|
Alabama
|
| |
8731
|
| |
45-4618270
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification No.) |
|
|
Darrick M. Mix, Esq.
Justin A. Santarosa, Esq. Duane Morris LLP 30 South 17th Street Philadelphia, Pennsylvania 19103 (215) 979-1227 |
| |
Mitchell S. Nussbaum, Esq.
Norwood P. Beveridge, Jr., Esq. Lili Taheri, Esq. Loeb & Loeb LLP 345 Park Avenue New York, NY 10154 (212) 407-4000 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | | | Non-accelerated filer ☒ | | |
Smaller reporting company ☒
Emerging growth company ☒
|
|
| | |
Per Share
|
| |
Total
|
|
Initial public offering price
|
| | | | | | |
Underwriting discounts and commissions(1)
|
| | | | | | |
Proceeds to us, before expenses
|
| | | | | | |
| | | | | 1 | | | |
| | | | | 9 | | | |
| | | | | 10 | | | |
| | | | | 12 | | | |
| | | | | 50 | | | |
| | | | | 51 | | | |
| | | | | 52 | | | |
| | | | | 53 | | | |
| | | | | 55 | | | |
| | | | | 56 | | | |
| | | | | 57 | | | |
| | | | | 58 | | | |
| | | | | 60 | | | |
| | | | | 62 | | | |
| | | | | 70 | | | |
| | | | | 71 | | | |
| | | | | 99 | | | |
| | | | | 106 | | | |
| | | | | 114 | | | |
| | | | | 115 | | | |
| | | | | 117 | | | |
| | | | | 120 | | | |
| | | | | 122 | | | |
| | | | | 131 | | | |
| | | | | 131 | | | |
| | | | | 131 | | | |
| | | | | F-1 | | |
| | |
Year Ended December 31,
|
| |
Nine Months
Ended September 30, |
| ||||||||||||||||||
(in thousands, except per share data)
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2019
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development
|
| | | $ | 836 | | | | | $ | 854 | | | | | $ | 162 | | | | | $ | 541 | | |
General and administrative
|
| | | | 1,342 | | | | | | 1,107 | | | | | | 3,422 | | | | | | 1,072 | | |
Total operating expenses
|
| | | | 2,178 | | | | | | 1,961 | | | | | | 3,584 | | | | | | 1,613 | | |
Loss from operations
|
| | | | (2,178) | | | | | | (1,961) | | | | | | (3,584) | | | | | | (1,613) | | |
Other income (expense)
|
| | | | (295) | | | | | | (152) | | | | | | (261) | | | | | | (222) | | |
Net loss
|
| | | $ | (2,473) | | | | | $ | (2,113) | | | | | $ | (3,845) | | | | | $ | (1,835) | | |
Pro forma net loss per common share – basic and diluted
(unaudited)(1) |
| | | $ | (0.51) | | | | | | | | | | | $ | (0.80) | | | | | | | | |
Pro forma weighted average common shares outstanding – basic and diluted (unaudited)(1)
|
| | | | 4,832,494 | | | | | | | | | | | | 4,832,494 | | | | | | | | |
| | |
As of September 30, 2020
|
| |||||||||||||||
(in thousands)
|
| |
Actual
|
| |
Pro Forma(1)
|
| |
Pro Forma As
Adjusted(2) |
| |||||||||
| | |
(Unaudited)
|
| |
(Unaudited)
|
| |
(Unaudited)
|
| |||||||||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash
|
| | | $ | 499 | | | | | $ | 499 | | | | | $ | 27,132 | | |
Working capital
|
| | | | (1,224) | | | | | | (438) | | | | | | 26,674 | | |
Total assets
|
| | | | 785 | | | | | | 785 | | | | | | 27,193 | | |
Convertible promissory notes, net of unamortized deferred
issuance costs |
| | | | 4,151 | | | | | | — | | | | | | — | | |
Preferred members’ interests, non-voting, net
|
| | | | 75 | | | | | | 75 | | | | | | — | | |
Equity (deficit)
|
| | | | (5,225) | | | | | | (288) | | | | | | 26,674 | | |
| | |
As of September 30, 2020
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma
As Adjusted |
| |||||||||
| | |
(in thousands, except share and per
share data) |
| |||||||||||||||
Cash
|
| | | $ | 499 | | | | | $ | 499 | | | | | $ | 27,132 | | |
Convertible promissory notes
|
| | | $ | 4,151 | | | | | $ | — | | | | | $ | — | | |
Preferred members’ interests, non-voting
|
| | | $ | 75 | | | | | $ | 75 | | | | | $ | — | | |
Members’ Equity (deficit): | | | | | | | | | | | | | | | | | | | |
Membership interests, actual; none issued and outstanding, pro forma and
pro forma as adjusted |
| | | $ | 16,239 | | | | | $ | — | | | | | $ | — | | |
Stockholders’ Equity (deficit): | | | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value; no shares authorized, and no shares
issued and outstanding, actual; 43,000,000 shares authorized, pro forma and pro forma as adjusted; 4,832,494 shares issued and outstanding, pro forma; 7,832,494 shares issued and outstanding, pro forma as adjusted |
| | | $ | — | | | | | $ | 0 | | | | | $ | 1 | | |
Preferred stock, $0.0001 par value; no shares authorized, and no shares issued and outstanding, actual; 2,000,000 shares authorized and no shares issued and outstanding, pro forma and pro forma as adjusted
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
Additional paid-in capital
|
| | | $ | — | | | | | $ | 21,176 | | | | | $ | 48,137 | | |
Accumulated deficit
|
| | | $ | (21,464) | | | | | $ | (21,464) | | | | | $ | (21,464) | | |
Total members’ / stockholders’ equity (deficit)
