x
|
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
DELAWARE
|
20-0077155
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
73 High Street, Buffalo, NY 14203
|
(716) 849-6810
|
(Address of principal executive offices)
|
Telephone No.
|
Title of each class
|
Name of each exchange on which registered
|
Common Stock, par value $0.005 per share
|
NASDAQ Capital Market
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
x
|
|
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Page
|
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||
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Item 1
|
||
Item 1A
|
||
Item 1B
|
||
Item 2
|
||
Item 3
|
||
Item 4
|
||
|
|
|
|
||
Item 5
|
||
Item 6
|
||
Item 7
|
||
Item 8
|
||
Item 9
|
||
Item 9A
|
||
Item 9B
|
||
|
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|
||
Item 10
|
||
Item 11
|
||
Item 12
|
||
Item 13
|
||
Item 14
|
||
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|
||
Item 15
|
||
•
|
the commercialization of our product candidates, if approved;
|
•
|
our plans to research, develop and commercialize our product candidates;
|
•
|
our ability to attract collaborators with development, regulatory and commercialization expertise;
|
•
|
our plans and expectations with respect to future clinical trials and commercial scale-up activities;
|
•
|
future agreements with third parties in connection with the commercialization of any approved product;
|
•
|
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
|
•
|
the rate and degree of market acceptance of our product candidates;
|
•
|
regulatory developments in the United States, the European Union and foreign countries;
|
•
|
the performance of our third-party suppliers and manufacturers;
|
•
|
the success of competing therapies that are or may become available;
|
•
|
our ability to attract and retain key scientific or management personnel;
|
•
|
the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;
|
•
|
the geopolitical relationship between the United States and the Russian Federation, as well as general business, legal, financial and other conditions within the Russian Federation;
|
•
|
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates; and
|
•
|
the other factors discussed below in “Item 1A. Risk Factors.”
|
PRODUCT Indication
|
DISCOVERY
|
PRECLINICAL
|
PIVOTAL ANIMAL STUDIES
|
HUMAN SAFETY / DOSE CONVERSION
|
||||||||||||
ENTOLIMOD-Biodefense
Acute Radiation Syndrome
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRODUCT Indication
|
DISCOVERY
|
PRECLINICAL
|
PHASE I
|
PHASE II
|
PHASE III
|
|||||||||||||||
ENTOLIMOD-Oncology
Advanced Solid Tumors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENTOLIMOD-Oncology
Neo-adjuvant Therapy of Colorectal Cancer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CBLB612
Chemotherapy-induced Myelosuppression
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRODUCT Indication
|
DISCOVERY
|
PRECLINICAL
|
PHASE I
|
PHASE II
|
PHASE III
|
|||||||||||||||
MOBILAN
Targeted Therapy of Prostate Cancer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
temporary and reversible suppression of apoptosis in normal cells to protect healthy tissues from stress-induced damage using compounds we categorize as Protectans, which include entolimod, Mobilan, and CBLB612; and,
|
(b)
|
reactivation of apoptosis in tumor cells to eliminate cancer using compounds we categorize as Curaxins, which includes CBL0137, currently being developed by our former subsidiary, Incuron.
|
Milestone Description
|
For Products Limited to Biodefense Uses
|
|
For All Other Products
(Maximum amount)*
|
||||
For any IND filing for a product
|
$
|
50,000
|
|
|
$
|
50,000
|
|
For any product entering Phase II clinical trials or similar registration
|
100,000
|
|
|
250,000
|
|
||
For any product entering Phase III clinical trials
|
—
|
|
|
700,000
|
|
||
For any product license application, BLA or NDA Filing for a product**
|
350,000
|
|
|
1,500,000
|
|
||
Upon regulatory approval permitting any product to be sold to the commercial market
|
1,000,000
|
|
|
4,000,000
|
|
*
|
Maximum amounts listed for achievement of milestone in U.S. If milestones are reached in another country first, milestone payments will be prorated for certain products under the license based on the market size for the product in such country as that market relates to the then current U.S. market.
|
**
|
New Drug Application ("
NDA
")
|
•
|
Two exclusive license and option agreements effective December 2007 and September 2011;
|
•
|
Various sponsored research agreements entered into between January 2007 to present; and
|
•
|
Clinical trial agreements for the conduct of our Phase 1 entolimod oncology study and Incuron’s Phase 1 CBL0137 intravenous administration study.
|
•
|
preclinical laboratory and animal tests performed in compliance with current GLPs;
|
•
|
development of manufacturing processes which conform to current Good Manufacturing Practices, or (
"GMPs"
);
|
•
|
submission and acceptance of an Investigational New Drug (
"IND"
) application which must become effective before human clinical trials may begin;
|
•
|
performance of adequate and well-controlled human clinical trials in compliance with current Good Clinical Practices (
"GCPs"
) to establish the safety and efficacy of the proposed drug for its intended use; or in the case of entolimod, for reducing the risk of death following exposure to potentially lethal radiation, we are required to perform pivotal animal studies in compliance with GLP and some aspects of GCP to establish efficacy; and
|
•
|
submission to and review and approval by the FDA of a NDA or BLA prior to any commercial sale or shipment of a product; or in the case of entolimod a pre-EUA prior to sales to the National Stockpile.
|
•
|
Phase 1
: The drug is introduced into healthy human subjects or patients with advanced disease (in the case of certain inherently toxic products for severe or life-threatening diseases such as cancer) and tested for safety, dosage tolerance, absorption, distribution, metabolism and excretion;
|
•
|
Phase 2
: Involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage; and
|
•
|
Phase 3
: Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide, if appropriate, an adequate basis for product labeling.
|
•
|
a determination by the Secretary of Department of Homeland Security that there is a domestic emergency, or a significant potential for a domestic emergency, involving a heightened risk of attack with a specified biological, chemical, radiological or nuclear agent or agents;
|
•
|
a determination by the Secretary of the DoD that there is a military emergency, or a significant potential for a military emergency, involving a heightened risk to U.S. military forces of attack with a specified biological, chemical, radiological or nuclear agent or agents; or
|
•
|
a determination by the Secretary of DHHS of a public health emergency that effects, or has the significant potential to effect, national security and that involves a specified biological, chemical, radiological or nuclear agent or agents, or a specified disease or condition that may be attributable to such agent or agent.
|
•
|
the number and characteristics of the product candidates we pursue;
|
•
|
the scope, progress, results and costs of researching and developing our product candidates, and conducting pre-clinical and clinical trials;
|
•
|
the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;
|
•
|
the cost of commercialization activities for any of our product candidates that are approved for sale, including marketing, sales and distribution costs;
|
•
|
the cost of manufacturing our product candidates and any products we successfully commercialize;
|
•
|
our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements;
|
•
|
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;
|
•
|
the success of the pre-EUA submission we made with the FDA and any future submissions in the U.S., EU, and other countries that we may make; and
|
•
|
the timing, receipt and amount of sales of, or royalties on, our future products, if any.
|
•
|
our ability to obtain adequate sources of continued financing;
|
•
|
our ability to obtain approval for, and if approved, to successfully commercialize our product candidates;
|
•
|
our ability to successfully enter into license, development or other partnership agreements with third-parties for the development and/or commercialization of one or more of our product candidates;
|
•
|
our R&D efforts, including the timing and cost of clinical trials; and
|
•
|
our ability to enter into favorable alliances with third-parties who can provide substantial capabilities in clinical development, manufacturing, regulatory affairs, sales, marketing and distribution.
