As filed with the Securities and Exchange
Commission on July 19, 2016
Registration No. 333-208918
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
GENSPERA, INC.
(Exact name of registrant as specified in its
charter)
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Delaware
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2834
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20-0438951
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(State or jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer Identification No.)
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2511 N Loop 1604 W, Suite 204
San Antonio, TX 78258
(210) 479-8112
FAX (210) 479-8113
(Address, including zip code, and telephone
number,
including area code, of registrant’s principal
executive offices)
Agent for Service:
National Corporate Research
800 Brazos St., Suite 400
Austin, TX 78701
800-345-4647
(Name, address, including zip code, and telephone
number,
including area code, of agent for service)
Copy to:
Raul Silvestre, Esq.
Silvestre Law Group, P.C.
31200 Via Colinas Suite 200
Westlake Village, CA 91362
Telephone: (818) 597-7552
Facsimile: (805) 553-9783
Approximate date of commencement of proposed
sale to the public:
From time to time after this registration statement becomes effective.
If any of the securities being registered on
this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following
box.
x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if smaller reporting company)
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Smaller reporting company
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x
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION
STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT
WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.
EXPLANATORY NOTE
Pursuant to Rule 429 under the Securities Act of 1933,
the prospectus included in this registration statement is a combined prospectus relating to:
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(i)
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the sale of 10,072,736 common shares to holders of our outstanding warrants that were previously issued pursuant to registration
statement no. 333-194687 filed on form S-1 and declared effective on January 27, 2015;
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(ii)
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the resale of 8,473,078 common shares previously registered on registration statement no. 333-206242, filed by the registrant
on Form S-1 and declared effective on August 19, 2015; and
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(iii)
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the resale of 20,485,362 common shares previously registered on registration statement no. 333-208918, filed by the registrant
on Form S-1 and declared effective on January 29, 2016.
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This registration statement constitutes a post-effective
amendments to the above referenced registration statements (“Registration Statements”), and such post-effective amendment
shall hereafter become effective concurrently with the effectiveness of this registration statement and in accordance with Section
8(c) of the Securities Act of 1933.
This Post-Effective Amendment is being filed
to act as a combined prospectus and to update and supplement the information contained in the Registration Statements, to include
the information contained in the Company’s: (i) Annual Report on Form 10-K for the fiscal year ended December 31, 2015 which
was filed with the SEC on March 30, 2016, and (ii) Quarterly Report on Form 10-Q for the three months ended March 31, 2016 which
was filed with the SEC on May 13, 2016.
The information included in this filing updates
and supplements this Registration Statements and the prospectus contained therein.
No additional securities are being registered
under this Post-Effective Amendment No. 1. All applicable registration fees were paid at the time of the original filing of the
Registration Statements.
The information in this preliminary
prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer
to buy, these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JULY
19, 2016
PRELIMINARY PROSPECTUS
10,072,736 shares of Common Stock issuable
upon the exercise of outstanding warrants
And
28,958,440 shares of Common Stock being sold
by Selling Shareholders
This prospectus covers the sale and issuance
of up to 10,072,736 shares of our common stock (“Shares”) to holder of our outstanding warrants (“Investor Warrants”)
that were originally issued on June 3, 2014 in a registered offering of our securities (“Original Offering”). Additionally,
the prospectus relates to the resale of 28,958,440 shares of our common stock, by the selling stockholder identified in the selling
stockholder tables beginning on page 18 of this prospectus (“Selling Stockholders”). To the extent the Investor Warrants
are exercised for cash, we will receive cash proceeds of up to approximately $7,987,817.
With respect to the Investor Warrants, we will
sell the Shares to the holders at a prices between $0.70 and $1.15 per share as more fully described in the “Description
of Securities” section. The prices at which the Selling Stockholders may sell their shares will be determined by the prevailing
market price for the shares of in privately negotiated transaction or in any other manner described in the “Plan of Distribution”
section of this prospectus.
Our common stock is listed on The OTCQB Tier
of the Over-The-Counter Markets Group under the symbol “GNSZ.” On July 14, 2016, the last reported sale price of our
common stock OTCQB was $0.125 per share.
Our principal executive offices are located
at 2511 N.
Loop 1604 W, Suite 204, San Antonio, Texas, 78258, telephone 210-479-8112.
Investing in our common stock is highly
speculative and involves a high degree of risk. You should consider carefully the risks and uncertainties in the section entitled
“Risk Factors” beginning on page 5 of this prospectus before investing in our common stock.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is [*],
TABLE OF CONTENTS
Please read this prospectus carefully.
It describes our business, our financial condition and our results of operations. We have prepared this prospectus so that you
will have the information necessary to make an informed investment decision.
You may rely only on the information
contained in this prospectus. We have not authorized anyone to provide information or to make representations not contained in
this prospectus. This prospectus is neither an offer to sell, nor a solicitation of an offer to buy, these securities in any jurisdiction
where an offer or solicitation would be unlawful. Neither the delivery of this prospectus, nor any sale made under this prospectus,
means that the information contained in this prospectus is correct as of any time after the date of this prospectus. This prospectus
may be used only where it is legal to offer and sell these securities.
USE OF MARKET AND INDUSTRY DATA
This prospectus includes market
and industry data that has been obtained from third party sources, including industry publications, as well as industry data prepared
by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s
estimates and assumptions relating to such industries based on that knowledge). Management’s knowledge of such industries
has been developed through its experience and participation in these industries. While our management believes the third party
sources referred to in this prospectus are reliable, neither we nor our management have independently verified any of the data
from such sources referred to in this prospectus or ascertained the underlying economic assumptions relied upon by such sources.
Internally prepared and third party market forecasts, in particular, are estimates only and may be inaccurate, especially over
long periods of time. In addition, references in this prospectus to any publications, reports, surveys or articles prepared by
third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article.
The information in any such publication, report, survey or article is not incorporated by reference in this prospectus.
TRADEMARKS AND TRADE NAMES
We own or have rights to various
trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also
contain trademarks, service marks and trade names of GenSpera, Inc. and third parties, which are the property of their respective
owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not
intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience,
the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but
such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law,
our rights or the right of the applicable licensor to these trademarks, service marks and trade names.
RISK FACTORS
Investing in our common stock involves a
high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus,
including our financial statements and related notes, before purchasing our common stock. The risks described below are not the
only ones we face. Additional risks not presently known to us or that we currently consider immaterial may also adversely affect
our business. We have attempted to identify below the major factors that could cause differences between actual and planned or
expected results, but we cannot assure you that we have identified all such factors.
If any of the following events were to occur,
our business, financial condition and results of operations could be materially and adversely affected. In these circumstances,
the market price of our common stock could decline, and you could lose your entire investment.
Risks Related to our Financial Position
and Need to Raise Additional Capital
We may not be able to continue as a going
concern if we do not obtain additional financing by September 2016.
Our cash and cash equivalents balance at March
31, 2016 was $1.6 million. Based on our current expected level of operating expenditures, we expect to be able to fund our operations
until September 2016, at which time we will need additional capital. Our ability to continue as a going concern is wholly dependent
upon obtaining sufficient financing to fund our operations. We have no committed sources of additional capital and our access to
capital funding is always uncertain. Accordingly, despite our ability to secure capital in the past, there is no assurance that
additional equity or debt financing will be available to us when needed. In the event that we are not able to secure financing,
we may be forced to curtail operations, delay or stop ongoing clinical trials, cease operations altogether or file for bankruptcy.
Our auditors have expressed substantial
doubt about our ability to continue as a going concern.
Our auditors’ report on our December
31, 2015 financial statements expressed an opinion that our capital resources as of the date of their audit report were not sufficient
to sustain operations or complete our planned activities for the upcoming year unless we raised additional funds. Accordingly,
notwithstanding our recent financings, our current cash level raises substantial doubt about our ability to continue as a going
concern past September 2016. If we do not obtain additional funds by such time, we may no longer be able to continue as a going
concern and will cease operation which means that our shareholders will lose their entire investment.
Risks Relating to Our Stage of Development
and Business
If we are unable to successfully retain
and integrate a new management team, our business could be harmed.
On March 16, 2016, we received the resignation
of our former President, Chief Executive Officer, Chief Financial Officer and founder. Upon receipt of his resignation, we appointed
Russell Richerson, our chief operating officer, as interim principal executive officer and principal accounting officer. We also
commenced a search for a new chief executive officer as well as additional senior management personnel. Our success depends largely
on the development and execution of our business strategy by our senior management team. The recent transitions in our executive
team may be disruptive to our business, and if we are unable to manage orderly transitions, our business may be adversely affected.
Additionally, since our management team consists of a limited number of individuals, the loss of these members of our senior management
team or key personnel would likely harm our ability to implement our business strategy and respond to the rapidly changing market
conditions in which we operate. There may be a limited number of persons with the requisite skills to serve in these positions,
and we cannot assure you that we would be able to identify or employ such qualified personnel on acceptable terms, if at all. We
cannot assure you that management will succeed in working together as a team. In the event we are unsuccessful, our business and
prospects could be harmed.
We are an early-stage company, have no
product revenues, are not profitable and may never be profitable.
From inception through March 31, 2016, we have
raised approximately $34.9 million through the sale of our securities and exercise of outstanding warrants. During this same period,
we have recorded an accumulated deficit of approximately $45.8 million. Our net losses for the two most recent fiscal years ended
December 31, 2015 and 2014 were $5.9 million and $7.0 million, respectively. None of our products in development have received
approval from the FDA, or other regulatory authorities in order to commence sales; we have no sales and have never generated revenues
nor do we expect to for the foreseeable future. Currently, our only product candidate in clinical development is mipsagargin, which:
(i) has completed a single arm Phase 2 clinical trial in liver cancer, (ii) is being tested in a single arm Phase2 clinical trial
in glioblastoma patients, and (iii) we have commenced enrollment in a Phase 2 pilot study in prostate cancer. We expect to incur
significant operating losses for the foreseeable future as we continue the research, pre-clinical and clinical development of our
product candidates. Accordingly, we will need additional capital to fund our continuing operations. Since we do not generate any
revenue, the most likely sources of such additional capital includes the sale of our securities, a strategic licensing collaboration
transaction or joint venture involving the rights to one or more of our product candidates, or from grants. To the extent that
we raise additional capital by issuing equity securities, our stockholders are likely to experience dilution with regard to their
percentage ownership of the company, which may be significant. If we raise additional funds through collaborations or licensing
arrangements, we may be required to relinquish some or all the rights to our technologies, product candidates, or grant licenses
on terms that are not favorable to us. If we raise additional capital by incurring debt, we could incur significant interest expense
and become subject to covenants that could affect the manner in which we conduct our business, including securing such debt obligations
with our assets.
Our product candidates are at various stages
of early development and significant financial resources are required to develop commercially viable products and obtain regulatory
approval to market and sell such products. To date, we have dedicated substantially all of our efforts and financial resources
to the development of mipsagargin and depend heavily on its success. We will need to devote significantly more research and development
efforts, financial resources and personnel to develop commercially viable products and obtain regulatory approvals. We may encounter
hurdles and unexpected issues as we proceed in the development of mipsagargin and our other product candidates. Although initial
data from our clinical trials appear promising, the outcome of the trials is uncertain and these trials or future trials may ultimately
be unsuccessful. If we fail to develop and successfully commercialize our product candidates, our business may be materially harmed
and could fail.
We have only one full-time employee,
a limited operating history, and may not be able to effectively operate our business.
Our limited staff and operating history means
that there is a high degree of uncertainty regarding our ability to:
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attract and build a management team;
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develop and commercialize our technologies and proposed products;
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obtain regulatory approval to commence the marketing of our products;
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identify, hire and retain needed personnel in order to implement our business plan, including pre-clinical
and clinical testing;
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achieve market acceptance or insurance reimbursement for any of our proposed products, if successfully
developed; or
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respond to competition.
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No assurances can be given as to exactly when,
if at all, we will be able to fully develop, and take the necessary steps to derive any revenues from our proposed product candidates.
Raising capital may be difficult as a
result of our history of losses and limited management and operating history in our current stage of development.
When making investment decisions, investors
typically look at a company’s earnings and historical performance in evaluating the risks and operations of the business
and the business’s future prospects. Our history of losses and relatively limited management and operating history in our
current stage of development makes such evaluation, as well as any estimation of our future performance, substantially more difficult.
As a result, investors may be unwilling to invest in us or on terms or conditions which are acceptable. If we are unable to secure
additional financing, we may need to materially scale back our business plan and/or operations or cease operations altogether.
Risks Related to Commercialization
The market for our proposed products
is rapidly changing and competitive.
The pharmaceutical and biotechnology industries
are subject to rapid and substantial technological change and innovation. Developments by others may render our proposed products
noncompetitive or obsolete, or we may be unable to keep pace with technological developments and other market factors. Competition
from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the field is
intense and is expected to increase.
As a pre-revenue company, our resources are
limited and we may experience challenges inherent in the early development of novel therapeutics. Competitors have developed or
are in the process of developing technologies that are, or in the future may be, the basis for competition. Some of these technologies
may have an entirely different approach or means of accomplishing similar therapeutic efforts compared to our proposed products.
Our competitors may develop therapies that are safer, more effective and less costly than our proposed products and therefore,
present a serious competitive threat to us.
The acceptance of therapies that are alternatives
to ours may limit market acceptance of our proposed products, even if commercialized. Many of our targeted diseases and conditions
can also be treated by other medications and treatments. These treatments may be widely accepted in medical communities and have
a longer history of use. The established use of other competing therapies may limit the potential for our proposed products, even
if commercialized.
Our proposed products may not be accepted
by the healthcare community.
Our proposed products, if approved for marketing,
may not achieve market acceptance by the healthcare community since hospitals, physicians, patients or the medical community in
general may decide not to utilize them. We are attempting to develop products that are likely to be first approved for marketing
as a treatment for late stage cancer where there is no truly effective standard of care. If approved for use in late stage cancer,
our proposed products might then be evaluated in earlier stages where they could represent a substantial departure from established
treatment methods and would most likely compete with a number of more conventional drugs and therapies which are manufactured and
marketed by major pharmaceutical companies. It is too early in the development cycle of our proposed products for us to predict
our major competitors. The degree of market acceptance of our products, if developed, will depend on a number of factors, including
but not limited to:
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our ability to demonstrate the clinical efficacy and safety of our proposed products to the medical
community;
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our ability to create products that are superior to alternative products;
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our ability to establish in the medical community the potential advantage of our treatments over
alternative treatment methods; and
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the reimbursement policies of government and third-party payors.
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If the healthcare community does not accept
our products, our business could be materially harmed.
Our potential competitors in the biotechnology
and pharmaceutical industries have significantly greater resources than we have.
We compete against numerous companies, many
of which have substantially greater resources than we have. Several such competitors have research programs and/or efforts to treat
the same diseases we target. Companies such as Merck & Co., Inc., Ipsen, Johnson & Johnson, and Sanofi S.A., as well as
others, have substantially greater financial, research, manufacturing and marketing resources than we do. As a result, such competitors
may find it easier to compete in our industry and bring competing products to market.
Risks Related to the Development and Manufacturing of Our Product
Candidates
We intend to rely exclusively upon third-party
FDA-regulated manufacturers and suppliers for our proposed products.
We currently have no internal manufacturing
capability, and intend to rely exclusively on FDA-approved licensees, strategic partners or third party contract manufacturers
or suppliers for the foreseeable future. Because manufacturing facilities are subject to regulatory oversight and inspection, the
failure of any of our third-party FDA regulated manufactures or suppliers to comply with regulatory requirements could result in
material manufacturing delays and product shortages, which could delay or otherwise negatively impact our clinical trials and product
development plans. Should we be forced to manufacture our proposed products, we cannot give any assurance that we would be able
to develop internal manufacturing capabilities or secure third party suppliers for raw materials. In the event we seek third party
suppliers or alternative manufacturers, they may require us to purchase a minimum amount of materials or could require other unfavorable
terms. Any such event would materially impact our business prospects and could delay the development of our proposed products.
Moreover, we cannot give any assurance that the contract manufacturers or suppliers that we select will be able to supply our products
in a timely or cost effective manner or in accordance with applicable regulatory requirements or our own specifications.
We may not be able to establish or maintain
the third-party relationships that are necessary to develop or potentially commercialize our product candidates.
Our business plan relies heavily on third party
collaborators, partners, licensees, clinical research organizations, clinical investigators, vendors or other third parties to
support our research and development efforts and to conduct clinical trials for our product candidates. We cannot guarantee that
we will be able to successfully negotiate agreements for, or maintain relationships with, these third parties on a commercially
reasonable basis, if at all. Additionally, to commercialize our proposed products, we intend to rely on third party licensees or
the outright sale of our proposed products to pharmaceutical partner(s). If we fail to establish or maintain such third-party relationships
as anticipated, we could experience delays in the development or commercialization of our proposed products.
We are dependent upon third parties to
develop our product candidates, and such parties are, to some extent, outside of our control.
We depend upon independent contract research
organizations, investigators and collaborators, such as universities and medical institutions, to conduct our pre-clinical and
clinical trials. These individuals and/or entities are not our employees and we cannot control the amount or timing of resources
that they devote to our programs. These third parties may not assign as great a priority to our programs or pursue them as diligently
as we would if we were undertaking such programs ourselves. If these third parties fail to devote sufficient time and resources
to our programs, or if their performance is substandard, the development of our drug candidates and corresponding FDA approval
could be delayed or fail entirely.
Our business is dependent upon securing
and importing sufficient quantities of seeds from the plant,
Thapsia garganica
, which grows in very specific locations outside
of the United States.
The therapeutic component of our proposed products,
including mipsagargin, is referred to as 12ADT. 12ADT is derived from the seeds of the
Thapsia garganica
plant, which grows
along the coastal regions of the Mediterranean Sea. We currently secure the seeds from Thapsibiza, SL, a third-party supplier.
There can be no assurances that
Thapsia garganica
will continue to grow in sufficient quantities to produce a commercial
supply or that the countries from which we can secure
Thapsia garganica
will continue to allow the collect and/or export
of such seeds. The process of importing
Thapsia garganica
seeds is subject to U.S. import and export laws and controls.
Our supply agreement with Thapsibiza, SL (our sole supplier) expires on April 6, 2017 or April 6, 2022 if extended. In the event
we are no longer able to obtain these seeds in the future, we may not be able to produce our proposed drug and our business will
be adversely affected.
We may be required to expend significant
capital to locate, secure and finance land for cultivation and harvesting of
Thapsia garganica.
We believe that we can satisfy our needs for
the clinical development of mipsagargin, through completion of Phase 3 clinical studies and early commercialization from
Thapsia
garganica
that grows naturally in the wild. In the event mipsagargin is approved for commercial marketing and is widely adopted
by the medical community, our current supply of
Thapsia garganica
may not be sufficient. In order to secure sufficient quantities
of
Thapsia garganica
, we would need to secure adequate acreage of land to cultivate and grow
Thapsia garganica
.
We have not yet fully assessed the amount of land or other costs that would be associated with a full-scale farming operation.
There can be no assurances that we will be able to secure sufficient acres of land, or the capital to purchase or lease such land,
to grow sufficient quantities of
Thapsia garganica
to manufacture mipsagargin on a commercial scale. Our inability to secure
adequate seeds could adversely impact our business.
The synthesis of our therapeutic
compounds must be conducted in special facilities, which limits the locations where it may be manufactured.
We are required to manufacture our
therapeutic compounds that are to be used in our clinical trials in FDA approved facilities. There are a limited number
of manufacturing facilities qualified to handle and manufacture toxic therapeutic agents and compounds. This limits the
number of potential manufacturing sites for our therapeutic compounds derived from
Thapsia garganica
. No assurances
can be provided that these facilities will be available for the manufacture of our therapeutic compounds under our time
schedules or within the parameters of our manufacturing budget. In the event facilities are not available for the
manufacturing of our therapeutic compounds, we may not be able to complete our clinical trials and our business and future
prospects would be adversely affected.
Our therapeutic compounds may not be
able to be manufactured profitably on a large enough scale to support commercialization.
To date, our therapeutics compounds have only
been manufactured at a scale which is adequate to supply our research activities and early-stage clinical trials. There can be
no assurance that the procedures currently used to manufacture our therapeutic compounds will work at a scale which is adequate
for commercial needs. In the event our therapeutic compounds cannot be manufactured in sufficient quantities for commercialization,
our future prospects could be significantly impacted and our financial prospects would be materially harmed.
Risks Relating to our Intellectual Property
Our competitive position is dependent
on our intellectual property and we may not be able to withstand challenges to our intellectual property rights.
We rely on our intellectual property, including
our issued and applied for U.S. and foreign patents as well as our licenses, as the foundation of our business. If our intellectual
property rights are challenged, no assurances can be given that our patents or licenses would survive claims alleging invalidity
or infringement on other patents and/or licenses. In addition, disputes may arise regarding inventorship of our intellectual property.
It is possible that our intellectual property may be infringing upon existing patents that we are not currently unaware of. As
the number of participants in the marketplace grows, the possibility of patent infringement claims against us increases. It is
difficult, if not impossible, to determine how such disputes would be resolved. Furthermore, because of the substantial amount
of discovery required in connection with patent litigation, there is a risk that some of our confidential information could be
required to be publicly disclosed. Any litigation claims against us may cause us to incur substantial costs and could place a significant
strain upon our financial resources, divert the attention of management or restrict our core business or result in the public disclosure
of confidential information.
We may incur substantial costs as a result
of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our
rights to, or use of, our technology.
Some or all of our patent applications may
not issue as patents, or the claims of any issued patents may not afford meaningful protection for our technologies or products.
In addition, patents issued to us or our licensors, if any, may be challenged and subsequently narrowed, invalidated or circumvented.
Patent litigation is widespread in the biotechnology industry and could harm our business. Litigation might be necessary to protect
our patent position or to determine the scope and validity of third-party proprietary rights. If we choose to go to court to stop
someone else from using the inventions claimed in our patents, that individual or company would have the right to ask the court
to rule that such patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and
we may not have the required resources to pursue such litigation or to protect our patent rights. In addition, there is a risk
that the court might decide that these patents are not valid and that we do not have the right to stop the other party from using
the inventions. There is also the risk that, even if the validity of these patents is upheld, the court could refuse to stop the
other party on the ground that such other party’s activities do not infringe on our rights contained in these patents.
Furthermore, a third party may claim that we
are using inventions covered by their patent rights and may go to court to stop us from engaging in our normal operations and activities,
including making or selling our product candidates. These lawsuits are costly and could materially increase our operating expenses
and divert the attention of managerial and technical personnel. There is a risk that a court would decide that we are infringing
the third party’s patents and would order us to stop the activities covered by the patents. In addition, there is a risk
that a court would order us to pay the other party damages for having violated the other party’s patents. The biotechnology
industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents
cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the
interpretation is not always uniform.
Because some patent applications in the United
States may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions
are typically not published until eighteen months after filing, and publications in the scientific literature often lag behind
actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our issued patents
or our pending applications or that we were the first to invent the technology. Our competitors may have filed, and may in the
future file, patent applications covering technology similar to ours. Any such patent application may have priority over our patent
applications and could further require us to obtain rights to issued patents covering such technologies.
If another party has filed a United States
patent application on inventions similar to ours, we may have to participate in an interference or other proceeding in the U.S.
Patent and Trademark Office, or the PTO, or a court to determine priority of invention in the United States. The costs of these
proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our United
States patent position with respect to such inventions.
Some of our competitors may be able to sustain
the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition,
any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our
ability to raise the capital necessary to continue our operations.
Obtaining and maintaining our patent
protection depends upon compliance with various procedural, documentary, fee payment and other requirements imposed by governmental
patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
The PTO and various foreign governmental patent
agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process.
There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in
partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the
market earlier than would otherwise have been the case.
We may not be able to adequately protect
our intellectual property.
We rely in part on trade secret protection
in order to protect our proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and
we cannot be certain that others do not develop the same or similar technologies on their own. Additionally research with regard
to our technologies has been performed in countries outside of the United States and we also anticipate conducting future clinical
trials outside the US. The laws in some of these countries may not provide protection for our trade secrets and intellectual property.
We have taken steps, including entering into confidentiality agreements with our employees, consultants, service providers, and
potential strategic partners to protect our trade secrets and unpatented know-how. These agreements generally require that the
other party keep confidential and not disclose to third parties all confidential information developed by the party or made known
to the party by us during the course of the party’s relationship with us. We also typically obtain agreements from these
parties which provide that inventions conceived by the party in the course of rendering services to us are our property. However,
these agreements may not be honored, including in foreign countries in which we conduct research, and may not effectively assign
intellectual property rights to us. Enforcing a claim that a party illegally obtained and is using our trade secrets or know-how
is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may
be less willing to protect trade secrets or know-how. The failure to obtain or maintain trade secret protection could adversely
affect our competitive position.
We may be subject to claims that our
employees or consultants have wrongfully used or disclosed alleged trade secrets of their former employers.
As is common in the biotechnology and pharmaceutical
industry, we employ and hire individuals and/or entities who were previously employed at other biotechnology or pharmaceutical
companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject
to claims that these individuals, entities or us have inadvertently or otherwise used or disclosed trade secrets or other proprietary
information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in
defending against these claims, litigation could result in substantial costs and be a distraction to management.
Risks Relating to Marketing Approval and
Government Regulations
Thapsia garganica
is highly toxic and
we may be liable for any contamination or injury we may cause or any environmental and safety law we may violate.
The therapeutic component of our proposed products,
including our lead product mipsagargin, is highly toxic. As a consequence, we are subject to numerous environmental and safety
laws and regulations, including those governing laboratory procedures and the handling of toxic materials. We may be required to
incur significant costs to comply with current or future environmental laws and regulations and may be adversely affected by the
cost of compliance with these laws and regulations. Although we believe that our safety procedures for using, handling, storing
and disposing of hazardous materials comply with the standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated. In the event of such an accident, state or federal authorities
could curtail our use of these materials and we could be liable for any civil damages that result, the cost of which could be substantial.
Further, any failure by us to control the use, disposal, removal or storage, or to adequately restrict the discharge, or assist
in the clean-up of toxic substances could subject us to significant liabilities, including joint and several liabilities under
certain statutes. Although we feel this risk may be minimized through our use of third parties, it is possible that the employees
of such contractors could suffer medical issues related to the handling of these toxic agents and subsequently seek compensation
from us via, for example, litigation. Any such liability could exceed our resources and could have a material adverse effect on
our business, financial condition and results of operations. No assurances can be given, despite our contractual relationship with
the third-party contractor, that we would not be the subject of litigation. Additional federal, state and local laws and regulations
affecting us may be adopted in the future. We may incur substantial costs to comply with these laws and regulations and substantial
fines or penalties if we violate any of these laws or regulations, which would adversely affect our business.
Data obtained from clinical trials are
susceptible to varying interpretations and may not be sufficient to support approval of our proposed products by the FDA.
The design of our clinical trials is based
on many assumptions about the expected effect of our product candidate and if those assumptions are incorrect, our clinical trials
may not produce statistically significant results. Preliminary results may not be confirmed on full analysis of the detailed results
of early clinical trials. Data already obtained, or in the future obtained, from pre-clinical studies and clinical trials do not
necessarily predict the results that may be obtained from later trials. Moreover, pre-clinical and clinical data are susceptible
to varying interpretations, which could delay, limit or prevent regulatory approval. A number of companies in the pharmaceutical
and biotechnology industries have suffered significant setbacks in advanced clinical trials, even after promising results in earlier
trials. The failure to adequately demonstrate the safety and effectiveness of a proposed formulation or product under development
could delay or prevent regulatory clearance of the potential drug. Our products may not prove to be safe and effective in clinical
trials and may not meet all regulatory requirements needed to receive regulatory approval. Although data from our trials appear
promising, the outcome of the trials is uncertain and these trials or future trials may ultimately be unsuccessful. Our clinical
trials may among other things, not demonstrate sufficient levels of safety and efficacy necessary to obtain the requisite regulatory
approvals for our drugs, and thus our proposed drugs may not be approved for marketing.
Our proposed products may not receive
FDA or other regulatory approvals.
The FDA and comparable government agencies
in foreign countries impose substantial regulations on the manufacture and marketing of pharmaceutical products through expensive,
lengthy and detailed laboratory, pre-clinical and clinical testing procedures, sampling activities and other costly and time-consuming
procedures. Satisfaction of these regulations typically takes several years or more and varies substantially based upon the type,
complexity and novelty of the proposed product. Our proposed products are subject to extensive regulation and/or acceptance by
numerous governmental authorities in the United States, including the FDA, and authorities in other countries. Most of our proposed
products will require governmental approval before they can be commercialized. Our failure to receive the regulatory approvals
in the United States or foreign countries would likely cause us to cease operations and go out of business.
Our proposed products may not have favorable
results in clinical trials or receive regulatory approval.
Encouraging results from pre-clinical studies
and our clinical trials to date should not be relied upon as evidence that our clinical trials will ultimately be successful or
our product approved for marketing. Even though the results of our Phase 2 studies to date seem promising, we will be required
to demonstrate through further clinical trials that our product candidates are safe and effective for use in a diverse population
before we can seek regulatory approvals for their commercial sale. There is typically an extremely high rate of attrition from
the failure of product candidates as they proceed through clinical trials. If any product candidate fails to demonstrate sufficient
safety and efficacy in any clinical trial, then we could experience potentially significant delays in, or be required to abandon,
development of that product candidate. Although initial data from our trials appear promising, the outcome of the trials is uncertain
and these trials or future trials may ultimately be unsuccessful.
We may be unable to complete all of our
planned Phase 2 clinical trials of mipsagargin if we do not have adequate enrollment or capital to finance the studies.
We are conducting a Phase 2 clinical trials
in patients with glioblastoma and prostate cancer, and we anticipate commencing additional clinical trials in the future. The initiation,
continuation and/or completion of these trials are dependent on a number of factors, including adequate capital to fund the clinical
trials and patient enrollment at the trial sites. At present, we have limited capital resources and require significant additional
capital to complete any ongoing or future clinical trials that we may initiate. Our failure to enroll sufficient patients or to
finance our clinical trials could materially harm our business.
If users of our proposed products are
unable to obtain adequate reimbursement from third-party payors, market acceptance of our proposed products may be limited and
we may not achieve revenues or profits.
The continuing efforts of governments, insurance
companies, health maintenance organizations and other payers of healthcare costs to contain or reduce costs of health care may
affect our future revenues and profitability as well as the future revenues and profitability of our potential customers, suppliers
and collaborative partners in addition to the availability of capital. In other words, our ability to commercialize our proposed
products depends in large part on the extent to which appropriate reimbursement levels for the cost of our proposed formulations,
products and related treatments are obtained by the health care providers of these products and treatments. At this time we cannot
predict the precise impact that recently adopted or future laws will have on these reimbursement levels.
We may be unable to comply with our reporting
and other requirements under federal securities laws.
The Sarbanes-Oxley Act of 2002, as well as
related new rules and regulations implemented by the United States Securities and Exchange Commission, or SEC, and the Public Company
Accounting Oversight Board, require changes in the corporate governance practices and financial reporting standards for public
companies. These laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating
to internal control over financial reporting, would be expected to materially increase the Company’s legal and financial
compliance costs and make some activities more time-consuming and more burdensome. Presently we qualify as a non-accelerated filer.
Accordingly, we are exempt from the requirements of Section 404(b) and our independent registered public accounting firm is not
required to audit the design and operating effectiveness of our internal controls and management’s assessment of the design
and the operating effectiveness of such internal controls. In the event we become an accelerated filer, we will be required to
expend substantial capital in connection with compliance.
We do not have effective internal controls
over our financial reporting.
Because of our limited resources, management
has concluded that our internal control over financial reporting may not be effective in providing reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
generally accepted accounting principles. Effective internal controls over financial reporting and disclosure controls and procedures
are necessary for us to provide reliable financial and other reports and effectively prevent fraud. If we cannot provide reliable
financial or SEC reports or prevent fraud, investors may lose confidence in our SEC reports, our operating results and the trading
price of our common stock could suffer materially and we may become subject to litigation.
Compliance with changing regulation of
corporate governance and public disclosure may result in additional expenses and will divert time and attention away from revenue
generating activities.
Changing laws, regulations and standards relating
to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created
uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and
public reporting. Our management team invests significant time and financial resources to comply with both existing and evolving
standards for public companies, which will lead to increased general and administrative expenses and a diversion of management
time and attention from developing our business to compliance activities which could have an adverse effect on our business.
Risks Relating to our Securities
Our common stock price may be particularly
volatile because of our stage of development and business.
The market prices for the securities of biotechnology
and pharmaceutical companies in general, and early-stage drug development companies in particular, such as ours, have been highly
volatile and may continue to be highly volatile in the future. The following may have a significant impact on the market price
of our common stock:
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the development status of our drug candidates, particularly the results of our clinical trials;
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market conditions or trends related to the biotechnology and pharmaceutical industries, or the
market in general;
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announcements of technological innovations, new commercial products, or other material events by
our competitors or us;
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disputes or other developments concerning our proprietary rights;
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changes in, or failure to meet, securities analysts’ or investors’ expectations of
our financial and developmental performance;
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additions or departures of key personnel;
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loss of any strategic relationship;
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discussions of our business, products, financial performance, prospects, or stock price by the
financial and scientific press and online investor communities such as chat rooms;
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industry developments, including, without limitation, changes in healthcare policies or practices
or third-party reimbursement policies;
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public concern as to, and legislative action with respect to, testing or other research areas of
biopharmaceutical and pharmaceutical companies, the pricing and availability of prescription drugs, or the safety of drugs;
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regulatory developments in the United States or foreign countries; and
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economic, political and other external factors.
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Broad market fluctuations may cause the market
price of our common stock to decline substantially. Additionally, fluctuations in the trading price or liquidity of our common
stock may materially and adversely affect, among other things, the interest of investors to purchase our common stock on the open
market and, generally, our ability to raise capital.
Our board of directors has broad discretion
to issue additional securities.
We are authorized under our certificate of
incorporation to issue up to 150,000,000 shares of common stock and 30,000,000 “blank check” shares of preferred stock.
Shares of our blank check preferred stock provide the board of directors’ with broad authority to determine voting, dividend,
conversion, and other rights. As of March 31, 2016, we have issued and outstanding 41,762,356 shares of common stock and 74,637,693
shares of common stock reserved for future grants under our equity compensation plans and for issuances upon the exercise or conversion
of currently outstanding shares of preferred stock, options, warrants and other convertible securities. As of March 31, 2016, we
have issued and outstanding 1,853 shares of Series A 0% convertible preferred stock. Accordingly, we are entitled to issue up to
33,599,951 additional shares of common stock, and 29,998,147 additional shares of “blank check” preferred stock. Our
board may generally issue those common and preferred shares, or convertible securities to purchase those shares, without further
approval by our shareholders. Any additional preferred shares we may issue could have such rights, preferences, privileges and
restrictions as may be designated from time-to-time by our board, including preferential dividend rights, voting rights, conversion
rights, redemption rights and liquidation provisions.
It is likely that we will issue a large amount
of additional securities to raise capital in order to further our business plans. It is also likely that we will issue a large
amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their
services, both in the form of stand-alone grants or under our various stock plans. Any issuances could be made at a price that
reflects a discount to, or a premium from, the then-current market price of our common stock. These issuances would dilute the
percentage ownership interest of our current shareholders, which would have the effect of reducing your influence on matters on
which our stockholders vote, and might dilute the net tangible book value per share of our common stock.
Future sales of our common stock could
cause our stock price to fall.
Transactions that result in a large amount
of newly issued shares become readily tradable, or other events that cause current stockholders to sell shares, could place downward
pressure on the trading price of our common stock. In addition, the lack of a robust trading market may require a stockholder who
desires to sell a large number of shares of common stock to sell the shares in increments over time to mitigate any adverse impact
of the sales on the market price of our stock. If our stockholders sell, or the market perceives that our stockholders intend to
sell for various reasons, substantial amounts of our common stock in the public market, including shares issued upon the exercise
of outstanding options or warrants, the market price of our common stock could fall. Sales of a substantial number of shares of
our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price
that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management’s
attention and harm our business.
As of March 31, 2016, we had 41,762,356 shares
of common stock and 1,853 shares of Series A 0% Convertible Preferred Stock issued and outstanding. Substantially all of the common
shares and common shares underlying the preferred shares are available for public sale, subject in some cases to volume and other
limitations or delivery of a prospectus. As of March 31, 2016, we had reserved for issuance (i) 16,060,417 shares of our common
stock issuable upon the conversion of 1,853 shares of Series A 0% Convertible Preferred Stock including an additional number of
common shares we are contractually obligated to reserve pursuant to our December 2015 Offering; (ii) 46,747,276 shares of our common
stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $0.71 per share, including an additional
number of common shares we are contractually obligated to reserve pursuant to our December 2015 Offering; and (iii) 9,058,195 shares
of our common stock issuable upon exercise of outstanding stock options under our equity compensation plans at a weighted average
exercise price of $1.54 per share. Subject to applicable vesting requirements and holding periods, upon conversion or exercise
of the outstanding convertible notes, warrants and options, the underlying shares may be resold into the public market. We cannot
predict if future issuances or sales of our common stock, or the availability of our common stock for sale, would harm the market
price of our common stock or our ability to raise capital.
You will experience immediate and substantial
dilution in the net tangible book value per share of our common stock upon exercise of the warrants.
The exercise price of the warrants are substantially
higher than the net tangible book value per share of our common stock outstanding prior to this offering. Therefore, if you exercise
the warrants to purchase our common stock, you will experience immediate dilution.
Holders of warrants will have no rights as common stockholders
until such holders exercise their warrants and acquire our common stock.
Until holders of warrants acquire shares of
our common stock upon exercise of the warrants, holders of warrants will have no rights with respect to the shares of our common
stock underlying such warrants. Upon exercise of the warrants, the holders will be entitled to exercise the rights of a common
stockholder only as to matters for which the record date occurs after the exercise date.
The market for our common stock has been
illiquid and our investors may be unable to sell their shares as a result.
Our common stock trades with limited volume
on the OTCQB tier of the OTC Markets Group Inc. Accordingly, although a limited public market for our common stock exists, it is
still relatively illiquid compared to that of a seasoned issuer. Any prospective investor in our securities should consider the
limited market of our common stock when making an investment decision. No assurances can be given that the trading volume of our
common stock will increase or that a liquid public market for our securities will ever materialize.
We have not paid cash dividends in the
past and do not expect to pay cash dividends in the foreseeable future.
We have never paid cash dividends on our common
stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. If we do not pay dividends, our
common stock may be less valuable because a return on your investment will only occur if the market price of our common stock appreciates.
Provisions of Delaware law and executive
employment agreements may prevent or delay a change of control, which could depress the trading price of our common stock.
We are subject to the Delaware anti-takeover
laws regulating corporate takeovers. These anti-takeover laws prevent Delaware corporations from engaging in a merger or sale of
more than 10% of its assets with any stockholder, including all affiliates and associates of the stockholder, who owns 15% or more
of the corporation’s outstanding voting stock, for three years following the date that the stockholder acquired 15% or more
of the corporation’s assets unless:
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the Board of Directors approved the transaction in which the stockholder acquired 15% or more of
the corporation’s assets;
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after the transaction in which the stockholder acquired 15% or more of the corporation’s
assets, the stockholder owned at least 85% of the corporation’s outstanding voting stock, excluding shares owned by directors,
officers and employee stock plans in which employee participants do not have the right to determine confidentially whether shares
held under the plan will be tendered in a tender or exchange offer; or
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on or after this date, the merger or sale is approved by the Board of Directors and the holders
of at least two-thirds of the outstanding voting stock that is not owned by the stockholder.
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A Delaware corporation may opt out of the Delaware
anti-takeover laws if its certificate of incorporation or bylaws so provides. We have not opted out of the provisions of the anti-takeover
laws. As such, these laws could prohibit or delay mergers or other takeover or change of control transactions and may discourage
attempts by other companies to acquire us.
