UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2010
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission File No. 0-50772
INHIBITEX, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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74-2708737
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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9005 Westside Parkway
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Alpharetta, Georgia
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30009
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(Address of principal executive
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(Zip Code)
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offices)
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(678) 746-1100
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such
files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
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Large Accelerated Filer
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Accelerated Filer
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Non-Accelerated Filer
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Smaller Reporting Company
þ
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
o
No
þ
As of November 9, 2010, 62,330,608 shares of the Registrant’s Common Stock were outstanding.
ITEM 1. FINANCIAL STATEMENTS
INHIBITEX,
INC.
CONSOLIDATED BALANCE SHEETS
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September 30,
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December 31,
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2010
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2009
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(unaudited)
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ASSETS
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Current assets:
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Cash and cash
equivalents
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$
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9,059,783
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$
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11,290,332
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Short-term
investments
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15,117,103
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26,625,496
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Prepaid expenses and other current
assets
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580,125
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831,196
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Accounts
receivable
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63,797
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61,062
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Total current
assets
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24,820,808
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38,808,086
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Property and equipment,
net
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1,226,699
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1,621,392
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Other
assets
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42,110
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40,290
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Total
assets
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$
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26,089,617
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$
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40,469,768
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts
payable
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$
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1,656,587
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$
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1,590,804
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Accrued
expenses
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2,102,460
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1,537,637
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Current portion of notes
payable
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182,292
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78,125
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Current portion of capital lease
obligations
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212,618
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207,100
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Current portion of deferred
revenue
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166,667
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191,667
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Other current
liabilities
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234,309
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202,531
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Total current
liabilities
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4,554,933
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3,807,864
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Long-term liabilities:
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Notes payable, net of current
portion
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364,583
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546,875
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Capital lease obligations, net of
current portion
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22,113
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180,792
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Deferred revenue, net of current
portion
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—
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87,500
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Other liabilities, net of current
portion
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927,681
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1,096,629
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Total long-term
liabilities
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1,314,377
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1,911,796
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Total
liabilities
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5,869,310
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5,719,660
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Stockholders’ equity:
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Preferred stock, $.001 par value;
5,000,000 shares authorized at
September 30, 2010 and December 31,
2009; none issued and
outstanding
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—
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—
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Common stock, $.001 par value;
150,000,000 shares authorized at
September 30, 2010 and December 31,
2009, respectively; 62,280,110 and
61,559,782 shares issued and
outstanding at September 30, 2010 and
December 31, 2009, respectively
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62,280
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61,560
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Warrants
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11,281,056
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12,133,216
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Accumulated other comprehensive
income
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6,502
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8,977
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Additional paid-in
capital
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269,382,091
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267,432,572
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Accumulated
deficit
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(260,511,622
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(244,886,217
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Total stockholders’
equity
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20,220,307
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34,750,108
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Total liabilities and stockholders’
equity
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$
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26,089,617
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$
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40,469,768
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The accompanying notes are an integral part of these financial statements.
3
INHIBITEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2010
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2009
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2010
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2009
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Revenue:
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License fees and
milestones
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$
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37,500
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$
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37,500
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$
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824,167
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$
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112,500
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Collaborative research
and
development
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250,000
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250,000
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750,000
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750,000
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Total revenue
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287,500
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287,500
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1,574,167
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862,500
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Operating expense:
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Research and
development
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4,700,987
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3,945,464
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14,406,501
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11,123,072
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General and
administrative
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877,177
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831,264
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2,860,052
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2,840,108
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Total operating
expense
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5,578,164
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4,776,728
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17,266,553
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13,963,180
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Loss from
operations
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(5,290,664
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(4,489,228
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(15,692,386
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(13,100,680
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Other income (expense),
net
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(1,107
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1,562
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14,607
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39,634
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Interest income,
net
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18,309
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15,929
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52,374
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164,368
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Net loss
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$
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(5,273,462
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$
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(4,471,737
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$
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(15,625,405
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$
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(12,896,678
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Basic and diluted net
loss per share
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$
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(0.08
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$
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(0.10
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$
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(0.25
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$
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(0.30
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Weighted average shares
used to compute basic
and diluted net loss per
share
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62,248,265
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43,545,057
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61,884,023
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43,499,678
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The accompanying notes are an integral part of these financial statements.
4
INHIBITEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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Nine Months Ended
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September 30,
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2010
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2009
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Cash flows from operating activities:
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Net loss
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$
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(15,625,405
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$
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(12,896,678
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Adjustments to reconcile net loss to net
cash used in operating activities:
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Depreciation and
amortization
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478,343
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635,547
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Share-based compensation
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420,600
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413,123
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Gain on sale of equipment
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—
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(39,890
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Amortization of investment premium or
discount
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381,128
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16,811
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Changes in operating assets and liabilities:
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Prepaid expenses and other
assets
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249,251
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(418,538
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Accounts receivable
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(2,735
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29,115
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Accounts payable and other
liabilities
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(71,387
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)
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57,442
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Accrued expenses
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564,823
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617,740
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Deferred revenue
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(112,500
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(112,500
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Net cash used in operating
activities
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(13,717,882
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(11,697,828
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Cash flows from investing activities
:
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Purchases of property and
equipment
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(83,650
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(4,981
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Proceeds from sale of property and
equipment
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—
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39,890
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Purchases of investments
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(17,701,210
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(15,277,699
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Proceeds from maturities and sales of
investments
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28,826,000
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23,890,000
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Net cash provided by investing
activities
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11,041,140
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8,647,210
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Cash flows from financing activities
:
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Payments on promissory notes and capital
leases
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(231,286
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)
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(284,105
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Repurchase of common
stock
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—
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(3,213
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)
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Proceeds from the issuance of common
stock
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677,479
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8,248
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Net cash provided by (used in)
financing activities
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446,193
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(279,070
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)
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Decrease in cash and cash
equivalents
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(2,230,549
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)
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(3,329,688
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Cash and cash equivalents at beginning of
period
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11,290,332
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11,507,137
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Cash and cash equivalents at end of
period
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$
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9,059,783
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$
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8,177,449
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Supplemental cash flow information:
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Interest paid
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$
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31,398
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$
|
50,954
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The accompanying notes are an integral part of these financial statements.
