Delaware
|
2834
|
04-3321804
|
(State or other jurisdiction
of incorporation or organization)
|
(Primary Standard Industrial
Classification Code Number)
|
(I.R.S. Employer
Identification Number)
|
Paul Bork, Esq.
Foley Hoag LLP
155 Seaport Boulevard
Boston, Massachusetts 02210
(617) 832-1000
|
Harvey Kesner, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, New York 10006
(212) 930-9700
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller reporting company
x
|
Title of Each Class of
Securities to be
Registered
|
Proposed Maximum
Aggregate Offering
Price (1)
|
Amount of
Registration Fee
|
||||||
Common Stock, par value $0.00001 per share (2)
|
$
|
15,000,000
|
$
|
1,719.00
|
||||
Common Stock issuable upon exercise of warrants (2)
|
15,000,000
|
1,719.00
|
||||||
Common Stock, par value $0.00001 per share (2) (3)
|
2,250,000
|
257.85
|
||||||
Common Stock issuable upon exercise of warrants (2) (3)
|
2,250,000
|
257.85
|
||||||
$
|
3,953.70
|
(1)
|
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.
|
(2)
|
Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
|
(3)
|
Consists of additional proceeds which may be received pursuant to the exercise of a 45-day option granted by the registrant to the underwriters to cover over-allotments, if any.
|
*
|
Of the total amount of the registration fee, $2,002.73 has been previously paid.
|
PRELIMINARY PROSPECTUS
|
SUBJECT TO COMPLETION, DATED NOVEMBER 9, 2011
|
Per Unit
|
Total
|
|||||||
|
|
|
|
|
|
|
||
Public offering price
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting discounts and commissions (1)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds, before expenses, to us
|
|
$
|
|
|
|
$
|
|
|
|
Page
|
|
|
PROSPECTUS SUMMARY
|
1
|
|
|
RISK FACTORS
|
7
|
|
|
FORWARD-LOOKING STATEMENTS
|
19
|
|
|
USE OF PROCEEDS
|
19
|
|
|
CAPITALIZATION
|
20
|
|
|
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
20
|
|
|
DILUTION
|
22
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
22
|
|
|
BUSINESS
|
27
|
|
|
LITIGATION
|
38
|
|
|
PROPERTIES
|
39
|
|
|
MANAGEMENT
|
39
|
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
45
|
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
47
|
|
|
UNDERWRITING
|
48
|
|
|
DESCRIPTION OF SECURITIES
|
52
|
|
|
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
|
54
|
|
|
WHERE YOU CAN FIND MORE INFORMATION
|
54
|
|
|
LEGAL MATTERS
|
54
|
|
|
EXPERTS
|
54
|
|
|
GLOSSARY OF SCIENTIFIC TERMS
|
55
|
FINANCIAL STATEMENTS (POST-ACQUISITION)
|
F-1
|
|
|
FINANCIAL STATEMENTS (PRE-ACQUISITION)
|
F-26
|
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
|
F-60
|
|
·
|
To provide proof-of-concept for LIGHT itself as a PET imaging agent with the potential to supplant the current “gold standard” agent, 18-fluoro-deoxyglucose (FDG), due to what we believe to be LIGHT’s superior cancer-specificity and more favorable logistics of clinical use; and
|
|
·
|
To accelerate clinical development of HOT by predicting efficacy and enabling estimation of efficacious doses of HOT for Phase 2 trials.
|
|
·
|
We will require additional capital in order to continue our operations, and may have difficulty raising additional capital.
|
|
·
|
We are a development stage company with a history of losses and can provide no assurance of our future operating results;
|
|
·
|
We and our Chief Executive Officer are defendants in a securities fraud class action lawsuit. We are also defending counterclaims in another lawsuit that we initiated, and if we are not successful in defending claims against us, the resulting liability could be substantial;
|
|
·
|
At present, our success depends solely on the successful commercialization of Cellectar compounds;
|
|
·
|
The integration of Novelos and Cellectar may be costly and difficult;
|
|
·
|
We have a history of recurring losses and an accumulated deficit which, among other factors, raise substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing;
|
|
·
|
The failure to complete development of our therapeutic technology, to obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could prevent, delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing business;
|
|
·
|
Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results;
|
|
·
|
We may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety risks that could preclude approval of our product candidates;
|
|
·
|
We have limited in-house research and manufacturing capacity and will rely, to some extent, on research and manufacturing facilities at various universities, hospitals, contract research organizations and contract manufacturers for a portion of our research, development, and manufacturing. In the event we exceed our in-house capacity or lose access to those facilities, our ability to gain FDA approval and commercialization of our drug delivery technology and products could be delayed or impaired; and
|
|
·
|
We are exposed to product, clinical and preclinical liability risks that could create a substantial financial burden should we be sued.
|
Proposed Reverse Split
|
|
In connection with this offering, we anticipate that we will effect the Offering Reverse Split within a range of 1:2 to 1:10 in order to satisfy the minimum price requirement for our common stock to be listed on The NASDAQ Capital Market. The proposal for the Offering Reverse Split has been approved by our stockholders and our board of directors is authorized to determine the time and ratio at which the reverse split will be effected by filing the appropriate amendment to our certificate of incorporation.
We estimate that the Offering Reverse Split will be on a 1-for-10 basis.
|
Securities offered by us:
|
|
Up to units (up to units if the underwriter exercises its over-allotment option).
Each unit will consist of one share of our common stock and a warrant to purchase one share of our common stock.
|
Description of Warrants:
|
The warrants will be exercisable on or after the applicable closing date of this offering until the close of business on the fifth anniversary of the date of issuance at an exercise price equal to 100% of the unit price.
|
|
Common Stock to be outstanding after this offering:
|
|
shares,
giving effect to an estimated 1-for-10 Offering Reverse Split
. (1)
|
|
||
Use of Proceeds:
|
We expect to use the net proceeds received from this offering to fund our research and development activities, including furthering development of LIGHT, HOT and COLD and for general corporate purposes, including capital expenditures, working capital, and, potentially, acquisition activities. For a more complete description of our anticipated use of proceeds from this offering, see “Use of Proceeds.”
|
|
Risk Factors:
|
|
See “Risk Factors” beginning on page 7 and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding whether to purchase our securities.
|
OTC Bulletin Board symbol for our Common Stock:
|
|
NVLT.OB
|
Proposed NASDAQ Capital Market listing symbol for our common stock:
|
We have applied for listing of our common stock on The NASDAQ Capital Market under the symbol “NVLT”. No assurance can be given that our application will be approved.
|
(1)
|
The number of shares of our common stock to be outstanding after this offering is based on 2,682,615 shares of common stock outstanding as of November 4, 2011 and excludes, as of that date:
|
|
·
|
shares issuable upon the exercise of warrants sold in this offering;
|
|
·
|
an aggregate of 370,263 shares of common stock issuable upon the exercise of outstanding stock options issued to employees, directors and consultants, including under our 2006 Stock Incentive Plan;
|
|
·
|
an aggregate of 340,611 additional shares of common stock reserved for future issuance under our 2006 Stock Incentive Plan;
|
|
·
|
an aggregate of 703,946 additional shares of common stock reserved for issuance under outstanding warrant agreements entered into in connection with the private placement of our securities completed on April 8, 2011 expiring on March 31, 2016 at an exercise price of $7.50 per share; and
|
|
·
|
an aggregate of 28,785 additional shares of common stock reserved for issuance under various outstanding warrant agreements, with expiration dates between May 7, 2012 and December 31, 2016, at exercise prices ranging from $7.50 to $1,912.50.
|
Nine Months Ended
September 30,
|
Year Ended
December 31,
|
|||||||||||||||
2011
|
2010
|
2010
|
2009
|
|||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development costs
|
|
$
|
2,445,429
|
|
|
$
|
2,616,834
|
|
|
$
|
2,984,207
|
|
|
$
|
4,351,983
|
|
General and administrative costs
|
|
|
1,827,510
|
|
|
|
1,014,094
|
|
|
|
1,156,549
|
|
|
|
1,824,302
|
|
Merger costs
|
746,207
|
-
|
52,925
|
-
|
||||||||||||
Total costs and expenses
|
|
|
5,019,146
|
|
|
|
3,630,928
|
|
|
|
4,193,681
|
|
|
|
6,176,285
|
|
Other expense
|
|
|
(450,356
|
)
|
|
|
(467,495
|
)
|
|
|
(366,582
|
)
|
|
|
(43,588
|
)
|
Net loss
|
|
|
(5,469,502
|
)
|
|
|
(4,098,423
|
)
|
|
|
(4,560,263
|
)
|
|
|
(6,219,873
|
)
|
Basic and diluted net loss attributable to common stockholders per common share
|
(0.25
|
)
|
(0.32
|
)
|
(0.36
|
)
|
(0.49
|
)
|
September 30, |
December 31,
|
|||||||||||
2011 | 2010 | 2009 | ||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Current assets
|
$
|
2,108,688
|
|
$
|
1,279,781
|
|
|
$
|
1,704,212
|
|
||
Working capital
|
|
1,586,871
|
|
|
374,964
|
|
|
|
795,891
|
|
||
Total assets
|
|
6,994,975
|
|
|
4,802,142
|
|
|
|
5,824,706
|
|
||
Long term debt, including current portion
|
|
450,000
|
|
|
3,846,728
|
|
|
|
866,532
|
|
||
Total stockholders’ equity
|
|
5,897,099
|
|
|
133,762
|
|
|
|
4,126,893
|
|
Nine Months
Ended
September 30,
|
Year Ended
December 31,
|
|||||||
2011
|
2010
|
|||||||
Pro Forma Statement of Operations Data:
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Research and development costs
|
|
$
|
2,982,884
|
|
|
$
|
5,982,191
|
|
General and administrative costs
|
|
|
2,406,619
|
|
|
|
3,618,501
|
|
Total costs and expenses
|
|
|
5,389,503
|
|
|
|
9,600,692
|
|
Other income
|
|
|
98,984
|
|
|
|
7,895,726
|
|
Net loss
|
(5,290,519
|
)
|
(1,704,966
|
)
|
||||
Net loss attributable to common stockholders
|
|
|
(5,290,519
|
)
|
|
|
(1,704,966
|
)
|
Basic and diluted net loss attributable to common stockholders per common share
|
(0.20
|
)
|
(0.06
|
)
|
||||
Basic and diluted net loss attributable to common stockholders per common share giving effect to an estimated 1-for-10 Offering Reverse Split
|
(1.97
|
)
|
(0.64
|
)
|
|
·
|
the number of potential products and technologies in development;
|
|
·
|
continued progress and cost of our research and development programs;
|
|
·
|
progress with pre-clinical studies and clinical trials;
|
|
·
|
the time and costs involved in obtaining regulatory clearance;
|
|
·
|
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
|
|
·
|
costs of developing sales, marketing and distribution channels and our ability to sell our drugs;
|
|
·
|
costs involved in establishing manufacturing capabilities for clinical trial and commercial quantities of our drugs;
|
|
·
|
competing technological and market developments;
|
|
·
|
market acceptance of our products;
|
|
·
|
costs for recruiting and retaining management, employees and consultants;
|
|
·
|
costs for educating physicians regarding the application and use of our products;
|
|
·
|
whether or not we obtain listing on a national exchange and, if not, our prospects for obtaining such listing;
|
|
·
|
uncertainty and economic instability resulting from terrorist acts and other acts of violence or war; and
|
|
·
|
the condition of capital markets and the economy generally, both in the U.S. and globally.
|
|
·
|
future clinical trial results may show that the cancer-targeting technologies of Cellectar are not well tolerated by recipients at its effective doses or are not efficacious;
|
|
·
|
future clinical trial results may be inconsistent with Cellectar’s previous preliminary testing results and data from Cellectar’s earlier studies may be inconsistent with clinical data;
|
|
·
|
even if the cancer-targeting technologies of Cellectar are shown to be safe and effective for their intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all;
|
|
·
|
our ability to complete the development and commercialization of the cancer-targeting technologies of Cellectar for our intended use is substantially dependent upon our ability to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products;
|
|
·
|
even if the cancer-targeting technologies of Cellectar are successfully developed, commercially produced and receive all necessary regulatory approvals, there is no guarantee that there will be market acceptance of our products; and
|
|
·
|
our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result that our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues to offset the development and manufacturing costs of our product candidates.
|
|
·
|
consolidating research and development operations;
|
|
·
|
preserving important research and development, manufacturing and supply, and other relationships;
|
|
·
|
minimizing the diversion of management’s attention from ongoing business concerns;
|
|
·
|
coordinating geographically separate organizations; and
|
|
·
|
optimizing the functioning of a newly constituted Board of Directors.
|
|
·
|
demonstrating benefit from delivery of each specific drug for specific medical indications;
|
|
·
|
demonstrating through pre-clinical and clinical trials that each drug is safe and effective; and
|
|
·
|
demonstrating that we have established viable Good Manufacturing Practices capable of potential scale-up.
|
|
·
|
uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;
|
|
·
|
uncertainties arising as a result of the broad array of alternative potential treatments related to cancer and other diseases; and
|
|
·
|
anticipated expense and time believed to be associated with the development and regulatory approval of treatments for cancer and other diseases.
|
|
·
|
receiving regulatory clearance of marketing claims for the uses that we are developing;
|
|
·
|
establishing and demonstrating the advantages, safety and efficacy of our technologies;
|
|
·
|
pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and other health plan administrators;
|
|
·
|
our ability to attract corporate partners, including pharmaceutical companies, to assist in commercializing our intended products; and
|
|
·
|
our ability to market our products.
|
|
·
|
cease selling, incorporating or using any of our technologies and/or products that incorporate the challenged intellectual property, which would adversely affect our ability to generate revenue;
|
|
·
|
obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or
|
|
·
|
redesign our products, which would be costly and time-consuming.
|
|
·
|
fail to adequately market our products;
|
|
·
|
fail to satisfy financial or contractual obligations to us;
|
|
·
|
offer, design, manufacture or promote competing products; or
|
|
·
|
cease operations with little or no notice.
|
|
·
|
announcements or press releases relating to the biopharmaceutical sector or to our own business or prospects;
|
|
·
|
regulatory, legislative, or other developments affecting us or the healthcare industry generally;
|
|
·
|
sales by holders of restricted securities pursuant to effective registration statements or exemptions from registration; and
|
|
·
|
market conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally.
|
|
·
|
the election of directors;
|
|
·
|
the amendment of charter documents; and
|
|
·
|
the approval of certain mergers and other significant corporate transactions, including a sale of substantially all of our assets.
|
·
|
if a "penny stock" is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.
|
·
|
if a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.
|
|
provide for the division of our board into three classes as nearly equal in size as possible with staggered three-year terms and further limit the removal of directors and the filling of vacancies;
|
|
authorize our board of directors to issue without stockholder approval blank check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;
|
|
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;
|
|
establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings;
|
|
require the approval of the holders of 75% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our restated certificate of incorporation and restated bylaws.
|
|
·
|
to fund our research and development activities, including the further development of our LIGHT, HOT and COLD compounds in a wide range of cancers; and
|
|
·
|
for general corporate purposes, such as general and administrative expenses, capital expenditures, working capital, prosecution and maintenance of our intellectual property, and the potential investment in technologies or products that complement our business.
|
|
·
|
on an actual basis
, giving effect to an estimated 1-for-10 Offering Reverse Split
; and
|
|
·
|
on a pro forma as adjusted basis to give effect to the issuance of the securities offered hereby.