|
| | | $ | (5,225) | | | | | $ | (288) | | | | | $ | 26,674 | | |
Total capitalization
|
| | | $ | (999) | | | | | $ | (213) | | | | | $ | 26,674 | | |
|
Initial public offering price per share
|
| | | | | | | | | $ | 10.00 | | |
|
Historical net tangible book value deficit per share as of September 30, 2020
|
| | | $ | (1.27) | | | | | | | | |
|
Increase in pro forma net tangible book value per share attributable to the conversion of outstanding convertible promissory notes
|
| | | $ | 1.18 | | | | | | | | |
|
Pro forma net tangible book value deficit per share as of September 30,
2020 |
| | | $ | (0.09) | | | | | | | | |
|
Increase in pro forma as adjusted net tangible book value per share attributable to this offering
|
| | | $ | 3.50 | | | | | | | | |
|
Pro forma as adjusted net tangible book value per share after this offering
|
| | | | | | | | | $ | 3.41 | | |
|
Dilution per share to new investors purchasing common stock this offering
|
| | | | | | | | | $ | 6.59 | | |
| | |
Shares Purchased
|
| |
Total
Consideration |
| |
Average Price
Per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||
Existing stockholders
|
| | | | 4,832,494 | | | | | | 61.7% | | | | | $ | 17,211 | | | | | | 36.5% | | | | | $ | 3.56 | | |
New investors
|
| | | | 3,000,000 | | | | | | 38.3% | | | | | $ | 30,000 | | | | | | 63.5% | | | | | $ | 10.00 | | |
Total
|
| | | | 7,832,494 | | | | | | 100% | | | | | $ | 47,211 | | | | | | 100% | | | | | | | | |
| | |
Year Ended December 31,
|
| |
Nine Months
Ended September 30, |
| ||||||||||||||||||
(in thousands, except for per share data)
|
| |
2019
|
| |
2018
|
| |
2020
|
| |
2019
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development
|
| | | $ | 836 | | | | | $ | 854 | | | | | $ | 162 | | | | | $ | 541 | | |
General and administrative
|
| | | | 1,342 | | | | | | 1,107 | | | | | | 3,422 | | | | | | 1,072 | | |
Total operating expenses
|
| | | | 2,178 | | | | | | 1,961 | | | | | | 3,584 | | | | | | 1,613 | | |
Loss from operations
|
| | | | (2,178) | | | | | | (1,961) | | | | | | (3,584) | | | | | | (1,613) | | |
Other income (expense)
|
| | | | (295) | | | | | | (152) | | | | | | (261) | | | | | | (222) | | |
Net loss
|
| | | $ | (2,473) | | | | | $ | (2,113) | | | | | $ | (3,845) | | | | | $ | (1,835) | | |
Pro forma net loss per common share – basic and diluted
(unaudited)(1) |
| | | $ | (0.51) | | | | | | | | | | | $ | (0.80) | | | | | | | | |
Pro forma weighted average common shares outstanding – basic and diluted (unaudited)(1)
|
| | | | 4,832,494 | | | | | | | | | | | | 4,832,494 | | | | | | | | |
| | |
As of September 30, 2020
|
| |||||||||||||||
(in thousands)
|
| |
Actual
|
| |
Pro Forma(1)
|
| |
Pro Forma
As Adjusted(2) |
| |||||||||
| | |
(Unaudited)
|
| |
(Unaudited)
|
| |
(Unaudited)
|
| |||||||||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash
|
| | | $ | 499 | | | | | $ | 499 | | | | | $ | 27,132 | | |
Working capital
|
| | | | (1,224) | | | | | | (438) | | | | | | 26,674 | | |
Total assets
|
| | | | 785 | | | | | | 785 | | | | | | 27,193 | | |
Convertible promissory notes, net of unamortized deferred issuance
costs |
| | | | 4,151 | | | | | | — | | | | | | — | | |
| | |
As of September 30, 2020
|
| |||||||||||||||
(in thousands)
|
| |
Actual
|
| |
Pro Forma(1)
|
| |
Pro Forma
As Adjusted(2) |
| |||||||||
| | |
(Unaudited)
|
| |
(Unaudited)
|
| |
(Unaudited)
|
| |||||||||
Preferred members’ interests, non-voting, net
|
| | | | 75 | | | | | | 75 | | | | | | — | | |
Equity (deficit)
|
| | | | (5,225) | | | | | | (288) | | | | | | 26,674 | | |
| | |
Year Ended
December 31, |
| |
Nine Months
Ended September 30, |
| ||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2020
|
| |
2019
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Research and development
|
| | | $ | 836,175 | | | | | $ | 854,109 | | | | | $ | 161,944 | | | | | $ | 541,073 | | |
General and administrative
|
| | | | 1,342,324 | | | | | | 1,107,386 | | | | | | 3,421,798 | | | | | | 1,071,696 | | |
| | | | $ | 2,178,499 | | | | | $ | 1,961,495 | | | | | $ | 3,583,742 | | | | | $ | 1,612,769 | | |
| | |
Years Ended
December 31, |
| |
Nine Months Ended
September 30, |
| ||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2020
|
| |
2019
|
| ||||||||||||
| | | | | | | | | | | | | | |
(Unaudited)
|
| |||||||||
Statement of Cash Flows Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Total net cash (used in) provided by: | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating activities
|
| | | $ | (2,092,150) | | | | | $ | (1,195,955) | | | | | $ | (1,608,834) | | | | | $ | (1,620,436) | | |
Financing activities
|
| | | | 2,371,508 | | | | | | 1,150,468 | | | | | | 1,798,532 | | | | | | 1,797,078 | | |