5
INHIBITEX, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Operations
Inhibitex, Inc. (“Inhibitex” or the “Company”) was incorporated in the state of Delaware in May
1994. Inhibitex is a biopharmaceutical company focused on the development of differentiated
anti-infective products to prevent and treat serious infections.
The Company is focused on developing orally-available antiviral therapies to treat herpes zoster,
also referred to as shingles, and chronic infections caused by hepatitis C virus (“HCV”). Currently
available antiviral therapies have a number of limitations that may include inadequate potency,
significant adverse side effects, complex dosing schedules, inconvenient methods of administration,
and diminishing efficacy due to the emergence of drug-resistant viruses. The Company believes that
its antiviral product candidates have the potential to address a number of these limitations, as
well as unmet clinical needs in their respective intended indications. In addition to developing
its antiviral programs, the Company has also licensed the rights to certain intellectual property
from its MSCRAMM protein platform to Pfizer, Inc. for the development of active vaccines to prevent
staphylococcal infections.
The Company has not received regulatory approval for any of its product candidates, and the Company
does not have any commercialization capabilities; therefore, it is possible that the Company may
never successfully derive any significant revenues from any of its existing or future product
candidates.
The Company plans to continue to finance its operations with its existing cash, cash equivalents
and short-term investments, proceeds from existing and potential future collaborations or
partnerships (if any) and proceeds of future equity and/or debt financings (if any). The Company’s
ability to continue its operations is dependent, in the near-term, upon managing its cash
resources, the successful development of its product candidates, entering into collaboration or
partnership agreements, executing future financings and ultimately, upon the approval of its
products for sale and achieving positive cash flow from operations. There can be no assurance that
additional funds will be available on terms acceptable to the Company (if at all), or that the
Company will ever generate significant revenue and become profitable.
2. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States (“U.S.”) for interim
financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. In
the opinion of the Company’s management, all material adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. They do not include all
information and notes required by generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no material change in the
information disclosed in the notes to the consolidated financial statements included in the Annual
Report on Form 10-K for the year ended December 31, 2009.
The Company’s significant accounting policies have not changed since December 31, 2009, except as
outlined below:
Recent Accounting Pronouncements.
In April 2010, the Financial Accounting Standards Board (“FASB”) amended the guidance for applying
the milestone method of revenue recognition to research or development arrangements. Under this
guidance, the Company may recognize revenue contingent upon the achievement of a milestone in its
entirety in the period in which the milestone is achieved, only if the milestone meets all the
criteria within the guidance to be considered substantive. This amendment is effective on a
prospective basis for research and development milestones achieved in fiscal years, and interim
periods within those years, beginning on or after June 15, 2010. Early adoption is permitted.
This amendment is effective for the Company beginning January 1, 2011. The adoption of this
amendment is not expected to have a material impact on the Company’s consolidated financial
position or results of operations.
In October 2009, the FASB amended the guidance for revenue recognition in multiple-element
arrangements. The guidance requires an entity to provide updated guidance on whether multiple
deliverables exist, how the deliverables in an arrangement should be separated, and how the
consideration should be allocated and; then allocate revenue in an arrangement using estimated
selling prices of deliverables if a vendor does not have vendor-specific objective evidence
(“VSOE”) or third-party evidence of selling price. The
guidance also eliminates the use of the residual method and requires an entity to allocate revenue
using the relative selling price method. This amendment is effective for the Company beginning
January 1, 2011 and can be applied prospectively or retrospectively.
The Company is currently evaluating the impact of this accounting amendment on its consolidated
financial statements.
6
3. Net Loss Per Share
Basic and diluted net loss per share have been computed based on net loss and the weighted-average
number of common shares outstanding during the applicable period. For diluted net loss per share,
common stock equivalents (common shares issuable upon the exercise of stock options and warrants)
are excluded from the calculation of diluted net loss per share if their effect is antidilutive.
The Company has excluded all options and warrants to purchase common stock, as such potential
shares are antidilutive.
The following table sets forth the computation of historical basic and diluted net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net loss
|
|
$
|
(5,273,462
|
)
|
|
$
|
(4,471,737
|
)
|
|
$
|
(15,625,405
|
)
|
|
$
|
(12,896,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used to
compute basic earnings per share
|
|
|
62,248,265
|
|
|
|
43,545,057
|
|
|
|
61,884,023
|
|
|
|
43,499,678
|
|
|
Dilutive effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute diluted earnings per share
|
|
|
62,248,265
|
|
|
|
43,545,057
|
|
|
|
61,884,023
|
|
|
|
43,499,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of antidilutive stock options excluded from
computation
|
|
|
5,593,942
|
|
|
|
4,631,736
|
|
|
|
5,593,942
|
|
|
|
4,631,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of antidilutive warrants excluded from
computation
|
|
|
13,008,484
|
|
|
|
8,000,597
|
|
|
|
13,008,484
|
|
|
|
8,000,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Comprehensive Loss
The components of comprehensive loss for the three and nine months ended September 30, 2010 and
2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net loss
|
|
$
|
(5,273,462
|
)
|
|
$
|
(4,471,737
|
)
|
|
$
|
(15,625,405
|
)
|
|
$
|
(12,896,678
|
)
|
|
Change in net unrealized gains (losses) on
investments
|
|
|
8,185
|
|
|
|
(14,422
|
)
|
|
|
(2,475
|
)
|
|
|
(103,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(5,265,277
|
)
|
|
$
|
(4,486,159
|
)
|
|
$
|
(15,627,880
|
)
|
|
$
|
(13,000,540
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Fair Value Measurements
The following table sets forth the financial assets and liabilities that were measured at fair
value on a recurring basis at September 30, 2010, by level within the fair value hierarchy. The
assets and liabilities measured at fair value are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement.
