Delaware
|
| |
8731
|
| |
20-0077155
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(State or other jurisdiction of
incorporation or organization)
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| |
(Primary Standard Industrial
Classification Code Number)
|
| |
(I.R.S. Employer
Identification Number)
|
Cecil E. Martin, III, Esq.
David S. Wolpa, Esq.
McGuireWoods LLP
500 East Pratt Street, Suite 1000
Baltimore, MD 21202
(410) 659-4400
|
| |
Rachael M. Bushey, Esq.
Jennifer L. Porter, Esq.
Troutman Pepper Hamilton Sanders LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103
(215) 981-4331
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Large accelerated filer
|
| |
☐
|
| |
Accelerated filer
|
| |
☐
|
Non-accelerated filer
|
| |
☒
|
| |
Smaller reporting company
|
| |
☒
|
|
| |
|
| |
Emerging growth company
|
| |
☐
|
|
| |
|
1.
|
Approve the issuance of shares of common stock of Cleveland BioLabs to securityholders of Cytocom, pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus, and the change of control resulting from the merger;
|
2.
|
Approve an amendment to the certificate of incorporation of Cleveland BioLabs to effect an increase in the number of authorized shares of common stock, in the form attached as Annex D to the accompanying proxy statement/prospectus;
|
3.
|
Consider and vote upon an adjournment of the Cleveland BioLabs special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2; and
|
4.
|
Transact such other business as may properly come before the stockholders at the Cleveland BioLabs special meeting or any adjournment or postponement thereof.
|
|
| |
|
Christopher Zosh
Vice President of Finance
Cleveland BioLabs, Inc.
|
| |
Michael K. Handley
President and Chief Executive
Officer Cytocom Inc.
|
TIME:
|
10:00 a.m. Eastern Time
|
DATE:
|
, 2021
|
PLACE:
|
www.virtualshareholdermeeting.com/CBLI2021SM
|
1.
|
To approve the issuance of shares of common stock of Cleveland BioLabs, Inc., or Cleveland BioLabs, to stockholders of Cytocom Inc., or Cytocom, pursuant to the terms of the Agreement and Plan of Merger, among Cleveland BioLabs, Cytocom and High Street Acquisition Corp., or Merger Sub, dated as of October 16, 2020, a copy of which is attached as Annex A, which is referred to in this Notice as the Merger Agreement, and the change of control resulting from the merger;
|
2.
|
To approve an amendment to the certificate of incorporation of Cleveland BioLabs to effect an increase in the number of authorized shares of common stock, in the form attached as Annex D;
|
3.
|
To consider and vote upon an adjournment of the Cleveland BioLabs special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2; and
|
4.
|
To transact such other business as may properly come before the stockholders at the Cleveland BioLabs special meeting or any adjournment or postponement thereof.
|
|
| |
|
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Christopher Zosh
|
|
| |
Senior Vice President of Finance
|
|
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Buffalo, New York
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Q:
|
What is the merger?
|
A:
|
Cleveland BioLabs, Inc., or Cleveland BioLabs, and Cytocom Inc., or Cytocom, have entered into an Agreement and Plan of Merger, or the Merger Agreement, dated as of October 16, 2020, a copy of which is attached as Annex A to this proxy statement/prospectus. The Merger Agreement contains the terms and conditions of the proposed business combination of Cleveland BioLabs and Cytocom. Pursuant to the Merger Agreement, High Street Acquisition Corp., or Merger Sub, a direct, wholly owned subsidiary of Cleveland BioLabs, will merge with and into Cytocom, with Cytocom surviving as a wholly owned subsidiary of Cleveland BioLabs. This transaction is referred to in this proxy statement/prospectus as the merger. After the consummation of the merger, Cleveland BioLabs will change its corporate name to “Cytocom Inc.” Cleveland BioLabs following the merger is referred to herein as the combined company.
|
Q:
|
Why are the two companies proposing to merge?
|
A:
|
Cleveland BioLabs and Cytocom believe that combining the two companies will result in a company with a stronger pipeline, strong leadership team and greater ability to raise capital resources, positioning it to become a leading company researching, developing and commercializing immunotherapies for oncology, infectious disease, inflammation and auto-immune mediated conditions. For a more complete description of the reasons for the merger, please see the sections titled “The Merger— Cleveland BioLabs Reasons for the Merger” and “The Merger—Cytocom Reasons for the Merger” beginning on pages 120 and 122, respectively, of this proxy statement/prospectus.
|
Q:
|
Why am I receiving this proxy statement/prospectus?
|
A:
|
You are receiving this proxy statement/prospectus because you have been identified as a stockholder of Cleveland BioLabs as of the record date, and you are entitled to vote at the Cleveland BioLabs special meeting to approve the matters set forth herein. This document serves as:
|
•
|
a proxy statement of Cleveland BioLabs used to solicit proxies for the Cleveland BioLabs special meeting to vote on the matters set forth herein; and
|
•
|
a prospectus of Cleveland BioLabs used to offer shares of Cleveland BioLabs common stock in exchange for shares of Cytocom common stock and preferred stock in the merger.
|
Q:
|
What proposals will be voted on at the Cleveland BioLabs special meeting in connection with the merger?
|
A:
|
Pursuant to the terms of the Merger Agreement, the following proposal must be approved by the requisite stockholder vote at the Cleveland BioLabs special meeting in order for the merger to close:
|
•
|
Proposal No. 1 to approve the issuance of shares of Cleveland BioLabs common stock to Cytocom stockholders pursuant to the Merger Agreement and the change of control resulting from the merger.
|
Q:
|
What proposals are to be voted on at the Cleveland BioLabs special meeting, other than the merger proposal?
|
A:
|
At the Cleveland BioLabs special meeting, the holders of Cleveland BioLabs common stock will also be asked to consider the following proposals:
|
•
|
to approve an amendment to the certificate of incorporation of Cleveland BioLabs to effect an increase in the number of authorized shares of common stock, in the form attached as Annex D to this proxy statement/prospectus;
|
•
|
to consider and vote upon an adjournment of the Cleveland BioLabs special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2; and
|
•
|
to transact such other business as may properly come before the stockholders at the Cleveland BioLabs special meeting or any adjournment or postponement thereof.
|
Q:
|
What stockholder votes are required to approve the proposals at the Cleveland BioLabs special meeting?
|
A:
|
The affirmative vote of the holders of a majority of shares present in attendance or represented by proxy at the Cleveland BioLabs special meeting and entitled to vote on the matter, assuming a quorum is present, is required for approval of Proposal Nos. 1, 3 and 4. The affirmative vote of the holders of a majority of the outstanding shares of Cleveland BioLabs common stock entitled to vote at the Cleveland BioLabs special meeting is required for approval of Proposal No. 2.
|
Q:
|
What will Cytocom stockholders and restricted stock unit award holders receive in the merger?
|
A:
|
Cytocom stockholders and the holders of vested Cytocom restricted stock units will receive shares of Cleveland BioLabs common stock, and the holders of unvested Cytocom restricted stock unit awards will receive Cleveland BioLabs restricted stock units, determined on the basis of an exchange ratio formula. Applying the exchange ratio formula, which will be calculated based on the total number of outstanding shares of Cleveland BioLabs common stock and Cytocom common stock, each on a fully-diluted basis, and the respective valuations of Cleveland BioLabs and Cytocom, as of immediately prior to the closing of the merger, the former Cytocom securityholders immediately before the merger are expected to own, or hold rights to acquire, approximately 50% of the aggregate number of shares of the combined company’s common stock on a fully diluted basis following the merger and Cleveland BioLabs securityholders immediately before the merger are expected to own approximately 50% of the aggregate number of shares of the combined company’s common stock on a fully diluted basis following the merger. This estimate is based on each party’s estimated net cash as of March 31, 2021 and remains subject to adjustment prior to closing of the merger based on the outstanding number of shares of Cytocom and Cleveland BioLabs and the respective net cash balances of Cytocom and Cleveland BioLabs at the cash determination time and as a result, Cleveland BioLabs securityholders could own more, and former Cytocom securityholders could own less, or vice versa, of the fully diluted common stock of the combined company, following the closing of the merger. Additionally, this estimate excludes the impact of any issuances of the combined company’s common stock after the merger upon (i) the exercise of the warrant to be issued to Avenue immediately after closing of the merger and (ii) the conversion of the indebtedness owed by Cytocom to Avenue.
|
Q:
|
Will the common stock of the combined company trade on an exchange?
|
A:
|
Shares of Cleveland BioLabs common stock are currently listed on Nasdaq under the symbol “CBLI.” Cytocom has filed an initial listing application for the combined company with Nasdaq. After consummation of the merger, Cleveland BioLabs will be renamed “Cytocom Inc.” and it is expected that the common stock of the combined company will trade on Nasdaq under the symbol “CYTO.” On June 3, 2021, the last trading day before the date of this proxy statement/prospectus, the closing sale price of Cleveland BioLabs common stock was $5.31 per share.
|
Q:
|
Who will be the directors of the combined company following the merger?
|
A:
|
Immediately following the merger, the combined company’s board of directors will be composed of up to seven members, consisting of (i) three individuals designated by Cleveland BioLabs, two of whom will be current board members Randy Saluck and Lea Verny and the third of whom will be designated at a later time, and (ii) four individuals designated by Cytocom, three of whom will be Michael K. Handley (who is Cytocom’s President and Chief Executive Officer and will serve as President and Chief Executive Officer of the combined company), Taunia Markvicka, and Steve Barbarick, and the fourth of whom will be designated at a later time.
|
Q:
|
Who will be the executive officers of the combined company immediately following the merger?
|
A:
|
Immediately following the merger, the executive management team of the combined company is expected to consist of the following individuals:
|
Name
|
| |
Position
|
Michael K. Handley
|
| |
President and Chief Executive Officer; Director
|
Taunia Markvicka, PharmD
|
| |
Chief Operating Officer; Director
|
Andrei Gudkov, Ph.D., D. Sci.
|
| |
Global Head of R&D
|
Peter Aronstam, Ph.D.
|
| |
Chief Financial Officer
|
Clifford Selsky, M.D., Ph.D.
|
| |
Chief Medical Officer
|
Cozette M. McAvoy, JD, M.S.
|
| |
Chief Legal Officer
|
Robert W. Buckheit, Jr., Ph.D.
|
| |
Chief Technology Officer
|
Q:
|
As a Cleveland BioLabs stockholder, how does Cleveland BioLabs’ board of directors recommend that I vote?
|
A:
|
After careful consideration, Cleveland BioLabs’ board of directors unanimously recommends that Cleveland BioLabs stockholders vote “FOR” all of the proposals.
|
Q:
|
What risks should I consider in deciding whether to vote in favor of the merger?
|
A:
|
You should carefully review the section titled “Risk Factors” beginning on page 25 of this proxy statement/prospectus, which set forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of Cleveland BioLabs and Cytocom, as independent companies, are subject.
|
Q:
|
When do you expect the merger to be consummated?
|
A:
|
The merger is anticipated to close in the second quarter of 2021, but the exact timing cannot be predicted. For more information, please see the section titled “The Merger Agreement—Conditions to the Consummation of the Merger” beginning on page 154 of this proxy statement/prospectus.
|
Q:
|
What do I need to do now?
|
A:
|
Whether you plan to attend the special meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via mobile device or over the Internet. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the recommendations of the Cleveland BioLabs board of directors. Voting by proxy will not affect your right to attend the special meeting. If your shares are registered directly in your name through our stock transfer agent, Continental Stock Transfer & Trust Company, or you have stock certificates registered in your name, you may vote:
|
•
|
By Internet. Follow the instructions included on the proxy card included with a paper copy of the proxy statement to vote by Internet.
|
•
|
By mobile device using smartphone or tablet. If you choose to vote by mobile device, scan the QR Code imprinted on the proxy card using either a smartphone or table and you will be taken directly to the Internet voting site.
|
•
|
By mail (if you received a paper copy of the proxy materials by mail). Please sign, date, and promptly mail the enclosed proxy card in the postage-paid envelope that has been provided to you.
|
•
|
Electronically at the meeting. If you attend the virtual special meeting, you may vote electronically at the meeting. Further instructions on how to attend, participate in and vote at the virtual special meeting, including how to demonstrate your ownership of our stock as of the record date, are available at www.virtualshareholdermeeting.com/CBLI2021SM. Please note you will only be able to attend, participate, and vote in the meeting using this website.
|
Q:
|
What happens if I do not return a proxy card or otherwise vote or provide proxy instructions, as applicable?
|
A:
|
If you are a Cleveland BioLabs stockholder, the failure to return your proxy card or otherwise vote or provide proxy instructions will reduce the aggregate number of votes required to approve Proposal Nos. 1, 3 and 4 and will have the same effect as a vote “AGAINST” Proposal No. 2.
|
Q:
|
May I attend the Cleveland BioLabs special meeting and vote in person?
|
A:
|
In light of the coronavirus/COVID-19 outbreak and governmental decrees that in-person large gatherings be postponed or cancelled, and in the best interests of public health and the health and safety of Cleveland BioLabs’ board of directors and stockholders, the Cleveland BioLabs special meeting will be held entirely online. Stockholders of record as of , 2021 will be able to attend and participate in the Cleveland BioLabs special meeting online by accessing www.virtualshareholdermeeting.com/CBLI2021SM. To join the Cleveland BioLabs special meeting, you will need to have your 16-digit control number which is included on your proxy card.
|
Q:
|
Who counts the votes?
|
A:
|
Broadridge Financial Solutions, Inc., or Broadridge, has been engaged as Cleveland BioLabs’ independent agent to tabulate stockholder votes, which Cleveland BioLabs refers to as the inspector of election. If you are a stockholder of record, your executed proxy card is returned directly to Broadridge for tabulation. If you hold your shares through a broker, your broker returns one proxy card to Broadridge on behalf of all its clients.
|
Q:
|
If my Cleveland BioLabs shares are held in “street name” by my broker, will my broker vote my shares for me?
|
A:
|
Unless your broker has discretionary authority to vote on certain matters, your broker will not be able to vote your shares of Cleveland BioLabs common stock on matters requiring discretionary authority without instructions from you. If you do not give instructions to your broker, your broker can vote your Cleveland BioLabs shares with respect to “discretionary,” routine items but not with respect to “non-discretionary,” non-routine items. Discretionary items are proposals considered routine under Rule 452 of the New York Stock Exchange on which your broker may vote shares held in “street name” in the absence of your voting instructions. With respect to non-routine items for which you do not give your broker instructions, your Cleveland BioLabs shares will be treated as broker non-votes. It is anticipated that Proposal Nos. 1, 2 and 4 at the Cleveland BioLabs special meeting will be non-routine. It is anticipated that Proposal No. 3 will be routine. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.
|
Q:
|
What are broker non-votes and do they count for determining a quorum?
|
A:
|
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (i) has not received voting instructions from the beneficial owner and (ii) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on non-routine matters.
|
Q:
|
May I change my vote after I have submitted a proxy or provided proxy instructions?
|
A:
|
Cleveland BioLabs stockholders of record, unless such stockholder’s vote is subject to a voting and support agreement, may change their vote at any time before their proxy is voted at the Cleveland BioLabs special meeting in one of four ways:
|
•
|
You may submit another properly completed proxy with a later date by mail or via the internet.
|
•
|
You can provide your proxy instructions via mobile device at a later date.
|
•
|
You may send a written notice that you are revoking your proxy to Cleveland BioLabs’ Corporate Secretary at 73 High Street, Buffalo, New York 14203.
|
•
|
You may attend the Cleveland BioLabs special meeting online and vote by following the instructions at www.virtualshareholdermeeting.com/CBLI2021SM. Simply attending the Cleveland BioLabs special meeting will not, by itself, revoke your proxy.
|
Q:
|
Who is paying for this proxy solicitation?
|
A:
|
Cleveland BioLabs will pay the costs of printing and filing of this proxy statement/prospectus and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Cleveland BioLabs common stock for the forwarding of solicitation materials to the beneficial owners of Cleveland BioLabs common stock. Cleveland BioLabs 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.
|
Q:
|
What are the material U.S. federal income tax consequences of the merger to United States holders of Cytocom capital stock?
|
A:
|
Cleveland BioLabs and Cytocom intend the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the merger constitutes a reorganization, subject to the limitations and qualifications described in the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger,” holders of Cytocom capital stock will not recognize gain or loss for U.S. federal income tax purposes on the receipt of shares of Cleveland BioLabs common stock issued in connection with the merger. However, a holder of Cytocom capital stock will recognize gain or loss attributable to cash received in lieu of fractional shares of Cleveland BioLabs common stock. Any gain recognized generally will be long-term capital gain, provided certain holding period and other requirements are met. For a more detailed discussion of the material U.S. federal income tax consequences of the merger, see “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 137.
|
Q:
|
Who can help answer my questions?
|
A:
|
If you are a Cleveland BioLabs stockholder and would like additional copies of this proxy statement/prospectus without charge or if you have questions about the merger, including the procedures for voting your shares, you should contact:
|
•
|
Certain current members of the Cleveland BioLabs board of directors will continue as directors of the combined company after the effective time of the merger, and, following the closing of the merger, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Cleveland BioLabs non-employee director compensation policy following the effective time of the merger.
|
•
|
Under the Merger Agreement, Cleveland BioLabs’ directors and executive officers are entitled to continued indemnification and expense advancement.
|
•
|
Initiate, seek, solicit or knowingly encourage or facilitate any inquiries or the making or submission of any Acquisition Proposal (as defined in the section of this proxy statement/prospectus entitled “The Merger Agreement—Non-Solicitation”);
|
•
|
Participate or engage in discussions or negotiations with, or disclose any non-public information or data relating to the other company or any of its subsidiaries to, or afford access to the properties, books or records of the other company or any of its subsidiaries to, any person with respect to any Acquisition Proposal; or
|
•
|
execute or enter into any agreement, including any letter of intent, memorandum of understanding, agreement in principal, merger agreement, acquisition agreement or other similar agreement, whether or not binding, with respect to an Acquisition Proposal.
|
•
|
withhold, withdraw, amend or modify, or publicly propose to withhold, withdraw, amend or modify the recommendation of the Cleveland BioLabs board of directors with respect to the merger;
|
•
|
publicly propose to adopt, approve or recommend any Acquisition Proposal; or
|
•
|
fail to include the recommendation of the Cleveland BioLabs board of directors in this proxy statement/prospectus or fail to reaffirm or republish such recommendation upon Cytocom’s request.
|
•
|
such Cytocom stockholder will not recognize gain or loss upon the exchange of Cytocom capital stock for Cleveland BioLabs common stock pursuant to the merger;
|
•
|
such Cytocom stockholder’s aggregate tax basis for the shares of Cleveland BioLabs common stock received in the merger will equal the stockholder’s aggregate tax basis in the shares of Cytocom capital stock surrendered in the merger;
|
•
|
the holding period of the shares of Cleveland BioLabs common stock received by such Cytocom stockholder in the merger will include the holding period of the shares of Cytocom capital stock surrendered in exchange therefor; and
|
•
|
such Cytocom stockholder will recognize gain or loss attributable to any cash received in lieu of fractional shares of Cleveland BioLabs common stock. Any gain recognized generally will be long-term capital gain, provided certain holding period and other requirements are met. See “The Merger –Material U.S. Federal Income Tax Consequences of the Merger – Cash Received in Lieu of Fractional Shares.”
|
•
|
The exchange ratio formula will not be adjusted based on the market price of Cleveland BioLabs 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;
|
•
|
If the conditions to the merger are not satisfied or waived, the merger may not occur;
|
•
|
The merger may be consummated even though material adverse effects may result from the announcement of the merger, industry-wide changes and other causes;
|
•
|
The market price of the combined company’s common stock following the merger may decline as a result of the merger;
|
•
|
Cleveland BioLabs’ stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger, including the conversion of Cytocom common stock issued in the Cytocom pre-closing financing;
|
•
|
If the merger is not consummated, Cleveland BioLabs’ stock price may decline significantly;
|
•
|
Cleveland BioLabs and Cytocom may not be able to enter into a business combinations with another party on more favorable terms while the merger is pending due to restrictions in the Merger Agreement, which could adversely affect their respective business prospects;
|
•
|
Cleveland BioLabs may pay more than the fair market value of Cytocom’s capital stock because of the lack of a public market for Cytocom’s capital stock and therefore the difficulty of evaluating the fair market value of Cytocom’s capital stock;
|
•
|
The combined company may be unable to successfully integrate the businesses of Cleveland BioLabs and Cytocom and realize the anticipated benefits of the merger;
|
•
|
An active trading market for the combined company’s common stock may never develop and stockholders may not be able to resell shares of common stock for a profit, if at all;
|
•
|
The combined company’s common stock ownership may be highly concentrated and it could prevent other stockholders from influencing significant corporate decisions;
|
•
|
The combined company will incur additional costs and demands upon management as a result of compliance with laws and regulations that affect public companies;
|
•
|
Cleveland BioLabs and/or Cytocom have become involved in securities litigation or stockholder derivative litigation in connection with the merger, and may become involved in additional litigation, and this could harm the combined company’s business, and insurance coverage may not be sufficient to cover all related costs and damages; and
|
•
|
The combined company will have broad discretion in its use of cash and cash equivalents and may invest or spend the proceeds of any future capital-raising in ways with which stockholders do not agree and in way that may not increase the value of a stockholder’s investment.
|
|
| |
For the Year Ended December 31,
|
| |
For the three months ended March 31,
(unaudited)
|
||||||
|
| |
2020
|
| |
2019
|
| |
2021
|
| |
2020
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
Grants and contracts
|
| |
$262,942
|
| |
$1,113,421
|
| |
$—
|
| |
$156,042
|
Operating expenses:
|
| |
|
| |
|
| |||||
Research and development
|
| |
691,070
|
| |
1,656,427
|
| |
118,258
|
| |
218,208
|
General and administrative
|
| |
2,158,423
|
| |
1,817,830
|
| |
433,004
|
| |
382,166
|
Total operating expenses
|
| |
2,849,493
|
| |
3,474,257
|
| |
551,262
|
| |
600,374
|
Loss from operations
|
| |
(2,586,551 )
|
| |
(2,360,836)
|
| |
(551,262)
|
| |
(444,332)
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
Interest and other income (expense)
|
| |
518,118
|
| |
(404,722)
|
| |
3,915
|
| |
2,900
|
Foreign exchange gain (loss)
|
| |
56,690
|
| |
(1,329)
|
| |
142
|
| |
393
|
Change in value of warrant liability
|
| |
(426,130)
|
| |
72,223
|
| |
—
|
| |
(160,689)
|
Total other income (expense)
|
| |
148,678
|
| |
(333,828)
|
| |
4,057
|
| |
(157,396)
|
Net loss
|
| |
(2,437,873)
|
| |
(2,694,664)
|
| |
(547,205)
|
| |
(601,728)
|
Net loss attributable to noncontrolling interests
|
| |
39,416
|
| |
47,677
|
| |
9,107
|
| |
13,196
|
Net loss attributable to Cleveland BioLabs, Inc.
|
| |
$(2,398,457)
|
| |
$(2,646,987)
|
| |
$(538,098)
|
| |
$(588,532)
|
Net loss available to common stockholders per share of common stock, basic and diluted
|
| |
$(0.19)
|
| |
$(0.23)
|
| |
$(0.04)
|
| |
$(0.05)
|
Weighted average number of shares used in calculating net loss per share, basic and diluted
|
| |
12,396,628
|
| |
11,298,239
|
| |
14,227,014
|
| |
11,353,456
|
|
| |
As of December 31,
|
| |
As of March 31,
|
|||
|
| |
2020
|
| |
2019
|
| |
2021
(unaudited)
|
Consolidated Balance Sheets Data:
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$1,946,418
|
| |
$1,126,124
|
| |
$14,359,297
|
Working capital(1)
|
| |
2,009,695
|
| |
950,105
|
| |
14,175,459
|
Total assets
|
| |
2,318,021
|
| |
2,036,852
|
| |
14,699,758
|
Accumulated deficit
|
| |
(169,104,029)
|
| |
(166,705,572)
|
| |
(169,642,127)
|
Total stockholders’ equity
|
| |
2,013,410
|
| |
984,286
|
| |
14,181,607
|
(1)
|
Cleveland BioLabs defines working capital as current assets less current liabilities.
|
|
| |
For the Year Ended
December 31,
|
| |
For the three months ended March 31,
(unaudited)
|
||||||
|
| |
2020
|
| |
2019
|
| |
2021
|
| |
2020
|
|
| |
|
| |
|
| |
|
| |
|
Statements of Operations Data:
|
| |
|
| |
|
| |
|
| |
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
Research and development
|
| |
$5,263,829
|
| |
$587,000
|
| |
$1,024,344
|
| |
$28,000
|
Sales and marketing
|
| |
2,406
|
| |
—
|
| |
2,796
|
| |
—
|
General and administrative
|
| |
5,235,433
|
| |
2,227,176
|
| |
4,166,889
|
| |
83,919
|
Operating expenses:
|
| |
10,501,668
|
| |
2,814,176
|
| |
5,194,029
|
| |
111,919
|
Loss from operations
|
| |
(10,501,668)
|
| |
(2,814,176)
|
| |
(5,194,029)
|
| |
(111,919)
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
Interest (expense)
|
| |
(1,130,693)
|
| |
(124,233)
|
| |
(92,617)
|
| |
(36,191)
|
Other (expense) income, net
|
| |
(461,500)
|
| |
(285,613)
|
| |
—
|
| |
(500,000)
|
Total other income (expense)
|
| |
(1,592,193)
|
| |
(409,846)
|
| |
(92,617)
|
| |
(536,191)
|
Net loss
|
| |
$(12,093,861)
|
| |
$(3,224,022)
|
| |
$(5,286,646)
|
| |
$(648,110)
|
Net loss available to common stockholders per share of common stock, basic and diluted*
|
| |
$(0.56)
|
| |
$(0.16)
|
| |
$(0.22)
|
| |
$(0.03)
|
Weighted average number of shares used in calculating net loss per share, basic and diluted
|
| |
21,558,650
|
| |
19,607,850
|
| |
24,423,700
|
| |
20,509,499
|
*
|
Calculated to reflect the 1 for 4 reverse split effective August 2020.
|
|
| |
As of December 31,
|
| |
As of March 31,
|
|||
|
| |
2020
|
| |
2019
|
| |
2021
|
|
| |
|
| |
|
| |
|
Consolidated Balance Sheet Data:
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$593,869
|
| |
$1,650
|
| |
$151,913
|
Working capital(1)
|
| |
(3,695,095)
|
| |
(4,209,860)
|
| |
(4,716,335)
|
Total assets
|
| |
1,035,485
|
| |
1,650
|
| |
750,013
|
Accumulated deficit
|
| |
(27,631,321)
|
| |
(15,537,460)
|
| |
(32,917,967)
|
Total stockholders’ deficit
|
| |
(3,655,737)
|
| |
(4,209,860)
|
| |
(4,672,297)
|
(1)
|
Working capital is defined as current assets less current liabilities.
|
|
| |
For the Three Months
Ended March 31,
|
| |
For the year
ended,
December 31,
|
|
| |
2021
|
| |
2020
|
|
| |
|
| |
|
Unaudited Pro Forma
|
| |
|
| |
|
Combined Statement of Operations Data:
|
| |
|
| |
|
Revenues:
|
| |
|
| |
|
Service
|
| |
$836,686
|
| |
$2,656,393
|
Product
|
| |
—
|
| |
52,040
|
Total Revenue
|
| |
836,686
|
| |
2,708,433
|
Cost of sales
|
| |
460,746
|
| |
1,401,805
|
Gross Profit
|
| |
375,940
|
| |
1,306,628
|
Operating expenses:
|
| |
|
| |
|
Research and development
|
| |
1,305,914
|
| |
5,954,899
|
Sales and marketing
|
| |
3,395
|
| |
346,175
|
General and administrative
|
| |
4,688,084
|
| |
8,094,917
|
Total operating expenses
|
| |
5,997,393
|
| |
14,049,816
|
Loss from operations
|
| |
(5,621,453)
|
| |
(13,089,363)
|
|
| |
For the Three Months
Ended March 31,
|
| |
For the year
ended,
December 31,
|
|
| |
2021
|
| |
2020
|
Other income (expense):
|
| |
|
| |
|
Loss on debt extinguishment
|
| |
—
|
| |
(317,757)
|
Interest expense
|
| |
(388,513)
|
| |
(1,707,084)
|
Foreign exchange gain
|
| |
142
|
| |
56,690
|
Change in value of warrant liability
|
| |
—
|
| |
(426,130)
|
Total other expense
|
| |
(388,371)
|
| |
(2,394,061)
|
Net loss
|
| |
(6,009,824)
|
| |
(15,483,424)
|
Net loss attributable to noncontrolling interests
|
| |
39,416
|
| |
39,416
|
Net loss attributable to Cleveland BioLabs, Inc.
|
| |
$(5,970,408)
|
| |
(15,444,008)
|
Net loss attributable to common stockholders per share of common stock, basic and diluted
|
| |
$(0.18)
|
| |
$(0.47)
|
Weighted average number of shares used in calculating net loss per share, basic and diluted
|
| |
32,633,112
|
| |
32,633,112
|
|
| |
As of
March 31,
2021
|
| |
As of
December 31,
2020
|
Unaudited Pro Forma Combined Balance Sheet Data:
|
| |
|
| |
|
Total current liabilities
|
| |
$10,169,290
|
| |
$8,363,540
|
Non-current liabilities
|
| |
15,685,262
|
| |
703,504
|
Total liabilities
|
| |
$25,854,552
|
| |
$9,067,044
|
Stockholders’ equity:
|
| |
|
| |
|
Preferred stock, $.005 par value; 1,000,000 shares authorized as of December 31, 2020 and March 31, 2021
|
| |
—
|
| |
—
|
Common stock, $.005 par value; 150,000,000 shares authorized as of December 31, 2020 and March 31, 2021; 32,633,112 shares issued and outstanding as of December 31, 2020 and March 31, 2021
|
| |
163,166
|
| |
163,166
|
Additional paid-in capital
|
| |
98,447,843
|
| |
76,779,095
|
Accumulated other comprehensive loss
|
| |
(690,864)
|
| |
(685,680)
|
Accumulated deficit
|
| |
(32,917,967)
|
| |
(27,631,321)
|
Total Cleveland BioLabs, Inc. stockholders’ equity
|
| |
65,002,178
|
| |
48,625,260
|
Noncontrolling interest in stockholders’ equity
|
| |
4,961,870
|
| |
4,973,465
|
Total stockholders’ equity
|
| |
69,964,048
|
| |
53,598,725
|
Total liabilities and stockholders’ equity
|
| |
$95,818,600
|
| |
$62,665,769
|
|
| |
Three Months
Ended
March 31,
2021
|
| |
Year Ended
December 31,
2020
|
Cleveland BioLabs Historical Per Common Share Data:
|
| |
|
| |
|
Basic and diluted net loss per share
|
| |
$(0.04)
|
| |
$(0.19)
|
Book value per share
|
| |
1.00
|
| |
$0.16
|
Cytocom Historical Per Common Share Data:
|
| |
|
| |
|
Basic and diluted net loss per share
|
| |
$(0.22)
|
| |
$(0.56)
|
Book value per share
|
| |
$(0.19)
|
| |
$(0.17)
|
Combined Company Pro Forma Per Common Share Data:
|
| |
|
| |
|
Basic and diluted net loss per share
|
| |
$(0.18)
|
| |
$(0.47)
|
Book value per share
|
| |
$2.14
|
| |
$1.64
|
•
|
if the Merger Agreement is terminated under specified circumstances, Cleveland Biolabs may be required to pay Cytocom a termination fee of $300,000 and in some circumstances one party may be required to pay the other party the other party’s expenses up to $200,000;
|
•
|
the price of Cleveland BioLabs common stock may decline and could fluctuate significantly; and
|
•
|
costs related to the merger, such as financial advisor, legal and accounting fees, which Cleveland BioLabs estimates will total approximately $100,000, $600,000, and $50,000, respectively, which must be paid even if the merger is not consummated.
|
•
|
the initiation of, material developments in, or conclusion of litigation to enforce or defend its intellectual property rights or defend against claims involving the intellectual property rights of others;
|
•
|
the entry into, or termination of, key agreements, including commercial partner agreements;
|
•
|
announcements by commercial partners or competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments;
|
•
|
adverse publicity relating to the combined company’s product candidates, including with respect to other products and potential products in that market;
|
•
|
the introduction of technological innovations or new therapies that compete with its future products;
|
•
|
the loss of key employees;
|
•
|
future sales of its common stock;
|
•
|
general and industry-specific economic conditions that may affect its research and development expenditures;
|
•
|
the failure to meet industry analyst expectations; and
|
•
|
period-to-period fluctuations in financial results.
|
•
|
Certain current members of the Cleveland BioLabs board of directors will continue as directors of the combined company after the effective time of the merger, and, following the closing of the merger, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Cleveland BioLabs non-employee director compensation policy following the effective time of the merger.
|
•
|
Under the Merger Agreement, Cleveland BioLabs’ directors and executive officers are entitled to continued indemnification and expense advancement.
|
•
|
results of clinical trials and preclinical studies of the combined company’s product candidates, or those of the combined company’s competitors or the combined company’s existing or future collaborators;
|
•
|
failure to meet or exceed financial and development projections the combined company may provide to the public;
|
•
|
failure to meet or exceed the financial and development projections of the investment community;
|
•
|
if the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts;
|
•
|
announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by the combined company or its competitors;
|
•
|
the entry into, or termination of, key agreements, including key licensing or collaboration agreements;
|
•
|
actions taken by regulatory agencies with respect to the combined company’s product candidates, clinical studies, manufacturing process or sales and marketing terms;
|
•
|
disputes or other developments relating to proprietary rights, including patents, litigation matters, and the combined company’s ability to obtain patent protection for its technologies;
|
•
|
additions or departures of key personnel;
|
•
|
significant lawsuits, including patent or stockholder litigation;
|
•
|
if securities or industry analysts do not publish research or reports about the combined company’s business, or if they issue adverse or misleading opinions regarding its business and stock;
|
•
|
changes in the market valuations of similar companies;
|
•
|
general market or macroeconomic conditions or market conditions in the pharmaceutical and biotechnology sectors;
|
•
|
sales of securities by the combined company or its securityholders in the future;
|
•
|
if the combined company fails to raise an adequate amount of capital to fund its operations and continued development of its product candidates;
|
•
|
trading volume of the combined company’s common stock;
|
•
|
announcements by competitors of new commercial products, clinical progress or lack thereof, significant contracts, commercial relationships or capital commitments;
|
•
|
adverse publicity relating to product candidates similar to those produced by the combined company;
|
•
|
the introduction of technological innovations or new therapies that compete with the products and services of the combined company; and
|
•
|
period-to-period fluctuations in the combined company’s financial results.