|
•
|
preclinical or clinical study results may show the product to be less effective than desired (e.g., a study may fail to meet its primary objectives) or to have harmful or problematic side effects;
|
•
|
we fail to receive the necessary regulatory approvals or there may be a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies, length of time to achieve study endpoints, additional time requirements for data analysis or pre-EUA, MAA, NDA, or BLA preparation, discussions with the FDA, EMA, and other regulatory agencies, and their request for additional preclinical or clinical data or unexpected safety or manufacturing issues;
|
•
|
our contract laboratories fail to follow good laboratory practices or sufficient quantities of the drug are not available for clinical studies or commercialization;
|
•
|
we fail to receive funding necessary for the development of one or more of our products;
|
•
|
they fail to conform to a changing standard of care for the diseases they seek to treat;
|
•
|
they are less effective or more expensive than current or alternative treatment methods;
|
•
|
patients withdraw or die during a clinical trial for a variety of reasons, including adverse events associated with the advanced stage of their disease and medical problems that may or may not be related to our products or product candidates;
|
•
|
the clinical or animal trial design, although approved, is inadequate to demonstrate safety and/or efficacy;
|
•
|
the third-party clinical investigators or contract organizations do not perform our clinical or animal studies on our anticipated schedule or consistent with the study protocol or do not perform data collection and analysis in a timely or accurate manner;
|
•
|
the economic feasibility of the product is not attainable due to high manufacturing costs, pricing or reimbursement issues, or other factors;
|
•
|
one or more of our financial partners in our subsidiaries and us do not agree on the development strategy of our products;
|
•
|
proprietary rights of others and their competing products and technologies may prevent our product from being commercialized.
|
•
|
regulators or IRBs may not authorize us to commence a clinical trial, conduct a clinical trial at a prospective trial site or continue a clinical trial following amendment of a clinical trial protocol or an IACUC may not authorize us to commence an animal study at a prospective study site;
|
•
|
we may decide, or regulators may require us, to conduct additional preclinical or clinical studies, or we may abandon projects that we expect to be promising, if our preclinical tests, clinical trials or animal efficacy studies produce negative or inconclusive results;
|
•
|
we may have to suspend or terminate our clinical trials if the participants are being exposed to unacceptable safety risks;
|
•
|
regulators or IRBs may require that we hold, suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or if it is believed that the clinical trials present an unacceptable safety risk to the patients enrolled in our clinical trials;
|
•
|
the cost of our clinical trials or animal studies could escalate and become cost prohibitive;
|
•
|
any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the product not commercially viable;
|
•
|
we may not be successful in recruiting a sufficient number of qualifying subjects for our clinical trials or certain animals used in our animal studies or facilities conducting our studies may not be available at the time that we plan to initiate a study;
|
•
|
the effects of our product candidates may not be the desired effects, may include undesirable side effects, or the product candidates may have other unexpected characteristics; and
|
•
|
our collaborators that conduct our clinical or pivotal animal studies could go out of business and not be available for FDA inspection when we submit our product for approval.
|
•
|
contract manufacturers may encounter difficulties in achieving volume production, quality control and quality assurance and also may experience shortages in qualified personnel and obtaining active ingredients for our product candidates;
|
•
|
if, for any circumstance, we are required to change manufacturers, we could be faced with significant monetary and lost opportunity costs with switching manufacturers. Furthermore, such change may take a significant amount of time. The FDA and foreign regulatory agencies must approve these manufacturers in advance. This requires prior approval of regulatory submissions as well as successful completion of pre-approval inspections to ensure compliance with FDA and foreign regulations and standards;
|
•
|
contract manufacturers are subject to ongoing periodic, unannounced inspection by the FDA and state and foreign agencies or their designees to ensure strict compliance with GMPs and other governmental regulations and corresponding foreign standards. We do not have control over compliance by our contract manufacturers with these regulations and standards. Our contract manufacturers may not be able to comply with GMPs and other FDA requirements or other regulatory requirements outside the U.S. Failure of contract manufacturers to comply with applicable regulations could result in delays, suspensions or withdrawal of approvals, seizures or recalls of product candidates and operating restrictions, any of which could significantly and adversely affect our business;
|
•
|
contract manufacturers might not be able or refuse to fulfill our commercial or clinical trial needs, which would require us to seek new manufacturing arrangements and may result in substantial delays in meeting market or clinical trial demands. For example, our current agreement with SynCo Bio Partners B.V. (“
Synco
”) does not impose any obligation on Synco to reserve a minimum annual capacity for the production of entolimod, which could impair our ability to obtain product from them in a timely fashion;
|
•
|
our product costs may increase if our manufacturers pass their increasing costs of manufacture on to us;
|
•
|
if our contract manufacturers do not successfully carry out their contractual duties or meet expected deadlines, we will not be able to obtain or maintain regulatory approvals for our products and product candidates and will not be able to successfully commercialize our products and product candidates. In such event, we may not be able to locate any necessary acceptable replacement manufacturers or enter into favorable agreements with such replacement manufacturers in a timely manner, if at all; and
|
•
|
contract manufacturers may breach the manufacturing agreements that we have with them because of factors beyond our control or may terminate or fail to renew a manufacturing agreement based on their own business priorities at a time that is costly or inconvenient to us.
|
•
|
perceptions by members of the government healthcare community, including physicians, about the safety and effectiveness of our drugs;
|
•
|
published studies demonstrating the safety and effectiveness of our drugs;
|
•
|
adequate reimbursement for our products from payors; and
|
•
|
effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.
|
•
|
the need to devote substantial time and attention of management and key employees to the preparation of bids and proposals for contracts that may not be awarded to us;
|
•
|
the need to accurately estimate the resources and cost structure that will be required to perform any contract that we might be awarded;
|
•
|
the risk that the government will issue a request for proposal to which we would not be eligible to respond;
|
•
|
the risk that third parties may submit protests to our responses to requests for proposal that could result in delays or withdrawals of those requests for proposal;
|
•
|
the expenses that we might incur and the delays that we might suffer if our competitors protest or challenge contract awards made to us pursuant to competitive bidding and the risk that any such protest or challenge could result in the resubmission of bids based on modified specifications, or in termination, reduction or modification of the awarded contract; and
|
•
|
the risk that review of our proposal or award of a contract or an option to an existing contract could be significantly delayed for reasons including, but not limited to, the need for us to resubmit our proposal or limitations on available funds due to government budget cuts.
|
•
|
suspend or prevent us for a set period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations;
|
•
|
terminate our existing contracts;
|
•
|
reduce the scope and value of our existing contracts;
|
•
|
audit and object to our contract-related costs and fees, including allocated indirect costs;
|
•
|
control and potentially prohibit the export of our products; and
|
•
|
change certain terms and conditions in our contracts.
|
•
|
decreased demand for our product candidates;
|
•
|
injury to our reputation;
|
•
|
withdrawal of clinical trial participants;
|
•
|
costs of related litigation;
|
•
|
diversion of our management’s time and attention;
|
•
|
substantial monetary awards to patients or other claimants;
|
•
|
loss of revenues;
|
•
|
the inability to commercialize product candidates; and
|
•
|
increased difficulty in raising required additional funds in the private and public capital markets.
|
•
|
Controlled Foreign Companies rules, pursuant to which undistributed profits of certain foreign organizations as well as foreign structures not being legal entities controlled by Russian tax residents should be subject to taxation in Russia;
|
•
|
the concept of tax residency for legal entities whereby foreign legal entities would be deemed Russian tax residents if their place of management is located in Russia; and
|
•
|
beneficial ownership concept which provides that treaty relief should be available to foreign legal entities which qualify for the beneficial owners of income.
|
•
|
a majority of the board of directors consist of independent directors;
|
•
|
we have a nominating and corporate governance committee that is composed entirely of independent directors; and
|
•
|
we have a compensation committee that is composed entirely of independent directors.
