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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3171943
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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2600 Kelly Road, Suite 100
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Warrington, Pennsylvania 18976-3622
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(Address of principal executive offices)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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The Nasdaq Capital Market
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Preferred Stock Purchase Rights
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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x
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•
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risks related generally to our efforts to gain regulatory approval, in the United States and elsewhere, for our drug product candidates, including our lead products that we are developing to address respiratory distress syndrome (RDS) in premature infants: Surfaxin for the prevention of RDS, Surfaxin LS™ (our initial lyophilized KL
4
surfactant) and Aerosurf ® (our initial aerosolized KL
4
surfactant);
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•
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the risk that we and the U.S. Food and Drug Administration (FDA) or other regulatory authorities will not be able to agree on matters raised during the regulatory review process, or that we may be required to conduct significant additional activities to potentially gain approval of our product candidates, if ever;
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the risk that the FDA will not be satisfied with the results of our efforts to (i) finally validate our optimized fetal rabbit biological activity test (BAT), (ii) demonstrate that the BAT has the ability to adequately reflect the biological activity of Surfaxin throughout its shelf life and to discriminate biologically active from inactive Surfaxin drug product, and (iii) demonstrate the comparability of drug product used in the Surfaxin Phase 3 clinical program with Surfaxin drug product to be manufactured for commercial use through prospectively-designed, side-by-side preclinical studies (i.e., concordance studies) using the optimized BAT and the well-established preterm lamb model of RDS;
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the risk that the FDA or other regulatory authorities may not accept, or may withhold or delay consideration of, any applications that we may file, or may not approve our applications or may limit approval of our products to particular indications or impose unanticipated label limitations;
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risks relating to the rigorous regulatory approval processes, including pre-filing activities, required for approval of any drug or combination drug-device products that we may develop, whether independently, with strategic development partners or pursuant to collaboration arrangements;
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the risk that the FDA may not approve Surfaxin or may subject the marketing of Surfaxin to onerous requirements that significantly impair marketing activities;
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the risk that we may identify unforeseen problems that have not yet been discovered or the FDA could in the future impose additional requirements to gain approval of Surfaxin;
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risks relating to our efforts to manufacture within our planned time frame the additional batches of Surfaxin for use in our comprehensive preclinical program and to complete the investigation into the manufacture of the two batches manufactured in January 2011 that did not meet specification;
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risks, if we succeed in gaining approval of Surfaxin and our other drug products, relating to our lack of marketing and distribution capabilities, which we will have to develop internally or secure through third-party strategic alliances and/or marketing alliances and/or distribution arrangements, that could require us to give up rights to our drug products and drug product candidates;
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risks, if we succeed in gaining approval of Surfaxin and our other drug products, that reimbursement and health care reform may adversely affect us or that our products will not be accepted by physicians, patients and others in the medical community;
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the risk that changes in the national or international political and regulatory environment may make it more difficult to gain FDA or other regulatory approval of our drug product candidates;
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risks relating to our research and development activities, which involve time-consuming and expensive preclinical studies and other efforts, and potentially multiple clinical trials, which may be subject to potentially significant delays or regulatory holds, or fail, and which must be conducted using sophisticated and extensive analytical methodologies, including an acceptable BAT, if required, as well as other quality control release and stability tests to satisfy the requirements of the regulatory authorities;
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risks relating to our ability to develop and manufacture drug products and drug-device combination products based on our capillary aerosolization technology for clinical studies and, if approved, for commercialization of our products;
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risks relating to the transfer of our manufacturing technology to third-party contract manufacturers and assemblers;
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the risk that we, our contract manufacturers or any of our third-party suppliers may encounter problems or delays in manufacturing or assembling drug products, drug product substances, capillary aerosolization devices and related components and other materials on a timely basis or in an amount sufficient to support our development efforts and, if our products are approved, commercialization;
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the risk that we may be unable to identify potential strategic partners or collaborators with whom we can develop and, if approved, commercialize our products in a timely manner, if at all;
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the risk that we or our strategic partners or collaborators will not be able to attract or maintain qualified personnel;
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the risk that, if approved, market conditions, the competitive landscape or other factors may make it difficult to launch and profitably sell our products;
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the risk that we may not be able to raise additional capital or enter into strategic alliances or collaboration agreements (including strategic alliances for development or commercialization of our drug products and combination drug-device products);
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risks that the unfavorable credit environment will adversely affect our ability to fund our activities, that our share price will not reach or remain at the price level necessary for us to access capital under our Committed Equity Financing Facilities (CEFFs), that the CEFFs may expire before we are able to access the full dollar amount potentially available thereunder, and that additional equity financings could result in substantial equity dilution;
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the risk that, although we have regained compliance with the Minimum Bid Price Requirement of The Nasdaq Capital Market® by implementing a reverse split, we will be unable to maintain compliance with the listing requirements of Nasdaq, including without limitation those relating to market capitalization and stockholders equity, which could increase the probability that our stock will be delisted from Nasdaq, which could cause our stock price to decline;
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risks related to our need for significant additional capital to continue our planned research and development activities and continue operating as a going concern, which if derived from additional financings, could result in equity dilution;
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the risks that we may be unable to maintain and protect the patents and licenses related to our products and that other companies may develop competing therapies and/or technologies;
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the risks that we may become involved in securities, product liability and other litigation and that our insurance may be insufficient to cover costs of damages and defense;
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the risks that we will be unable to attract and retain key employees in a competitive market for skilled personnel, which could affect our ability to develop and market our products; and
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other risks and uncertainties detailed in “Risk Factors” and in the documents incorporated by reference in this report.
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PART I
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ITEM 1.
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BUSINESS
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1 |
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ITEM 1A.
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RISK FACTORS
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29
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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50
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ITEM 2.
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PROPERTIES
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50
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ITEM 3.
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LEGAL PROCEEDINGS
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50
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ITEM 4.
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RESERVED
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51
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PART II
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ITEM 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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51
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ITEM 6.
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SELECTED FINANCIAL DATA
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51
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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52
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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69
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ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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69
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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70
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ITEM 9A.
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CONTROLS AND PROCEDURES
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70
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ITEM 9B.
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OTHER INFORMATION
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71
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PART III
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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71
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ITEM 11.
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EXECUTIVE COMPENSATION
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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PART IV
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ITEM 15.
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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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72
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SIGNATURES
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73
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ITEM 1.
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BUSINESS
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·
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We plan to continue to focus our research and development efforts on the management of RDS in premature infants. We believe that the RDS market represents a significant opportunity from both a medical and a business perspective. We further believe that our neonatal pipeline programs, Surfaxin, Surfaxin LS and Aerosurf, have the potential to greatly improve the management of RDS and, collectively, represent the opportunity, over time, to expand the current RDS estimated worldwide annual market of $200 million to a $1 billion market opportunity.
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o
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Surfaxin is the first synthetic, peptide-containing surfactant that, if approved, will provide healthcare practitioners with an alternative therapy to the currently-approved, animal-derived surfactants that are standard of care today. The safety and efficacy of Surfaxin for the prevention of RDS has previously been demonstrated in a comprehensive Phase 3 clinical program. In April 2009, we received a Complete Response Letter (2009 Complete Response Letter) from the FDA with respect to our Surfaxin NDA that focused primarily on issues related to our BAT. Consistent with previous communications from the FDA, there were no questions regarding clinical trial data and no indication that the FDA has any concerns related to our other quality control and release tests or the manufacturing process for Surfaxin. We have had several interactions with the FDA intended to gain direction regarding our plans for final validation of the BAT, which we believe is a key remaining CMC issue that we must address to potentially gain FDA marketing approval of Surfaxin. Taking into account the FDA’s responses, we have optimized the BAT and expect to conclude a comprehensive preclinical program and file a Complete Response to the 2009 Complete Response Letter in the third quarter of 2011. During the anticipated six-month FDA review cycle, we anticipate that the FDA will conduct certain pre-approval reviews, including an inspection of our Surfaxin manufacturing operations and related quality assurance/quality control facilities, and potentially the facilities of our third-party raw materials suppliers. We believe that Surfaxin for the prevention of RDS in premature infants could gain marketing approval in the United States as early as the first quarter of 2012.
See
“– Surfactant Replacement Therapy for Respiratory Medicine – Respiratory Distress Syndrome in Premature Infants (RDS) – Surfaxin for the Prevention of RDS in Premature Infants.”
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o
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We also are developing Surfaxin LS, our initial lyophilized (dry powder) formulation that is resuspended to liquid form prior to use, with the objective of improving ease of use for healthcare practitioners, eliminating the need for cold-chain storage, and potentially further improving clinical performance. We are developing Surfaxin LS for both the United States and all other major markets throughout the world. We are in the process of conducting a technology transfer of the Surfaxin LS lyophilized manufacturing process to a cGMP-compliant, third-party contract manufacturer with expertise in lyophilized formulations. We also plan to seek regulatory and scientific guidance with respect to a planned Surfaxin LS late-stage global registration clinical program from the FDA and the European Medicines Agency (EMA) in 2011. We believe that collectively, over time, Surfaxin and Surfaxin LS, if approved, have the potential to displace the use of animal-derived surfactants in all major markets throughout the world.
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o
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Aerosurf, our lead aerosolized KL
4
surfactant program, holds the promise to significantly expand the use of surfactant therapy in premature infants by potentially providing neonatologists with a means of administering KL
4
surfactant to infants without the risks currently associated with administration of currently-approved surfactants, which require invasive endotracheal intubation and mechanical ventilation. We believe that Aerosurf, if approved, will allow for a potentially significant increase in the number of infants who will benefit from surfactant therapy, given that many such infants currently are not treated because the benefits of surfactant therapy are believed to be outweighed by the risks of invasive administration. In December 2010, the National Institutes of Health (NIH) awarded us Phase I of a Fast Track Small Business Innovation Research Grant to support up to $580,000 of Aerosurf development activities. Following conclusion of the Phase I grant activities, we anticipate that the NIH may potentially award us a Phase II grant which could provide up to an additional $1.8 million to support further development.
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Although we continue to conserve resources and pace our investment in exploratory development programs, we are conducting limited exploratory development of our KL
4
surfactant to investigate its use for addressing Cystic Fibrosis (CF) and Acute Lung Injury (ALI). In addition, resources permitting, we plan in the future on continuing to assess the feasibility of whether our KL
4
surfactant, either alone or in combination with our capillary aerosolization technology, may represent a novel approach for drug combination therapies by efficiently delivering small- and large-molecule therapeutics to the lung.
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o
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Our aerosolized KL
4
surfactant was evaluated in an investigator-initiated Phase 2a clinical trial in CF patients conducted at The University of North Carolina with the support of the Cystic Fibrosis Foundation. The trial concluded in 2010 and demonstrated that aerosolized KL
4
surfactant delivery to CF patients was feasible, generally safe and well tolerated and further demonstrated evidence of pharmacologic response via improvement in mucociliary clearance versus patient baseline. Additionally, in 2010 the FDA granted us orphan drug designation for the treatment of CF with KL
4
surfactant.
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o
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We believe that our aerosolized KL
4
surfactant, administered as an early-intervention therapy, may be potentially effective as a preventive measure for patients at risk for ALI, a syndrome entailing pulmonary function compromise, significant inflammation and increased lung permeability, all associated with pulmonary surfactant dysfunction. We are presently conducting preclinical experiments in collaboration with a prominent academic investigator assessing the potential application of our aerosolized KL
4
surfactant in the prevention and treatment of ALI. In 2010, we concluded a Phase 2 clinical trial of Surfaxin administered intratracheally as a liquid bolus in children with acute respiratory failure (ARF), a critical pediatric respiratory condition that is often caused by severe respiratory infections and has a similar presentation to ALI. The objective of the study was to evaluate the safety and tolerability of intratracheal administration of Surfaxin and to assess whether Surfaxin treatment could decrease the duration of mechanical ventilation in children with ARF. Data from the trial indicate that, based on patient stratification by severity of lung injury, Surfaxin treatment meaningfully reduced time on mechanical ventilation in the least severe patient segment. We believe this supports the rationale for an early-intervention strategy, prior to disease progression to a severe state requiring intubation, for our aerosolized KL
4
surfactant to serve as a potentially effective preventive measure for patients at risk for ALI.
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An important priority for us is to strengthen our long-term strategic and financial position to advance our KL
4
surfactant pipeline programs and maximize shareholder value.
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o
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Since receipt of the 2009 Complete Response Letter, we have implemented cost-containment measures to conserve cash, including reducing our workforce and limiting investments in our pipeline programs. We plan to continue closely managing our expenditures in 2011 and focus our financial resources on our RDS programs, primarily activities in support of the potential approval of Surfaxin.