|
•
|
the inability to successfully combine the businesses of Cleveland BioLabs in a manner that permits the combined company to achieve the synergies anticipated to result from the merger, which would result in the anticipated benefits of the merger not being realized partly or wholly in the time frame currently anticipated or at all;
|
•
|
complexities associated with managing the combined businesses;
|
•
|
integrating personnel from the two companies;
|
•
|
creation of uniform standards, controls, procedures, policies and information systems;
|
•
|
potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the merger; and
|
•
|
performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations.
|
•
|
the number and characteristics of the product candidates Cleveland BioLabs pursues;
|
•
|
the scope, progress, results, and costs of researching and developing its product candidates, and conducting pre-clinical and clinical trials;
|
•
|
the timing of, and the costs involved in, obtaining regulatory approvals for its product candidates;
|
•
|
the cost of commercialization activities for any of its product candidates that are approved for sale, including marketing, sales, and distribution costs;
|
•
|
the cost of manufacturing its product candidates and any products Cleveland BioLabs successfully commercializes;
|
•
|
its ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements;
|
•
|
the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims, including litigation costs and the outcome of such litigation;
|
•
|
the success of the pre Emergency Use Authorization (“pre-EUA”) submission Cleveland BioLabs made with the FDA, and any future submissions in the U.S., E.U., and other countries that Cleveland BioLabs may make; and
|
•
|
the timing, receipt, and amount of sales of, or royalties on, its future products, if any.
|
•
|
its ability to obtain adequate sources of continued financing;
|
•
|
its ability to obtain approval for, and if approved, to successfully commercialize its product candidates;
|
•
|
its ability to successfully enter into license, development or other partnership agreements with third-parties for the development and/or commercialization of one or more of its product candidates;
|
•
|
its R&D efforts, including the timing and cost of clinical trials; and
|
•
|
its ability to enter into favorable alliances with third-parties who can provide substantial capabilities in clinical development, manufacturing, regulatory affairs, sales, marketing, and distribution.
|
•
|
preclinical or clinical study results may show the product to be less effective than desired (e.g., a study may fail to meet its primary objectives) or to have harmful or problematic side effects;
|
•
|
it fails to receive the necessary regulatory approvals or there may be a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies, length of time to achieve study endpoints, additional time requirements for data analysis or pre-EUA, MAA, NDA, or BLA preparation, discussions with the FDA, EMA, and other regulatory agencies, and their request for additional preclinical or clinical data or unexpected safety or manufacturing issues;
|
•
|
its contract laboratories fail to follow good laboratory practices or sufficient quantities of the drug are not available for clinical studies or commercialization;
|
•
|
it fails to receive funding necessary for the development of one or more of its products;
|
•
|
they fail to conform to a changing standard of care for the diseases they seek to treat;
|
•
|
they are less effective or more expensive than current or alternative treatment methods;
|
•
|
patients withdraw or die during a clinical trial for a variety of reasons, including adverse events associated with the advanced stage of their disease and medical problems that may or may not be related to Cleveland BioLabs’ products or product candidates;
|
•
|
the clinical or animal trial design, although approved, is inadequate to demonstrate safety and/or efficacy;
|
•
|
the third-party clinical investigators or contract organizations do not perform Cleveland BioLabs’ clinical or animal studies on its anticipated schedule or consistent with the study protocol or do not perform data collection and analysis in a timely or accurate manner;
|
•
|
the economic feasibility of the product is not attainable due to high manufacturing costs, pricing or reimbursement issues, or other factors;
|
•
|
one or more of Cleveland BioLabs’ financial partners in its subsidiaries or joint ventures and Cleveland BioLabs do not agree on the development strategy of its products; or
|
•
|
proprietary rights of others and their competing products and technologies may prevent its product from being commercialized.
|
•
|
regulators or Institutional Review Boards (“IRBs”) may not authorize it to commence a clinical trial, conduct a clinical trial at a prospective trial site or continue a clinical trial following amendment of a clinical trial protocol or an IACUC may not authorize Cleveland BioLabs to commence an animal study at a prospective study site;
|
•
|
it may decide, or regulators may require Cleveland BioLabs, to conduct additional preclinical or clinical studies, or it may abandon projects that it expects to be promising, if its preclinical tests, clinical trials or animal efficacy studies produce negative or inconclusive results;
|
•
|
it may have to suspend or terminate its clinical trials if the participants are being exposed to unacceptable safety risks;
|
•
|
regulators or IRBs may require that Cleveland BioLabs hold, suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or if it is believed that the clinical trials present an unacceptable safety risk to the patients enrolled in Cleveland BioLabs’ clinical trials;
|
•
|
the cost of Cleveland BioLabs’ clinical trials or animal studies could escalate and become cost prohibitive;
|
•
|
any regulatory approval Cleveland BioLabs ultimately obtains may be limited or subject to restrictions or post-approval commitments that render the product not commercially viable;
|
•
|
Cleveland BioLabs may not be successful in recruiting a sufficient number of qualifying subjects for its clinical trials or certain animals used in its animal studies or facilities conducting its studies may not be available at the time that it plans to initiate a study;
|
•
|
the effects of Cleveland BioLabs’ product candidates may not be the desired effects, may include undesirable side effects, or the product candidates may have other unexpected characteristics; and
|
•
|
Cleveland BioLabs’ collaborators that conduct its clinical or pivotal animal studies could go out of business and not be available for FDA inspection when Cleveland BioLabs submits its product for approval.
|
•
|
contract manufacturers may encounter difficulties in achieving volume production, quality control, and quality assurance and also may experience shortages in qualified personnel and obtaining active ingredients for Cleveland BioLabs’ product candidates, including delays or shortages due to limited supply or capacity of production facilities as a result of the COVID-19 pandemic;
|
•
|
if, for any circumstance, Cleveland BioLabs is required to change manufacturers, it could be faced with significant monetary and lost opportunity costs with switching manufacturers. Furthermore, such change
|
•
|
contract manufacturers are subject to ongoing periodic, unannounced inspection by the FDA and state and foreign agencies or their designees to ensure strict compliance with GMPs and other governmental regulations and corresponding foreign standards. Cleveland BioLabs does not have control over compliance by its contract manufacturers with these regulations and standards. Its contract manufacturers may not be able to comply with GMPs and other FDA requirements or other regulatory requirements outside the U.S. Failure of contract manufacturers to comply with applicable regulations could result in delays, suspensions or withdrawal of approvals, seizures or recalls of product candidates and operating restrictions, any of which could significantly and adversely affect Cleveland BioLabs’ business;
|
•
|
contract manufacturers might not be able or refuse to fulfill Cleveland BioLabs’ commercial or clinical trial needs, which would require Cleveland BioLabs to seek new manufacturing arrangements and may result in substantial delays in meeting market or clinical trial demands;
|
•
|
Cleveland BioLabs’ product costs may increase if its manufacturers pass their increasing costs of manufacture on to Cleveland BioLabs;
|
•
|
if Cleveland BioLabs’ contract manufacturers do not successfully carry out their contractual duties or meet expected deadlines, it will not be able to obtain or maintain regulatory approvals for its products and product candidates and will not be able to successfully commercialize its products and product candidates. In such event, Cleveland BioLabs may not be able to locate any necessary acceptable replacement manufacturers or enter into favorable agreements with such replacement manufacturers in a timely manner, if at all; and
|
•
|
contract manufacturers may breach the manufacturing agreements that Cleveland BioLabs has with them because of factors beyond its control or may terminate or fail to renew a manufacturing agreement based on their own business priorities at a time that is costly or inconvenient to Cleveland BioLabs.
|
•
|
perceptions by members of the government healthcare community, including physicians, about the safety and effectiveness of Cleveland BioLabs’ drugs;
|
•
|
published studies demonstrating the safety and effectiveness of Cleveland BioLabs’ drugs;
|
•
|
adequate reimbursement for Cleveland BioLabs’ products from payors; and
|
•
|
effectiveness of marketing and distribution efforts by Cleveland BioLabs and its licensees and distributors, if any.
|
•
|
the need to devote substantial time and attention of management and key employees to the preparation of bids and proposals for contracts that may not be awarded to Cleveland BioLabs;
|
•
|
the need to accurately estimate the resources and cost structure that will be required to perform any contract that it might be awarded;
|
•
|
the risk that the government will issue a request for proposal to which it would not be eligible to respond;
|
•
|
the risk that third parties may submit protests to its responses to requests for proposal that could result in delays or withdrawals of those requests for proposal;
|
•
|
the expenses that it might incur and the delays that it might suffer if its competitors protest or challenge contract awards made to it pursuant to competitive bidding and the risk that any such protest or challenge could result in the resubmission of bids based on modified specifications, or in termination, reduction or modification of the awarded contract; and
|
•
|
the risk that review of its proposal or award of a contract or an option to an existing contract could be significantly delayed for reasons including, but not limited to, the need for it to resubmit its proposal or limitations on available funds due to government budget cuts.
|
•
|
suspend or prevent Cleveland BioLabs for a set period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations;
|
•
|
terminate Cleveland BioLabs’ existing contracts;
|
•
|
reduce the scope and value of Cleveland BioLabs’ existing contracts;
|
•
|
audit and object to Cleveland BioLabs’ contract-related costs and fees, including allocated indirect costs;
|
•
|
control and potentially prohibit the export of Cleveland BioLabs’ products; and
|
•
|
change certain terms and conditions in Cleveland BioLabs’ contracts.
|
•
|
delays, difficulties or postponement in enrolling and retaining patients in its clinical trials;
|
•
|
delays, difficulties or postponement in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
|
•
|
diversion of healthcare resources away from the conduct of clinical trials unrelated to infectious diseases;
|
•
|
interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;
|
•
|
limitations in employee resources that would otherwise be focused on the conduct of its research and development efforts, preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with other individuals; or
|
•
|
inability or difficulty in obtaining additional financing or access the financial markets.
|
•
|
decreased demand for its product candidates;
|
•
|
injury to its reputation;
|
•
|
withdrawal of clinical trial participants;
|
•
|
costs of related litigation;
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diversion of its management’s time and attention;
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substantial monetary awards to patients or other claimants;
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loss of revenues;
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the inability to commercialize product candidates; and
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increased difficulty in raising required additional funds in the private and public capital markets.
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its progress in developing and commercializing its products;
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price and volume fluctuations in the overall stock market from time to time;
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fluctuations in stock market prices and trading volumes of similar companies;
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actual or anticipated changes in its earnings or fluctuations in its operating results or in the expectations of securities analysts;
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general economic conditions and trends;
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major catastrophic events;
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sales of large blocks of its stock;
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departures of key personnel;
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changes in the regulatory status of its product candidates, including results of its preclinical studies and clinical trials;
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status of contract and funding negotiations relating to its product candidates;
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events affecting its collaborators;
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events affecting its competitors; announcements of new products or technologies, commercial relationships or other events by Cleveland BioLabs or its competitors;
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the recent COVID-19 pandemic;
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regulatory developments in the U.S. and other countries;
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failure of its common stock to be listed or quoted on the NASDAQ Capital Market, another national market system, or any national stock exchange;
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changes in accounting principles; and
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discussion of Cleveland BioLabs or its stock price by the financial and scientific press and in online investor communities.
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complete research regarding, and nonclinical and clinical development of, Cytocom’s proprietary product candidates;
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formulate appropriate dosing protocols and drug preparation methods;
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obtain regulatory approvals and marketing authorizations for product candidates for which Cytocom completes clinical trials;
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develop sustainable and scalable manufacturing processes, including establishing and maintaining commercially viable supply relationships with third parties;
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compliantly launch and commercialize product candidates for which Cytocom obtains regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor;
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obtain market acceptance of Cytocom’s product candidates and their routes of administration as viable treatment options;
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identify, assess, acquire and/or develop new product candidates;
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address any competing technological and market developments;
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negotiate and maintain favorable terms in any collaboration, licensing or other arrangements into which Cytocom may enter;
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maintain, protect and expand Cytocom’s portfolio of intellectual property rights, including patents, trade secrets and know-how; and
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attract, hire and retain qualified personnel.
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the type, scope, progress, expansions, results, costs and timing of, Cytocom’s clinical trials of its product candidates which Cytocom is pursuing or may choose to pursue in the future;
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the costs and timing of manufacturing for Cytocom’s product candidates, including commercial manufacturing if any of Cytocom’s product candidates is approved;
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the costs, timing and outcome of regulatory review of Cytocom’s product candidates, including the possibility that applicable regulators may require that Cytocom perform more studies than those that are currently expected;
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the costs of obtaining, maintaining and enforcing patents and other intellectual property rights;
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the number and characteristics of product candidates that Cytocom may in-license and develop;
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the costs associated with hiring additional personnel and consultants as clinical activities increase;
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the timing and amount of the milestone or other payments Cytocom must make to the licensors and other third parties from whom it has in-licensed its acquired product candidates;
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the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved;
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Cytocom’s ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;
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the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;
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cash requirements of any future acquisitions and/or the development of other product candidates; and
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the time and cost necessary to respond to technological and market developments.
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delays or difficulties in enrolling patients in its planned clinical trials;
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delays or difficulties in clinical site initiation or authorizations, including difficulties in recruiting clinical site investigators and clinical site staff;
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diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as clinical trial sites and hospital staff supporting the conduct of Cytocom’s clinical trials or absenteeism due to the COVID-19 pandemic that reduces site resources;
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interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data;
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risk that participants enrolled in Cytocom’s clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events or patient withdrawals from trials;
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limitations in employee resources that would otherwise be focused on conducting clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
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delays in clinical sites receiving the supplies and materials needed to conduct clinical trials;
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interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in clinical trials;
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changes in local regulations as part of a response to the COVID-19 coronavirus pandemic which may require Cytocom to change the ways in which clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
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interruptions or delays in preclinical studies due to restricted or limited operations at research and development laboratory facilities;
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delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and
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refusal of the FDA to accept data from clinical trials in affected geographies outside the U.S.
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Cytocom has incurred and expects to continue to incur significant expenses related to the proposed acquisition even if the acquisition is not consummated;
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Cytocom’s CROs, CMOs, partners and other investors in general may view the failure to consummate the acquisition as a poor reflection on its business or prospects;
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some of Cytocom’s CROs, CMOs and other business partners may seek to change or terminate their relationships with Cytocom as a result of the proposed acquisition; and
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Cytocom’s management team may be distracted from day to day operations as a result of the proposed acquisition.
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Cytocom may fail to reach an agreement with regulators or IRBs regarding the scope, design, or implementation of clinical trials;
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the FDA, comparable foreign regulators or IRBs may not authorize Cytocom to commence a clinical trial, to conduct a clinical trial at a prospective trial site or to amend trial protocols, or such regulators or IRBs may require that Cytocom modify or amend its clinical trial protocols in ways that make further clinical trials impractical or not financially prudent;
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Cytocom may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites or CROs;
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Cytocom may be unable to initiate or complete preclinical studies or clinical trials on time or at all due to the impacts of the COVID-19 pandemic, and the spread of COVID-19 may affect the operations of research sites, CROs, IRBs, or key governmental agencies, such as the FDA, which may delay the development of Cytocom’s current or future product candidates;
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the supply or quality of raw materials or manufactured product candidates (whether provided by Cytocom or third parties) or other materials necessary to conduct clinical trials of Cytocom’s product candidates may be insufficient, inadequate or not available at an acceptable cost, or in a timely manner, or Cytocom may experience interruptions in supply;
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the number of patients required for clinical trials of Cytocom’s current and future product candidates may be larger than Cytocom anticipates, enrollment in these clinical trials may be slower than Cytocom anticipates or participants may drop out of these clinical trials or be lost to follow-up at a higher rate than Cytocom anticipates;
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patients that enroll in Cytocom’s studies may misrepresent their eligibility or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients from the study or clinical trial, increase the needed enrollment size for the clinical trial or extend its duration;
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clinical trial participants may elect to participate in alternative clinical trials sponsored by Cytocom’s competitors with product candidates that treat the same indications as Cytocom’s product candidates;
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Cytocom’s third-party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or meet their contractual obligations to Cytocom in a timely manner, or at all, and Cytocom may be required to engage in additional clinical trial site monitoring to review Cytocom’s contractors’ performance;
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Cytocom, regulators, or IRBs may require that Cytocom or its investigators suspend or terminate clinical trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects, or other unexpected characteristics of the product candidate, or if such undesirable effects are found to be caused by a chemically or mechanistically similar therapeutic or therapeutic candidate;
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clinical trials of Cytocom’s current and future product candidates may produce negative or inconclusive results, or Cytocom’s studies may fail to reach the necessary level of statistical significance, and Cytocom may decide, or regulators may require it, to conduct additional clinical trials, analyses, reports, data, or preclinical trials or abandon product development programs;
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regulators may revise the requirements for approving Cytocom’s product candidates, or such requirements may not be as Cytocom expects or statutes, regulations clinical trial or site policies could be amended or new ones could be adopted;
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the cost of clinical trials of Cytocom’s current and future product candidates may be greater than anticipated or Cytocom may have insufficient funds or resources to pursue or complete certain aspects of its clinical trial program or to do so within the timeframes planned;
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Cytocom may have delays in adding new investigators or clinical trial sites, or it may experience a withdrawal of clinical trial sites;
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there may be regulatory questions or disagreements regarding interpretations of data and results, or new information may emerge regarding Cytocom’s current and future product candidates;
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the FDA or comparable foreign regulatory authorities may not accept data from studies with clinical trial sites in foreign countries;
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the FDA or comparable foreign regulatory authorities may disagree with Cytocom’s proposed indications, fail to approve or subsequently find fault with the manufacturing processes or Cytocom’s manufacturing facilities for clinical and future commercial supplies, and may take longer than Cytocom anticipates to review any regulatory submissions it may make for its current or any future product candidates;
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Cytocom may not be able to demonstrate that a product candidate provides an advantage over current standards of care or current or future competitive therapies in development; and
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regarding trials managed by Cytocom’s existing or any future collaborators, Cytocom’s collaborators may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but potentially suboptimal for Cytocom.
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regulatory authorities may withdraw, suspend or limit approvals of such product;
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Cytocom may be required to recall a product or change the way such product is administered to patients;
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regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication;
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Cytocom may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients;
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Cytocom may be required to change the way a product is distributed or administered, conduct additional clinical trials or change the labeling of a product or be required to conduct additional post-marketing studies or surveillance;
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Cytocom could be sued and held liable for harm caused to patients;
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sales of the product may decrease significantly or the product could become less competitive;
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Cytocom may decide to remove the product from the marketplace; and
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Cytocom’s reputation may suffer.
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such authorities may disagree with the scope, design or implementation of Cytocom’s clinical trials;
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negative or ambiguous results from Cytocom’s clinical trials or results may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval;
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serious and unexpected drug-related side effects may be experienced by participants in Cytocom’s clinical trials or by individuals using drugs similar to Cytocom’s product candidates;
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the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which Cytocom seeks approval;
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such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the U.S.;
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Cytocom may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
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such authorities may disagree with Cytocom’s interpretation of data from preclinical studies or clinical trials;
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such authorities may have regulatory questions regarding interpretations of data and results and the emergence of new information regarding Cytocom’s product candidates or other products;
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such authorities may make requests for additional analyses, reports, data, non-clinical and preclinical studies and clinical trials;
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such authorities may not agree that the data collected from clinical trials of Cytocom’s product candidates are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the U.S. or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials;
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such authorities may disagree regarding the formulation, labeling and/or the specifications of Cytocom’s product candidates;
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approval may be granted only for indications that are significantly more limited than what Cytocom applies for and/or with other significant restrictions on distribution and use;
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such authorities may find deficiencies in the manufacturing processes or facilities of Cytocom’s third-party manufacturers with which Cytocom contracts for clinical and commercial supplies; or the approval policies;
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regulations of such authorities may significantly change in a manner rendering Cytocom or any of Cytocom’s potential future collaborators’ clinical data insufficient for approval; or
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such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission.
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the demand for Cytocom’s product candidates, if they obtain regulatory approval;
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Cytocom’s ability to receive or set a price that it believes is fair for its products;
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Cytocom’s ability to generate revenue and achieve or maintain profitability;
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the level of taxes that Cytocom is required to pay; and
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the availability of capital.
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•
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the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or providing any remuneration (including any kickback, bribe or certain rebates), directly or indirectly, overtly or covertly, in cash or in kind, in return for, either the referral of an individual or the purchase, lease, or order, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service, for which payment may be made, in whole or in part, 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 in order 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 civil False Claims Act;
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the federal false claims and civil monetary penalties laws, including the civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making or causing to be made a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services. 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 in order to have committed a violation;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations, also impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information without appropriate authorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers as well as their business associates that perform certain services for or on their behalf involving the use or disclosure of individually identifiable health information;
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the federal Physician Payments Sunshine Act, which requires certain 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 Centers for Medicare and Medicaid Services, or CMS, information related to payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to Cytocom’s business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers, or by the patients themselves; 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, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; state and local laws that require the registration of pharmaceutical sales representatives; state and foreign laws governing the privacy and
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launching commercial sales of Cytocom’s product candidates, whether alone or in collaboration with others;
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receiving an approved label with claims that are necessary or desirable for successful marketing, and that does not contain safety or other limitations that would impede Cytocom’s ability to market its product candidates;
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creating market demand for Cytocom’s product candidates through marketing, sales and promotion activities;
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hiring, training, and deploying a sales force or contracting with third parties to commercialize Cytocom’s product candidates;
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manufacturing, either on Cytocom’s own or through third parties, product candidates in sufficient quantities and at acceptable quality and cost to meet commercial demand at launch and thereafter;
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•
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establishing and maintaining agreements with wholesalers, distributors, and group purchasing organizations on commercially reasonable terms;
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•
|
creating partnerships with, or offering licenses to, third parties to promote and sell product candidates in foreign markets where Cytocom receives marketing approval;
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•
|
maintaining patent and trade secret protection and regulatory exclusivity for Cytocom’s product candidates;
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•
|
achieving market acceptance of Cytocom’s product candidates by patients, the medical community, and third-party payors;
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•
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achieving appropriate reimbursement for Cytocom’s product candidates;
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•
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effectively competing with other therapies; and
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•
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maintaining an acceptable tolerability profile of Cytocom’s product candidates following launch.
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•
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demonstration of clinical efficacy and safety compared to other more-established products;
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•
|
the indications for which Cytocom’s product candidates are approved;
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•
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the limitation of Cytocom’s targeted patient population and other limitations or warnings contained in any FDA-approved labeling;
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•
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acceptance of a new treatment for the relevant indication by healthcare providers and their patients;
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•
|
the pricing and cost-effectiveness of Cytocom’s products, as well as the cost of treatment with Cytocom’s products in relation to alternative treatments and therapies;
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•
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Cytocom’s ability to obtain and maintain sufficient third-party coverage and adequate reimbursement from government healthcare programs, including Medicare and Medicaid, private health insurers and other third-party payors;
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•
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the willingness of patients to pay all, or a portion of, out-of-pocket costs associated with Cytocom’s products in the absence of sufficient third-party coverage and adequate reimbursement;
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•
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the safety, efficacy, and other potential advantages over, and the availability of, alternative treatments already used or that may later be approved;
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•
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any restrictions on the use of Cytocom’s products, and the prevalence and severity of any adverse effects;
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•
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potential product liability claims;
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•
|
the timing of market introduction of Cytocom’s products as well as competitive products;
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•
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the effectiveness of Cytocom’s or any of its potential future collaborators’ sales and marketing strategies;
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•
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any restrictions on the use of Cytocom’s products, if approved, together with other medications; and
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•
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any unfavorable publicity relating to the product.
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•
|
the inability to recruit, train, manage, and retain adequate numbers of effective sales and marketing personnel;
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•
|
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe the product candidates in the CYTO-200 and CYTO-400 AIMS programs or any of its other product candidates;
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•
|
Cytocom’s inability to effectively oversee a geographically dispersed sales and marketing team;
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•
|
the costs associated with training sales and marketing personnel on legal and regulatory compliance matters and monitoring their actions;
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•
|
an inability to secure adequate coverage and reimbursement by government and private health plans;
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•
|
the clinical indications for which the products are approved and the claims that Cytocom may make for the products;
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•
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limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling;
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•
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any distribution and use restrictions imposed by the FDA or comparable foreign regulatory authorities or to which Cytocom agrees as part of a mandatory REMS, or voluntary risk management plan;
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•
|
liability for sales or marketing personnel who fail to comply with the applicable legal and regulatory requirements;
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•
|
the lack of complimentary products to be offered by sales personnel, which may put Cytocom at a competitive disadvantage relative to companies with more extensive product lines; and
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•
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unforeseen costs and expenses associated with creating an independent sales and marketing organization or engaging a contract sales organization.
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•
|
restrictions on the marketing or manufacturing of Cytocom’s products, withdrawal of the product from the market or voluntary or mandatory product recalls;
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•
|
restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials;
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•
|
fines, restitution, disgorgement of profits or revenues, warning letters, untitled letters or holds on clinical trials;
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•
|
refusal by the FDA to approve pending applications or supplements to approved applications filed by Cytocom or suspension or revocation of approvals;
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•
|
product seizure or detention, or refusal to permit the import or export of Cytocom’s products; and
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•
|
injunctions or the imposition of civil or criminal penalties.
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•
|
different regulatory requirements for approval of drugs in foreign countries;
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•
|
different medical practices and customs in foreign countries affecting acceptance in the marketplace;
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•
|
reduced protection for intellectual property rights;
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•
|
the existence of additional third-party patent rights of potential relevance to Cytocom’s business;
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•
|
unexpected changes in tariffs, trade barriers and regulatory requirements;
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•
|
economic weakness, including inflation, or political instability in particular foreign economies and markets;
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•
|
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
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•
|
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;
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•
|
foreign reimbursement, pricing and insurance regimes;
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•
|
workforce uncertainty in countries where labor unrest is common;
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•
|
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
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•
|
business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
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•
|
an inability to continue clinical trials of the CYTO-200 and CYTO-400 AIMS programs or any of Cytocom’s other product candidates currently under development;
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•
|
delay in submitting regulatory applications, or receiving marketing approvals, for Cytocom’s product candidates;
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•
|
subjecting third-party manufacturing facilities or Cytocom’s manufacturing facilities to additional inspections by regulatory authorities;
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•
|
requirements to cease development or to recall batches of Cytocom’s product candidates; and
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•
|
in the event of approval to market and commercialize any of Cytocom’s product candidates or an inability to meet commercial demands for such product candidates.
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•
|
failure of third-party manufacturers to comply with regulatory requirements and maintain quality assurance;
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•
|
breach of the manufacturing agreement by the third party;
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•
|
failure to manufacture Cytocom’s product according to its specifications;
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•
|
failure to manufacture Cytocom’s product according to its schedule or at all;
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•
|
raw materials and components used in the manufacturing process, particularly those for which Cytocom has no other source or supplier, being unavailable or unsuitable or unacceptable for use due to material or component defects;
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•
|
misappropriation of Cytocom’s proprietary information, including its trade secrets and know-how; and
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•
|
termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for Cytocom.
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•
|
the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to Cytocom’s product candidates, which may change from time to time;
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•
|
coverage and reimbursement policies with respect to Cytocom’s product candidates, if approved, and potential future drugs that compete with such products;
|
•
|
the cost of manufacturing Cytocom’s product candidates, which may vary depending on the quantity of production and the terms of Cytocom’s agreements with third-party manufacturers;
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•
|
the timing and amount of the milestone or other payments Cytocom must make to the licensors and other third parties from whom it has in-licensed or acquired its product candidates;
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•
|
expenditures that Cytocom may incur to acquire, develop or commercialize additional product candidates and technologies;
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•
|
the level of demand for any approved products, which may vary significantly;
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•
|
future accounting pronouncements or changes in accounting policies; and
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•
|
the timing and success or failure of clinical trials for Cytocom’s product candidates or competing product candidates, or any other change in the competitive landscape of the biopharmaceutical industry, including consolidation among Cytocom’s competitors or partners.
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•
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identifying, recruiting, integrating, maintaining, and motivating additional employees;
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•
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managing internal development efforts effectively, including the clinical and FDA or other comparable authority review process for Cytocom’s product candidates, while complying with its contractual obligations to contractors and other third parties; and
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•
|
improving Cytocom’s operational, financial and management controls, reporting systems and procedures.
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•
|
decreased demand for Cytocom’s products;
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•
|
injury to Cytocom’s reputation and significant negative media attention;
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•
|
withdrawal of clinical trial participants and inability to continue clinical trials;
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•
|
initiation of investigations by regulators;
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•
|
costs to defend the related litigation;
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•
|
a diversion of management’s time and the Cytocom’s resources;
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•
|
substantial monetary awards to trial participants or patients;
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•
|
product recalls, withdrawals or labeling, marketing or promotional restrictions;
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•
|
significant negative financial impact;
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•
|
exhaustion of any available insurance and Cytocom’s capital resources; and
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•
|
the inability to commercialize Cytocom’s product candidates.
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•
|
diversion of management time and focus from operating Cytocom’s business to addressing acquisition integration challenges;
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•
|
coordination of research and development efforts;
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•
|
retention of key employees from the acquired company;
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•
|
changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
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•
|
cultural challenges associated with integrating employees from the acquired company into Cytocom’s organization;
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•
|
the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
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•
|
liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violation of laws, commercial disputes, tax liabilities and other known liabilities;
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•
|
unanticipated write-offs or charges; and
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•
|
litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
|
•
|
the scope of rights granted under the license agreement and other interpretation-related issues;
|
•
|
whether and the extent to which Cytocom’s technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
|
•
|
Cytocom’s right to sublicense patent and other rights to third parties under collaborative development relationships;
|
•
|
Cytocom’s diligence obligations with respect to the use of the licensed technology in relation to Cytocom’s development and commercialization of Cytocom’s product candidates and what activities satisfy those diligence obligations;
|
•
|
royalty, milestone or other payment obligations that may result from the advancement or commercial sale of any of Cytocom’s product candidates; and
|
•
|
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Cytocom’s licensors and Cytocom.
|
•
|
others may be able to make or use compounds that are similar to the active compositions of Cytocom’s product candidates but that are not covered by the claims of Cytocom’s patents;
|
•
|
the APIs in Cytocom’s current product candidates will eventually become commercially available in generic drug products, and no patent protection may be available with regard to formulation or method of use;
|
•
|
Cytocom’s licensors, as the case may be, may fail to meet Cytocom’s obligations to the U.S. government regarding any in-licensed patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights;
|
•
|
Cytocom’s licensors, as the case may be, might not have been the first to file patent applications for certain inventions;
|
•
|
others may independently develop similar or alternative technologies or duplicate any of Cytocom’s technologies;
|
•
|
it is possible that Cytocom’s pending patent applications will not result in issued patents;
|
•
|
it is possible that there are prior public disclosures that could invalidate Cytocom’s owned or in-licensed patents, as the case may be, or parts of Cytocom’s owned or in-licensed patents;
|
•
|
it is possible that others may circumvent Cytocom’s owned or in-licensed patents;
|
•
|
it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering Cytocom’s product candidates or technology similar to Cytocom’s;
|
•
|
the laws of foreign countries may not protect Cytocom’s or Cytocom’s licensors’, as the case may be, proprietary rights to the same extent as the laws of the U.S.;
|
•
|
the claims of Cytocom’s owned or in-licensed issued patents or patent applications, if and when issued, may not adequately cover Cytocom’s product candidates;
|
•
|
Cytocom’s owned or in-licensed issued patents may not provide Cytocom with any competitive advantages, may be narrowed in scope, or be held invalid or unenforceable as a result of legal challenges by third parties;
|
•
|
the inventors of Cytocom’s owned or in-licensed patents or patent applications may become involved with competitors, develop products or processes that design around Cytocom’s patents, or become hostile to Cytocom or the patents or patent applications on which they are named as inventors;
|
•
|
it is possible that Cytocom’s owned or in-licensed patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable or such omitted individuals may grant licenses to third parties;
|
•
|
Cytocom has engaged in scientific collaborations in the past and will continue to do so in the future and Cytocom’s collaborators may develop adjacent or competing products that are outside the scope of Cytocom’s patents;
|
•
|
Cytocom may not develop additional proprietary technologies for which Cytocom can obtain patent protection;
|
•
|
it is possible that product candidates or diagnostic tests Cytocom develops may be covered by third parties’ patents or other exclusive rights; or
|
•
|
the patents of others may have an adverse effect on Cytocom’s business.
|
•
|
infringement and other intellectual property claims that, regardless of merit, may be expensive and time-consuming to litigate and may divert Cytocom’s management’s attention from its core business;
|
•
|
substantial damages for infringement, which Cytocom may have to pay if a court decides that the product candidate or technology at issue infringes on or violates the third party’s rights, and, if the court finds that the infringement was willful, Cytocom could be ordered to pay treble damages plus the patent owner’s attorneys’ fees;
|
•
|
a court prohibiting Cytocom from developing, manufacturing, marketing or selling Cytocom’s product candidates, or from using Cytocom’s proprietary technologies, unless the third-party licenses its product rights or proprietary technology to Cytocom, which it is not required to do, on commercially reasonable terms or at all;
|
•
|
if a license is available from a third party, Cytocom may have to pay substantial royalties, upfront fees and other amounts, and/or grant cross-licenses to intellectual property rights for Cytocom’s product candidates;
|
•
|
the requirement that Cytocom redesign its product candidates or processes so they do not infringe, which may not be possible or may require substantial monetary expenditures and time; and
|
•
|
there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of Cytocom’s common stock.
|
•
|
diversion of management time and focus from operating Cytocom’s business to addressing acquisition integration challenges;
|
•
|
coordination of research and development efforts;
|
•
|
retention of key employees from the acquired company;
|
•
|
changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
|
•
|
cultural challenges associated with integrating employees from the acquired company into Cytocom’s organization;
|
•
|
the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
|
•
|
liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violation of laws, commercial disputes, tax liabilities and other known liabilities;
|
•
|
unanticipated write-offs or charges; and
|
•
|
litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties.
|
•
|
decreased demand for any product candidates that Cytocom may develop;
|
•
|
injury to Cytocom’s reputation and significant negative media attention;
|
•
|
withdrawal of clinical trial participants;
|
•
|
significant time and costs to defend the related litigation;
|
•
|
substantial monetary awards to trial participants or patients;
|
•
|
loss of revenue;
|
•
|
termination of Cytocom’s collaboration relationships or disputes with its collaborators;
|
•
|
voluntary product recalls, withdrawals or labeling restrictions; and
|
•
|
the inability to commercialize any product candidates that Cytocom may develop.