|
As of September 30, 2011
|
|||||||
Actual
|
Pro Forma As
Adjusted (1)
|
||||||
Cash and cash equivalents
|
|
$
|
1,590,755
|
|
$ | 15,290,755 | |
|
|
|
|
|
|
||
Wisconsin Department of Commerce Loan
|
|
|
450,000
|
|
450,000
|
||
Capital lease obligations
|
|
|
6,862
|
|
6,862
|
||
Total debt obligations
|
|
|
456,862
|
|
456,862
|
||
|
|
|
|
|
|
||
Stockholders’ equity (deficit):
|
|
|
|
|
|
||
Common stock, par value $0.00001 per share: 150,000,000 shares authorized; 2,682,615 issued as of September 30, 2011
|
|
|
27
|
|
52
|
||
Additional paid in capital
|
35,411,578
|
49,111,553
|
|||||
Deficit accumulated during the development stage
|
(29,514,506
|
) |
(29,514,506
|
) | |||
Total stockholders’ equity
|
5,897,099
|
19,597,099
|
|||||
|
|
|
|
|
|
||
Total capitalization
|
|
$
|
6,353,961
|
|
$
|
20,053,961
|
(1)
|
Assumes that $15,000,000 of units are sold in this offering at an assumed offering price of $6.00 per unit and that the net proceeds thereof are approximately $13,700,000 after deducting underwriting discounts and commissions and our estimated offering expenses.
|
Fiscal Year 2009
|
|
High
|
|
|
Low
|
|
||
First Quarter
|
|
$
|
917.40
|
|
|
$
|
458.70
|
|
Second Quarter
|
|
|
1,437.30
|
|
|
|
504.50
|
|
Third Quarter
|
|
|
1,498.40
|
|
|
|
871.50
|
|
Fourth Quarter
|
|
|
4,434.20
|
|
|
|
993.80
|
|
Fiscal Year 2010
|
|
High
|
|
|
Low
|
|
||
First Quarter
|
|
$
|
4,663.60
|
|
|
$
|
261.60
|
|
Second Quarter
|
|
|
426.60
|
|
|
|
146.70
|
|
Third Quarter
|
|
|
230.80
|
|
|
|
61.70
|
|
Fourth Quarter
|
|
|
91.70
|
|
|
|
28.20
|
|
Fiscal Year 2011
|
|
High
|
|
|
Low
|
|
||
First Quarter
|
|
$
|
81.00
|
|
|
$
|
15.20
|
|
Second Quarter
|
|
38.20
|
|
|
9.50
|
|
||
Third Quarter
|
15.50
|
11.30
|
||||||
Fourth Quarter (through November 4, 2011)
|
13.90 | 3.32 |
Plan category
|
Number of shares to
be issued upon
exercise of outstanding
options, warrants and
rights (#)
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
($)
|
Number of shares
remaining available for
future issuance under
equity compensation plans
(excluding shares reflected
in column (a)) (#)
|
|||||||||
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Equity compensation plans approved by stockholders
|
|
|
3,865
|
|
|
$
|
1,009.80
|
|
|
|
2,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by stockholders
|
|
|
1,056
|
|
|
$
|
1,009.80
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,921
|
|
|
$
|
1,009.80
|
|
|
|
2,555
|
|
Assumed public offering price per unit
|
$
|
6.00
|
||||
Pro forma net tangible book value per share as of September 30, 2011
|
$ | 1.57 | ||||
Increase per share attributable to sale of securities to investors
|
$ | 1.89 | ||||
Pro forma as adjusted net tangible book value per share after the offering
|
$
|
3.46 | ||||
Dilution per share to investors
|
$
|
2.54 |
Nine Months Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
Interest expense, convertible notes
|
$
|
(159,000
|
)
|
$
|
(223,000
|
)
|
||
Beneficial conversion feature, convertible notes
|
(258,000
|
)
|
(214,000
|
)
|
||||
Interest expense, bank note
|
(6,000
|
)
|
(43,000
|
)
|
||||
Interest expense, other
|
(9,000
|
)
|
(1,000
|
)
|
||||
Interest income
|
4,000
|
13,000
|
||||||
$
|
(428,000
|
)
|
$
|
(468,000
|
)
|
Year ended December 31,
|
||||||||
2010
|
2009
|
|||||||
Interest expense, convertible notes
|
$ | (305,000 | ) | $ | — | |||
Beneficial conversion feature, convertible notes
|
(214,000 | ) | — | |||||
Interest expense, bank note
|
(55,000 | ) | (68,000 | ) | ||||
Interest expense, other
|
(7,000 | ) | — | |||||
Interest income
|
15,000 | 24,000 | ||||||
$ | (566,000 | ) | $ | (44,000 | ) |
Date of Grant
|
Number of Options
Granted
|
Exercise
Price
|
Fair value of
Underlying Stock
on Grant Date
|
Fair Value of
Instrument on
Grant Date
|
Compensation
Expense
Recognized
through September 30,
2011
|
|||||||||||||||
April 25, 2011
|
100,000 | $ | 3.00 | $ | 3.00 | $ | 2.79 | $ | 5,000 | |||||||||||
May 18, 2011
|
1,581,100 | $ | 1.40 | $ | 1.40 | $ | 1.17 | 177,778 | ||||||||||||
May 18, 2011
|
670,200 | $ | 1.40 | $ | 1.40 | $ | 1.18 | 72,467 | ||||||||||||
May 18, 2011
|
750,000 | $ | 1.40 | $ | 1.40 | $ | 1.15 | 158,751 | ||||||||||||
May 18, 2011
|
405,100 | $ | 1.40 | $ | 1.40 | $ | 1.14 | 47,799 | ||||||||||||
May 18, 2011
|
150,000 | $ | 1.40 | $ | 1.40 | $ | 1.30 | 119,481 | ||||||||||||
May 23, 2011
|
20,000 | $ | 1.88 | $ | 1.88 | $ | 1.57 | 3,690 | ||||||||||||
May 25, 2011
|
20,000 | $ | 1.65 | $ | 1.65 | $ | 1.34 | 12,709 | ||||||||||||
October 6, 2011 | 70,000 | $ | 1.05 | $ | 1.05 | $ | 0.85 | - | ||||||||||||
3,766,400 | $ | 597,675 |
•
|
Selective uptake and retention by cancer cells/cancer stem cells compared to normal cells/stem cells. This results in significantly greater potency of COLD as an inhibitor of cell proliferation in cancer cells vs. normal cells (greater than a 10-fold difference), or
|
•
|
Suitability for intravenous administration, avoiding dose-limiting gastrointestinal toxicity seen with orally administered Akt-inhibiting APCs and potentially enabling greater systemic drug exposure and, hence, Akt-inhibition in cancer cells, resulting in superior efficacy.
|
|
·
|
HOT is selectively taken up by and retained in cancer vs. normal cells and its delivery vehicle (COLD) is intended to be given to patients in sub-pharmacological doses, resulting in an improved safety profile compared to standard chemotherapy.
|
|
·
|
HOT does not rely on inhibition or enhancement of a specific pathway; it works by exposing cancer cells to sustained lethal radiation from within.
|
|
·
|
To date, HOT (as demonstrated with LIGHT studies) has shown near-universal cancer-specific retention in more than 50
in vivo
tumor models, making the molecule potentially effective in numerous cancer types (broad-spectrum) as compared to type-specific therapies.
|
|
·
|
We believe we have completed all preclinical safety, pharmacology and toxicology studies required for an NDA including both single-dose and multi-dose studies.
|
|
·
|
HOT is a small molecule that is easily characterized and synthesized and is therefore not subject to scale-up and manufacturing risks typically associated with large molecules such as monoclonal antibodies.
|
|
·
|
HOT exploits a new cancer-selective delivery and retention mechanism, but is paired with a proven and effective radioisotope (
131
I) for therapy.
|
|
1.
|
Lipid rafts are portals of entry for APLs such as COLD, HOT and LIGHT. The marked selectivity of our compounds for cancer cells versus non-cancer cells is due to the fact that cancer cells have far more lipid rafts. In addition to accumulating in lipid rafts, COLD, HOT and LIGHT are transported into the cytoplasm, where they distribute to organelle membranes (mitochondria, ER, lysosomes) but not the nucleus.
|
|
2.
|
Lipid rafts also regulate signaling-based cell functions including apoptosis and cell proliferation, and COLD disrupts this regulation. For example, one key signaling pathway that is regulated by interactions with lipid rafts and phospholipids is the phosphatidylinosotol 3-kinase (PI3K)/Akt pathway. Akt (a serine/threonine protein kinase) is activated in lipid raft regions via phosphorylation by PI-dependent kinases and goes on to phosphorylate anti-apoptotic proteins (e.g., Bcl-xL and FLIP) resulting in their inactivation and, thus, promotion of tumor cell survival. COLD pharmacologically inhibits the activation of Akt. In cancer cells, Akt inhibition is associated with induction of apoptosis and decreased cell proliferation/survival.
|
•
|
Selective uptake and retention by cancer cells/cancer stem cells compared to normal cells/stem cells. This results in significantly greater potency of COLD as an inhibitor of cell proliferation in cancer cells vs. normal cells (>10-fold difference), or
|
•
|
Suitability for intravenous administration, avoiding dose-limiting gastrointestinal toxicity seen with orally administered Akt-inhibiting APCs and potentially enabling greater systemic drug exposure and, hence, Akt-inhibition in cancer cells, resulting in superior efficacy.
|
·
|
preclinical laboratory and animal tests performed under the FDA’s Good Laboratory Practices regulations, referred to herein as GLP;
|
·
|
submission to the FDA of an IND, which must become effective before human clinical trials may commence;
|
·
|
human clinical studies performed under the FDA’s Good Clinical Practices regulations, to evaluate the drug’s safety and effectiveness for its intended uses;
|
FDA review of whether the facility in which the drug is manufactured, processed, packed, or held meets standards designed to assure the product’s continued quality; and
|
·
|
submission of a marketing application to the FDA, and approval of the application by the FDA.
|
Name
|
Age
|
Position
|
||
Stephen A. Hill, B.M. B.Ch., M.A., F.R.C.S. (3)
|
53
|
Chairman of the Board (term expiring at 2012 annual meeting or upon his successor being duly elected and qualified)
|
||
Harry S. Palmin
|
41
|
President, Chief Executive Officer and Director (term as Director expiring at 2013 annual meeting or upon his successor being duly elected and qualified)
|
||
Kimberly A. Hawkins
|
39
|
Vice President of Clinical Development
|
||
Christopher J. Pazoles, Ph.D.
|
61
|
Senior Vice President of Research and Development
|
||
Joanne M. Protano
|
43
|
Vice President, Chief Financial Officer and Treasurer
|
||
Jamey P. Weichert, Ph.D.
|
55
|
Chief Scientific Officer and Director (term as Director expiring at 2013 annual meeting or upon his successor being duly elected and qualified)
|
||
Thomas Rockwell Mackie, Ph.D. (2)
|
57
|
Director (term expiring at 2011 annual meeting or upon his successor being duly elected and qualified)
|
||
James S. Manuso, Ph.D. (2)(3)
|
62
|
Director (term expiring at 2011 annual meeting or upon his successor being duly elected and qualified)
|
||
John Neis (1)(2)
|
56
|
Director (term expiring at 2012 annual meeting or upon his successor being duly elected and qualified)
|
||
John E. Niederhuber, M.D. (1)(3)
|
73
|
Director (term expiring at 2011 annual meeting or upon his successor being duly elected and qualified)
|
||
Howard M. Schneider (1)
|
67
|
Director (term expiring at 2013 annual meeting or upon his successor being duly elected and qualified)
|
||
Michael F. Tweedle, Ph.D. (2)
|
60
|
Director (term expiring at 2012 annual meeting or upon his successor being duly elected and qualified)
|
|
(1)
|
Member of the audit committee.
|
|
(2)
|
Member of the compensation committee
|
|
(3)
|
Member of the nominating and corporate governance committee
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
(4)
|
Option
Awards ($)
(5)
|
Total ($)
|
|||||||||||||
Harry S. Palmin (1)
|
2010
|
$ | 270,000 | $ | 0 | $ | 0 | $ | 270,000 | |||||||||
President, Chief Executive Officer
|
2009
|
$ | 270,000 | $ | 40,500 | $ | 131,650 | $ | 442,150 | |||||||||
Christopher J. Pazoles (2)
|
2010
|
$ | 235,000 | $ | 39,167 | $ | 0 | $ | 274,167 | |||||||||
Vice President of Research and Development
|
2009
|
$ | 235,000 | $ | 35,250 | $ | 105,320 | $ | 375,570 | |||||||||
Elias B. Nyberg (3)
|
2010
|
$ | 225,000 | $ | 37,500 | $ | 0 | $ | 262,500 | |||||||||
Vice President of Regulatory, Quality and Compliance
|
2009
|
$ | 225,000 | $ | 33,750 | $ | 78,990 | $ | 337,740 |
|
(1)
|
There has been no increase to Mr. Palmin’s annual salary for 2011. On May 18, 2011, Mr. Palmin was granted an option to purchase 134,040 shares of common stock at an exercise price of $14.00 per share, which option will vest with respect to: 67,020 such shares in equal quarterly installments over a four-year period; 16,755 such shares upon the closing of one or more financings with total gross proceeds of at least $10 million before December 31, 2011; 16,755 such shares upon the closing of one or more financings with total gross proceeds of at least $20 million before December 31, 2012; 16,755 such shares upon the availability of proof of concept data in man for LIGHT by December 31, 2011; and 16,755 such shares upon the initiation of a Phase 2a clinical trial for HOT by August 31, 2012.
|
|
(2)
|
On May 18, 2011, Dr. Pazoles’ annual salary was increased to $250,000 and he was granted an option to purchase 20,000 shares of common stock at an exercise price of $14.00 per share, which option will vest in equal quarterly installments over a three-year period.
|
|
(3)
|
On March 10, 2011, the Company terminated Dr. Nyberg’s employment. In connection with that termination, which was without cause, Dr. Nyberg received a payment of approximately $83,000 pursuant to the terms of the executive retention agreement between him and the Company dated May 14, 2010.
|
|
(4)
|
Bonus amounts for 2009 were paid in 2010. Bonus amounts for Dr. Pazoles and Dr. Nyberg in 2010 represent retention bonuses paid as of October 1, 2010 pursuant to their respective retention agreements dated May 14, 2010.
|
|
(5)
|
The fair value of each stock award was estimated on the grant date using the Black-Scholes option-pricing model. See Note 7 to the pre-acquisiton financial statements for a description of the assumptions used in estimating the fair value of stock options. There were no option grants during 2010.
|
Individual Grants
|
||||||||||||||||
Name
|
Year
of Grant
|
Number of
securities
underlying
unexercised
options
(#
exercisable)
|
Number of
securities
underlying
unexercised
options
(#
unexercisable)
|
Exercise or
base price
($/share)
|
Expiration
date
|
|||||||||||
Harry S. Palmin
|
2009
|
(1) | 54 | 109 | $ | 1,147.50 |
12/8/2019
|
|||||||||
2008
|
(2) | 174 | 87 | 657.90 |
12/15/2018
|
|||||||||||
2007
|
(2) | 130 | — | 688.50 |
12/17/2017
|
|||||||||||
2006
|
(2) | 98 | — | 1,392.30 |
12/11/2016
|
|||||||||||
2005
|
(3) | 163 | — | 15.30 |
1/31/2015
|
|||||||||||
2005
|
(3) | 98 | — | 15.30 |
3/31/2015
|
|||||||||||
2004
|
(4) | 215 | — | 15.30 |
4/1/2014
|
|||||||||||
2003
|
(5) | 4 | — | 1,071.00 |
8/1/2013
|
|||||||||||
Christopher J. Pazoles
|
2009
|
(1) | 43 | 87 | $ | 1,147.50 |
12/8/2019
|
|||||||||
2008
|
(2) | 87 | 43 | 657.90 |
12/15/2018
|
|||||||||||
2007
|
(2) | 81 | — | 688.50 |
12/17/2017
|
|||||||||||
2006
|
(2) | 65 | — | 1,392.30 |
12/11/2016
|
|||||||||||
2005
|
(6) | 65 | — | 15.30 |
4/8/2015
|
|||||||||||
Elias B. Nyberg
|
2009
|
(1) | 33 | 65 | $ | 1,147.50 |
12/8/2019
|
|||||||||
2008
|
(2) | 43 | 22 | 657.90 |
12/15/2018
|
|||||||||||
2008
|
(7) | 65 | — | 887.40 |
4/1/2018
|
(1)
|
These shares vest quarterly in increments of one-twelfth over three years from the date of grant. The exercise price equals the closing price on the date of grant.