|
•
|
our progress in developing and commercializing our products;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
fluctuations in stock market prices and trading volumes of similar companies;
|
•
|
actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts;
|
•
|
general economic conditions and trends;
|
•
|
major catastrophic events;
|
•
|
sales of large blocks of our stock;
|
•
|
departures of key personnel;
|
•
|
changes in the regulatory status of our product candidates, including results of our preclinical studies and clinical trials;
|
•
|
status of contract and funding negotiations relating to our product candidates;
|
•
|
events affecting our collaborators;
|
•
|
events affecting our competitors;
|
•
|
announcements of new products or technologies, commercial relationships or other events by us or our competitors;
|
•
|
regulatory developments in the U.S. and other countries;
|
•
|
failure of our common stock to be listed or quoted on the NASDAQ Capital Market, other national market system or any national stock exchange;
|
•
|
changes in accounting principles; and
|
•
|
discussion of us or our stock price by the financial and scientific press and in online investor communities.
|
2016
|
High
|
|
Low
|
||||
First Quarter
|
$
|
4.00
|
|
|
$
|
2.42
|
|
Second Quarter
|
3.30
|
|
|
1.92
|
|
||
Third Quarter
|
3.25
|
|
|
1.55
|
|
||
Fourth Quarter
|
1.96
|
|
|
1.22
|
|
||
2015
(1)
|
|
|
|
||||
First Quarter
|
$
|
6.90
|
|
|
$
|
3.07
|
|
Second Quarter
|
7.24
|
|
|
1.84
|
|
||
Third Quarter
|
5.29
|
|
|
3.38
|
|
||
Fourth Quarter
|
4.85
|
|
|
3.38
|
|
•
|
Level 1 – Quoted prices for identical instruments in active markets.
|
•
|
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable.
|
•
|
Level 3 – Instruments where significant value drivers are unobservable to third parties.
|
|
|
Year Ended December 31,
|
|
|
|
|
||||||||||||
Funding Source
|
Program
|
2016
|
|
Percent of Total
|
|
2015
|
|
Percent of Total
|
|
Variance
|
||||||||
DoD
|
JWMRP Contract
|
$
|
1,198,247
|
|
|
34.1
|
%
|
|
$
|
193,216
|
|
|
7.1
|
%
|
|
$
|
1,005,031
|
|
DoD
|
PRMRP Grant
|
49,077
|
|
|
1.4
|
%
|
|
20,174
|
|
|
0.7
|
%
|
|
28,903
|
|
|||
MPT
(1)
|
CBLB612
|
304,485
|
|
|
8.7
|
%
|
|
484,783
|
|
|
17.9
|
%
|
|
(180,298
|
)
|
|||
MPT
(1)
|
Entolimod oncology
|
734,194
|
|
|
20.9
|
%
|
|
474,167
|
|
|
17.5
|
%
|
|
260,027
|
|
|||
Incuron
|
Service Contracts
|
622,360
|
|
|
17.7
|
%
|
|
881,732
|
|
|
32.6
|
%
|
|
(259,372
|
)
|
|||
|
|
2,908,363
|
|
|
82.7
|
%
|
|
2,054,072
|
|
|
75.8
|
%
|
|
854,291
|
|
|||
MPT
(1)
|
Mobilan
|
610,039
|
|
|
17.3
|
%
|
|
654,153
|
|
|
24.2
|
%
|
|
(44,114
|
)
|
|||
|
|
$
|
3,518,402
|
|
|
100.0
|
%
|
|
$
|
2,708,225
|
|
|
100.0
|
%
|
|
$
|
810,177
|
|
(1)
|
The contracts received from Russian government entities are denominated in Russian rubles. The revenue above was calculated using average exchange rates for the periods presented.
|
Funding source
|
|
Program
|
|
Total award value
|
|
Funded award value
|
|
Cumulative revenue recognized
|
|
Funded backlog
|
|
Unfunded backlog
|
||||||||||
DoD
|
|
JWMRP Contract
|
|
$
|
9,226,455
|
|
|
$
|
9,226,455
|
|
|
$
|
1,391,463
|
|
|
$
|
7,834,992
|
|
|
$
|
—
|
|
DoD
|
|
PRMRP Grant
|
|
6,573,992
|
|
|
6,573,992
|
|
|
69,251
|
|
|
6,504,741
|
|
|
—
|
|
|||||
MPT
(1)
|
|
CBLB612
|
|
3,342,247
|
|
|
3,342,247
|
|
|
3,342,247
|
|
|
—
|
|
|
—
|
|
|||||
MPT
(1)
|
|
Entolimod oncology
|
|
3,035,575
|
|
|
3,035,575
|
|
|
3,035,575
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
22,178,269
|
|
|
22,178,269
|
|
|
7,838,536
|
|
|
14,339,733
|
|
|
—
|
|
|||||
MPT
(1)
|
|
Mobilan
|
|
3,207,585
|
|
|
3,207,585
|
|
|
3,207,585
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
$
|
25,385,854
|
|
|
$
|
25,385,854
|
|
|
$
|
11,046,121
|
|
|
$
|
14,339,733
|
|
|
$
|
—
|
|
(1)
|
The contract values above are calculated based on the cumulative revenue recognized to date plus our backlog valued at the
December 31, 2016
exchange rate for Russian ruble denominated values.
|
|
Year Ended December 31,
|
|
|
||||||||
|
2016
|
|
2015
|
|
Variance
|
||||||
Entolimod's biodefense indication
|
$
|
3,328,865
|
|
|
$
|
2,800,583
|
|
|
$
|
528,282
|
|
CBLB612
|
484,238
|
|
|
397,440
|
|
|
86,798
|
|
|||
Entolimod's oncology indications
|
1,716,542
|
|
|
2,649,054
|
|
|
(932,512
|
)
|
|||
|
5,529,645
|
|
|
5,847,077
|
|
|
(317,432
|
)
|
|||
Curaxins
|
466,684
|
|
|
811,463
|
|
|
(344,779
|
)
|
|||
Panacela product candidates
|
499,793
|
|
|
484,753
|
|
|
15,040
|
|
|||
Total research & development expenses
|
$
|
6,496,122
|
|
|
$
|
7,143,293
|
|
|
$
|
(647,171
|
)
|
•
|
From inception through December 31,
2016
, we have raised $144.7 million of net equity capital, including amounts received from the exercise of options and warrants. We have also received $7.3 million in net proceeds from the issuance of long-term debt instruments;
|
•
|
DoD and BARDA have funded grants and contracts totaling $60.4 million for the development of entolimod for its biodefense indication;
|
•
|
The Russian Federation has funded a series of contracts totaling $17.3 million, based on the exchange rates in effect on the date of funding. These contracts include requirements for us to contribute matching funds, which we have satisfied or expect to satisfy with both the value of developed intellectual property at the time of award, incurred development expenses and future expenses;
|
•
|
We have been awarded $4.0 million in grants and contracts not described above, all of which has been recognized at
December 31, 2016
;
|
•
|
Incuron was formed to develop and commercialize the Curaxins product line, including its lead oncology drug candidate CBL0137. As more fully described in Note 5, "Noncontrolling Interests" we sold our remaining ownership interest in Incuron during 2015 for approximately $4.0 million and retain a 2% royalty interest in the CBL0137 technology; and
|
•
|
Panacela was formed to develop and commercialize preclinical compounds, which were transferred to Panacela through assignment and lease agreements. Rusnano contributed $9.0 million and we contributed $3.0 million plus intellectual property at formation. As more fully described in Note 5, "Noncontrolling Interests" we recapitalized Panacela in December 2015 with Rusnano converting $0.7 million of debt to equity and CBLI obtaining $2.2 million of Panacela equity through a combination of cash payments, debt forgiveness and common stock issuance. As of the date of this filing, CBLI owns
67.57%
of Panacela.