|
•
|
the risk that the proposed merger may not be consummated in a timely manner or at all, which may adversely affect the business of Cleveland BioLabs and Cytocom and the price of Cleveland BioLabs’ common stock;
|
•
|
the failure of either party to satisfy any of the conditions to the consummation of the proposed merger, including the approval of Cleveland BioLabs’ stockholders;
|
•
|
uncertainties as to the timing of the consummation of the proposed merger;
|
•
|
the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;
|
•
|
the effect of the announcement or pendency of the proposed merger on the business relationships, operating results and business generally of Cleveland BioLabs or Cytocom;
|
•
|
risks that the proposed merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed merger;
|
•
|
risks related to diverting the attention of management of Cleveland BioLabs or Cytocom from each company’s ongoing business operations;
|
•
|
the outcome of any legal proceedings that may be instituted against Cleveland BioLabs or Cytocom related to the Merger Agreement or the proposed merger;
|
•
|
unexpected costs, charges or expenses resulting from the proposed merger;
|
•
|
the risk that as a result of adjustments to the exchange ratio, Cleveland BioLabs and Cytocom’s stockholders could own more or less of the combined company than is currently anticipated;
|
•
|
Cleveland BioLabs’ or Cytocom’s need for additional financing to meet its business objectives;
|
•
|
each of Cleveland BioLabs’ and Cytocom’s history of operating losses;
|
•
|
the substantial doubt expressed by the independent auditors of Cytocom about its ability to continue as a going concern;
|
•
|
the ability of Cleveland BioLabs or Cytocom to successfully develop, obtain regulatory approval for, and commercialize its products in a timely manner;
|
•
|
each company’s plans to research, develop and commercialize its product candidates;
|
•
|
each company’s ability to attract collaborators with development, regulatory and commercialization expertise;
|
•
|
the plans and expectations of Cleveland BioLabs or Cytocom with respect to future clinical trials and commercial scale-up activities;
|
•
|
the reliance by each of Cleveland BioLabs and Cytocom on third-party manufacturers of their product candidates;
|
•
|
the size and growth potential of the markets for the product candidates of each of Cleveland BioLabs and Cytocom, and each of its respective ability to serve those markets;
|
•
|
the rate and degree of market acceptance of each company’s product candidates;
|
•
|
regulatory requirements and developments in the United States, the European Union and foreign countries;
|
•
|
the performance of third-party suppliers and manufacturers;
|
•
|
the success of competing therapies that are or may become available;
|
•
|
the ability of each company to attract and retain key scientific or management personnel;
|
•
|
the historic reliance by Cleveland BioLabs on government funding for a significant portion of its operating costs and expenses;
|
•
|
government contracting processes and requirements;
|
•
|
the exercise of control over Cleveland BioLabs by its largest stockholder;
|
•
|
the geopolitical relationship between the United States and the Russian Federation as well as general business, legal, financial and other conditions within the Russian Federation;
|
•
|
the ability of each of Cleveland BioLabs and Cytocom to obtain and maintain intellectual property protection for its respective product candidates; and
|
•
|
the matters discussed under the section of this proxy statement/prospectus titled “Risk Factors.”
|
1.
|
Approve the issuance of shares of common stock of Cleveland BioLabs to stockholders of Cytocom, pursuant to the terms of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and the change of control resulting from the merger;
|
2.
|
Approve an amendment to the certificate of incorporation of Cleveland BioLabs to effect an increase in the number of authorized shares of common stock, in the form attached as Annex D to this proxy statement/prospectus;
|
3.
|
Consider and vote upon an adjournment of the Cleveland BioLabs special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No.’s 1 and 2; and
|
4.
|
Transact such other business as may properly come before the stockholders at the Cleveland BioLabs special meeting or any adjournment or postponement thereof.
|
•
|
Cleveland BioLabs’ board of directors has determined and believes that the issuance of shares of Cleveland BioLabs’ common stock pursuant to the Merger Agreement is advisable and fair to, in the best interests of, Cleveland BioLabs and its stockholders and has approved such issuance. Cleveland BioLabs’ board of directors unanimously recommends that Cleveland BioLabs stockholders vote “FOR” Proposal No. 1 to approve the issuance of shares of Cleveland BioLabs common stock pursuant to the Merger Agreement and the change of control resulting from the merger.
|
•
|
Cleveland BioLabs’ board of directors has determined and believes that it is in the best interests of Cleveland BioLabs and its stockholders to approve the amendment to the certificate of incorporation of Cleveland BioLabs effecting the increase in the number of authorized shares, as described in this proxy statement/prospectus. Cleveland BioLabs’ board of directors unanimously recommends that Cleveland BioLabs stockholders vote “FOR” Proposal No. 2 to approve the amendment.
|
•
|
Cleveland BioLabs’ board of directors has determined and believes that adjourning the Cleveland BioLabs special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No.’s 1 and 2 is fair to, in the best interests of, and advisable to, Cleveland BioLabs and its stockholders and has approved and adopted the proposal. Cleveland BioLabs’ board of directors unanimously recommends that Cleveland BioLabs stockholders vote “FOR” Proposal No. 3 to adjourn the Cleveland BioLabs special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No.’s 1 and 2.
|
•
|
By Internet. Follow the instructions included on the proxy card included with this proxy statement/prospectus to vote by Internet.
|
•
|
By mobile device using smartphone or tablet. If you choose to vote by mobile device, scan the QR Code imprinted on the proxy card included with this proxy statement/prospectus using either a smartphone or table and you will be taken directly to the Internet voting site.
|
•
|
By mail. Please sign, date, and promptly mail the enclosed proxy card in the postage-paid envelope that has been provided to you.
|
•
|
Electronically at the meeting. If you attend the virtual special meeting, you may vote electronically at the meeting. Further instructions on how to attend, participate in and vote at the virtual special meeting, including how to demonstrate your ownership of our stock as of the record date, are available at www.virtualshareholdermeeting.com/CBLI2021SM. Please note you will only be able to attend, participate, and vote in the meeting using this website.
|
•
|
You may submit another properly completed proxy with a later date by mail or via the internet.
|
•
|
You can provide your proxy instructions via mobile device at a later date.
|
•
|
You may send a written notice that you are revoking your proxy to Cleveland BioLabs’ Corporate Secretary at 73 High Street, Buffalo, New York 14203.
|
•
|
You may attend the Cleveland BioLabs special meeting online and vote by following the instructions at www.virtualshareholdermeeting.com/CBLI2021SM. Simply attending the Cleveland BioLabs special meeting will not, by itself, revoke your proxy.
|
•
|
the belief of Cleveland BioLabs’ board of directors that maintaining Cleveland BioLabs as an independent stand-alone company involved significant risk, taking into account Cleveland BioLabs’ business, operational and financial status and prospects, including its cash position, uncertainty regarding the successful clinical development of Cleveland BioLabs’ drug candidate programs, given their early stage of development, and the need to raise significant additional financing for the future development of its clinical product candidates in a volatile market;
|
•
|
the belief of Cleveland BioLabs’ board of directors, based in part on the judgment, advice and analysis of its special committee, which unanimously recommended approval of the Merger Agreement to the full board, and Cleveland BioLabs management with respect to the potential strategic, financial and operational benefits of the merger, that Cytocom’s multiple promising clinical-stage drug programs in the area of immunotherapy targeting autoimmune, inflammatory and infectious diseases and cancers would result in a greater probability of providing value to Cleveland BioLabs stockholders than Cleveland BioLabs continuing as an independent stand-alone company;
|
•
|
the Cleveland BioLabs board of directors’ consideration of the valuation and business prospects of the other strategic combination candidates, and its collective view that Cytocom was the most attractive candidate for Cleveland BioLabs;
|
•
|
the consideration by the Cleveland BioLabs board of directors that the combined company will be led by a senior management team from Cytocom experienced in clinical drug development under the supervision of an experienced, well-qualified board of directors with representation from each of the current boards of directors of Cleveland BioLabs and Cytocom;
|
•
|
Cleveland BioLabs board of directors’ belief that the combination of the company’s principal drug candidate, entolimod, with Cytocom’s lead clinical programs, from the CYTO-200 portfolio and the CYTO-400 portfolio: CYTO-201 as an adjunct to the standard of care in Pediatric Crohn’s disease, CYTO-205 to prevent the advancement of COVID-19 infected patients from mild to severe disease and CYTO-401 as an adjunct to standard of care therapy to extend the duration of disease remission in patients with pancreatic cancer, and further pipeline candidates in these portfolios for other autoimmune, inflammatory and infectious diseases and cancers would stand a greater likelihood of delivering long-term value to Cleveland BioLabs’ stockholders than Cleveland BioLabs’ current drug development pipeline on a standalone basis;
|
•
|
the possibility that the combined company would be able to take advantage of the potential benefits resulting from the combination of the Cleveland BioLabs public company structure with the Cytocom business to raise additional funds in the future, if necessary;
|
•
|
the ability of stockholders of Cleveland BioLabs to participate in the future growth potential of the combined company following the merger;
|
•
|
the financial analyses and opinion of Cassel Salpeter, including its opinion to the special committee of the board of directors that as of the date of such opinion and based upon and subject to the various
|
•
|
the risks associated with continuing to operate Cleveland BioLabs on a stand-alone basis and the substantial efforts made over a significant period of time by Cleveland BioLabs’ senior management to find strategic alternatives for Cleveland BioLabs to the merger, including the discussions that Cleveland BioLabs management and the Cleveland BioLabs board of directors had in 2019 with other potential strategic transaction candidates.
|
•
|
the exchange ratio formula used to establish the number of shares of Cleveland BioLabs common stock to be issued to securityholders of Cytocom in the merger, which will not fluctuate based on the price of Cleveland BioLabs common stock;
|
•
|
the limited number and nature of the conditions to the Cytocom 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, Cleveland BioLabs and Cytocom under the Merger Agreement to consider certain unsolicited acquisition proposals under certain circumstances should Cleveland BioLabs or Cytocom receive a superior proposal;
|
•
|
the reasonableness of the potential termination fee of $300,000 and related reimbursement of certain transaction expenses of up to $200,000, which could become payable by Cleveland BioLabs if the Merger Agreement is terminated in certain circumstances;
|
•
|
the reasonableness of the potential reimbursement of certain transaction expenses of up to $200,000, which could become payable by Cytocom if the Merger Agreement is terminated in certain circumstances;
|
•
|
the delivery of the written consent of Cytocom’s stockholders necessary to adopt the Merger Agreement thereby approving the merger and related transactions immediately following the execution of the Merger Agreement; 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 possibility that Cleveland BioLabs’ stockholders may not approve the merger proposals;
|
•
|
the fact that certain provisions of the Merger Agreement could have the effect of discouraging proposals for competing transactions involving Cleveland BioLabs, including that under certain circumstances Cleveland BioLabs may have to pay Cytocom a $300,000 termination fee and reimbursement for up to $200,000 in related expenses;
|
•
|
the substantial expenses to be incurred in connection with the merger, including the costs associated with any litigation arising out of the proposed merger;
|
•
|
the possible volatility, at least in the short term, of the trading price of the Cleveland BioLabs common stock resulting from the merger announcement;
|
•
|
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 on the delay or failure to complete the merger on the reputation of Cleveland BioLabs;
|
•
|
the risk to the business of Cleveland BioLabs and its operations and financial results in the event that the merger is not consummated;
|
•
|
the strategic direction of the combined company following the consummation of the merger, which will be determined by a board of directors that will be comprised of a minority of the members of the current Cleveland BioLabs board of directors;
|
•
|
the risk that the financial condition of Cytocom is not as strong as anticipated as a result of Cleveland BioLabs management not being able to review audited financial statements of Cytocom for the fiscal years ended December 31, 2020 or 2019 prior to the signing of the Merger Agreement;
|
•
|
the fact that Cytocom’s product candidates are still in an early stage of development, and accordingly are subject to the risk that they might not ever be successfully developed into products that can be marketed and sold;
|
•
|
the significant dilution to which Cleveland BioLabs’ stockholders will be subject in the event that the merger closes, as well as the additional dilution that would occur upon any subsequent financing transaction involving the combined company; and
|
•
|
various other risks associated with the combined organization and the merger, including those described in the section titled “Risk Factors” in this proxy statement/prospectus.
|
•
|
the Cytocom board’s belief that no alternatives to the merger were reasonably likely to create greater value for Cytocom’s stockholders, after reviewing the various financing and other strategic options to enhance stockholder value that were considered by the Cytocom board;
|
•
|
the cash resources of the combined company expected to be available at the closing of the merger relative to the anticipated cash needs of the combined company;
|
•
|
the potential for access to public capital markets, including sources of capital from a broader range of investors to support the clinical development of its product candidates than it might otherwise 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;
|
•
|
the expectation that the merger would be a more time- and cost-effective means to access capital than other options considered, including an initial public offering which Cytocom was alternatively planning to pursue;
|
•
|
the fact that the issuance of the shares of Cleveland BioLabs common stock issued to Cytocom stockholders will be registered pursuant to the registration statement on Form S-4 of which this proxy statement/prospectus forms a part by Cleveland BioLabs and will become freely tradable for Cytocom’s stockholders who are not affiliates of Cytocom;
|
•
|
the availability of appraisal rights under the DGCL to holders of Cytocom’s 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 Cytocom capital stock as determined by the Delaware Court of Chancery.
|
•
|
the terms and conditions of the Merger Agreement, including, without limitation, the following:
|
○
|
the determination that the expected relative percentage ownership of Cleveland BioLabs’ stockholders and Cytocom’s stockholders in the combined company is appropriate based on the Cytocom board’s assessment of the approximate valuations of Cleveland BioLabs and Cytocom, respectively;
|
○
|
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 to the Cleveland BioLabs 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, Cleveland BioLabs and Cytocom under the Merger Agreement to consider certain unsolicited acquisition proposals under certain circumstances should Cleveland BioLabs or Cytocom receive a superior proposal;
|
○
|
the reasonableness of the potential termination fee of $300,000 and related reimbursement of certain transaction expenses of up to $200,000, which could become payable by Cleveland BioLabs if the Merger Agreement is terminated in certain circumstances;
|
○
|
the reasonableness of the potential reimbursement of certain transaction expenses of up to $200,000, which could become payable by Cytocom if the Merger Agreement is terminated in certain circumstances; 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 possibility that the merger might not be consummate and the potential adverse effect of the public announcement of the merger on the reputation of Cytocom and the ability of Cytocom to obtain financing in the future in the event the merger is not consummated;
|
•
|
The expense reimbursements payable by Cytocom upon the occurrence of certain events, and the potential effect of such expense reimbursement provisions in deterring other potential partners from proposing a competing transaction that may be more advantageous to Cytocom’s shareholders;
|
•
|
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 integrating the businesses;
|
•
|
the additional public company expenses and obligations that Cytocom’s business will be subject to following the merger to which it has not previously been subject as a private company;
|
•
|
various other risks associated with the combined company and the merger, including the risks described in the section titled “Risk Factors” beginning on page 25 of this proxy statement/prospectus.
|
(1)
|
Risk-Adjusted Free cash flow is defined as Risk-Adjusted Operating Income, less taxes, plus depreciation and amortization, less capital expenditures, plus or minus changes in net working capital. Free cash flow is a non-GAAP financial measure and should not be considered as an alternative to net cash provided by operations as a measure of operating performance or as an alternative to any other measure provided in accordance with GAAP.
|
(2)
|
Net Sales, Operating Income and Total Expenses associated with each product candidate was risk-adjusted based on either publicly available studies regarding the likelihood of approval by regulatory authorities of other products candidates with indications deemed similar in one or more respects to those of the applicable product candidate or discussions with Cleveland BioLabs management.
|
•
|
Reviewed a draft, dated October 10, 2020, of the Merger Agreement.
|
•
|
Reviewed certain publicly available financial information and other data with respect to Cleveland BioLabs and Cytocom that Cassel Salpeter deemed relevant.
|
•
|
Reviewed certain other information and data with respect to Cleveland BioLabs and Cytocom made available to Cassel Salpeter by Cleveland BioLabs and Cytocom, including financial projections with respect to the future financial performance of Cytocom on a standalone basis without giving effect to Cytocom’s acquisition of ImQuest Life Sciences, Inc., or ImQuest, and, such acquisition, the ImQuest Acquisition, prepared by management of Cytocom, or the Projections, and other internal financial information furnished to Cassel Salpeter by or on behalf of Cleveland BioLabs and Cytocom.
|
•
|
Considered and compared the financial and operating performance of Cytocom with that of companies with publicly traded equity securities that Cassel Salpeter deemed relevant.
|
•
|
Discussed the business, operations and prospects of Cleveland BioLabs, Cytocom, and the proposed merger with Cleveland BioLabs’ and Cytocom’s management and certain of Cleveland BioLabs’ and Cytocom’s representatives.
|
•
|
Conducted such other analyses and inquiries, and considered such other information and factors, as Cassel Salpeter deemed appropriate.
|
|
| |
Closing Price
|
| |
Implied Equity Value
|
||||||||||||
|
| |
Spot
|
| |
1 month
|
| |
3 months
|
| |
Spot
|
| |
1 month
|
| |
3 months
|
High
|
| |
|
| |
$2.23
|
| |
$3.27
|
| |
|
| |
$31,400,000
|
| |
$46,000,000
|
Mean
|
| |
|
| |
$2.08
|
| |
$2.28
|
| |
|
| |
$29,300,000
|
| |
$32,100,000
|
Median
|
| |
|
| |
$2.09
|
| |
$2.21
|
| |
|
| |
$29,400,000
|
| |
$31,000,000
|
Low
|
| |
|
| |
$1.90
|
| |
$1.65
|
| |
|
| |
$26,700,000
|
| |
$23,200,000
|
Volume Weighted Mean
|
| |
|
| |
$2.10
|
| |
$2.76
|
| |
|
| |
$29,500,000
|
| |
$38,800,000
|
October 14, 2020
|
| |
$2.21
|
| |
|
| |
|
| |
$31,100,000
|
| |
|
| |
|
(Dollars in Thousands)
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Market
Value
|
| |
Total
Invested
Capital
|
| |
Cash/
Total
Invested
Capital
|
| |
2021E
Revenue
|
| |
2022E
Revenue
|
Active Biotech AB
|
| |
$31,938
|
| |
$32,085
|
| |
13.5%
|
| |
NA
|
| |
NA
|
AIM ImmunoTech Inc.
|
| |
$102,742
|
| |
$105,823
|
| |
33.1%
|
| |
$1,523
|
| |
$2,756
|
Aptevo Therapeutics Inc.
|
| |
$22,630
|
| |
$26,046
|
| |
29.2%
|
| |
$3,869
|
| |
NA
|
Curls, Inc.
|
| |
$70,028
|
| |
$78,115
|
| |
30.2%
|
| |
$10,813
|
| |
$12,782
|
Helix BioPharma Corp.
|
| |
$40,479
|
| |
$39,829
|
| |
9.5%
|
| |
NA
|
| |
NA
|
Idera Pharmaceuticals, Inc.
|
| |
$78,494
|
| |
$79,475
|
| |
39.0%
|
| |
NA
|
| |
$38,514
|
Leap Therapeutics, Inc.
|
| |
$127,071
|
| |
$127,813
|
| |
50.8%
|
| |
$3,494
|
| |
NA
|
Onxeo SA
|
| |
$64,109
|
| |
$72,796
|
| |
31.7%
|
| |
$11,735
|
| |
$21,171
|
PDS Biotechnology Corporation
|
| |
$52,315
|
| |
$52,980
|
| |
32.0%
|
| |
NA
|
| |
NA
|
SELLAS Life Sciences Group, Inc.
|
| |
$25,169
|
| |
$26,177
|
| |
12.8%
|
| |
NA
|
| |
NA
|
Vascular Biogenics Ltd.
|
| |
$59,871
|
| |
$62,458
|
| |
65.2%
|
| |
$851
|
| |
NA
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
High
|
| |
$127,071
|
| |
$127,813
|
| |
65.2%
|
| |
$17,500
|
| |
$38,514
|
Mean
|
| |
65,049
|
| |
67,820
|
| |
29.9%
|
| |
7,112
|
| |
15,545
|
Median
|
| |
61,990
|
| |
67,627
|
| |
31.0%
|
| |
3,869
|
| |
12,782
|
Low
|
| |
22,630
|
| |
26,046
|
| |
9.5%
|
| |
851
|
| |
2,500
|
Position
|
| |
Annual Fee
|
| |
Compensated
Directors
|
Board Member
|
| |
$30,000
|
| |
Ms. Verny, Mr. Saluck
|
Board Chair
|
| |
5,000
|
| |
Ms. Verny
|
Audit Committee Chair
|
| |
5,000
|
| |
Mr. Saluck
|
Name
|
| |
Paid or
earned
in cash ($)
|
| |
Total
($)
|
Randy S. Saluck, J.D., MBA(1)
|
| |
85,000
|
| |
85,000
|
Lea Verny(2)
|
| |
135,000
|
| |
135,000
|
Anna Evdokimova(2)
|
| |
—
|
| |
—
|
Ivan Fedyunin(2)
|
| |
—
|
| |
—
|
Alexander Andryuschechkin(2)
|
| |
—
|
| |
—
|
Daniil Talyanskiy(2)
|
| |
—
|
| |
—
|
(1)
|
Mr. Saluck held 20,250 options at December 31, 2020.
|
(2)
|
Mmes. Verny, Evdokimova and Messrs. Fedyunin, Andryuschechkin and Talyanskiy held no stock options as of December 31, 2020.
|
Golden Parachute Compensation
|
|||||||||||||||||||||
Name
|
| |
Cash
($)(1)
|
| |
Equity
($)(2)
|
| |
Pension
/NQDC
($)
|
| |
Perquisites/Benefits
($)(3)
|
| |
Tax
Reimbursement
($)
|
| |
Other
($)
|
| |
Total
($)
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
| |
(h)
|
Michael Handley
Chief Executive Officer
|
| |
837,000
|
| |
3,239,375
|
| |
—
|
| |
28,939
|
| |
—
|
| |
—
|
| |
4,105,314
|
Cozette McAvoy
Chief Legal Officer
|
| |
493,000
|
| |
665,625
|
| |
—
|
| |
12,280
|
| |
—
|
| |
—
|
| |
1,170,905
|
Dr. Clifford Selsky
Chief Medical Officer
|
| |
290,001
|
| |
665,625
|
| |
—
|
| |
43,004
|
| |
—
|
| |
—
|
| |
998,630
|
(1)
|
In each case, the amounts in this column represent cash severance benefits equal to twelve (12) months of the executive’s current base salary and the executive’s target annual bonus, which would be payable upon a termination without “cause” or a resignation for “good reason” (collectively, an “involuntary termination”) under the terms of each executive’s employment agreement. The base salary component would be included upon any involuntary termination. The target annual bonus component would only be included if the involuntary termination occurs within twelve (12) months following a “change in control.” Mr. Handley’s base salary is $540,000 and his target annual bonus is 55% of his base salary ($297,000). Ms. McAvoy’s base salary is $340,000 and her target annual bonus is 45% of her base salary ($153,000). Mr. Selsky’s current base salary is $200,001 and his target annual bonus is 45% of his base salary ($90,000) (but these amounts would increase to $400,000 and $180,000, respectively, upon Cytocom’s completion of certain financing transactions).
|
(2)
|
In each case, the amounts in this column represent accelerated vesting of restricted stock units that would otherwise vest upon July 1, 2021. For this purpose, each Cytocom restricted stock unit is estimated to be worth (i) the average closing market price of Cleveland BioLabs common stock over the first five business days following the October 19, 2020 announcement of the parties’ execution of the Merger Agreement, in accordance with Item 402(t) of Regulation S-K, multiplied by (ii) the number of shares of Cleveland BioLabs common stock then expected to be issuable in respect of one share of Cytocom common stock pursuant to the Merger Agreement (i.e., the exchange ratio). This results in an estimated value per unit of $1.42. Insofar as this estimate is a function of both the then current price of Cleveland BioLabs common stock and the exchange ratio (which itself is a function of, among other things, the price of Cleveland BioLabs common stock and the net cash positions of both Cleveland BioLabs and Cytocom), this estimate may vary significantly from the actual value ultimately received in respect of each restricted stock unit. For additional details regarding the calculation of the exchange ratio, please see the section titled “The Merger Agreement—Exchange Ratio Formula.”
|
(3)
|
In each case, the amounts in this column represent the cost to continue the executive’s group health care benefits for twelve (12) months following an involuntary termination under the terms of each executive’s employment agreement, based on current premium rates.
|
•
|
“Cause” means a material act, or act of fraud, committed by the executive intended to result in his or her personal enrichment to the detriment or expense of Cytocom, a felony conviction, gross negligence or willful misconduct, or failure to perform the duties or obligations reasonably assigned to the executive by the Cytocom Board, which is not cured within ten (10) days prior written notice (unless the Cytocom Board reasonably determines such negligence, misconduct or failure cannot be cured), or violation of the Employee Proprietary Information and Inventions Agreement.
|
•
|
“Good Reason” means a material breach by Cytocom of the employment agreement, a material reduction in base salary, a material diminution in his or her authority, duties or responsibilities or a
|
Name
|
| |
Common Stock
|
| |
Restricted Stock
Awards
|
| |
% (Fully Diluted)
|
Michael K. Handley
|
| |
0.00
|
| |
2,281,250(1)
|
| |
6.15
|
Taunia Markvicka
|
| |
0.00
|
| |
500,000(2)
|
| |
1.35
|
Peter Aronstam
|
| |
408,625
|
| |
406,250(1)
|
| |
2.20
|
Clifford Selsky
|
| |
187,500
|
| |
468,250(1)
|
| |
1.77
|
Robert W. Buckheit
|
| |
0
|
| |
187,500(1)
|
| |
0.56
|
Cozette M. McAvoy
|
| |
0
|
| |
468,250(1)
|
| |
1.26
|
(1)
|
Each restricted stock unit will vest 60% upon the earlier of (i) the time immediately prior to (but contingent upon) the closing of any transaction or series of related transactions to which the common stock of Cytocom or any successor in interest to Cytocom is traded on Nasdaq or any other national securities exchange, including pursuant to (A) any “reverse merger” or other transaction pursuant to which the common stock of Cytocom or any successor in interest to Cytocom is exchanged for shares of common stock of an entity that is traded on Nasdaq or any other securities exchange or (B) any initial public offering of the common stock of Cytocom or any successor in interest to Cytocom; or (ii) July 1, 2021 and the remaining 40% will vest on August 15, 2022.
|
(2)
|
These restricted stock units will vest as follows: 66% of the restricted stock units will vest on August 15, 2022 and the remaining 34% will vest on August 16, 2023.
|
•
|
persons who do not hold their Cytocom capital stock as a “capital asset” within the meaning of Section 1221 of the Code;
|
•
|
brokers, dealers or traders in securities, banks, insurance companies, other financial institutions or mutual funds;
|
•
|
real estate investment trusts; regulated investment companies; tax-exempt organizations or governmental organizations;
|
•
|
pass-through entities such as partnerships, S corporations, disregarded entities for federal income tax purposes and limited liability companies (and investors therein);
|
•
|
stockholders who are subject to the alternative minimum tax provisions of the Code;
|
•
|
persons who hold their shares as part of a hedge, wash sale, synthetic security, conversion transaction or other integrated transaction;
|
•
|
persons that have a functional currency other than the U.S. dollar;
|
•
|
traders in securities who elect to apply a mark-to-market method of accounting;
|
•
|
persons who hold shares of Cytocom capital stock that may constitute “qualified small business stock” under Section 1202 of the Code or as “Section 1244 stock” for purposes of Section 1244 of the Code;
|
•
|
persons who acquired their shares of stock in a transaction subject to the gain rollover provisions of Section 1045 of the Code;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to Cytocom common stock being taken into account in an “applicable financial statement” (as defined in the Code);
|
•
|
persons deemed to sell Cytocom capital stock under the constructive sale provisions of the Code;
|
•
|
persons holding Cytocom common stock who exercise dissenters’ rights;
|
•
|
persons who acquired their shares of stock pursuant to the exercise of options or otherwise as compensation or through a tax-qualified retirement plan or through the exercise of a warrant or conversion rights under convertible instruments; and
|
•
|
certain expatriates or former citizens or long-term residents of the United States.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation or any other entity taxable as a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
|
•
|
a trust if either (i) a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more United States persons (within the meaning of Section 7701(a)(30) of the Code) are authorized or have the authority to control all substantial decisions of such trust, or (ii) the trust was in existence on August 20, 1996 and has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes; or
|
•
|
an estate, the income of which is subject to U.S. federal income tax regardless of its source.
|
•
|
each U.S. holder generally will not recognize gain or loss upon the exchange of their Cytocom capital stock for Cleveland BioLabs common stock;
|
•
|
each U.S. holder’s aggregate tax basis in the Cleveland BioLabs common stock received in the merger (including any fractional share of Cleveland BioLabs common stock for which cash is received) will be equal to such U.S. holder’s aggregate tax basis in the Cytocom capital stock exchanged therefor; and
|
•
|
the holding period of the shares of Cleveland BioLabs common stock received by a Cytocom stockholder in the merger will include the holding period of the shares of Cytocom capital stock surrendered in exchange therefor.
|
•
|
a certificate or evidence of shares in book-entry form representing the number of whole shares of Cleveland BioLabs 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 Cleveland BioLabs common stock.
|
•
|
organization and corporate power;
|
•
|
authority to enter into the Merger Agreement and the related agreements;
|
•
|
outstanding capital stock of Cleveland BioLabs and Cytocom;
|
•
|
subsidiaries;
|
•
|
consents and approvals required for consummation of the merger and non-contravention of the organizational documents, certain laws, governmental authorizations or certain contracts of the parties;
|
•
|
financial statements and, with respect to Cleveland BioLabs, documents filed with the SEC and the accuracy of information contained in those documents;
|
•
|
absence of undisclosed liabilities;
|
•
|
absence of certain recent development;
|
•
|
compliance with laws;
|
•
|
title to properties;
|
•
|
certain tax matters;
|
•
|
the validity of material contracts to which the parties or their subsidiaries are a party and any violation, default or breach of such contracts;
|
•
|
intellectual property;
|
•
|
litigation;
|
•
|
insurance;
|
•
|
employee benefit plans;
|
•
|
environmental compliance and conditions;
|
•
|
employment and labor matters;
|
•
|
FDA and regulatory matters;
|
•
|
brokerage commissions;
|
•
|
certain transactions or relationships with affiliates; and
|
•
|
with respect to Cleveland BioLabs, stockholder rights plans, “poison pills,” anti-takeover plans.
|
•
|
declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of capital stock (except for dividends or other distributions made by subsidiaries of such party to such party) ; or repurchase, redeem or otherwise reacquire any shares of capital stock or other securities (except for shares of such party’s common stock from terminated employees, directors or consultants of such party);
|
•
|
sell, issue, grant, pledge or otherwise dispose of or encumber or authorize the issuance of: any capital stock or other security (except for such party’s common stock issued upon the valid exercise or settlement of such party’s equity awards outstanding, as applicable); any option, warrant or right to acquire any capital stock or any other security; or any instrument convertible into or exchangeable for any capital stock or other security;
|
•
|
except as required to give effect to anything in contemplation of the closing or for the shares of Cleveland BioLabs common stock issuable to holders of Cytocom capital stock in connection with the merger to be approved for listing on NASDAQ, which for the avoidance of doubt, may include a proposal to amend the Cleveland BioLabs organizational documents to increase the number of authorized shares of Cleveland BioLabs common stock and/or effect a reverse split of Cleveland BioLabs’ common stock, amend the certificate of incorporation, bylaws or other organizational
|
•
|
form any subsidiary or acquire any equity interest or other interest in any other person or enter into any joint venture with any other person;
|
•
|
lend money to any person, incur or guarantee any indebtedness for borrowed money in excess of $100,000, guarantee any debt securities of others or make any capital expenditures or commitments in excess of $100,000 in the aggregate;
|
•
|
adopt, establish or enter into any plan for the benefit of any current or former employee, officer, independent contractor or direct of such party, cause or permit any plan, including, for the avoidance of doubt, any award agreement under a plan, to be amended other than as required by law;
|
•
|
pay any bonus or make any profit-sharing or similar payment to (except with respect to obligations pursuant to the existing terms of any benefit plan);
|
•
|
increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its employees, directors or consultants or increase the severance or change of control benefits offered to any current or new employees, directors or consultants;
|
•
|
acquire any material asset or sell, lease or otherwise irrevocably dispose of any of its assets or properties, other than in the ordinary course of business consistent with past practices, or grant any lien with respect to such assets or properties;
|
•
|
sell, assign, transfer, allow to lapse or expire, pledge, abandon, discontinue, fail to maintain or otherwise dispose of, or license, sublicense or otherwise encumber any material intellectual property rights owned by such party, other than pursuant to certain non-exclusive licenses;
|
•
|
make, change or revoke any material tax election; file any material amendment to any tax return or adopt or change any material accounting method in respect of taxes;
|
•
|
waive, settle or compromise any pending or threatened legal proceeding against such party or any of its subsidiaries, other than waivers, settlements or agreements for an amount not in excess of $100,000 in the aggregate (excluding amounts to be paid under existing insurance policies or renewals thereof), and that do not impose any material restriction on the operations or business of such party or its subsidiaries, taken as a whole, or any equitable relief on, or admission of any wrongdoing by, such party or its subsidiaries;
|
•
|
terminate or modify in any material respect, or fail to exercise renewal rights with respect to, any material insurance policy;
|
•
|
enter into, amend or terminate, or fail to exercise renewal rights with respect to, any of such party’s material contracts;
|
•
|
implement or adopt any change in accounting principles, practices or methods, except as required by changes in GAAP (upon the advice of its independent auditors) or applicable laws, in each case, after the date hereof;
|
•
|
enter into any new line of business or change in any material respect its business as conducted as of the date hereof;
|
•
|
voluntarily terminate, suspend, abrogate, amend or modify any of its permits in a manner materially adverse to the business, assets, results of operations or condition (financial or otherwise) of such party and its subsidiaries, taken as a whole; or
|
•
|
agree, resolve or commit to do, or adopt any resolution of the board of directors in support of, any of the foregoing.
|
•
|
initiate, seek or solicit, or knowingly encourage or facilitate (including by way of furnishing non-public information) or take any other action that is reasonably expected to promote, directly or indirectly, any inquiries or the making or submission of any proposal that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal (as defined below);
|
•
|
participate or engage in discussions or negotiations with, or disclose any non-public information or data relating to itself or any of its subsidiaries to, or afford access to the properties, books or records of itself or any of its subsidiaries to, any person with respect to any Acquisition Proposal; or
|
•
|
execute or enter into any agreement, including any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement, whether or not binding, with respect to an Acquisition Proposal.