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o
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During 2010, we completed two public offerings of our common stock and warrants resulting in aggregate net proceeds of $24.2 million, after taking into account transaction related fees and expenses. Also in 2010, we restructured and paid off our $10.6 million loan with PharmaBio Development Inc. (PharmaBio), the former strategic investment subsidiary of Quintiles Transnational Corp. (Quintiles). Contemporaneously with the restructuring, we completed a sale of our common stock and warrants to PharmaBio resulting in net proceeds of $2.1 million. We also raised approximately $2.0 million in additional capital in 2010 by drawing on our CEFF ($1.4 million), completing a second offering of common stock and warrants to PharmaBio ($500,000), and receiving $245,000 in grant proceeds awarded us under the Patient Protection and Affordable Care Act of 2010. In February 2011, we completed a public offering of our common stock and warrants resulting in net proceeds of approximately $21.6 million, after taking into account transaction related fees and expenses.
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o
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We continue to assess strategic alliances and other collaborative arrangements for the development and/or commercialization of our KL
4
surfactant product candidates that would provide financial support (potentially in the form of upfront payments, milestone payments, commercialization royalties and a sharing of research and development expenses) and development and commercial capabilities to advance our KL
4
technology. We also are assessing various financial alternatives that would provide infusions of capital and other resources needed to advance our KL
4
respiratory pipeline programs. Although we are actively assessing potential strategic and/or financial partners, there can be no assurance that any strategic alliance or other financing alternatives will be successfully concluded.
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We have, and will continue to, invest in maintaining and enforcing our potential competitive position by protecting our exclusive rights in and to our KL
4
surfactant technology, pipeline products and capillary aerosolization technology through patents, patent extensions, trademarks, trade secrets and regulatory exclusivity designations, including potential orphan drug and new drug product and supplemental exclusivities. We believe that our development programs may also provide opportunities for new patent filings, which may potentially significantly extend the benefits of exclusivity into the future.
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We have, and will continue to evaluate, and invest in, our quality systems and manufacturing capabilities, including at our Surfaxin manufacturing operations in Totowa, New Jersey, and our analytical and medical device development laboratories in Warrington, Pennsylvania. We plan to manufacture sufficient drug product to meet our anticipated preclinical, clinical, formulation development and, if approved, potential future commercial requirements of Surfaxin, Aerosurf and other KL
4
surfactant product candidates. With respect to Surfaxin LS, we are in the process of conducting a technology transfer of the lyophilized manufacturing process to a cGMP-compliant, third-party contract manufacturer with expertise in such formulations. For our capillary aerosolization systems,
we plan to collaborate with engineering device experts and use contract manufacturers to produce aerosol devices and related components to meet our manufacturing requirements.
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In December 2010, data were presented at the 2010 Annual Hot Topics in Neonatology Congress in Washington, DC demonstrating that Aerosurf, in a dose-dependent fashion, meaningfully improved lung function and lung structural integrity and reduced lung tissue inflammatory marker levels in a preclinical study using the well-established preterm lamb model of RDS. Aerosurf is our initial form of aerosolized KL
4
surfactant created via our proprietary capillary aerosolization technology that we are currently developing for premature infants with or at risk for RDS. In this preclinical study, preterm lambs were randomized to receive continuous positive airway pressure (CPAP) alone or CPAP plus either 10, 20, 30, or 90 minutes of Aerosurf exposure. The results demonstrated that treatment with Aerosurf resulted in a dose-dependent improvement in lung function and a decrease in lung interleukin-8, an established marker of respiratory inflammation, with marked differences following 20 minutes of aerosol exposure and no further improvement following 30 and 90 minutes of exposure. Additionally, improvement in oxygenation was observed to a greater degree in the 10, 20, and 30 minute dosing groups compared with CPAP alone or the 90 minute dosing group and Aerosurf preserved lung structural integrity in all exposure groups.
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In May 2010, data were presented at the 2010 American Thoracic Society International Conference from a preclinical study using KL
4
surfactant in an established porcine model of lung transplantation. The objective of this study was to assess the potential protective role of KL
4
surfactant in reducing ischemia-reperfusion injury by administering KL
4
surfactant to donor lungs prior to harvest and transplantation in an experimental pig lung transplant model. In transplanted donor lungs that were treated with KL
4
surfactant prior to lung harvest and transplantation, a significant improvement in oxygenation (p < 0.05) was observed, as well as preservation of lung surfactant composition (p < 0.05) and a significant reduction in oxidative damage (p < 0.05) compared with animals receiving untreated transplanted lungs. The study demonstrated a potentially important protective role in a newly transplanted lung, reducing ischemia-reperfusion injury often seen after lung transplantation, and suggesting that KL
4
surfactant may play an important protective role in minimizing lung damage triggered by ischemia-reperfusion injury following lung transplantation.
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In May 2010, data from two preclinical studies were presented at the Pediatric Academic Societies (PAS) Annual Meeting that demonstrate that our initial lyophilized KL
4
surfactant, Surfaxin LS, improves lung function and oxygenation while attenuating lung inflammation in the preterm lamb model of RDS. In one study, lyophilized KL
4
surfactant was compared to commercially available animal-derived surfactants to assess improvements in pulmonary function (lung compliance, functional residual capacity and ventilator support requirements), integrity of lung tissue structure, and the potential impact on inflammatory mediators in preterm lambs with RDS. This study demonstrated that treatment with lyophilized KL
4
surfactant, compared with untreated controls, resulted in significant improvements in pulmonary function (
p
< 0.05), significantly better microscopic lung tissue structure (
p
< 0.05), and a significant reduction in two potent inflammatory mediators: interleukin (IL) – 8 and myeloperoxidase (
p
< 0.05). Significant improvements in pulmonary function were observed in lambs treated with the animal-derived surfactants, Survanta
®
(beractant, a surfactant derived from cow lung and the most prescribed surfactant in the United States) and Curosurf
®
(poractant alfa, a surfactant derived from pig lung and the most prescribed surfactant in Europe), compared with controls (
p
< 0.05); however, oxygenation was significantly improved in lambs treated with lyophilized KL
4
surfactant compared with those treated with comparator animal-derived surfactants (
p
< 0.05).
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·
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In another study presented at PAS, the effects of lyophilized KL
4
surfactant on pulmonary function and peri-dosing associated effects of surfactant administration in preterm lambs with RDS were compared to those of Curosurf. Both surfactants significantly improved pulmonary function (
p
< 0.05). However, lambs treated with lyophilized KL
4
surfactant required significantly lower mechanical ventilator pressures to maintain pulmonary function compared with Curosurf-treated lambs (
p
< 0.05). Additionally, lambs treated with Curosurf experienced significant reductions in heart rate and rapidly increased brain oxygenation during the peri-dosing period (
p
< 0.05), in contrast to lambs treated with lyophilized KL
4
surfactant. The study investigators concluded that lyophilized KL
4
surfactant may enable ventilation at lower mean airway pressures which may reduce the incidence of chronic lung disease.
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In December 2009, research was published in the Proceedings of the National Academy of Sciences indicating that a naturally occurring phospholipid in pulmonary surfactant, palmitoyl-oleoyl-phosphatidylglycerol (POPG), suppresses respiratory syncytial virus (RSV) infection and associated inflammation in both in vitro and in vivo models (Numata et al, Proc Nat Acad of Sci, Dec 09). The research demonstrates that POPG inhibits the spreading of RSV infection in mice exposed to RSV. We believe that our KL
4
surfactant, which contains relatively high concentrations of POPG, is the only surfactant in which POPG is a recognized active pharmaceutical ingredient. This study further supports our belief that our KL
4
surfactant may play a unique role in addressing several debilitating respiratory disorders.
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In May 2009, data from a preclinical study was presented at the PAS 2009 Annual Meeting, that compared Surfaxin, at a dose of 5.8 mL/kg (the dose used in the Surfaxin Phase 3 clinical trials for RDS), with Curosurf at a dose of 2.5 mL/kg (the dose prescribed in its label), in the well-established preterm lamb model. The purpose of the study was to test the hypothesis that a larger dose volume of surfactant could potentially result in more homogeneous distribution of surfactant throughout the lungs and may ultimately result in improved pulmonary and clinical outcomes. The data showed that both surfactants significantly increased pulmonary compliance and tidal volume in this preterm lamb model of RDS without adversely affecting heart rate, blood pressure, or cerebral blood flow, irrespective of the dose volume employed. However, significantly more homogeneous lung distribution of Surfaxin (p < 0.001) was observed compared with Curosurf, as measured by pulmonary distribution of a mix of gold-labeled microspheres and surfactant.
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·
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Also in May 2009, data from a preclinical study was presented at PAS that demonstrated a favorable physiologic benefit and subsequent survival impact on treating ALI in an animal model for this severe respiratory condition. The objective of the study was to examine the effectiveness of KL
4
surfactant in treating newborn piglets with severe ALI. The results demonstrated that piglets treated with KL
4
surfactant experienced a statistically significant improvement in oxygenation (p < 0.001), as well as better structural integrity of the lung tissue (p < 0.05) and improved survival (p < 0.05).
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·
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A study that assessed the impact of exogenous surfactants, including Surfaxin, on hyperoxic-induced lung injury in an in-vitro cell-culture model was published in Pediatric Research, a prominent peer-reviewed journal, in July 2008 and concluded that our KL4 surfactant reduced inflammation and cell injury in this model, resulting in improved cell survival and function compared with both a saline control and Survanta.
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·
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In May 2008 at the 2008 PAS, data were presented from an animal study that assessed the effect of Surfaxin on biomarkers of lung inflammation and lung structure as compared to those treated with Survanta, Curosurf, or no surfactant replacement therapy. The chosen animal model, the preterm lamb, was selected because it closely resembles RDS in human lungs and is regarded as the most relevant system to study the pathophysiology and treatment of RDS. The results of the study showed that animals treated with Surfaxin had better lung function compared with those treated with Survanta, Curosurf, or no surfactant replacement. In addition, animals treated with Surfaxin had better structural integrity, as assessed by evaluation of lung tissue, and lower levels of lung tissue and blood inflammatory mediators, compared with animals treated with Survanta or no surfactant replacement therapy.
|
|
|
·
|
A study presented at the 2008 PAS in May 2008 investigated the antimicrobial properties of Surfaxin. In that study, gram-positive and gram-negative bacteria-containing broth was mixed with Surfaxin and Survanta, as well as with saline, a negative control, and ciprofloxacin, an antibiotic that served as a positive control. While both Surfaxin and Survanta suppressed gram-positive bacterial growth, only Surfaxin suppressed gram-negative bacterial growth.
|
|
|
·
|
Also at the 2008 PAS in May 2008, a study was presented that assessed the potential for KL
4
to induce an immune response known as anaphylaxis in a well-established animal model. Anaphylaxis, a potentially life-threatening allergic reaction, can occur in humans after exposure to medications that contain a foreign protein. In this study, a well-established animal model was used to test whether KL
4
would trigger anaphylaxis. Supporting our belief that our KL
4
surfactant has nonimmunogenic properties, this study concluded that KL
4
did not induce active or passive anaphylaxis in this animal model, even when the immune system was potentiated and sensitized.
|
|
|
·
|
In May 2007, a study was presented at the 2007 PAS, the objective of which was to determine the impact of Surfaxin on cytokine-driven lung inflammation and focused specifically on the transforming growth factor-beta (TGF-beta) superfamily. In this study, Surfaxin suppressed two central members of the TGF-beta superfamily (BMP10 and BMP15), which could have implications in reducing inflammation and fibrosis (scarring) of the lung in a variety of pulmonary diseases. Members of the TGF-beta superfamily are known to induce fibrosis (scar tissue formation) in the lung. These results support our developing our KL
4
surfactant technology to potentially treat diseases in which respiratory inflammation plays an integral part, such as ALI, ARF and CF.
|
|
|
·
|
In May 2010, results from our previously-conducted Phase 2a feasibility study of Aerosurf for the prevention of RDS in premature infants were published in the
Journal of Aerosol Medicine and Pulmonary Drug Delivery
. In this feasibility study, Aerosurf was administered to seventeen infants within 30 minutes of birth using a commercially-available aerosolization device via nCPAP over a three-hour duration. Aerosurf was generally safe and well tolerated with twelve (71%) of the infants requiring a single dose of Aerosurf only. In addition, all infants survived through the assessment period (day 28 of life), fifteen (88%) infants survived with no evidence of Bronchopulmonary Dysplasia (BPD) at day 28 of life, and five (29%) infants required intubation and mechanical ventilation (commonly known as nCPAP failure). The study investigators concluded that Aerosurf can be safely administered via nCPAP to preterm infants at risk for RDS and may provide an alternative to surfactant administration via an endotracheal tube.
|
|
|
·
|
In April 2009, we presented a pharmacoeconomic analysis of data from our pivotal SELECT and STAR Phase 3 clinical trials for Surfaxin at the 2009 International Congress on Clinical Pharmacy (ICCP) in Orlando, Florida. The analysis shows that in-hospital costs are higher for infants who require reintubation after surfactant administration and successful extubation, when compared with infants who do not require reintubation. The presentation also included previously-reported data demonstrating that infants treated with Surfaxin in the SELECT and STAR trials required less reintubation compared with infants treated with currently available animal-derived surfactants.
