Nevada
(State or other jurisdiction of incorporation or organization) |
2834
(Primary Standard Industrial Classification Code Number) |
87-0449967
(I.R.S. Employer Identification Number) |
Cheston J. Larson, Esq.
Matthew T. Bush, Esq. Anthony A. Gostanian, Esq. Latham & Watkins LLP 12670 High Bluff Drive San Diego, California 92130 (858) 523-5400 |
Raj Mehra, Ph.D.
Seelos Therapeutics, Inc. 209 Lukes Wood Road New Canaan, CT 06840 (646) 998-6475 |
Jeffrey T. Hartlin, Esq.
Samantha Eldredge, Esq. Paul Hastings LLP 1117 S. California Avenue Palo Alto, CA 94304 (650) 320-1800 |
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
|
|
Emerging growth company
|
☐
|
Title of Each Class of Security Being Registered
|
Amount to be Registered(1)
|
Proposed Maximum Offering Price Per Share
|
Proposed Maximum Aggregate Offering Price(2)
|
Amount of Registration Fee(3)
|
|||||
Common stock, $0.001 par value per share
|
5,070,792
|
|
N/A
|
$
|
12,607,000
|
|
$
|
1,570
|
|
(1)
|
Relates to common stock, $0.001 par value per share, of Apricus Biosciences, Inc., a Nevada corporation (“Apricus”), issuable to holders of common stock, $0.00001 par value per share, and options to purchase common stock, of Seelos Therapeutics, Inc., a Delaware corporation (“Seelos”), in the proposed merger of Arch Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Apricus, with and into Seelos (the “merger”). The amount of Apricus common stock to be registered is based on the estimated number of shares of Apricus common stock that are expected to be issued pursuant to the merger, after taking into account an assumed investment of approximately $15.0 million in Seelos which is expected to occur following the date hereof and prior to or concurrently with the consummation of the merger and the effect of a reverse stock split of Apricus common stock, at a ratio of one post-split share for every
31.4834
shares outstanding immediately prior to the reverse stock split, assuming an exchange ratio of
31.4834
shares of pre-reverse stock split Apricus common stock for each outstanding share of Seelos common stock and for each option exercisable for shares of Seelos common stock.
|
(2)
|
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(f) of the Securities Act of 1933, as amended, based upon the estimated book value of the Seelos securities to be exchanged in the merger, as of immediately prior to the merger (which such calculation takes into effect an assumed investment of approximately $
15.0
million in Seelos which is expected to occur following the date hereof and prior to or concurrently with the consummation of the merger). Seelos is a private company, and no market exists for its securities.
|
(3)
|
This fee has been calculated pursuant to Section 6(b) of the Securities Act of 1933, as amended.
|
1.
|
approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger and the issuance of Apricus common stock to Seelos’ stockholders;
|
2.
|
approve a reverse stock split of Apricus common stock, at a ratio of one post-split share for every
shares outstanding immediately prior to the reverse stock split;
|
3.
|
approve an amendment to Apricus’ amended and restated articles of incorporation changing the Apricus corporate name to “Seelos Therapeutics, Inc.,” each as described in the accompanying proxy statement/prospectus/information statement;
|
4.
|
approve an amendment and restatement of the Apricus 2012 Stock Long Term Incentive Plan (“2012 Plan”) to, among other things, increase the total number of shares of Apricus common stock currently available for issuance under the 2012 Plan by
9.2 million
shares, prior to giving effect to the reverse split to be effected in connection with the merger;
|
5.
|
approve, on a non-binding, advisory basis, the compensation that will be paid or may become payable to Apricus’ named executive officers in connection with the merger;
|
6.
|
consider and vote upon an adjournment of the special meeting of stockholders, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2; and
|
7.
|
transact such other business as may properly come before the Apricus special meeting or any adjournment or postponement thereof.
|
Richard Pascoe
|
Raj Mehra, Ph.D.
|
Chief Executive Officer
|
Chairman, Founder and Chief Executive Officer
|
Apricus Biosciences, Inc.
|
Seelos Therapeutics, Inc.
|
1.
|
To consider and vote upon a proposal to approve the Agreement and Plan of Merger and Reorganization, dated as of July 30, 2018 (the “Merger Agreement”), by and among Apricus, Merger Sub, and Seelos, a copy of which is attached as
Annex A
to this proxy statement/prospectus/information statement, and the transactions contemplated thereby, including the merger and the issuance of shares of Apricus common stock to Seelos’ stockholders pursuant to the terms of the Merger Agreement.
|
2.
|
To approve a reverse stock split of Apricus common stock, at a ratio of one post-split share for every
shares outstanding immediately prior to the reverse stock split.
|
3.
|
To approve an amendment to the amended and restated articles of incorporation of Apricus to change the corporate name of Apricus from “Apricus Biosciences, Inc.” to “Seelos Therapeutics, Inc.” in the form attached as
Annex C
to this proxy statement/prospectus/information statement.
|
4.
|
To approve an amendment and restatement of the Apricus 2012 Stock Long Term Incentive Plan (the “2012 Plan”) to, among other things, increase the total number of shares of Apricus common stock currently available for issuance under the 2012 Plan by
9.2 million
shares, prior to giving effect to the reverse split to be effected in connection with the merger, in the form attached as
Annex D
to this proxy statement/prospectus/information statement.
|
5.
|
To approve, on a non-binding, advisory basis, the compensation that will be paid or may become payable to Apricus’ named executive officers in connection with the merger.
|
6.
|
To consider and vote upon an adjournment of the Apricus special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2.
|
7.
|
To transact such other business as may properly come before the Apricus special meeting or any adjournment or postponement thereof.
|
A:
|
Apricus Biosciences, Inc. (“Apricus”) and Seelos Therapeutics, Inc. (“Seelos”) have entered into an Agreement and Plan of Merger and Reorganization, dated as of July 30, 2018 (the “Merger Agreement”). The Merger Agreement contains the terms and conditions of the proposed business combination of Apricus and Seelos. Under the Merger Agreement, Arch Merger Sub, Inc., a wholly owned subsidiary of Apricus (“Merger Sub”), will merge with and into Seelos, with Seelos surviving as a wholly owned subsidiary of Apricus. This transaction is referred to as “the merger.”
|
A:
|
If, for any reason, the merger does not close, Apricus’ board of directors may elect to, among other things, attempt to complete another strategic transaction like the merger, attempt to sell or otherwise dispose of the various assets of Apricus, resume its research and development activities and continue to operate the business of Apricus or dissolve and liquidate its assets. If Apricus decides to dissolve and liquidate its assets, Apricus would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for
|
A:
|
The merger will result in a clinical-stage biopharmaceutical company focused on the development and advancement of novel therapeutics to address unmet medical needs for the benefit of patients with central nervous system (CNS) disorders. Apricus and Seelos believe that the combined organization will benefit from a late-stage product development portfolio and an experienced management team. For a discussion of Apricus’ and Seelos’ reasons for the merger, please see the section entitled “The Merger—Apricus Reasons for the Merger” and “The Merger—Seelos Reasons for the Merger” in this proxy statement/prospectus/information statement.
|
A:
|
You are receiving this proxy statement/prospectus/information statement because you have been identified as a stockholder of Apricus or of Seelos as of the applicable record date. If you are a stockholder of Apricus, you are entitled to vote at Apricus’ special stockholder meeting (referred to herein as the “Apricus special meeting”), which has been called for the purpose of approving the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of shares of Apricus common stock pursuant to the Merger Agreement. If you are a stockholder of Seelos, you are entitled to sign and return the Seelos written consent to adopt the Merger Agreement and approve the transactions contemplated thereby, including the merger. This document serves as:
|
•
|
a proxy statement of Apricus used to solicit proxies for the Apricus special meeting;
|
•
|
a prospectus of Apricus used to offer shares of Apricus common stock in exchange for shares of Seelos’ capital stock in the merger and issuable upon exercise of Seelos’ options, as applicable; and
|
•
|
an information statement of Seelos used to solicit the written consent of its stockholders for the adoption of the Merger Agreement and the approval of the merger and related transactions.
|
A:
|
To consummate the merger, Apricus’ stockholders must approve the issuance of Apricus common stock pursuant to the Merger Agreement and the Apricus Reverse Stock Split, and Seelos’ stockholders must adopt the Merger Agreement and, thereby, approve the merger and the other transactions contemplated therein.
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A:
|
At the Apricus special meeting, the holders of Apricus common stock will also be asked to consider the following proposals, along with any other business that may properly come before the Apricus special meeting or any adjournment or postponement thereof:
|
•
|
Proposal No. 3 to approve an amendment to Apricus’ amended and restated articles of incorporation changing the Apricus corporate name to “Seelos Therapeutics, Inc.”;
|
•
|
Proposal No. 4 to approve an amendment and restatement of the Apricus 2012 Stock Long Term Incentive Plan (the “2012 Plan”) to, among other things, increase the total number of shares of Apricus common stock currently available for issuance under the 2012 Plan by
9.2 million
shares, prior to giving effect to the Apricus Reverse Stock Split to be effected in connection with the merger, in the form attached as
Annex D
to this proxy statement/prospectus/information statement;
|
•
|
Proposal No. 5 to approve, on a non-binding, advisory basis, the compensation that will be paid or may become payable to Apricus’ named executive officers in connection with the merger; and
|
•
|
Proposal No. 6 to approve an adjournment of the Apricus special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2.
|
A:
|
The affirmative vote of a majority of the votes cast in person or by proxy at the Apricus special meeting, assuming a quorum is present, is required for approval of Proposal Nos. 1, 4, 5 and 6. The affirmative vote of the holders of a majority of the outstanding shares of Apricus common stock entitled to vote at the Apricus special meeting is required for approval of Proposal Nos. 2 and 3.
|
A:
|
As a result of the merger, Seelos’ stockholders and optionholders will become entitled to receive shares, or rights to acquire shares, of Apricus common stock equal to, in the aggregate, approximately 86% of the Fully-Diluted Common Stock of Apricus. These estimates are subject to adjustment prior to closing of the merger, including an upward adjustment to the extent that Apricus’ net cash at the Effective Time is less than $2,700,000 (and as a result, Apricus stockholders could own less, and Seelos stockholders could own more, of the combined organization), or a downward adjustment to the extent that Apricus’ net cash at the Effective Time is more than $3,300,000 (and as a result, Apricus stockholders could own more, and Seelos stockholders could own less, of the combined organization). In addition, the exchange ratio assumes that Seelos completes an additional investment in Seelos of approximately $15.0 million immediately prior to or concurrently with the consummation of the merger.
|
A:
|
In connection with the merger, Apricus’ board of directors will be reduced to a total of five directors. Pursuant to the terms of the Merger Agreement, four of such directors will be designated by Seelos and one of such directors will be designated by Apricus. It is anticipated that, following the closing of the merger, Apricus’ board of directors will be constituted as follows:
|
Name
|
Current Principal Affiliation
|
Raj Mehra, Ph.D.
|
Seelos, Chairman, Founder & Chief Executive Officer
|
Richard Pascoe
|
Apricus, Chief Executive Officer
|
Robin L. Smith, M.D.
|
The Stem for Life Foundation, Chairman of the Board
|
Daniel J. O’Connor, J.D.
|
OncoSec Medical, Inc., Chief Executive Officer
|
Brian Lian, Ph.D.
|
Viking Therapeutics, Inc., Chief Executive Officer and President
|
A:
|
Immediately following the consummation of the merger, the executive management team of Apricus is expected to be composed solely of the members of the Seelos executive management team prior to the merger:
|
Name
|
Titles
|
Raj Mehra, Ph.D.
|
Chairman, Chief Executive Officer, President & Interim Chief Financial Officer
|
A:
|
After careful consideration, Apricus’ board of directors recommends that Apricus’ stockholders vote:
|
•
|
“FOR” Proposal No. 1 to approve the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of shares of Apricus common stock to Seelos’ stockholders in the merger;
|
•
|
“FOR” Proposal No. 2 to approve the Apricus Reverse Stock Split;
|
•
|
“FOR” Proposal No. 3 to approve an amendment to the amended and restated articles of incorporation of Apricus to effect the Apricus Name Change;
|
•
|
“FOR” Proposal No. 4 to approve the amendment and restatement of the 2012 Plan to, among other things, increase the total number of shares of Apricus common stock currently available for issuance under the 2012 Plan by
9.2 million
shares, prior to giving effect to the reverse split to be effected in connection with the merger;
|
•
|
“FOR” Proposal No. 5 to approve, on a non-binding, advisory basis, the compensation that will be paid or may become payable to Apricus’ named executive officers in connection with the merger; and
|
•
|
“FOR” Proposal No. 6 to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2.
|
A:
|
After careful consideration, Seelos’ board of directors recommends that Seelos’ stockholders execute the written consent indicating their vote in favor of the adoption of the Merger Agreement and the approval of the merger and the transactions contemplated by the Merger Agreement.
|
A:
|
You should carefully review the section of this proxy statement/prospectus/information statement entitled “Risk Factors,” which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined organization’s business will be subject, and risks and uncertainties to which each of Apricus and Seelos, as an independent company, is subject.
|
A:
|
It is a condition to Apricus’ obligation to consummate the merger that Apricus receive an opinion from Latham & Watkins LLP, dated as of the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). It is a condition to Seelos’ obligation to consummate the merger that Seelos receive an opinion from Paul Hastings LLP, dated as of the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Subject to the tax opinion representations and assumptions (as defined on page 115), in the opinions of Latham & Watkins LLP and Paul Hastings LLP, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, a U.S. Holder (as defined on page 115) of Seelos common stock will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of shares of Seelos common stock for shares of Apricus common stock in the merger, except
|
A:
|
Apricus intends to report the issuance of the contingent value rights (such rights “CVRs”), to be received by Apricus stockholders pursuant to the Merger Agreement, to Apricus U.S. Holders (as defined on page 135) as a distribution of property with respect to its stock. Please review the information in the section entitled “Agreements Related to the Merger—CVR Agreement—Material U.S. Federal Income Tax Consequences of the Receipt of CVRs” for a more complete description of the material U.S. federal income tax consequences of the receipt of CVRs to Apricus U.S. Holders, including possible alternative treatments.
|
A:
|
The Apricus special meeting will be held at Latham & Watkins LLP, located at 12670 High Bluff Drive, San Diego, California 92130, at a.m., Pacific time, on , 2018. Subject to space availability, all of Apricus stockholders as of the record date, or their duly appointed proxies, may attend the Apricus special meeting. Since seating is limited, admission to the Apricus special meeting will be on a first-come, first-served basis. Registration and seating will begin at a.m., Pacific time.
|
A:
|
Apricus and Seelos anticipate that the merger will occur sometime soon after the Apricus special meeting to be held on , 2018 but we cannot predict the exact timing. For more information, please see the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus/information statement.
|
A:
|
Apricus and Seelos urge you to read this proxy statement/prospectus/information statement carefully, including its annexes, and to consider how the merger affects you.
|
A:
|
If you are a stockholder of Apricus, the failure to return your proxy card or otherwise provide proxy instructions will reduce the aggregate number of votes required to approve Proposal Nos. 1, 4, 5 and 6 and will have the same effect as voting against Proposal Nos. 2 and 3. If your shares are held in “street name” by your broker, Apricus does not believe your broker will have discretion to vote for or against any of the proposals if you do not provide your broker with voting instructions. Thus, for shares held in “street name,” if you do not provide voting instructions to your broker, this will result in a "broker non-vote" and such "broker non-votes" have the same effect as an “AGAINST” vote on Proposal Nos. 2 and 3 and will have no effect on Proposal Nos. 1, 4, 5 and 6. Please see the answer to “Q: If my Apricus shares are held in “street name” by my broker, will my broker vote my shares for me?” below for further discussion regarding broker discretion to vote on the proposals and “broker non-votes.”
|
A:
|
If your shares of Apricus common stock are registered directly in your name with Apricus’ transfer agent, you are considered to be the stockholder of record with respect to those shares, and the proxy materials and proxy card are being sent directly to you by Apricus. If you are a record stockholder of Apricus, you may attend the Apricus special meeting and vote your shares in person. Even if you plan to attend the Apricus special meeting in person, Apricus requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Apricus special meeting if you become unable to attend. If your shares of Apricus common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction card. As the beneficial owner, you are also invited to attend the Apricus special meeting. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Apricus special meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the Apricus special meeting.
|
A:
|
Brokers are not expected to have discretionary authority to vote for any of the proposals, so your broker will not be able to vote your shares of Apricus common stock without instructions from you. Apricus believes that each of Proposal Nos. 1, 2, 3, 4, 5 and 6 are deemed to be “non-discretionary” matters under certain rules applicable to brokers, which does not allow brokers to vote on these matters if they are not provided with voting instructions by the beneficial owners of the shares. Therefore, if you fail to provide instructions to your broker as to how to vote your shares on each of Proposal Nos. 1, 2, 3, 4, 5 and 6, your broker will not have the discretion to vote your shares on those proposals. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.
|
A:
|
Apricus’ stockholders of record, other than those of Apricus’ stockholders who are parties to support agreements, may change their vote at any time before their proxy is voted at the Apricus special meeting by sending a written notice to the Secretary of Apricus stating that it would like to revoke its proxy, submitting new proxy instructions either on a new proxy card or via the Internet, or attending the Apricus special meeting and voting in person. Attendance alone will not revoke a proxy. If a stockholder of Apricus of record or a stockholder who owns shares of Apricus common stock in “street name” has instructed a broker to vote its shares of Apricus common stock, the stockholder must follow directions received from its broker to change those instructions
|
A:
|
Apricus and Seelos will share equally the cost of printing and filing of this proxy statement/prospectus/information statement and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Apricus common stock for the forwarding of solicitation materials to the beneficial owners of Apricus common stock. Apricus will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.
|
A:
|
If you are a stockholder of Apricus and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the merger, including the procedures for voting your shares, you should contact:
|
•
|
Company with Two Late-Stage Product Candidates. Seelos plans to commence a Phase 3 clinical trial of SLS-002 in patients with suicidality in 2019 and a Phase 3 clinical trial of SLS-006 as an adjunctive therapy with reduced doses of L-DOPA in patients with late stage Parkinson’s disease in 2019
.
|
•
|
Experienced Management. It is expected that the combined organization will be led by the experienced senior management from Seelos and a board of directors with representation from each of Apricus and Seelos.
|
•
|
the strategic alternatives of Apricus to the merger, including the discussions that Apricus previously conducted with other potential merger partners;
|
•
|
the loss of the operational capabilities of Apricus, and the risks associated with continuing to operate Apricus on a stand-alone basis, including the need to conduct additional clinical trials to address the complete response letter from the FDA for Vitaros and raise substantial funds to continue its operations;
|
•
|
the risks associated with, and the limited value and high costs of, liquidating Apricus and thereafter distributing the remaining proceeds, if any, to Apricus’ stockholders; and
|
•
|
Apricus’ potential inability to maintain its Nasdaq listing without completing the merger.
|
•
|
the potential increased access to sources of capital and a broader range of investors to support the clinical development of its product candidates than it may not otherwise be able to obtain if it continued to operate as a privately held company;
|
•
|
the potential to provide its current stockholders with greater liquidity by owning stock in a public company;
|
•
|
Seelos’ board of directors’ belief that no alternatives to the merger were reasonably likely to create greater value for Seelos’ stockholders after reviewing the various strategic options to enhance stockholder value that were considered by Seelos’ board of directors; and
|
•
|
the expectation that the merger will be treated as a reorganization for U.S. federal income tax purposes.
|
•
|
solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission or announcement of, any “acquisition proposal” (as defined in the section titled “The Merger Agreement—No Solicitation” below), or “acquisition inquiry” (as defined in the section titled “The Merger Agreement—No Solicitation” below);
|
•
|
furnish any non-public information with respect to it to any person in connection with or in response to an acquisition proposal or acquisition inquiry;
|
•
|
engage in discussions or negotiations with any person with respect to any acquisition proposal or acquisition inquiry;
|
•
|
approve, endorse or recommend an acquisition proposal;
|
•
|
execute or enter into any letter of intent or similar document or any contract contemplating or otherwise relating to an acquisition transaction (as defined in the section titled “The Merger Agreement—No Solicitation” below); or
|
•
|
publicly propose to do any of the above.
|
Name
|
Title
|
Raj Mehra, Ph.D.
|
Chairman, Chief Executive Officer, President & Interim Chief Financial Officer
|
•
|
the exchange ratio is not adjustable based on the market price of Apricus common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed;
|
•
|
the exchange ratio is adjustable based on the net cash of both Apricus and Seelos at the Effective Time, so the relative ownership of the combined organization as between current stockholders of Apricus and current stockholders of Seelos may change based on interim cash burn and any financings conducted by Apricus or Seelos prior to the closing of the merger;
|
•
|
failure to complete the merger may result in Apricus and Seelos paying a termination fee or expenses to the other and could harm the price of Apricus common stock and the future business and operations of each company;
|
•
|
the merger may be completed even though material adverse changes may result solely from the announcement of the merger, changes in the industry in which Apricus and Seelos operate that apply to all companies generally and other causes;
|
•
|
the combined organization will need to raise additional capital by issuing securities or debt or through licensing arrangements, which may cause significant dilution to the combined organization's stockholders, restrict the combined organization's operations or require the combined organization to relinquish proprietary rights;
|
•
|
some of Apricus’ and Seelos’ respective officers and directors have interests that are different from or in addition to those considered by other stockholders of Apricus and Seelos and which may influence them to support or approve the merger;
|
•
|
the market price of the combined organization’s common stock may decline as a result of the merger;
|
•
|
Apricus’ and Seelos’ stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger;
|
•
|
during the pendency of the merger, Apricus and Seelos may not be able to enter into a business combination with another party under certain circumstances because of restrictions in the Merger Agreement, which could adversely affect their respective businesses;
|
•
|
certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement;
|
•
|
because the lack of a public market for shares of Seelos common stock makes it difficult to evaluate the fairness of the merger, Seelos’ stockholders may receive consideration in the merger that is less than the fair market value of the shares of Seelos common stock and/or Apricus may pay more than the fair market value of the shares of Seelos common stock; and
|
•
|
if the conditions to the merger are not met, or waived (to the extent capable of being waived), the merger will not occur.
|
|
Year Ended December 31,
|
||||||
(in thousands, except per share data)
|
2017
|
|
2016
|
||||
Operating expense
|
|
|
|
||||
Research and development
|
$
|
(3,463
|
)
|
|
$
|
(5,880
|
)
|
General and administrative
|
(7,210)
|
|
|
(7,778)
|
|
||
Total other income (expense)
|
(1,076)
|
|
|
5,999
|
|
||
Loss from continuing operations
|
(11,749)
|
|
|
(7,659)
|
|
||
Income from discontinued operations
|
12,070
|
|
|
226
|
|
||
Net income (loss)
|
$
|
321
|
|
|
$
|
(7,433
|
)
|
|
|
|
|
||||
Basic and diluted earnings (loss) per share
|
|
|
|
||||
Continuing operations
|
$
|
(0.99
|
)
|
|
$
|
(1.18
|
)
|
Discontinued operations
|
$
|
1.01
|
|
|
$
|
0.03
|
|
Total earnings (loss) per share
|
$
|
0.02
|
|
|
$
|
(1.15
|
)
|
|
|
|
|
||||
Weighted average common shares outstanding for basic and diluted earnings (loss) per share
|
11,892
|
|
|
6,517
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
(in thousands, except per share data)
|
(
unaudited
)
|
||||||
Operating expense
|
|
|
|
||||
Research and development
|
$
|
(379
|
)
|
|
$
|
(1,266
|
)
|
General and administrative
|
(4,210)
|
|
|
(3,043)
|
|
||
Total other income (expense)
|
65
|
|
|
(832)
|
|
||
Loss from continuing operations
|
(4,524)
|
|
|
(5,141)
|
|
||
Income from discontinued operations
|
(24)
|
|
|
11,740
|
|
||
Net income (loss)
|
$
|
(4,548
|
)
|
|
$
|
6,599
|
|
|
|
|
|
||||
Basic and diluted earnings (loss) per share
|
|
|
|
||||
Continuing operations
|
$
|
(0.23
|
)
|
|
$
|
(0.54
|
)
|
Discontinued operations
|
$
|
—
|
|
|
$
|
1.23
|
|
Total earnings (loss) per share
|
$
|
(0.23
|
)
|
|
$
|
0.69
|
|
|
|
|
|
||||
Weighted average common shares outstanding for basic and diluted earnings (loss) per share
|
19,648
|
|
|
9,547
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
June 30,
2018 |
||||||
(in thousands)
|
|
|
|
|
(
unaudited
)
|
||||||
Assets
|
|
|
|
|
|
||||||
Cash
|
$
|
6,331
|
|
|
$
|
2,087
|
|
|
$
|
6,836
|
|
Other current assets
|
261
|
|
|
177
|
|
|
294
|
|
|||
Property and equipment, net
|
79
|
|
|
164
|
|
|
56
|
|
|||
Other long term assets
|
35
|
|
|
60
|
|
|
36
|
|
|||
Assets of discontinued operations
|
—
|
|
|
2,212
|
|
|
—
|
|
|||
Total assets
|
$
|
6,706
|
|
|
$
|
4,700
|
|
|
$
|
7,222
|
|
|
|
|
|
|
|
||||||
Liabilities and stockholders’ equity (deficit)
|
|
|
|
|
|
||||||
Current liabilities
|
$
|
1,583
|
|
|
$
|
2,710
|
|
|
$
|
1,882
|
|
Current liabilities of discontinued operations
|
—
|
|
|
1,934
|
|
|
21
|
|
|||
Notes payable, net
|
—
|
|
|
6,650
|
|
|
—
|
|
|||
Warrant liabilities
|
694
|
|
|
846
|
|
|
—
|
|
|||
Other long term liabilities
|
58
|
|
|
76
|
|
|
35
|
|
|||
Stockholders’ equity (deficit)
|
4,371
|
|
|
(7,516)
|
|
|
5,284
|
|
|||
Total liabilities and stockholders’ equity (deficit)
|
$
|
6,706
|
|
|
$
|
4,700
|
|
|
$
|
7,222
|
|
(in thousands, except per share data)
|
For the Year Ended December 31, 2017
|
|
For the Period from June 1, 2016 (Inception) through December 31, 2016
|
||||
Operating expense
|
|
|
|
||||
Research and development
|
$
|
(400
|
)
|
|
$
|
(25
|
)
|
General and administrative
|
(654
|
)
|
|
(230
|
)
|
||
Total other expense
|
(23
|
)
|
|
—
|
|
||
Net loss
|
$
|
(1,077
|
)
|
|
$
|
(255
|
)
|
|
|
|
|
||||
Net loss per common share: basic and diluted
|
$
|
(0.27
|
)
|
|
$
|
(0.08
|
)
|
Weighted average common shares outstanding: basic and diluted
|
4,000
|
|
|
3,308
|
|
|
Six Months Ended June 30,
|
|
|||||
(in thousands, except per share data)
|
2018
|
|
2017
|
||||
Operating expense
|
(
unaudited
)
|
||||||
Research and development
|
$
|
(250
|
)
|
|
$
|
—
|
|
General and administrative
|
(807)
|
|
|
(48)
|
|
||
Total other expense
|
(101
|
)
|
|
(3)
|
|
||
Net loss
|
$
|
(1,158
|
)
|
|
$
|
(51
|
)
|
|
|
|
|
||||
Net loss per common share: basic and diluted
|
$
|
(0.29
|
)
|
|
$
|
(0.01
|
)
|
Weighted average common shares outstanding: basic and diluted
|
4,000
|
|
|
4,000
|
|
|
June 30,
2018 |
|
December 31, 2017
|
|
December 31, 2016
|
||||||
(in thousands)
|
(
unaudited
)
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Cash
|
$
|
183
|
|
|
$
|
258
|
|
|
$
|
—
|
|
Other current assets
|
2
|
|
|
2
|
|
|
—
|
|
|||
Total assets
|
$
|
185
|
|
|
$
|
260
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Liabilities and stockholders’ deficit
|
|
|
|
|
|
||||||
Current liabilities
|
$
|
1,895
|
|
|
$
|
609
|
|
|
$
|
254
|
|
Convertible notes payable, at fair value
|
1,537
|
|
|
917
|
|
|
—
|
|
|||
Stockholders’ deficit
|
(2,392
|
)
|
|
(1,265
|
)
|
|
(254
|
)
|
|||
Total liabilities and stockholders’ deficit
|
$
|
1,040
|
|
|
$
|
261
|
|
|
$
|
—
|
|
Selected Unaudited Pro Forma Condensed Combined Statements of Operation
|
Year Ended December 31, 2017
|
|
Six Months Ended June 30, 2018
|
||||
(in thousands, except per share data)
|
|
|
|
||||
Research and development
|
$
|
9,013
|
|
|
$
|
629
|
|
General and administrative
|
7,864
|
|
|
5,017
|
|
||
Loss on disposal of assets
|
2
|
|
|
—
|
|
||
Total operating expenses
|
16,879
|
|
|
5,646
|
|
||
Loss before other income (expense)
|
(16,879
|
)
|
|
(5,646
|
)
|
||
|
|
|
|
||||
Interest expense
|
(104
|
)
|
|
(46
|
)
|
||
Change in fair value of convertible notes payable
|
(2
|
)
|
|
(55
|
)
|
||
Change in fair value of warrant liability
|
(646
|
)
|
|
222
|
|
||
Amendment of equity classified warrants
|
—
|
|
|
(158
|
)
|
||
Loss on extinguishment of debt
|
(422
|
)
|
|
—
|
|
||
Other (income) expense
|
77
|
|
|
1
|
|
||
Total other expenses
|
(1,097
|
)
|
|
(36
|
)
|
||
Loss from continuing operations
|
$
|
(17,976
|
)
|
|
$
|
(5,682
|
)
|
|
|
|
|
||||
Loss from continuing operations per share
|
|
|
|
||||
Basic and diluted
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
Weighted average number of shares
|
222,788
|
|
|
230,544
|
|
Unaudited Pro Forma Condensed Combined Balance Sheet Data
|
|
As of June 30, 2018
|
||
Assets
|
|
|
||
Current assets
|
|
|
||
Cash and cash equivalents
|
|
$
|
1,869
|
|
Due from related party
|
|
2
|
|
|
Prepaid expense and other current assets
|
|
294
|
|
|
Total current assets
|
|
2,165
|
|
|
Property and equipment
|
|
56
|
|
|
Other long-term assets
|
|
36
|
|
|
Goodwill
|
|
6,163
|
|
|
Total assets
|
|
$
|
8,420
|
|
Liabilities and Stockholders' Equity
|
|
|
||
Current liabilities
|
|
|
||
Accounts payable
|
|
$
|
3,216
|
|
Other payables and accrued expenses
|
|
977
|
|
|
Total current liabilities
|
|
4,193
|
|
|
Non-current liabilities
|
|
|
||
Other long-term liabilities
|
|
35
|
|
|
Total liabilities
|
|
4,228
|
|
|
Commitments and contingencies
|
|
|
||
Stockholders’ equity
|
|
|
||
Common Stock, $.001 par value
|
|
245
|
|
|
Additional paid-in-capital
|
|
12,837
|
|
|
Accumulated deficit
|
|
(8,890)
|
|
|
Total stockholders’ equity
|
|
4,192
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
8,420
|
|
|
|
Year Ended December 31, 2017
|
|
Six Months Ended June 30, 2018
|
||||
Apricus Historical Per Common Share Data
|
|
|
|
|
||||
Loss from continuing operations per share: basic and diluted
|
|
$
|
(0.99
|
)
|
|
$
|
(0.23
|
)
|
Book value per share
|
|
$
|
0.29
|
|
|
$
|
0.23
|
|
Seelos Historical Per Common Share Data
|
|
|
|
|
||||
Net loss per common share: basic and diluted
|
|
$
|
(0.27
|
)
|
|
$
|
(0.29
|
)
|
Book value per share
|
|
$
|
(0.32
|
)
|
|
$
|
(0.60
|
)
|
Combined Organization Per Common Share Data
|
|
|
|
|
||||
Loss from continuing operations per share: basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
Book value per share
|
|
N/A
|
|
|
$
|
0.02
|
|
•
|
any effect resulting from the announcement or pendency of the merger or any related transactions;
|
•
|
the taking of any action, or the failure to take any action, by either Apricus or Seelos required to comply with the terms of the Merger Agreement;
|
•
|
any natural disaster or any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world, or any governmental or other response or reaction to any of the foregoing;
|
•
|
general economic or political conditions or conditions generally affecting the industries in which Seelos or Apricus, as applicable, operates;
|
•
|
any rejection by a governmental body of a registration or filing by Apricus or Seelos relating to certain intellectual property rights of Apricus or Seelos;
|
•
|
any change in accounting requirements or principles or any change in applicable laws, rules, or regulations or the interpretation thereof;
|
•
|
with respect to Apricus, any change in the stock price or trading volume of Apricus excluding any underlying effect that may have caused such change;
|
•
|
with respect to Apricus, the termination, sublease, or assignment of Apricus’ facility lease, or failure to do the foregoing;
|
•
|
with respect to Apricus, continued losses from operations or decreases in cash balances of Apricus not materially inconsistent with kind and degree of losses from operations and decreases in cash balances which have occurred between December 31, 2016 and July 30, 2018;
|
•
|
with respect to Apricus, the winding down of Apricus’ operations not materially inconsistent with the kind and degree of winding down activities which have occurred between December 31, 2016 and July 30, 2018; and
|
•
|
with respect to Seelos, any change in the cash position of Seelos resulting from operations in the ordinary course of business.
|
•
|
investors react negatively to the prospects of the combined organization’s product candidates, business and financial condition following the merger;
|
•
|
the effect of the merger on the combined organization’s business and prospects is not consistent with the expectations of financial or industry analysts; or
|
•
|
the combined organization does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts. Apricus and Seelos stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.
|
•
|
difficulties in achieving identified financial revenue synergies, growth opportunities, operating synergies and cost savings;
|
•
|
difficulties in assimilating the personnel, operations and products of an acquired company, and the potential loss of key employees;
|
•
|
difficulties in consolidating information technology platforms, business applications and corporate infrastructure;
|
•
|
difficulties in integrating Apricus’ corporate culture with local customs and cultures;
|
•
|
possible overlap between Apricus products or customers and those of an acquired entity that may create conflicts in relationships or other commitments detrimental to the integrated businesses;
|
•
|
Apricus’ inability to achieve expected revenues and gross margins for any products Apricus may acquire;
|
•
|
the diversion of management’s attention from other business concerns;
|
•
|
risks and challenges of entering or operating in markets in which Apricus has limited or no prior experience, including the unanticipated effects of export controls, exchange rate fluctuations, foreign legal and regulatory requirements, and foreign political and economic conditions; and
|
•
|
difficulties in reorganizing, winding-down or liquidating operations if not successful.
|
•
|
collaborators may not have sufficient resources or may decide not to devote the necessary resources due to internal constraints such as budget limitations, lack of human resources, or a change in strategic focus;
|
•
|
collaborators may believe Apricus’ intellectual property is not valid or is unenforceable or the product candidate infringes on the intellectual property rights of others;
|
•
|
collaborators may dispute their responsibility to conduct development and commercialization activities pursuant to the applicable collaboration, including the payment of related costs or the division of any revenues;
|
•
|
collaborators may decide to pursue a competitive product developed outside of the collaboration arrangement;
|
•
|
collaborators may not be able to obtain, or believe they cannot obtain, the necessary regulatory approvals;
|
•
|
collaborators may delay the development or commercialization of Apricus’ product candidates in favor of developing or commercializing their own or another party’s product candidate; or
|
•
|
collaborators may decide to terminate or not to renew the collaboration for these or other reasons.
|
•
|
an annual, nondeductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents;
|
•
|
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
|
•
|
a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
|
•
|
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts, which, through subsequent legislative amendments, was increased to 70%, off negotiated prices of applicable brand drugs to eligible beneficiaries under their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;
|
•
|
extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;
|
•
|
expansion of eligibility criteria for Medicaid programs;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
|
•
|
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
|
•
|
the availability of financial resources for Apricus’ partners to commence and complete the planned clinical trials;
|
•
|
reaching agreement on acceptable terms and pricing with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;
|
•
|
obtaining independent institutional review board (“IRB”) approval at each clinical trial site;
|
•
|
obtaining regulatory approval to commence clinical trials in each country;
|
•
|
recruiting a sufficient number of eligible patients to participate in a clinical trial;
|
•
|
having patients complete a clinical trial or return for post-treatment follow-up;
|
•
|
clinical trial sites deviating from trial protocol or dropping out of a trial;
|
•
|
adding new clinical trial sites; or
|
•
|
manufacturing sufficient quantities of Apricus’ product candidate(s) for use in clinical trials.