Increase (decrease) in cash
|
| | | $ | 279,358 | | | | | $ | (45,487) | | | | | $ | 189,698 | | | | | $ | 176,642 | | |
Pain Analysis
|
| |
Placebo LS
Change @ Endpoint (SE) |
| |
IMC-1 LS
Change @ Endpoint (SE) |
| |
Contrast (SE)
|
| |
P- Value
|
| |||
NRS 24-hour recall, MMRM LOCF/BOCF Imputation @ 16 weeks
|
| |
-1.1 (0.28)
|
| |
-1.9 (0.28)
|
| |
-0.8 (0.37)
|
| | | | 0.031 | | |
FIQ-R 7-days recall, MMRM LOCF/BOCF Imputation @ 16 weeks
|
| |
-0.92 (0.30)
|
| |
-2.2 (0.30)
|
| |
-1.25 (0.38)
|
| | | | 0.001 | | |
50% Pain Responder Analysis
|
| |
Measure
|
| |
Placebo
Responders (%) |
| |
Placebo
Non-Responders (%) |
| |
IMC-1
Responders (%) |
| |
IMC-1
Non-Responders |
| |
P-Value
|
| |||
Week 16 Visit, 50% Reduction
|
| |
NRS
|
| |
11 (15.1)
|
| |
62 (84.9)
|
| |
20 (30.3)
|
| |
46 (69.7)
|
| | | | 0.009 | | |
Week 16 Visit, 50% Reduction
|
| |
FIQ-R Pain
|
| |
12 (16.9)
|
| |
59 (83.1)
|
| |
25 (37.9)
|
| |
41 (62.1)
|
| | | | 0.001 | | |
30% Pain Responder Analysis
|
| |
Measure
|
| |
Placebo
Responders (%) |
| |
Placebo
Non-Responders (%) |
| |
IMC-1
Responders (%) |
| |
IMC-1
Non-Responders |
| |
P-Value
|
| |||
Week 16 Visit, 30%
Reduction . . . . . . . . . . . |
| |
NRS
|
| |
23 (31.5)
|
| |
50 (68.5)
|
| |
28 (42.4)
|
| |
38 (57.6)
|
| | | | 0.052 | | |
Week 16 Visit, 30%
Reduction . . . . . . . . . . . |
| |
FIQ-R Pain
|
| |
20 (28.2)
|
| |
51 (71.8)
|
| |
29 (43.9)
|
| |
37 (56.1)
|
| | | | 0.012 | | |
PGIC Analysis
|
| |
Placebo
Responders (%) |
| |
Placebo
Non-Responders (%) |
| |
IMC-1
Responders (%) |
| |
IMC-1
Non-Responders |
| |
P- Value
|
| |||
Week 6 Visit
|
| |
14 (19.2)
|
| |
59 (80.8)
|
| |
26 (37.7)
|
| |
43 (62.3)
|
| | | | 0.040 | | |
Week 12 Visit
|
| |
13 (17.8)
|
| |
60 (82.2)
|
| |
26 (37.7)
|
| |
43 (62.3)
|
| | | | 0.005 | | |
Week 16 Visit
|
| |
14 (19.2)
|
| |
59 (80.8)
|
| |
23 (33.3)
|
| |
46 (66.6)
|
| | | | 0.040 | | |
Outcomes Measure
|
| |
Method
|
| |
Placebo
Baseline |
| |
IMC-1
Baseline |
| |
Placebo LS
Change (SE) |
| |
IMC-1 LS
Change (SE) |
| |
Contrast (SE)
|
| |
P- Value
|
| |||
FIQ-R
|
| |
Week 16 MMRM LOCF/BOCF
|
| |
56.81 (73)
|
| |
54.28 (69)
|
| |
-7.87 (2.33)
|
| |
-17.54 (2.40)
|
| |
-9.67 (3.05)
|
| | | | 0.002 | | |
PROMIS Fatigue
|
| |
Week 16 MMRM LOCF/BOCF
|
| |
65.83 (73)
|
| |
65.55 (69)
|
| |
-2.68 (0.93)
|
| |
-6.65 (0.96)
|
| |
-3.96 (1.22)
|
| | | | 0.001 | | |
Week 16
FIQ-R Analysis LOCF/BOCF Imputation)* |
| |
LS Mean (SE) Change from Baseline
|
| | | | | | | | | | |||
|
Placebo
|
| |
IMC-1
|
| | | | | | | | | | ||
|
N = 71
|
| |
N = 66
|
| |
Contrast (SE)
|
| |
P- Value**
|
| |||||
Functional Domain
|
| |
-5.44 (2.32)
|
| |
-14.29 (2.40)
|
| |
-8.85 (3.03)
|
| | | | 0.004 | | |
Overall Impact Domain
|
| |
-1.89 (0.61)
|
| |
-4.29 (0.63)
|
| |
-2.40 (0.79)
|
| | | | 0.003 | | |
Symptoms Domain
|
| |
-7.90 (2.33)
|
| |
-16.77 (2.40)
|
| |
-8.88 (3.06)
|
| | | | 0.004 | | |
Name
|
| |
Age
|
| |
Position
|
|
Executive Officers | | | | | | | |
Greg Duncan | | |
55
|
| | Chief Executive Officer, and Chairman | |
Richard Burch(2) | | |
64
|
| | President, Director | |
R. Michael Gendreau, M.D., Ph.D. | | |
65
|
| | Chief Medical Officer | |
Ralph Grosswald | | |
52
|
| | Vice President of Operations | |
Angela Walsh | | |
54
|
| | Vice President of Finance, Treasurer | |
Directors | | | | | | | |
Robert Buchalter(1) | | |
64
|
| | Director | |
Abel De La Rosa, Ph.D.(3) | | |
57
|
| | Director | |
David Keefer | | |
67
|
| | Director | |
William L. Pridgen, M.D. | | |
60
|
| | Founder, Director | |
John C. Thomas, Jr.(3) | | |
67
|
| | Director | |
Richard J. Whitley, M.D.(3) | | |
75
|
| | Director | |
Robert Young(1) | | |
74
|
| | Director | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($) |
| |
Option
Awards ($) |
| |
Total
($) |
| ||||||||||||
William L. Pridgen, M.D.(1) | | | | | 2019 | | | | | | 350,000 | | | | | | — | | | | | | 350,000 | | |
Chief Executive Officer
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Richard Burch | | | | | 2019 | | | | | | 350,000 | | | | | | — | | | | | | 350,000 | | |
President
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Number of
Shares Beneficially Owned Prior to Offering |
| |
Percentage of
Shares Beneficially Owned |
| ||||||||||||
Name of Beneficial Owner
|
| |
Prior to
Offering |
| |
After
Offering |
| ||||||||||||
Robert Buchalter
|
| | | | 4,905(1) | | | | | | * | | | | | | * | | |
Richard Burch
|
| | | | 439,843(2) | | | | | | 8.58% | | | | | | 5.41% | | |
Abel De La Rosa
|
| | | | — | | | | | | — | | | | | | — | | |
Greg Duncan
|
| | | | 410,154(3) | | | | | | 7.83% | | | | | | 4.98% | | |
David Keefer
|
| | | | 7,808(4) | | | | | | * | | | | | | * | | |
William L. Pridgen, M.D.