|
|
For the year ended December 31,
|
|
|
||||||||
|
2016
|
|
2015
|
|
Variance
|
||||||
Net cash used in operating activities
|
$
|
(5,039,639
|
)
|
|
$
|
(12,080,120
|
)
|
|
$
|
7,040,481
|
|
Net cash provided by (used in) investing activities
|
5,673,013
|
|
|
(10,276,623
|
)
|
|
15,949,636
|
|
|||
Net cash provided by financing activities
|
539,998
|
|
|
24,935,624
|
|
|
(24,395,626
|
)
|
|||
Effect of exchange rate change on cash and equivalents
|
(189,980
|
)
|
|
235,574
|
|
|
(425,554
|
)
|
|||
Increase in cash and cash equivalents
|
983,392
|
|
|
2,814,455
|
|
|
(1,831,063
|
)
|
|||
Cash and cash equivalents at beginning of period
|
5,918,424
|
|
|
3,103,969
|
|
|
2,814,455
|
|
|||
Cash and cash equivalents at end of period
|
$
|
6,901,816
|
|
|
$
|
5,918,424
|
|
|
$
|
983,392
|
|
|
December 31,
|
||||||
2016
|
|
2015
|
|||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,901,816
|
|
|
$
|
5,918,424
|
|
Short-term investments
|
8,343,657
|
|
|
13,701,273
|
|
||
Accounts receivable
|
352,700
|
|
|
631,084
|
|
||
Other current assets
|
289,768
|
|
|
442,642
|
|
||
Total current assets
|
15,887,941
|
|
|
20,693,423
|
|
||
Equipment, net
|
37,376
|
|
|
122,958
|
|
||
Restricted cash
|
—
|
|
|
37,663
|
|
||
Other long-term assets
|
30,553
|
|
|
26,560
|
|
||
Total assets
|
$
|
15,955,870
|
|
|
$
|
20,880,604
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
336,435
|
|
|
$
|
197,134
|
|
Accrued expenses
|
1,823,235
|
|
|
1,584,826
|
|
||
Deferred revenue
|
—
|
|
|
11,892
|
|
||
Accrued warrant liability
|
949,419
|
|
|
4,048,900
|
|
||
Total current liabilities
|
3,109,089
|
|
|
5,842,752
|
|
||
Commitments and contingencies
|
—
|
|
|
—
|
|
||
Total liabilities
|
3,109,089
|
|
|
5,842,752
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $.005 par value; 10,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively
|
—
|
|
|
—
|
|
||
Common stock, $.005 par value; 160,000,000 shares authorized, 10,987,166 and 10,987,166 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively
|
54,932
|
|
|
54,932
|
|
||
Additional paid-in capital
|
158,773,753
|
|
|
158,764,985
|
|
||
Other comprehensive loss
|
(564,559
|
)
|
|
(408,051
|
)
|
||
Accumulated deficit
|
(150,740,156
|
)
|
|
(147,978,831
|
)
|
||
Treasury Stock, at cost; 0 and 158,900, respectively
|
—
|
|
|
(544,853
|
)
|
||
Total Cleveland BioLabs, Inc. stockholders’ equity
|
7,523,970
|
|
|
9,888,182
|
|
||
Noncontrolling interest in stockholders’ equity
|
5,322,811
|
|
|
5,149,670
|
|
||
Total stockholders’ equity
|
12,846,781
|
|
|
15,037,852
|
|
||
Total liabilities and stockholders’ equity
|
$
|
15,955,870
|
|
|
$
|
20,880,604
|
|
|
For the Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
||||
Grants and contracts
|
$
|
3,518,402
|
|
|
$
|
2,708,225
|
|
Operating expenses:
|
|
|
|
||||
Research and development
|
6,496,122
|
|
|
7,143,293
|
|
||
General and administrative
|
3,378,130
|
|
|
6,355,962
|
|
||
Total operating expenses
|
9,874,252
|
|
|
13,499,255
|
|
||
Loss from operations
|
(6,355,850
|
)
|
|
(10,791,030
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest and other income (expense)
|
263,653
|
|
|
(99,488
|
)
|
||
Foreign exchange gain (loss)
|
362,140
|
|
|
(509,513
|
)
|
||
Gain (loss) on investment provision
|
40,517
|
|
|
(1,060,834
|
)
|
||
Change in value of warrant liability
|
3,099,481
|
|
|
(221,915
|
)
|
||
Equity in loss of Incuron, LLC
|
—
|
|
|
(362,137
|
)
|
||
Total other income (expense)
|
3,765,791
|
|
|
(2,253,887
|
)
|
||
Net loss
|
(2,590,059
|
)
|
|
(13,044,917
|
)
|
||
Net loss (gain) attributable to noncontrolling interests
|
(68,806
|
)
|
|
407,280
|
|
||
Net loss attributable to Cleveland BioLabs, Inc.
|
$
|
(2,658,865
|
)
|
|
$
|
(12,637,637
|
)
|
Net loss available to common stockholders per share of common stock, basic and diluted
|
$
|
(0.24
|
)
|
|
$
|
(1.79
|
)
|
Weighted average number of shares used in calculating net income (loss) per share, basic and diluted
|
10,987,166
|
|
|
7,060,396
|
|
|
For the Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
||||
Net loss including noncontrolling interests
|
$
|
(2,590,059
|
)
|
|
$
|
(13,044,917
|
)
|
|
Other comprehensive loss
|
|
|
|
|
||||
Unrealized gain (loss) on short-term investments
|
3,904
|
|
|
(6,190
|
)
|
|
||
Foreign currency translation adjustment
|
(158,537
|
)
|
|
30,025
|
|
|
||
Comprehensive loss including noncontrolling interests
|
(2,744,692
|
)
|
|
(13,021,082
|
)
|
|
||
Comprehensive loss (gain) attributable to noncontrolling interests
|
(63,448
|
)
|
|
449,752
|
|
|
||
Comprehensive loss attributable to Cleveland BioLabs, Inc.
|
$
|
(2,808,140
|
)
|
|
$
|
(12,571,330
|
)
|
|
|
For the Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(2,590,059
|
)
|
|
$
|
(13,044,917
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation
|
63,456
|
|
|
140,135
|
|
||
Amortization of loan costs
|
—
|
|
|
135,082
|
|
||
Gain on debt extinguishment
|
—
|
|
|
(184,475
|
)
|
||
Unrealized currency loss on short-term investments
|
(43,931
|
)
|
|
(17,928
|
)
|
||
Gain on equipment disposal
|
(180,901
|
)
|
|
(25,685
|
)
|
||
Investment loss provision
|
43,524
|
|
|
1,060,834
|
|
||
Noncash compensation
|
13,623
|
|
|
96,401
|
|
||
Warrant issuance costs
|
—
|
|
|
617,776
|
|
||
Equity in loss of Incuron, LLC
|
—
|
|
|
362,137
|
|
||
Change in value of warrant liability
|
(3,099,481
|
)
|
|
221,915
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
300,762
|
|
|
(414,068
|
)
|
||
Other current assets
|
174,717
|
|
|
(286,240
|
)
|
||
Other long-term assets
|
(3,736
|
)
|
|
13,431
|
|
||
Accounts payable
|
124,006
|
|
|
(833,947
|
)
|
||
Deferred revenue
|
(12,929
|
)
|
|
(130,048
|
)
|
||
Accrued expenses
|
171,310
|
|
|
209,477
|
|
||
Net cash used in operating activities
|
(5,039,639
|
)
|
|
(12,080,120
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of short-term investments
|
(17,225,557
|
)
|
|
(16,873,917
|
)
|
||
Sale of short-term investments
|
22,712,480
|
|
|
3,184,287
|
|
||
Proceeds from sale of equipment
|
198,914
|
|
|
25,685
|
|
||
Purchase of equipment
|
(10,249
|
)
|
|
(19,775
|
)
|
||
Proceeds from sale of Incuron, LLC
|
—
|
|
|
3,000,000
|
|
||