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of Apricus’ clinical trials;
|
•
|
Apricus may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that Apricus’ product candidates are safe and effective for any of the proposed indications;
|
•
|
the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
|
•
|
Apricus may be unable to demonstrate that its product candidates’ clinical and other benefits outweigh their safety risks;
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with Apricus’ interpretation of data from preclinical studies or clinical trials;
|
•
|
the data collected from clinical trials of Apricus’ product candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of an NDA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;
|
•
|
the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which Apricus contracts for clinical and commercial supplies;
|
•
|
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering Apricus’ clinical data insufficient for approval; and
|
•
|
even after following regulatory guidance or advice, the FDA or comparable foreign regulatory authorities may still reject Apricus’ ultimate regulatory submissions since their guidance is generally considered non-binding and the regulatory authorities have the authority to revise or adopt new and different guidance at any time.
|
•
|
restrictions on the marketing or manufacturing of Apricus’ product candidates, withdrawal of the product from the market, or voluntary or mandatory product recalls;
|
•
|
fines, warning letters or holds on clinical trials;
|
•
|
refusal by the FDA to approve pending applications or supplements to approved applications filed by Apricus or suspension or revocation of license approvals;
|
•
|
product seizure or detention, or refusal to permit the import or export of Apricus’ product candidates; and
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
the federal Anti-Kickback Statute which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act of 1986, as amended (the “False Claims Act”);
|
•
|
the federal False Claims Act, which imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
|
•
|
the federal HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
|
•
|
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
|
•
|
the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or
|
•
|
analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and state and foreign laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
|
•
|
regulatory authorities may withdraw approvals of such product;
|
•
|
regulatory authorities may require additional warnings on the label;
|
•
|
Apricus may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
|
•
|
Apricus could be sued and held liable for harm caused to patients; and
|
•
|
Apricus’ reputation may suffer.
|
•
|
clinical trials may produce negative or inconclusive results;
|
•
|
preclinical studies conducted with product candidates during clinical development to, among other things, evaluate their toxicology, carcinogenicity and pharmacokinetics and optimize their formulation may produce unfavorable results;
|
•
|
patient recruitment and enrollment in clinical trials may be slower than Seelos anticipates;
|
•
|
costs of development may be greater than Seelos anticipates;
|
•
|
Seelos’ product candidates may cause undesirable side effects that delay or preclude regulatory approval or limit their commercial use or market acceptance, if approved;
|
•
|
collaborators who may be responsible for the development of Seelos’ product candidates may not devote sufficient resources to these clinical trials or other preclinical studies of these candidates or conduct them in a timely manner; or
|
•
|
Seelos may face delays in obtaining regulatory approvals to commence one or more clinical trials.
|
•
|
the scope, rate of progress, results and cost of its clinical trials, preclinical studies and other related activities;
|
•
|
its ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
|
•
|
the timing of, and the costs involved in, obtaining regulatory approvals for any of its current or future product candidates;
|
•
|
the number and characteristics of the product candidates it seeks to develop or commercialize;
|
•
|
the cost of manufacturing clinical supplies, and establishing commercial supplies, of its product candidates;
|
•
|
the cost of commercialization activities if any of its current or future product candidates are approved for sale, including marketing, sales and distribution costs;
|
•
|
the expenses needed to attract and retain skilled personnel;
|
•
|
the costs associated with being a public company;
|
•
|
the amount of revenue, if any, received from commercial sales of its product candidates, should any of its product candidates receive marketing approval; and
|
•
|
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation.
|
•
|
Seelos may be unable to obtain additional financing on acceptable terms, if at all;
|
•
|
Seelos’ collaborators may terminate any development agreements covering these product candidates;
|
•
|
if any development agreements are terminated, Seelos may determine not to further develop the affected product candidates due to resource constraints and may not be able to establish additional collaborations for their further development on acceptable terms, if at all;
|
•
|
if Seelos were to later continue the development of these product candidates and receive regulatory approval, earlier findings may significantly limit their marketability and thus significantly lower Seelos’ potential future revenues from their commercialization;
|
•
|
Seelos may be subject to product liability or stockholder litigation; and
|
•
|
Seelos may be unable to attract and retain key employees.
|
•
|
regulatory authorities may withdraw their approval of the product, or Seelos or Seelos’ partners may decide to cease marketing and sale of the product voluntarily;
|
•
|
Seelos may be required to change the way the product is administered, conduct additional clinical trials or preclinical studies regarding the product, change the labeling of the product, or change the product’s manufacturing facilities; and
|
•
|
Seelos’ reputation may suffer.
|
•
|
obtaining regulatory approval to commence one or more clinical trials;
|
•
|
reaching agreement on acceptable terms with prospective third-party contract research organizations
(“CROs”)
and clinical trial sites;
|
•
|
manufacturing sufficient quantities of a product candidate or other materials necessary to conduct clinical trials;
|
•
|
obtaining institutional review board approval to conduct one or more clinical trials at a prospective site;
|
•
|
recruiting and enrolling patients to participate in one or more clinical trials; and
|
•
|
the failure of Seelos’ collaborators to adequately resource Seelos’ product candidates due to their focus on other programs or as a result of general market conditions.
|
•
|
failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols;
|
•
|
inspection of the clinical trial operations or clinical trial site by the FDA, the EMA or comparable foreign authorities resulting in the imposition of a clinical hold;
|
•
|
unforeseen safety issues; or
|
•
|
lack of adequate funding to continue the clinical trial.
|
•
|
a product candidate may not be deemed safe or effective;
|
•
|
agency officials of the FDA, the EMA or comparable foreign authorities may not find the data from non-clinical or preclinical studies and clinical trials generated during development to be sufficient;
|
•
|
the FDA, the EMA or comparable foreign authorities may not approve Seelos’ third-party manufacturers’ processes or facilities; or
|
•
|
the FDA, the EMA or a comparable foreign authority may change its approval policies or adopt new regulations.
|
•
|
issue warning letters or other notices of possible violations;
|
•
|
impose civil or criminal penalties or fines or seek disgorgement of revenue or profits;
|
•
|
suspend any ongoing clinical trials;
|
•
|
refuse to approve pending applications or supplements to approved applications filed by Seelos or Seelos’ collaborators;
|
•
|
withdraw any regulatory approvals;
|
•
|
impose restrictions on operations, including costly new manufacturing requirements, or shut down Seelos’ manufacturing operations; or
|
•
|
seize or detain products or require a product recall.
|
•
|
the effectiveness of Seelos’ approved product candidates as compared to currently available products;
|
•
|
patient willingness to adopt Seelos’ approved product candidates in place of current therapies;
|
•
|
Seelos’ ability to provide acceptable evidence of safety and efficacy;
|
•
|
relative convenience and ease of administration;
|
•
|
the prevalence and severity of any adverse side effects;
|
•
|
restrictions on use in combination with other products;
|
•
|
availability of alternative treatments;
|
•
|
pricing and cost-effectiveness assuming either competitive or potential premium pricing requirements, based on the profile of Seelos’ product candidates and target markets;
|
•
|
effectiveness of Seelos’ or its partners’ sales and marketing strategy;
|
•
|
Seelos’ ability to obtain sufficient third-party coverage or reimbursement; and
|
•
|
potential product liability claims.
|
•
|
exposure to unknown liabilities;
|
•
|
disruption of Seelos’ business and diversion of Seelos’ management’s time and attention in order to develop acquired products, product candidates or technologies;
|
•
|
incurrence of substantial debt or dilutive issuances of equity securities to pay for any of these transactions;
|
•
|
higher-than-expected transaction and integration costs;
|
•
|
write-downs of assets or goodwill or impairment charges;
|
•
|
increased amortization expenses;
|
•
|
difficulty and cost in combining the operations and personnel of any acquired businesses or product lines with Seelos’ operations and personnel;
|
•
|
impairment of relationships with key suppliers or customers of any acquired businesses or product lines due to changes in management and ownership; and
|
•
|
inability to retain key employees of any acquired businesses.
|
•
|
the scope of rights granted under the license agreement and other interpretation-related issues;
|
•
|
the extent to which Seelos’ technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
|
•
|
the sublicensing of patent and other rights;
|
•
|
Seelos’ diligence obligations under the license agreement and what activities satisfy those diligence obligations;
|
•
|
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Seelos’ licensors and Seelos and Seelos’ collaborators; and
|
•
|
the priority of invention of patented technology.
|
•
|
the patents may not be broad or strong enough to prevent competition from other products that are identical or similar to Seelos’ product candidates;
|
•
|
there can be no assurance that the term of a patent can be extended under the provisions of patent term extensions afforded by U.S. law or similar provisions in foreign countries, where available;
|
•
|
the issued patents and patents that Seelos may obtain or license in the future may not prevent generic entry into the market for Seelos’ product candidates;
|
•
|
Seelos, or third parties from whom Seelos in-license or may license patents, may be required to disclaim part of the term of one or more patents;
|
•
|
there may be prior art of which Seelos is not aware that may affect the validity or enforceability of a patent claim;
|
•
|
there may be prior art of which Seelos is aware, which Seelos does not believe affects the validity or enforceability of a patent claim, but which, nonetheless, ultimately may be found to affect the validity or enforceability of a patent claim;
|
•
|
there may be other patents issued to others that will affect Seelos’ freedom to operate;
|
•
|
if the patents are challenged, a court could determine that they are invalid or unenforceable;
|
•
|
there might be a significant change in the law that governs patentability, validity and infringement of Seelos’ licensed patents or any future patents Seelos may own that adversely affects the scope of Seelos’ patent rights;
|
•
|
a court could determine that a competitor’s technology or product does not infringe Seelos’ licensed patents or any future patents Seelos may own; and
|
•
|
the patents could irretrievably lapse due to failure to pay fees or otherwise comply with regulations or could be subject to compulsory licensing.
|
•
|
results from, and any delays in, planned clinical trials for the combined organization's product candidates, or any other future product candidates, and the results of trials of competitors or those of other companies in the combined organization's market sector;
|
•
|
any delay in filing an NDA for any of the combined organization’s product candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that NDA;
|
•
|
significant lawsuits, including patent or stockholder litigation;
|
•
|
inability to obtain additional funding;
|
•
|
failure to successfully develop and commercialize the combined organization’s product candidates;
|
•
|
changes in laws or regulations applicable to the combined organization’s product candidates;
|
•
|
inability to obtain adequate product supply for the combined organization’s product candidates, or the inability to do so at acceptable prices;
|
•
|
unanticipated serious safety concerns related to any of the combined organization’s product candidates;
|
•
|
adverse regulatory decisions;
|
•
|
introduction of new products or technologies by the combined organization’s competitors;
|
•
|
failure to meet or exceed drug development or financial projections the combined organization provides to the public;
|
•
|
failure to meet or exceed the estimates and projections of the investment community;
|
•
|
the perception of the biopharmaceutical industry by the public, legislatures, regulators and the investment community;
|
•
|
announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by the combined organization or the combined organization’s competitors;
|
•
|
disputes or other developments relating to proprietary rights, including patents, litigation matters and the combined organization’s ability to obtain patent protection for the combined organization’s licensed and owned technologies;
|
•
|
additions or departures of key scientific or management personnel;
|
•
|
changes in the market valuations of similar companies;
|
•
|
general economic and market conditions and overall fluctuations in the U.S. equity market;
|
•
|
sales of the combined organization’s common stock by the combined organization or its stockholders in the future; and
|
•
|
trading volume of the combined organization’s common stock.
|
1.
|
To consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of Apricus common stock to Seelos’ stockholders in accordance with the Merger Agreement.
|
2.
|
To approve the Apricus Reverse Stock Split.
|
3.
|
To approve the amendment to the amended and restated articles of incorporation of Apricus to effect the Apricus Name Change in the form attached as Annex C to this proxy statement/prospectus/information statement.
|
4.
|
To approve the amendment and restatement of the 2012 Plan, to, among other things, increase the total number of shares of Apricus common stock currently available for issuance under the 2012 Plan by
9.2 million
shares, prior to giving effect to the reverse split to be effected in connection with the merger, in the form attached as Annex D to this proxy statement/prospectus/information statement.
|
5.
|
To approve, on a non-binding, advisory basis, the compensation that will be paid or may become payable to Apricus’ named executive officers in connection with the merger.
|
6.
|
To consider and vote upon an adjournment of the Apricus special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2.
|
7.
|
To transact such other business as may properly come before the Apricus special meeting or any adjournment or postponement thereof.
|
•
|
Apricus’ board of directors has determined that the transactions contemplated by the Merger Agreement, including the merger and the issuance of shares of Apricus common stock to Seelos’ stockholders pursuant
|
•
|
Apricus’ board of directors has determined that the Apricus Reverse Stock Split is fair to, advisable and in the best interests of Apricus and its stockholders and has approved and declared advisable the Apricus Reverse Stock Split. Apricus’ board of directors recommends that Apricus’ stockholders vote “FOR” Proposal No. 2 to approve the Apricus Reverse Stock Split.
|
•
|
Apricus’ board of directors has determined that the Apricus Name Change is fair to, advisable and in the best interests of Apricus and its stockholders and has approved and declared advisable the Apricus Name Change. Apricus’ board of directors recommends that Apricus’ stockholders vote “FOR” Proposal No. 3 to approve an amendment to the amended and restated articles of incorporation of Apricus effecting the Apricus Name Change.
|
•
|
Apricus’ board of directors has determined that the amendment and restatement of the 2012 Plan to, among other things, increase the number of shares of Apricus common stock available for issuance under the 2012 Plan is fair to, advisable and in the best interests of Apricus and its stockholders and has approved and declared advisable the amendment to the 2012 Plan. Apricus’ board of directors recommends that Apricus’ stockholders vote “FOR” Proposal No. 4 to approve such amendment and restatement of the 2012 Plan.
|
•
|
Apricus’ board of directors recommends that Apricus stockholders vote “FOR” Proposal No. 5 to approve, on a non-binding, advisory basis, the compensation that will be paid or may become payable to Apricus’ named executive officers in connection with the merger.
|
•
|
Apricus’ board of directors has determined and believes that adjourning the Apricus special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2 is advisable to, and in the best interests of, Apricus and its stockholders and has approved and adopted the proposal. Apricus’ board of directors recommends that Apricus’ stockholders vote “FOR” Proposal No. 6 to adjourn the Apricus special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 or 2.
|
•
|
to vote in person, attend the Apricus special meeting and Apricus will provide you a ballot when you arrive.
|
•
|
to vote using the proxy card, simply mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. If you return your signed proxy card to Apricus before the Apricus special meeting, Apricus will vote your shares as you direct on the proxy card.
|
•
|
to vote by telephone or on the Internet, dial the number on the proxy card or voting instruction form or visit the website on the proxy card or voting instruction form to complete an electronic proxy card. You will be asked to provide Apricus’ number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern time on , 2018 to be counted.
|
•
|
Based in part on the scientific diligence and analysis of Seelos’ product pipeline, the potential market opportunity for its products and the expertise of its scientific team, which was conducted over several weeks by Apricus management and reviewed with Apricus’ board of directors, Apricus’ board of directors believes that Seelos' platform and potential product candidates have the potential to meet unmet medical needs and address a sizable market opportunity, thereby potentially enhancing value for the stockholders
|
•
|
Apricus’ board of directors considered that current Apricus stockholders will receive a CVR to receive 90% of any future payments above $500,000 based on the sale or out-licensing of the Vitaros assets, including any milestone payments, less reasonable transaction expenses.
|
•
|
Apricus’ board of directors considered the strength of the balance sheet and sufficiency of the expected cash resources of the combined organization.
|
•
|
Apricus’ board of directors also reviewed with Apricus’ management the current operating plans of Seelos to confirm the likelihood that the combined organization would possess sufficient financial resources to allow the management team to focus on implementing Seelos’ business plan and growing Seelos’ business, without the need for immediate fundraising. Apricus’ board of directors also considered the ability of Seelos to take advantage of the potential benefits resulting from becoming a public reporting company listed on Nasdaq when it seeks to raise additional equity or debt in the future.
|
•
|
Apricus’ board of directors considered the strength of Seelos’ current and proposed management and scientific team, and their expertise in the biotechnology industry and the field of CNS disorders, as well as the fact that the board of directors following the completion of the merger will include a representative of Apricus who has public company leadership experience.
|
•
|
Apricus’ board of directors concluded that the merger would provide Apricus’ existing stockholders with a significant opportunity to participate in the potential increase in value of the combined organization following the merger.
|
•
|
Apricus’ board of directors also reviewed various factors impacting the financial condition, results of operations and prospects for Apricus, including:
|
•
|
the strategic alternatives to the merger, including potential transactions that could have resulted from discussions that Apricus’ management conducted with other potential merger partners, as well as potential in-licensing opportunities and related capital requirements;
|
•
|
the consequences of the complete response letter from the FDA related to Vitaros, and the likelihood that Apricus would not be able to address the FDA comments in the foreseeable future on a stand-alone basis;
|
•
|
the loss of the operational capabilities of Apricus, and the risks associated with continuing to operate Apricus on a stand-alone basis, including the need to secure a development partner to conduct additional clinical trials to address the complete response letter from the FDA, as well as raise substantial funds to continue its operations;
|
•
|
the risks associated with, and the limited value and high costs of, liquidating Apricus and thereafter distributing the remaining proceeds to Apricus’ stockholders; and
|
•
|
Apricus’ potential inability to maintain its Nasdaq listing without completing the merger.
|
•
|
that the exchange ratio used to establish the number of shares of Apricus common stock to be issued to Seelos’ stockholders in the merger is not subject to adjustment based on trading prices, and thus the relative percentage ownership of Apricus’ stockholders and Seelos’ stockholders immediately following the completion of the merger is fixed, subject to adjustment for closing cash balances;
|
•
|
the limited number and nature of the conditions to Seelos’ obligation to consummate the merger and the limited risk of non-satisfaction of such conditions as well as the likelihood that the merger will be consummated on a timely basis;
|
•
|
the respective rights of, and limitations on, Apricus and Seelos under the Merger Agreement to consider certain unsolicited acquisition proposals under certain circumstances should Apricus or Seelos receive a superior offer (as defined in the section titled “The Merger Agreement—No Solicitation” below);
|
•
|
the reasonableness of the potential termination fee of $500,000 and related reimbursement of certain transaction expenses, which could become payable by either Apricus or Seelos to the other party if the Merger Agreement is terminated in certain circumstances;
|
•
|
the fact that the termination fee of $500,000 can be paid by either party in shares of common stock, reducing the potential cash payment in connection with a termination;
|
•
|
the support agreements, pursuant to which certain directors, officers and stockholders of Apricus and Seelos, respectively, have agreed, solely in their capacity as stockholders of Apricus and Seelos, respectively, to vote all of their shares of Seelos common stock or Apricus common stock in favor of the adoption or approval, respectively, of the Merger Agreement;
|
•
|
the agreement of Seelos to provide a written consent of its stockholders necessary to adopt the Merger Agreement thereby approving the merger and related transactions within five business days of the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, becoming effective; and
|
•
|
the belief that the terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, are reasonable under the circumstances.
|
•
|
the $500,000 termination fee and related expense reimbursement obligations payable by Apricus to Seelos upon the occurrence of certain events and the potential effect of such fees in deterring other potential acquirers from proposing an alternative transaction that may be more advantageous to Apricus’ stockholders;
|
•
|
the substantial expenses to be incurred in connection with the merger;
|
•
|
the possible volatility, at least in the short term, of the trading price of Apricus common stock resulting from the announcement of the merger;
|
•
|
the risk that the merger might not be consummated in a timely manner or at all and the potential adverse effect of the public announcement of the merger or of the delay or failure to complete the merger on the reputation of Apricus;
|
•
|
the likely detrimental effect on Apricus’ cash position, stock price and ability to initiate another process and to successfully complete an alternative transaction should the merger not be completed;
|
•
|
the risk to Apricus’ business, operations and financial results in the event that the merger is not consummated;
|
•
|
the likelihood of disruptive stockholder litigation following announcement of the merger;
|
•
|
the unproven, development-stage nature of Seelos’ product candidates, which may not be successfully developed into products marketed and sold;
|
•
|
the strategic direction of the combined organization following the completion of the merger, which will be determined by a board of directors initially comprised of a majority of the directors designated by Seelos;
|
•
|
the fact that the merger could result in substantial limits on the utilization of Apricus’ net operating loss carryforwards; and
|
•
|
various other risks associated with the combined organization and the merger, including those described in the section entitled “Risk Factors” in this proxy statement/prospectus/information statement.
|
•
|
the potential increased access to sources of capital and a broader range of investors to support the clinical development of its therapeutic candidates following consummation of the transaction compared to if Seelos continued to operate as a privately held company;
|
•
|
the potential to provide its current stockholders with greater liquidity by owning stock in a public company;
|
•
|
the Seelos board of directors’ belief that no alternatives to the merger were reasonably likely to create greater value for Seelos’ stockholders, after reviewing the various financing and other strategic options to enhance stockholder value that were considered by Seelos’ board of directors and the likelihood of achieving any alternative transaction compared to the likelihood of completing the merger;
|
•
|
the cash resources of the combined organization, expected to be available at the closing of the merger relative to the anticipated burn rate of the combined organization;
|
•
|
the business, history and credibility of Apricus and its affiliates, and its financial resources;
|
•
|
the availability of appraisal rights under the DGCL to holders of Seelos’ capital stock who comply with the required procedures under the DGCL, which allow such holders to seek appraisal of the fair value of their shares of Seelos capital stock as determined by the Delaware Court of Chancery;
|
•
|
the expectation that the merger with Apricus would be a more time- and cost-effective means to access capital than other options considered by Seelos’ board of directors, including additional private financings or an initial public offering;
|
•
|
the terms and conditions of the Merger Agreement, including, without limitation, the following:
|
•
|
the determination that the expected relative percentage ownership of Seelos’ stockholders and Apricus’ stockholders in the combined organization was appropriate in the judgment of the Seelos board of directors, based on the Seelos board of directors’ assessment of the approximate valuations of Apricus and Seelos;
|
•
|
the expectation that the merger will be treated as a reorganization for U.S. federal income tax purposes;
|
•
|
the limited number and nature of the conditions of the obligation of Apricus to consummate the merger;
|
•
|
the conclusion of Seelos’ board of directors that the potential termination fee of $500,000, or in some situations the reimbursement of certain transaction expenses incurred in connection with the merger of up to $350,000, payable by Apricus or Seelos to the other party, and the circumstances when such fee may be payable, were reasonable; and
|
•
|
the belief that the other terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, were reasonable in light of the entire transaction.
|
•
|
the fact that shares of Apricus common stock issued to Seelos’ stockholders will be registered on a Form S-4 registration statement and will become freely tradable for Seelos’ stockholders who are not affiliates of Seelos;
|
•
|
the support agreements, pursuant to which certain directors, officers and stockholders of Seelos and Apricus, respectively, have agreed, solely in their capacity as stockholders of Seelos and Apricus, respectively, to vote all of their shares of Seelos common stock or Apricus common stock, respectively, in favor of the approval of the Merger Agreement;
|
•
|
the ability to obtain a Nasdaq listing for the common stock and the fact that Apricus will change its name to Seelos Therapeutics, Inc. upon the closing of the merger;
|
•
|
the competitive market conditions private companies currently face when seeking exchange traded merger or business combination partners;
|
•
|
the fact that the proposed merger may enable certain stockholders of Apricus and Seelos to increase the value of their current stockholding; and
|
•
|
the likelihood that the merger will be consummated on a timely basis.
|
•
|
the possibility that the merger might not be completed and the potential adverse effect of the public announcement of the merger on the reputation of Seelos and the ability of Seelos to obtain financing in the future in the event the merger is not completed;
|
•
|
the termination fee of $500,000, or in some situations the reimbursement of certain transaction expenses incurred in connection with the merger of up to $350,000, payable by Seelos to Apricus upon the occurrence of certain events, and the potential effect of such termination fee in deterring other potential acquirers from proposing an alternative transaction that may be more advantageous to Seelos’ stockholders;
|
•
|
the risk that the merger might not be consummated in a timely manner or at all;
|
•
|
the expenses to be incurred in connection with the merger and related administrative challenges associated with combining the companies;
|
•
|
the additional expenses and obligations to which Seelos’ business will be subject following the merger that Seelos has not previously been subject to, and the operational changes to Seelos’ business, in each case that may result from being a public company;
|
•
|
the current liabilities and obligations of Apricus; and
|
•
|
various other risks associated with the combined organization and the merger, including the risks described in the section entitled “Risk Factors” in this proxy statement/prospectus/information statement.
|
Name
|
|
Number of Vested Company Stock Options Held
|
|
Number of Unvested Company Stock Options Held
|
Executive Officers
|
|
|
|
|
Richard W. Pascoe
|
|
146,464
|
|
268,536
|
Brian T. Dorsey
|
|
39,589
|
|
70,411
|
Neil Morton
|
|
40,016
|
|
70,984
|
Non-Employee Directors
|
|
|
|
|
Sanford D. Smith
|
|
33,919
|
|
14,581
|
Kleanthis G. Xanthopoulos, Ph.D.
|
|
47,369
|
|
20,831
|
Paul V. Maier
|
|
32,019
|
|
14,581
|
Russell Ray
|
|
31,119
|
|
14,581
|
Wendell Wierenga, Ph.D.
|
|
35,419
|
|
14,581
|
Name
|
|
Number of Apricus RSUs Held
|
|
Value of
Apricus RSUs |
||
Executive Officers
|
|
|
|
|
||
Richard W. Pascoe
|
|
167,500
|
|
$
|
47,905
|
|
Brian T. Dorsey
|
|
125,000
|
|
$
|
35,750
|
|
Neil Morton
|
|
117,500
|
|
$
|
33,605
|
|
•
|
Mr. Pascoe’s employment will be involuntarily terminated by Apricus effective at the closing of the merger and Mr. Pascoe will be entitled to receive the severance payments described above for an involuntary termination within 12 months following a change of control as a result of such termination.
|
•
|
In the event the payment of the cash severance to Mr. Pascoe consisting of 18 months of his base salary and his target annual bonus (the “Base and Bonus Severance Obligation”) in cash (and assuming that all other Apricus employees are terminated at the closing of the merger and become entitled to severance pursuant to their employment arrangements) would cause the “Apricus Net Cash” (as defined in the Merger Agreement and described in the section entitled “The Merger - Merger Consideration”) to be less than $0, then Mr. Pascoe’s severance shall be paid as follows:
|
•
|
Such portion of the Base and Bonus Severance Obligation payable to Mr. Pascoe under his employment agreement as would cause the Apricus Net Cash to be less than $0 (but in no event more than 40% of the Base and Bonus Severance Obligation) (the “Equity-Settled Severance Portion”) shall be paid as follows:
|
•
|
At the closing of the merger, Mr. Pascoe will be granted a restricted stock unit under the Restated Plan (as described in Proposal No. 4), or if the Restated Plan has not yet been approved, under the 2012 Plan, denominated with a dollar value equal to 120% of the Equity-Settled Severance Portion (the “Pascoe Closing RSU”).
|
•
|
The Pascoe Closing RSU will vest in two equal installments on each of March 1, 2019 and March 1, 2020, subject to Mr. Pascoe’s continued service to Apricus as director on the applicable vesting date, subject to accelerated vesting in the event of (1) a change of control of Apricus (following the closing of the merger), (2) the failure of the Apricus board of directors to nominate Mr. Pascoe for reelection to the Apricus board of directors or Mr. Pascoe’s failure to be reelected to Apricus board of directors at any meeting of Apricus stockholders or any other involuntary termination of Mr. Pascoe’s service as a member of the Apricus board of directors of Apricus, or (3) Mr. Pascoe’s death or disability.
|
•
|
The Pascoe Closing RSU will provide for settlement within 10 days of vesting in either (1) shares of Apricus common stock with an aggregate value equal to the denominated dollar value vesting on the applicable vesting date (which value shall be converted into Apricus shares based on the average closing price of Apricus common stock over the 20 trading days preceding the settlement date) or (2) in the event any shares cannot be issued under the terms of the Restated Plan or the 2012 Plan, as applicable, for any reason, including as a result of there being insufficient shares available for issuance thereunder or the issuance of shares causing any individual award limit under the plan to be exceeded, in cash with respect to such shares. In addition, Apricus may elect to settle the Pascoe Closing RSU in cash, in its discretion. If the settlement of the Pascoe Closing RSU would not be possible as of the grant date as a result of there being insufficient shares available for issuance under the Restated Plan or the 2012 Plan, as applicable, or the issuance of such shares causing the award to exceed any individual award limits contained in the 2012 Plan, the Pascoe Closing RSU will still be granted but any share settlement shall be subject to the approval by the Apricus board of directors and/or the Apricus stockholders of an amendment to the Restated Plan or the 2012 Plan, as applicable, permitting such share settlement under the terms of such plan (and increasing or deleting the individual award limits).
|
•
|
The Pascoe Closing RSU will permit Mr. Pascoe to elect net settlement of such RSU for tax withholding purposes.
|
•
|
Mr. Pascoe shall be entitled to implement a 10b5-1 trading plan with respect to the payment of tax withholding upon settlement of the Pascoe Closing RSU.
|
•
|
In the event the Pascoe Closing RSU cannot be granted at the closing of the merger under the terms of the Restated Plan or the 2012 Plan for any reason, all of the Base and Bonus Severance Obligations shall instead be paid in cash at the time set forth in the employment agreement.
|
•
|
The remainder of the Base and Bonus Severance Obligation shall be paid in cash at the time set forth in the employment agreement.
|
•
|
Mr. Dorsey will receive a cash payment in the amount of $447,020, representing 12 months of his annual base salary in effect on the date of his termination plus his target bonus for 2018, payable in a lump sum within five days following the effective date of the release agreement.
|
•
|
All of Mr. Dorsey’s outstanding equity awards vested in full effective as of the date of his termination of employment.
|
•
|
Mr. Dorsey will be reimbursed for the cost of continuation of health insurance benefits provided to him immediately prior to the termination (as provided under COBRA or other applicable law) until the earliest of 12 months following the date of his termination of employment, the date Mr. Dorsey becomes eligible for coverage under health and/or dental plans of another employer or the date upon which he is no longer eligible for such COBRA or other benefits under applicable law.
|
•
|
In addition, in the event the merger closes on or before March 5, 2019, Mr. Dorsey will be eligible to receive, at the closing of the merger, a restricted stock unit under the Restated Plan (as described in Proposal No. 4), or if the Restated Plan has not yet been approved, under the 2012 Plan, denominated with a dollar value equal to $159,650 (the “Dorsey Closing RSU”).
|
•
|
The Dorsey Closing RSU will vest on March 5, 2019, subject to Mr. Dorsey’s continued service to Apricus as a consultant
on such date, subject to accelerated vesting in the event of (1) a change of control of Apricus (following the closing of the merger), or (2) the termination of Mr. Dorsey’s consulting services with Apricus for any reason other than his voluntary termination of such services, or (3) Mr. Dorsey’s death or disability.
|
•
|
The Dorsey Closing RSU will provide for settlement within 10 days of vesting in either (1) shares of Apricus common stock with an aggregate value equal to the denominated dollar value vesting on the applicable vesting date (which value shall be converted into Apricus shares based on the average closing price of Apricus common stock over the 20 trading days preceding the settlement date) or (2) in the event any shares cannot be issued under the terms of the Restated Plan or the 2012 Plan, as applicable, for any reason, including as a result of there being insufficient shares available for issuance thereunder or the issuance of shares causi
ng any individual award limit under the plan to be exceeded, in cash with respect to such shares. In addition, Apricus may elect to settle the Dorsey Closing RSU in cash, in its discretion. If the settlement of the Dorsey Closing RSU would not be
|
•
|
The Dorsey Closing
RSU will permit Mr. Dorsey to elect net settlement of such RSU for tax withholding purposes.
|
•
|
Mr. Dorsey shall be entitled to implement a 10b5-1 trading plan with respect to the payment of tax withholding upo
n settlement of the Dorsey Closing RSU.
|
•
|
the Effective Time occurred on August 15, 2018 (but after giving effect to the termination of Mr. Dorsey’s employment on
August 30, 2018
and the execution of his release agreement, as described above, for purposes of the following disclosure);
|
•
|
a price per share of Apricus common stock of $0.29, which represents the average closing trading price of Apricus common stock over the first five business days following the first public announcement of the transaction;
|
•
|
the employment of each of Mr. Pascoe and Mr. Morton will be terminated on such date in a manner that entitles the named executive officer to receive the severance payments and benefits under the terms of the employment or release agreements between Apricus and such named executive officer (as described in above under the heading “
Employment and Consulting Agreements
”). The employment of each of Mr. Pascoe and Mr. Morton is expected to be terminated effective as of the closing of the merger; and Mr. Dorsey's employment terminated on August 30, 2018;
|
•
|
the named executive officer’s base salary and target annual bonus are those in place as of August 15, 2018;
|
•
|
except for the Pascoe Closing RSU and the Dorsey Closing RSU, no named executive officer receives any additional equity grants prior to or at the Effective Time; and
|
•
|
no named executive officer enters into new agreements or is otherwise legally entitled to, prior to the Effective Time, additional compensation or benefits.
|
Name
|
|
Cash
(1)
|
|
Equity Acceleration
(2)
|
|
Benefits
(3)
|
|
Other
(4)
|
|
Total
(5)
|
||||||||||
Richard W. Pascoe
|
|
$
|
974,792
|
|
|
$
|
47,905
|
|
|
$
|
56,566
|
|
|
$
|
77,984
|
|
|
$
|
1,157,247
|
|
Brian T. Dorsey
|
|
$
|
447,020
|
|
|
$
|
35,750
|
|
|
$
|
37,710
|
|
|
$
|
159,650
|
|
|
$
|
680,130
|
|
Neil Morton
|
|
$
|
522,500
|
|
|
$
|
33,605
|
|
|
$
|
39,510
|
|
|
$
|
—
|
|
|
$
|
595,615
|
|
(1)
|
With respect to Messrs. Pascoe and Morton, under the employment agreements, cash severance would be payable following termination of the named executive officer’s employment by Apricus other than for cause (and other than due to death or disability) or the named executive officer’s resignation for good reason, in either case, within 12 months following a change of control, subject to the named executive officer’s execution of a release of claims. In either such event, pursuant to the employment agreements, the named executive officer will receive severance payments equal to the sum of (1) 18 months’ base salary plus (2) the named executive officer’s target annual bonus. Any amounts payable in connection with the termination of an executive’s employment are subject to applicable withholdings and are payable in a lump sum within five days following the effective date of the named executive officer’s release. These cash payments are double-trigger benefits in that they will be paid only if the named executive officer experiences a qualifying termination of employment during the period described above, in accordance with the employment agreements.
|
Name
|
|
Base Salary Severance
|
|
Bonus Component of Severance
|
||||
Richard W. Pascoe
(a)
|
|
$
|
731,094
|
|
|
$
|
243,698
|
|
Brian T. Dorsey
|
|
319,300
|
|
|
127,720
|
|
||
Neil Morton
|
|
412,500
|
|
|
110,000
|
|
(a)
|
Reflects the full amount of the Base and Bonus Severance Obligation payable to Mr. Pascoe under his employment agreement (as described in above) and assumes the payment of such amounts would not cause the Apricus Net Cash to be less than $0 so that no portion of such amounts would be paid in the form of the Pascoe Closing RSU and such award would not be granted.
|
(2)
|
With respect to Messrs. Pascoe and Morton, under the employment agreements, each named executive officer would be entitled to accelerated vesting of his unvested equity awards pursuant to a double trigger arrangement (
i.e.