In addition, employment agreements with certain
executive officers provide for the payment of severance and accelerated vesting of options and restricted stock in the event of
termination following a change of control. These provisions could have the effect of discouraging potential takeover attempts even
if it would be beneficial to shareholders.
Our certificate of incorporation and
bylaws contain provisions that could discourage a third-party from acquiring us.
Our certificate of incorporation and bylaws,
as applicable, among other things (i) provide our board with the ability to alter the bylaws without stockholder approval and (ii)
provide that vacancies on our board of directors may be filled by a majority of directors in office. These provisions, while designed
to reduce vulnerability to an unsolicited acquisition proposal, and to discourage certain tactics used in proxy fights, may negatively
impact a third-party’s decision to acquire us even if it would be beneficial to shareholders.
If securities or industry analysts do
not publish research or reports or if they publish unfavorable research or reports, an active market for our common stock may not
develop and the price of our common stock could decline.
We are a small company which is relatively
unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence
sales volume. Even if we come to the attention of such persons, they may be reluctant to follow or recommend an unproven company
such as ours until such time as we became more seasoned and viable. Generally, the trading market for a company’s securities
depends in part on the research and reports that securities or industry analysts publish. We currently have limited research coverage
by securities and industry analysts. As a consequence, there may be periods of time when trading activity in our shares is minimal
or non-existent, as compared to a seasoned issuer with significant research coverage. We cannot give you any assurance that a broader
or more active public trading market for our common stock will develop or if developed, will be sustained, or that current trading
levels could be sustained or not diminish. In addition, in the event any analysts downgrade our securities, the price of our shares
would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in
the purchase of our securities could decrease, which could cause the price of our common stock and its trading volume, if any,
to decline.
Our common stock may be considered a
“penny stock,” and may be subject to additional sale and trading regulations that may make it more difficult to sell.
Our common stock may be considered a “penny
stock.” The principal result or effect of being designated a penny stock is that securities broker-dealers participating
in sales of our common stock may be subject to the penny stock regulations set forth in Rules 15g-2 through 15g-9 promulgated under
the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least
two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny
stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or
her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as
to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy
of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment
experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders
of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.
Other Risks
We received a notice of termination from
Dr. Craig Dionne, our former chief executive officer demanding certain payments pursuant to the termination of his employment agreement.
On March 16, 2016, Dr. Craig Dionne provided
us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice
of termination alleges that such termination was for “Good Reason” as a result of a purported material change in his
authority, functions, duties and responsibilities as chief executive officer. On April 11, 2016, we received a letter from Dr.
Dionne demanding approximately $2.3 million as a result of the foregoing. The Company disputes such claims, and does not believe
Dr. Dionne had “Good Reason” to terminate his employment. However, in the event of litigation, the outcome of such
litigation, as well as the costs associated therewith, could have a material adverse effect on our operations. For a further discussion
of this matter, please see the section of this prospectus entitled “Legal Proceedings.”
We may be required to make significant
payments to our sole employee in the event his employment with us is terminated or if we experience a change of control.
We are a party to an employment agreement with
our sole employee. In the event we terminate his employment, we experience a change in control or, in certain cases, if such executive
terminates his employment with us, such executive will be entitled to receive certain severance and related payments. Additionally,
in such instance, certain securities held by such employee will become immediately vested and exercisable. Upon the occurrence
of any such event, our obligation to make such payments could significantly impact our working capital and, accordingly, our ability
to execute our business plan which could have a materially adverse effect to our business. Also, these provisions may discourage
potential takeover attempts that could be beneficial to our stockholders.
If our management team is not effective
or if we fail to attract, hire or retain qualified personnel, we may not be able to design, develop or commercialize our products
successfully or manage our business.
Our anticipated growth and expansion may require
the addition of new personnel and the development of additional expertise by existing management. There is intense competition
for qualified personnel in such areas. Accordingly, there can be no assurances that we would be able to attract and retain the
qualified personnel necessary for the successful development of our business.
ADVISEMENT
We urge you to read this entire prospectus
carefully, including the” Risk Factors” section and the financial statements and related notes included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”)
as well as our Quarterly Report on Form 10-Q for the three month periods ended March 31, 2015, and all subsequent reports we file
with the SEC.
As used in this prospectus, unless the context
otherwise requires, the words “we,” “us,” “our,” “the Company,” “GenSpera”
and “Registrant” refer to GenSpera, Inc. Also, any reference to “common stock” or “common shares”
refers to our $0.0001 par value common stock. Also, any reference to “preferred stock” or “preferred shares”
refers to our $0.0001 par value Series A 0% Convertible Preferred Stock. The information contained herein is current as of the
date of this prospectus, unless another date is specified.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes “forward-looking”
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements relate to our business development plans,
clinical trials, regulatory reviews, timing, strategies, expectations, anticipated expense levels, business prospects and positioning
with respect to the market for our proposed products, business outlook, technology spending and various other matters (including
contingent liabilities and obligations and changes in accounting policies, standards and interpretations) and express our current
intentions, beliefs, expectations, strategies or predictions, as well as historical information. Such forward- looking statements
involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements
to be materially different from anticipated results, performance or achievements expressed or implied by such forward-looking statements.
When used in this prospectus, statements that are not statements of current or historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words “plan,” “intend,” “may,” “will,”
“expect,” “believe,” “could,” “anticipate,” “estimate,” or “continue”
or similar expressions or other variations or comparable terminology are intended to identify such forward-looking statements.
Although we believe that the assumptions on which the forward-looking statements contained herein are based are reasonable, any
of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future
events. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.
Our future operating results are dependent upon many factors which are outside our control. You should not place undue reliance
on forward-looking statements. Forward-looking statements may not be realized due to a variety of factors, including, without limitation,
our ability to:
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attract and build a senior management team;
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manage our business given continuing operating losses and negative cash flows;
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obtain sufficient capital or a strategic business arrangement to fund our operations and expansion plans;
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build the management, human resources and infrastructure necessary to support the growth of our business;
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manage competitive factors and developments beyond our control;
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manage scientific and medical developments beyond our control;
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government the state, federal and international regulation of our business;
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successfully complete our clinical trials of our proposed drug candidates and gain regulatory approval to market such products;
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maintain and protect our intellectual property;
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obtain the granting of patents based on any of our current or future patent applications;
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obtain and maintain other rights to technology required or desirable for the conduct of our business;
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achieve any potential strategic benefits of licensing transactions, acquisitions, or licensing of new technologies, if any;
and
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manage any other factors discussed in the “Risk Factors” section, and elsewhere in this Prospectus.
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All forward-looking statements attributable to us are expressly
qualified in their entirety by these and other factors. We undertake no obligation to update or revise these forward-looking statements,
whether to reflect events or circumstances after the date initially filed, to reflect the occurrence of unanticipated events or
otherwise, except to the extent required by federal securities laws. The risks discussed in this report should be considered in
evaluating our business and future prospects.
USE OF PROCEEDS
If holders elect to exercise their Investor
Warrants, we may also receive proceeds of up to $7,987,807, assuming the exercise of all of the Investor Warrants. We cannot predict
when or if the Investor Warrants will be exercised. It is possible that the Investor Warrants may expire and may never be exercised.
The Investor Warrants contain a net exercise provision, therefore the holder may elect to utilize this feature, if available, and
in this case we would not receive any proceeds from such exercise. In the event the holders elect to exercise the Investor Warrants,
we will use the proceeds received from the exercise of warrants, if any, to fund our clinical trials and for working capital.
Our management will have broad discretion in
the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application
of the proceeds of this offering.
We will not receive any of the proceeds from
the sale of the shares by any of the selling stockholders. However, we will receive up to $ $17,018,305 upon the exercise of warrants
in the event they are all exercised for cash. We will use the proceeds received from the exercise of warrants, if any, to fund
our clinical trials and for working capital.
DETERMINATION OF OFFERING PRICE
The purchase price of the Shares offered pursuant
to the Investor Warrants is determined by reference to the exercise price of the warrants. The price per warrant was determined
based upon arm’s-length negotiations between the purchasers of units in the original offering and us.
The Selling Stockholders will offer their shares
at the prevailing market prices, privately negotiated prices, or in any other fashion and manner as described in the section of
this Prospectus entitled “Plan
of Distribution.
”
MARKET FOR COMMON EQUITY
& RELATED STOCKHOLDER MATTERS
Our common shares are quoted on the OTCQB under
the symbol GNSZ. Although a market for our common stock exists, it is relatively illiquid. The prices reflect high and
low inter-dealer bid prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.
|
Quarter Ended
|
|
High
|
|
|
Low
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.167
|
|
|
$
|
0.110
|
|
|
2015:
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
0.45
|
|
|
$
|
0.145
|
|
|
Third Quarter
|
|
$
|
0.897
|
|
|
$
|
0.353
|
|
|
Second Quarter
|
|
$
|
0.82
|
|
|
$
|
0.578
|
|
|
First Quarter
|
|
$
|
1.02
|
|
|
$
|
0.60
|
|
|
2014:
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
0.75
|
|
|
$
|
0.53
|
|
|
Third Quarter
|
|
$
|
0.91
|
|
|
$
|
0.66
|
|
|
Second Quarter
|
|
$
|
1.33
|
|
|
$
|
0.20
|
|
|
First Quarter
|
|
$
|
1.44
|
|
|
$
|
1.20
|
|
Holders
As of July 11, 2016, the approximate number of record holders of
our common stock was 134.
Dividend Policy
We have never declared or paid any cash dividends
on our capital stock and we do not currently anticipate declaring or paying cash dividends on our capital stock in the foreseeable
future. We currently intend to retain all of our future earnings, if any, to finance the operation and expansion of our business.
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend
on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions
and covenants, applicable law and other factors that our board of directors may deem relevant. If we do not pay dividends, a return
on your investment will occur only if the market price of our common stock appreciates.
CAPITALIZATION
The following table sets forth our capitalization
as of March 31, 2016 on:
|
|
·
|
an
as adjusted basis
to reflect (i) our receipt of estimated net proceeds of approximately
$ million from the exercise of the Investor Warrants and (ii) the anticipated use of such net proceeds, as described under “Use
of Proceeds.”
|
You should read this capitalization table together
with the financial statements and related notes included in this prospectus, as well as “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and the other financial information contained in our Quarterly
Report on Form 10-Q for the three month period ended March 31, 2016.
|
|
|
As of March 31, 2016
|
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
|
(amounts in thousands except per share data)
|
|
|
Cash and cash equivalents
|
|
$
|
1,558
|
|
|
$
|
9,546
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.0001 per share; 30,000,000 shares authorized, 1,853 issued and outstanding
|
|
|
‒
|
|
|
|
‒
|
|
|
Common stock, par value $0.0001 per share; 150,000,000 shares authorized, 41,762,356 shares issued and outstanding, actual, and 51,835,092 shares issued and outstanding, as adjusted
|
|
|
4
|
|
|
|
5
|
|
|
Additional paid-in capital
|
|
|
43,376
|
|
|
|
51,363
|
|
|
Accumulated deficit
|
|
|
(45,755
|
)
|
|
|
(45,755
|
)
|
|
Total stockholders’ equity (deficit)
|
|
|
(2,375
|
)
|
|
|
5,613
|
|
|
Total capitalization
|
|
$
|
(2,375
|
)
|
|
$
|
5,613
|
|
In the discussion and table above, we assume
no exercise of outstanding options or warrants (except for the Shares being registered which are issuable upon the exercise of
the Investor Warrants). The discussion above is based on shares of common stock outstanding as of March 31, 2016. This number excludes:
|
|
·
|
47,985,547 shares of common stock issuable upon the exercise, or conversion as applicable, of outstanding options (including
those issued under our equity compensation plans), warrants (except for the Shares being registered which are issuable upon the
exercise of the Warrants) and convertible securities (including our outstanding shares of preferred stock) having exercise or conversion
prices, as applicable, ranging from $0.13 to $3.50 per share and a weighted average exercise or conversion price of $0.58 per share;
and
|
|
|
·
|
6,214,877 shares reserved for future issuances and grants pursuant to our equity incentive plans as of March 31, 2016.
|
DILUTION
Our net tangible book value as of March 31,
2016, was approximately $(2.5) million, or approximately $(0.06) per share. Net tangible book value per share is equal to the amount
of our total tangible assets, less total liabilities, divided by the aggregate number of shares of our common stock outstanding
as of March 31, 2016. Dilution in net tangible book value per share represents the difference between the weighted average exercise
price of the Investor Warrants, per share paid by the warrant holder upon the exercise of the Investor Warrants and the net tangible
book value per share of our common stock immediately after this offering. After giving effect to the sale of 10,072,736 shares
of common stock from the exercise of the Investor Warrants, at a weighted average exercise price of $0.79 per share, our as adjusted
net tangible book value as of March 31, 2016 would have been approximately $5.5 million, or approximately $.11 per share. This
represents an immediate dilution of $0.69 per share to investors purchasing the Shares upon the exercise of the Investor Warrants.
The following table illustrates this dilution:
|
Weighted average exercise price per share
|
|
|
|
|
|
$
|
0.79
|
|
|
Net tangible book value per share as of March 31, 2016
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
Increase in net tangible book value per share attributable to investors in this offering
|
|
$
|
0.17
|
|
|
|
|
|
|
As adjusted net tangible book value per share after giving effect to this offering
|
|
|
|
|
|
$
|
0.11
|
|
|
Dilution per share to investors in this offering
|
|
|
|
|
|
$
|
0.69
|
|
To the extent that outstanding convertible
securities are exercised or converted, you will experience further dilution.
In addition, we may choose to raise additional
capital due to market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future
operating plans. To the extent that additional capital is raised through the sale of equity or convertible securities, the issuance
of these securities could result in further dilution to our stockholders.
The discussion above is based on shares of
common stock outstanding as of March 31, 2016. This number excludes:
|
|
·
|
47,985,547 shares of common stock issuable upon the exercise, or conversion as applicable, of outstanding options (including
those issued under our equity compensation plans), warrants (except for the Shares being registered which are issuable upon the
exercise of the Warrants) and convertible securities (including our outstanding shares of preferred stock) having exercise or conversion
prices, as applicable, ranging from $0.13 to $3.50 per share and a weighted average exercise or conversion price of $0.58 per share;
and
|
|
|
·
|
6,214,877 shares reserved for future issuances and grants pursuant to our equity incentive plans as of March 31, 2016.
|
SELLING STOCKHOLDERS
This prospectus relates to the offering and
sale, from time to time, of up to 28,958,440 shares of our common stock held by the stockholders named in the tables below (“Selling
Stockholders”), which only includes common shares issuable upon the exercise of warrants held by the Selling Stockholders.
All of the shares being registered have been previously been registered and this prospectus constitutes a post-effective amendment
to the prior registration statement. The shares relate to: (i) 20,485,362 shares underlying warrants issue during our December
2015 offering (“December 2015 Offering”), (ii) 3,207,359 shares underlying warrants issued during our July 2015 offering
(“July 2015 Offering”) (iii) 483,125 shares underlying warrants issued during our June 2014 private offering (“June
2014 Offering”), (iv) 3,600,024 shares underlying warrants issued during our August 2013 offering (“August 2013 Offering”);
(v) 1,072,570 shares underlying warrants issued during our December 2012 through March 2013 offering (“December 2012 - March
2013 Offering”), (vi) 110,000 shares underlying warrants issued to consultants for services provided (“Consultant Warrants”);
The Selling Stockholders may exercise their
warrants at any time in their sole discretion. Set forth below is information, to the extent known to us, the name of each Selling
Stockholders and the amount and percentage of common stock owned by each (including shares that can be acquired on the exercise
of outstanding warrants) prior to the offering, the shares to be sold in the offering, and the amount and percentage of common
stock to be owned by each (including shares that can be acquired on the exercise of outstanding warrants) after the offering assuming
all shares are sold. The footnotes provide information about persons who have voting and dispositive control with respect to the
securities being offered.
The Selling Stockholders may sell all, some
or none of the shares of common stock they are offering, and may sell shares of our common stock otherwise than pursuant to this
prospectus. See “
Plan of Distribution
.” The tables below assumes that each Selling Stockholder sells all of
its common shares and exercises all of its warrants and sells all of the shares issued upon exercise thereof, and that each Selling
Stockholder does not acquire any additional shares. We are unable to determine the exact number of shares that will actually be
sold or when or if these sales will occur. All of the Selling Stockholders named below acquired their common stock and warrants
which are being registered directly from us in private transactions (as described below).
The total number of common shares sold under
this prospectus may be adjusted to reflect adjustments due to stock dividends, stock distributions, splits, combinations or recapitalizations
with regard to the common stock underlying the warrants. Unless otherwise stated below in the footnotes, to our knowledge, no Selling
Stockholder nor any affiliate of such stockholder: (i) has held any position or office with us during the three years prior to
the date of this prospectus; or (ii) is a broker-dealer, or an affiliate of a broker-dealer. We may amend or supplement this prospectus
from time to time in the future to update or change this list and shares which may be resold.
December 2015 Offering
We are registering an aggregate of 20,485,362
common shares underlying warrants sold in our December 2015 offering (“December 2015 Offering”). From the sale of preferred
stock, common stock purchase warrants, and exercise of certain outstanding warrants, we received gross proceeds of $2,492,500.
The preferred stock has a stated value of $1,000 per share and the common shares are issuable pursuant to conversion of the preferred
stock at a conversion price of $0.15 per share, subject to a 9.99% beneficial ownership limitation and subject to adjustment pursuant
to stock splits and dividends, and subject to adjustment pursuant to customary anti-dilution protection for subsequent equity sales
for a period of 18 months from the effective date of this registration statement. The warrants include (i) 6,177,084 Series F common
stock purchase warrants with a price per share of $0.30 and a term of five years from the date in which the shares underlying the
warrants are registered (January 1, 2016), (ii) 6,177,084 Series G common stock purchase warrants with a price per share of $0.30
and a term of eighteen months from the date in which the shares underlying the warrants are registered (January 1, 2016), (iii)
3,571,430 Series H common stock purchase warrants issued pursuant to a contractually obligated exercise of prior outstanding warrants,
with a price per share of $0.30 and a term of five years from the issuance date, and (iv) 3,571,430 Series I common stock purchase
warrants issued pursuant to a contractually obligated exercise of prior outstanding warrants, with a price per share of $0.30 and
a term of eighteen months from the issuance date. The common shares underlying the preferred stock are subject to adjustment in
the in the event of stock splits and dividends, subsequent equity sales, pro rata distributions and fundamental transactions. In
the event that the shares underlying all of the warrants issued in the December 2015 Offering are not subject to a registration
statement at the time of exercise, the warrants may be exercised on a cashless basis after 6 months from the issuance date. The
warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in the event
of stock splits or dividends, fundamental transactions, and pro rata distributions. The warrants do not contain any price protection
provisions.
The shares being registered also include 988,334
common shares underlying placement agent warrants issued in connection with the December 2015 Offering. The placement agent warrants
have substantially the same terms as the Series F Warrants except that they have an expiration date of December 29, 2020.
Pursuant to the terms of the warrants and the
preferred shares, a selling shareholder may not exercise and or convert the securities to the extent the selling shareholder, together
with its affiliates and attribution parties, would beneficially own a number of shares of common stock which would exceed 4.99,
or with 61 day’s notice, 9.99% of our then outstanding common stock following such exercise, excluding for purposes of such
determination shares of common stock issuable upon exercise of the warrants which have not been exercised. The selling shareholders
may sell all, some or none of their shares in this offering. See "Plan of Distribution."
None of the shares underlying warrants or placement
agent warrants have been exercised or sold. Accordingly, we are including herein 20,485,362 shares underlying warrants
July 2015 Offering.
We are registering an aggregate of 3,207,359
common shares underlying warrants sold in our July 2015 Offering. From the sale of an aggregate of 3,591,278 units, we received
gross proceeds of $2,513,894 or $0.70 per unit. Each unit consists of (i) one share of common stock, (ii) one Series D common stock
purchase warrant and (iii) one Series E common stock purchase warrant. The Series D warrants have a term of five years and originally
had an exercise price of $0.80 which has subsequently been reduced to $0.15. The Series E warrants have a term of eighteen months
and originally had an exercise price of $0.70 which has been subsequently reduced to $0.15. In the event that the shares underlying
the warrants are not subject to a registration statement at the time of exercise, the Series D and E warrants may be exercised
on a cashless basis after 6 months from the issuance date. The Series D and E warrants also contain provisions providing for an
adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends, fundamental transactions,
subsequent rights offerings and pro rata distributions. The warrants do not contain any price protection provisions. Additionally,
the warrants contain limitations on the holder’s ability to exercise the warrants in the event such exercise causes the holder
to beneficially own in excess of 4.99% of the Company’s issued and outstanding common stock, subject to a discretionary increase
in such limitation by the holder to 9.99% upon 61 days’ notice. The shares being registered include 287,303 common shares
underlying placement agent warrants issued in connection with the offering. The placement agent warrants have substantially the
same terms as the Series D warrants, except that the exercise price is $0.80. We previously registered 7,182,556 common shares
underlying warrants pursuant to the July 2015 Offering and 287,303 shares underlying placement agent warrants. 4,262,500 common
shares underlying warrants have been exercised and 0 placement agent warrants have been exercised, and accordingly, we are including
herein 3,207,359 shares underlying warrants.
June 2014 Offering.
We are registering an aggregate of 483,125
common shares underlying warrants sold in our June 2014 Offering. Pursuant to our June 2014 Offering, we sold an aggregate of 966,250
units resulting in gross proceeds of $773,000 or $0.80 per unit. Each unit consists of (i) one share of common stock and (ii) one
half common stock purchase warrant. The warrants have a term of five years and entitle the holders to purchase the common shares
at a price per share of $1.15. In the event the shares underlying warrants are not subject to a registration statement, the warrants
may be exercised on a cashless basis after 6 months from the issuance date. The warrants also contain provisions providing for
an adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental transactions.
The warrants do not contain price protection provisions. Additionally, the warrants contain limitations on the holder’s ability
to exercise the warrants in the event such exercise causes the holder to beneficially own in excess of 4.99% of the Company’s
issued and outstanding common stock, subject to a discretionary increase in such limitation by the holder to 9.99% upon 61 days’
notice. We previously registered 483,125 common shares underlying warrants pursuant to the August 2013 Offering. None of the warrants
have been exercised or sold, and accordingly, we are including herein 483,125 shares underlying warrants.
August 2013 Offering.
We are registering an aggregate of 3,600,024
common shares underlying warrants sold in our August 2013 Offering. Pursuant to our August 2013 Offering, we sold an aggregate
of 3,333,356 units resulting in gross proceeds of $5,000,032 or $1.50 per unit. Each unit consists of (i) one share of common stock
and (ii) one common stock purchase warrant. The warrants have a term of five years and an exercise price of $1.75. In the event
that the shares underlying the warrants are not subject to a registration statement at the time of exercise, the warrants may be
exercised on a cashless basis after 6 months from the issuance date. The warrants also contain provisions providing for an adjustment
in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental transactions. The
warrants do not contain any price protection provisions. Additionally, the warrants contain limitations on the holder’s ability
to exercise the warrants in the event such exercise causes the holder to beneficially own in excess of 4.99% of the Company’s
issued and outstanding common stock, subject to a discretionary increase in such limitation by the holder to 9.99% upon 61 days’
notice. We additionally granted 266,668 common stock purchase warrants to placement agents. The placement agent warrants have substantially
the same terms as the investor warrants. We previously registered 3,333,356 common shares underlying warrants pursuant to the August
2013 Offering and 266,668 common shares underlying placement agent warrants. None of the warrants have been exercised or sold,
and accordingly, we are including herein 3,600,024 shares underlying warrants.
December 2012 through March 2013 Offering.
We are registering an aggregate of 1,072,570
common shares underlying warrants sold in our December 2012 – March 2013 Offering. Pursuant to our December 2012 –
March 2013 Offering, we sold an aggregate of 1,054,160 units resulting in gross proceeds of $1,869,000, or $1.773 per unit. Each
unit consists of (i) one share of common stock and (ii) one common stock purchase warrant. The warrants have a term of five years
and entitle the holders to purchase common stock at a price per share of $3.00. In the event the shares underlying the warrants
are not subject to a registration statement, the warrants may be exercised on a cashless basis after 12 months from the issuance
date. The warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in
the event of stock splits or dividends and fundamental transactions. The warrants do not contain any price protection provisions.
Additionally, the warrants contain limitations on the holder’s ability to exercise the warrants in the event such exercise
causes the holder to beneficially own in excess of 4.99% of the Company’s issued and outstanding common stock, subject to
a discretionary increase in such limitation by the holder to 9.99% upon 61 days’ notice. We additionally granted 18,410 common
stock purchase warrants to placement agents. We previously registered 1,054,160 common shares underlying warrants pursuant to the
December 2012 – March 2013 Offering and 18,410 common shares underlying placement agent warrants. None of the warrants have
been exercised or sold, and accordingly, we are including herein 1,072,570 shares underlying warrants.
Consultant Warrants.
We are also registering shares underlying warrants
issued to consultants and service providers in exchange for services and reimbursement of expenses. We previously registered 401,667
common shares underlying warrants of which 291,667 warrants have expired. Accordingly, we are including herein the remaining 110,000
common shares underlying warrants.
|
|
|
Common
Shares Owned Before Sale (1)
|
|
|
|
|
|
Common
Shares Owned After Sale (2)
|
|
|
|
|
Held
Outright
|
|
|
Convertible
Securities
|
|
|
Amount
|
|
|
%
of class
|
|
|
Shares
being
registered
|
|
|
Amount
|
|
|
%
of Class
|
|
|
Bristol Investment Fund, Ltd.(3)
|
|
|
-
|
|
|
|
200,959
|
|
|
|
200,959
|
|
|
|
*
|
|
|
|
133,334
|
|
|
|
67,625
|
|
|
|
*
|
|
|
IRA FBO J. Steven Emerson Rollover II Pershing LLC as Custodian
(4)
|
|
|
-
|
|
|
|
381,000
|
|
|
|
381,000
|
|
|
|
*
|
|
|
|
381,000
|
|
|
|
-
|
|
|
|
*
|
|
|
T.R. Winston & Company, LLC (5)
|
|
|
-
|
|
|
|
282,540
|
|
|
|
282,540
|
|
|
|
*
|
|
|
|
56,987
|
|
|
|
225,553
|
|
|
|
*
|
|
|
Benjamin Hill (6)
|
|
|
35,000
|
|
|
|
33,639
|
|
|
|
68,639
|
|
|
|
*
|
|
|
|
33,639
|
|
|
|
35,000
|
|
|
|
*
|
|
|
Ravenwood Partners, LLC (7)
|
|
|
-
|
|
|
|
19,741
|
|
|
|
19,741
|
|
|
|
*
|
|
|
|
19,741
|
|
|
|
-
|
|
|
|
*
|
|
|
Kihong Kwon, M.D., Custodian, UGMA for Connor Merrihew (8)
|
|
|
71,359
|
|
|
|
14,665
|
|
|
|
86,024
|
|
|
|
*
|
|
|
|
14,665
|
|
|
|
71,359
|
|
|
|
*
|
|
|
Kihong Kwon, M.D., Custodian, UGMA for Mason Kwon (9)
|
|
|
97,109
|
|
|
|
14,665
|
|
|
|
111,774
|
|
|
|
*
|
|
|
|
14,665
|
|
|
|
97,109
|
|
|
|
*
|
|
|
Brandon Hill (10)
|
|
|
31,667
|
|
|
|
30,305
|
|
|
|
61,972
|
|
|
|
*
|
|
|
|
30,305
|
|
|
|
31,667
|
|
|
|
*
|
|
|
Walter H. Bass, LLC (11)
|
|
|
173,430
|
|
|
|
50,000
|
|
|
|
223,430
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
173,430
|
|
|
|
*
|
|
|
Karen K. Ting (12)
|
|
|
-
|
|
|
|
13,718
|
|
|
|
13,718
|
|
|
|
*
|
|
|
|
13,718
|
|
|
|
-
|
|
|
|
*
|
|
|
John W. Galuchie, Jr. (13)
|
|
|
-
|
|
|
|
11,000
|
|
|
|
11,000
|
|
|
|
*
|
|
|
|
11,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Abraham Mirman (14)
|
|
|
-
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
|
|
|
|
*
|
|
|
Cataracta Aps (15)
|
|
|
312,500
|
|
|
|
80,000
|
|
|
|
392,500
|
|
|
|
*
|
|
|
|
60,000
|
|
|
|
332,500
|
|
|
|
*
|
|
|
Willie and Patsy Mosley (16)
|
|
|
284,205
|
|
|
|
169,205
|
|
|
|
453,410
|
|
|
|
1.08
|
%
|
|
|
169,205
|
|
|
|
284,205
|
|
|
|
*
|
|
|
The Nancy M. Kwon Separate Property Trust DTD 11/7/05 (17)
|
|
|
84,884
|
|
|
|
29,330
|
|
|
|
114,214
|
|
|
|
*
|
|
|
|
29,330
|
|
|
|
84,884
|
|
|
|
*
|
|
|
Bull Dog Trust-Trustee Eric J Byrnes (18)
|
|
|
56,001
|
|
|
|
28,201
|
|
|
|
84,202
|
|
|
|
*
|
|
|
|
28,201
|
|
|
|
56,001
|
|
|
|
*
|
|
|
Walter H. Bass (19)
|
|
|
112,804
|
|
|
|
112,804
|
|
|
|
225,608
|
|
|
|
*
|
|
|
|
112,804
|
|
|
|
112,804
|
|
|
|
*
|
|
|
Carolina Preferred Investments, LLC (20)
|
|
|
-
|
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
*
|
|
|
|
400,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Elevado Investment Company, LLC (21)
|
|
|
-
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
*
|
|
|
|
70,000
|
|
|
|
-
|
|
|
|
*
|
|
|
EZ MM&B Holdings, LLC, a Delaware limited liability company
(22)
|
|
|
-
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
*
|
|
|
|
70,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Roth IRA FBO Marshall S. Ezralow Pershing LLC as Custodian (23)
|
|
|
-
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
*
|
|
|
|
70,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Ronnie Foust (24)
|
|
|
79,167
|
|
|
|
47,917
|
|
|
|
127,084
|
|
|
|
*
|
|
|
|
47,917
|
|
|
|
79,167
|
|
|
|
*
|
|
|
Meadows Capital, LLC (25)
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
133,334
|
|
|
|
*
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
*
|
|
|
Gerald T. Laurie (26)
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
20,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
BMO Harris Bank N.A. as directed Trustee of the Lapp Libra 401(k)
Plan FBO William Lapp (27)
|
|
|
48,021
|
|
|
|
48,021
|
|
|
|
96,042
|
|
|
|
*
|
|
|
|
48,021
|
|
|
|
48,021
|
|
|
|
*
|
|
|
Robin Houghton (28)
|
|
|
-
|
|
|
|
44,868
|
|
|
|
44,868
|
|
|
|
*
|
|
|
|
44,868
|
|
|
|
-
|
|
|
|
*
|
|
|
Julie A. Songy (29)
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
40,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
*
|
|
|
L. Wayne Powell, Jr. (30)
|
|
|
132,495
|
|
|
|
101,245
|
|
|
|
233,740
|
|
|
|
*
|
|
|
|
101,245
|
|
|
|
132,495
|
|
|
|
*
|
|
|
Sean and Patricia St. Denis (31)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
*
|
|
|
Jonathan Gluck (32)
|
|
|
-
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Craig L. Schlinz & Jean M. Schlinz Joint Tenants (33)
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
*
|
|
|
James Johnson (34)
|
|
|
-
|
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
*
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Gary L. Lively (35)
|
|
|
-
|
|
|
|
6,667
|
|
|
|
6,667
|
|
|
|
*
|
|
|
|
6,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Philip S. Forte (36)
|
|
|
-
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
*
|
|
|
|
33,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Delaware Charter Cust FBO Philip S. Forte R/O IRA (37)
|
|
|
-
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
*
|
|
|
|
33,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Jack Steven Jacobsen (38)
|
|
|
-
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
*
|
|
|
|
33,333
|
|
|
|
-
|
|
|
|
*
|
|
|
John N. Davis III (39)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Mark W. Livingston (40)
|
|
|
-
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
*
|
|
|
|
66,667
|
|
|
|
-
|
|
|
|
*
|
|
|
George B. Wright III (41)
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Arthur Ronald Jacobstein (42)
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
14,000
|
|
|
|
*
|
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
*
|
|
|
Shawn Hooker (43)
|
|
|
-
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Charles C. Swanke (44)
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
33,334
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
Jeffrey S. Smith (45)
|
|
|
-
|
|
|
|
23,333
|
|
|
|
23,333
|
|
|
|
*
|
|
|
|
23,333
|
|
|
|
-
|
|
|
|
*
|
|
|
AAR Accounts Family Limited Partnership (46)
|
|
|
-
|
|
|
|
333,333
|
|
|
|
333,333
|
|
|
|
*
|
|
|
|
333,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Robert J. Martin (47)
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Robert G. McBride & Carol McBride JTWROS (48)
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
20,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
Charles Mortimer IRA FCC As Custodian (49)
|
|
|
-
|
|
|
|
16,000
|
|
|
|
16,000
|
|
|
|
*
|
|
|
|
16,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Michael Solkow (50)
|
|
|
-
|
|
|
|
19,333
|
|
|
|
19,333
|
|
|
|
*
|
|
|
|
19,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Mark V. Reed IRA FCC As Custodian (51)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Elbow Canyon Estates, LLC (52)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
William R. Thomas (53)
|
|
|
6,667
|
|
|
|
6,667
|
|
|
|
13,334
|
|
|
|
*
|
|
|
|
6,667
|
|
|
|
6,667
|
|
|
|
*
|
|
|
William Scott Smith (54)
|
|
|
-
|
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
*
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Sally Reed R/O IRA (IRA) As Custodian (55)
|
|
|
-
|
|
|
|
23,333
|
|
|
|
23,333
|
|
|
|
*
|
|
|
|
23,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Joe T. McClure (56)
|
|
|
-
|
|
|
|
9,333
|
|
|
|
9,333
|
|
|
|
*
|
|
|
|
9,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Ricky McKnight (57)
|
|
|
-
|
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
*
|
|
|
|
13,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Dr. Thomas T. Paukert (58)
|
|
|
-
|
|
|
|
14,000
|
|
|
|
14,000
|
|
|
|
*
|
|
|
|
14,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Delaware Charter C/F Joseph Lukeman IRA (59)
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
26,666
|
|
|
|
*
|
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
*
|
|
|
David R. Mattson (60)
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
26,666
|
|
|
|
*
|
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
*
|
|
|
Barry J. Batson (61)
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Jonthan Stanney (62)
|
|
|
-
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
*
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Chaskel Frankl (63)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Charles Retz (64)
|
|
|
-
|
|
|
|
6,667
|
|
|
|
6,667
|
|
|
|
*
|
|
|
|
6,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Dean S. Nye (65)
|
|
|
-
|
|
|
|
8,333
|
|
|
|
8,333
|
|
|
|
*
|
|
|
|
8,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Scott Johnson (66)
|
|
|
-
|
|
|
|
13,333
|
|
|
|
13,333
|
|
|
|
*
|
|
|
|
13,333
|
|
|
|
-
|
|
|
|
*
|
|
|
Lorraine T. Gilman (67)
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
4,000
|
|
|
|
*
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
*
|
|
|
Michael L. Corsetto (68)
|
|
|
3,333
|
|
|
|
3,333
|
|
|
|
6,666
|
|
|
|
*
|
|
|
|
3,333
|
|
|
|
3,333
|
|
|
|
*
|
|
|
Dale Crystal (69)
|
|
|
-
|
|
|
|
33,333
|
|
|
|
33,333
|
|
|
|
*
|
|
|
|
33,333
|
|
|
|
-
|
|
|
|
*
|
|
|
|
|
Common
Shares Owned Before Sale (1)
|
|
|
|
|
|
Common
Shares Owned After Sale (2)
|
|
|
|
|
Held
Outright
|
|
|
Convertible
Securities
|
|
|
Amount
|
|
|
%
of class
|
|
|
Shares
being
registered
|
|
|
Amount
|
|
|
%
of Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Stamatis, Jr. (70)
|
|
|
-
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
*
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Thomas A. Kitchens (71)
|
|
|
-
|
|
|
|
9,667
|
|
|
|
9,667
|
|
|
|
*
|
|
|
|
9,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Brian Stout SEP IRA FCC As Custodian (72)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Raylan Loggins (73)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Delaware Charter Cust FBO Dennis M. Cryan R/O IRA (74)
|
|
|
-
|
|
|
|
7,000
|
|
|
|
7,000
|
|
|
|
*
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
*
|
|
|
G. Tyler Runnels & Jasmine Niklas Runnels
TTEES The Runnels Family Trust DTD 1-11-2000 (75)
|
|
|
-
|
|
|
|
133,333
|
|
|
|
133,333
|
|
|
|
*
|
|
|
|
133,333
|
|
|
|
-
|
|
|
|
*
|
|
|
DAFNA Lifescience Ltd. (76)
|
|
|
-
|
|
|
|
76,700
|
|
|
|
76,700
|
|
|
|
*
|
|
|
|
76,700
|
|
|
|
-
|
|
|
|
*
|
|
|
DAFNA Lifescience Market Neutral Ltd. (77)
|
|
|
-
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
*
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
*
|
|
|
DAFNA Lifescience Select Ltd. (78)
|
|
|
-
|
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
*
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Michael Evan Meyers (79)
|
|
|
-
|
|
|
|
86,667
|
|
|
|
86,667
|
|
|
|
*
|
|
|
|
86,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Noam Rubenstein (80)
|
|
|
|
|
|
|
518,041
|
|
|
|
518,041
|
|
|
|
1.23
|
%
|
|
|
401,825
|
|
|
|
116,216
|
|
|
|
*
|
|
|
Kingsbrook Opportunities Master Fund LP (81)
|
|
|
-
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
*
|
|
|
|
66,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Willie Mosley (82)
|
|
|
125,000
|
|
|
|
62,500
|
|
|
|
187,500
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
125,000
|
|
|
|
*
|
|
|
Andrew P. Fridberg IRA (83)
|
|
|
-
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
*
|
|
|
|
66,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Christopher Spring (84)
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Mark G. Christiana (85)
|
|
|
-
|
|
|
|
16,667
|
|
|
|
16,667
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Kevin Harrington (86)
|
|
|
-
|
|
|
|
66,667
|
|
|
|
66,667
|
|
|
|
*
|
|
|
|
66,667
|
|
|
|
-
|
|
|
|
*
|
|
|
Molly Lowery Adams (87)
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
56,402
|
|
|
|
*
|
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
*
|
|
|
Equity Trust Company, d.b.a. Sterling Trust, Custodian FBO Lawrence
Baker, Account #407208 (88)
|
|
|
14,100
|
|
|
|
14,100
|
|
|
|
28,200
|
|
|
|
*
|
|
|
|
14,100
|
|
|
|
14,100
|
|
|
|
*
|
|
|
Scott A. Coleman (89)
|
|
|
-
|
|
|
|
42,302
|
|
|
|
42,302
|
|
|
|
*
|
|
|
|
42,302
|
|
|
|
-
|
|
|
|
*
|
|
|
Jason Haase (90)
|
|
|
24,253
|
|
|
|
24,253
|
|
|
|
48,506
|
|
|
|
*
|
|
|
|
24,253
|
|
|
|
24,253
|
|
|
|
*
|
|
|
James Krauskopf (91)
|
|
|
8,461
|
|
|
|
8,461
|
|
|
|
16,922
|
|
|
|
*
|
|
|
|
8,461
|
|
|
|
8,461
|
|
|
|
*
|
|
|
C Thomas + J Thomas ttee Thomas Family Trust UA DTD 7/13/94 (92)
|
|
|
-
|
|
|
|
8,461
|
|
|
|
8,461
|
|
|
|
*
|
|
|
|
8,461
|
|
|
|
-
|
|
|
|
*
|
|
|
Brian Wald (93)
|
|
|
5,641
|
|
|
|
5,641
|
|
|
|
11,282
|
|
|
|
*
|
|
|
|
5,641
|
|
|
|
5,641
|
|
|
|
*
|
|
|
Peter Minden + Patricia Minden JT Ten (94)
|
|
|
14,101
|
|
|
|
14,101
|
|
|
|
28,202
|
|
|
|
*
|
|
|
|
14,101
|
|
|
|
14,101
|
|
|
|
*
|
|
|
K. Smith + J. Smith Ttee KJ Smith Family Trust U/A DTD 6/10/06 (95)
|
|
|
-
|
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
*
|
|
|
|
28,201
|
|
|
|
-
|
|
|
|
*
|
|
|
CRB Investments LLC (96)
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
56,402
|
|
|
|
*
|
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
*
|
|
|
Alta Sue Hayes (97)
|
|
|
78,963
|
|
|
|
78,963
|
|
|
|
157,926
|
|
|
|
*
|
|
|
|
78,963
|
|
|
|
78,963
|
|
|
|
*
|
|
|
Daniel E. Enderson (98)
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
56,402
|
|
|
|
*
|
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
*
|
|
|
James L. McGregor (99)
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
56,402
|
|
|
|
*
|
|
|
|
28,201
|
|
|
|
28,201
|
|
|
|
*
|
|
|
Bruce M Davis (100)
|
|
|
19,741
|
|
|
|
19,741
|
|
|
|
39,482
|
|
|
|
*
|
|
|
|
19,741
|
|
|
|
19,741
|
|
|
|
*
|
|
|
Sandor Petroleum (101)
|
|
|
169,005
|
|
|
|
169,205
|
|
|
|
338,210
|
|
|
|
*
|
|
|
|
169,205
|
|
|
|
169,005
|
|
|
|
*
|
|
|
Kevin Kwon, Kihong Kwon & James Rim TTEES The Kevin Kwon Alaska
Asset Pres Tr 9/24/02 (102)
|
|
|
5,692
|
|
|
|
29,330
|
|
|
|
35,022
|
|
|
|
*
|
|
|
|
29,330
|
|
|
|
5,692
|
|
|
|
*
|
|
|
Fidelity Investments FOB James Gucker Roth IRA (103)
|
|
|
7,051
|
|
|
|
7,051
|
|
|
|
14,102
|
|
|
|
*
|
|
|
|
7,051
|
|
|
|
7,051
|
|
|
|
*
|
|
|
Fidelity Investments FOB Joseph Gucker Traditional IRA (104)
|
|
|
7,051
|
|
|
|
7,051
|
|
|
|
14,102
|
|
|
|
*
|
|
|
|
7,051
|
|
|
|
7,051
|
|
|
|
*
|
|
|
John Carris Investments (105)
|
|
|
0
|
|
|
|
62,083
|
|
|
|
62,083
|
|
|
|
*
|
|
|
|
62,083
|
|
|
|
-
|
|
|
|
*
|
|
|
Bass Capital LLC (106)
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
150,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
*
|
|
|
Castle Bison, Inc. (107)
|
|
|
62,500
|
|
|
|
31,250
|
|
|
|
93,750
|
|
|
|
*
|
|
|
|
31,250
|
|
|
|
62,500
|
|
|
|
*
|
|
|
Ernest & Cecilia Plata (108)
|
|
|
66,250
|
|
|
|
33,125
|
|
|
|
99,375
|
|
|
|
*
|
|
|
|
33,125
|
|
|
|
66,250
|
|
|
|
*
|
|
|
Pauline Wagner Living Trust U/A DTD 4/22/03 (109)
|
|
|
125,000
|
|
|
|
62,500
|
|
|
|
187,500
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
125,000
|
|
|
|
*
|
|
|
RJF Partners, Ltd (110)
|
|
|
125,000
|
|
|
|
62,500
|
|
|
|
187,500
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
125,000
|
|
|
|
*
|
|
|
Sylvia De Leon (111)
|
|
|
62,500
|
|
|
|
31,250
|
|
|
|
93,750
|
|
|
|
*
|
|
|
|
31,250
|
|
|
|
62,500
|
|
|
|
*
|
|
|
The Rannelle Family Irrevocable Trust (112)
|
|
|
125,000
|
|
|
|
62,500
|
|
|
|
187,500
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
125,000
|
|
|
|
*
|
|
|
TRW Capital Growth Fund, LP (113)
|
|
|
-
|
|
|
|
104,000
|
|
|
|
104,000
|
|
|
|
*
|
|
|
|
104,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Scott Gottlieb (114)
|
|
|
-
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Russell Steward (115)
|
|
|
-
|
|
|
|
12,000
|
|
|
|
12,000
|
|
|
|
*
|
|
|
|
12,000
|
|
|
|
-
|
|
|
|
*
|
|
|
Sabby Healthcare Master Fund, Ltd. (116)
|
|
|
2,363,629
|
|
|
|
17,016,788
|
|
|
|
19,380,417
|
|
|
|
32.97
|
%
|
|
|
10,345,538
|
|
|
|
9,034,879
|
|
|
|
15.37
|
%
|
|
Sabby Volatility Warrant Master Fund, Ltd. (117)
|
|
|
1,640,731
|
|
|
|
13,249,288
|
|
|
|
14,890,019
|
|
|
|
27.07
|
%
|
|
|
8,801,788
|
|
|
|
6,088,231
|
|
|
|
11.07
|
%
|
|
Intracoastal Capital, LLC (118)
|
|
|
|
|
|
|
378,840
|
|
|
|
378,840
|
|
|
|
*
|
|
|
|
306,363
|
|
|
|
72,477
|
|
|
|
*
|
|
|
Alpha Capital Anstalt (119)
|
|
|
1,787,896
|
|
|
|
10,663,217
|
|
|
|
12,451,113
|
|
|
|
23.75
|
%
|
|
|
2,697,322
|
|
|
|
9,753,791
|
|
|
|
18.61
|
%
|
|
Osher Capital Partners LLC (120)
|
|
|
62,500
|
|
|
|
1,183,782
|
|
|
|
1,246,282
|
|
|
|
2.90
|
%
|
|
|
532,740
|
|
|
|
713,542
|
|
|
|
1.66
|
%
|
|
Charles Worthman (121)
|
|
|
-
|
|
|
|
16,025
|
|
|
|
16,025
|
|
|
|
*
|
|
|
|
12,757
|
|
|
|
3,268
|
|
|
|
*
|
|
|
H.C. Wainwright & Co., LLC (122)
|
|
|
-
|
|
|
|
480,736
|
|
|
|
480,736
|
|
|
|
1.14
|
%
|
|
|
382,691
|
|
|
|
98,045
|
|
|
|
*
|
|
|
Michael Vasinkevich (123)
|
|
|
-
|
|
|
|
549,578
|
|
|
|
549,578
|
|
|
|
1.30
|
%
|
|
|
440,095
|
|
|
|
109,483
|
|
|
|
*
|
|
|
Mark Viklund (124)
|
|
|
-
|
|
|
|
48,074
|
|
|
|
48,074
|
|
|
|
*
|
|
|
|
38,269
|
|
|
|
9,805
|
|
|
|
*
|
|
|
|
|
|
8,850,511
|
|
|
|
49,416,599
|
|
|
|
58,267,110
|
|
|
|
63.90
|
%
|
|
|
28,958,440
|
|
|
|
29,308,670
|
|
|
|
32.14
|
%
|
* Represents less than
1%
**Unless otherwise stated,
the individual(s) with voting and dispositive control of securities offered on behalf of trusts or custodial accounts is the individual
or entity referenced in the name of such accounts.
