PERNIX THERAPEUTICS HOLDINGS, INC. |
(Exact name of registrant as specified in its charter) |
Maryland
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001-14494
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33-0724736
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(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
33219
Forest West Street
Magnolia,
TX
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77354
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(Address
of principal executive offices)
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(Zip
Code)
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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·
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projections
of revenues, expenses, income, income per share, net interest margins,
asset growth, loan production, asset quality, deposit growth and other
performance measures;
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·
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statements
regarding expansion of operations, including entrance into new markets and
development of products; and
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·
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statements
preceded by, followed by or that include the words “estimate,” “plan,”
“project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,”
“seek,” “target” or similar
expressions.
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·
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changes
in general business, economic and market
conditions;
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·
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volatility
in the securities markets generally or in the market price of the
Registrant’s stock specifically;
and
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·
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the
risks outlined below in the section entitled “Risk
Factors.”
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i)
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the
offer was limited to the five former stockholders of Pernix, all of whom
served as officers or directors of
Pernix;
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ii)
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each
of Pernix’s former stockholders are sophisticated investors and had
available to them all information necessary to make an informed investment
decision regarding the Merger;
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iii)
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each
of Pernix’s former stockholders was an active participant in considering
the merits and risks of the Merger;
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iv)
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the
Merger was a negotiated transaction, as opposed to a widespread
offering;
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v)
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there
was no public solicitation; and
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vi)
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the
substantial contractual restrictions on resale by the former stockholders
of Pernix ensure they will not be deemed to be
underwriters. For a description of these contractual
restrictions, see the section of the Registrant’s Definitive Proxy
Statement filed with the SEC on February 8, 2010 titled “The Merger-
Agreements with Pernix Stockholders and GTA Officers and Directors,” which
is incorporated herein by
reference.
|
Marketed
Products |
Active
Pharmaceutical Ingredient |
Method
of
Administration |
Primary
Indication |
Gross
Sales
Year Ended 12/31/2009 |
Gross
Sales
Year Ended 12/31/2008 |
|||||
ALDEX
AN
|
Doxylamine
Succinate
|
Oral
Tablet
|
Allergies
and
Congestion
|
$ 640,833
|
$ 939,431
|
|||||
ALDEX
CT
|
Diphenhydramine
HCI
and
Phenylephrine
HCI
|
Oral
Tablet
|
Allergies
and
Congestion
|
3,665,890
|
2,569,395
|
|||||
ALDEX
D
|
Pyrilamine
Maleate and Phenylephrine HCI
|
Liquid
|
Allergies
and
Congestion
|
7,596,143
|
4,129,828
|
|||||
ALDEX
DM
|
Pyrilamine
Maleate Phenylephrine HCI, Dextromethorphan
|
Liquid
|
Allergies,
Congestion and Cough
|
6,487,126
|
10,003,313
|
|||||
PEDIATEX
TD
|
Triprolidine
and Pseudoephedrine
|
Liquid
|
Allergies
and Congestion
|
5,699,099
|
1,465,768
|
|||||
Z
COF 8 DM
|
Dextromethorphan,
Pseudoephedrine and Guaifenesin
|
Liquid
|
Nasal
Congestion, Chest Congestion and Cough
|
7,756,320
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6,742,855
|
|||||
BROVEX
PEB
|
Phenylephrine
HCI and Brompheniramine Maleate
|
Liquid
|
Congestion
and Allergies
|
429,072
|
-----
|
|||||
BROVEX
PEB DM
|
Phenylephrine,
Brompheniramine Maleate and Dextromethorphan
|
Liquid
|
Congestion,
Allergies and Cough
|
2,601,823
|
-----
|
|||||
BROVEX
PSB
|
Pseudoephedrine
and Brompheniramine Maleate
|
Liquid
|
Congestion
and Allergies
|
413,341
|
-----
|
|||||
BROVEX
PSB DM
|
Pseudoephedrine
HCI, Brompheniramine Maleate and Dextromethorphan
|
Liquid
|
Congestion,
Allergies and Cough
|
1,599,615
|
-----
|
|||||
BROVEX
PSE
|
Pseudoephedrine
HCI and Brompheniramine Maleate
|
Oral
Tablet
|
Congestion
and Allergies
|
143,564
|
-----
|
|||||
BROVEX
PSE DM
|
Pseudoephedrine
HCI, Brompheniramine Maleate and Dextromethorphan
|
Oral
Tablet
|
Congestion,
Allergies and Cough
|
601,665
|
-----
|
|||||
REZYST
IM
|
Lactobacillus
and Bifidobacterium
|
Oral
Table
|
Immune
and GI Health
|
284,880
|
-----
|
|||||
QUINZYME
|
Ubiquinone
58b
|
Oral
Tablet
|
Ubiquininone
Levels
|
55,077
|
-----
|
·
|
Aldex AN.
ALDEX AN is
an antihistamine/decongestant combination administered orally in a
chewable tablet form containing the active pharmaceutical ingredient, or
API, doxylamine succinate. It is indicated for the temporary relief of
runny nose, sneezing, itching of nose or throat, itchy, watery eyes due to
hay fever or other respiratory
allergies.
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·
|
Aldex CT.
ALDEX CT is
an antihistamine/decongestant combination administered orally in a
chewable tablet form containing the API diphenhydramine HCl and
phenylephrine HCl. It is indicated for the temporary relief of nasal and
sinus congestion, sneezing, runny nose, and watery eyes that occur from
respiratory allergies.
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·
|
Aldex D.
ALDEX D is an
antihistamine/decongestant combination for oral administration as a
suspension. Each 5mL dose contains the API phenylephrine HCI and
pyrilamine maleate. It is indicated for the symptomatic relief of coryza
and nasal congestion associated with the common cold, sinusitis, allergic
rhinitis and other upper respiratory tract
conditions.
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·
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Aldex DM.
ALDEX DM is
an antihistamine/nasal decongestant/antitussive combination for oral
administration as a suspension. Each 5mL dose contains the API
phenylephrine HCI, pyrilamine maleate and dextromethorphan HBr. It is
indicated for the symptomatic relief of coryza, nasal decongestion, and
cough associated with the common cold, sinusitis, allergic rhinitis, and
other upper respiratory tract
conditions.
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·
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Our
ALDEX products incorporate the patented drug delivery technology developed
by Kiel Laboratories.
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·
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Because
of the rapid onset of first generation antihistamines like doxylamine,
found in ALDEX AN, symptomatic relief is almost
immediate.
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·
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ALDEX
CT contains the API diphenhydramine, one of the oldest, most effective
antihistamines on the market. It is well known and trusted by
doctors.
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·
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ALDEX
D and ALDEX DM both contain the API pyrilamine, one of the least sedating
first generation antihistamines
available.
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·
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PEDIATEX
TD is effective for the relief of perennial and seasonal allergic
rhinitis, vasomotor rhinitis, nasal congestion due to the common cold, hay
fever or other respiratory allergies, and nasal congestion associated with
sinusitis. Its antihistamine is a potent agent with a rapid onset and long
duration of action.