|
(2)
|
These shares vest annually in increments of one-third over three years from the date of grant. The exercise price equals the closing price on the date of grant.
|
(3)
|
These shares initially vested over a two-year period. Pursuant to their terms, the shares fully vested upon the completion of a non-bridge loan financing, which occurred in the second quarter of 2005. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
|
(4)
|
These shares initially vested one-third upon grant and one-third annually over the following two years. Pursuant to their terms, one additional year of vesting occurred upon the completion of a non-bridge loan financing, which occurred in the second quarter of 2005. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
|
(5)
|
These shares vest annually in increments of one-third over three years from the date of grant. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
|
(6)
|
These shares vested in increments of one-fourth every six months over two years from the date of grant. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
|
(7)
|
These shares were fully vested upon grant. The exercise price equals the closing price on the date of grant.
|
Name and Principal Position
|
Year
|
Director
Fees
($) (3)
|
Total ($)
|
|||||||
Stephen A. Hill, Chairman (1)
|
2010
|
$ | 39,500 | $ | 39,500 | |||||
Michael J. Doyle, Director (1)(2)
|
2010
|
33,250 | 33,250 | |||||||
Sim Fass, Director (1)(2)
|
2010
|
32,500 | 32,500 | |||||||
James S. Manuso, Director (1)
|
2010
|
23,000 | 23,000 | |||||||
David B. McWilliams, Director (1)(2)
|
2010
|
24,500 | 24,500 | |||||||
Howard M. Schneider, Director (1)
|
2010
|
39,000 | 39,000 |
(1)
|
As of December 31, 2010, outstanding options to purchase common stock held by directors were as follows: Dr. Hill 228; Mr. Doyle 228; Dr. Fass 228; Dr. Manuso 196; Mr. McWilliams 264; Mr. Schneider 163.
|
(2)
|
In connection with the Acquisition, Mr. Doyle, Dr. Fass and Mr. McWilliams resigned from the board of directors.
|
(3)
|
Director fees include all fees earned for director services including quarterly fees, meeting fees and committee chairman fees.
|
(4)
|
There were no option grants during 2010.
|
|
·
|
Each person known by us to be the beneficial owner of more than five percent of our common stock;
|
|
·
|
Each of our directors;
|
|
·
|
Each executive officer named in the summary compensation table; and
|
|
·
|
All of our current directors and executive officers as a group.
|
Shares Beneficially Owned (Pro forma for Offering Reverse Split)
|
||||||||||||||||
Name and Address of Beneficial Owner
|
Outstanding
|
Right to Acquire
|
Total
|
Percentage
|
||||||||||||
Venture Investors LLC (1) (2)
University Technology Park
505 S. Rosa Road; Suite 201
Madison, WI 53719
|
453,430 | 200,000 | 653,430 | 22.7 | ||||||||||||
Jamey P. Weichert (3)
c/o Novelos Therapeutics, Inc.
3301 Agriculture Drive
Madison, WI 53716
|
470,673 | 2,266 | 472,939 | 17.6 | ||||||||||||
Greenway Properties Inc. (2)(4)
725 Heartland Trail, Suite 102
Madison, WI 53707
|
133,740 | 100,000 | 233,740 | 8.4 | ||||||||||||
Continuum Investment Limited Partnership (5)
P.O. Box 620557
Middleton, WI 53562
|
180,852 | 0 | 180,852 | 6.7 | ||||||||||||
Harry S. Palmin (6)
|
419 | 9,457 | 9,876 | * | ||||||||||||
Christopher J. Pazoles
|
0 | 3,763 | 3,763 | * | ||||||||||||
Stephen A. Hill
|
0 | 3,978 | 3,978 | * | ||||||||||||
Thomas Rockwell Mackie
|
11,612 | 2,500 | 14,112 | * | ||||||||||||
James S. Manuso
|
0 | 2,695 | 2,695 | * | ||||||||||||
John Neis (1) (7)
|
453,430 | 202,500 | 655,930 | 22.7 | ||||||||||||
John E. Niederhuber
|
0 | 2,500 | 2,500 | * | ||||||||||||
Howard M. Schneider
|
65 | 2,662 | 2,727 | * | ||||||||||||
Michael F. Tweedle
|
0 | 2,500 | 2,500 | * | ||||||||||||
All directors and officers as a group (12 persons)
|
936,199 | 240,342 | 1,176,541 | 40.3 |
(1)
|
Ownership consists of shares of common stock held by Venture Investors Early Stage Fund IV Limited Partnership and Advantage Capital Wisconsin Partners I, Limited Partnership. VIESF IV GP LLC is the general partner of Venture Investors Early Stage Fund IV Limited Partnership and Venture Investors LLC is the submanager and special limited partner of Advantage Capital Wisconsin Partners I, Limited Partnership. The investment decisions of VIESF IV GP LLC and Venture Investors LLC are made collectively by six managers, including Mr. Neis. Each such manager and Mr. Neis disclaim such beneficial ownership except to the extent of his pecuniary interest therein. The address of Mr. Neis is c/o Venture Investors LLC, 505 South Rosa Road, #201, Madison, Wisconsin 53719.
|
(2)
|
Shares in the “Right to Acquire” column consist of warrants to purchase common stock at a price of $7.50, expiring on March 31, 2016
.
|
(3)
|
Dr. Weichert serves as a director and our Chief Scientific Officer following the Acquisition. The shares beneficially owned by him have been included in the total of directors and officers as a group.
|
(4)
|
Jeffrey Straubel is the President and principal owner of Greenway Properties, Inc. and has sole dispositive and voting power over shares held by Greenway Properties, Inc.
|
(5)
|
Ownership includes shares of common stock held by Cellectar Investor I, LLC. Continuum Investment Limited Partnership is the manager of Cellectar Investor I, LLC. Bruce Neviaser is the president of Continuum Investment Limited Partnership and has sole dispositive and voting power over shares held by Continuum Investment Limited Partnership and Cellectar Investor I, LLC.
|
(6)
|
Ownership of H. Palmin includes shares owned by his wife, Deanna Palmin.
|
(7)
|
Shares in the “Right to Acquire” column consist of warrants to purchase 200,000 shares of common stock at a price of $7.50, expiring on March 31, 2016, held by Venture Investors Early Stage Fund IV Limited Partnership and options to purchase 2,500 shares of common stock at $14.00 per share, held by Mr. Neis.
|
|
·
|
the information in this prospectus and otherwise available to the underwriters;
|
|
·
|
the history and the prospects for the industry in which we will compete;
|
|
·
|
our current financial condition and the prospects for our future cash flows and earnings;
|
|
·
|
the general condition of the economy and the securities markets at the time of this offering;
|
|
·
|
the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and
|
|
·
|
the public demand for our securities in this offering
|
Total
|
||||||||||||
Per
Unit
|
Without
Over-Allotment
|
With
Over-Allotment
|
||||||||||
Public offering price
|
$ | $ | $ | |||||||||
Underwriting discount (5%) (1)
|
$ | $ | $ | |||||||||
Non-accountable expense allowance (1%) (2)
|
$ | $ | $ | |||||||||
Proceeds, before expenses, to us (3)
|
$ | $ | $ |
|
(1)
|
Underwriting discount is $ per unit (5% of the price of the securities sold in the offering).
|
|
(2)
|
The expense allowance of 1% is not payable with respect to the units sold upon exercise of the underwriter’s over-allotment option.
Includes $50,000 which was previously paid to the underwriter as an advance.
|
|
(3)
|
We estimate that the total expenses of this offering, excluding the underwriter’s discount and the non-accountable expense allowance are approximately $ .
|
|
·
|
Stabilizing transactions permit bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, so long as stabilizing bids do not exceed a specified maximum.
|
|
·
|
Over-allotment involves sales by the underwriter of securities in excess of the number of units the underwriter is obligated to purchase, which creates a short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of units over-allotted by the underwriter is not greater than the number of units that it may purchase in the over-allotment option. In a naked short position, the number of units involved is greater than the number of units in the over-allotment option. The underwriter may close out any covered short position by either exercising its over-allotment option or purchasing shares in the open market.
|
|
·
|
Covering transactions involve the purchase of securities in the open market after the distribution has been completed in order to cover short positions. In determining the source of securities to close out the short position, the underwriter will consider, among other things, the price of securities available for purchase in the open market as compared to the price at which it may purchase securities through the over-allotment option. If the underwriter sells more shares of common stock than could be covered by the over-allotment option, creating a naked short position, the position can only be closed out by buying securities in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in this offering.
|
|
·
|
Penalty bids permit the underwriter to reclaim a selling concession from a selected dealer when the shares of common stock originally sold by the selected dealer are purchased in a stabilizing or syndicate covering transaction.
|
|
·
|
read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC’s Public Reference Room; or
|
|
·
|
obtain a copy from the SEC upon payment of the fees prescribed by the SEC.
|
Page
|
||||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|||
Balance Sheets at September 30, 2011, December 31, 2010 and 2009
|
F-3
|
|||
Statements of Operations for the Nine Months Ended September 30, 2011 and 2010, the Years Ended December 31, 2010 and 2009, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2010
|
F-4
|
|||
Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2011 and Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2010
|
F-5
|
|||
Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010, the Years Ended December 31, 2010 and 2009, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2010
|
F-6
|
|||
Notes to Financial Statements
|
F-7
|
Consolidated September 30,
2011
|
December 31,
2010
|
December 31,
2009
|
||||||||||
(unaudited)
|
(audited)
|
(audited)
|
||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
$
|
1,590,755
|
$
|
673,739
|
$
|
980,125
|
||||||
Restricted cash
|
55,000
|
555,000
|
555,000
|
|||||||||
Prepaid expenses and other current assets
|
303,633
|
51,042
|
69,626
|
|||||||||
Deferred issuance costs
|
159,300
|
—
|
99,461
|
|||||||||
Total current assets
|
2,108,688
|
1,279,781
|
1,704,212
|
|||||||||
FIXED ASSETS, NET
|
3,183,603
|
3,510,489
|
4,088,951
|
|||||||||
INTANGIBLE ASSETS
|
—
|
—
|
19,671
|
|||||||||
EXCESS PURCHASE PRICE OVER NET ASSETS ACQUIRED
|
1,675,462
|
—
|
—
|
|||||||||
OTHER ASSETS
|
27,222
|
11,872
|
11,872
|
|||||||||
TOTAL ASSETS
|
$
|
6,994,975
|
$
|
4,802,142
|
$
|
5,824,706
|
||||||
CURRENT LIABILITIES:
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
441,653
|
$
|
392,881
|
$
|
715,588
|
||||||
Accrued interest
|
—
|
305,049
|
—
|
|||||||||
Derivative liability
|
77,967
|
—
|
—
|
|||||||||
Notes payable, current portion
|
—
|
204,802
|
190,789
|
|||||||||
Capital lease obligations, current portion
|
2,197
|
2,085
|
1,944
|
|||||||||
Total current liabilities
|
521,817
|
904,817
|
908,321
|
|||||||||
LONG-TERM LIABILITIES:
|
||||||||||||
Convertible debt (Note 7)
|
—
|
2,720,985
|
—
|
|||||||||
Notes payable, net of current portion
|
450,000
|
920,941
|
675,743
|
|||||||||
Deferred rent
|
121,394
|
115,311
|
105,338
|
|||||||||
Capital lease obligations, net of current portion
|
4,665
|
6,326
|
8,411
|
|||||||||
Total long-term liabilities
|
576,059
|
3,763,563
|
789,492
|
|||||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||||||
STOCKHOLDERS’ EQUITY:
|
||||||||||||
Preferred stock, $0.00001 par value; 7,000 shares authorized; none issued none outstanding as of September 30, 2011, December 31, 2010 and December 31, 2009
|
—
|
—
|
—
|
|||||||||
Common stock, $0.00001 par value; 150,000,000 shares authorized; 26,826,157 shares issued and outstanding at September 30, 2011, 12,820,102 shares issued and outstanding at December 31, 2010 and December 31, 2009
|
268
|
128
|
128
|
|||||||||
Additional paid-in capital
|
35,411,337
|
24,178,638
|
23,611,506
|
|||||||||
Deficit accumulated during the development stage
|
(29,514,506
|
)
|
(24,045,004
|
)
|
(19,484,741
|
)
|
||||||
Total stockholders’ equity
|
5,897,099
|
133,762
|
4,126,893
|
|||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
6,994,975
|
$
|
4,802,142
|
$
|
5,824,706
|
Nine Months Ended
September 30,
|
Year Ended
December 31,
|
Cumulative Development- Stage Period from November 7, 2002 (date of inception) through December 31, 2010
|
||||||||||||||||||
Consolidated
2011
(unaudited)
|
2010
(unaudited)
|
2010
(audited)
|
2009
(audited)
|
(audited)
|
||||||||||||||||
COSTS AND EXPENSES:
|
||||||||||||||||||||
Research and development
|
$
|
2,445,429
|
$
|
2,616,834
|
$
|
2,984,207
|
$
|
4,351,983
|
$
|
17,205,959
|
||||||||||
General and administrative
|
1,827,510
|
1,014,094
|
1,156,549
|
1,824,302
|
6,970,179
|
|||||||||||||||
Merger costs
|
746,207
|
—
|
52,925
|
—
|
52,925
|
|||||||||||||||
Total costs and expenses
|
5,019,146
|
3,630,928
|
4,193,681
|
6,176,285
|
24,229,063
|
|||||||||||||||
LOSS FROM OPERATIONS
|
(5,019,146
|
)
|
(3,630,928
|
)
|
(4,193,681
|
)
|
(6,176,285
|
)
|
(24,229,063
|
)
|
||||||||||
OTHER INCOME (EXPENSE):
|
||||||||||||||||||||
Grant income
|
44,479
|
—
|
200,000
|
—
|
200,000
|
|||||||||||||||
Loss on derivative liability
|
(66,820
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||
Interest expense, net
|
(428,015
|
)
|
(467,495
|
)
|
(566,156
|
)
|
(43,588
|
)
|
(17,102
|
)
|
||||||||||
Other income
|
—
|
—
|
(426
|
)
|
—
|