|
|
|
·
|
Our Phase 3 pivotal clinical study, SELECT, has demonstrated that Surfaxin is safe and efficacious when used for the prevention of RDS in premature infants. Data taken together from our SELECT and STAR (a supportive Phase 3 trial) studies demonstrate that Surfaxin improved survival (continuing through at least one year of life) and other outcomes versus the animal-derived comparator surfactants. The SELECT and STAR trials, including follow-on neonatal patient assessment through the first year of life, have been presented at several international medical meetings and trial results were published in
Pediatrics
, the Official Journal of the American Academy of Pediatrics and a premier medical journal for pediatric healthcare practitioners.
|
|
|
·
|
In October 2010, results from an investigator-initiated Phase 2a clinical trial of aerosolized KL
4
surfactant in patients with CF was presented at the North American Cystic Fibrosis Conference. The trial demonstrated that aerosolized KL
4
surfactant delivery to CF patients was feasible, generally safe and well tolerated and was not associated with serious adverse events. Both aerosolized KL
4
surfactant and the active comparator, aerosolized saline control, produced a marked, significant (p < 0.01) increase from patient baseline in mucociliary clearance measured one hour after the last dose in both whole lung and peripheral lung compartments. We believe these results support further scientific assessment of a potential complementary therapeutic role for aerosolized KL
4
surfactant specifically targeting airway mucus adhesions.
|
|
|
·
|
In 2010, we concluded and reported results from a Phase 2 clinical trial evaluating the safety and tolerability of intratracheal administration of Surfaxin (as a liquid bolus) and assessing whether Surfaxin treatment could decrease the duration of mechanical ventilation in children with ARF. Data from the trial demonstrate that, based on patient stratification by severity of lung injury, Surfaxin treatment significantly reduced time on mechanical ventilation in the least severe patient segment (p < 0.01). Additionally, Surfaxin intervention reduced the need for a second dose (p < 0.05), suggesting a decrease in disease severity following surfactant treatment. ARF is a critical pediatric respiratory condition with a similar presentation to ALI that is often caused by severe respiratory infections. We believe the results from the ARF trial suggest the rationale for an early-intervention strategy, prior to disease progression to a severe state requiring intubation, for our aerosolized KL
4
surfactant as a potentially effective preventive measure for patients at risk for ALI.
|
|
|
·
|
In 2009, results of our Phase 2 clinical trial for Surfaxin for the prevention and treatment of BPD, which was designed as an estimation study to evaluate the safety and potential efficacy of Surfaxin in infants at risk for BPD, were published in Pediatrics. In the clinical trial, infants were randomized to receive, in addition to standard of care, either a Surfaxin standard or low dose or sham air as a control. Observations from this pilot estimation study included that infants treated with the Surfaxin standard dose, as compared to those in the control group experienced a lower incidence of death or BPD (58% vs. 66%), a higher survival rate through 36 weeks post-menstrual age (89% vs. 84%), and fewer days on mechanical ventilation. BPD, also known as Chronic Lung Disease, affects premature infants and is associated with surfactant deficiency and the prolonged use of mechanical ventilation and oxygen supplementation. We believe that the results of our estimation trial suggest that our KL
4
surfactant may potentially represent a novel therapeutic option for infants at risk for BPD.
|
|
·
|
lowered viscosity, which may aid and/or improve the distribution of the surfactant through the lung and potentially reduce the frequency of transient peridosing events typically observed with the intratracheal administration of surfactants;
|
|
|
·
|
improved ease of administration and time of drug product preparation;
|
|
|
·
|
potentially eliminating continuous cold chain storage and refrigeration;
|
|
|
·
|
potentially eliminating the need for warming prior to product use; and
|
|
|
·
|
potentially improving drug product stability and extending shelf life.
|
|
|
·
|
full retention of the surface-tension lowering properties of a functioning surfactant necessary to restore lung function and maintain patency of the conducting airways;
|
|
|
·
|
full retention of the surfactant composition upon aerosolization; and
|
|
|
·
|
drug particle size believed to be suitable for deposition into the lung.
|
|
|
·
|
retains the surface-tension lowering properties of a functioning surfactant;
|
|
|
·
|
retains the surfactant composition of our liquid KL
4
surfactant;
|
|
|
·
|
has a drug particle size believed to be suitable for deposition into the lung;
|
|
|
·
|
is produced at rates that can deliver therapeutic dosages in a reasonable time period, with consistent reproducible output. Preclinical studies presented at PAS in 2007 comparing our capillary aerosolization technology to commercially-available aerosol devices, indicated that the capillary aerosolization system generated as much as a 10-fold higher aerosol output rate compared with the other devices studied; and
|
|
|
·
|
produces in vivo evidence of uniform lung distribution and superior physiologic outcomes versus nasal continuous positive airway pressure (nCPAP) alone in an animal model of RDS.
|
|
|
·
|
physicians with expertise in pediatric and pulmonary medicine and extensive contacts in the neonatal medical community;
|
|
|
·
|
expertise in the design and implementation of pre-clinical experiments and studies to support drug development. We conduct certain development-related experiments and bench studies in-house and also engage professional research laboratories as well as academic and education centers to conduct animal studies and experiments requiring specialized equipment and expertise;
|
|
|
·
|
expertise in the design, development and management of clinical trials. Our own expertise includes scientific, medical, statistical and trial management capabilities. We also rely on scientific advisory committees and other medical and consulting experts to assist in the design and monitoring of clinical trials that we may conduct. We also plan to rely on contract research organizations (CROs) to support operations of our planned multi-center trials in certain countries;
|
|
·
|
data management and biostatistics expertise to analyze and report on our clinical trial data, supported by third-party technology systems and independent consultants;
|
|
·
|
regulatory personnel with expertise in FDA regulatory matters. We also consult extensively with independent FDA and international regulatory experts, including former senior scientific staff of the FDA;
|
|
·
|
engineering expertise that supports development of our aerosolized KL
4
surfactant. In addition to our own design engineering team, we are assessing and plan to work with design engineers, medical device experts and other third-party collaborators to advance the development of our capillary aerosolization technology;
|
|
·
|
quality operations capabilities to assure compliance with applicable regulations;
|
|
|
·
|
manufacturing capabilities to manufacture our KL
4
surfactant for use in pre-clinical and clinical studies. We also rely on third-party manufacturers to manufacture our capillary aerosolization systems and related components and plan to rely on contract manufacturing organizations (CMOs) to produce certain formulations of our KL
4
drug product; and
|
|
·
|
research, analytical and medical device development laboratories and manufacturing facilities and related capabilities, including our development laboratories that support our drug and device development activities. We also rely on third party laboratories to support our ongoing efforts and provide certain laboratory services.
|
|
|
·
|
complete our pre-clinical and clinical trials of our KL
4
surfactant product candidates with scientific results that are sufficient to support further development and regulatory approval;
|
|
|
·
|
receive the necessary regulatory approvals;
|
|
·
|
obtain adequate supplies of surfactant active drug substances, manufactured to our specifications and on commercially reasonable terms;
|
|
·
|
perform under agreements to supply drug substances, medical device components and related services necessary to manufacture our KL
4
surfactant product candidates, including Surfaxin, Surfaxin LS and Aerosurf;
|
|
·
|
resolve to the FDA’s satisfaction the matters identified in the 2009 Complete Response Letter for Surfaxin for the prevention of RDS in premature infants;
|
|
·
|
provide for sufficient manufacturing capabilities, at our manufacturing operations in Totowa and with third-party contract manufacturers, to produce sufficient drug product, including Surfaxin, Surfaxin LS and capillary aerosolization systems and related materials to meet our pre-clinical and clinical development requirements;
|
|
|
·
|
obtain the capital necessary to fund our research and development efforts, including our business administration, preclinical and clinical organizations, and our quality and manufacturing operations.
|
|
|
·
|
slow patient enrollment;
|
|
|
·
|
long treatment time required to demonstrate effectiveness;
|
|
|
·
|
lack of sufficient clinical supplies and material;
|
|
|
·
|
adverse medical events or side effects in treated patients;
|
|
|
·
|
lack of compatibility with complementary technologies;
|
|
|
·
|
failure of a drug product candidate to demonstrate effectiveness; and
|
|
|
·
|
lack of sufficient funds.
|
|
|
·
|
the number of clinical sites;
|
|
|
·
|
the size of the patient population;
|
|
|
·
|
the proximity of patients to the clinical sites;
|
|
|
·
|
the eligibility and enrollment criteria for the study;
|
|
|
·
|
the willingness of patients or their parents or guardians to participate in the clinical trial;
|
|
·
|
the existence of competing clinical trials;
|
|
·
|
the existence of alternative available products; and
|
|
|
·
|
geographical and geopolitical considerations.
|
|
|
·
|
the need to make necessary modifications to qualify and validate a facility;
|
|
|
·
|
difficulties with production and yields, including manufacturing and completing all required release testing on a timely basis to meet demand;
|
|
|
·
|
availability of raw materials and supplies;
|
|
·
|
quality control and assurance;
|
|
·
|
casualty damage to a facility; and
|
|
|
·
|
shortages of qualified personnel.
|
|
|
·
|
equipment malfunctions or failures;
|
|
|
·
|
technology malfunctions;
|
|
|
·
|
work stoppages or slowdowns;
|
|
|
·
|
damage to or destruction of the facility;
|
|
|
·
|
regional power shortages; and
|
|
|
·
|
product tampering.
|
|
|
·
|
We may not successfully develop an optimized prototype capillary aerosolization system that is suitable for use in a clinical environment, if at all, on a timely basis and such inability may delay or prevent initiation of our planned clinical trials.
|
|
|
·
|
We will require access to sophisticated engineering capabilities. Our plans include our medical device engineering staff working with leading medical device development engineers and medical device design experts that have a successful track record of developing innovative devices for the medical and pharmaceutical industries. If we are unable to identify design engineers and medical device experts to support our development efforts, including for the optimized prototype capillary aerosolization system for use in our planned clinical trials and, potentially, for later development versions of the capillary aerosolization systems, it would impair our ability to commercialize or develop our aerosolized KL
4
surfactant products.
|
|
|
·
|
We will also require additional capital to advance our development activities and plan to seek a potential strategic partner or third-party collaborator to provide financial support and potentially the necessary medical device development expertise. There can be no assurance, however, that we will successfully identify or be able to enter into agreements with such potential partners or collaborators on terms and conditions that are favorable to us. If we are unable to secure the necessary medical device development expertise to support our development program, this could impair our ability to commercialize or develop our aerosolized KL
4
surfactant.
|
|
·
|
our distributors or collaborators may require that we transfer to them important rights to our products and/or drug product candidates;
|
|
·
|
we may not be able to control the amount and timing of resources that our distributors or collaborators devote to the commercialization of our drug product candidates;
|
|
·
|
if our distributors or collaborators fail to perform their obligations under our arrangements to our satisfaction, we may not achieve our projected sales and our revenues would suffer. We also may incur additional expense to terminate such arrangements and to identify and enter into arrangements with replacement distributors or collaborators;
|
|
|
·
|
our distributors or collaborators may experience financial difficulties; and
|
|
|
·
|
business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to perform its obligations under any arrangement, which would adversely affect our business.
|
|
|
·
|
the perceived safety and efficacy of our products;
|
|
|
·
|
the potential advantages over alternative treatments;
|
|
|
·
|
the prevalence and severity of any side effects;
|
|
|
·
|
the relative convenience and ease of administration;
|
|
|
·
|
cost effectiveness;
|
|
|
·
|
the willingness of the target patient population to try new products and of physicians to prescribe our products;
|
|
|
·
|
the effectiveness of our marketing strategy and distribution support; and
|
|
|
·
|
the sufficiency of coverage or reimbursement by third parties.
|
|
|
·
|
announcements of the results of clinical trials by us or our competitors;
|
|
|
·
|
patient adverse reactions to drug products;
|
|
|
·
|
governmental approvals, delays in expected governmental approvals or withdrawals of any prior governmental approvals or public or regulatory agency concerns regarding the safety or effectiveness of our products;
|
|
|
·
|
changes in the United States or foreign regulatory policy during the period of product development;
|
|
|
·
|
changes in the United States or foreign political environment and the passage of laws, including tax, environmental or other laws, affecting the product development business;
|
|
|
·
|
developments in patent or other proprietary rights, including any third party challenges of our intellectual property rights;
|
|
|
·
|
announcements of technological innovations by us or our competitors;
|
|
·
|
announcements of new products or new contracts by us or our competitors;
|
|
·
|
actual or anticipated variations in our operating results due to the level of development expenses and other factors;
|
|
|
·
|
changes in financial estimates by securities analysts and whether our earnings meet or exceed the estimates;
|
|
|
·
|
conditions and trends in the pharmaceutical and other industries;
|
|
·
|
new accounting standards; and
|
|
·
|
the occurrence of any of the risks described in these “Risk Factors” or elsewhere in this Annual Report on Form 10-K or our other public filings.