|
| | | | 726,493(5) | | | | | | 15.03% | | | | | | 9.27% | | |
John C. Thomas, Jr.
|
| | | | — | | | | | | — | | | | | | — | | |
Angela Walsh
|
| | | | 40,625(6) | | | | | | * | | | | | | * | | |
Richard J. Whitley, M.D.
|
| | | | — | | | | | | — | | | | | | — | | |
Robert Young
|
| | | | 46,968 | | | | | | * | | | | | | * | | |
Directors and Officers as a group (8 individuals before offering and 9 individuals upon offering)
|
| | | | 1,717,421 | | | | | | 30.58% | | | | | | 19.93% | | |
Beneficial Owners of more than 5% of our common stock: | | | | | | | | | | | | | | | | | | | |
The University of Alabama(7)
|
| | | | 323,347 | | | | | | 6.69% | | | | | | 4.13% | | |
Underwriter
|
| |
Number of
Shares |
| |||
ThinkEquity, a division of Fordham Financial Management, Inc.
|
| | | | | | |
| | | | | | | |
Total
|
| | | | 3,000,000 | | |
| | | | | | | | |
Total
|
| |||||||||
| | |
Per Share
|
| |
Without
Option |
| |
With
Option |
| |||||||||
Public offering price
|
| | | $ | | | | | $ | | | | | $ | | | |||
Underwriting discounts and commissions (7%)
|
| | | $ | | | | | $ | | | | | $ | | | |||
Non-accountable expense allowance (1%)
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | | | $ | | | |
| | |
Page(s)
|
| |||
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-17 | | | |
| | | | F-18 | | | |
| | | | F-19 | | | |
| | | | F-20 | | | |
| | | | F-21 | | |
December 31
|
| |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash
|
| | |
$
|
309,384
|
| | | | $ | 30,026 | | |
Prepaid expenses and other current assets
|
| | |
|
6,516
|
| | | | | 12,372 | | |
Total current assets
|
| | |
|
315,900
|
| | | | | 42,398 | | |
Deferred issuance costs
|
| | |
|
—
|
| | | | | 23,537 | | |
Total assets
|
| | |
$
|
315,900
|
| | | | $ | 65,935 | | |
Liabilities and members’ deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | |
$
|
35,421
|
| | | | $ | 145,656 | | |
Accrued expenses
|
| | |
|
525,445
|
| | | | | 174,427 | | |
Accrued salaries
|
| | |
|
1,060,000
|
| | | | | 1,006,250 | | |
Total current liabilities
|
| | |
|
1,620,866
|
| | | | | 1,326,333 | | |
Convertible promissory notes, net
|
| | |
|
3,637,543
|
| | | | | — | | |
Total liabilities
|
| | |
|
5,258,409
|
| | | | | 1,326,333 | | |
Commitments and contingencies (Note 9) | | | | | | | | | | | | | |
Preferred members’ interests, non-voting, net
|
| | |
|
75,000
|
| | | | | 1,283,484 | | |
Members’ deficit: | | | | | | | | | | | | | |
Member’s interests, voting
|
| | |
|
—
|
| | | | | — | | |
Members’ interests, non-voting
|
| | |
|
12,601,201
|
| | | | | 12,601,201 | | |
Accumulated deficit
|
| | |
|
(17,618,710)
|
| | | | | (15,145,083) | | |
Total members’ deficit
|
| | |
|
(5,017,509)
|
| | | | | (2,543,882) | | |
Total liabilities and members’ deficit
|
| | |
$
|
315,900
|
| | | | $ | 65,935 | | |
For the years ended December 31
|
| |
2019
|
| |
2018
|
| ||||||
Revenue
|
| | |
$
|
—
|
| | | | $ | — | | |
Research and development expenses
|
| | |
|
836,175
|
| | | | | 854,109 | | |
General and administrative expenses
|
| | |
|
1,342,324
|
| | | | | 1,107,386 | | |
Operating loss
|
| | |
|
(2,178,499)
|
| | | | | (1,961,495) | | |
Interest expense, net
|
| | |
|
(295,128)
|
| | | | | (152,103) | | |
Other income
|
| | |
|
—
|
| | | | | 6 | | |
Loss before provision for income taxes
|
| | |
|
(2,473,627)
|
| | | | | (2,113,592) | | |
Provision for income taxes
|
| | |
|
—
|
| | | | | — | | |
Net loss
|
| | |
$
|
(2,473,627)
|
| | | | $ | (2,113,592) | | |
Pro forma information (unaudited): | | | | | | | | | | | | | |
Net loss
|
| | | $ | (2,473,627) | | | | | | | | |
Pro forma income tax (expense) benefit
|
| | | | — | | | | | | | | |
Pro forma net loss
|
| | | $ | (2,473,627) | | | | | | | | |
Pro forma net loss per share – basic and diluted
|
| | | $ | (0.51) | | | | | | | | |
Weighted average pro forma number of shares outstanding – basic and diluted
|
| | | | 4,832,499 | | | | | | | | |
| | |
Voting
Member’s Interests |
| |
Non-voting
Members Interests |
| |
Accumulated
Deficit |
| |
Total
Members’ Deficit |
| ||||||||||||
Balance, December 31, 2017
|
| | | $ | — | | | | | $ | 12,601,201 | | | | | $ | (13,031,491) | | | | | $ | (430,290) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | (2,113,592) | | | | | | (2,113,592) | | |
Balance, December 31, 2018
|
| | | | — | | | | | | 12,601,201 | | | | | | (15,145,083) | | | | | | (2,543,882) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | (2,473,627) | | | | | | (2,473,627) | | |
Balance, December 31, 2019