7
The Company’s short-term investments have been classified as Level 2, which have been initially
valued at the transaction price and subsequently revalued, at the end of each reporting period,
utilizing a third party pricing service. The pricing service utilizes industry standard valuation
models and observable market inputs to determine value that include surveying the bond dealer
community, obtaining benchmark quotes, incorporating relevant trade data, and updating spreads
daily.
There have been no transfers of assets or liabilities between the fair value measurement
classifications.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted prices in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
active markets for
|
|
|
Significant other
|
|
|
Significant
|
|
|
|
|
|
|
|
|
identical assets
|
|
|
observable inputs
|
|
|
unobservable inputs
|
|
|
September 30, 2010
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Cash equivalents
|
|
$
|
7,746,485
|
|
|
$
|
6,496,622
|
|
|
$
|
1,249,863
|
|
|
$
|
—
|
|
|
Short-term investments available-for-sale
|
|
|
15,117,103
|
|
|
|
—
|
|
|
|
15,117,103
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
22,863,588
|
|
|
$
|
6,496,622
|
|
|
$
|
16,366,966
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents consist of money market funds. Short-term investments consist of commercial
paper, U.S. agency securities, U.S. Treasury securities and corporate debt notes classified as
available-for-sale and have original maturities greater than 90 days, but less than 365 days from
the date of acquisition.
The Company has had no realized gains or losses from the sale of investments for the nine months
ended September 30, 2010. The following table shows the unrealized gains and losses and fair
values for those investments as of September 30, 2010 and December 31, 2009 aggregated by major
security type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
September 30, 2010
|
|
At Cost
|
|
|
Gains
|
|
|
(Losses)
|
|
|
At Fair Value
|
|
|
Money market funds
|
|
$
|
6,496,622
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,496,622
|
|
|
Commercial paper
|
|
|
10,240,219
|
|
|
|
6,341
|
|
|
|
—
|
|
|
|
10,246,560
|
|
|
Corporate debt
|
|
|
5,619,331
|
|
|
|
2,299
|
|
|
|
(2,164
|
)
|
|
|
5,619,466
|
|
|
Debt securities of U.S. government
agencies
|
|
|
500,914
|
|
|
|
26
|
|
|
|
—
|
|
|
|
500,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
22,857,086
|
|
|
$
|
8,666
|
|
|
$
|
(2,164
|
)
|
|
$
|
22,863,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
December 31, 2009
|
|
At Cost
|
|
|
Gains
|
|
|
(Losses)
|
|
|
At Fair Value
|
|
|
Certificates of deposit and money market
funds
|
|
$
|
10,380,463
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,380,463
|
|
|
Commercial paper
|
|
|
9,635,631
|
|
|
|
9,145
|
|
|
|
—
|
|
|
|
9,644,776
|
|
|
Corporate debt
|
|
|
9,183,702
|
|
|
|
956
|
|
|
|
(5,006
|
)
|
|
|
9,179,652
|
|
|
Debt securities of U.S. government
agencies
|
|
|
7,293,200
|
|
|
|
5,273
|
|
|
|
(1,428
|
)
|
|
|
7,297,045
|
|
|
U.S. Treasury securities
|
|
|
503,986
|
|
|
|
103
|
|
|
|
(66
|
)
|
|
|
504,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
36,996,982
|
|
|
$
|
15,477
|
|
|
$
|
(6,500
|
)
|
|
$
|
37,005,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2010, the Company had investments in an unrealized loss position. The Company
has determined that the unrealized losses on these investments at September 30, 2010 are temporary
in nature and expects the security to mature at its stated maturity principal. All
available-for-sale securities held at September 30, 2010 will mature within one year.
8
6. Research and License Agreements
Out-licensing Agreements
Pfizer (Wyeth).
In August 2001, the Company entered into an exclusive worldwide license and
development collaboration agreement with Wyeth Pharmaceuticals, Inc., which has since been acquired
by Pfizer, Inc. (“Pfizer”), for the development of staphylococcal
vaccines for humans. Under the terms of this agreement, the Company granted Pfizer an exclusive
worldwide license to intellectual property from its MSCRAMM protein platform with respect to the
development of human vaccines against staphylococcal organisms. The development, manufacture and
sale of any vaccines resulting from the collaboration are the responsibility of Pfizer. The Company
may terminate the agreement if Pfizer fails to use reasonable commercial efforts to bring related
products to market. Pfizer may terminate the agreement, without cause, upon six months notice.
Otherwise, this agreement will terminate upon the expiration of all of the licensed patents.
Currently, the latest to expire of the issued patents under the license agreement expires in 2019.
Pursuant to this agreement, the Company has received $8,000,000 in an upfront license fee and
annual research support payments from Pfizer as of September 30, 2010. The Company is entitled to
receive minimum research support payments of $1,000,000 per year until reaching a target sales
threshold of any product developed under this agreement. The Company is also entitled to receive
milestones upon the commencement of a Phase 1 trial, Phase 2 and Phase 3 clinical trials, the
filing of a Biologic License Application, and the approval of a licensed product by the U.S. Food
and Drug Administration (“FDA”). If all such milestones are achieved relative to one licensed
product, the Company would be entitled to receive a minimum of $10,000,000 in additional milestone
payments from Pfizer. The maximum milestone payments the Company could receive with respect to all
licensed products are $15,500,000. Finally, the Company is also entitled to royalties on net sales
of licensed products manufactured, sold or distributed by Pfizer.
In January 2010, the Company announced that Pfizer had initiated recruitment in a randomized,
double-blind Phase 1 clinical trial to evaluate the safety, tolerability, and immunogenicity of
three ascending dose levels of a 3-antigen
Staphylococcus aureus (“S. aureus”)
vaccine (SA3Ag) in
408 healthy adults. The vaccine contains an antigen originating from the Company’s proprietary
MSCRAMM protein platform. In January 2010, the Company earned a payment of $667,000 upon the
achievement of this milestone.
7. Stockholders’ Equity
Common Stock Warrants.
For the nine months ended September 30, 2010, a total of 358,244 warrants
expired with a weighted average exercise price of $2.64. The total Black-Scholes value of those
warrants was $214,225 and such amount was reclassified from warrants to additional paid-in capital.