|
•
|
withhold, withdraw, amend, qualify or modify in a manner adverse to Cytocom, the approval, recommendation or declaration of advisability by its board of directors or any such committee of the contemplated transactions (or publicly propose to do any of the foregoing);
|
•
|
propose publicly to recommend, adopt or approve any Acquisition Proposal with respect to itself; or
|
•
|
fail to reaffirm or re-publish the CBLI Recommendation (as defined below), within ten days of being requested by the Cytocom to do so or, if earlier, not later than two business days before the Cleveland BioLabs’ Special Meeting (any of the foregoing, a “Cleveland BioLabs’ Adverse Recommendation Change”).
|
•
|
until four days after the Cleveland BioLabs Board notifies Cytocom in writing of its receipt of a Superior Proposal, specifying the material terms and conditions of such Superior Proposal, identifying the person or group making the Superior Proposal and including all documents pertaining to such Superior Proposal;
|
•
|
if during such notice period, Cytocom proposes any alternative transaction (including any modification to the terms of the Merger Agreement), unless the Cleveland BioLabs Board determines in good faith, after consultation with its financial advisor and outside legal counsel, and after good faith negotiations between Cytocom and Cleveland BioLabs (if such negotiations are requested by Cytocom), that the Acquisition Proposal continues to constitute a Superior Proposal (after taking into account all financial, legal and regulatory terms and conditions of such Superior Proposal and such alternative transaction proposal proposed by Cytocom); and
|
•
|
unless the Cleveland BioLabs Board in good faith after consultation with its outside legal counsel that failure to make a Cleveland BioLabs Adverse Recommendation Change would reasonably be expected to violate the Cleveland BioLabs Board’s fiduciary obligations to its stockholders.
|
•
|
the registration statement on Form S-4, of which this proxy statement/prospectus 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 governmental authority of competent jurisdiction, and no law, statute, rule, regulation, ruling or decree will be in effect which has the effect of making the consummation of the merger or any of the other transactions contemplated by the Merger Agreement illegal;
|
•
|
approval of the issuance of the Cleveland BioLabs common stock to be issued as merger consideration by the holders of a majority of the outstanding shares of Cleveland BioLabs common stock at the Cleveland BioLabs special meeting of stockholders shall have been obtained;
|
•
|
the written consents of the Cytocom stockholders and Cleveland BioLabs, as the sole stockholder of the Merger Sub, approving the contemplated transactions and adopting the Merger Agreement, shall continue to be in force and effect; and
|
•
|
the approval of the listing of the additional shares of Cleveland BioLabs common stock on NASDAQ will have been obtained and the shares of Cleveland BioLabs common stock to be issued in the merger pursuant to the Merger Agreement will have been approved for listing (subject to official notice of issuance) on NASDAQ.
|
•
|
the accuracy as of the closing date (or, in the case of representations and warranties that address matters only as of a particular date, as of such date) of certain representations and warranties made in the Merger Agreement by Cytocom or Cleveland BioLabs, as the case may be, regarding other fundamental matters, including, among other things, corporate organization, authority and the execution, delivery and enforceability of the Merger Agreement and the transactions contemplated thereby;
|
•
|
the representations and warranties regarding capitalization matters of Cytocom 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 consummated 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 consummated or, if such
|
•
|
compliance in all material respects with all of the covenants and agreements required to be performed or complied with by Cytocom or Cleveland BioLabs, as the case may be, prior to the closing; and
|
•
|
delivery of a certificate from a duly authorized officer of Cytocom or Cleveland BioLabs, as the case may be, stating that the conditions set forth under this paragraph (“ – Additional Conditions to Consummation”) have been satisfied with respect to the applicable party.
|
•
|
Cleveland BioLabs shall have delivered to Cytocom employment agreements duly executed by Cleveland BioLabs, in form and substance reasonably satisfactory to Cytocom, between Cleveland BioLabs and each of the individuals to be employed by Cytocom following the merger;
|
•
|
Cleveland BioLabs shall have delivered to Cytocom its certification of the total number of shares of Cleveland BioLabs to be issued as merger consideration based on its calculation of net cash immediately prior to closing; and
|
•
|
Cleveland BioLabs shall have obtained the requisite consents and approvals as agreed on by the parties.
|
•
|
Dissenting shares shall not represent five percent (5%) or more of the outstanding shares of Cytocom common stock unless waived by Cleveland BioLabs acting in its sole discretion;
|
•
|
Cytocom shall have delivered to Cleveland BioLabs financial statements for the fiscal years ended December 31, 2018 and 2019, audited by an independent registered public accounting firm;
|
•
|
Cytocom shall have delivered to Cleveland BioLabs its certification of the total number of shares of Cleveland BioLabs to be issued as merger consideration based on its calculation of net cash immediately prior to closing;
|
•
|
Cytocom shall have obtained the requisite consents, approvals and documents as agreed on by the parties.
|
•
|
cooperation between Cytocom and Cleveland BioLabs in connection with public announcements;
|
•
|
giving prompt notice to the other party upon the occurrence of certain events;
|
•
|
the use of each party’s commercially reasonable efforts as needed to cause the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986 and will not take actions that would reasonably be expected to cause the merger to not qualify as a reorganization pursuant to Section 368(a);
|
•
|
taking any actions and grant any approvals necessary, in accordance with the Merger Agreement, to consummate the contemplated transactions in the event that a takeover law becomes, or purports to be, applicable to the contemplated transactions; and
|
•
|
obtaining the resignation of any directors of Cytocom or directors of Cleveland BioLabs, effective as of the Effective Time, who will not be on the Cleveland BioLabs board following the Effective Time.
|
(a)
|
by mutual written consent of Cleveland BioLabs and Cytocom;
|
(b)
|
by either Cleveland BioLabs or Cytocom, if the merger has not been consummated by 5:00 P.M., New York time on April 30, 2021; provided, that the right to terminate the Merger Agreement shall not be available to any party whose action or failure to act has been the primary cause of the failure of the merger to occur on or before such date and such action or failure to act constitutes a breach of this Agreement by such party;
|
(c)
|
by either Cleveland BioLabs or Cytocom, if a court of competent jurisdiction or governmental entity has issued a final and non-appealable 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; provided, however, that neither Cleveland BioLabs nor Cytocom may terminate the Merger Agreement if that party’s action or failure to act was the primary case of the failure of the merger to occur on or before such date and such action or failure to act constitutes a breach of the Merger Agreement;
|
(d)
|
by either Cleveland BioLabs or Cytocom, if the written consent of Cytocom stockholders necessary to adopt the Merger Agreement and approve the merger and related matters has been rescinded, withdrawn, cancelled or otherwise not in full force and effect or any vote or consent by the Cytocom stockholders is inconsistent with the Cytocom stockholder written consent, the merger, the Merger Agreement or that approves or authorizes any merger, consolidation, sale of assets or other strategic transactions other than the merger;
|
(e)
|
by either Cleveland BioLabs or Cytocom, if the Cleveland BioLabs special meeting has been held and consummated and Cleveland BioLabs’ stockholders have taken a final vote on the merger proposal set forth herein, including the issuance of Cleveland BioLabs common stock to Cytocom stockholders in connection with the merger, and such merger proposal has not been approved by the Cleveland BioLabs stockholders; provided, that neither Cleveland BioLabs nor Cytocom may terminate the Merger Agreement pursuant to this provision if the failure to obtain the approval of Cleveland BioLabs stockholders was caused by the action or failure to act by the terminating party and such action or failure to act constitutes a material breach by the terminating party of the Merger Agreement;
|
(f)
|
by Cytocom, at any time prior to the approval by Cleveland BioLabs stockholders of the merger proposal set forth herein to be considered at the Cleveland BioLabs special meeting, if any of the following circumstances shall occur:
|
•
|
Cleveland BioLabs fails to include in this proxy statement/prospectus the Cleveland BioLabs board of directors’ recommendation that Cleveland BioLabs stockholders vote to approve the merger proposal set forth herein to be considered at the Cleveland BioLabs special meeting or the Cleveland BioLabs board of directors publicly proposes to or allows Cleveland BioLabs to publicly propose to take this action; or
|
•
|
the Cleveland BioLabs board of directors, or any committee thereof, makes a recommendation change adverse to Cytocom or approves, endorses or recommends any Acquisition Proposal or the Cleveland BioLabs board of directors publicly proposes to or allows Cleveland BioLabs to publicly propose to take any of the actions;
|
(g)
|
by Cytocom, if Cleveland BioLabs materially breaches its non-solicitation obligations under the Merger Agreement;
|
(h)
|
by Cleveland BioLabs, at any time prior to the adoption of the Merger Agreement and approval of the transactions contemplated therein by the Cleveland BioLabs stockholders, upon written notice to Cytocom, in order to enter into a definitive agreement with a third party providing for a Superior
|
(i)
|
by Cleveland BioLabs, if Cytocom materially breaches its non-solicitation obligations under the Merger Agreement;
|
(j)
|
by Cytocom, if Cleveland BioLabs 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 Cleveland BioLabs has become inaccurate, in either case such that the conditions to the closing would not be satisfied as of time of such breach or inaccuracy; provided that, if such breach or inaccuracy is curable, then the Merger Agreement will not terminate pursuant to this paragraph 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 of such breach or inaccuracy from Cytocom to Cleveland BioLabs or Merger Sub and Cytocom’s intention to terminate pursuant to this paragraph (it being understood that the Merger Agreement will not terminate pursuant to this paragraph as a result of such particular breach or inaccuracy if such breach by Cleveland BioLabs or Merger Sub is cured prior to such termination becoming effective); or
|
(k)
|
by Cleveland BioLabs, if Cytocom has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement or if any representation or warranty of Cytocom has become inaccurate, in either case such that the conditions to the closing would not be satisfied as of time of such breach or inaccuracy; provided that, if such breach or inaccuracy is curable, then the Merger Agreement will not terminate pursuant to this paragraph 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 of such breach or inaccuracy from Cleveland BioLabs to Cytocom and Cleveland BioLabs’ intention to terminate pursuant to this paragraph (it being understood that the Merger Agreement will not terminate pursuant to this paragraph as a result of such particular breach or inaccuracy if such breach by Cytocom is cured prior to such termination becoming effective).
|
(a)
|
temporary and reversible suppression of apoptosis in normal cells to protect healthy tissues from stress-induced damage using compounds Cleveland BioLabs categorizes as Protectans, which include entolimod and Mobilan; and
|
(b)
|
reactivation of apoptosis in tumor cells to eliminate cancer using compounds Cleveland BioLabs categorizes as Curaxins, which includes CBL0137, currently being developed by its former subsidiary, Incuron.
|
Milestone Description
|
| |
For
Products
Limited to
Biodefense
Uses
|
| |
For All Other
Products
(Maximum
amount)*
|
For any IND filing for a product
|
| |
$50,000
|
| |
$50,000
|
For any product entering Phase II clinical trials or similar registration
|
| |
100,000
|
| |
250,000
|
For any product entering Phase III clinical trials
|
| |
—
|
| |
700,000
|
For any product license application, BLA or NDA Filing for a product**
|
| |
350,000
|
| |
1,500,000
|
Upon regulatory approval permitting any product to be sold to the commercial market
|
| |
1,000,000
|
| |
4,000,000
|
*
|
Maximum amounts listed for achievement of milestone in U.S. If milestones are reached in another country first, milestone payments will be prorated for certain products under the license based on the market size for the product in such country as that market relates to the then current U.S. market.
|
**
|
New Drug Application (“NDA”)
|
•
|
Two exclusive license and option agreements effective December 2007 and September 2011;
|
•
|
Various sponsored research agreements entered into between January 2007 to present; and
|
•
|
Clinical trial agreements for the conduct of its Phase 1 entolimod oncology study and Incuron’s Phase 1 CBL0137 intravenous administration study.
|
•
|
preclinical laboratory and animal tests performed in compliance with current GLPs;
|
•
|
development of manufacturing processes which conform to current Good Manufacturing Practices (“GMPs”);
|
•
|
submission and acceptance of an Investigational New Drug (“IND”) application which must become effective before human clinical trials may begin;
|
•
|
performance of adequate and well-controlled human clinical trials in compliance with current Good Clinical Practices (“GCPs”) to establish the safety and efficacy of the proposed drug for its intended use; or in the case of entolimod, for reducing the risk of death following exposure to potentially lethal radiation, Cleveland BioLabs is required to perform pivotal animal studies in compliance with GLP and some aspects of GCP to establish efficacy; and
|
•
|
submission to and review and approval by the FDA of a NDA or BLA prior to any commercial sale or shipment of a product; or in the case of entolimod, a pre-EUA prior to sales to the National Stockpile.
|
•
|
Phase 1: The drug is introduced into healthy human subjects or patients with advanced disease (in the case of certain inherently toxic products for severe or life-threatening diseases such as cancer) and tested for safety, dosage tolerance, absorption, distribution, metabolism, and excretion;
|
•
|
Phase 2: Involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage; and
|
•
|
Phase 3: Clinical trials are undertaken to further evaluate dosage, clinical efficacy, and safety in an expanded patient population at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide, if appropriate, an adequate basis for product labeling.
|
•
|
a determination by the Secretary of the Department of Homeland Security that there is a domestic emergency, or a significant potential for a domestic emergency, involving a heightened risk of attack with a specified biological, chemical, radiological, or nuclear agent or agents;
|
•
|
a determination by the Secretary of the DoD that there is a military emergency, or a significant potential for a military emergency, involving a heightened risk to U.S. military forces of attack with a specified biological, chemical, radiological, or nuclear agent or agents; or
|
•
|
a determination by the Secretary of the DHHS that a public health emergency that effects, or has the significant potential to effect, national security and that involves a specified biological, chemical, radiological, or nuclear agent or agents, or a specified disease or condition that may be attributable to such agent or agent.
|
|
| |
Year Ended December 31,
|
|||||||||||||||
Funding Source
|
| |
Program
|
| |
2020
|
| |
Percent of
Total
|
| |
2019
|
| |
Percent of
Total
|
| |
Variance
|
DoD
|
| |
JWMRP Contract
|
| |
$156,685
|
| |
59.6%
|
| |
$637,355
|
| |
57.3%
|
| |
$(480,670)
|
DoD
|
| |
PRMRP Grant
|
| |
56,900
|
| |
21.6%
|
| |
80,522
|
| |
7.2%
|
| |
(23,622)
|
Incuron
|
| |
Service Contracts
|
| |
49,357
|
| |
18.8%
|
| |
395,544
|
| |
35.5%
|
| |
(346,187)
|
|
| |
|
| |
$262,942
|
| |
100.0%
|
| |
$1,113,421
|
| |
100.0%
|
| |
$(850,479)
|
Funding Source
|
| |
Program
|
| |
Total
award
value
|
| |
Funded
award
value
|
| |
Cumulative
revenue
recognized
|
| |
Funded
backlog
|
| |
Unfunded
backlog
|
DoD
|
| |
JWMRP Contract
|
| |
$9,226,455
|
| |
$3,558,603
|
| |
$3,558,603
|
| |
$—
|
| |
$—
|
DoD
|
| |
PRMRP Grant
|
| |
6,573,992
|
| |
214,860
|
| |
214,860
|
| |
—
|
| |
—
|
|
| |
|
| |
$15,800,447
|
| |
$3,773,463
|
| |
$3,773,463
|
| |
$—
|
| |
$—
|
|
| |
Year Ended December 31,
|
| |
|
|||
|
| |
2020
|
| |
2019
|
| |
Variance
|
Entolimod's biodefense indication
|
| |
$657,443
|
| |
$1,302,572
|
| |
$(645,129)
|
CBLB612
|
| |
—
|
| |
5,825
|
| |
(5,825)
|
Entolimod's oncology indications
|
| |
—
|
| |
7,598
|
| |
(7,598)
|
|
| |
657,443
|
| |
1,315,995
|
| |
(658,552)
|
Curaxins
|
| |
12,272
|
| |
310,566
|
| |
(298,294)
|
Panacela product candidates
|
| |
21,355
|
| |
29,866
|
| |
(8,511)
|
Total research & development expenses
|
| |
$691,070
|
| |
$1,656,427
|
| |
$(965,357)
|
|
| |
|
| |
Three Months Ended March 31,
|
| |
|
|||
Funding Source
|
| |
Program
|
| |
2021
|
| |
2020
|
| |
Variance
|
DoD
|
| |
JWMRP Contract(1)
|
| |
$—
|
| |
$69,011
|
| |
$(69,011)
|
DoD
|
| |
PRMRP Contract(2)
|
| |
—
|
| |
46,021
|
| |
(46,021)
|
Incuron
|
| |
Service contract
|
| |
—
|
| |
41,010
|
| |
(41,010)
|
|
| |
|
| |
$—
|
| |
$156,042
|
| |
$(156,042)
|
(1)
|
The Congressionally Directed Medical Research Programs (CDMRP) Joint Warfighter Medical Research Program (JWMRP) contract was awarded on September 1, 2015.
|
(2)
|
The CDMRP Peer Reviewed Medical Research Program (PRMRP) grant was awarded effective as of September 30, 2015.
|
|
| |
Three Months Ended March 31,
|
| |
|
|||
|
| |
2021
|
| |
2020
|
| |
Variance
|
Entolimod for Biodefense Applications
|
| |
$115,553
|
| |
$200,955
|
| |
$(85,402)
|
|
| |
115,553
|
| |
200,955
|
| |
(85,402)
|
Curaxins
|
| |
—
|
| |
11,544
|
| |
(11,544)
|
Panacela product candidates
|
| |
2,705
|
| |
5,709
|
| |
(3,004)
|
Total research & development expenses
|
| |
$118,258
|
| |
$218,208
|
| |
$(99,950)
|
•
|
From inception through December 31, 2020, it raised $147.9 million of net equity capital, including amounts received from the exercise of options and warrants. Cleveland BioLabs also received $7.3 million in net proceeds from the issuance of long-term debt instruments;
|
•
|
DoD and the Biomedical Advanced Research and Development Authority (BARDA), within the Office of the Assistant Secretary for Preparedness and Response in the U.S. Department of Health and Human Services, have funded grants and contracts totaling $48.4 million for the development of entolimod for its biodefense indication;
|
•
|
The Russian Federation has funded a series of contracts totaling $17.3 million, based on the exchange rates in effect on the date of funding. These contracts included requirements for Cleveland BioLabs to contribute matching funds, which Cleveland BioLabs has satisfied with both the value of developed intellectual property at the time of award, incurred development expenses and future expenses;
|
•
|
Cleveland BioLabs has been awarded $4.0 million in grants and contracts not described above, all of which has been recognized at December 31, 2020;
|
•
|
Incuron was formed to develop and commercialize the Curaxins product line, including its lead oncology drug candidate CBL0137. In 2015, Cleveland BioLabs sold its ownership interest for approximately $4.0 million and retained a 2% royalty interest in the CBL0137 technology; and
|
•
|
Panacela was formed to develop and commercialize preclinical compounds, which were transferred to Panacela through assignment and lease agreements. Rusnano contributed $9.0 million to Panacela and CBLI contributed $3.0 million plus intellectual property to Panacela. As of December 31, 2020, CBLI owned 67.57% of Panacela.
|
|
| |
For the Year Ended
December 31,
|
| |
|
|||
|
| |
2020
|
| |
2019
|
| |
Variance
|
Net cash used in operating activities
|
| |
$(2,372,985)
|
| |
$(2,663,389)
|
| |
$290,404
|
Net cash provided by investing activities
|
| |
55,443
|
| |
156,783
|
| |
(101,340)
|
Net cash provided by financing activities
|
| |
3,165,640
|
| |
—
|
| |
3,165,640
|
Effect of exchange rate change on cash and equivalents
|
| |
(27,804)
|
| |
15,496
|
| |
(43,300)
|
Increase (decrease) in cash and cash equivalents
|
| |
820,294
|
| |
(2,491,110)
|
| |
3,311,404
|
Cash and cash equivalents at beginning of period
|
| |
1,126,124
|
| |
3,617,234
|
| |
(2,491,110)
|
Cash and cash equivalents at end of period
|
| |
$1,946,418
|
| |
$1,126,124
|
| |
$820,294
|
•
|
From inception through March 31, 2021, it raised $160.6 million of net equity capital, including amounts received in connection with Cleveland BioLabs’ February 2021 registered direct offering and from the exercise of options and warrants. Cleveland BioLabs also received $7.3 million in net proceeds from the issuance of long-term debt instruments;
|
•
|
DoD and BARDA have funded grants and contracts totaling $49 million for the development of entolimod for its biodefense indication;
|
•
|
The government of the Russian Federation has funded a series of Cleveland BioLabs’ contracts totaling $17.3 million, based on the exchange rates in effect on the date of funding. These contracts included a requirement for Cleveland BioLabs to contribute matching funds, which Cleveland BioLabs has satisfied;
|
•
|
Cleveland BioLabs has been awarded $4.0 million in grants and contracts not described above, all of which have been recognized at March 31, 2021;
|
•
|
Incuron was formed to develop and commercialize the Curaxins product line, including its lead oncology drug candidate CBL0137. In 2015, Cleveland BioLabs sold its ownership interest in Incuron for approximately $4.0 million and retains a 2% royalty interest in the CBL0137 technology;
|
•
|
Panacela was formed to develop and commercialize preclinical compounds, which were transferred to Panacela through assignment and lease agreements. RUSNANO contributed $9.0 million to Panacela and CBLI contributed $3.0 million plus intellectual property to Panacela. As of March 31, 2021, CBLI owned 67.57% of Panacela; and
|
•
|
Cleveland BioLabs formed its GPI joint venture with Everon. GPI, which is currently 50% owned by Cleveland BioLabs and 50% owned by Everon, is undertaking a research and development program aimed at clinical testing of entolimod and GP532 (a variant of Cleveland BioLabs’ entolimod drug candidate) and the development of medications with anti-aging and other indications associated with genome damage. GPI has been funded by an initial investment of $10.5 million from venture capital fund Norma Investments Limited.
|
|
| |
For the Three Months Ended March 31,
|
||||||
|
| |
2021
|
| |
2020
|
| |
Variance
|
Cash flows used in operating activities
|
| |
$(363,093)
|
| |
$(425,593)
|
| |
$62,500
|
Cash flows provided by investing activities
|
| |
53,807
|
| |
—
|
| |
53,807
|
Cash flows provided by financing activities
|
| |
12,723,074
|
| |
382,215
|
| |
12,340,859
|
Effect of exchange rate change on cash and equivalents
|
| |
(909)
|
| |
(23,935)
|
| |
23,026
|
Increase (decrease) in cash and cash equivalents
|
| |
12,412,879
|
| |
(67,313)
|
| |
12,480,192
|
Cash and cash equivalents at beginning of period
|
| |
1,946,418
|
| |
1,126,124
|
| |
820,294
|
Cash and cash equivalents at end of period
|
| |
$14,359,297
|
| |
$1,058,811
|
| |
$13,300,486
|
Name
|
| |
Age
|
| |
Position with the Company
|
Alexander Andryuschechkin(1)
|
| |
37
|
| |
Director
|
Anna Evdokimova
|
| |
45
|
| |
Director
|
Ivan Fedyunin
|
| |
33
|
| |
Director
|
Randy S. Saluck(1)
|
| |
55
|
| |
Director
|
Daniil Talyanskiy
|
| |
36
|
| |
Director
|
Lea Verny(1)
|
| |
55
|
| |
Chair of the Board
|
1.
|
Member of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee.
|
Name
|
| |
Age
|
| |
Position
|
Langdon Miller, MD
|
| |
67
|
| |
Chief Medical Officer
|
Andrei Gudkov, Ph.D., D. Sci.
|
| |
64
|
| |
Chief Scientific Officer
|
Christopher Zosh
|
| |
45
|
| |
Interim Principal Executive Officer and Principal Financial Officer; Vice President of Finance
|
|
| |
|
| |
|
Name and Principal
Position
|
| |
Year
|
| |
Salary
($)
|
| |
All Other
Compensation
($)
|
| |
Total ($)
|
|||
Langdon L. Miller
|
| |
2020
|
| |
23,100
|
| |
—
|
| |
|
| |
23,100
|
Chief Medical Officer
|
| |
2019
|
| |
73,725
|
| |
—
|
| |
|
| |
77,625
|
Andrei Gudkov
|
| |
2020
|
| |
26,055
|
| |
—
|
| |
|
| |
26,055
|
Chief Science Officer
|
| |
2019
|
| |
66,138
|
| |
—
|
| |
|
| |
66,138
|
Christopher Zosh
|
| |
2020
|
| |
116,769
|
| |
4,671(1)
|
| |
|
| |
121,440
|
Vice President of Finance* (principal executive officer and principal financial officer)
|
| |
2019
|
| |
92,463
|
| |
11,031(2)
|
| |
|
| |
103,494
|
1.
|
Includes Cleveland BioLabs 401(k) matching contributions.
|
2.
|
Includes Cleveland BioLabs 401(k) matching contributions and quarterly bonus payments.
|
*
|
Following the resignation of Cleveland BioLabs’ former chief executive officer, which became effective as of December 13, 2019, Christopher Zosh was designated by the Board as interim Principal Executive Officer and Principal Financial Officer on December 13, 2019.
|
|
| |
Option Awards
|
||||||
Name
|
| |
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
| |
Option
Exercise
Price
($)
|
| |
Option
Expiration
Date
|
Langdon L. Miller
|
| |
10,000
|
| |
3.00
|
| |
5/4/2025
|
Andrei Gudkov
|
| |
6,250
|
| |
3.20
|
| |
4/22/2025
|
|
| |
7,500
|
| |
13.60
|
| |
3/13/2024
|
|
| |
4,203
|
| |
30.80
|
| |
5/12/2023
|
|
| |
2,813
|
| |
67.00
|
| |
1/22/2022
|
|
| |
7,481
|
| |
143.20
|
| |
3/20/2021
|
Christopher Zosh
|
| |
125
|
| |
10.40
|
| |
6/16/2024
|
|
| |
300
|
| |
3.20
|
| |
4/22/2025
|
Position
|
| |
Annual Fee
|
| |
Compensated
Directors
|
Board Member
|
| |
$30,000
|
| |
Ms. Verny, Mr. Saluck
|
Board Chair
|
| |
5,000
|
| |
Ms. Verny
|
Audit Committee Chair
|
| |
5,000
|
| |
Mr. Saluck
|
Name
|
| |
Paid or
earned
in cash ($)
|
| |
Total
($)
|
Randy S. Saluck, J.D., MBA(1)
|
| |
85,000
|
| |
85,000
|
Lea Verny(2)
|
| |
135,000
|
| |
135,000
|
Anna Evdokimova(2)
|
| |
—
|
| |
—
|
Ivan Fedyunin(2)
|
| |
—
|
| |
—
|
Ivan Persiyanov(2)
|
| |
—
|
| |
—
|
Alexander Andryuschechkin(2)
|
| |
—
|
| |
—
|
Daniil Talyanskiy(2)
|
| |
—
|
| |
—
|
1.
|
As of December 31, 2020, Mr. Saluck held 20,250 options that are all exercisable and fully vested.
|
2.
|
Mmes. Verny, Evdokimova and Messrs. Fedyunin, Andryushechkin and Talyanskiy held no stock options or other equity awards as of December 31, 2020.
|
Name
|
| |
Outstanding
Shares
Beneficially
Owned
|
| |
Rights to Acquire
Beneficial
Ownership
|
| |
Total Shares
Beneficially
Owned
|
| |
Percent
|
5% or greater shareholders
|
| |
|
| |
|
| |
|
| |
|
David Davidovich(1)
|
| |
6,459,948
|
| |
—
|
| |
6,459,948
|
| |
48.29%
|
James W. Harpel(2)
|
| |
1,205,979
|
| |
—
|
| |
1,205,979
|
| |
9.02%
|
Directors and Named Executive Officers
|
| |
|
| |
|
| |
|
| |
|
Alexander Andryuschechkin
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
Anna Evdokimova
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
Ivan Fedyunin
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
Randy S. Saluck, J.D., MBA
|
| |
140
|
| |
20,250(3)
|
| |
20,390
|
| |
*
|
Daniil Talyanskiy
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
Lea Verny
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
Andrei Gudkov, Ph.D., D. Sci.
|
| |
75,869
|
| |
28,247
|
| |
104,116
|
| |
*
|
Langdon L. Miller, MD
|
| |
—
|
| |
10,000(4)
|
| |
10,000
|
| |
*
|
Christopher Zosh
|
| |
—
|
| |
425(5)
|
| |
425
|
| |
*
|
All current executive officers and directors as a group (9 persons)
|
| |
76,009
|
| |
58,922
|
| |
134,931
|
| |
1.00%
|
*
|
Represents beneficial ownership of less than 1% of the outstanding shares of Cleveland BioLabs’ common stock.
|
(1)
|
David Davidovich reported sole voting and dispositive power with respect to 6,459,948 shares of Cleveland BioLabs’ common stock in a Statement on Schedule 13D filed with the SEC on July 21, 2015. Mr. Davidovich’s address is APT 3, 21 Manresa Road, London, United Kingdom, SW3 SLZ.
|
(2)
|
James W. Harpel reported sole voting and dispositive power with respect to 1,009,979 shares of Cleveland BioLabs’ common stock and shared voting and dispositive power over 196,000 shares of Cleveland BioLabs’ common stock on Schedule 13G filed with the SEC on February 11, 2021. Mr. Harpel reported that the shares with respect to which he has shared voting and dispositive power are owned by six trusts over which Mr. Harpel has Power of Attorney and shares with the trustees of such trusts the power to vote or dispose the shares held by such trusts. Mr. Harpel’s address is Palm Beach Capital, 525 South Flagler Drive, Suite 201, West Palm Beach, FL 33401.
|
(3)
|
These shares of common stock can be acquired through the exercise of options that are directly owned by Mr. Saluck. Upon acquisition, Mr. Saluck will have sole voting and investment power over such shares.
|
(4)
|
These shares of common stock can be acquired through the exercise of options that are directly owned by Dr. Miller. Upon acquisition, Dr. Miller will have sole voting and investment power over all such shares.
|
(5)
|
These shares of common stock can be acquired through the exercise of options that are directly owned by Mr. Zosh. Upon acquisition, Mr. Zosh will have sole voting and investment power over such shares.
|
Plan Category
|
| |
(a)
Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants and
rights
|
| |
(b)
Weighted-
average
exercise price
of
outstanding
options,
warrants and
rights
|
| |
(c)
Number
of securities
remaining
available
for future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
Equity compensation plans approved by security holders(1)
|
| |
76,064
|
| |
27.35
|
| |
515,493
|
Equity compensation plans not approved by security holders
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
76,064
|
| |
27.35
|
| |
515,493
|
(1)
|
Consists of the Equity Plan.
|
•
|
CYTO-201 as an adjunct to the standard of care in pediatric Crohn’s disease. CYTO-201 is intended to target the restoration of mucosal healing and intestinal barrier function in pediatric patients with Crohn’s disease via immune homeostasis and decreased inflammation. Based on the available data, Cytocom believes there is an opportunity for CYTO-201 to be developed as a differentiated immunotherapy for the treatment of pediatric patients with active Crohn’s disease. A Type B meeting with the FDA is scheduled for July 27, 2021 and, subject to the results of that meeting, Cytocom plans to initiate a Phase 3, multicenter, randomized, double blind, placebo controlled, parallel group clinical trial to evaluate the efficacy and safety of CYTO-201 in pediatric subjects with active Crohn’s disease in the second half of 2021.
|
•
|
CYTO-401 as an adjunct to standard of care therapy to extend the duration of disease remission in patients with pancreatic cancer. CYTO-401 is an injectable pentapeptide new chemical entity that Cytocom plans to develop as an adjunct to the standard of care therapy to extend the duration of disease remission in patients with pancreatic cancer. Subject to discussions with the FDA, CYTO-401 is targeted for a phase 2 clinical trial, expected to begin in the second half of 2021.
|
•
|
CYTO-203 to prevent disease progression in patients with MS. Cytocom intends to develop CYTO-203 to prevent disease progression in patients with MS. Subject to discussions with the FDA and submission and acceptance of an IND, CYTO-203 is targeted for a phase 2 clinical trial, which is expected to begin in 2022.
|
•
|
CYTO-202 to reduce the pain associated with fibromyalgia. CYTO-202 is intended to reduce the pain associated with fibromyalgia. Subject to discussions with the FDA and submission and acceptance of an IND, CYTO-202 is targeted for a phase 2 or 3 clinical trial, expected to begin in the second half of 2022.
|
•
|
CYTO-205 to prevent the advancement of COVID-19. infected patients from mild to severe disease. CYTO-205 is intended to prevent the advancement of COVID-19 infected patients from mild to severe disease. The FDA has provided notice to Cytocom that it may proceed with the enrollment of patients in a Phase 2 clinical trial.
|
•
|
CYTO-402 to be used as an adjunct to standard of care therapy for hepatocellular cancer. CYTO-402 is an injectable pentapeptide new chemical entity. Cytocom intends to develop CYTO-402 as an adjunct to the standard of care therapy for hepatocellular cancer. Cytocom has not yet initiated discussion with or submitted an IND for this indication.
|
•
|
Advance the clinical development of Cytocom’s product candidates toward marketing authorizations and commercialization of such product candidates to generate revenue. Subject to discussions with the FDA, Cytocom expects to initiate a Phase 3, multicenter, randomized, double blind, placebo controlled clinical trial to evaluate the efficacy and safety of CYTO-201 in pediatric subjects with active Crohn’s disease in the second half of 2021. Cytocom has also received permission to commence its Phase 2 study of CYTO-205 to prevent the advancement of COVID-19 infected patients from mild to severe disease. Cytocom plans to begin this trial this year. In addition, in the second half of 2021, subject to discussions with the FDA, Cytocom intends to initiate a Phase 2 clinical trial to evaluate CYTO-401 in patients with late-stage pancreatic cancer as an adjunct to standard of care therapy to extend the duration of disease remission in patients with pancreatic cancer. Subject to discussions with the FDA and submission and acceptance of additional INDs, additional clinical trials are planned in 2022 and 2023 for certain immune mediated diseases such as fibromyalgia and MS where clinical data supports ongoing development in the CYTO-200 AIMS program and in cancer under the CYTO-400 AIMS program for hepatocellular cancer.