(1) Pursuant
to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any common shares as to which a shareholder has sole
or shared voting power or investment power, and also any common shares which the shareholder has the right to acquire within 60
days, including upon exercise of common shares purchase options or warrants. There were 41,762,356 common shares outstanding as
of July 15, 2016.
(2) Includes
the sale of all common shares registered herein.
(3) The
shares being registered include 133,334 shares underlying warrants pursuant to August 2013 Offering. Bristol Capital Advisors,
LLC (“BCA”) is the investment advisor to Bristol Investment Fund, Ltd. (“Bristol”). Paul Kessler is the
manager of BCA and as such has voting and investment control over the securities held by Bristol. Mr. Kessler disclaims beneficial
ownership of these securities.
(4) The
shares being registered include 381,000 shares underlying warrants pursuant to August 2013 Offering.
(5) The
shares being registered include 56,987 shares underlying warrants pursuant to August 2013 Offering. G. Tyler Runnels, as President,
has voting and dispositive control with respect to the securities being offered. Mr. Runnels is an associated person of TR Winston
& Company, LLC, a registered broker-dealer.
(6) The
shares being registered include (i) 10,000 shares underlying warrants pursuant to August 2013 Offering, (ii) 1,934 shares underlying
warrants for placement agent services pursuant to August 2013 Offering, (iii) 9,205 shares underlying warrants for placement agent
services pursuant to December 2012 – March 2013 Offering, and (iv) 12,500 shares underlying warrants pursuant to June 2014
Offering. Mr. Hill is an associated person of Galt Financial, Inc., a registered broker-dealer.
(7) The
shares being registered include 19,741 shares underlying warrants pursuant to December 2012 – March 2013 Offering. Greg Bolloten
has voting and dispositive control with respect to the securities being offered.
(8) The
shares being registered include 14,665 shares underlying warrants pursuant to December 2012 – March 2013 Offering. Kihong
Kwon, Custodian, has voting and dispositive control with respect to the securities being offered. Amount of securities
owned does not take into account restrictions on exercise limiting security holder’s ability to exercise warrants in the
event of 4.99% and 9.99% ownership thresholds.
(9) The
shares being registered include 14,665 shares underlying warrants pursuant to December 2012 – March 2013 Offering. Kihong
Kwon, Custodian, has voting and dispositive control with respect to the securities being offered. Amount of securities
owned does not take into account restrictions on exercise limiting security holder’s ability to exercise warrants in the
event of 4.99% and 9.99% ownership thresholds.
(10) The
shares being registered include (i) 6,667 shares underlying warrants pursuant to August 2013 Offering, (ii) 1,933 shares underlying
warrants for placement agent services pursuant to August 2013 Offering, (iii) 9,205 shares underlying warrants for placement agent
services pursuant to December 2012 – March 2013 Offering and (iv) 12,500 shares underlying warrants pursuant to June 2014
Offering. Mr. Hill is an associated person of Galt Financial, Inc., a registered broker-dealer.
(11) The
shares being registered include 50,000 shares underlying warrants for consulting services on 12/28/11. Walter Bass has voting and
dispositive control with respect to the securities being offered.
(12) The
shares being registered include 13,718 shares underlying warrants for services as placement agent pursuant to August 2013 Offering.
Karen K. Ting is an associated person of T.R. Winston & Company, LLC, a registered broker-dealer.
(13) The
shares being registered include 11,000 shares underlying warrants for services as placement agent pursuant to August 2013 Offering.
John W. Galuchie, Jr. is an associated person of T.R. Winston & Company, LLC, a registered broker-dealer.
(14) The
shares being registered include 20,000 shares underlying warrants for services as placement agent pursuant to August 2013 Offering.
Abraham Mirman is an associated person of T.R. Winston & Company, LLC, a registered broker-dealer.
(15) The
shares being registered include (i) 60,000 warrants pursuant to consulting services on 2/11/08. Søren Brøgger Christensen,
PhD has voting and dispositive control with respect to the securities being offered.
(16) The
shares being registered include 169,205 shares underlying warrants pursuant to December 2012 – March 2013 Offering.
(17) The
shares being registered include 29,330 shares underlying warrants pursuant to December 2012 – March 2013 Offering. Nancy
M. Kwon, Trustee, has voting and dispositive control with respect to the securities being offered
(18) The
shares being registered include 28,201 shares underlying warrants pursuant to December 2012 – March 2013 Offering. Eric J.
Byrnes, Trustee, has voting and dispositive control with respect to the securities being offered.
(19) The
shares being registered include 112,804 shares underlying warrants pursuant to December 2012 – March 2013 Offering.
(20) The
shares being registered 400,000 shares underlying warrants pursuant to August 2013 Offering. Todd D. Beddard, Manager, has voting
and dispositive control with respect to the securities being offered
(21) The
shares being registered include 70,000 shares underlying warrants pursuant to August 2013 Offering. Bryan Ezralow has voting and
dispositive control with respect to the securities being offered.
(22) The
shares being registered include 70,000 shares underlying warrants pursuant to August 2013 Offering. Bryan Ezralow has voting and
dispositive control with respect to the securities being offered.
(23) The
shares being registered include 70,000 shares underlying warrants pursuant to August 2013 Offering. Marshall Ezralow has voting
and dispositive control with respect to the securities being offered.
(24) The
shares being registered include (i) 16,667 shares underlying warrants pursuant to August 2013 Offering and (ii) 31,250 shares underlying
warrants pursuant to June 2014 Offering.
(25) The
shares being registered include 66,667 shares underlying warrants pursuant to August 2013 Offering. Robert Cohen has voting and
dispositive control with respect to the securities being offered.
(26) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(27) The
shares being registered include (i) 17,000 shares underlying warrants pursuant to August 2013 Offering, and (ii) 31,021 shares
underlying warrants pursuant to December 2012 - March 2013 offering. Stephanie L. Napier and Lori Harding have voting and dispositive
control with respect to the securities being offered.
(28) The
shares being registered include (i) 16,667 shares underlying warrants pursuant to August 2013 Offering and (ii) 28,201 shares underlying
warrants pursuant to December 2012 – March 2013 Offering.
(29) The
shares being registered include 20,000 shares underlying warrants pursuant to August 2013 Offering.
(30) The
shares being registered include (i) 33,333 shares underlying warrants pursuant to August 2013 Offering, (ii) 36,662 shares underlying
warrants pursuant to December 2012 – March 2013 Offering and (iii) 31,250 shares underlying warrants pursuant to June 2014
Offering.
(31) The
shares being registered include 50,000 shares underlying warrants pursuant to August 2013 Offering.
(32) The
shares being registered include 20,000 shares underlying warrants pursuant to August 2013 Offering.
(33) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(34) The
shares being registered include 7,000 shares underlying warrants pursuant to August 2013 Offering.
(35) The
shares being registered include 6,667 shares underlying warrants pursuant to August 2013 Offering.
(36) The
shares being registered include 33,333 shares underlying warrants pursuant to August 2013 Offering.
(37) The
shares being registered include (i) 28,000 shares underlying warrants pursuant to August 2013 Offering and (ii) 5,333 shares underlying
warrants pursuant to August 2013 Offering.
(38) The
shares being registered include 33,333 shares underlying warrants pursuant to August 2013 Offering.
(39) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(40) The
shares being registered include 66,667 shares underlying warrants pursuant to August 2013 Offering.
(41) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(42) The
shares being registered include 7,000 shares underlying warrants pursuant to August 2013 Offering.
(43) The
shares being registered include 50,000 shares underlying warrants pursuant to August 2013 Offering.
(44) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(45) The shares being
registered include 23,333 shares underlying warrants pursuant to August 2013 Offering.
(46) The
shares being registered include 333,333 shares underlying warrants pursuant to August 2013 Offering. Andrew Roth has voting and
dispositive control with respect to the securities being offered.
(47) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(48) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(49) The
shares being registered include 16,000 shares underlying warrants pursuant to August 2013 Offering.
(50) The
shares being registered include 19,333 shares underlying warrants pursuant to August 2013 Offering.
(51) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(52) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering. Russell and Susan Bergstrom
have voting and dispositive control with respect to the securities being offered.
(53) The
shares being registered include 6,667 shares underlying warrants pursuant to August 2013 Offering.
(54) The
shares being registered include 7,000 shares underlying warrants pursuant to August 2013 Offering.
(55) The
shares being registered include 23,333 shares underlying warrants pursuant to August 2013 Offering.
(56) The
shares being registered include 9,333 shares underlying warrants pursuant to August 2013 Offering.
(57) The
shares being registered include 13,333 shares underlying warrants pursuant to August 2013 Offering.
(58) The
shares being registered include 14,000 shares underlying warrants pursuant to August 2013 Offering.
(59) The
shares being registered include 13,333 shares underlying warrants pursuant to August 2013 Offering.
(60) The
shares being registered include 13,333 shares underlying warrants pursuant to August 2013 Offering.
(61) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(62) The
shares being registered include 30,000 shares underlying warrants pursuant to August 2013 Offering.
(63) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(64) The
shares being registered include 6,667 shares underlying warrants pursuant to August 2013 Offering.
(65) The
shares being registered include 8,333 shares underlying warrants pursuant to August 2013 Offering.
(66) The
shares being registered include 13,333 shares underlying warrants pursuant to August 2013 Offering.
(67) The
shares being registered include 2,000 shares underlying warrants pursuant to August 2013 Offering.
(68) The
shares being registered include 3,333 shares underlying warrants pursuant to August 2013 Offering.
(69) The
shares being registered include 33,333 shares underlying warrants pursuant to August 2013 Offering.
(70) The
shares being registered include 15,000 shares underlying warrants pursuant to August 2013 Offering.
(71) The
shares being registered include 9,667 shares underlying warrants pursuant to August 2013 Offering.
(72) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(73) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(74) The
shares being registered include 7,000 shares underlying warrants pursuant to August 2013 Offering.
(75) The
shares being registered include 133,333 shares underlying warrants pursuant to August 2013 Offering. G. Tyler Runnels has voting
and dispositive control with respect to the securities being offered.
(76) The shares being
registered include 76,700 shares underlying warrants pursuant to August 2013 Offering. Fariba Ghodsian has voting and dispositive
control with respect to the securities being offered.
(77) The shares being
registered include 15,000 shares underlying warrants pursuant to August 2013 Offering. Fariba Ghodsian has voting and dispositive
control with respect to the securities being offered.
(78) The
shares being registered include 75,000 shares underlying warrants pursuant to August 2013 Offering. Fariba Ghodsian has voting
and dispositive control with respect to the securities being offered.
(79) The
shares being registered include (i) 66,667 shares underlying warrants pursuant to August 2013 Offering and (ii) 20,000 shares underlying
warrants pursuant to placement agent services in August 2013 Offering. Michael Evan Meyers is an associated person of T.R. Winston
& Company, LLC, a registered broker-dealer.
(80) The
shares being registered include (i) 311,325 shares underlying warrants for services as placement agent pursuant to December 2015
Offering. and (ii) 90,500 shares underlying warrants for services as placement agent pursuant to July 2015 Offering. Noam Rubenstein
is an associated person of H.C. Wainwright & Co., LLC, a registered broker-dealer.
(81) The shares being
registered include 66,667 shares underlying warrants pursuant to August 2013 Offering. Adam J. Chill has voting and dispositive
control with respect to the securities being offered.
(82) The
shares being registered include 62,500 shares underlying warrants pursuant to June 2014 Offering.
(83) The
shares being registered include 66,667 shares underlying warrants pursuant to August 2013 Offering.
(84) The
shares being registered include 10,000 shares underlying warrants pursuant to August 2013 Offering.
(85) The
shares being registered include 16,667 shares underlying warrants pursuant to August 2013 Offering.
(86) The
shares being registered include 66,667 shares underlying warrants pursuant to August 2013 Offering.
(87) The
shares being registered include 28,201 shares underlying warrants pursuant to December 2012 through March 2013 Offering.
(88) The
shares being registered include 14,100 shares underlying warrants pursuant to December 2012 - March 2013 Offering. Dr. Lawrence
Baker has voting and dispositive control with respect to the securities being offered.
(89) The
shares being registered include 42,302 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(90) The
shares being registered include 24,253 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(91) The
shares being registered include 8,461 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(92) The
shares being registered include 8,461 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(93) The shares being
registered include 5,641 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(94) The shares being
registered include 14,101 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(95) The shares being
registered include 28,201 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(96) The shares being
registered include 28,201 shares underlying warrants pursuant to December 2012 - March 2013 Offering. Chuck Burtzloff has voting
and dispositive control with respect to the securities being offered.
(97) The shares being
registered include 78,963 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(98) The shares being
registered include 28,201 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(99) The shares being
registered include 28,201 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(100) The shares being
registered include 19,741 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(101) The shares being
registered include 169,205 shares underlying warrants pursuant to December 2012 - March 2013 Offering. Evelyn P. Sabo has voting
and dispositive control with respect to the securities being offered.
(102) The shares being
registered include 29,330 shares underlying warrants pursuant to December 2012 - March 2013 Offering. Kevin Kwon has voting and
dispositive control with respect to the securities being offered.
(103) The shares being
registered include 7,051 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(104) The shares being
registered include 7,051 shares underlying warrants pursuant to December 2012 - March 2013 Offering.
(105) The shares being
registered include 62,083 shares underlying placement agent warrants pursuant to August 2013 Offering.
(106) The
shares being registered include 50,000 shares underlying warrants pursuant to June 2014 Offering.
(107) The
shares being registered include 31,250 shares underlying warrants pursuant to June 2014 Offering. Raul Silvestre has voting and
dispositive control with respect to the securities being offered.
(108) The
shares being registered include 33,125 shares underlying warrants pursuant to June 2014 Offering.
(109) The
shares being registered include 62,500 shares underlying warrants pursuant to June 2014 Offering. Pauline Wagner and Ernest Plata
have voting and dispositive control with respect to the securities being offered.
(110) The
shares being registered include 62,500 shares underlying warrants pursuant to June 2014 Offering. John W. Feik has voting and dispositive
control with respect to the securities being offered.
(111) The
shares being registered include 31,250 shares underlying warrants pursuant to June 2014 Offering.
(112) The
shares being registered include 62,500 shares underlying warrants pursuant to June 2014 Offering. Michael Ranelle has voting and
dispositive control with respect to the securities being offered.
(113) The
shares being registered include 104,000 shares underlying warrants for services as placement agent pursuant to August 2013 Offering.
G. Tyler Runnels has voting and dispositive control with respect to the securities being offered. Tyler Runnels is an associated
person of T.R. Winston & Company, LLC, a registered broker-dealer.
(114) The
shares being registered include 20,000 shares underlying warrants for services as placement agent pursuant to August 2013 Offering.
Scott Gottlieb is an associated person of T.R. Winston & Company, LLC, a registered broker-dealer.
(115) The
shares being registered include 12,000 shares underlying warrants for services as placement agent pursuant to August 2013 Offering.
Russell Steward is an associated person of T.R. Winston & Company, LLC, a registered broker-dealer.
(116) The
shares being registered include (i) 6,671,250 common shares underlying warrants pursuant to December 2015 Offering, (ii) 2,857,144
common shares underlying replacement warrants issued pursuant to December 2015 Offering and (iii) 817,144 shares underlying warrants
pursuant to July 2015 Offering. Sabby Management, LLC serves as the investment manager of Sabby Healthcare Master Fund, Ltd. and
Sabby Volatility Warrant Master Fund, Ltd. Hal Mintz is the manager of Sabby Management, LLC. Each of Sabby Management, LLC
and Hal Mintz disclaims beneficial ownership over the securities covered by the Form S-1 except to the extent of its pecuniary
interest therein.
(117) The
shares being registered include (i) 4,447,500 common shares underlying warrants pursuant to December 2015 Offering, (ii) 2,857,144
common shares underlying replacement warrants issued pursuant to December 2015 Offering and (iii) 1,497,144 shares underlying warrants
pursuant to July 2015 Offering. Sabby Management, LLC serves as the investment manager of Sabby Healthcare Master Fund, Ltd. and
Sabby Volatility Warrant Master Fund, Ltd. Hal Mintz is the manager of Sabby Management, LLC. Each of Sabby Management, LLC
and Hal Mintz disclaims beneficial ownership over the securities covered by the Form S-1 except to the extent of its pecuniary
interest therein.
(118) The
shares being registered include (i) 39,696 shares underlying warrants pursuant to July 2015 Offering and (ii) 266,667 shares underlying
warrants pursuant to August 2013 Offering.
Mitchell P. Kopin (“Mr. Kopin”)
and Daniel B. Asher (“Mr. Asher”), each of whom are managers of Intracoastal Capital LLC (“Intracoastal”),
have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal. As a result,
each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of the securities reported herein that are held by Intracoastal.
In the aggregate, Mr. Kopin and Mr. Asher may
be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act) of 378,840 of our ordinary shares
issuable upon exercise of warrants.
Mr. Asher, who is a manager of Intracoastal,
is also a control person of a broker-dealer. As a result of such common control, Intracoastal may be deemed to be an affiliate
of a broker-dealer. Intracoastal acquired the ordinary shares being registered hereunder in the ordinary course of business, and
at the time of the acquisition of the ordinary shares and warrants described herein, Intracoastal did not have any arrangements
or understandings with any person to distribute such securities.
(119) The
shares being registered include (i) 1,068,750 common shares underlying warrants pursuant to December 2015 Offering, (ii) 1,214,286
common shares underlying replacement warrants issued pursuant to December 2015 Offering and (iii) 414,286 shares underlying warrants
pursuant to July 2015 Offering. Konrad Ackerman has voting and dispositive control with respect to the securities being offered.
(120) The
shares being registered include (i) 166,668 common shares underlying warrants pursuant to December 2015 Offering, (ii) 214,286
common shares underlying replacement warrants issued pursuant to December 2015 Offering and (iii) 151,786 shares underlying warrants
pursuant to July 2015 Offering. Ari Kluger has voting and dispositive control with respect to the securities being offered.
(121) The
shares being registered include (i) 9,884 shares underlying warrants for services as placement agent pursuant to December 2015
Offering and (ii) 2,873 shares underlying warrants for services as placement agent pursuant to July 2015 Offering. Charles Worthman
is an associated person of H.C. Wainwright & Co., LLC, a registered broker-dealer.
(122) The
shares being registered include (i) 296,500 shares underlying warrants for services as placement agent pursuant to December 2015
Offering and (ii) 86,191 shares underlying warrants for services as placement agent pursuant to July 2015 Offering. H.C. Wainwright
& Co., LLC is a registered broker-dealer. Mark W. Viklund and Thomas Pinou have voting and dispositive control with respect
to the securities being offered. H.C. Wainwright & Co., LLC is a registered broker-dealer.
(123) The
shares being registered include (i) 340,975 shares underlying warrants for services as placement agent pursuant to December 2015
Offering and (ii) 99,120 shares underlying warrants for services as placement agent pursuant to July 2015 Offering. Michael Vasinkevich
is an associated person of H.C. Wainwright & Co., LLC, a registered broker-dealer.
(124) The
shares being registered include (i) 29,650 shares underlying warrants for services as placement agent pursuant to December 2015
Offering and (ii) 8,619 shares underlying warrants for services as placement agent pursuant to July 2015 Offering. Mark Viklund
is an associated person of H.C. Wainwright & Co., LLC, a registered broker-dealer.
PLAN OF DISTRIBUTION
Investor Warrants
Pursuant to the terms of the Investor Warrants
the Shares will be distributed to those holders who properly exercise and remit the payment of the exercise price.
The Shares being offered pursuant to the exercise
of the Investor Warrants consist solely of 10,072,736 common shares. The Investor Warrants were sold in our Original Offering.
We will sell and issue the Shares directly
to the applicable warrant holder upon proper exercise in accordance with the terms of the Investor Warrants, following delivery
to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon
such exercise.
Selling Stockholders
Each Selling Stockholder
of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their
securities covered hereby on the OTCQB or any other stock exchange, market or trading facility on which the securities are traded
or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of
the following methods when selling securities:
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·
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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·
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block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
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·
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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·
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an exchange distribution in accordance with the rules of the applicable exchange;
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·
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privately negotiated transactions;
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·
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settlement of short sales;
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·
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in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities
at a stipulated price per security;
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·
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
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·
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a combination of any such methods of sale; or
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·
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any other method permitted pursuant to applicable law.
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The Selling Stockholders
may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available,
rather than under this prospectus.
Broker-dealers engaged by
the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction
not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale
of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume.
The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which
require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities
such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The Selling Stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to
pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities
Act.
We agreed to keep this prospectus
effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration
and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to
be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect
or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule
of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they
have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
Under applicable rules and
regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage
in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M,
prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and
sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to
the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior
to the time of the sale (including by compliance with Rule 172 under the Securities Act).
DESCRIPTION OF SECURITIES
General
As of July 5, 2016, our authorized capital
stock consisted of:
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150,000,000 shares of common stock, par value $0.0001;
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1,854 shares of Series A 0% convertible preferred stock, par value
$0.0001; and
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29,998,146 shares of “blank check” preferred stock, par value $0.0001.
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As of July 5, 2016, we had 41,762,356 shares
of common stock issued and outstanding and 1,853.12505 shares of preferred stock were issued and outstanding. All of our currently
issued and outstanding shares of capital stock were validly issued, fully paid and non-assessable under the DGCL.
Set forth below is a summary description of
all of the material terms of our capital stock and convertible securities. This description is qualified in its entirety by reference
to our amended and restated certificate of incorporation, bylaws and form of convertible securities, each of which is filed as
an exhibit to the registration statement, of which this prospectus forms a part. Additionally, the description of registration
rights are qualified in their entirety by reference to each respective registration rights agreement which are filed as an exhibit
to this registration statement.
Preferred Stock
Series A Convertible Preferred Stock
In our December 2015 Offering, our board of
directors authorized the designation and issuance of up to 1,854 shares of Series A 0% Convertible Preferred Stock. The
Series A 0% Convertible Preferred Stock has a stated value of $1,000 per share. Pursuant to the December 2015 Offering, we issued
a total of 1,853.12505 shares of our Series A 0% Convertible Preferred Stock, convertible into 12,354,167 common shares,
subject to adjustment therein.
Subject to the terms and conditions of our
Series A 0% Convertible Preferred Stock and to customary adjustments to the conversion rate, each share of our Series A
Preferred Stock is convertible into approximately 6,667 shares of our common stock so long as the number of shares of our common
stock beneficially owned by such investor does not exceed 9.9% of our beneficial ownership. Except for anti-dilution protection
for subsequent equity sales, one share of Series A 0% Convertible Preferred Stock is the economic equivalent of approximately 6,667
shares of common stock into which it is convertible. Except as required by law, the Series A 0% Convertible Preferred Stock
will not have any voting rights. For a complete description of the terms of the Series A Preferred Stock, please see the certificate
of designation, which is incorporated by reference into the registration statement of which this prospectus is a part.
We may issue our preferred shares from time
to time in one or more series as determined by our board of directors. The voting powers and preferences, the relative rights of
each series, and the qualifications, limitations and restrictions thereof may be established by our board of directors without
any further vote or action by our shareholders.
Shares to be Sold Pursuant to the Investor Warrants
We are registering 10,072,736 common shares
to be sold upon the exercise of the Investor Warrants. The Investor Warrants were originally issued in our Original Offering. We
subsequently reduced the exercise price and extend the term of certain Investor Warrants. The Investor Warrants are currently comprised
of:
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Series A Warrants
:
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Each Series A warrant entitles the holder to purchase at any time prior to June 3, 2019, one share of common stock at an exercise price of $1.15 per share. We issued an aggregate of 2,081,985 Series A warrants in our Original Offering, all of which are currently outstanding.
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Series B Warrants:
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Each Series B warrant entitles the holder to purchase at any time prior to December 31, 2016, one share of common stock at an exercise price of $0.70 per share. We issued an aggregate of 4,163,970 Series B warrants in our Original Offering, of which 3,826,792 are currently outstanding due to the exercise of 337,169 Series B warrants.
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Series C Warrants:
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Each Series C warrant entitles the holder to purchase at any time prior to December 31, 2016, one share of common stock at an exercise price of $0.70 per share. We issued an aggregate of 4,163,970 Series A warrants in our Original Offering, all of which are currently outstanding.
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The Investor Warrants are not listed or quoted
on any securities exchange or quotation system. The warrant holders do not have the rights or privileges of holders of common stock
and any voting rights until they exercise their unit warrants and receive shares of common stock.
If the registration statement covering the
shares issuable upon exercise of the Investor Warrants is not effective at the time of exercise, the Investor Warrants may only
be exercised on a “cashless” basis and will be issued with appropriate restrictive legends unless such shares are eligible
for resale without restriction under the Securities Act.
We are not required to issue fractional shares
upon the exercise of the Warrants. Instead, we may choose to purchase the fraction for an amount in cash equal to the current value
of the fraction computed on the basis of the closing market price of a share of our common stock on the trading day immediately
preceding the exercise date of the Warrant.
We will attempt to maintain the effectiveness
of a current prospectus covering the common stock issuable upon exercise of the Warrants until the expiration of the Warrants.
However, we cannot assure you that we will be able to do so. If the prospectus relating to the common stock issuable upon the exercise
of the Warrants is not current or if the common stock is not qualified or exempt from qualification in the jurisdictions in which
the holders of the Warrants reside, the Warrants may have no value.
The exercise price and the number of shares
of common stock issuable upon the exercise of the Warrants are subject to adjustment upon the happening of certain events, such
as recapitalizations, reorganizations, mergers or consolidations.
The Warrants provide that no exercise will
be effected, and the holder of a Warrant will not have the right to exercise the Warrant, if after giving effect to the exercise
the holder, together with any affiliates, would beneficially own in excess of, solely at the option of the holder, either 4.99%
or 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the issuance of shares upon
exercise of such Warrant.
Resale Shares Being Registered for the Selling
Stockholders
For a description of the warrants pursuant
to which the Selling Stockholders will be acquiring their shares, see the section of this prospectus entitled “Selling Stockholders”
and the description of our offerings contained therein.
Warrants
As of July 5, 2016, we had an aggregate of
40,088,993 common stock purchase warrants issued and outstanding with a range of exercise prices from $0.15 to $3.00 per share
and an average weighted exercise price of $0.66 per share, consisting of:
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Description of Securities
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Exercise
Price
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Expiration
Date
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Price Adjustment
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Callable
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Consultant Warrants
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60,000 Warrants
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$
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0.50
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1/31/2018
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Stock Dividends and Splits
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No
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25,000 Warrants
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$
|
1.94
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8/16/2016
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Stock Dividends and Splits
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No
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190,000 Warrants
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$
|
2.03
|
|
|
12/28/2016
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Stock Dividends and Splits
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|
No
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18,000 Warrants
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$
|
2.55
|
|
|
6/1/2017
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Stock splits, Dividends and Fundamental Transactions
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No
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96,000 Warrants
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$
|
3.00
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2/01/2019
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12,500 Warrants
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$
|
1.15
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8/05/2019
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Stock Splits and Dividends and Fundamental Transactions
|
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No
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139,500 Warrants
|
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$
|
1.15
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|
|
8/05/2019
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Stock Splits and Dividends
|
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No
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150,000 Warrants
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|
$
|
0.65
|
|
|
1/12/2020
|
|
Stock Splits and Dividends
|
|
No
|
|
75,000 Warrants
|
|
$
|
0.65
|
|
|
5/26/2020
|
|
Stock Splits and Dividends
|
|
No
|
|
75,000 Warrants
|
|
$
|
0.35
|
|
|
11/04/2020
|
|
Stock Splits and Dividends
|
|
No
|
|
Offering Warrants
|
|
|
|
|
|
|
|
|
|
|
|
3,571,430 – December 2015 Private Offering Replacement Warrant
|
|
$
|
0.30
|
|
|
12/29/2020
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
3,571,430 – December 2015 Private Offering Replacement Warrants
|
|
$
|
0.30
|
|
|
7/29/2017
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
6,177,084 – December 2015 Private Offering
|
|
$
|
0.30
|
|
|
1/29/2021
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
6,177,084 – December 2015 Private Offering
|
|
$
|
0.30
|
|
|
7/29/2017
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
988,334 – December 2015 Private Offering (1)
|
|
$
|
0.30
|
|
|
12/29/2020
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
287,303 – July 2015 Private Offering (2)
|
|
$
|
0.80
|
|
|
7/9/2020
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
2,679,850 – July 2015 Private Offering
|
|
$
|
0.15
|
|
|
7/9/2020
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
107,143 – July 2015 Private Offering
|
|
$
|
0.15
|
|
|
7/10/2020
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
88,420 – July 2015 Private Offering
|
|
$
|
0.15
|
|
|
1/9/2017
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
44,643 – July 2015 Private Offering
|
|
$
|
0.15
|
|
|
1/10/2017
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
483,125 – June 2014 Private Offering
|
|
$
|
1.15
|
|
|
6/24/2019
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
2,408,800 – June 2014 Public Offering (3)
|
|
$
|
1.15
|
|
|
6/3/2019
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
7,990,753 — June 2014 Public Offering
|
|
$
|
0.70
|
|
|
12/31/2016
|
|
Stock Splits and Dividends and Fundamental Transactions
|
|
No
|
|
3,600,024 – Aug 2013 Offering (4)
|
|
$
|
1.75
|
|
|
8/20/2018
|
|
Stock Splits, Dividends and Fundamental Transactions
|
|
No
|
|
1,072,570 – Jan/Mar 2013 Offering (5)
|
|
$
|
3.00
|
|
|
Dec 2017 - Mar 2018
|
|
Stock Splits and Dividends
|
|
No
|
|
|
(1)
|
Represents warrants issued to our placement agent in connection with December 2015 Private Offering.
|
|
|
(2)
|
Represents warrants issued to our placement agent with an average exercise price of $0.80 per share.
|
|
|
(3)
|
Includes 326,817 warrants issued to our placement agents with an average exercise price of $1.15 per share.
|
|
|
(4)
|
Includes 266,668 warrants issued to our placement agents with an average exercise price of $1.75 per share.
|
|
|
(5)
|
Includes 18,410 warrants issued to our placement agent and finder with an average exercise price of $3.00 per share.
|
Options
As of July 5, 2016 we had an aggregate of 5,562,123
common stock purchase options issued and outstanding with an average exercise price of $1.40 per share. The options were issued
pursuant to our 2007 Equity Compensation Plan, as amended, and our 2009 Executive Compensation Plan, as amended.
Delaware Anti-Takeover Law and Charter and Bylaws Provisions
We are subject to Section 203 of the Delaware
General Corporation Law. This provision generally prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:
|
|
·
|
prior to such date, the board of directors approved either the business combination or the transaction
that resulted in the stockholder becoming an interested stockholder;
|
|
|
·
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also
officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
|
|
|
·
|
on or subsequent to such date, the business combination is approved by the board of directors and
authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
Section 203 defines a business combination
to include:
|
|
·
|
any merger or consolidation involving the corporation and the interested stockholder;
|
|
|
·
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation
involving the interested stockholder;
|
|
|
·
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder;
|
|
|
·
|
any transaction involving the corporation that has the effect of increasing the proportionate share
of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
|
|
|
·
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges
or other financial benefits provided by or through the corporation.
|
In general, Section 203 defines an “interested
stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation, or
an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of a corporation
at any time within three years prior to the time of determination of interested stockholder status, and any entity or person affiliated
with or controlling or controlled by such entity or person.
Our certificate of incorporation and bylaws
contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying
or preventing a change in control, including changes a stockholder might consider favorable. In particular, the certificate of
incorporation and bylaws, as applicable, among other things:
|
|
·
|
provides our board of directors with the ability to alter its bylaws without stockholder approval;
and
|
|
|
·
|
provides that vacancies on our board of directors may be filled by a majority of directors in office,
although less than a quorum.
|
Such provisions may have the effect of discouraging
a third-party from acquiring us, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance
the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by them,
and to discourage some types of transactions that may involve an actual or threatened change in control of our company. These provisions
are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used
in proxy fights. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such
proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.
However, these provisions could have the effect
of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts. These
provisions also may have the effect of preventing changes in our management.