Additionally, for the nine months ended September 30, 2010, a total of 686,590 warrants were
exercised with a weighted average exercise price of $1.21 and a total Black-Scholes value of
$637,935.
As of September 30, 2010 and December 30, 2009, there were 13,008,484 and 14,053,318 warrants
outstanding, respectively, with a weighted average exercise price of $1.15 and $1.19, respectively.
As of September 30, 2010, all of the outstanding warrants are exercisable and expire from November
1, 2010 through September 26, 2018.
9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on
Form 10-Q
contains forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause actual
results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. In some cases,
you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,”
“would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “project,” “predict,”
“forecast,” “potential,” “likely” or “possible”, as well as the negative of such expressions, and
similar expressions intended to identify forward-looking statements. These forward-looking
statements include, without limitation, statements relating to:
|
•
|
|
The anticipated availability of top-line data in the fourth quarter of 2010 from the ongoing Phase 2 trial of FV-100;
|
|
|
|
•
|
|
the anticipated availability of top-line data and the expected time to complete the ongoing Phase 1b, multiple
ascending dose (“MAD”) clinical trial of INX-189;
|
|
|
|
•
|
|
pharmacokinetic data from the INX-189 Phase 1a clinical trial supporting the potential for once-daily dosing (QD)
and our plans to present detailed results from this trial during a future scientific meeting;
|
|
|
|
•
|
|
the number of months that our current cash, cash equivalents and short-term investments will allow us to operate;
|
|
|
|
•
|
|
our future financing requirements, the factors that may influence the timing and amount of these requirements, and
our ability to fund them;
|
|
|
|
•
|
|
our potential future revenue from collaborative research agreements, partnerships, license agreements, product
related revenue or materials transfer agreements;
|
|
|
|
•
|
|
the potential of our product candidates to address a number of current therapeutic limitations, such as inadequate
potency, diminishing efficacy due to the emergence of drug-resistant viruses, toxic or adverse side effects, complex
dosing schedules, and inconvenient routes of administration and other unmet needs in their intended indications; and
|
|
|
|
•
|
|
anticipated future net losses from operations.
|
These statements reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties including, without limitation: that we, the FDA,
or an investigational review board might delay, suspend or terminate the clinical development of
FV-100 or INX-189 for lack of safety, manufacturing issues or other clinical reasons; FV-100 not
demonstrating sufficient efficacy in reducing the incidence and severity of shingles-related
symptoms, including acute pain and post herpetic neuralgia, to be clinically relevant or
commercially viable; the results of ongoing or future preclinical studies and clinical trials of
INX-189 not supporting its further development; Pfizer not terminating our license and
collaborative research agreements; our ability to maintain sufficient resources, including
executive management and key employees; our ability to successfully develop current and future
product candidates either in collaboration with a partner or independently and through the
regulatory process; our ongoing or future preclinical studies or clinical trials not demonstrating
an appropriate safety and/or efficacy profile of our product candidates; our ability to secure and
use third-party clinical and preclinical research and data management organizations and third party
manufacturers not fulfilling their contractual obligations or otherwise performing satisfactorily
in the future; our ability to manufacture and maintain sufficient quantities of preclinical and
clinical trial material on hand to complete our preclinical studies or clinical trials on a timely
basis; our ability or that of the clinical investigator to enroll patients in our clinical trials
or on a timely basis; our failure to obtain regulatory approval to market our product candidates;
our ability to protect and maintain our proprietary intellectual property rights from unauthorized
use by others or not infringing on the intellectual property rights of others; our collaborators
failing to fulfill their obligations under our agreements with them in the future; our ability to
attract suitable organizations to collaborate on the development and commercialization of our
product candidates; the condition of the financial equity and debt markets and our ability to raise
sufficient funding in such markets; our ability to manage our current cash reserves as planned;
changes in general economic business or competitive conditions; and other statements contained
elsewhere in this Quarterly Report on
Form 10-Q
(including the “Risk Factors” section herein) and
risk factors described in or referred to in greater detail in the “Risk Factors” section of our
Form 10-K for the year ended December 31, 2009. There may be events in the future that we are
unable to predict accurately, or over which we have no control. You should read this
Form 10-Q
and
the documents that we reference herein and which been filed or incorporated by reference as
exhibits completely and with the understanding that our actual future results
may be materially different from what we expect. Our business, financial condition, results of
operations, and prospects may change. We may not update these forward-looking statements, even
though our situation may change in the future, unless we have obligations under the federal
securities laws to update and disclose material developments related to previously disclosed
information. We qualify all of the information presented in this
Form 10-Q
, and particularly our
forward-looking statements, by these cautionary statements.
10
Inhibitex
®
and
MSCRAMM
®
are registered trademarks of Inhibitex, Inc.
The following discussion should be read in conjunction with the financial statements and the notes
thereto included in Item 1 of this Quarterly Report on
Form 10-Q
.
Overview
We are a biopharmaceutical company focused on developing orally-available antiviral therapies to
treat herpes zoster, also referred to as shingles, and chronic infections caused by HCV. Currently
available antiviral therapies have a number of limitations that may include inadequate potency,
significant adverse side effects, complex dosing schedules, inconvenient methods of administration,
and diminishing efficacy due to the emergence of drug-resistant viruses. We believe that our
antiviral product candidates have the potential to address a number of these limitations, as well
as unmet clinical needs in their respective intended indications. In addition to developing our
antiviral programs, we have also licensed the rights to certain intellectual property from our
MSCRAMM protein platform to Pfizer for its use in the development of active vaccines to prevent
staphylococcal infections.
We have not received regulatory approval to sell or market any of our current or past product
candidates, nor do we have any commercialization capabilities; therefore, it is possible that we
may never successfully derive any commercial revenues from any of our existing or future product
candidates. We were incorporated in the state of Delaware in May 1994 and became a public company
in June 2004.
