.
From time
to time, the Company grants warrants to consultants and grants warrants to
purchase common stock in connection with private placements. Warrants
issued to consultants during 2008 and 2007 were 250,000 and zero shares,
respectively, and resulted in expense charges of $21,000 and zero,
respectively.
Warrants to purchase common
stock
Warrant
activity for the years ended December 31, 2008 and 2007 was as
follows:
|
|
|
Warrants
|
|
|
Weighted
Average
Warrant Exercise Price
|
|
|
Balance
at January 1, 2007
|
|
|
37,128,790 |
|
|
$ |
0.65 |
|
|
Granted
|
|
|
560,106 |
|
|
|
0.59 |
|
|
Expired
|
|
|
(2,021,268 |
) |
|
|
1.93 |
|
|
Exercised
|
|
|
(6,458,287 |
) |
|
|
0.25 |
|
|
Balance
at December 31, 2007
|
|
|
29,209,341 |
|
|
|
0.69 |
|
|
Granted
|
|
|
2,079,444 |
|
|
|
0.20 |
|
|
Expired
|
|
|
(10,938,637 |
) |
|
|
1.13 |
|
|
Balance
at December 31, 2008
|
|
|
20,350,148 |
|
|
$ |
0.41 |
|
During
2009, warrants to purchase approximately 10,500,000 of the Company’s common
stock will expire.
The
weighted-average exercise price, by price range, for outstanding warrants at
December 31, 2008 was:
|
Price
Range
|
|
Weighted
Average Remaining
Contractual Life in Years
|
|
|
Outstanding
Warrants
|
|
|
Exercisable
Warrants
|
|
|
$0.06-$0.25
|
|
|
0.8 |
|
|
|
10,120,330 |
|
|
|
10,120,330 |
|
|
$0.26-$0.51
|
|
|
1.6 |
|
|
|
6,359,575 |
|
|
|
6,359,575 |
|
|
$0.52-$0.88
|
|
|
1.2 |
|
|
|
3,870,243 |
|
|
|
3,870,243 |
|
|
Total
|
|
|
1.1 |
|
|
|
20,350,148 |
|
|
|
20,350,148 |
|
9. Concentrations
At
December 31, 2008 and 2007, the Company had deposits in financial institutions
that exceeded the amount under protection by the Securities Investor Protection
Corporation (“SIPC”). Currently we are covered by $1,000,000 by the SIPC. The
excess amounts at December 31, 2008 and December 31, 2007 were approximately,
$475,000 and $1,200,000, respectively. These funds are held at a major Banking
Institution.
10. Commitments
and Contingencies
The
Company has commitments of approximately $5.6 million at December 31, 2008 in
connection with a collaboration agreement with Numoda for the execution of
our confirmatory, Phase 3 clinical trial of orBec®
that will began in November 2008 and is expected to continue through November
2010.
The
Company has several licensing agreements with consultants and universities,
which upon clinical or commercialization success may require the payment of
milestones and/or royalties if and when achieved. However, there can be no
assurance that clinical or commercialization success will occur.
Certain
operating leases for office and warehouse space maintained by the Company
resulted in rent expense for the years ended December 31, 2008 and 2007 of
$75,467 and $79,941, respectively.