1,161
|
||||||||||||||
Total other income (expense)
|
(450,356
|
)
|
(467,495
|
)
|
(366,582
|
)
|
(43,588
|
)
|
184,059
|
|||||||||||
NET LOSS
|
$
|
(5,469,502
|
)
|
$
|
(4,098,423
|
)
|
$
|
(4,560,263
|
)
|
$
|
(6,219,873
|
)
|
$
|
(24,045,004
|
)
|
|||||
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$
|
(0.25
|
)
|
$
|
(0.32
|
)
|
$
|
(0.36
|
)
|
$
|
(0.49
|
)
|
$
|
(2.53
|
)
|
|||||
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
21,847,984
|
12,820,102
|
12,820,102
|
12,820,102
|
9,513,115
|
Common Stock
|
Additional
Paid-in
Capital
|
Deficit
Accumulated
During the
Development
Stage
|
Total
Stockholders’
Equity
|
|||||||||||||||||
Shares
|
Par
Amount
|
|||||||||||||||||||
BALANCE AT NOVEMBER 7, 2002
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||
Issuance of common stock for cash
|
6,440,123
|
64
|
590,205
|
—
|
590,269
|
|||||||||||||||
Issuance of common stock in exchange for professional services
|
101,220
|
1
|
9,107
|
—
|
9,108
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
BALANCE AT DECEMBER 31, 2002
|
6,541,343
|
65
|
599,312
|
—
|
599,377
|
|||||||||||||||
Issuance of common stock for cash, net of issuance costs
|
37,958
|
—
|
4,937
|
—
|
4,937
|
|||||||||||||||
Issuance of common stock in exchange for licensed technology
|
203,483
|
2
|
80,410
|
—
|
80,412
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(295,790)
|
(295,790
|
)
|
||||||||||||||
BALANCE AT DECEMBER 31, 2003
|
6,782,784
|
67
|
684,659
|
(295,790
|
)
|
388,936
|
||||||||||||||
Net loss
|
—
|
—
|
—
|
(342,761
|
)
|
(342,761
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2004
|
6,782,784
|
67
|
684,659
|
(638,551
|
)
|
46,175
|
||||||||||||||
Issuance of common stock for cash, net of issuance costs
|
610,664
|
6
|
835,862
|
—
|
835,868
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(481,837
|
)
|
(481,837
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2005
|
7,393,448
|
73
|
1,520,521
|
(1,120,388
|
)
|
400,206
|
||||||||||||||
Issuance of common stock for cash, net of issuance costs
|
2,202,179
|
22
|
7,097,050
|
—
|
7,097,072
|
|||||||||||||||
Common stock repurchased
|
(43,819
|
)
|
—
|
(31,667
|
)
|
—
|
(31,667
|
)
|
||||||||||||
Stock-based compensation
|
—
|
—
|
43,994
|
—
|
43,994
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(963,440
|
)
|
(963,440
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2006
|
9,551,808
|
95
|
8,629,898
|
(2,083,828
|
)
|
6,546,165
|
||||||||||||||
Issuance of common stock for cash, net of issuance costs
|
60,250
|
1
|
249,999
|
—
|
250,000
|
|||||||||||||||
Exercise of warrant to purchase common stock
|
75,045
|
1
|
249,999
|
—
|
250,000
|
|||||||||||||||
Stock-based compensation
|
—
|
—
|
570,392
|
—
|
570,392
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(5,090,325
|
)
|
(5,090,325
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2007
|
9,687,103
|
97
|
9,700,288
|
(7,174,153
|
)
|
2,526,232
|
||||||||||||||
Issuance of common stock for cash, net of issuance costs
|
3,132,999
|
31
|
12,931,531
|
—
|
12,931,562
|
|||||||||||||||
Stock-based compensation
|
—
|
—
|
477,488
|
—
|
477,488
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(6,090,715
|
)
|
(6,090,715
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2008
|
12,820,102
|
128
|
23,109,307
|
(13,264,868
|
)
|
9,844,567
|
||||||||||||||
Stock-based compensation
|
—
|
—
|
502,199
|
—
|
502,199
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(6,219,873
|
)
|
(6,219,873
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2009
|
12,820,102
|
128
|
23,611,506
|
(19,484,741
|
)
|
4,126,893
|
||||||||||||||
Stock-based compensation
|
—
|
—
|
353,340
|
—
|
353,340
|
|||||||||||||||
Intrinsic value of beneficial conversion feature associated with convertible debt issued in exchange for cash
|
—
|
—
|
213,792
|
—
|
213,792
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(4,560,263
|
)
|
(4,560,263
|
)
|
|||||||||||||
BALANCE AT DECEMBER 31, 2010
|
12,820,102
|
128
|
24,178,638
|
(24,045,004
|
)
|
133,762
|
||||||||||||||
Issuance of common stock upon conversion of convertible notes
|
4,181,535
|
42
|
3,184,665
|
—
|
3,184,707
|
|||||||||||||||
Issuance of common stock in a business combination
|
2,959,871
|
30
|
2,219,873
|
—
|
2,219,903
|
|||||||||||||||
Cash paid in lieu of fractional shares in a business combination
|
(41
|
)
|
—
|
(145
|
)
|
—
|
(145
|
)
|
||||||||||||
Issuance of common stock and warrants, net of issuance costs
|
6,846,537
|
68
|
4,866,338
|
—
|
4,866,406
|
|||||||||||||||
Intrinsic value of beneficial conversion feature associated with the conversion of convertible debt
|
—
|
—
|
257,973
|
—
|
257,973
|
|||||||||||||||
Issuance of common stock upon the cashless exercise of warrants
|
18,153
|
—
|
48,339
|
—
|
48,339
|
|||||||||||||||
Stock-based compensation
|
—
|
—
|
655,656
|
—
|
655,656
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
(5,469,502
|
)
|
(5,469,502
|
)
|
|||||||||||||
BALANCE AT SEPTEMBER 30, 2011 (CONSOLIDATED) (unaudited)
|
26,826,157
|
$
|
268
|
$
|
35,411,337
|
$
|
(29,514,506
|
)
|
$
|
5,897,099
|
Nine Months Ended
September 30,
|
Year Ended
December 31,
|
Cumulative Development-Stage Period from November 7, 2002 through December 31, 2010
|
||||||||||||||||||
Consolidated
2011
(unaudited)
|
2010
(unaudited)
|
2010
(audited)
|
2009
(audited)
|
(audited)
|
||||||||||||||||
Net loss
|
$ | (5,469,502 | ) | $ | (4,098,423 | ) | $ | (4,560,263 | ) | $ | (6,219,873 | ) | $ | (24,045,004 | ) | |||||
Adjustments to reconcile net loss to cash used in operating activities:
|
||||||||||||||||||||
Depreciation and amortization
|
439,587 | 435,917 | 580,114 | 576,745 | 1,831,197 | |||||||||||||||
Stock-based compensation
|
655,656 | 331,186 | 353,340 | 502,199 | 1,947,413 | |||||||||||||||
Intrinsic value of beneficial conversion feature associated with convertible debt
|
257,973 | 213,792 | 213,792 | — | 213,792 | |||||||||||||||
Issuance of stock for technology and services
|
— | — | — | — | 89,520 | |||||||||||||||
Impairment of intangible assets
|
— | 19,671 | 19,671 | — | 19,671 | |||||||||||||||
Loss on disposal of fixed assets
|
6,009 | — | — | 1,607 | 30,468 | |||||||||||||||
Loss on derivative warrants
|
66,820 | — | — | — | — | |||||||||||||||
Changes in:
|
||||||||||||||||||||
Prepaid expenses and other current assets
|
(224,548 | ) | 20,614 | 18,584 | 23,152 | (62,914 | ) | |||||||||||||
Accounts payable and accrued liabilities
|
(331,357 | ) | (419,634 | ) | (322,707 | ) | 278,131 | 392,881 | ||||||||||||
Accrued interest
|
158,672 | 222,748 | 305,049 | — | 305,049 | |||||||||||||||
Deferred rent
|
6,083 | 4,765 | 9,973 | 62,789 | 115,311 | |||||||||||||||
Cash used in operating activities
|
(4,434,607 | ) | (3,269,364 | ) | (3,382,447 | ) | (4,775,250 | ) | (19,162,616 | ) | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||||||
Cash acquired in a business combination
|
905,649 | — | — | — | — | |||||||||||||||
Purchases of fixed assets
|
(112,195 | ) | — | (1,652 | ) | (143,347 | ) | (5,368,181 | ) | |||||||||||
Proceeds from sale of fixed assets
|
— | — | — | — | 7,000 | |||||||||||||||
Purchases of short-term certificates of deposit
|
— | — | — | — | (5,500,730 | ) | ||||||||||||||
Proceeds from short-term certificates of deposit
|
— | — | — | — | 5,500,730 | |||||||||||||||
Change in restricted cash
|
500,000 | — | — | — | (555,000 | ) | ||||||||||||||
Payment for intangible assets
|
— | — | — | — | (19,671 | ) | ||||||||||||||
Cash provided by (used in) investing activities
|
1,293,454 | — | (1,652 | ) | (143,347 | ) | (5,935,852 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||||||
Proceeds from issuance of convertible notes
|
— | 2,720,985 | 2,720,985 | — | 2,720,985 | |||||||||||||||
Proceeds from long-term obligations
|
— | — | 450,000 | — | 1,677,945 | |||||||||||||||
Payments on long-term obligations
|
(675,743 | ) | (141,794 | ) | (190,789 | ) | (177,807 | ) | (552,201 | ) | ||||||||||
Payments on capital lease obligations
|
(1,549 | ) | (1,446 | ) | (1,944 | ) | (619 | ) | (2,563 | ) | ||||||||||
Proceeds from issuance of common stock, net of issuance costs
|
4,866,406 | — | — | — | 21,709,708 | |||||||||||||||
Proceeds from exercise of warrant
|
— | — | — | — | 250,000 | |||||||||||||||
Repurchase of common stock
|
— | — | — | — | (31,667 | ) | ||||||||||||||
Cash paid in lieu of fractional shares in a business combination
|
(145 | ) | — | — | — | — | ||||||||||||||
Change in deferred issuance costs
|
(130,800 | ) | 99,461 | 99,461 | (99,461 | ) | — | |||||||||||||
Cash provided by (used in) financing activities
|
4,058,169 | 2,677,206 | 3,077,713 | (277,887 | ) | 25,772,207 | ||||||||||||||
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
|
917,016 | (592,158 | ) | (306,386 | ) | (5,196,484 | ) | 673,739 | ||||||||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
|
673,739 | 980,125 | 980,125 | 6,176,609 | — | |||||||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD
|
$ | 1,590,755 | $ | 387,967 | $ | 673,739 | $ | 980,125 | $ | 673,739 | ||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||||||||||||||
Interest paid
|
$ | 13,716 | $ | 42,888 | $ | 55,454 | $ | 68,436 | $ | 194,973 | ||||||||||
Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise
|
$ | 48,339 | $ | — | $ | — | $ | — | $ | — | ||||||||||
Issuance of common stock upon conversion of notes payable and accrued interest
|
$ | 3,184,707 | $ | — | $ | — | $ | — | $ | — | ||||||||||
Fair value of assets acquired in exchange for securities in a business combination
|
$ | 78,407 | $ | — | $ | — | $ | — | $ | — | ||||||||||
Fair value of liabilities assumed in exchange for securities in a business combination
|
$ | (439,615 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||
Excess of purchase price over net assets acquired in a business combination
|
$ | 1,675,462 | $ | — | $ | — | $ | — | $ | — |
COSTS AND EXPENSES:
|
||||
Research and development
|
$
|
19,651,388
|
||
General and administrative
|
8,797,688
|
|||
Merger costs
|
799,133
|
|||
Total costs and expenses
|
29,248,209
|
|||
LOSS FROM OPERATIONS
|
(29,248,209
|
)
|
||
OTHER EXPENSE, NET
|
(266,297
|
)
|
||
NET LOSS
|
$
|
(29,514,506
|
)
|
|
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$
|
(2.80
|
)
|
|
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
10,549,244
|
Net loss
|
$
|
(29,514,506
|
)
|
|
Adjustments to reconcile net loss to cash used in operating activities
|
5,558,106
|
|||
Changes in working capital
|
359,177
|
|||
Cash used in operating activities
|
(23,597,223
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||
Cash acquired in a business combination
|
905,649
|
|||
Purchases of fixed assets, net of $7,000 proceeds from sale of fixed assets
|
(5,473,376
|
)
|
||
Change in restricted cash
|
(55,000
|
)
|
||
Payment for intangible assets
|
(19,671
|
)
|
||
Cash used in investing activities
|
(4,642,398
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||
Proceeds from issuance of common stock and warrants, net of issuance costs, repurchase of common stock, and cash paid in lieu of fractional shares in a business combination
|
26,794,302
|
|||
Change in deferred issuance costs
|
(130,800
|
)
|
||
Proceeds from issuance of long-term obligations
|
4,398,930
|
|||
Payments on long-term obligations
|
(1,232,056
|
)
|
||
Cash provided by financing activities
|
29,830,376
|
|||
INCREASE IN CASH AND EQUIVALENTS
|
1,590,755
|
|||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
|
—
|
|||
CASH AND EQUIVALENTS AT END OF PERIOD
|
$
|
1,590,755
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
||||
Interest paid
|
$
|
208,689
|
||
Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise
|
$
|
48,339
|
||
Issuance of common stock upon the conversion of notes payable and accrued interest
|
$
|
3,184,707
|
||
Fair value of assets acquired in exchange for securities in a business combination
|
$
|
78,407
|
||
Fair value of liabilities assumed in exchange for securities in a business combination
|
$
|
(439,615
|
)
|
|
Excess of purchase price over net assets acquired in a business combination
|
$
|
1,675,462
|
|
·
|
Level 1: Input prices quoted in an active market for identical financial assets or liabilities.
|
|
·
|
Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
|
|
·
|
Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market.
|
September 30, 2011
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrants
|
$ | - | $ | 77,967 | $ | - | $ | 77,967 |
December 31, 2010
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrants
|
$ | - | $ | - | $ | - | $ | - |
4.
|
ACQUISITION
|
Consideration - issuance of securities
|
$ | 2,219,903 | ||
Prepaid expenses and other assets
|
$ | 71,892 | ||
Fixed assets
|
6,515 | |||
Accrued liabilities
|
(380,130 | ) | ||
Derivative liability
|
(59,485 | ) | ||
Excess of purchase price over net assets acquired
|
1,675,462 | |||
Total purchase price – net of cash acquired of $905,649
|
$ | 1,314,254 |
5.
|
FIXED ASSETS
|
2010 | 2009 | |||||||
Office and laboratory equipment
|
$
|
2,984,375
|
$
|
2,982,723
|
||||
Leasehold improvements
|
2,317,597
|
2,317,597
|
||||||
Total fixed assets
|
5,301,972
|
5,300,320
|
||||||
Less accumulated depreciation and amortization
|
(1,791,483
|
)
|
(1,211,369
|
)
|
||||
Fixed assets, net
|
$
|
3,510,489
|
$
|
4,088,951
|
6.
|
LICENSE AGREEMENTS
|
7.
|
CONVERTIBLE DEBT
|
Years ended December 31,
|
||||
$
|
204,802
|
|||
2012
|
470,941
|
|||
2013
|
—
|
|||
2014
|
—
|
|||
2015
|
119,957
|
|||
Thereafter
|
330,043
|
|||
$
|
1,125,743
|
9.