Increase (decrease) in restricted cash
|
(2,575
|
)
|
|
407,097
|
|
||
Net cash provided by (used in) investing activities
|
5,673,013
|
|
|
(10,276,623
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Issuance of common stock, net of offering costs
|
—
|
|
|
27,190,292
|
|
||
Net repayment of long-term debt
|
—
|
|
|
(2,664,691
|
)
|
||
Net proceeds from sale of treasury stock
|
539,998
|
|
|
417,545
|
|
||
Repayment of capital lease obligation
|
—
|
|
|
(7,522
|
)
|
||
Net cash provided by financing activities
|
539,998
|
|
|
24,935,624
|
|
||
Effect of exchange rate change on cash and equivalents
|
(189,980
|
)
|
|
235,574
|
|
||
Increase in cash and cash equivalents
|
983,392
|
|
|
2,814,455
|
|
||
Cash and cash equivalents at beginning of period
|
5,918,424
|
|
|
3,103,969
|
|
||
Cash and cash equivalents at end of period
|
$
|
6,901,816
|
|
|
$
|
5,918,424
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
—
|
|
|
$
|
517,904
|
|
Supplemental schedule of noncash financing activities:
|
|
|
|
||||
Allocation of equity proceeds to fair value of warrants
|
$
|
—
|
|
|
$
|
3,081,634
|
|
Debt to equity conversion
|
—
|
|
|
1,846,500
|
|
||
Repurchase of treasury stock
|
—
|
|
|
906,321
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in Capital |
||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||||||
Balance at December 31, 2014
|
2,858,126
|
|
|
14,287
|
|
|
—
|
|
|
—
|
|
|
132,693,988
|
|
|||
Stock based compensation
|
5,023
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
256,795
|
|
|||
Issuance of common stock, net of offering costs of $1,410,011
|
8,122,189
|
|
|
40,611
|
|
|
—
|
|
|
—
|
|
|
28,839,862
|
|
|||
Repurchase of Treasury Stock
|
—
|
|
|
—
|
|
|
264,318
|
|
|
(906,321
|
)
|
|
—
|
|
|||
Sale of Treasury Stock
|
—
|
|
|
—
|
|
|
(105,418
|
)
|
|
361,468
|
|
|
56,077
|
|
|||
Exercise of warrants
|
1,828
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||
Increased ownership of Panacela Labs, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|||
Noncontrolling interest contribution in Panacela Labs, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Allocation of equity proceeds to fair value of warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,081,634
|
)
|
|||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2015
|
10,987,166
|
|
|
54,932
|
|
|
158,900
|
|
|
(544,853
|
)
|
|
158,764,985
|
|
|||
Stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,623
|
|
|||
Sale of Treasury Stock
|
—
|
|
|
—
|
|
|
(158,900
|
)
|
|
544,853
|
|
|
(4,855
|
)
|
|||
Increased ownership of Panacela Labs, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2016
|
10,987,166
|
|
|
$
|
54,932
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
158,773,753
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Accumulated
Deficit |
|
Noncontrolling
Interests |
|
Total
|
|||||||||
Balance at December 31, 2014
|
(380,110
|
)
|
|
(133,935,562
|
)
|
|
3,393,499
|
|
|
1,786,102
|
|
|||||
Stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
256,820
|
|
|||||
Issuance of common stock, net of offering costs of $1,410,011
|
—
|
|
|
—
|
|
|
—
|
|
|
28,880,473
|
|
|||||
Repurchase of Treasury Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(906,321
|
)
|
|||||
Sale of Treasury Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
417,545
|
|
|||||
Exercise of warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Increased ownership of Panacela Labs, Inc.
|
(94,248
|
)
|
|
(1,405,632
|
)
|
|
1,499,880
|
|
|
(94
|
)
|
|||||
Noncontrolling interest contribution in Panacela Labs, Inc.
|
—
|
|
|
—
|
|
|
706,043
|
|
|
706,043
|
|
|||||
Allocation of equity proceeds to fair value of warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,081,634
|
)
|
|||||
Net loss
|
—
|
|
|
(12,637,637
|
)
|
|
(407,280
|
)
|
|
(13,044,917
|
)
|
|||||
Foreign currency translation
|
72,497
|
|
|
—
|
|
|
(42,472
|
)
|
|
30,025
|
|
|||||
Balance at December 31, 2015
|
(408,051
|
)
|
|
(147,978,831
|
)
|
|
5,149,670
|
|
|
15,037,852
|
|
|||||
Stock based compensation
|
—
|
|
|
—
|
|
|
|
|
13,623
|
|
||||||
Sale of Treasury Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
539,998
|
|
|||||
Increased ownership of Panacela Labs, Inc.
|
(7,233
|
)
|
|
(102,460
|
)
|
|
109,693
|
|
|
—
|
|
|||||
Net loss
|
—
|
|
|
(2,658,865
|
)
|
|
68,806
|
|
|
(2,590,059
|
)
|
|||||
Unrealized gain on short-term investments
|
3,904
|
|
|
—
|
|
|
—
|
|
|
3,904
|
|
|||||
Foreign currency translation
|
(153,179
|
)
|
|
—
|
|
|
(5,358
|
)
|
|
(158,537
|
)
|
|||||
Balance at December 31, 2016
|
$
|
(564,559
|
)
|
|
$
|
(150,740,156
|
)
|
|
$
|
5,322,811
|
|
|
$
|
12,846,781
|
|
|
Years ended December 31,
|
|
|
|||||
|
2016
|
|
2015
|
|
Variance
|
|||
U.S. Department of Defense
|
35.4
|
%
|
|
7.9
|
%
|
|
27.5
|
%
|
Russian government agencies
|
46.9
|
%
|
|
59.6
|
%
|
|
(12.7
|
)%
|
Incuron, LLC
|
17.7
|
%
|
|
32.5
|
%
|
|
(14.8
|
)%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
—
|
%
|
Asset Category
|
Estimated Useful Life
(in Years)
|
Laboratory equipment
|
5
|
Furniture and fixtures
|
5
|
Computer equipment
|
3
|
|
Unrealized loss on available-for-sale securities
|
|
Gains and losses on foreign exchange translations
|
|
Total
|
||||||
Beginning balance
|
$
|
(6,190
|
)
|
|
$
|
(401,861
|
)
|
|
$
|
(408,051
|
)
|
Other comprehensive income/(loss) before reclassifications
|
3,904
|
|
|
(158,537
|
)
|
|
(154,633
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(1,875
|
)
|
|
(1,875
|
)
|
|||
Ending balance
|
$
|
(2,286
|
)
|
|
$
|
(562,273
|
)
|
|
$
|
(564,559
|
)
|
|
|
2015
|
Risk-free interest rate
|
|
1.35-1.59%
|
Expected dividend yield
|
|
0%
|
Expected life
|
|
5 - 5.5 Years
|
Expected volatility
|
|
75.53-76.21%
|
|
As of December 31,
|
||||
Common Equivalent Securities
|
2016
|
|
2015
|
||
Warrants
|
2,148,741
|
|
|
2,222,155
|
|
Options
|
233,367
|
|
|
343,643
|
|
Total
|
2,382,108
|
|
|
2,565,798
|
|
•
|
Level 1 – Observable inputs for identical assets or liabilities such as quoted prices in active markets;
|
•
|
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable; and
|
•
|
Level 3 – Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use.