The
Company has approximate future obligations over the next five years as
follows:
|
Year
|
|
Research
and Development
|
|
|
Property
and Other Leases
|
|
|
Public
and Investor Relations
|
|
|
Total
|
|
|
2009
|
|
$ |
3,300,000 |
|
|
$ |
92,000 |
|
|
$ |
53,000 |
|
|
|
3,445,000 |
|
|
2010
|
|
|
2,900,000 |
|
|
|
95,000 |
|
|
|
- |
|
|
|
2,995,000 |
|
|
2011
|
|
|
200,000 |
|
|
|
96,000 |
|
|
|
- |
|
|
|
296,000 |
|
|
2012
|
|
|
200,000 |
|
|
|
105,000 |
|
|
|
- |
|
|
|
305,000 |
|
|
2013
|
|
|
200,000 |
|
|
|
115,000 |
|
|
|
- |
|
|
|
315,000 |
|
|
Total
|
|
$ |
6,800,000 |
|
|
$ |
503,000 |
|
|
$ |
53,000 |
|
|
$ |
7,356,000 |
|
On
February 2007, the Company’s Board of Directors authorized the issuance of the
following shares to Dr. Schaber, Mr. Myrianthopoulos, Dr. Brey and certain other
employees and a consultant, upon the completion of a transaction, or series or a
combination of related transactions negotiated by the Company’s Board of
Directors whereby, directly or indirectly, a majority of the Company’s capital
stock or a majority of its assets are transferred from the Company and/or its
stockholders to a third party: 1,000,000 common shares to Dr. Schaber;
750,000 common shares to Mr. Myrianthopoulos; 200,000 common shares to Dr. Brey;
and 750,000 to employees and a consultant shall be
issued.
Employees
with employment contracts have severance agreements that will provide separation
benefits from the Company if they are involuntarily separated from
employment.
11. Subsequent Events
On April
1, 2009, the Company will occupy office space in Princeton, New Jersey. The
Company entered into a sub-lease agreement thru March 31, 2012. The Company is
required to provide, 4 months of rent as a security deposit, the rent for the
first 18 months will be $7,437.50 per month, or $17.00 per square foot. This
increases to $7,656.25 per month of rent, or $17.50 per square foot for the
remaining 18 months.
On March 12, 2009, the Company entered into a two-year employment
agreement with Dr. Hamilton. Pursuant to this employment agreement the Company
agreed to pay Dr. Hamilton a base salary of $270,000 per year. After one year of
service Dr. Hamilton would be entitled to a minimum annual bonus of $70,000. The
Company agreed to issue him options to purchase 1,000,000 shares of its common
stock, with the options vesting over three years. All vested options shall be
exercisable for a period of one year following termination, subject to extension
in the discretion of the Stock Option Administrator. Upon a change in control
due to merger or acquisition, all of Dr. Hamilton’s options shall become fully
vested, and be exercisable for a period of three years after such change in
control (unless they would have expired sooner pursuant to their
terms). In the event of his death during term of the agreement, all
of his unvested options shall immediately vest and remain exercisable for the
remainder of their term and become the property of Dr. Hamilton’s immediate
family.
Upon
termination without “Just Cause” as defined by this agreement, the Company would
pay Dr. Hamilton six months severance subject to set off if
termination occurs during first full year of employment, as well as any accrued
bonuses and accrued vacation would become payable.
On March
6, 2009, the Company entered into a $400,000 common stock equity investment
agreement priced at market with its clinical trials management partner,
Numoda. One hundred thousand dollars of this investment will be
completed in January 2010. The investment follows and enhances the
collaboration between the Company and Numoda announced on June 30, 2008 and
represents partial payment by the Company under the collaboration
agreement.
On February 11, 2009, the Company entered into
a collaboration and supply agreement with Sigma-Tau for the commercialization of
orBec®. Pursuant to this agreement, Sigma-Tau has an exclusive license to
commercialize orBec® in the U.S., Canada and Mexico (the Territory). Sigma-Tau
is obligated to make payments upon the attainment of significant milestones, as
set forth in the agreement. The first milestone payment, a $1 million payment,
will be made upon the enrollment of the first patient in the Company’s
confirmatory Phase 3 clinical trial of orBec® for the treatment of acute GI
GVHD, which is expected to occur in the second half of 2009. Total milestone
payments due from Sigma-Tau for orBec® under the agreement could reach up to $10
million. Sigma-Tau will pay the Company a 35% royalty
on net sales in the Territory, as well as pay for commercialization
expenses, including launch activities
In connection with the execution of the
collaboration and supply agreement, the Company entered into a common stock
purchase agreement with Sigma-Tau pursuant to which the Company sold 25 million
shares of common stock to Sigma-Tau for $0.18 per share, for an aggregate price
of $4,500,000. The purchase price is equal to one hundred fifty
percent (150%) of the average trading price of the Company’s common stock over
the five trading days prior to February 11, 2009. As part of the transaction,
the Company granted Sigma-Tau certain demand and piggy-back registration
rights.