|
LINE OF CREDIT
|
Offering
|
Number of Shares
Issuable Upon
Exercise of
Outstanding
Warrants
|
Exercise
Price
|
Expiration Date
|
||||||
April 8, 2011 Private Placement
|
7,039,468
|
$
|
0.75
|
March 31, 2016
|
|||||
Series B Preferred Stock – placement agents
|
5,392
|
$
|
191.25
|
May 2, 2012
|
|||||
Series C Exchange
|
8,169
|
$
|
191.25
|
May 2, 2012
|
|||||
Series E Preferred Stock
|
60,330
|
$
|
99.45
|
December 31, 2015
|
|||||
August 2009 Private Placement
|
31,194
|
$
|
100.98
|
December 31, 2015
|
|||||
July 2010 Direct Offering (1)
|
77,729
|
$
|
0.75
|
July 27, 2015
|
|||||
Preferred Incentive Warrants
|
105,040
|
$
|
16.065
|
July 27, 2015
|
|||||
Total
|
7,327,322
|
September 30,
|
December 31,
|
|||||||||||
2011
(unaudited)
|
2010
|
2009
|
||||||||||
Warrants
|
7,327,322 | — | — | |||||||||
Stock options
|
3,632,638 | 769,189 | 991,736 | |||||||||
Convertible notes
|
— | 3,646,370 | — | |||||||||
Total number of shares reserved for future issuance
|
10,959,960 | 4,415,559 | 991,736 |
Nine Months Ended
September 30,
(unaudited)
|
Year Ended
December 31,
|
Cumulative Development- Stage Period from November 7, 2002 through December 31,
|
||||||||||||||||||
Consolidated
2011
|
2010
|
2010
|
2009
|
2010
|
||||||||||||||||
Employee and director stock option grants:
|
||||||||||||||||||||
Research and development
|
$ | 121,393 | $ | 52,492 | $ | 61,791 | $ | 87,598 | $ | 298,386 | ||||||||||
General and administrative
|
349,781 | 278,694 | 291,549 | 414,401 | 1,577,303 | |||||||||||||||
471,174 | 331,186 | 353,340 | 501,999 | 1,875,689 | ||||||||||||||||
Non-employee consultant stock option grants:
|
||||||||||||||||||||
Research and development
|
46,851 | — | — | 200 | 71,724 | |||||||||||||||
General and administrative
|
137,631 | — | — | — | — | |||||||||||||||
184,482 | — | — | 200 | 71,724 | ||||||||||||||||
Total stock-based compensation
|
$ | 655,656 | $ | 331,186 | $ | 353,340 | $ | 502,199 | $ | 1,947,413 |
Nine Months
Ended September
30, 2011
(unaudited)
|
Year Ended
December 31,
2009
|
|||||||
Volatility
|
110 | % | 85 | % | ||||
Risk-free interest rate
|
1.84% – 3.17 | % | 1.72%-1.91 | % | ||||
Expected life (years)
|
5.5 – 6.25 | 6.25 | ||||||
Dividend
|
0 | % | 0 | % | ||||
Weighted-average exercise price
|
$ | 1.45 | $ | 0.76 | ||||
Weighted-average grant-date fair value
|
$ | 1.22 | $ | 0.55 |
Number of
Shares
Issuable Upon
Exercise of
Outstanding
Options
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contracted
Term in
Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at November 7, 2002
|
—
|
|||||||||||||||
Granted
|
922,654
|
$
|
2.52
|
|||||||||||||
Forfeited
|
(12,653
|
)
|
$
|
3.04
|
||||||||||||
Outstanding at January 1, 2009
|
910,001
|
$
|
2.86
|
|||||||||||||
Granted
|
90,929
|
$
|
0.76
|
|||||||||||||
Forfeited
|
(9,194
|
)
|
$
|
2.72
|
||||||||||||
Outstanding at December 31, 2009
|
991,736
|
$
|
2.68
|
|||||||||||||
Canceled
|
(222,547
|
)
|
$
|
2.63
|
||||||||||||
Outstanding at December 31, 2010
|
769,189
|
$
|
2.69
|
|||||||||||||
Canceled
|
(769,189
|
)
|
$
|
2.69
|
||||||||||||
Options acquired in connection with a business combination
|
49,159
|
$
|
100.52
|
|||||||||||||
Granted
|
3,696,400
|
$
|
1.45
|
|||||||||||||
Canceled
|
(12,921
|
)
|
$
|
112.21
|
||||||||||||
Forfeited
|
(100,000
|
)
|
$
|
3.00
|
||||||||||||
Outstanding at September 30, 2011 (unaudited)
|
3,632,638
|
$
|
2.35
|
|||||||||||||
Vested, December 31, 2010
|
743,450
|
$
|
2.69
|
4.07
|
$
|
—
|
||||||||||
Unvested, December 31, 2010
|
25,739
|
$
|
2.62
|
5.08
|
$
|
—
|
||||||||||
Exercisable at December 31, 2010
|
743,450
|
$
|
2.69
|
4.07
|
$
|
—
|
||||||||||
Vested, September 30, 2011 (unaudited)
|
332,685
|
$
|
10.47
|
9.25
|
$
|
—
|
||||||||||
Unvested, September 30, 2011 (unaudited)
|
3,299,953
|
$
|
1.53
|
9.63
|
$
|
—
|
||||||||||
Exercisable at September 30, 2011 (unaudited)
|
332,685
|
$
|
10.47
|
9.25
|
$
|
—
|
2010
|
2009
|
|||||||
Deferred tax assets
|
||||||||
Federal net operating loss
|
$
|
6,116,804
|
$
|
4,754,001
|
||||
Federal research and development tax credit carryforwards
|
390,600
|
273,788
|
||||||
Wisconsin net operating loss credit carryforwards
|
814,492
|
589,548
|
||||||
Wisconsin research and development tax credit carryforwards
|
220,738
|
171,552
|
||||||
Stock-based compensation expense
|
552,859
|
415,060
|
||||||
Charitable contribution carryforwards
|
49,725
|
49,725
|
||||||
Accrued liabilities
|
25,327
|
75,711
|
||||||
Total deferred tax assets
|
8,170,545
|
6,329,385
|
||||||
Deferred tax liabilities
|
||||||||
Depreciable and intangible assets
|
(434,056
|
)
|
(475,524
|
)
|
||||
Total deferred tax liabilities
|
(434,056
|
)
|
(475,524
|
)
|
||||
Net deferred tax assets
|
7,736,489
|
5,853,861
|
||||||
Less valuation allowance
|
(7,736,489
|
)
|
(5,853,861
|
)
|
||||
Total deferred tax assets
|
$
|
—
|
$
|
—
|
Nine Months Ended September 30,
(unaudited)
|
Twelve Months Ended
December 31,
|
Cumulative
Development-
Stage Period
from
November
7, 2002
(inception)
through
December 31,
|
||||||||||||||||||
Consolidated
2011
|
2010
|
2010
|
2009
|
2010
|
||||||||||||||||
Convertible debt
|
—
|
3,547,198
|
3,646,370
|
—
|
3,646,370
|
|||||||||||||||
Warrants
|
7,327,322
|
—
|
—
|
—
|
—
|
|||||||||||||||
Stock options
|
3,632,638
|
775,853
|
769,189
|
991,736
|
769,189
|
Minimum
lease
payments
|
Less interest
|
Present value
of net
minimum
lease
payments
|
||||||||||
2011
|
$
|
2,608
|
$
|
523
|
$
|
2,085
|
||||||
2012
|
2,608
|
373
|
2,235
|
|||||||||
2013
|
2,608
|
211
|
2,397
|
|||||||||
2014
|
1,739
|
45
|
1,694
|
|||||||||
$
|
9,563
|
$
|
1,152
|
$
|
8,411
|
2010
|
2009
|
|||||||
Office equipment
|
$
|
10,973
|
$
|
10,973
|
||||
Less accumulated amortization
|
(2,928
|
)
|
(732
|
)
|
||||
$
|
8,045
|
$
|
10,241
|
15.
|
LITIGATION
|
For the Nine Months Ended September 30,
|
For the Twelve
Months Ended
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
Net loss
|
$
|
(5,290,519
|
)
|
$
|
(783,007
|
)
|
$
|
(1,704,966
|
)
|
1)
|
Elimination of $165,000, $266,000, and $361,000 of interest expense for the nine months ended September 30, 2011 and 2010 and the twelve months ended December 31, 2010, respectively; such amounts relate to interest accrued on the Convertible Notes which were converted immediately prior to the Acquisition (see Note 7) and the Bank Note which was paid in full settlement of the note immediately prior to the Acquisition (see Note 8).
|
2)
|
Recognition of a additional BCF of $463,000 in the nine months ended September 30, 2010 and the year ended December 31, 2010 and the elimination of BCF of $258,000 in the nine months ended September 30, 2011 in connection with the conversion of the Convertible Notes, which is assumed to have occurred on January 1, 2010 for the purpose of pro forma presentation (see Note 7).
|
3)
|
Elimination of Acquisition costs incurred during the nine months ended September 30, 2011 and the twelve months ended December 31, 2010, which are assumed to have been incurred prior to January 1, 2010 for the purpose of presentation in the pro forma statements of operations.
|
4)
|
Elimination of $450,000 of investment banking fees incurred upon the consummation of the Acquisition on April 8, 2011 from the nine months ended September 30, 2011.
|
5)
|
Elimination of dividends and deemed dividends on Novelos’ preferred convertible stock, which is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of pro forma presentation.
|
6)
|
Elimination of Novelos historical revenue related to the amortization of deferred revenue that was determined to have no fair value in purchase accounting.
|
7)
|
Elimination of liquidated damages accrued in 2010 related to Novelos
’
convertible preferred stock. The liquidated damages are assumed not to have accrued as the preferred stock is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of pro forma presentation.
|
19.
|
PROPOSED REVERSE STOCK SPLIT
|
Page
|
||
Report of Independent Registered Public Accounting Firm
|
F-27 | |
Balance Sheets at December 31, 2010 and 2009
|
F-28 | |
Statements of Operations for the Years Ended December 31, 2010 and 2009
|
F-29 | |
Statements of Redeemable Preferred Stock and Stockholders’ Equity (Deficiency) for the Years Ended December 31, 2010 and 2009
|
F-30 | |
Statements of Cash Flows for the Years Ended December 31, 2010 and 2009
|
F-31 | |
Notes to Financial Statements
|
F-32 | |
Balance Sheet at March 31, 2011
|
F-48 | |
Statements of Operations for the Three Months Ended March 31, 2011 and 2010
|
F-49 | |
Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
|
F-50 | |
Notes to Interim Financial Statements
|
F-51 |
Year Ended December 31,
|
||||||||
2010
|
2009
|
|||||||
REVENUES
|
$
|
33,334
|
$
|
33,334
|
||||
COSTS AND EXPENSES:
|
||||||||
Research and development
|
2,997,984
|
8,080,242
|
||||||
General and administrative
|
2,486,032
|
2,182,253
|
||||||
Total costs and expenses
|
5,484,016
|
10,262,495
|
||||||
LOSS FROM OPERATIONS
|
(5,450,682
|
)
|
(10,229,161
|
)
|
||||
OTHER INCOME (EXPENSE):
|
||||||||
Interest income
|
2,421
|
1,013
|
||||||
Grant income
|
244,479
|
62,980
|
||||||
Gain (loss) on derivative warrants (see Note 2)
|
8,118,174
|
(12,114,371
|
)
|
|||||
Liquidated damages (see Note 6)
|
(819,000
|
)
|
—
|
|||||
Miscellaneous
|
—
|
6,233
|
||||||
Total other income (expense)
|
7,546,074
|
(12,044,145
|
)
|
|||||
NET INCOME (LOSS)
|
2,095,392
|
(22,273,306
|
)
|
|||||
PREFERRED STOCK DIVIDENDS
|
(2,207,827
|
)
|
(3,296,289
|
)
|
||||
PREFERRED STOCK DEEMED DIVIDENDS
|
(12,541,201
|
)
|
(714,031
|
)
|
||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(12,653,636
|
)
|
$
|
(26,283,626
|
)
|
||
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$
|
(15.36
|
)
|
$
|
(80.57
|
)
|
||
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
823,933
|
326,209
|
REDEEMABLE
PREFERRED STOCK
Series D and E
Convertible
Preferred Stock
|
Common Stock
|
Series C Cumulative
Convertible
Preferred Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
(Deficiency)
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Par
Amount
|
Shares
|
Par
Amount
|
|||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2009
|
413.5 | $ | 13,904,100 | 287,423 | $ | 3 | 272 | $ | — | $ | 40,204,549 | $ | (59,693,153 | ) | $ | (19,488,601 | ) | |||||||||||||||||||
Reclassification of warrants to derivative liability (see Note 2)
|
— | — | — | — | — | — | (6,893,316 | ) | 5,894,371 | (998,945 | ) | |||||||||||||||||||||||||
Conversion of Series C convertible preferred stock and accumulated dividends into common stock
|
— | — | 10,058 | — | (68 | ) | — | 184,246 | — | 184,246 | ||||||||||||||||||||||||||
Conversion of Series E convertible preferred stock and accumulated dividends into common stock
|
(97.18209375 | ) | (3,213,056 | ) | 51,889 | 1 | — | — | 3,514,313 | — | 3,514,314 | |||||||||||||||||||||||||
Cashless exercise of warrants
|
— | — | 3,162 | — | — | — | 1,000,962 | — | 1,000,962 | |||||||||||||||||||||||||||
Issuance of common stock in exchange for warrants
|
— | — | 13,623 | — | — | — | 1,625,760 | — | 1,625,760 | |||||||||||||||||||||||||||
Issuance of common stock and warrants in a private placement, net of issuance costs of $61,116
|
— | — | 89,126 | 1 | — | — | 8,938,883 | — | 8,938,884 | |||||||||||||||||||||||||||
Compensation expense associated with options issued to employees
|
— | — | — | — | — | — | 437,066 | — | 437,066 | |||||||||||||||||||||||||||
Compensation expense associated with options issued to non-employees
|
— | — | — | — | — | — | 427,271 | — | 427,271 | |||||||||||||||||||||||||||
Issuance of Series E redeemable convertible preferred stock and warrants, net of issuance costs of $795,469
|
200 | 6,297,323 | — | — | — | — | 2,907,208 | — | 2,907,208 | |||||||||||||||||||||||||||
Issuance of Series E redeemable convertible preferred stock in payment of accumulated dividends
|
31.942875 | 1,597,144 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Adjustment to record the carrying value of Series E redeemable convertible preferred stock at fair value on the date of sale
|
— | (125,892 | ) | — | — | — | — | 125,892 | — | 125,892 | ||||||||||||||||||||||||||
Fair value of the extension of expiration date of warrants
|
— | — | — | — | — | — | 839,923 | — | 839,923 | |||||||||||||||||||||||||||
Accretion of deemed dividend associated with the extension of expiration date of warrants
|
— | — | — | — | — | — | (839,923 | ) | — | (839,923 | ) | |||||||||||||||||||||||||
Dividends accrued on preferred stock
|
— | — | — | — | — | — | (3,296,289 | ) | — | (3,296,289 | ) | |||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (22,273,306 | ) | (22,273,306 | ) | |||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2009
|
548.26078125 | 18,459,619 | 455,281 | 5 | 204 | — | 49,176,545 | (76,072,088 | ) | (26,895,538 | ) | |||||||||||||||||||||||||
Exercise of stock options
|
— | — | 5,991 | — | — | — | 158,567 | — | 158,567 | |||||||||||||||||||||||||||
Conversion of Series E convertible preferred stock and accumulated dividends into common stock
|
(139.99673625 | ) | (4,689,593 | ) | 76,770 | 1 | — | — | 5,324,517 | — | 5,324,518 | |||||||||||||||||||||||||