|
|
As of December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
2,436,589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,436,589
|
|
Short-term investments
|
7,487,365
|
|
|
856,292
|
|
|
—
|
|
|
8,343,657
|
|
||||
Total assets
|
$
|
9,923,954
|
|
|
$
|
856,292
|
|
|
$
|
—
|
|
|
$
|
10,780,246
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
949,419
|
|
|
$
|
949,419
|
|
|
As of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
1,885,826
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,885,826
|
|
Short-term investments
|
13,701,273
|
|
|
—
|
|
|
—
|
|
|
13,701,273
|
|
||||
Total assets
|
$
|
15,587,099
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,587,099
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,048,900
|
|
|
$
|
4,048,900
|
|
Compensatory stock options not yet issued
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,048,900
|
|
|
$
|
4,048,900
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Stock Price
|
$
|
1.42
|
|
|
$
|
3.49
|
|
Exercise Price
|
$ 3.00 - 60.00
|
|
|
$ 3.00 - 100.00
|
|
||
Term in years
|
0.17 - 4.60
|
|
|
0.48 - 5.60
|
|
||
Volatility
|
52.88 - 96.36%
|
|
|
64.00 - 114.74%
|
|
||
Annual rate of quarterly dividends
|
0
|
%
|
|
0
|
%
|
||
Discount rate- bond equivalent yield
|
.15 - 1.84%
|
|
|
.31 - 1.86%
|
|
|
Year Ended December 31, 2016
|
||||||
|
Accrued Warrant
Liability
|
|
Compensatory
Stock Options
Issued After
Year End
|
||||
Beginning Balance
|
$
|
4,048,900
|
|
|
$
|
—
|
|
Total (gains) or losses, realized and unrealized, included in earnings (1)(2)
|
(3,099,481
|
)
|
|
—
|
|
||
Issuances
|
—
|
|
|
—
|
|
||
Settlements
|
—
|
|
|
—
|
|
||
Balance at, December 31, 2016
|
$
|
949,419
|
|
|
$
|
—
|
|
|
Year Ended December 31, 2015
|
||||||
|
Accrued Warrant
Liability
|
|
Compensatory
Stock Options
Issued After
Year End
|
||||
Beginning Balance
|
$
|
862,074
|
|
|
$
|
132,295
|
|
Total (gains) or losses, realized and unrealized, included in earnings (1)(2)
|
221,915
|
|
|
(51,569
|
)
|
||
Issuances
|
3,636,260
|
|
|
—
|
|
||
Settlements
|
(671,349
|
)
|
|
(80,726
|
)
|
||
Balance at, December 31, 2015
|
$
|
4,048,900
|
|
|
$
|
—
|
|
(1)
|
Unrealized gains or losses related to the accrued warrant liability were included as change in value of accrued warrant liability. For the years ended
December 31, 2016
and
2015
we realized gains of
$0
and
$671,349
, respectively, in connection with the elimination of the Series B warrants issued to an investor in the January 2014 equity investment transaction.
|
(2)
|
Expenses recorded for compensatory stock options not yet issued are included in "Research and Development" expense and "General and Administrative" expense in the Statements of Operations.
|
|
December 31, 2016
|
||||||||
Description
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range in years
|
||
Accrued warrant liability
|
$
|
949,419
|
|
|
Black-scholes pricing model
|
|
Expected term
|
|
0.17 - 4.60
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Computer equipment
|
$
|
205,280
|
|
|
$
|
298,772
|
|
Lab equipment
|
575,793
|
|
|
1,023,795
|
|
||
Furniture
|
500,202
|
|
|
494,188
|
|
||
|
1,281,275
|
|
|
1,816,755
|
|
||
Less accumulated depreciation
|
(1,243,899
|
)
|
|
(1,693,797
|
)
|
||
Equipment, net
|
$
|
37,376
|
|
|
$
|
122,958
|
|
|
February 6, 2015
|
|
|
||||||||
|
Series A
|
|
Pre-Funded
|
|
January 16,
2014 |
||||||
Stock price
|
$
|
3.16
|
|
|
$
|
3.16
|
|
|
$
|
24.60
|
|
Exercise price
|
$
|
3.64
|
|
|
$
|
3.00
|
|
|
$
|
24.40
|
|
Term in years
|
6.5
|
|
|
1.00
|
|
|
.75 - 2.50
|
|
|||
Expected volatility
|
0.83
|
%
|
|
0.88
|
%
|
|
43.06 - 79.86
|
|
|||
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|||
Risk-free interest rate
|
1.48
|
%
|
|
0.26
|
%
|
|
0.09% - 0.58%
|
|
|
Year Ended December 31, 2016
|
||||||||||||
|
Total Stock Options
Outstanding
|
|
Weighted Average
Exercise Price per
Share
|
|
Nonvested Stock
Options
|
|
Weighted Average
Grant Date Fair
Value per Share
|
||||||
December 31, 2015
|
343,643
|
|
|
$
|
46.60
|
|
|
42,000
|
|
|
$
|
1.99
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Vested
|
—
|
|
|
—
|
|
|
(42,000
|
)
|
|
1.99
|
|
||
Exercised
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited, Canceled
|
(110,276
|
)
|
|
56.37
|
|
|
—
|
|
|
—
|
|
||
December 31, 2016
|
233,367
|
|
|
41.98
|
|
|
—
|
|
|
—
|
|
|
Stock Options
Outstanding
|
|
Vested Stock
Options
|
||||
Quantity
|
233,367
|
|
|
233,367
|
|
||
Weighted-average exercise price
|
$
|
41.98
|
|
|
$
|
41.98
|
|
Weighted Average Remaining Contractual Term (in Years)
|
6.05
|
|
|
6.05
|
|
||
Intrinsic value
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Operating loss carryforwards
|
$
|
50,687,000
|
|
|
$
|
51,710,000
|
|
Accrued expenses
|
8,781,000
|
|
|
8,932,000
|
|
||
Tax credit carryforwards
|
3,747,000
|
|
|
3,618,000
|
|
||
Intellectual property
|
4,097,000
|
|
|
3,902,000
|
|
||
Outside tax basis difference in affiliate
|
—
|
|
|
—
|
|
||
Equipment
|
283,000
|
|
|
330,000
|
|
||
Other
|
—
|
|
|
—
|
|
||
Total deferred tax assets
|
67,595,000
|
|
|
68,492,000
|
|
||
Deferred tax liabilities:
|
—
|
|
|
—
|
|
||
Net deferred tax asset
|
67,595,000
|
|
|
68,492,000
|
|
||
Valuation allowance
|
(67,595,000
|
)
|
|
(68,492,000
|
)
|
||
|
$
|
—
|
|
|
$
|
—
|
|
|
For the Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Tax at the U.S. statutory rate
|
$
|
(881,000
|
)
|
|
$
|
(4,435,000
|
)
|
Change in value of warrant liability
|
(1,054,000
|
)
|
|
75,000
|
|
||
Valuation allowance
|
1,933,000
|
|
|
3,335,000
|
|
||
Deconsolidation of Incuron
|
—
|
|
|
—
|
|
||
Gain on sale of Incuron
|
—
|
|
|
1,020,000
|
|
||
Other
|
2,000
|
|
|
5,000
|
|
||
|
$
|
—
|
|
|
$
|
—
|
|
|
Unrecognized
Tax Benefits
|
|
Interest
and Penalties
|
||||
Balance at January 1, 2015
|
$
|
453,000
|
|
|
$
|
—
|
|
Prior year tax position
|
—
|
|
|
—
|
|
||
Current year tax position
|
—
|
|
|
—
|
|
||
Deferred tax position
|
15,000
|
|
|
—
|
|
||
Settlements with tax authorities
|
—
|
|
|
—
|
|
||
Expiration of the statute of limitations
|
—
|
|
|
—
|
|
||
Balance at December 31, 2015
|
468,000
|
|
|
—
|
|
||
Prior year tax position
|
—
|
|
|
—
|
|
||
Current year tax position
|
—
|
|
|
—
|
|
||
Deferred tax position
|
14,000
|
|
|
—
|
|
||
Settlements with tax authorities
|
—
|
|
|
—
|
|
||
Expiration of the statute of limitations
|
—
|
|
|
—
|
|
||
Balance at December 31, 2016
|
$
|
482,000
|
|
|
$
|
—
|
|
2017
|
$
|
385,426
|
|
2018
|
376,532
|
|
|
2019
|
191,048
|
|
|
Total minimum lease payments
|
$
|
953,006
|
|
(1)
|
Financial Statements, included in Part II, Item 8. “Financial Statements and Supplementary Data”:
|
(2)
|
Financial Statement Schedules:
|
(3)
|
Index to Exhibits: The exhibits listed in the following Exhibit Index are filed with this report or, as noted, incorporated by reference here.
|
Exhibit No.