Transfer Agent and Registrar
The transfer agent and registrar for our common
stock is American Stock Transfer & Trust Company. The address of American Stock Transfer & Trust Company is 59 Maiden Lane,
New York, New York, 10038 and the phone number is (718) 921-8201.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion
and Analysis of Financial Condition and Results of Operations contains forward-looking statements regarding our business development
plans, clinical trials, regulatory reviews, timing, strategies, expectations, anticipated expenses levels, business prospects and
positioning with respect to market, demographic and pricing trends, business outlook, technology spending and various other matters
(including contingent liabilities and obligations and changes in accounting policies, standards and interpretations) and express
our current intentions, beliefs, expectations, strategies or predictions. These forward-looking statements are based on a number
of assumptions and currently available information and are subject to a number of risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set
forth under “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” and elsewhere
in this prospectus. The following discussion should be read in conjunction with our financial statements and related notes thereto
included elsewhere in this prospectus.
Our Management’s Discussion and Analysis
of Financial Condition and Results of Operations, or MD&A, is provided in addition to the accompanying financial statements
and related notes in this prospectus to assist readers in understanding our results of operations, financial condition, and cash
flows. MD&A is organized as follows:
|
|
·
|
Company Overview
- Discussion of our business plan and strategy in order to provide context
for the remainder of MD&A.
|
|
|
·
|
Critical Accounting Policies and Use of Estimates
- Accounting policies that we believe
are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
|
|
|
·
|
Results of Operations
- Analysis of our financial results comparing the: (i) three months
ended March 31, 2016 to the comparable period in 2015, and (ii) the year ended December 31, 2015 to the year ended December 31,
2014.
|
|
|
·
|
Liquidity and Capital Resources
- Analysis of changes in our cash flows, and discussion
of our financial condition and potential sources of liquidity.
|
The various sections of this MD&A contain
a number of forward-looking statements. Such statements are based on our current expectations and could be affected by the uncertainties
and risk factors described throughout this filing and particularly in the Risk Factors section of this Prospectus. Our actual results
may differ materially.
Company Overview
We are an early-stage, pre-revenue, pharmaceutical
company focused on the development of prodrug cancer therapeutics for the treatment of solid tumors including brain, liver, prostate
and other cancers. A prodrug is an inactive precursor of a drug that is converted into its active form only at the site of the
tumor. Our technology platform combines a powerful, plant-derived cytotoxin with a patented prodrug delivery system that targets
the release of the drug within the tumor. We believe our cancer prodrugs have the potential to provide a targeted therapeutic approach
to a broad range of solid tumors with fewer side effects than those related to current chemotherapy treatments. Our lead drug candidate,
mipsagargin, is currently undergoing Phase II clinical evaluation in glioblastoma and prostate patients.
Financial
To date, we have devoted a substantial portion
of our efforts and financial resources to the development of our proposed drug candidates. Mipsagargin is the only product candidate
for which we have conducted clinical trials, and we have not marketed, distributed or sold any products. Since our inception in
2003, we have generated no revenue from product sales and have funded our operations principally through the private and public
sales of our equity securities. We have never been profitable and, as of March 31, 2016, we had an accumulated deficit of approximately
$45.8 million. We expect to continue to incur significant operating losses for the foreseeable future as we continue the development
of our product candidates and advance them through clinical trials.
Our cash and cash equivalents balance at March
31, 2016 was approximately $1.6 million, representing 88% of total assets. Based on our current expected level of operating expenditures,
we expect to be able to fund our operations for the next three to six months. This period could be shortened if there are any significant
increases in spending that were not anticipated or other unforeseen events.
We anticipate raising additional cash needed
through the private or public sales of equity or debt securities, collaborative arrangements, or a combination thereof, to continue
to fund our operations and the development of our product candidates. There is no assurance that any such collaborative arrangement
will be entered into or that financing will be available to us when needed in order to allow us to continue our operations, or
if available, on terms acceptable to us. If we do not raise sufficient funds in a timely manner, we may be forced to curtail operations,
delay or stop our ongoing clinical trials, cease operations altogether, or file for bankruptcy. We currently do not have commitments
for future funding from any source.
Going Concern
Our auditors’ report on our December
31, 2015 financial statements expressed an opinion that our capital resources as of the date of their Audit Report were not sufficient
to sustain operations or complete our planned activities for the upcoming year unless we raised additional funds. Accordingly,
our current cash level raises substantial doubt about our ability to continue as a going concern past September 2016. If we do
not obtain additional funds by such time, we may no longer be able to continue as a going concern and will cease operation which
means that our shareholders will lose their entire investment.
Critical Accounting Policies and Use of Estimates
We have prepared our financial statements in
conformity with accounting principles generally accepted in the United States, which requires management to make significant judgments
and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses during the reporting period. We base these significant
judgments and estimates on historical experience and other applicable assumptions we believe to be reasonable based upon information
presently available. These estimates may change as new events occur, as additional information is obtained and as our operating
environment changes. These changes have historically been minor and have been included in the financial statements as soon as they
became known. Actual results could materially differ from our estimates under different assumptions, judgments or conditions.
All of our significant accounting policies
are discussed in Note 3, Summary of Critical Accounting Policies, to our financial statements, included elsewhere in this Annual
Report. We have identified the following as our critical accounting policies and estimates, which are defined as those that are
reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial
condition and results of operations and could potentially result in materially different results under different assumptions, judgments
or conditions.
We believe the following critical accounting
policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:
Use of Estimates
— The preparation of financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual
results may differ from those estimates.
Cash and Equivalents
— Cash equivalents are comprised of certain highly liquid investments with maturity of three months or less when purchased.
We maintain our cash in bank deposit accounts which, at times, may exceed federally insured limits. We have not experienced any
losses in such accounts.
Research and Development
Costs
— Research and development costs are charged to expense as incurred. Our research and development expenses
consist primarily of expenditures for toxicology and other studies, manufacturing, clinical trials, compensation and consulting
costs.
Stock-based Compensation
— The Company measures the cost of employee services received in exchange for an equity award based on the grant-date fair
value of the award. All grants under our stock-based compensation programs are accounted for at fair value and that cost is recognized
over the period during which an employee is required to provide service in exchange for the award (the vesting period).
Compensation expense for options granted to
non-employees is determined in accordance with the standard as the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably measured. Compensation expense for awards granted to non-employees is
re-measured each period. Determining the appropriate fair value of the stock-based compensation requires the input of subjective
assumptions, including the expected life of the stock-based payment and stock price volatility. The Company uses the Black-Scholes
option-pricing option model to value its stock option awards which incorporate the Company’s stock price, volatility, U.S.
risk-free rate, dividend rate, and estimated life.
Fair Value of Financial
Instruments
— Our short-term financial instruments, including cash, accounts payable and other liabilities, consist
primarily of instruments without extended maturities. We believe that the fair values of our current assets and current liabilities
approximate their reported carrying amounts.
Warrant derivative liability consists of certain
of our warrants with anti-dilution provisions, and are valued using option pricing models which incorporate the Company’s
stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life.
Recent Accounting Pronouncements
In January 2015, the FASB issued ASU No. 2015-01,
Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating
the Concept of Extraordinary Items, simplifying the income statement presentation. The guidance does not change the requirement
to disclose items that are unusual in nature and occur infrequently. ASU No. 2015-01 is effective for annual reporting periods
beginning after December 15, 2015, including interim periods within that reporting period, although early adoption is permitted.
Exclusive of a material transaction that would qualify for extraordinary item presentation in future periods, we do not expect
the adoption of this standard to materially impact our financial statements.
In April 2015, the Financial Accounting Standard
Board issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance
Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance
sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective
for annual and interim reporting periods of public entities beginning after December 15, 2015, and early adoption is permitted.
We do not expect the adoption of this standard to materially impact our consolidated financial statements.
There are various other recently issued updates,
most of which represented technical corrections to the accounting literature or application to specific industries, and are not
expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Result of Operations
Three Months Ended March 31, 2016 Compared
to Three Months Ended March 31, 2015
Our results of operations have varied significantly
from year to year and quarter to quarter and may vary significantly in the future. We did not have revenue during the three months
ended March 31, 2016 and 2015, and we do not anticipate generating any revenues during 2016. Net losses for the three months ending
March 31, 2016 and 2015 were approximately $0.5 million and $1.8 million, respectively, resulting from the operational activities
described below.
Operating Expenses
Operating expense totaled approximately $1.0
million and $1.8 million during the three months ended March 31, 2016 and 2015, respectively. The decrease in operating expenses
is the result of the following factors.
|
|
|
Three months
ended March 31,
|
|
|
Change in 2016 versus 2015
|
|
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
|
|
|
(amount in thousands)
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
323
|
|
|
$
|
815
|
|
|
$
|
(492
|
)
|
|
|
(60
|
)%
|
|
General and administrative
|
|
|
707
|
|
|
|
1,028
|
|
|
|
(321
|
)
|
|
|
(31
|
)%
|
|
Total operating expenses
|
|
$
|
1,030
|
|
|
$
|
1,843
|
|
|
$
|
(813
|
)
|
|
|
(44
|
)%
|
Research and Development Expenses
Research and development expenses totaled approximately
$0.3 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively. The decrease of approximately $0.5
million, or 60%, for the three months ended March 31, 2016 compared to the same period in 2016 was primarily due to a decrease
in clinical trial expense due to completion of our Phase II clinical trial in liver cancer. Additionally, manufacturing expense
decreased from prior year as a result as sponsored research incurred in prior year related to creating a sustainable source of
high quality thapsigargin, as well as a decrease in legal expenses as we resolved our outstanding patent litigation.
Our research and development expenses consist
primarily of expenditures related to manufacturing, clinical trials, employee compensation, consulting, and patent related costs.
General and Administrative
General and administrative expenses totaled
approximately $0.7 and $1.0 million for the three months ended March 31, 2016 and 2015, respectively. The decrease of approximately
$320,000, or 31%, for the three months ended March 31, 2016 compared to the same period in 2015, was primarily as a result of a
decrease from prior year in corporate communication and business development costs, as we reduced consultant costs related to investor
and public relations initiatives for the company. Additionally, compensation costs decreased as a result of the resignation of
our CEO, and the company no longer accruing related bonuses.
Our general and administrative expenses consist
primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general
operating expenses.
Other Income (Expense)
Other income totaled approximately $540,000 and $0 for the three
months ended March 31, 2016 and 2015, respectively.
|
|
|
Three Months
Ended March 31,
|
|
|
Change in 2016 Versus 2015
|
|
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
|
|
|
(amount in thousands)
|
|
|
|
|
|
|
|
|
Gain on change in fair value of derivative liability
|
|
$
|
538
|
|
|
$
|
─
|
|
|
$
|
538
|
|
|
|
100
|
%
|
|
Interest income (expense), net
|
|
|
2
|
|
|
|
─
|
|
|
|
2
|
|
|
|
100
|
%
|
|
Total other income (expense)
|
|
$
|
540
|
|
|
$
|
─
|
|
|
$
|
540
|
|
|
|
100
|
%
|
Gain on change in fair
value of derivative liability
There was a gain as a result of a change in
the fair value of our derivative liability of approximately $538,000 during the three months ended March 31, 2016 compared to no
gain or loss during the three months ended March 31, 2015. The change in the fair value of our derivative liability from the prior
year was the result of our private placement in December 2015, where we issued convertible preferred stock with 18-month anti-dilutive
features and warrants. Refer to Note 6 in our Financial Statements for further discussion on our derivative liability.
Interest income (expense)
We had no net interest income as interest income
offset interest expense in 2015, compared to net interest income of approximately $2,000 for the three months ended March 31, 2016,
respectively. The increase of $2,000 was attributable to an increase in interest earned on higher average outstanding cash balances
during the period, as well as the conversion of outstanding notes payable into the company’s common stock in the prior year.
Year Ended December 31, 2015 Compared to the Year Ended December
31, 2014
Our results of operations have varied significantly
from year to year and quarter to quarter and may vary significantly in the future. We did not have revenue during the years ending
December 31, 2015 and 2014. We do not anticipate generating any revenues during 2016. Net loss for 2015 and 2014 were $5.9 million
and $7.0 million, respectively, resulting from the operational activities described below.
Operating Expenses
Operating expense totaled $6.1 million and
$7.0 million during 2015 and 2014, respectively. The decrease in operating expenses is the result of the following factors.
|
|
|
Year Ended
|
|
|
Change in 2015
|
|
|
|
|
December 31,
|
|
|
Versus 2014
|
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
|
|
|
(amount in thousands)
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
2,303
|
|
|
$
|
3,691
|
|
|
$
|
(1,388
|
)
|
|
|
(38
|
)%
|
|
General and administrative
|
|
|
3,764
|
|
|
|
3,307
|
|
|
|
457
|
|
|
|
14
|
%
|
|
Total operating expense
|
|
$
|
6,067
|
|
|
$
|
6,998
|
|
|
$
|
(931
|
)
|
|
|
(13
|
)%
|
Research and Development
Research and development expenses totaled $2.3
million and $3.7 million for the year ended 2015 and 2014, respectively. The decrease of $1.4 million, or 38%, in 2015 compared
to 2014 was primarily attributable a decline in costs related to manufacturing of over $0.7 million from prior year due to process
development projects incurred in the prior year. Additionally, clinical trial expense decreased over $0.6 million in the current
year due to our Phase II clinical trial closing enrollment to new patients during the prior year.
Our research and development expenses consist
primarily of expenditures related to toxicology and other studies, manufacturing, clinical trials, compensation and consulting
costs.
General and Administrative
General and administrative expenses totaled
$3.8 million and $3.3 million during 2015 and 2014, respectively. The increase of approximately $457,000, or 14%, in 2015 compared
to 2014 was primarily attributable to an increase in corporate communication and business development costs, as we engaged consultants
and launched a comprehensive investor and public relations initiative for the company. These increases were partially offset by
a decrease in stock compensation expense compared to prior year.
Our general and administrative expenses consist
primarily of expenditures related to employee compensation, legal, accounting and tax, other professional services, and general
operating expenses.
Other Income (Expense)
Other income totaled approximately $181,000 and $4,000 for 2015
and 2014, respectively.
|
|
|
Year Ended
|
|
|
Change in 2015
|
|
|
|
|
December 31,
|
|
|
Versus 2014
|
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
|
|
|
(amount in thousands)
|
|
|
|
|
|
|
|
|
(Loss) gain on change in fair value of derivative liability
|
|
$
|
181
|
|
|
$
|
—
|
|
|
$
|
181
|
|
|
|
100
|
%
|
|
Interest income (expense), net
|
|
|
—
|
|
|
|
4
|
|
|
|
(4
|
)
|
|
|
(100
|
)%
|
|
Total other income (expense)
|
|
$
|
181
|
|
|
$
|
4
|
|
|
$
|
177
|
|
|
|
2,200
|
%
|
(Loss) gain on change in fair value of derivative liability
There was a gain on change in fair value of
our derivative liability of approximately $181,000 during the year ended December 31, 2015 compared to no gain or loss during the
year ended December 31, 2014. The change in the fair value of our derivative liability from the prior year was the result of our
private placement in December 2015, where we issued convertible preferred stock with 18-month anti-dilutive features and warrants.
Refer to Note 8 in our Financial Statements for further discussion on our derivative liability.
Interest income (expense)
We had no net interest income as interest income
offset interest expense in 2015, compared to net interest income of approximately $4,000 for the year ended December 31, 2015 and
2014, respectively. The decrease of $4,000 was attributable to an increase in interest earned on higher average outstanding cash
balances in the prior year.
Liquidity and Capital Resources
We have incurred losses since our inception
in 2003 as a result of significant expenditures for operations and research and development and the lack of any approved products
to generate revenue. We have a deficit accumulated of $45.3 and $45.8 million as of December 30, 2015 and March 31, 2016, respectively,
and anticipate that we will continue to incur additional losses for the foreseeable future. To date, we have funded our operations
through the private sale of our equity securities and exercise of options and warrants, resulting in gross proceeds of $34.9 million.
Cash and cash equivalents at March 31, 2016 were $1.6 million.
Our auditors’ report on our December
31, 2015 financial statements expressed an opinion that our capital resources as of the date of their audit report were not sufficient
to sustain operations or complete our planned activities for the upcoming year unless we raised additional funds. Based on our
current level of expected operating expenditures, we expect to be able to fund our operations through September 2016. This assumes
that we spend minimally on general operations and only continue conducting our ongoing Phase II clinical trials, and that we do
not encounter any unexpected events or other circumstances that could shorten this time period. If we do not obtain additional
funds by such time, we may no longer be able to continue as a going concern and will cease operation which means that our shareholders
will lose their entire investment.
We are actively seeking sources of financing
to fund our continued operations and research and development programs. To raise additional capital, we may sell shares of equity
or debt securities, or enter into collaborative, strategic and/or licensing transactions. There can be no assurance that we will
be able to complete any financing transaction in a timely manner or on acceptable terms or otherwise. If we are not able to raise
additional cash, we may be forced to further delay, curtail, or cease development of our product candidates, or cease operations
altogether.
We are actively seeking sources of financing
to fund our continued operations and research and development programs. To raise additional capital, we may sell equity or debt
securities, or enter into collaborative, strategic and/or licensing transactions. There can be no assurance that we will be able
to complete any financing transaction in a timely manner or on acceptable terms or otherwise or enter into a collaborative or strategic
transaction. If we are not able to raise additional cash, we may be forced to delay, curtail, or cease development of our product
candidates, or cease operations altogether.
|
|
|
Three months ended
|
|
|
Year Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(amounts in thousands)
|
|
|
(amounts in thousands)
|
|
|
Cash at beginning of period
|
|
$
|
2,465
|
|
|
$
|
2,316
|
|
|
$
|
2,316
|
|
|
$
|
3,587
|
|
|
Net cash used in operating activities
|
|
|
(907
|
)
|
|
|
(1,196
|
)
|
|
|
(4,633
|
)
|
|
|
(5,044
|
)
|
|
Net cash used in investing activities
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Net cash provided by financing activities
|
|
|
—
|
|
|
|
287
|
|
|
|
4,786
|
|
|
|
3,777
|
|
|
Cash at end of period
|
|
$
|
1,558
|
|
|
$
|
1,403
|
|
|
$
|
2,465
|
|
|
$
|
2,316
|
|
Cash totaled approximately $1.6 million and
$1.4 million as of March 31, 2016 and 2015, respectively. The increase of approximately $160,000 at March 31, 2016 compared to
the same period in 2015 was primarily attributable to having $150,000 more in cash at the beginning of 2016 compared to the beginning
of 2015.
Net Cash Used in Operating Activities
Net cash used in operating activities was approximately
$0.9 million and $1.2 million for the three months ended March 31, 2016 and 2015, respectively. Cash used for operations declined
by approximately $0.3 million, or 24%, during the three months ended March 31, 2016, compared to the same period in 2015, due to
our net loss decreasing approximately $0.8 million compared to prior year as a result of a decrease in research and development
related costs, as well as a decrease in general and administrative costs, as described above. This decrease in our net loss was
partially offset by the gain recognized for our derivative liability during the current period.
Net cash used in operating activities was $4.6
million and $5.0 million during 2015 and 2014, respectively. The decrease of $0.4 million in cash used during 2015 compared to
2014 was primarily attributable to a decrease in our net loss of approximately $1.0 million, as well as an increase of $1.1 million
in our change in accrued liabilities, partially offset by a decrease of $1.7 million in stock-based compensation.
Net Cash Provided by Investing Activities
There was no cash used in investing activities
for the three months ended March 31, 2016, compared to cash used in investing activities of $4,000 for the three months ended March
31, 2015, respectively. The cash used in investing activities was due to purchases of office equipment in the prior year.
Cash used in investing activities was $4,000
for 2015 and 2014, respectively. The cash used in investing activities was due to purchases of office equipment in 2015 and 2014.
Net Cash Provided by Financing Activities
There was no cash provided by financing activities
for the three months ended March 31, 2016, compared to approximately $0.3 million provided for the three months ended March 31,
2015. The decrease of $0.3 million, or 100%, in cash provided by financing activities for the three months ended March 31, 2016
compared to 2015 is attributable to proceeds of $287,000 from the exercise of warrants in 2015.
During 2015, we received net proceeds of $4.8
million from the sales of our securities and the exercise of warrants, compared to $3.8 million during 2014 in net proceeds from
the sales of our securities in a registered offering and a private placement. We are actively seeking sources of financing to fund
our continued operations and research and development programs.
OUR BUSINESS
Overview
We are an early-stage, pre-revenue, pharmaceutical
company focused on the development of prodrug cancer therapeutics for the treatment of solid tumors including liver, brain, prostate
and other cancers. A prodrug is an inactive precursor of a drug that is converted into its active form only at the site of the
tumor. Our technology platform combines a powerful, plant-derived cytotoxin with a patented prodrug delivery system that targets
the release of the drug within the tumor. We believe our cancer prodrugs have the potential to provide a targeted therapeutic approach
to a broad range of solid tumors with fewer side effects than those related to current chemotherapy treatments. Our lead drug candidate,
mipsagargin, is currently undergoing Phase II clinical evaluation in glioblastoma patients.
Our major focus for the next twelve to eighteen
months is the (i) identifying and retaining senior management, (ii) ongoing Phase II clinical trial in patients with glioblastoma,
(iii) development of a clinical protocol for our next clinical trial, which we anticipate will be a randomized study, (iv) ongoing
business development discussions with potential development partners, (v) prioritization of our next thapsigargin prodrug development
candidate, and (vi) building a senior management team. Our ability to execute our business plan is dependent on the amount and
timing of cash, if any, that we are able to raise. Should we not raise sufficient funds to execute our business plan, our priority
is the continuation and completion of our ongoing Phase II clinical study in glioblastoma patients.
In January 2015, we presented preliminary results
from our Phase II study of mipsagargin in liver cancer patients, and these data were updated in May 2015 when we received a final
clinical study report. We consider the study outcome to be positive, with 63% of treated patients having stable disease at two
(2) months, and with a median time to progression of 4.5 months. Additionally, the trial showed that mipsagargin is effective at
destroying the vascularity of solid tumors thereby starving the tumor. These results support our plans to continue the development
of mipsagargin for patients with liver cancer, as well as proceed with our clinical development strategy in other indications.
We plan to develop subsequent randomized studies to further develop mipsagargin, preferably with a development partner, with a
goal of seeking approval from the United States Food and Drug Administration, or FDA, for marketing or licensing mipsagargin to
a pharmaceutical company. Although data from our completed trials appear promising, the outcomes of our ongoing or future trials
may ultimately be unsuccessful.
In the first quarter of 2014, we entered into
a collaborative arrangement to conduct a Phase II clinical trial entitled, “An Open-Label, Single-Arm, Phase II Study to
Evaluate the Efficacy, Safety and CNS Exposure of G-202 in Patients with Recurrent or Progressive Glioblastoma.” In May 2015,
we announced that based on preliminary data obtained in the first stage of the trial, we were expanding the trial to a potential
34 patients. In September 2015 we announced interim Phase II data from 11 patients with glioblastoma with demonstrated clinical
benefit in a subset of patients with high levels of PSMA expression in the primary tumor. As of July 8, 2016, we have treated 23
patients in the trial.
We have opened enrollment for our Phase II pilot study for patents
with prostate cancer entitled, G-202-005: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202
Administered in the Neoadjuvant Setting Followed by Radical Prostatectomy in Patients with Adenocarcinoma of the Prostate, and
as of July 8, 2016 have enrolled 1 patient.
Recent Developments
|
|
·
|
We initiated a Phase II clinical pilot study in patients with prostate cancer entitled, G-202-005:
An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202 Administered in the Neoadjuvant Setting
Followed by Radical Prostatectomy in Patients with Adenocarcinoma of the Prostate, via a collaborative agreement with a single
site in the U.S., in which 1 patient has been enrolled as of July 8, 2016.
|
|
|
·
|
We initiated a Phase II clinical pilot study in patients with clear cell renal cell carcinoma
entitled, G-202-006: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202 in Patients with
Clear Cell Renal Cell Carcinoma that Expresses PSMA via a collaborative agreement with a single site in the U.S., as of July
15, 2016 1 patient has been enrolled.
|
|
|
·
|
We engaged FLG Partners, LLC, and its partner Chris Lowe, to provide strategic advice to further
complement the Company’s efforts to strengthen its corporate and clinical development, including alignment of the Company’s
long term-goals to optimize the clinical and regulatory development of mipsagargin, implement cost-efficient processes and advise
on business development and funding initiatives.
|
|
|
·
|
In March 2016, Craig A. Dionne, Ph.D., resigned as GenSpera’s Chairman of the Board and as
a Director, and submitted a notice of termination as GenSpera’s CEO and CFO, all effective immediately. Peter E. Grebow Ph.D.,
a GenSpera Director, was been appointed Interim Chairman, and Russell Richerson Ph.D., GenSpera’s Chief Operating Officer
and Secretary, was named Interim Principal Executive Officer and Principal Accounting Officer.
|
Product Development of Mipsagargin
Our ability to execute our product development
plan is dependent on the amount and timing of cash, if any, that we are able to raise. Should we not raise sufficient funds to
execute our product development plan, our priority is the initiation, continuation and completion of our ongoing and planned Phase
II clinical studies in glioblastoma. We are actively involved in identifying a potential development and commercialization partner
at both multi-national and regional levels to assist with the development of mipsagargin through clinical trials in liver cancer.
Our current product development plan of mipsagargin contemplates the following major initiatives:
|
|
·
|
Continue our Phase II clinical trial in patients with glioblastoma (a form of brain cancer) which
is being conducted at the University of California San Diego Moores Cancer Center.
|
|
|
·
|
Development of a clinical protocol for our next clinical trial in glioblastoma and/or HCC which
we anticipate will be a randomized study.
|
|
|
·
|
Continue ongoing business development discussions with potential development partners.
|
|
|
·
|
Identifying and building a senior management team.
|
Business Strategy
Our ability to execute our product development
plan is dependent on the amount and timing of cash, if any, that we are able to raise. Should we not raise sufficient funds to
execute our product development plan, our priority is the continuation and completion of our ongoing and planned Phase II clinical
studies in glioblastoma. We are actively involved in identifying a potential development and commercialization partner at both
multi-national and regional levels to assist with the development of mipsagargin through clinical trials in liver cancer.
Our current product development plan of mipsagargin contemplates
the following major initiatives:
|
|
·
|
Development of a clinical protocol for our next clinical trial in glioblastoma and/or HCC, which we anticipate will be a randomized
study.
|
|
|
·
|
Continue ongoing business development discussions with potential development partners.
|
|
|
·
|
Continue our Phase II clinical trial in patients with glioblastoma (a form of brain cancer) which is being conducted at the
University of California San Diego Moores Cancer Center.
|
Clinical and Pre-Clinical Development Strategy
Under the planning and direction of key personnel,
we expect to continue to outsource all of our preclinical development (e.g., toxicology), manufacturing, and clinical development
activities to contract research organizations (CROs) and contract manufacturing organizations (CMOs). Our contract CROs and CMOs
are required to comply with federal, state and United States Food and Drug Administration or FDA regulations including Good Manufacturing
Practices (cGMP), Good Clinical Practices (GCP), and Good Lab Practices (GLP).
We intend to conduct several Phase II clinical
trials to determine the therapeutic efficacy of mipsagargin in cancer patients. We anticipate that mipsagargin will be therapeutically
effective in a wide range of solid tumor types and have chosen to first evaluate the drug in liver cancer, glioblastoma, prostate
cancer and renal cell carcinoma. We believe this strategy will validate mipsagargin as a platform technology over multiple indications
while at the same time diversifying the risk associated with any individual indication.
MIPSAGARGIN
CLINICAL DEVELOPMENT PROGRAM
|
Indication
|
|
Status
|
|
|
|
|
|
Solid Tumors
|
|
Completed Phase Ia/b safety, tolerability and dosing refinement study. Closed to further enrollment.
|
|
|
|
|
|
Hepatocellular Carcinoma (liver cancer)
|
|
In 2012, we obtained clearance from the FDA to initiate our Phase II clinical trial entitled, “A Phase II, Multicenter, Single-Arm Study of G-202 as Second-Line Therapy Following Sorafenib for Adult Patients with Progressive Advanced Hepatocellular Carcinoma.” In October of 2014 we closed patient enrollment in the trial. In total, we treated 25 patients. We presented trial data at a poster session at the American Society for Clinical Oncology 2015 Gastrointestinal Cancers Symposium on January 2015 in San Francisco, CA and presented final data at the BIO International Convention 2015 held in Philadelphia, PA. in June of 2015.
|
|
|
|
|
|
Glioblastoma (brain cancer)
|
|
In the first quarter of 2014, we entered into a collaborative arrangement and commenced a Phase II clinical trial in patients with recurrent or progressive glioblastoma. We announced the expansion of the Phase 2 trial to a potential 34 patients in May after the successful completion of the first stage of the trial. In September we announced interim Phase 2 data from 11 patients with glioblastoma with demonstrated clinical benefit in a subset of patients with high levels of PSMA expression in the primary tumor. The trial is ongoing and as of July 8, 2016, a total of 23 patients have been treated in the study. This trial is being conducted at the University of California San Diego Moores Cancer Center.
|
|
|
|
|
|
Prostate Cancer
|
|
We initiated a Phase II clinical pilot study in patients with prostate cancer entitled, G-202-005: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202 Administered in the Neoadjuvant Setting Followed by Radical Prostatectomy in Patients with Adenocarcinoma of the Prostate,via a collaborative agreement with a single site in the U.S., in which 1 patient has been enrolled as of July 8, 2016.
|
|
|
|
|
|
Renal Cell Carcinoma
|
|
We initiated a Phase II clinical pilot study in patients with clear cell renal cell carcinoma
entitled, G-202-006: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety and Activity of G-202 in Patients with
Clear Cell Renal Cell Carcinoma that Expresses PSMA via a collaborative agreement with a single site in the U.S., in which 1 patient has been enrolled as of July 15, 2016.
|
Hepatocellular Carcinoma (Liver Cancer)
Hepatocellular carcinoma is cancer that forms
in the tissues of the liver. Estimates for liver and intrahepatic bile duct cancer in the U.S. for 2016 are approximately 39,000
new cases and 27,000 deaths. Incidence of hepatocellular carcinoma in the U.S. is rising, principally in relation to the spread
of hepatitis C infection. Hepatocellular carcinoma is potentially curable by surgical resection, but surgery is the treatment of
choice for only the small fraction of patients with localized disease. Prognosis depends on the degree of local tumor replacement
and the extent of liver function impairment. Treatment options for people with liver cancer are surgery (including liver transplant),
ablation, embolization, targeted therapy, radiation therapy, and chemotherapy, for which there is only one approved drug (sorafenib),
or a combination of these options. There is no standard therapy for patients with advanced metastatic liver cancer after treatment
with sorafenib.
Glioblastoma multiforme (Brain Cancer)
Glioblastoma is the most common and most aggressive
malignant primary brain tumor in humans. Estimated for brain and other nervous system tumors in the United States in 2016 are approximately
24,000 new cases and 16,000 deaths. Brain tumors account for 85% to 90% of all primary central nervous system (CNS) tumors. Despite
optimal treatment, the median survival for these patients is only 12 - 15 months. Treatment commonly consists of surgery followed
by radiation and the drug temozolomide. There are a few drugs that have been approved in patients that have recurrent tumors but
none have been shown to promote long-term tumor stabilization or survival.
Prostate Cancer
Prostate cancer forms in tissues of the prostate
(a gland in the male reproductive system found below the bladder and in front of the rectum). Prostate cancer is the second
leading cause of cancer death in American men, behind only lung cancer. Estimates for prostate cancer in the U.S. for 2016 are
about 181,000 new cases and approximately 26,000 deaths. Depending on the situation, the treatment options for men with prostate
cancer may include: expectant management (watchful waiting) or active surveillance; surgery; radiation therapy; cryosurgery;
hormone therapy; chemotherapy; and vaccine treatment. These treatments are generally used one at a time, although in some
cases they may be combined.
Generic Name Designation
In August of 2014, we were notified that the
World Health Organization’s or the WHO’s International Nonproprietary Name group or the INN recommended the generic
name “mipsagargin” for our lead compound G-202. Mipsagargin was also recommended by the United States Adopted Names
Council of the American Medical Association. Our generic name includes a new or novel pre-stem that we believe was proposed based
on our compound possessing a unique mechanism of action or structure.
Commercialization Strategy
We intend to (i) license or sell the underlying
technology of our drug compounds to third parties during or after Phase II clinical trials, (ii) seek a corporate partner for further
development, or (iii) continue developing our drug candidates ourselves. It is expected that such third parties would then continue
to develop, market, sell, and distribute any resulting products. As part of our overall strategic plan, we are exploring our options
and actively seeking to engage in a collaborative, strategic and/or licensing arrangement with another pharmaceutical company.
If we enter into any such transaction, we may be required to give up certain rights to our technology and control over its future
development.
Clinical Trials
Phase II Clinical Development of G-202 –
Hepatocellular Carcinoma (Liver Cancer)
In 2012, we obtained clearance from the FDA
to initiate our Phase II clinical trial entitled, “A Phase II, Multicenter, Single-Arm Study of G-202 as Second-Line Therapy
Following Sorafenib for Adult Patients with Progressive Advanced Hepatocellular Carcinoma.” This trial was conducted at multiple
sites in the U.S. and measured disease progression in 25 patients with advanced stage liver disease and poor liver reserves who
had failed first line treatment with sorafenib. Patients were administered episodic dosing of mipsagargin on the first three days
of each treatment cycle.
In January 2015, we presented Phase II results
that demonstrated that mipsagargin appears to be effective and is well-tolerated by HCC patients. Mipsagargin targets the enzyme
prostate-specific membrane antigen (PSMA), which is highly expressed in tumor vasculature and prostate cancer cells. The Phase
II study results (n=25) demonstrate that the prodrug effectively stabilizes progression of HCC by reducing blood flow within tumors
while not affecting blood flow within normal tissues. Study participants experienced a median time to progression of 4.5 months,
nearly twice the time demonstrated in prior studies with placebo or ineffective agents. Additionally, mipsagargin demonstrated
decreased blood flow in liver tumors as measured by DCE-MRI.
We plan to develop subsequent randomized studies
to further develop mipsagargin with a development partner with the ultimate goal of seeking regulatory approval to market our drug
on a global basis. Notwithstanding that the data from our studies appear promising, the outcome of our ongoing trial is uncertain
and our current or future trials may ultimately be unsuccessful.
Phase II Clinical Development of G-202 –
Glioblastoma (Brain Cancer)
In the first quarter of 2014, we entered into
a collaborative arrangement and plan to conduct a Phase II clinical trial entitled, “An Open-Label, Single-Arm, Phase II
Study to Evaluate the Efficacy, Safety and CNS Exposure of G-202 in Patients with Recurrent or Progressive Glioblastoma.”
In May we announced that based on preliminary data obtained in the first stage of the trial, we were expanding the trial to a potential
34 patients. In September we announced interim Phase II data from 11 patients with glioblastoma with demonstrated clinical benefit
in a subset of patients with high levels of PSMA expression in the primary tumor. In November we reported that a total of 18 patients
have been treated in the study. This trial is being conducted at the University of California San Diego Moores Cancer Center. As
of July 8, 2016, we have treated 23 patients in the study.
Pilot Study – Prostate Cancer
During 2016 we initiated a Phase II clinical
pilot study in patients with prostate cancer entitled, G-202-005: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety
and Activity of G-202 Administered in the Neoadjuvant Setting Followed by Radical Prostatectomy in Patients with Adenocarcinoma
of the Prostate,via a collaborative agreement with a single site in the U.S., in which 1 patient has been enrolled as of July 8,
2016.
Pilot Study – Renal Cancer
We initiated a Phase II clinical pilot study
in patients with clear cell renal cell carcinoma entitled, G-202-006: An Open-Label, Single-Arm, Phase II Study to Evaluate the
Safety and Activity of G-202 in Patients with Clear Cell Renal Cell Carcinoma that Expresses PSMA via a collaborative agreement
with a single site in the U.S., in which 1 patient has been enrolled as of July 15, 2016.
Our Technology
Our approach is to identify specific enzymes
that are found at high levels in tumors relative to other tissues in the body. Upon identifying these enzymes, we attempt to create
a peptide that is recognized predominantly by those enzymes in the tumor and not by enzymes in normal tissues. We then use the
peptide as the masking/targeting agent and attach it to our “cytotoxin” to create a prodrug. We believe that this double
layer of recognition adds to the tumor-targeting found in our prodrugs.
Cytotoxin-Thapsigargin
Thapsigargin is a cytotoxin found within the
plant
Thapsia garganica
that grows wild in the Mediterranean region. Thapsigargin is a potent inhibitor of the intracellular
sarcoplasmic/endoplasmic reticulum calcium adenosine triphosphastase (SERCA) pump protein, consequently causing calcium levels
to rise significantly and trigger apoptosis (cell death). We chemically modify thapsigargin to create the molecule 12ADT that retains
all the potent cell-killing attributes of thapsigargin, but contains a new structure that can be coupled to a masking/targeting
agent. Our prodrugs are manufactured by attaching a specific peptide to 12ADT.
Masking/Targeting Agent
We use peptides to mask the cytotoxin and target
the tumor (masking/targeting agents). Peptides are short strings of amino-acids, the building blocks of many components found in
cells. When attached to 12ADT, they have the potential to make the cytotoxin inactive and once the peptide is removed from
12ADT, the cytotoxin is active again. Our technology attempts to take advantage of the fact that the masking peptides can be removed
by chemical reactors in the body called enzymes, and that the recognition of particular peptides by particular enzymes can be very
specific. The peptides also make 12ADT soluble in blood. When the masking peptide is removed, 12ADT returns to its natural insoluble
state and precipitates directly into nearby tumor cells.
Our Prodrug Therapies
Cancer chemotherapy involves treating patients
with cytotoxic drugs (compounds or agents that are toxic to cells). Chemotherapy is often combined with surgery or radiation in
the treatment of early-stage disease and it is the preferred, or only, treatment option for many forms of cancer in later stages
of the disease. However, major drawbacks of chemotherapy include, but are not limited to:
|
|
·
|
Side effects - non-cancer cells in the body are also affected, often leading to serious side effects, which may include the destruction of bone marrow, damage to digestive tract cells, and hair loss.
|
|
|
·
|
Incomplete tumor kill - many of the leading chemotherapeutic agents act during the process of cell division and may be effective on tumors comprised of rapidly-dividing cells, but are much less effective on tumors that contain slowly dividing cells.
|
|
|
·
|
Resistance - tumors will often develop resistance to current drugs after repeated exposure, thereby limiting the effectiveness of such therapies over multiple dosing.
|
Prodrug chemotherapy is a relatively new
approach to cancer treatment that is being explored as a means of delivering higher concentrations of cytotoxic agents at the tumor
location while avoiding or decreasing toxicity in the rest of the body. An inactive form of a cytotoxin is administered to the
patient. The prodrug is converted into the active cytotoxin preferentially at the tumor site. We believe that our lead compound,
mipsagargin, may overcome a number of drawbacks associated with current cancer drugs, including:
|
|
·
|
Reduced side effects - our lead compound, mipsagargin, appears to be well-tolerated in cancer patients with reduced side effects compared to traditional chemotherapeutic agents, particularly exhibiting significantly less or no effect on the patient’s bone marrow.
|
|
|
·
|
Cell-killing activity - our prodrugs have been shown in animal cancer models to kill slowly-dividing, non-dividing, as well as rapidly-dividing cancer cells.
|
|
|
·
|
Lack of acquired drug resistance - testing in animal models of cancer indicated no development of resistance to mipsagargin after multiple cycles of treatment.
|
Our Prodrug Development Candidates
We currently have identified four prodrug
candidates based on our technology, as summarized in the table below. At this time we are focused exclusively on the clinical development
of mipsagargin and have deferred further development of the other prodrug candidates.
|
Prodrug
Candidate
|
|
Activating
Enzyme
|
|
Target Location of
Active Enzyme
|
|
Status/Developments
|
|
Mipsagargin
|
|
Prostate Specific Membrane Antigen (PSMA)
|
|
The blood vessels of most solid tumors
|
|
Ongoing Phase II clinical trials being conducted in glioblastoma.
Anticipated to commence Phase II clinical trial in patients
with prostate cancer.
Closed patient enrollment in Phase II clinical trial of patients
with liver cancer and presented data in January of 2015.