On
January 20, 2009, the Company received $2,384,200 from the completed private
placement of common stock and warrants to accredited investors. Under the terms
of the agreement, the Company sold 20,914,035 common shares together with five
year warrants to purchase up to 20,914,035 shares of the Company’s common stock
at $0.14 per share, for an aggregate price of $2,384,200 representing a price of
$0.114 per share. The expiration date of the warrants can be accelerated if the
Company’s common stock meets certain price thresholds and the Company would
receive additional gross proceeds of approximately $2.9 million if they are all
exercised.
12. Business
Segments
The
Company had two active segments for the year ended December 31, 2008 and
December 31, 2007: BioDefense and BioTherapeutics. Summary
data is as follows:
| |
|
December 31, |
|
|
|
|
2008
|
|
|
2007
|
|
|
Net Revenues
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
BioDefense |
|
$ |
2,269,647 |
|
|
$ |
1,258,017 |
|
|
BioTherapeutics |
|
|
40,618 |
|
|
|
- |
|
|
Total
|
|
$ |
2,310,265 |
|
|
$ |
1,258,017 |
|
|
Loss from Operations
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
( 132,272 |
) |
|
$ |
( 109,698 |
) |
|
BioTherapeutics
|
|
|
( 1,556,429 |
) |
|
|
( 2,748,764 |
) |
|
Corporate
|
|
|
( 1,767,123 |
) |
|
|
( 3,468,621 |
) |
|
Total
|
|
$ |
( 3,455,824 |
) |
|
$ |
( 6,327,083 |
) |
|
|
|
|
|
|
|
|
|
|
|
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
1,076,854 |
|
|
$ |
896,383 |
|
|
BioTherapeutics
|
|
|
650,179 |
|
|
|
552,248 |
|
|
Corporate
|
|
|
1,635,702 |
|
|
|
2,335,248 |
|
|
Total
|
|
$ |
3,362,735 |
|
|
$ |
3,783,879 |
|
|
Amortization and Depreciation
Expense
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
85,354 |
|
|
$ |
90,185 |
|
|
BioTherapeutics
|
|
|
58,829 |
|
|
|
24,312 |
|
|
Corporate
|
|
|
5,000 |
|
|
|
5,068 |
|
|
Total
|
|
$ |
149,183 |
|
|
$ |
119,565 |
|
|
Interest Income
|
|
|
|
|
|
|
|
Corporate
|
|
$ |
37,073 |
|
|
$ |
164,847 |
|
|
Total
|
|
$ |
37,073 |
|
|
$ |
164,847 |
|
|
Stock Option Compensation
|
|
|
|
|
|
|
|
BioDefense
|
|
$ |
92,822 |
|
|
$ |
69,591 |
|
|
BioTherapeutics
|
|
|
89,346 |
|
|
|
161,077 |
|
|
Corporate
|
|
|
203,448 |
|
|
|
446,733 |
|
|
Total
|
|
$ |
385,616 |
|
|
$ |
677,401 |
|
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13. Other Expenses of Issuance and
Distribution.
The
following table sets forth the estimated costs and expenses of the Registrant in
connection with the offering described in the registration statement.
| SEC
registration fee |
|
$ |
677 |
|
|
Legal
fees and
expenses
|
|
$
|
10,000
|
|
|
Accounting
fees and
expenses
|
|
$
|
8,000
|
|
|
Miscellaneous
|
|
$
|
1,000
|
|
|
|
|
|
|
|
| TOTAL |
|
$ |
19,677 |
|
ITEM 14. Indemnification of Directors and
Officers.