PEDIATEX
TD, which utilizes Kiel’s patented drug delivery technology, can be used
two to four times per day, which is advantageous to caregivers with
children either at home or in day
care.
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·
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The
product has a unique safety mechanism that helps to prevent overdose. The
bottle adapter and calibrated syringe are included in each sample and
prescription bottle, ensuring safety precautions are taken before the
caregiver doses the patient.
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·
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BROVEX PEB.
BROVEX PEB is an antihistamine/decongestant combination
administered orally in a liquid form containing the API phenylephrine HCl,
a decongestant, and brompheniramine maleate, an antihistamine. It is
indicated for the temporary relief of nasal and sinus congestion,
sneezing, runny nose, and watery eyes that occur from seasonal and
perennial allergic rhinitis.
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·
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BROVEX PEB
DM.
BROVEX PEB DM is an antihistamine/decongestant/antitussive
combination administered orally in a liquid form containing the active
pharmaceutical ingredients phenylephrine, brompheniramine maleate and
dextromethorphan, an antitussive. It is indicated for the relief of nasal
and sinus congestion, coughing, sneezing, runny nose, and watery eyes that
occur from seasonal and perennial allergic rhinitis or the common
cold.
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·
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BROVEX PSB.
BROVEX PSB is an antihistamine/decongestant administered orally in
a liquid form containing the active pharmaceutical ingredients
pseudoephedrine HCl, a decongestant, and brompheniramine maleate, an
antihistamine. It is indicated for the temporary relief of nasal and sinus
congestion, sneezing, runny nose, and watery eyes that occur from seasonal
and perennial allergic rhinitis.
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·
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BROVEX PSB
DM.
BROVEX PSB DM is an antihistamine administered orally in a
liquid form containing the active pharmaceutical ingredients
pseudoephedrine HCl, a decongestant, brompheniramine maleate, an
antihistamine and dextromethorphan, an antitussive. It is indicated for
the temporary relief of nasal and sinus congestion, coughing, sneezing,
runny nose, and watery eyes that occur from seasonal and perennial
allergic rhinitis or the common
cold.
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·
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BROVEX PSE.
BROVEX PSE is an antihistamine administered orally in tablet form
containing the active pharmaceutical ingredients pseudoephedrine HCl, a
decongestant, and brompheniramine maleate, an antihistamine. It is
indicated for the temporary relief of nasal and sinus congestion,
sneezing, runny nose, and watery eyes that occur from seasonal and
perennial allergic rhinitis.
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·
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BROVEX PSE
DM.
BROVEX PSE DM is an antihistamine administered orally in tablet
form containing the active pharmaceutical ingredients pseudoephedrine HCl,
a decongestant, brompheniramine maleate, an antihistamine, and
dextromethorphan, an antitussive. BROVEX PEB current suggested dosage is 1
tablet four times a day for ages 6 and up. It is indicated for the
temporary relief of nasal and sinus congestion, coughing, sneezing, runny
nose, and watery eyes that occur from seasonal and perennial allergic
rhinitis or the common cold.
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·
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The
API brompheniramine maleate is in the least sedating class of
antihistamines called alkylamines.
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·
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First
generation antihistamines are more effective in treating allergies than
second generation antihistamines.
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·
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Alkylamines
have moderate anticholinergic
effects.
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·
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It
has a well known API, brompheniramine maleate, which doctors feel
comfortable prescribing.
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·
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It
has analgesic-sparing effects on opioid analgesics, which reduce codeine
and hydrocodone requirements by 10 to
35%.
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·
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It
utilizes Kiel’s patented drug release delivery
technology.
|
·
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It
has twice the guaifenesin of many competitive
products.
|
·
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Dextromethorphan,
an effective antitussive, is not a controlled substance like codeine or
hydrocodone.
|
·
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It
can be taken during the day and a narcotic cough suppressant can be taken
at night, helping the patient rest.
|
·
|
It
does not contain an antihistamine. If the patient is on a daily
maintenance antihistamine like Schering-Plough HealthCare Products Inc’s
Clarinex® or McNeil-PPC, Inc.’s Zyrtec®, the doctor can add Z-COF 8DM to
treat new symptoms of nasal and chest congestion accompanied with a cough
without interrupting allergy
therapy.
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·
|
It
is sugar and alcohol free.
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·
|
recognition
that antibiotic therapy has not been successful to the extent one might
have expected. Although it has no doubt solved some medical problems, it
has also created some new ones;
|
·
|
an
increasing awareness of the fact that antibiotic treatment deranges the
protective flora, and thereby predisposes them to the alteration of
infections; and
|
·
|
an
increasing fear of antibiotic-resistant microbial strains, as a result of
widespread over-prescription and misuse of
antibiotics.
|
·
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It
promotes the growth and colonization of microflora, a microorganism in the
intestine that helps digestion, trains the immune system, prevents growth
of harmful species, regulates the development of tissue and produces
vitamins and hormones.
|
·
|
It
is administered in a proprietary
formulation.
|
·
|
It
contains 3 billion CFU, or total viable cells per
tablet.
|
·
|
It
is involved in key biochemical reactions that produce energy in
cells.
|
·
|
It
functions as an antioxidant, which is important in clinical
effects.
|
·
|
It
comes in a smooth dissolve tablet for rapid
absorption.
|
·
|
There
is no gritty or chalky texture.
|
·
|
Continuing
to recruit a results-oriented sales force with performance based incentive
packages and an open, accountable
environment;
|
·
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Enlisting
internal and external product development partnerships to develop
prescription NDA, medical food, OTC monograph products, 510k, 505(b)2 and
branded ANDA regulatory strategies;
|
·
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Focusing
on operational efficiency through an authorized generic partnership with
our authorized generic partner Macoven Pharmaceuticals, which is described
in the section titled “Relationship with Macoven Pharmaceuticals, LLC”
below, and by exploring alternative generic production partners;
and
|
·
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Aggressively
pursuing targeted business development opportunities through
cost-effective acquisitions, and specialty niche products, while being
pediatric focused.
|
·
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Platform
to expand into larger markets
|
·
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Low
cost infrastructure
|
·
|
Effective
sales, marketing, and distribution
|
·
|
Extensive
specialty pharmaceutical management
expertise
|
Customer |
2009
|
2008
|
|||||||
Cardinal
Health
|
37% | 36% | |||||||
McKesson
Corporation
|
32% | 33% | |||||||
Morris
& Dickson
|
13% | 14% |
Manufacturer
|
Product/Product
Candidate
|
Location
|
||
|
|
|||
Denison
Pharmaceuticals
|
Pediatex
TD
|
Pawtucket,
RI
|
||
Sonar
Products
|
Aldex
D, Aldex DM
|
Carlstadt,
NJ
|
||
Avema
Pharma Solutions
|
ReZyst
IM
|
Miami,
FL
|
||
Protoform,
Inc.