Recent Developments
FV-100 for Shingles —
In October 2010, we announced that we had completed enrollment in the Phase 2
clinical trial of FV-100 in shingles (herpes zoster) patients. The objectives of the trial are to
further evaluate the safety of FV-100 and its potential therapeutic benefit in reducing the
severity and duration of shingles-associated pain, the incidence of post herpetic neuralgia
(“PHN”), and the time to heal shingles-related lesions. The Phase 2 trial is a well-controlled,
double-blind study of 350 shingles patients, aged 50 years and older with shingles-associated pain,
who were randomized equally to one of three treatment arms: 200 mg or 400 mg FV-100 administered
orally once daily, or 1,000 mg valacyclovir administered orally three times per day. We anticipate
top-line data from the trial will be available later this quarter.
INX-189 for Chronic Hepatitis C —
In November 2010, we announced that we had initiated a Phase 1b,
multiple ascending dose (“MAD”) clinical trial of INX-189, its nucleotide polymerase inhibitor in
development for the treatment of chronic infections caused by HCV. The trial, which is being
conducted under an investigational new drug application (“IND”) in the United States, is a
double-blind, placebo-controlled, dose escalation study designed to evaluate the safety,
tolerability, pharmacokinetics and anti-viral activity of INX-189, administered orally once-daily
for seven days, in treatment naïve patients with HCV genotype 1. Each treatment cohort will include
10 patients, eight of which will receive INX-189 and two of which will receive placebo. The first
cohort in the Phase 1b study will receive 9 mg of INX-189 once daily. In addition to evaluating
INX-189 as monotherapy, the Company intends to evaluate two dose levels of INX-189, administered
once-daily for seven days, in combination with ribavirin, which is one of the drugs currently
approved for the treatment of HCV. The dose levels of INX-189 to be evaluated in combination with
ribavirin will be determined based upon the results of the monotherapy cohorts. The Company
anticipates that top-line safety and anti-viral data from this trial will be available in the first
quarter of 2011.
In September 2010, we announced that we had successfully completed a Phase 1a, first-in-man, single
ascending dose trial of INX-189. In this trial, 42 healthy volunteers received either a single
oral dose of INX-189, ranging from 3 mg to 100 mg, or placebo. We plan to present detailed results
from this trial during a future scientific meeting. Preliminary data from the Phase 1a trial
indicated that INX-189 was generally well tolerated at all dose levels; there were no drug-related
serious adverse events, no dose-related trends in frequency or type of adverse events, and no grade
II or higher laboratory abnormality adverse events or clinically significant changes in ECGs.
Furthermore, we believe that the pharmacokinetic data from this study further supports INX-189’s
potential for once-daily (QD) dosing.
11
Critical Accounting Policies
Management’s Discussion and Analysis of Results of Operations discusses our financial statements,
which (except to the extent described in the Notes thereto) have been prepared in accordance with
U.S. generally accepted accounting principles. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
We base our estimates and judgments on historical experience, current economic and industry
conditions and on various other factors that we believe to be reasonable under the circumstances.
This forms the basis for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions. We believe the following critical accounting policies require
significant judgment and estimates:
|
|
•
|
|
Use of Estimates
|
|
|
|
|
•
|
|
Revenue Recognition
|
|
|
|
|
•
|
|
Accrued Expenses
|
There has been no change in these critical accounting policies used to create the underlying
accounting assumptions and estimates used in 2010.
In April 2010, the FASB amended the guidance for applying the milestone method of revenue
recognition to research or development arrangements. Under this guidance, we may recognize revenue
contingent upon the achievement of a milestone in its entirety in the period in which the milestone
is achieved, only if the milestone meets all the criteria within the guidance to be considered
substantive. This amendment is effective on a prospective basis for research and development
milestones achieved in fiscal years, and interim periods within those years, beginning on or after
June 15, 2010. Early adoption is permitted. This amendment is effective for us beginning January
1, 2011. The adoption of this amendment is not expected to have a material impact on our
consolidated financial position or results of operations.
In October 2009, the FASB amended the guidance for revenue recognition in multiple-element
arrangements. The guidance requires an entity to provide updated guidance on whether multiple
deliverables exist, how the deliverables in an arrangement should be separated, and the
consideration allocated; and then allocate revenue in an arrangement using estimated selling prices
of deliverables if a vendor does not have VSOE or third-party evidence of selling price. The
guidance also eliminates the use of the residual method and requires an entity to allocate revenue
using the relative selling price method. This amendment is effective for us beginning January 1,
2011 and can be applied prospectively or retrospectively. We are currently evaluating the impact of
this accounting amendment on our consolidated financial statements.
Results of Operations
Three Months Ended September 30, 2010 and 2009
Summary.
We reported a net loss of $5.3 million in the third quarter of 2010, as compared to a
net loss of $4.5 million in the third quarter of 2009. Basic and diluted net loss per share was
$0.08 for the third quarter of 2010 as compared to $0.10 in the third quarter of 2009. The $0.8
million increase in net loss in the third quarter of 2010 was the result of higher research and
development expense and a small increase in general and administrative expense. The decrease in
net loss per share for the third quarter of 2010 was the result of an increase in the number of
weighted-average shares outstanding as compared to 2009, offset in part by the increase in net
loss.
We expect to incur losses for the foreseeable future as we intend to continue to support the
clinical and preclinical development of our antiviral programs.
Revenue.
Revenue was $0.3 million for the three months ended September 30, 2010 and September
30, 2009.
12
Research and Development Expense.
Research and development expense increased to $4.7 million during
the three months ended September 30, 2010 from $3.9 million in the same quarter of 2009. The
following table summarizes the components of our research
and development expense for the three months ended September 30, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(In millions)
|
|
|
Direct clinical, preclinical,
manufacturing and milestone
expenses
|
|
$
|
2.8
|
|
|
$
|
2.0
|
|
|
Salaries, benefits and share-based
compensation expense
|
|
|
1.0
|
|
|
|
1.0
|
|
|
Professional fees, supplies and other
expense
|
|
|
0.5
|
|
|
|
0.4
|
|
|
Depreciation and facility related
expenses
|
|
|
0.4
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
Total research and development
expense
|
|
$
|
4.7
|
|
|
$
|
3.9
|
|
|
|
|
|
|
|
|
|
Direct clinical, preclinical, manufacturing and milestone expenses increased by $0.8 million
primarily due to an increase in clinical expenses and milestone payments associated with advancing
INX-189 into a Phase Ia clinical trial, enrollment in the Phase 2 trial of FV-100, and research
expenses related to the preclinical development of other HCV protide compounds. Professional fees,
supplies and other expenses increased due to slightly higher outside professional fees and other
expenses. Depreciation and facility expense decreased due to lower depreciation expense.