Section
102(b)(7) of the Delaware General Corporation Law grants the Registrant the
power to limit the personal liability of its directors to the Registrant or its
stockholders for monetary damages for breach of a fiduciary duty. Article X of
the Registrant’s Certificate of Incorporation, as amended, provides for the
limitation of personal liability of the directors of the Registrant as
follows:
“A
Director of the Corporation shall have no personal liability to the corporation
or its stockholders for monetary damages for breach of his fiduciary duty as a
Director; provided, however, this Article shall not eliminate or limit the
liability of a Director (i) for any breach of the Director’s duty of loyalty to
the Corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) for the unlawful payment of dividends or unlawful stock repurchases under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the Director derived an improper personal benefit. If
the General Corporation Law is amended after approval by the stockholders of
this Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so
amended.”
Article
VIII of the Registrant’s Bylaws, as amended and restated, provide for
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law.
The
Registrant has a directors’ and officers’ liability insurance
policy.
The above
discussion is qualified in its entirety by reference to the Registrant’s
Certificate of Incorporation and Bylaws.
ITEM
15. Recent Sales of Unregistered Securities.
On January 3, 2007, the Registrant completed a
private placement in which it issued 4,065,041 shares of common stock at $0.246
per share, resulting in net proceeds of $1 million. The shares of
common stock were issued in transactions exempt from registration under the
Securities Act, in reliance upon Rule 506 of Regulation D under Section 4(2) of
the Securities Act, as transactions not involving a public offering.
Under the terms of a Securities Purchase
Agreement dated as of February 9, 2007 among the Registrant and institutional
investors and certain of its officers and directors named therein, the
Registrant issued 11,680,850 shares of its common stock to the investors, for
aggregate gross proceeds of $5,490,000. Also, as part of the compensation
received for its assistance in the private placement, the placement agent
received $259,950 cash and warrants to purchase an aggregate of 560,106 shares
of the Registrant's common stock at an exercise price of $0.59 per share. Such
securities were issued pursuant to an exemption provided by Section 4(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated
thereunder.
During 2008, the Registrant issued 310,860
shares of common stock for services rendered to the Registrant. The shares of
common stock were offered in transactions exempt from registration under the
Securities Act in reliance upon Rule 506 of Regulation D under Section 4(2) of
the Securities Act, as transactions not involving a public offering.
On February 14, 2008, the Registrant
entered into a common stock purchase agreement with Fusion
Capital. Pursuant to the agreement, the Registrant issued to Fusion
Capital 1,275,000 shares of common stock as a partial commitment fee, and
2,777,778 common shares and a four year warrant to purchase 1,388,889 shares of
common stock for $0.22 per share, for an aggregate price of
$500,000. Such securities were issued pursuant to an exemption
provided by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506
of Regulation D promulgated thereunder.
On February 14, 2008, the Registrant sold
881,112 shares of its common stock to institutional and other accredited
investors for an aggregate purchase price of approximately $158,600. The
investors also received four year warrants to purchase an aggregate of 440,556
shares of our common stock at an exercise price of $0.22 per share. Such
securities were issued pursuant to an exemption provided by Section 4(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated
thereunder.
During May 2008, the Registrant issued
347,222 shares of common stock at an exercise price of $0.18 per share to Numoda
Corporation for services rendered to the Registrant. The shares of common stock
were offered in transactions exempt from registration under the Securities Act
in reliance upon Rule 506 of Regulation D under Section 4(2) of the Securities
Act, as transactions not involving a public offering.
During June 2008, the Registrant issued
warrants to purchase up to 100,000 shares of common stock at an exercise price
of $0.12 per share for services rendered to the Registrant. The warrants were
offered in transactions exempt from registration under the Securities Act in
reliance upon Rule 506 of Regulation D under Section 4(2) of the Securities Act,
as transactions not involving a public offering.
On December 1, 2008, the Registrant issued
16,666,667 shares of common stock in connection with the letter of intent
entered into with Sigma-Tau Pharmaceuticals, Inc. for $1,500,000. Such
securities were issued pursuant to an exemption provided by Section 4(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated
thereunder.
During December 2008, the Registrant issued
warrants to purchase up to 300,000 shares of common stock at an exercise price
of $0.06 per share to Little Gem Life Sciences Fund, LLC for services rendered
to the Registrant. The warrants were offered in transactions exempt from
registration under the Securities Act in reliance upon Rule 506 of Regulation D
under Section 4(2) of the Securities Act, as transactions not involving a public
offering.