, the occurrence of a change of control and such executive’s qualifying termination as described in footnote (1) above). Additionally, under the Merger Agreement, effective as of immediately prior to the Effective Time, (i) each Apricus stock option will fully vest, and (ii) each Apricus restricted stock unit will fully vest. All of Mr. Dorsey's equity awards accelerated as a result of his termination of employment on
August 30, 2018
pursuant to his release agreement. The amount listed in this column represents the estimated value of the unvested Apricus stock options and Apricus restricted stock units held by the named executive officers as to which vesting will accelerate immediately prior to the Effective Time (or, with respect to Mr. Dorsey, which did accelerate at the time of termination). The accelerated vesting is a single-trigger (closing of the merger) benefit that will be received solely because of the merger and regardless of whether a named executive officer’s employment is terminated (or, with respect to Mr. Dorsey, the acceleration occurred solely as a result of his termination of employment on
August 30, 2018
pursuant to his release agreement).
|
Name
|
|
Number of
Unvested
Apricus Stock
Options Subject
to Acceleration
|
|
Value of
Accelerated
Apricus Stock
Option Vesting
(a)
|
|
Number of
Unvested
Apricus RSUs
Subject to
Acceleration
|
|
Value of
Accelerated
Apricus RSU
Vesting
(b)
|
|
Total Value of
Unvested Equity
Acceleration
|
||||||||
Richard W. Pascoe
|
|
268,536
|
|
|
$
|
—
|
|
|
167,500
|
|
|
$
|
47,905
|
|
|
$
|
47,905
|
|
Brian T. Dorsey
|
|
70,411
|
|
|
$
|
—
|
|
|
125,000
|
|
|
$
|
35,750
|
|
|
$
|
35,750
|
|
Neil Morton
|
|
70,984
|
|
|
$
|
—
|
|
|
117,500
|
|
|
$
|
33,605
|
|
|
$
|
33,605
|
|
(a)
|
The value of the unvested and accelerated Apricus stock options is the excess of the average closing market price of the Apricus common stock for the first five (5) business days following the announcement of the merger on July 30, 2018 ($0.29) over the exercise price of the stock options that were unvested as of August 15, 2018, multiplied by the number of shares underlying the unvested Apricus stock options as of August 15, 2018, consistent with the methodology applied under SEC Regulation M-A Item 1011(b) and Regulation S-K Item 402(t)(2). All of Mr. Dorsey’s stock options vested effective
August 30, 2018
as a result of his termination of employment pursuant to his release agreement, but they are included here because his termination was undertaken in contemplation of the merger.
|
(b)
|
The value of the unvested and accelerated Apricus restricted stock units is the average closing market price of the Apricus common stock for the first five (5) business days following the announcement of the merger on July 30, 2018 ($0.29), multiplied by the number of shares underlying the unvested Apricus restricted stock units as of August 15, 2018, consistent with the methodology applied under SEC Regulation M-A Item 1011(b) and Regulation S-K Item 402(t)(2). All of Mr. Dorsey’s restricted stock units vested effective
August 30, 2018
as a result of his termination of employment pursuant to his release agreement, but they are included here because his termination was undertaken in contemplation of the merger.
|
(3)
|
Consists of COBRA coverage for a period of 18 months (12 months for Mr. Dorsey) following the date of termination. The value is based upon the type of insurance coverage Apricus carried for each named executive officer as of August 15, 2018
and is valued at the premiums in effect on such date. These benefits are double-trigger benefits in that they will be paid only if the executive officer experiences a qualifying termination of employment following the Effective Time in accordance with the employment agreements (or, with respect to Mr. Dorsey, a single-trigger benefit as he became eligible for 12 months of COBRA coverage solely as a result of his termination on
August 30, 2018
pursuant to his release agreement).
|
(4)
|
Pursuant to his employment agreement, in the event that the Base and Bonus Severance Obligation payable to Mr. Pascoe under his employment agreement (as described in footnote (1) above and disclosed in the “Cash” column in the table above) would cause the Apricus Net Cash to be less than $0, such portion as would result in the Apricus Net Cash being less than $0 (but in no event more than 40% of the Base and Bonus Severance Obligation) (the “Equity-Settled Severance Portion”) would be paid in the form of a restricted stock unit granted at closing under the Restated Plan (as defined in Proposal No. 4 above), or, if the Restated Plan is not approved, the 2012 Plan, denominated with a dollar value equal to 120% of the Equity-Settled Severance Portion (the “Pascoe Closing RSU”). The terms and conditions of the Pascoe Closing RSU are described further above under “
Employment and Consulting Agreements
.” For purposes of the table above, because the full value of the cash severance payable to Mr. Pascoe is disclosed under the “Cash” column, only the amount by which the value of the Pascoe Closing RSU at the time of grant, if granted, would exceed the total Base and Bonus Severance Obligation to Mr. Pascoe (and assuming that the maximum 40% of the total Base and Bonus Severance Obligation is paid in such form) is disclosed in the “Other” column to avoid double counting the severance obligations to Mr. Pascoe. As a result, the value disclosed in the table above for the Pascoe Closing RSU was calculated by multiplying (a) 20% by (b) $389,917 (40% of the total Base and Bonus Severance Obligation, the maximum amount payable in the form of restricted stock units). The Pascoe Closing RSU is a double-trigger benefit in that it will only be granted if he experiences a qualifying termination of employment at or following the Effective Time in accordance with his employment agreement.
|
(5)
|
The severance benefits prescribed by the employment agreements are subject to a Section 280G better-off cutback provision, which provides that, in the event that the benefits provided to the named executive officer pursuant to the employment agreements or otherwise constitute parachute payments with the meaning of Section 280G of the Code, the severance benefits under the Severance Plan will either be delivered in full or reduced to the extent necessary to avoid an excise tax under Section 4999 of the Code, whichever would result in the named executive officer receiving the largest amount of severance benefits on an after-tax basis. The amounts reported in this table do not reflect any such reductions as a result of the limit under Section 280G of the Code.
|
•
|
each share of Seelos common stock outstanding immediately prior to the Effective Time will automatically be converted into the right to receive a number of shares of Apricus common stock equal to the exchange ratio, subject to adjustment to account for the Apricus Reverse Stock Split;
|
•
|
each option to purchase shares of Seelos common stock outstanding and unexercised immediately prior to the Effective Time will be assumed by Apricus and will become an option, subject to vesting, to purchase shares of Apricus common stock with the number of shares of Apricus common stock underlying such options and the exercise prices for such options adjusted to reflect the exchange ratio and the Apricus Reverse Stock Split; and
|
•
|
each promissory note convertible into Seelos’ common stock outstanding and not terminated or converted as of immediately prior to the Effective Time will be converted into shares of Seelos’ common stock, which shares of Seelos common stock shall then converted into the right to receive a number of shares of Apricus common stock equal to the exchange ratio, subject to adjustment to account for the Apricus Reverse Stock Split.
|
•
|
Apricus’ accounts payable and accrued expenses, and Apricus’ other current liabilities payable in cash, including any litigation settlement expenses;
|
•
|
Apricus’ transaction expenses;
|
•
|
Apricus’ indebtedness;
|
•
|
50% the aggregate amount that may be payable by Apricus pursuant to the exercise of a repurchase option contained in any of the Apricus outstanding warrants, capped at an aggregate reduction of $500,000;
|
•
|
50% of the employer and employee portions of any payroll taxes associated with the vesting and settlement of the Apricus restricted stock units; and
|
•
|
50% of the severance payable in cash to Apricus employees.
|
•
|
book-entry shares representing the number of whole shares of Apricus common stock that such holder has the right to receive pursuant to the provisions of the Merger Agreement, and
|
•
|
cash in lieu of any fractional share of Apricus common stock.
|
•
|
U.S. expatriates and former citizens or long-term residents of the United States;
|
•
|
U.S. Holders whose functional currency is not the U.S. dollar;
|
•
|
persons holding Seelos common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
|
•
|
banks, insurance companies, and other financial institutions;
|
•
|
real estate investment trusts or regulated investments companies;
|
•
|
brokers, dealers or traders in securities;
|
•
|
“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
|
•
|
S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
|
•
|
persons for whom Seelos common stock constitutes “qualified small business stock” within the meaning of Section 1202 of the Code;
|
•
|
tax-exempt organizations or governmental organizations;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to Seelos common stock being taken into account in an “applicable financial statement” (as defined in the Code);
|
•
|
persons deemed to sell Seelos common stock under the constructive sale provisions of the Code;
|
•
|
persons who hold or receive Seelos common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
|
•
|
tax-qualified retirement plans.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
•
|
a trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
|
•
|
a U.S. Holder of shares of Seelos common stock generally will not recognize any gain or loss upon the exchange of shares of Seelos common stock for shares of Apricus common stock in the merger, except with respect to cash received in lieu of fractional shares (as discussed below);
|
•
|
a U.S. Holder of shares of Seelos common stock will have a tax basis in the shares of Apricus common stock received in the merger (including fractional shares deemed received and redeemed as described below) equal to the tax basis of the shares of Seelos common stock surrendered in exchange therefor;
|
•
|
a U.S. Holder of shares of Seelos common stock will have a holding period for the shares of Apricus common stock received in the merger (including fractional shares deemed received and redeemed as described below) that includes its holding period for its shares of Seelos common stock surrendered in exchange therefor; and
|
•
|
if a U.S. Holder of shares of Seelos common stock acquired different blocks of shares of Seelos common stock at different times or at different prices, the shares of Apricus common stock received in the merger (including fractional shares deemed received and redeemed as described below) will be allocated pro rata to each block of shares of Seelos common stock, and the basis and holding period of such shares of Apricus common stock will be determined on a block-for-block approach depending on the basis and holding period of each block of shares of Seelos common stock exchanged for such shares of Apricus common stock.
|
•
|
the holder fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number;
|
•
|
the holder furnishes an incorrect taxpayer identification number;
|
•
|
the applicable withholding agent is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or
|
•
|
the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding.
|
•
|
book-entry shares representing the number of whole shares of Apricus common stock that such holder has the right to receive pursuant to the provisions of the Merger Agreement; and
|
•
|
cash in lieu of any fractional share of Apricus common stock.
|
•
|
the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, must have been declared effective by the SEC in accordance with the Securities Act and must not be subject to any stop order or proceeding, or any proceeding threatened by the SEC, seeking a stop order that has not been withdrawn;
|
•
|
there must not have been issued, and remain in effect, any temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the merger or any of the other transactions contemplated by the Merger Agreement by any court of competent jurisdiction or other
|
•
|
the holders of a majority of the outstanding shares of Seelos common stock must have adopted and approved the merger, and the holders of a majority of the outstanding shares of Apricus common stock must have approved the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of Apricus common stock in the merger; and
|
•
|
the existing shares of Apricus common stock must have been continually listed on Nasdaq through the closing of the merger, and Apricus must have caused the shares of Apricus common stock to be issued in the merger to be approved for listing on Nasdaq (subject to official notice of issuance) as of the closing of the merger.
|
•
|
the representations and warranties regarding certain matters related to organization, authority, vote required and financial advisors of the other party in the Merger Agreement must be true and correct on the date of the Merger Agreement and on the closing date of the merger with the same force and effect as if made on the date on which the merger is to be completed or, if such representations and warranties address matters as of a particular date, then as of that particular date;
|
•
|
the representations and warranties regarding capitalization matters of the other party in the Merger Agreement must be true and correct on the date of the Merger Agreement and on the closing date of the merger with the same force and effect as if made on the date on which the merger is to be completed or, if such representations and warranties address matters as of a particular date, then as of that particular date, except for such inaccuracies which are de minimis, individually or in the aggregate;
|
•
|
the remaining representations and warranties of the other party in the Merger Agreement must be true and correct on the date of the Merger Agreement and on the closing date of the merger with the same force and effect as if made on the date on which the merger is to be completed or, if such representations and warranties address matters as of a particular date, then as of that particular date, except in each case, or in the aggregate, where the failure to be so true and correct would not reasonably be expected to have a Company Material Adverse Effect (as defined below) or Apricus Material Adverse Effect (as defined below), as applicable (without giving effect to any references therein to any Company Material Adverse Effect or Apricus Material Adverse Effect, as applicable, or other materiality qualifications);
|
•
|
the other party to the Merger Agreement must have performed or complied with in all material respects all of such party’s agreements and covenants required to be performed or complied with by it under the Merger Agreement at or prior to the Effective Time;
|
•
|
the other party must have delivered certain certificates and other documents required under the Merger Agreement for the closing of the merger; and
|
•
|
each party must have received an opinion of its legal counsel, dated as of the closing date of the merger, to the effect that the merger will be treated, for U.S. federal income tax purposes, as a reorganization within the meaning of Section 368(a) of the Code.
|
•
|
there shall have been no effect, change, event, circumstance, or development that (considered together with all other effects, changes, events, circumstances, or developments that have occurred prior to the applicable date of determination) has or would reasonably be expected to have a material adverse effect on the business, financial condition, assets, liabilities or results of operations of Seelos (a
|
•
|
any rejection by a governmental body of a registration or filing by Seelos relating to intellectual property owned, licensed or controlled by Seelos;
|
•
|
the announcement or pendency of the Merger Agreement or the transactions contemplated thereby;
|
•
|
the taking of any action, or the failure to take any action, by Seelos that is required to comply with the terms of the Merger Agreement;
|
•
|
any natural disaster or any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing;
|
•
|
any change in generally accepted accounting principles or any change in applicable laws, rules or regulations or the interpretation thereof;
|
•
|
general economic or political conditions or conditions generally affecting the industries in which Seelos operate; or
|
•
|
any change in the cash position of Seelos which results from operations in the ordinary course of business;
|
•
|
there shall have been no effect, change, event, circumstance, or development that (considered together with all other effects, changes, circumstances, or developments that have occurred prior to the applicable date of determination) has or would reasonably be expected to have a material adverse effect on the business, financial condition, assets, liabilities or results of operations of Apricus and its subsidiaries, taken as a whole (an “Apricus Material Adverse Effect”); provided, that effects, changes, events, circumstances or developments resulting from the following shall not be taken into account for purposes of determining whether a Apricus Material Adverse Effect shall have occurred:
|
•
|
any rejection by a governmental body of a registration or filing by Apricus relating to intellectual property owned, licensed or controlled by Apricus;
|
•
|
the termination, sublease or assignment of Apricus’ facility lease, or failure to do the foregoing;
|
•
|
the announcement or pendency of the Merger Agreement or the transactions contemplated thereby;
|
•
|
any change in the stock price or trading volume of Apricus common stock;
|
•
|
the taking of any action, or the failure to take any action, by Apricus that is required to comply with the terms of the Merger Agreement;
|
•
|
any natural disaster or any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing;
|
•
|
any change in generally accepted accounting principles or any change in applicable laws, rules or regulations or the interpretation thereof;
|
•
|
general economic or political conditions or conditions generally affecting the industries in which Apricus operates;
|
•
|
continued losses from operations or decreases in cash balances of Apricus not materially inconsistent with kind and degree of losses from operations and decreases in cash balances which have occurred between December 31, 2016 and the date of the Merger Agreement; or
|
•
|
the winding down of Apricus’ operations not materially inconsistent with the kind and degree of winding down activities which have occurred between December 31, 2016 and the date of the Merger Agreement;
|
•
|
Seelos must have received written resignations by the officers and directors of Apricus who will not continue as officers or directors of Apricus;
|
•
|
Seelos must have received from Apricus lock-up agreements executed by certain stockholders of Apricus;
|
•
|
Seelos must have received an executed copy of an amended and restated employment agreement between Apricus and Richard W. Pascoe; and
|
•
|
Apricus must have terminated its office lease or subleased its office space in its entirety to a third party.
|
•
|
corporate organization and power, and similar corporate matters;
|
•
|
subsidiaries;
|
•
|
authority to enter into the Merger Agreement and the related agreements;
|
•
|
votes required for completion of the merger that will be the subject of Seelos' stockholder written consent and approval of the proposals that will come before the Apricus special meeting;
|
•
|
except as otherwise specifically disclosed pursuant to in the Merger Agreement, the fact that the consummation of the merger would not contravene or require the consent of any third party;
|
•
|
capitalization;
|
•
|
financial statements and with respect to Apricus, documents filed with the SEC and the accuracy of information contained in those documents;
|
•
|
absence of changes ;
|
•
|
absence of undisclosed
liabilities;
|
•
|
title to assets;
|
•
|
real property and leaseholds;
|
•
|
intellectual property;
|
•
|
the validity of material contracts to which the parties, or any subsidiaries of Apricus, are a party and any violation, default or breach to such contracts;
|
•
|
regulatory compliance, permits and restrictions;
|
•
|
legal proceedings and orders;
|
•
|
tax matters;
|
•
|
employee and labor matters and benefit plans;
|
•
|
environmental matters;
|
•
|
insurance;
|
•
|
any brokerage or finder’s fee or other fee or commission in connection with the merger;
|
•
|
with respect to Seelos, the accuracy of the disclosure for inclusion in this proxy statement/prospectus/information statement;
|
•
|
transactions with affiliates;
|
•
|
valid issuance of the Apricus common stock in the merger; and
|
•
|
the inapplicability of Section 203 of the DGCL.
|
•
|
solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission or announcement of, any “acquisition proposal” (as defined below) or “acquisition inquiry” (as defined below) or take any action that could reasonably be expected to lead to an acquisition proposal or acquisition inquiry;
|
•
|
furnish any non-public information with respect to it to any person in connection with or in response to an acquisition proposal or acquisition inquiry;
|
•
|
engage in discussions or negotiations with any person with respect to any acquisition proposal or acquisition inquiry;
|
•
|
approve, endorse or recommend an acquisition proposal;
|
•
|
execute or enter into any letter of intent or any contract contemplating or otherwise relating to an acquisition transaction; or
|
•
|
publicly propose to do any of the above.
|
•
|
any merger, consolidation, amalgamation, share exchange, business combination, issuance or acquisition of securities, reorganization, recapitalization, tender offer, exchange offer or similar transaction: (i) in which Apricus, Seelos or Merger Sub is a constituent entity, (ii) in which any individual, entity, governmental entity, or “group”, as defined under applicable securities laws and regulations, directly or indirectly acquires beneficial or record ownership of securities representing more than 20% of the outstanding securities of any class of voting securities of Apricus, Seelos or Merger Sub or any of their respective subsidiaries or (iii) in which Apricus, Seelos or Merger Sub or any of their respective subsidiaries issues securities representing more than 20% of the outstanding securities of any class of voting securities of such party or any of its subsidiaries; or
|
•
|
any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets that constitute or account for 20% or more of the consolidated book value or the fair market value of the assets of Apricus, Seelos or Merger Sub and their respective subsidiaries, as applicable, taken as a whole.
|
•
|
neither such party nor any representative of such party has breached the solicitation provisions of the Merger Agreement described above;
|
•
|
such party’s board of directors concludes in good faith, based on the advice of outside legal counsel, that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of such board of directors under applicable legal requirements;
|
•
|
such party gives the other party at least two business days’ prior written notice of the identity of the third party and of that party’s intention to furnish information to, or enter into discussions or negotiations with, such third party before furnishing any information or entering into discussions or negotiations with such third party;
|
•
|
such party receives from the third party an executed confidentiality agreement containing provisions at least as favorable to such party as those contained in the confidentiality agreement between Apricus and Seelos; and
|
•
|
substantially contemporaneously with the furnishing of any non-public information to a third party, such party furnishes the same non-public information to the other party to the extent not previously furnished.
|
•
|
declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of capital stock; or repurchase, redeem or otherwise reacquire any shares of capital stock or other securities (except for shares of common stock from terminated current or former employees, directors or consultants of Apricus or its subsidiaries or in connection with the satisfaction of tax withholding obligations related to Apricus RSUs);
|
•
|
sell, issue, grant, pledge or otherwise dispose of or encumber or authorize any of the foregoing actions with respect to: any capital stock or other security (except for Apricus common stock issued upon the valid exercise of outstanding options or warrants to purchase shares of Apricus common stock or vesting of RSUs); any option, warrant or right to acquire any capital stock or any other security of Apricus; or any instrument convertible into or exchangeable for any capital stock or other security of Apricus;
|
•
|
except as required to give effect to anything in contemplation of the closing of the merger, amend the articles of incorporation, bylaws or other similar organizational documents of Apricus, or effect or become a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction except as related to the proposed transactions under the Merger Agreement; provided, however that Apricus shall not unreasonably withhold, delay or condition any consent to effectuate a forward or reverse stock split of Seelos common stock;
|
•
|
form any subsidiary or acquire any equity interest or other interest in any other entity or enter into any joint venture with any other entity;
|
•
|
lend money to any person; incur or guarantee any indebtedness for borrowed money; guarantee any debt securities of others; or make any capital expenditure or commitment in excess of $100,000;
|
•
|
other than as required by law or the terms of a Apricus employee plan in effect as of the date of the Merger Agreement, adopt, establish or enter into any Apricus employee plan; cause or permit any Apricus employee plan to be amended; other than in the ordinary course of business, pay any bonus or make any profit-sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its or its subsidiaries’ current or former employees, directors or consultants; increase the severance or change of control benefits offered to any current or new employees, directors or consultants; or hire any new employees, consultants or independent contractors;
|
•
|
enter into any material transaction;
|
•
|
sell, assign, transfer, license, sublicense or otherwise dispose of any material Apricus intellectual property rights (other than pursuant to non-exclusive licenses in the ordinary course of business);
|
•
|
acquire any material asset or sell, lease or otherwise irrevocably dispose of any of its assets or properties, or grant any encumbrance with respect to such assets or properties, except in the ordinary course of business consistent with past practices;
|
•
|
except in the ordinary course of business and consistent with past practice, make, change or revoke any material tax election; file any material amendment to any tax return; settle or compromise any material tax liability, or adopt or change any material accounting method in respect of taxes;
|
•
|
enter into, materially amend or terminate certain material contracts;
|
•
|
make any expenditures or incur any liabilities in amounts that exceed the limitations set forth in Apricus’ operating budget delivered to Seelos concurrently with the execution of the Merger Agreement in an amount that exceeds, in the aggregate, $500,000; or
|
•
|
agree, resolve or commit to do any of the foregoing.
|
•
|
declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of capital stock of Seelos; or repurchase, redeem or otherwise reacquire any shares of capital stock or other securities of Seelos (except for shares of common stock from terminated current or former employees, directors or consultants of Seelos);
|
•
|
sell, issue, grant, pledge or otherwise dispose of or encumber or authorize any of the foregoing actions with respect to: any capital stock or other security of Seelos (except for shares of Seelos common stock issued upon the valid exercise of outstanding Seelos options or upon conversion of outstanding notes; any option, warrant or right to acquire any capital stock or any other security of Seelos; or any instrument convertible into or exchangeable for any capital stock or other security of Seelos;
|
•
|
except as required to give effect to anything in contemplation of the closing of the merger, amend the certificate of incorporation, bylaws or other similar organizational documents of Seelos, or effect or become a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction except as related to the proposed transactions under the Merger Agreement;
|
•
|
form any subsidiary or acquire any equity interest or other interest in any other entity or enter into a joint venture with any other entity;
|
•
|
lend money to any person; incur or guarantee any indebtedness for borrowed money, other than in the ordinary course of business in accordance with past practices; guarantee any debt securities of others; or make any capital expenditure or commitment in excess of $100,000;
|
•
|
other than as required by applicable law, the terms of a company employee plan or in the ordinary course of business in accordance with past practices: adopt, establish or enter into any employee plan; cause or permit any employee plan to be amended; pay any bonus or make any profit-sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its current or former employees, directors or consultants; or increase the severance or change of control benefits offered to any current or new employees, directors or consultants;
|
•
|
enter into any material transaction outside the ordinary course of business in accordance with past practices;
|
•
|
acquire any material asset or sell, lease or otherwise irrevocably dispose of any of its assets or properties, or grant any encumbrance with respect to such assets or properties, except in the ordinary course of business;
|
•
|
sell, assign, transfer, license, sublicense or otherwise dispose of any material Seelos intellectual property rights (other than pursuant to non-exclusive licenses in the ordinary course of business in accordance with past practices);
|
•
|
enter into, materially amend or terminate certain material contracts;
|
•
|
amend or terminate Seelos’ Asset Purchase Agreement with Vyera Pharmaceuticals AG or its License Agreement with Ligand Pharmaceuticals Incorporated, Neurogen Corporation and CyDex Corporation;
|
•
|
except in the ordinary course of business and consistent with past practice, make, change or revoke any material tax election; file any material amendment to any tax return; settle or compromise any material tax liability, or adopt or change any material accounting method in respect of taxes;
|
•
|
make any expenditures or incur any liabilities in amounts that exceed the limitations set forth in Seelos’ operating budget delivered to Apricus concurrently with the execution of the Merger Agreement in an amount that exceeds, in the aggregate, $500,000; or
|
•
|
agree, resolve or commit to do any of the foregoing.
|
•
|
make all filings and other submissions and give all
notices required to be made or given in connection with the merger and the other transactions contemplated by the Merger Agreement;
|
•
|
use commercially reasonable efforts to obtain each consent reasonably required to be obtained in connection with the merger and the other transactions contemplated by the Merger Agreement;
|
•
|
use commercially reasonable efforts to lift any injunction prohibiting, or any other legal bar to, the merger or the other transactions contemplated by the Merger Agreement; and
|
•
|
use commercially reasonable efforts to satisfy the conditions precedent to the consummation of the transactions contemplated by the Merger Agreement.
|
•
|
Apricus will use its commercially reasonable efforts to (A) maintain the listing of its common stock on Nasdaq until the closing of the merger and to obtain approval for listing of the combined organization on Nasdaq and (B) to the extent required by the rules and regulations of Nasdaq, to (i) prepare and submit to Nasdaq a notification form for the listing of the shares of Apricus common stock to be issued in connection with the merger and (ii) to cause such shares to be approved for listing (subject to official notice of issuance); and (c) to the extent required by Nasdaq Marketplace Rule 5110, to file an initial listing application for Apricus common stock on Nasdaq and to cause such listing application to be conditionally approved prior to the Effective Time;
|
•
|
for a period of six years after the Effective Time, Apricus will indemnify each person who is now, or has been prior to the Effective Time, a director or officer of Apricus or Seelos to the fullest extent permitted under the NRS and DGCL, respectively, and will purchase a six-year prepaid "tail policy" for the non-cancellable extension of the directors’ and officers’ liability coverage of Apricus' existing directors and officers' insurance policies; and
|
•
|
Apricus shall maintain directors’ and officers’ liability insurance policies commencing at the closing of the merger, on commercially available terms and conditions and with coverage limits customary for U.S. public companies similarly situated to Apricus.
|
•
|
by mutual written consent of Apricus and Seelos;
|
•
|
by either Apricus or Seelos if the merger shall not have been consummated by November 30, 2018 (the “Outside Date”); provided, however, that this right to terminate the Merger Agreement will not be available to any party whose action or failure to act has been a principal cause of the failure of the merger to occur on or before the Outside Date and such action or failure to act constitutes a breach
|
•
|
by either Apricus or Seelos if a court of competent jurisdiction or governmental entity has issued a final and nonappealable order, decree or ruling or taken any other action that permanently restrains, enjoins or otherwise prohibits the merger or any of the other transactions contemplated by the Merger Agreement;
|
•
|
by Apricus if the written consent of Seelos’ stockholders necessary to adopt the Merger Agreement and approve the merger and related matters has not been obtained within five business days of the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, becoming effective; provided that this right to terminate the Merger Agreement will not be available to Apricus once Seelos obtains such stockholder approval;
|
•
|
by either Apricus or Seelos if the Apricus special meeting shall have been held and completed and Apricus’ stockholders shall have taken a final vote and shall not have approved the Merger Agreement or any of the transactions contemplated thereby, including the merger and the issuance of Apricus common stock to Seelos’ stockholders in the merger; provided, that Apricus may not terminate the Merger Agreement pursuant to this provision if the failure to obtain the approval of Apricus’ stockholders was caused by the action or failure to act of Apricus and such action or failure to act constitutes a material breach by Apricus of the Merger Agreement;
|
•
|
by Seelos, at any time prior to the approval by Apricus’ stockholders of the proposals to be considered at the Apricus special meeting, if any of the following circumstances shall occur (each of the following, a “Apricus triggering event”):
|
•
|
Apricus’ board of directors fails to recommend that the stockholders of Apricus vote to approve the merger and the issuance of Apricus common stock to Seelos’ stockholders in connection with the merger or withholds, amends, withdraws or modifies its recommendation in a manner adverse to Seelos;
|
•
|
Apricus fails to include in this proxy statement/prospectus/information statement such recommendation;
|
•
|
Apricus’ board of directors approves, endorses or recommends any acquisition proposal;
|
•
|
Apricus enters into any letter of intent or similar document or any contract relating to any acquisition proposal, other than a confidentiality agreement permitted pursuant to the Merger Agreement; or
|
•
|
Apricus or any director or officer of Apricus willfully and intentionally breaches the no solicitation provisions or the provisions regarding the Apricus special meeting set forth in the Merger Agreement;
|
•
|
by Apricus, at any time prior to the adoption of the Merger Agreement by Seelos’ stockholders, if any of the following circumstances shall occur (each an “Seelos triggering event”):
|
•
|
Seelos’ board of directors fails to recommend that Seelos’ stockholders vote to adopt the Merger Agreement, thereby approving the merger, or withholds, amends, withdraws or modifies its recommendation in a manner adverse to Apricus;
|
•
|
Seelos enters into any letter of intent or similar document or any contract relating to any acquisition proposal, other than a confidentiality agreement permitted pursuant to the Merger Agreement; or
|
•
|
Seelos or any director or officer of Seelos willfully and intentionally breaches the no solicitation provisions or the provisions regarding written consent of Seelos’ stockholders set forth in the Merger Agreement;
|
•
|
by Apricus or Seelos if the other party has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement or if any representation or warranty of the other party has become inaccurate, in either case such that the conditions to the closing of the merger would not be satisfied as of time of such breach or inaccuracy, provided that the non-breaching party is not then in material breach of any representation, warranty, covenant or agreement, provided, further that if such breach or inaccuracy is curable, then the Merger Agreement will not terminate pursuant to this provision as a result of a particular breach or inaccuracy until the earlier of the expiration of a 30-day period after delivery of written notice from the non-breaching party of such breach or inaccuracy and the breaching party ceasing to exercise commercially reasonable efforts to cure such breach, if such breach has not been cured;
|
•
|
by Seelos prior to receiving written consent approving the transaction if Apricus has received a superior offer for another transaction, enters into a definitive agreement regarding the superior officer and pays Apricus the termination fee identified below in “The Merger Agreement – Termination Fee”;
|
•
|
by Apricus prior to Seelos receiving written consent approving the transaction if Seelos has received a superior offer for another transaction, enters into a definitive agreement regarding the superior officer and pays Seelos the termination fee identified below in “The Merger Agreement – Termination Fee”; or
|
•
|
by either party if the Apricus Board of Directors authorizes Apricus to enter into an alternative transaction.