|
•
|
Maximize the commercial potential of CYTO-200 and CYTO-400 AIMS program product candidates. If any product candidates in the CYTO-200 or CYTO-400 AIMS programs receive marketing approval from the FDA or other regulatory body for any of the indications Cytocom intends to build a specialty focused infrastructure to commercialize the approved product or products with a dedicated, specialty sales organization targeting the physicians specializing in these conditions. If any of Cytocom’s current product candidates receive regulatory approval in jurisdictions outside the United States, it expects to pursue a variety of licensing, collaboration, distribution and other marketing arrangements with one or more third parties to commercialize its products in the applicable markets. Cytocom has established partnerships for the manufacture of its product candidates and plans to scale up manufacturing to support commercial supply as necessary. Currently, Cytocom is seeking to engage large contract manufacturing organizations to assist in the clinical and commercial production of CYTO-201 and is evaluating organizations to assist in the large-scale production of CYTO-401.
|
•
|
Leverage Cytocom’s AIMS platform to develop product candidates for additional indications. Cytocom will seek to leverage its AIMS platform to develop therapies for multiple cancers, HINI, influenza A and autoimmune/inflammatory diseases. Cytocom may also seek to develop CYTO-200 analogs for the treatment of other dermatology, oncology, hematology and neurology related conditions.
|
•
|
Evaluate business development opportunities and potential collaborations. Cytocom plans to evaluate the merits of entering into collaboration agreements with other pharmaceutical or biotechnology companies that may contribute to its ability to efficiently advance product candidates, build its product pipeline and concurrently advance a range of research and development programs. Cytocom is currently engaging potential companies, with global or regional interests in the Cytocom pipeline assets, that could provide capital and resources to advance the clinical development and commercialization of Cytocom’s pipeline.
|
•
|
Leverage acquisition of ImQuest Life Sciences to produce revenue and strengthen product development capabilities. Cytocom believes that the addition of ImQuest Life Sciences will provide Cytocom the potential to expand its relationships in the drug development arena while strengthening its own product development capabilities and revenue generation.
|
(1)
|
Dashed lines in the above pipeline chart for fibromyalgia, MS and hepatocellular cancer reflect Cytocom’s beliefs about the product’s stage of development. Cytocom has not yet filed INDs or had discussions with FDA about these indications or whether they can proceed with product development for these product candidates or indications.
|
(2)
|
The use of a dashed line for the pancreatic cancer indication reflects that FDA has recently reinstated the IND and that further development on pancreatic cancer is subject to discussions with FDA. CYTO-401 is targeted for a phase 2 or 3 clinical trial, expected to begin in the second half of 2021.
|
•
|
submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;
|
•
|
approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;
|
•
|
performance of adequate and well-controlled human clinical trials to establish the safety, potency and purity of the product candidate for each proposed indication, in accordance with current good clinical practices, or GCP;
|
•
|
preparation and submission to the FDA of an NDA for a drug product which includes not only the results of the clinical trials, but also, detailed information on the chemistry of and manufacture and quality controls for the product candidate and proposed labelling for one or more proposed indication(s);
|
•
|
review of the product candidate by an FDA advisory committee, where appropriate or if applicable;
|
•
|
satisfactory completion of an FDA inspection of the manufacturing facility or facilities, including those of third parties, at which the product candidate or components thereof are manufactured to assess compliance with current good manufacturing practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;
|
•
|
satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance with GLP and GCP and the integrity of clinical data in support of the NDA;
|
•
|
payment of user fees and securing FDA approval of the NDA to allow marketing of the new drug product; and
|
•
|
compliance with any post-approval requirements, including the potential requirement to implement a REMS and the potential requirement to conduct any post-approval studies required by the FDA.
|
•
|
restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
|
•
|
fines, warning letters, untitled letters, Form 483s or holds on post-approval clinical trials;
|
•
|
refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals;
|
•
|
product seizure or detention, or refusal to permit the import or export of products; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
that Cytocom will be the first to obtain approval for any drug for which it obtains orphan drug designation;
|
•
|
that orphan drug designation will result in any commercial advantage or reduce competition; or
|
•
|
that the limited exceptions to this exclusivity will not be invoked by the relevant regulatory authority.
|
•
|
Specifically, the applicant must certify with respect to each patent that:
|
•
|
the required patent information has not been filed;
|
•
|
the listed patent has expired;
|
•
|
the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or
|
•
|
the listed patent is invalid, is unenforceable or will not be infringed by the new product.
|
•
|
A certification that the new product will not infringe the already approved product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IV certification. If the applicant does not challenge the listed patents or indicates that it is not seeking approval of a patented method of use, the application will not be approved until all of the listed patents claiming the referenced product have expired (other than method of use patents involving indications for which the applicant is not seeking approval).
|
•
|
If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earliest of 30 months after the receipt of the Paragraph IV notice, expiration of the patent and a decision in the infringement case that is favorable to the ANDA applicant.
|
•
|
To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would. As a result, approval of a Section 505(b)(2) NDA can be stalled until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of an NCE, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earliest of 30 months, settlement of the lawsuit and a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
|
•
|
the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal health care program such as Medicare and Medicaid;
|
•
|
the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent or knowingly making, using or causing to made or used a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government;
|
•
|
HIPAA which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or making false statements relating to health care matters;
|
•
|
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
|
•
|
the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health care benefits, items or services;
|
•
|
the FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment;
|
•
|
numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the FTC Act), govern the collection, use, disclosure and protection of health-related and other personal information. Failure to comply with data protection laws and regulations could result in government enforcement actions and create liability, private litigation and/or adverse publicity;
|
•
|
the CCPA, which became effective on January 1, 2020, creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal data. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Similar laws have been proposed at the federal level and in other states;
|
•
|
the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services within the United States Department of Health and Human Services, information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;
|
•
|
federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs;
|
•
|
federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and
|
•
|
analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to health care items or services that are reimbursed by non-government third-party payors, including private insurers.
|
•
|
In March 2010, the ACA was enacted, which significantly changed the way healthcare is financed by both governmental and private insurers. Among the provisions of the ACA of importance to the pharmaceutical and biotechnology industry are the following:
|
•
|
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;
|
•
|
an increase in the rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for branded and generic drugs, respectively;
|
•
|
a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts to negotiated prices of applicable brand drugs to eligible beneficiaries during 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 covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;
|
•
|
expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
|
•
|
a licensure framework for follow-on biologic products;
|
•
|
a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;
|
•
|
a requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
|
•
|
establishment of a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending that began on January 1, 2011.
|
•
|
the applicant must complete an identified program of studies within a time period specified by the competent authority, the results of which form the basis of a reassessment of the benefit/risk profile;
|
•
|
the medicinal product in question may be supplied on medical prescription only and may in certain cases be administered only under strict medical supervision, possibly in a hospital and in the case of a radiopharmaceutical, by an authorized person; and
|
•
|
the package leaflet and any medical information must draw the attention of the medical practitioner to the fact that the particulars available concerning the medicinal product in question are as yet inadequate in certain specified respects.
|
•
|
Compliance with the European Union’s stringent pharmacovigilance or safety reporting rules must be ensured. These rules can impose post-authorization studies and additional monitoring obligations.
|
•
|
The manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the applicable E.U. laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice, or E.U. cGMP. These requirements include compliance with E.U. cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union.
|
•
|
The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European Union notably under Directive 2001/83EC, as amended, and E.U. Member State laws. Direct-to-consumer advertising of prescription medicines is prohibited across the European Union.
|
•
|
advances its product candidates through preclinical and clinical development;
|
•
|
seeks regulatory approval, prepares for and, if approved, proceeds to commercialization of its product candidates;
|
•
|
continues its research and development efforts and expands its pipeline of product candidates;
|
•
|
attracts, hires and retains additional personnel;
|
•
|
maintains, expands and protects its intellectual property portfolio;
|
•
|
implements operational, financial and management information systems; and changes associated with being a public company; and
|
•
|
establishes a sales, marketing and distribution infrastructure to commercialize any product candidate for which it may obtain marketing approval.
|
•
|
Level 1 – Quoted prices for identical instruments in active markets.
|
•
|
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable.
|
•
|
Level 3 – Instruments where significant value drivers are unobservable to third parties.
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Statements of Operations Data:
|
| |
|
| |
|
Operating expenses:
|
| |
|
| |
|
Research and development
|
| |
$5,263,829
|
| |
$587,000
|
Sales and marketing
|
| |
2,406
|
| |
—
|
General and administrative
|
| |
5,235,433
|
| |
2,227,176
|
Total operating expenses
|
| |
10,501,668
|
| |
2,814,176
|
Loss from operations
|
| |
(10,501,668)
|
| |
(2,814,176)
|
Other income (expense)
|
| |
|
| |
|
Interest income (expense), net
|
| |
(1,130,693)
|
| |
(124,233)
|
Other income (expense), net
|
| |
(461,500)
|
| |
(285,613)
|
Net loss
|
| |
$(12,093,861)
|
| |
$(3,224,022)
|
|
| |
2020
|
| |
2019
|
| |
Variance
|
Patent expenses
|
| |
$3,948,533
|
| |
$600,000
|
| |
$3,348,533
|
Payroll R&D expenses
|
| |
593,738
|
| |
—
|
| |
593,738
|
Trials
|
| |
191,214
|
| |
—
|
| |
191,214
|
Contracted technical services
|
| |
470,881
|
| |
3,000
|
| |
467,881
|
Professional fees
|
| |
38,834
|
| |
(16,000)
|
| |
54,834
|
Other expenses
|
| |
20,629
|
| |
—
|
| |
20,629
|
Totals
|
| |
$5,263,829
|
| |
$587,000
|
| |
$4,676,829
|
|
| |
2020
|
| |
2019
|
| |
Variance
|
Payroll G&A expenses
|
| |
$3,586,826
|
| |
$387,000
|
| |
$3,199,826
|
Professional fees
|
| |
841,895
|
| |
411,115
|
| |
430,780
|
Investor related expenses
|
| |
118,501
|
| |
3,383
|
| |
115,118
|
Consultants and contractors
|
| |
594,274
|
| |
1,420,500
|
| |
(826,226)
|
Travel expenses
|
| |
51,527
|
| |
2,040
|
| |
49,487
|
Other
|
| |
42,411
|
| |
3,138
|
| |
39,272
|
|
| |
$5,235,433
|
| |
$2,227,176
|
| |
$3,008,257
|
|
| |
2020
|
| |
2019
|
| |
Variance
|
Interest expense
|
| |
$(1,130,693)
|
| |
$(124,233)
|
| |
$(1,006,460)
|
Other expense
|
| |
(461,500)
|
| |
(285,613)
|
| |
(175,887)
|
Total Other expense
|
| |
$(1,592,193)
|
| |
$(409,846)
|
| |
$(1,182,347)
|
|
| |
Three months ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Statements of Operations Data:
|
| |
|
| |
|
Operating expenses:
|
| |
|
| |
|
Research and development
|
| |
$1,024,344
|
| |
$28,000
|
Sales and marketing
|
| |
2,796
|
| |
—
|
General and administrative
|
| |
4,166,889
|
| |
83,919
|
Total operating expenses
|
| |
5,194,029
|
| |
111,919
|
Loss from operations
|
| |
5,194,029
|
| |
111,919
|
Other income (expense)
|
| |
|
| |
|
Interest income (expense), net
|
| |
(92,617 )
|
| |
(36,191)
|
Other income (expense), net
|
| |
—
|
| |
(500,000)
|
Net loss
|
| |
$(5,286,646)
|
| |
$(648,110)
|
|
| |
2021
|
| |
2020
|
| |
Variance
|
Patent expenses
|
| |
$171,730
|
| |
$25,000
|
| |
$146,730
|
Payroll R&D expenses
|
| |
501,294
|
| |
—
|
| |
501,294
|
Trials
|
| |
111,800
|
| |
—
|
| |
118,800
|
Contracted technical services
|
| |
212,663
|
| |
3,000
|
| |
209,663
|
Professional fees
|
| |
12,367
|
| |
—
|
| |
12,367
|
Other expenses
|
| |
14,488
|
| |
—
|
| |
14,488
|
Totals
|
| |
$1,024,342
|
| |
$28,000
|
| |
$996,342
|
|
| |
2021
|
| |
2020
|
| |
Variance
|
Payroll G&A expenses
|
| |
$ 2,616,755
|
| |
$66,000
|
| |
$ 2,550,755
|
Professional fees
|
| |
922,017
|
| |
735
|
| |
921,281
|
Investor related expenses
|
| |
91,576
|
| |
2,765
|
| |
88,811
|
Consultants and contractors
|
| |
471,289
|
| |
12,500
|
| |
458,789
|
Travel expenses
|
| |
19,193
|
| |
0
|
| |
19,193
|
Other
|
| |
46,059
|
| |
1,919
|
| |
44,140
|
|
| |
$4,166,889
|
| |
$83,919
|
| |
$4,082,970
|
|
| |
2021
|
| |
2020
|
| |
Variance
|
Interest expense
|
| |
$(92,617)
|
| |
$(36,191)
|
| |
$(56,426)
|
Loss on extinguishment of debt
|
| |
—
|
| |
(500,000)
|
| |
500,000
|
Total Other expense (income)
|
| |
$(92,617)
|
| |
$(536,191)
|
| |
$443,833
|
|
| |
For the Year Ended
December 31,
|
| |
|
|||
|
| |
2020
|
| |
2019
|
| |
Variance
|
Net cash used in operating activities
|
| |
$(5,082,144)
|
| |
$(240,370)
|
| |
$(4,841,774)
|
Net cash (used in)/ provided by investing activities
|
| |
(9,637)
|
| |
—
|
| |
(9,637)
|
Net cash provided by financing activities
|
| |
5,684,000
|
| |
231,000
|
| |
5,453,000
|
Increase/ (decrease) in cash and cash equivalents
|
| |
592,219
|
| |
(9,370)
|
| |
601,589
|
Cash and cash equivalents at beginning of period
|
| |
1,650
|
| |
11,020
|
| |
(9,370)
|
Cash and cash equivalents at end of period
|
| |
593,869
|
| |
1,650
|
| |
(592,219)
|
|
| |
For the three months
ended
March 31,
|
| |
Variance
|
|||
|
| |
2021
|
| |
2020
|
| ||
Net cash used in operating activities
|
| |
$(2,592,271)
|
| |
$(1,552)
|
| |
$(2,905,320)
|
Net cash (used in)/ provided by investing activities
|
| |
(4,685)
|
| |
—
|
| |
(4,685)
|
Net cash provided by financing activities
|
| |
2,155,000
|
| |
—
|
| |
2,469,600
|
Increase/ (decrease) in cash and cash equivalents
|
| |
(441,956)
|
| |
(1,552)
|
| |
(440,405)
|
Cash and cash equivalents at beginning of period
|
| |
593,869
|
| |
1,650
|
| |
592,219
|
Cash and cash equivalents at end of period
|
| |
151,913
|
| |
98
|
| |
151,815
|
Name
|
| |
Age
|
| |
Position
|
Executive Officers:
|
| |
|
| |
|
Michael K. Handley
|
| |
50
|
| |
President and Chief Executive Officer; Director
|
Taunia Markvicka, Pharm.D., M.B.A.
|
| |
52
|
| |
Chief Operating Officer; Director
|
Peter Aronstam, Ph.D.
|
| |
68
|
| |
Chief Financial Officer
|
Clifford Selsky, M.D., Ph.D.
|
| |
72
|
| |
Chief Medical Officer
|
Cozette M. McAvoy, J.D., M.S.
|
| |
41
|
| |
Chief Legal Officer
|
Robert W. Buckheit, Jr., Ph.D.
|
| |
60
|
| |
Chief Technology Officer
|
Andrei Gudkov, Ph.D., D. Sci.
|
| |
64
|
| |
Global Head of Research & Development
|
|
| |
|
| |
|
Non-Employee Directors:
|
| |
|
| |
|
Steve Barbarick
|
| |
53
|
| |
Director
|
Randy Saluck, J.D., M.B.A.
|
| |
55
|
| |
Director
|
Lea Verny
|
| |
55
|
| |
Director
|
Position
|
| |
Annual Fee
|
| |
Compensated Directors
|
Board Member
|
| |
$30,000
|
| |
Ms. Verny, Mr. Saluck
|
Board Chair
|
| |
5,000
|
| |
Ms. Verny
|
Audit Committee Chair
|
| |
5,000
|
| |
Mr. Saluck
|
Name
|
| |
Paid or
earned
in cash
($)
|
| |
Total
($)
|
Randy S. Saluck, J.D., MBA(1)
|
| |
85,000
|
| |
85,000
|
Lea Verny(2)
|
| |
135,000
|
| |
135,000
|
Anna Evdokimova(2)
|
| |
—
|
| |
—
|
Ivan Fedyunin(2)
|
| |
—
|
| |
—
|
Alexander Andryuschechkin(2)
|
| |
—
|
| |
—
|
Daniil Talyanskiy(2)
|
| |
—
|
| |
—
|
(1)
|
Mr. Saluck held 20,250 options at December 31, 2020.
|
(2)
|
Mmes. Verny and Evdokimova and Messrs. Fedyunin, Andryuschechkin and Talyanskiy held no stock options as of December 31, 2020.
|
Name and Principal Position
|
| |
Year
|
| |
Salary
($)(1)
|
| |
Bonus
($)(2)
|
| |
Stock
Awards
($)(3)
|
| |
All Other
Compensation
($)
|
| |
Total
($)
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
Michael Handley
Chief Executive Officer
|
| |
2020
|
| |
281,350
|
| |
135,000
|
| |
2,281,250
|
| |
__
|
| |
2,697,600
|
Cozette McAvoy
Chief Legal Officer
|
| |
2020
|
| |
201,667
|
| |
81,856
|
| |
468,750
|
| |
__
|
| |
752,273
|
Dr. Clifford Selsky
Chief Medical Officer
|
| |
2020
|
| |
116,667
|
| |
81,250
|
| |
468,750
|
| |
__
|
| |
666,667
|
(1)
|
Amounts for Handley and McAvoy include consulting fees in the amounts of $28,850 and $20,000, respectively, paid to them as contractors in 2020 prior to the commencement of their employment with Cytocom, as well as salary earned by them in 2020, following the commencement of their employment.
|
(2)
|
These amounts reflect signing bonuses paid to each executive upon execution of his or her employment agreement with Cytocom in 2020 and, in the case of Ms. McAvoy, includes a $25,000 annual bonus in respect of her 2020 performance. Neither Mr. Handley or Dr. Selsky was awarded an annual bonus in respect of his 2020 performance.
|
(3)
|
These amounts reflect the full grant-date fair value of restricted stock units granted during 2020 and computed in accordance with FASB ASC Topic 718. We provide information regarding the assumptions used to calculate the value of all stock awards made to named executive officers in Note 2 to Cytocom’s audited financial statements included elsewhere in this Form S-4.
|
|
| |
Stock Awards
|
|||
Name
(a)
|
| |
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
(b)(1)
|
| |
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
(c)(2)
|
Michael Handley
Chief Executive Officer
|
| |
2,281,250
|
| |
3,855,313
|
Cozette McAvoy
Chief Legal Officer
|
| |
468,750
|
| |
792,188
|
Dr. Clifford Selsky
Chief Medical Officer
|
| |
468,750
|
| |
792,188
|
(1)
|
In each case, the amounts in this column represent the awards of Cytocom restricted stock units granted during 2020. Each award vests as follows: (a) sixty percent (60%) of the units will vest upon the earlier of: (i) of July 1, 2021, or (ii) upon the closing of any transaction or series of related transactions pursuant to which Cytocom common stock or any successor becomes traded on a national securities exchange, including pursuant to (A) any “reverse merger” or other transaction pursuant to which Cytocom common stock or any successor is exchanged for shares of common stock of an entity that is traded on a national securities exchange, or (B) any initial public offering of Cytocom common stock. The remaining forty percent (40%) of each executive’s restricted stock unit award vests (subject to the executive’s continued service) on August 15, 2022.
|
(2)
|
In each case, the amounts in this column represent accelerated vesting of restricted stock units that would otherwise vest upon July 1, 2021. For this purpose, each Cytocom restricted stock unit is estimated to be worth (i) the closing market price of Cleveland BioLabs common stock on December 31, 2020 multiplied by (ii) the number of shares of Cleveland BioLabs common stock then expected to be issuable in respect of one share of Cytocom common stock pursuant to the Merger Agreement (i.e., the exchange ratio). This results in an estimated value per unit of $1.69. Insofar as this estimate is a function of both the then current price of Cleveland BioLabs common stock and the exchange ratio (which itself is a function of, among other things, the price of Cleveland BioLabs common stock and the net cash positions of both Cleveland BioLabs and Cytocom), this estimate may vary significantly from the actual value ultimately received in respect of each restricted stock unit. For additional details regarding the calculation of the exchange ratio, please see the section titled “The Merger Agreement—Exchange Ratio Formula.”
|
•
|
either Cytocom or Cleveland BioLabs has been or are to be a participant;
|
•
|
the amounts involved exceeded or will exceed the lesser of $120,000 and 1% of the average of Cytocom’s or Cleveland BioLabs’ total assets at year end for the last two completed fiscal years, as applicable; and
|
•
|
any of Cytocom’s or Cleveland BioLabs’ directors, executive officers or holders of more than 5% of Cytocom’s or Cleveland BioLabs’ capital stock, or an affiliate or immediate family member of the foregoing persons, had or will have a direct or indirect material interest.
|
Provision
|
| |
Cytocom
|
| |
Cleveland BioLabs
|
ELECTIONS; VOTING; PROCEDURAL MATTERS
|
||||||
|
| |
|
| |
|
Authorized Capital Stock
|
| |
The authorized capital stock of Cytocom consists of 225,000,000 shares, of which 200,000,000 shares are designated as common stock, par value $0.001 per share and 25,000,000 shares are designated as preferred stock, par value $0.001 per share.
|
| |
The authorized capital stock of Cleveland BioLabs consists of 151,000,000 shares, of which 150,000,000 shares are designated as common stock, par value $0.005 per share and 1,000,000 shares are designated as preferred stock, par value $0.005 per share.
|
|
| |
|
| |
|
Number of Directors
|
| |
The bylaws of Cytocom provide that the board of directors shall consist of no less than one (1) member, as determined from time to time by the board of directors or action of the stockholders.
|
| |
The amended and restated bylaws, as amended, provide that the number of directors shall be established by a majority of the board of directors and never be less than the minimum number required under the DGCL or the amended and restated certificate of incorporation, as amended.
|
|
| |
|
| |
|
Stockholder Nominations and Proposals
|
| |
The amended and restated certificate of incorporation of Cytocom require advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders.
|
| |
Cleveland BioLabs’ amended and restated bylaws, as amended provide that, for nominations to the board of directors or for other business to be properly brought by a stockholder before a meeting of stockholders, the stockholder must first have given timely notice of the proposal in writing to our secretary. For an annual meeting, a stockholder’s notice generally must be delivered not less than 90 days nor more than 120 days prior to the anniversary of the date of the previous year’s annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be received not later than the 10th day following the day on which such notice of the date of the annual meeting was mailed or public disclosure was made, whichever occurs first.
|
|
| |
|
| |
|
Classified Board of Directors
|
| |
Cytocom does not have a classified board of directors. The bylaws of Cytocom provide that the directors shall be elected at the annual
|
| |
Cleveland BioLabs does not have a classified board of directors. The entire board of directors is elected at each annual meeting of
|
Provision
|
| |
Cytocom
|
| |
Cleveland BioLabs
|
|
| |
meeting of stockholders, except in the case of vacancies, and each director elected shall hold office until the next annual meeting of stockholders.
|
| |
stockholders, with a term lasting until the next annual meeting of stockholders.
|
|
| |
|
| |
|
Removal of Directors
|
| |
The bylaws of Cytocom provide that any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
|
| |
The amended and restated certificate of incorporation, as amended, and the amended and restated bylaws, as amended, of Cleveland BioLabs provide that the stockholders of Cleveland BioLabs may, at any time, remove any director, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding shares of capital stock of Cleveland BioLabs entitled to vote in connection with the election of directors.
|
|
| |
|
| |
|
Special Meeting of the Stockholders
|
| |
The bylaws of Cytocom provide that special meetings of the stockholders may be called at any time by the board of directors, the chairman of the board, the president, chief executive officer or by one or more stockholders holding shares in the aggregate entitled to cast not less than twenty-five percent (25%) of the votes at that meeting.
|
| |
The amended and restated certificate of incorporation, as amended, and the amended and restated bylaws, as amended, provide that special meetings of stockholders, for any purpose or purposes, may be called by (i) the chairman of the board, (ii) the board or (iii) any holder or holders of 10% or more of the outstanding voting power of the issued and outstanding shares of capital stock of Cleveland BioLabs, Inc. entitled to vote in connection with the election of directors.
|
|
| |
|
| |
|
Cumulative Voting
|
| |
Neither the amended and restated certificate of incorporation or the bylaws of Cytocom have a provision granting cumulative voting rights to stockholders.
|
| |
Neither the amended and restated certificate of incorporation, as amended, or the amended and restated bylaws, as amended, of Cleveland BioLabs have a provision granting cumulative voting rights to stockholders.
|
|
| |
|
| |
|
Vacancies
|
| |
The amended and restated certificate of incorporation and the bylaws of Cytocom provide that vacancies occurring on the board of directors for newly created directorships resulting from any increase in the authorized number
|
| |
The amended and restated certificate of incorporation, as amended, and the amended and restated bylaws, as amended, of Cleveland BioLabs provide that any vacancy on the board of directors that results from an increase in the
|
Provision
|
| |
Cytocom
|
| |
Cleveland BioLabs
|
|
| |
of directors may be filled by the vote of a majority of the remaining members of the board of directors, even if less than a quorum, or by a sole remaining director.
Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.
If, at the time of filing any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10%) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.
|
| |
number of directors may be filled by a majority of the directors then in office, provided that a quorum is present, and any other vacancy occurring on the board may be filled by a majority of the board then in office, even if less than a quorum, or by a sole remaining director.
|
|
| |
|
| |
|
Voting Stock
|
| |
Each stockholder of Cytocom is entitled to one vote for each share of common stock held by such stockholder. At all elections of directors the voting may but need not be by ballot and a plurality of the votes cast there shall elect. Except as otherwise required by law, all other matters shall be determined by a majority of the votes cast affirmatively or negatively.
On any matter, event or action submitted to the holders of
|
| |
The amended and restated bylaws, as amended, provide that capital stock registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the board of directors of such corporation or other entity or
|
Provision
|
| |
Cytocom
|
| |
Cleveland BioLabs
|
|
| |
Cytocom’s capital stock for a vote, one share of Series B preferred stock shall have a number of votes equal to twenty-four percent (24%) of the total votes eligible to be cast on such matter by the outstanding shares of the Company’s voting capital stock.
|
| |
agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or other fiduciary may vote stock registered in his name as such fiduciary, either in person or by proxy.
|
|
| |
|
| |
|
Notice of Stockholder Meeting
|
| |
The bylaws of Cytocom provide that written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.
|
| |
Under the amended and restated bylaws, as amended, notice shall be given by the secretary not less than ten (10) nor more than sixty (60) days before each meeting of stockholders, except as required by law, to each stockholder entitled to vote at such meeting, and to each stockholder not entitled to vote who is entitled to notice of the meeting. The notice must be written or printed and state the time and place of the meeting and must be given either by mail or by presenting it to such stockholder personally or by leaving it at his residence or usual place of business.
|
|
| |
|
| |
|
Conversion Rights
|
| |
The certificate of designations, preferences and rights of the holders of Cytocom’s series B preferred stock provides that holders of series B preferred can, at any time upon written notice to Cytocom, elect to convert each share of series B preferred stock into one (1) share of common stock.
Cytocom’s series A and A-1 preferred stock do not have optional conversion rights.
|
| |
N/A
|
|
| |
|
| |
|
Protective Provisions
|
| |
The certificate of designations, preferences and rights of the holders of Cytocom’s series A, A-1 and B preferred stock each provide that Cytocom cannot, written consent of the holders of the majority such class of preferred stock, alter or change any rights, preferences or privileges of that
|
| |
N/A
|
Provision
|
| |
Cytocom
|
| |
Cleveland BioLabs
|
|
| |
directors, voting together as a single class, to amend, alter or repeal Article X.
|
| |
|
|
| |
|
| |
|
Amendment of Bylaws
|
| |
The bylaws of Cytocom provide that the bylaws may be amended or repealed by the board of directors, subject to limitations contained in the bylaws, or the stockholders.
|
| |
The amended and restated bylaws of Cleveland BioLabs, as amended, may be altered, amended or repealed or new bylaws may be adopted by the stockholders or by the board of directors at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such proposed alteration, amendment, repeal or adoption of new bylaws is contained in the notice of such special meeting.
|
•
|
each person, or group of affiliated persons, known by Cytocom to beneficially own more than 5% of our common stock;
|
•
|
each of Cytocom’s directors;
|
•
|
each of Cytocom’s named executive officers; and
|
•
|
all of Cytocom’s current executive officers and directors as a group.
|
|
| |
Beneficial Ownership
|
|||
Name and Address of Beneficial Owner
|
| |
Number of Shares
|
| |
Percent of Total
|
5% Stockholders
|
| |
|
| |
|
Immune Therapeutics, Inc.(1)
|
| |
3,296,584
|
| |
8.98%
|
Robert J. Dailey(2)
|
| |
2,366,020
|
| |
6.45%
|
Noreen M. Griffin(3)
|
| |
2,414,489
|
| |
6.58%
|
Acuity Opportunities Fund I LLC(4)
|
| |
2,675,600
|
| |
7.29%
|
|
| |
|
| |
|
Named Executive Officers and Directors
|
| |
|
| |
|
Michael Handley(5)
|
| |
1,368,750
|
| |
3.73%
|
Peter Aronstam(6)
|
| |
652,375
|
| |
1.78%
|
Clifford Selsky(7)
|
| |
468,750
|
| |
1.28%
|
Cozette McAvoy(8)
|
| |
281,250
|
| |
*
|
All current executive officers and directors as a group (4 persons)(9)
|
| |
2,771,125
|
| |
7.55%
|
(1)
|
Immune Therapeutics, Inc. is managed through a board of directors comprised of Dr. Roscoe Moore and Mr. Kevin Philips (collectively, the “Immune Directors”). Each of the Immune Directors disclaims beneficial ownership of the shares held by Immune Therapeutics, Inc., except to the extent of his or her pecuniary interest therein if any. The business address for Immune Therapeutics, Inc. is 2431 Aloma Ave., Suite 124, Winter Park, Florida 32792.
|
(2)
|
Consists of 2,336,494 shares of common stock directly held by Mr. Dailey; 1,345 shares of common stock held by Mr. Dailey in joint tenancy with Christine Dailey; 26,009 shares of common stock held by Christine Dailey, Mr. Dailey’s spouse, and 2,172 shares of common stock held by RJ Dailey Construction Co., which is owned and managed by Mr. Dailey.
|
(3)
|
Consists of 6,300 shares of common stock held in the name of Griffin Enterprises Group LLC, which is 50% owned by Robert Wilson, Ms. Griffin’s son and an executive officer of Cytocom; 1,221,562 shares of common stock held by the Griffin Family Trust, an irrevocable trust that is not managed by Ms. Griffin; 250 shares of common stock held by Global Reverb Corporation, a corporation for which Ms. Griffin serves as Chief Executive Officer; 1,987 shares of common stock held by GDA Advisors, Inc., which is owned and managed by Ms. Griffin; 59,390 shares of common stock directly held by Ms. Griffin, and 1,125,000 shares of common stock represented by 1,125,000 restricted stock units held by Ms. Griffin that will vest immediately prior to the completion of the Merger.
|
(4)
|
Consists of (i) 299,000 shares of common stock held by Acuity Partners, LLC; (ii) 925,600 shares of common stock issuable upon conversion of Series A-1 Preferred Stock held by Acuity Opportunities Fund I LLC; (iii) 1,500,000 shares of common stock issuable upon conversion of Series A Preferred Stock held by Acuity Opportunities Fund I LLC, Series P (“Acuity Series P”) and (iv) 250,000 shares held by Acuity Opportunities Fund I LLC, Series 8 (“Acuity Series 8”). Each of Acuity Partners, LLC and Acuity Opportunities Fund I LLC is managed through a management committee comprised of two individuals, Bob Spiegel and Scott Kurland.
|
(5)
|
Consists of 1,368,750 shares of common stock represented by 1,368,750 restricted stock units held by Mr. Handley that will vest immediately prior to the completion of the Merger.
|
(6)
|
Consists of 408,625 shares of common stock directly held by Mr. Aronstam and 243,750 shares of common stock represented by 243,750 restricted stock units held by Mr. Aronstam that will vest immediately prior to the completion of the Merger.
|
(7)
|
Consists of 187,500 shares of common stock directly held by Dr. Selsky and 281,250 shares of common stock represented by 281,250 restricted stock units held by Dr. Selsky that will vest immediately prior to the completion of the Merger.
|
(8)
|
Consists of 281,250 shares of common stock represented by 281,250 restricted stock units held by Ms. McAvoy that will vest immediately prior to the completion of the Merger.
|
(9)
|
Consists of 596,125 shares of common stock and 2,175,000 shares of common stock represented by 2,175,000 restricted stock units that will vest immediately prior to the completion of the Merger.
|
Cleveland BioLabs, Inc.
|
| |
Cytocom Inc.
|
73 High Street
|
| |
2537 Research Boulevard, Suite 201
|
Buffalo, New York 14203
|
| |
Fort Collins, Colorado 80526
|
Attn: Investor Relations
|
| |
Attn: Investor Relations
|
Tel: (716) 849-6810
|
| |
Tel: (888) 613-8802
|
Email: czosh@cbiolabs.com
|
| |
Email: info@cytocom.com
|
•
|
We gained an understanding of the internal controls over the Company’s going concern evaluation, including the inputs and assumptions used in forecasted results.
|
•
|
We reviewed Company’s records and made specific inquiries of management to assess if there are additional factors that contribute to the uncertainties disclosed which included a possible merger with a Company that issued 2019 financial statements included a going concern exception.
|
•
|
We assessed whether the Company’s determination that there is no substantial doubt about the entity’s ability to continue as a going concern was adequately disclosed, including adequate disclosure of detail related to management’s plan.
|
•
|
We tested the reasonableness of the forecasted operating expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. This testing included inquiries with management, comparison of prior period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, market and industry factors and consideration of the Company’s relationships with its financing partners.