On January 20, 2009, the Registrant
completed a private placement in which it issued 20,914,035 shares of common
stock at $0.114 per share, and warrants to purchase 20,914,035 shares of common
stock, resulting in net proceeds of $2,384,200. Also, as part of the
compensation received for its assistance in the private placement, the placement
agent received $114,000 cash and warrants to purchase an aggregate of 1,000,000
shares of the Registrant's common stock at an exercise price of $0.14 per
share. The shares of common stock were issued in transactions exempt
from registration under the Securities Act, in reliance upon Rule 506 of
Regulation D under Section 4(2) of the Securities Act, as transactions not
involving a public offering.
During January 2009, the Registrant issued
warrants to purchase up to 50,000 shares of common stock at an exercise price of
$0.10 per share for services rendered by consultants to the Registrant. The
warrants were offered in transactions exempt from registration under the
Securities Act in reliance upon Rule 506 of Regulation D under Section 4(2) of
the Securities Act, as transactions not involving a public offering.
On February 11, 2009, the Registrant issued
warrants to purchase up to 1,000,000 shares of common stock at an exercise price
of $0.11 per share to Dr. George B. McDonald for services rendered to the
Registrant. The warrants were offered in transactions exempt from registration
under the Securities Act in reliance upon Rule 506 of Regulation D under Section
4(2) of the Securities Act, as transactions not involving a public
offering.
On February 11, 2009, the Registrant issued
25 million shares of common stock at an exercise price of $0.18 per share in
connection with the collaboration and supply agreement entered into with
Sigma-Tau Pharmaceuticals, Inc. for $4,500,000. Such securities were issued
pursuant to an exemption provided by Section 4(2) of the Securities Act of 1933,
as amended, and Rule 506 of Regulation D promulgated thereunder.
During March 2009, the Registrant issued
2,500,000 shares of common stock to Numoda Corporation for services rendered to
the Registrant. The shares were offered in a transaction exempt from
registration under the Securities Act in reliance upon Rule 506 of Regulation D
under Section 4(2) of the Securities Act, as transactions not involving a public
offering.
On September 28, 2009, the Registrant completed
a private placement in which it issued 17,352,569 shares of common stock at
$0.253 per share, and warrants to purchase 8,676,285 shares of common stock,
resulting in net proceeds of $4,390,200. Also, as part of the
compensation received for its assistance in the private placement, the placement
agent received $137,500 cash and warrants to purchase an aggregate of 543,478
shares of the Registrant's common stock at an exercise price of $0.278 per
share. The shares of common stock were issued in transactions exempt
from registration under the Securities Act, in reliance upon Rule 506 of
Regulation D under Section 4(2) of the Securities Act, as transactions not
involving a public offering.
ITEM
16. Exhibits.
|
2.1
|
Agreement
and Plan of Merger, dated May 10, 2006 by and among the Company, Corporate
Technology Development, Inc., Enteron Pharmaceuticals, Inc. and CTD
Acquisition, Inc. (incorporated by reference to Exhibit 2.1 included in
our Registration Statement on Form SB-2 (File No. 333-133975) filed on May
10, 2006).
|
|
3.1
|
Amended
and Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 included in our Quarterly Report on Form 10-QSB, as amended,
for the fiscal quarter ended September 30, 2003).
|
|
3.2
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 4.2 included in our Registration
Statement on Form S-8 (File No. 333-130801) filed on December 30,
2005).
|
|
3.3
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
(incorporated by reference to Annex A to our Proxy Statement filed
December 12, 2006).
|
|
3.4
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation.*
|
| 3.5
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 included in our current report
on Form 8-K filed on September 30, 2009).
|
|
3.6
|
Certificate
of Designations of Series A Junior Participating Preferred Stock
(incorporated by reference to Exhibit 3.1 included in our current
report on Form 8-K filed on June 22, 2007).