|
|
|
·
|
agreements may be breached;
|
|
|
·
|
agreements may not provide adequate remedies for the applicable type of breach;
|
|
·
|
our trade secrets or proprietary know-how may otherwise become known;
|
|
·
|
our competitors may independently develop similar technology; or
|
|
|
·
|
our competitors may independently discover our proprietary information and trade secrets.
|
|
·
|
developing products;
|
|
·
|
undertaking preclinical testing and human clinical trials;
|
|
·
|
obtaining FDA and other regulatory approvals or products; and
|
|
|
·
|
manufacturing and marketing products.
|
|
·
|
uninsured expenses related to defense or payment of substantial monetary awards to claimants;
|
|
·
|
a decrease in demand for our drug product candidates;
|
|
·
|
damage to our reputation; and
|
|
·
|
an inability to complete clinical trial programs or to commercialize our drug product candidates, if approved.
|
|
|
·
|
safe, effective and medically necessary;
|
|
|
·
|
appropriate for the specific patient;
|
|
|
·
|
cost-effective; and
|
|
|
·
|
neither experimental nor investigational.
|
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
|
|
ITEM 2.
|
PROPERTIES.
|
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
|
ITEM 4.
|
RESERVED.
|
|
Low
|
High
|
|||||||
|
First Quarter 2009
|
$ | 13.65 | $ | 22.20 | ||||
|
Second Quarter 2009
|
$ | 10.65 | $ | 36.00 | ||||
|
Third Quarter 2009
|
$ | 4.88 | $ | 25.35 | ||||
|
Fourth Quarter 2009
|
$ | 9.15 | $ | 20.70 | ||||
|
First Quarter 2010
|
$ | 7.35 | $ | 12.58 | ||||
|
Second Quarter 2010
|
$ | 2.70 | $ | 9.30 | ||||
|
Third Quarter 2010
|
$ | 2.56 | $ | 5.10 | ||||
|
Fourth Quarter 2010
|
$ | 2.52 | $ | 5.40 | ||||
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
|
|
·
|
Company Overview and Business Strategy
: this section provides a general description of our company and business plans.
|
|
|
·
|
Critical Accounting Policies:
this section contains a discussion of the accounting policies that we believe are important to our financial condition and results of operations and that require the exercise of judgment and use of estimates on the part of management in their application. In addition, all of our significant accounting policies, including the critical accounting policies and estimates, are discussed in Note 3 to the accompanying consolidated financial statements.
|
|
|
·
|
Results of Operations
: this section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations, including comparisons of the results for the years ended December 31, 2010, and 2009.
|
|
|
·
|
Liquidity and Capital Resources
: this section provides a discussion of our capital resources, future capital requirements, cash flows, committed equity financing facilities, historical financing transactions, outstanding debt arrangements and commitments.
|
|
(Dollars in thousands)
|
Year Ended December 31,
|
|||||||
|
Research and Development Expenses:
|
2010
|
2009
|
||||||
|
Manufacturing development
|
$ | 10,235 | $ | 9,118 | ||||
|
Development operations
|
4,841 | 7,100 | ||||||
|
Direct pre-clinical and clinical programs
|
2,060 | 2,859 | ||||||
|
Total Research and Development Expenses
(1)
|
$ | 17,136 | $ | 19,077 | ||||
|
|
(1)
|
Included in research and development expenses are charges associated with stock-based employee compensation in accordance with the provisions of ASC Topic 718. For years ended December 31, 2010, and 2009, these charges were $0.5 million and $0.7 million, respectively.
|
|
2010
|
2009
|
|||||||
|
Salaries & Benefits
|
$ | 6,858 | $ | 8,693 | ||||
|
Contracted Services
|
4,395 | 4,832 | ||||||
|
Rents & Utilities
|
1,442 | 1,310 | ||||||
|
Depreciation
|
1,207 | 1,235 | ||||||
|
Raw Materials & Supplies
|
1,009 | 1,466 | ||||||
|
Contract Manufacturing
|
990 | – | ||||||
|
Stock-Based Compensation
|
479 | 694 | ||||||
|
All Other
|
756 | 847 | ||||||
|
Total
|
$ | 17,136 | $ | 19,077 | ||||
|
(Dollars in thousands)
|
Year Ended December 31,
|
|||||||
|
2010
|
2009
|
|||||||
|
Interest income
|
$ | 13 | $ | 48 | ||||
|
Interest expense
|
(357 | ) | (1,096 | ) | ||||
|
Other income / (expense)
|
275 | 5 | ||||||
|
Other income / (expense), net
|
$ | (69 | ) | $ | (1,043 | ) | ||
|
(In millions)
|
Year Ended December 31,
|
|||||||
|
2010
|
2009
|
|||||||
|
Financings pursuant to common stock offerings
|
$ | 26.6 | $ | 10.5 | ||||
|
Financings under CEFFs
|
1.4 | 10.3 | ||||||
|
Debt service payments
|
(9.2 | ) | (2.5 | ) | ||||
|
Cash flows from financing activities, net
|
$ | 18.8 | $ | 18.3 | ||||
|
Minimum
|
# of
|
|||||||||||||||||||||||||
|
Price per
|
Trading
|
Potential Availability
|
||||||||||||||||||||||||
|
Share
|
Days
|
Amount
|
at
|
|||||||||||||||||||||||
|
(in millions, except per
|
to Initiate
|
Minimum
|
In Each
|
per Contract
|
December 31, 2010
|
|||||||||||||||||||||
|
share data and trading days)
|
Draw
|
VWAP for
|
Draw
|
Maximum
|
Maximum
|
|||||||||||||||||||||
|
Expiration
|
Down
(1)
|
Daily Pricing
(2)
|
Down
(2)
|
Shares
|
Proceeds
|
Shares
|
Proceeds
|
|||||||||||||||||||
|
May 2008 CEFF
|
June 18, 2011
|
$ | 1.15 |
90% of the
closing market
price on the
|
8 | 1.3 | $ | 60.0 | 0.9 | $ | 51.8 | |||||||||||||||
|
Dec. 2008 CEFF
|
Feb. 6, 2011
|
$ | 0.60 |
day preceding
the first day of
draw down
|
6 | 1.0 | $ | 25.0 | 0.5 | $ | 17.7 | |||||||||||||||
|
2010 CEFF
|
June 11, 2013
|
$ | 0.20 |
Threshold Price
(3)
|
8 | 2.1 | $ | 35.0 | 1.6 | $ | 33.7 | |||||||||||||||
|
|
(1)
|
To initiate a draw down, the closing price of our common stock on the trading day immediately preceding the first trading day of the draw down period must be at least equal to the minimum price set forth above.
|
|
|
(2)
|
If on any trading day, the daily volume-weighted average price of our common stock (VWAP) is less than the minimum VWAP set forth above, no shares are purchased on that trading day and the aggregate amount that we originally designated for the overall draw down is reduced for each such day by 1/8
th
under the June 2010 and May 2008 CEFFs, and 1/6
th
under December 2008 CEFF, respectively. Unless we and Kingsbridge agree otherwise, a minimum of three trading days must elapse between the expiration of any draw-down period and the beginning of the next draw-down period.
|
|
|
(3)
|
Threshold Price is either (i) 90% of the closing market price of our common stock on the trading day immediately preceding the first trading day of the draw down period or (ii) a price that we specify at our sole discretion, but not less than $0.20 per share.
|
|
·
|
May 2008 CEFF – the lesser of 3.0% of the closing market value of the outstanding shares of our common stock at the time of the draw down or $10 million
|
|
·
|
December 2008 CEFF – the lesser of 1.5% of the closing market value of the outstanding shares of our common stock at the time of the draw down or $3 million
|
|
|
·
|
2010 CEFF – Kingsbridge is obligated to purchase (“Obligated Amount”) in a draw down the amount determined under one of two methodologies that we choose at our discretion, subject to a limit of the lesser of 3.5% of the closing market value of the outstanding shares of our common stock at the time of the draw down or $15 million. The methodologies for determining the Obligated Amount are:
|
|
Methodology 1 – based on Threshold Price
|
Obligated
Amount
|
|||
|
Threshold Price is:
|
||||
|
Greater than $90.00 per share
|
$ | 7,250,000 | ||
|
Greater than or equal to $75.00 but less than $90.00 per share
|
$ | 6,500,000 | ||
|
Greater than or equal to $60.00 but less than $75.00 per share
|
$ | 4,250,000 | ||
|
Greater than or equal to $45.00 but less than $60.00 per share
|
$ | 3,500,000 | ||
|
Greater than or equal to $30.00 but less than $45.00 per share
|
$ | 2,750,000 | ||
|
Greater than or equal to $18.75 but less than $30.00 per share
|
$ | 2,000,000 | ||
|
Greater than or equal to $11.25 but less than $18.75 per share
|
$ | 1,350,000 | ||
|
Greater than or equal to $7.50 but less than $11.25 per share
|
$ | 1,000,000 | ||
|
Greater than or equal to $3.75 but less than $7.50 per share
|
$ | 500,000 | ||
|
Greater than or equal to $3.00 but less than $3.75 per share
|
$ | 350,000 | ||
|
Daily VWAP
|
% of
VWAP
|
Applicable Discount
|
||||||
|
May 2008 CEFF
|
||||||||
|
Greater than $7.25 per share
|
94 | % | 6 | % | ||||
|
Less than or equal to $7.25 but greater than $3.85 per share
|
92 | % | 8 | % | ||||
|
Less than or equal to $3.85 but greater than $1.75 per share
|
90 | % | 10 | % | ||||
|
Less than or equal to $1.75 but greater than or equal to $1.15 per share
|
88 | % | 12 | % | ||||
|
Daily VWAP
|
% of
VWAP
|
Applicable Discount
|
||||||
|
December 2008 CEFF
|
||||||||
|
Greater than $7.25 per share
|
94 | % | 6 | % | ||||
|
Less than or equal to $7.25 but greater than $3.85 per share
|
92 | % | 8 | % | ||||
|
Less than or equal to $3.85 but greater than $1.75 per share
|
90 | % | 10 | % | ||||
|
Less than or equal to $1.75 but greater than or equal to $1.10 per share
|
88 | % | 12 | % | ||||
|
Less than or equal to $1.10 but greater than or equal to $.60
|
85 | % | 15 | % | ||||
|
2010 CEFF
|
||||||||
|
Greater than $6.00 per share
|
95.62 | % | 4.38 | % | ||||
|
Greater than or equal to $5.00 but less than $6.00 per share
|
95.25 | % | 4.75 | % | ||||
|
Greater than or equal to $4.00 but less than $5.00 per share
|
94.75 | % | 5.25 | % | ||||
|
Greater than or equal to $3.00 but less than $4.00 per share
|
94.25 | % | 5.75 | % | ||||
|
Greater than or equal to $2.00 but less than $3.00 per share
|
94.00 | % | 6.00 | % | ||||
|
Greater than or equal to $1.25 but less than $2.00 per share
|
92.50 | % | 7.50 | % | ||||
|
Greater than or equal to $0.75 but less than $1.25 per share
|
91.50 | % | 8.50 | % | ||||
|
Greater than or equal to $0.50 but less than $0.75 per share
|
90.50 | % | 9.50 | % | ||||
|
Greater than or equal to $0.25 but less than $0.50 per share
|
85.00 | % | 15.00 | % | ||||
|
Greater than or equal to $0.20 but less than $0.25 per share
|
82.50 | % | 17.50 | % | ||||
|
|
·
|
On May 22, 2008, a warrant to purchase up to 55,000 shares of our common stock at an exercise price of $37.59 per share, expiring in November 2013.
|
|
|
·
|
On December 22, 2008, a warrant to purchase up to 45,000 shares of our common stock at an exercise price of $22.70 per share, expiring in May 2014.
|
|
·
|
On June 11, 2010, a warrant to purchase up to 83,333 shares of our common stock at an exercise price of $6.69 per share. The warrant expires in December 2015 and is exercisable, in whole or in part, for cash, except in limited circumstances.
|
|
·
|
On April 17, 2006, a warrant to purchase up to 32,667 shares of our common stock at an exercise price equal to $84.29 per share, expiring in October 2011.
|
|
·
|
In 2004, a warrant to purchase up to 25,000 shares of our common stock at an exercise price equal to $181.12 per share, which expired unexercised in January 2010.