|
•
|
(a) the Merger Agreement is terminated by (i) either Apricus or Seelos because, after the Apricus special meeting has been held, Apricus’ stockholders have not approved the Merger Agreement or the transactions contemplated by the Merger Agreement, including the issuance of shares of Apricus common stock to Seelos’ stockholders in the merger, or (ii) by Seelos because Apricus or Merger Sub has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement or if any representation or warranty of Apricus or Merger Sub has become inaccurate, in either case, such that the conditions to the closing of the merger would not be satisfied as of the time of such breach or inaccuracy, subject to a 30 day cure period, (b) at any time after the date of Merger Agreement and prior to the Apricus special meeting an acquisition proposal with respect to Apricus was publicly announced, disclosed or otherwise communicated to the board of directors of Apricus, and (c) within 12 months after the date of such termination, Apricus enters into a definitive agreement for or consummates an acquisition transaction
;
|
•
|
the Merger Agreement is terminated by Apricus prior to Seelos receiving written consent approving the transaction if Apricus has received a superior offer for another transaction and enters into a definitive agreement regarding the superior offer
; or
|
•
|
the Merger Agreement is terminated by Seelos at any time prior to the approval of the Merger Agreement and the transactions contemplated therein by Apricus’ stockholders because of the occurrence of an Apricus triggering event.
|
•
|
the Merger Agreement is terminated by either Apricus or Seelos if (a) the Apricus special meeting shall have been held and completed and (b) Apricus’ stockholders shall have not approved the Merger Agreement or the transactions contemplated by the Merger Agreement, including the issuance of shares of Apricus common stock to Seelos’ stockholders in the merger;
|
•
|
the Merger Agreement is terminated by Seelos because Apricus or Merger Sub has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement or if any representation or warranty of Apricus or Merger Sub has become inaccurate, in either case such that the conditions to the closing of the merger would not be satisfied as of the time of such breach or inaccuracy, subject to a 30 day cure period; or
|
•
|
Seelos fails to consummate the transactions described in the Merger Agreement solely as a result of an Apricus Material Adverse Effect.
|
•
|
(a) the Merger Agreement is terminated by Apricus because (i) the required approval of Seelos’ stockholders has not been obtained within five business days of the registration statement on Form S-4, of which this proxy statement/prospectus/information statement is a part, being declared effective by the U.S. Securities and Exchange Commission or (ii) Seelos has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement or if any representation or warranty of Seelos has become inaccurate, in either case, such that the conditions to the closing of the merger would not be satisfied as of the time of such breach or inaccuracy, subject to a 30 day cure period ,(b) at any time after the date of the Merger Agreement and prior to obtaining the approval of Seelos’ stockholders, an acquisition proposal with respect to Seelos was publicly announced, disclosed or otherwise communicated to the board of directors of Seelos and (c) within 12 months after the date of such termination, Seelos enters into a definitive agreement for or consummates an acquisition transaction
;
|
•
|
the Merger Agreement is terminated by Seelos prior to Apricus receiving written consent approving the transaction if Seelos has received a superior offer for another transaction and enters into a definitive agreement regarding the superior offer
; or
|
•
|
the Merger Agreement is terminated by Apricus at any time prior to the adoption of the Merger Agreement, and approval of the merger and the other transactions contemplated by the Merger Agreement, by Seelos’ stockholders upon the occurrence of an Seelos triggering event
.
|
•
|
the Merger Agreement is terminated by Apricus because Seelos has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement or if any representation or warranty of Seelos has become inaccurate, in either case such that the conditions to the closing of the merger would not be satisfied as of the time of such breach or inaccuracy, subject to a 30-day cure period; or
|
•
|
Apricus fails to consummate the transactions described in the Merger Agreement solely as a result of the occurrence of a Company Material Adverse Effect.
|
•
|
U.S. expatriates and former citizens or long-term residents of the United States;
|
•
|
Apricus U.S. Holders whose functional currency is not the U.S. dollar;
|
•
|
persons holding Apricus common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
|
•
|
banks, insurance companies, and other financial institutions;
|
•
|
real estate investment trusts or regulated investments companies;
|
•
|
brokers, dealers or traders in securities;
|
•
|
“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
|
•
|
S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
|
•
|
persons for whom Apricus common stock constitutes “qualified small business stock” within the meaning of Section 1202 of the Code;
|
•
|
tax-exempt organizations or governmental organizations;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to Apricus common stock being taken into account in an “applicable financial statement” (as defined in the Code);
|
•
|
persons deemed to sell Apricus common stock under the constructive sale provisions of the Code;
|
•
|
persons who hold or receive Apricus common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
|
•
|
tax-qualified retirement plans.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
•
|
a trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
|
•
|
Richard Pascoe
|
•
|
Brian Dorsey
|
•
|
Neil Morton
|
•
|
Kleanthis G. Xanthopoulos
|
•
|
Russell Ray
|
•
|
Paul V. Maier
|
•
|
Wendell Wierenga
|
•
|
Sandford Smith
|
•
|
Richard Pascoe
|
•
|
Brian Dorsey
|
•
|
Neil Morton
|
•
|
Kleanthis G. Xanthopoulos
|
•
|
Russell Ray
|
•
|
Paul V. Maier
|
•
|
Wendell Wierenga
|
•
|
Sandford Smith
|
Name and Position
|
Year
|
Salary
|
Bonus
(4)
|
Stock Awards
(5)
|
Option Awards
(6)
|
Non-Equity Incentive Plan Compensation
(7)
|
All Other Compensation
|
Total
|
||||||||||||||
Richard W. Pascoe, Chief Executive Officer, Secretary and Director
(1)
|
2017
|
$
|
487,396
|
|
$
|
97,479
|
|
$
|
64,000
|
|
$
|
—
|
|
$
|
176,681
|
|
$
|
13,036
|
|
$
|
838,592
|
|
2016
|
$
|
487,396
|
|
$
|
—
|
|
$
|
179,555
|
|
$
|
383,891
|
|
$
|
—
|
|
$
|
12,836
|
|
$
|
1,063,678
|
|
|
Brian T. Dorsey, Senior Vice President, Chief Development Officer
(2)
|
2017
|
$
|
319,300
|
|
$
|
63,860
|
|
$
|
48,000
|
|
$ —
|
$
|
92,597
|
|
$
|
12,788
|
|
$
|
536,545
|
|
||
2016
|
$
|
319,300
|
|
$ —
|
$
|
95,250
|
|
$
|
153,559
|
|
$
|
—
|
|
$
|
12,588
|
|
$
|
580,697
|
|
|||
Neil Morton, Senior Vice President, Chief Business Officer
(3)
|
2017
|
$
|
275,000
|
|
$
|
55,000
|
|
$
|
48,000
|
|
$ —
|
$
|
79,750
|
|
$
|
12,006
|
|
$
|
469,756
|
|
||
2016
|
$
|
275,000
|
|
$ —
|
$
|
46,691
|
|
$
|
130,180
|
|
$
|
—
|
|
$
|
11,806
|
|
$
|
463,677
|
|
(1)
|
Mr. Pascoe’s all other compensation in 2017 includes $10,800 for Apricus’ matching and profit sharing contribution to the 401(k) plan and $2,236 in life insurance premiums.
|
(2)
|
Mr. Dorsey’s all other compensation in 2017 includes $10,800 for Apricus’ matching and profit sharing contribution to the 401(k) plan and $1,988 in life insurance premiums.
|
(3)
|
Mr. Morton’s all other compensation in 2017 includes $10,800 for Apricus’ matching and profit sharing contribution to the 401(k) plan and $1,206 in life insurance premiums.
|
(4)
|
Represents the dollar amount of the special one-time bonus approved and ratified by the Compensation Committee on June 1, 2017, which was intended to recognize the efforts of such executives related to the sale of Apricus’ ex-U.S. Vitaros business.
|
(5)
|
Represents the grant date fair value of the stock awards granted in the applicable fiscal year, computed in accordance with FASB ASC Topic 718. For information relating to Apricus’ assumptions made in valuing the stock awards granted to its named executive officers in 2017, see note 8 to its audited consolidated financial statements included in this proxy statement/prospectus/information statement.
|
(6)
|
Represents the grant date fair value of the stock option awards granted in 2016, calculated in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of valuation assumptions for stock-based compensation, see note 8 to Apricus’ audited consolidated financial statements included in this proxy statement/prospectus/information statement. These figures do not reflect the amortized compensation expense or value received by the officer in the year indicated or that may be received by the officer with respect to such equity awards.
|
(7)
|
Represents the bonuses paid to the named executive officers in cash in 2018 for 2017 performance pursuant to Apricus’ annual incentive program. There were no bonuses paid to the named executive officers in 2017 for 2016 performance pursuant to Apricus’ annual incentive program
|
Name
|
Title
|
Fiscal Year 2017 Incentive Bonus Rate at Target
|
|
2017 Evaluation of Company Performance
|
|
Final Ratio Incentive Bonus as a Percentage of Base Salary
|
|
Fiscal 2017 Incentive Bonus Award
|
|||||
Richard W. Pascoe
|
Chief Executive Officer, Secretary and Director
|
50
|
|
%
|
72.5
|
|
%
|
36.25
|
|
%
|
$
|
176,681
|
|
Brian T. Dorsey
|
Senior Vice President, Chief Development Officer
|
40
|
|
%
|
72.5
|
|
%
|
29
|
|
%
|
$
|
92,597
|
|
Neil Morton
|
Senior Vice President, Chief Business Officer
|
40
|
|
%
|
72.5
|
|
%
|
29
|
|
%
|
$
|
79,750
|
|
|
Option Awards
(1)
|
Stock Awards
|
|||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options Exercisable (#)
|
Number of Securities Underlying Unexercised Options Non-Exercisable (#)
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested (#)
(3)
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
(4)
|
Equity Incentive Plan Awards: Number of Unearned shares, Units or Other Rights That Have Not Vested (#)
(5)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
(4)
|
||||||||
Richard W. Pascoe
|
90,000
|
—
|
|
—
|
|
$
|
25.10
|
|
3/18/2023
|
67,500
|
$
|
124,200
|
|
117,500
|
$
|
216,200
|
|
|
21,875
|
8,125
|
|
—
|
|
$
|
14.30
|
|
1/29/2025
|
|
|
|
|
||||
|
21,875
|
28,125
|
|
—
|
|
$
|
11.10
|
|
3/15/2026
|
|
|
|
|
||||
Brian T. Dorsey
|
22,500
|
7,500
|
|
—
|
|
$
|
11.30
|
|
12/1/2024
|
50,000
|
$
|
92,000
|
|
87,500
|
$
|
161,000
|
|
|
8,750
|
11,250
|
|
—
|
|
$
|
11.10
|
|
3/15/2026
|
|
|
|
|
||||
Neil Morton
|
11,250
|
750
|
|
—
|
|
$
|
23.20
|
|
3/20/2024
|
42,500
|
$
|
78,200
|
|
80,000
|
$
|
147,200
|
|
|
8,000
|
—
|
|
—
|
|
$
|
23.20
|
|
3/20/2024
|
|
|
|
|
||||
|
4,375
|
1,625
|
|
|
$
|
14.30
|
|
1/29/2025
|
|
|
|
|
|||||
|
3,721
|
4,779
|
|
|
$
|
11.10
|
|
3/15/2026
|
|
|
|
|
|||||
|
6,875
|
9,625
|
|
|
$
|
5.70
|
|
4/1/2026
|
|
|
|
|
(1)
|
Except as otherwise noted, all stock options have a term of ten years from the date of grant and vest over four years, with 25% of the shares subject to the options vesting on the first anniversary of the date of grant and the remainder vesting in 36 monthly tranches thereafter. For a
|
(2)
|
Represents performance-based stock options that vested based on Apricus’ initiation of one or more Phase II or later clinical trials of assets approved by the Apricus board of directors (each, a “Qualifying Trial”) on or before December 31, 2015, as follows: (1) 25% of the underlying shares vested upon the First Vesting Date (e.g., the enrollment of the first patient in the first Qualifying Trial), which occurred as a result of the randomization and first dosing of the first RayVa Phase 2a patient in December 2014; 1/96
th
of the total number of shares subject to the option vested monthly thereafter over a 24-month period so that the option was vested and exercisable with respect to 50% of the total number of shares of stock underlying the option on the second anniversary of the First Vesting Date, and (2) 25% of the underlying shares vested upon the Second Vesting Date (e.g., the enrollment of the first patient in the second Qualifying Trial), which occurred as a result of the randomization and first dosing of the first fispemifene patient in May 2015; 1/96
th
of the total number of shares subject to the option vested monthly thereafter over a 24-month period so that the option was vested and exercisable with respect to 100% of the total number of shares of stock underlying the option on the second anniversary of the Second Vesting Date. Pursuant to the Merger Agreement, all of these options will vest immediately prior to the consummation of the merger.
|
(3)
|
Includes restricted stock units granted in April 2016 (with respect to Mr. Pascoe) and May 2016 (with respect to Messrs. Dorsey and Morton) that vested on January 1, 2018, as follows: Mr. Pascoe, 17,500 restricted stock units; Mr. Dorsey, 12,500 restricted stock units; and Mr. Morton, 5,000 restricted stock units.
|
(4)
|
Computed by multiplying the number of shares underlying each RSU by $1.84, the closing market price of Apricus common stock on December 29, 2017, the last trading day of 2017.
|
(5)
|
Includes performance-based restricted stock units granted in April 2016 (with respect to Mr. Pascoe) and May 2016 (with respect to Messrs. Dorsey and Morton) that will vest upon Apricus' receipt of marketing approval of Vitaros in the United States by the FDA on or before December 31, 2018, subject to the executive’s continuous employment or service with Apricus through the vesting date, as follows: Mr. Pascoe, 17,500 restricted stock units; Mr. Dorsey, 12,500 restricted stock units; and Mr. Morton, 5,000 restricted stock units.
|
Name
|
Cash Compensation
(1)
|
Option Grants
(2)
|
Stock Awards
(3)
|
Total
|
||||||||
Kleanthis G. Xanthopoulos, Ph.D.
|
$
|
92,000
|
|
$
|
—
|
|
$
|
19,200
|
|
$
|
111,200
|
|
Russell Ray
|
$
|
55,000
|
|
$
|
—
|
|
$
|
14,400
|
|
$
|
69,400
|
|
Paul V. Maier
|
$
|
58,000
|
|
$
|
—
|
|
$
|
14,400
|
|
$
|
72,400
|
|
Wendell Wierenga, Ph.D.
|
$
|
48,000
|
|
$
|
—
|
|
$
|
14,400
|
|
$
|
62,400
|
|
Sandford D. Smith
|
$
|
52,000
|
|
$
|
—
|
|
$
|
14,400
|
|
$
|
66,400
|
|
(1)
|
Includes the value of the annual retainers payable to Apricus’ non-employee directors.
|
(2)
|
No stock options were granted to the directors in 2017. As of December 31, 2017, each of Apricus’ non-employee directors held stock options to purchase the following number of shares of Apricus common stock: Dr. Xanthopoulos, options to purchase 18,200 shares; Mr. Ray, options to purchase 10,700 shares; Mr. Maier, options to purchase 11,600 shares; Dr. Wierenga, options to purchase 15,000 shares; and Mr. Smith, options to purchase 13,500 shares. As of December 31, 2017, each of Apricus’ non-employee directors held the following amounts of unvested restricted stock units: Dr. Xanthopoulos, 15,000; Mr. Ray, 11,250; Mr. Maier, 11,250; Dr. Wierenga, 11,250; and Mr. Smith, 11,250.
|
(3)
|
Represents the grant date fair value of the stock awards granted in 2017, computed in accordance with FASB ASC Topic 718. For information relating to Apricus’ assumptions made in valuing the stock awards granted to its non-employee directors in 2017, see note 8 to Apricus’ audited consolidated financial statements included in this proxy statement/prospectus/information statement.
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)(1)
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)(2)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column
(a)(3)
|
||
Equity compensation plans approved by security holders
|
1,086,509
|
$
|
17.37
|
|
225,975
|
(1)
|
Consists of options and restricted stock units outstanding as of December 31, 2017 under the 2012 Plan, and the 2006 Plan.
|
(2)
|
Consists of the weighted average exercise price of outstanding options as of December 31, 2017.
|
(3)
|
Consists entirely of shares of Apricus common stock that remain available for future issuance under the 2012 Plan as of December 31, 2017.
|
•
|
Apricus’ board of directors believes effecting the Apricus Reverse Stock Split may be an effective means of avoiding a delisting of Apricus common stock from Nasdaq in the future; and
|
•
|
Apricus’ board of directors believes that the Apricus Reverse Stock Split will result in a number of authorized but unissued shares of Apricus common stock sufficient for the issuance of shares of Apricus common stock to Seelos’ stockholders pursuant to the Merger Agreement.
|
•
|
U.S. expatriates and former citizens or long-term residents of the United States;
|
•
|
Apricus U.S. Holders whose functional currency is not the U.S. dollar;
|
•
|
persons holding Apricus common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
|
•
|
banks, insurance companies, and other financial institutions;
|
•
|
real estate investment trusts or regulated investments companies;
|
•
|
brokers, dealers or traders in securities;
|
•
|
persons for whom Apricus common stock constitutes “qualified small business stock” within the meaning of Section 1202 of the Code;
|
•
|
“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
|
•
|
S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
|
•
|
tax-exempt organizations or governmental organizations;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to Apricus common stock being taken into account in an “applicable financial statement” (as defined in the Code);
|
•
|
persons deemed to sell Apricus common stock under the constructive sale provisions of the Code;
|
•
|
persons who hold or receive Apricus common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
|
•
|
tax-qualified retirement plans.
|
|
Number of Shares #
|
As of a % of Shares Outstanding
(1)
|
Dollar
Value $ (2) |
|||||
2006 Plan
|
|
|
|
|||||
Options outstanding
|
120,270
|
|
0.51
|
%
|
$
|
32,473
|
|
|
Weighted average exercise price of outstanding options
|
$
|
25.64
|
|
|
|
|||
Weighted average remaining term of outstanding options
|
4.55 years
|
|
|
|
||||
|
|
|
|
|||||
2012 Plan
|
|
|
|
|||||
Restricted stock units outstanding
|
570,084
|
|
2.43
|
%
|
$
|
153,923
|
|
|
Options outstanding
|
933,059
|
|
3.98
|
%
|
$
|
251,926
|
|
|
Weighted average exercise price of outstanding options
|
$
|
5.10
|
|
|
|
|||
Weighted average remaining term of outstanding options
|
8.7 years
|
|
|
|
||||
|
|
|
|
|||||
Shares remaining available for grant under 2012 Plan
(3)
|
160,302
|
|
0.68
|
%
|
$
|
43,282
|
|
|
|
|
|
|
|||||
Restated Plan
|
|
|
|
|||||
Proposed increase in shares available for issuance under Restated Plan (over existing share reserve under 2012 Plan)
(4)
|
9,200,000
|
|
39.2%
|
|
$2,484,000
|
|
(1)
|
Based on 23,441,449 shares of Apricus common stock outstanding as of August 15, 2018.
|
(2)
|
Based on the closing price of Apricus common stock on August 15, 2018, of $0.27 per share.
|
(3)
|
Does not include possible future increases to the share reserve under the evergreen provision of the 2012 Plan, which allows for an annual increase in the number of shares available for issuance under the 2012 Plan on January 1 of each year during the ten-year term of the 2012 Plan by a number of shares of Apricus common stock equal to the lesser of: (a) 4% of the number of shares of Apricus common stock issued and outstanding on a fully-diluted basis as of the close of business on the immediately preceding December 31, or (b) a number of shares of Apricus common stock set by the Apricus board of directors.
|
(4)
|
Does not include possible future increases to the share reserve under the evergreen provision of the Restated Plan. Pursuant to the evergreen provision, up to the lesser of (a) 4% of the outstanding shares of Apricus common son a fully diluted basis or (b) a number of shares of set by the Apricus board of directors, may become available for issuance under the Restated Plan during its ten-year term. For instance, in January 2018, 608,689 shares were added to the 2012 Plan, which represented 4% of the outstanding shares of Apricus common stock on a fully diluted basis as of December 31, 2017. These shares have an aggregate dollar value of $164,346 based on the closing price of Apricus common stock on August 15, 2018, or $0.27 per share. In no event may more than 40,000,000 shares of Apricus common stock be delivered upon satisfaction of Awards under the Restated Plan, which maximum number of shares have an aggregate dollar value of $10,800,000 based on the closing price of Apricus common stock on August 15, 2018, or $0.27 per share.
|
•
|
The purpose of the proposed increase in the number of shares reserved for issuance under the Restated Plan is to provide the combined organization with appropriate capacity to issue equity compensation
|
•
|
In determining the size of the share reserve under the Restated Plan, Apricus’ board of directors considered the number of equity awards granted by Apricus during the past three calendar years and the substantial changes to the capitalization structure of Apricus that will occur as a result of the Apricus Reverse Stock Split and the merger, which will have the effect of significantly diminishing the share reserve under the 2012 Plan. In calendar years 2017, 2016 and 2015, Apricus’ annual equity burn rates (calculated by dividing the number of shares subject to equity awards granted during the year by the weighted-average number of shares outstanding during the applicable year) under Apricus’ equity plans were 5.73%, 4.01% and 2.92%, respectively.
|
•
|
Apricus expects the proposed aggregate share reserve under the Restated Plan to provide Apricus with enough shares for awards for approximately two to three years, assuming Apricus continues to grant awards consistent with Apricus’ current practices and historical usage, as reflected in Apricus’ historical burn rate, assuming Apricus receives the maximum annual evergreen increases under the Restated Plan during its ten-year term, and further dependent on the price of Apricus shares and hiring activity during the next few years, forfeitures of outstanding awards, and noting that the consummation of the merger and future circumstances may require Apricus to change its current equity grant practices. Apricus cannot predict its future equity grant practices, the future price of Apricus shares or future hiring activity with any degree of certainty at this time, and the share reserve under the Restated Plan could last for a shorter or longer time.
|
•
|
In fiscal years 2017, 2016 and 2015, Apricus' end of year overhang rate (calculated by dividing (1) the sum of the number of shares subject to equity awards outstanding at the end of the calendar year plus shares remaining available for issuance for future awards at the end of the calendar year by (2) the number of shares outstanding at the end of the calendar year) was 7.14%, 6.4% and 13.07%, respectively.
|
•
|
If the Restated Plan is approved, the merger is consummated and the Apricus Reverse Stock Split is implemented, Apricus expects the combined organization's overhang at the end of 2018 will be approximately %, excluding any possible future grants currently unforeseen to Apricus.
|
•
|
Following the closing of the merger, the Restated Plan will be the only plan under which Apricus will be able to grant new equity awards.
|
Name and Principal Position(s)
|
Stock Options (#)
|
Restricted Stock Units (#)
|
||
Richard W. Pascoe, Chief Executive Officer, Secretary & Director
(1)
|
325,000
|
|
167,500
|
|
Brian T. Dorsey, Senior Vice President, Chief Development Officer
(2)
|
110,000
|
|
125,000
|
|
Neil Morton, Senior Vice President, Chief Business Officer
|
111,000
|
|
117,500
|
|
All current executive officers as a group (3 persons)
|
546,000
|
|
410,000
|
|
All current non-executive directors as a group (5 persons)
(3)
|
243,700
|
|
-
|
|
All employees, including all current officers who are not executive officers, as a group (10 persons)
|
143,359
|
|
160,084
|
|
Each nominee for election as a director
(1)(3)
|
—
|
|
—
|
|
Each associate of any executive officers, current directors or director nominees
|
—
|
|
—
|
|
Each other person who received or is to receive 5% of awards
(1)(2)(3)
|
—
|
|
—
|
|
(1)
|
Mr. Pascoe is a current director and will continue as a director following the closing of the merger. Pursuant to his employment agreement, in the event that the Base and Bonus Severance Obligation payable to Mr. Pascoe under his employment agreement (as described in footnote (1) in the table under the heading “
Apricus Named Executive Officer Golden Parachute Payments
” above and disclosed in the “Cash” column in such table) would cause the Apricus Net Cash to be less than $0, such portion as would result in the Apricus Net Cash being less than $0 (but in no event more than 40% of the Base and Bonus Severance Obligation) (the “Equity-Settled Severance Portion”) would be paid in the form of a restricted stock unit granted at closing of the merger under the 2012 Plan or the Restated Plan denominated with a dollar value equal to 120% of the Equity-Settled Severance Portion (the “Pascoe Closing RSU”). The terms and conditions of the Pascoe Closing RSU are described further below under “
Employment and Consulting Agreements
.” In the event the merger does not close, the Pascoe Closing RSU will not be issued. Because it is uncertain whether the Pascoe Closing RSU will be granted or, if it is granted, whether it will be settled in shares of Apricus common stock, it is impossible to estimate the number of shares of Apricus common stock that may be issued pursuant to the Pascoe Closing RSU. The maximum aggregate dollar value of the cash or shares of Apricus common stock issuable under the Pascoe Closing RSU, however, is estimated to be $467,901. The Pascoe Closing RSU will be granted as part of Mr. Pascoe's termination benefits and is not compensation for his services as a non-employee director following the closing of the merger.
|
(2)
|
Pursuant to his release agreement, in the event the merger closes on or prior to March 5, 2019, Mr. Dorsey will be eligible to receive a restricted stock unit granted at closing of the merger under the Restated Plan denominated with a dollar value equal to $159,650 (the “Dorsey Closing RSU”). The terms and conditions of the Dorsey Closing RSU are described further below under “
Employment and Consulting Agreements
.” In the event the merger does not close on or before March 5, 2019, the Dorsey Closing RSU will not be issued. Because it is uncertain whether the Dorsey Closing RSU will be granted or, if it is granted, whether it will be settled in shares of Apricus common stock, it is impossible to estimate the number of shares of Apricus common stock that may be issued pursuant to the Dorsey Closing RSU. The maximum aggregate dollar value of the cash or shares of Apricus common stock issuable under the Dorsey Closing RSU, however, is estimated to be $159,650.
|
(3)
|
Apricus expects to continue to make automatic equity awards under the Restated Plan to Apricus’ non-employee directors pursuant to Apricus’ non-employee director compensation policy, as described under “
Apricus Director Compensation
.”
|
1.
|
Want a fast-acting and on-demand treatment;
|
2.
|
Prefer a locally-acting treatment instead of an oral systemic treatment;
|
3.
|
Have contraindications to PDE5 inhibitors due to medications or concurrent disease;
|
4.
|
Are healthy enough to take the PDE5 inhibitors but stop taking them because they are non-responders; or
|
5.
|
Drop out because of poor tolerability or side effects from oral PDE5 inhibitors.
|
•
|
submission to the FDA of an IND which must become effective before human clinical trials may begin and must be updated annually;
|
•
|
completion of extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the FDA’s Good Laboratory Practice regulations;
|
•
|
performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each proposed indication in accordance with good clinical practices, or GCPs;
|
•
|
submission to the FDA of an NDA after completion of all pivotal clinical trials;
|
•
|
a determination by the FDA within 60 days of its receipt of an NDA to file the NDA for review;
|
•
|
satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the active pharmaceutical ingredient (“API”) and finished drug product are produced and tested to assess compliance with cGMP regulations; and
|
•
|
FDA review and approval of an NDA prior to any commercial marketing or sale of the drug in the United States.
|
•
|
Phase 1
. Phase 1 includes the initial introduction of an investigational new drug into humans. Phase 1 clinical trials are typically closely monitored and may be conducted in patients with the target disease or condition or in healthy volunteers. These studies are designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the investigational drug in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness. During Phase 1 clinical trials, sufficient information about the investigational drug’s pharmacokinetics and pharmacological effects may be obtained to permit the design of well-controlled and scientifically valid Phase 2 clinical trials. The total number of participants included in Phase 1 clinical trials varies, but is generally in the range of 20 to 80.
|
•
|
Phase 2
. Phase 2 includes controlled clinical trials conducted to preliminarily or further evaluate the effectiveness of the investigational drug for a particular indication(s) in patients with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks associated with the drug. Phase 2 clinical trials are typically well-controlled,
|
•
|
Phase 3
. Phase 3 clinical trials are generally controlled clinical trials conducted in an expanded patient population generally at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the drug has been obtained, and are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the investigational drug product, and to provide an adequate basis for product approval. Phase 3 clinical trials usually involve several hundred to several thousand participants.
|
•
|
Centralized Procedure. Under the Centralized Procedure a so-called Community Marketing Authorization is issued by the European Commission, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency (“EMA”). The Community Marketing Authorization is valid throughout the entire territory of the European Economic Area (“EEA”) (which includes the 28 Member States of the EU plus Norway, Liechtenstein and Iceland). The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.
|
•
|
For medicines that do not fall within these categories, an applicant has the option of submitting an application for a centralized marketing authorization to the EMA, as long as the medicine concerned is a significant therapeutic, scientific or technical innovation, or if its authorization would be in the interest of public health.
|
•
|
National Authorization Procedures. There are also two other possible routes to authorize medicinal products in several countries, which are available for investigational drug products that fall outside the scope of the centralized procedure:
|
•
|
Decentralized Procedure. Using the Decentralized Procedure, an applicant may apply for simultaneous authorization in more than one European Union country of medicinal products that have not yet been authorized in any European Union country and that do not fall within the mandatory scope of the centralized procedure. Under the Decentralized Procedure the applicant chooses one country as Reference Member State. The regulatory authority of the Reference Member State will then be in charge of leading the assessment of the marketing authorization application.
|
•
|
Mutual Recognition Procedure. In the Mutual Recognition Procedure, a medicine is first authorized in one European Union Member State, in accordance with the national procedures of that country. Following this, further marketing authorizations can be sought from other European Union countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.
|
|
2018
|
2017
|
||||||||||
|
High
|
Low
|
High
|
Low
|
||||||||
First quarter
|
$
|
3.34
|
|
$
|
0.38
|
|
$
|
4.07
|
|
$
|
1.19
|
|
Second quarter
|
$
|
0.58
|
|
$
|
0.25
|
|
$
|
2.45
|
|
$
|
0.86
|
|
Third quarter (through August 30, 2018)
|
$
|
0.47
|
|
$
|
0.26
|
|
$
|
1.87
|
|
$
|
1.00
|
|
Fourth quarter
|
N/A
|
|
N/A
|
|
$
|
2.14
|
|
$
|
1.20
|
|
•
|
Advancing SLS-002 in suicidality in PTSD and in major depressive disorder;
|
•
|
Advancing SLS-006 in early stage and late stage Parkinson’s disease as a monotherapy and adjunctive therapy, respectively;
|
•
|
Filing an IND for SLS-008 in pediatric esophagitis and another undisclosed indication;
|
•
|
Forming strategic collaborations in the European Union and Asian markets; and
|
•
|
Acquiring synergistic assets in the central nervous system therapy space through licensing and partnerships.
|
•
|
completion of non-clinical laboratory tests, animal studies and formulation studies conducted according to good laboratory practice or other applicable regulations;
|
•
|
submission of an IND, which allows clinical trials to begin unless the FDA objects within 30 days;
|
•
|
adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use or uses conducted in accordance with FDA regulations GCP, which are international ethical and scientific quality standards meant to assure that the rights, safety and well-being of trial participants are protected, and to define the roles of clinical trial sponsors, administrators and monitors and to assure clinical trial data integrity;
|
•
|
pre-approval inspection of manufacturing facilities and clinical trial sites; and
|
•
|
FDA approval of an NDA, which must occur before a drug can be marketed or sold.
|
•
|
Phase I
– the drug is initially given to healthy human subjects or patients in order to determine metabolism and pharmacologic actions of the drug in humans, side effects and, if possible, to gain early evidence on effectiveness. During Phase I clinical trials, sufficient information about the investigational drug’s pharmacokinetics and pharmacologic effects may be obtained to permit the design of well-controlled and scientifically valid Phase II clinical trials.
|
•
|
Phase II
– clinical trials are conducted to evaluate the effectiveness of the drug for a particular indication or in a limited number of patients in the target population to identify possible adverse effects and safety risks, to determine the efficacy of the drug for specific targeted diseases and to determine dosage tolerance and optimal dosage. Multiple Phase II clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase III clinical trials.
|
•
|
Phase
III – when Phase II clinical trials demonstrate that a dosage range of the drug appears effective and has an acceptable safety profile, and provide sufficient information for the design of Phase III clinical trials, Phase III clinical trials in an expanded patient population at multiple clinical sites may be undertaken. They are performed after preliminary evidence suggesting effectiveness of the drug has been obtained, and are intended to further evaluate dosage, effectiveness and safety, to establish the overall benefit-risk relationship of the investigational drug and to provide an adequate basis for product labeling and approval by the FDA. In most cases, the FDA requires two adequate and well-controlled Phase III clinical trials to demonstrate the efficacy of the drug in an expanded patient population at multiple clinical trial sites.
|
•
|
The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the Department of Health and Human Services as a condition for states to receive federal matching funds for the manufacturer’s covered outpatient drugs furnished to Medicaid patients. Effective in 2010, the PPACA made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs and biologic agents to 23.1% of the AMP and adding a new rebate calculation for “line extensions” (
i.e.
, new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP. The PPACA also expanded the universe of Medicaid utilization subject to drug rebates by requiring pharmaceutical manufacturers to pay rebates on Medicaid managed care utilization and by expanding the population potentially eligible for Medicaid drug benefits. The CMS have proposed to expand Medicaid rebate liability to the territories of the U.S. as well. In addition, the PPACA provides for the public availability of retail survey prices and certain weighted average AMPs under the Medicaid program. The implementation of this requirement by the CMS may also provide for the public availability of pharmacy acquisition of cost data, which could negatively impact Seelos’ sales.
|
•
|
In order for a pharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or to be sold directly to U.S. government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the AMP and Medicaid rebate amounts reported by the manufacturer. The PPACA expanded the types of entities eligible to receive discounted 340B pricing, although, under the current state of the law, with the exception of children’s hospitals, these newly-eligible entities will not be eligible to receive discounted 340B pricing on orphan drugs when used for the orphan indication. In addition, as 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase.
|
•
|
The PPACA imposes a requirement on manufacturers of branded drugs and biologic agents to provide a 50% discount off the negotiated price of branded drugs dispensed to Medicare Part D patients in the coverage gap (
i.e.