|
|
3.7
|
By-laws
(incorporated by reference to Exhibit 3.1 included in our Quarterly
Report on Form 10-QSB, as amended, for the fiscal quarter ended June 30,
2003).
|
| 4.1 |
Form
of Warrant issued to each investor in the February 2005 private placement
(incorporated by reference to Exhibit 10.2 included in our current
report on Form 8-K filed on February 3, 2005).
|
|
4.2
|
Form
of Warrant issued to each investor in the April 2006 private placement
(incorporated by reference to Exhibit 10.2 included in our current
report on Form 8-K filed on April 7, 2006).
|
|
4.3
|
Form
of Warrant issued to finders in connection with the February 2007 private
placement (incorporated by reference to Exhibit 4.14 included in our
registration statement on Form SB-2 filed on April 16, 2007).
|
|
4.4
|
Rights
Agreement dated June 22, 2007, between the Company and American Stock
Transfer & Trust Company, as Rights Agent (incorporated by reference
to Exhibit 4.1 included in our current report on Form 8-K filed on
June 22, 2007).
|
|
4.5
|
Form
of Right Certificate (incorporated by reference to Exhibit 4.2 included
in our current report on Form 8-K filed on June 22,
2007).
|
|
4.6
|
Warrant
dated February 14, 2008, issued to Fusion Capital Fund II, LLC
(incorporated by reference to Exhibit 4.17 included in our Registration
Statement on Form S-1 (File No. 333-149239) filed on February 14,
2008).
|
|
4.7
|
Form
of Warrant issued to each investor in the February 2008 private placement
(incorporated by reference to Exhibit 10.2 in our current report on Form
8-K filed on January 21, 2009).
|
|
4.8
|
Form
of Warrant issued to each investor in the January 2009 private placement
(incorporated by reference to Exhibit 4.18 included in our Registration
Statement on Form S-1 (File No. 333-149239) filed on February 14,
2008).
|
|
4.9
|
Form
of Warrant issued to each investor in the September 2009 private placement
(incorporated by reference to Exhibit 10.2 included in our current report
on Form 8-K filed on September 29, 2009).
|
|
5.1
|
Opinion
of Edwards Angell Palmer & Dodge LLP.*
|
|
10.1
|
Amended
and Restated 1995 Omnibus Incentive Plan (incorporated by reference to
Exhibit 10.1 included in our Quarterly Report on Form 10-QSB, as amended,
for the fiscal quarter ended September 30, 2003). **
|
|
10.2
|
License
Agreement between the Company and the University of Texas Southwestern
Medical Center (incorporated by reference to Exhibit 10.8 included in our
Annual Report on Form 10-KSB, as amended, for the fiscal year ended
December 31, 2004).
|
|
10.3
|
License
Agreement between the Company and Thomas Jefferson University
(incorporated by reference to Exhibit 10.9 included in our Annual Report
on Form 10-KSB, as amended, for the fiscal year ended December 31,
2004).
|
|
10.4
|
License
Agreement between the Company and the University of Texas Medical Branch
(incorporated by reference to Exhibit 10.10 included in our Annual Report
on Form 10-KSB, as amended, for the fiscal year ended December 31,
2004).
|
|
10.5
|
Consulting
Agreement between the Company and Lance Simpson of Thomas Jefferson
University. (incorporated by reference to Exhibit 10.43 included in our
Annual Report on Form 10-KSB as amended for the fiscal year ended December
31, 2002).
|
|
10.6
|
Employment
agreement between the Company and Evan Myrianthopoulos dated December 7,
2004 (incorporated by reference to Exhibit 10.17 included in our Annual
Report on Form 10-KSB, as amended, for the fiscal year ended December 31,
2004). **
|
|
10.7
|
2005
Equity Incentive Plan (incorporated by reference to Appendix D to our
Proxy Statement filed December 12, 2005). **
|
|
10.8
|
Form
S-8 Registration of Stock Options Plan dated December 30, 2005
(incorporated by reference to our registration statement on Form S-8 filed
on December 30, 2005).
|
|
10.9
|
Employment
Agreement, dated as of August 29, 2006, between Christopher J. Schaber,
Ph.D., and the Company (incorporated by reference to Exhibit 10.1 included
in our current report on Form 8-K filed on August 30, 2006).