|
|
(in thousands, except per share data)
|
Discounted
|
|||||||||||
|
Average Price
|
||||||||||||
|
Completion Date
|
Shares Issued
|
Gross Proceeds
|
Per Share
|
|||||||||
|
July 11, 2008
|
74 | $ | 1,563 | $ | 21.21 | |||||||
|
July 31, 2008
|
66 | 1,500 | 22.69 | |||||||||
|
October 17, 2008
|
61 | 1,313 | 21.55 | |||||||||
|
November 20, 2008
|
15 | 250 | 16.95 | |||||||||
|
January 2, 2009
|
32 | 500 | 15.66 | |||||||||
|
January 16, 2009
|
28 | 438 | 15.68 | |||||||||
|
February 18, 2009
|
57 | 1,000 | 17.50 | |||||||||
|
March 31, 2009
|
68 | 1,094 | 16.17 | |||||||||
|
October 13, 2009
|
37 | 606 | 16.27 | |||||||||
| 438 | $ | 8,264 | ||||||||||
|
(in thousands, except per share data)
|
Discounted
|
|||||||||||
|
Average Price
|
||||||||||||
|
Completion Date
|
Shares Issued
|
Gross Proceeds
|
Per Share
|
|||||||||
|
April 8, 2009
|
54 | $ | 1,000 | $ | 18.60 | |||||||
|
May 7, 2009
|
85 | 1,000 | 11.78 | |||||||||
|
September 23, 2009
|
120 | 1,583 | 13.24 | |||||||||
|
October 13, 2009
|
127 | 1,800 | 14.14 | |||||||||
|
October 21, 2009
|
140 | 1,900 | 13.57 | |||||||||
| 526 | $ | 7,283 | ||||||||||
|
(in thousands, except per share data)
|
Discounted
|
|||||||||||
|
Average Price
|
||||||||||||
|
Completion Date
|
Shares Issued
|
Gross Proceeds
|
Per Share
|
|||||||||
|
October 4, 2010
|
351 | $ | 973 | $ | 2.77 | |||||||
|
November 4, 2010
|
166 | 432 | 2.60 | |||||||||
|
January 24, 2011
|
314 | 991 | 3.16 | |||||||||
| 831 | $ | 2,396 | ||||||||||
|
(in thousands)
|
2010
|
2009
|
||||||
|
GE Business Financial Services, Inc.
|
||||||||
|
Short-term
|
$ | 51 | $ | 538 | ||||
|
Long-term
|
- | 65 | ||||||
|
Total
|
51 | 603 | ||||||
|
Pennsylvania Machinery and Equipment Loan
|
||||||||
|
Short-term
|
63 | 59 | ||||||
|
Long-term
|
296 | 363 | ||||||
|
Total
|
359 | 422 | ||||||
|
Other Capitalized Leases
|
||||||||
|
Short-term
|
22 | - | ||||||
|
Long-term
|
5 | - | ||||||
|
Total
|
27 | - | ||||||
|
Total Short-term
|
136 | 597 | ||||||
|
Total Long-term
|
301 | 428 | ||||||
|
Total
|
$ | 437 | $ | 1,025 | ||||
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
|
(c)
|
Changes in internal controls
|
|
|
·
|
we improved access to accounting literature, research materials and documents; and
|
|
|
·
|
we have provided for increased communication among our legal and finance personnel and third-party professionals with whom we consult regarding complex accounting applications.
|
|
ITEM 9B.
|
OTHER INFORMATION.
|
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
DISCOVERY LABORATORIES, INC.
|
||
|
Date: March 31, 2011
|
By:
|
/s/ W. Thomas Amick
|
|
W. Thomas Amick, Chairman of the Board
|
||
|
and Chief Executive Officer
|
||
|
Signature
|
Name & Title
|
Date
|
||
|
W. Thomas Amick
|
March 31, 2011
|
|||
|
/s/ W. Thomas Amick
|
Chairman of the Board and Chief Executive Officer
|
|||
|
(Principal Executive Officer)
|
||||
|
John G. Cooper
|
March 31, 2011
|
|||
|
/s/ John G. Cooper
|
President and Chief Financial Officer
|
|||
|
(Principal Financial Officer)
|
||||
|
John Tattory
|
March 31, 2011
|
|||
|
/s/ John Tattory
|
Vice President, Finance and Controller
|
|||
|
(Principal Accounting Officer)
|
||||
|
Antonio Esteve, Ph.D.
|
March 31, 2011
|
|||
|
/s/ Antonio Esteve
|
Director
|
|||
|
Max E. Link, Ph.D.
|
March 31, 2011
|
|||
|
/s/ Max E. Link
|
Director
|
|||
|
|
||||
|
Herbert H. McDade, Jr.
|
March 31, 2011
|
|||
|
/s/ Herbert H. McDade, Jr.
|
Director
|
|||
| Bruce A. Peacock |
March 31, 2011
|
|||
|
/s/ Bruce A. Peacock
|
Director
|
|
||
|
Marvin E. Rosenthale, Ph.D.
|
March 31, 2011
|
|||
|
/s/ Marvin E. Rosenthale
|
Director
|
|
Exhibit No.
|
Description
|
Method of Filing
|
||
|
3.1
|
Amended and Restated Certificate of Incorporation of Discovery Laboratories, Inc. (Discovery), as amended as of December 28, 2010..
|
Filed herewith.
|
||
|
3.2
|
Certificate of Designations, Preferences and Rights of Series A Junior Participating Cumulative Preferred Stock of Discovery, dated February 6, 2004.
|
Incorporated by reference to Exhibit 2.2 to Discovery’s Form 8-A, as filed with the SEC on February 6, 2004.
|
||
|
3.3
|
Amended and Restated By-Laws of Discovery, as amended effective September 3, 2009.
|
Incorporated by reference to Exhibit 3.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on September 4, 2009
|
||
|
4.1
|
Shareholder Rights Agreement, dated as of February 6, 2004, by and between Discovery and Continental Stock Transfer & Trust Company.
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on February 6, 2004.
|
||
|
4.2
|
Class C Investor Warrant, dated April 17, 2006, issued to Kingsbridge Capital Limited
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on April 21, 2006.
|
||
|
4.3
|
Warrant Agreement, dated November 22, 2006
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on November 22, 2006.
|
||
|
4.4
|
Warrant Agreement dated May 22, 2008 by and between Kingsbridge Capital Limited and Discovery.
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K as filed with the SEC on May 28, 2008.
|
||
|
4.5
|
Warrant Agreement dated December 12, 2008 by and between Kingsbridge Capital Limited and Discovery.
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on December 15, 2008.
|
||
|
4.6
|
Form of Stock Purchase Warrant issued in May 2009
|
Incorporated by reference to Exhibit 10.3 to Discovery’s Current Report on Form 8-K, as filed with the SEC on May 8, 2009.
|
||
|
4.7
|
Form of Stock Purchase Warrant issued in February 2010
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on February 18, 2010.
|
||
|
4.8
|
Warrant Agreement, dated as of April 30, 2010, by and between Discovery and PharmaBio
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on April 28, 2010.
|
|
Exhibit No.
|
Description
|
Method of Filing
|
||
|
4.9
|
Warrant Agreement dated June 11, 2010 by and between Kingsbridge Capital Limited and Discovery
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on June 14, 2010
|
||
|
4.10
|
Form of Five-Year Warrant issued on June 22, 2010
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on June 17, 2010
|
||
|
4.11
|
Form of Short-Term Warrant issued on June 22, 2010
|
Incorporated by reference to Exhibit 4.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on June 17, 2010
|
||
|
4.12
|
Warrant Agreement, dated as of October 12, 2010, by and between Discovery and PharmaBio
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on October 13, 2010
|
||
|
4.13.
|
Form of Voting Agreement between RSA Holders and Discovery dated November 12, 2010
|
Filed herewith
|
||
|
4.14
|
Form of Five-Year Warrant issued on February 22, 2011
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on February 16, 2011.
|
||
|
4.15
|
Form of Short Term Warrant issued on February 22, 2011
|
Incorporated by reference to Exhibit 4.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on February 16, 2011.
|
||
|
10.1+
|
Sublicense Agreement, dated as of October 28, 1996, between Johnson & Johnson, Ortho Pharmaceutical Corporation and Acute Therapeutics, Inc.
|
Incorporated by reference to Exhibit 10.6 to Discovery’s Registration Statement on Form SB-2/A, as filed with the SEC on April 18, 1997 (File No. 333-19375).
|
||
|
10.2
|
Registration Rights Agreement, dated June 16, 1998, among Discovery, Johnson & Johnson Development Corporation and The Scripps Research Institute.
|
Incorporated by reference to Exhibit 10.28 to Discovery’s Annual Report on Form 10-KSB for the year ended December 31, 1998, as filed with the SEC on April 9, 1999.
|
||
|
10.3 +
|
Amended and Restate License Agreement by and between Discovery and Philip Morris USA Inc., d/b/a/ Chrysalis Technologies, dated March 28, 2008
|
Incorporated by reference to Exhibit 10.4 to Discovery’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, as filed with the SEC on May 9, 2008.
|
||
|
10.4 +
|
License Agreement by and between and Philip Morris Products S.A., dated March 28, 2008
|
Incorporated by reference to Exhibit 10.5 to Discovery’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, as filed with the SEC on May 9, 2008.
|
||
|
10.5*
|
Amended and Restated 1998 Stock Incentive Plan of Discovery (amended as of May 13, 2005).
|
Incorporated by reference to Exhibit 4.1 to Discovery’s Registration Statement on Form S-8, as filed with the SEC on August 23, 2005 (File No. 333-116268).
|
|
Exhibit No.
|
Description
|
Method of Filing
|
||
|
10.6*
|
Form of Notice of Grant of Stock Option under the 1998 Stock Incentive Plan.
|
Incorporated by reference to Exhibit 10.2 to Discovery’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 1999, as filed with the SEC on November 17, 1999.
|
||
|
10.7*
|
Discovery’s 2007 Long Term Incentive Plan
|
Incorporated by reference to Exhibit 1.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on June 28, 2007.
|
||
|
10.8*
|
Form of 2007 Long-Term Incentive Plan Stock Option Agreement
|
Incorporated by reference to Exhibit 10.3 to Discovery’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, as filed with the SEC on August 9, 2007.
|
||
|
10.9*
|
Form of Stock Issuance Agreement, dated as of October 30, 2007, between Discovery and the Grantees
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on November 5, 2007.
|
||
|
10.10*
|
Form of Restricted Stock Award (RSA) Agreement dated September 27, 2010
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on October 1, 2010.
|
||
|
10.11*
|
Separation of Employment Agreement and General Release, dated as of August 13, 2009, by and between Discovery and Robert J. Capetola
|
Incorporated by reference to Exhibit 10.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on September 4, 2009.
|
||
|
10.12*
|
Agreement, dated as of August 13, 2009, by and between Discovery and W. Thomas Amick Regarding Service as CEO on a Part-Time, Interim Basis
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on September 4,2009.
|
||
|
10.13*
|
Renewal of Interim CEO Agreement dated July 2, 2010 between W. Thomas Amick and Discovery
|
Incorporated by reference to Exhibit 10.8 to Discovery’s Quarterly Report on Form 10-Q dated June 30, 2010, as filed with the SEC on August 9, 2010.
|
||
|
10.14*
|
Employment Agreement dated as of October 18, 2010 by and between W. Thomas Amick and Discovery.
|
Incorporated by reference to Exhibit 10.5 to Discovery’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, as filed with the SEC on November 15, 2010.
|
||
|
10.15*
|
Amended and Restated Employment Agreement, dated as of May 4, 2006, by and between Discovery and John G. Cooper.
|
Incorporated by reference to Exhibit 10.2 to Discovery’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as filed with the SEC on May 10, 2006.
|
||
|
10.16*
|
Amendment to the Amended and Restated Employment Agreement dated as of May 4, 2006 between John G. Cooper and Discovery Laboratories, Inc.
|
Incorporated by reference to Exhibit 10.3 to Discovery’s Current Report on Form 8-K, as filed with the SEC on January 3, 2008.
|
|
Exhibit No.
|
Description
|
Method of Filing
|
||
|
10.17*
|
Amended and Restated Employment Agreement, dated as of May 4, 2006, by and between Discovery and David L. Lopez, Esq., CPA
|
Incorporated by reference to Exhibit 10.3 to Discovery’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as filed with the SEC on May 10, 2006.
|
||
|
10.18*
|
Amendment to the Amended and Restated Employment Agreement dated as of May 4, 2006 between David L. Lopez and Discovery Laboratories, Inc.
|
Incorporated by reference to Exhibit 10.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on January 3, 2008.
|
||
|
10.19+
|
Amended and Restated Sublicense and Collaboration Agreement made as of December 3, 2004, between Discovery and Laboratorios del Dr. Esteve, S.A.
|
Incorporated by reference to Exhibit 10.28 to Discovery’s Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC on March 16, 2005.
|
||
|
10.20+
|
Amended and Restated Supply Agreement, dated as of December 3, 2004, by and between Discovery and Laboratorios del Dr. Esteve, S.A.
|
Incorporated by reference to Exhibit 10.29 to Discovery’s Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC on March 16, 2005.
|
||
|
10.21
|
Assignment of Lease and Termination and Option Agreement, dated as of December 30, 2005, between Laureate Pharma, Inc. and Discovery.