, “donut hole”).
|
•
|
The PPACA imposes an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications.
|
•
|
The PPACA requires pharmaceutical manufacturers to track certain financial arrangements with physicians and teaching hospitals, including any “transfer of value” made or distributed to such entities, as well as any investment interests held by physicians and their immediate family members. Manufacturers are required to track this information and were required to make their first reports in March 2014. The information reported is publicly available on a searchable website.
|
•
|
As of 2010, a new Patient-Centered Outcomes Research Institute was established pursuant to the PPACA to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research. The research conducted by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceutical products.
|
•
|
The PPACA created the Independent Payment Advisory Board, which has the authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. Under certain circumstances, these recommendations will become law unless Congress enacts legislation that will achieve the same or greater Medicare cost savings.
|
•
|
The PPACA established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation from 2011 to 2019.
|
•
|
Developing drugs with a proven mechanism of action in human clinical studies, which increases the probability of success in trials;
|
•
|
Pursuing orphan and rare disease indications that are aptly suited for an emerging growth company like Seelos; and
|
•
|
Focusing on large unmet needs in neurological and psychiatric disorders, matching the prior experience of its research and development team.
|
•
|
For treatment of suicidality in depression, generally both somatic and psychiatric therapies are recommended. In general, somatic therapies such as antidepressants, antipsychotics, or mood-stabilizing agents are recommended. However, early use of supplemental medicines, including sedative-anxiolytics or low doses of second-generation antipsychotics, is also utilized to rapidly address agitation, anxiety, and insomnia, which are additional risk factors for suicide.
|
•
|
A mainstay of the treatment of suicidal patients suffering from acute, recurrent, and chronic depressive illness is the administration of antidepressant medication. Antidepressants also have demonstrated efficacy in the treatment of anxiety disorders. They have also been used successfully in treating suicidal patients with comorbid depression and substance use disorders. Remarkably, however, there is relatively limited evidence that antidepressant treatment reduces risk. There is strong and consistent evidence in patients with recurring bipolar disorder and major depressive disorder that long-term maintenance treatment with lithium salts is associated with major reductions in risk of both suicide and suicide attempts. As with antidepressants, the potential lethality of lithium in overdose is a serious burden when deciding on the quantity of lithium to give with each prescription. Despite the increased use and antimanic efficacy of specific anticonvulsant and antipsychotic agents, their long-term effectiveness in protecting against recurrent mood episodes is less well established. Moreover, there is no established evidence of a reduced risk of suicidal behavior with any other “mood-stabilizing” anticonvulsants. Analogous to the use of antidepressants for patients with depression, the antipsychotic medications have been the mainstay of somatic treatment for suicidal patients with psychotic disorders.
|
•
|
Since anxiety is a significant and modifiable risk factor for suicide, utilization of antianxiety agents may have the potential to decrease this risk. More specifically, before accompanying depression has resolved, acute suicide risk may be associated with severe psychic anxiety, panic attacks, agitation, and severe insomnia. Although these symptoms may be reduced by aggressive short-term treatment, research on suicide risk with antianxiety treatment is quite limited, with no clinical trial of antianxiety treatment showing short- or long-term anti-suicide effects. Electro-Convulsive therapy (“ECT”), is sometimes used to treat patients who are acutely suicidal, and available evidence suggests that ECT reduces short-term suicidal ideation.
|
•
|
In addition to pharmacotherapies and ECT, psychotherapies play a central role in the management of suicidal behavior in clinical practice. Although few rigorous studies have directly examined whether these
|
•
|
The medications currently approved by the FDA for the treatment of PTSD show little evidence of a treatment effect, lack evidence of efficacy in those for whom the traumatic event was combat-related, and carry suicidality warnings. Sleep disturbances are central features of PTSD and are predictive of disease severity, depression, substance abuse, and suicidal ideation, yet are resistant to the approved medications and present a difficult therapeutic challenge. Current PTSD treatments include off-label use of anxiolytics, sedative-hypnotics, and antipsychotics, many of which lack reliable evidence of efficacy, and many have significant safety liabilities and dependence risk.
|
•
|
The pharmaceutical market for the treatment of major depressive disorder, as indicated earlier, includes selective serotonin reuptake inhibitors (“SSRIs”), serotonin and norepinephrine reuptake inhibitors (“SNRIs”), and atypical antipsychotics; a number of these marketed antidepressants will be generic, and would be key competitors to SLS-002. These products include Forest Laboratory’s Lexapro/Cipralex (escitalopram) and Viibryd (vilazodone), Pfizer, Inc.’s Zoloft (sertraline) Effexor (venlafaxine), and Pristiq (desvenlafaxine), GlaxoSmithKline plc’s Paxil/Seroxat (paroxetine), Eli Lilly and Company’s Prozac (fluoxetine) and Cymbalta (duloxetine), AstraZeneca plc’s Seroquel (quetiapine), and Bristol-Myers Squibb Company’s Abilify (aripiprazole), among others.
|
•
|
Both SSRIs and SNRIs have significant limitations. SSRIs may lead to varying levels of weight gain and the impairment in cognitive and sexual functions. In some cases, SNRIs have a worse safety and tolerability profile compared to SSRIs, in particular with respect to cardiovascular side effects. In addition, neither SSRIs nor SNRIs have shown any remarkable efficacy in suicidality, so far.
|
•
|
Patients with treatment-resistant depression often require treatment with several antidepressants, such as an SSRI or SNRI, combined with an “adjunct” therapy such as an antipsychotic or mood stabilizer. These antipsychotic compounds, such as AstraZeneca plc’s Seroquel (quetiapine) and Bristol-Myers Squibb Company’s Abilify (aripiprazole), and mood stabilizers, such as Janssen Pharmaceutica’s Topamax (topiramate), cause some slight improvements in efficacy but often have unacceptable side effects, including motor symptoms, sedation, lack of concentration, and weight gain. In addition, Janssen Pharmaceutica’s intranasal esketamine has recently shown a successful Phase III study in treatment-resistant depression and along with Allergan’s rapastinel (formerly Naurex), both of which target the NMDA receptor and are expected to have a faster onset of therapeutic effect as compared to currently available therapies.
|
•
|
Apricus’ ability to successfully complete the merger with Seelos or, if the merger is not completed, another strategic transaction for Apricus;
|
•
|
Apricus’ ability to raise additional funds to finance its operations;
|
•
|
Apricus’ ability to secure a development partner for U.S. Vitaros in order to overcome deficiencies raised in the 2018 CRL;
|
•
|
Apricus’ ability to maintain compliance with the listing requirements of Nasdaq;
|
•
|
the outcome, costs and timing of any clinical trial results for Apricus’ current or future product candidates;
|
•
|
the extent and amount of any indemnification claims made by Ferring under the Ferring Asset Purchase Agreement;
|
•
|
litigation expenses, including the ongoing litigation with Laboratoires Majorelle SAS and Majorelle International SARL;
|
•
|
the emergence and effect of competing or complementary products;
|
•
|
Apricus’ ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments Apricus may be required to make, or that Apricus may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
|
•
|
Apricus’ ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel;
|
•
|
the terms and timing of any collaborative, licensing or other arrangements that Apricus has or may establish;
|
•
|
the trading price of Apricus common stock; and
|
•
|
Apricus’ ability to increase the number of authorized shares outstanding to facilitate future financing events.
|
|
Three Months Ended June 30,
|
2018 vs 2017
|
Six Months Ended June 30,
|
2018 vs 2017
|
||||||||||||||||||
|
2018
|
2017
|
$ Change
|
%
Change
|
2018
|
2017
|
$ Change
|
%
Change
|
||||||||||||||
Operating expense
|
|
|
|
|
|
|
|
|
||||||||||||||
Research and development
|
$
|
162
|
|
$
|
839
|
|
$
|
(677
|
)
|
(81
|
)%
|
$
|
379
|
|
$
|
1,266
|
|
$
|
(887
|
)
|
(70
|
)%
|
General and administrative
|
2,075
|
|
1,602
|
|
473
|
|
30
|
%
|
4,210
|
|
3,043
|
|
1,167
|
|
38
|
%
|
||||||
Total operating expense
|
2,237
|
|
2,441
|
|
(204)
|
|
(8
|
)%
|
4,589
|
|
4,309
|
|
280
|
|
6
|
%
|
||||||
Loss before other income (expense)
|
$
|
(2,237
|
)
|
$
|
(2,441
|
)
|
$
|
204
|
|
(8
|
)%
|
$
|
(4,589
|
)
|
$
|
(4,309
|
)
|
$
|
(280
|
)
|
6
|
%
|
|
Three Months Ended June 30,
|
2018 vs 2017
|
Six Months Ended June 30,
|
2018 vs 2017
|
||||||||||||||||
|
2018
|
2017
|
$ Change
|
%
Change
|
2018
|
2017
|
$ Change
|
%
Change
|
||||||||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income (expense), net
|
$ —
|
$
|
3
|
|
$
|
(3
|
)
|
(100)%
|
$ —
|
$
|
(92
|
)
|
$
|
92
|
|
(100)%
|
||||
Loss on extinguishment of debt
|
—
|
|
—
|
|
—
|
|
N/M
|
—
|
|
(422)
|
|
422
|
|
(100)%
|
||||||
Change in fair value of warrant liability
|
—
|
|
716
|
|
(716)
|
|
(100)%
|
222
|
|
(292)
|
|
514
|
|
(176)%
|
||||||
Amendment of equity classified warrants
|
(17)
|
|
—
|
|
(17)
|
|
N/M
|
(158)
|
|
|
(158)
|
|
N/M
|
|||||||
Other income (expense), net
|
1
|
|
—
|
|
1
|
|
N/M
|
1
|
|
(26)
|
|
27
|
|
(104)%
|
||||||
Total other income (expense)
|
$
|
(16
|
)
|
|
$719
|
|
$
|
(735
|
)
|
(102)%
|
$
|
65
|
|
$
|
(832
|
)
|
$
|
897
|
|
(108)%
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Product sales
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
143
|
|
Royalty revenue
|
—
|
|
147
|
|
—
|
|
368
|
|
||||
Cost of goods sold
|
(24
|
)
|
—
|
|
(24
|
)
|
(74
|
)
|
||||
Operating expenses
|
—
|
|
(149
|
)
|
—
|
|
(748
|
)
|
||||
Other expense
|
—
|
|
—
|
|
—
|
|
(16
|
)
|
||||
Gain on sale
|
—
|
|
250
|
|
—
|
|
12,067
|
|
||||
Income (loss) from discontinued operations
|
$
|
(24
|
)
|
$
|
248
|
|
$
|
(24
|
)
|
$
|
11,740
|
|
|
Year Ended December 31,
|
2017 vs 2016
|
|||||||||
|
2017
|
2016
|
$ Change
|
% Change
|
|||||||
Operating expense
|
|
|
|
|
|||||||
Research and development
|
$
|
3,463
|
|
$
|
5,880
|
|
$
|
(2,417
|
)
|
(41
|
)%
|
General and administrative
|
7,210
|
|
7,778
|
|
(568)
|
|
(7
|
)%
|
|||
Loss on disposal of assets
|
2
|
|
14
|
|
(12)
|
|
(86
|
)%
|
|||
Total operating expense
|
10,675
|
|
13,672
|
|
(2,997)
|
|
(22
|
)%
|
|||
Loss from continuing operations
|
$
|
(10,675
|
)
|
$
|
(13,672
|
)
|
$
|
2,997
|
|
(22
|
)%
|
|
Year Ended December 31,
|
2017 vs 2016
|
||||||
|
2017
|
2016
|
$ Change
|
% Change
|
||||
Other (expense) income
|
|
|
|
|
||||
Interest expense, net
|
(83
|
)
|
(983
|
)
|
900
|
|
(92
|
)%
|
Change in fair value of warrant liabilities
|
(646
|
)
|
7,479
|
|
(8,125
|
)
|
(109
|
)%
|
Loss on extinguishment of debt
|
(422
|
)
|
—
|
|
(422
|
)
|
N/M
|
|
Other financing expenses
|
—
|
|
(461
|
)
|
461
|
|
(100
|
)%
|
Other income (expense), net
|
77
|
|
(22
|
)
|
99
|
|
(450
|
)%
|
Total other income
|
(1,074
|
)
|
6,013
|
|
(7,087
|
)
|
(118
|
)%
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Product sales
|
$
|
143
|
|
$
|
675
|
|
Royalty revenue
|
368
|
|
1,088
|
|
||
License fee revenue
|
—
|
|
4,000
|
|
||
Cost of goods sold
|
(74)
|
|
(511)
|
|
||
Cost of Sandoz rights
|
(10)
|
|
(3,380)
|
|
||
Operating expenses
|
(658)
|
|
(1,606)
|
|
||
Other expense
|
(16)
|
|
(40)
|
|
||
Gain on sale
|
12,317
|
|
—
|
|
||
Income from discontinued operations
|
$
|
12,070
|
|
$
|
226
|
|
|
Six Months Ended
June 30, |
|||||
|
2018
|
2017
|
||||
Net cash used in operating activities from continuing operations
|
$
|
(3,865
|
)
|
$
|
(4,851
|
)
|
Net cash provided by (used in) financing activities from continuing operations
|
4,373
|
|
(1,051)
|
|
||
Net cash provided by (used in) discontinued operations
|
(3)
|
|
11,636
|
|
||
Net increase in cash
|
$
|
505
|
|
$
|
5,734
|
|
|
2017
|
2016
|
||||
Net cash provided by (used in) operations
|
|
|
||||
Net cash used in operating activities from continuing operations
|
$
|
(10,571
|
)
|
$
|
(13,780
|
)
|
Net cash provided by investing activities from continuing operations
|
—
|
|
265
|
|
||
Net cash provided by financing activities from continuing operations
|
2,501
|
|
11,003
|
|
||
Net cash provided by discontinued operations
|
12,314
|
|
712
|
|
||
Net increase (decrease) in cash
|
$
|
4,244
|
|
$
|
(1,800
|
)
|
|
For the Six Months Ended
June 30, |
Change
|
||||
(in thousands)
|
2018
|
2017
|
$
|
|||
Operating expenses:
|
|
|
|
|||
General and administrative expenses
|
807
|
|
49
|
|
758
|
|
Research and development expenses
|
250
|
|
—
|
|
250
|
|
Total operating expenses
|
1,057
|
|
49
|
|
1,008
|
|
|
|
|
|
|||
Other expenses:
|
|
|
|
|||
Interest expense
|
46
|
|
2
|
|
44
|
|
Change in fair value of convertible notes payable
|
55
|
|
0
|
|
55
|
|
Total other expenses
|
101
|
|
2
|
|
99
|
|
Net loss
|
1,158
|
|
51
|
|
1,107
|
|
(in thousands)
|
For the Year Ended
December 31, 2017 |
For the period from
June 1, 2016 (inception) through December 31, 2016 |
Change ($)
|
||||||
Operating expenses:
|
|
|
|
||||||
General and administrative expenses
|
$
|
654
|
|
$
|
230
|
|
$
|
424
|
|
Research and development expenses
|
400
|
|
25
|
|
375
|
|
|||
Total operating expenses
|
1,054
|
|
255
|
|
799
|
|
|||
Other expenses:
|
|
|
|
||||||
Interest expense
|
21
|
|
—
|
|
21
|
|
|||
Change in fair value of convertible notes payable
|
2
|
|
—
|
|
2
|
|
|||
Total other expenses
|
23
|
|
0
|
|
23
|
|
|||
Net loss
|
$
|
(1,077
|
)
|
$
|
(255
|
)
|
$
|
(822
|
)
|
|
For the Six Months Ended
June 30, |
|||||
(in thousands)
|
2018
|
2017
|
||||
Net cash used in operating activities
|
$
|
(641
|
)
|
$
|
(32
|
)
|
Net cash provided by financing activities
|
565
|
|
200
|
|
||
Net change in cash
|
$
|
(76
|
)
|
$
|
168
|
|
(in thousands)
|
For the Year Ended December 31, 2017
|
For the period from June 1, 2016 (inception) through December 31, 2016
|
||||
Net cash used in operating activities
|
$
|
(632
|
)
|
$
|
—
|
|
Net cash used in investing activities
|
(25
|
)
|
—
|
|
||
Net cash provided by financing activities
|
915
|
|
—
|
|
||
Net change in cash
|
$
|
258
|
|
$
|
—
|
|
•
|
contemporaneous valuations of Seelos’ common stock;
|
•
|
the prices, rights, preferences and privileges of Seelos’ preferred stock relative to its common stock;
|
•
|
Seelos’ business, financial condition and results of operations, including related industry trends affecting its operations;
|
•
|
the likelihood of achieving a liquidity event, such as an initial public offering, or sale of Seelos, given prevailing market conditions;
|
•
|
the lack of marketability of Seelos’ common stock;
|
•
|
the market performance of comparable publicly traded companies;
|
•
|
U.S. and global economic and capital market conditions and outlook; and
|
•
|
Common stock valuation methodology.
|
Name
|
Current Principal Affiliation
|
Raj Mehra, Ph.D.
|
Seelos, Chairman, Founder & Chief Executive Officer
|
Richard Pascoe
|
Apricus, Chief Executive Officer
|
Robin L. Smith, M.D.
|
The Stem for Life Foundation, Chairman of the Board
|
Daniel J. O’Connor, J.D.
|
OncoSec Medical, Inc., Chief Executive Officer
|
Brian Lian, Ph.D.
|
Viking Therapeutics, Inc., Chief Executive Officer and President
|
Name
|
Age
|
Titles
|
Raj Mehra, Ph.D.
|
59
|
Chairman, Chief Executive Officer, President & Interim Chief Financial Officer
|
•
|
Class I directors: Kleanthis G. Xanthopoulos, Ph.D. and Paul V. Maier;
|
•
|
Class II directors: Richard W. Pascoe and Sandford D. Smith; and
|
•
|
Class III directors: Russell Ray and Wendell Wierenga, Ph.D.
|
•
|
Class I director (expiring in 2019): Daniel J. O’Connor, J.D.;
|
•
|
Class II directors (expiring in 2021): Raj Mehra, Ph.D. and Brian Lian, Ph.D.; and
|
•
|
Class III directors (expiring in 2020): Dr. Robin L. Smith and Richard W. Pascoe.
|
Audit Committee Chairperson
|
$
|
15,000
|
|
Audit Committee member
|
$
|
7,000
|
|
Compensation Committee Chairperson
|
$
|
12,000
|
|
Compensation Committee member
|
$
|
5,000
|
|
Corporate Governance/Nominating Committee Chairperson
|
$
|
8,000
|
|
Corporate Governance/Nominating Committee member
|
$
|
3,000
|
|
|
Seelos
|
Apricus
|
Pro Forma Adjustments
|
Note 4
|
Pro Forma Combined
|
||||||||
ASSETS
|
|
|
|
|
|
||||||||
Current assets
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
183
|
|
$
|
6,836
|
|
$
|
(5,150
|
)
|
(d) (z)
|
$
|
1,869
|
|
Due from related party
|
2
|
|
—
|
|
—
|
|
|
2
|
|
||||
Prepaid expense and other current assets
|
—
|
|
294
|
|
—
|
|
|
294
|
|
||||
Total current assets
|
185
|
|
7,130
|
|
(5,150
|
)
|
|
$
|
2165
|
|
|||
Property and equipment
|
—
|
|
56
|
|
—
|
|
|
56
|
|
||||
Other long-term assets
|
—
|
|
36
|
|
—
|
|
|
36
|
|
||||
Intangible assets
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||
Goodwill
|
—
|
|
—
|
|
6,163
|
|
(b)
|
6,163
|
|
||||
Total assets
|
$
|
185
|
|
$
|
7,222
|
|
$
|
1,013
|
|
|
$
|
8,420
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||||
Current liabilities
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
912
|
|
$
|
1,054
|
|
$
|
1,250
|
|
(e)
|
$
|
3,216
|
|
Other payables and accrued expenses
|
128
|
|
849
|
|
—
|
|
|
977
|
|
||||
Convertible notes payable, at fair value
|
1,537
|
|
—
|
|
(1,537
|
)
|
(c)
|
—
|
|
||||
Total current liabilities
|
2,577
|
|
1,903
|
|
(287
|
)
|
|
4,193
|
|
||||
Non-current liabilities
|
|
|
|
|
|
||||||||
Other long-term liabilities
|
—
|
|
35
|
|
—
|
|
|
35
|
|
||||
Contingent consideration liability
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
2,577
|
|
1,938
|
|
(287
|
)
|
|
4,228
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||||||||
Stockholders’ equity (deficit)
|
|
|
|
|
|
||||||||
Common Stock, $.001 par value
|
—
|
|
23
|
|
(23
|
)
|
(b)
|
245
|
|
||||
|
—
|
|
—
|
|
245
|
|
(a)
|
—
|
|
||||
Additional paid-in-capital
|
98
|
|
325,796
|
|
(245
|
)
|
(a)
|
12,837
|
|
||||
|
—
|
|
—
|
|
1,537
|
|
(c)
|
—
|
|
||||
|
—
|
|
—
|
|
(325,796
|
)
|
(b)
|
—
|
|
||||
|
—
|
|
—
|
|
7,447
|
|
(b)
|
—
|
|
||||
|
|
|
4,000
|
|
(d)
|
|
|||||||
Accumulated deficit
|
(2,490
|
)
|
(320,535
|
)
|
320,535
|
|
(b)
|
(8,890
|
)
|
||||
|
—
|
|
—
|
|
(5,150
|
)
|
(d)
|
—
|
|
||||
|
—
|
|
—
|
|
(1,250
|
)
|
(e)
|
—
|
|
||||
Total stockholders’ equity (deficit)
|
(2,392
|
)
|
5,284
|
|
1,300
|
|
|
4,192
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
185
|
|
$
|
7,222
|
|
$
|
1,013
|
|
|
$
|
8,420
|
|
|
Seelos
|
Apricus
|
Pro Forma Adjustments
|
Note 4
|
Pro Forma Combined
|
||||||||
Research and development
|
$
|
250
|
|
$
|
379
|
|
$
|
—
|
|
|
$
|
629
|
|
General and administrative
|
807
|
|
4,210
|
|
—
|
|
|
5,017
|
|
||||
Total operating expenses
|
1,057
|
|
4,589
|
|
—
|
|
|
5,646
|
|
||||
Loss from operations
|
(1,057
|
)
|
(4,589
|
)
|
—
|
|
|
(5,646
|
)
|
||||
Interest expense
|
(46
|
)
|
—
|
|
—
|
|
|
(46
|
)
|
||||
Change in fair value of convertible notes payable
|
(55
|
)
|
—
|
|
—
|
|
|
(55
|
)
|
||||
Change in fair value of warrant liability
|
—
|
|
222
|
|
—
|
|
|
222
|
|
||||
Amendment of equity classified warrants
|
—
|
|
(158
|
)
|
—
|
|
|
(158
|
)
|
||||
Other income
|
—
|
|
1
|
|
—
|
|
|
1
|
|
||||
Total other (income)/expense
|
(101
|
)
|
65
|
|
0
|
|
|
(36
|
)
|
||||
Loss from continuing operations
|
(1,158
|
)
|
(4,524
|
)
|
0
|
|
|
(5,682
|
)
|
||||
Loss from continuing operations per share:
|
|
|
|
|
|
||||||||
Basic and diluted
|
|
$
|
(0.23
|
)
|
|
|
$
|
(0.02
|
)
|
||||
Weighted average number of shares
|
|
19,648
|
|
210,896
|
|
(f)
|
230,544
|
|
|||||
|
|
|
|
|
|
|
Seelos
|
Apricus
|
Pro Forma Adjustments
|
Note 5
|
Pro Forma Combined
|
||||||||
Research and development
|
$
|
400
|
|
$
|
3,463
|
|
$
|
5,150
|
|
(d)
|
9,013
|
|
|
General and administrative
|
654
|
|
7,210
|
|
—
|
|
|
7,864
|
|
||||
Loss on disposal of assets
|
—
|
|
2
|
|
—
|
|
|
2
|
|
||||
Total operating expenses
|
1,054
|
|
10,675
|
|
5,150
|
|
|
16,879
|
|
||||
Loss from operations
|
(1,054
|
)
|
(10,675
|
)
|
(5,150
|
)
|
|
(16,879
|
)
|
||||
Interest expense
|
(21
|
)
|
(83
|
)
|
—
|
|
|
(104
|
)
|
||||
Change in fair value of convertible notes payable
|
(2
|
)
|
—
|
|
—
|
|
|
(2
|
)
|
||||
Change in fair value of warrant liability
|
|
(646
|
)
|
—
|
|
|
(646
|
)
|
|||||
Gain on extinguishment of debt
|
—
|
|
(422
|
)
|
—
|
|
|
(422
|
)
|
||||
Other (income) expense
|
—
|
|
77
|
|
—
|
|
|
77
|
|
||||
Total other expenses
|
(23
|
)
|
(1,074
|
)
|
0
|
|
|
(1,097
|
)
|
||||
Loss from continuing operations
|
(1,077
|
)
|
(11,749
|
)
|
(5,150
|
)
|
|
(17,976
|
)
|
||||
Loss from continuing operations per share
|
|
|
|
|
|
||||||||
Basic and diluted
|
|
$
|
(0.99
|
)
|
|
|
$
|
(0.08
|
)
|
||||
Weighted average number of shares
|
|
11,892
|
|
210,896
|
|
(f)
|
223,774
|
|
Purchase consideration:
|
|
||
Fair value of Apricus shares outstanding
|
7,267
|
|
|
Estimated value of Apricus stock options assumed
|
—
(1)
|
|
|
Estimated value of Apricus warrants assumed
|
—
|
|
|
Estimated value of Apricus RSUs assumed
|
180
|
|
|
Contingent value rights
|
—
(1)
|
|
|
Total preliminary purchase price
|
$
|
7,447
|
|
(1)
|
Seelos prepared a preliminary valuation. The estimated fair value is immaterial.
|
Cash and cash equivalents
|
$
|
6,836
|
|
Prepaid expense and other current assets
|
294
|
|
|
Property and equipment
|
56
|
|
|
Other long-term assets
|
36
|
|
|
Accounts payable
|
(1,054)
|
|
|
Other payables and accrued expenses
|
(4,849)
|
|
|
Other long-term liabilities
|
(35)
|
|
|
Goodwill
|
6,163
|
|
|
Total consideration
|
$
|
7,447
|
|
Change in stock price
|
Share price
|
Estimated purchase price
|
Estimated goodwill
|
||||||
Increase of 10%
|
$
|
0.34
|
|
$
|
8,192
|
|
$
|
6,908
|
|
Decrease of 10%
|
$
|
0.28
|
|
$
|
6,702
|
|
$
|
5,418
|
|
Increase of 20%
|
$
|
0.37
|
|
$
|
8,936
|
|
$
|
7,652
|
|
Decrease of 20%
|
$
|
0.25
|
|
$
|
5,957
|
|
$
|
4,673
|
|
Increase of 30%
|
$
|
0.40
|
|
$
|
9,681
|
|
$
|
8,397
|
|
Decrease of 30%
|
$
|
0.22
|
|
$
|
5,213
|
|
$
|
3,929
|
|
Increase of 50%
|
$
|
0.47
|
|
$
|
11,170
|
|
$
|
9,886
|
|
Decrease of 50%
|
$
|
0.16
|
|
$
|
3,723
|
|
$
|
2,439
|
|
(a)
|
Represents the issuance of 210,896,337 shares of common stock of Apricus and its effect on the shares of common stock and additional paid in capital accounts (in thousands).
|
|
Common Stock
|
Additional Paid
in Capital |
||||
Issuance of 210,896,337 shares
|
$
|
211
|
|
$
|
(211
|
)
|
Adjustments due to reverse merger
|
34
|
|
(34)
|
|
||
|
$
|
245
|
|
$
|
(245
|
)
|
(b)
|
Represents the elimination of the historical equity of Apricus equity and the initial allocation of excess purchase price to goodwill, as follows (in thousands):
|
Total consideration
|
7,447
|
|
(y)
|
|
Cash
|
4,000
|
|
(z)
|
|
Common Stock, $.001 par value
|
(23
|
)
|
|
|
Additional paid-in-capital
|
(325,796
|
)
|
|
|
Accumulated deficit
|
320,535
|
|
|
|
Goodwill
|
$
|
6,163
|
|
|
(c)
|
Reflects an automatic conversion of $1.5 million in Seelos convertible notes payable into 107,722 shares of Seelos common stock as a result of a qualified financing triggered by the merger.
|
(d)
|
Reflects the fair value of the issuance of 248,615 shares of Seelos common stock valued at $4.0 million and the payment of $1.15 million in cash to purchase certain in process research and development (“IPR&D”) assets from Vyera. These transactions will be accounted for as asset acquisitions pursuant to ASU 2017-01 as the majority of the fair value of the assets acquired was concentrated in a group of similar assets, and the acquired assets did not have outputs or employees. Because the underlying development programs have not yet received regulatory approval, the purchase price paid to date for these assets will be expensed in Seelos’ statement of operations. In addition, the potential milestone payments are not yet considered probable, and no milestone payments have been accrued at June 30, 2018.
|
(e)
|
Reflects an adjustment of approximately $1.25 million for the estimated transaction costs for both Seelos and Apricus, such as adviser fees, legal and accounting expenses that were not incurred as of June 30, 2018.
|
(f)
|
Represents the increase in the weighted average shares due to the issuance of 210,896,337 shares of Apricus common stock in connection with the merger.
|
•
|
60,000,000 shares of common stock, $0.001 par value; and
|
•
|
10,000,000 shares of preferred stock, $0.001 par value.
|
•
|
the designation and stated value, if any, of the class or series of preferred stock;
|
•
|
the number of shares of the class or series of preferred stock offered, the liquidation preference per share and the offering price of the preferred stock;
|
•
|
the dividend rate(s), period(s) or payment date(s) or method(s) of calculation applicable to the class or series of preferred stock;
|
•
|
whether dividends are cumulative or non-cumulative and, if cumulative, the date from which dividends on the class or series of preferred stock will accumulate;
|
•
|
the procedures for any auction and remarketing, if any, for the class or series of preferred stock;
|
•
|
the provisions for a sinking fund, if any, for the class or series of preferred stock;
|
•
|
the provision for redemption, if applicable, of the class or series of preferred stock;
|
•
|
any listing of the class or series of preferred stock on any securities exchange;
|
•
|
the terms and conditions, if applicable, upon which the class or series of preferred stock will be convertible into common stock, including the conversion price or manner of calculation and conversion period;
|
•
|
voting rights, if any, of the class or series of preferred stock;
|
•
|
a discussion of any material or special U.S. federal income tax considerations applicable to the class or series of preferred stock;
|
•
|
the relative ranking and preferences of the class or series of preferred stock as to dividend rights and rights upon the liquidation, dissolution or winding up of Apricus' affairs;
|
•
|
any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the class or series of preferred stock as to dividend rights and rights upon liquidation, dissolution or winding up of Apricus' affairs; and
|
•
|
any other specific terms, preferences, rights, limitations or restrictions of the class or series of preferred stock.
|
•
|
acquisition of Apricus by means of a tender offer;
|
•
|
acquisition of Apricus by means of a proxy contest or otherwise; or
|
•
|
removal of Apricus’ incumbent officers and directors.
|
|
Apricus Stockholder Rights
(Post-Merger) |
Seelos Stockholder Rights
(Pre-Merger) |
|
|
|
Committees of the Board of Directors
|
The Apricus bylaws provide that the board of directors may designate one or more committees, each committee to consist of at least one director of Apricus and the name, powers and duties of each such committee shall be prescribed by the board of directors. The Apricus bylaws permit the board of directors to designate an executive committee of not less than two but not more than seven members of the board of directors, one of whom must be the president of Apricus if the president is a director. Such executive committee may exercise all powers of the board of directors between meetings of the board of directors except that the executive committee shall not declare dividends, issue stock, recommend to stockholders any action requiring stockholder approval, change the membership of any committee or discharge a committee. The current committees of the board of directors of Apricus are the Compensation Committee, the Corporate Governance/ Nominating Committee and the Audit Committee.
|
The Seelos bylaws provide that the Seelos board of directors may designate one or more committees of the board of directors, each comprised of one or more of its members. To the extent provided in a resolution or the bylaws, committees may exercise all of the authority of the board of directors, except no committee may recommend to stockholders any action or matter expressly required to the DGCL to be submitted to stockholder approval or adopt or amend any Seelos bylaw and subject to limitations in Delaware law. There are currently no committees of the board of directors of Seelos.
|
|
|
|
Stockholder Quorum
|
The Apricus bylaws provide that the holders of a majority of the outstanding shares of Apricus entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders.
|
The Seelos bylaws provide that the holders of a majority of the shares of the stock of Seelos issued and outstanding entitled to vote at such meeting of the stockholders, present in person or represented by proxy, shall constitute a quorum at all meetings of stockholders except as otherwise provided by Delaware law or the Seelos certificate of incorporation.
|
|
|
|
Stockholder Action by Written Consent
|
The Apricus bylaws provide that any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a written consent is signed by stockholders holding at least a majority of the stockholders entitled to vote with respect to the subject matter, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.
|
The Seelos bylaws provide that any action required to be taken at any annual or special meeting of the stockholders may be effected, without prior notice, by written consent signed by stockholders representing the not less than the minimum number of votes as necessary to take the proposed action.
|
|
|
|
Amendment of Articles/Certificate of Incorporation
|
The Apricus articles of incorporation provides that Apricus reserves the right to amend or repeal any provision contained in its articles of incorporation in the manner prescribed by Nevada law except the amendment or repeal of certain provisions of the Apricus articles of incorporation require approval by holders of at least 66 and 2/3% of the voting power of then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class.
Under Nevada law, amendment of the Apricus articles of incorporation requires the approval by the board of directors and the holders of a majority of the voting power of the outstanding shares of each class entitled to vote on such matters, however, if a proposed amendment would adversely alter or change any preference or right to given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series adversely affected by the amendment regardless of limitations or restrictions on the voting power thereof.
|
Under Delaware law, a majority of the outstanding stock entitled to vote, and a majority of the outstanding stock of each class entitled to vote as a class is required to effect an amendment to the certificate of incorporation.
|
|
|
|
Amendment of Bylaws
|
Both the Apricus stockholders and the board of directors may amend or repeal the Apricus bylaws.
|
Both the Seelos stockholders and board of directors may amend or repeal the Seelos bylaws.
|
|
|
|
Indemnification and Liability Exculpation of Directors and Officers
|
The Apricus bylaws and articles of incorporation provide that, to the fullest extent permitted by Nevada law, Apricus shall indemnify its directors and officers, including payment of expenses as they are incurred and in advance of the final disposition of any action, suit, or proceeding, so long as such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to criminal proceedings, had no reasonable caused to believe his conduct was unlawful.
Pursuant to NRS 78.7502, indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Further, NRS 78.751(3)(a) provides that indemnification, unless ordered by a court pursuant to statute, may not be made to or on behalf of any director or officer if a final adjudication establishes that the director’s or officer’s acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action.
|
The Seelos bylaws and certificate of incorporation provides that Seelos shall indemnify its directors and officers, including payment of expenses as they are incurred and in advance of the final disposition of any action, suit, or proceeding.
Under Delaware law, the determination to indemnify based on such requirements shall be made by the stockholders, the board of directors by a majority vote consisting of directors who were not parties to such action, suit or proceeding, by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion.
|
|
|
|
Restrictions on Transfer
|
Apricus’ articles of incorporation and bylaws do not contain any restrictions on the transfer of its common stock.
|
The Seelos bylaws provide that no stockholder may sell, transfer, assign, pledge, or otherwise dispose of or encumber any shares of common stock without prior written consent of Seelos by authorized resolution of the board of directors, subject to certain exceptions.
|
Name and Address of Beneficial Owner
|
Number of Shares Beneficially Owned
|
Percentage of Class (%)
(1)
|
|
|
|
|
|
Armistice Capital Master Fund, Ltd.