|
| | | $ | — | | | | | $ | 12,601,201 | | | | | $ | (17,618,710) | | | | | $ | (5,017,509) | | |
For the years ended December 31
|
| |
2019
|
| |
2018
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net loss
|
| | |
$
|
(2,473,627)
|
| | | | $ | (2,113,592) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Amortization of issuance costs
|
| | |
|
62,841
|
| | | | | 33,016 | | |
Provision for uncollectable receivables
|
| | |
|
2,160
|
| | | | | 15,489 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
(Increase) decrease:
|
| | | | | | | | | | | | |
Prepaid expenses and other current assets
|
| | |
|
3,696
|
| | | | | (23,694) | | |
Increase (decrease):
|
| | | | | | | | | | | | |
Accounts payable
|
| | |
|
(89,824)
|
| | | | | 65,638 | | |
Accrued expenses
|
| | |
|
348,854
|
| | | | | 156,355 | | |
Accrued salaries
|
| | |
|
53,750
|
| | | | | 670,833 | | |
Net cash used in operating activities
|
| | |
|
(2,092,150)
|
| | | | | (1,195,955) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Proceeds from issuance of convertible promissory notes
|
| | |
|
2,430,000
|
| | | | | — | | |
Proceeds from issuance of non-voting preferred members’ interests
|
| | |
|
—
|
| | | | | 1,220,000 | | |
Payment of deferred issuance costs
|
| | |
|
(58,492)
|
| | | | | (69,532) | | |
Net cash provided by financing activities
|
| | |
|
2,371,508
|
| | | | | 1,150,468 | | |
Net increase (decrease) in cash
|
| | |
|
279,358
|
| | | | | (45,487) | | |
Cash, beginning of period
|
| | |
|
30,026
|
| | | | | 75,513 | | |
Cash, end of period
|
| | |
$
|
309,384
|
| | | | $ | 30,026 | | |
Supplemental disclosure of non-cash financing transactions: | | | | | | | | | | | | | |
Accrued deferred issuance costs
|
| | |
$
|
5,290
|
| | | | $ | 23,537 | | |
Conversion of non-voting preferred members’ interests to convertible promissory notes
|
| | |
$
|
1,245,000
|
| | | | $ | — | | |
Conversion of investor loan to non-voting preferred members’ interests
|
| | |
$
|
—
|
| | | | $ | 100,000 | | |
December 31
|
| |
2019
|
| |
2018
|
| ||||||
Prepaid insurance
|
| | |
$
|
—
|
| | | | $ | 7,871 | | |
Prepaid data room hosting services
|
| | |
|
5,731
|
| | | | | 4,167 | | |
Miscellaneous receivables
|
| | |
|
785
|
| | | | | 334 | | |
Total prepaid expenses and other assets
|
| | |
$
|
6,516
|
| | | | $ | 12,372 | | |
December 31
|
| |
2019
|
| |
2018
|
| ||||||
Accrued CRO and CMO costs
|
| | |
$
|
149,178
|
| | | | $ | 35,228 | | |
Accrued interest on preferred members’ interests
|
| | |
|
188,085
|
| | | | | 119,257 | | |
Accrued interest on promissory notes
|
| | |
|
163,123
|
| | | | | — | | |
Other
|
| | |
|
25,059
|
| | | | | 19,942 | | |
| | | |
$
|
525,445
|
| | | | $ | 174,427 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
| | |
(Unaudited)
|
| | | | | | | |||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash
|
| | |
$
|
499,082
|
| | | | $ | 309,384 | | |
Prepaid expenses and other current assets
|
| | |
|
61,014
|
| | | | | 6,516 | | |
Total current assets
|
| | |
|
560,096
|
| | | | | 315,900 | | |
Deferred issuance costs
|
| | |
|
225,278
|
| | | | | — | | |
Total assets
|
| | |
$
|
785,374
|
| | | | $ | 315,900 | | |
Liabilities and members’ deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | |
$
|
199,366
|
| | | | $ | 35,421 | | |
Accrued expenses
|
| | |
|
569,395
|
| | | | | 525,445 | | |
Accrued salaries
|
| | |
|
1,015,713
|
| | | | | 1,060,000 | | |
Total current liabilities
|
| | |
|
1,784,474
|
| | | | | 1,620,866 | | |
Convertible promissory notes, net
|
| | |
|
4,150,776
|
| | | | | 3,637,543 | | |
Total liabilities
|
| | |
|
5,935,250
|
| | | | | 5,258,409 | | |
Commitments and contingencies (Note 9) | | | | | | | | | | | | | |
Preferred members’ interests, non-voting, net
|
| | |
|
75,000
|
| | | | | 75,000 | | |
Members’ deficit: | | | | | | | | | | | | | |
Members’ interests, voting
|
| | |
|
16,239,001
|
| | | | | — | | |
Members’ interests, non-voting
|
| | |
|
—
|
| | | | | 12,601,201 | | |
Accumulated deficit
|
| | |
|
(21,463,877)
|
| | | | | (17,618,710) | | |
Total members’ deficit
|
| | |
|
(5,224,876)
|
| | | | | (5,017,509) | | |
Total liabilities and members’ deficit
|
| | |
$
|
785,374
|
| | | | $ | 315,900 | | |
| | |
Three Months Ended
|
| |
Nine Months Ended
|
| ||||||||||||||||||
| | |
September 30,
2020 |
| |
September 30,
2019 |
| |
September 30,
2020 |
| |
September 30,
2019 |
| ||||||||||||
Revenue
|
| | |
$
|
—
|
| | | | $ | — | | | | |
$
|
—
|
| | | | $ | — | | |