|
Identification of Exhibit
|
3.1
|
Restated Certificate of Incorporation filed with the Secretary of State of Delaware on March 18, 2010 (Incorporated by reference to Exhibit 3.1 to Form 10-K for the year ended December 31, 2009, filed on March 22, 2010).
|
3.2
|
Certificate of Amendment to the Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on June 20, 2013 (Incorporated by reference to Exhibit 3.1 to Form 10-Q for the period ended June 30, 2013, filed on August 9, 2013).
|
3.3
|
Certificate of Amendment of Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 27, 2015).
|
3.4
|
Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on April 20, 2015 (incorporated by reference to Exhibit 3.4 to Form 10-Q for the period ended March 31, 2016, filed May 16, 2016.
|
3.5
|
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 9, 2015).
|
3.6
|
Certificate of Amendment of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to Form 8-K filed on February 9, 2015).
|
3.7
|
Second Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 5, 2007).
|
3.8
|
Amendment to Second Amended and Restated By-Laws of Cleveland BioLabs, Inc. (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 18, 2015).
|
4.0
|
Form of Common Stock Purchase Warrant (Series D Transaction) (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on March 30, 2009).
|
4.1
|
Form of Common Stock Purchase Warrant (Private Placement closed on March 2, 2010) (Incorporated by reference to Exhibit 4.1 to Form 8-K/A filed on February 26, 2010).
|
4.2
|
Form of Series F Warrants (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on June 21, 2011).
|
4.3
|
Form of Warrant Agreement by and between Cleveland BioLabs, Inc. and Continental Stock Transfer & Trust Company (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on October 22, 2012).
|
4.4
|
Warrant Agreement, dated September 30, 2013, between Cleveland BioLabs, Inc. and Hercules Technology II, L.P. (Incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended September 30, 2013, filed on November 8, 2013).
|
Exhibit No.
|
Identification of Exhibit
|
4.5.1
|
Form of Series A Warrant to Purchase Common Stock (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on January 15, 2014).
|
4.5.2
|
Amendment to Series A Common Stock Purchase Warrant, dated September 4, 2014, by and between Cleveland BioLabs, Inc.,Sabby Healthcare Volatility Master Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd. (Incorporated by reference to Exhibit 4.1 and Exhibit 4.2 to Form 8-K filed on September 8, 2014).
|
4.6
|
Form of Series J Warrant Agreement (Incorporated by reference to Exhibit 4.1 Form 8-K filed on June 20, 2014).
|
4.7
|
Form of Series A Warrant to Purchase Common Stock, as amended to date (Incorporated by reference to Exhibit 4.2 to Form 8-K filed on February 9, 2015).
|
10.0
|
Amendment No. 1 to Securities Purchase Agreement and Series D Warrants, dated September 29, 2014, by and among Cleveland BioLabs, Inc. and the parties on the signature pages thereto (Incorporated by reference to Exhibit 10.1 Form 8-K filed on October 2, 2014).
|
10.1
|
Amendment No. 1 to Securities Purchase Agreement, dated February 25, 2010, by and among Cleveland BioLabs, Inc., and the Purchasers set forth therein (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on January 13, 2015).
|
10.2
|
Registration Rights Agreement, dated June 17, 2014, by and among Cleveland BioLabs, Inc., and the purchasers on Exhibit A thereto (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on June 20, 2014).
|
10.3
|
Securities Purchase Agreement, dated February 4, 2015, by and among Cleveland BioLabs, Inc. and the Purchasers set forth therein, as amended to date (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 9, 2015).
|
10.4
|
Registration Rights Agreement, dated February 4, 2015, by and among Cleveland BioLabs, Inc. and the Purchasers set forth therein (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on February 9, 2015).
|
10.5
|
Securities Purchase Agreement dated June 24, 2015 by and between Cleveland BioLabs, Inc. and David Davidovich (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 24, 2015).
|
10.6
|
Registration Rights Agreement dated June 24, 2015 by and between Cleveland BioLabs, Inc. and David Davidovich (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on June 24, 2015).
|
10.7
|
Stock Subscription Agreement, dated as of December 18, 2015, between Cleveland BioLabs, Inc. and Open Joint Stock Company “Rusnano” (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 24, 2015).
|
10.8
|
Stock Subscription Agreement, dated as of December 18, 2015, between Panacela Labs, Inc. and Cleveland BioLabs, Inc. (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 24, 2015).
|
10.9
|
Stock Subscription Agreement, dated as of December 18, 2015, between Panacela Labs, Inc. and Open Joint Stock Company “Rusnano” (Incorporated by reference to Exhibit 10.3 to Form 8-K filed on December 24, 2015).
|
10.10
|
Acknowledgement Agreement, dated as of December 18, 2015, among Cleveland BioLabs, Inc., Panacela Labs, Inc. and Open Joint Stock Company “Rusnano” (Incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 24, 2015).
|
10.11
|
Exclusive License Agreement by and between The Cleveland Clinic Foundation and Cleveland BioLabs, Inc., effective as of July 1, 2004 (Incorporated by reference to Exhibit 10.8 to Amendment No. 1 to Registration Statement on Form SB-2 filed on April 25, 2006 (File No. 333-131918)).
|
10.12†
|
Second Amendment to Exclusive License Agreement, dated September 22, 2011, by and between The Cleveland Clinic Foundation and the registrant (Incorporated by reference to Exhibit 10.3 to Form 10-Q for the period ended September 30, 2011, filed on November 9, 2011).
|
10.13
|
Library Access Agreement by and between ChemBridge Corporation and Cleveland BioLabs, Inc., effective as of April 27, 2004 (Incorporated by reference to Exhibit 10.5 to Amendment No. 1 to Registration Statement on Form SB-2 filed on April 25, 2006 (File No. 333-131918)).
|
10.14
|
Restricted Stock and Investor Rights Agreement between Cleveland BioLabs, Inc. and ChemBridge Corporation, dated as of April 27, 2004 (Incorporated by reference to Exhibit 10.6 to Amendment No. 1 to Registration Statement on Form SB-2 filed on April 25, 2006 (File No. 333-131918)).
|
10.15
|
Process Development and Manufacturing Agreement between Cleveland BioLabs, Inc. and SynCo Bio Partners B.V., effective as of August 31, 2006 (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 25, 2006).
|
Exhibit No.
|
Identification of Exhibit
|
10.16
|
Sponsored Research Agreement between Cleveland BioLabs, Inc. and Roswell Park Cancer Institute Corporation, effective as of January 12, 2007 (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on January 12, 2007).
|
10.17
|
Investment Agreement, dated September 19, 2011, by and among Panacela Labs, Inc., the Registrant and Open Joint Stock Company Rusnano (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the period ended September 30, 2011, filed on November 9, 2011).
|
10.18†
|
Exclusive License and Option Agreement, dated September 23, 2011, by and between Children’s Cancer Institute Australia for Medical Research and Panacela Labs, Inc (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the period ended September 30, 2011, filed on November 9, 2011).
|
10.19†
|
Exclusive License and Option Agreement, dated September 23, 2011, by and between Health Research, Inc., Roswell Park Institute Division, Roswell Park Cancer Institute Corporation, and Panacela Labs, Inc (Incorporated by reference to Exhibit 10.4 to Form 10-Q for the period ended September 30, 2011, filed on November 9, 2011).
|
10.20
|
Amended and Restated Exclusive Sublicense Agreement, dated September 23, 2011, by and between the registrant and Panacela Labs, Inc. (Incorporated by reference to Exhibit 10.5 to Form 10-Q for the period ended September 30, 2011, filed on November 9, 2011).
|
10.21
|
Assignment Agreement, dated September 23, 2011, by and between Panacela Labs, Inc. and the registrant (Incorporated by reference to Exhibit 10.7 to Form 10-Q for the period ended September 30, 2011, filed on November 9, 2011).
|
10.22
|
Master Services Agreement, dated October 14, 2014, between Buffalo BioLabs, LLC and Cleveland BioLabs, Inc. (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 18, 2013).