(2)
|
5,827,160
|
|
22.31%
|
Sabby Volatility Warrant Master Fund, Ltd.
(3)
|
2,700,000
|
|
11.09%
|
Iroquois Capital Management, LLC
(4)
|
2,158,455
|
|
8.91%
|
Sarissa Capital Management LP
(5)
|
2,120,361
|
|
8.79%
|
Directors and Executive Officers
(6)
|
|
|
|
Richard W. Pascoe
(7)
|
198,210
|
|
*
|
Brian T. Dorsey
(8)
|
73,705
|
|
*
|
Neil Morton
(9)
|
68,347
|
|
*
|
Kleanthis G. Xanthopoulos, Ph.D.
(10)
|
71,944
|
|
*
|
Wendell Wierenga, Ph.D.
(11)
|
50,792
|
|
*
|
Sandford D. Smith
(12)
|
50,079
|
|
*
|
Russell Ray
(13)
|
48,324
|
|
*
|
Paul V. Maier
(14)
|
45,873
|
|
*
|
All current executive officers and directors as a group (eight persons)
(15)
|
607,274
|
|
2.55%
|
*
|
Less than one percent.
|
(1)
|
Percentage ownership is calculated based on a total of 23,441,449 shares of Apricus common stock issued and outstanding as of August 15, 2018.
|
(2)
|
Represents shares of Apricus common stock beneficially owned by Armistice Capital Master Fund, Ltd. (“
Armistice Capital Master Fund
”) at December 31, 2017, as indicated in the entity’s Schedule 13G/A filed with the SEC on February 14, 2018, plus (i) 2,300,000 shares and warrants to purchase up to 1,150,000 shares issued in an April 2018 public offering, (ii) warrants to purchase up to 723,589 shares issued in a September 2017 private placement and (iii) warrants to purchase up to 803,571 shares issued in an April 2017 public offering. The beneficial ownership table does not give effect to an issuance limitation prohibiting Armistice Capital Master Fund from exercising its warrants to the extent that such exercise would result in aggregate beneficial ownership by such holder, together with any of its affiliates, of more than 9.99% of the Apricus common stock then issued and outstanding. Armistice Capital, LLC is an investment manager to Armistice Capital Master Fund and Steven J. Boyd, the chief investment officer of Armistice Capital, LLC, may be deemed to have voting and investment power with respect to the securities held by Armistice Capital Master Fund. Armistice Capital Master Fund’s beneficial ownership includes warrants to purchase up to 2,677,160 shares. The principal business address of (i) Armistice Capital Master Fund is c/o dms Corporate Services Ltd., 20 Genesis Close, P.O. Box 314, Grand Cayman KY1-1104, Cayman Islands, (ii) Armistice Capital, LLC is 510 Madison Avenue, 22nd Floor, New York, NY 10022 and (iii) Steven Boyd is c/o Armistice Capital, LLC, 510 Madison Avenue, 22nd Floor, New York, NY 10022.
|
(3)
|
Represents shares of Apricus common stock beneficially owned by Sabby Volatility Warrant Master Fund, Ltd. (“
Sabby Fund
”) at March 28, 2018, as indicated in the entity’s Schedule 13G filed with the SEC on March 29, 2018, plus warrants to purchase up to 900,000 shares issued in an April 2018 public offering. The beneficial ownership table does not give effect to an issuance limitation prohibiting Sabby Fund from exercising its warrants to the extent that such exercise would result in aggregate beneficial ownership by such holder, together with any of
|
(4)
|
Represents shares of Apricus common stock beneficially owned by Iroquois Capital Management, LLC and Iroquois Master Fund, Ltd. (collectively “
Iroquois
”) at December 31, 2017, as indicated in the entity’s Schedule 13G/A filed with the SEC on February 14, 2018, plus 500,000 shares and warrants to purchase up to 250,000 shares issued in an April 2018 public offering. Iroquois Capital Management, LLC is the investment manager of Iroquois Master Fund, Ltd. Iroquois Capital Management, LLC has voting control and investment discretion over securities held by Iroquois Master Fund, Ltd. As President of Iroquois Capital Management, LLC, Richard Abbe makes voting and investment decisions on behalf of Iroquois Capital Management, LLC in his capacity as investment manager to Iroquois Master Fund Ltd. As a result of the foregoing, Mr. Abbe may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by Iroquois Capital Management, LLC and Iroquois Master Fund Ltd. Iroquois’ beneficial ownership includes warrants to purchase up to 771,430 shares. The principal business address of Iroquois is 205 East 42nd Street, 20th Floor, New York, NY 10017.
|
(5)
|
Represents shares of Apricus common stock beneficially owned by Sarissa Capital Management LP (“
Sarissa Management
”) at January 31, 2018, as indicated in the entity’s Schedule 13D/A filed with the SEC on January 31, 2018. The shares of Apricus common stock are owned by Sarissa Management, Alexander J. Denner, the Chief Investment Officer of Sarissa Management and Sarissa Capital Offshore Master Fund LP (“
Sarissa Offshore
”). Sarissa Management’s beneficial ownership includes warrants to purchase up to 672,455 shares and as reported in the entity’s Schedule 13D/A filed with the SEC on June 22, 2018, the warrant price was reduced from $0.71 per share to $0.42 per share. The principal business address of (i) each of Sarissa Management and Dr. Denner is c/o Sarissa Capital Management LP, 660 Steamboat Road, 3rd Floor, Greenwich, CT 06830 and (ii) Sarissa Offshore is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman Islands.
|
(6)
|
Unless otherwise indicated, the address for each of Apricus' executive officers and directors is c/o 11975 El Camino Real, Suite 300, San Diego, California, 92130.
|
(7)
|
Includes 142,088 shares issuable upon exercise of stock options and 1,750 shares issuable upon exercise of warrants exercisable within 60 days of August 15, 2018.
|
(8)
|
Includes 37,088 shares issuable upon exercise of stock options exercisable within 60 days of August 15, 2018.
|
(9)
|
Includes 38,547 shares issuable upon exercise of stock options exercisable within 60 days of August 15, 2018.
|
(10)
|
Includes 34,868 shares issuable upon exercise of stock options exercisable within 60 days of August 15, 2018 and 24,575 shares of Apricus common stock held jointly in a trust controlled by Dr. Xanthopoulos.
|
(11)
|
Includes 26,668 shares issuable upon exercise of stock options exercisable within 60 days of August 15, 2018 and 15,373 shares of Apricus common stock held jointly in a trust controlled by Dr. Wierenga.
|
(12)
|
Includes 24,637 shares issuable upon exercise of stock options exercisable within 60 days of August 15, 2018.
|
(13)
|
Includes 22,368 shares issuable upon exercise of stock options and 250 shares issuable upon exercise of warrants exercisable within 60 days of August 15, 2108.
|
(14)
|
Includes 23,268 shares issuable upon exercise of stock options exercisable within 60 days of August 15, 2018.
|
(15)
|
Includes 349,532 shares issuable upon exercise of stock options and 2,000 shares issuable upon exercise of warrants exercisable within 60 days of August 15, 2018.
|
•
|
each of Seelos’ directors;
|
•
|
each of Seelos’ executive officers;
|
•
|
all of Seelos’ current directors and executive officers as a group; and
|
•
|
each person or group who beneficially owned more than 5% of Seelos’ common stock.
|
Name of Beneficial Owner
|
Number of Shares Beneficially Owned
|
Percentage of Shares Beneficially Owned
|
|
5% Stockholders:
|
|
|
|
Raj Mehra, Ph.D.
(1)
|
4,000,000
|
100
|
%
|
Directors and Executive Officers:
|
|
|
|
Raj Mehra, Ph.D.
(1)
|
4,000,000
|
100
|
%
|
All current directors and executive officers as a group (1 person)
|
4,000,000
|
100
|
%
|
(1)
|
Consists of 4,000,000 shares of Seelos’ common stock held directly by Dr. Mehra.
|
•
|
each director and named executive officer of the combined organization’s;
|
•
|
all of the combined organization’s directors and executive officers as a group; and
|
•
|
each person or group who is known to the management of Apricus or Seelos to become the beneficial owner of more than 5% of the common stock of the combined organization upon the consummation of the merger.
|
5% Stockholders
|
|
Number of Shares
|
|
Options, RSUs and Warrants Exercisable Within 60 days
|
|
Approximate % Owned
|
Raj Mehra, Ph.D.
|
|
|
|
|
|
|
Richard Pascoe
|
|
|
|
|
|
|
Robin L. Smith, M.D.
|
|
|
|
|
|
|
Daniel J. O’Connor, J.D.
|
|
|
|
|
|
|
Brian Lian, Ph.D.
|
|
|
|
|
|
|
All current executive officers and directors as a group (five persons)
|
|
|
|
|
|
|
|
PAGE
|
Report of Independent Registered Public Accounting Firm
|
F-A-2
|
Financial Statements:
|
|
Consolidated Balance Sheets as of December 31, 2017 and 2016
|
F-A-3
|
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016
|
F-A-4
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016
|
F-A-5
|
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2017 and 2016
|
F-A-7
|
Notes to the Consolidated Financial Statements
|
F-A-8
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
6,331
|
|
|
$
|
2,087
|
|
Prepaid expenses and other current assets
|
261
|
|
|
177
|
|
||
Current assets of discontinued operations
|
—
|
|
|
1,370
|
|
||
Total current assets
|
6,592
|
|
|
3,634
|
|
||
Property and equipment, net
|
79
|
|
|
164
|
|
||
Other long term assets
|
35
|
|
|
60
|
|
||
Noncurrent assets of discontinued operations
|
—
|
|
|
842
|
|
||
Total assets
|
$
|
6,706
|
|
|
$
|
4,700
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity (deficit)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
58
|
|
|
$
|
763
|
|
Accrued expenses
|
650
|
|
|
1,333
|
|
||
Accrued compensation
|
863
|
|
|
614
|
|
||
Deferred revenue
|
12
|
|
|
—
|
|
||
Note payable, net
|
—
|
|
|
6,650
|
|
||
Current liabilities of discontinued operations
|
—
|
|
|
1,934
|
|
||
Total current liabilities
|
1,583
|
|
|
11,294
|
|
||
Warrant liabilities
|
694
|
|
|
846
|
|
||
Other long term liabilities
|
58
|
|
|
76
|
|
||
Total liabilities
|
2,335
|
|
|
12,216
|
|
||
|
|
|
|
||||
Commitments and contingencies (note 10)
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
||||
Preferred stock, $.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of December 31, 2017 and 2016
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value, 30,000,000 shares authorized, 15,217,231 and 7,733,205 issued and outstanding as of December 31, 2017 and 2016, respectively
|
15
|
|
|
8
|
|
||
Additional paid-in-capital
|
320,343
|
|
|
308,784
|
|
||
Accumulated deficit
|
(315,987
|
)
|
|
(316,308
|
)
|
||
Total stockholders’ equity (deficit)
|
4,371
|
|
|
(7,516
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
6,706
|
|
|
$
|
4,700
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Operating expense
|
|
|
|
|
||||
Research and development
|
|
$
|
3,463
|
|
|
$
|
5,880
|
|
General and administrative
|
|
7,210
|
|
|
7,778
|
|
||
Loss on disposal of assets
|
|
2
|
|
|
14
|
|
||
Total operating expense
|
|
10,675
|
|
|
13,672
|
|
||
Loss before other income (expense)
|
|
(10,675
|
)
|
|
(13,672
|
)
|
||
Other income (expense)
|
|
|
|
|
||||
Interest expense, net
|
|
(83
|
)
|
|
(983
|
)
|
||
Change in fair value of warrant liabilities
|
|
(646
|
)
|
|
7,479
|
|
||
Loss on extinguishment of debt
|
|
(422
|
)
|
|
—
|
|
||
Other financing expenses
|
|
—
|
|
|
(461
|
)
|
||
Other income (expense), net
|
|
77
|
|
|
(22
|
)
|
||
Total other income (expense)
|
|
(1,074
|
)
|
|
6,013
|
|
||
Loss from continuing operations
|
|
(11,749
|
)
|
|
(7,659
|
)
|
||
Income from discontinued operations
|
|
12,070
|
|
|
226
|
|
||
Net income (loss)
|
|
$
|
321
|
|
|
$
|
(7,433
|
)
|
Total earnings (loss) per share
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.99
|
)
|
|
$
|
(1.18
|
)
|
Discontinued operations
|
|
$
|
1.01
|
|
|
$
|
0.03
|
|
Total earnings (loss) per share
|
|
$
|
0.02
|
|
|
$
|
(1.15
|
)
|
|
|
|
|
|
||||
Weighted average common shares outstanding used for basic and diluted earnings (loss) per share
|
|
11,892
|
|
|
6,517
|
|
|
For the Year Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
321
|
|
|
$
|
(7,433
|
)
|
Net income from discontinued operations
|
12,070
|
|
|
226
|
|
||
Net loss from continuing operations
|
(11,749
|
)
|
|
(7,659
|
)
|
||
Adjustments to reconcile net income (loss) to net cash used in operating activities from continuing operations:
|
|
|
|
||||
Depreciation and amortization
|
117
|
|
|
106
|
|
||
Non-cash interest expense
|
56
|
|
|
362
|
|
||
Stock-based compensation expense
|
1,138
|
|
|
1,747
|
|
||
Warrant liabilities revaluation
|
646
|
|
|
(7,479
|
)
|
||
Other financing expenses
|
—
|
|
|
461
|
|
||
Loss on debt extinguishment
|
422
|
|
|
—
|
|
||
Other
|
2
|
|
|
10
|
|
||
Changes in operating assets and liabilities from continuing operations:
|
|
|
|
||||
Prepaid expenses and other current assets
|
(84
|
)
|
|
408
|
|
||
Other assets
|
25
|
|
|
40
|
|
||
Accounts payable
|
(705
|
)
|
|
45
|
|
||
Accrued expenses
|
(681
|
)
|
|
(1,340
|
)
|
||
Accrued compensation
|
249
|
|
|
(360
|
)
|
||
Other liabilities
|
(7
|
)
|
|
(121
|
)
|
||
Net cash used in operating activities from continuing operations
|
(10,571
|
)
|
|
(13,780
|
)
|
||
Cash flows from investing activities from continuing operations:
|
|
|
|
||||
Purchase of fixed assets, net
|
—
|
|
|
(18
|
)
|
||
Proceeds from the sale of property and equipment
|
—
|
|
|
3
|
|
||
Release of restricted cash
|
—
|
|
|
280
|
|
||
Net cash provided by investing activities from continuing operations
|
—
|
|
|
265
|
|
||
Cash flows from financing activities from continuing operations:
|
|
|
|
||||
Issuance of common stock and warrants
|
10,733
|
|
|
14,762
|
|
||
Issuance costs related to common stock and warrants
|
(1,392
|
)
|
|
(641
|
)
|
||
Repayment of notes payable
|
(7,129
|
)
|
|
(3,113
|
)
|
||
Proceeds from exercise of warrants
|
289
|
|
|
—
|
|
||
Repayment of capital lease obligations
|
—
|
|
|
(5
|
)
|
||
Net cash provided by financing activities from continuing operations
|
2,501
|
|
|
11,003
|
|
||
Cash flows from discontinued operations:
|
|
|
|
||||
Net cash (used in) provided by operating activities of discontinued operations
|
105
|
|
|
712
|
|
||
Net cash provided by investing activities of discontinued operations
|
12,209
|
|
|
—
|
|
||
Net cash provided by discontinued operations
|
12,314
|
|
|
712
|
|
Net increase (decrease) in cash
|
4,244
|
|
|
(1,800
|
)
|
||
Cash, beginning of period
|
2,087
|
|
|
3,887
|
|
||
Cash, end of period
|
$
|
6,331
|
|
|
$
|
2,087
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
92
|
|
|
$
|
646
|
|
Cash paid for income taxes
|
$
|
—
|
|
|
$
|
6
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Reclassification of warrant liabilities to equity
|
$
|
798
|
|
|
$
|
—
|
|
Issuance of placement agent warrants
|
$
|
287
|
|
|
$
|
103
|
|
Issuance of restricted stock
|
$
|
—
|
|
|
$
|
249
|
|
Accrued transaction costs for financing activities
|
$
|
—
|
|
|
$
|
(236
|
)
|
|
Common
Stock (Shares) |
|
Common
Stock (Amount) |
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Total
Stockholders’
(Deficit) Equity
|
||||||||||
Balance as of December 31, 2015
|
5,042
|
|
|
$
|
5
|
|
|
$
|
298,926
|
|
|
$
|
(308,875
|
)
|
|
$
|
(9,944
|
)
|
|
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,747
|
|
|
—
|
|
|
1,747
|
|
|||||
Issuance of restricted stock units to settle bonus liability
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
|||||
Issuance of common stock and warrants, net of offering costs
|
2,691
|
|
|
3
|
|
|
7,862
|
|
|
—
|
|
|
7,865
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,433
|
)
|
|
(7,433
|
)
|
|||||
Balance as of December 31, 2016
|
7,733
|
|
|
8
|
|
|
308,784
|
|
|
(316,308
|
)
|
|
(7,516
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,138
|
|
|
—
|
|
|
1,138
|
|
|||||
Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes
|
131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock and warrants
|
7,353
|
|
|
7
|
|
|
10,726
|
|
|
—
|
|
|
10,733
|
|
|||||
Issuance costs related to common stock and warrants
|
—
|
|
|
—
|
|
|
(1,392
|
)
|
|
—
|
|
|
(1,392
|
)
|
|||||
Proceeds from exercise of warrants
|
—
|
|
|
—
|
|
|
289
|
|
|
—
|
|
|
289
|
|
|||||
Reclassification of warrant liabilities to equity
|
—
|
|
|
—
|
|
|
798
|
|
|
—
|
|
—
|
|
798
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
321
|
|
|
321
|
|
|||||
Balance as of December 31, 2017
|
15,217
|
|
|
$
|
15
|
|
|
$
|
320,343
|
|
|
$
|
(315,987
|
)
|
|
$
|
4,371
|
|
•
|
its ability to raise additional funds to finance its operations;
|
•
|
the outcome of the Company’s meeting with the FDA that it plans to request regarding the Vitaros NDA resubmission and its ability to overcome deficiencies raised in the 2018 CRL, if the Company believes it’s commercially reasonable to do so;
|
•
|
its ability to maintain compliance with the listing requirements of The Nasdaq Capital Market (“Nasdaq”);
|
•
|
the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates;
|
•
|
the extent and amount of any indemnification claims made by Ferring under the Ferring Asset Purchase Agreement;
|
•
|
litigation expenses;
|
•
|
the emergence and effect of competing or complementary products;
|
•
|
its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
|
•
|
its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel;
|
•
|
the terms and timing of any collaborative, licensing or other arrangements that it has or may establish;
|
•
|
the trading price of its common stock; and
|
•
|
its ability to increase the number of authorized shares outstanding to facilitate future financing events.
|
•
|
Machinery and equipment: three to five years
|
•
|
Furniture and fixtures: ten years
|
•
|
Computer software: five years
|
Warrant liabilities
|
|
Quoted Market Prices for Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
694
|
|
|
$
|
694
|
|
Balance as of December 31, 2016
|
|
0
|
|
|
$
|
0
|
|
|
$
|
846
|
|
|
$
|
846
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
||||
Risk-free interest rate
|
|
2.2%-2.2%
|
|
1.64%-1.99%
|
||||
Volatility
|
|
89%-89.41%
|
|
77.25%-81.03%
|
||||
Dividend yield
|
|
0
|
%
|
|
0
|
%
|
||
Expected term
|
|
5.04-5.17
|
|
4.75-6.17
|
||||
Weighted average fair value
|
|
$
|
0.80
|
|
|
$
|
0.49
|
|
|
|
Warrant liabilities
|
|||
Balance as of December 31, 2016
|
|
$
|
846
|
|
|
Change in fair value measurement of warrant liability
|
|
646
|
|
|
|
Warrant liability reclassified to stockholders' equity
|
|
(798
|
)
|
|
|
Balance as of December 31, 2017
|
|
$
|
694
|
|
|
|
|
Year Ended December 31,
|
||||
|
|
2017
|
|
2016
|
||
Outstanding stock options
|
|
368
|
|
|
415
|
|
Outstanding warrants
|
|
7,084
|
|
|
2,318
|
|
Restricted stock units
|
|
718
|
|
|
115
|
|
|
|
8,170
|
|
|
2,848
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Europe
(1)(2)
|
|
$
|
364
|
|
|
$
|
5,093
|
|
Canada
(1)
|
|
142
|
|
|
570
|
|
||
Asia Pacific
(1)(2)
|
|
0
|
|
|
100
|
|
||
Other
(1)(2)
|
|
5
|
|
|
0
|
|
||
|
|
$
|
511
|
|
|
$
|
5,763
|
|
(2)
|
Amounts included have not been broken out by country as it is impractical to do so given the nature and structure of the license agreements which cover multiple countries and/or territories. The basis for attributing product sales and royalty revenues from external customers to individual countries was based on the geographic location of the end user customer.
|
Upfront payment received
|
$
|
11,500
|
|
Transition services payments
|
500
|
|
|
Payment received for inventory
|
709
|
|
|
Total proceeds from sale
|
$
|
12,709
|
|
Carrying value of assets sold in sale
|
(1,578
|
)
|
|
Liabilities transferred upon sale
|
1,186
|
|
|
Total gain on sale of Purchased Assets
|
$
|
12,317
|
|
|
December 31,
2016
|
||
Accounts receivable
|
$
|
530
|
|
Inventories
|
764
|
|
|
Prepaid expenses and other current assets
|
76
|
|
|
Current assets of discontinued operations
|
1,370
|
|
|
Property and equipment, net
|
842
|
|
|
Total assets of discontinued operations
|
$
|
2,212
|
|
|
|
||
Accounts payable
|
197
|
|
|
Accrued expenses
|
1,737
|
|
|
Total liabilities of discontinued operations
|
$
|
1,934
|
|
|
Year Ended
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Product sales
|
$
|
143
|
|
|
$
|
675
|
|
Royalty revenue
|
368
|
|
|
1,088
|
|
||
License fee revenue
|
—
|
|
|
4,000
|
|
||
Cost of goods sold
|
(74
|
)
|
|
(511
|
)
|
||
Cost of Sandoz rights
|
(10
|
)
|
|
(3,380
|
)
|
||
Operating expenses
|
(658
|
)
|
|
(1,606
|
)
|
||
Other expense
|
(16
|
)
|
|
(40
|
)
|
||
Gain on sale
|
12,317
|
|
|
—
|
|
||
Income from discontinued operations
|
$
|
12,070
|
|
|
$
|
226
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Leasehold improvements
|
$
|
20
|
|
|
$
|
20
|
|
Machinery and equipment
|
270
|
|
|
279
|
|
||
Capital lease equipment
|
76
|
|
|
76
|
|
||
Computer software
|
130
|
|
|
130
|
|
||
Furniture and fixtures
|
25
|
|
|
25
|
|
||
Total property and equipment
|
521
|
|
|
530
|
|
||
Less: accumulated depreciation and amortization
|
(442
|
)
|
|
(366
|
)
|
||
Property and equipment, net
|
$
|
79
|
|
|
$
|
164
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Professional fees
|
$
|
575
|
|
|
$
|
880
|
|
Outside research and development services
|
61
|
|
|
142
|
|
||
Deferred compensation
|
0
|
|
|
134
|
|
||
Other
|
14
|
|
|
177
|
|
||
Accrued expenses, net
|
$
|
650
|
|
|
$
|
1,333
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred rent
|
46
|
|
|
76
|
|
||
Security deposit
|
12
|
|
|
0
|
|
||
Other long term liabilities, net
|
$
|
58
|
|
|
$
|
76
|
|
|
|
December 31,
2016
|
||
Notes payable, principal
|
|
$
|
6,392
|
|
Add: accretion of final payment fee
|
|
378
|
|
|
Less: unamortized debt discount
|
|
(120
|
)
|
|
Total notes payable
|
|
6,650
|
|
|
Common Shares
Issuable upon
Exercise
|
|
Weighted
Average
Exercise
Price
|
||||
Outstanding at December 31, 2016
|
2,318
|
|
|
$
|
15.19
|
|
|
Issued
|
5,199
|
|
|
$
|
1.6
|
|
|
Exercised
|
(186
|
)
|
|
$
|
1.55
|
|
|
Cancelled
|
(247
|
)
|
|
52.5
|
|
|
|
Outstanding as of December 31, 2017
|
7,084
|
|
|
$
|
3.91
|
|
|
Exercisable as of December 31, 2017
|
7,084
|
|
|
$
|
3.91
|
|
|
Shares Issuable Upon Exercise
|
|
Exercise Price
|
|
Expiration Date
|
|||
300
|
|
|
$
|
34.00
|
|
|
May 2018
|
1,068
|
|
|
$
|
1.67
|
|
|
March 2020
|
107
|
|
|
$
|
2.16
|
|
|
March 2020
|
252
|
|
|
$
|
1.75
|
|
|
April 2022
|
4,452
|
|
|
$
|
1.55
|
|
|
May 2022
|
429
|
|
|
$
|
8.80
|
|
|
January 2023
|
442
|
|
|
$
|
8.80
|
|
|
March 2023
|
19
|
|
|
$
|
12.90
|
|
|
October 2024
|
15
|
|
|
$
|
16.40
|
|
|
July 2025
|
7,084
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average Remaining
Contractual
Life (in years)
|
|
Total
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding as of December 31, 2016
|
415
|
|
|
$
|
17.23
|
|
|
|
7.6
|
|
|
$
|
—
|
|
|
||
Cancelled
|
(46
|
)
|
|
16.08
|
|
|
|
—
|
|
|
|
—
|
|
|
|||
Outstanding as of December 31, 2017
|
369
|
|
|
$
|
17.37
|
|
|
|
6.7
|
|
|
$
|
—
|
|
|
||
Vested and expected to vest as of December 31, 2017
|
356
|
|
|
$
|
17.61
|
|
|
|
6.7
|
|
|
$
|
—
|
|
|
||
Exercisable as of December 31, 2017
|
293
|
|
|
$
|
18.91
|
|
|
|
6.4
|
|
|
$
|
—
|
|
|
|
Number of
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||||
Nonvested as of December 31, 2016
|
$
|
115
|
|
|
$
|
5.11
|
|
|
Granted
|
873
|
|
|
$
|
1.13
|
|
|
|
Vested
|
(214
|
)
|
|
$
|
1.7
|
|
|
|
Forfeited
|
(56
|
)
|
|
$
|
1.45
|
|
|
|
Nonvested as of December 31, 2017
|
$
|
718
|
|
|
$
|
1.57
|
|
|
|
2016
|
||
Risk-free interest rate
|
1.36%-1.78%
|
||
Volatility
|
72.35%-80.02%
|
||
Dividend yield
|
0
|
%
|
|
Expected term
|
5.25-6.08 years
|
||
Forfeiture rate
|
11.33
|
%
|
|
Weighted average fair value
|
$
|
7.23
|
|
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
|
2016
|
|||
Research and development
|
|
$
|
227
|
|
$
|
534
|
|
General and administrative
|
|
911
|
|
1,213
|
|
||
|
|
$
|
1,138
|
|
$
|
1,747
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net operating tax loss and capital loss carryforwards
|
|
$
|
23,463
|
|
|
$
|
68,672
|
|
Capitalized research and development costs
|
|
4,620
|
|
|
5,270
|
|
||
Research and development tax credits
|
|
1,923
|
|
|
1,659
|
|
||
Deferred compensation
|
|
—
|
|
|
46
|
|
||
Other accruals and reserves
|
|
721
|
|
|
1,214
|
|
||
Basis of intangible assets
|
|
3,658
|
|
|
3,870
|
|
||
Total deferred tax asset
|
|
34,385
|
|
|
80,731
|
|
||
Less valuation allowance
|
|
(34,385
|
)
|
|
(80,731
|
)
|
||
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|||||
Beginning balance
|
|
$
|
3,047
|
|
|
$
|
2,882
|
|
|
Change in current period positions
|
|
34
|
|
|
68
|
|
|
||
Change in prior period positions
|
|
(2,368
|
)
|
|
97
|
|
|
||
Ending balance
|
|
$
|
713
|
|
|
$
|
3,047
|
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Federal statutory tax rate
|
|
(34
|
)
|
%
|
|
(34
|
)
|
%
|
Change in rate
|
|
165
|
|
%
|
|
—
|
|
%
|
Valuation allowance
|
|
(360
|
)
|
%
|
|
81
|
|
%
|
Deferred tax true-ups
|
|
227
|
|
%
|
|
(5
|
)
|
%
|
Revaluation of warrants
|
|
2
|
|
%
|
|
(34
|
)
|
%
|
Permanent differences
|
|
1
|
|
%
|
|
(4
|
)
|
%
|
Tax credits
|
|
(1
|
)
|
%
|
|
(4
|
)
|
%
|
Income tax expense
|
|
—
|
|
%
|
|
—
|
|
%
|
2018
|
|
$
|
364
|
|
2019
|
|
374
|
|
|
2020
|
|
32
|
|
|
Total
|
|
$
|
770
|
|
|
PAGE
|
Financial Statements:
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Cash Flows
|
|
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
|
|
Notes to the Consolidated Financial Statements
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
6,836
|
|
|
$
|
6,331
|
|
Prepaid expenses and other current assets
|
294
|
|
|
261
|
|
||
Total current assets
|
7,130
|
|
|
6,592
|
|
||
Property and equipment, net
|
56
|
|
|
79
|
|
||
Other long term assets
|
36
|
|
|
35
|
|
||
Total assets
|
$
|
7,222
|
|
|
$
|
6,706
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,054
|
|
|
$
|
58
|
|
Accrued expenses
|
454
|
|
|
650
|
|
||
Accrued compensation
|
374
|
|
|
863
|
|
||
Deferred revenue
|
—
|
|
|
12
|
|
||
Current liabilities of discontinued operations
|
21
|
|
|
—
|
|
||
Total current liabilities
|
1,903
|
|
|
1,583
|
|
||
Warrant liabilities
|
—
|
|
|
694
|
|
||
Other long term liabilities
|
35
|
|
|
58
|
|
||
Total liabilities
|
1,938
|
|
|
2,335
|
|
||
|
|
|
|
||||
Commitments and contingencies (note 7)
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2018 and December 31, 2017
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value, 60,000,000 and 30,000,000 shares authorized, 23,441,449 and 15,217,231 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
|
23
|
|
|
15
|
|
||
Additional paid-in-capital
|
325,796
|
|
|
320,343
|
|
||
Accumulated deficit
|
(320,535
|
)
|
|
(315,987
|
)
|
||
Total stockholders’ equity
|
5,284
|
|
|
4,371
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,222
|
|
|
$
|
6,706
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating expense
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
162
|
|
|
$
|
839
|
|
|
$
|
379
|
|
|
$
|
1,266
|
|
General and administrative
|
2,075
|
|
|
1,602
|
|
|
4,210
|
|
|
3,043
|
|
||||
Total operating expense
|
2,237
|
|
|
2,441
|
|
|
4,589
|
|
|
4,309
|
|
||||
Loss before other income (expense)
|
(2,237
|
)
|
|
(2,441
|
)
|
|
(4,589
|
)
|
|
(4,309
|
)
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Interest income (expense), net
|
—
|
|
|
3
|
|
|
—
|
|
|
(92
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(422
|
)
|
||||
Change in fair value of warrant liability
|
—
|
|
|
716
|
|
|
222
|
|
|
(292
|
)
|
||||
Amendment of equity classified warrants
|
(17
|
)
|
|
—
|
|
|
(158
|
)
|
|
—
|
|
||||
Other income (expense), net
|
1
|
|
|
—
|
|
|
1
|
|
|
(26
|
)
|
||||
Total other income (expense)
|
(16
|
)
|
|
719
|
|
|
65
|
|
|
(832
|
)
|
||||
Loss from continuing operations
|
(2,253
|
)
|
|
(1,722
|
)
|
|
(4,524
|
)
|
|
(5,141
|
)
|
||||
Income (loss) from discontinued operations
|
(24
|
)
|
|
248
|
|
|
(24
|
)
|
|
11,740
|
|
||||
Net income (loss)
|
$
|
(2,277
|
)
|
|
$
|
(1,474
|
)
|
|
$
|
(4,548
|
)
|
|
$
|
6,599
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted earnings (loss) per share
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.10
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.54
|
)
|
Discontinued operations
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
1.23
|
|
Total earnings (loss) per share
|
$
|
(0.10
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding for basic and diluted earnings (loss) per share
|
23,362
|
|
|
11,335
|
|
|
19,648
|
|
|
9,547
|
|
|
|
For the Six Months Ended
June 30, |
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(4,548
|
)
|
|
$
|
6,599
|
|
Net income (loss) from discontinued operations
|
|
(24
|
)
|
|
11,740
|
|
||
Net loss from continuing operations
|
|
(4,524
|
)
|
|
(5,141
|
)
|
||
Adjustments to reconcile net income (loss) to net cash used in operating activities from continuing operations:
|
|
|
|
|
||||
Depreciation and amortization
|
|
23
|
|
|
77
|
|
||
Non-cash interest expense
|
|
—
|
|
|
56
|
|
||
Stock-based compensation expense
|
|
556
|
|
|
572
|
|
||
Warrant liabilities revaluation
|
|
(222
|
)
|
|
292
|
|
||
Loss on debt extinguishment
|
|
—
|
|
|
422
|
|
||
Amendment of equity classified warrants
|
|
158
|
|
|
—
|
|
||
Changes in operating assets and liabilities from continuing operations:
|
|
|
|
|
||||
Prepaid expenses and other current assets
|
|
(33
|
)
|
|
(145
|
)
|
||
Other assets
|
|
(1
|
)
|
|
14
|
|
||
Accounts payable
|
|
996
|
|
|
(547
|
)
|
||
Accrued expenses
|
|
(294
|
)
|
|
(478
|
)
|
||
Accrued compensation
|
|
(489
|
)
|
|
43
|
|
||
Deferred revenue
|
|
(12
|
)
|
|
—
|
|
||
Other liabilities
|
|
(23
|
)
|
|
(16
|
)
|
||
Net cash used in operating activities from continuing operations
|
|
(3,865
|
)
|
|
(4,851
|
)
|
||
Cash flows from financing activities from continuing operations:
|
|
|
|
|
||||
Proceeds from exercise of warrants
|
|
1,275
|
|
|
—
|
|
||
Issuance of common stock and warrants
|
|
3,550
|
|
|
6,866
|
|
||
Issuance costs related to common stock and warrants
|
|
(452
|
)
|
|
(788
|
)
|
||
Repayment of notes payable
|
|
—
|
|
|
(7,129
|
)
|
||
Net cash provided by (used in) financing activities from continuing operations
|
|
4,373
|
|
|
(1,051
|
)
|
||
Cash flows from discontinued operations:
|
|
|
|
|
||||
Net cash used in operating activities of discontinued operations
|
|
(3
|
)
|
|
(114
|
)
|
||
Net cash provided by investing activities of discontinued operations
|
|
—
|
|
|
11,750
|
|
||
Net cash provided by (used in) discontinued operations
|
|
(3
|
)
|
|
11,636
|
|
||
Net increase in cash
|
|
505
|
|
|
5,734
|
|
||
Cash, beginning of period
|
|
6,331
|
|
|
2,087
|
|
||
Cash, end of period
|
|
$
|
6,836
|
|
|
$
|
7,821
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
—
|
|
|
$
|
92
|
|
Non-cash investing and financing activities:
|
|
|
|
|
||||
Accrued transaction costs for financing activities
|
|
$
|
(98
|
)
|
|
$
|
(135
|
)
|
Issuance of placement agent warrants
|
|
$
|
105
|
|
|
$
|
176
|
|
Reclassification of warrant liabilities to equity
|
|
$
|
472
|
|
|
$
|
798
|
|
|
|
Common
Stock (Shares) |
|
Common
Stock (Amount) |
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Total
Stockholders’ Equity |
|||||||||
Balance as of December 31, 2017
|
|
15,217
|
|
|
$
|
15
|
|
|
$
|
320,343
|
|
|
$
|
(315,987
|
)
|
|
$
|
4,371
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
556
|
|
|
|
|
|
556
|
|
||||
Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes
|
|
83
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from exercise of warrants
|
|
1,041
|
|
|
1
|
|
|
1,274
|
|
|
—
|
|
|
1,275
|
|
||||
Issuance of common stock and warrants
|
|
7,100
|
|
|
7
|
|
|
3,543
|
|
|
—
|
|
|
3,550
|
|
||||
Issuance costs related to common stock and warrants
|
|
—
|
|
|
—
|
|
|
(550
|
)
|
|
—
|
|
|
(550
|
)
|
||||
Amendment of equity classified warrants
|
|
—
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
158
|
|
||||
Reclassification of warrant liabilities to equity
|
|
—
|
|
|
—
|
|
|
472
|
|
|
—
|
|
|
472
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,548
|
)
|
|
(4,548
|
)
|
||||
Balance as of June 30, 2018
|
|
23,441
|
|
|
$
|
23
|
|
|
$
|
325,796
|
|
|
$
|
(320,535
|
)
|
|
$
|
5,284
|
|
•
|
its ability to successfully complete the Merger with Seelos or, if the Merger is not completed, another strategic transaction for the Company;
|
•
|
its ability to raise additional funds to finance its operations;
|
•
|
its ability to secure a development partner for U.S. Vitaros in order to overcome deficiencies raised in the 2018 CRL;
|
•
|
its ability to maintain compliance with the listing requirements of The Nasdaq Capital Market (“Nasdaq”);
|
•
|
the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates;
|
•
|
the extent and amount of any indemnification claims made by Ferring under the Ferring Asset Purchase Agreement;
|
•
|
litigation expenses, including the ongoing litigation with Laboratoires Majorelle SAS and Majorelle International SARL;
|
•
|
the emergence and effect of competing or complementary products;
|
•
|
its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
|
•
|
its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel;
|
•
|
the terms and timing of any collaborative, licensing or other arrangements that it has or may establish;
|
•
|
the trading price of its common stock; and
|
•
|
its ability to increase the number of authorized shares outstanding to facilitate future financing events.