|
QuinZyme
|
Westampton,
NJ
|
||
TG
United
|
Brovex
Line
|
Brooksville,
FL
|
Patent
Description
|
Patent
Owners
|
Product(s)
/
Product
Candidate(s)
|
Expiration
|
|||
|
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||||
Process
for preparing control delivery capsule or other solid dosage
forms
|
Kiel
Laboratories
|
ALDEX
AN and ALDEX CT
|
September 25,
2027
|
|||
Process
for preparing control delivery liquid and semi-solid dosage
forms
|
Kiel
Laboratories
|
ALDEX
D, ALDEX DM, PEDIATEX TD and Z COF 8DM
|
August 22,
2026
|
·
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performance
of preclinical laboratory test, animal studies and formulation studies in
compliance with the FDA’s good laboratory practice, or GLP,
regulations;
|
·
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an
investigational new drug application, or IND, submitted to the FDA, which
must become effective before human clinical trials may
commence;
|
·
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an
independent institutional review board (IRB) approval at each clinical
site before each trial may begin;
|
·
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completion
of approved, well-controlled human clinical trials in accordance with good
clinical practices, or GCP, to establish the safety and efficacy of the
proposed drug for each indication;
|
·
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submission
of a new drug application, or NDA, to the
FDA;
|
·
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adequate
completion of an FDA advisory committee audit, if
applicable;
|
·
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adequate
completion of an FDA inspection of the manufacturing facilities at which
the product is produced to evaluate compliance with current good
manufacturing practices, or cGMP, and to assure that the facilities,
methods and controls are satisfactory to preserve the drug’s identity,
strength, quality and
purity; and
|
·
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FDA
review and approval of the NDA.
|
·
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Phase 1:
Healthy human
subjects or patients with the target disease or condition are tested for
safety, dosage tolerance, absorption, metabolism, distribution, excretion
and, if possible, to gain an early indication of its effectiveness, are
initially introduced to the drug.
|
·
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Phase 2:
A limited
patient population is administered the drug 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.
|
·
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Phase 3:
An expanded
patient population is administered the drug generally at geographically
unique clinical trial sites to further evaluate dosage, clinical efficacy
and safety, to establish the overall risk-benefit relationship of the
drug, and to provide adequate information for the labeling of the
drug.
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·
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unrecognized
public health concerns emerge at the time of the protocol
assessment;
|
·
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protocol
that was agreed upon with the FDA has not been followed by a
sponsor;
|
·
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the
information in a request for SPA change, submitted by a sponsor, are found
to be false or contain misstatements or are found to exclude important
facts; or
|
·
|
a
modification of the protocol is agreed upon by the FDA and the sponsor and
such modification is intended to improve the
study.
|
·
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product
recalls, complete withdrawal of the product from the market or
restrictions on the marketing or manufacturing of the
product;
|
·
|
warning
letters, fines or holds on post-approval clinical
trials;
|
·
|
suspension
or revocation of product license approvals, or refusal of the FDA to
approve pending applications or supplements to approved
applications;
|
·
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refusal
to permit the import, or export of products or product seizure or
detention; or
|
·
|
civil
or criminal penalties or
injunctions.
|
·
|
the
required patent information has not been
filed;
|
·
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the
listed patent has expired;
|
·
|
the
listed patent will expire on a particular date, but has not expired and
approval is sought after patent
expiration; or
|
·
|
the
listed patent is unenforceable, invalid or will not be infringed by the
manufacture, sale or use of the new
product.
|
·
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be
a food for oral ingestion or tube feeding (nasogastric
tube);
|
·
|
be
labeled for the dietary management of a specific medical disorder, disease
or condition for which there are distinctive nutritional requirements;
and
|
·
|
be
intended to be used under medical supervision. Medical foods require a
prescription from a physician.
|
·
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regulations
on government backed reimbursement for
drugs;
|
·
|
regulations
on payments to health care providers that affect demand for drug
products;
|
·
|
objections
to the pricing of drugs or limits or prohibitions on reimbursement for
specific products through other
means;
|
·
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waning
of restrictions on imports of
drugs; and
|
·
|
increase
of managed care systems in which health care providers commit to provide
comprehensive health care for a fixed cost per
person.
|
·
|
Federal Anti-Kickback
Law.
The anti-kickback law contained in the federal Social Security
Act is a criminal statute that makes it a felony for individuals or
entities knowingly and intentionally to offer or pay, or to solicit or
receive, direct or indirect remuneration, in order to encourage the
purchase, order, lease, or recommending of items or services, or the
referral of patients for services, that are reimbursed under a federal
health care program, including Medicare and Medicaid. The term
“remuneration” has been interpreted broadly and includes both direct and
indirect compensation and other items and services of value. Both the
party offering and paying remuneration and the recipient may be found to
have violated the statute. Courts have interpreted the anti-kickback law
to cover any situation where one purpose of the remuneration is to
encourage purchases or referrals, despite if there are also legitimate
purposes for the arrangement. There are narrow exemptions and regulatory
safe harbors, but many legitimate transactions fall outside of the scope
of any exemption or safe harbor, although that does not necessarily mean
the arrangement will be subject to penalties under the anti-kickback
statute. Penalties for federal anti-kickback violations are severe,
including up to five years imprisonment, individual and corporate criminal
fines, exclusion from participation in federal health care programs and
civil monetary penalties in the form of treble damages plus $50,000 for
each violation of the statute.
|
·
|
State Laws.
Various
states have enacted laws and regulations comparable to the federal fraud
and abuse laws and regulations. These state laws and regulations may apply
to items or services reimbursed by any third-party payor, including
private, commercial insurers and other payors. Moreover, these laws and
regulations vary significantly from state to state and, in some cases, are
broader than the federal laws and regulations. These differences increase
the costs of compliance and the risk that the same arrangements may be
subject to different compliance standards in different
states.
|
·
|
the
prevalence and severity of any side
effect;
|
·
|
the
efficacy and potential advantages over the alternative
treatments;
|
·
|
the
ability to offer our products for sale at competitive prices, including in
relation to any generic products;
|
·
|
relative
convenience and ease of
administration;
|
·
|
the
willingness of the target patient population to try new therapies and of
physicians to prescribe these
therapies;
|
·
|
the
strength of marketing and distribution support;
and
|
·
|
sufficient
third party coverage or
reimbursement.
|
·
|
ALDEX
Line – Other branded prescription antihistamine, decongestant, and cough
suppressants marketed in the United States, such as WraSer
Pharmaceutical’s VazoTab®, VazoBID
TM
and VazoTan®;
Atley
Pharmaceutical Inc.’s Sudal®-12 and ATuss® DS; Centrix Pharmaceutical
Inc.’s Dicel®.
|
·
|
PEDIATEX
TD – Other branded phenylephrine products, such as Johnson and Johnson’s
Sudafed PE, Wyeth’s Robitussin® CF, McNeil-PPC, Inc.’s Tylenol® Sinus,
Novartis Consumer Health Inc.’s Theraflu®, ALDEX CT, ALDEX D and ALDEX DM;
and other pseudoephedrine products, such as Johnson and Johnson’s
Sudafed®, Burroughs Wellcome Fund’s Actifed®, GlaxoSmithKline plc’s
Contac®, and Schering-Plough HealthCare Products Inc’s
Claritin®-D.