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 16, 2006.
|
||
|
10.22
|
Lease Agreement dated May 26, 2004, and First Amendment to Lease Agreement, dated April 2, 2007, by and between TR Stone Manor Corp. and Discovery Laboratories, Inc.
|
Incorporated by reference to Exhibits 10.1 and 10.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on April 6, 2007.
|
||
|
10.23
|
Second Amended and Restated Loan Agreement, dated as of December 10, 2001, amended and restated as of October 25, 2006, by and between Discovery and PharmaBio
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on October 26, 2006.
|
||
|
10.24
|
Payment Agreement and Loan Amendment (amending the Second Amended and Restated Loan Agreement, dated as of December 10, 2001, amended and restated as of October 25, 2006) dated April 27, 2010, by and between Discovery and PharmaBio
|
Incorporated by reference to Exhibit 1.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on April 28, 2010.
|
||
|
10.25
|
Third Amended Promissory Note dated April 27, 2010 (amending and restating the Second Amended Promissory Note dated as of October 25, 2006), payable to PharmaBio
|
Incorporated by reference to Exhibit 1.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on April 28, 2010.
|
||
|
10.26
|
Securities Purchase Agreement dated April 27, 2010, by and between Discovery and PharmaBio
|
Incorporated by reference to Exhibit 1.3 to Discovery’s Current Report on Form 8-K, as filed with the SEC on April 28, 2010.
|
|
Exhibit No.
|
Description
|
Method of Filing
|
||
|
10.27
|
Securities Purchase Agreement dated October 12, 2010 by and between PharmaBio and Discovery.
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on October 13, 2010.
|
||
|
10.28
|
Credit and Security Agreement, dated as of May 21, 2007, by and between Discovery and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc.
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on May 24, 2007.
|
||
|
10.29
|
First Amendment to Credit and Security Agreement (the “Amendment”) dated May 30, 2008, between the Company and GE Business Financial Services Inc. (formerly Merrill Lynch Business Financial Services, Inc.)
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on June 2, 2008.
|
||
|
10.30
|
Common Stock Purchase Agreement, dated as of May 22, 2008, by and between Kingsbridge Capital and Discovery
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on May 27, 2008.
|
||
|
10.31
|
Registration Rights Agreement, dated as of May 22, 2008, by and between Kingsbridge Capital and Discovery
|
Incorporated by reference to Exhibit 10.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on May 27, 2008.
|
||
|
10.32
|
Common Stock Purchase Agreement, dated December 12, 2008, by and between Discovery and Kingsbridge Capital Limited.
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on December 15, 2008.
|
||
|
10.33
|
Registration Rights Agreement, dated as of December 12, 2008, by and between Kingsbridge Capital and Discovery
|
Incorporated by reference to Exhibit 10.2 to Discovery’s Current Report on Form 8-K, as filed with the SEC on December 15, 2008.
|
||
|
10.34
|
Common Stock Purchase Agreement dated as of June 11, 2010, by and between Kingsbridge Capital Limited and Discovery.
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on June 14, 2010.
|
||
|
10.35+
|
Supply Agreement dated as of December 22, 2010 between by and between Corden Pharma (formerly Genzyme Pharmaceuticals LLC) and Discovery
|
Incorporated by reference to Exhibit 10.1 to Discovery’s Current Report on Form 8-K, as filed with the SEC on December 29, 2010.
|
||
|
21.1
|
Subsidiaries of Discovery.
|
Filed herewith.
|
||
|
23.1
|
Consent of Ernst & Young LLP, independent registered public accounting firm.
|
Filed herewith.
|
||
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
|
Filed herewith.
|
||
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
|
Filed herewith.
|
|
Exhibit No.
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Description
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Method of Filing
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Filed herewith.
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Page
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Consolidated Financial Statements
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Report of Independent Registered Public Accounting Firm
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F-2
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Balance Sheets as of December 31, 2010 and December 31, 2009
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F-3
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Statements of Operations for the years ended
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December 31, 2010 and December 31, 2009
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F-4
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Statements of Changes in Stockholders’ Equity for the years ended
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December 31, 2010 and December 31, 2009
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F-5
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Statements of Cash Flows for the years ended
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December 31, 2010 and December 31, 2009
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F-6
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Notes to consolidated financial statements
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F-7
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December 31,
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December 31,
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|||||||
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2010
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2009
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|||||||
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ASSETS
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Current Assets:
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||||||||
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Cash and cash equivalents
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$ | 10,211 | $ | 15,741 | ||||
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Prepaid expenses and other current assets
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285 | 233 | ||||||
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Total current assets
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10,496 | 15,974 | ||||||
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Property and equipment, net
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3,467 | 4,668 | ||||||
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Restricted cash
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400 | 400 | ||||||
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Other assets
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174 | 361 | ||||||
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Total assets
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$ | 14,537 | $ | 21,403 | ||||
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LIABILITIES & STOCKHOLDERS’ EQUITY
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||||||||
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Current Liabilities:
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||||||||
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Accounts payable
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$ | 1,685 | $ | 1,294 | ||||
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Accrued expenses
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3,286 | 3,446 | ||||||
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Common stock warrant liability
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2,469 | 3,191 | ||||||
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Loan payable, including accrued interest
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- | 10,461 | ||||||
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Equipment loans and capitalized leases, current portion
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136 | 597 | ||||||
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Total current liabilities
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7,576 | 18,989 | ||||||
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Equipment loans and capitalized leases, non-current portion
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301 | 428 | ||||||
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Other liabilities
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634 | 690 | ||||||
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Total liabilities
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8,511 | 20,107 | ||||||
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Stockholders’ Equity:
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||||||||
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Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding
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– | – | ||||||
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Common stock, $0.001 par value; 50,000 authorized; 13,822 and 8,446 shares issued, 13,801 and 8,425 shares outstanding
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14 | 8 | ||||||
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Additional paid-in capital
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385,521 | 361,622 | ||||||
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Accumulated deficit
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(376,455 | ) | (357,280 | ) | ||||
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Treasury stock (at cost); 21 shares
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(3,054 | ) | (3,054 | ) | ||||
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Total stockholders’ equity
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6,026 | 1,296 | ||||||
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Total liabilities & stockholders’ equity
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$ | 14,537 | $ | 21,403 | ||||
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Year Ended December 31,
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||||||||
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2010
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2009
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Revenue
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$ | – | $ | – | ||||
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Expenses:
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||||||||
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Research & development
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17,136 | 19,077 | ||||||
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General & administrative
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8,392 | 10,120 | ||||||
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Total expenses
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25,528 | 29,197 | ||||||
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Operating loss
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(25,528 | ) | (29,197 | ) | ||||
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Change in fair value of common stock warrant liability
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6,422 | 369 | ||||||
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Other income / (expense):
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||||||||
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Interest and other income
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288 | 39 | ||||||
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Interest and other expense
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(357 | ) | (1,082 | ) | ||||
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Other income / (expense), net
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(69 | ) | (1,043 | ) | ||||
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Net loss
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$ | (19,175 | ) | $ | (29,871 | ) | ||
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Net loss per common share - basic and diluted
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$ | (1.65 | ) | $ | (3.89 | ) | ||
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Weighted average number of common shares outstanding - basic and diluted
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11,602 | 7,680 | ||||||
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(
In
thousands)
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Common Stock
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Additional
Paid-in
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Accumulated
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Treasury Stock
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Accumulated
Other Com-
prehensive
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|||||||||||||||||||||||||||
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Shares
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Amount
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Capital
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Deficit
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Shares
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Amount
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Income/(Loss)
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Total
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|||||||||||||||||||||||||
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Balance – January1, 2009
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6,773 | $ | 6 | $ | 341,389 | $ | (327,409 | ) | (21 | ) | $ | (3,054 | ) | $ | 1 | $ | 10,933 | |||||||||||||||
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Comprehensive loss:
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||||||||||||||||||||||||||||||||
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Net loss
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– | – | – | (29,871 | ) | – | – | – | (29,871 | ) | ||||||||||||||||||||||
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Other comprehensive loss – unrealized gains on investments
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– | – | – | – | – | – | (1 | ) | (1 | ) | ||||||||||||||||||||||
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Total comprehensive loss
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– | – | – | – | – | – | – | (29,872 | ) | |||||||||||||||||||||||
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Issuance of common stock, restricted stock awards
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1 | – | – | – | – | – | – | – | ||||||||||||||||||||||||
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Issuance of common stock, 401(k) employer match
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23 | – | 290 | – | – | – | – | 290 | ||||||||||||||||||||||||
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Issuance of common stock, May 2009 financing
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933 | 1 | 6,904 | – | – | – | – | 6,905 | ||||||||||||||||||||||||
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Issuance of common stock, CEFF financings
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716 | 1 | 10,356 | – | – | – | – | 10,357 | ||||||||||||||||||||||||
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Stock-based compensation expense
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– | – | 2,683 | – | – | – | – | 2,683 | ||||||||||||||||||||||||
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Balance – December 31, 2009
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8,446 | $ | 8 | $ | 361,622 | $ | (357,280 | ) | (21 | ) | $ | (3,054 | ) | $ | – | $ | 1,296 | |||||||||||||||
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Comprehensive loss:
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Net loss
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– | – | – | (19,175 | ) | – | – | – | (19,175 | ) | ||||||||||||||||||||||
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Other comprehensive loss – unrealized gains on investments
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– | – | – | – | – | – | – | – | ||||||||||||||||||||||||
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Total comprehensive loss
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– | – | – | – | – | – | – | (19,175 | ) | |||||||||||||||||||||||
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Issuance of common stock, restricted stock awards
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155 | – | – | – | – | – | – | – | ||||||||||||||||||||||||
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Issuance of common stock, 401(k) employer match
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61 | 1 | 223 | – | – | – | – | 224 | ||||||||||||||||||||||||
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Issuance of common stock, February 2010 financing
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1,833 | 2 | 9,379 | – | – | – | – | 9,381 | ||||||||||||||||||||||||
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Issuance of common stock, April 2010 financing
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270 | – | 2,105 | – | – | – | – | 2,105 | ||||||||||||||||||||||||
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Issuance of common stock, June 2010 financing
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2,381 | 2 | 9,092 | – | – | – | – | 9,094 | ||||||||||||||||||||||||
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Issuance of common stock, October 2010 financing
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159 | – | 452 | – | – | – | – | 452 | ||||||||||||||||||||||||
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Issuance of common stock, CEFF financings
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517 | 1 | 1,242 | – | – | – | – | 1,243 | ||||||||||||||||||||||||
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Stock-based compensation expense
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– | – | 1,406 | – | – | – | – | 1,406 | ||||||||||||||||||||||||
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Balance – December 31, 2010
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13,822 | $ | 14 | $ | 385,521 | $ | (376,455 | ) | (21 | ) | $ | (3,054 | ) | $ | – | $ | 6,026 | |||||||||||||||
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Year Ended December 31,
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2010
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2009
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Cash flow from operating activities:
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||||||||
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Net loss
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$ | (19,175 | ) | $ | (29,871 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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1,549 | 1,992 | ||||||
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Stock–based compensation and 401(k) match
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1,634 | 2,973 | ||||||
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Fair value adjustment of common stock warrants
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(6,422 | ) | (369 | ) | ||||
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Gain on sale of equipment
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(16 | ) | – | |||||
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Changes in:
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||||||||
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Prepaid expenses and other current assets
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(52 | ) | 392 | |||||
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Accounts payable
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391 | (817 | ) | |||||
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Accrued expenses
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(166 | ) | (1,867 | ) | ||||
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Other assets
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4 | (1 | ) | |||||
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Other liabilities and accrued interest on loan payable
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(2,017 | ) | 153 | |||||
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Net cash used in operating activities
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(24,270 | ) | (27,415 | ) | ||||
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Cash flow from investing activities:
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||||||||
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Purchase of property and equipment
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(101 | ) | (147 | ) | ||||
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Restricted cash
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– | 200 | ||||||
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Proceeds from sale or maturity of marketable securities
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– | 2,047 | ||||||
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Net cash provided by / (used in) investing activities
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(101 | ) | 2,100 | |||||
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Cash flow from financing activities:
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||||||||
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Proceeds from issuance of securities, net of expenses
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27,977 | 20,820 | ||||||
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Principal payments of loan payable
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(8,500 | ) | – | |||||
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Principal payments under equipment loan and capital lease obligations
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(636 | ) | (2,508 | ) | ||||
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Net cash provided by financing activities
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18,841 | 18,312 | ||||||
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Net decrease in cash and
cash equivalents
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(5,530 | ) | (7,003 | ) | ||||
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Cash and cash equivalents – beginning of year
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15,741 | 22,744 | ||||||
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Cash and cash equivalents – end of year
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$ | 10,211 | $ | 15,741 | ||||
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Supplementary disclosure of cash flows information:
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Interest paid
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$ | 2,123 | $ | 208 | ||||
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Non-cash transactions:
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Unrealized gain / (loss) on marketable securities
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– | (1 | ) | |||||
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Equipment acquired through capitalized lease
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48 | – | ||||||
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(in thousands)
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December 31,
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|||||||
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2010
|
2009
|
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Net loss
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$ | (19,175 | ) | $ | (29,871 | ) | ||
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Change in unrealized (losses)/gains on marketable securities
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– | (1 | ) | |||||
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Comprehensive loss
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$ | (19,175 | ) | $ | (29,872 | ) | ||
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·
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Level 1 – Quoted prices in active markets for identical assets and liabilities. Level 1 is generally considered the most reliable measurement of fair value under ASC 820.