Research and development expenses
|
| | |
|
108,086
|
| | | | | 392,832 | | | | |
|
161,944
|
| | | | | 541,073 | | |
General and administrative expenses
|
| | |
|
2,554,724
|
| | | | | 343,496 | | | | |
|
3,421,798
|
| | | | | 1,071,696 | | |
Operating loss
|
| | |
|
(2,662,810)
|
| | | | | (736,328) | | | | |
|
(3,583,742)
|
| | | | | (1,612,769) | | |
Interest expense, net
|
| | |
|
(104,440)
|
| | | | | (75,491) | | | | |
|
(304,646)
|
| | | | | (222,269) | | |
Other income
|
| | |
|
43,221
|
| | | | | — | | | | |
|
43,221
|
| | | | | — | | |
Loss before provision for income taxes
|
| | |
|
(2,724,029)
|
| | | | | (811,819) | | | | |
|
(3,845,167)
|
| | | | | (1,835,038) | | |
Provision for income taxes
|
| | |
|
—
|
| | | | | — | | | | |
|
—
|
| | | | | — | | |
Net loss
|
| | |
$
|
(2,724,029)
|
| | | | $ | (811,819) | | | | |
$
|
(3,845,167)
|
| | | | $ | (1,835,038) | | |
Pro forma information (unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss before taxes
|
| | |
$
|
(2,724,029)
|
| | | | | | | | | |
$
|
(3,845,167)
|
| | | | | | | |
Pro forma tax expense
|
| | |
|
—
|
| | | | | | | | | |
|
—
|
| | | | | | | |
Pro forma net loss
|
| | |
$
|
(2,724,029)
|
| | | | | | | | | |
$
|
(3,845,167)
|
| | | | | | | |
Pro forma net loss per share – basic and diluted
|
| | |
$
|
(0.56)
|
| | | | | | | | | |
$
|
(0.80)
|
| | | | | | | |
Weighted average pro forma number of shares outstanding – basic and diluted
|
| | |
|
4,832,494
|
| | | | | | | | | |
|
4,832,494
|
| | | | | | | |
| | |
Voting
Member’s Interests |
| |
Non-voting
Members’ Interests |
| |
Accumulated
Deficit |
| |
Total
Members’ Deficit |
| ||||||||||||
Balance, December 31, 2018
|
| | | $ | — | | | | | $ | 12,601,201 | | | | | $ | (15,145,083) | | | | | $ | (2,543,882) | | |
Net loss
|
| | | | — | | | | |
|
—
|
| | | | | (455,363) | | | | | | (455,363) | | |
Balance, March 31, 2019
|
| | | | — | | | | | | 12,601,201 | | | | | | (15,600,446) | | | | | | (2,999,245) | | |
Net loss
|
| | | | — | | | | |
|
—
|
| | | | | (567,856) | | | | | | (567,856) | | |
Balance, June 30, 2019
|
| | | | — | | | | | | 12,601,201 | | | | | | (16,168,302) | | | | | | (3,567,101) | | |
Net loss
|
| | | | — | | | | |
|
—
|
| | | | | (811,819) | | | | | | (811,819) | | |
Balance, September 30, 2019
|
| | | $ | — | | | | | $ | 12,601,201 | | | | | $ | (16,980,121) | | | | | $ | (4,378,920) | | |
|
| | |
Voting
Members’ Interests |
| |
Non-voting
Members’ Interests |
| |
Accumulated
Deficit |
| |
Total
Members’ Deficit |
| ||||||||||||
Balance, December 31, 2019
|
| | | $ | — | | | | | $ | 12,601,201 | | | | | $ | (17,618,710) | | | | | $ | (5,017,509) | | |
Net loss
|
| | | | — | | | | |
|
—
|
| | | | | (466,553) | | | | | | (466,553) | | |
Balance, March 31, 2020
|
| | | | — | | | | | | 12,601,201 | | | | | | (18,085,263) | | | | | | (5,484,062) | | |
Membership conversion to voting interests
|
| | | | 12,601,201 | | | | | | (12,601,201) | | | | | | — | | | | | | — | | |
Net loss
|
| | | | — | | | | |
|
—
|
| | | | | (654,585) | | | | | | (654,585) | | |
Balance, June 30, 2020
|
| | | $ | 12,601,201 | | | | | $ | — | | | | | $ | (18,739,848) | | | | | $ | (6,138,647) | | |
Conversion of convertible promissory notes
|
| | | | 1,637,800 | | | | | | — | | | | | | — | | | | | | 1,637,800 | | |
Equity-based compensation expense
|
| | | | 2,000,000 | | | | | | — | | | | | | — | | | | | | 2,000,000 | | |
Net loss
|
| | | | — | | | | |
|
—
|
| | | | | (2,724,029) | | | | | | (2,724,029) | | |
Balance, September 30, 2020
|
| | | $ | 16,239,001 | | | | | $ | — | | | | | $ | (21,463,877) | | | | | $ | (5,224,876) | | |
For the nine months ended September 30
|
| |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net loss
|
| | |
$
|
(3,845,167)
|
| | | | $ | (1,835,038) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Amortization of issuance costs
|
| | |
|
42,071
|
| | | | | 50,894 | | |
(Recovery) provision for uncollectable receivables
|
| | |
|
(15,020)
|
| | | | | 1,967 | | |
Equity-based compensation
|
| | |
|
2,000,000
|
| | | | | — | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
(Increase) decrease:
|
| | | | | | | | | | | | |
Prepaid expenses and other current assets
|
| | |
|
(39,478)
|
| | | | | 1,294 | | |
Increase (decrease):
|
| | | | | | | | | | | | |
Accounts payable
|
| | |
|
156,139
|
| | | | | (74,253) | | |
Accrued expenses
|
| | |
|
136,908
|
| | | | | 210,117 | | |
Accrued salaries
|
| | |
|
(44,287)
|
| | | | | 24,583 | | |
Net cash used in operating activities
|
| | |