|
·
|
BROVEX
Line – Other antihistamine combination products with the common API
brompheniramine maleate, such as Histex PD 12 ®, Pamlab LLC’s Palgic ®,
McNeil-ppc, Inc’s Zyrtec ® and Vazol-D
®.
|
·
|
Z-COF
8DM – Other antitussive/decongestant/expectorant combination products,
including Johnson and Johnson’s Sudafed®, Wyeth’s Robitussin® DAC and
Robitussin® AC and Reckitt Benckiser Group plc’s
Mucinex®.
|
·
|
REZYST
IM – Other probiotic treatment options, including Lactanax®, Amerifit
Brands Inc.’s Culturelle®, Ganeden Biotech Inc.’s Sustenex®, and BioGaia©
AB’s probiotic products.
|
·
|
QUINZYME
– Currently there are no prescription competitors. Over-The-Counter
ubiquinone products include CoQ10 branded
products.
|
·
|
decreased
demand for our products or any products that we may
develop;
|
·
|
injury
to reputation;
|
·
|
withdrawal
of client trial participants;
|
·
|
withdrawal
of a product from the market;
|
·
|
costs
to defend the related litigation;
|
·
|
substantial
monetary awards to trial participants or
patients;
|
·
|
diversion
of management time and attention;
|
·
|
loss
of revenue; and
|
·
|
the
inability to commercialize any products that we may
develop.
|
·
|
reliance
on third party for regulatory compliance and quality
assurance;
|
·
|
the
possible breach of the manufacturing arrangement by the third party
because of factors beyond our control;
and
|
·
|
the
possible termination or nonrenewal of the manufacturing relationship by
the third party, based on its own business priorities, at a time that is
costly or inconvenient for us.
|
·
|
fines;
|
·
|
injunctions;
|
·
|
civil
penalties;
|
·
|
failure
of regulatory authorities to grant marketing approval of our product
candidates;
|
·
|
FDA
regulatory action against any currently marketed products or products in
development;
|
·
|
delays,
suspension or withdrawal of
approvals;
|
·
|
suspension
of manufacturing operations;
|
·
|
license
revocation;
|
·
|
seizures
or recalls of products or product
candidates;
|
·
|
operating
restrictions; and
|
·
|
criminal
prosecutions.
|
·
|
the
level of product sales from our currently marketed products and any
additional products that we may market in the
future;
|
·
|
the
scope, progress, results and costs of clinical development activities for
our product candidates;
|
·
|
the
costs, timing and outcome of regulatory review of our product
candidates;
|
·
|
the
number of, and development requirements for, additional product candidates
that we pursue;
|
·
|
the
costs of commercialization activities, including product marketing, sales
and distribution;
|
·
|
the
costs and timing of establishing manufacturing and supply arrangements for
clinical and commercial supplies of our product
candidates;
|
·
|
the
extent to which we acquire or invest in products, businesses and
technologies;
|
·
|
the
extent to which we choose to establish collaboration, co-promotion,
distribution or other similar arrangements for our products and product
candidates; and
|
·
|
the
costs of preparing, filing and prosecuting patent applications and
maintaining, enforcing and defending intellectual property-related
claims.
|
·
|
our
operating results, including the amount and timing of sales of our
products;
|
·
|
the
availability and timely delivery of a sufficient supply of our
products;
|
·
|
our
licensing and collaboration agreements and the products or product
candidates that are the subject of those
agreements;
|
·
|
the
results of discoveries, preclinical studies and clinical trials by us or
our competitors;
|
·
|
the
acquisition of technologies, product candidates or products by us or our
competitors;
|
·
|
the
development of new technologies, product candidates or products by us or
our competitors;
|
·
|
regulatory
actions with respect to our product candidates or products or those of our
competitors; and
|
·
|
significant
acquisitions, strategic partnerships, joint ventures or capital
commitments by us or our
competitors.
|
·
|
delaying,
deferring or preventing a change in
control;
|
·
|
impeding
a merger, consolidation, takeover or other business
combination; or
|
·
|
discouraging
a potential acquirer from making an acquisition proposal or otherwise
attempting to obtain control.
|
·
|
period-to-period
fluctuations in financial results;
|
·
|
issues
in manufacturing products;
|
·
|
unanticipated
potential product liability
claims;
|
·
|
new
or increased competition from
generics;
|
·
|
the
introduction of technological innovations or new commercial products by
competitors;
|
·
|
changes
in the availability of reimbursement to the patient from third-party
payers for our
products;
|
·
|
the
entry into, or termination of, key agreements, including key strategic
alliance agreements;
|
·
|
the
initiation of litigation to enforce or defend any of our intellectual
property rights;
|
·
|
the
loss of key employees;
|
·
|
the
results of pre-clinical testing, IND application, and potential clinical
trials of some product candidates;
|
·
|
regulatory
changes;
|
·
|
the
results and timing of regulatory reviews relating to the approval of
product candidates;
|
·
|
the
results of clinical trials conducted by others on products that would
compete with our products and product
candidates;
|
·
|
failure
of any of our products or product candidates to achieve commercial
success;
|
·
|
general
and industry-specific economic conditions that may affect research and
development expenditures;
|
·
|
future
sales of our common stock; and
|
·
|
changes
in the structure of health care payment systems resulting from proposed
healthcare legislation or
otherwise.
|
·
|
successful
completion of pre-clinical laboratory and animal
testing;
|
·
|
approval
by the FDA of an investigational new drug application or IND application,
which must occur before human clinical trials may
commence;
|
·
|
successful
completion of clinical trials;
|
·
|
receipt
of marketing approvals from the
FDA;
|
·
|
establishing
commercial manufacturing arrangements with third party
manufacturers;
|
·
|
launching
commercial sales of the product;
|
·
|
acceptance
of the product by patients, the medical community and third party
payors;
|
·
|
competition
from other therapies;
|
·
|
achieving
and maintaining compliance with all regulatory requirements applicable to
the product; and
|
·
|
a
continued acceptable safety profile of the product following
approval.
|
·
|
regulators
or institutional review boards may not authorize us to commence a clinical
trial or conduct a clinical trial at a prospective trial
site;
|
·
|
our
clinical trials may produce negative or inconclusive results, and we may
decide, or regulators may require us, to conduct additional clinical
trials or we may abandon projects that we expect to be
promising;
|
·
|
the
number of patients required for our clinical trials may be larger than we
anticipate, enrollment in our clinical trials may be slower than we
anticipate, or participants may drop out of our clinical trials at a
higher rate than we anticipate;
|
·
|
our
third party contractors may fail to comply with regulatory requirements or
meet their contractual obligations to us in a timely
manner;
|
·
|
we
might have to suspend or terminate our clinical trials if the participants
are being exposed to unacceptable health
risks;
|
·
|
regulators
or institutional review boards may require that we hold, suspend or
terminate clinical research for various reasons, including noncompliance
with regulatory requirements;
|
·
|
the
cost of our clinical trials may be greater than we
anticipate;
|
·
|
the
supply or quality of our product candidates or other materials necessary
to conduct our clinical trials may be insufficient or inadequate;
and
|
·
|
the
effects of our product candidates may not be the desired effects or may
include undesirable side effects or the product candidates may have other
unexpected characteristics.