Orphan Drug designation in liver cancer granted.
Opened patient enrollment in Phase II clinical pilot study of
patients with prostate cancer in a neoadjuvant setting.
Opened patient enrollment in Phase II clinical pilot study of
patients with clear cell renal cell carcinoma.
|
|
|
|
|
|
|
|
|
|
G-115
|
|
Prostate Specific Antigen (PSA)
|
|
Prostate cancers
|
|
Pilot toxicology completed.
Limited pre-clinical development.
|
|
|
|
|
|
|
|
|
|
G-114
|
|
Prostate Specific Antigen (PSA)
|
|
Prostate cancers
|
|
Validated efficacy in pre-clinical animal models (Johns Hopkins University).
|
|
|
|
|
|
|
|
|
|
G-301
|
|
Human glandular kallikrein 2 (hK2)
|
|
Prostate cancers
|
|
Validated efficacy in pre-clinical animal models (Johns Hopkins University).
|
Mipsagargin
The enzymes that we target with our prodrugs
are found in very specific places within the body and within the tumors. Our lead drug candidate, mipsagargin, is activated by
the enzyme Prostate Specific Membrane Antigen, or PSMA, which is found in prostate epithelial cells in the normal prostate, in
prostate cancer cells, and in vascular endothelial cells (blood vessels) found in almost all solid tumors. Thus, we expect that
mipsagargin may be used in the treatment of almost all solid tumors. Importantly, we believe that mipsagargin may work by destroying
the tumor vasculature, thus starving the tumor to death.
G-115
G-115 is activated by the enzyme Prostate
Specific Antigen, or PSA, which is secreted by prostate epithelial cells in the normal prostate and by prostate cancer cells. PSA
is found in the bloodstream and is a known tumor marker for prostate cancer, but it is inactive in the bloodstream due to potent
binding by a protein inhibitor. However, PSA is enzymatically active on the surface of prostate cancer cells as it is being secreted
and this activity forms the basis for tumor targeting with G-115.
G-301
G-301 is activated by the enzyme Human
Glandular Kallikrein 2, or hK2, which is secreted by prostate epithelial cells in the normal prostate and by prostate cancer cells.
The enzyme hK2 is found in the bloodstream and is known as a tumor marker for prostate cancer but it is inactive in the bloodstream
due to potent binding by a protein inhibitor. However, hK2 is enzymatically active on the surface of prostate cancer cells as it
is being secreted and this activity forms the basis for tumor targeting with G-301.
Both G-115 and G-301 are believed to be
useful in the treatment of prostate cancers only and not to be useful for the treatment of other cancers.
Market and Competitive Considerations
The table below summarizes estimates for
a number of potential U.S. target markets for our proposed drug candidates:
|
|
|
2016 Estimated Number of*
|
|
|
Cancer Type
|
|
New Cases
|
|
|
Deaths
|
|
|
Prostate
|
|
|
180,000
|
|
|
|
26,000
|
|
|
Breast
|
|
|
249,000
|
|
|
|
41,000
|
|
|
Liver & intrahepatic bile duct
|
|
|
39,000
|
|
|
|
27,000
|
|
|
Brain & other nervous system
|
|
|
24,000
|
|
|
|
16,000
|
|
Source: CA Cancer J. Clin 2015; 65: 5-29
*All numbers are approximated.
Therapeutic Opportunity for Our Drug
Candidates
We believe that current anti-angiogenesis
drugs (drugs that disrupt the blood supply to tumors) validate the clinical approach and market potential of our drug candidate.
Angiogenesis is the physiological process involving the growth of new blood vessels from pre-existing vessels and is a normal process
in growth and development, as well as in wound healing. Angiogenesis is also a fundamental step in the development of tumors from
a clinically insignificant size to a malignant state because no tumor can grow beyond a few millimeters in size without the nutrition
and oxygenation that comes from an associated blood supply. Interrupting this process has been targeted as a point of intervention
for slowing or reversing tumor growth. An example of an anti-angiogenic approach is the FDA approved drug, Avastin
®
,
a monoclonal antibody that inhibits the activity of Vascular Endothelial Growth Factor, which is important for the growth and survival
of endothelial cells. Avastin and other anti-angiogenic drugs have only a limited therapeutic effect with increased median patient
survival times of only a few months. Our approach is designed to destroy both the existing and newly growing tumor vasculature,
rather than just block new blood vessel formation. We anticipate that this approach will lead to a more immediate collapse of the
tumor’s nutrient supply and consequently an enhanced rate and degree of tumor destruction.
Competition
The pharmaceutical and biotechnology industries
are very competitive, fast moving and intense, and expected to be increasingly so in the future. Although we are not aware of any
competitor who is developing a drug that is designed to destroy both the existing and newly growing tumor vasculature in a manner
similar to our drug candidates, there are several marketed drugs and drugs in development that attack tumor-associated blood vessels
to some degree. For example, Avastin
®
is a marketed product that acts predominantly
as an anti-angiogenic agent. Zybrestat
®
is another drug in development that
is described as a vascular-disrupting agent that inhibits blood flow to tumors. Nexavar
®
and Sutent
®
are two other approved drugs that appear to work in part through
anti-angiogenic mechanisms. It is impossible to accurately ascertain how well our drugs will compete against these or other products
that may be in the marketplace until we have more complete human patient data for comparison.
Intellectual Property
We regard the protection of patents and
other intellectual property rights that we own or license as critical to our business and competitive position. To protect our
intellectual property, we rely on patent, trade secret and copyright law, as well as confidentiality, nondisclosure, assignment
of invention and other contractual arrangements with our officers, directors, employees, consultants, investigators, clinical trial
sites, contractors, collaborators and other third parties to whom we disclose confidential information. Our policy is to pursue
patent applications on inventions and discoveries that we believe are commercially important to the development and growth of our
business. We solely own or have exclusive licenses to all of our patents and patent applications.
Our pipeline currently includes four drug
product candidates: mipsagargin (solid tumors), G-114 (prostate cancer), G-115 (prostate cancer) and G-301 (prostate cancer). Our
patent portfolio is currently composed of: 14 issued U.S. patents; 3 pending U.S. non-provisional patent applications; 1 pending
Patent Cooperation Treaty, or PCT, application; and more than 35 pending applications throughout the world, including European,
Japan, China and Hong Kong, among others.
When appropriate, we plan to continue to
seek patent protection for inventions in our core technologies and in ancillary technologies that support our core technologies
or which we otherwise believe would provide us with a competitive advantage. We expect to be able to accomplish this by filing
and maintaining patent applications for discoveries we make, either alone or in collaboration with scientific collaborators and
strategic partners. Typically, we plan to file patent applications in the United States as well as foreign countries, where applicable.
In addition, we may obtain licenses or options to acquire licenses to patent filings from other individuals and organizations that
we anticipate could be useful in advancing our research, development and commercialization initiatives and our strategic business
interest.
In addition to and separate from patent
protection, mipsagargin for the treatment of hepatocellular carcinoma has been granted orphan drug designation under the Orphan
Drug Act of 1983, as amended, which was enacted to provide incentives to pharmaceutical companies who create treatments for rare
diseases. It does so by granting seven years of exclusivity after approval of a drug in the rare disease, or "orphan"
indication. During the seven-year period, the FDA may not grant marketing authorization (e.g. to a generic manufacturer) for the
same drug for the orphan indication.
Manufacturing and Supply
We do not plan to develop company-owned
or company-operated manufacturing facilities. We outsource all drug manufacturing to contract manufacturers that are required to
operate in compliance with cGMP. We may also seek to refine the current manufacturing process in order to achieve improvements
in efficiency, costs, purity and the like as well as address different drug formulations to achieve improvements in stability and/or
drug delivery.
Supply of Raw Materials - Thapsibiza
SL
To our knowledge, there is only one commercial
supplier of
Thapsia garganica
seeds. In April 2007, we obtained the proper permits from the U.S. Department of Agriculture
(the USDA) for the importation of
Thapsia garganica
seeds. In April 2012, we entered into a five year sole source agreement
with Thapsibiza, SL. Either party can extend the agreement for an additional five years by providing 30 days written notice prior
to the expiration date. Pursuant to the terms of the agreement, Thapsibiza, SL has agreed to exclusively provide us
Thapsia
garganica
seeds while we retain the right to seek additional suppliers. The agreement requires us to purchase minimum quantities
of seeds per harvest period.
Long-term Supply of Raw Materials
We believe that we have sufficient supply
of
Thapsia garganica
seeds in storage to complete our clinical trials as currently planned. However, in order to secure
a long-term, stable supply of thapsigargin starting material, we are engaged in two ongoing research projects, including traditional
cultivation and metabolic engineering of moss cells.
We are funding an ongoing
Thapsia garganica
cultivation project with Thapsibiza, SL. It is known that thapsigargin is produced in the various parts of the plant and we are
evaluating the most cost-effective way to produce thapsigargin, whether it is extracted from seedlings, early roots, stems and/or
shoots or from seeds of the mature plant. Reliable germination methods are established and transfer of plantings from greenhouse
to fields appears straightforward. At the current time, we believe traditional cultivation, farming and harvesting of
Thapsia
garganica
is the most reliable and straightforward source of thapsigargin starting material.
We also co-funded a moss project at the
University of Copenhagen. A major goal of the project entitled SPOTLight (Sustainable Production of Thapsigargin using Light) is
to produce thapsigargin in high yields in genetically modified moss cells thus enabling an inexpensive year-round supply of thapsigargin
for drug manufacturing. The SPOTLight project was primarily funded by a DKK 18.3M (approximately $3.5M USD) grant from The Danish
Council for Strategic Research and is directed by Dr. Søren Brøgger Christensen, Professor at the University of Copenhagen,
member of our Scientific Advisory Board and the scientist responsible for the initial isolation and characterization of thapsigargin.
As a result of our co-funding, under the terms of our agreement, we have obtained an exclusive, milestone- and royalty-free, fully
paid license to the resulting moss cell lines necessary to generate thapsigargin or its chemical precursors. We recognize that
this is an ambitious project and that the goal of having a thapsigargin-producing cell line may not be reached. However, even if
the project can only generate cell lines that produce chemical precursors of thapsigargin, this might form the basis of a semi-synthetic
route to thapsigargin on a commercially viable scale.
Manufacturing Partnership
In February 2014, we entered into an agreement
with Phyton Biotech GmbH (Phyton) to conduct a feasibility study to evaluate plant cell suspension cultures derived from
Thapsia
garganica
as a potential source of thapsigargin, the key ingredient in the company's investigational agent mipsagargin. In
November 2014, we expanded our strategic partnership to have Phyton develop a method for a high producing cell line derived from
the
Thapsia garganica
expressing thapsigargin. We anticipate this method development will provide us with a sustainable
source of high quality thapsigargin, and assist us in achieving commercial production of our active pharmaceutical ingredient.
Governmental Regulations
FDA Approval Process
Prior to commencement of clinical studies
involving humans, preclinical testing of new pharmaceutical products is generally conducted on animals in the laboratory to evaluate
the potential efficacy and safety of the product candidate. The results of these studies are submitted to the FDA as part of an
Investigational New Drug (IND) application, which must become effective before clinical testing in humans can begin. Typically,
human clinical evaluation involves a time-consuming and costly three-phase process. In Phase I, clinical trials are conducted with
a small number of people to assess safety, tolerability and to evaluate the pattern of drug distribution within the body. In Phase
II, clinical trials are conducted with groups of patients afflicted with a specific disease in order to determine preliminary efficacy,
optimal dosages and expanded evidence of safety. (In some cases, an initial trial is conducted in diseased patients to assess both
preliminary efficacy and preliminary safety, in which case it is referred to as a Phase I/II trial.) In Phase III, large-scale,
multi-center, comparative trials are conducted with patients afflicted with a target disease in order to provide enough data to
demonstrate the efficacy and safety required by the FDA. The FDA closely monitors the progress of each of the three phases of clinical
testing and may, at its discretion, re-evaluate, alter, suspend, or terminate the testing based upon the data which have been accumulated
to that point and its assessment of the risk/benefit ratio to the patient. All adverse events must be reported to the FDA. Monitoring
of all aspects of the study to minimize risks is a continuing process.
The results of the preclinical and clinical
testing on non-biologic drugs and certain diagnostic drugs are submitted to the FDA in the form of a New Drug Application (NDA)
for approval prior to commencement of commercial sales. In responding to an NDA submission, the FDA may grant marketing approval,
may request additional information, may deny the application if it determines that the application does not provide an adequate
basis for approval, and may also refuse to review an application that has been submitted if it determines that the application
does not provide an adequate basis for filing and review. There can be no assurance that approvals would be granted on a timely
basis, if at all, for any of our proposed products.
Orphan Drugs
Under the Orphan Drug Act, the FDA may
grant orphan drug designation to drugs intended to treat a rare disease or condition, which is generally defined as a disease or
condition that affects fewer than 200,000 individuals in the United States. Orphan drug designation must be requested before submitting
an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed
publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review
and approval process. The first NDA applicant to receive FDA approval for a particular active ingredient to treat a particular
disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the United States for that product,
for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same
drug for the same orphan indication, except in limited circumstances, such as a showing of clinical superiority to the product
with orphan drug exclusivity in that it is shown to be safer, more effective or makes a major contribution to patient care. Orphan
drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for
a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and
a waiver of the NDA application user fee.
European and Other Regulatory Approval
Whether or not FDA approval has been obtained,
approval of a product by comparable regulatory authorities in Europe and other countries is necessary prior to commencement of
marketing the product in such countries. The regulatory authorities in each country may impose their own requirements and may refuse
to grant an approval, or may require additional data before granting it, even though the relevant product has been approved by
the FDA or another authority. As with the FDA, the regulatory authorities in the European Union (EU), and other developed countries
have lengthy approval processes for pharmaceutical products. The process for gaining approval in particular countries varies, but
generally follows a similar sequence to that described for FDA approval. In Europe, the European Committee for Proprietary Medicinal
Products provides a mechanism for EU-member states to exchange information on all aspects of product licensing. The EU has established
a European agency for the evaluation of medical products, with both a centralized community procedure and a decentralized procedure,
the latter being based on the principle of licensing within one member country followed by mutual recognition by the other member
countries.
Reimbursement and Health Care Cost Control
Reimbursement for the costs of treatments
and products such as ours from government health administration authorities, private health insurers and others, both in the United
States and abroad, is a key element in the success of new health care products. Significant uncertainty often exists as to the
reimbursement status of newly approved health care products. The revenue and profitability of some health care-related companies
have been affected by the continuing efforts of governmental and third party payors to contain or reduce the cost of health care
through various means. Payors are increasingly attempting to limit both coverage and the levels of reimbursement for new therapeutic
products approved for marketing by the FDA, and are refusing, in some cases, to provide any coverage for uses of approved products
for disease indications for which the FDA has not granted marketing approval. In certain foreign markets, pricing or profitability
of prescription pharmaceuticals is subject to government control.
In the United States, there have been a
number of federal and state proposals to implement government control over health care costs. The U.S. Patient Protection and Affordance
Care Act and the Health Care and Education Reconciliation Act were signed into law in March 2010. A number of provisions of those
laws require further rulemaking action by governmental agencies to implement. The laws change access to health care products and
services and create new fees for the pharmaceutical and medical device industries. Future rulemaking could increase rebates, reduce
prices or the rate of price increases for health care products and services, or require additional reporting and disclosure. The
laws also include new authorization to the FDA to approve companies to market biosimilar products within the United States, although
to date FDA rulemaking under this legislation has been limited. We cannot predict the timing or impact of any such future rulemaking
on our business.
Other Regulations
We are also subject to various U.S. federal,
state, local and international laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing
practices and the use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious
disease agents, used in connection with our business. Additionally, we are subject to regulations and standards relating to corporate
governance and public disclosure, including the Sarbanes-Oxley Act of 2002, and Securities and Exchange Commission regulations.
We cannot accurately predict the extent of government regulation which might result from future legislation or administrative action.
Scientific Advisory Board
We have access to a number of academic
and industry advisors with expertise in clinical and pharmaceutical development. Members of our Scientific Advisory Board, or SAB,
meet with our management and key scientific employees on an ad hoc basis to provide advice in their respective areas of expertise
and further assist us by periodically reviewing with management our preclinical and clinical activities. The members of our SAB
are Søren Brøgger Christensen, PhD, Samuel R. Denmeade, MD, John T. Isaacs, PhD and Santosh Kesari, MD, PhD. Our
SAB members possess deep insight into our technologies and our drug candidate’s mechanism of action which is instrumental
in advancing our clinical and development programs. In connection with a member’s retention on our SAB, we have entered into
confidentiality agreements as well as assignment of invention agreements, subject to the member respective obligations and responsibilities
to any institution or institutions at which they are employed.
Employees
As of March 31, 2016, we employed one full-time
individual who holds an advanced degree. In addition, we contract with approximately 12 to 15 consultants to assist in activities
related to our operations and research and development plan.
Corporate History
We were incorporated in the State of Delaware
in November 2003 and our principal office is located in San Antonio, Texas. Since our inception, we have invested a substantial
portion of our efforts and financial resources in the development of mipsagargin (G-202). Mipsagargin is the only product candidate
for which we have conducted clinical trials, and to date we have not marketed, distributed or sold any products. We have generated
no revenues from the sale of our product candidates and have experienced substantial net operating losses.
Where to Find More Information
We make our public filings with the SEC,
including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all exhibits
and amendments to these reports. These materials are available on the Company’s website at
www.genspera.com
or on
the SEC’s web site,
http://www.sec.gov
. You may also read or copy any materials we file with the SEC at the SEC’s
Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. Alternatively, you may obtain copies of these filings, including exhibits,
by writing or telephoning us at:
GENSPERA
2511 N Loop 1604 W, Suite 204
San Antonio, TX 78258
Attn: Chief Executive Officer
Tel: 210-479-8112
PROPERTIES
Our executive offices are located at 2511
N Loop 1604 W, Suite 204, San Antonio, TX 78258. We lease this facility, consisting of approximately 2,376 square feet, for approximately
$4,950 per month. Our lease expires on October 14, 2018. There is no affiliation between us or any of our principals or agents
and our landlords or any of their principals or agents.
LEGAL PROCEEDINGS
Except as described below, as of the date
of this Report, there are no material pending legal or governmental proceedings relating to our company or properties to which
we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers or affiliates
are a party adverse to us or which have a material interest adverse to us.
On March 16, 2016, Dr. Craig Dionne provided
us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice
of termination alleges that such termination was for “Good Reason” as a result of a purported material change in his
authority, functions, duties and responsibilities as chief executive officer. In the event that termination was for “Good
Reason”, Dr. Dionne would be entitled to certain severance payments as well as other benefits. His notice of termination,
in additional to requesting such severance, also requests the payment of Dr. Dionne’s annual and long term bonus for 2014
and 2015. On April 11, 2016, we received a letter from Dr. Dionne demanding approximately $2.3 million as a result of the foregoing.
The Company vigorously disputes that the
termination of his employment was for “Good Reason,” as that term is defined in his employment agreement and under
applicable law. This matter is at the early stages. While no litigation is pending at this time, there can be no assurance that
this matter will be resolved in such a manner as to avoid litigation. Accordingly, the Company is unable at this time to predict
the outcome of this matter, and any views formed as to the viability of these claims or the costs to the Company which could result
may change from time to time as the matter proceeds through its course.
OUR MANAGEMENT
Directors, Executive Officers and Significant Employees
The following sets forth the current members
of our board of directors, as well as information with regard to our executive officers, and information concerning their ages
and background. All directors hold office until the next annual meeting of stockholders or until their respective successors are
elected, except in the case of death, resignation or removal:
|
Name
|
|
Position
|
|
Age
|
|
Director
Since
|
|
Executive Officers
|
|
|
|
|
|
|
|
Russell Richerson, PhD
|
|
Interim Principal Executive Officer, Interim Principal Accounting Officer, Chief Operating Officer and Secretary
|
|
64
|
|
—
|
|
Non-employee Directors
|
|
|
|
|
|
|
|
Peter E. Grebow, PhD
|
|
Director (interim Chairman)
|
|
69
|
|
05/2012
|
|
Bo Jesper Hansen, MD, PhD
|
|
Director
|
|
58
|
|
08/2010
|
|
Scott V. Ogilvie
|
|
Director
|
|
62
|
|
03/2008
|
Russell Richerson, PhD
serves
as our interim Principal Executive Officer, Interim Principal Accounting Officer, Chief Operations Officer and Secretary. Dr. Richerson
has over 34 years of experience in the biotechnology/diagnostics industry, including 11 years at Abbott Laboratories in numerous
management roles. Most recently, he has served as Vice President of Diagnostic Research and Development at Prometheus Laboratories
(2001 - 2004) and then as Chief Operating Officer of the Molecular Profiling Institute (2005 - 2008). Dr. Richerson also served
as Vice President of Operations of International Genomics Consortium (IGC) from 2005 to 2008. Between August of 2011 and March
of 2015, Dr. Richerson served on the IGC board of directors. Dr. Richerson received his BS in 1974 from Louisiana State University,
Baton Rouge, Louisiana and his PhD in 1983 from the University of Texas at Austin.
Peter E. Grebow, PhD
joined
our board in May of 2012. Dr. Grebow is President and founder of P.E. Grebow Consulting, Inc. which he formed in 2011. He also
serves as Executive Vice President of Research and Development at Eagle Pharmaceuticals, Inc. since October, 2013. From 1991 to
2011, Dr. Grebow held several key positions with Cephalon, Inc. (now Teva Pharmaceuticals), a biopharmaceutical company, including
Executive Vice President, Cephalon Ventures, Executive Vice President, Technical Operations, Senior Vice President, Worldwide Business
Development and Senior Vice President, Drug Development. Prior to joining Cephalon, Dr. Grebow served as the Vice President, Drug
Development for Rorer Central Research, a division of Rhone-Poulenc Rorer Pharmaceuticals Inc., a pharmaceutical company, from
1986 to 1990. Dr. Grebow served as a director of Optimer Pharmaceuticals from February 2009 until October, 2013. Dr. Grebow has
also served as a director of Q Holdings, Inc. since December 2011 and Complexa, Inc. since 2011. Dr. Grebow is a member of the
Investment Advisory Board of the Harrington Discovery Institute since April, 2014. Dr. Grebow received his undergraduate degree
from Cornell University, an MS in chemistry from Rutgers University and a PhD in physical biochemistry from the University of California,
Santa Barbara. Dr. Grebow's demonstrated leadership in his field, his knowledge of scientific matters affecting our business and
his understanding of our industry contribute to our conclusion that he should serve as a director.
Bo Jesper Hansen, MD, PhD
joined our board in August of 2010. Dr. Hansen is currently the Executive Chairman of the Board of Swedish Orphan Biovitrum AB
(NASDAQ OMX, STO: SOBI), an international growth company specializing in the development, registration, marketing and distribution
of pharmaceutical drugs for rare and life-threatening diseases. Dr. Hansen has held the position since January 2010 as a result
of the merger of Swedish Orphan International AB Group and Biovitrum. Prior to the merger, Dr. Hansen served in numerous positions
with Swedish Orphan International AB Group, including, from 1998 to 2010, CEO, President and Director of the Board. Dr. Hansen’s
responsibilities at the company include establishment, development and expansion of the company’s operations in Europe, Japan,
the Americas and Australia. Dr. Hansen holds a Doctor of Medicine degree from the University of Copenhagen with a specialty in
urology. Dr. Hansen is Chairman of Karolinska Development AB (NASDAQ OMX, STO: KDEV) and also serves on the boards of CMC AB, Orphazyme
ApS, Newron (SIX; NWRN), Hyperion Therapeutics Inc. (NASDAQ: HPTX), and Ablynx NV (ABLX). Dr. Hansen previously served on the boards
of Onxeo SA and TopoTarget A/S (EURONEXT, PA: ONXEONASDAQ OMX:TOPO) until August of 2014. In evaluating Dr. Hansen’s specific
experience, qualifications, attributes and skills in connection with his appointment to our board, we took into account his prior
work with both public and private organizations, including his experience in building biopharmaceutical organizations, his strong
business development background and experience with mergers and acquisitions and his past experience and relationships in the biopharma
and biotech fields.
Scott V. Ogilvie
has served
as a director on our board since February 2008. Mr. Ogilvie is currently the President of AFIN International, Inc., a private equity/business
advisory firm, which he founded in 2006. Prior to December 31, 2009, he was CEO of Gulf Enterprises International, Ltd, a company
that brings strategic partners, expertise and investment capital to the Middle East and North Africa. He held this position since
August 2006. Mr. Ogilvie previously served as Chief Operating Officer of CIC Group, Inc., an investment manager, a position he
held from 2001 to 2007. He began his career as a corporate and securities lawyer with Hill, Farrer & Burrill, and has extensive
public and private corporate management and board experience in finance, real estate, and technology companies. Mr. Ogilvie currently
serves on the board of directors of Neuralstem, Inc. (NASDAQ: CUR) and Research Solutions, Inc. (OTCQB: RSSS). Mr. Ogilvie also
served on the board of directors of Preferred Voice Inc. (OTCQB: PRFV), Innovative Card Technologies, Inc. (OTCBB: INVC) and National
Healthcare Exchange, Inc. (OTCBB: NHXS). In evaluating Mr. Ogilvie’s specific experience, qualifications, attributes and
skills in connection with his appointment to our board, we took into account his prior work in both public and private organizations
regarding corporate finance, securities and compliance and international business development.
Family Relationships
There are no family relationships between any director, executive
officer, or person nominated or chosen by the registrant to become a director or executive officer.
Code of Ethics
We have adopted a “Code of Ethics”
that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions. A copy of our code can be viewed on our website at
www.genspera.com
.
Independent Directors
For purposes of determining independence,
the Company has adopted the definition of independence as contained in NASDAQ Market Place Rules 4200. Pursuant to the definition,
the Company has determined that Messrs. Ogilvie, Grebow and Hansen qualify as independent.
Committees
The board of directors has established
three standing committees: (1) an Audit Committee, (2) a Nominating and Corporate Governance Committee, and (3) a Leadership Development
and Compensation Committee. Each of the committees operates under a written charter adopted by the board of directors. All of the
committee charters are available on our web site at
www.genspera.com
. The committee membership and the function of each
of the committees are described below.
|
Director
|
|
Audit Committee
|
|
Nominating
and Corporate
Governance
Committee
|
|
Leadership
Development
and Compensation
Committee
|
|
Peter E. Grebow, PhD
|
|
Member
|
|
Chair
|
|
Member
|
|
Bo Jesper Hansen, MD, PhD
|
|
Member
|
|
Member
|
|
Chair
|
|
Scott V. Ogilvie
|
|
Chair
|
|
Member
|
|
Member
|
Audit Committee
The main function of our Audit Committee,
which was established in accordance with Section 3(a)(58)(A) of the Exchange Act, is to oversee our accounting and financial reporting
processes, internal systems of control, independent auditor relationships and the audits of our financial statements. This committee’s
responsibilities include:
|
|
·
|
Selecting and hiring our independent auditors.
|
|
|
·
|
Evaluating the qualifications, independence and performance of our independent auditors.
|
|
|
·
|
Approving the audit and non-audit services to be performed by our independent auditors.
|
|
|
·
|
Reviewing the design, implementation, adequacy and effectiveness of our internal controls and our
critical accounting policies.
|
|
|
·
|
Overseeing and monitoring the integrity of our financial statements and our compliance with legal
and regulatory requirements as they relate to financial statements or accounting matters.
|
|
|
·
|
Reviewing with management any earnings announcements and other public announcements regarding our
results of operations.
|
|
|
·
|
Reviewing regulatory filings with management and our auditors.
|
|
|
·
|
Preparing any report the SEC requires for inclusion in our annual proxy statement.
|
|
|
·
|
The Audit Committee will review and approve all related party transactions.
|
Our Audit Committee is currently comprised
of Peter E. Grebow, PhD, Bo Jesper Hansen, MD, PhD and Scott V. Ogilvie, each of whom is a non-employee member of our board of
directors. Our board of directors has determined that each of the directors serving on our Audit Committee is independent within
the meaning of the rules of the SEC and rule 5605(a)(2) of the Marketplace Rules of NASDAQ. Additionally, our board has determined
that Bo Jesper Hansen, MD, PhD and Scott V. Ogilvie are audit committee financial experts as defined under the rules of the SEC.
A copy of the charter is available on our website at
www.genspera.com
.
Nominating and Corporate Governance
Committee
Our Nominating and Corporate Governance
Committee’s purpose is to assist our board of directors in identifying individuals qualified to become members of our board
of directors consistent with criteria set by our board of directors and to develop our corporate governance principles. This committee’s
responsibilities include:
|
|
·
|
Evaluating the composition, size, organization and governance of our board of directors and its
committees, determining future requirements, and making recommendations regarding future planning, the appointment of directors
to our committees and selection of chairs of these committees.
|
|
|
·
|
Reviewing and recommending to our board of directors director independence determinations made
with respect to continuing and prospective directors.
|
|
|
·
|
Establishing a policy for considering stockholder nominees for election to our board of directors.
|
|
|
·
|
Recommending ways to enhance communications and relations with our stockholders.
|
|
|
·
|
Evaluating and recommending candidates for election to our board of directors.
|
|
|
·
|
Overseeing our board of directors’ performance and self-evaluation process and developing
continuing education programs for our directors.
|
|
|
·
|
Evaluating and recommending to the board of directors termination of service of individual members
of the board of directors as appropriate, in accordance with governance principles, for cause or for other proper reasons.
|
|
|
·
|
Making regular written reports to the board of directors.
|
|
|
·
|
Reviewing and reexamining the committee’s charter and making recommendations to the board
of directors regarding any proposed changes.
|
|
|
·
|
Reviewing annually the committee’s own performance against responsibilities outlined in its
charter and as otherwise established by the board of directors.
|
Our Nominating and Corporate Governance
Committee is currently comprised of Peter E. Grebow, PhD, Bo Jesper Hansen, MD, PhD and Scott V. Ogilvie, each of whom is a non-employee
member of our board of directors. Our board of directors has determined that each of the directors serving on our Nominating and
Corporate Governance Committee is independent as defined in rule 5605(a)(2) of the Marketplace Rules of NASDAQ. The charter of
the Nominating and Corporate Governance Committee is available on our website at www.genspera.com.
Leadership Development and Compensation
Committee
The purpose of our Leadership Development
and Compensation Committee is to oversee our compensation programs including determining the compensation of our executive officers.
The committee may form and delegate authority to subcommittees or, with respect to compensation for employees and consultants who
are not executive officers for purposes of Section 16 of the Exchange Act, to our officers, in either instance as the committee
determines appropriate. The committee’s responsibilities include:
|
|
·
|
Reviewing and approving our general compensation strategy.
|
|
|
·
|
Establishing annual and long-term performance goals for our CEO and other executive officers.
|
|
|
·
|
Conducting and reviewing with the board of directors an annual evaluation of the performance of
the CEO and other executive officers.
|
|
|
·
|
Evaluating the competitiveness of the compensation of the CEO and the other executive officers.
|
|
|
·
|
Reviewing and making recommendations to the board of directors regarding the salary, bonuses, equity
awards, perquisites and other compensation and benefit plans for the CEO.
|
|
|
·
|
Reviewing and approving all salaries, bonuses, equity awards, perquisites and other compensation
and benefit plans for our other executive officers.
|
|
|
·
|
Reviewing and approving the terms of any offer letters, employment agreements, termination agreements
or arrangements, change-in-control agreements, indemnification agreements and other material agreements between the company and
our executive officers.
|
|
|
·
|
Acting as the administering committee for our stock and bonus plans and for any equity or cash
compensation arrangements that we may adopt from time to time.
|
|
|
·
|
Providing oversight for our overall compensation plans and benefit programs, monitoring trends
in executive and overall compensation and making recommendations to the board of directors with respect to improvements to such
plans and programs or the adoption of new plans and programs.
|
|
|
·
|
Reviewing and approving compensation programs as well as salaries, fees, bonuses and equity awards
for non-employee members of the board of directors.
|
|
|
·
|
Reviewing plans for the development, retention and succession of our executive officers.
|
|
|
·
|
Reviewing executive education and development programs.
|
|
|
·
|
Monitoring total equity usage for compensation and establishing appropriate equity dilution levels.
|
|
|
·
|
Reporting regularly to the board of directors on the committee’s activities.
|
|
|
·
|
Reviewing and discussing with management the required annual compensation discussion and analysis
disclosure, if any, regarding named executive officer compensation and, based on this review and discussions, making a recommendation
to include in our annual public filings.
|
|
|
·
|
Preparing and approving any required committee report to be included in our annual public filings.
|
|
|
·
|
Performing a review, at least annually, of the performance of the committee and its members and
reporting to the board of directors on the results of this review.
|
|
|
·
|
Investigating any matter brought to its attention, with full access to all our books, records,
facilities and employees and obtaining advice, reports or opinions from internal or external counsel and expert advisors in order
to help it perform its responsibilities.
|
Our Leadership Development and Compensation
Committee is currently comprised of Peter E. Grebow, PhD, Bo Jesper Hansen, MD, PhD and Scott V. Ogilvie, each of whom is a non-employee
member of our board of directors. Each member of our Leadership Development and Compensation Committee is an “outside”
director as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and a “non-employee”
director within the meaning of Rule 16b-3 of the Exchange Act. Our board of directors has determined that each of the directors
serving on our Leadership Development and Compensation Committee is independent as defined in rule 5605(a)(2) of the Marketplace
Rules of NASDAQ.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires
the Company’s officers and directors, and persons who own more than ten percent of a registered class of the Company’s
equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and
greater than ten percent shareholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of the copies
of such forms furnished to the Company, and on written representations from the reporting persons, the Company believes that all
Section 16(a) filing requirements applicable to the Company’s directors and officers were timely met during 2015.
|
Name of Reporting Person
|
|
Type of Report and Number Filed Late
|
|
No. of Transactions
Reported Late
|
|
|
|
|
|
|
|
Craig A. Dionne, PhD*
|
|
Form 4 (1 filed late)
|
|
1
|
|
Peter E. Grebow, PhD
|
|
Form 4 (1 filed late)
|
|
1
|
* On March 16, 2016, Dr.
Craig Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer.
Limitation on Liability and Indemnification of Directors
and Officers
Our certificate of incorporation states
that, to the fullest extent permitted by the Delaware General Corporate Law, or the DGCL, no director shall be personally liable
to us or our stockholders for monetary damages for breach of fiduciary duty as director; provided, however, that this provision
eliminating personal liability of a director shall not eliminate or limit the liability of a director (i) for any breach of the
director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit .
Section 174 of the DGCL provides,
among other things, that a director who willfully and negligently approves of an unlawful payment of dividends or an unlawful stock
purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approved
or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing
the minutes of the meetings of the board of directors at the time the action occurred or immediately after the absent director
receives notice of the unlawful acts.
Our certificate of incorporation and bylaws
provide that we will indemnify our directors and officers and may indemnify our employees or agents to the fullest extent permitted
by law against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices
or positions with us. However, nothing in our certificate of incorporation or bylaws protects or indemnifies a director, officer,
employee or agent against any liability to which that person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of that person’s office or position. To the
extent that a director has been successful in defending any proceeding brought against him, the Delaware General Corporation Law
provides that the director shall be indemnified against reasonable expenses incurred by him in connection with the proceeding.
Diversity of Board of Directors
We do not have a formal policy with regard to the consideration
of diversity in identifying director nominees, but the Nominating and Corporate Governance Committee strives to nominate Directors
with a variety of complementary skills so that, as a group, the board of directors will possess the appropriate talent, skills,
and expertise to oversee our businesses.
EXECUTIVE COMPENSATION
Summary Compensation
The following table provides disclosure
concerning all compensation paid for services to us in all capacities for our fiscal years ended December 31, 2015 and 2014 provided
by (i) each person serving as our principal executive officer, or PEO, or acting in a similar capacity during our fiscal year ended
December 31, 2014; (ii) our most highly compensated executive officers other than our PEO who were serving as executive officers
on December 31, 2015 and whose total compensation exceeded $100,000 (collectively with the PEO referred to as the “named
executive officers” in this Executive Compensation section); and (iii) our Principal Financial Officer.
Name & Principal
Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
|
Craig Dionne, PhD
|
|
2015
|
|
|
|
381,150
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
|
|
|
47,945
|
|
|
|
429,095
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
And Chief Financial Officer (2)
|
|
2014
|
|
|
|
381,150
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
|
|
|
44,763
|
|
|
|
425,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Richerson, PhD
|
|
2015
|
|
|
|
324,685
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
|
|
|
17,524
|
|
|
|
342,209
|
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
324,685
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
(1)
|
|
|
‒
|
|
|
|
‒
|
|
|
|
17,160
|
|
|
|
341,845
|
|
|
(1)
|
As of March 11, 2016, the executive’s bonus for 2015 and 2014 have not yet been determined.
|
|
(2)
|
On March 16, 2016, Dr. Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer.
|
Outstanding Executive Equity Awards
at Fiscal Year-End 2015
The following table sets forth information concerning stock
options held on December 31, 2015, the last day of our 2015 fiscal year, for each named executive officer.
|
|
|
Number of Securities Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
Unexercised Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
Name and Principal Position
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig Dionne, PhD
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
1.65
|
|
|
9/2/2016
|
|
Chief Executive Officer and
|
|
|
302,580
|
|
|
|
—
|
|
|
|
2.01
|
|
|
7/1/2018
|
|
Chief Financial Officer(1)(2)
|
|
|
344,813
|
|
|
|
—
|
|
|
|
2.21
|
|
|
1/2/2019
|
|
|
|
|
70,342
|
|
|
|
—
|
|
|
|
2.21
|
|
|
1/2/2019
|
|
|
|
|
418,951
|
|
|
|
—
|
|
|
|
2.18
|
|
|
3/25/2020
|
|
|
|
|
142,443
|
|
|
|
—
|
|
|
|
2.18
|
|
|
3/25/2020
|
|
|
|
|
378,981
|
|
|
|
—
|
|
|
|
1.42
|
|
|
1/7/2021
|
|
|
|
|
757,962
|
|
|
|
—
|
|
|
|
1.42
|
|
|
1/7/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Richerson, PhD
|
|
|
775,000
|
|
|
|
—
|
|
|
|
1.50
|
|
|
9/2/2016
|
|
Chief Operating Officer
|
|
|
256,790
|
|
|
|
—
|
|
|
|
1.83
|
|
|
7/1/2018
|
|
|
|
|
292,927
|
|
|
|
—
|
|
|
|
2.01
|
|
|
1/2/2019
|
|
|
|
|
46,576
|
|
|
|
—
|
|
|
|
2.01
|
|
|
1/2/2019
|
|
|
|
|
343,137
|
|
|
|
—
|
|
|
|
1.98
|
|
|
3/25/2020
|
|
|
|
|
173,181
|
|
|
|
—
|
|
|
|
1.98
|
|
|
3/25/2020
|
|
|
|
|
210,508
|
|
|
|
—
|
|
|
|
1.29
|
|
|
1/7/2021
|
|
|
|
|
601,451
|
|
|
|
—
|
|
|
|
1.29
|
|
|
1/7/2021
|
|
(1)
|
On March 16, 2016, Dr. Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer.
|
|
(2)
|
On June 14, 2016, all of Dr. Dionne’s outstanding options listed hereunder expired pursuant to the terms of the applicable equity compensation plans.
|
Employment Agreements and Change in Control
Craig Dionne
In connection with Dr. Dionne’s employment,
we entered into: (i) an employment agreement; (ii) a severance agreement; (iii) a proprietary information, inventions and competition
agreement; and (iv) an indemnification agreement.
Employment Agreement
Craig Dionne was employed by the company
until March 16, 2016, when he provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial
Officer. During his employment as our Chief Executive Officer, Dr. Dionne had a written employment contract that automatically
extended for successive one year terms on September 2, of each year. As compensation for his services during 2015 and 2014, Dr.
Dionne received an annual base salary of $381,150, respectively. Such base salary is reviewed yearly with regard to possible increase.