|
|
|
Warrant liabilities
|
||
Balance as of December 31, 2017
|
|
$
|
694
|
|
Change in fair value measurement of warrant liability
|
|
(222
|
)
|
|
Warrant liability reclassified to stockholders' equity
|
|
(472
|
)
|
|
Balance as of June 30, 2018
|
|
$
|
—
|
|
|
|
As of June 30,
|
||||
|
|
2018
|
|
2017
|
||
Outstanding stock options
|
|
1,064
|
|
|
400
|
|
Outstanding warrants
|
|
9,415
|
|
|
6,095
|
|
Restricted stock units
|
|
581
|
|
|
934
|
|
|
|
June 30, 2018
|
||
Risk-free interest rate
|
|
2.27%-2.29%
|
|
|
Volatility
|
|
98.09%-105.01%
|
|
|
Dividend yield
|
|
—
|
%
|
|
Expected term
|
|
5-6.08 years
|
|
|
Forfeiture rate
|
|
—
|
%
|
|
Weighted average grant date fair value
|
|
$
|
1.66
|
|
|
|
Number of
Shares |
|
Weighted
Average Exercise Price |
|||
Outstanding as of December 31, 2017
|
|
369
|
|
|
$
|
17.37
|
|
Granted
|
|
695
|
|
|
$
|
2.11
|
|
Outstanding as of June 30, 2018
|
|
1,064
|
|
|
$
|
7.40
|
|
|
|
Number of
Shares |
|
Weighted Average Grant Date Fair Value
|
|||
Unvested as of December 31, 2017
|
|
718
|
|
|
$
|
1.57
|
|
Vested
|
|
(137
|
)
|
|
$
|
2.25
|
|
Unvested as of June 30, 2018
|
|
581
|
|
|
$
|
1.41
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Research and development
|
|
$
|
37
|
|
|
$
|
85
|
|
|
$
|
78
|
|
|
$
|
137
|
|
General and administrative
|
|
219
|
|
|
202
|
|
|
478
|
|
|
435
|
|
||||
Total
|
|
$
|
256
|
|
|
$
|
287
|
|
|
$
|
556
|
|
|
$
|
572
|
|
Upfront payment received
|
$
|
11,500
|
|
Transition services payments
|
500
|
|
|
Payment received for inventory
|
709
|
|
|
Total proceeds from sale
|
$
|
12,709
|
|
Carrying value of assets sold in sale
|
(1,578
|
)
|
|
Liabilities transferred upon sale
|
1,186
|
|
|
Total gain on sale of Purchased Assets
|
$
|
12,317
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Product sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
143
|
|
Royalty revenue
|
—
|
|
|
147
|
|
|
—
|
|
|
368
|
|
||||
Cost of goods sold
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
|
(74
|
)
|
||||
Operating expenses
|
—
|
|
|
(149
|
)
|
|
—
|
|
|
(748
|
)
|
||||
Other expense
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
||||
Gain on sale
|
—
|
|
|
250
|
|
|
—
|
|
|
12,067
|
|
||||
Income from discontinued operations
|
$
|
(24
|
)
|
|
$
|
248
|
|
|
$
|
(24
|
)
|
|
$
|
11,740
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Professional fees
|
$
|
379
|
|
|
$
|
575
|
|
Outside research and development services
|
21
|
|
|
61
|
|
||
Other
|
54
|
|
|
14
|
|
||
|
$
|
454
|
|
|
$
|
650
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Deferred rent
|
$
|
16
|
|
|
$
|
46
|
|
Security deposit
|
12
|
|
|
12
|
|
||
Other
|
7
|
|
|
—
|
|
||
|
$
|
35
|
|
|
$
|
58
|
|
|
Common Shares
Issuable upon Exercise |
|
Weighted
Average Exercise Price |
|||
Outstanding as of December 31, 2017
|
7,084
|
|
|
$
|
3.91
|
|
Issued
|
3,905
|
|
|
$
|
0.51
|
|
Exercised
|
(1,041
|
)
|
|
$
|
1.48
|
|
Cancelled
|
(533
|
)
|
|
19.81
|
|
|
Outstanding as of June 30, 2018
|
9,415
|
|
|
$
|
0.96
|
|
Exercisable as of June 30, 2018
|
9,415
|
|
|
$
|
0.96
|
|
Shares Issuable Upon Exercise
|
|
Exercise Price
|
|
Expiration Date
|
|||
1,103
|
|
|
$
|
0.60
|
|
|
March 2020
|
252
|
|
|
$
|
1.75
|
|
|
April 2022
|
3,251
|
|
|
$
|
1.55
|
|
|
May 2022
|
89
|
|
|
$
|
0.71
|
|
|
January 2023
|
340
|
|
|
$
|
0.42
|
|
|
January 2023
|
109
|
|
|
$
|
0.71
|
|
|
March 2023
|
332
|
|
|
$
|
0.42
|
|
|
March 2023
|
355
|
|
|
$
|
0.625
|
|
|
March 2023
|
3,550
|
|
|
$
|
0.50
|
|
|
May 2023
|
19
|
|
|
$
|
12.90
|
|
|
October 2024
|
15
|
|
|
$
|
16.40
|
|
|
July 2025
|
9,415
|
|
|
|
|
|
|
Page No.
|
|
|
Report of Independent Registered Public Accounting Firm
|
F-B-2
|
Balance Sheets as of December 31, 2017 and December 31, 2016
|
F-B-3
|
Statements of Operations for the Year Ended December 31, 2017 and for the period from June 1, 2016 (Inception) through December 31, 2016
|
F-B-4
|
Statements of Stockholders' Deficit for the Year Ended December 31, 2017 and for the period from June 1, 2016 (Inception) through December 31, 2016
|
F-B-5
|
Statements of Cash Flows for the Year Ended December 31, 2017 and for the period from June 1, 2016 (Inception) through December 31, 2016
|
F-B-6
|
Notes to Financial Statements
|
F-B-7
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
(in thousands)
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash
|
$
|
258
|
|
|
$
|
—
|
|
Other current assets
|
3
|
|
|
—
|
|
||
Total assets
|
$
|
261
|
|
|
$ -
|
|
|
|
|
|
|
||||
Liabilities and stockholders’ deficit
|
|
|
|
||||
Current liabilities
|
$
|
609
|
|
|
$
|
254
|
|
Convertible notes payable, at fair value
|
917
|
|
|
—
|
|
||
Stockholders’ deficit
|
(1,265)
|
|
|
(254)
|
|
||
Total liabilities and stockholders’ deficit
|
$
|
261
|
|
|
$
|
—
|
|
(in thousands, except per share data)
|
For the Year Ended December 31, 2017
|
|
For the Period from June 1, 2016 (Inception) through December 31, 2016
|
||||
Operating expense
|
|
|
|
||||
Research and development
|
$
|
(400
|
)
|
|
$
|
(25
|
)
|
General and administrative
|
(654
|
)
|
|
(230
|
)
|
||
Total other expense
|
(23
|
)
|
|
—
|
|
||
Net loss
|
$
|
(1,077
|
)
|
|
$
|
(255
|
)
|
|
|
|
|
||||
Net loss per common share: basic and diluted
|
$
|
(0.27
|
)
|
|
$
|
(0.08
|
)
|
Weighted average common shares outstanding: basic and diluted
|
4,000
|
|
|
3,308
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Total Stockholders' Deficit
|
|||||||||||
(in thousands)
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||
Balance - June 1, 2016 (Inception
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuance of restricted stock
|
|
4,000
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(255
|
)
|
|
(255
|
)
|
||||
Balance - December 31, 2016
|
|
4,000
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(255
|
)
|
|
$
|
(254
|
)
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
|
|
(1,077
|
)
|
|
(1,077
|
)
|
|||||
Balance - December 31, 2017
|
|
4,000
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
$
|
(1,332
|
)
|
|
$
|
(1,265
|
)
|
(in thousands)
|
For the Year Ended December 31, 2017
|
|
For the period from June 1, 2016 (Inception) through December 31, 2016
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net loss
|
$
|
(1,077
|
)
|
|
$
|
(254
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Stock-based compensation
|
66
|
|
|
—
|
|
||
Change in fair value of convertible notes payable
|
2
|
|
|
—
|
|
||
Research and development - license acquired, accrued
|
—
|
|
|
25
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts payable
|
178
|
|
|
229
|
|
||
Accrued expenses
|
180
|
|
|
—
|
|
||
Accrued interest
|
21
|
|
|
—
|
|
||
Due from related party
|
(2
|
)
|
|
—
|
|
||
Net cash used in operating activities
|
(632
|
)
|
|
—
|
|
||
|
|
|
|
||||
Cash Flows from Investing Activities:
|
|
|
|
||||
Payments for research and development related license
|
(25
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(25
|
)
|
|
—
|
|
||
|
|
|
|
||||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from convertible notes
|
915
|
|
|
—
|
|
||
Net cash provided by financing activities
|
915
|
|
|
—
|
|
||
|
|
|
|
||||
Net change in cash
|
258
|
|
|
—
|
|
||
|
|
|
|
||||
Cash - beginning of the period
|
—
|
|
|
—
|
|
||
Cash - ending of the period
|
258
|
|
|
—
|
|
|
For the Year Ended December 31, 2017
|
|
For the period from June 1, 2016 (Inception) through December 31, 2016
|
Statutory federal income tax rate
|
(34.0) %
|
|
(34.0) %
|
State and local taxes, net of federal benefit
|
(9.8) %
|
|
(9.8) %
|
Permanent items
|
1.0 %
|
|
0.0 %
|
Deferred rate change
|
(2.7) %
|
|
0.0 %
|
Current/ deferred tax rate differential
|
16.1 %
|
|
0.0 %
|
Change in valuation allowance
|
29.4 %
|
|
43.8 %
|
Income tax provision (benefit)
|
0.0 %
|
|
0.0 %
|
|
December 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryovers
|
$
|
143
|
|
|
$
|
4
|
|
Accrued expenses
|
58
|
|
|
—
|
|
||
Amortization
|
138
|
|
|
11
|
|
||
Stock based compensation
|
22
|
|
|
—
|
|
||
Start up cost
|
67
|
|
|
96
|
|
||
Total deferred tax assets
|
428
|
|
|
112
|
|
||
Valuation allowance
|
(428
|
)
|
|
(112
|
)
|
||
Deferred tax assets, net of allowance
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Federal
|
|
|
|
||||
Current
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
(188
|
)
|
|
(87
|
)
|
||
State and Local
|
|
|
|
||||
Current
|
—
|
|
|
—
|
|
||
Deferred
|
(129
|
)
|
|
(25
|
)
|
||
Change in valuation allowance
|
317
|
|
|
112
|
|
||
Income tax provision (benefit)
|
$
|
—
|
|
|
$
|
—
|
|
|
June 30,
2018 |
|
December 31, 2017
|
||||
(in thousands)
|
(
unaudited
)
|
|
|
||||
Assets
|
|
|
|
||||
Cash
|
$
|
183
|
|
|
$
|
258
|
|
Other current assets
|
2
|
|
|
3
|
|
||
Total assets
|
$
|
185
|
|
|
$
|
261
|
|
|
|
|
|
||||
Liabilities and stockholders’ deficit
|
|
|
|
||||
Current liabilities
|
$
|
1,040
|
|
|
$
|
609
|
|
Convertible notes payable, at fair value
|
1,537
|
|
|
917
|
|
||
Stockholders’ deficit
|
(2,393)
|
|
|
(1,265)
|
|
||
Total liabilities and stockholders’ deficit
|
$
|
184
|
|
|
$
|
261
|
|
|
Six Months Ended June 30,
|
|
|||||
(in thousands, except per share data)
|
2018
|
|
2017
|
||||
Operating expense
|
(
unaudited
)
|
||||||
Research and development
|
$
|
(250
|
)
|
|
$
|
—
|
|
General and administrative
|
(807
|
)
|
|
(48
|
)
|
||
Total other expense
|
(101
|
)
|
|
(3
|
)
|
||
Net loss
|
$
|
(1,158
|
)
|
|
$
|
(51
|
)
|
|
|
|
|
||||
Net loss per common share: basic and diluted
|
$
|
(0.29
|
)
|
|
$
|
(0.01
|
)
|
Weighted average common shares outstanding: basic and diluted
|
4,000
|
|
|
4,000
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Total Stockholders' Deficit
|
|||||||
|
Shares
|
|
Amount
|
|
|
|
||||||||
Balance - December 31, 2017
|
4,000
|
|
|
—
|
|
|
67
|
|
|
(1,332
|
)
|
|
(1,265
|
)
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
(1,159
|
)
|
|
(1,159
|
)
|
|
Balance - June 30, 2018
|
4,000
|
|
|
—
|
|
|
98
|
|
|
(2,490
|
)
|
|
(2,393
|
)
|
|
For the Six Months Ended June 30,
|
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net loss
|
$
|
(1,159
|
)
|
|
$
|
(51
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Stock-based compensation
|
31
|
|
|
—
|
|
||
Change in fair value of convertible notes payable
|
55
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts payable
|
505
|
|
|
19
|
|
||
Accrued expenses
|
(119
|
)
|
|
—
|
|
||
Accrued interest
|
46
|
|
|
2
|
|
||
Due from related party
|
—
|
|
|
(2
|
)
|
||
Net cash used in operating activities
|
(641
|
)
|
|
(32
|
)
|
||
|
|
|
|
||||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from convertible notes
|
565
|
|
|
200
|
|
||
Net cash provided by financing activities
|
565
|
|
|
200
|
|
||
|
|
|
|
||||
Net change in cash
|
(76
|
)
|
|
168
|
|
||
|
|
|
|
||||
Cash - beginning of the period
|
258
|
|
|
—
|
|
||
Cash - ending of the period
|
$
|
183
|
|
|
$
|
168
|
|
|
|
|
|
Page
|
Section 1. Description of Transaction
|
|
A-9
|
||
|
1.1
|
The Merger
|
|
A-9
|
|
1.2
|
Effects of the Merger
|
|
A-9
|
|
1.3
|
Closing; Effective Time
|
|
A-10
|
|
1.4
|
Certificate of Incorporation and Bylaws; Directors and Officers
|
|
A-10
|
|
1.5
|
Conversion of Shares
|
|
A-11
|
|
1.6
|
Contingent Value Right
|
|
A-12
|
|
1.7
|
Closing of the Company’s Transfer Books
|
|
A-12
|
|
1.8
|
Surrender of Certificates
|
|
A-13
|
|
1.9
|
Calculation of Apricus Net Cash
|
|
A-14
|
|
1.10
|
Calculation of Company Net Cash
|
|
A-16
|
|
1.11
|
Appraisal Rights
|
|
A-17
|
|
1.12
|
Further Action
|
|
A-17
|
|
1.13
|
Tax Consequences
|
|
A-18
|
|
1.14
|
Withholding
|
|
A-18
|
Section 2. Representations and Warranties of the Company
|
|
A-18
|
||
|
2.1
|
Due Organization; Subsidiaries.
|
|
A-18
|
|
2.2
|
Organizational Documents
|
|
A-19
|
|
2.3
|
Authority; Binding Nature of Agreement
|
|
A-19
|
|
2.4
|
Vote Required
|
|
A-19
|
|
2.5
|
Non-Contravention; Consents
|
|
A-19
|
|
2.6
|
Capitalization
|
|
A-20
|
|
2.7
|
Financial Statements
|
|
A-22
|
|
2.8
|
Absence of Changes
|
|
A-23
|
|
2.9
|
Absence of Undisclosed Liabilities
|
|
A-23
|
|
2.10
|
Title to Assets
|
|
A-23
|
|
2.11
|
Real Property; Leasehold
|
|
A-24
|
|
2.12
|
Intellectual Property
|
|
A-24
|
|
2.13
|
Agreements, Contracts and Commitments
|
|
A-27
|
|
2.14
|
Compliance; Permits; Restrictions
|
|
A-29
|
|
2.15
|
Legal Proceedings; Orders
|
|
A-31
|
|
2.16
|
Tax Matters
|
|
A-31
|
|
2.17
|
Employee and Labor Matters; Benefit Plans
|
|
A-33
|
|
2.18
|
Environmental Matters
|
|
A-36
|
|
2.19
|
Insurance
|
|
A-36
|
|
2.20
|
No Financial Advisors
|
|
A-37
|
|
2.21
|
Disclosure
|
|
A-37
|
|
2.22
|
Transactions with Affiliates
|
|
A-37
|
|
2.23
|
No Other Representations or Warranties
|
|
A-37
|
Section 3. Representations and Warranties of Apricus and Merger Sub
|
|
A-37
|
||
|
3.1
|
Due Organization; Subsidiaries
|
|
A-38
|
|
3.2
|
Organizational Documents
|
|
A-38
|
|
3.3
|
Authority; Binding Nature of Agreement
|
|
A-38
|
|
3.4
|
Vote Required
|
|
A-39
|
|
3.5
|
Non-Contravention; Consents
|
|
A-39
|
|
3.6
|
Capitalization
|
|
A-40
|
|
3.7
|
SEC Filings; Financial Statements
|
|
A-42
|
|
3.8
|
Absence of Changes
|
|
A-44
|
|
3.9
|
Absence of Undisclosed Liabilities
|
|
A-44
|
|
3.10
|
Title to Assets
|
|
A-44
|
|
3.11
|
Real Property; Leasehold
|
|
A-45
|
|
3.12
|
Intellectual Property
|
|
A-45
|
|
3.13
|
Agreements, Contracts and Commitments
|
|
A-48
|
|
3.14
|
Compliance; Permits; Restrictions
|
|
A-50
|
|
3.15
|
Legal Proceedings; Orders
|
|
A-52
|
|
3.16
|
Tax Matters
|
|
A-52
|
|
3.17
|
Employee and Labor Matters; Benefit Plans
|
|
A-54
|
|
3.18
|
Environmental Matters
|
|
A-57
|
|
3.19
|
Insurance
|
|
A-57
|
|
3.20
|
No Financial Advisors
|
|
A-58
|
|
3.21
|
Transactions with Affiliates
|
|
A-58
|
|
3.22
|
Valid Issuance
|
|
A-58
|
|
3.23
|
No Other Representations or Warranties
|
|
A-58
|
Section 4. Certain Covenants of the Parties
|
|
A-59
|
||
|
4.1
|
Operation of Apricus’ Business
|
|
A-59
|
|
4.2
|
Operation of the Company’s Business
|
|
A-60
|
|
4.3
|
Access and Investigation
|
|
A-63
|
|
4.4
|
No Solicitation
|
|
A-63
|
|
4.5
|
Notification of Certain Matters
|
|
A-65
|
Section 5. Additional Agreements of the Parties
|
|
A-65
|
||
|
5.1
|
Registration Statement; Proxy Statement
|
|
A-65
|
|
5.2
|
Company Stockholder Written Consent
|
|
A-66
|
|
5.3
|
Apricus Stockholders’ Meeting
|
|
A-69
|
|
5.4
|
Regulatory Approvals
|
|
A-71
|
|
5.5
|
Company Options and Company Notes
|
|
A-71
|
|
5.6
|
Apricus Options
|
|
A-72
|
|
5.7
|
Employee Benefits
|
|
A-73
|
|
5.8
|
Indemnification of Officers and Directors
|
|
A-73
|
|
5.9
|
Additional Agreements
|
|
A-75
|
|
5.10
|
Disclosure
|
|
A-75
|
|
5.11
|
Listing
|
|
A-75
|
|
5.12
|
Tax Matters
|
|
A-76
|
|
5.13
|
Legends
|
|
A-77
|
|
5.14
|
Directors and Officers
|
|
A-77
|
|
5.15
|
Termination of Certain Agreements and Rights
|
|
A-77
|
|
5.16
|
Corporate Identity
|
|
A-77
|
|
5.17
|
Section 16 Matters
|
|
A-77
|
|
5.18
|
Cooperation
|
|
A-77
|
|
5.19
|
Allocation Certificate
|
|
A-77
|
|
5.20
|
Company Financial Statements
|
|
A-78
|
|
5.21
|
Apricus Reverse Stock Split
|
|
A-78
|
|
5.22
|
Disposition of Vitaros Assets
|
|
A-78
|
|
5.23
|
Amendment of Employment Agreement
|
|
A-78
|
|
5.24
|
Amendment of Subscription Agreement
|
|
A-79
|
|
5.25
|
Amendment of Wainwright Agreement
|
|
A-79
|
|
5.26
|
Treatment of Office Lease
|
|
A-79
|
Section 6. Conditions Precedent to Obligations of Each Party
|
|
A-79
|
||
|
6.1
|
Effectiveness of Registration Statement
|
|
A-79
|
|
6.2
|
No Restraints
|
|
A-79
|
|
6.3
|
Stockholder Approval
|
|
A-79
|
|
6.4
|
Listing
|
|
A-80
|
Section 7. Additional Conditions Precedent to Obligations of Apricus and Merger Sub
|
|
A-80
|
||
|
7.1
|
Accuracy of Representations
|
|
A-80
|
|
7.2
|
Performance of Covenants
|
|
A-80
|
|
7.3
|
Closing Certificate
|
|
A-80
|
|
7.4
|
FIRPTA Certificate
|
|
A-81
|
|
7.5
|
No Company Material Adverse Effect
|
|
A-81
|
|
7.6
|
Termination of Investor Agreements
|
|
A-81
|
|
7.7
|
Apricus Tax Opinion
|
|
A-81
|
Section 8. Additional Conditions Precedent to Obligation of the Company
|
|
A-81
|
||
|
8.1
|
Accuracy of Representations
|
|
A-81
|
|
8.2
|
Performance of Covenants
|
|
A-82
|
|
8.3
|
Documents
|
|
A-82
|
|
8.4
|
Sarbanes-Oxley Certifications
|
|
A-82
|
|
8.5
|
No Apricus Material Adverse Effect
|
|
A-82
|
|
8.6
|
Lock-Up Agreements
|
|
A-82
|
|
8.7
|
Company Tax Opinion
|
|
A-83
|
|
8.8
|
Employment Agreement Amendment
|
|
A-83
|
|
8.9
|
Lease Treatment
|
|
A-83
|
Section 9. Termination
|
|
A-83
|
||
|
9.1
|
Termination
|
|
A-83
|
|
9.2
|
Effect of Termination
|
|
A-85
|
|
9.3
|
Expenses; Termination Fees
|
|
A-86
|
Section 10. Miscellaneous Provisions
|
|
A-89
|
||
|
10.1
|
Non-Survival of Representations and Warranties
|
|
A-89
|
|
10.2
|
Amendment
|
|
A-89
|
|
10.3
|
Waiver
|
|
A-89
|
|
10.4
|
Entire Agreement; Counterparts; Exchanges by Facsimile
|
|
A-89
|
|
10.5
|
Applicable Law; Jurisdiction
|
|
A-89
|
|
10.6
|
Attorneys’ Fees
|
|
A-90
|
|
10.7
|
Assignability
|
|
A-90
|
|
10.8
|
Notices
|
|
A-90
|
|
10.9
|
Cooperation
|
|
A-91
|
|
10.10
|
Severability
|
|
A-91
|
|
10.11
|
Other Remedies; Specific Performance
|
|
A-92
|
|
10.12
|
No Third Party Beneficiaries
|
|
A-92
|
|
10.13
|
Construction
|
|
A-92
|
Exhibit A
|
Definitions
|
Exhibit B
|
Form of Apricus Stockholder Support Agreement
|
Exhibit C
|
Form of Company Stockholder Support Agreement
|
Exhibit D
|
Form of CVR Agreement
|
Exhibit E
|
Form of Lock-Up Agreement
|
a)
|
For purposes of the Agreement (including this Exhibit A):
|
•
|
“
Additional Company Proceeds
” means the sum of (i) the Company Net Cash
plus
(ii) the aggregate gross proceeds received or to be received pursuant to one or more executed definitive agreements governing the sale of equity securities (including securities convertible, exercisable or exchangeable into such equity securities) of Apricus concurrent with or following the Effective Time, provided that, if the Additional Company Proceeds are at least $13,500,000 and no greater than $16,500,000, the Additional Company Proceeds shall be deemed to be $15,000,000.
|
•
|
“
Aggregate Value
” means the sum of (i) the Company Pre-Money Valuation,
plus
(ii) the Apricus Pre-Money Valuation,
plus
(iii) the Additional Company Proceeds,
plus
(iv) the Apricus Unrestricted Cash.
|
•
|
“
Apricus Allocation Percentage
” means the quotient determined by dividing (i) the sum of the Apricus Pre-Money Valuation
plus
the Apricus Unrestricted Cash by (ii) the Aggregate Value.
|
•
|
“
Apricus Outstanding Shares
” means the total number of shares of Apricus Common Stock outstanding immediately prior to the Effective Time expressed on a fully-diluted basis, but assuming, without limitation or duplication, (i) with respect to Apricus Options, the cashless exercise solely of those Apricus Options outstanding as of immediately prior to the Effective Time with an exercise price less than the Apricus Closing Price (and otherwise disregarding any other Apricus Options), (ii) with respect to Apricus Warrants, the cashless exercise solely of those Apricus Warrants outstanding as of immediately prior to the Effective Time with an exercise price less than the Apricus Closing Price (and otherwise disregarding any other Apricus Warrants), (iii) with respect to Apricus RSUs, the settlement of such Apricus RSUs for shares of Apricus Common Stock on a net settlement basis as provided in
Section 1.5
and (iv) the issuance of shares of Apricus Common Stock in respect of all other outstanding options, warrants or rights to receive such shares (assuming cashless exercise using the Apricus Closing Price in the case of options, warrants and other similar rights), whether conditional or unconditional and including any outstanding options, warrants or rights triggered by or associated with the
|
•
|
“
Apricus Pre-Money Valuation
” means $11,470,000.
|
•
|
“
Apricus Unrestricted Cash
” means the amount of the Apricus Net Cash balance as of the Closing;
provided
that, if the Apricus Net Cash balance as of the Closing is at least $2,700,000 and no greater than $3,300,000, the Apricus Unrestricted Cash shall be deemed to be $3,000,000 and
provided further
that if the condition set forth on Section B to the Apricus Disclosure Schedule has not been satisfied as of the Closing, the Apricus Unrestricted Cash shall be decreased by $500,000.
|
•
|
“
Company Allocation Percentage
” means the quotient determined by dividing (i) the sum of the Company Pre-Money Valuation
plus
the Additional Company Proceeds, by (ii) the Aggregate Value.
|
•
|
“
Company Merger Shares
” means the product determined by multiplying the Post-Closing Apricus Shares by the Company Allocation Percentage.
|
•
|
“
Company Outstanding Shares
” means the total number of shares of Company Capital Stock outstanding immediately prior to the Effective Time expressed on a fully-diluted and as-converted to Company Common Stock basis and assuming, without limitation or duplication, (i) the exercise of all Company Options outstanding as of immediately prior to the Effective Time, (ii) the conversion of all Company Notes outstanding as of immediately prior to the Effective Time, and (iii) the issuance of shares of Company Capital Stock in respect of all other outstanding options, warrants or rights to receive such shares, whether conditional or unconditional and including any outstanding options, warrants or rights triggered by or associated with the consummation of the Merger (but excluding any shares of Company Common Stock reserved for issuance other than with respect to outstanding Company Options under the Company Stock Plan).
|
•
|
“
Company Pre-Money Valuation
” means $65,000,000.
|
•
|
“
Post-Closing Apricus Shares
” means the quotient determined by dividing the Apricus Outstanding Shares by the Apricus Allocation Percentage.
|
b)
|
Each of the following terms is defined in the Section set forth opposite such term:
|
Term
|
Section
|
409A Plan
|
2.17(j)
|
Allocation Certificate
|
5.19
|
Apricus
|
Preamble
|
Apricus Board Recommendation
|
5.3(b)
|
Apricus Change in Circumstance Notice
|
5.3(d)
|
Apricus Charter Amendment
|
1.4(b)
|
Apricus Disclosure Schedule
|
3
|
Apricus Employee Plan
|
3.17(a)
|
Apricus Material Contract
|
3.13
|
Apricus Notice Period
|
5.3(c)
|
Apricus Permits
|
3.14(b)
|
Apricus Product Candidates
|
3.14(d)
|
Apricus Regulatory Permits
|
3.14(d)
|
Apricus Real Estate Leases
|
3.11
|
Apricus Reverse Stock Split
|
5.21
|
Apricus SEC Documents
|
3.7(a)
|
Apricus Stock Plans
|
3.6(c)
|
Apricus Stockholder Matters
|
5.3(a)
|
Apricus Stockholders’ Meeting
|
5.3(a)
|
Apricus Stockholder Support Agreements
|
Recitals
|
Apricus Tax Opinion
|
7.7
|
Capitalization Date
|
3.6(a)
|
Certificate of Merger
|
1.3
|
Certification
|
3.7(a)
|
Closing
|
1.3
|
Closing Date
|
1.3
|
Company
|
Preamble
|
Company Board Recommendation
|
5.2(a)
|
Company Change in Circumstance Notice
|
5.2(e)
|
Company Disclosure Schedule
|
2
|
Company Employee Plan
|
2.17(b)
|
Company Financials
|
2.7(a)
|
Company Material Contract
|
2.13
|
Company Permits
|
2.14(b)
|
Company Product Candidates
|
2.14(d)
|
Company Real Estate Leases
|
2.11
|
Company Regulatory Permits
|
2.14(d)
|
Company Stock Certificate
|
1.7
|
Company Stock Plan
|
2.6(c)
|
Company Stockholder Support Agreements
|
Recitals
|
Company Stockholder Written Consent
|
Recitals
|
Term
|
Section
|
Company Tax Opinion
|
8.7
|
Company Termination Fee
|
9.3(b)
|
Costs
|
5.8(a)
|
D&O Indemnified Party
|
5.8(a)
|
Dissenting Shares
|
1.11(a)
|
Drug Regulatory Agency
|
2.14(c)
|
Effective Time
|
1.3
|
Employment Agreement Amendment
|
5.23
|
End Date
|
9.1(b)
|
Exchange Agent
|
1.8(a)
|
Exchange Fund
|
1.8(a)
|
FDA
|
2.14(c)
|
FDCA
|
2.14(c)
|
GAAP
|
2.7(a)
|
Investor Agreements
|
5.15
|
Liability
|
2.9
|
Merger
|
Recitals
|
Merger Sub
|
Preamble
|
Non-Transferred Vitaros Assets
|
5.22
|
Notice Period
|
5.2(d)
|
Office Lease
|
5.26
|
Pre-Closing Period
|
4.1(a)
|
Required Company Stockholder Vote
|
2.4
|
Required Apricus Stockholder Vote
|
3.4
|
Sarissa Parties
|
5.24
|
Subscription Agreement Amendment
|
5.24
|
Surviving Corporation
|
1.1
|
Third Party Expenses
|
9.3(f)
|
Wainwright Agreement Amendment
|
5.25
|
(a)
|
Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
|
(b)
|
Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:
|
(1)
|
Provided, however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
|
(2)
|
Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
|
a.