|
·
|
be
delayed in obtaining marketing approval for one or more of our product
candidates;
|
·
|
not
be able to obtain marketing
approval;
|
·
|
obtain
approval for indications that are not as broad as intended;
or
|
·
|
have
the product removed from the market after obtaining marketing
approval.
|
·
|
a
covered benefit under its health
plan;
|
·
|
safe,
effective and medically necessary;
|
·
|
appropriate
for the specific patient;
|
·
|
cost-effective;
and
|
·
|
neither
experimental nor investigational.
|
·
|
withdrawal
of the products from the market;
|
·
|
restrictions
on the marketing or distribution of such
products;
|
·
|
restrictions
on the manufacturers or manufacturing
processes;
|
·
|
warning
letters;
|
·
|
refusal
to approve pending applications or supplements to approved applications
that we submit;
|
·
|
recalls;
|
·
|
fines;
|
·
|
suspension
or withdrawal of regulatory
approvals;
|
·
|
refusal
to permit the import or export of our
products;
|
·
|
product
seizure; or
|
·
|
injunctions
or the imposition of civil or criminal
penalties.
|
·
|
The
federal healthcare anti-kickback statute prohibits, among other things,
persons from knowingly and willfully soliciting, offering, receiving or
providing remuneration, directly or indirectly, in cash or in kind, to
induce or reward either the referral of an individual for, or the
purchase, order or recommendation of, any good or service, for which
payment may be made under federal healthcare programs such as Medicare and
Medicaid.
|
·
|
The
Ethics in Patient Referrals Act, commonly referred to as the Stark Law,
and its corresponding regulations, prohibit physicians from referring
patients for designated health services reimbursed under the Medicare and
Medicaid programs to entities with which the physicians or their immediate
family members have a financial relationship or an ownership interest,
subject to narrow regulatory
exceptions.
|
·
|
The
federal False Claims Act imposes criminal and civil penalties, including
civil whistleblower or
qui tam
actions,
against individuals or entities for knowingly presenting, or causing to be
presented, to the federal government, claims for payment that are false or
fraudulent or making a false statement to avoid, decrease, or conceal an
obligation to pay money to the federal
government.
|
·
|
The
federal Health Insurance Portability and Accountability Act of 1996, or
HIPAA, imposes criminal and civil liability for executing a scheme to
defraud any healthcare benefit program and also imposes obligations,
including mandatory contractual terms, with respect to safeguarding the
privacy, security and transmission of individually identifiable health
information.
|
·
|
The
federal false statements statute prohibits knowingly and willfully
falsifying, concealing or covering up a material fact or making any
materially false statement in connection with the delivery of or payment
for healthcare benefits, items or
services.
|
·
|
Analogous
state laws and regulations, such as state anti-kickback and false claims
laws, may apply to sales or marketing arrangements and claims involving
healthcare items or services reimbursed by non-governmental third party
payors, including private insurers, and some state laws require
pharmaceutical companies to comply with the pharmaceutical industry’s
voluntary compliance guidelines and the relevant compliance guidance
promulgated by the federal
government.
|
·
|
We
may be unable to license or acquire the relevant products, product
candidates or technologies on terms that would allow us to make an
appropriate return on investment;
|
·
|
Companies
that perceive us as a competitor may be unwilling to license or sell their
product rights or technologies to
us;
|
·
|
We
may be unable to identify suitable products, product candidates or
technologies within our areas of
expertise; and
|
·
|
We
may have inadequate cash resources or may be unable to obtain financing to
acquire rights to suitable products, product candidates or technologies
from third parties.
|
·
|
use
of cash resources;
|
·
|
higher
than anticipated acquisition costs and
expenses;
|
·
|
potentially
dilutive issuances of equity
securities;
|
·
|
the
incurrence of debt and contingent liabilities, impairment losses or
restructuring charges;
|
·
|
large
write-offs and difficulties in assessing the relative percentages of
in-process research and development expense that can be immediately
written off as compared to the amount that must be amortized over the
appropriate life of the
asset; and
|
·
|
amortization
expenses related to other intangible
assets.
|
·
|
challenges
associated with managing an increasingly diversified
business;
|
·
|
disruption
of our ongoing business;
|
·
|
difficulty
and expense in assimilating the operations, products, technology,
information systems or personnel of the acquired
company;
|
·
|
diversion
of management’s time and attention from other business
concerns;
|
·
|
inability
to maintain uniform standards, controls, procedures and
policies;
|
·
|
the
assumption of known and unknown liabilities of the acquired company,
including intellectual property
claims; and
|
·
|
subsequent
loss of key personnel.
|
·
|
the
potential disruption of our ongoing business and distraction of
management;
|
·
|
the
potential strain on our financial and managerial controls and reporting
systems and procedures;
|
·
|
unanticipated
expenses and potential delays related to integration of the operations,
technology and other resources of the two
companies;
|
·
|
the
impairment of relationships with employees, suppliers and customers as a
result of any integration of new management
personnel;
|
·
|
greater
than anticipated costs and expenses related to
integration; and
|
·
|
potential
unknown or currently unquantifiable liabilities associated with the Merger
and the combined operations.
|
Year
Ended
December 31,
|
||||||||
2009
|
2008
|
|||||||
Gross
Product Sales
|
||||||||
ALDEX
Family
|
$ | 18,390 | $ | 17,642 | ||||
PEDIATEX
Family
|
5,699 | 1,466 | ||||||
BROVEX
Family
|
5,796 | — | ||||||
Z-COF
Family
|
7,756 | 7,429 | ||||||
REZYST
Family
|
285 | — | ||||||
QUINZYME
|
55 | — | ||||||
Collaboration
Revenue
|
292 | — | ||||||
Gross
Sales
|
$ | 38,273 | $ | 26,537 | ||||
Adjustments
|
229 | (226 | ) | |||||
Discounts
|
(2,938 | ) | (1,879 | ) | ||||
Allowance
for Returns
|
(2,810 | ) | (1,985 | ) | ||||
Medicaid
Rebate Expense
|
(4,824 | ) | (1,791 | ) | ||||
Net
Sales Revenues
|
$ | 27,930 | $ | 20,656 |
·
|
the
nature of the estimate or assumption is material due to the level of
subjectivity and judgment necessary to account for highly uncertain
matters or the susceptibility of such matters to change;
and
|
·
|
the
impact of the estimates and assumptions on its financial condition or
operating performance is material.