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
ASSETS
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$1,946,418
|
| |
$1,126,124
|
Short-term investments
|
| |
324,870
|
| |
452,301
|
Accounts receivable
|
| |
11,512
|
| |
378,865
|
Other current assets
|
| |
31,506
|
| |
45,381
|
Total current assets
|
| |
2,314,306
|
| |
2,002,671
|
Equipment, net
|
| |
3,715
|
| |
15,514
|
Other long-term assets
|
| |
—
|
| |
18,667
|
Total assets
|
| |
$2,318,021
|
| |
$2,036,852
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
Accounts payable
|
| |
$167,773
|
| |
$263,573
|
Accrued expenses
|
| |
136,838
|
| |
782,579
|
Accrued warrant liability
|
| |
—
|
| |
6,414
|
Total current liabilities
|
| |
304,611
|
| |
1,052,566
|
Non-current liabilities
|
| |
—
|
| |
—
|
Commitments and contingencies (Note 9)
|
| |
—
|
| |
—
|
Total liabilities
|
| |
304,611
|
| |
1,052,566
|
Stockholders’ equity:
|
| |
|
| |
|
Preferred stock, $.005 par value; 1,000,000 shares authorized as of December 31, 2020 and December 31, 2019, 0 shares issued and outstanding as of December 31, 2020 and December 31, 2019
|
| |
—
|
| |
—
|
Common stock, $.005 par value; 25,000,000 shares authorized as of December 31, 2020 and December 31, 2019, 13,376,062 and 11,298,239 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively
|
| |
66,876
|
| |
56,487
|
Additional paid-in capital
|
| |
166,762,778
|
| |
163,161,523
|
Accumulated other comprehensive loss
|
| |
(685,680)
|
| |
(568,030)
|
Accumulated deficit
|
| |
(169,104,029)
|
| |
(166,705,572)
|
Total Cleveland BioLabs, Inc. stockholders’ deficit
|
| |
(2,960,055)
|
| |
(4,055,592)
|
Noncontrolling interest in stockholders’ deficit
|
| |
4,973,465
|
| |
5,039,878
|
Total stockholders’ equity
|
| |
2,013,410
|
| |
984,286
|
Total liabilities and stockholders’ equity
|
| |
$2,318,021
|
| |
$2,036,852
|
|
| |
For the Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Revenues:
|
| |
|
| |
|
Grants and contracts
|
| |
$262,942
|
| |
$1,113,421
|
Operating expenses:
|
| |
|
| |
|
Research and development
|
| |
691,070
|
| |
1,656,427
|
General and administrative
|
| |
2,158,423
|
| |
1,817,830
|
Total operating expenses
|
| |
2,849,493
|
| |
3,474,257
|
Loss from operations
|
| |
(2,586,551)
|
| |
(2,360,836)
|
Other income (expense):
|
| |
|
| |
|
Interest and other income (expense)
|
| |
518,118
|
| |
(404,722)
|
Foreign exchange gain (loss)
|
| |
56,690
|
| |
(1,329)
|
Change in value of warrant liability
|
| |
(426,130)
|
| |
72,223
|
Total other income (expense)
|
| |
148,678
|
| |
(333,828)
|
Net loss
|
| |
(2,437,873)
|
| |
(2,694,664)
|
Net loss attributable to noncontrolling interests
|
| |
39,416
|
| |
47,677
|
Net loss attributable to Cleveland BioLabs, Inc.
|
| |
$(2,398,457)
|
| |
$(2,646,987)
|
Net loss available to common stockholders per share of common stock, basic and diluted
|
| |
$(0.19)
|
| |
$(0.23)
|
Weighted average number of shares used in calculating net loss per share, basic and diluted
|
| |
12,396,628
|
| |
11,298,239
|
|
| |
For the Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Net loss including noncontrolling interests
|
| |
$(2,437,873)
|
| |
$(2,694,664)
|
Other comprehensive income (loss):
|
| |
|
| |
|
Realized foreign currency translation
|
| |
(57,936)
|
| |
—
|
Foreign currency translation adjustment
|
| |
(86,711)
|
| |
64,923
|
Comprehensive loss including noncontrolling interests
|
| |
(2,582,520)
|
| |
(2,629,741)
|
Comprehensive loss attributable to noncontrolling interests
|
| |
66,413
|
| |
26,094
|
Comprehensive loss attributable to Cleveland BioLabs, Inc.
|
| |
$(2,516,107)
|
| |
$(2,603,647)
|
|
| |
For the Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Cash flows from operating activities:
|
| |
|
| |
|
Net loss
|
| |
$(2,437,873)
|
| |
$(2,694,664)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
| |
|
| |
|
Depreciation
|
| |
11,446
|
| |
13,782
|
Gain on equipment disposal
|
| |
—
|
| |
(50,200)
|
Noncash compensation
|
| |
13,500
|
| |
—
|
Realized foreign currency translation
|
| |
(57,938)
|
| |
—
|
Accrued liability extinguishment
|
| |
(501,892)
|
| |
—
|
Change in value of warrant liability
|
| |
426,130
|
| |
(72,223)
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable and other current assets
|
| |
380,146
|
| |
(68,478)
|
Other long-term assets
|
| |
18,667
|
| |
11,871
|
Accounts payable and accrued expenses
|
| |
(225,171)
|
| |
196,523
|
Net cash used in operating activities
|
| |
(2,372,985)
|
| |
(2,663,389)
|
Cash flows from investing activities:
|
| |
|
| |
|
Purchase of short-term investments
|
| |
(679,174)
|
| |
(1,243,508)
|
Sale of short-term investments
|
| |
734,617
|
| |
1,351,639
|
Proceeds from sale of equipment
|
| |
—
|
| |
50,200
|
Purchase of equipment
|
| |
—
|
| |
(1,548)
|
Net cash provided by investing activities
|
| |
55,443
|
| |
156,783
|
Cash flows from financing activities:
|
| |
|
| |
|
Issuance of common stock, net of offering costs
|
| |
2,783,425
|
| |
—
|
Exercise of warrants
|
| |
382,215
|
| |
—
|
Net cash provided by financing activities
|
| |
3,165,640
|
| |
—
|
Effect of exchange rate change on cash and equivalents
|
| |
(27,804)
|
| |
15,496
|
Increase (decrease) in cash and cash equivalents
|
| |
820,294
|
| |
(2,491,110)
|
Cash and cash equivalents at beginning of period
|
| |
1,126,124
|
| |
3,617,234
|
Cash and cash equivalents at end of period
|
| |
$1,946,418
|
| |
$1,126,124
|
Supplemental disclosure of cash flow information:
|
| |
|
| |
|
Supplemental schedule of non-cash financing activities:
|
| |
|
| |
|
Cashless exercise of warrants
|
| |
$432,504
|
| |
$—
|
|
| |
Common Stock
|
| |
Treasury Stock
|
| |
Additional
Paid-in
Capital
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||
Balance at December 31, 2018
|
| |
11,298,239
|
| |
$56,487
|
| |
—
|
| |
$—
|
| |
$163,161,523
|
Exercise of warrants
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Foreign currency translation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Balance at December 31, 2019
|
| |
11,298,239
|
| |
56,487
|
| |
—
|
| |
—
|
| |
163,161,523
|
Exercise of warrants
|
| |
555,945
|
| |
2,780
|
| |
—
|
| |
—
|
| |
811,939
|
Net loss
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
—
|
Realized foreign currency translation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Foreign currency translation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Issuance of common stock, net of offering costs
|
| |
1,521,878
|
| |
7,609
|
| |
—
|
| |
—
|
| |
2,789,316
|
Balance at December 31, 2020
|
| |
13,376,062
|
| |
$66,876
|
| |
—
|
| |
$—
|
| |
$166,762,778
|
|
| |
Accumulated Other
Comprehensive
Income (Loss)
|
| |
Accumulated Deficit
|
| |
Noncontrolling
Interests
|
| |
Total
|
Balance at December 31, 2018
|
| |
$(611,370)
|
| |
$(164,058,585)
|
| |
$5,065,972
|
| |
$3,614,027
|
Exercise of warrants
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net loss
|
| |
—
|
| |
(2,646,987)
|
| |
(47,677)
|
| |
(2,694,664)
|
Foreign currency translation
|
| |
43,340
|
| |
—
|
| |
21,583
|
| |
64,923
|
Balance at December 31, 2019
|
| |
(568,030)
|
| |
(166,705,572)
|
| |
5,039,878
|
| |
984,286
|
Exercise of warrants
|
| |
—
|
| |
—
|
| |
—
|
| |
814,719
|
Net loss
|
| |
—
|
| |
(2,398,457)
|
| |
(39,416)
|
| |
(2,437,873)
|
Realized foreign currency translation
|
| |
(57,936)
|
| |
—
|
| |
—
|
| |
(57,936)
|
Foreign currency translation
|
| |
(59,714)
|
| |
—
|
| |
(26,997)
|
| |
(86,711)
|
Issuance of common stock, net of offering costs
|
| |
—
|
| |
—
|
| |
—
|
| |
2,796,925
|
Balance at December 31, 2020
|
| |
$(685,680)
|
| |
$(169,104,029)
|
| |
$4,973,465
|
| |
$2,013,410
|
|
| |
Years ended December 31,
|
| |
Variance
|
|||
|
| |
2020
|
| |
2019
|
| ||
U.S. Department of Defense
|
| |
81.2%
|
| |
64.5%
|
| |
16.7%
|
Incuron, Inc
|
| |
18.8%
|
| |
35.5%
|
| |
-16.7%
|
|
| |
100.0%
|
| |
100.0%
|
| |
0.0%
|
Asset Category
|
| |
Estimated Useful Life
(in Years)
|
Laboratory equipment
|
| |
5
|
Furniture and fixtures
|
| |
5
|
Computer equipment
|
| |
3
|
|
| |
Gains and (losses) on foreign
exchange translations
|
| |
Total
|
Beginning balance
|
| |
$(568,030)
|
| |
$(568,030)
|
Realized foreign currency translation
|
| |
(57,936)
|
| |
(57,936)
|
Foreign currency translation
|
| |
(59,714)
|
| |
(59,714)
|
Ending balance
|
| |
$(685,680)
|
| |
$(685,680)
|
|
| |
As of December 31,
|
|||
Common Equivalent Securities
|
| |
2020
|
| |
2019
|
Warrants
|
| |
371,340
|
| |
327,253
|
Options
|
| |
76,064
|
| |
136,105
|
Total
|
| |
447,404
|
| |
463,358
|
•
|
Level 1 – Observable inputs for identical assets or liabilities such as quoted prices in active markets;
|
•
|
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable; and
|
•
|
Level 3 – Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use.
|
|
| |
As of December 31, 2020
|
|||||||||
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Assets:
|
| |
|
| |
|
| |
|
| |
|
Short-term investments
|
| |
$—
|
| |
$324,870
|
| |
$—
|
| |
$324,870
|
Total assets
|
| |
$—
|
| |
$324,870
|
| |
$—
|
| |
$324,870
|
Liabilities:
|
| |
|
| |
|
| |
|
| |
|
Accrued warrant liability
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
|
| |
As of December 31, 2019
|
|||||||||
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Assets:
|
| |
|
| |
|
| |
|
| |
|
Short-term investments
|
| |
$—
|
| |
$452,301
|
| |
$—
|
| |
$452,301
|
Total assets
|
| |
$—
|
| |
$452,301
|
| |
$—
|
| |
$452,301
|
Liabilities:
|
| |
|
| |
|
| |
|
| |
|
Accrued warrant liability
|
| |
$—
|
| |
$—
|
| |
$6,414
|
| |
$6,414
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Stock Price
|
| |
$3.45
|
| |
$0.60
|
Exercise Price
|
| |
$20.40
|
| |
$3.64 - 20.40
|
Term in years
|
| |
0.04
|
| |
1.04-1.60
|
Volatility
|
| |
69.29%
|
| |
84.59 - 98.24%
|
Annual rate of quarterly dividends
|
| |
0%
|
| |
0%
|
Discount rate- bond equivalent yield
|
| |
0.00%
|
| |
1.58 - 1.59%
|
|
| |
Year Ended
December 31, 2020
|
Beginning Balance
|
| |
$6,414
|
Total (gains) or losses, realized and unrealized, included in earnings(1)
|
| |
426,130
|
Settlements
|
| |
(432,544)
|
Balance at December 31, 2020
|
| |
$—
|
|
| |
Year Ended
December 31, 2019
|
Beginning Balance
|
| |
$78,637
|
Total (gains) or losses, realized and unrealized, included in earnings(1)
|
| |
(72,223)
|
Balance at December 31, 2019
|
| |
$6,414
|
(1)
|
Unrealized gains or losses related to the accrued warrant liability were included as change in value of warrant liability.
|
|
| |
December 31, 2020
|
|||||||||
Description
|
| |
Fair Value
|
| |
Valuation Technique
|
| |
Unobservable Input
|
| |
Range in years
|
Accrued warrant liability
|
| |
$—
|
| |
Black-Scholes pricing model
|
| |
Expected term
|
| |
0.04
|
|
| |
As of December 31,
|
|||
|
| |
2020
|
| |
2019
|
Computer equipment
|
| |
$89,362
|
| |
$98,307
|
Lab equipment
|
| |
39,651
|
| |
39,651
|
Furniture
|
| |
3,100
|
| |
3,100
|
|
| |
132,113
|
| |
141,058
|
Less accumulated depreciation
|
| |
(128,398)
|
| |
(125,544)
|
Equipment, net
|
| |
$3,715
|
| |
$15,514
|
|
| |
June 3, 2020
|
Stock Price
|
| |
$1.65
|
Exercise Price
|
| |
$2.03 - $2.62
|
Term in years
|
| |
5.00
|
Volatility
|
| |
98.20%
|
Annual rate of quarterly dividends
|
| |
0%
|
Discount rate- bond equivalent yield
|
| |
0.38%
|
|
| |
Number of
Warrants
|
| |
Weighted Average
Exercise Price
|
Outstanding at December 31, 2018
|
| |
528,054
|
| |
$10.90
|
Forfeited, Canceled
|
| |
(200,801)
|
| |
14.18
|
Outstanding at December 31, 2019
|
| |
327,253
|
| |
8.89
|
Granted
|
| |
871,630
|
| |
2.11
|
Exercised
|
| |
(827,543)
|
| |
2.03
|
Outstanding at December 31, 2020
|
| |
371,340
|
| |
$7.28
|
|
| |
Year ended December 31, 2020
|
|||||||||
|
| |
Total Stock
Options
Outstanding
|
| |
Weighted
Average
Exercise Price
per Share
|
| |
Nonvested
Stock Options
|
| |
Weighted
Average Grant
Date Fair Value
per Share
|
December 31, 2019
|
| |
136,105
|
| |
$40.07
|
| |
—
|
| |
$—
|
Forfeited, Canceled
|
| |
(60,041)
|
| |
56.19
|
| |
—
|
| |
—
|
December 31, 2020
|
| |
76,064
|
| |
$27.35
|
| |
—
|
| |
$—
|
|
| |
Stock Options
Outstanding
|
| |
Vested Stock
Options
|
Quantity
|
| |
76,064
|
| |
76,064
|
Weighted-average exercise price
|
| |
$27.35
|
| |
$27.35
|
Weighted Average Remaining Contractual Term (in Years)
|
| |
3.24
|
| |
3.24
|
Intrinsic value
|
| |
$12,300
|
| |
$12,300
|
|
| |
For the Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
US operations
|
| |
$(2,352,514)
|
| |
$(2,562,960)
|
Foreign operations
|
| |
(85,359)
|
| |
(131,704)
|
|
| |
$(2,437,873)
|
| |
$(2,694,664)
|
|
| |
As of December 31,
|
|||
|
| |
2020
|
| |
2019
|
Deferred tax assets:
|
| |
|
| |
|
Operating loss carryforwards
|
| |
$36,791,000
|
| |
$36,449,000
|
Accrued expenses and stock compensation
|
| |
5,922,000
|
| |
5,940,000
|
Tax credit carryforwards
|
| |
4,045,000
|
| |
4,017,000
|
Intellectual property
|
| |
2,460,000
|
| |
4,049,000
|
Equipment
|
| |
40,000
|
| |
71,000
|
Other
|
| |
36,000
|
| |
—
|
Total deferred tax assets
|
| |
49,294,000
|
| |
50,526,000
|
Deferred tax liabilities
|
| |
—
|
| |
—
|
Net deferred tax asset
|
| |
49,294,000
|
| |
50,526,000
|
Valuation allowance
|
| |
(49,294,000)
|
| |
(50,526,000)
|
|
| |
$—
|
| |
$—
|
|
| |
For the Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Tax at the U.S. statutory rate
|
| |
$(512,000)
|
| |
$(566,000)
|
Change in value of warrant liability
|
| |
89,000
|
| |
(15,000)
|
Valuation allowance
|
| |
289,000
|
| |
581,000
|
Merger facilitative costs
|
| |
134,000
|
| |
—
|
|
| |
$—
|
| |
$—
|
|
| |
Unrecognized Tax
Benefits
|
| |
Interest and Penalties
|
Balance at January 1, 2019
|
| |
$504,000
|
| |
$—
|
Deferred tax position
|
| |
6,000
|
| |
—
|
Balance at December 31, 2019
|
| |
510,000
|
| |
—
|
Deferred tax position
|
| |
4,000
|
| |
—
|
Balance at December 31, 2020
|
| |
$514,000
|
| |
$—
|
|
| |
March 31, 2021
|
| |
December 31,
2020
|
|
| |
(Unaudited)
|
| |
|
ASSETS
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$14,359,297
|
| |
$1,946,418
|
Short-term investments
|
| |
264,193
|
| |
324,870
|
Accounts receivable
|
| |
—
|
| |
11,512
|
Other current assets
|
| |
70,120
|
| |
31,506
|
Total current assets
|
| |
14,693,610
|
| |
2,314,306
|
Equipment, net
|
| |
6,148
|
| |
3,715
|
Total assets
|
| |
$14,699,758
|
| |
$2,318,021
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
Accounts payable
|
| |
$309,721
|
| |
$167,773
|
Accrued expenses
|
| |
208,430
|
| |
136,838
|
Total liabilities
|
| |
518,151
|
| |
304,611
|
Stockholders’ equity:
|
| |
|
| |
|
Preferred stock, $.005 par value; 1,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020
|
| |
—
|
| |
—
|
Common stock, $.005 par value; 25,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 15,468,945 and 13,376,062 shares issued and outstanding as of March 31, 2021 and December 31, 2020
|
| |
77,340
|
| |
66,876
|
Additional paid-in capital
|
| |
179,475,388
|
| |
166,762,778
|
Accumulated other comprehensive loss
|
| |
(690,864)
|
| |
(685,680)
|
Accumulated deficit
|
| |
(169,642,127)
|
| |
(169,104,029)
|
Total Cleveland BioLabs, Inc. stockholders’ equity (deficit)
|
| |
9,219,737
|
| |
(2,960,055)
|
Noncontrolling interest in stockholders’ equity
|
| |
4,961,870
|
| |
4,973,465
|
Total stockholders’ equity
|
| |
14,181,607
|
| |
2,013,410
|
Total liabilities and stockholders’ equity
|
| |
$14,699,758
|
| |
$2,318,021
|
|
| |
For the Three Months Ended
March 31,
|
|||
|
| |
2021
|
| |
2020
|
Revenues:
|
| |
|
| |
|
Grants and contracts
|
| |
$—
|
| |
$156,042
|
Operating expenses:
|
| |
|
| |
|
Research and development
|
| |
118,258
|
| |
218,208
|
General and administrative
|
| |
433,004
|
| |
382,166
|
Total operating expenses
|
| |
551,262
|
| |
600,374
|
Loss from operations
|
| |
(551,262)
|
| |
(444,332)
|
Other income (expense):
|
| |
|
| |
|
Interest and other income
|
| |
3,915
|
| |
2,900
|
Foreign exchange gain
|
| |
142
|
| |
393
|
Change in value of warrant liability
|
| |
—
|
| |
(160,689)
|
Total other income (expense)
|
| |
4,057
|
| |
(157,396)
|
Net loss
|
| |
(547,205)
|
| |
(601,728)
|
Net loss attributable to noncontrolling interests
|
| |
9,107
|
| |
13,196
|
Net loss attributable to Cleveland BioLabs, Inc.
|
| |
$(538,098)
|
| |
$(588,532)
|
Net loss attributable to common stockholders per share of common stock, basic and diluted
|
| |
$(0.04)
|
| |
$(0.05)
|
Weighted average number of shares used in calculating net loss per share, basic and diluted
|
| |
14,227,014
|
| |
11,353,456
|
|
| |
For the Three Months Ended
March 31,
|
|||
|
| |
2021
|
| |
2020
|
Net loss including noncontrolling interests
|
| |
$(547,205)
|
| |
$(601,728)
|
Other comprehensive loss:
|
| |
|
| |
|
Foreign currency translation adjustment
|
| |
(7,672)
|
| |
(108,100)
|
Comprehensive loss including noncontrolling interests
|
| |
(554,877)
|
| |
(709,828)
|
Comprehensive loss attributable to noncontrolling interests
|
| |
11,595
|
| |
46,819
|
Comprehensive loss attributable to Cleveland BioLabs, Inc.
|
| |
$(543,282)
|
| |
$(663,009)
|
|
| |
Common Stock
|
| |
Treasury Stock
|
| |
Additional
Paid-In
Capital
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||
Balance at December 31, 2019
|
| |
11,298,239
|
| |
$56,487
|
| |
—
|
| |
$—
|
| |
$163,161,523
|
Exercise of warrants
|
| |
105,000
|
| |
53
|
| |
—
|
| |
—
|
| |
504,853
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Foreign currency translation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Balance at March 31, 2020
|
| |
11,403,239
|
| |
$56,540
|
| |
—
|
| |
$—
|
| |
$163,666,376
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance at December 31, 2020
|
| |
13,376,062
|
| |
$66,876
|
| |
—
|
| |
$—
|
| |
$166,762,778
|
Exercise of warrants
|
| |
92,883
|
| |
464
|
| |
—
|
| |
—
|
| |
(464)
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Foreign currency translation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Issuance of common stock, net of offering costs
|
| |
2,000,000
|
| |
10,000
|
| |
—
|
| |
—
|
| |
12,713,074
|
Balance at March 31, 2021
|
| |
15,468,945
|
| |
$77,340
|
| |
—
|
| |
$—
|
| |
$179,475,388
|
|
| |
Accumulated
Other
Comprehensive
Loss
|
| |
Accumulated
Deficit
|
| |
Noncontrolling
Interests
|
| |
Total
|
Balance at December 31, 2019
|
| |
$(568,030)
|
| |
$(166,705,572)
|
| |
$5,039,878
|
| |
$984,286
|
Exercise of warrants
|
| |
—
|
| |
—
|
| |
—
|
| |
504,906
|
Net loss
|
| |
—
|
| |
(588,532)
|
| |
(13,196)
|
| |
(601,728)
|
Foreign currency translation
|
| |
(74,777)
|
| |
—
|
| |
(33,623)
|
| |
(108,100)
|
Balance at March 31, 2020
|
| |
$(642,807)
|
| |
$(167,294,104)
|
| |
$4,993,059
|
| |
$779,364
|
|
| |
|
| |
|
| |
|
| |
|
Balance at December 31, 2020
|
| |
$(685,680)
|
| |
$(169,104,029)
|
| |
$4,973,465
|
| |
$2,013,410
|
Exercise of warrants
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net loss
|
| |
—
|
| |
(538,098)
|
| |
(9,107)
|
| |
(547,205)
|
Foreign currency translation
|
| |
(5,184)
|
| |
—
|
| |
(2,488)
|
| |
(7,672)
|
Issuance of common stock, net of offering costs
|
| |
—
|
| |
—
|
| |
—
|
| |
12,723,074
|
Balance at March 31, 2021
|
| |
$(690,864)
|
| |
$(169,642,127)
|
| |
$4,961,870
|
| |
$14,181,607
|
|
| |
For the Three Months Ended
March 31,
|
|||
|
| |
2021
|
| |
2020
|
Cash flows from operating activities:
|
| |
|
| |
|
Net loss
|
| |
$(547,205)
|
| |
$(601,728)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
| |
|
| |
|
Depreciation and amortization
|
| |
1,883
|
| |
3,080
|
Change in value of warrant liability
|
| |
—
|
| |
160,689
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable and other current assets
|
| |
(27,227)
|
| |
8,074
|
Accounts payable and accrued expenses
|
| |
209,456
|
| |
4,292
|
Net cash used in operating activities
|
| |
(363,093)
|
| |
(425,593)
|
Cash flows from investing activities:
|
| |
|
| |
|
Sale of short-term investments
|
| |
53,807
|
| |
—
|
Net cash provided by investing activities
|
| |
53,807
|
| |
—
|
Cash flows from financing activities:
|
| |
|
| |
|
Issuance of common stock, net of offering costs
|
| |
12,723,074
|
| |
—
|
Exercise of warrants
|
| |
—
|
| |
382,215
|
Net cash provided by financing activities
|
| |
12,723,074
|
| |
382,215
|
Effect of exchange rate change on cash and equivalents
|
| |
(909)
|
| |
(23,935)
|
Increase (decrease) in cash and cash equivalents
|
| |
12,412,879
|
| |
(67,313)
|
Cash and cash equivalents at beginning of period
|
| |
1,946,418
|
| |
1,126,124
|
Cash and cash equivalents at end of period
|
| |
$14,359,297
|
| |
$1,058,811
|
|
| |
Three Months Ended March 31,
|
||||||
Customer
|
| |
2021
|
| |
2020
|
| |
Variance
|
Department of Defense
|
| |
0.0%
|
| |
73.7%
|
| |
(73.7)%
|
Incuron
|
| |
0.0%
|
| |
26.3%
|
| |
(26.3)%
|
Total
|
| |
0.0%
|
| |
100.0%
|
| |
(100)%
|
|
| |
Gains and losses
on foreign
exchange
translations
|
Beginning balance
|
| |
$(685,680)
|
Other comprehensive income (loss) before reclassifications
|
| |
(5,184)
|
Amounts reclassified from accumulated other comprehensive loss
|
| |
—
|
Ending balance
|
| |
$(690,864)
|
|
| |
As of March 31,
|
|||
Common Equivalent Securities
|
| |
2021
|
| |
2020
|
Warrants
|
| |
299,519
|
| |
222,253
|
Options
|
| |
67,901
|
| |
96,397
|
Total
|
| |
367,420
|
| |
318,650
|
•
|
Level 1 – Observable inputs for identical assets or liabilities such as quoted prices in active markets;
|
•
|
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable; and
|
•
|
Level 3 – Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use.
|
|
| |
As of March 31, 2021
|
|||||||||
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Assets:
|
| |
|
| |
|
| |
|
| |
|
Short-term investments
|
| |
$—
|
| |
$264,193
|
| |
$—
|
| |
$264,193
|
Total assets
|
| |
$—
|
| |
$264,193
|
| |
$—
|
| |
$264,193
|
|
| |
As of December 31, 2020
|
|||||||||
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
Assets:
|
| |
|
| |
|
| |
|
| |
|
Short-term investments
|
| |
$—
|
| |
$324,870
|
| |
$—
|
| |
$324,870
|
Total assets
|
| |
$—
|
| |
$324,870
|
| |
$—
|
| |
$324,870
|
Accrued warrant liability
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
|
| |
Three Months Ended
March 31, 2021
|
| |
Three Months
Ended
March 31, 2020
|
|
| |
Accrued Warrant
Liability
|
| |
Accrued Warrant
Liability
|
Beginning Balance
|
| |
$—
|
| |
$6,414
|
Total (gains) or losses, realized and unrealized, included in earnings(1)
|
| |
—
|
| |
160,689
|
Settlements
|
| |
—
|
| |
(122,691)
|
Ending Balance
|
| |
$—
|
| |
$44,412
|
(1)
|
Unrealized gains or losses related to the accrued warrant liability were included as change in value of accrued warrant liability. There were no realized gains or losses for the three months ended March 31, 2021 and 2020.
|
|
| |
Total Stock
Options
Outstanding
|
| |
Weighted
Average Exercise
Price per Share
|
December 31, 2020
|
| |
76,064
|
| |
$27.35
|
Granted
|
| |
—
|
| |
—
|
Vested
|
| |
—
|
| |
—
|
Forfeited, Canceled
|
| |
(8,163)
|
| |
143.62
|
March 31, 2021
|
| |
67,901
|
| |
$13.37
|
|
| |
As of March 31, 2021
|
|||
|
| |
Stock Options
Outstanding
|
| |
Vested Stock
Options
|
Quantity
|
| |
67,901
|
| |
67,901
|
Weighted Average Exercise Price
|
| |
$13.37
|
| |
$13.37
|
Weighted Average Remaining Contractual Term (in Years)
|
| |
3.36
|
| |
3.36
|
Intrinsic Value
|
| |
$86,400
|
| |
$86,400
|
|
| |
Number of
Warrants
|
| |
Weighted
Average Exercise
Price
|
December 31, 2020
|
| |
371,340
|
| |
$7.28
|
Granted
|
| |
150,000
|
| |
8.75
|
Exercised
|
| |
(119,361)
|
| |
2.03
|
Forfeited, Canceled
|
| |
(102,460)
|
| |
20.40
|
March 31, 2021
|
| |
299,519
|
| |
$5.62
|
| | ||
Financial Statements as of and for the years ended December 31, 2020 and 2019
|
| |
|
| | ||
| | ||
| | ||
| | ||
| | ||
Financial Statements as of and for the period ended March 31, 2021 and 2020
|
| |
|
| | ||
| | ||
| | ||
| | ||
| |
|
| |
Years ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
|
| |
|
Operating expenses:
|
| |
|
| |
|
Sales and marketing
|
| |
$2,406
|
| |
$—
|
Research and development
|
| |
5,263,829
|
| |
587,000
|
General and administrative
|
| |
5,235,433
|
| |
2,227,176
|
LOSS FROM OPERATIONS
|
| |
(10,501,668)
|
| |
(2,814,176)
|
|
| |
|
| |
|
Other (expense) income:
|
| |
|
| |
|
Interest expense
|
| |
(1,130,693)
|
| |
(124,233)
|
Other (expense) income, net
|
| |
(461,500)
|
| |
(285,613)
|
TOTAL OTHER (EXPENSE) INCOME
|
| |
(1,592,193)
|
| |
(409,846)
|
|
| |
|
| |
|
NET LOSS
|
| |
(12,093,861)
|
| |
$(3,224,022)
|
|
| |
|
| |
|
Net loss per common share – basic and diluted
|
| |
$(0.56)
|
| |
$(0.16)
|
Weighted average number of shares outstanding
|
| |
21,558,650
|
| |
19,607,850
|
|
| |
Common stock
|
| |
Preferred Stock-
Series A
|
| |
Preferred Stock-Series
A-1
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Stockholders’
Deficit
|
|||||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at December 31, 2018
|
| |
19,215,749
|
| |
$19,216
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$9,433,580
|
| |
$(12,313,438)
|
| |
$(2,860,642)
|
Stock issued for services
|
| |
1,131,250
|
| |
1,131
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,873,673
|
| |
—
|
| |
1,874,804
|
Net Loss
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(3,224,022)
|
| |
(3,224,022)
|
Balance December 31, 2019
|
| |
20,346,999
|
| |
$20,347
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$11,307,253
|
| |
$(15,537,460)
|
| |
$(4,209,860)
|
Common stock issued for cash
|
| |
8,000
|
| |
8
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
7,992
|
| |
—
|
| |
8,000
|
Common stock issued for license
|
| |
325,250
|
| |
325
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
324,925
|
| |
—
|
| |
325,250
|
Common stock issued for debt conversion
|
| |
3,282,103
|
| |
3,282
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,435,724
|
| |
—
|
| |
3,439,006
|
Common stock issued for extension of debt maturities
|
| |
250,000
|
| |
250
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
499,750
|
| |
—
|
| |
500,000
|
Common stock issued for services
|
| |
125,000
|
| |
125
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
499,875
|
| |
—
|
| |
500,000
|
Preferred Stock – Series A issued for cash
|
| |
—
|
| |
—
|
| |
2,375,000
|
| |
2,375
|
| |
—
|
| |
—
|
| |
2,211,025
|
| |
—
|
| |
2,213,400
|
Preferred Stock – Series A-1 issued for cash
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,125,000
|
| |
2,125
|
| |
2,122,875
|
| |
—
|
| |
2,125,000
|
Preferred stock – Series A-1 stock issuances due
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,345,600
|
| |
—
|
| |
1,345,600
|
Stock based compensation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,191,728
|
| |
—
|
| |
2,191,728
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(12,093,861)
|
| |
(12,093,861)
|
Balance December 31, 2020
|
| |
24,337,352
|
| |
$24,337
|
| |
2,375,000
|
| |
$2,375
|
| |
2,125,000
|
| |
$2,125
|
| |
$23,946,747
|
| |
$(27,631,321)
|
| |
$(3,655,737)
|
|
| |
Years ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
| |
|
| |
|
Net loss
|
| |
$(12,093,861)
|
| |
$(3,224,022)
|
Reconciliation of net loss to net cash used in operating activities:
|
| |
|
| |
|
Stock issued for services
|
| |
2,699,728
|
| |
1,874,804
|
Depreciation
|
| |
947
|
| |
—
|
Non-cash operating lease asset amortization
|
| |
90
|
| |
—
|
Common stock issued for license agreement
|
| |
325,250
|
| |
—
|
Assumption of debt in exchange for license agreement
|
| |
4,036,743
|
| |
—
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Other current assets
|
| |
(331,878)
|
| |
415,000
|
Accounts payable and accrued expenses
|
| |
280,837
|
| |
868,203
|
Accounts payable and accrued expenses – related party
|
| |
—
|
| |
(174,355)
|
Net cash used in operating activities
|
| |
(5,082,144)
|
| |
(240,370)
|
|
| |
|
| |
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
| |
|
| |
|
Purchase of property and equipment
|
| |
(9,637)
|
| |
—
|
NET CASH FLOWS USED IN INVESTING ACTIVITIES
|
| |
(9,637)
|
| |
—
|
|
| |
|
| |
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
| |
|
| |
|
Proceeds from issuance of preferred stock Series A
|
| |
2,275,000
|
| |
—
|
Payment of offering costs – preferred stock Series A
|
| |
(61,000)
|
| |
—
|
Proceeds from issuance of preferred stock Series A-1
|
| |
2,125,000
|
| |
—
|
Proceeds from preferred stock Series A-1 to be issued
|
| |
1,345,600
|
| |
—
|
Proceeds from notes payable – related party
|
| |
—
|
| |
96,000
|
Proceeds from notes payable
|
| |
—
|
| |
135,000
|
|
| |
|
| |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| |
5,684,000
|
| |
231,000
|
|
| |
|
| |
|
Net (decrease) increase in cash
|
| |
592,219
|
| |
(9,370)
|
|
| |
|
| |
|
Cash and cash equivalents, beginning of year
|
| |
1,650
|
| |
11,020
|
|
| |
|
| |
|
Cash and cash equivalents, end of year
|
| |
$593,869
|
| |
1,650
|
|
| |
|
| |
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
| |
|
| |
|
|
| |
|
| |
|
Cash paid for interest
|
| |
$—
|
| |
$—
|
|
| |
|
| |
|
Cash paid for taxes
|
| |
$—
|
| |
$—
|
|
| |
|
| |
|
NON-CASH INVESTING AND FINANCING ACTIVITES:
|
| |
|
| |
|
Conversion of notes payable to equity
|
| |
$3,439,006
|
| |
$—
|
Common stock issued as a modification of debt terms
|
| |
$500,000
|
| |
$—
|
Asset Category
|
| |
Estimated
Useful Life
(in Years)
|
Laboratory equipment
|
| |
5
|
Furniture and fixtures
|
| |
5
|
Computer equipment
|
| |
3
|
•
|
Level 1 – Quoted prices for identical instruments in active markets.