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·
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Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
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·
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Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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Fair Value
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Fair value measurement using
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|||||||||||||||
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(in thousands)
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December 31,
2010
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Level 1
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Level 2
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Level 3
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Assets:
|
||||||||||||||||
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Money markets
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$ | 9,690 | $ | 9,690 | $ | – | $ | – | ||||||||
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Certificate of deposit
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600 | 600 | – | – | ||||||||||||
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Total Assets
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$ | 10,290 | $ | 10,290 | $ | – | $ | – | ||||||||
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Liabilities
|
||||||||||||||||
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Common stock warrant liability
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$ | 2,469 | $ | $ – | $ | – | $ | 2,469 | ||||||||
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Fair Value
|
Fair value measurement using
|
|||||||||||||||
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(in thousands)
|
December 31,
2009
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
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Assets:
|
||||||||||||||||
|
Money markets
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$ | 14,690 | $ | 14,690 | $ | – | $ | – | ||||||||
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Certificate of deposit
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600 | 600 | – | – | ||||||||||||
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Total Assets
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$ | 15,290 | $ | 15,290 | $ | – | $ | – | ||||||||
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Liabilities
|
||||||||||||||||
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Common stock warrant liability
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$ | 3,191 | $ | – | $ | – | $ | 3,191 | ||||||||
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(in thousands)
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Fair Value Measurements of
Common Stock Warrants Using
Significant Unobservable Inputs
(Level 3)
|
|||
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Balance at December 31, 2009
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$ | 3,191 | ||
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Issuance of common stock warrants
|
5,700 | |||
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Change in fair value of common stock warrant liability
|
(6,422 | ) | ||
|
Balance at December 31, 2010
|
$ | 2,469 | ||
|
December 31,
|
||||||||
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(in thousands)
|
2010
|
2009
|
||||||
|
Equipment
|
$ | 7,418 | $ | 7,265 | ||||
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Furniture
|
801 | 791 | ||||||
|
Leasehold improvements
|
2,838 | 2,838 | ||||||
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Subtotal
|
11,057 | 10,894 | ||||||
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Accumulated depreciation and amortization
|
(7,590 | ) | (6,226 | ) | ||||
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Property and equipment, net
|
$ | 3,467 | $ | 4,668 | ||||
|
December 31,
|
||||||||
|
(in thousands)
|
2010
|
2009
|
||||||
|
Accrued compensation
(1)
|
$ | 760 | $ | 1,792 | ||||
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Accrued manufacturing
|
796 | 393 | ||||||
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Accrued research and development
|
689 | 478 | ||||||
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Accrued accounting and legal fees
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395 | 254 | ||||||
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All other accrued expenses
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646 | 529 | ||||||
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Total accounts payable and accrued expenses
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$ | 3,286 | $ | 3,446 | ||||
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(1)
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Accrued compensation primarily consists of potential employee incentive arrangements
(pursuant to plans approved by our Board) and employees’ unused earned vacation. As of December 31, 2009 accrued compensation also included contractual severance arrangements for our former President and Chief Executive Officer which were paid in the first quarter of 2010.
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(in thousands)
|
2010
|
2009
|
||||||
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GE Business Financial Services, Inc.
|
||||||||
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Short-term
|
$ | 51 | $ | 538 | ||||
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Long-term
|
– | 65 | ||||||
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Total
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51 | 603 | ||||||
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Pennsylvania Machinery and Equipment Loan
|
||||||||
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Short-term
|
63 | 59 | ||||||
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Long-term
|
296 | 363 | ||||||
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Total
|
359 | 422 | ||||||
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(in thousands)
|
2010
|
2009
|
||||||
|
Capitalized Leases
|
||||||||
|
Short-term
|
22 | - | ||||||
|
Long-term
|
5 | - | ||||||
|
Total
|
27 | - | ||||||
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Total Short-term
|
136 | 597 | ||||||
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Total Long-term
|
301 | 428 | ||||||
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Total
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$ | 437 | $ | 1,025 | ||||
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(in millions, except per
share data and trading days)
|
Minimum
Price
per
Share
to Initiate
|
Minimum
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# of
Trading
Days
In Each
|
Amount
per Contract
|
Potential Availability
at
December 31, 2010
|
|||||||||||||||||||||
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Expiration
|
Draw
Down
(1)
|
VWAP for
Daily Pricing
(2)
|
Draw
Down
(2)
|
Shares
|
Maximum
Proceeds
|
Shares
|
Maximum
Proceeds
|
|||||||||||||||||||
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May 2008 CEFF
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June 18, 2011
|
$ | 1.15 |
90% of the
closing market
price on the
|
8 | 1.3 | $ | 60.0 | 0.9 | $ | 51.8 | |||||||||||||||
|
Dec. 2008
CEFF
|
Feb. 6, 2011
|
$ | 0.60 |
day preceding
the
first day of
draw down
|
6 | 1.0 | $ | 25.0 | 0.5 | $ | 17.7 | |||||||||||||||
|
2010 CEFF
|
June 11, 2013
|
$ | 0.20 |
Threshold Price
(3)
|
8 | 2.1 | $ | 35.0 | 1.6 | $ | 33.7 | |||||||||||||||
|
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(1)
|
To initiate a draw down, the closing price of our common stock on the trading day immediately preceding the first trading day of the draw down period must be at least equal to the minimum price set forth above.
|
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(2)
|
If on any trading day, the daily volume-weighted average price of our common stock (VWAP) is less than the minimum VWAP set forth above, no shares are purchased on that trading day and the aggregate amount that we originally designated for the overall draw down is reduced for each such day by 1/8
th
under the June 2010 and May 2008 CEFFs, and 1/6
th
under December 2008 CEFF, respectively. Unless we and Kingsbridge agree otherwise, a minimum of three trading days must elapse between the expiration of any draw-down period and the beginning of the next draw-down period.
|
|
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(3)
|
Threshold Price is either (i) 90% of the closing market price of our common stock on the trading day immediately preceding the first trading day of the draw down period or (ii) a price that we specify at our sole discretion, but not less than $0.20 per share.
|
|
|
·
|
May 2008 CEFF – the lesser of 3.0% of the closing market value of the outstanding shares of our common stock at the time of the draw down or $10 million
|
|
|
·
|
December 2008 CEFF – the lesser of 1.5% of the closing market value of the outstanding shares of our common stock at the time of the draw down or $3 million
|
|
|
·
|
2010 CEFF – Kingsbridge is obligated to purchase (“Obligated Amount”) in a draw down the amount determined under one of two methodologies that we choose at our discretion, subject to a limit of the lesser of 3.5% of the closing market value of the outstanding shares of our common stock at the time of the draw down or $15 million. The methodologies for determining the Obligated Amount are:
|
|
Methodology 1 – based on Threshold Price
|
Obligated
Amount
|
|||
|
Threshold Price is:
|
||||
|
Greater than $90.00 per share
|
$ | 7,250,000 | ||
|
Greater than or equal to $75.00 but less than $90.00 per share
|
$ | 6,500,000 | ||
|
Greater than or equal to $60.00 but less than $75.00 per share
|
$ | 4,250,000 | ||
|
Greater than or equal to $45.00 but less than $60.00 per share
|
$ | 3,500,000 | ||
|
Greater than or equal to $30.00 but less than $45.00 per share
|
$ | 2,750,000 | ||
|
Greater than or equal to $18.75 but less than $30.00 per share
|
$ | 2,000,000 | ||
|
Greater than or equal to $11.25 but less than $18.75 per share
|
$ | 1,350,000 | ||
|
Greater than or equal to $7.50 but less than $11.25 per share
|
$ | 1,000,000 | ||
|
Greater than or equal to $3.75 but less than $7.50 per share
|
$ | 500,000 | ||
|
Greater than or equal to $3.00 but less than $3.75 per share
|
$ | 350,000 | ||
|
Daily VWAP
|
% of
VWAP
|
Applicable Discount
|
||||||
|
May 2008 CEFF
|
||||||||
|
Greater than $7.25 per share
|
94 | % | 6 | % | ||||
|
Less than or equal to $7.25 but greater than $3.85 per share
|
92 | % | 8 | % | ||||
|
Less than or equal to $3.85 but greater than $1.75 per share
|
90 | % | 10 | % | ||||
|
Less than or equal to $1.75 but greater than or equal to $1.15 per share
|
88 | % | 12 | % | ||||
|
December 2008 CEFF
|
||||||||
|
Greater than $7.25 per share
|
94 | % | 6 | % | ||||
|
Less than or equal to $7.25 but greater than $3.85 per share
|
92 | % | 8 | % | ||||
|
Less than or equal to $3.85 but greater than $1.75 per share
|
90 | % | 10 | % | ||||
|
Less than or equal to $1.75 but greater than or equal to $1.10 per share
|
88 | % | 12 | % | ||||
|
Less than or equal to $1.10 but greater than or equal to $.60
|
85 | % | 15 | % | ||||
|
Daily VWAP
|
% of
VWAP
|
Applicable Discount
|
||||||
|
2010 CEFF
|
||||||||
|
Greater than $6.00 per share
|
95.62 | % | 4.38 | % | ||||
|
Greater than or equal to $5.00 but less than $6.00 per share
|
95.25 | % | 4.75 | % | ||||
|
Greater than or equal to $4.00 but less than $5.00 per share
|
94.75 | % | 5.25 | % | ||||
|
Greater than or equal to $3.00 but less than $4.00 per share
|
94.25 | % | 5.75 | % | ||||
|
Greater than or equal to $2.00 but less than $3.00 per share
|
94.00 | % | 6.00 | % | ||||
|
Greater than or equal to $1.25 but less than $2.00 per share
|
92.50 | % | 7.50 | % | ||||
|
Greater than or equal to $0.75 but less than $1.25 per share
|
91.50 | % | 8.50 | % | ||||
|
Greater than or equal to $0.50 but less than $0.75 per share
|
90.50 | % | 9.50 | % | ||||
|
Greater than or equal to $0.25 but less than $0.50 per share
|
85.00 | % | 15.00 | % | ||||
|
Greater than or equal to $0.20 but less than $0.25 per share
|
82.50 | % | 17.50 | % | ||||
|
|
·
|
On May 22, 2008, a warrant to purchase up to 55,000 shares of our common stock at an exercise price of $37.59 per share, expiring in November 2013.
|
|
|
·
|
On December 22, 2008, a warrant to purchase up to 45,000 shares of our common stock at an exercise price of $22.70 per share, expiring in May 2014.
|
|
|
·
|
On June 11, 2010, a warrant to purchase up to 83,333 shares of our common stock at an exercise price of $6.69 per share. The warrant expires in December 2015 and is exercisable, in whole or in part, for cash, except in limited circumstances.
|
|
|
·
|
On April 17, 2006, a warrant to purchase up to 32,667 shares of our common stock at an exercise price equal to $84.29 per share, expiring in October 2011.
|
|
|
·
|
In 2004, a warrant to purchase up to 25,000 shares of our common stock at an exercise price equal to $181.12 per share, which expired unexercised in January 2010.