|
Sales
Returns
|
Rebates
|
Discounts
|
||||||||||
(In
Thousands)
|
||||||||||||
Balance
at December 31, 2007
|
$ | 1,922,000 | $ | 616,000 | $ | 354,000 | ||||||
Current
provision
|
1,985,000 | 1,791,000 | 1,879,000 | |||||||||
Payments
and credits
|
(1,521,000 | ) | (1,669,000 | ) | (1,524,000 | ) | ||||||
Balance
at December 31, 2008
|
2,386,000 | 738,000 | 709,000 | |||||||||
Current
provision
|
2,810,000 | 4,824,000 | 2,938,000 | |||||||||
Payments
and credits
|
(1,221,000 | ) | (3,261,000 | ) | (3,127,000 | ) | ||||||
Balance
at December 31, 2009
|
$ | 3,975,000 | $ | 2,301,000 | $ | 647,000 |
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Cash
provided by (used in)
|
||||||||
Operating
activities
|
$ | 9,943,000 | $ | 8,208,000 | ||||
Investing
activities
|
(733,000 | ) | (245,000 | ) | ||||
Financing
activities
|
(9,506,000 | ) | (3,911,000 | ) | ||||
Net
increase (decrease) in cash and cash
equivalents
|
$ | (296,000 | ) | $ | 4,052,000 |
·
|
the
level of product sales of its currently marketed products and any
additional products that Pernix may market in the
future;
|
·
|
the
scope, progress, results and costs of development activities for Pernix’s
current product candidates;
|
·
|
the
costs, timing and outcome of regulatory review of Pernix’s product
candidates;
|
·
|
the
number of, and development requirements for, additional product candidates
that Pernix pursues;
|
·
|
the
costs of commercialization activities, including product marketing, sales
and distribution;
|
·
|
the
costs and timing of establishing manufacturing and supply arrangements for
clinical and commercial supplies of Pernix’s product candidates and
products;
|
·
|
the
extent to which Pernix acquires or invests in products, businesses and
technologies;
|
·
|
the
extent to which Pernix chooses to establish collaboration, co-promotion,
distribution or other similar arrangements for its marketed products and
product candidates; and
|
·
|
the
costs of preparing, filing and prosecuting patent applications and
maintaining, enforcing and defending claims related to intellectual
property owned by or licensed to
Pernix.
|
Before
Merger and
Reverse
Split (1)
|
After
Merger and
Reverse
Split (2)
|
|||||||||||||||
Name
of Beneficial Owner
|
Number
of
Shares
of
Common
Stock
|
Percentage
of
Class
|
Number
of
Shares
of
Common
Stock
|
Percentage
of
Class
|
||||||||||||
Cooper
C. Collins
|
* | * | 9,405,000 | 38.3 | % | |||||||||||
James
E. Smith, Jr.
|
* | * | 5,225,000 | 21.28 | % | |||||||||||
Anthem
Blanchard
|
* | * | * | |||||||||||||
Tracy
S. Clifford (3)
|
36,667 | * | 30,000 | * | ||||||||||||
Jan
H. Loeb (4)
|
884,100 | 12.02 | % | 462,050 | 1.88 | % | ||||||||||
Michael
C. Pearce (5)
|
211,668 | 2.81 | % | 180,000 | * | |||||||||||
Michael
Venters
|
* | * | * | * | ||||||||||||
David
Waguespack
|
* | * | 2,090,000 | 8.51 | % | |||||||||||
Elizabeth
E. Bonner Deville
|
* | * | 2,090,000 | 8.51 | % | |||||||||||
Brandon
Belanger
|
* | * | 2,090,000 | 8.51 | % | |||||||||||
Directors
and executive officers as a group
|
||||||||||||||||
(7
persons)
|
1,132,435 | 15.48 | % | 15,302,050 | 62.31 | % |
(1)
|
Based
on 7,317,163 common shares outstanding immediately prior to the Merger and
reverse stock split. In accordance with the rules of the Securities and
Exchange Commission, each person’s percentage interest is calculated by
dividing such person’s beneficially owned common shares by the sum of the
total number of common shares outstanding plus the number of options which
will become exercisable within 60 days of March 9, 2010 according to their
respective vesting schedules.
|
(2)
|
Beneficial
ownership reported under the heading “After Merger and Reverse Split”
reflects the change in ownership of our common stock following
consummation of the Merger based on the issuance of 20,900,000 additional
shares of the Registrant’s common stock to the former stockholders of
Pernix, the immediate vesting of all outstanding, unvested options held by
our directors and executive officers pursuant to the Merger Agreement, and
a one for two reverse stock split.
|
(3)
|
Beneficial
ownership reported under the heading “Before Merger and Reverse Split”
includes options to purchase 36,667 shares of our common stock which have
vested and are exercisable as of March 9, 2010, or will become exercisable
within 60 days from that date, and excludes 23,333 options which are
scheduled to vest as follows: (i) 16,667 options on January 18, 2011;
(ii) 3,333 options on February 27, 2011; and (iii) 3,333 options on
February 27, 2012.
|
(4)
|
Mr.
Loeb’s business address is 10451 Mill Run Circle, Owings Mills, Maryland
21117. Mr. Loeb reports that he has sole power to vote or to direct the
vote of 806,100 shares, shared power to vote or to direct the vote of
38,000 shares, sole power to dispose or to direct the disposition of
806,100 shares and shared power to dispose or to direct the disposition of
38,000 shares. Beneficial ownership reported under the heading “Before
Merger and Reverse Split” includes options to purchase 40,000 shares of
our common stock which have vested and are exercisable as of March 9,
2010, or will become exercisable within 60 days from that date, and
excludes 40,000 options which are scheduled to vest as follows: (i) 13,334
options on January 23, 2011; (ii) 13,333 options on March 4,
2011; and (iii) 13,333 options on March 4,
2012.
|
(5)
|
Beneficial
ownership reported under the heading “Before Merger and Reverse Split”
includes options to purchase 211,668 shares of our common stock which have
vested and are exercisable as of March 9, 2010, or will become exercisable
within 60 days from that date, and excludes 148,332 options which are
scheduled to vest as follows: (i) 91,666 on December 24, 2010, (ii)28,333
on February 27,2011, and (iii) 28,333 on February 27,
2012.
|
Name
|
Age
|
Position
|
||
|
|
|||
Michael
C. Pearce
|
48
|
Chairman
of the Board
|
||
Cooper
C. Collins
|
30
|
President
and Chief Executive Officer, and Director
|
||
Jan
H. Loeb
|
51
|
Director
|
||
Anthem
Blanchard
|
29
|
Director
|
||
Jim
Smith
|
57
|
Director
|
||
Tracy
S. Clifford
|
41
|
Chief
Financial Officer, Treasurer and Secretary
|
||
Michael
Venters
|
44
|
Executive
Vice President of Operations
|
·
|
Public
company management
|
·
|
Strategic
planning
|
·
|
Sales
and marketing knowledge and
experience
|
·
|
Business
development
|
·
|
Operational
knowledge of our company
|
·
|
Sales
and marketing knowledge and
experience
|
·
|
Strategic
planning
|
·
|
Finance
|
·
|
Public
company management
|
·
|
Audit
Committee experience
|
·
|
Emerging
company management
|
·
|
Business
development
|
·
|
Finance
|
·
|
Legal
|
·
|
Private
company management
|
·
|
Operational
knowledge of our company
|
(a)
|
Financial
statements of business acquired. Audited financial statements
of Pernix Therapeutics, Inc. for the fiscal years ended December 31, 2009
and 2008.