|
10.23
|
Cooperative Research and Development Agreement by and between the Uniformed Services University of the Health Sciences, the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc., the Cleveland Clinic Foundation, and Cleveland BioLabs, Inc., dated as of August 1, 2004 (Incorporated by reference to Exhibit 10.9 to Form 10-Q for the period ended September 30, 2010, filed on November 15, 2010).
|
10.24†
|
Award/Contract W81XWH-15-C-0101 dated September 1, 2015 issued by USA Med Research ACQ Activity (Incorporated by reference to Exhibit 10.4 to Form 10-Q filed on November 9, 2015).
|
10.25†
|
Award/Contract W81XWH-15-C-0101 modification dated October 4, 2016 issued by USA Med Research ACQ Activity (Incorporated by reference to Exhibit 10.1 to Form 10-Q filed November 14, 2016.
|
10.26†
|
Award/Contract W81XWH-15-1-0570 dated September 30, 2015 by issued by USA Med Research ACQ Activity (Incorporated by reference to Exhibit 10.5 to Form 10-Q filed on November 9, 2015).
|
10.27
|
Master Purchase Agreement dated April 29, 2015 by and among Cleveland BioLabs, Inc., Mikhail Mogutov and Incuron LLC (Incorporated by reference to Exhibit 2.1 to Form 8-K filed on May 4, 2015).
|
10.28
|
Option Agreement dated April 29, 2015 by and between Cleveland BioLabs, Inc. and Mikhail Mogutov (Incorporated by reference to Exhibit 2.2 to Form 8-K filed on May 4, 2015).
|
10.29
|
Royalty Agreement dated April 29, 2015 by and between Cleveland BioLabs, Inc. and Incuron LLC (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 4, 2015).
|
10.30
|
Master Services Agreement, dated June 1, 2010, between Incuron, LLC and Cleveland BioLabs, Inc.
|
10.31
|
Master Development Agreement, dated July 1, 2010, between Incuron, LLC and Cleveland BioLabs, Inc.
|
10.32*
|
Employment Agreement, dated August 4, 2011, between the Company and C. Neil Lyons (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 4, 2011).
|
10.33*
|
Separation and Consulting Agreement between and C. Neil Lyons and Cleveland BioLabs, Inc., dated as of May 6, 2016 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 6, 2016).
|
10.34*
|
Employment Agreement dated July 9, 2015 by and between Cleveland BioLabs, Inc. and Langdon Miller (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on July 10, 2015).
|
10.35*
|
Employment Agreement dated July 9, 2015 by and between Cleveland BioLabs, Inc. and Andrei Gudkov (Incorporated by reference to Exhibit 10.3 to Form 8-K filed on July 10, 2015).
|
10.36*
|
Employment Agreement dated July 9, 2015 by and between Cleveland BioLabs, Inc. and Yakov Kogan (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 10, 2015).
|
10.37*
|
Cleveland BioLabs, Inc. Equity Incentive Plan (Incorporated by reference to Appendix A to Proxy Statement on Schedule 14A filed on April 1, 2008).
|
10.38*
|
First Amendment to Cleveland BioLabs, Inc. Equity Incentive Plan (Incorporated by reference to Exhibit 99.1 to Form 8-K filed on June 9, 2010).
|
10.39*
|
Second Amendment to Cleveland BioLabs, Inc. Equity Incentive Plan (Incorporated by reference to Exhibit 99.1 to Form 8-K filed on June 15, 2012).
|
10.40*
|
Third Amendment to Cleveland BioLabs, Inc. Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 17, 2015).
|
10.41*
|
Form of Stock Award Grant Agreement (Incorporated by reference to Exhibit 99.2 to Form 8-K filed on June 15, 2012).
|
10.42*
|
Form of Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 99.3 to Form 8-K filed on June 15, 2012).
|
Exhibit No.
|
Identification of Exhibit
|
10.43*
|
Cleveland BioLabs, Inc. 2013 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 20, 2013).
|
10.44*
|
First Amendment to Cleveland BioLabs, Inc. Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on April 17, 2015).
|
10.45*
|
2012 Long-term Executive Compensation Plan (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 15, 2012).
|
10.45*
|
Severance Benefit Plan (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 13, 2014).
|
21.1
|
Subsidiaries
|
23.1
|
Consent of Meaden & Moore, Ltd.
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Yakov Kogan
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of C. Neil Lyons
|
32.1
|
Section 1350 Certification.
|
101.1
|
The following financial statements and supplementary data are filed as a part of this annual report on Form 10-K for the quarter and year ended December 31, 2016: (i) Consolidated Balance Sheets at December 31, 2016 and 2015; (ii) Consolidated Statements of Operations for years ended December 31, 2016 and 2015; (iii) Consolidated Statements of Comprehensive Income (Loss) for years ended December 31, 2016 and 2015; (iv) Consolidated Statements of Stockholders’ Equity for years ended December 31, 2016 and 2015; (v) Consolidated Statements of Cash Flows for years ended December 31, 2016 and 2015; and (vi) Notes to Consolidated Financial Statements as blocks of text.
|
†
|
Confidential treatment has been granted from the Securities and Exchange Commission as to certain portions of this document.
|
*
|
Indicates management contract or compensatory plan required to be filed as an Exhibit.
|
|
|
CLEVELAND BIOLABS, INC.
|
||
|
|
|
|
|
Dated:
|
February 22, 2017
|
By:
|
|
/s/ YAKOV KOGAN
|
|
|
|
|
Yakov Kogan
|
|
|
|
|
Chief Executive Officer
|
|
|
|
||
|
|
CLEVELAND BIOLABS, INC.
|
||
|
|
|
|
|
Dated:
|
February 22, 2017
|
By:
|
|
/s/ C. NEIL LYONS
|
|
|
|
|
C. Neil Lyons
|
|
|
|
|
Chief Financial Officer
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/S/ Yakov Kogan
|
|
Chief Executive Officer and Director (principal executive officer)
|
February 22, 2017
|
Yakov Kogan
|
|
|
|
|
|
|
|
/S/ C. Neil Lyons
|
|
Chief Financial Officer (principal financial and accounting officer)
|
February 22, 2017
|
C. Neil Lyons
|
|
|
|
|
|
|
|
/S/ Lea Verny
|
|
Director
|
February 22, 2017
|
Lea Verny
|
|
|
|
|
|
|
|
/S/ Randy Saluck
|
|
Director
|
February 22, 2017
|
Randy Saluck
|
|
|
|
|
|
|
|
/S/ Alexander Andryushechkin
|
|
Director
|
February 22, 2017
|
Alexander Andryushechkin
|
|
|
|
|
|
|
|
/S/ Anna Evdokimova
|
|
Director
|
February 22, 2017
|
Anna Evdokimova
|
|
|
|
|
|
|
|
/S/ Ivan Persiyanov
|
|
Director
|
February 22, 2017
|
Ivan Persiyanov
|
|
|
|
|
|
|
|
/S/ Alexey Nechaev
|
|
Director
|
February 22, 2017
|
Alexey Nechaev
|
|
|
|
|
|
|
|
/S/ Daniil Talyanskiy
|
|
Director
|
February 22, 2017
|
Daniil Talyanskiy
|
|
|
|
Date:
|
February 22, 2017
|
By:
|
|
/s/ Yakov Kogan
|
|
|
|
|
Yakov Kogan
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Date:
|
February 22, 2017
|
|
By:
|
|
/s/ C. Neil Lyons
|
|
|
|
|
|
C. Neil Lyons
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
(Principal Financial Officer)
|
Date:
|
February 22, 2017
|
By:
|
|
/s/ Yakov Kogan
|
|
|
|
|
Yakov Kogan
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
February 22, 2017
|
By:
|
|
/s/ C. Neil Lyons
|
|
|
|
|
C. Neil Lyons
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
*
|
This certification accompanies the Annual Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Cleveland BioLabs, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Annual Report), irrespective of any general incorporation language contained in such filing.
|