General and Administrative Expense.
General and administrative expense increased to $0.9 million
for the three months ended September 30, 2010 from $0.8 million in the same quarter of 2009. The
following table summarizes the components of our general and administrative expense for the three
months ended September 30, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(In millions)
|
|
|
Salaries, benefits and share-based
compensation expense
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
Professional and legal
fees
|
|
|
0.2
|
|
|
|
0.2
|
|
|
Other expenses
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative
expense
|
|
$
|
0.9
|
|
|
$
|
0.8
|
|
|
|
|
|
|
|
|
|
Other expenses increased due to slightly higher shareholder filing and listing expenses.
Nine Months Ended September 30, 2010 and 2009
Summary.
We reported a net loss of $15.6 million for the nine months ended September 30, 2010,
as compared to a net loss of $12.9 million in the same period in 2009. Basic and diluted net
loss per share was $0.25 for the nine months ended September 30, 2010, as compared to basic and
diluted net loss of $0.30 for the same period in 2009. The increase in net loss was primarily
the result of higher research and development expense and lower net interest income, offset in
part by higher revenues from a collaborative license and development agreement. The decrease
in net loss per share for the nine months ended September 30, 2010 was the result of an increase
in the number of weighted-average shares outstanding as compared to the same period in 2009,
offset in part by the increase in net loss.
We expect to incur losses for the foreseeable future as we intend to continue to support the
clinical and preclinical development of our antiviral programs.
Revenue.
Revenue increased to $1.6 million for the nine months ended September 30, 2010 from
$0.9 million in the same period in 2009. This increase of $0.7 million was the result of a
milestone payment earned by the Company in January 2010.
Research and Development Expense.
Research and development expense increased to $14.4 million
during the nine months ended September 30, 2010 from $11.1 million in the same period of 2009. The
following table summarizes the components of our research and development expense for the nine
months ended September 30, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(In millions)
|
|
|
Direct clinical, preclinical,
manufacturing and milestone
expenses
|
|
$
|
8.6
|
|
|
$
|
5.1
|
|
|
Salaries, benefits and share-based
compensation expense
|
|
|
3.0
|
|
|
|
3.0
|
|
|
Professional fees, supplies and other
expenses
|
|
|
1.5
|
|
|
|
1.6
|
|
|
Depreciation and facility related
expenses
|
|
|
1.3
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
Total research and development
expense
|
|
$
|
14.4
|
|
|
$
|
11.1
|
|
|
|
|
|
|
|
|
|
13
Direct clinical, preclinical, manufacturing and milestone expenses increased by $3.5 million
primarily due to an increase in clinical, preclinical, manufacturing and milestone expenses
associated with the advancing INX-189 into a Phase 1a clinical trial, enrollment in the Phase 2
trial of FV-100 and to a lesser extent, research expenses related to the preclinical development of
other HCV protide compounds. Professional fees, supplies and other expenses decreased slightly due
to lower supplies expense. Depreciation and facility related expenses decreased due to lower
depreciation expense.
General and Administrative Expense.
General and administrative expense increased to $2.9 million
for the nine months ended September 30, 2010 from $2.8 million in the same period of 2009. The
following table summarizes the components of our general and administrative expense for the nine
months ended September 30, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(In millions)
|
|
|
Salaries, benefits and share-based
compensation expense
|
|
$
|
1.1
|
|
|
$
|
1.2
|
|
|
Professional and legal
fees
|
|
|
0.9
|
|
|
|
0.8
|
|
|
Other expenses
|
|
|
0.9
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative
expense
|
|
$
|
2.9
|
|
|
$
|
2.8
|
|
|
|
|
|
|
|
|
|
Salaries, benefits and share-based compensation expense decreased due to slight decrease in
headcount. Professional and legal expenses increased primarily due to higher legal expenses.
Other expenses increased due to slightly higher shareholder filing and listing expenses.
Liquidity and Capital Resources
For the nine months ended September 30, 2010, cash, cash equivalents and short-term investments
decreased by $13.7 million, from $37.9 million to $24.2 million. This decrease was primarily the
result of net cash used for operating activities and, to a lesser extent, the repayment of capital
lease obligations and notes payable.
Net cash used for operating activities was $13.7 million for the nine months ended September 30,
2010, which reflected our net loss for the period of $15.6 million, offset by a net increase in
operating liabilities over operating assets of $0.6 million and non-cash charges of $1.3 million.
Our net loss resulted largely from the funding of clinical trials, preclinical studies,
manufacturing expenses, other research and development activities, and general and administrative
expenses, offset in part by the amortization of deferred revenue from our license and collaboration
agreements and net interest income. The net increase in operating liabilities over operating assets
reflects a $0.6 million increase in accrued expenses, a $0.2 million decrease in prepaid and other
expenses, offset by a $0.1 million decrease in deferred revenue and a $.1 million decrease in
accounts payable and other liabilities.
Net cash provided from investing activities during the nine months ended September 30, 2010 was
$11.0 million, which consisted of $11.1 million net proceeds from our short-term investments,
offset by $0.1 million in cash paid for capital expenditures.
Net cash provided from financing activities during the nine months ended September 30, 2010 was
$0.5 million, which consisted of $0.7 million in proceeds from the issuance of common stock related
primarily to the exercise of stock options and warrants, offset in part by $0.2 million in
scheduled payments on capital leases and notes payable.
At September 30, 2010, our cash, cash equivalents and short-term investments totaled $24.2 million
and our investments had a planned average maturity of less than 12 months. Our cash, cash
equivalents and short-term investments are generally held in a variety of interest-bearing
instruments, generally consisting of U.S. agency securities, commercial paper, corporate debt notes
and money market accounts.