Cashless exercise of warrants
|
— | — | 53,478 | 1 | — | — | 2,584,396 | — | 2,584,397 | |||||||||||||||||||||||||||
Compensation expense associated with options issued to employees
|
— | — | — | — | — | — | 586,321 | — | 586,321 | |||||||||||||||||||||||||||
Compensation expense (benefit) associated with options issued to non-employees
|
— | — | — | — | — | — | (249,023 | ) | — | (249,023 | ) | |||||||||||||||||||||||||
Issuance of common stock and warrants in a public offering (net of issuance costs of $250,862)
|
— | — | 140,056 | 1 | — | — | 744,910 | — | 744,911 | |||||||||||||||||||||||||||
Fair value of warrants issued to preferred shareholders
|
— | — | — | — | — | — | 586,050 | — | 586,050 | |||||||||||||||||||||||||||
Accretion of deemed dividend associated with the issuance of warrants to preferred stockholders
|
— | — | — | — | — | — | (586,050 | ) | — | (586,050 | ) | |||||||||||||||||||||||||
Exchange of preferred stock and dividends for common stock
|
(408.264045 | ) | (13,770,026 | ) | 2,228,338 | 22 | (204 | ) | — | 19,064,869 | — | 19,064,891 | ||||||||||||||||||||||||
Fair value of incremental shares issued to preferred stockholders in connection with exchange of preferred stock for common stock
|
— | — | — | — | — | — | 11,955,151 | — | 11,955,151 | |||||||||||||||||||||||||||
Accretion of deemed dividend associated with the incremental shares of common stock issued in connection with the exchange of preferred stock
|
— | — | — | — | — | — | (11,955,151 | ) | — | (11,955,151 | ) | |||||||||||||||||||||||||
Dividends accrued on preferred stock
|
— | — | — | — | — | — | (2,207,827 | ) | — | (2,207,827 | ) | |||||||||||||||||||||||||
Net income
|
— | — | — | — | — | — | — | 2,095,392 | 2,095,392 | |||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2010
|
— | $ | $— | 2,959,914 | $ | 30 | — | $ | — | $ | 75,183,275 | $ | (73,976,696 | ) | $ | 1,206,609 |
Year Ended December 31,
|
||||||||
2010
|
2009
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$
|
2,095,392
|
$
|
(22,273,306
|
)
|
|||
Adjustments to reconcile net income (loss) to cash used in operating activities:
|
||||||||
Depreciation and amortization
|
35,342
|
32,354
|
||||||
Stock-based compensation
|
337,298
|
864,337
|
||||||
(Gain) loss on derivative warrants
|
(8,118,174
|
)
|
12,114,371
|
|||||
Non-cash settlement of liquidated damages
|
819,000
|
—
|
||||||
Changes in:
|
||||||||
Prepaid expenses and other current assets
|
39,397
|
26,862
|
||||||
Accounts payable and accrued liabilities
|
(2,733,494
|
)
|
(1,354,695
|
)
|
||||
Accrued compensation
|
(245,711
|
)
|
5,072
|
|||||
Deferred revenue
|
(33,333
|
)
|
(33,333
|
)
|
||||
Cash used in operating activities
|
(7,804,283
|
)
|
(10,618,338
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of fixed assets
|
—
|
(18,000
|
)
|
|||||
Cash used in investing activities
|
—
|
(18,000
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from issuance of common stock, net
|
1,249,138
|
8,938,884
|
||||||
Proceeds from issuance of Series E convertible preferred stock and warrants, net
|
—
|
9,204,531
|
||||||
Proceeds from exercise of stock options
|
158,567
|
—
|
||||||
Cash provided by financing activities
|
1,407,705
|
18,143,415
|
||||||
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
|
(6,396,578
|
)
|
7,507,077
|
|||||
CASH AND EQUIVALENTS AT BEGINNING OF YEAR
|
8,769,529
|
1,262,452
|
||||||
CASH AND EQUIVALENTS AT END OF YEAR
|
$
|
2,372,951
|
$
|
8,769,529
|
||||
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
|
||||||||
Dividends accumulated on shares of Series E preferred stock exchanged for or converted into shares of common stock
|
$
|
5,110,790
|
$
|
1,898,402
|
||||
Dividends accumulated on shares of Series C preferred stock converted into shares of common stock
|
$
|
—
|
$
|
184,246
|
||||
Fair value of derivative warrants upon adoption of new accounting principle
|
$
|
—
|
$
|
998,945
|
||||
Fair value of common stock issued in exchange for tender of derivative warrants
|
$
|
—
|
$
|
1,625,760
|
||||
Fair value of derivative warrants upon cashless exercise
|
$
|
2,584,397
|
$
|
1,000,962
|
||||
Exchange of Series D for Series E preferred stock
|
$
|
—
|
$
|
13,904,100
|
||||
Relative fair value of warrants issued to stockholders
|
$
|
504,227
|
$
|
4,835,727
|
2010
|
2009
|
|||||||
Office and computer equipment
|
$
|
61,907
|
$
|
73,261
|
||||
Computer software
|
43,896
|
43,896
|
||||||
Leasehold improvements
|
4,095
|
4,095
|
||||||
Total fixed assets
|
109,898
|
121,252
|
||||||
Less accumulated depreciation and amortization
|
(101,143
|
)
|
(77,155
|
)
|
||||
Fixed assets, net
|
$
|
8,755
|
$
|
44,097
|
|
·
|
Level 1: Input prices quoted in an active market for identical financial assets or liabilities.
|
|
·
|
Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
|
|
·
|
Level 3: Input prices that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market.
|
December 31, 2010
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrants
|
$
|
-
|
$
|
288,250
|
$
|
-
|
$
|
288,250
|
December 31, 2009
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrants
|
$
|
-
|
$
|
10,487,000
|
$
|
-
|
$
|
10,487,000
|
5.
|
COLLABORATION AGREEMENTS
|
Offering
|
Outstanding
(as adjusted)
|
Exercise
Price
(as adjusted)
|
Expiration Date
|
||||||
2006 Issuance of Common Stock
|
33,569
|
$
|
234.09
|
March 7, 2011
|
|||||
Series B Preferred Stock – placement agents
|
5,392
|
$
|
191.25
|
May 2, 2012
|
|||||
Series C Exchange
|
8,169
|
$
|
191.25
|
May 2, 2012
|
|||||
Series E Preferred Stock
|
60,330
|
$
|
99.45
|
December 31, 2015
|
|||||
August 2009 Private Placement
|
31,194
|
$
|
100.98
|
December 31, 2015
|
|||||
July 2010 Direct Offering (1)
|
105,039
|
$
|
10.71
|
July 27, 2015
|
|||||
Preferred Incentive Warrants
|
105,040
|
$
|
16.065
|
July 27, 2015
|
|||||
Total
|
348,733
|
Original private placement
|
Shares of
Common Stock
Issued
|
Warrants
Exercised
|
Exercise
Price
|
|||||||||
2005 Bridge Financing
|
2,059 | 2,614 | $ | 95.625 | ||||||||
2005 Issuance of Common Stock – placement agents
|
1,481 | 2,074 | $ | 99.45 | ||||||||
2006 Issuance of Common Stock
|
2,395 | 6,480 | $ | 263.16 | ||||||||
Series B Preferred Stock – purchasers
|
29,709 | 49,019 | $ | 99.45 | ||||||||
Series B Preferred Stock – placement agents
|
229 | 490 | $ | 191.25 | ||||||||
Series D Preferred Stock
|
17,292 | 28,531 | $ | 99.45 | ||||||||
Series C Exchange
|
313 | 544 | $ | 191.25 | ||||||||
Total
|
53,478 | 89,752 |
Original private placement
|
Shares of
Common Stock
Issued
|
Warrants
Exercised
|
Exercise
Price
|
|||||||||
2005 Bridge Financing
|
1,429
|
2,091
|
$
|
95.625
|
||||||||
2005 Common Stock
|
1,310
|
3,172
|
$
|
99.45
|
||||||||
Series A Preferred Stock
|
250
|
396
|
$
|
99.45
|
||||||||
2006 Issuance of Common Stock
|
173
|
1,316
|
$
|
263.16
|
||||||||
Total
|
3,162
|
6,975
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
2000 Stock Option Plan
|
291
|
366
|
||||||
2006 Stock Incentive Plan
|
38,366
|
43,856
|
||||||
Options issued outside of formalized plans
|
10,569
|
16,037
|
||||||
Warrants
|
348,733
|
232,164
|
||||||
Preferred stock
|
—
|
329,451
|
||||||
Total shares reserved for future issuance
|
397,959
|
621,874
|
Year Ended
December 31,
|
||||||||
2010
|
2009
|
|||||||
Employee and director stock option grants:
|
||||||||
Research and development
|
$
|
230,101
|
$
|
148,030
|
||||
General and administrative
|
356,220
|
289,036
|
||||||
586,321
|
437,066
|
|||||||
Non-employee consultant stock option grants and restricted stock awards:
|
||||||||
Research and development
|
(220,969
|
)
|
328,614
|
|||||
General and administrative
|
(28,054
|
)
|
98,657
|
|||||
(249,023
|
)
|
427,271
|
||||||
Total stock-based compensation
|
$
|
337,298
|
$
|
864,337
|
Year Ended
December 31,
2009
|
||||
Volatility
|
90
|
%
|
||
Weighted-average volatility
|
90
|
%
|
||
Risk-free interest rate
|
2.12
|
%
|
||
Expected life (years)
|
5
|
|||
Dividend
|
0
|
%
|
||
Weighted-average exercise price
|
$
|
0.75
|
||
Weighted-average grant-date fair value
|
$
|
0.53
|
Options
Outstanding
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contracted
Term in
Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at January 1, 2009
|
47,580
|
$
|
91.80
|
7.9
|
$
|
989,718
|
||||||||||
Options granted
|
12,679
|
$
|
114.75
|
|||||||||||||
Outstanding at December 31, 2009
|
60,259
|
$
|
96.39
|
7.5
|
$
|
17,650,255
|
||||||||||
Options exercised
|
(5,991
|
)
|
$
|
26.01
|
$
|
663,600
|
||||||||||
Options canceled
|
(5,042
|
)
|
$
|
139.23
|
$
|
0
|
||||||||||
Outstanding at December 31, 2010
|
49,226
|
$
|
100.98
|
6.9
|
$
|
24,842
|
||||||||||
Exercisable at December 31, 2010
|
39,270
|
$
|
100.98
|
6.4
|
$
|
24,842
|
2010
|
2009
|
|||||||
Net operating loss carryforwards
|
$
|
12,872,000
|
$
|
9,543,000
|
||||
Research and development expenses
|
14,180,000
|
14,906,000
|
||||||
Tax credits
|
1,711,000
|
1,563,000
|
||||||
Capital loss carryforward
|
340,000
|
340,000
|
||||||
Stock-based compensation
|
365,000
|
650,000
|
||||||
Gross deferred tax asset
|
29,468,000
|
27,002,000
|
||||||
Valuation allowance
|
(29,468,000
|
)
|
(27,002,000
|
)
|
||||
Net deferred tax asset
|
$
|
—
|
$
|
—
|
Year Ended
December 31,
|
||||||||
2010
|
2009
|
|||||||
Stock options
|
50,074
|
60,260
|
||||||
Warrants
|
356,925
|
232,164
|
||||||
Conversion of preferred stock
|
2,042,108
|
329,451
|
(1)
|
12.
|
SUBSEQUENT EVENTS
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
REVENUE
|
$ | 8,333 | $ | 8,333 | ||||
COSTS AND EXPENSES:
|
||||||||
Research and development
|
532,686 | 1,910,889 | ||||||
General and administrative
|
611,877 | 644,763 | ||||||
Total costs and expenses
|
1,144,563 | 2,555,652 | ||||||
LOSS FROM OPERATIONS
|
(1,136,230 | ) | (2,547,319 | ) | ||||
OTHER INCOME:
|
||||||||
Interest income
|
668 | — | ||||||
Gain on derivative warrants (see Note 2)
|
125,490 | 7,897,441 | ||||||
Total other income
|
126,158 | 7,897,441 | ||||||
NET INCOME (LOSS)
|
(1,010,072 | ) | 5,350,122 | |||||
PREFERRED STOCK DIVIDENDS
|
— | (656,635 | ) | |||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (1,010,072 | ) | $ | 4,693,487 | |||
BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$ | (0.34 | ) | $ | 8.99 | |||
SHARES USED IN COMPUTING BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
2,959,871 | 522,350 | ||||||
DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$ | (0.34 | ) | $ | 3.41 | |||
SHARES USED IN COMPUTING DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
2,959,871 | 881,861 |
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$ | (1,010,072 | ) | $ | 5,350,122 | |||
Adjustments to reconcile net income (loss) to cash used in operating activities:
|
||||||||
Depreciation and amortization
|
2,240 | 27,290 | ||||||
Stock-based compensation
|
108,378 | (97,479 | ) | |||||
Gain on derivative warrants
|
(125,490 | ) | (7,897,441 | ) | ||||
Changes in:
|
||||||||
Prepaid expenses and other current assets
|
35,483 | (47,574 | ) | |||||
Accounts payable and accrued liabilities
|
(315,715 | ) | (403,760 | ) | ||||
Accrued compensation
|
— | (238,022 | ) | |||||
Deferred revenue
|
(8,333 | ) | (8,333 | ) | ||||
Cash used in operating activities
|
(1,313,509 | ) | (3,315,197 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Deferred financing costs
|
(28,500 | ) | — | |||||
Proceeds from exercise of stock options
|
— | 157,400 | ||||||
Cash provided by financing activities
|
(28,500 | ) | 157,400 | |||||
DECREASE IN CASH AND EQUIVALENTS
|
(1,342,009 | ) | (3,157,797 | ) | ||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
|
2,372,951 | 8,769,529 | ||||||
CASH AND EQUIVALENTS AT END OF PERIOD
|
$ | 1,030,942 | $ | 5,611,732 | ||||
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
|
||||||||
Dividends accumulated on shares of Series E preferred stock exchanged or converted into shares of common stock
|
$ | — | $ | 634,925 | ||||
Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise
|
$ | — | $ | 2,584,397 | ||||
Carrying value of redeemable preferred stock converted into common stock
|
$ | — | $ | 4,689,593 |
1.
|
NATURE OF BUSINESS, BASIS OF PRESENTATION
|
2.
|
FAIR VALUES OF ASSETS AND LIABILITIES
|
|
·
|
Level 1: Input prices quoted in an active market for identical financial assets or liabilities.
|
|
·
|
Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
|
|
·
|
Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market.
|
March 31, 2011
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrants
|
$ | - | $ | 162,760 | $ | - | $ | 162,760 |
3.
|
COLLABORATION AGREEMENTS
|
4.
|
STOCKHOLDERS’ EQUITY
|
Offering
|
Number of Shares
Issuable Upon
Exercise of
Outstanding
Warrants
|
Exercise
Price
|
Expiration Date
|
||||||
Series B Preferred Stock – placement agents
|
5,392
|
$
|
191.25
|
May 2, 2012
|
|||||
Series C Exchange
|
8,169
|
$
|
191.25
|
May 2, 2012
|
|||||
Series E Preferred Stock
|
60,331
|
$
|
99.45
|
December 31, 2015
|
|||||
August 2009 Private Placement
|
31,194
|
$
|
100.98
|
December 31, 2015
|
|||||
July 2010 Direct Offering (1)
|
105,042
|
$
|
10.71
|
July 27, 2015
|
|||||
Preferred Incentive Warrants
|
105,042
|
$
|
16.065
|
July 27, 2015
|
|||||
Total
|
315,170
|
5.