|
(b)
|
Pro
forma financial information. Combined audited pro forma balance
sheet of Pernix Therapeutics, Inc. at December 31, 2009 and Golf Trust of
America, Inc. at December 31, 2009.
|
(d)
|
Exhibits
|
Exhibit
No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger By and Among Golf Trust of America, Inc., GTA
Acquisition, LLC and Pernix Therapeutics, Inc. dated as of October 6, 2009
(previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed
on October 7, 2009, and incorporated herein by
reference)
|
|
Articles
of Incorporation, as currently in effect
|
||
Bylaws,
as currently in effect
|
||
2009
Stock Incentive Plan
|
||
10.2
|
Pharmaceuticals
Agreement dated as of July 27, 2009, by and between Pernix Therapeutics,
Inc. and Macoven Pharmaceuticals, L.L.C.
|
|
Employment
and Non-Compete Agreement, dated December 31, 2008, by and between Pernix
Therapeutics, Inc. and Michal Venters
|
||
Employment
Non-Compete Agreement, dated Jun 1, 2008, by and between Pernix
Therapeutics, Inc. and Cooper Collins
|
||
10.5
|
Form
of Merger Partner Stockholder Agreement (previously filed as Exhibit A to
Exhibit 10.1 to our Current Report on Form 8-K filed on October 7, 2009,
and incorporated herein by reference.
|
|
Letter
from BDO Seidman, LLP to the SEC dated March 12, 2010
|
||
Subsidiaries
of the Company
|
||
Consent
of Cherry, Bekeart & Holland, L.L.P.
|
||
Cowen
and Company Healthcare Conference Presentation dated March 10,
2010
|
Historical
as of
December
31, 2009
|
||||||||||||||||
Golf
Trust of
America,
Inc.
|
Pernix
Therapeutics,
Inc.
|
Pro forma
Adjustments
|
Pro
forma
|
|||||||||||||
ASSETS
|
|
|
|
|||||||||||||
Current
Assets
|
|
|||||||||||||||
Cash
and cash equivalents
|
$ | 6,714 | $ | 4,579 | $ | (383) | (e) | $ | 10,910 | |||||||
Note
receivable – current
|
133 | — | — | 133 | ||||||||||||
Accounts
receivable
|
— | 3,836 | — | 3,836 | ||||||||||||
Inventories
|
— | 1,082 | — | 1,082 | ||||||||||||
Prepaids
and other current assets
|
28 | 1,984 | — | 2,012 | ||||||||||||
Deferred
tax asset - current
|
— | — | 2,738 |
(d)
|
2,738 | |||||||||||
Total
current assets
|
6,875 | 11,481 | 2,355 | 20,711 | ||||||||||||
Property
& equipment – net
|
965 | 139 | — | 1,104 | ||||||||||||
Intangible
assets
|
— | 1,409 | — | 1,409 | ||||||||||||
Other
assets – long-term
|
— | 383 | 634 | (d) | 1,017 | |||||||||||
Note
receivable – long-term
|
120 | — | — | 120 | ||||||||||||
TOTAL
ASSETS
|
$ | 7,960 | $ | 13,412 | $ | 2,989 | $ | 24,361 | ||||||||
LIABILITIES
& STOCKHOLDERS’ EQUITY
|
||||||||||||||||
Current
liabilities
|
||||||||||||||||
Accounts
payable
|
$ | 86 | $ | 437 | $ | — | $ | 523 | ||||||||
Accrued
expenses
|
62 | 243 | (29) | (e) | 276 | |||||||||||
Accrued
allowances
|
— | 6,795 | — | 6,795 | ||||||||||||
Accrued
personnel cost
|
— | — | — | — | ||||||||||||
Total current liabilities | 148 | 8,036 | (29 | ) | 8,155 | |||||||||||
Total
Liabilities
|
148 | 8,036 | (29 | ) | 8,155 | |||||||||||
Stockholders
and Non-Controlling Equity
|
||||||||||||||||
Common
Stock
|
73 | — | 172 |
(a)
|
245 | |||||||||||
Additional
Paid in Capital
|
8,982 | 998 | 1,957 | (a)(d) | 11,937 | |||||||||||
Retained
earnings
|
(1,243 | ) | 4,308 | 889 |
(a)
|
3,954 | ||||||||||
Total
Stockholders’ Equity
|
7,812 | 5,306 | 3,018 | 16,136 | ||||||||||||
Non-controlling
equity
|
— | 70 | — | 70 | ||||||||||||
Total
Equity
|
7,812 | 5,376 | 3,018 | 16,206 | ||||||||||||
TOTAL
LIABILITIES & EQUITY
|
$ | 7,960 | $ | 13,412 | $ | 2,989 | $ | 24,361 |
Historical Year
Ended
December
31, 2009
|
|||||||||||||||
Golf
Trust of
America,
Inc.
|
Pernix
Therapeutics,
Inc.
|
Pro forma
Adjustments
|
Pro forma
|
||||||||||||
Net
Sales
|
$ | — | $ | 27,930 | $ | — | $ | 27,930 | |||||||
Costs
and expenses:
|
|||||||||||||||
Cost
of product sales
|
— | 5,437 | — | 5,437 | |||||||||||
Selling
expenses
|
— | 4,742 | — | 4,742 | |||||||||||
Royalty
expenses
|
— | 1,224 | — | 1,224 | |||||||||||
General
and administrative
|
1,562 | 6,388 | (1,064 ) | (b) | 6,886 | ||||||||||
Research
and development expense
|
— | 712 | — | 712 | |||||||||||
Impairment
loss
|
80 | — | — | 80 | |||||||||||
Depreciation
and amortization expense
|
4 | 211 | (16) | (c) | 199 | ||||||||||
Total
costs and expenses
|
1,646 | 18,714 | (1,080) | 19,280 | |||||||||||
Income
(loss) from operation
|
(1,646 | ) | 9,216 | 1,080 | 8,650 | ||||||||||
Other
Income:
|
|||||||||||||||
Interest
income, net
|
96 | 20 | — | 116 | |||||||||||
Other
income
|
— | 2 | — | 2 | |||||||||||
Other
income, net
|
96 | 22 | — | 118 | |||||||||||
Income
(loss) from continuing operations before income tax and non-controlling
interest
|
(1,550 | ) | 9,238 | 1,080 | 8,768 | ||||||||||
Less:
Provision for taxes
|
— | 39 | 3,250 | (d) | 3,289 | ||||||||||
Net
income/(loss) before
non-controlling interest
|
(1,550 | ) | 9,199 | (2,170) | 5,479 | ||||||||||
Net
loss attributable to the
non-controlling interests
|
— | (41) | — | (41) | |||||||||||
Net
income/(loss)
attributable
to controlling interest
|
$ | (1,550 | ) | $ | 9,240 | $ | (2,170) | $ | 5,520 | ||||||
(Loss)/earnings
per share of common stock:
|
|||||||||||||||
Basic
and fully diluted
|
$ | (0.21 | ) | $ | 0.22 | ||||||||||
Weighted
average
number of shares outstanding:
|
|||||||||||||||
(24,558,581) | (a) | ||||||||||||||
Basic
and fully diluted
|
7,317,163 | 41,800,000 | (a) | 24,558,581 |
(a)
|
In
general terms, pursuant to the terms and subject to the conditions set
forth in an Agreement and Plan of Merger (the “Merger Agreement”), dated
as of October 6, 2009, by and among Golf Trust of America, Inc.