14
Our future funding requirements are difficult to determine and will depend on a number of factors,
including:
|
•
|
|
our development timelines and plans for our product candidates, including any changes in our strategy;
|
|
|
|
•
|
|
the variability, timing and costs associated with conducting clinical trials, the rate of enrollment in such
clinical trials and the results of these clinical trials:
|
|
•
|
|
the variability, timing and costs associated with conducting preclinical studies, and the results of these studies;
|
|
|
|
•
|
|
the cost of formulating and manufacturing preclinical and clinical trial materials to evaluate our product
candidates;
|
|
|
|
•
|
|
whether we receive regulatory approval to advance the clinical development of our product candidates in a timely
manner, if at all;
|
|
|
|
•
|
|
the cost to obtain regulatory approvals required to advance the development of our product candidates;
|
|
|
|
•
|
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish in the future;
|
|
|
|
•
|
|
future payments we may receive or make under existing or future license or collaboration agreements, if any;
|
|
|
|
•
|
|
the cost to maintain a corporate infrastructure to support being a publicly-traded company; and
|
|
|
|
•
|
|
the cost of filing, prosecuting, and enforcing patent and other intellectual property claims.
|
Based on our current strategy and operating plan, and considering the potential costs associated
with advancing the clinical development of our product candidates on our planned timelines, we
believe that our existing cash, cash equivalents and short-term investments of $24.2 million as of
September 30, 2010, together with the anticipated proceeds from our existing license and
collaboration agreements, will enable us to operate for a period of at least 18 months from
September 30, 2010. Our estimate assumes that we complete the ongoing Phase 2 clinical trial of
FV-100 in the fourth quarter of 2010 and complete a Phase 1b multiple ascending dose trial of
INX-189 in the first quarter of 2011. This estimate does not include the direct costs associated
with continuing the clinical development of FV-100 or INX-189 beyond these ongoing clinical trials,
or the impact of any other significant transaction or change in strategy or development plans in
the future.
We currently do not have any commitments for future funding, nor do we anticipate that we will
generate significant revenue from the sale of any products in the foreseeable future. Therefore, in
order to meet our anticipated liquidity needs beyond 18 months to continue the development of our
product candidates, or possibly sooner in the event we enter into other transactions or change our
strategy or development plans, we may need to secure additional capital. We would expect to do so
primarily through the sale of additional common stock or other equity securities, as well as
through proceeds from licensing agreements, strategic collaborations, forms of debt financing, or
any other financing vehicle. Funds from these sources may not be available to us on acceptable
terms, if at all, and our failure to raise such funds could have a material adverse impact on our
future business strategy, plans, financial condition and results of operations. If adequate funds
are not available to us on acceptable terms in the future, we may be required to delay, reduce the
scope of, or eliminate one or more of our research and development programs, or delay or curtail
our preclinical studies and clinical trials. If additional capital is not available to us on
acceptable terms, we may need to obtain funds through license agreements, or collaborative or
partner arrangements pursuant to which we will likely relinquish rights to certain product
candidates that we might otherwise choose to develop or commercialize independently, or be forced
to enter into such arrangements earlier than we would prefer, which would likely result in less
favorable transaction terms. Additional equity financings may be dilutive to holders of our common
stock, and debt financing, if available, may involve significant payment obligations and
restrictive covenants that restrict how we operate our business.
15
ITEM 4T. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the reports that we file or submit pursuant to the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms and that such information is
accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, who is currently the same individual, as appropriate to allow timely decisions
regarding required disclosure. Our management, under the supervision of the Chief Executive
Officer/Chief Financial Officer, carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period covered by this
report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive
Officer/Chief Financial Officer concluded that our disclosure controls and procedures were
effective. It should be noted that any system of controls, however well designed and operated, can
provide only
reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the
design of any control system is based in part upon certain assumptions about the likelihood of
future events. Because of these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended
September 30, 2010 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
16
PART II
OTHER INFORMATION
ITEM 1A. RISK FACTORS
You should carefully consider the following discussion of risks, together with the other
information contained in this
Form 10-Q
. The occurrence of any of the following risks could
materially harm our business, our ability to continue to operate our business, our financial
condition, or our ability to raise additional capital in the future, or ever become profitable. In
that event, the market price of our common stock could decline and you could lose part or all of
your investment. The Risk Factors included in the Company’s Annual Report on
Form 10-K
for the year
ended December 31, 2009, as updated by our
Form 10-Q
for quarters ended March 31, 2010 and June 30,
2010, have not materially changed, except as set forth below.
Risks Relating to our Development of our Product Candidates
All of our product candidates are in the early stages of development and their commercial
viability remains subject to future preclinical studies, clinical trials, regulatory approvals and
the risks generally inherent in these activities. If we are unable to successfully advance or
develop our product candidates, our business will be materially harmed.
In the near-term, failure to successfully advance the development of one or more of our product
candidates may have a material adverse effect on us. To date, we have not successfully developed or
commercially marketed, distributed or sold any product candidates. The success of our business
depends primarily upon our ability to successfully advance the development of our product
candidates through preclinical studies and clinical trials, have these product candidates approved
for sale by the FDA or regulatory authorities in other countries, and ultimately have our product
candidates successfully commercialized by us or a strategic collaborator. We have completed
enrollment in our Phase 2 trial for FV-100, a product candidate we are developing to treat shingles
and anticipate having top-line data available from this trial in the fourth quarter of 2010.
Further, we have also initiated a Phase 1b multiple ascending dose trial for INX-189, a nucleotide
polymerase inhibitor we are developing to treat chronic hepatitis C infections and anticipate
having top-line data available from the trial in the first quarter of 2011. We cannot assure you
that the results of ongoing preclinical studies or these clinical trials will support or justify
the continued development of one or both of these product candidates, or that we will receive
approval from the FDA, or a similar regulatory authority in other countries, to advance the
development of our product candidates.