|
•
|
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable.
|
•
|
Level 3 – Instruments where significant value drivers are unobservable to third parties.
|
•
|
Step 1: Identify the contract(s) with a customer
|
•
|
Step 2: Identify the performance obligations in the contract
|
•
|
Step 3: Determine the transaction price
|
•
|
Step 4: Allocate the transaction price to the performance obligations in the contract
|
•
|
Step 5: Recognize revenue when (or as) a performance obligation is satisfied
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Warrants
|
| |
250,000
|
| |
325,000
|
Total
|
| |
250,000
|
| |
325,000
|
|
| |
December 31, 2020
|
| |
December 31, 2019
|
Operating lease cost
|
| |
$ 3,347
|
| |
$ —
|
Variable lease cost
|
| |
—
|
| |
—
|
Total lease cost
|
| |
$ 3,347
|
| |
$ —
|
|
| |
December 31, 2020
|
| |
December 31, 2019
|
Cash paid for amounts included in the measurement of lease liabilities:
|
| |
|
| |
|
Operating cash flows from operating lease
|
| |
$3,437
|
| |
$ —
|
Right-of-use asset obtained in exchange for lease obligation:
|
| |
|
| |
|
Operating lease
|
| |
$ 101,048
|
| |
$ —
|
2021
|
| |
$39,163
|
2022
|
| |
40,254
|
2023
|
| |
37,807
|
Total minimum lease payments
|
| |
$117,224
|
Less: imputed interest
|
| |
16,086
|
Present value of future minimum lease payments
|
| |
$ 101,138
|
Less: current portion of operating lease liability
|
| |
30,758
|
Long-term lease liability
|
| |
$70,380
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Promissory note in the amount of $25,000 issued in June 2015. The amount initially earned a fixed interest fee of $2,500 and matured on September 2015. The note continues to earn interest at penalty rate of 1% per month. As of December 31, 2020, the note was in default.
|
| |
25,000
|
| |
25,000
|
Balance owing on promissory notes issued in 2015 by Immune Therapeutics and assigned to Cytocom in September 2020. The notes accrue interest at 10% per annum and matured in November 2015. As of December 31, 2020, the notes were in default.
|
| |
97,737
|
| |
—
|
Promissory note in the amount of $50,000 issued in February 2016. The note accrues interest at 10% per annum and matured in February 2017. As of December 31, 2020, the note was in default.
|
| |
50,000
|
| |
50,000
|
Promissory note in the amount of $20,000 issued originally by Immune Therapeutics, a related party, in March 2016. The note accrues interest at 2% and 5% per annum and matured in March 2017. As of December 31, 2020, the note was in default.
|
| |
20,000
|
| |
20,000
|
Promissory note in the amount of $25,000 issued originally by Immune Therapeutics, a related party, in September 2016. The note accrues interest at 2% and 5% per annum and matured in September 2017. As of December 31, 2020, the note was in default.
|
| |
25,000
|
| |
25,000
|
Promissory note in the amount of $5,000 issued originally by Immune Therapeutics, a related party, in March 2017. The note accrues interest at 2% and 5% per annum and matured in March 2018. As of December 31, 2020, the note was in default.
|
| |
5,000
|
| |
5,000
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Promissory note in the amount of $400,000 issued in September 2015. The note accrues interest at 8% per annum and matured in September 2016. As of December 31, 2020, the note was in default.
|
| |
400,000
|
| |
400,000
|
Promissory note in the amount of $80,000 issued in January 2016. The note accrues interest at 10% per annum and matured in January 2017. As of December 31, 2020, the note was in default.
|
| |
80,000
|
| |
80,000
|
Promissory note in the amount of $275,000 issued originally by Immune Therapeutics, a related party, in November 2016. The note accrues interest at 2% and 5% per annum and matured in November 2017. As of December 31, 2020, the note was in default.
|
| |
275,000
|
| |
275,000
|
Promissory note in the amount of $30,000 issued originally by Immune Therapeutics, a related party, in December 2016. The note accrues interest at 2% and 5% per annum and matured in December 2017. As of December 31, 2020, the note was in default.
|
| |
30,000
|
| |
30,000
|
Promissory note in the amount of $101,000 issued in March 2018. The note accrues interest at 5% per annum and matured in March 2019. As of December 31, 2020, the note was in default.
|
| |
101,000
|
| |
101,000
|
Promissory note in the amount of $70,000 issued in March 2018. The note accrues interest at 5% per annum and matured in March 2019. As of December 31, 2020, the note was in default.
|
| |
70,000
|
| |
70,000
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Promissory note in the amount of $37,500 issued in June 2018. The note accrues interest at 5% per annum and matured in June 2019. As of December 31, 2020, the note was in default.
|
| |
37,500
|
| |
37,500
|
Promissory note in the amount of $50,000 issued in June 2018. The note accrues interest at 5% per annum and matured in June 2019. As of December 31, 2020, the note was in default.
|
| |
50,000
|
| |
50,000
|
Promissory note in the amount of $62,000 issued in September 2018. The note accrues interest at 5% per annum and matured in September 2019. As of December 31, 2020, the note was in default.
|
| |
62,000
|
| |
62,000
|
Promissory note in the amount of $30,000 issued in September 2018. The note accrues interest at 5% per annum and matured in September 2019. As of December 31, 2020, the note was in default.
|
| |
30,000
|
| |
30,000
|
Promissory note in the amount of $45,000 issued on March 31, 2019. The note accrues interest at 5% per annum and matured on March 31, 2020. On April 20, 2020, the maturity date of the note was extended to March 30, 2021.
|
| |
45,000
|
| |
45,000
|
Promissory note in the amount of $75,000 issued on May 31, 2019. The note accrues interest at 5% per annum and matured on May 31, 2020. On April 20, 2020, the maturity date of the note was extended to May 30, 2021.
|
| |
75,000
|
| |
75,000
|
Promissory note in the amount of $30,000 issued on April 30, 2019. The note accrues interest at 5% per annum and matured on April 30, 2020. On April 20, 2020, the maturity date of the note was extended to April 29, 2021.
|
| |
30,000
|
| |
30,000
|
Promissory note in the amount of $49,000 issued on September 30, 2019. The note accrues interest at 5% per annum and matured on September 30, 2020. On April 20, 2020, the maturity date of the note was extended to September 29, 2021.
|
| |
49,000
|
| |
49,000
|
Promissory note in the amount of $32,000 issued on December 31, 2019. The note accrues interest at 5% per annum and matures on December 31, 2020.
|
| |
32,000
|
| |
32,000
|
Total
|
| |
$1,366,500
|
| |
$1,366,500
|
|
| |
Number of
Shares
|
| |
Exercise
Price
|
| |
Weighted
Average
Price
|
Warrants as of December 31, 2018
|
| |
168,750
|
| |
$0.68 - $2.00
|
| |
$1.25
|
Issued in 2019
|
| |
156,250
|
| |
$1.00
|
| |
$1.00
|
Expired and forfeited in 2019
|
| |
—
|
| |
$—
|
| |
$—
|
Exercised in 2019
|
| |
—
|
| |
$—
|
| |
$—
|
Warrants as of December 31, 2019
|
| |
325,000
|
| |
$0.68 - 2.00
|
| |
$1.13
|
Issued in 2020
|
| |
—
|
| |
$—
|
| |
$—
|
Canceled in 2020
|
| |
(25,000)
|
| |
$0.68
|
| |
$0.68
|
Exercised in 2020
|
| |
(50,000)
|
| |
$2.00
|
| |
$2.00
|
Warrants as of December 31, 2020
|
| |
250,000
|
| |
$1.00
|
| |
$1.00
|
Expiration Date
|
| |
Number of
Shares
|
| |
Exercise Price
|
| |
Remaining
Life (years)
|
Second Quarter 2032
|
| |
250,000
|
| |
$1.00
|
| |
11.3
|
|
| |
250,000
|
| |
$1.00
|
| |
11.3
|
(a)
|
60% on the earlier of (i) the time immediately prior to (but contingent upon) the closing of any transaction or series of related transactions pursuant to which the common stock of the Company or any successor in interest to the Company is traded on NASDAQ or any other national securities exchange, including pursuant to (A) any “reverse merger” or other transaction pursuant to which the common stock of the Company or any successor in interest to the Company is exchanged for shares of common stock of an entity that is traded on NASDAQ or any other national securities exchange or (B) any initial public offering of the common stock of the Company or any successor in interest to the Company; or (ii) July 1, 2021
|
(b)
|
40% on August 15, 2022.
|
(a)
|
66% will vest on August 15, 2022;
|
(b)
|
34% will vest on August 16, 2023.
|
|
| |
Restricted Stock Awards
|
| |
Weighted Average
Grant Date Fair Value
- per share
|
| |
Fair Value at Grant
Date
|
Outstanding as of December 31, 2019
|
| |
|
| |
|
| |
|
Granted
|
| |
8,250,000
|
| |
$1.00
|
| |
8,250,000
|
Vested
|
| |
—
|
| |
—
|
| |
—
|
Forfeited
|
| |
—
|
| |
—
|
| |
—
|
Outstanding as of December 31, 2020
|
| |
8,250,000
|
| |
$1.00
|
| |
8,250,000
|
|
| |
Fiscal Year Ended Last Day
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Restricted Stock Units
|
| |
$1,692,876
|
| |
|
Stock Options
|
| |
—
|
| |
$500,000
|
Share based compensation expense
|
| |
$1,692,876
|
| |
$500,000
|
Less income tax benefits
|
| |
—
|
| |
—
|
Share based compensation expense, net of income tax benefits
|
| |
$1,692,876
|
| |
$500,000
|
Continuing operations earnings per share impact of share-based compensation expense:
|
| |
|
| |
|
Basic
|
| |
$(0.08)
|
| |
$(0.03)
|
|
| |
For the Years Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Net operating loss carry forwards
|
| |
$4,921,274
|
| |
$2,544,973
|
Stock Based Compensation`
|
| |
710,158
|
| |
184,079
|
Fixed assets
|
| |
(2,202)
|
| |
|
Valuation allowance
|
| |
(5,629,230)
|
| |
(2,729,052)
|
Net Deferred Tax Asset
|
| |
$—
|
| |
$—
|
|
| |
For the year ended
December 31,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
%
|
| |
%
|
Statutory federal tax rate
|
| |
21.00%
|
| |
21.00%
|
State taxes, net of federal benefits
|
| |
4.16%
|
| |
3.94%
|
Permanent differences
|
| |
(0.88)%
|
| |
(1.95)%
|
Income tax rate change
|
| |
0.00%
|
| |
0.00%
|
Valuation allowance
|
| |
(24.28)%
|
| |
(22.99)%
|
Provision for income taxes
|
| |
0.00%
|
| |
0.00%
|
1.
|
The July 2014 and the January 2017 Loans were cancelled and replaced by a new loan to Immune in the principal amount of $150,000. Immune was required to pay past-due interest on those loans in the amount of $67,000 before January 15, 2020.
|
2.
|
The May 2015 Note was cancelled and replaced by a new loan to Cytocom in the amount of $300,000. Cytocom was required to pay Ira Gaines and the Gaines Trust a restructuring fee of $25,000 by January 15, 2020.
|
3.
|
Griffin’s guarantee of the January 2017 Note was cancelled and replaced by a new Immune $150,000 loan.
|
4.
|
Cytocom also agreed to issue 125,000 shares of its common stock (calculated to reflect the 1 for 4 reverse split effective August 2020) to Ira Gaines as part of a settlement between Ira Gaines and Ron Brouillette in a separate lawsuit.
|
Date of issuance or
receipt of cash
|
| |
Number of
Shares
Issued
|
| |
Class of Shares
|
| |
Reason for Issuance
|
March 5, 2021
|
| |
299,000
|
| |
Common stock
|
| |
In accordance with an agreement entered into with a securities dealer to raise equity for the Company.
|
February 8, 2021
|
| |
2,145,600
|
| |
Series A-1
preferred stock
|
| |
Issued to investors in accordance with various share purchase agreements signed in 2020 and 2021.
|
February 23, 2021
|
| |
25,000
|
| |
Series A-1
preferred stock
|
| |
Issued to an investor in accordance with a share purchase agreement dated July 31, 2020.
|
February 22, 2021 to
April 5, 2021
|
| |
102,000
|
| |
Series A-3
preferred stock
|
| |
Issued to investors in accordance with various share purchase agreements signed in 2021. For each share purchased, the investors also received a warrant, exercisable on or before December 31, 2021, to purchase for $7.00 an additional share of the new company to be formed through the merger of Cytocom and Cleveland BioLabs, contingent upon the closing of the merger.
|
April 21, 2021
|
| |
200,000
|
| |
Common stock
|
| |
Issued in accordance with a cashless exercise on April 2, 2021 of 250,000 warrants to purchase common stock.
|
|
| |
Three months ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Operating expenses:
|
| |
|
| |
|
Research and development
|
| |
$1,024,344
|
| |
$28,000
|
Sales and marketing
|
| |
2,796
|
| |
—
|
General and administrative
|
| |
4,166,889
|
| |
83,919
|
LOSS FROM OPERATIONS
|
| |
(5,194,029)
|
| |
(111,919)
|
|
| |
|
| |
|
Other (expense) income:
|
| |
|
| |
|
Interest (expense)
|
| |
(92,617)
|
| |
(36,191)
|
Other (expense) income, net
|
| |
—
|
| |
(500,000)
|
TOTAL OTHER (EXPENSE) INCOME
|
| |
(92,617)
|
| |
(536,191)
|
NET LOSS
|
| |
$(5,286,646)
|
| |
$(648,110)
|
|
| |
|
| |
|
Net loss per common share – basic and diluted
|
| |
$(0.22)
|
| |
$(0.03)
|
|
| |
|
| |
|
Weighted average number of shares outstanding
|
| |
24,423,700
|
| |
20,509,499
|
|
| |
Common stock
|
| |
Preferred Stock-
Series A
|
| |
Preferred Stock-Series
A-1
|
| |
Additional
Paid in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Stockholders’
Deficit
|
|||||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance December 31, 2019
|
| |
20,346,999
|
| |
$20,347
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$11,307,253
|
| |
$(15,537,460)
|
| |
$(4,209,860)
|
Common stock issued for debt conversion
|
| |
125,000
|
| |
125
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
499,875
|
| |
—
|
| |
500,000
|
Net loss
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
(648,110)
|
| |
(648,110)
|
Balance March 31, 2020
|
| |
20,471,999
|
| |
$20,472
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$11,807,128
|
| |
$(16,185,570)
|
| |
$(4,357,970)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance December 31, 2020
|
| |
24,337,352
|
| |
$24,337
|
| |
2,375,000
|
| |
$2,375
|
| |
2,125,000
|
| |
$2,125
|
| |
$23,946,747
|
| |
$(27,631,321)
|
| |
$(3,655,737)
|
Common stock issued for services
|
| |
299,000
|
| |
299
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
298,701
|
| |
—
|
| |
299,000
|
Preferred Stock – Series A-1 issued for cash
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,170,600
|
| |
2,171
|
| |
2,168,429
|
| |
—
|
| |
2,170,000
|
Preferred Stock – Series A-1 cash received prior period
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,345,600)
|
| |
—
|
| |
(1,345,600)
|
Preferred stock – Series A-3 stock issuances due
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,100,000
|
| |
—
|
| |
1,100,000
|
Preferred stock – Series A-4 stock issuances due
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
230,000
|
| |
—
|
| |
230,000
|
Stock based compensation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,816,086
|
| |
—
|
| |
1,816,086
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
(5,286,646)
|
| |
(5,286,646)
|
Balance March 31, 2021
|
| |
24,636,352
|
| |
$24,636
|
| |
2,375,000
|
| |
$2,375
|
| |
4,295,600
|
| |
$4,296
|
| |
$28,214,363
|
| |
$(32,917,967)
|
| |
$(4,672,297)
|
|
| |
For the Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
| |
|
| |
|
Net loss
|
| |
$(5,286,646)
|
| |
$(648,110)
|
|
| |
|
| |
|
Reconciliation of net loss to net cash used in operating activities:
|
| |
|
| |
|
Depreciation expense
|
| |
792
|
| |
—
|
Noncash lease expense
|
| |
(787)
|
| |
—
|
Stock based compensation
|
| |
1,816,086
|
| |
—
|
Common stock issued for services rendered
|
| |
299,000
|
| |
—
|
Assumption of debt in exchange for license agreement
|
| |
—
|
| |
500,000
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Other current assets
|
| |
(160,224)
|
| |
2,081
|
Accounts payable and accrued expenses
|
| |
738,448
|
| |
144,477
|
Accounts payable and accrued expenses – related party
|
| |
1,060
|
| |
—
|
|
| |
|
| |
|
Net cash used in operating activities
|
| |
(2,592,271)
|
| |
(1,552)
|
|
| |
|
| |
|
CASH FLOWS USED IN INVESTING ACTIVITIES
|
| |
|
| |
|
Purchase of property and equipment
|
| |
(4,685)
|
| |
—
|
|
| |
|
| |
|
NET CASH USED IN INVESTING ACTIVITIES
|
| |
(4,685)
|
| |
—
|
|
| |
|
| |
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
| |
|
| |
|
Proceeds from sale of preferred stock Series A-1
|
| |
825,000
|
| |
—
|
Stock issuances due preferred stock Series A-3
|
| |
1,100,000
|
| |
—
|
Stock issuances due preferred stock Series A-4
|
| |
230,000
|
| |
—
|
|
| |
|
| |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
| |
2,155,000
|
| |
—
|
|
| |
|
| |
|
Net (decrease) increase in cash
|
| |
(441,956)
|
| |
(1,552)
|
|
| |
|
| |
|
Cash and cash equivalents, beginning of period
|
| |
593,869
|
| |
1,650
|
|
| |
|
| |
|
Cash and cash equivalents, end of period
|
| |
$151,913
|
| |
$98
|
|
| |
|
| |
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
| |
|
| |
|
Common stock issued for services
|
| |
$299,000
|
| |
$—
|
Common stock issued as a modification of debt terms
|
| |
$—
|
| |
$500,000
|
Cash paid for taxes
|
| |
$—
|
| |
$—
|
|
| |
March 31,
|
|||
|
| |
2021
|
| |
2020
|
Convertible debt and liabilities
|
| |
—
|
| |
—
|
Warrants
|
| |
250,000
|
| |
309,375
|
Total
|
| |
250,000
|
| |
309,375
|
|
| |
|
| |
|
|
| |
Number of
Shares
|
| |
Exercise
Price
($)
|
| |
Weighted
Average
Price
($)
|
Warrants as of December 31, 2019
|
| |
325,000
|
| |
$0.68 - 2.00
|
| |
$1.13
|
Issued in 2020
|
| |
—
|
| |
$—
|
| |
$—
|
Canceled in 2020
|
| |
(25,000)
|
| |
$0.68
|
| |
$0.68
|
Exercised in 2020
|
| |
(50,000)
|
| |
$2.00
|
| |
$2.00
|
Warrants as of December 31, 2020
|
| |
250,000
|
| |
$1.00
|
| |
$1.00
|
Issued in 2021
|
| |
—
|
| |
$—
|
| |
$—
|
Canceled in 2021
|
| |
—
|
| |
$—
|
| |
$—
|
Exercised in 2021
|
| |
—
|
| |
$—
|
| |
$—
|
Warrants as of March 31, 2021
|
| |
250,000
|
| |
$1.00
|
| |
$1.00
|
|
| |
|
| |
|
| |
|
Expiration Date
|
| |
Number of
Shares
|
| |
Exercise
Price
($)
|
| |
Remaining
Life (years)
|
|
| |
|
| |
|
| |
|
Fourth Quarter 2033
|
| |
250,000
|
| |
$1.00
|
| |
12.75
|
|
| |
Restricted Stock
Awards
|
| |
Weighted Average
Grant Date Fair
Value
per share
|
| |
Fair Value
at Grant
Date
|
Outstanding as of December 31, 2019
|
| |
—
|
| |
—
|
| |
—
|
Granted
|
| |
8,250,000
|
| |
$1.00
|
| |
$8,250,000
|
Vested
|
| |
—
|
| |
—
|
| |
—
|
Forfeited
|
| |
—
|
| |
—
|
| |
—
|
Outstanding as of December 31, 2020
|
| |
8,250,000
|
| |
$1.00
|
| |
$8,250,000
|
Granted
|
| |
468,085
|
| |
$5.00
|
| |
2,340,425
|
Vested
|
| |
—
|
| |
—
|
| |
—
|
Forfeited
|
| |
—
|
| |
—
|
| |
—
|
Outstanding as of March 31, 2021
|
| |
8,718,085
|
| |
$1.21
|
| |
$10,590,425
|
|
| |
Three months ended
March 31,
|
|||
|
| |
2021
|
| |
2020
|
Restricted Stock Units
|
| |
$1,811,583
|
| |
—
|
Stock Options
|
| |
—
|
| |
|
Share based compensation expense
|
| |
$1,811,583
|
| |
—
|
Less income tax benefits
|
| |
—
|
| |
—
|
Share based compensation expense, net of income tax benefits
|
| |
$1,811,583
|
| |
—
|
Continuing operations earnings per share impact of share-based compensation expense:
|
| |
|
| |
|
Basic
|
| |
$0.2
|
| |
—
|
1.
|
The July 2014 and the January 2017 Loans were cancelled and replaced by a new loan to Immune in the principal amount of $150,000. Immune was required to pay past-due interest on those loans in the amount of $67,000 before January 15, 2020.
|
2.
|
The May 2015 Note was cancelled and replaced by a new loan to Cytocom in the amount of $300,000. Cytocom was required to pay Ira Gaines and the Gaines Trust a restructuring fee of $25,000 by January 15, 2020.
|
3.
|
Griffin’s guarantee of the January 2017 Note was cancelled and replaced by a new Immune $150,000 loan.
|
4.
|
Cytocom also agreed to issue 125,000 shares of its common stock (calculated on the basis of the 1 for 4 reverse split in August 2020) to Ira Gaines as part of a settlement between Ira Gaines and Ron Brouillette in a separate lawsuit.
|
Date of issuance or
receipt of cash
|
| |
Number of
Shares
Issued
|
| |
Class of Shares
|
| |
Reason for Issuance
|
April 21, 2021
|
| |
200,000
|
| |
Common stock
|
| |
Issued in accordance with a cashless exercise on April 2, 2021 of 250,000 warrants to purchase common stock.
|
|
| |
|
| |
|
| |
|
April 26, 2021
|
| |
102,000
|
| |
Series A-4 preferred stock
|
| |
Issued to investors at $5.00 per share in accordance with various share purchase agreements signed in 2021.
|
|
| |
|
| |
|
| |
|
May 17, 2021
|
| |
450,000
|
| |
Series A-3 preferred stock
|
| |
Issued to investors at $5.00 per share in accordance with various share purchase agreements signed in 2021.
|
| | ||
Financial Statements as of and for the years ended December 31, 2020 and 2019
|
| ||
| | ||
| | ||
| | ||
| | ||
| | ||
Financial Statements as of and for the three months ended March 31, 2021 and 2020
|
| |
|
| | ||
| | ||
| | ||
| | ||
| |
|
| |
For the Years Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Revenue, net
|
| |
$2,445,491
|
| |
$2,262,558
|
Cost of goods sold
|
| |
1,401,805
|
| |
1,436,057
|
Gross profit
|
| |
1,043,686
|
| |
826,501
|
|
| |
|
| |
|
Operating expenses
|
| |
|
| |
|
General and administrative
|
| |
232,724
|
| |
245,274
|
Salaries and wages
|
| |
468,337
|
| |
491,235
|
Advertisement and marketing
|
| |
343,769
|
| |
149,489
|
Total operating expenses
|
| |
1,044,830
|
| |
885,998
|
|
| |
|
| |
|
Operating loss
|
| |
(1,144)
|
| |
(59,497)
|
|
| |
|
| |
|
Other income (expense)
|
| |
|
| |
|
Interest expense
|
| |
(1,094,509)
|
| |
(910,196)
|
PPP forgiveness and other income
|
| |
143,963
|
| |
—
|
Total other income (expense)
|
| |
(950,546)
|
| |
(910,196)
|
|
| |
|
| |
|
Net loss
|
| |
(951,690)
|
| |
(969,693)
|
|
| |
|
| |
|
Net loss attributable to non-controlling interest
|
| |
(120,358)
|
| |
(84,664)
|
|
| |
|
| |
|
Net loss attributable to common stockholders
|
| |
$(831,332)
|
| |
$(885,029)
|
|
| |
Common Stock
|
| |
Treasury
Stock
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Subtotal
|
| |
Non-controlling
Interest
|
| |
Total
Stockholders’
Deficit
|
|||
|
| |
Number of Shares
|
| |
Amount
|
| |||||||||||||||||
Balance at January 1, 2019
|
| |
99,057,181
|
| |
$99,057
|
| |
$(50,000)
|
| |
$15,764,795
|
| |
$(22,117,934)
|
| |
$(6,304,082)
|
| |
$(165,055)
|
| |
$(6,469,137)
|
Issuance of common shares for services
|
| |
20,000
|
| |
20
|
| |
—
|
| |
497
|
| |
—
|
| |
517
|
| |
—
|
| |
517
|
Stock based compensation
|
| |
—
|
| |
—
|
| |
—
|
| |
33
|
| |
—
|
| |
33
|
| |
—
|
| |
33
|
Shares issued for services
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
20,000
|
| |
20,000
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(885,029)
|
| |
(885,029)
|
| |
(84,664)
|
| |
(969,693)
|
Balance at December 31, 2019
|
| |
99,077,181
|
| |
$99,077
|
| |
$(50,000)
|
| |
$15,765,325
|
| |
$(23,002,963)
|
| |
$(7,188,561)
|
| |
$(229,719)
|
| |
$(7,418,280)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Stock based compensation
|
| |
—
|
| |
—
|
| |
—
|
| |
6
|
| |
—
|
| |
6
|
| |
—
|
| |
6
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(831,332)
|
| |
(831,332)
|
| |
(120,358)
|
| |
$(951,690)
|
Balance at December 31, 2020
|
| |
99,077,181
|
| |
$99,077
|
| |
$(50,000)
|
| |
$15,765,331
|
| |
$(23,834,295)
|
| |
$(8,019,887)
|
| |
$(350,077)
|
| |
$(8,369,964)
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
| |
|
| |
|
Net Loss
|
| |
$(951,690)
|
| |
$(969,693)
|
Adjustments to reconcile Net loss to net cash used in operating activities:
|
| |
|
| |
|
Depreciation
|
| |
842
|
| |
839
|
Stock-based compensation
|
| |
6
|
| |
20,550
|
Amortization of operating lease right-of-use assets
|
| |
47,422
|
| |
45,317
|
Bad Debt
|
| |
(1,615)
|
| |
—
|
Changes in assets and liabilities:
|
| |
|
| |
|
Accounts receivable
|
| |
(43,862)
|
| |
123,642
|
Inventory
|
| |
17,489
|
| |
(92,725)
|
Accounts payable and accrued expenses
|
| |
432,867
|
| |
413,988
|
Notes payable - related party
|
| |
—
|
| |
20,000
|
Contract asset
|
| |
(63,555)
|
| |
(2,390)
|
Accrued interest related party
|
| |
583,102
|
| |
515,814
|
Contract liability
|
| |
118,602
|
| |
(250,605)
|
Lease liability
|
| |
(17,517)
|
| |
(11,620)
|
Net cash provide / (used) in operating activities
|
| |
122,091
|
| |
(186,883)
|
|
| |
|
| |
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
| |
|
| |
|
Purchase of equipment
|
| |
—
|
| |
—
|
Net cash used in investing activities
|
| |
—
|
| |
—
|
|
| |
|
| |
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
| |
|
| |
|
Proceeds from related party notes payable
|
| |
—
|
| |
—
|
Proceeds notes payable
|
| |
329,330
|
| |
—
|
Net cash provided by financing activities
|
| |
329,330
|
| |
—
|
|
| |
|
| |
|
|
| |
|
| |
|
Increase (decrease) in cash
|
| |
520,641
|
| |
(186,883)
|
|
| |
|
| |
|
Cash at beginning of year
|
| |
43,610
|
| |
230,493
|
|
| |
|
| |
|
Cash at end of year
|
| |
$564,251
|
| |
$43,610
|
|
| |
|
| |
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities
|
| |
|
| |
|
Operating lease asset obtained in exchange for operating lease obligation
|
| |
$—
|
| |
$695,118
|
Asset Category
|
| |
Estimated Useful
Life (in Years)
|
Laboratory equipment
|
| |
5
|
Furniture and fixtures
|
| |
5
|
Computer equipment
|
| |
3
|
•
|
Level 1 – Quoted prices for identical instruments in active markets.
|
•
|
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable.
|
•
|
Level 3 – Instruments where significant value drivers are unobservable to third parties.