**
|
|
10.10
|
Letter
of Intent dated January 3, 2007 by and between the Company and Sigma-Tau
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.1 included
in our current report on Form 8-K filed on January 4,
2007).
|
|
10.11
|
Securities
Purchase Agreement dated February 7, 2007 by and among the Company and the
investors named therein (incorporated by reference to Exhibit 10.1
included in our current report on Form 8-K filed on February 12,
2007).
|
|
10.12
|
Registration
Rights Agreement dated February 7, 2007 by among the Company and the
investors named therein (incorporated by reference to Exhibit 10.2
included in our current report on Form 8-K filed on February 12,
2007).
|
|
10.13
|
Letter
from Sigma-Tau Pharmaceuticals, Inc. dated February 21, 2007 (incorporated
by reference to Exhibit 10.1 included in our current report on Form 8-K
filed on February 23, 2007).
|
|
10.14
|
Letter
dated May 3, 2007 between the Company and Sigma-Tau Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 10.1 included in our current
report on Form 8-K filed on May 4, 2007).
|
|
10.15
|
Employment
Agreement dated December 27, 2007, between Christopher
J. Schaber, PhD and the Company (incorporated by reference to
Exhibit 10.30 included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2008). **
|
|
10.16
|
Employment
Agreement dated December 27, 2007, between Evan Myrianthopoulos and the
Company (incorporated by reference to Exhibit 10.31 included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
**
|
|
10.17
|
Employment
Agreement dated December 27, 2007, between James Clavijo, CPA and the
Company (incorporated by reference to Exhibit 10.32 included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
**
|
|
10.18
|
Common
Stock Purchase Agreement dated February 14, 2008, between the Company and
Fusion Capital Fund II, LLC (incorporated by reference to Exhibit 10.35
included on Form S-1 filed on February 14, 2008).
|
|
10.19
|
Registration
Rights Agreement dated February 14, 2008, between the Company and Fusion
Capital Fund II, LLC (incorporated by reference to Exhibit 10.35 included
in our Registration Statement on Form S-1
(File No. 333-149239) on Form S-1 filed on February 14,
2008).
|
|
10.20
|
Letter
dated December 1, 2008, between the Company and Sigma-Tau Pharmaceuticals,
Inc. (incorporated by reference to Exhibit 10.1 included in our current
report on Form 8-K filed on December 1, 2008).
|
|
10.21
|
Form of Securities Purchase Agreement between the
Company and each investor dated February 14, 2008 (incorporated by
reference to Exhibit 10.37 included
in our Registration Statement on Form
S-1 (File No. 333-149239) filed on
February 14, 2008).
|
|
10.22
|
Common
Stock Purchase Agreement dated January 12, 2009, between the Company and
accredited investors (incorporated by reference to Exhibit 10.1 included
in our current report on Form 8-K filed on January 21, 2009).
|
|
10.23
|
Registration
Rights Agreement dated January 12, 2009, between the Company and
accredited investors (incorporated by reference to Exhibit 10.3 included
in our current report on Form 8-K filed on January 21, 2009).
|
|
10.24
|
Registration
Rights Agreement dated January 12, 2009, between the Company and accredited investors (incorporated by
reference to Exhibit 10.3 included in our current report on Form 8-K filed
on January 21, 2009).
|
|
10.25
|
Exclusive License Agreement dated November 24,
1998, between Enteron Pharmaceuticals, Inc. and George B. McDonald,
M.D. and amendments (incorporated by reference to Exhibit 10.42
included on Form S-1 (File No.
333-157322) filed on February 13,
2009).
|
|
10.26
|
Collaboration and Supply Agreement dated February
11, 2009, between the Company and Sigma-Tau Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 10.43 included on Form S-1
(File No. 333-157322) filed on February 13, 2009). †
|
|
10.27
|
Common
Stock Purchase Agreement dated February 11, 2009, between the Company and
Sigma-Tau Pharmaceuticals, Inc. (incorporated by reference to Exhibit
10.44 included on Form S-1 (File No.