|
(1,608,834)
|
| | | | | (1,620,436) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Proceeds from issuance of converibile promissory notes
|
| | |
|
1,994,133
|
| | | | | 1,850,000 | | |
Payment of deferred issuance costs
|
| | |
|
(57,971)
|
| | | | | (52,922) | | |
Payment of proposed public offering costs
|
| | |
|
(137,630)
|
| | | | | — | | |
Net cash provided by financing activities
|
| | |
|
1,798,532
|
| | | | | 1,797,078 | | |
Net increase in cash
|
| | |
|
189,698
|
| | | | | 176,642 | | |
Cash, beginning of period
|
| | |
|
309,384
|
| | | | | 30,026 | | |
Cash, end of period
|
| | |
$
|
499,082
|
| | | | $ | 206,668 | | |
Supplemental cash flow disclosures: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 3,000 | | | | | $ | — | | |
Non-cash financing transactions: | | | | | | | | | | | | | |
Deferred public offering costs included in accounts payable
|
| | | $ | 7,806 | | | | | $ | — | | |
Deferred public offering costs included in accrued expenses
|
| | | $ | 79,842 | | | | | $ | — | | |
Deferred issuance costs included in accounts payable
|
| | |
$
|
—
|
| | | | $ | 6,802 | | |
Conversion of convertible promissory notes and accrued interest into membership interests
|
| | |
$
|
1,637,800
|
| | | | $ | — | | |
Conversion of non-voting preferred members’ interests to convertible promissory notes
|
| | |
$
|
—
|
| | | | $ | 540,000 | | |
| | |
Three Months Ended
|
| |
Nine Months Ended
|
| ||||||||||||||||||
| | |
September 30,
2020 |
| |
September 30,
2019 |
| |
September 30,
2020 |
| |
September 30,
2019 |
| ||||||||||||
Convertible promissory notes
|
| | |
$
|
14,749
|
| | | | $ | 7,559 | | | | |
$
|
42,071
|
| | | | $ | 17,650 | | |
Mezzanine preferred members’ interests
|
| | |
|
—
|
| | | | | 4,764 | | | | |
|
—
|
| | | | | 33,244 | | |
| | | |
$
|
14,749
|
| | | | $ | 12,323 | | | | |
$
|
42,071
|
| | | | $ | 50,894 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Prepaid insurance
|
| | |
$
|
4,347
|
| | | | $ | — | | |
Prepaid legal fees
|
| | |
|
50,000
|
| | | | | — | | |
Prepaid services
|
| | |
|
6,667
|
| | | | | 5,731 | | |
Miscellaneous receivables
|
| | |
|
—
|
| | | | | 785 | | |
Total prepaid expenses and other assets
|
| | |
$
|
61,014
|
| | | | $ | 6,516 | | |
| | |
September 30,
2020 |
| |
December 31,
2019 |
| ||||||
Accrued CRO and CMO costs
|
| | |
$
|
—
|
| | | | $ | 149,178 | | |
Accrued interest on preferred members’ interests
|
| | |
|
188,085
|
| | | | | 188,085 | | |
Accrued interest on promissory notes
|
| | |
|
249,657
|
| | | | | 163,123 | | |
Accrued public offering costs
|
| | |
|
79,842
|
| | | | | | | |
Accrued vacation
|
| | |
|
34,654
|
| | | | | — | | |
Other
|
| | |
|
17,157
|
| | | | | 25,059 | | |
| | | |
$
|
569,395
|
| | | | $ | 525,445 | | |
| | |
Three Months Ended
|
| |
Six Months Ended
|
| ||||||||||||||||||
| | |
September 30,
2020 |
| |
September 30,
2019 |
| |
September 30,
2020 |
| |
September 30,
2019 |
| ||||||||||||
Fourth offering
|
| | |
$
|
50,940
|
| | | | $ | 48,061 | | | | |
$
|
197,324
|
| | | | $ | 106,322 | | |
Fifth offering
|
| | |
|
38,750
|
| | | | | — | | | | |
|
65,010
|
| | | | | — | | |
| | | |
$
|
89,690
|
| | | | $ | 48,061 | | | | |
$
|
262,334
|
| | | | $ | 106,322 | | |
| | |
Amount
|
| |||
Securities and Exchange Commission registration fee
|
| | | $ | 4,140 | | |
FINRA filing fee
|
| | | $ | 6,193 | | |
Initial Nasdaq listing fee
|
| | | $ | 50,000 | | |
Accountants’ fees and expenses
|
| | | $ | 48,000 | | |
Legal fees and expenses
|
| | | $ | 350,000 | | |
Transfer agent’s fees and expenses
|
| | | $ | 5,000 | | |
Printing and engraving expenses
|
| | | $ | 100,000 | | |
Non-accountable expenses to underwriters
|
| | | $ | 300,000 | | |
Miscellaneous
|
| | | $ | 75,000 | | |
Total expenses
|
| | | $ | 938,333 | | |
| | | | VIRIOS THERAPEUTICS, LLC | | ||||||
| | | | By: | | | /s/ Greg Duncan | | |||
| | | | | | | Name: | | | Greg Duncan | |
| | | | | | | Title: | | |
Chief Executive Officer and Chairman
|
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Greg Duncan
Greg Duncan
|
| |
Chief Executive Officer and Chairman
(principal executive officer) |
| |
December 1, 2020
|
|
|
/s/ Angela Walsh
Angela Walsh
|
| |
Vice President of Finance (principal
financial and accounting officer) |
| |
December 1, 2020
|
|
|
*
Richard Burch
|
| | President | | |
December 1, 2020
|
|
|
*
Robert Buchalter
|
| | Director | | |
December 1, 2020
|
|
|
*
David Keefer
|
| | Director | | |
December 1, 2020
|
|
|
*
William L. Pridgen, M.D.