|
•
|
Step 1: Identify the contract(s) with a customer
|
•
|
Step 2: Identify the performance obligations in the contract
|
•
|
Step 3: Determine the transaction price
|
•
|
Step 4: Allocate the transaction price to the performance obligations in the contract
|
•
|
Step 5: Recognize revenue when (or as) a performance obligation is satisfied
|
|
| |
Year Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Grant Awards
|
| |
$—
|
| |
$293,346
|
CRO Services
|
| |
2,393,451
|
| |
1,947,333
|
Retail Sales of FLIP lube
|
| |
52,040
|
| |
21,879
|
|
| |
$ 2,445,491
|
| |
$ 2,262,558
|
Maturity of Lease Liability
|
| |
Building
|
| |
Equipment
|
| |
Total
|
2021
|
| |
142,000
|
| |
1,688
|
| |
143,688
|
2022
|
| |
150,000
|
| |
—
|
| |
150,000
|
2023
|
| |
157,500
|
| |
—
|
| |
157,500
|
2024
|
| |
165,375
|
| |
—
|
| |
165,375
|
2025
|
| |
173,644
|
| |
—
|
| |
173,644
|
Thereafter
|
| |
405,930
|
| |
—
|
| |
405,930
|
Total undiscounted lease payments
|
| |
1,194,449
|
| |
1,688
|
| |
1,196,137
|
Less: Imputed interest
|
| |
530,054
|
| |
103
|
| |
530,157
|
Present value of lease liabilities
|
| |
$664,395
|
| |
$1,585
|
| |
$665,980
|
Remaining lease term
|
| |
7.17
|
| |
0.67
|
| |
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Computer equipment
|
| |
$16,818
|
| |
$16,818
|
Furniture and Fixtures
|
| |
6,843
|
| |
6,843
|
Laboratory Equipment
|
| |
4,195
|
| |
4,195
|
Accumulated depreciation
|
| |
(26,877)
|
| |
(26,035)
|
Net carrying value
|
| |
$979
|
| |
$1,821
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Dan Caffoe
|
| |
$791,885
|
| |
$791,885
|
Caffoe Sec & Ins FLP
|
| |
183,140
|
| |
183,140
|
Dan Biehl
|
| |
1,045,284
|
| |
1,045,284
|
Total
|
| |
$2,020,309
|
| |
$2,020,309
|
|
| |
Number of
Options
|
| |
Weighted Average
Exercise Price
(per share)
|
| |
Weighted Average
Grant Date Fair
Value
|
Options as of December 31, 2018
|
| |
15,235,954.00
|
| |
$0.37
|
| |
$0.87
|
Issued
|
| |
5,500.00
|
| |
0.50
|
| |
0.01
|
Forfeited
|
| |
(15,100.00)
|
| |
0.50
|
| |
0.29
|
Exercised
|
| |
—
|
| |
—
|
| |
—
|
Options as of December 31, 2019
|
| |
15,226,354.00
|
| |
0.37
|
| |
0.87
|
Issued
|
| |
1,000.00
|
| |
0.50
|
| |
0.01
|
Forfeited
|
| |
—
|
| |
—
|
| |
—
|
Exercised
|
| |
—
|
| |
—
|
| |
—
|
Options as of December 31, 2020
|
| |
15,227,354.00
|
| |
$0.37
|
| |
$0.87
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
Expected term (years)
|
| |
10
|
| |
10
|
Risk-free interest rate
|
| |
1.87%
|
| |
1.87%
|
Volatility
|
| |
64.66%
|
| |
64.66%
|
Dividend yield
|
| |
None
|
| |
None
|
|
| |
12/31/2020
|
| |
12/31/2019
|
Deferred tax assets
|
| |
|
| |
|
Net Operating Loss Carryforward
|
| |
$1,779,960
|
| |
$1,552,925
|
Nonqualified Stock Options
|
| |
2,821,956
|
| |
2,821,955
|
Right of Use assets/lease liability
|
| |
6,456
|
| |
3,398
|
Depreciation
|
| |
—
|
| |
63
|
Total Deferred tax assets
|
| |
4,608,372
|
| |
4,378,340
|
|
| |
|
| |
|
Valuation allowance
|
| |
(4,608,372)
|
| |
(4,378,340)
|
Net deferred tax assets (liabilities)
|
| |
$—
|
| |
$—
|
|
| |
For the Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
|
| |
|
| |
|
Revenue, net
|
| |
$836,686
|
| |
$389,204
|
Cost of goods sold
|
| |
460,746
|
| |
223,686
|
Gross profit
|
| |
375,940
|
| |
165,518
|
|
| |
|
| |
|
Operating expenses
|
| |
|
| |
|
General and administrative
|
| |
88,191
|
| |
49,347
|
Salaries and wages
|
| |
163,312
|
| |
92,563
|
Advertisement and marketing
|
| |
599
|
| |
6,730
|
Total operating expenses
|
| |
252,102
|
| |
148,640
|
|
| |
|
| |
|
Operating income
|
| |
123,836
|
| |
16,878
|
|
| |
|
| |
|
Other income (expense)
|
| |
|
| |
|
Interest expense
|
| |
(299,811)
|
| |
(254,351)
|
Total other income (expense)
|
| |
(299,811)
|
| |
(254,351)
|
|
| |
|
| |
|
Net loss
|
| |
(175,975)
|
| |
(237,473)
|
|
| |
|
| |
|
Net loss attributable to non-controlling interest
|
| |
(20,862)
|
| |
(17,001)
|
Net loss attributable to common stockholders
|
| |
$(155,112)
|
| |
$ (220,472)
|
|
| |
|
| |
|
| |
|
| |
Additional
|
| |
|
| |
|
| |
|
| |
Total
|
|
| |
Common Stock
|
| |
|
| |
Paid-in
|
| |
Accumulated
|
| |
|
| |
Non-controlling
|
| |
Stockholders’
|
|||
|
| |
Number of Shares
|
| |
Amount
|
| |
Treasury
Stock
|
| |
Capital
|
| |
Deficit
|
| |
Subtotal
|
| |
Interest
|
| |
Deficit
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance at January 1, 2020
|
| |
99,077,181
|
| |
$99,077
|
| |
$(50,000)
|
| |
$15,765,325
|
| |
$(23,002,963)
|
| |
$(7,188,561)
|
| |
$(229,719)
|
| |
$(7,418,280)
|
Issuance of common shares for services
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Stock based compensation
|
| |
—
|
| |
—
|
| |
—
|
| |
6
|
| |
—
|
| |
6
|
| |
—
|
| |
6
|
Shares issued for services
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(220,472)
|
| |
(220,472)
|
| |
(17,001)
|
| |
(237,473)
|
Balance at March 31, 2020
|
| |
99,077,181
|
| |
$99,077
|
| |
$(50,000)
|
| |
$15,765,331
|
| |
$(23,223,435)
|
| |
$(7,409,027)
|
| |
$(246,720)
|
| |
$(7,655,747)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance at January 1, 2021
|
| |
99,077,181
|
| |
$99,077
|
| |
$(50,000)
|
| |
$15,765,331
|
| |
$(23,834,295)
|
| |
$(8,019,887)
|
| |
$(350,077)
|
| |
$(8,369,964)
|
Stock based compensation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
180
|
| |
180
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(155,112)
|
| |
(155,112)
|
| |
(20,863)
|
| |
$(175,975)
|
Balance at March 31, 2021
|
| |
99,077,181
|
| |
$99,077
|
| |
$(50,000)
|
| |
$15,765,331
|
| |
$(23,989,407)
|
| |
$(8,174,999)
|
| |
$(370,760)
|
| |
$(8,545,759)
|
|
| |
Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
| |
|
| |
|
Net Loss
|
| |
$ (175,975)
|
| |
$ (237,473)
|
Adjustments to reconcile Net loss to net cash used in operating activities:
|
| |
|
| |
|
Depreciation
|
| |
1,719
|
| |
210
|
Stock-based compensation
|
| |
180
|
| |
6
|
Impairment of inventory
|
| |
100,000
|
| |
—
|
Amortization of operating lease right-of-use assets
|
| |
12,381
|
| |
11,583
|
Bad Debt
|
| |
—
|
| |
—
|
Changes in assets and liabilities:
|
| |
|
| |
|
Accounts receivable
|
| |
(104,209)
|
| |
(30,276)
|
Inventory
|
| |
1,687
|
| |
859
|
Accounts payable and accrued expenses
|
| |
134,797
|
| |
102,192
|
Notes payable - related party
|
| |
—
|
| |
—
|
Contract asset
|
| |
30,802
|
| |
(40,406)
|
Accrued interest related party
|
| |
154,284
|
| |
141,459
|
Contract liability
|
| |
(35,609)
|
| |
95,949
|
Lease liability
|
| |
(6,405)
|
| |
(2,607)
|
Net cash provide / (used) in operating activities
|
| |
113,652
|
| |
(41,041)
|
|
| |
|
| |
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
| |
|
| |
|
Purchase of equipment
|
| |
(30,197)
|
| |
—
|
Net cash used in investing activities
|
| |
—
|
| |
—
|
|
| |
|
| |
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
| |
|
| |
|
Proceeds from related party notes payable
|
| |
—
|
| |
—
|
Proceeds notes payable
|
| |
—
|
| |
—
|
Net cash provided by financing activities
|
| |
—
|
| |
—
|
|
| |
|
| |
|
|
| |
|
| |
|
Increase (decrease) in cash
|
| |
83,455
|
| |
41,041
|
|
| |
|
| |
|
Cash at beginning of period
|
| |
564,251
|
| |
43,610
|
|
| |
|
| |
|
Cash at end of period
|
| |
$647,706
|
| |
$84,651
|
|
| |
|
| |
|
|
| |
|
| |
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities
|
| |
|
| |
|
Operating lease asset obtained in exchange for operating lease obligation
|
| |
$—
|
| |
$—
|
•
|
Step 1: Identify the contract(s) with a customer
|
•
|
Step 2: Identify the performance obligations in the contract
|
•
|
Step 3: Determine the transaction price
|
•
|
Step 4: Allocate the transaction price to the performance obligations in the contract
|
•
|
Step 5: Recognize revenue when (or as) a performance obligation is satisfied
|
|
| |
Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Grant Awards
|
| |
$—
|
| |
$—
|
CRO Services
|
| |
829,853
|
| |
386,464
|
Retail Sales of FLIP lube
|
| |
6,833
|
| |
2,740
|
|
| |
$836,686
|
| |
$389,204
|
Maturity of Lease Liability
|
| |
Building
|
| |
Equipment
|
| |
Total
|
2021
|
| |
108,000
|
| |
1,055
|
| |
109,055
|
2022
|
| |
150,000
|
| |
—
|
| |
150,000
|
2023
|
| |
157,500
|
| |
—
|
| |
157,500
|
2024
|
| |
165,375
|
| |
—
|
| |
165,375
|
2025
|
| |
173,644
|
| |
—
|
| |
173,644
|
Thereafter
|
| |
405,930
|
| |
—
|
| |
405,930
|
Total undiscounted lease payments
|
| |
1,160,449
|
| |
1,055
|
| |
1,161,054
|
Less: Imputed interest
|
| |
501,886
|
| |
42
|
| |
501,928
|
Present value of lease liabilities
|
| |
$658,564
|
| |
$1,013
|
| |
$659,576
|
Remaining lease term
|
| |
6.92
|
| |
0.42
|
| |
|
|
| |
March 31, 2021
|
| |
December 31, 2010
|
Computer equipment
|
| |
$16,818
|
| |
$16,818
|
Furniture and Fixtures
|
| |
6,843
|
| |
6,843
|
Laboratory Equipment
|
| |
34,392
|
| |
4,195
|
Accumulated depreciation
|
| |
(28,596)
|
| |
(26,877)
|
Net carrying value
|
| |
$29,457
|
| |
$979
|
|
| |
March 31, 2021
|
| |
December 31, 2010
|
Dan Caffoe
|
| |
$791,885
|
| |
$791,885
|
Caffoe Sec & Ins FLP
|
| |
183,140
|
| |
183,140
|
Dan Biehl
|
| |
1,045,284
|
| |
1,045,284
|
Total
|
| |
$2,020,309
|
| |
$2,020,309
|
|
| |
Number of
Options
|
| |
Weighted Average
Exercise Price
(per share)
|
| |
Weighted Average
Grant Date Fair
Value
|
Options as of December 31, 2019
|
| |
15,226,354
|
| |
$0.37
|
| |
$0.87
|
Issued
|
| |
1,000
|
| |
0.50
|
| |
0.01
|
Forfeited
|
| |
—
|
| |
—
|
| |
—
|
Exercised
|
| |
—
|
| |
—
|
| |
—
|
Options as of December 31, 2020
|
| |
15,227,354
|
| |
0.37
|
| |
0.87
|
Issued
|
| |
—
|
| |
—
|
| |
—
|
Forfeited
|
| |
—
|
| |
—
|
| |
—
|
Exercised
|
| |
—
|
| |
—
|
| |
—
|
Options as of December 31, 2021
|
| |
15,227,354
|
| |
$0.37
|
| |
$0.87
|
|
| |
March 31,
|
|||
|
| |
2021
|
| |
2020
|
Expected term (years)
|
| |
na
|
| |
10
|
Risk-free interest rate
|
| |
na
|
| |
1.87%
|
Volatility
|
| |
na
|
| |
64.66%
|
Dividend yield
|
| |
na
|
| |
None
|
1.
|
The audited consolidated financial statements of CBLI as of and for the years ended December 31, 2020 and 2019.
|
2.
|
The audited financial statements of CYTO as of and for the years ended December 31, 2020 and 2019.
|
3.
|
The audited financial statements of ImQuest as of and for the years ended December 31, 2020 and 2019.
|
4.
|
The unaudited consolidated financial statements of CBLI as of and for the three months ended March 31, 2021 and 2020.
|
5.
|
The unaudited financial statements of CYTO as of and for the three months ended March 31, 2021 and 2020.
|
6.
|
The unaudited financial statements of ImQuest as of and for the three months ended March 31, 2021 and 2020.
|
|
| |
Cytocom
|
| |
ImQuest
|
| |
CBLI
|
| |
Adjustments
|
| |
NR.
|
| |
Consolidated
|
Assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$593,869
|
| |
$564,251
|
| |
$1,946,418
|
| |
|
| |
|
| |
$3,104,538
|
Short-term investments
|
| |
|
| |
|
| |
324,870
|
| |
|
| |
|
| |
324,870
|
Accounts receivable
|
| |
|
| |
73,238
|
| |
11,512
|
| |
|
| |
|
| |
84,750
|
Inventory
|
| |
|
| |
106,356
|
| |
|
| |
|
| |
|
| |
106,356
|
Other current assets
|
| |
331,878
|
| |
|
| |
31,506
|
| |
(329,330)
|
| |
6
|
| |
34,054
|
Total current assets
|
| |
925,747
|
| |
743,845
|
| |
2,134,306
|
| |
(329,330)
|
| |
|
| |
3,654,568
|
Equipment, net
|
| |
8,690
|
| |
979
|
| |
3,715
|
| |
|
| |
|
| |
13,384
|
Operating lease right-of-use asset
|
| |
101,048
|
| |
602,379
|
| |
|
| |
|
| |
|
| |
703,427
|
Contract asset
|
| |
|
| |
118,192
|
| |
|
| |
|
| |
|
| |
118,192
|
Goodwill and Identified intangible assets
|
| |
|
| |
|
| |
|
| |
58,176,198
|
| |
1,4
|
| |
58,176,198
|
Total Assets
|
| |
$1,035,485
|
| |
$1,465,395
|
| |
$2,318,021
|
| |
$57,846,868
|
| |
|
| |
$62,655,769
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Liabilities and Stockholders' equity (deficit)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current Liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accounts payable
|
| |
$2,687,847
|
| |
$1,493,766
|
| |
$167,773
|
| |
|
| |
|
| |
$4,349,386
|
Accounts payable and accrued expenses - related party
|
| |
|
| |
20,000
|
| |
|
| |
|
| |
|
| |
20,000
|
Current portion of operating lease liabilities
|
| |
30,758
|
| |
32,857
|
| |
|
| |
|
| |
|
| |
63,615
|
Accrued expenses
|
| |
|
| |
|
| |
136,838
|
| |
|
| |
|
| |
136,838
|
Contract liability
|
| |
|
| |
200,014
|
| |
|
| |
|
| |
|
| |
200,014
|
Accrued warrant liability
|
| |
|
| |
|
| |
|
| |
822,230
|
| |
4
|
| |
822,230
|
Notes payable - related party
|
| |
1,366,500
|
| |
|
| |
|
| |
|
| |
|
| |
1,366,500
|
Related party - loans and accrued interest
|
| |
|
| |
6,257,048
|
| |
|
| |
(6,257,048)
|
| |
2
|
| |
—
|
Notes payable
|
| |
535,737
|
| |
1,198,550
|
| |
|
| |
(329,330)
|
| |
6
|
| |
1,404,957
|
Total current liabilities
|
| |
4,620,842
|
| |
9,202,235
|
| |
304,611
|
| |
(5,764,148)
|
| |
|
| |
8,363,540
|
Long Term Liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating lease liability, net of current portion
|
| |
70,380
|
| |
633,124
|
| |
|
| |
|
| |
|
| |
703,504
|
Total Liabilities
|
| |
$4,691,222
|
| |
$9,835,359
|
| |
$304,611
|
| |
($5,764,148)
|
| |
|
| |
$9,067,044
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Stockholders' Equity (deficit)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
CBLI:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common stock
|
| |
|
| |
|
| |
66,876
|
| |
96,290
|
| |
4
|
| |
163,166
|
ImQuest:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common stock
|
| |
|
| |
99,077
|
| |
|
| |
(99,077)
|
| |
1
|
| |
—
|
Cytocom:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common stock
|
| |
24,337
|
| |
|
| |
|
| |
(24,337)
|
| |
1,3,4
|
| |
—
|
Series A Preferred stock
|
| |
2,375
|
| |
|
| |
|
| |
(2,375)
|
| |
3
|
| |
—
|
Series A-1 Preferred stock
|
| |
2,125
|
| |
|
| |
|
| |
(2,125)
|
| |
3
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
| |
Cytocom
|
| |
ImQuest
|
| |
CBLI
|
| |
Adjustments
|
| |
NR.
|
| |
Consolidated
|
Additional Paid-in Capital
|
| |
23,946,747
|
| |
15,765,331
|
| |
166,762,778
|
| |
(129,695,761)
|
| |
1,3,4,5
|
| |
76,779,095
|
Treasury stock
|
| |
|
| |
(50,000)
|
| |
|
| |
50,000
|
| |
1
|
| |
—
|
Accumulated other comprehensive loss
|
| |
|
| |
|
| |
(685,680)
|
| |
|
| |
|
| |
(685,680)
|
Accumulated equity (deficit)
|
| |
(27,631,321)
|
| |
(24,184,372)
|
| |
(169,104,029)
|
| |
193,288,401
|
| |
1,4
|
| |
(27,631,321)
|
Stockholders' equity (deficit)
|
| |
(3,655,737)
|
| |
(8,369,964)
|
| |
(2,960,055)
|
| |
63,611,016
|
| |
|
| |
48,625,260
|
Noncontrolling interest in stockholders' equity
|
| |
|
| |
|
| |
4,973,465
|
| |
|
| |
|
| |
4,973,465
|
Total stockholders' equity (deficit)
|
| |
(3,655,737)
|
| |
(8,369,964)
|
| |
2,013,410
|
| |
63,611,016
|
| |
|
| |
53,598,725
|
Total liabilities and stockholder's equity
|
| |
$1,035,485
|
| |
$1,465,395
|
| |
$2,318,021
|
| |
$57,846,868
|
| |
|
| |
$62,665,769
|
|
| |
Cytocom
|
| |
ImQuest
|
| |
CBLI
|
| |
Adjustments
|
| |
NR.
|
| |
Consolidated
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Service Revenue
|
| |
$—
|
| |
$2,393,451
|
| |
$262,942
|
| |
|
| |
|
| |
$2,656,393
|
Product revenue
|
| |
|
| |
52,040
|
| |
|
| |
|
| |
|
| |
52,040
|
Cost of Sales
|
| |
—
|
| |
1,401,805
|
| |
|
| |
|
| |
|
| |
1,401,805
|
Gross Profit
|
| |
—
|
| |
1,043,686
|
| |
262,942
|
| |
|
| |
|
| |
1,306,628
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Sales and marketing
|
| |
2,406
|
| |
343,769
|
| |
|
| |
|
| |
|
| |
346,175
|
Research and development
|
| |
5,263,829
|
| |
|
| |
691,070
|
| |
|
| |
|
| |
5,954,899
|
General and administrative
|
| |
5,235,433
|
| |
701,061
|
| |
2,158,423
|
| |
|
| |
|
| |
8,094,917
|
Total operating expenses
|
| |
10,501,668
|
| |
1,044,830
|
| |
2,849,493
|
| |
|
| |
|
| |
14,395,991
|
Loss from operations
|
| |
(10,501,668)
|
| |
(1,144)
|
| |
(2,586,551)
|
| |
|
| |
|
| |
(13,089,363)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Loss on debt extinguishment.
|
| |
(461,500)
|
| |
143,963
|
| |
|
| |
|
| |
|
| |
(317,537)
|
Interest other income (expense)
|
| |
(1,130,693)
|
| |
(1,094,509)
|
| |
518,118
|
| |
|
| |
|
| |
(1,707,084)
|
Foreign exchange gain
|
| |
|
| |
|
| |
56,690
|
| |
|
| |
|
| |
56,690
|
Change in value of warrant liability
|
| |
|
| |
|
| |
(426,130)
|
| |
|
| |
|
| |
(426,130)
|
Total other income (expense):
|
| |
(1,592,193)
|
| |
(950,546)
|
| |
148,678
|
| |
|
| |
|
| |
(2,394,061)
|
Net loss
|
| |
(12,093,861)
|
| |
(951,690)
|
| |
(2,437,873)
|
| |
|
| |
|
| |
(15,483,424)
|
Net loss attributable to noncontrolling interests
|
| |
|
| |
|
| |
39,416
|
| |
|
| |
|
| |
39,416
|
Net loss attributable to Cleveland BioLabs Inc.
|
| |
($12,093,861)
|
| |
($951,690)
|
| |
($2,398,457)
|
| |
|
| |
|
| |
($15,444,008)
|
|
| |
Cytocom
|
| |
ImQuest
|
| |
CBLI
|
| |
Adjustments
|
| |
NR.
|
| |
Consolidated
|
Assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$151,913
|
| |
$647,706
|
| |
$14,359,297
|
| |
$17,760,000
|
| |
8,9
|
| |
$32,918,916
|
Short-term investments
|
| |
|
| |
|
| |
264,193
|
| |
|
| |
|
| |
264,193
|
Accounts receivable
|
| |
|
| |
177,447
|
| |
|
| |
|
| |
|
| |
177,447
|
Inventory
|
| |
|
| |
4,669
|
| |
|
| |
|
| |
|
| |
4,669
|
Other current assets
|
| |
492,102
|
| |
|
| |
70,120
|
| |
(329,330)
|
| |
6
|
| |
232,892
|
Total current assets
|
| |
644,015
|
| |
829,822
|
| |
14,693,610
|
| |
17,430,670
|
| |
|
| |
33,598,117
|
Restricted cash
|
| |
|
| |
|
| |
|
| |
15,000,000
|
| |
7
|
| |
15,000,000
|
Equipment, net
|
| |
12,583
|
| |
29,457
|
| |
6,148
|
| |
|
| |
|
| |
48,188
|
Operating lease right-of-use asset
|
| |
93,415
|
| |
589,998
|
| |
|
| |
|
| |
|
| |
683,413
|
Contract asset
|
| |
|
| |
87,390
|
| |
|
| |
|
| |
|
| |
87,390
|
Goodwill and Identified intangible assets
|
| |
|
| |
|
| |
|
| |
46,401,492
|
| |
1,4
|
| |
46,401,492
|
Total Assets
|
| |
$750,013
|
| |
$1,536,667
|
| |
$14,699,758
|
| |
$78,832,162
|
| |
|
| |
$95,818,600
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Liabilities and Stockholders' equity (deficit)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current Liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accounts payable
|
| |
$3,426,295
|
| |
$1,628,560
|
| |
$309,721
|
| |
|
| |
|
| |
$5,364,576
|
Accounts payable and accrued expenses - related party
|
| |
|
| |
20,000
|
| |
|
| |
|
| |
|
| |
20,000
|
Current portion of operating lease liabilities
|
| |
31,818
|
| |
36,274
|
| |
|
| |
|
| |
|
| |
68,092
|
Accrued expenses
|
| |
|
| |
|
| |
208,430
|
| |
|
| |
|
| |
208,430
|
Contract liability
|
| |
|
| |
164,405
|
| |
|
| |
|
| |
|
| |
164,405
|
Accrued warrant liability
|
| |
|
| |
|
| |
|
| |
1,572,327
|
| |
4
|
| |
1,572,327
|
Notes payable - related party
|
| |
1,366,500
|
| |
2,000,309
|
| |
|
| |
(2,000,309)
|
| |
2
|
| |
1,366,500
|
Related party - loans and accrued interest
|
| |
|
| |
4,411,023
|
| |
|
| |
(4,411,023)
|
| |
2
|
| |
—
|
Notes payable
|
| |
535,737
|
| |
1,198,550
|
| |
|
| |
(329,330)
|
| |
6
|
| |
1,404,957
|
Total current liabilities
|
| |
5,360,350
|
| |
9,459,121
|
| |
518,151
|
| |
(5,168,335)
|
| |
|
| |
10,169,290
|
Long Term Liabilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating lease liability, net of current portion
|
| |
61,960
|
| |
623,302
|
| |
|
| |
|
| |
|
| |
685,262
|
Long-term debt
|
| |
|
| |
|
| |
|
| |
15,000,000
|
| |
7
|
| |
15,000,000
|
Total Liabilities
|
| |
5,422,310
|
| |
10,082,423
|
| |
518,151
|
| |
9,831,665
|
| |
|
| |
25,854,552
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Stockholders' Equity (deficit)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
CBLI:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common stock
|
| |
|
| |
|
| |
77,340
|
| |
85,826
|
| |
4
|
| |
163,166
|
ImQuest:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common stock
|
| |
|
| |
99,077
|
| |
|
| |
(99,077)
|
| |
1
|
| |
—
|
Cytocom:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Common stock
|
| |
24,636
|
| |
|
| |
|
| |
(24,636)
|
| |
1,3,4
|
| |
—
|
Series A Preferred stock
|
| |
2,375
|
| |
|
| |
|
| |
(2,375)
|
| |
3
|
| |
—
|
Series A-1 Preferred stock
|
| |
4,296
|
| |
|
| |
|
| |
(4,296)
|
| |
3
|
| |
—
|
|
| |
Cytocom
|
| |
ImQuest
|
| |
CBLI
|
| |
Adjustments
|
| |
NR.
|
| |
Consolidated
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Additional Paid-in Capital
|
| |
28,214,363
|
| |
15,765,331
|
| |
179,475,388
|
| |
(125,007,239)
|
| |
1,3,4,5,8,9
|
| |
98,447,843
|
Treasury stock
|
| |
|
| |
(50,000)
|
| |
|
| |
50,000
|
| |
1
|
| |
—
|
Accumulated other comprehensive loss
|
| |
|
| |
|
| |
(690,864)
|
| |
|
| |
|
| |
(690,864)
|
Accumulated deficit
|
| |
(32,917,967)
|
| |
(24,360,167)
|
| |
(169,642,127)
|
| |
194,002,294
|
| |
1,4
|
| |
(32,917,967)
|
Stockholders' equity (deficit)
|
| |
(4,672,297)
|
| |
(8,545,769)
|
| |
9,219,737
|
| |
69,000,497
|
| |
|
| |
65,002,178
|
Noncontrolling interest in stockholders' equity
|
| |
|
| |
|
| |
4,961,870
|
| |
|
| |
|
| |
4,961,870
|
Total stockholders' equity (deficit)
|
| |
(4,672,297)
|
| |
(8,545,769)
|
| |
14,181,607
|
| |
69,000,497
|
| |
|
| |
69,964,048
|
Total liabilities and stockholder's equity
|
| |
$750,013
|
| |
$1,536,667
|
| |
$14,699,758
|
| |
$78,832,162
|
| |
|
| |
$95,818,600
|
|
| |
Cytocom
|
| |
ImQuest
|
| |
CBLI
|
| |
Adjustments
|
| |
NR.
|
| |
Consolidated
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Service Revenue
|
| |
$—
|
| |
$836,686
|
| |
$—
|
| |
|
| |
|
| |
$836,686
|
Product revenue
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
—
|
Cost of Sales
|
| |
—
|
| |
460,746
|
| |
—
|
| |
|
| |
|
| |
460,746
|
Gross Profit
|
| |
—
|
| |
375,940
|
| |
—
|
| |
|
| |
|
| |
375,940
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Sales and marketing
|
| |
2,796
|
| |
599
|
| |
|
| |
|
| |
|
| |
3,395
|
Research and development
|
| |
1,024,344
|
| |
163,312
|
| |
118,258
|
| |
|
| |
|
| |
1,305,914
|
General and administrative
|
| |
4,166,889
|
| |
88,191
|
| |
433,004
|
| |
|
| |
|
| |
4,688,084
|
Total operating expenses
|
| |
5,194,029
|
| |
252,102
|
| |
551,262
|
| |
|
| |
|
| |
5,997,393
|
Loss from operations
|
| |
(5,194,029)
|
| |
123,838
|
| |
(551,262)
|
| |
|
| |
|
| |
(5,621,453)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest other income (expense)
|
| |
(92,617)
|
| |
(299,811)
|
| |
3,915
|
| |
|
| |
|
| |
(388,513)
|
Foreign exchange gain
|
| |
|
| |
|
| |
142
|
| |
|
| |
|
| |
142
|
Change in value of warrant liability
|
| |
|
| |
|
| |
—
|
| |
|
| |
|
| |
—
|
Total other income (expense):
|
| |
(92,617)
|
| |
(299,811)
|
| |
4,057
|
| |
|
| |
|
| |
(388,371)
|
Net loss
|
| |
(5,286,646)
|
| |
(175,973)
|
| |
(547,205)
|
| |
|
| |
|
| |
(6,009,824)
|
Net loss attributable to noncontrolling interests
|
| |
|
| |
|
| |
9,107
|
| |
|
| |
|
| |
9,107
|
Net loss attributable to Cleveland BioLabs Inc.
|
| |
$(5,286,646)
|
| |
$(175,973)
|
| |
$(538,098)
|
| |
|
| |
|
| |
$(6,000,717)
|
1.
|
This entry is to record the acquisition of ImQuest and its affiliates by CYTO. To affect the ImQuest Merger, CYTO will issue shares of its common stock for 100% of the equity interests in ImQuest and its affiliates. The fair value of the consideration to be issued by CYTO in this transaction will not exceed $12 million, which was the amount allocated to the fair value of the assets acquired and liabilities assumed from ImQuest. The residual amount was allocated to goodwill. This adjustment also eliminated the equity interests and accumulated deficit of ImQuest.
|
2.
|
At the time of the ImQuest Merger, certain equity holders of ImQuest and its affiliates will forgive notes payable by ImQuest to the equity holders totaling $6,411,332. This forgiveness of Debt was accounted for as a capital contribution to ImQuest by the equity holders.
|
3.
|
At the consummation of the CYTO merger, CYTO’s issued Series A and Series A-1 preferred shares are automatically converted into 4,500,000 shares of CYTO common stock.
|
4.
|
The CYTO Merger triggers cash settlement terms in equity warrants issued by CBLI in June 2020 and February 2021. The fair value of these warrants of $1,572,327 and $822,230 at March 31, 2021 and December 31, 2020, respectively was recognized as a liability and an addition to goodwill. This fair value of this warrant liability will be adjusted every accounting period with the change in fair value recognized in the calculation of net income or loss.
|
5.
|
This entry reflects the issuance of 16,796,747 shares of CBLI stock issued for 100% of the equity interest of CYTO. After the CYTO merger, CYTO holders will hold approximately 51% shares of the combined companies, four of the seven board members will be designated by CYTO and the executive management team will be comprised of mainly of CYTO executives. Therefore, CYTO will gain control of CBLI. Since CYTO obtains control of CBLI as a result of the CYTO merger, it will be considered the accounting acquirer even though legal entity of CBLI will be the surviving entity. This transaction will be accounted for as a reverse merger in accordance with the authoritative accounting guidance. In a reverse merger the purchase consideration is allocated to the fair value of the legal acquiror (accounting acquiree).
|
6.
|
To eliminate receivable from Imquest and payable to CYTO.
|
7.
|
To record $15,000,000 in restricted cash received by Cytocom during April 2021 in the form of long-term debt designated for use following the merger.
|
8.
|
To record the issuances of preferred stock by Cytocom in the cumulative amount of $2,760,000 since March 31, 2021 that converts to Cleveland BioLabs Inc. common stock on a one-for-one basis following the merger.
|
9.
|
To record Cytocom’s anticipated draw of $15,000,000 on an equity line of credit that is designated for contribution to Cleveland BioLabs capital following the merger.
|
Carrying value of CYTO equity(1)
|
| |
$46,005,670
|
Fair value of CBLI(2)
|
| |
$52,605,339
|
Total value of issued equity of combined company
|
| |
$98,611,009
|
Amount allocated to common stock(3)
|
| |
$(163,166)
|
Amount allocated to additional paid-in capital
|
| |
$98,447,843
|
(1)
|
Represents value of issued equity on March 31, 2021 of $34,005,670 plus $12,000,000 equity issued in connection with the ImQuest Merger.
|
(2)
|
Estimated fair value of CBLI.
|
(3)
|
Common stock post transaction (32,633,112 * $.005).
|
|
| |
|
| |
|
| |
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| |
CYTOCOM INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michael Handley
|
|
| |
Name:
|
| |
Michael Handley
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
|
| |
CLEVELAND BIOLABS, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Christopher Zosh
|
|
| |
Name:
|
| |
Christopher Zosh
|
|
| |
Title:
|
| |
Vice President of Finance
|
|
| |
|
| |
|
|
| |
HIGH STREET ACQUISITION CORPORATION
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Christopher Zosh
|
|
| |
Name:
|
| |
Christopher Zosh
|
|
| |
Title:
|
| |
President
|
•
|
Reviewed a draft, dated October 10, 2020, of the Agreement.
|
•
|
Reviewed certain publicly available financial information and other data with respect to CBLI and CYTO that we deemed relevant.
|
•
|
Reviewed certain other information and data with respect to CBLI and CYTO made available to us by CBLI and CYTO, including financial projections with respect to the future financial performance of CYTO on a standalone basis without giving effect to the ImQuest Acquisition prepared by management of CYTO (the “Projections”), and other internal financial information furnished to us by or on behalf of CBLI and CYTO.
|
•
|
Considered and compared the financial and operating performance of CYTO with that of companies with publicly traded equity securities that we deemed relevant.
|
•
|
Discussed the business, operations and prospects of CBLI, CYTO, and the proposed Merger with CBLI’s and CYTO’s management and certain of CBLI’s and CYTO’s representatives.
|
•
|
Conducted such other analyses and inquiries, and considered such other information and factors, as we deemed appropriate.
|
|
| |
CYTOCOM INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
|
|
| |
Title:
|
| |
|
|
| |
|
| |
|
|
| |
|
| |
|
|
| |
|
| |
|
|
| |
STOCKHOLDER
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
(Signature)
|
|
| |
|
| |
|
|
| |
Name:
|
| |
|
1.
|
This Certificate of Amendment (the “Certificate of Amendment”) amends the provisions of the Corporation’s Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on March 18, 2010, as amended (the “Certificate of Incorporation”).
|
2.
|
The first paragraph of Article Fourth of the Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:
|
3.
|
This amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. This Certificate of Amendment shall be effective upon filing with the Secretary of State of the State of Delaware.
|
4.
|
All other provisions of the Certificate of Incorporation shall remain in full force and effect.
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
Christopher Zosh
|
|
| |
Title:
|
| |
Vice President of Finance
|
Item 20.
|
Indemnification of Directors and Officers
|
Item 21.
|
Exhibits and Financial Statement Schedules
|
(a)
|
Exhibit Index
|
(b)
|
Financial Statements
|
Item 22.
|
Undertakings
|
(a)
|
The undersigned registrant hereby undertakes as follows:
|
(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
(i)
|
to include any prospectus required by Section 10(a)(3) of the Securities Act;
|
(ii)
|
to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
|
(iii)
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
(2)
|
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
(3)
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
(4)
|
That, for purposes of determining liability under the Securities Act to any purchaser, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15 (d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15 (d) of the Exchange Act) that is incorporated by reference in this registration statement 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.
|
(5)
|
That prior to any public reoffering of the securities registered hereunder through use of a prospectus 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 prospectus 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.
|
(6)
|
That every prospectus (i) that is filed pursuant to paragraph (a)(5) 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.
|
(7)
|
To respond to requests for information that is incorporated by reference into this proxy statement/prospectus pursuant to Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
|
(8)
|
To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
|
(b)
|
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
|
Exhibit No.
|
| |
Identification of Exhibit
|
| |
Agreement and Plan of Merger, dated as of October 16, 2020, among Cleveland BioLabs, Inc., High Street Acquisition Corp. and Cytocom Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed on October 19, 2020)†
|
|
| |
Form of Voting Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 19, 2020).
|
|
| |
Restated Certificate of Incorporation filed with the Secretary of State of Delaware on March 18, 2010 (incorporated by reference to Exhibit 3.1 to Form 10-K for the year ended December 31, 2009, filed on March 22, 2010).
|
|
| |
Certificate of Amendment to the Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on June 20, 2013 (incorporated by reference to Exhibit 3.1 to Form 10-Q for the period ended June 30, 2013, filed on August 9, 2013).
|
|
| |
Certificate of Amendment of Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 27, 2015).
|
|
| |
Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on April 20, 2016 (incorporated by reference to Exhibit 3.4 to Form 10-Q for the period ended March 31, 2016, filed May 16, 2016).
|
|
| |
Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on April 21, 2017 (incorporated by reference to Exhibit 3.5 to Form 10-Q for the period ended March 31, 2017, filed May 15, 2017).
|
|
| |
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 9, 2015).
|
|
| |
Certificate of Amendment of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to Form 8-K filed on February 9, 2015).
|
|
| |
Second Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 5, 2007).
|
|
| |
Amendment to Second Amended and Restated By-Laws of Cleveland BioLabs, Inc. (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 18, 2015).
|
|
| |
Opinion of McGuireWoods LLP.
|
|
| |
Tax Opinion of McGuireWoods LLP.
|
|
| |
Consent of Meaden & Moore, Ltd.
|
|
| |
Consent of Turner, Stone & Company, L.L.P. (Cytocom)
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Consent of Turner, Stone & Company, L.L.P. (ImQuest)
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Consent of McGuireWoods LLP (included in Exhibit 5.1).
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Power of Attorney (included in signature pages to original registration statement).
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Consent of Cassel Salpeter & Co., LLC.
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Consent of Michael K. Handley to be named as director.
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Consent of Taunia Markvicka to be named as director.
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Consent of Steve Barbarick to be named as director.
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Form of proxy card of Cleveland BioLabs, Inc.
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*
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Filed herewith.
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**
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Previously filed.
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†
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Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules have been omitted. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission upon request.
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Cleveland BioLabs, Inc.
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By:
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/s/ Christopher Zosh
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Name:
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Christopher Zosh
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Title:
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Senior Vice President of Finance
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By:
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/s/ Christopher Zosh
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Christopher Zosh
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*Pursuant to Power of Attorney
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RE:
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Proxy Statement / Prospectus of Cleveland BioLabs, Inc. (“Cleveland BioLabs”), which forms part of Amendment No. 2 to the Registration Statement on Form S-4 of Cleveland BioLabs (the
“Registration Statement”).
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Dated: June 4, 2021
Cassel Salpeter & Co., LLC
/s/ Cassel Salpeter & Co., LLC
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