Our product candidates must satisfy rigorous regulatory standards of safety and efficacy before we
can advance or complete their clinical development, or they can be approved for sale. To satisfy
these standards, we must engage in expensive and lengthy testing, preclinical studies and clinical
trials, develop acceptable manufacturing processes, and obtain regulatory approval of our product
candidates. Despite these efforts, our product candidates may not:
|
•
|
|
offer therapeutic or other benefits over existing comparable drugs or other product candidates in development;
|
|
•
|
|
be proven to be safe and effective in current and future preclinical studies or clinical trials;
|
|
•
|
|
have the desired effects (or may be free from undesirable or unexpected effects);
|
|
•
|
|
meet applicable regulatory standards;
|
|
•
|
|
be capable of being formulated and manufactured in commercially suitable quantities and at an acceptable cost; or
|
|
•
|
|
be successfully commercialized by us or by collaborators.
|
Even if we demonstrate favorable results in preclinical studies and early-stage clinical trials, we
cannot assure you that the results of late-stage clinical trials will be favorable and continue to
support the development of our product candidates. A number of companies in the pharmaceutical and
biopharmaceutical industries have experienced significant delays, setbacks and failure in all
stages of development, including late-stage clinical trials, even after achieving promising results
in preclinical testing or early-stage clinical trials. Accordingly, results from completed
preclinical studies and early-stage clinical trials of our product candidates may not be predictive
of the results we may obtain in later-stage trials. Furthermore, even if the data collected from
preclinical studies or clinical trials involving any of our product candidates demonstrate a
satisfactory safety and efficacy profile, such results may not be sufficient to support the
submission of an IND, the initiation or continuation of human clinical trials, or a new drug
application or biologics license application to obtain regulatory approval from the FDA in the U.S.
to market and sell the product.
Our product candidates will require significant additional research and development efforts, the
commitment of substantial financial resources, and regulatory approvals prior to advancing into
further clinical development or being commercialized by us or collaborators. We cannot assure you
that any of our product candidates will successfully progress through the drug development
process or will result in commercially viable products. We do not expect any of our product
candidates to be commercialized by us or collaborators for at least several years.
17
In order to develop our product candidates and support our operations beyond 18 months from
September 30, 2010, we expect that we will need to raise additional capital. Such capital may not
be available to us on acceptable terms, if at all, which could materially harm our business and
business prospects.
We anticipate that our existing cash and cash equivalents and short-term investments on hand from
September 30, 2010, together with proceeds we expect to receive from our existing license and
collaboration agreement will enable us to operate for at least 18 months. We have no other
committed sources of additional capital at this time. This estimate assumes that we complete the
ongoing Phase 2 clinical trial of FV-100 in the fourth quarter of 2010 and complete our Phase 1b
multiple ascending dose trial of INX-189 in the first quarter of 2011. This estimate does not
include the direct costs associated with continuing the clinical development of FV-100 or INX-189
beyond these ongoing clinical trials, or the impact of any other significant transaction or change
in strategy or development plans in the future.
We currently do not have any commitments for future funding, nor do we anticipate that we will
generate significant revenue from the sale of any products in the foreseeable future. Therefore, in
order to meet our anticipated liquidity needs beyond 18 months to continue the development of our
product candidates, or possibly sooner in the event we enter into other transactions or change our
strategy or development plans, we may need to secure additional capital. We would expect to do so
primarily through the sale of additional common stock or other equity securities, as well as
through proceeds from licensing agreements, strategic collaborations, forms of debt financing, or
any other financing vehicle. Funds from these sources may not be available to us on acceptable
terms, if at all, and our failure to raise such funds could have a material adverse impact on our
future business strategy, plans, financial condition and results of operations. If adequate funds
are not available to us on acceptable terms in the future, we may be required to delay, reduce the
scope of, or eliminate one or more of our research and development programs, or delay or curtail
our preclinical studies and clinical trials. If additional capital is not available to us on
acceptable terms, we may need to obtain funds through license agreements, or collaborative or
partner arrangements pursuant to which we will likely relinquish rights to certain product
candidates that we might otherwise choose to develop or commercialize independently, or be forced
to enter into such arrangements earlier than we would prefer, which would likely result in less
favorable transaction terms. Additional equity financings may be dilutive to holders of our common
stock, and debt financing, if available, may involve significant payment obligations and
restrictive covenants that restrict how we operate our business.
The timing and extent of our future financing needs will depend on many factors, some of which are
very difficult to predict and others that may be beyond our control, including:
|
•
|
|
our development timelines and plans for our product candidates, including any changes in our strategy;
|
|
|
|
•
|
|
the variability, timing and costs associated with conducting clinical trials, the rate of enrollment in such
clinical trials and the results of these clinical trials:
|
|
|
|
•
|
|
the variability, timing and costs associated with conducting preclinical studies, and the results of these studies;
|
|
|
|
•
|
|
the cost of formulating and manufacturing preclinical and clinical trial materials to evaluate our product
candidates;
|
|
|
|
•
|
|
whether we receive regulatory approval to advance the clinical development of our product candidates in a timely
manner, if at all;
|
|
|
|
•
|
|
the cost to obtain regulatory approvals required to advance the development of our product candidates;
|
|
|
|
•
|
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish in the future;
|
|
|
|
•
|
|
future payments we may receive or make under existing or future license or collaboration agreements, if any;
|
|
|
|
•
|
|
the cost to maintain a corporate infrastructure to support being a publicly-traded company; and
|
|
|
|
•
|
|
the cost of filing, prosecuting, and enforcing patent and other intellectual property claims.
|
18
ITEM 6. EXHIBITS
The following is a list of exhibits filed as part of this Report:
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Section 302 Certification of the Chief Executive Officer and Chief Financial Officer
Required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer
|
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
Date: November 15, 2010
|
|
INHIBITEX, INC
|
|
|
|
|
|
|
|
/s/ Russell H. Plumb
|
|
|
|
|
|
|
|
Russell H. Plumb
|
|
|
|
President, Chief Executive Officer,
|
|
|
|
Chief Financial Officer and Chief Accounting Officer
|
20
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Section 302 Certification of the Chief Executive Officer and Chief Financial Officer as
Required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer
|
21
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