|
| | Director | | |
December 1, 2020
|
|
|
*
Robert Young
|
| | Director | | |
December 1, 2020
|
|
|
* By:
|
| |
/s/ Greg Duncan
Attorney-in-fact
|
| | | |
Exhibit 10.9
AGREEMENT ON OWED SALARY BETWEEN DR. PRIDGEN AND INNOVATIVE MED CONCEPTS, LLC
July 15, 2020
This Agreement on Owed Salary (“ Agreement”) is an agreement between Innovative Med Concepts, LLC (“IMC” or the “Company”), and Dr. William L. Pridgen (“Pridgen”) regarding the payment and satisfaction of salary accrued and owed to Dr. Pridgen (IMC and Pridgen together as ““Parties” and individually as a “Party”“).
WHEREAS, the Company owes Pridgen $549,046.29 of accrued salary; and
WHEREAS, The Parties wish to enter into this Agreement as to how the accrued salary will be repaid and satisfied.
NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Promptly after closing of the Company”s IPO, if and when it is completed, the Company will pay Pridgen the accrued salary in cash or equity, in its discretion. Any equity paid to satisfy the amount of accrued salary shall be issued using a Company valuation of $40,000,000, rather than the pre-money or post-money valuation for the IPO.
2. Any stock issued to Pridgen shall be considered issued immediately before the IPO, such that Pridgen shall receive any equity after any dilution occurring to the pre-existing investors in the Company, other than any dilution resulting from the issuance of stock to new investors in the IPO or from exercise of warrants, which dilution shall apply to Pridgen” s stock.
3. If the Company elects to pay any portion of the accrued salary in cash, then the cash portion of the accrued salary payment shall be paid to Pridgen within 30 days of the IPO.
4. If in dispute, the calculation of the amount of the payment, including the value of stock issued to Pridgen, shall be made by Barfield, Murphy, Shank & Smith, LLC. Such valuation shall be based on the market value of the public stock issued to the investors, without any discounts applied for blockage, restrictions on sale, etc., to simplify the calculation.
5. In the case the company decides to call off the IPO or raise the required capital privately, Pridgen”s accrued salary shall be paid under the original terms of such payment as described in Section 4. 7 of the First Amendment to the Amended and Restated Operating Agreement of the Company, entered into May 31, 2018.
6. The agreement entered into between Pridgen and the Company with Advisory Committee in its Meeting on May 6, 2014 shall apply to the payment of the accrued salary. Pridgen received an advance on his salary in the amount of $100,000. That amount will be offset against the payment, and Pridgen will have the option of setting it off against the cash portion or the stock portion of the accrued salary payment, if the Company elects to pay the accrued salary through cash and equity.
7. This Agreement shall be governed by laws of the state of Alabama, without regard to conflicts of law principles requiring the application of the laws of any other state or jurisdiction. The Parties agree to submit to the jurisdiction and venue of courts located in Tuscaloosa County, Alabama for any lawsuit involving this Agreement.
8. This Agreement may be executed and accepted in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] [SIGNATURE PAGE TO FOLLOW]
2 |
IN WITNESS WHEREOF, the undersigned have hereunto set their hands or caused their duly authorized representative to execute this agreement on their behalf under seal effective as of the day and date first printed above.
INNOVATIVE MED CONCEPTS, LLC | |||
By: | /s/ Greg Duncan | ||
Name: Greg Duncan | |||
Title: Chief Executive Officer | |||
/s/ Dr. William L. Pridgen | |||
Dr. William L. Pridgen, individually |
3 |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this registration statement on Form S-1 (Amendment No. 7) of Virios Therapeutics, LLC (formerly Innovative Med Concepts, LLC) (the "Company") of our report dated July 23, 2020, which includes an explanatory paragraph as to the Company's ability to continue as a going concern, with respect to our audits of the financial statements of the Company as of December 31, 2019 and 2018, and for each of the years in the two-year period ended December 31, 2019, which appears in this registration statement. We also consent to the reference to our firm under the caption “Experts” in this registration statement.
/s/ Dixon Hughes Goodman LLP
Atlanta, Georgia
December 1, 2020