|
Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
|
b.
|
Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
|
c.
|
Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
|
d.
|
Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
|
(3)
|
In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
|
(4)
|
In the event of an amendment to a corporation’s certificate of incorporation contemplated by § 363(a) of this title, appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word “amendment” substituted for the words “merger or consolidation,” and the word “corporation” substituted for the words “constituent corporation” and/or “surviving or resulting corporation.”
|
(c)
|
Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of this section, shall apply as nearly as is practicable.
|
(d)
|
Appraisal rights shall be perfected as follows:
|
(1)
|
If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
|
(2)
|
If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s
|
(e)
|
Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder’s written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection.
|
(f)
|
Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
|
(g)
|
At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have
|
(h)
|
After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
|
(i)
|
The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.
|
(j)
|
The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
|
(k)
|
From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an
|
(l)
|
The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
|
Certificate of Amendment
(Pursuant to NRS 78.385 AND 78.390)
|
USE BLACK INK ONLY - DO NOT HIGHLIGHT
|
ABOVE SPACE IS FOR OFFICE USE ONLY
|
1. Name of corporation:
|
Apricus Biosciences, Inc.
|
|
2. The articles have been amended as follows: (provide article numbers, if available)
|
1. Article FIRST of the Amended and Restated Articles of Incorporation of Apricus Biosciences, Inc. (the "Corporation"), as heretofore amended, is hereby deleted and replaced in its entirety with the following:
"FIRST: The name of the corporation is Seelos Therapeutics, Inc. (the "Corporation")."
|
|
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is:
|
in excess of a majority
|
4. Effective date and time of filing: (optional)
|
Date:
|
|
Time:
|
|
|
(must not be later than 90 days after the certificate is filed)
|
This form must be accompanied by appropriate fees.
|
Nevada Secretary of State Amend Profit-After
|
|
Revised 1-5-15
|
1.
|
DEFINED TERMS
|
2.
|
PURPOSE
|
3.
|
ADMINISTRATION
|
4.
|
LIMITS ON AWARDS UNDER THE PLAN
|
5.
|
ELIGIBILITY AND PARTICIPATION
|
6.
|
RULES APPLICABLE TO AWARDS
|
(a)
|
In General
|
(5)
|
Recovery of Compensation; Other Terms
|
7.
|
EFFECT OF CERTAIN TRANSACTIONS
|
(b)
|
Changes in and Distributions With Respect to Stock
|
8.
|
LEGAL CONDITIONS ON DELIVERY OF STOCK
|
9.
|
AMENDMENT AND TERMINATION
|
10.
|
OTHER COMPENSATION ARRANGEMENTS
|
11.
|
MISCELLANEOUS
|
12.
|
ESTABLISHMENT OF SUB-PLANS
|
13.
|
GOVERNING LAW
|
(viii)
|
Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise based on Stock.
|
(1)
|
That prior to any public reoffering of the securities registered hereunder through use of a proxy statement/prospectus/information statement which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering proxy statement/prospectus/information statement will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
|
(2)
|
That every proxy statement/prospectus/information statement (i) that is filed pursuant to paragraph (a)(1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, 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.
|
Exhibit
Number |
|
Description of Document
|
|
|
|
2.1
*
|
|
Agreement and Plan of Merger, dated July 30, 2018, by and among Apricus Biosciences, Inc., Arch Merger Sub, Inc. and Seelos Therapeutics, Inc. (included as
Annex A
to the proxy statement/prospectus/information statement forming a part of this Registration Statement).
|
|
|
|
|
Form of Support Agreement, by and between Apricus Biosciences, Inc., Seelos Therapeutics, Inc. and certain stockholders of Apricus Biosciences, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2018).
|
|
|
|
|
|
Support Agreement, dated July 30, 2018, by and between Apricus Biosciences, Inc., Seelos Therapeutics, Inc. and Raj Mehra (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2018).
|
|
|
|
|
|
Amended and Restated Articles of Incorporation of Apricus Biosciences, Inc. (incorporated herein by reference to Exhibit 2.1 to Apricus Biosciences, Inc.'s Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on March 14, 1997).
|
|
|
|
|
|
Certificate of Amendment to Articles of Incorporation of Apricus Biosciences, Inc., dated June 22, 2000 (incorporated herein by reference to Exhibit 3.2 to Apricus Biosciences, Inc.'s Form 10-K filed with the Securities and Exchange Commission on March 31, 2003).
|
|
|
|
|
|
Certificate of Amendment to Articles of Incorporation of Apricus Biosciences, Inc., dated June 14, 2005 (incorporated herein by reference to Exhibit 3.4 to Apricus Biosciences, Inc.'s Form 10-K filed with the Securities and Exchange Commission on March 16, 2006).
|
Exhibit
Number |
|
Description of Document
|
|
|
|
|
Certificate of Amendment to Amended and Restated Articles of Incorporation of Apricus Biosciences, Inc., dated March 3, 2010 (incorporated herein by reference to Exhibit 3.6 to Apricus Biosciences, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2010).
|
|
|
|
|
|
Certificate of Correction to Certificate of Amendment to Amended and Restated Articles of Incorporation of Apricus Biosciences, Inc., dated March 3, 2010 (incorporated herein by reference to Exhibit 3.7 to Apricus Biosciences, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2010).
|
|
|
|
|
|
Certificate of Designation for Series D Junior-Participating Cumulative Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-A12G filed with the Securities and Exchange Commission on March 24, 2011).
|
|
|
|
|
|
Certificate of Change filed with the Nevada Secretary of State (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 17, 2010).
|
|
|
|
|
|
Certificate of Amendment to Amended and Restated Articles of Incorporation of Apricus Biosciences, Inc., dated September 10, 2010 (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2010).
|
|
|
|
|
|
Certificate of Withdrawal of Series D Junior Participating Cumulative Preferred Stock, dated May 15, 2013 (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2013).
|
|
|
|
|
|
Certificate of Change filed with the Nevada Secretary of State (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Form 8-K filed with the Securities and Exchange Commission on October 25, 2016).
|
|
|
|
|
|
Certificate of Amendment filed with the Nevada Secretary of State (incorporated herein by reference to Exhibit 3.10 to Apricus Biosciences, Inc.'s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 2, 2017).
|
|
|
|
|
|
Fourth Amended and Restated Bylaws, dated December 18, 2012 (incorporated herein by reference to Exhibit 3.9 to Apricus Biosciences, Inc.'s Form 10-K filed with the Securities and Exchange Commission on March 18, 2013).
|
|
|
|
|
|
Amendment to the Fourth Amended and Restated Bylaws of Apricus Biosciences, Inc., dated January 11, 2016 (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2016).
|
|
|
|
|
|
Second Amendment to the Fourth Amended and Restated Bylaws of Apricus Biosciences, Inc., dated March 3, 2016 (incorporated herein by reference to Exhibit 3.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2016).
|
|
|
|
|
|
Form of Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2011).
|
|
|
|
|
|
Form of Warrant (incorporated herein by reference to Exhibit 1.1 to Apricus Biosciences, Inc.'s Current Report on From 8-K filed with the Securities and Exchange Commission on May 24, 2013).
|
Exhibit
Number |
|
Description of Document
|
|
|
|
|
Form of Warrant issued to the lenders under the Loan and Security Agreement, dated as of October 17, 2014, by and among Apricus Biosciences, Inc., NexMed (U.S.A.), Inc., NexMed Holdings, Inc. and Apricus Pharmaceuticals USA, Inc., as borrowers, Oxford Finance LLC, as collateral agent, and the lenders party thereto from time to time including Oxford Finance LLC and Silicon Valley Bank. (incorporated herein by reference to Exhibit 4.2 to Apricus Biosciences, Inc.'s Form 8-K filed with the Securities and Exchange Commission on October 20, 2014).
|
|
|
|
|
|
Form of Warrant (incorporated herein by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2015).
|
|
|
|
|
|
Form of Warrant issued to Sarissa Capital Domestic Fund LP and Sarissa Capital Offshore Master Fund LP (incorporated herein by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2016).
|
|
|
|
|
|
Form of Warrant issued to other purchasers (incorporated herein by reference to Exhibit 4.2 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2016).
|
|
|
|
|
|
Form of Warrant Amendment (incorporated herein by reference to Exhibit 4.3 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2016).
|
|
|
|
|
|
Form of Warrant (incorporated herein by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 28, 2016).
|
|
|
|
|
|
Form of Warrant Amendment (incorporated herein by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 21, 2017).
|
|
|
|
|
|
Form of Warrant (incorporated herein by reference to Exhibit 4.9 of Amendment No. 1 to Company’s Registration Statement on Form S-1 (File No. 333-217036) filed with the Securities and Exchange Commission on April 17, 2017).
|
|
|
|
|
|
Form of Warrant (incorporated herein by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 11, 2017).
|
|
|
|
|
|
Amendment to Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.12 of Amendment No. 1 to Apricus Biosciences, Inc.'s Registration Statement on Form S-3 (File No. 333-2223353) filed with the Securities and Exchange Commission on March 22, 2018).
|
|
|
|
|
|
Amendment to Warrant to Purchase Common Stock, dated as of March 27, 2018 (incorporated by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on March 29, 2018).
|
|
|
|
|
|
Form of Warrant (incorporated by reference to Exhibit 4.2 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on March 29, 2018).
|
|
|
|
|
Exhibit
Number |
|
Description of Document
|
|
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on March 29, 2018).
|
|
|
|
|
|
Amendment to Warrant to Purchase Common Stock, dated as of June 22, 2018, by and between the Company and Sarissa Offshore (incorporated by reference to Exhibit 4.1 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on June 22, 2018).
|
|
|
|
|
5.1^
|
|
Opinion of Brownstein Hyatt Farber Schreck, LLP regarding the validity of the securities.
|
|
|
|
8.1^
|
|
Legal Opinion of Latham & Watkins LLP regarding tax matters.
|
|
|
|
8.2^
|
|
Legal Opinion of Paul Hastings LLP regarding tax matters.
|
|
|
|
10.1
#
|
|
NexMed, Inc. 2006 Stock Incentive Plan (incorporated herein by reference to
Annex A
of Apricus Biosciences, Inc.'s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 6, 2006).
|
|
|
|
10.2
#
|
|
NexMed, Inc. Amendment to 2006 Stock Incentive Plan (incorporated herein by reference to Appendix A of Apricus Biosciences, Inc.'s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 18, 2008).
|
|
|
|
|
Asset Purchase Agreement, dated February 3, 2009, by and between Warner Chilcott Company, Inc. and NexMed, Inc. (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5, 2009).
|
|
|
|
|
|
License Agreement, dated February 3, 2009, by and between NexMed, Inc. and Warner Chilcott Company, Inc. (incorporated herein by reference to Exhibit 10.2 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5, 2009).
|
|
|
|
|
10.5
#
|
|
Apricus Biosciences, Inc. 2012 Stock Long Term Incentive Plan (incorporated by reference to Exhibit A of the Registrant’s Definitive Proxy Statement filed on April 6, 2012).
|
|
|
|
|
Settlement Agreement and Release, dated as of September 23, 2013, by and between Apricus Biosciences, Inc. and Topotarget A/S (incorporated by reference to Exhibit 10.1 of Amendment No. 1 to Apricus Biosciences, Inc.'s Registration Statement on Form S-3 (File No. 333-191679) filed with the Securities and Exchange Commission on October 31, 2013).
|
|
|
|
|
10.7
#
|
|
Form of Stock Option Grant Notice and Stock Option Agreement under the Apricus Biosciences, Inc. 2012 Stock Long Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Form 10-Q filed with the Securities and Exchange Commission on August 11, 2014).
|
|
|
|
|
Stock Issuance Agreement, by and among Apricus Biosciences, Inc., Forendo Pharma Ltd. and Birch & Lake Partners, LLC, dated as of October 17, 2014 (incorporated herein by reference to Exhibit 10.2 to Apricus Biosciences, Inc.'s Form 8-K filed with the Securities and Exchange Commission on October 20, 2014).
|
|
|
|
|
Exhibit
Number |
|
Description of Document
|
10.9
†
|
|
License Agreement and Amendment, by and between NexMed (U.S.A.), Inc. and Warner Chilcott Company, LLC, dated September 9, 2015 (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Form 10-Q filed with the Securities and Exchange Commission on November 5, 2015).
|
|
|
|
|
Subscription Agreement dated January 12, 2016, among Apricus Biosciences, Inc., Sarissa Capital Domestic Fund LP and Sarissa Capital Offshore Master Fund LP (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2016).
|
|
|
|
|
|
Amendment No. 1 to Subscription Agreement, dated as of June 22, 2018, by and among Apricus, Sarissa Capital Domestic Fund LP and Sarissa Capital Offshore Master Fund LP.
|
|
|
|
|
|
Employment Transition Agreement, by and between Apricus Biosciences, Inc. and Dr. Barbara Troupin, dated April 13, 2016 (incorporated herein by reference to Exhibit 10.4 to Apricus Biosciences, Inc.'s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2016).
|
|
|
|
|
10.13
#
|
|
Form of Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.6 to Apricus Biosciences, Inc.'s Form 10-Q filed with the Securities and Exchange Commission on May 9, 2016).
|
|
|
|
10.14
#
|
|
Non-Employee Director Compensation Policy (incorporated herein by reference to Exhibit 10.30 to Apricus Biosciences, Inc.'s Form 10-Q filed with the Securities and Exchange Commission on March 3, 2018).
|
|
|
|
|
Form of Securities Purchase Agreement (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 28, 2016).
|
|
|
|
|
|
Second Amended and Restated Employment Agreement, by and between Apricus Biosciences, Inc. and Richard W. Pascoe, August 30, 2018 (incorporated herein by reference to Exhibit 10.10 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 30, 2018).
|
|
|
|
|
10.17
#
|
|
Amended and Restated Employment Agreement by and between Apricus Biosciences, Inc. and Neil Morton, dated December 20, 2016 (incorporated herein by reference to Exhibit 10.21 to Apricus Biosciences, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2017).
|
|
|
|
10.18
#
|
|
Amended and Restated Employment Agreement, by and between Apricus Biosciences, Inc. and Brian Dorsey, dated December 20, 2016 (incorporated herein by reference to Exhibit 10.22 to Apricus Biosciences, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2017).
|
|
|
|
|
Release, by and between Apricus Biosciences, Inc. and Brian Dorsey, dated August 30, 2018 (incorporated herein by reference to Exhibit 10.2 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 30, 2018).
|
|
|
|
|
Exhibit
Number |
|
Description of Document
|
|
Asset Purchase Agreement, dated March 8, 2017, by and between Ferring International Center S.A. and Apricus Biosciences, Inc., NexMed (U.S.A.), Inc., NexMed Holdings, Inc. and NexMed International Limited (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2017).
|
|
|
|
|
|
License Agreement, dated March 8, 2017, by and between Apricus Biosciences, Inc. and Ferring International Center S.A. (incorporated herein by reference to Exhibit 10.2 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2017).
|
|
|
|
|
|
Transition Services Agreement, dated March 8, 2017, by and between Apricus Biosciences, Inc. and Ferring International Center S.A. (incorporated herein by reference to Exhibit 10.3 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2017).
|
|
|
|
|
|
2012 Stock Long Term Incentive Plan, as amended and restated effective May 17, 2017 (incorporated herein by reference to Appendix A to Apricus Biosciences, Inc.'s Definitive Proxy Statement on Schedule 14A filed on April 13, 2017.
|
|
|
|
|
|
Form of Registration Rights Agreement (incorporated herein by reference to Exhibit 4.2 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 11, 2017).
|
|
|
|
|
|
Securities Purchase Agreement dated as of September 10, 2017, between Apricus Biosciences, Inc. and each purchaser named in the signature pages thereto (incorporated herein by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 11, 2017).
|
|
|
|
|
|
Engagement Letter between Apricus Biosciences, Inc. and H.C. Wainwright & Co., LLC, dated as of September 10, 2017 (incorporated herein by reference to Exhibit 10.2 to Apricus Biosciences, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 11, 2017).
|
|
|
|
|
|
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on March 29, 2018).
|
|
|
|
|
|
Engagement Agreement, dated as of March 27, 2018, between Apricus Biosciences, Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 10.2 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on March 29, 2018).
|
|
|
|
|
|
Amendment No. 1 to Subscription Agreement, dated as of June 22, 2018, by and between the Investors and Apricus Biosciences, Inc. (incorporated by reference to Exhibit 10.1 to Apricus Biosciences, Inc.'s 8-K filed with the Securities and Exchange Commission on June 22, 2018).
|
|
|
|
|
|
Form of CVR Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2018).
|
|
|
|
|
10.31
*
|
|
Engagement Letter, between Apricus Biosciences, Inc. and Canaccord Genuity LLC, dated as of March 22, 2018.*
|
|
|
|
|
Form of Indemnification Agreement for Apricus Biosciences, Inc. Directors and Officers.
|
Exhibit
Number |
|
Description of Document
|
|
|
|
10.33
†*
|
|
License Agreement, dated September 21, 2016, by and among Seelos Therapeutics, Inc., Ligand Pharmaceuticals Incorporated, Neurogen Corporation and CyDex Pharmaceuticals.
|
|
|
|
10.34
†*
|
|
Asset Purchase Agreement, dated as of March 6, 2018, by and between Seelos Therapeutics, Inc. and Vyera Pharmaceuticals AG f/k/a Turing Pharmaceuticals AG.
|
|
|
|
10.35
†
|
|
Amendment to Asset Purchase Agreement, dated as of May 18, 2018, by and between Seelos Therapeutics, Inc. and Vyera Pharmaceuticals AG f/k/a Turing Pharmaceuticals AG.
|
|
|
|
|
Indemnity Agreement, dated July 8, 2016, by and between Seelos Therapeutics, Inc. and Raj Mehra, Ph.D.
|
|
|
|
|
|
Form of Seelos Therapeutics, Inc. Note Purchase Agreement.
|
|
|
|
|
|
Form of Seelos Therapeutics, Inc. Convertible Promissory Note.
|
|
|
|
|
10.39
#
|
|
Seelos Therapeutics, Inc. 2016 Equity Incentive Plan.
|
|
|
|
|
Form of Option Agreement under the Seelos Therapeutics, Inc. 2016 Equity Incentive Plan
|
|
|
|
|
21
|
|
Subsidiaries.
|
|
|
|
|
Consent of BDO USA LLP, Independent Registered Public Accounting Firm to Apricus Biosciences, Inc.
|
|
|
|
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm to Seelos Therapeutics, Inc.
|
|
|
|
|
23.3^
|
|
Consent of Brownstein Hyatt Farber Schreck, LLP (included in Exhibit 5.1 hereto)
|
|
|
|
23.4^
|
|
Consent of Latham & Watkins LLP (included in Exhibit 8.1 hereto)
|
|
|
|
23.5^
|
|
Consent of Paul Hastings LLP (included in Exhibit 8.2 hereto)
|
|
|
|
24.1
|
|
Power of Attorney (included on signature page)
|
|
|
|
99.1^
|
|
Form of Proxy Card for the Apricus Biosciences, Inc. Special Meeting of Stockholders
|
|
|
|
99.2
|
|
Proposed Certificate of Amendment to the Registrant’s Articles of Incorporation to be filed with the Nevada Secretary of State (included as
Annex C
to the proxy statement/prospectus/information statement forming a part of this Registration Statement).
|
|
|
|
|
Consent of Daniel J. O’Connor to be named as director
|
|
|
|
|
|
Consent of Brian Lian to be named as director
|
Exhibit
Number |
|
Description of Document
|
|
|
|
|
Consent of Raj Mehra to be named as director
|
|
|
|
|
|
Consent of Robin L. Smith to be named as director
|
|
|
|
|
101
|
|
The following materials from Apricus Biosciences, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017, and the Quarterly Report on Form 10-Q for the quarter ending June 30, 2018, formatted in Extensible Business Reporting Language (XBRL) includes (i) Condensed Consolidated Balance Sheets at June 30, 2018 and December 31, 2017, (ii) Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2017 and 2018, (iii) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2018 and (iv) Notes to Condensed Consolidated Financial Statements.
|
*
|
All schedules and exhibits to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities Exchange Commission upon request.
|
#
|
Management compensatory plan or arrangement
|
^
|
To be filed by amendment.
|
†
|
Confidential treatment has been requested for portions of this exhibit. Those portions have been omitted and filed separately with the Securities and Exchange Commission.
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Richard W. Pascoe
Richard W. Pascoe
|
Chief Executive Officer, Secretary and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
|
August 31, 2018
|
|
|
|
/s/ Kleanthis G. Xanthopoulos, Ph.D.
Kleanthis G. Xanthopoulos, Ph.D.
|
Chairman of the Board of Directors
|
August 31, 2018
|
|
|
|
/s/ Russell Ray
Russell Ray
|
Director
|
August 31, 2018
|
|
|
|
/s/ Paul V. Maier
Paul V. Maier
|
Director
|
August 31, 2018
|
|
|
|
/s/ Wendell Wierenga, Ph.D.
Wendell Wierenga, Ph.D.
|
Director
|
August 31, 2018
|
|
|
|
/s/ Sandford D. Smith
Sandford D. Smith
|
Director
|
August 31, 2018
|
Attention:
|
Richard Pascoe
Chief Executive Officer |
(a)
|
the acquisition by an individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “
Person
”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) fifty percent (50.0%) or more of either (i) the then-outstanding shares of common stock of the Company (the “
Outstanding Company Common Stock
”) or (ii) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “
Outstanding Company Voting Securities
”); or
|
(b)
|
the consummation of a Transaction involving the Company, unless, immediately following such Transaction, each of the following two conditions is satisfied: (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Transaction beneficially own, directly or indirectly, more than fifty percent (50.0%) of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Transaction in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Transaction and (ii) no Person beneficially owns, directly or indirectly, fifty percent (50.0%) or more of the then-outstanding shares of common stock of the acquiring corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Transaction); provided, however, that in no event shall the term “Change in Control” or “Transaction” include (i) any license (whether exclusive or non-exclusive) by the Company of its intellectual property, or (ii) the issuance or sale of equity securities of the Company for bona-fide capital raising purposes.
|
1.
|
Services to be Rendered.
The Company hereby engages Canaccord Genuity to act as its financial advisor and participate and assist in negotiations with respect to exploring, negotiating and consummating one or more Transactions during the term of this engagement. As financial advisor, Canaccord Genuity shall perform such financial advisory and investment banking services as the Company may reasonably request and that Canaccord Genuity deems necessary or appropriate in connection with potential Transactions including (i) analyzing and evaluating the business, operations, financial condition and prospects of the Company; (ii) reviewing the Company’s financial and strategic plans and business alternatives with management; (iii) advising the board of directors (the “
Board
”) on various strategic alternatives and the financial implications of each. In connection with this engagement, Canaccord Genuity will develop a list of private entities that might be potential reverse merger candidates.
|
2.
|
Fees.
In consideration for its services hereunder, the Company shall pay Canaccord Genuity, by wire transfer of immediately available funds at the time due, the following fees:
|
(a)
|
upon execution of engagement letter, a non-refundable “
Retainer Fee
” of fifty thousand dollars ($50,000), creditable against any Success Fee;
|
(b)
|
upon the Closing (as defined below) of a Transaction, a “
Success Fee
” of seven hundred and fifty thousand dollars ($750,000), unless the Closing of a Transaction is consummated with a party listed in Schedule A, in which instance a “
Success Fee
” of five hundred thousand dollars ($500,000), provided that in no event shall the Success Fee be payable on more than one occasion; and/or
|
(c)
|
upon the delivery to the Board (only if such Opinion is delivered at the request of the Board), a “
Fairness Opinion Fee
” of three hundred thousand dollars ($300,000); it being understood and agreed that no separate fee will be payable in connection with any update, amendment or supplement to any such Opinion except as set forth herein; however, in the event the Opinion requires a material update, a separate fee shall be payable which amount shall be negotiated in good faith by the Company and Canaccord Genuity at such time based on the scope of the update to the Opinion
|
(d)
|
if, during the term of this engagement, in connection with a Transaction that is not completed, the Company receives a break-up fee, topping fee or other termination fee from a Covered Party (as defined below) (collectively, “
Termination Proceeds
”), a “
Termination Fee
” equal fifteen percent (15.0%) of the Termination Proceeds, less the aggregate amount of the Company’s expenses incurred in connection with the Transaction.
|
3.
|
Expenses.
In addition to any fees that may be payable to Canaccord Genuity hereunder and regardless of whether any Transaction is proposed or closed, the Company hereby agrees, from time to time, upon request, to reimburse Canaccord Genuity for all of its reasonable, documented out-of-pocket expenses arising out of the engagement hereunder (including travel and related expenses, the costs of document preparation, production and distribution of materials, and the reasonable fees and disbursements of outside counsel retained by Canaccord Genuity) not to exceed $25,000 without prior written consent of the Company (which shall not be unreasonably withheld or delayed). Canaccord Genuity expects to bill such expenses periodically with payment due within thirty (30) days after a statement therefor.
|
4.
|
Indemnification.
In consideration of and as a condition precedent to Canaccord Genuity understanding the engagement contemplated by this letter, the Company agrees to the indemnification provision and other matters set forth in
Annex A
, which is incorporated by reference into this Agreement.
|
5.
|
Termination of Engagement.
The engagement of Canaccord Genuity hereunder shall continue until the closing of the Transaction or until earlier terminated under this Section 5. Canaccord Genuity’s engagement hereunder may be terminated by either party at any time for any reason, upon ten (10) days’ prior written notice to the other party. Upon any termination of the engagement hereunder, except for a termination by the Company with cause (as defined below) or a termination by Canaccord Genuity , Canaccord Genuity will be entitled to all fees payable under Section 2(b) hereof in the event that (i) at any time prior to the expiration of twelve (12) months after such termination a Transaction is consummated with a party (A) listed on Schedule A, (B) Canaccord Genuity contacted (or sought to contact but was prohibited by the Company from doing so) during the term of this Agreement, or (C) with whom the Company or Canaccord Genuity had substantive discussions about a Transaction during the term of this Agreement (a “Covered Party”); or (ii) the Company enters into an agreement during the term of this Agreement or during such subsequent twelve (12) month period with a Covered Party contemplating a Transaction and such Transaction is ultimately consummated. For purposes of this agreement, “cause” shall mean a reasonable and in good faith determination of the Board of Directors of the Company that Canaccord Genuity acted with gross negligence, bad faith or willful misconduct in the performance of its services under this Agreement. In the event the Company seeks to terminate this Agreement for “cause”, the Company shall provide a reasonably detailed description of the facts determined by the Board of Directors to constitute “cause” hereunder.
|
6.
|
Reliance on Others.
Canaccord Genuity does not provide accounting, tax or legal advice. The Company confirms that it will rely on its own independent counsel and independent accountants for such advice.
|
7.
|
No Rights in Shareholders, etc.
Canaccord Genuity has been engaged only by the Company, and this engagement of Canaccord Genuity is not intended to confer rights upon any shareholder, partner or other owner of the Company or any other person not a party hereto. Unless otherwise expressly agreed, no one other than the Company is authorized to rely on any statements, advice, opinions or conduct by Canaccord Genuity. Any opinions or advice rendered by Canaccord Genuity to the Board or the Company’s management in the course of this engagement are for the purpose of assisting the Board or the Company’s management, as the case may be, in evaluating the Transaction contemplated hereby and such opinions or advice do not constitute a recommendation to any shareholder of the Company concerning action that such shareholder might or should take in connection with a Transaction. Canaccord Genuity’s role herein is that of an independent contractor and nothing contained herein is intended to create or shall be construed as creating a fiduciary relationship between Canaccord Genuity and the Company or its security holders, employees or creditors.
|
8.
|
Other Activities.
Canaccord Genuity is a full service securities firm engaged, either directly or through its affiliates, in various activities, including securities trading, investment management, financing and brokerage activities. Canaccord Genuity may agree or arrange to provide any prospective strategic partner with, or otherwise assist them in retaining all
|
9.
|
Miscellaneous.
Nothing in this Agreement is intended to obligate or commit Canaccord Genuity to provide any services other than as set forth above. This Agreement may be executed in counterparts, each of which shall be deemed an original, but which together shall be considered a single instrument. This Agreement (including
Annex A
) constitutes the entire agreement between the parties hereto, and supersedes all prior agreements and understandings (both written and oral) of the parties hereto with respect to the subject matter hereof, and cannot be amended or otherwise modified except in writing executed by the parties hereto. The provisions hereof shall inure to the benefit of and be binding upon the successors and assigns of the Company and Canaccord Genuity. Canaccord Genuity may refer to the Transaction, after it is public knowledge, in traditional “tombstone” announcements or any of its other professional promotional materials. In connection therewith Canaccord Genuity may use the Company’s corporate logo in such advertising or promotional materials (including electronic versions thereof). If requested by Canaccord Genuity, the Company shall include a mutually acceptable reference to Canaccord Genuity in the initial press release or other public announcement made by the Company regarding the Transaction.
|
By:
|
/s/ Eugene Rozelman
Eugene Rozelman Managing Director |
By:
|
/s/ Richard Pascoe
Richard Pascoe Chief Executive Officer |
Company:
|
Apricus Biosciences, Inc.
|
Indemnitee:
|
______________________
|
(a)
|
Trade, quantity and cash discounts;
|
(b)
|
Discounts, refunds, rebates, chargebacks, retroactive price adjustments, and any other allowances given and taken which effectively reduce the net selling price (other than such which have already diminished the gross amount invoiced), including, without limitation, Medicaid rebates and institutional rebates;
|
(b)
|
Product returns and allowances;
|
(c)
|
Administrative fees paid to group purchasing organizations (e.g., Medicare) and government-mandated rebates;
|
(d)
|
Shipping, handling, freight, postage, insurance and transportation charges, but all only to the extent included as a separate line item or otherwise separately identified in the gross amount invoiced;
|
(e)
|
Any tax, tariff or duties imposed on the production, sale, delivery or use of the Licensed Product, including, without limitation, sales, use, excise or value added taxes and customs and duties, but all only to the extent included as a separate line item or otherwise separately identified (e.g., “taxes”) in the gross amount invoiced; and
|
(f)
|
Bad debt actually written off during the accounting period (provided, that any bad debt write-off so taken which is later reversed shall be added back to Net Sales in the accounting period in which the reversal occurs).
|
|
Milestone Event
|
Milestone Payment
|
(i)
|
Submission of an Application
in the United States for a particular Licensed Product
|
$750,000
|
(ii)
|
United States FDA approval of an Application for a particular Licensed Product
|
$3,000,000
|
(iii)
|
Regulatory Approval in or for a Major Market (outside the United States) for a particular Licensed Product
|
$1,125,000
|
(iv)
|
Regulatory Approval in or for a second Major Market (outside the United States) for a particular Licensed Product
|
$1,125,000
|
|
Milestone Event
|
Milestone Payment
|
(i)
|
Submission of an Application in the United States for a particular Aplindore Primary Licensed Product
|
$100,000
|
(ii)
|
United States FDA approval of an Application for a particular Aplindore Primary Licensed Product
|
$350,000
|
(iii)
|
Regulatory Approval in or for a Major Market (outside the United States) for a particular Aplindore Primary Licensed Product
|
$125,000
|
(iv)
|
Regulatory Approval in or for a second Major Market (outside the United States) for a particular Aplindore Primary Licensed Product
|
$125,000
|
|
Milestone Event
|
Milestone Payment
|
(i)
|
$1,000,000,000 of cumulative worldwide Net Sales of Aplindore Licensed Products since the First Commercial Sale of the first Aplindore Licensed Product to have a First Commercial Sale
|
$10,000,000
|
(ii)
|
$1,000,000,000 of cumulative worldwide Net Sales of H3 Receptor Licensed Products since the First Commercial Sale of the first H3 Receptor Licensed Product to have a First Commercial Sale
|
$10,000,000
|
(iii)
|
$1,000,000,000 of cumulative worldwide Net Sales of CEA Licensed Products since the First Commercial Sale of the first CEA Licensed Product to have a First Commercial Sale
|
$10,000,000
|
(iv)
|
$1,000,000,000 of cumulative worldwide Net Sales of CRTh2 Antagonist Licensed Products since the First Commercial Sale of the first CRTh2 Antagonist Licensed Product to have a First Commercial Sale
|
$10,000,000
|
(v)
|
$2,000,000,000 of cumulative worldwide Net Sales of Aplindore Licensed Products since the First Commercial Sale of the first Aplindore Licensed Product to have a First Commercial Sale
|
$20,000,000
|
(vi)
|
$2,000,000,000 of cumulative worldwide Net Sales of H3 Receptor Licensed Products since the First Commercial Sale of the first H3 Receptor Licensed Product to have a First Commercial Sale
|
$20,000,000
|
(vii)
|
$2,000,000,000 of cumulative worldwide Net Sales of CEA Licensed Products since the First Commercial Sale of the first CEA Licensed Product to have a First Commercial Sale
|
$20,000,000
|
(viii)
|
$2,000,000,000 of cumulative worldwide Net Sales of CRTh2 Antagonist Licensed Products since the First Commercial Sale of the first CRTh2 Antagonist Licensed Product to have a First Commercial Sale
|
$20,000,000
|
If to Seller, to:
|
Vyera Pharmaceuticals AG
|
Name:
|
Raj Mehra
|
Title:
|
CEO
|
Name:
|
Raj Mehra
|
Title:
|
CEO
|
|
COMPANY:
|
||
|
|
||
|
Seelos Therapeutics, Inc.
|
||
|
|
||
|
By:
|
/s/ Raj Mehra
|
|
|
|
|
|
|
|
Name:
|
Raj Mehra
|
|
|
Title:
|
CEO
|
|
|
||
|
INDEMNITEE:
|
||
|
|
||
|
Raj Mehra
|
||
|
|
/s/ Raj Mehra
|
|
|
|
(
Signature
)
|
Name of Lender
|
Address
|
Closing Date
|
Loan Amount
|
|
|
|
|
1.
|
General
.
|
2.
|
Administration
.
|
3.
|
Shares Subject to the Plan
.
|
4.
|
Eligibility
.
|
5.
|
Provisions Relating to Options and Stock Appreciation Rights
.
|
6.
|
Provisions of Stock Awards other than Options and SARs
.
|
7.
|
Covenants of the Company
.
|
8.
|
Miscellaneous
.
|
9.
|
Adjustments upon Changes in Common Stock; Other Corporate Events
.
|
10.
|
Plan Term; Earlier Termination or Suspension of the Plan
.
|
11.
|
Effective Date of Plan
.
|
12.
|
Choice of Law
.
|
13.
|
Definitions
.
|