|
STOCK-BASED COMPENSATION
|
Three Months Ended
March 31,
|
||||||||
2011
|
2010
|
|||||||
Employee and director stock option grants:
|
||||||||
Research and development
|
$ | 49,298 | $ | 57,113 | ||||
General and administrative
|
59,682 | 82,928 | ||||||
108,980 | 140,041 | |||||||
Non-employee consultant stock option grants:
|
||||||||
Research and development
|
(545 | ) | (210,825 | ) | ||||
General and administrative
|
(57 | ) | (26,695 | ) | ||||
(602 | ) | (237,520 | ) | |||||
Total stock-based compensation
|
$ | 108,378 | $ | (97,479 | ) |
Number of
Shares
Issuable Upon
Exercise of
Outstanding
Options
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contracted
Term in
Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at December 31, 2010
|
49,227 | $ | 100.61 | 6.9 | $ | 24,842 | ||||||||||
Outstanding at March 31, 2011
|
49,227 | $ | 100.61 | 6.6 | 12,421 | |||||||||||
Exercisable at March 31, 2011
|
40,348 | $ | 101.03 | 6.2 | $ | 12,421 |
6.
|
NET INCOME (LOSS) PER SHARE
|
Numerator:
|
||||
Net income available to common stockholders used in basic earnings per share calculation
|
$ | 4,693,487 | ||
Derivative gain recorded on dilutive warrants
|
(2,340,515 | ) | ||
Dividends on convertible preferred stock
|
656,635 | |||
Net income available to common stockholders used in diluted earnings per share calculation
|
$ | 3,009,607 | ||
Denominator:
|
||||
Weighted average shares of common stock used in the computation of basic earnings per share
|
522,350 | |||
Dilutive effect of stock options
|
26,430 | |||
Dilutive effect of warrants to purchase common stock
|
79,646 | |||
Dilutive effect of convertible preferred stock
|
253,435 | |||
Shares used in computation of diluted earnings per share
|
881,861 |
Three Months Ended
March 31,
|
||||||||
|
2011
|
2010
|
||||||
Stock options
|
49,227 | 3,970 | ||||||
Warrants
|
315,170 | 43,349 |
7.
|
INCOME TAXES
|
8.
|
LITIGATION
|
9.
|
COMMITMENTS
|
10.
|
SUBSEQUENT EVENTS
|
Page
|
||
Unaudited Pro Forma Condensed Combined Statement of Operations for the Nine Months Ended September 30, 2011
|
F-61 | |
Unaudited Pro Forma Condensed Combined Statement of Operations for the Twelve Months Ended December 31, 2010
|
F-62 | |
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
|
F-63 |
Historical
|
|||||||||||||||||
Novelos (Pre-
Acquisition)
|
Combined Company as Reported
|
Pro forma Adjustments
|
Pro forma Combined
|
||||||||||||||
REVENUE
|
$
|
8,333
|
$
|
—
|
$
|
(8,333
|
)
|
(a) |
$
|
—
|
|||||||
COSTS AND EXPENSES:
|
|||||||||||||||||
Research and development
|
537,455
|
2,445,429
|
—
|
|
2,982,884
|
||||||||||||
General and administrative
|
862,546
|
2,573,717
|
(1,029,644
|
)
|
(b)
|
2,406,619
|
|||||||||||
Total costs and expenses
|
1,400,001
|
5,019,146
|
(1,029,644
|
)
|
5,389,503
|
||||||||||||
LOSS FROM OPERATIONS
|
(1,391,668
|
)
|
(5,019,146
|
)
|
1,021,311
|
(5,389,503
|
)
|
||||||||||
OTHER INCOME (EXPENSE):
|
|||||||||||||||||
Grant income
|
—
|
44,479
|
—
|
44,479
|
|||||||||||||
Gain (loss) on derivative instruments
|
125,490
|
(66,820
|
)
|
—
|
58,670
|
||||||||||||
Interest income (expense), net
|
691
|
(428,015
|
)
|
423,159
|
(c)
|
(4,165
|
)
|
||||||||||
Total other income (expense)
|
126,181
|
(450,356
|
)
|
423,159
|
98,984
|
||||||||||||
Net loss
|
$
|
(1,265,487
|
)
|
$
|
(5,469,502
|
)
|
1,444,470
|
(5,290,519
|
)
|
||||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(1,265,487
|
)
|
$
|
(5,469,502
|
)
|
$
|
1,444,470
|
$
|
(5,290,519
|
)
|
||||||
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$
|
(0.43
|
)
|
$
|
(0.25
|
)
|
$
|
(0.20
|
)
|
||||||||
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
2,959,871
|
21,847,984
|
26,818,045
|
||||||||||||||
PRO FORMA NET LOSS PER SHARE GIVING EFFECT TO AN ESTIMATED 1-FOR-10 OFFERING REVERSE SPLIT (SEE NOTE 4):
|
|||||||||||||||||
PRO FORMA BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$
|
(1.97
|
)
|
||||||||||||||
PRO FORMA SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
2,681,804
|
Historical
|
|
|
||||||||||||||
Novelos
|
Cellectar
|
Pro forma
Adjustments
|
Pro forma
Combined |
|||||||||||||
REVENUE
|
$ | 33,334 | $ | — | $ | (33,334 | )(a) | $ | — | |||||||
COSTS AND EXPENSES:
|
||||||||||||||||
Research and development
|
2,997,984 | 2,984,207 | — | 5,982,191 | ||||||||||||
General and administrative
|
2,486,032 | 1,209,474 | (77,005 | )(b) | 3,618,501 | |||||||||||
Total costs and expenses
|
5,484,016 | 4,193,681 | (77,005 | ) | 9,600,692 | |||||||||||
LOSS FROM OPERATIONS
|
(5,450,682 | ) | (4,193,681 | ) | 43,671 | (9,600,692 | ) | |||||||||
OTHER INCOME (EXPENSE):
|
||||||||||||||||
Grant income
|
244,479 | 200,000 | — | 444,479 | ||||||||||||
Gain on derivative instruments
|
8,118,174 | — | — | 8,118,174 | ||||||||||||
Liquidated damages
|
(819,000 | ) | — | 819,000 | (d) | — | ||||||||||
Interest income (expense), net
|
2,421 | (566,156 | ) | (102,766 | )(e) | (666,501 | ) | |||||||||
Other income
|
— | (426 | ) | — | (426 | ) | ||||||||||
Total other income (expense)
|
7,546,074 | (366,582 | ) | 716,234 | 7,895,726 | |||||||||||
Net income (loss)
|
2,095,392 | (4,560,263 | ) | 759,905 | (1,704,966 | ) | ||||||||||
Preferred stock dividend
|
(2,207,827 | ) | — | 2,207,827 | (f) | — | ||||||||||
Preferred stock deemed dividend
|
(12,541,201 | ) | — | 12,541,201 | (f) | — | ||||||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (12,653,636 | ) | $ | (4,560,263 | ) | $ | 15,508,933 | $ | (1,704,966 | ) | |||||
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
$ | (15.36 | ) | $ | (0.36 | ) | $ | (0.06 | ) | |||||||
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
|
823,933 | 12,820,102 | 26,808,004 |
PRO FORMA NET LOSS PER SHARE GIVING EFFECT TO AN ESTIMATED 1-FOR-10 OFFERING REVERSE SPLIT (NOTE 4):
|
||||||||||||||||
PRO FORMA BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE (NOTE 4)
|
$
|
(0.64
|
)
|
|||||||||||||
PRO FORMA SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE (NOTE 4)
|
2,680,800
|
Consideration - issuance of securities
|
$ | 2,219,903 | ||
Prepaid expenses and other assets
|
$ | 71,892 | ||
Fixed assets
|
6,515 | |||
Accrued liabilities
|
(380,130 | ) | ||
Derivative liability
|
(59,485 | ) | ||
Excess of purchase price over net assets acquired
|
1,675,462 | |||
Total purchase price – net of cash acquired of $905,649
|
$ | 1,314,254 |
(a)
|
Represents the elimination of Novelos historical revenue related to the amortization of an advance payment made to Novelos in connection with a collaboration agreement. The payment was recorded as deferred revenue and recognized as revenue on a straight-line basis over the life of the collaboration agreement. As a result of the Acquisition, the Company determined as part of the purchase price allocation that the estimated fair value of the deferred revenue was $0. As such, for purposes of the pro forma presentation the historical revenue associated with deferred revenue has been eliminated.
|
(b)
|
Represents the adjustment to reflect transaction-related costs in connection with the Acquisition. For purposes of the pro forma unaudited statement of operations presentation for the nine and twelve month period ended September 30, 2011 and December 31, 2010, the Company gives effect to the Acquisition as if it had occurred on January 1, 2010. As such, the Company eliminated transaction-related costs that were incurred prior to the consummation of the Acquisition and therefore excluded for pro forma presentation. Additionally, the Company paid $450,000 related to investment banking fees as described in Note 2 on April 8, 2011. For purposes of the pro forma presentation, these investment banking fees were eliminated from the nine month period ended September 30, 2011. See adjustments as follows:
|
For the Nine
Months Ended
September 30,
2011 |
For the
Twelve Months Ended
December
31, 2010 |
|||||||
Adjustment to eliminate transaction related costs that were incurred prior to the consummation of the Acquisition.
|
$
|
(579,644
|
)
|
$
|
(77,005
|
)
|
||
Adjustment to eliminate the merger costs as a result of the consummation of the Acquisition (as described in Note 2)
|
(450,000
|
)
|
—
|
|||||
Total adjustment to merger costs
|
$
|
(1,029,644
|
)
|
$
|
(77,005
|
)
|
(c)
|
Represents the adjustment to eliminate interest expense associated with the convertible notes and the bank note for the nine-month period ended September 30, 2011 and to eliminate interest expense associated with a beneficial conversion feature that was recorded as a result of the conversion of convertible notes immediately prior to the Acquisition. For purposes of the pro forma unaudited statement of operations for the nine months ended September 30, 2011 presentation, the conversion of the notes would have occurred immediately before the Acquisition, or January 1, 2010 and therefore the associated interest expense has been excluded from the pro forma presentation. A detail of the components of the adjustment is presented below:
|
Adjustment to eliminate interest expense associated with the convertible notes
|
$
|
158,680
|
||
Adjustment to eliminate interest expense associated with the bank note
|
6,506
|
|||
Adjustment to reflect the impact of the beneficial shares that were issued on the date of the conversion of the convertible notes in connection with the acquisition
|
257,973
|
|||
Total adjustment to interest income (expense), net
|
$
|
423,159
|
(d)
|
Represents the adjustment to eliminate the estimated liquidated damages recorded for failure to file a registration statement for the resale of common stock issuable upon exercise of shares of Novelos’ convertible preferred stock. For pro forma presentation, the preferred stock is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure and liquidated damages are therefore assumed not to have accrued. |
(e)
|
Represents the adjustment to eliminate the interest expense for the year ended December 31, 2010 associated with the convertible notes and the bank note, net of an adjustment to reflect the additional interest expense associated with beneficial shares that were issued on the assumed date of conversion (January 1, 2010) in connection with the Acquisition associated with the outstanding principal balance of $2,720,985 on convertible notes. For the purpose of pro forma presentation, the fair value of the beneficial shares was calculated assuming the notes were converted on the date of issuance (January 2010); at which time no interest would have accrued or converted resulting in a higher fair value for the pro forma presentation in the statement of operations. The Company determined the interest expense for pro forma purposes of $677,062 as the difference between the conversion price and the estimated fair value of Novelos common stock as of the Acquisition date, or $0.75 per share, multiplied by the beneficial shares assumed converted of 902,749 less the amount of interest expense already included in the statement of operations of $213,793.
|
Adjustment to eliminate interest expense associated with the convertible notes
|
$
|
305,049
|
||
Adjustment to eliminate interest expense associated with the bank note
|
55,454
|
|||
Adjustment to eliminate interest expense associated with a beneficial conversion feature resulting from the conversion of convertible notes on April 8, 2011.
|
213,793
|
|||
Adjustment to reflect interest expense related to beneficial shares that were issued on the date of the conversion of the convertible notes, for pro forma purposes, in connection with the acquisition as if it occurred on January 1, 2010
|
(677,062
|
)
|
||
Total adjustment to interest income (expense), net
|
$
|
(102,766
|
)
|
(f)
|
Represents the elimination of the accruing dividends and deemed dividends on Novelos’ convertible preferred stock, which is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of presentation in the pro forma statements of operations.
|
Nature of Expense
|
Amount
|
|||
SEC registration fee
|
$
|
3,954
|
||
Accounting fees and expenses
|
80,000
|
|||
Legal fees and expenses
|
150,000
|
|||
Transfer agent’s fees and expenses
|
10,000
|
|||
Printing and related fees
|
25,000
|
|||
Miscellaneous
|
10,000
|
|||
Total
|
$
|
278,954
|
|
·
|
We issued 76,769 shares of our common stock upon conversion of approximately 140 shares of our Series E preferred stock, having an aggregate stated value of approximately $7,000,000, and accumulated undeclared dividends thereon.
|
|
·
|
We issued 47,000 shares of our common stock upon the cashless exercise of warrants to purchase 77,551 shares of common stock. The warrants had an expiration date of December 31, 2015 and an exercise price of $99.45 per share.
|
|
·
|
We issued 1,480 shares of our common stock upon the cashless exercise of warrants to purchase 2,075 shares of common stock. The warrants had an expiration date of August 9, 2010 and an exercise price of $99.45 per share.
|
|
·
|
We issued 229 shares of our common stock upon the cashless exercise of warrants to purchase 490 shares of common stock. The warrants had an expiration date of May 2, 2012 and an exercise price of $191.25 per share.
|
|
·
|
We issued 2,395 shares of our common stock upon the cashless exercise of warrants to purchase 6,480 shares of common stock. The warrants had an expiration date of March 7, 2011 and an exercise price of $263.16 per share.
|
|
·
|
We issued 313 shares of our common stock upon the cashless exercise of warrants to purchase 544 shares of common stock. The warrants had an expiration date of May 2, 2012 and an exercise price of $191.25 per share.
|
|
·
|
We issued 2,058 shares of our common stock upon the cashless exercise of warrants to purchase 2,614 shares of common stock. The warrants had an expiration date of April 1, 2010 and an exercise price of $95.62 per share.
|
|
·
|
We issued 31,384 shares of our common stock upon conversion of approximately 58 shares of our Series E preferred stock, having an aggregate stated value of approximately $2,907,000, and accumulated undeclared dividends thereon.
|
|
·
|
We issued 4,330 shares of our common stock upon conversion of 28 shares of our Series C preferred stock having an aggregate stated value of $336,000, and accumulated undeclared dividends thereon.
|
|
·
|
We issued 172 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,316 shares of common stock. The warrants had an expiration date of March 7, 2011 and an exercise price of $263.16 per share.
|
|
·
|
We issued 793 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,320 shares of common stock. The warrants had an expiration date of August 9, 2010 and an exercise price of $0.65 per share.
|
|
·
|
We issued 218,648 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 320,000 shares of common stock. The warrants had an expiration date of April 1, 2010 and an exercise price of $99.45 per share.
|
|
·
|
We issued 249 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 396 shares of common stock. The warrants had an expiration date of October 3, 2010 and an exercise price of $99.45 per share.
|
|
·
|
We sold 54,466 shares of our common stock and warrants to purchase 19,063 shares of common stock at an exercise price of $100.98 per share for gross proceeds of approximately $5,500,000.
|
|
·
|
We sold 34,660 shares of our common stock and warrants to purchase 12,131 shares of common stock at an exercise price of $100.98 per share for gross proceeds of approximately $3,500,000.
|
|
·
|
We issued 13,622 shares of our common stock in exchange for outstanding warrants to purchase 45,409 shares of common stock at an exercise price of $278.46 per share. These warrants had been issued in a March 2006 financing. The issuance was made pursuant to an exchange agreement with each warrant holder and was exempt from registration under Section 3(a)(9) of the Securities Act.
|
|
·
|
We issued 747 shares of our common stock upon conversion of approximately 39 shares of our Series E preferred stock, having an aggregate stated value of approximately $1,952,000, and accumulated undeclared dividends thereon.