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(in thousands, except per share data)
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Discounted
Average Price
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|||||||||||
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Completion Date
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Shares Issued
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Gross Proceeds
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Per Share
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|||||||||
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July 11, 2008
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74 | $ | 1,563 | $ | 21.21 | |||||||
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July 31, 2008
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66 | 1,500 | 22.69 | |||||||||
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October 17, 2008
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61 | 1,313 | 21.55 | |||||||||
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November 20, 2008
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15 | 250 | 16.95 | |||||||||
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January 2, 2009
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32 | 500 | 15.66 | |||||||||
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January 16, 2009
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28 | 438 | 15.68 | |||||||||
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February 18, 2009
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57 | 1,000 | 17.50 | |||||||||
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March 31, 2009
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68 | 1,094 | 16.17 | |||||||||
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October 13, 2009
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37 | 606 | 16.27 | |||||||||
| 438 | $ | 8,264 | ||||||||||
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(in thousands, except per share data)
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Discounted
Average Price
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|||||||||||
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Completion Date
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Shares Issued
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Gross Proceeds
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Per Share
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|||||||||
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April 8, 2009
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54 | $ | 1,000 | $ | 18.60 | |||||||
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May 7, 2009
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85 | 1,000 | 11.78 | |||||||||
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September 23, 2009
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120 | 1,583 | 13.24 | |||||||||
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October 13, 2009
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127 | 1,800 | 14.14 | |||||||||
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October 21, 2009
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140 | 1,900 | 13.57 | |||||||||
| 526 | $ | 7,283 | ||||||||||
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(in thousands, except per share data)
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Discounted
Average Price
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|||||||||||
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Completion Date
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Shares Issued
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Gross Proceeds
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Per Share
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October 4, 2010
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351 | $ | 973 | $ | 2.77 | |||||||
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November 4, 2010
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166 | 432 | 2.60 | |||||||||
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January 24, 2011
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314 | 991 | 3.16 | |||||||||
| 831 | $ | 2,396 | ||||||||||
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(in thousands, except price per share data)
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December 31,
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Exercise
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Expiration
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||||||||||
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2010
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2009
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Price
|
Date
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||||||||||
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PharmaBio – October 2010 Financing
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79 | - | $ | 4.10 |
10/13/2015
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||||||||
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Investor Warrants – June 2010 Financing
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1,190 | - | $ | 4.20 |
6/22/2015
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||||||||
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Investor Warrants – June 2010 Financing
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1,190 | - | $ | 6.00 |
3/22/2011
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Kingsbridge – 2010 CEFF
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83 | - | $ | 6.69 |
12/11/2015
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PharmaBio – April 2010 Financing
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135 | - | $ | 10.59 |
4/30/2015
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Investor Warrants – February 2010 Financing
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917 | - | $ | 12.75 |
2/23/2015
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Investor Warrants – May 2009 Financing
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467 | 467 | $ | 17.25 |
5/13/2014
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Kingsbridge – December 2008 CEFF
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45 | 45 | $ | 22.70 |
6/12/2014
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Kingsbridge – May 2008 CEFF
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55 | 55 | $ | 37.59 |
11/22/2013
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Private Placement – 2006
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154 | 154 | $ | 47.70 |
11/22/2011
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(in thousands, except price per share data)
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December 31,
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Exercise
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Expiration
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||||||||||
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2010
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2009
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Price
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Date
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||||||||||
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Quintiles - 2006 Loan Restructuring
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- | 100 | $ | 53.70 |
10/26/2013
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Class C Investor Warrants - 2006 CEFF
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33 | 33 | $ | 84.29 |
10/17/2011
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Quintiles - 2004 Partnership Restructuring
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- | 57 | $ | 107.85 |
11/3/2014
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Class B Investor Warrants - 2004 CEFF
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- | 25 | $ | 181.12 |
1/6/2010
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Class A Investor Warrants – 2003
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- | 54 | $ | 103.20 |
9/19/2010
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Total
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4,348 | 990 | |||||||||||
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(in thousands)
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As of December 31,
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|||||||
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2010
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2009
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|||||||
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2007 Plan
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||||||||
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Outstanding
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564 | 446 | ||||||
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Available for Future Grants
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3 | 121 | ||||||
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Total
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567 | 567 | ||||||
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1998 Plan
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||||||||
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Outstanding
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533 | 620 | ||||||
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Available for Future Grants
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– | – | ||||||
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Total
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533 | 620 | ||||||
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Total Outstanding
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1,097 | 1,066 | ||||||
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Total Available for Future Grants
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3 | 121 | ||||||
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Total
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1,100 | 1,187 | ||||||
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(in thousands)
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Potential future issuance
as of December 31,
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||||||||
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Expiration
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2010
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2009
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|||||||
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May 2008 CEFF
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June 18, 2011
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851 | 851 | ||||||
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December 2008 CEFF
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February 6, 2011
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475 | 475 | ||||||
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2010 CEFF
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June 11, 2013
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1,589 | - | ||||||
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(in thousands, except for weighted-average data)
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Price Per Share
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Shares
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Weighted-
Average
Exercise
Price
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Weighted-
Average
Remaining
Contractual
Term
(In Yrs)
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|||||||||
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Outstanding at December 31, 2008
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$ | 12.15 – $156.45 | 1,147 | $ | 55.73 | ||||||||
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Granted
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$ | 7.35 – $17.70 | 20 | 11.70 | |||||||||
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Exercised
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— | — | — | ||||||||||
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Forfeited or expired
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$ | 12.15 – $137.55 | (102 | ) | 39.47 | ||||||||
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Outstanding at December 31, 2009
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$ | 7.35- $156.45 | 1,065 | $ | 56.46 | ||||||||
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Granted
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$ | 2.55 - $5.85 | 20 | 3.19 | |||||||||
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Exercised
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— | — | – | ||||||||||
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Forfeited or expired
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$ | 5.40 - $137.55 | (142 | ) | 51.93 | ||||||||
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Outstanding at December 31, 2010
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$ | 2.55 – $156.45 | 943 | $ | 56.06 |
5.4
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Exercisable at December 31, 2010
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$ | 2.55 – $156.45 | 879 | $ | 58.79 |
5.2
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|||||||
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(shares in thousands)
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Option
Shares
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Weighted-
Average Grant-
Date Fair Value
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||||||
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Non-vested at December 31, 2009
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158 | $ | 16.65 | |||||
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Granted
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20 | 3.19 | ||||||
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Vested
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(91 | ) | 16.80 | |||||
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Forfeited
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(23 | ) | 16.86 | |||||
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Non-vested at December 31, 2010
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64 | $ | 10.05 | |||||
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(shares in thousands)
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Outstanding |
Vested and Exercisable
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||||||||||||||||
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Price per share
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Shares
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Weighted-
Average
Price
per Share
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Weighted-
Average
Remaining
Contractual
Life
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Shares
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Weighted-
Average
Price
per Share
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Weighted-
Average
Remaining
Contractual
Life
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||||||||||||
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$2.55 - $7.35
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23 | $ | 3.89 |
8.94 Years
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4 | $ | 7.35 |
8.67 Years
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||||||||||
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$7.36 – $18.15
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68 | $ | 17.25 |
7.93 Years
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53 | $ | 17.02 |
7.92 Years
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$18.16 – $29.85
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171 | $ | 27.61 |
6.44 Years
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143 | $ | 27.46 |
6.44 Years
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$29.86 – $49.05
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432 | $ | 39.59 |
5.42 Years
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430 | $ | 39.62 |
5.42 Years
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$49.06 – $156.45
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249 | $ | 119.56 |
3.68 Years
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249 | $ | 119.56 |
3.68 Years
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||||||||||
| 943 | 879 | |||||||||||||||||
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December 31,
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||||||||
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(in thousands)
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2010
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2009
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Research and development
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$ | 479 | $ | 649 | ||||
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General and administrative
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931 | 2,035 | ||||||
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Total
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$ | 1,410 | $ | 2,684 | ||||
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December 31,
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||||||||
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2010
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2009
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Weighted average expected volatility
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112 | % | 99 | % | ||||
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Weighted average expected term
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4.9 years
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4.7 years
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||||||
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Weighted average risk-free interest rate
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1.47 | % | 1.7 | % | ||||
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Expected dividends
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– | – | ||||||
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(in thousands)
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Severance
and Benefits
Related
|
Termination
of
Commercial
Programs
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Total
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|||||||||
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2009 Charge
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$ | 554 | $ | 74 | $ | 628 | ||||||
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2009 Payments / Adjustments
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(554 | ) | (45 | ) | (599 | ) | ||||||
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Liability as of December 31, 2009
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$ | – | $ | 29 | $ | 29 | ||||||
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Payments / Adjustments
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– | (29 | ) | (29 | ) | |||||||
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Liability as of December 31, 2010
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$ | – | $ | – | $ | – | ||||||
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(in thousands)
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2011
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2012
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2013
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2014
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2015
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There-
after
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Total
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|||||||||||||||||||||
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Equipment loan obligations
(1)
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152 | 85 | 85 | 85 | 70 | - | $ | 477 | ||||||||||||||||||||
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Operating lease obligations
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1,146 | 1,166 | 320 | 150 | – | – | 2,782 | |||||||||||||||||||||
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Total
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$ | 1,298 | $ | 1,251 | $ | 405 | $ | 235 | $ | 70 | $ | – | $ | 3,259 | ||||||||||||||
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(in thousands)
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December 31,
|
|||||||
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2010
|
2009
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|||||||
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Income tax benefit, statutory rates
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$ | 6,519 | $ | 10,156 | ||||
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State taxes on income, net of Federal benefit
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1,206 | 423 | ||||||
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Research and development tax credit
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656 | 756 | ||||||
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Employee Related
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(2,562 | ) | (1,471 | ) | ||||
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Other
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18 | 107 | ||||||
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Income tax benefit
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5,837 | 9,971 | ||||||
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Valuation allowance
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(5,837 | ) | (9,971 | ) | ||||
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Income tax benefit
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$ | – | $ | – | ||||
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(in thousands)
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December 31,
|
|||||||
|
2010
|
2009
|
|||||||
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Long-term deferred tax assets:
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||||||||
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Net operating loss carryforwards
(Federal and state)
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$ | 132,994 | $ | 126,291 | ||||
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Research and development tax credits
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8,447 | 7,893 | ||||||
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Compensation expense on stock
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5,126 | 4,730 | ||||||
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Charitable contribution carryforward
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7 | 6 | ||||||
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Other accrued
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607 | 1,635 | ||||||
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Depreciation
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2,493 | 2,341 | ||||||
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Capitalized research and development
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1,932 | 2,069 | ||||||
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Total long-term deferred tax assets
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151,606 | 144,965 | ||||||
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Long-term deferred tax liabilities
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– | – | ||||||
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Net deferred tax assets
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151,606 | 144,965 | ||||||
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Less: valuation allowance
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(151,606 | ) | (144,965 | ) | ||||
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Deferred tax assets, net of valuation allowance
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$ | – | $ | – | ||||
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2010 Quarters Ended:
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||||||||||||||||||||
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(in thousands, except per share data)
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Mar. 31
|
June 30
|
Sept. 30
|
Dec. 31
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Total Year
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|||||||||||||||
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Revenues
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$ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||
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Expenses:
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||||||||||||||||||||
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Research and development
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4,133 | 4,363 | 4,727 | 3,913 | 17,136 | |||||||||||||||
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General and administrative
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2,932 | 1,865 | 1,476 | 2,119 | 8,392 | |||||||||||||||
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Total expenses
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7,065 | 6,228 | 6,203 | 6,032 | 25,528 | |||||||||||||||
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Operating loss
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(7,065 | ) | (6,228 | ) | (6,203 | ) | (6,032 | ) | (25,528 | ) | ||||||||||
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Change in fair value of common stock warrant liability
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1,230 | 5,519 | (365 | ) | 38 | 6,422 | ||||||||||||||
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Other expense, net
|
(223 | ) | (84 | ) | (16 | ) | 254 | (69 | ) | |||||||||||
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Net loss
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$ | (6,058 | ) | $ | (793 | ) | $ | (6,584 | ) | $ | (5,740 | ) | $ | (19,175 | ) | |||||
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Net loss per common share - basic and diluted
|
$ | ($0.66 | ) | $ | (0.07 | ) | $ | (0.51 | ) | $ | (0.42 | ) | $ | (1.65 | ) | |||||
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Weighted average number of common shares outstanding
|
9,180 | 10,695 | 12,945 | 13,525 | 11,602 | |||||||||||||||
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2009 Quarters Ended:
|
||||||||||||||||||||
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(in thousands, except per share data)
|
Mar. 31
|
June 30
|
Sept. 30
|
Dec. 31
|
Total Year
|
|||||||||||||||
|
Revenues
|
$ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||
|
Expenses:
|
||||||||||||||||||||
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Research and development
|
5,607 | 5,052 | 4,530 | 3,888 | 19,077 | |||||||||||||||
|
General and administrative
|
3,096 | 2,592 | 2,417 | 2,015 | 10,120 | |||||||||||||||
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Total expenses
|
8,703 | 7,644 | 6,947 | 5,903 | 29,197 | |||||||||||||||
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Operating loss
|
(8,703 | ) | (7,644 | ) | (6,947 | ) | (5,903 | ) | (29,197 | ) | ||||||||||
|
Change in fair value of common stock warrant liability
|
- | (1,323 | ) | (1,662 | ) | 3,354 | 369 | |||||||||||||
|
Other expense, net
|
(297 | ) | (264 | ) | (244 | ) | (238 | ) | (1,043 | ) | ||||||||||
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Net loss
|
$ | (9,000 | ) | $ | (9,231 | ) | $ | (8,853 | ) | $ | (2,787 | ) | $ | (29,871 | ) | |||||
|
Net loss per common share - basic and diluted
|
$ | (1.32 | ) | $ | (1.23 | ) | $ | (1.11 | ) | $ | (0.33 | ) | $ | (3.89 | ) | |||||
|
Weighted average number of common shares outstanding
|
6,806 | 7,514 | 8,000 | 8,376 | 7,680 | |||||||||||||||
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|