In addition, Dr. Dionne was eligible to receive annual discretionary and long term incentive bonuses as determined by the board.
For 2014, Dr. Dionne’s target bonus levels for annual discretionary bonus and long term incentive bonuses were: (i) 50%,
and (ii) 100%, of base salary, respectively. Notwithstanding, the Board has broad discretion to make awards in excess of executive’s
established targets. Commencing in 2014, the annual discretionary bonus was payable in cash and the long term incentive bonus was
payable in common stock purchase options. Dr. Dionne was also entitled to receive certain payments and acceleration of outstanding
equity awards in the event his employment was terminated. In the event that Dr. Dionne was terminated (not in connection with a
change of control) without cause or if he resigned for good reason, he would have been entitled to thirty-six (36) months of salary
continuation (payable in monthly installments), thirty-six (36) months of continued medical insurance coverage for Dr. Dionne and
his family at a cost no less favorable than the premium co-pay charged to active employees, the acceleration of outstanding equity
awards and any accrued obligations. In the event that Dr. Dionne was terminated as a result of his disability, he would have be
entitled to twelve (12) months of salary continuation plus any accrued obligations. Any termination payments that may have become
due to Dr. Dionne are contingent upon his execution of a timely separation agreement in a form acceptable to us, which shall include
a release of claims against us and his resignation from the board.
Severance Agreement
Craig Dionne was employed until he tendered
his notice of termination on March 16, 2016. Notwithstanding the foregoing, we entered into a severance agreement with Dr. Dionne.
The severance agreement provided for certain payments, as described below, in the event Dr. Dionne’s employment was terminated
in connection with a change in control. In the event that Dr. Dionne is terminated without cause or resigns for good reason within
a period of two (2) months before or two (2) years following the consummation of a change of control, the Company would have be
required to pay him (i) 100% of his then annual target bonus, pro-rated by the number of calendar days in which he was employed
during that particular year, and (ii) a lump sum payment in an amount equal to three (3) times his then annual salary. These payments
are subject to Dr. Dionne’s execution of a release of claims against us and shall be made on the tenth business day following
the effective date of the release. If any payment under the severance agreement, when combined with any other payment, would constitute
a “parachute payment” within the meaning of Code Section 280G then such payment shall be either the full amount or
such lesser amount that would not result in an excise tax under Code Section 280G, based upon which interpretation yields the greater
after-tax amount for Dr. Dionne.
Proprietary Information, Inventions
and Competition Agreement
The proprietary information, inventions
and competition agreement requires Dr. Dionne to maintain the confidentiality of the Company’s intellectual property as well
as the assignment of any inventions made by Dr. Dionne during his employment. The agreement also limits Dr. Dionne’s ability
to compete within certain fields of interest, as defined in the agreement, for a period of 18 months following the end of his employment.
Indemnification Agreement
The indemnification agreement provides
for the indemnification and defense of Dr. Dionne, in the event of litigation, to the fullest extent permitted by law. The Company
has also adopted the form of indemnification agreement for use with its other executive officers, employees and directors.
The foregoing summaries of Dr. Dionne’s:
(i) employment agreement; (ii) severance agreement; (iii) proprietary information, inventions and competition agreement; and (iv)
indemnification agreement are qualified in their entirety by reference to the full text of the agreements which have been filed
with the SEC as exhibits to our public filings.
Russell Richerson
In connection with Dr. Richerson’s
employment, we have entered into: (i) an employment agreement; (ii) a proprietary information, inventions and competition agreement;
and (iii) an indemnification agreement.
Employment Agreement
We employ Russell Richerson as our Chief
Operating Officer pursuant to a written contract that automatically extended for successive one year term on September 2, of each
year. Such base salary is reviewed yearly with regard to possible increase. In addition, Dr. Richerson is eligible to receive annual
discretionary and long term incentive bonuses as determined by the board. In connection with our board of directors and Leadership
Development and Compensation Committee’s review of Dr. Richerson’s compensation in June of 2014, his target bonus levels
for annual discretionary bonus and long term incentive bonuses were adjusted to: (i) 40% and (ii) 100%, of base salary, for 2014.
Commencing in 2014, the annual discretionary bonus is payable in cash and the long term incentive bonus is payable in common stock
purchase options. Dr. Richerson is also entitled to receive certain payments and acceleration of outstanding equity awards in the
event his employment is terminated. In the event that Dr. Richerson is terminated without cause or if he resigns for good reason,
he will be entitled to eighteen (18) months of salary continuation (payable in monthly installments), eighteen (18) months of continued
medical insurance coverage for Dr. Richerson and his family at a cost no less favorable than the premium co-pay charged to active
employees, the acceleration of outstanding equity awards and any accrued obligations. In the event that Dr. Richerson is terminated
as a result of his disability, he will be entitled to twelve (12) months of salary continuation plus any accrued obligations. Any
termination payments that may become due to Dr. Richerson are contingent upon his execution of a timely separation agreement in
a form acceptable to us, which shall include a release of claims against us and his resignation from the board, if applicable.
Proprietary Information, Inventions
and Competition Agreement
The proprietary information, inventions
and competition agreement requires Dr. Richerson to maintain the confidentiality of the Company’s intellectual property as
well as the assignment of any inventions made by Dr. Richerson during his employment. The agreement also limits Dr. Richerson’s
ability to compete within certain fields of interest, as defined in the agreement, for a period of 18 months following end of his
employment.
Indemnification Agreement
The indemnification agreement provides
for the indemnification and defense of Dr. Richerson, in the event of litigation, to the fullest extent permitted by law.
The foregoing summaries of Mr. Richerson’s:
(i) employment agreement; (ii) proprietary information, inventions and competition agreement; and (iv) indemnification agreement
are qualified in their entirety by reference to the full text of the agreements which have been filed with the SEC as exhibits
to our public filings.
Potential Payments Upon Termination or Change- in-Control
The following table sets forth the payments
that would be made to our named executive officers if his employment in accordance with his employment agreement had been terminated
by us without cause, termination as a result of disability on December 31, 2015 or in the event a change in control of our Company
occurred on December 31, 2015, as applicable. On March 16, 2016, Dr. Dionne provided us his notice of termination as our Chief
Executive Officer and Chief Financial Officer. The notice claims that such termination was for “Good Cause.” Additionally,
Dr. Dionne resigned from the Company’s board of directors and as chairman on March 21, 2016. The Company currently disputes
Dr. Dionne’s claim that the termination was for “Good Reason” as provided for in his employment agreement.
|
Name
|
|
Terminated
without
cause
|
|
|
Terminated, change
of control
|
|
|
Termination as a
result of Disability
|
|
|
Craig Dionne, PhD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
1,143,450
|
|
|
$
|
1,143,450
|
|
|
$
|
381,150
|
|
|
Bonus (1)
|
|
|
571,725
|
|
|
|
571,725
|
|
|
|
—
|
|
|
Health
|
|
|
83,100
|
|
|
|
83,100
|
|
|
|
—
|
|
|
Total:
|
|
$
|
1,798,275
|
|
|
$
|
1,798,275
|
|
|
$
|
381,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Richerson, PhD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
487,027
|
|
|
$
|
—
|
|
|
$
|
324,685
|
|
|
Bonus (1)
|
|
|
454,559
|
|
|
|
—
|
|
|
|
—
|
|
|
Health
|
|
|
29,100
|
|
|
|
—
|
|
|
|
—
|
|
|
Total:
|
|
$
|
970,686
|
|
|
$
|
—
|
|
|
$
|
324,685
|
|
|
|
(1)
|
Assumes all annual bonus milestones have been attained prior to termination.
|
DIRECTOR COMPENSATION
|
Name
|
|
Fees
Earned
or Paid in
Cash ($)
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards ($)
|
|
|
Non-Equity Incentive
Plan Compensation ($)
|
|
|
Non-Qualified
Deferred
Compensation
Earnings ($)
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
|
Peter E. Grebow, PhD
|
|
|
40,002
|
|
|
|
—
|
|
|
|
13,680
|
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
53,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bo Jesper Hansen
|
|
|
40,002
|
|
|
|
—
|
|
|
|
16,163
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
56,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Ogilvie
|
|
|
40,002
|
|
|
|
—
|
|
|
|
18,435
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58,437
|
|
|
(1)
|
Represents an option to purchase 53,000 common shares with a fair market value on May 26, 2015, the grant date, of $0.258 per share. The option vests quarterly over a one-year period.
|
|
(2)
|
Represents an option to purchase 53,000 common shares with a fair market value on August 13, 2015, the grant date, of $0.305 per share. The option vests quarterly over a one-year period.
|
|
(3)
|
Represents an option to purchase 53,000 common shares with a fair market value on March 2, 2015, the grant date, of $0.348 per share. The option vests quarterly over a one-year period.
|
Director Compensation Plan
Our non-employee directors are entitled
to the following compensation for service on our Board:
Inducement/First
Year Grant.
Upon joining the board, board members receive options to purchase 50,000 shares of our common stock. The
options vest as follows: (i) 25,000 immediately upon appointment to the board; and (ii) 25,000 quarterly over the following
12 months.
Annual Grant.
Subject to the shareholder’s rights to elect any individual director, starting on the first year anniversary of service,
and each subsequent anniversary thereafter, each eligible director will be granted options to purchase 40,000 shares of common
stock or restricted stock units of equivalent value. The annual grants vest quarterly during the grant year.
Committee and Committee
Chairperson Grant.
Each director will receive options to purchase an additional 4,000 shares of common stock, or restricted
stock units of equivalent value, for each committee on which he or she serves. Chairpersons of each committee will receive options
to purchase an additional 1,000 share of common stock, or restricted stock units of equivalent value. The committee
grants vest quarterly during the grant year.
Special Committee
Grants.
From time to time, individual directors may be requested by the board of directors to provide extraordinary services. These
services may include such items as the negotiation of key contracts, assistance with scientific issues, or such other items as
the board deems necessary and in the best interest of our company and our shareholders. In such instances, the board
shall have the flexibility to issue special committee grants. The amount of such grants and terms will vary commensurate
with the function and tasks of the special committee.
Exercise Price
and Term.
All options issued pursuant to the amended non-executive board compensation policy will have an exercise price equal
to the fair market value of our common stock at close of market on the grant date. The term of the options shall be
for a period of 5 years from the grant date.
The determination
with regard to whether awards will be made in options or restricted stock units will be at the sole discretion of the director.
Cash Compensation.
Directors will also receive cash compensation equal to: (i) an annual cash retainer of $30,000, and (ii) a per committee cash
award of $3,334.
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
Related Party Transactions
Information regarding disclosure of an
employment relationship or transaction involving an executive officer and any related compensation solely resulting from that employment
relationship or transaction is incorporated by reference from the section of this Prospectus entitled “
Executive Compensation
.”
Information regarding disclosure of compensation
to a director is incorporated by reference from the section of this Prospectus entitled “
Director Compensation
.”
|
|
·
|
During our December 2012 through March 2013 offering, Kihong Kwon, MD (including related and/or
affiliated entities), purchased 70,914 units on the same terms and conditions as the other investors in the offering. The price
per unit was $2.20. On March 22, 2013, we issued Dr. Kwon (or his related and affiliated entities) 17,076 additional units in connection
with the adjustment to the per unit price. Each unit consists of: (i) one (1) share of the common stock, par value $0.0001, and
(ii) one common stock purchase warrant. The warrants have a term of five years and entitle the holders to purchase common stock
at a price per share of $3.00. In the event the shares underlying the warrants are not subject to a registration statement, the
warrants may be exercised on a cashless basis after 12 months from the issuance date. The warrants also contain provisions providing
for an adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental
transactions. The warrants do not contain any price protection provisions. Additionally, the warrants contain limitations on the
holder’s ability to exercise the warrants in the event such exercise causes the holder to beneficially own in excess of 4.99%
of the Company’s issued and outstanding common stock, subject to a discretionary increase in such limitation by the holder
to 9.99% upon 61 days’ notice.
|
In connection with the offering,
we entered into a registration rights agreement with Kihong Kwon, MD (including related and/or affiliated entities) on the same
terms as that of the other investors in the offering. Pursuant to the registration rights agreements, we agreed to file a “resale”
registration statement with the SEC covering all shares of the common stock and the shares underlying the warrants within 45 days
of the final closing date of the sale of units and to maintain the effectiveness of the registration statement until all securities
have been sold or are otherwise able to be sold pursuant to Rule 144. We have agreed to use our best efforts to have the registration
statement declared effective within 90 days of the final closing. We are also obligated to pay to investors, as partial liquidated
damages, a fee of 0.50% per month in cash up to a maximum of 6%, upon the occurrence of certain events, including but not limited
to failure to file and/or have the registration statement declared effective within the time provided. Subsequent to the offering,
we received a waiver and amendment to the registration rights agreement by holders of a majority of the registrable securities.
The effect of the waiver and amendment is to waive all penalties under the registration rights agreement with regard to filing
deadlines and effectiveness requirements.
|
|
·
|
On February 12, 2013, we granted each of Drs. Isaacs and Denmeade, in their respective capacities
as our Scientific Advisors, common stock purchase options to purchase 20,000 shares, as compensation for serving on the Company’s
scientific advisory board. The options have an exercise price of $1.95 per share. The options vest quarterly over the year beginning
on March 31, 2013 and lapse if unexercised on February 12, 2018.
|
|
|
·
|
On March 1, 2013 we granted Scott V. Ogilvie, one of our outside directors, options to purchase
38,000 shares of common stock. The options were granted pursuant to our legacy director compensation plan as compensation for Mr.
Ogilvie’s service on our board and related committees. The options have an exercise price of $1.90 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
On March 25, 2013, we issued Dr. Dionne, or CEO, options to purchase an aggregate of 561,394 in
connection with his 2012 long term and annual bonus. The options have a term of seven years, an exercise price of $2.18 and are
fully vested on the grant date.
|
|
|
·
|
On March 25, 2013, we issued Dr. Richerson, or COO, options to purchase an aggregate of 516,318
in connection with his 2012 long term and annual bonus. The options have a term of seven years, an exercise price of $1.98 and
are fully vested on the grant date.
|
|
|
·
|
On May 24, 2013, we granted Peter E. Grebow, PhD, one of our outside directors, options to purchase
38,000 shares of common stock. The options were granted pursuant to our director compensation plan as compensation for Dr. Grebow’s
service on our board and related committees. The options have an exercise price of $1.95 per share. The options vest quarterly
over the year and have a term of five years.
|
|
|
·
|
During June of 2013, in connection with Ms. Barnabei’s resignation as Vice President and
Treasurer, we entered into a release agreement with Ms. Barnabei which provides for an extended amount of time to exercise any
stock options vested as of June 30, 2013 from three months from the date of her final day of employment to the expiration date
of each respective award, in exchange for Ms. Barnabei’s general release of claims against the Company, if any.
|
|
|
·
|
On August 13, 2013, we granted Bo Jesper Hansen, M.D., one of our outside directors, options to
purchase 38,000 shares of common stock. The options were granted pursuant to our legacy director compensation plan as compensation
for Dr. Hansen’s service on our board and related committees. The options have an exercise price of $1.68 per share. The
options vest quarterly over the year and have a term of five years.
|
|
|
·
|
On January 7, 2014, we granted each of Drs. Isaacs and Denmeade, in their respective capacities
as our Scientific Advisors, common stock purchase options to purchase 20,000 shares, as compensation for serving on the Company’s
scientific advisory board. The options have an exercise price of $1.29 per share. The options vest quarterly over the year beginning
on March 31, 2014 and lapse if unexercised on January 7, 2019.
|
|
|
·
|
On January 8, 2014, we issued Dr. Dionne, our former CEO, options to purchase an aggregate of 1,136,943
in connection with his 2013 long term and annual bonus. The options have a term of seven years, an exercise price of $1.42 and
are fully vested on the grant date.
|
|
|
·
|
On January 8, 2014, we issued Dr. Richerson, or COO, options to purchase an aggregate of 811,959
in connection with his 2013 long term and annual bonus. The options have a term of seven years, an exercise price of $1.29 and
are fully vested on the grant date.
|
|
|
·
|
On March 1, 2014, we granted Scott V. Ogilvie, one of our outside directors, options to purchase
38,000 shares of common stock. The options were granted pursuant to our legacy director compensation plan as compensation for Mr.
Ogilvie’s service on our board and related committees. The options have an exercise price of $1.36 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
On May 24, 2014, we granted Peter E. Grebow, PhD, one of our outside directors, options to purchase
38,000 shares of common stock. The options were granted pursuant to our legacy director compensation plan as compensation for Dr.
Grebow’s service on our board and related committees. The options have an exercise price of $1.20 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
In June of 2014, our Leadership Development and Compensation Committee recommended, and our board
of directors approved, an amendment to non-executive director compensation policy. The amendment was made effective January 1,
2014. For a further discussion of the plan, see the section of this prospectus entitled “Director Compensation.”
|
|
|
·
|
On June 27, 2014, we granted Scott V. Ogilvie, one of our outside directors, options to purchase
15,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation for
Mr. Ogilvie’s service on our board and related committees. The options have an exercise price of $0.94 per share. The options
have a term of five years, and 3,750 shares are fully vested on the grant date, with the balance vesting quarterly over the year.
|
|
|
·
|
On June 27, 2014, we granted Peter E. Grebow, PhD, one of our outside directors, options to purchase
15,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation for
Dr. Grebow’s service on our board and related committees. The options have an exercise price of $0.94 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
On August 13, 2014, we granted Bo Jesper Hansen, M.D., one of our outside directors, options to
purchase 53,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation
for Dr. Hansen’s service on our board and related committees. The options have an exercise price of $0.70 per share. The
options vest quarterly over the year and have a term of five years.
|
|
|
·
|
On January 30, 2015, we granted each of Drs. Isaacs and Denmeade, in their respective capacities
as our Scientific Advisors, common stock purchase options to purchase 20,000 shares, as compensation for serving on the Company’s
scientific advisory board. The options have an exercise price of $0.87 per share. The options vest quarterly beginning on March
31, 2015 and lapse if unexercised on January 30, 2020.
|
|
|
·
|
On March 2, 2015 we granted Scott V. Ogilvie, one of our outside directors, options to purchase
53,000 shares of common stock. The options were granted pursuant to our legacy director compensation plan as compensation for Mr.
Ogilvie’s service on our board and related committees. The options have an exercise price of $0.95 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
On May 26, 2015, we granted Peter E. Grebow, PhD, one of our outside directors, options to purchase
53,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation for
Dr. Grebow’s service on our board and related committees. The options have an exercise price of $0.65 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
On July 5, 2015, we entered into securities purchase agreements with certain institutional accredited
investors. One such investor, Alpha Capital Anstalt was determined to be a related party by virtue of its greater than 5% ownership
of the Company’s securities. Alpha Capital Anstalt purchased $425,000 worth of our securities at a price per unit of $0.70
with each unit consisting of (i) one share of the Company’s common stock (ii) one Series D common stock purchase warrant
and (iii) one Series E common stock purchase warrant. The Series D and Series E warrants both have exercise prices of $0.70 per
share. The Series D warrants have a term of five years and the Series E warrants have a term of eighteen months.
|
|
|
·
|
On August 13, 2015, we granted Bo Jesper Hansen, M.D., one of our outside directors, options to
purchase 53,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation
for Dr. Hansen’s service on our board and related committees. The options have an exercise price of $0.75 per share. The
options vest quarterly over the year and have a term of five years.
|
|
|
·
|
In November 2015, Dr. Dionne, our former chief executive officer, converted three promissory notes
with an aggregate balance of $105,000 into 262,500 shares of common stock. Dr. Dionne waived all interest under the notes in exchange
for a reduction from the conversion price of $0.50 per share to $0.40 per share.
|
|
|
·
|
In December 2015, we entered into securities purchase agreements with certain institutional accredited
investors who are also the Selling Shareholders. Each of the investors was determined to be a related party by virtue of their
greater than 5% ownership of the Company’s securities. The investors purchased and exercised an aggregate of $2,492,500 worth
of our securities at a price per share of Series A 0% Convertible Preferred Stock of $1,000. The investors additionally received
(i) 1,853 shares of Series A 0% Convertible Preferred Stock convertible into 12,354,167 common shares at a conversion price of
$0.15 per share, subject to adjustment, (ii) 6,177,084 Series F common stock purchase warrants with a price per share of $0.30
and a term of five years from the date in which the shares underlying the warrants are registered, (ii) 6,177,084 Series G common
stock purchase warrants with a price per share of $0.30 and a term of eighteen months from the date in which the shares underlying
the warrants are registered, (iii) 3,571,430 Series H common stock purchase warrants issued pursuant to a contractually obligated
exercise of prior outstanding warrants, with a price per share of $0.30 and a term of five years from the issuance date, and (iv)
3,571,430 Series I common stock purchase warrants issued pursuant to a contractually obligated exercise of prior outstanding warrants,
with a price per share of $0.30 and a term of eighteen months from the issuance date.
|
|
|
·
|
On January 11, 2016, we granted each of Drs. Isaacs and Denmeade, in their respective capacities
as our Scientific Advisors, common stock purchase options to purchase 40,000 shares, as compensation for serving on the Company’s
scientific advisory board. The options have an exercise price of $0.16 per share. The options vest quarterly beginning on March
31, 2016 and lapse if unexercised on January 11, 2021.
|
|
|
·
|
On March 1, 2016 we granted Scott V. Ogilvie, one of our outside directors, options to purchase
53,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation for
Mr. Ogilvie’s service on our board and related committees. The options have an exercise price of $0.14 per share. The options
vest quarterly over the year and have a term of five years.
|
|
|
·
|
On May 23, 2016, we granted Peter E. Grebow, PhD, one of our outside directors, options to purchase
53,000 shares of common stock. The options were granted pursuant to our amended director compensation plan as compensation for
Dr. Grebow’s service on our board and related committees. The options have an exercise price of $0.13 per share. The options
vest quarterly over the year and have a term of five years.
|
Related Party Transactions Policy and
Procedure
We will only enter into or ratify a transaction
with a related party when our board of directors, acting through the Audit Committee, determines that the transaction is in the
best interests of GenSpera and its stockholders. We review all known relationships and transactions in which GenSpera and our directors,
executive officers, and significant stockholders or their immediate family members are participants to determine whether such persons
have a direct or indirect interest. Our outside legal counsel, in consultation with our management team, is primarily responsible
for developing and implementing processes and controls to obtain information regarding our directors, executive officers, and significant
stockholders with respect to related party transactions and then determining, based on the facts and circumstances, whether GenSpera
or a related party has a direct or indirect interest in these transactions. On a periodic basis, our outside counsel and our management
team review all transactions in which our executive officers, director or significant shareholders may have a material interest.
In addition, our directors and executive officers are required to notify us of any potential related party transactions and provide
us with the information regarding such transactions. If our outside legal counsel determines that a transaction is a related party
transaction, the Audit Committee must review the transaction and either approve or disapprove it. Any member of the Audit Committee
who is a related party with respect to a transaction under review may not participate in the deliberations or vote on the approval
of the transaction. In the event all members of the Audit Committee are a related party with respect to a transaction, the transaction
is reviewed and approved by a majority of the disinterested directors.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July
15, 2016, information regarding beneficial ownership of our capital stock by:
|
|
·
|
each person, or group of affiliated persons, known by us to be the beneficial owner of 5% or more
of any class of our voting securities;
|
|
|
·
|
each of our current directors and nominees;
|
|
|
·
|
each of our current named executive officers; and
|
|
|
·
|
all current directors and named executive officers as a group.
|
Beneficial ownership is determined according
to the rules of the SEC. Beneficial ownership means that a person has or shares voting or investment power of a security and includes
any securities that person or group has the right to acquire within 60 days after the measurement date. This table is based on
information supplied by officers, directors and principal stockholders. Except as otherwise indicated, we believe that each of
the beneficial owners of the common stock listed below, based on the information such beneficial owner has given to us, has sole
investment and voting power with respect to such beneficial owner’s shares, except where community property laws may apply.
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner(1)
|
|
Shares
|
|
|
Shares
Underlying
Convertible
Securities (2)
|
|
|
Total
|
|
|
Percent of
Class (2)
|
|
|
Directors and named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig Dionne, PhD(9)
|
|
|
2,227,249
|
(3)
|
|
|
—
|
|
|
|
2,227,249
|
|
|
|
5.3
|
%
|
|
Russell B. Richerson, PhD
|
|
|
942,392
|
|
|
|
1,924,570
|
|
|
|
2,866,962
|
|
|
|
6.6
|
%
|
|
Bo Jesper Hansen, MD, PhD
|
|
|
—
|
|
|
|
182,000
|
|
|
|
182,000
|
|
|
|
*
|
|
|
Scott Ogilvie
|
|
|
—
|
|
|
|
324,500
|
|
|
|
324,500
|
|
|
|
*
|
|
|
Peter E. Grebow, PhD
|
|
|
—
|
|
|
|
220,250
|
|
|
|
220,250
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (5 persons)
|
|
|
3,169,641
|
|
|
|
2,651,320
|
|
|
|
5,820,961
|
|
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Owners of 5% or more
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kihong Kwon, MD(4)
|
|
|
2,456,567
|
|
|
|
-
|
|
|
|
2,456,567
|
|
|
|
5.9
|
%
|
|
Alpha Capital Anstalt (5)(8)
|
|
|
1,788,166
|
|
|
|
337,099
|
|
|
|
2,125,265
|
|
|
|
5.0
|
%
|
|
Sabby Healthcare Master Fund, Ltd. (6)(8)
|
|
|
2,363,629
|
|
|
|
-
|
|
|
|
2,363,629
|
|
|
|
5.7
|
%
|
|
Sabby Volatility Warrant Master Fund, Ltd. (7)(8)
|
|
|
1,640,731
|
|
|
|
484,534
|
|
|
|
2,125,265
|
|
|
|
5.0
|
%
|
|
(1)
|
Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is GenSpera, Inc., 2511 N Loop 1604 W, Suite 204, San Antonio, TX 78258.
|
|
(2)
|
Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. There were 41,762,356 shares of common stock issued and outstanding as of July 11, 2016.
|
|
(3)
|
Includes 18,002 shares owned by Craig A. Dionne & Bonnie Camille Dionne TTEES The Dionne Annuity Trust of 2011, 981,998 shares owned by Craig A. Dionne & Bonnie Camille Dionne JTWROS, and 500,000 shares owned by Craig A. Dionne 2015 GRAT #2, where Dr. Dionne is trustee and beneficiary.
|
|
(4)
|
Does not include 1,804,455 warrants or convertible securities subject to exercise conditions based on percentage ownership.
|
|
(5)
|
Does not include 10,325,848 warrants or preferred stock convertible into common stock securities subject to exercise conditions based on percentage ownership.
|
|
(6)
|
Does not include 17,388,356 warrants or preferred stock convertible into common stock subject to exercise conditions based on percentage ownership.
|
|
(7)
|
Does not include 12,764,754 warrants or preferred stock convertible into common stock subject to exercise conditions based on percentage ownership.
|
|
(8)
|
Share ownership and percentage calculations made pursuant to disclosure made to the Company by reporting person on or about January 1, 2016.
|
|
(9)
|
On March 16, 2016, Dr. Dionne provided the Company notice of termination as Chief Executive Officer and Chief Financial Officer. Pursuant to the terms of the Company’s equity compensation plans, all unvested options terminated one (1) month from the date of Dr. Dionne’s termination and any vested options terminated three (3) months from the date of Dr. Dionne’s termination. All shares underlying such options reverted back to the respective equity compensation plans from which they were granted and are available for future grants.
|
EXPERTS
The financial statements included in this
prospectus and in the registration statement of which it forms a part, have been so included in reliance on the reports of Liggett
& Webb, P.A., who were formerly Liggett, Vogt & Webb, P.A., our independent registered public accounting firm for the year
ended December 31, 2014, and 2015, appearing elsewhere in this prospectus and the registration statement of which it forms a part,
given on the authority of said firms as experts in auditing and accounting.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of our securities offered and to be issued by this
prospectus will be passed upon for us by Silvestre Law Group, P.C. of Westlake Village, CA. The Silvestre Law Group, P.C. or its
various principals and/or affiliates, 287,500 shares of our common stock and options to purchase 325,000 shares.
WHERE YOU CAN FIND MORE INFORMATION
We make our public filings with the SEC,
including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all exhibits and amendments
to these reports. These materials are available on the Company’s website at
www.genspera.com
or on the SEC’s
web site,
http://www.sec.gov
. We have not incorporated by reference into this prospectus the information in, or that can
be accessed through, our website, and you should not consider it to be a part of this prospectus. You may also read or copy any
materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Alternatively, you may obtain copies
of these filings, including exhibits, by writing or telephoning us at:
GENSPERA
2511 N Loop 1604 W, Suite 204
San Antonio, TX 78258
Attn: Chief Executive Officer
Tel: 210-479-8112
This prospectus is part of a registration
statement on Form S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this
prospectus in accordance with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration
statement that are excluded from this prospectus. For further information you may:
|
|
·
|
read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC’s public reference rooms; or
|
|
|
·
|
obtain a copy from the SEC upon payment of the fees prescribed by the SEC.
|
INDEX TO FINANCIAL STATEMENTS
|
|
|
Page
|
|
Unaudited Financial Statements
|
|
|
|
Condensed Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015
|
|
F-2
|
|
Condensed Statements of Operations (Unaudited) Three months ended March 31, 2016
|
|
F-3
|
|
Condensed Statement of Stockholders' Equity (Unaudited) for the Three months ended March 31, 2016
|
|
F-4
|
|
Condensed Statements of Cash Flows (Unaudited) for the Three months ended March 31, 2016 and 2015
|
|
F-5
|
|
Notes to Unaudited Condensed Financial Statements
|
|
F-6
|
|
Audited Financial Statements
|
|
|
|
Report of Liggett & Webb P.A, Independent
Registered Public Accounting Firm
|
|
F-13
|
|
Balance Sheets for the years ended December 31, 2015 and 2014
|
|
F-14
|
|
Statements of Losses for the years ended December 31, 2015 and 2014
|
|
F-15
|
|
Statements of Stockholders’ Equity for the years ended December 31, 2015 and 2014
|
|
F-16
|
|
Statements of Cash Flows for the years ended December 31, 2015 and 2014
|
|
F-17
|
|
Notes to Financial Statements for the years ended December 31, 2015 and 2014
|
|
F-18
|
GENSPERA, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share and per share
data)
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,558
|
|
|
$
|
2,465
|
|
|
Prepaid expenses
|
|
|
116
|
|
|
|
114
|
|
|
Total current assets
|
|
|
1,674
|
|
|
|
2,579
|
|
|
Office equipment, net of accumulated depreciation of $28 and $27
|
|
|
11
|
|
|
|
12
|
|
|
Intangible assets, net of accumulated amortization of $132 and $128
|
|
|
80
|
|
|
|
84
|
|
|
Other assets
|
|
|
3
|
|
|
|
3
|
|
|
Total assets
|
|
$
|
1,768
|
|
|
$
|
2,678
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
941
|
|
|
$
|
977
|
|
|
Accrued expenses
|
|
|
2,563
|
|
|
|
2,432
|
|
|
Derivative liability
|
|
|
639
|
|
|
|
1,177
|
|
|
Total current liabilities
|
|
|
4,143
|
|
|
|
4,586
|
|
|
Total liabilities
|
|
|
4,143
|
|
|
|
4,586
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, par value $.0001 per
share; 30,000,000 shares authorized, 1,853 issued and outstanding, respectively
|
|
|
‒
|
|
|
|
‒
|
|
|
Common stock, par value $0.0001 per share; 150,000,000 shares authorized,
41,762,356 shares issued and outstanding, respectively
|
|
|
4
|
|
|
|
4
|
|
|
Additional paid-in capital
|
|
|
43,376
|
|
|
|
43,353
|
|
|
Accumulated deficit
|
|
|
(45,755
|
)
|
|
|
(45,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
|
(2,375
|
)
|
|
|
(1,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
|
$
|
1,768
|
|
|
$
|
2,678
|
|
The accompanying notes are an integral
part of these condensed financial statements.
GENSPERA, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share
data)
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Research and development
|
|
$
|
323
|
|
|
$
|
815
|
|
|
General and administrative
|
|
|
707
|
|
|
|
1,028
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,030
|
|
|
|
1,843
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,030
|
)
|
|
|
(1,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gain on change in fair value of derivative liability
|
|
|
538
|
|
|
|
‒
|
|
|
Interest income (expense), net
|
|
|
2
|
|
|
|
‒
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(490
|
)
|
|
|
(1,843
|
)
|
|
Provision for income taxes
|
|
|
‒
|
|
|
|
‒
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(490
|
)
|
|
$
|
(1,843
|
)
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
41,762,356
|
|
|
|
33,300,379
|
|
The accompanying notes are an integral
part of these condensed unaudited financial statements.
GENSPERA, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2016
(in thousands, except share and per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2015
|
|
|
1,853
|
|
|
$
|
‒
|
|
|
|
41,762,356
|
|
|
$
|
4
|
|
|
$
|
43,353
|
|
|
$
|
(45,265
|
)
|
|
$
|
(1,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
‒
|
|
|
|
‒
|
|
|
|
‒
|
|
|
|
‒
|
|
|
|
23
|
|
|
|
‒
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
‒
|
|
|
|
‒
|
|
|
|
‒
|
|
|
|
‒
|
|
|
|
‒
|
|
|
|
(490
|
)
|
|
|
(490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2016 (unaudited)
|
|
|
1,853
|
|
|
$
|
‒
|
|
|
|
41,762,356
|
|
|
$
|
4
|
|
|
$
|
43,376
|
|
|
$
|
(45,755
|
)
|
|
$
|
(2,375
|
)
|
The accompanying notes are an integral
part of these condensed financial statements.
GENSPERA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(490
|
)
|
|
$
|
(1,843
|
)
|
|
Adjustments to reconcile net loss to net cash used
in operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
5
|
|
|
|
5
|
|
|
Stock-based compensation
|
|
|
23
|
|
|
|
110
|
|
|
Gain on change in fair value of derivative liability
|
|
|
(538
|
)
|
|
|
‒
|
|
|
Decrease (increase) in operating assets:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(2
|
)
|
|
|
37
|
|
|
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
|
95
|
|
|
|
495
|
|
|
Cash used in operating activities
|
|
|
(907
|
)
|
|
|
(1,196
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of office equipment
|
|
|
‒
|
|
|
|
(4
|
)
|
|
Cash used in investing activities
|
|
|
‒
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of warrants
|
|
|
‒
|
|
|
|
287
|
|
|
Cash provided by financing
activities
|
|
|
‒
|
|
|
|
287
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(907
|
)
|
|
|
(913
|
)
|
|
Cash and cash equivalents,
beginning of period
|
|
|
2,465
|
|
|
|
2,316
|
|
|
Cash and cash equivalents,
end of period
|
|
$
|
1,558
|
|
|
$
|
1,403
|
|
The accompanying notes are an integral
part of these condensed unaudited financial statements.
GENSPERA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
NOTE 1 – BACKGROUND
GenSpera, Inc. (“we”, “us”,
“our company”, “our”, “GenSpera” or the “Company”) was formed under the laws of
the State of Delaware in November 2003, and has its principal office in San Antonio, Texas. We are an early-stage, pre-revenue,
pharmaceutical company focused on the discovery and development of prodrug cancer therapeutics for the treatment of solid tumors,
including brain, liver, prostate and other cancers. We plan to develop a series of therapies based on our target-activated prodrug
technology platform.
Our primary focus at the present time
is the clinical development of our lead compound, mipsagargin (formerly referred to as G-202), a novel therapeutic agent with
a unique mechanism of action. We have completed a Phase 1a/1b dose escalation, safety, tolerability and dose refinement study
of mipsagargin, in which we treated a total of 44 patients, including two patients with hepatocellular carcinoma (HCC), or liver
cancer, who experienced prolonged stabilization of disease up to eleven months after initiation of treatment.
In addition, we have completed a
Phase II clinical trial of mipsagargin in patients with liver cancer, in which twenty-five patients were treated. In May
2015, we received a final clinical study report. We consider the study outcome to be positive, with 63% of treated
patients having stable disease at two (2) months, and with a median time to progression of 4.5 months.
In the first quarter of 2014, we
entered into a collaborative arrangement to conduct a Phase II clinical trial entitled, “An Open-Label, Single-Arm,
Phase II Study to Evaluate the Efficacy, Safety and CNS Exposure of G-202 in Patients with Recurrent or Progressive
Glioblastoma.” In May 2015, we announced that based on preliminary data obtained in the first stage of the trial, we
were expanding the trial to a potential 34 patients. In September 2015, we announced interim Phase II data from 11 patients
with glioblastoma which demonstrated potential clinical benefit in a subset of patients with high levels of PSMA expression
in the primary tumor. As of May 6, 2016, we have treated twenty-two patients in the trial.
We have also opened enrollment
for our Phase II prostate clinical trial titled, G-202-005: An Open-Label, Single-Arm, Phase II Study to Evaluate the Safety
and Activity of G-202 Administered in the Neoadjuvant Setting Followed by Radical Prostatectomy in Patients with
Adenocarcinoma of the Prostate, and as of May 6, 2016 we have enrolled one patient. While we believe that the data from
these trials appear promising, the outcome of our ongoing or future trials may ultimately be unsuccessful.
NOTE 2 – MANAGEMENT’S PLANS
TO CONTINUE AS A GOING CONCERN
Basis of Presentation
We have prepared our financial statements
on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. Certain information and note disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations,
although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. We have
incurred losses since inception and have an accumulated deficit of $45.8 million as of March 31, 2016. We anticipate incurring
additional losses for the foreseeable future until such time, if ever, that we can generate significant sales from our therapeutic
product candidates which are currently in development or we enter into cash flow positive business development transactions.
To date, we have generated no sales or
revenues, have incurred significant losses and expect to incur significant additional losses as we advance mipsagargin through
clinical studies. Consequently, our operations are subject to all the risks inherent in the establishment of a pre-revenue business
enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds.
Our cash and cash equivalents balance
at March 31, 2016 was $1.6 million, representing 88% of our total assets. Based upon our current expected level of operating expenditures,
we expect to be able to fund our operations for the next three to six months. We will require additional cash to fund and continue
our operations beyond that point. This period could be shortened if there are any unanticipated increases in planned spending
on development programs or other unforeseen events. We anticipate raising additional funds through collaborative arrangements,
public or private sales of debt or equity securities, or some combination thereof. There is no assurance that any such collaborative
arrangement will be entered into or that financing will be available when needed in order to allow us to continue our operations,
or if available, on terms acceptable to us.
In the event financing is not obtained,
we may pursue cost cutting measures as well as explore the sale of selected assets to generate additional funds. If we are required
to significantly reduce operating expenses and delay, reduce the scope of, or eliminate any of our development programs or clinical
trials, these events could have a material adverse effect on: our business, results of operations, and financial condition. These
factors raise significant doubt about our ability to continue as a going concern. The financial statements do not include any
adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities
that might be necessary should we be unable to continue as a going concern.
Our auditors’ report issued in connection
with our December 31, 2015 financial statements expressed an opinion that our capital resources as of the date of their audit
report were not sufficient to sustain operations or complete our planned activities for the upcoming year unless we raised additional
funds. Accordingly, our current cash level raises substantial doubt about our ability to continue as a going concern past September
2016. If we do not obtain additional funds by such time, we may no longer be able to continue as a going concern and will cease
operation which means that our shareholders will lose their entire investment.
NOTE 3 – SUMMARY OF CRITICAL
ACCOUNTING POLICIES AND USE OF ESTIMATES
Use of estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying disclosures. Actual results may differ from those estimates.
Research and Development
Research and development costs are charged
to expense as incurred. Our research and development expenses consist primarily of expenditures for manufacturing, clinical trials,
employee compensation and consulting costs and expenses.
We incurred research and development expenses
of approximately $0.3 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively.