|
|
·
|
We issued 747 shares of our common stock upon conversion of 5 shares of our Series C preferred stock, having an aggregate stated value of $60,000, and accumulated dividends thereon.
|
|
·
|
We issued 476 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,715 shares of common stock. The warrants had an expiration date of August 9, 2010 and an exercise price of $99.45 per share.
|
|
·
|
We issued 39 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 136 shares of common stock. The warrants had an expiration date of August 9, 2010 and an exercise price of $99.45 per share.
|
|
·
|
We issued 4,979 shares of our common stock upon conversion of 35 shares of our Series C preferred stock, having an aggregate stated value of $420,000, and accumulated dividends thereon.
|
|
·
|
We sold 200 shares of our Series E preferred stock and warrants to purchase 60,331 shares of our common stock at an exercise price of $99.45 per share for gross proceeds of approximately $10,000,000 and paying approximately $800,000 in fees and expenses. In addition, 413.5 shares of our Series D preferred stock and accumulated undeclared dividends thereon were exchanged for 445.442875 shares of our Series E preferred stock.
|
Incorporated by Reference
|
||||||||||
Exhibit
No. |
Description
|
Filed with
this Form S-1 |
Form
|
Filing Date
|
Exhibit
No. |
|||||
1.1
|
Form of Underwriting Agreement
|
X
|
|
|||||||
2.1
|
Agreement and Plan of Merger by and among Novelos Therapeutics, Inc., Cell Acquisition Corp. and Cellectar, Inc. dated April 8, 2011
|
8-K
|
April 11, 2011
|
2.1
|
||||||
3.1
|
Second Amended and Restated Certificate of Incorporation
|
8-K
|
April 11, 2011
|
3.1
|
||||||
3.2
|
Amended and Restated By-laws
|
8-K
|
June 1, 2011
|
3.1
|
||||||
3.3
|
Form of Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Novelos Therapeutics, Inc.
|
S-1
|
July 1, 2011
|
3.3
|
||||||
5.1
|
Legal Opinion of Foley Hoag LLP*
|
|
||||||||
4.1 | Form of common stock certificate |
X
|
||||||||
4.2 | Form of Warrant |
X
|
||||||||
10.1
|
Employment Agreement with Harry S. Palmin dated January 31, 2006
|
8-K
|
February 6, 2006
|
99.1
|
||||||
10.2
|
Second Amendment to Employment Agreement between the Company and Harry Palmin
|
8-K
|
June 1, 2011
|
10.1
|
||||||
10.3
|
2000 Stock Option and Incentive Plan
|
SB-2
|
November 16, 2005
|
10.2
|
||||||
10.4
|
Form of 2004 non-plan non-qualified stock option
|
SB-2
|
November 16, 2005
|
10.3
|
||||||
10.5
|
Form of non-plan non-qualified stock option used from February to May 2005
|
SB-2
|
November 16, 2005
|
10.4
|
||||||
10.6
|
Form of non-plan non-qualified stock option used after May 2005
|
SB-2
|
November 16, 2005
|
10.5
|
||||||
10.7
|
Consideration and new technology agreement dated April 1, 2005 with ZAO BAM
|
10-QSB
|
August 15, 2005
|
10.2
|
||||||
10.8
|
Form of common stock purchase warrant dated March 2006
|
8-K
|
March 3, 2006
|
99.3
|
||||||
10.9
|
2006 Stock Incentive Plan, as amended
|
8-K
|
May 23,2011
|
10.1
|
||||||
10.10
|
Form of Incentive Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.1
|
||||||
10.11
|
Form of Non-Statutory Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.2
|
||||||
10.12
|
Form of Non-Statutory Director Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.3
|
10.13
|
Form of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the Agreement to Exchange and Consent dated May 2, 2007
|
10-QSB
|
May 8, 2007
|
4.2
|
||||||
10.14
|
Collaboration Agreement dated February 11, 2009**
|
10-K
|
March 30, 2009
|
10.39
|
||||||
10.15
|
Common Stock Purchase Warrant dated February 11, 2009
|
8-K
|
February 18, 2009
|
4.2
|
||||||
10.16
|
Form of Warrant Exchange Agreement dated August 21, 2009
|
8-K
|
August 26, 2009
|
10.5
|
||||||
10.17
|
Securities Purchase Agreement dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.41
|
||||||
10.18
|
Common Stock Purchase Warrant dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.43
|
||||||
10.19
|
Letter Agreement with LP Clover Limited dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.44
|
||||||
10.20
|
Letter Agreement with Mundipharma International Corporation Limited dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.45
|
||||||
10.21
|
Consent and Amendment Agreement dated January 21, 2010
|
S-1/A
|
January 26, 2010
|
10.47
|
||||||
10.22
|
Form of Executive Retention Agreement dated May 14, 2010
|
10-Q
|
May 17, 2010
|
10.3
|
||||||
10.23
|
Form of Placement Agent Agreement Between the Company and Rodman and Renshaw LLC
|
S-1A
|
June 25, 2010
|
10.50
|
||||||
10.24
|
Written Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
|
S-1A
|
July 7, 2010
|
10.52
|
||||||
10.25
|
Form of Common Stock Purchase Warrant to be issued pursuant to the Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
|
S-1A
|
July 7, 2010
|
10.53
|
||||||
10.26
|
Form of Securities Purchase Agreement dated July 21, 2010
|
8-K
|
July 22, 2010
|
10.1
|
||||||
10.27
|
Amendment to Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 21, 2010
|
8-K
|
July 22, 2010
|
10.2
|
||||||
10.28
|
Exchange Agreement dated November 30, 2010 between the Company and the holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock
|
8-K
|
November 30, 2010
|
10.1
|
10.29
|
Form of Common Stock Purchase Warrant dated April 8, 2011
|
8-K
|
April 11, 2011
|
4.3
|
||||||
10.30
|
Securities Purchase Agreement dated April 8, 2011
|
8-K
|
April 11, 2011
|
10.1
|
||||||
10.31
|
Placement Agency Agreement dated April 1, 2011
|
8-K
|
April 11, 2011
|
99.1
|
||||||
10.32
|
License Agreement between Cellectar, LLC and the Regents of the University of Michigan dated September 14, 2003, as amended through June 2010
|
S-1
|
July 1, 2011
|
10.31
|
||||||
10.33
|
Lease Agreement between Cellectar, LLC and McAllen Properties LLC, as amended and extended to date
|
S-1
|
July 1, 2011
|
10.32
|
||||||
10.34
|
Loan Agreement between the Wisconsin Department of Commerce and Cellectar, Inc. dated September 15, 2010
|
S-1
|
July 1, 2011
|
10.33
|
||||||
10.35
|
General Business Security Agreement dated September 15, 2010
|
S-1
|
July 1, 2011
|
10.34
|
||||||
23.1
|
Consent of Foley Hoag LLP (included in Exhibit 5.1)*
|
|
||||||||
23.2
|
Consent of Grant Thornton LLP
|
X
|
||||||||
23.3
|
Consent of Stowe & Degon LLC
|
X
|
||||||||
24.1
|
Powers of Attorney (included on signature page)
|
S-1
|
July 1, 2011
|
24.1
|
||||||
101 | Interactive Data Files | X |
|
1.
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
|
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
|
|
2.
|
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
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.
|
|
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to the offering shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
|
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
NOVELOS THERAPEUTICS, INC.
|
||
By:
|
/s/ Harry S. Palmin
|
|
Harry S. Palmin
|
||
President and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Harry S. Palmin
|
Chief Executive Officer and Director
|
November 9, 2011
|
||
Harry S. Palmin
|
(
principal
executive officer
)
|
|||
/s/ Joanne M. Protano
|
Chief Financial Officer
|
November 9, 2011
|
||
Joanne M. Protano
|
(
principal financial officer and principal accounting officer)
|
|||
/s/ *
|
Chairman of the Board of Directors
|
November 9, 2011
|
||
Stephen A. Hill
|
||||
/s/ *
|
Director
|
November 9, 2011
|
||
T. Rockwell Mackie
|
||||
/s/ *
|
Director
|
November 9, 2011
|
||
James S. Manuso
|
||||
/s/ *
|
Director
|
November 9, 2011
|
||
John Neis
|
||||
/s/ *
|
Director
|
November 9, 2011
|
||
John E. Niederhuber
|
||||
/s/ *
|
Director
|
November 9, 2011
|
||
Howard M. Schneider
|
||||
/s/ *
|
|
Director
|
|
November 9, 2011
|
Michael F. Tweedle
|
||||
/s/ *
|
Director
|
November 9, 2011
|
||
Jamey P. Weichert
|
Incorporated by Reference
|
||||||||||
Exhibit
No. |
Description
|
Filed with
this Form S-1 |
Form
|
Filing Date
|
Exhibit
No. |
|||||
1.1
|
Form of Underwriting Agreement
|
X
|
||||||||
2.1
|
Agreement and Plan of Merger by and among Novelos Therapeutics, Inc., Cell Acquisition Corp. and Cellectar, Inc. dated April 8, 2011
|
8-K
|
April 11, 2011
|
2.1
|
||||||
3.1
|
Second Amended and Restated Certificate of Incorporation
|
8-K
|
April 11, 2011
|
3.1
|
||||||
3.2
|
Amended and Restated By-laws
|
8-K
|
June 1, 2011
|
3.1
|
||||||
3.3
|
Form of Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Novelos Therapeutics, Inc.
|
S-1
|
July 1, 2011
|
3.3
|
||||||
5.1
|
Legal Opinion of Foley Hoag LLP*
|
|||||||||
4.1 | Form of common stock certificate |
X
|
||||||||
4.2 | Form of Warrant |
X
|
||||||||
10.1
|
Employment Agreement with Harry S. Palmin dated January 31, 2006
|
8-K
|
February 6, 2006
|
99.1
|
||||||
10.2
|
Second Amendment to Employment Agreement between the Company and Harry Palmin
|
8-K
|
June 1, 2011
|
10.1
|
||||||
10.3
|
2000 Stock Option and Incentive Plan
|
SB-2
|
November 16, 2005
|
10.2
|
||||||
10.4
|
Form of 2004 non-plan non-qualified stock option
|
SB-2
|
November 16, 2005
|
10.3
|
||||||
10.5
|
Form of non-plan non-qualified stock option used from February to May 2005
|
SB-2
|
November 16, 2005
|
10.4
|
||||||
10.6
|
Form of non-plan non-qualified stock option used after May 2005
|
SB-2
|
November 16, 2005
|
10.5
|
||||||
10.7
|
Consideration and new technology agreement dated April 1, 2005 with ZAO BAM
|
10-QSB
|
August 15, 2005
|
10.2
|
||||||
10.8
|
Form of common stock purchase warrant dated March 2006
|
8-K
|
March 3, 2006
|
99.3
|
||||||
10.9
|
2006 Stock Incentive Plan, as amended
|
8-K
|
May 23,2011
|
10.1
|
||||||
10.10
|
Form of Incentive Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.1
|
||||||
10.11
|
Form of Non-Statutory Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.2
|
10.13
|
Form of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the Agreement to Exchange and Consent dated May 2, 2007
|
10-QSB
|
May 8, 2007
|
4.2
|
||||||
10.14
|
Collaboration Agreement dated February 11, 2009**
|
10-K
|
March 30, 2009
|
10.39
|
||||||
10.15
|
Common Stock Purchase Warrant dated February 11, 2009
|
8-K
|
February 18, 2009
|
4.2
|
||||||
10.16
|
Form of Warrant Exchange Agreement dated August 21, 2009
|
8-K
|
August 26, 2009
|
10.5
|
||||||
10.17
|
Securities Purchase Agreement dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.41
|
||||||
10.18
|
Common Stock Purchase Warrant dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.43
|
||||||
10.19
|
Letter Agreement with LP Clover Limited dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.44
|
||||||
10.20
|
Letter Agreement with Mundipharma International Corporation Limited dated August 25, 2009
|
S-1
|
September 15, 2009
|
10.45
|
||||||
10.21
|
Consent and Amendment Agreement dated January 21, 2010
|
S-1/A
|
January 26, 2010
|
10.47
|
||||||
10.22
|
Form of Executive Retention Agreement dated May 14, 2010
|
10-Q
|
May 17, 2010
|
10.3
|
||||||
10.23
|
Form of Placement Agent Agreement Between the Company and Rodman and Renshaw LLC
|
S-1A
|
June 25, 2010
|
10.50
|
||||||
10.24
|
Written Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
|
S-1A
|
July 7, 2010
|
10.52
|
||||||
10.25
|
Form of Common Stock Purchase Warrant to be issued pursuant to the Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
|
S-1A
|
July 7, 2010
|
10.53
|
||||||
10.26
|
Form of Securities Purchase Agreement dated July 21, 2010
|
8-K
|
July 22, 2010
|
10.1
|
||||||
10.27
|
Amendment to Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 21, 2010
|
8-K
|
July 22, 2010
|
10.2
|
||||||
10.28
|
Exchange Agreement dated November 30, 2010 between the Company and the holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock
|
8-K
|
November 30, 2010
|
10.1
|
10.29
|
Form of Common Stock Purchase Warrant dated April 8, 2011
|
8-K
|
April 11, 2011
|
4.3
|
||||||
10.30
|
Securities Purchase Agreement dated April 8, 2011
|
8-K
|
April 11, 2011
|
10.1
|
||||||
10.31
|
Placement Agency Agreement dated April 1, 2011
|
8-K
|
April 11, 2011
|
99.1
|
||||||
10.32
|
License Agreement between Cellectar, LLC and the Regents of the University of Michigan dated September 14, 2003, as amended through June 2010
|
S-1
|
July 1, 2011
|
10.31
|
||||||
10.33
|
Lease Agreement between Cellectar, LLC and McAllen Properties LLC, as amended and extended to date
|
S-1
|
July 1, 2011
|
10.32
|
||||||
10.34
|
Loan Agreement between the Wisconsin Department of Commerce and Cellectar, Inc. dated September 15, 2010
|
S-1
|
July 1, 2011
|
10.33
|
||||||
10.35
|
General Business Security Agreement dated September 15, 2010
|
S-1
|
July 1, 2011
|
10.34
|
||||||
23.1
|
Consent of Foley Hoag LLP (included in Exhibit 5.1)*
|
|
||||||||
23.2
|
Consent of Grant Thornton LLP
|
X
|
||||||||
23.3
|
Consent of Stowe & Degon LLC
|
X
|
||||||||
24.1
|
Powers of Attorney (included on signature page)
|
S-1
|
July 1, 2011
|
24.1
|
||||||
101 | Interactive Data Files | X |
1.
|
Purchase and Sale of Securities.
|
3.
|
Covenants of the Company
. The Company covenants and agrees as follows:
|
5.
|
Indemnification
.
|
6.
|
Additional Covenants
.
|
7.
|
Effective Date of this Agreement and Termination Thereof
.
|
8.
|
Miscellaneous
.
|
Very truly yours, | |||
NOVELOS THERAPEUTICS, INC. | |||
|
By:
|
||
Name: Harry Palmin | |||
Title: Chief Executive Officer and President |
Accepted on the date first above written. | |||||
RODMAN & RENSHAW, LLC | |||||
By: |
|
|
|||
Name: John Borer
|
|
||||
Title: Head of Investment Banking
|
|
Very truly yours,
|
(Name):
|
(Address)
|
Very truly yours,
|
(Name):
|
(Address)
|
Warrant Shares: [_______]
|
Initial Exercise Date:_____________, 201_
|
|
(A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;
|
|
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
|
|
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
|
NOVELOS THERAPEUTICS, INC.
|
|||
By:
|
|||
Name: | |||
Title: |