333-157322) filed on February 13,
2009).
|
|
10.28
|
Sublease
Agreement dated April 1, 2009, between the Company and BioWa, Inc.
(incorporated by reference to Exhibit 10.43 included on Form S-1/A (File No. 333-157322) filed on April 14,
2009).
|
|
10.29
|
Employment
Agreement, dated as of July 1, 2009, between Christopher P. Schnittker,
CPA and the Company. (incorporated by reference to Exhibit 10.1 included
in our current report on Form 8-K
filed on July 7, 2009).
|
|
10.30
|
Securities
Purchase Agreement dated September 23, 2009 among the Company and the
investors named therein (incorporated by reference to Exhibit 10.1
included in our current report on Form 8-K
filed on September 29, 2009).
|
|
10.31
|
Registration
Rights Agreement dated September 23, 2009 among the Company and the
investors named therein (incorporated by reference to Exhibit 10.3
included in our current report on Form 8-K
filed on September 29, 2009).
|
|
10.32
|
Letter
Agreement dated September 25, 2009 between the Company and BAM Opportunity
Fund, L.P. *
|
|
10.33
|
Letter
Agreement dated September 23, 2009 between the Company and Iroquois Master
Fund, Ltd. *
|
|
23.1
|
Consent
of Sweeney, Matz & Co., LLC, independent registered public accounting
firm. *
|
|
23.2
|
Consent
of Amper, Pollitziner & Mattia, LLP, independent registered public
accounting firm. *
|
|
23.3
|
Consent
of Edwards Angell Palmer & Dodge LLC (contained in the opinion filed
as Exhibit 5.1 hereto). *
|
|
|
|
|
*
**
†
|
Filed herewith.
Indicates management contract or compensatory
plan.
Portions of this exhibit have been omitted
pursuant to a request for confidential
treatment.
|
ITEM
17. Undertakings.
(a) The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-1 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Princeton, State of New Jersey, on the 7th day of October 2009.
| |
SOLIGENIX,
INC. |
|
| |
|
|
|
|
|
By:
|
/s/ CHRISTOPHER
J. SCHABER |
|
| |
|
Christopher
J. Schaber, Ph.D. |
|
| |
|
President
and Chief Executive Officer |
|
| |
|
|
|
POWER
OF ATTORNEY
KNOW ALL MEN BY THESE
PRESENTS, that each person whose signature appears below constitutes and
appoints Christopher J. Schaber and Evan Myrianthopoulos, and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead in any and all
capacities, to sign any or all amendments to this Registration Statement on Form
S-1 (including post-effective amendments), 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 and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming 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 Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
|
Signature
|
|
Title
|
|
Date
|
|
By:
|
/s/
CHRISTOPHER J. SCHABER
|
|
|
|
|
|
|
Christopher
J. Schaber, Ph.D.
|
|
Director,
President and Chief Executive Officer (Principal Executive
Officer)
|
|
|
| By: |
/s/ EVAN
MYRIANTHOPOULOS |
|
|
|
|
|
|
Evan
Myrianthopoulos
|
|
Director
and Chief Financial Officer (Principal Financial Officer)
|
|
|
| By: |
/s/ JAMES S.
KUO |
|
|
|
|
|
|
James
S. Kuo
|
|
Chairman
of the Board
|
|
|
| By: |
/s/ CYRILLE F.
BUHRMAN |
|
|
|
|
|
|
Cyrille
F. Buhrman |
|
Director
|
|
October
7, 2009 |
|
|
/s/ GREGG A.
LAPOINTE
|
|
|
|
|
|
|
Gregg
A. Lapointe
|
|
Director
|
|
|
| By: |
/s/
CHRISTOPHER P. SCHNITTKER |
|
|
|
|
| |
Christopher
P. Schnittker |
|
Vice
President Administration, Controller and Secretary
(Principal Accounting Officer)
|
|
October
7, 2009 |
II-9