Loss per Share
Basic loss per share is calculated by
dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding
for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect
of being anti-dilutive in the computation of net loss per share. The following potentially dilutive securities have been excluded
from the computations of weighted average shares outstanding as of March 31, 2016 and 2015, as they would be anti-dilutive:
|
|
|
Three months ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Shares underlying options outstanding
|
|
|
9,058,195
|
|
|
|
8,853,695
|
|
|
Shares underlying warrants outstanding
|
|
|
40,898,168
|
|
|
|
19,401,382
|
|
|
Shares underlying convertible preferred stock outstanding
|
|
|
12,354,167
|
|
|
|
─
|
|
|
Shares underlying convertible notes outstanding
|
|
|
─
|
|
|
|
272,514
|
|
|
|
|
|
62,310,530
|
|
|
|
28,527,591
|
|
Derivative Liability
The Company has financial instruments
that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued
separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company
measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations
during the period of change. Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach
regarding the application of ASC 815-40 to its outstanding preferred stock.
Pursuant to the sequencing approach, the
Company evaluates its contracts based upon earliest issuance date wherein instruments with the earliest issuance date would be
settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock
split, to have an issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy,
all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent
to December 25, 2015 are derivative liabilities. The Company values these derivative liabilities using the Black-Scholes option
valuation model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change
in derivative liability in the statement of operations.
Fair Value of Financial Instruments
Our short-term financial instruments,
including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less
when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying
amounts.
The derivative liability consists of our
convertible preferred stock with anti-dilution provisions, and related warrants. The Company uses the Black-Scholes option pricing
model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest
rate, dividend rate, and estimated life.
Fair Value Measurements
Valuation Hierarchy - GAAP establishes
a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs
into three broad levels as follows:
Level 1: Quoted
prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Quoted
prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly
or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3: Unobservable
inputs based on our own assumptions used to measure assets and liabilities at fair value.
A financial asset or liability’s
classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company has recorded a derivative liability for convertible preferred stock with anti-dilution provisions, and related warrants,
as of March 31, 2016. The table below summarizes the fair values of our financial liabilities as of March 31, 2016 (in thousands):
|
|
|
Fair Value at
March
31,
|
|
|
Fair Value Measurement Using
|
|
|
|
|
2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
639
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
639
|
|
The reconciliation of the derivative liability measured at
fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
|
|
|
March 31, 2016
|
|
|
Balance at beginning of year
|
|
$
|
1,177
|
|
|
Additions to derivative instruments
|
|
|
─
|
|
|
Gain on change in fair value of derivative liability
|
|
|
(538
|
)
|
|
Balance at end of year
|
|
$
|
639
|
|
Stock-Based Compensation
We measure the cost of employee services
received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation
programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide
service in exchange for the award (the vesting period).
Compensation expense for options granted
to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured
on each accounting period.
Determining the appropriate fair value
of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation
and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates
our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
Recent Accounting Pronouncements
In March 2016, the Financial Accounting
Standards Board (FASB) issued FASB Accounting Standards Update (ASU) 2016-09, “Compensation—Stock Compensation (Topic
718): Improvements to Employee Share-Based Payment Accounting”. The amendments in this update simplify several aspects of
the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity
or liabilities, and classification on the statement of cash flows. This ASU is effective for annual periods beginning after December
15, 2016, and interim periods within those annual periods. We are currently evaluating the effect that the adoption of this standard
will have on our financial statements.
In February 2016, the FASB issued FASB
ASU 2016-02, “Leases (Topic 842)”. The core principle of Topic 842 is that a lessee should recognize the assets and
liabilities that arise from leases. For operating leases, a lessee would be required to recognize a right-of-use asset and a lease
liability, initially measured at the present value of the lease payments, in the statement of financial position. For leases with
a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize
lease assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP.
This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented
using a modified retrospective approach. We are currently evaluating the effect that the adoption of this ASU will have on our
financial statements.
In August 2014, the FASB issued Accounting
Standards Update ASU 2014-15 “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of
Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update provides guidance about management’s
responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or
to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as
a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments
contained in this update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We
are currently assessing the impact of the adoption of ASU 2014-15, and we have not yet determined the effect of the standard on
our ongoing financial reporting.
There are various other recently issued
updates, most of which represented technical corrections to the accounting literature or application to specific industries, and
are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 4 – SUPPLEMENTAL CASH FLOW INFORMATION
There was no cash paid for interest and income taxes for the
three months ended March 31, 2016 and 2015.
NOTE 5 – ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
Accrued compensation and benefits
|
|
$
|
2,204
|
|
|
$
|
2,134
|
|
|
Accrued research and development
|
|
|
147
|
|
|
|
152
|
|
|
Accrued other
|
|
|
212
|
|
|
|
146
|
|
|
Total accrued expenses
|
|
$
|
2,563
|
|
|
$
|
2,432
|
|
NOTE 6 – DERIVATIVE LIABILITY
We account for equity-linked financial
instruments, such as our convertible preferred stock, and our common stock warrants as either equity instruments or derivative
liabilities depending on the specific terms of the respective agreement. Equity-linked financial instruments are accounted for
as derivative liabilities, in accordance with ASC Topic 815 – Derivatives and Hedging, if the instrument allows for cash
settlement or provide for modification of the exercise price in the event subsequent sales of common stock are at a lower price
per share than the then-current warrant exercise price. Additionally, financial instruments are classified as derivative liabilities
if, as a result of the anti-dilution protection, there is no limit on the number of shares that may be subsequently issued and
we conclude there are not adequate authorized shares available to provide for subsequent issuances. We classify derivative liabilities
on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which
is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant.
In December 2015, we issued shares of
convertible preferred stock which contain anti-dilution protection for subsequent equity sales for a period of 18 months, and
related warrants. As a result, the Company assessed its outstanding equity-linked financial instruments and concluded that this
series of preferred stock, and related warrants, is subject to derivative accounting. The fair value of these shares are classified
as a liability in the financial statements, with the change in fair value during the periods presented recorded in the statement
of operations.
During the three months ended March 31,
2016, we recorded a gain of $0.5 million related to the change in fair value of the derivative liability during the period. For
purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model.
The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
|
|
|
2016
|
|
Volatility
|
|
68%
|
|
Expected term (years)
|
|
15 months
|
|
Risk-free interest rate
|
|
0.63%
|
|
Dividend yield
|
|
None
|
As of March 31, 2016, the derivative liability recognized in
the financial statements as was approximately $0.6 million.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
On March 16, 2016, Dr. Craig Dionne provided
us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice
of termination alleges that such termination was for “Good Reason” as a result of a purported material change in his
authority, functions, duties and responsibilities as chief executive officer. In the event that termination was for “Good
Reason”, Dr. Dionne would be entitled to certain severance payments as well as other benefits. His notice of termination,
in additional to requesting such severance, also requests the payment of Dr. Dionne’s annual and long term bonus for 2014
and 2015. On April 11, 2016, we received a letter from Dr. Dionne demanding approximately $2.3 million as a result of the foregoing.
The Company vigorously disputes that the
termination of his employment was for “Good Reason,” as that term is defined in his employment agreement and under
applicable law. This matter is at the early stages. While no litigation is pending at this time, there can be no assurance that
this matter will be resolved in such a manner as to avoid litigation. Accordingly, the Company is unable at this time to predict
the outcome of this matter, and any views formed as to the viability of these claims or the costs to the Company which could result
may change from time to time as the matter proceeds through its course.
NOTE 8 – CAPITAL STOCK AND STOCKHOLDER’S EQUITY
Common Stock
In September 2015, our board
of directors approved amending our certificate of incorporation to effect a reverse stock split, subject to shareholder
approval, at a ratio of not less than one-for-two (1 for 2), and not more than one-for thirty (1 for 30). On November 13,
2015, our shareholders approved the reverse stock split. As of March 31, 2016, the Company had not determined the degree, if
any, of a potential reverse stock split.
During the three months ended March 31,
2016, no warrants were exercised into common shares. During the three months ended March 31, 2015, 337,169 warrants were exercised
into an equivalent number of common shares for which we received approximately $287,000 in proceeds.
NOTE 9 – STOCK OPTIONS
Our 2009 Executive Compensation Plan (“2009
Plan”) and our 2007 Equity Compensation Plan (“2007 Plan”) allow for the issuance of up to 6,000,000 shares
of common stock each, or 12,000,000 in the aggregate. Collectively, the 2009 Plan and 2007 Plan are referred to as “the
Plans.”
Total stock-based compensation expense
recognized for stock options issued using the straight-line method in the statement of operations for the three months ended March
31, 2016 and 2015 was as follows:
|
|
|
Three months ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
5
|
|
|
$
|
10
|
|
|
General and administrative
|
|
|
18
|
|
|
|
25
|
|
|
|
|
$
|
23
|
|
|
$
|
35
|
|
The following table summarizes stock option
activity under the Plans:
|
|
|
Number of
shares
|
|
|
Weighted-
average
exercise
price
|
|
|
Weighted-average
remaining
contractual term
(in years)
|
|
|
Aggregate
intrinsic
value (in
thousands)
|
|
|
Outstanding at December 31, 2015
|
|
|
8,764,195
|
|
|
$
|
1.60
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
358,000
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(64,000
|
)
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2016
|
|
|
9,058,195
|
|
|
$
|
1.54
|
|
|
|
3.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2016
|
|
|
8,755,445
|
|
|
$
|
1.58
|
|
|
|
3.0
|
|
|
$
|
—
|
|
As of March 31, 2016, there was approximately
$39,000 of total unrecognized compensation cost related to non-vested stock options which vest over a weighted-average period
of approximately one year. As of March 31, 2016, there was no unrecognized compensation expense related to performance-based,
non-vested employee stock options.
During the three months ended March 31,
2016, we issued options to purchase 53,000 shares of common stock to non-employee directors under the Plans. Additionally, we
issued options to purchase 305,000 shares of common stock to consultants and advisors. During the three months ended March 31,
2015, we issued options to purchase 53,000 shares of common stock to non-employee directors, respectively, under the Plans. Additionally,
we issued options to purchase 192,600 shares of common stock to consultants and advisors. The weighted-average fair value of the
options granted during 2016 and 2015 was estimated at $0.07 and $0.34 per share, respectively, on the date of grant. During the
three months ended March 31, 2016 and 2015, no options were exercised.
The following table summarizes weighted-average
assumptions using the Black-Scholes option-pricing model used on the date of the grants issued during the three months ended March
31, 2016 and 2015:
|
|
|
Three months ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Volatility
|
|
|
76.0
|
%
|
|
|
56.6
|
%
|
|
Expected term (years)
|
|
|
2.7
|
|
|
|
3.7
|
|
|
Risk-free interest rate
|
|
|
1.1
|
%
|
|
|
1.0
|
%
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
NOTE 10 – WARRANTS
In December 2015, in connection with a
private placement, we issued an aggregate of 20,485,362 common stock purchase warrants, including 19,497,028 to investors; and
988,334 to placement agents. The warrants were issued with an exercise price of $0.30 per share. The Company assessed these outstanding
equity-linked financial instruments and concluded that the warrants are subject to derivative accounting (see Note 6).
Transactions involving our equity-classified
warrants are summarized as follows:
|
|
|
Number of
shares
|
|
|
Weighted-
average exercise
price
|
|
|
Weighted-average
remaining contractual
term (in years)
|
|
|
Aggregate
intrinsic
value (in
thousands)
|
|
|
Outstanding at December 31, 2015
|
|
|
42,277,445
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,379,277
|
)
|
|
$
|
3.30
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2016
|
|
|
40,898,168
|
|
|
$
|
0.71
|
|
|
|
2.6
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2016
|
|
|
40,898,168
|
|
|
$
|
0.71
|
|
|
|
2.6
|
|
|
$
|
—
|
|
During the three months ended March 31,
2016, no warrants were exercised. During the three months ended March 31, 2015, 337,169 warrants were exercised into an equivalent
number of common shares for which we received approximately $287,000 in proceeds. The following table summarizes outstanding common
stock purchase warrants as of March 31, 2016:
|
|
|
Number of
shares
|
|
|
Weighted-
average
exercise
price
|
|
|
Expiration
|
|
Issued to consultants
|
|
|
932,000
|
|
|
$
|
1.54
|
|
|
May 2016 through November 2020
|
|
Issued pursuant to 2011 financings
|
|
|
718,175
|
|
|
$
|
3.15
|
|
|
April 2016
|
|
Issued pursuant to 2012 financings
|
|
|
296,366
|
|
|
$
|
3.00
|
|
|
December 2017
|
|
Issued pursuant to 2013 financings
|
|
|
4,376,228
|
|
|
$
|
1.97
|
|
|
December 2017 through August 2018
|
|
Issued pursuant to 2014 financings
|
|
|
10,882,678
|
|
|
$
|
0.82
|
|
|
December 2016 through June 2019
|
|
Issued pursuant to 2014 financings
|
|
|
23,692,721
|
|
|
$
|
0.21
|
|
|
January 2017 through December 2020
|
|
|
|
|
40,898,168
|
|
|
|
|
|
|
|
During the three months ended March 31,
2016, no warrants were issued to consultants. During the three months ended March 31, 2015, we issued warrants to consultants
to purchase 150,000 shares of common stock as compensation for business and advisory services. The common stock purchase warrants
have an exercise price of $0.65 per share, are immediately exercisable and expire on the five-year anniversary of the date of
issuance. The per share weighted-average fair value of the warrants granted to consultants during 2015 was estimated at $0.32
per share on the date of grant.
Total stock-based compensation expense
of approximately $0 and $48,000 was recognized for warrants and included in the statement of operations for the three months ended
March 31, 2016 and 2015, respectively.
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Board of Directors
GenSpera, Inc.
San Antonio, TX
We have audited the accompanying balance sheets of GenSpera,
Inc. as of December 31, 2015 and 2014, and the related statements of losses, statement of stockholders' (deficit) equity, and cash
flows for each of the years ended December 31, 2015 and 2014. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on the financial statements based upon our audits
We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of GenSpera, Inc. at December 31, 2015 and 2014 and the results of its
operations and its cash flows for each of the years ended December 31, 2015 and 2014 in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had an accumulated
deficit of $45.4 million as of December 31, 2015, and will require additional cash to fund and continue operations, which raises
substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also
described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
|
/s/ Liggett & Webb, P.A.
|
|
|
|
Liggett & Webb, P.A
.
|
|
March 30, 2016
New York, New York
GENSPERA, INC.
BALANCE SHEETS
(in thousands, except share and per share
data)
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,465
|
|
|
$
|
2,316
|
|
|
Prepaid expenses
|
|
|
114
|
|
|
|
197
|
|
|
Total current assets
|
|
|
2,579
|
|
|
|
2,513
|
|
|
Office equipment, net of accumulated depreciation of $27
and $23
|
|
|
12
|
|
|
|
12
|
|
|
Intangible assets, net of accumulated amortization of $128
and $111
|
|
|
84
|
|
|
|
101
|
|
|
Other assets
|
|
|
3
|
|
|
|
3
|
|
|
Total assets
|
|
$
|
2,678
|
|
|
$
|
2,629
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
977
|
|
|
$
|
989
|
|
|
Accrued expenses
|
|
|
2,432
|
|
|
|
1,438
|
|
|
Derivative liability
|
|
|
1,177
|
|
|
|
—
|
|
|
Convertible notes – stockholder
|
|
|
—
|
|
|
|
105
|
|
|
Total current liabilities
|
|
|
4,586
|
|
|
|
2,532
|
|
|
Total liabilities
|
|
|
4,586
|
|
|
|
2,532
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' (deficit) equity:
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, par value $.0001 per share;
30,000,000 shares authorized, 1,853 and no shares issued and outstanding, respectively
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, par value $.0001 per share; 150,000,000 shares
authorized, 41,762,356 and 33,181,197 shares issued and outstanding, respectively
|
|
|
4
|
|
|
|
3
|
|
|
Additional paid-in capital
|
|
|
43,353
|
|
|
|
39,473
|
|
|
Accumulated deficit
|
|
|
(45,265
|
)
|
|
|
(39,379
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' (deficit) equity
|
|
|
(1,908
|
)
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' (deficit) equity
|
|
$
|
2,678
|
|
|
$
|
2,629
|
|
See accompanying notes to audited financial
statements.
GENSPERA, INC.
STATEMENTS OF LOSSES
(in thousands, except share and per share
data)
|
|
|
Years Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
2,303
|
|
|
$
|
3,691
|
|
|
General and administrative
|
|
|
3,764
|
|
|
|
3,307
|
|
|
Total operating expenses
|
|
|
6,067
|
|
|
|
6,998
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(6,067
|
)
|
|
|
(6,998
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Gain on change in fair value of derivative liability
|
|
|
181
|
|
|
|
—
|
|
|
Interest income (expense), net
|
|
|
—
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(5,886
|
)
|
|
|
(6,994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,886
|
)
|
|
$
|
(6,994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic
and diluted
|
|
$
|
(0.17
|
)
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
35,378,329
|
|
|
|
30,413,042
|
|
See accompanying notes to audited financial
statements.
GENSPERA, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands, except share and per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Convertible
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
Stockholders'
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
|
—
|
|
|
$
|
—
|
|
|
|
27,252,966
|
|
|
|
3
|
|
|
$
|
33,642
|
|
|
$
|
(32,385
|
)
|
|
$
|
1,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,319
|
|
|
|
—
|
|
|
|
1,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and warrants
issued as payment of services and consulting fees
|
|
|
—
|
|
|
|
—
|
|
|
|
798,020
|
|
|
|
—
|
|
|
|
735
|
|
|
|
—
|
|
|
|
735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
and warrants at $0.80 per share (Registered Offering)
|
|
|
—
|
|
|
|
—
|
|
|
|
4,163,961
|
|
|
|
—
|
|
|
|
3,331
|
|
|
|
—
|
|
|
|
3,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
and warrants at $0.80 per share (Private Placement)
|
|
|
—
|
|
|
|
—
|
|
|
|
966,250
|
|
|
|
—
|
|
|
|
773
|
|
|
|
—
|
|
|
|
773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance cost of sales
of common stock and warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(327
|
)
|
|
|
—
|
|
|
|
(327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,994
|
)
|
|
|
(6,994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
—
|
|
|
$
|
—
|
|
|
|
33,181,197
|
|
|
$
|
3
|
|
|
$
|
39,473
|
|
|
$
|
(39,379
|
)
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
138
|
|
|
|
—
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and warrants
issued as payment of services and consulting fees
|
|
|
—
|
|
|
|
—
|
|
|
|
127,712
|
|
|
|
—
|
|
|
|
175
|
|
|
|
—
|
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
upon conversion of note payable
|
|
|
—
|
|
|
|
—
|
|
|
|
262,500
|
|
|
|
—
|
|
|
|
139
|
|
|
|
—
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
and warrants at $0.70 per share
|
|
|
—
|
|
|
|
—
|
|
|
|
3,591,278
|
|
|
|
—
|
|
|
|
2,514
|
|
|
|
—
|
|
|
|
2,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
4,599,669
|
|
|
|
1
|
|
|
|
925
|
|
|
|
—
|
|
|
|
926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of preferred
stock and warrants at $0.15 per share
|
|
|
1,853
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,853
|
|
|
|
—
|
|
|
|
1,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance cost of sales
of common stock and warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(506
|
)
|
|
|
—
|
|
|
|
(506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,358
|
)
|
|
|
—
|
|
|
|
(1,358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,886
|
)
|
|
|
(5,886
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2015
|
|
|
1,853
|
|
|
$
|
—
|
|
|
|
41,762,356
|
|
|
$
|
4
|
|
|
$
|
43,353
|
|
|
$
|
(45,265
|
)
|
|
$
|
(1,908
|
)
|
See accompanying notes to audited financial
statements.
GENSPERA, INC.
STATEMENTS OF CASH FLOWS
(in thousands, except share and per share
data)
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,886
|
)
|
|
$
|
(6,994
|
)
|
|
Adjustments to reconcile net loss to net cash used
in operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
21
|
|
|
|
23
|
|
|
Stock-based compensation
|
|
|
313
|
|
|
|
2,054
|
|
|
Gain on change in fair value of derivative liability
|
|
|
(181
|
)
|
|
|
—
|
|
|
Increase in operating assets:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
83
|
|
|
|
(34
|
)
|
|
Increase in operating liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
1,017
|
|
|
|
(93
|
)
|
|
Cash used in operating activities
|
|
|
(4,633
|
)
|
|
|
(5,044
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of office equipment
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Cash used in investing activities
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock and warrants
|
|
|
4,367
|
|
|
|
4,104
|
|
|
Proceeds from exercise of warrants
|
|
|
925
|
|
|
|
—
|
|
|
Cost of common stock and warrants sold
|
|
|
(506
|
)
|
|
|
(327
|
)
|
|
Cash provided by financing activities
|
|
|
4,786
|
|
|
|
3,777
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
149
|
|
|
|
(1,271
|
)
|
|
Cash, beginning of period
|
|
|
2,316
|
|
|
|
3,587
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
2,465
|
|
|
$
|
2,316
|
|
See accompanying notes to audited financial
statements.
GENSPERA, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — BACKGROUND
GenSpera, Inc. (“we”, “us”,
“our company”, “our”, “GenSpera” or the “Company”) was formed under the laws of
the State of Delaware in November 2003, and has its principal office in San Antonio, Texas. We are an early-stage, pre-revenue,
pharmaceutical company focused on the discovery and development of prodrug cancer therapeutics for the treatment of solid tumors,
including liver, brain, prostate and other cancers. We plan to develop a series of therapies based on our target-activated prodrug
technology platform.
Our primary focus at the present time
is the clinical development of our lead compound, mipsagargin (formerly referred to as G-202), a novel therapeutic agent with
a unique mechanism of action. We have completed a Phase Ia/Ib dose escalation, safety, tolerability and dose refinement study
of mipsagargin, in which we treated a total of 44 patients (includes Phase Ia and Ib), including two patients with hepatocellular
carcinoma (HCC), or liver cancer, who experienced prolonged stabilization of disease up to eleven months after initiation of treatment.
We have completed a Phase II clinical trial of mipsagargin in patients with liver cancer, in which twenty-five patients were treated.
In May 2015, we received a final clinical study report. We consider the study outcome achieved positive results, with 63% of treated
patients having stable disease at two (2) months, and with a median time to progression of 4.5 months. These results support our
plans to continue the development of mipsagargin for patients with liver cancer, as well as proceed with our clinical development
strategy in other indications including glioblastoma and prostate cancer trials. Although the data from our completed trials appear
promising, the outcome of our ongoing or future trials may ultimately be unsuccessful.
We are currently conducting a Phase II
clinical trial in glioblastoma (a type of brain cancer), in which twenty patients have been treated as of March 11, 2016. We have
elected to defer opening enrollment for our Phase II prostate clinical trial with mispsagargin until the second quarter of 2016.
Note
2 — Management’s Plans to Continue as a Going Concern
Basis of Presentation
The opinion of our independent registered
accounting firm on our financial statements contains explanatory going concern language. We have prepared our financial statements
on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. Certain information and note disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations,
although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. As of
December 31, 2015, we have incurred losses since inception and have a deficit accumulated of $45.3 million. We anticipate incurring
additional losses for the foreseeable future until such time, if ever, that we can generate significant sales from our product
candidates currently in development or we enter into cash flow positive business development transactions.
To date, we have generated no sales or
revenues, have incurred significant losses and expect to incur significant additional losses as we advance mipsagargin through
clinical studies. Consequently, our operations are subject to all the risks inherent in the establishment of a pre-revenue business
enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds.
Our cash and cash equivalents balance
at December 31, 2015 was $2.5 million, representing 92% of our total assets. Based upon our current expected level of operating
expenditures, we expect to be able to fund our operations for the next six to nine months. We will require additional cash to
fund and continue our operations beyond that point. This period could be shortened if there are any unanticipated increases in
planned spending on development programs or other unforeseen events. We anticipate raising additional funds through collaborative
arrangements, public or private sales of debt or equity securities, or some combination thereof. There is no assurance that any
such collaborative arrangement will be entered into or that financing will be available when needed in order to allow us to continue
our operations, or if available, on terms acceptable to us.
In the event financing is not obtained,
we may pursue cost cutting measures as well as explore the sale of selected assets to generate additional funds. If we are required
to significantly reduce operating expenses and delay, reduce the scope of, or eliminate any of our development programs or clinical
trials, these events could have a material adverse effect on: our business, results of operations, and financial condition. These
factors raise significant doubt about our ability to continue as a going concern. The financial statements do not include any
adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities
that might be necessary should we be unable to continue as a going concern.
NOTE 3 —
Summary
of Critical Accounting Policies and Use of Estimates
Use of Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying disclosures. Significant estimates include the fair value of
derivative instruments, stock-based compensation, recognition of clinical trial costs and other accrued liabilities. Actual results
may differ from those estimates.
Research and Development
Research and development costs are charged
to expense as incurred. Our research and development expenses consist primarily of expenditures for toxicology and other studies,
manufacturing, clinical trials, compensation and consulting costs.
We incurred research and development expenses
of $2.3 and $3.7 million for the years ended December 31, 2015 and 2014, respectively.
Cash Equivalents
For purposes of the statements of cash
flows, we consider all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.
We maintain our cash in bank deposit accounts which, at times, may exceed applicable government mandate insurance limits. We have
not experienced any losses in our accounts.
Concentrations of Credit Risk
Financial instruments and related items,
which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company
places its cash and temporary cash investments with credit quality institutions. At times, such investments may exceed applicable
government mandated insurance limits. Cash and cash equivalents were $2.5 million and $2.3 million at December 31, 2015 and 2014,
respectively. As of December 31, 2015 and 2014, there was approximately $2.1 million and $1.9 million in cash over the federally
insured limit, respectively.
We currently outsource all manufacturing
of our clinical supplies to single source manufactures. We also have a single source supplier for the active ingredient in our
prodrug compounds, including mipsagargin. A change in these suppliers could cause a delay in manufacturing and/or clinical trials,
which would adversely affect our Company.
Intangible Assets
Intangible assets consist of licensed
technology, patents, and patent applications (see Note 5). The assets associated with licensed technology are recorded at
cost and are being amortized on the straight line basis over their estimated useful lives of twelve to seventeen years.
Office Equipment
Office equipment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight line basis
over the estimated useful lives of the assets of three to five years. Expenditures for repair and maintenance which do not materially
extend the useful lives of property and equipment are charged to expense. When property or equipment is sold or otherwise disposed
of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected
in operations. Management periodically reviews the carrying value of its office equipment for impairment.
Depreciation expense was approximately
$4,000 and $7,000 for the years ended December 31, 2015 and 2014, respectively.
Loss per Share
Basic loss per share is calculated by
dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding
for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect
of being anti-dilutive in the computation of net loss per share.
The following potentially dilutive securities
have been excluded from the computations of weighted average shares outstanding as of December 31, 2015 and 2014, as they would
be anti-dilutive:
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Shares underlying options outstanding
|
|
|
8,764,195
|
|
|
|
8,685,095
|
|
|
Shares underlying warrants outstanding
|
|
|
42,277,445
|
|
|
|
19,897,928
|
|
|
Shares underlying convertible preferred stock outstanding
|
|
|
12,354,167
|
|
|
|
—
|
|
|
Shares underlying convertible notes outstanding
|
|
|
—
|
|
|
|
270,339
|
|
|
|
|
|
63,395,807
|
|
|
|
28,853,362
|
|
Derivative Liability
The Company has financial instruments
that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued
separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company
measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations
during the period of change. Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach
regarding the application of ASC 815-40 to its outstanding preferred stock. Pursuant to the sequencing approach, the Company evaluates
its contracts based upon earliest issuance date wherein instruments with the earliest issuance date would be settled first. The
sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an
issuance date to coincide with the event giving rise to the additional shares. Using this sequencing policy, all instruments convertible
into common stock, including warrants and the conversion feature of notes payable, issued subsequent to December 25, 2015 are
derivative liabilities. The Company values these derivative liabilities using the Black-Scholes option valuation model. The resulting
liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the
statement of operations.
Fair Value of Financial Instruments
Our short-term financial instruments,
including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less
when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying
amounts.
The derivative liability consists of our
convertible preferred stock with anti-dilution provisions, and related warrants. The Company uses the Black-Scholes option-pricing
model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest
rate, dividend rate, and estimated life.
Fair Value Measurements
The U.S. GAAP Valuation Hierarchy establishes
a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs
into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset
or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial
asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant
to the fair value measurement.
The Company has recorded a derivative liability
for convertible preferred stock with anti-dilution provisions, and related warrants, as of December 31, 2015. The table below summarizes
the fair values of our financial liabilities as of December 31, 2015 (in thousands):
|
|
|
Fair Value at
December 31,
|
|
|
Fair Value Measurement Using
|
|
|
|
|
2015
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
1,177
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,177
|
|
The reconciliation of the derivative liability measured at
fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands):
|
|
|
2015
|
|
|
Balance at beginning of year
|
|
$
|
—
|
|
|
Additions to derivative instruments
|
|
|
1,358
|
|
|
Loss (gain) on change in fair value of derivative liability
|
|
|
(181
|
)
|
|
Balance at end of year
|
|
$
|
1,177
|
|
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations
in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion
or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference
becomes deductible.
Stock-Based Compensation
We measure the cost of employee services
received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation
programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide
service in exchange for the award (the vesting period).
Compensation expense for options granted
to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured
on each accounting period.
Determining the appropriate fair value
of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation
and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates
our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life.
Recent Accounting Pronouncements
In August 2014, the FASB issued Accounting
Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This update provides guidance
about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue
as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability
to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards.
The amendments contained in this update are effective for public and nonpublic entities for annual periods ending after December
15, 2016. We are currently assessing the impact of the adoption of ASU 2014-15, and we have not yet determined the effect of the
standard on our ongoing financial reporting.
In January 2015, the FASB issued ASU No.
2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating
the Concept of Extraordinary Items, simplifying the income statement presentation. The guidance does not change the requirement
to disclose items that are unusual in nature and occur infrequently. ASU No. 2015-01 is effective for annual reporting periods
beginning after December 15, 2015, including interim periods within that reporting period, although early adoption is permitted.
Exclusive of a material transaction that would qualify for extraordinary item presentation in future periods, we do not expect
the adoption of this standard to materially impact our financial statements.
In April 2015, the Financial Accounting
Standard Board issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented
in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This
guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2015, and early
adoption is permitted. We do not expect the adoption of this standard to materially impact our consolidated financial statements.
There are various other recently issued
updates, most of which represented technical corrections to the accounting literature or application to specific industries, and
are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 4 – SUPPLEMENTAL CASH FLOW INFORMATION
The following table contains additional
information for the periods reported (in thousands).
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Non-cash financial activities:
|
|
|
|
|
|
|
|
|
|
Common stock options issued as payment of accrued compensation
|
|
$
|
—
|
|
|
$
|
962
|
|
|
Common stock and warrants issued for consulting fees
|
|
|
175
|
|
|
|
735
|
|
|
Common stock issued on conversion of notes payable
|
|
|
139
|
|
|
|
—
|
|
There was no cash paid for interest and income taxes for the
years ended December 31, 2015 and 2014.
NOTE 5 – INTELLECTUAL PROPERTY
We solely own or have exclusive licenses
to all of our patents and patent applications. Between 2008 and 2011, we entered into license and assignment agreements with Johns
Hopkins University (JHU), the University of Copenhagen (UC) and certain co-inventors (Assignee Co-Founders), in which we paid
$212,000 in cash and common stock. As a result of these payments and pursuant to the agreements, we acquired worldwide, exclusive,
fully paid up rights in know-how, pre-clinical data, development data and certain patent portfolios that relate to, and form the
basis of, our technology. Under these agreements, we are not required to make any other future payments, including fees or other
reimbursements, milestones, or royalties, to JHU, UC, or the Assignee Co-Founders.
Amortization expense recorded during the
years ended December 31, 2015 and 2014 was approximately $17,000 for both years. Amortization expense is estimated to be approximately
$17,000 for each one of the next five fiscal years.
NOTE 6 – ACCRUED EXPENSES
Accrued expenses consist of the following
(in thousands):
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation and benefits
|
|
$
|
2,134
|
|
|
$
|
1,108
|
|
|
Accrued research and development
|
|
|
152
|
|
|
|
163
|
|
|
Accrued other
|
|
|
146
|
|
|
|
167
|
|
|
Total accrued expenses
|
|
$
|
2,432
|
|
|
$
|
1,438
|
|
NOTE 7 — CONVERTIBLE NOTES PAYABLE
We issued convertible notes to our former
chief executive officer pursuant to which we borrowed an aggregate of $0.2 million, with an interest rate of 4.2%, and maturities
at various dates through December 6, 2011. The notes and accrued interest were convertible, at the option of the holder, into shares
of our common stock at a conversion price of $0.50 per share.
In October 2015, the board of directors
approved amending the conversion price of the convertible notes from a price of $0.50 per share to $0.40 per share, in exchange
for our chief executive officer waiving approximately $33,000 of outstanding accrued interest. Accordingly, our chief executive
elected to convert the outstanding notes into 262,500 shares of common stock. Accrued interest at December 31, 2014 was approximately
$30,000.
NOTE 8 — DERIVATIVE LIABILITY
We account for equity-linked financial
instruments, such as our convertible preferred stock, and our common stock warrants as either equity instruments or derivative
liabilities depending on the specific terms of the respective agreement. Equity-linked financial instruments are accounted for
as derivative liabilities, in accordance with ASC Topic 815 – Derivatives and Hedging, if the instrument allows for cash
settlement or provide for modification of the exercise price in the event subsequent sales of common stock are at a lower price
per share than the then-current warrant exercise price. Additionally, financial instruments are classified as derivative liabilities
if, as a result of the anti-dilution protection, there is no limit on the number of shares that may be subsequently issued and
we conclude there are not adequate authorized shares available to provide for subsequent issuances. We classify derivative liabilities
on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which
is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant.
In December 2015, we issued shares of
convertible preferred stock which contain anti-dilution protection for subsequent equity sales for a period of 18 months, and
related warrants. As a result, the Company assessed its outstanding equity-linked financial instruments and concluded that this
series of preferred stock, and related warrants, is subject to derivative accounting. The fair value of these shares are classified
as a liability in the financial statements, with the change in fair value during the periods presented recorded in the statement
of operations.
During the year ended December 31, 2015,
we recorded a gain of $0.2 million related to the change in fair value of the derivative liability during the period. For purpose
of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant
assumptions used in the Black Scholes valuation of the derivative are as follows:
|
|
|
2015
|
|
Volatility
|
|
84%-85%
|
|
Expected term (years)
|
|
18 months
|
|
Risk-free interest
rate
|
|
0.75%
|
|
Dividend yield
|
|
None
|
As of December 31, 2015, the derivative
liability recognized in the financial statements as of December 31, 2015 was approximately $1.2 million.
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases its corporate offices
under an operating lease that expires on October 14, 2018. Rent expense for office space amounted to approximately $57,000
and $56,000 for the years ended December 31, 2015 and 2014, respectively. The following table summarizes future minimum lease
payments as of December 31, 2015 (in thousands):
|
2016
|
|
$
|
58
|
|
|
2017
|
|
|
60
|
|
|
2018
|
|
|
48
|
|
|
Thereafter
|
|
|
—
|
|
|
Total minimum lease payments
|
|
$
|
166
|
|
Employment Agreements
We employed our Chief
Executive Officer and employ our Chief Operating Officer (who is also our principal executive and accounting officer) pursuant
to written employment agreements. On March 16, 2016, Dr. Craig Dionne provided us his notice of termination as the company’s
Chief Executive Officer and Chief Financial Officer (See Legal Matters below). The employment agreements contain severance provisions
and indemnification clauses. The indemnification agreement provides for the indemnification and defense of the executive officers,
in the event of litigation, to the fullest extent permitted by law. As part of the agreements, the executives potentially shall
be entitled to the following (in thousands):
|
|
|
Chief Executive
Officer
|
|
|
Chief Operating
Officer
|
|
|
Terminated without cause
|
|
$
|
1,798
|
|
|
$
|
971
|
|
|
Terminated, change of control without good reason
|
|
|
1,798
|
|
|
|
—
|
|
|
Terminated for cause, death, disability and by executive without good reason
|
|
|
381
|
|
|
|
325
|
|
Legal Matters
On March 16, 2016, Dr. Craig Dionne provided
us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice
of termination states that such termination was for “Good Reason” as a result of a material change in his authority,
functions, duties and responsibilities as chief executive officer. In the event that termination was for “Good Reason”,
Dr. Dionne would be entitled to certain severance payments as well as other benefits. The notice of termination, in additional
to requesting such severance, also requests the payment of Dr. Dionne’s annual and long term bonus for 2014 and 2015. While
the Company disputes that the termination was for “Good Reason,” as well as the amount of the bonuses due Dr. Dionne,
if any, at this time the Company is unable to predict the financial outcome of this matter, and any views formed as to the viability
of these claims or the financial liability which could result may change from time to time as the matter proceeds through its course.
The Company is uncertain whether any litigation may result from the foregoing and the outcome of any such litigation is uncertain.
On July 16, 2015, the U.S. Court of Appeals
for the Federal Circuit entered judgment in GenSpera, Inc. v. Annastasiah Mudiwa Mhaka in favor of GenSpera. In a per curiam order
without an opinion, the Federal Circuit affirmed the decision of the U.S. District Court for the District of Maryland granting
summary judgment in GenSpera's favor in two consolidated cases relating to the inventorship of two patents owned by GenSpera.
The district court had issued a declaratory judgment that Dr. Annastasiah Mhaka should not be added as an inventor to the two
patents at issue, and had also granted summary judgment with respect to state law tort claims brought by Dr. Mhaka against the
company and two of its founders, Dr. John Isaacs and Dr. Sam Denmeade. The U.S. Court of Appeals for the Fourth Circuit previously
dismissed another appeal brought by Dr. Mhaka from the same district court judgments.
NOTE 10 — CAPITAL STOCK AND STOCKHOLDER’S EQUITY
Preferred Stock
In December 2015, we issued 1,853 shares
of our Series A 0% Convertible Preferred Stock, with a stated value of $1,000 per share and the common shares are issuable pursuant
to conversion of the preferred stock at a conversion price of $0.15 per share, subject to a 9.99% beneficial ownership limitation
and subject to adjustment pursuant to stock splits and dividends, and subject to adjustment pursuant to customary anti-dilution
protection for subsequent equity sales for a period of 18 months from the effective date of this registration statement. See “December
2015 Offering” below for further discussion.
Common Stock
In September 2015, the board of directors
approved amending the Company’s certificate of incorporation to effect a reverse stock split, subject to shareholder approval,
of the Company’s issued and outstanding common stock at a ratio of not less than one-for-two (1 for 2), and not more than
one-for thirty (1 for 30). Accordingly, the company was given the authority to take the action necessary to obtain shareholder
approval at the shareholder meeting scheduled to be held on November 13, 2015. At the meeting, the shareholders approved the amendment.
As of December 31, 2015, the Company had not determined the degree, if any, of a potential stock split.
In July 2015, we granted an aggregate
of 125,000 shares of common stock, valued at approximately $95,000, to a consultant for business advisory services to be provided
to the Company. In March 2015, we granted an aggregate of 30,000 shares of common stock, valued at approximately $27,000, to a
consultant for business advisory services to be provided to the Company. In August 2015, we cancelled and retired an aggregate
of 27,288 shares of common stock, with a value of approximately $25,000, upon the termination of an agreement for business advisory
services.
During the year ended December 31, 2015,
337,169 warrants were exercised into an equivalent number of common shares for which we received approximately $287,000 in proceeds.
During the year ended December 31, 2014, no warrants were exercised into common shares.
Equity Financing
December 2015 Offering
In December 2015, we offered and sold
1,853 shares of our Series A 0% Convertible Preferred Stock and 19,497,028 common stock purchase warrants to certain accredited
investors with whom we had a prior relationship or who were shareholders. From this sale and the exercise of 4,599,669 outstanding
warrants, we received gross proceeds of approximately $2.5 million. The warrants include (i) 6,177,084 Series F common stock purchase
warrants with a price per share of $0.30 and a term of five years from the date in which the shares underlying the warrants are
registered, (ii) 6,177,084 Series G common stock purchase warrants with a price per share of $0.30 and a term of eighteen months
from the date in which the shares underlying the warrants are registered, (iii) 3,571,430 Series H common stock purchase warrants
issued pursuant to a contractually obligated exercise of prior outstanding warrants, with a price per share of $0.30 and a term
of five years from the issuance date, and (iv) 3,571,430 Series I common stock purchase warrants issued pursuant to a contractually
obligated exercise of prior outstanding warrants, with a price per share of $0.30 and a term of eighteen months from the issuance
date. The preferred stock has a stated value of $1,000 per share and the common shares are issuable pursuant to conversion of
the preferred stock at a conversion price of $0.15 per share, subject to a 9.99% beneficial ownership limitation and subject to
adjustment pursuant to stock splits and dividends, and subject to adjustment pursuant to customary anti-dilution protection for
subsequent equity sales for a period of 18 months from the effective date of this registration statement. In connection with the
offering, we issued our placement agent 988,334 common stock purchase warrants with substantially the same terms as our Series
F warrants, except that they have an expiration date of December 29, 2020.
July 2015 Offering
In July 2015, we offered and sold 3,591,278
units, in a private placement to certain accredited investors with whom we had a prior relationship or who were shareholders.
Each unit consists of: (i) one share of common stock, (ii) one Series D common stock purchase warrant, and (iii) one Series E
common stock purchase warrant. The price was $0.70 per unit, and resulted in gross proceeds of approximately $2.5 million. The
Series D warrants have a term of five years and entitle the holder to purchase our common stock at a price per share of $0.80
per share. The Series E warrants have a term of eighteen months and entitle the holder to purchase our common stock at a price
per share of $0.70 per share. In the event that the shares underlying the warrants are not subject to a registration statement
at the time of exercise, the warrants may be exercised on a cashless basis after 30 days from the issuance date. In connection
with the offering, we issued our placement agent 287,303 common stock purchase warrants with substantially the same terms as our
Series D warrants.
NOTE 11 — STOCK OPTIONS
Deferred Compensation Plan
In July of 2011, we adopted Executive
Deferred Compensation Plan (the Deferred Plan). The Deferred Plan is intended to comply with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the Code). The Deferred Plan is intended to be an unfunded “top hat”
plan which is maintained primarily to provide deferred compensation benefits for a select group of our “management or highly
compensated employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of
1974, as amended (ERISA), and to therefore be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. The Deferred
Plan is intended to help build a supplemental source of savings and retirement income through pre-tax deferrals of eligible compensation,
which may include cash, option and stock bonus awards, discretionary cash, option and stock awards and/or any other payments which
may be designated by the Deferred Plan administrator, as eligible, for deferral under the Deferred Plan from time to time. As
administered, the Deferred Plan is used to defer compensation of stock awards granted under our other equity compensation plans
and does not by its terms approve any grants or awards.
GenSpera’s Compensation Plans
The Company’s 2007 Equity Compensation
Plan (2007 Plan) and 2009 Executive Compensation Plan (2009 Plan) (together, the Plans) provide for the awarding of stock grants,
nonqualified and incentive stock options, restricted stock units, performance units or other stock-based awards to officers, directors,
employees and consultants of the Company. The purpose of the Plans is to advance the interests of GenSpera and our stockholders
by attracting, retaining and rewarding persons performing services for us and to motivate such persons to contribute to our growth
and profitability. Our Plans are administered by a committee of non-employee directors (the Committee). The Committee determines:
who shall be granted awards; the vesting periods; the exercise price; and any other terms deemed appropriate for any award.
As of December 31, 2015, our 2009 Plan
authorized up to 6,000,000 shares of common stock to be reserved for issuance upon exercise of stock options or other stock-based
awards, and the Company has awarded 4,945,874 stock options, and 1,054,126 shares of common stock were available for future grants
under the 2009 Plan. All option awards granted under the 2009 Plan are fully vested.
Our 2007 Plan authorizes up to 6,000,000
shares of common stock to be reserved for the issuance upon exercise of stock options or other stock-based awards, subject to
an annual award limitation of 1,500,000 shares. Under the 2007 Plan, vesting schedules for stock options vary, but generally vest
for a period of not more than five years and at a rate of not less than 20% per year. The maximum term of an option granted under
the 2007 Plan is ten years. As of December 31, 2015, the Company has awarded 4,550,821 stock options, and 2,011,679 shares of
common stock were available for future grants under the 2007 Plan. The Company has recorded aggregate stock-based compensation
expense related to the issuance of stock option awards in the following line items in the accompanying consolidated statement
of losses (in thousands):
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Research and development
|
|
$
|
45
|
|
|
$
|
891
|
|
|
General and administrative
|
|
|
93
|
|
|
|
1,164
|
|
|
Total stock-based compensation expense
|
|
$
|
138
|
|
|
$
|
2,055
|
|
As of December 31, 2015, there was
$36,000 of total unrecognized compensation cost related to non-vested stock options which vest over time, and is expected to be
recognized over a weighted-average period of 0.7 of a year. As of December 31, 2014, there was $43,000 of total unrecognized
compensation cost related to non-vested stock options which vest over time, and is expected to be recognized over a weighted-average
period of 1.2 years.
The following table summarizes stock option
activity under the Plans:
|
|
|
Number of
shares
|
|
|
Weighted-
average
exercise
price
|
|
|
Weighted-
average
remaining
contractual term
(in years)
|
|
|
Aggregate
intrinsic
value (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2013
|
|
|
6,050,623
|
|
|
$
|
1.82
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,759,472
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(125,000
|
)
|
|
$
|
1.50
|
|
|
|
4.0
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2014
|
|
|
8,685,095
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
376,600
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(297,500
|
)
|
|
$
|
2.08
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2015
|
|
|
8,764,195
|
|
|
$
|
1.60
|
|
|
|
3.2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2015
|
|
|
8,657,195
|
|
|
$
|
1.61
|
|
|
|
3.2
|
|
|
$
|
—
|
|
During 2015 and 2014, the Company issued
options to purchase 159,000 and 2,107,902 shares of common stock, respectively, to employees, and non-employee directors under
the Plans. The weighted-average fair value of the options granted to employees and non-employee directors during 2015 and 2014
was estimated at $0.30 and $0.48 per share, respectively, on the date of grant.
During 2015 and 2014, the Company issued
options to purchase 217,600 and 651,570 shares of common stock, respectively, to consultants under the Plan. The per-share weighted-average
fair value of the options granted to consultants during 2015 and 2014 was estimated at $0.34 and $0.38, respectively, on the date
of grant.
The following table summarizes weighted-average
assumptions using the Black-Scholes option-pricing model used on the date of the grants issued for the years ended December 31,
2015 and 2014:
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Volatility
|
|
|
58.4%
|
|
|
|
55.8%
|
|
|
Expected term (years)
|
|
|
3.4
|
|
|
|
3.5
|
|
|
Risk-free interest rate
|
|
|
1.0%
|
|
|
|
0.7%
|
|
|
Dividend yield
|
|
|
None
|
|
|
|
None
|
|
No options were exercised during the years
ended December 31, 2015 and 2014.
NOTE 12 — WARRANTS
Transactions involving our warrants are
summarized as follows:
|
|
|
Number of
shares
|
|
|
Weighted-
average
exercise
price
|
|
|
Weighted-
average
remaining
contractual term
(in years)
|
|
|
Aggregate
intrinsic
value (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2013
|
|
|
10,216,597
|
|
|
$
|
2.56
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
11,467,847
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,786,516
|
)
|
|
$
|
2.85
|
|
|
|
2.8
|
|
|
$
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2014
|
|
|
19,897,928
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
28,255,221
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(4,599,669
|
)
|
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,276,035
|
)
|
|
$
|
3.12
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2015
|
|
|
42,277,445
|
|
|
$
|
0.79
|
|
|
|
2.7
|
|
|
$
|
14.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2015
|
|
|
42,277,445
|
|
|
$
|
0.79
|
|
|
|
2.7
|
|
|
$
|
14.6
|
|
During the year ended December 31, 2015,
4,599,669 warrants were exercised into an equivalent number of common shares for which we received approximately $926,000 in proceeds.
During the year ended December 31, 2014, no warrants were exercised into common shares.
The following table summarizes outstanding warrants to purchase
common stock as of December 31, 2015:
|
|
|
Number of
shares
|
|
|
Weighted
Average
Exercise
price
|
|
|
Expiration
|
|
Issued to consultants
|
|
|
1,092,667
|
|
|
$
|
1.80
|
|
|
March 2016 through November 2020
|
|
Issued pursuant to 2011 financings
|
|
|
1,936,785
|
|
|
$
|
3.24
|
|
|
January 2016 through April 2016
|
|
Issued pursuant to 2012 financings
|
|
|
296,366
|
|
|
$
|
3.00
|
|
|
December 2017
|
|
Issued pursuant to 2013 financings
|
|
|
4,376,228
|
|
|
$
|
1.97
|
|
|
December 2017 through August 2018
|
|
Issued pursuant to 2014 financings
|
|
|
10,882,678
|
|
|
$
|
0.93
|
|
|
December 2016 through June 2019
|
|
Issued pursuant to 2015 financings
|
|
|
23,692,721
|
|
|
$
|
0.29
|
|
|
January 2017 through December 2020
|
|
|
|
|
42,277,445
|
|
|
|
|
|
|
|
During
2015, the Company issued warrants to consultants to purchase 300,000 at a weighted-average fair value of $0.26 per share on the
date of grant. The common stock purchase warrants have exercise prices of between $0.35 and $0.65 per share, are immediately exercisable
and expire on the five-year anniversary of the date of issuance. During 2015, total stock-based compensation expense of approximately
$78,000, was recognized using the straight-line method in the statement of losses for warrants issued to consultants.
During
2014, the Company issued warrants to consultants to purchase 248,000 at a weighted-average fair value of $0.36 per share on the
date of grant. During 2014, total stock-based compensation expense of approximately $89,000, was recognized using the straight-line
method in the statement of losses for warrants issued to consultants. The following table summarizes weighted-average assumptions
using the Black-Scholes option-pricing model used on the date of the equity-classified warrants issued for services:
|
|
|
Year Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Volatility
|
|
|
72.6%
|
|
|
|
51.1%
|
|
|
Expected term (years)
|
|
|
1.8
|
|
|
|
2.0
|
|
|
Risk-free interest rate
|
|
|
0.6%
|
|
|
|
0.5%
|
|
|
Dividend yield
|
|
|
None
|
|
|
|
None
|
|
In December 2015, in connection with a
private placement, we issued an aggregate of 20,485,362 common stock purchase warrants, including 19,497,028 to investors; and
988,334 to placement agents. The warrants were issued with an exercise price of $0.30 per share. The Company assessed these outstanding
equity-linked financial instruments and concluded that the warrants are subject to derivative accounting (see Note 8).
In July 2015, also in connection with
a private placement, we issued an aggregate of 7,469,859 common stock purchase warrants, including 7,182,556 to investors; and
287,303 to placement agents. The warrants were issued with exercise prices between $0.70 and $0.80 per share.
In June 2014, in connection with a registered
offering, we issued an aggregate of 10,736,722 common stock purchase warrants, including 10,409,905 issued to investors and 326,817
issued to the placement agents. The warrants were issued with exercise prices between $0.85 and $1.15 per share. In 2015, we amended
3,826,792 of the Series B and 4,163,961 of the Series C warrants in order to extend their respective term to December 31, 2016,
and reduce their exercise price to $0.70 per share. Additionally, we issued 483,125 common stock purchase warrants to investors
in a June 2014 private placement. The warrants have an exercise price of $1.15 per share.
In June 2014, in connection with our registered
offering, we issued an aggregate of 10,736,722 common stock purchase warrants, including 10,409,905 issued to investors and 326,817
issued to the placement agents. The warrants were issued with exercise prices between $0.85 and $1.15 per share. Additionally,
we also issued 483,125 common stock purchase warrants to investors in our June 2014 private placement. The warrants have an exercise
price of $1.15 per share.
NOTE 13 — INCOME TAXES
The Company had, subject to limitation,
$32.5 million of net operating loss carryforwards at December 31, 2015, which will expire at various dates beginning in 2016 through
2026. In addition, the Company has research and development tax credits of approximately $456,000 at December 31, 2015 available
to offset future taxable income, which will expire from 2028 through 2036. We have provided a 100% valuation allowance for the
deferred tax benefits resulting from the net operating loss carryover and our tax credits due to our lack of earnings history.
In addressing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance
increased by $2.0 and $2.4 million for the year ended December 31, 2015 and 2014, respectively. Significant components of deferred
tax assets and liabilities are as follows (in thousands):
|
|
|
2015
|
|
|
2014
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
11,066
|
|
|
$
|
9,466
|
|
|
Stock-based compensation
|
|
|
3,768
|
|
|
|
3,372
|
|
|
Other
|
|
|
(60
|
)
|
|
|
—
|
|
|
Tax credits
|
|
|
456
|
|
|
|
443
|
|
|
Total deferred tax assets
|
|
|
15,230
|
|
|
|
13,281
|
|
|
Less: valuation allowance
|
|
|
(15,230
|
)
|
|
|
(13,281
|
)
|
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
The actual tax benefit differs from the expected tax benefit
for the years ended December 31, 2015 and 2014 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before
taxes) are as follows:
|
|
|
2015
|
|
|
2014
|
|
|
Statutory federal income tax rate
|
|
|
-34.0
|
%
|
|
|
-34.0
|
%
|
|
Non-deductible items
|
|
|
0.1
|
%
|
|
|
0.0
|
%
|
|
Adjustment for R&D Credit
|
|
|
-0.2
|
%
|
|
|
0.2
|
%
|
|
Valuation allowance
|
|
|
34.1
|
%
|
|
|
33.8
|
%
|
|
Effective income tax rate
|
|
|
—
|
%
|
|
|
—
|
%
|
The Company’s tax returns for the previous three years
remain open for audit by the respective tax jurisdictions.
NOTE 14 ‒ SUBSEQUENT EVENTS
On March 16, 2016, Dr. Craig Dionne provided
us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer (See Note 9).
10,072,736 shares of Common Stock issuable
upon the exercise of outstanding warrants
And
28,958,440 shares of Common Stock being
sold by Selling Shareholders
PROSPECTUS
, 2016
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and
Distribution.
The following table sets forth the estimated
costs and expenses in connection with the sale and distribution of the securities being registered, other than placement agent
fees. All expenses incurred will be paid by the Company. All of the amounts shown are estimates other than the Securities
and Exchange Commission, or SEC, registration fees, and the FINRA filing fee.
|
|
|
To be Paid
by the
Registrant
|
|
|
SEC registration fees
|
|
$
|
0
|
|
|
Legal fees and expenses
|
|
$
|
30,000
|
|
|
Accounting fees and expenses
|
|
$
|
20,000
|
|
|
Printing and engraving expenses
|
|
$
|
5,000
|
|
|
Transfer agent’s fees
|
|
$
|
2,000
|
|
|
Miscellaneous fees and expenses
|
|
$
|
5,000
|
|
|
Total
|
|
$
|
62,000
|
|
Item 14.
Indemnification of Directors and
Officers.
Section 102 of the Delaware General
Corporation Law, as amended, or DGCL, allows a corporation to eliminate the personal liability of directors to a corporation or
its stockholders for monetary damages for a breach of a fiduciary duty as a director, except where the director (i) breached his
duty of loyalty, (ii) failed to act in good faith, (iii) engaged in intentional misconduct or knowingly violated a law, (iv) authorized
the payment of a dividend or approved a stock repurchase or redemption in violation of Delaware corporate law or (v) obtained an
improper personal benefit.
Our certificate of incorporation states
that, to the fullest extent permitted by the DGCL, no director shall be personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as director; provided, however, that this provision eliminating personal liability of a director
shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to us or our
stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(iii) under section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit .
Section 145 of the DGCL provides,
among other things, that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason
of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the corporation’s
request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with the action, suit or proceeding. The power to indemnify applies if (i) such person is successful
on the merits or otherwise in defense of any action, suit or proceeding or (ii) such person acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was unlawful. The power to indemnify applies to actions brought
by or in the right of the corporation as well, but only to the extent of defense expenses (including attorneys’ fees) actually
and reasonably incurred and not to any satisfaction of judgment or settlement of the claim itself, and with the further limitation
that in such actions no indemnification shall be made in the event of any adjudication of negligence or misconduct in the performance
of his duties to the corporation, unless a court believes that in light of all the circumstances indemnification should apply.
Section 174 of the DGCL provides,
among other things, that a director who willfully and negligently approves of an unlawful payment of dividends or an unlawful stock
purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approved
or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing
the minutes of the meetings of the board of directors at the time the action occurred or immediately after the absent director
receives notice of the unlawful acts.
Our bylaws provide that we shall, to the
fullest extent authorized by the DGCL, indemnify any person who was or is made a party or threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that
he or she, or a person of whom he or she is the legal representative, is or was our director or officer or is or was serving at
our request as a director or officer of another corporation, or as a controlling person of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director or officer, or in any other capacity while serving as a director or officer, against
all expenses, liability or loss reasonably incurred or suffered by such person in connection with such action, suit or proceeding.
Our bylaws also provide that we may enter
into one or more agreements with any director, officer, employee or agent of ours, or any person serving at our request as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit
plans, that provides for indemnification rights equivalent to or, if our board of directors so determines, greater than, those
provided for in such bylaws. As a general policy, we enter into indemnification agreements with our officers and directors.
We maintain a liability insurance policy for our directors and
officers, subject to certain exclusions.
Item 15.
Recent Sales of Unregistered Securities.
The following information is given with
regard to unregistered securities sold during the preceding three years including the dates and amounts of securities sold, the
persons or class of persons to whom we sold the securities, the consideration received in connection with such sales and, if the
securities were issued or sold other than for cash, the description of the transaction and the type and amount of consideration
received. The descriptions contained below are a summary and qualified by the agreements, if applicable, included as
Exhibits to this Registration Statement. The following securities were issued in private offerings pursuant to the exemption from
registration contained in Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act and the rules promulgated
thereunder:
|
|
·
|
In December of 2012 we commenced a unit offering of our securities. Each unit consists of: (i)
one (1) share of common stock, par value $0.0001, and (ii) one common stock purchase warrant. The warrants have a term of five
years and entitle the holders to purchase common stock at a price per share of $3.00. In the event the shares underlying the warrants
are not subject to a registration statement, the warrants may be exercised on a cashless basis after 12 months from the issuance
date. The warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in
the event of stock splits or dividends and fundamental transactions, as defined. The warrants do not contain any price protection
provisions. Additionally, the warrants contain limitations on the holder’s ability to exercise the warrants in the event
such exercise causes the holder to beneficially own in excess of 4.99% of the Company’s issued and outstanding common stock,
subject to a discretionary increase in such limitation by the holder to 9.99% upon 61 days’ prior notice to the Company.
In connection with the offering, we agreed to enter into registration rights agreement with our investors. Pursuant to the registration
rights agreements, we agreed to file a “resale” registration statement with the SEC covering the shares of common stock
included in the units as well as the shares underlying the warrants, within 45 days of the final closing date of the sale of units
and to maintain the effectiveness of the registration statement until all securities have been sold or are otherwise able to be
sold pursuant to Rule 144. We have agreed to use our best efforts to have the registration statement declared effective within
90 days of the final closing. We are also obligated to pay to investors, as partial liquidated damages, a fee of 0.50% per month
in cash up to a maximum of 6%, upon the occurrence of certain events, including but not limited to failure to file and/or have
the registration statement declared effective within the time provided. Subsequent to the offering, we received a waiver and amendment
to the registration rights agreement by holders of a majority of the registrable securities. The effect of the waiver and amendment
is to waive all penalties under the registration rights agreement with regard to filing deadlines and effectiveness requirements.
|
|
|
·
|
In January 2013, we offered and sold an aggregate of 104,095 units in an additional closing of
our December offering resulting in gross proceeds of $0.2 million. The price per unit was $2.20. In connection with the December
2012 and January 2013 closings of our December offering, we issued 96,443 additional units in March 2013 in order to adjust the
price per unit from $2.20 to $1.773 to be consistent with the price per unit of our March 2013 closing.
|
|
|
·
|
In March 2013, we offered and sold an additional 557,256 units in connection with another closing
of our December offering. This closing resulted in gross proceeds of $1.0 million. The price per unit was $1.773. In connection
with this closing, we incurred placement agent fees and expenses in the amount of $37,000 in cash and issued warrants to purchase
18,410 shares at an exercise price per share of $3.00.
|
|
|
·
|
Between August 14 and August 16, 2013, we sold an aggregate of $5,000,032, or 3,333,356 units,
to the accredited and institutional investors. The price per unit is $1.50, with each unit consisting of (i) one share of the Company’s
common stock and (ii) one common stock purchase warrant. The warrants have a term of five years and entitle the investors to purchase
the Company’s common stock at a price per share of $1.75. In the event that the shares underlying the warrants are not subject
to a registration statement at the time of exercise, the warrants may be exercised on a cashless basis after 6 months from the
issuance date. The warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise
price in the event of stock splits or dividends and fundamental transactions. In connection with the offering, we entered into
registration rights agreements with the investors obligating us to register the shares and shares underlying the warrants issued
in connection with the units. T.R. Winston & Company acted as placement agents for the Offering. The Placement Agent received
a commission equal to 8% of gross proceeds, for an aggregate commission of $400,002.56, and a non-accountable expense allowance
equal to 2% of the gross proceeds, or $100,000.64. The placement agent also received common stock purchase warrants to purchase
such number of shares equal to 8% of the shares sold in the offering to investors, or 266,668 placement agent warrants with substantially
the same terms as the warrants. Additionally, the placement agent was also reimbursed for its legal and due diligence costs in
an amount not to exceed $35,000. The placement agent will also receive (i) a cash fee of 4% of gross proceeds received from the
exercise of the warrants, and (ii) additional transaction fees equal to 8% of gross proceeds and 8% warrant coverage for any future
investment by one of the Investors in the Company for a period of 12 months following the closing of the offering.
|
|
|
·
|
In February 2014, we entered into an agreement for method development by a contract manufacturer
and issued an aggregate of 91,334 shares of common stock as compensation.
|
|
|
·
|
In February 2014, we entered into an agreement to grant an aggregate of 47,800 shares of common
stock to a consultant, which shares vest at the rate of 7,800 shares upon execution of the agreement and 10,000 shares per month
for four months, the term of the agreement. These shares will be granted for business advisory services to be provided to the Company.
In addition, the consultant was issued a warrant to purchase 96,000 shares of common stock at a strike price of $3.00 per share,
which shares vest at the rate of 16,000 shares upon execution of the agreement and 20,000 shares per month for four months. The
warrant issued is substantially similar to the warrants issued in conjunction with our financing completed in March 2013.
|
|
|
·
|
In June 2014, we offered and sold 966,250 units, in a private placement to certain accredited investors
with whom we had a prior relationship or who were shareholders. Each unit consists of: (i) one (1) share of common stock, and (ii)
one-half of one Series D common stock purchase warrant. The price was $0.80 per unit, and resulted in gross proceeds of approximately
$0.8 million. The warrants have a term of five years and entitle the holder to purchase our common stock at a price of $1.15 per
share. As part of the transaction, the investors agreed to a contractual six month lockup restricting their ability to sell or
transfer the securities. Additionally, in the event that the shares underlying the warrants are not subject to a registration statement
at the time of exercise, the warrants may be exercised on a cashless basis after 6 months from the issuance date. The warrants
also contain provisions providing for an adjustment in the underlying number of shares and exercise price in the event of stock
splits or dividends and fundamental transactions.
|
|
|
·
|
In August 2014, we issued an aggregate of 25,000 units to consultants as payment for $20,000 of
business and advisory services. Each unit consists of one share of our common stock, and one-half of one Series D common stock
purchase warrant. The units are substantially similar to the units issued in our June 2014 private placement disclosed above.
|
|
|
·
|
In August 2014, we issued a total of 189,364 common shares as partial compensation for investor
and media relations services. The services associated with the shares were valued at $168,000 in total. Of the shares issued, 120,000
are subject to monthly vesting over the next 12 months.
|
|
|
·
|
In August 2014, we issued warrants to purchase an aggregate of 139,500 shares of common stock as
compensation for business and advisory services. We valued the services at approximately $45,914. The warrants have an exercise
price of $1.15 per share, a term of five years and provide for cashless exercise if the shares underlying the warrants are not
registered.
|
|
|
·
|
In October 2014, we issued a total of 20,000 common shares as partial compensation for business
advisory services. The services associated with the shares were valued at approximately $15,000 in total.
|
|
|
·
|
In December 2014, we issued a total of 424,522 common shares to Phyton Biotech GmbH as partial
compensation for services related to the development of a cell line derived from Thapsia garganica. The services were valued at
$280,000.
|
|
|
·
|
In January 2015, we issued warrants to purchase an aggregate of 150,000 shares of common stock
as compensation for business and advisory services. We valued the services at approximately $48,000. The warrants have an exercise
price of $0.65 per share, a term of five years and provide for cashless exercise if the shares underlying the warrants are not
registered.
|
|
|
·
|
In March 2015, we issued a total of 30,000 common shares as partial compensation for business advisory
services. The services associated with the shares were valued at approximately $27,000 in total.
|
|
|
·
|
In May 2015, we issued warrants to purchase an aggregate of 75,000 shares of common stock as compensation
for business and advisory services. We valued the services at approximately $18,000. The warrants have an exercise price of $0.65
per share, a term of five years and provide for cashless exercise if the shares underlying the warrants are not registered.
|
|
|
·
|
In June 2015, we amended 3,826,792 of the Series B and 4,163,961 of the Series C warrants in order
to extend their respective term and reduce their exercise price. Pursuant to the amendment, the amended Series B and C warrants
now have an exercise price of $0.70 and expire on December 31, 2016.
|
|
|
·
|
In July 2015, we offered and sold 3,591,278 units, in a private placement to certain accredited
investors with whom we had a prior relationship or who were shareholders. Each unit consists of: (i) one share of common stock,
(ii) one Series D common stock purchase warrant, and (iii) one Series E common stock purchase warrant. The price was $0.70 per
unit, and resulted in gross proceeds of approximately $2.5 million. The Series D warrants have a term of five years and entitle
the holder to purchase our common stock at a price per share of $0.80 per share. The Series E warrants have a term of eighteen
months and entitle the holder to purchase our common stock at a price per share of $0.70 per share. In the event that the shares
underlying the warrants are not subject to a registration statement at the time of exercise, the warrants may be exercised on a
cashless basis after 30 days from the issuance date. In connection with the offering, we issued our placement agent 287,303 common
stock purchase warrants with substantially the same terms as our Series D warrants.
|
|
|
·
|
In July 2015, we issued a total of 125,000 common shares as partial compensation for business advisory services. The services
associated with the shares were valued at approximately $95,000 in total.
|
|
|
·
|
In November 2015, Dr. Dionne, our former chief executive officer, converted three promissory notes with an aggregate principal
balance of $105,000 into 262,500 shares of common stock. Dr. Dionne waived all interest under the notes in exchange for a reduction
from the conversion price of $0.50 per share to $0.40 per share.
|
|
|
·
|
In November 2015, we issued a warrant to purchase an aggregate of 75,000 shares of common stock as compensation for business
and advisory services. We valued the services at approximately $11,000. The warrant has an exercise price of $0.35 per share, a
term of five years and provides for cashless exercise if the shares underlying the warrant are not registered.
|
|
|
·
|
In December 2015, we offered and sold 1,853 units, in a private placement to certain accredited
investors for gross proceeds of approximately $2.5 million. The preferred stock has a stated value of $1,000 per share and the
common shares are issuable pursuant to conversion of the preferred stock at a conversion price of $0.15 per share, subject to a
9.99% beneficial ownership limitation and subject to adjustment pursuant to stock splits and dividends, and subject to adjustment
pursuant to customary anti-dilution protection for subsequent equity sales for a period of 18 months from the effective date of
this registration statement. The warrants include (i) 6,177,084 Series F common stock purchase warrants with a price per share
of $0.30 and a term of five years from the date in which the shares underlying the warrants are registered, (ii) 6,177,084 Series
G common stock purchase warrants with a price per share of $0.30 and a term of eighteen months from the date in which the shares
underlying the warrants are registered, (iii) 3,571,430 Series H common stock purchase warrants issued pursuant to a contractually
obligated exercise of prior outstanding warrants, with a price per share of $0.30 and a term of five years from the issuance date,
and (iv) 3,571,430 Series I common stock purchase warrants issued pursuant to a contractually obligated exercise of prior outstanding
warrants, with a price per share of $0.30 and a term of eighteen months from the issuance date. The common shares underlying the
preferred stock are subject to adjustment in the in the event of stock splits and dividends, subsequent equity sales, pro rata
distributions and fundamental transactions. In the event that the shares underlying all of the warrants issued in the December
2015 Offering are not subject to a registration statement at the time of exercise, the warrants may be exercised on a cashless
basis after 6 months from the issuance date. The warrants also contain provisions providing for an adjustment in the underlying
number of shares and exercise price in the event of stock splits or dividends, fundamental transactions, and pro rata distributions.
The warrants do not contain any price protection provisions. In connection with the offering, we issued our placement agent 988,334
common stock purchase warrants with substantially the same terms as our Series F warrants.
|
Item 16.
Exhibits.
See Exhibit Index beginning on page II-7 of this registration
statement. The exhibits filed with this registration statement are set forth are incorporated by reference in their entirety into
this item.
Item 17.
Undertakings.
Insofar as indemnification by the Registrant
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referenced in Item 15 of this registration statement or otherwise, the Registrant has been advised
that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is therefore
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) (§230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration
statement.
(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) If
the registrant is relying on Rule 430B (§230.430B of this chapter):
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this chapter) shall be deemed to be part
of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement;
and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§230.424(b)(2), (b)(5), or (b)(7) of this chapter)
as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii),
or (x) (§230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section
10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier
of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is
at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the
securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such effective date; or
(5) That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities:
The undersigned registrant undertakes that
in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of
the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to
Rule 424 (§230.424 of this chapter);
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(6) For
purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective.
(7) For
the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City
of Tucson, State of Arizona, on July 19, 2016.
|
|
GENSPERA, INC.
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|
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By
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/S/ Russell Richerson
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Russell Richerson
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Principal Executive Officer and Principle Financial Officer
|
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each
person whose signature appears below constitutes and appoints Russell Richerson, with full power of substitution and resubstitution
and full power to act without the other, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement,
and all documents in connection therewith (including all post-effective amendments and any subsequent registration statement filed
pursuant to Rule 462(b) under the Securities Act), with the SEC, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the dates indicated.
|
Signature
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Title
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Date
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/s/ Bo Jesper Hansen, MD PhD
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Director
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July 19, 2016
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Bo Jesper Hansen, MD PhD
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/s/ Scott Ogilvie
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Director
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July 19, 2016
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Scott Ogilvie
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/s/ Peter Grebow
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Director
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July 19, 2016
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Peter E. Grebow, PhD
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INDEX TO EXHIBITS
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Incorporated by Reference
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Exhibit
No.
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|
Description
|
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Filed
Herewith
|
|
Form
|
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Exhibit
No.
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File
No.
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Filing
Date
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|
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3.01
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Amended and Restated Certificate of Incorporation dated September 4, 2013
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8-K
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3.01
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333-153829
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9/6/13
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3.02
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Certificate of Designation of Preferences, Rights and Limitations of Series A 0% Convertible Preferred Stock
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3.03
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Amended and Restated Bylaws
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8-K
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3.02
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333-153829
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1/11/10
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|
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4.01
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Specimen of Common Stock Certificate
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S-1
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4.01
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333-153829
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10/03/08
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4.02
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Form of Series A Preferred Stock Certificate
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8-K
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3.01
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000-55331
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12/23/15
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4.03**
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Amended and Restated GenSpera 2007 Equity Compensation Plan amended January 2010
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8-K
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4.01
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333-153829
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1/11/10
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4.04**
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GenSpera Form of 2007 Equity Compensation Plan Grant and 2009 Executive Compensation Plan Grant
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8-K
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4.02
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333-153829
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9/09/09
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4.05
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Form of 4.0% convertible note issued to shareholder
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S-1
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4.05
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333-153829
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10/03/08
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4.06
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Form of 4.0% convertible debenture modification between GenSpera, Inc. and shareholder
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|
8-K
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10.02
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333-153829
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2/20/09
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4.07
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Form of 4.0% convertible debenture modification between GenSpera, Inc. and shareholder
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8-K
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10.02
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333-153829
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2/20/09
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4.08**
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Amended and Restated 2009 Executive
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10-K
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4.11
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333-153829
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3/29/13
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Compensation Plan amended on March 25, 2013
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4.09
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Form of Common Stock Purchase Warrant issued Jan - Mar 2010
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10-K
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4.28
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333-153829
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3/31/10
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4.10
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Form of Consultant Warrants issued in May 2010
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10-Q
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4.29
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333-153829
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5/14/10
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4.11
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Form of Common Stock Purchase Warrant - May 18, 2010 offering, and June 2010 Consultant Warrants
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8-K
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10.02
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333-153829
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5/25/10
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4.12**
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Form of 2007 Equity Compensation Plan Restricted Stock Grant and 2009 Executive Compensation Plan Restricted Stock Grant
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S-8
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4.03
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333-171783
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1/20/11
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4.13
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Form of Common Stock Purchase Warrant dated January and February of 2011
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8-K
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10.02
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333-153829
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1/27/11
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4.14**
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Form of 2007 Equity Compensation Plan Restricted Stock Unit Agreement and 2009 Executive Compensation Plan Restricted Stock Unit Agreement
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10-K
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4.22
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333-153829
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3/30/11
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4.15
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Form of Common Stock Purchase Warrant dated April 2011
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8-K
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10.02
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333-153829
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5/03/11
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4.16**
|
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Form of Executive Deferred Compensation Plan
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|
8-K
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99.01
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|
333-153829
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7/08/11
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4.17
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Form of Common Stock Purchase Warrant issued to consultants in December of 2011
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|
|
10-K
|
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4.26
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|
333-153829
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3/06/12
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4.18
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|
Form of Common Stock Purchase Warrant issued to LifeTech on January 12, 2012
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|
|
10-K
|
|
4.27
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333-153829
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3/06/12
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|
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|
|
|
|
4.19
|
|
Form of Common Stock Purchase Warrant for December 2012 through March 2013 Offering
|
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|
|
8-K
|
|
4.01
|
|
333-153829
|
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3/28/13
|
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|
|
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4.20
|
|
Form of Securities Purchase Agreement for August 2013 Offering
|
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|
|
8-K
|
|
10.02
|
|
333-153829
|
|
8/16/13
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|
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4.21
|
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Form of Warrant from August 2013 Offering
|
|
|
|
8-K
|
|
10.04
|
|
333-153829
|
|
8/16/13
|
|
|
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|
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|
|
|
|
|
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|
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4.22
|
|
Form of Series A, B and C Common Stock Purchase Warrant for May 2014 Registered Offering
|
|
|
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S-1/A
|
|
4.34
|
|
333-194687
|
|
5/22/14
|
|
|
|
|
|
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|
|
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|
|
|
|
|
4.23
|
|
Form of Securities Purchase Agreement for May 2014 Registered Offering
|
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S-1/A
|
|
10.12
|
|
333-194687
|
|
5/22/14
|
|
|
|
|
|
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|
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|
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4.24
|
|
Form of Series D Common Stock Purchase Warrant for June 2014 Private Placement
|
|
|
|
10-Q
|
|
4.36
|
|
333-153829
|
|
8/8/14
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
4.25
|
|
Form of Securities Purchase Agreement for June 2014 Private Placement
|
|
|
|
10-Q
|
|
4.37
|
|
333-153829
|
|
8/8/14
|
|
|
|
|
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|
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|
|
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4.26
|
|
Form of Consultant Common Stock Purchase Warrant issued February, August 2014, January 2015 and May 2015
|
|
|
|
10-Q
|
|
4.38
|
|
333-153829
|
|
8/8/14
|
|
|
|
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|
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|
|
|
|
|
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|
|
4.27
|
|
Form of Securities Purchase Agreement for July 2015 Private Placement
|
|
|
|
8-K
|
|
10.01
|
|
000-55331
|
|
7/6/15
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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4.28
|
|
Form of Registration Rights Agreement for July 2015 Private Placement
|
|
|
|
8-K
|
|
10.02
|
|
000-55331
|
|
7/6/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.29
|
|
Form of Series D and E Common Stock Purchase Warrants for July 2015 Private Placement
|
|
|
|
8-K
|
|
10.03
|
|
000-55331
|
|
7/6/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.30
|
|
Form of Securities Purchase Agreement for December 2015 Private Placement
|
|
|
|
8-K
|
|
10.01
|
|
000-55331
|
|
12/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.31
|
|
Form of Registration Rights Agreement for December 2015 Private Placement
|
|
|
|
8-K
|
|
10.02
|
|
000-55331
|
|
12/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.32
|
|
Form of Series F and Series G Common Stock Purchase Warrants for December 2015 Private Placement
|
|
|
|
8-K
|
|
10.03
|
|
000-55331
|
|
12/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.33
|
|
Form of Series H and I Common Stock Purchase Warrants for December 2015 Private Placement
|
|
|
|
8-K
|
|
10.05
|
|
000-55331
|
|
12/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.34
|
|
Form of Amendment Agreement from December 2015 Private Placement
|
|
|
|
8-K
|
|
10.04
|
|
000-55331
|
|
12/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.01
|
|
Opinion of Silvestre Law Group, P.C.
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.01
|
|
Exclusive Supply Agreement between GenSpera and Thapsibiza dated April 2012
|
|
|
|
10-K
|
|
10.01
|
|
333-153829
|
|
3/29/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.02**
|
|
Craig Dionne Employment Agreement
|
|
|
|
8-K
|
|
10.04
|
|
333-153829
|
|
9/09/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.03**
|
|
Amendment dated May 14, 2010 to the Employment Agreement of Craig Dionne
|
|
|
|
10-Q
|
|
10.03
|
|
333-153829
|
|
8/13/10
|
|
10.04**
|
|
Craig Dionne Severance Agreement
|
|
|
|
8-K
|
|
10.05
|
|
333-153829
|
|
9/09/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.05**
|
|
Craig Dionne Proprietary Information, Inventions And Competition Agreement
|
|
|
|
8-K
|
|
10.06
|
|
333-153829
|
|
9/09/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.06**
|
|
Form of Indemnification Agreement
|
|
|
|
8-K
|
|
10.07
|
|
333-153829
|
|
9/09/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.07**
|
|
Russell Richerson Employment Agreement
|
|
|
|
8-K
|
|
10.08
|
|
333-153829
|
|
9/09/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.08**
|
|
Amendment dated May 14, 2010 to the Employment Agreement of Russell Richerson
|
|
|
|
10-Q
|
|
10.08
|
|
333-153829
|
|
8/13/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.09**
|
|
Russell Richerson Proprietary Information, Inventions And Competition Agreement
|
|
|
|
8-K
|
|
10.09
|
|
333-153829
|
|
9/09/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10**
|
|
Independent Director Agreement
|
|
|
|
8-K
|
|
10.01
|
|
333-153892
|
|
06/1/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
Engagement Letter with H.C. Wainwright for May 2014 Registered Offering
|
|
|
|
S-1/A
|
|
10.11
|
|
333-194687
|
|
5/22/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.01
|
|
Consent of Liggett & Webb, P.A.
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.02
|
|
Consent of Silvestre Law Group (contained in opinion filed as Exhibit 5.01 to this registration statement
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.01
|
|
Power of Attorney (contained on signature page)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
*
|
|
|
|
|
|
|
|
|
|
**
|
Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
|