(“GTA”), GTA Acquisition LLC (“Transitory Sub”) and Pernix Therapeutics,
Inc. (“Pernix”), Pernix merged (the “Merger”) with and into Transitory
Sub, a wholly-owned subsidiary of GTA, with Transitory Sub as the
surviving corporation. As a condition to the consummation of the Merger,
each share of Pernix common stock was converted into the right to receive
209,000 shares of GTA common stock (representing in the aggregate
20,900,000 shares, after adjusting for the effect of the reverse stock
split, of GTA stock issuable to the stockholders of Pernix in connection
with the Merger) subject to certain
adjustments.
|
·
|
Options
to purchase an aggregate of 20,000 shares of GTA Common Stock at an
exercise price per share of $17.94 issued on February 6, 2000 and
which expired on February 6, 2010 (10,000 options at $35.88 after
giving effect to the reverse stock
split);
|
·
|
Options
to purchase an aggregate of 20,000 shares of GTA Common Stock at an
exercise price per share of $7.85 issued on February 6, 2001 and
expiring on February 6, 2011 (10,000 options at $15.70 after giving
effect to the reverse stock split);
|
·
|
Options
to purchase an aggregate of 275,000 shares of GTA Common Stock at an
exercise price per share of $2.10 issued on December 24, 2007 and
expiring ratably over three years starting on December 24, 2011
(137,500 options at $4.20 after giving effect to the reverse stock
split);
|
·
|
Options
to purchase an aggregate of 50,000 shares of GTA Common Stock at an
exercise price per share of $1.90 issued on January 18, 2008 and
expiring ratably over three years starting on January 18, 2012
(25,000 options at $3.80 after giving effect to the reverse stock
split);
|
·
|
Options
to purchase an aggregate of 160,000 shares of GTA Common Stock at an
exercise price per share of $1.82 issued on January 23, 2008 and
expiring ratably over three years starting on January 23, 2012
(80,000 options at $3.64 after giving effect to the reverse stock
split;
|
·
|
Options
to purchase an aggregate of 95,000 shares of GTA Common Stock at an
exercise price per share of $1.10 issued on February 27, 2009 and
expiring ratably over three years starting on February 27, 2013
(47,500 options at $2.20 after giving effect to the reverse stock split);
and
|
·
|
Options
to purchase an aggregate of 120,000 shares of GTA Common Stock at an
exercise price per share of $0.97 issued on March 4, 2009 and
expiring ratably over three years starting on March 4, 2013 (60,000
options at $1.94 after giving effect to the reverse stock
split).
|
(b)
|
This
adjustment represents the elimination of incremental merger costs and the
compensation and benefits of Michael C. Pearce who, pursuant to the
merger agreement, will be the chairman of the board of directors of the
combined company instead of the chief executive officer offset by an
estimated increase in legal and accounting professional fees and rent
expense.
|
(c)
|
Zinterests,
L.L.C. is a Louisana limited liability company formed on June 23,
2009 of which the members are the stockholders of Pernix prior to the
merger with GTA. Two pieces of improved real estate, one located in
Gonzales Louisana and one located in Magnolia, Texas that both house
certain operations of Pernix were transferred from Pernix to Zinterests,
L.L.C. with such transfer being recorded on August 13, 2009.
Effective August 15, 2009, Pernix entered in to a month to month
lease with Zinterests, L.L.C. for each of these properties. The total
combined monthly rent of both facilities is $4,000. This entry reverses
the depreciation and amortization associated with building and land
transferred to Zinterests, L.L.C. and records the rent expense under the
leases and the related impact on the net income of
Pernix.
|
(d)
|
For
purposes of determining the estimated income tax expense for adjustments
reflected in the unaudited proforma combined and consolidated statement of
operations, a combined U.S. Federal and state statutory rate of
approximately 36.0% has been used. Deferred tax assets at December 31,
2009 consist primarily of inventory reserves, sales returns and allowances
and accrued Medicaid rebates. The effective tax rate of the combined
company could be significantly different than the rates assumed for
purposes of preparing the unaudited proforma combined and consolidated
financial statements for a variety of factors, including post-merger
activities. Due to the limitations that will be imposed on the use of
GTA’s net operating loss carryforwards the Company only recognized a tax
benefit of approximately $756,000 in deferred tax assets resulting from
recognition of approximately $2.2 million of its $85 million in net
operating loss carryforwards..
|
(e)
|
Michael C.
Pearce, received the equivalent of six months of salary and benefits,
approximately $102,000, upon his termination pursuant to his employment
agreement following the Merger. This amount along with his accrued
vacation and the $250,000 balance of the broker fee due to Velocity Health
are reflected as payments at
closing.
|
December 31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 4,578,476 | $ | 4,874,296 | ||||
Accounts
receivable
|
3,836,279 | 2,401,023 | ||||||
Inventory,
net
|
1,081,970 | 1,520,928 | ||||||
Prepaid
expenses and other current assets
|
1,983,797 | 457,216 | ||||||
Total
current assets
|
11,480,522 | 9,253,463 | ||||||
Property
and equipment, net
|
139,456 | 273,323 | ||||||
Other
assets:
|
||||||||
Intangible
assets, net
|
1,409,337 | 1,179,379 | ||||||
Other
long-term assets
|
383,333 | — | ||||||
Assets
held for sale
|
— | 778,679 | ||||||
Total
assets
|
$ | 13,412,648 | $ | 11,484,844 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 436,663 | $ | 70,795 | ||||
Accrued
personnel expense
|
560,657 | 909,391 | ||||||
Accrued
allowances
|
6,795,542 | 3,736,826 | ||||||
Other
accrued expenses
|
243,578 | 326,130 | ||||||
Total
current liabilities
|
8,036,440 | 5,043,142 | ||||||
EQUITY
|
||||||||
Common
stock, no par value; 300 and 1,000 shares authorized; 200
shares
issued and outstanding at December 31, 2009 and 2008
|
— | — | ||||||
Additional
paid-in capital
|
997,979 | — | ||||||
Retained
earnings
|
4,308,491 | 6,331,210 | ||||||
Total
stockholders’ equity – Pernix Therapeutics, Inc.
|
5,306,470 | 6,331,210 | ||||||
Non-controlling
interest
|
69,738 | 110,492 | ||||||
Total
equity
|
5,376,208 | 6,441,702 | ||||||
Total
liabilities and equity
|
$ | 13,412,648 | $ | 11,484,844 |
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Net
sales
|
$ | 27,930,352 | $ | 20,655,807 | ||||
Costs
and expenses:
|
||||||||
Cost
of product sales
|
5,436,818 | 4,873,117 | ||||||
Selling
expenses
|
4,742,605 | 4,340,655 | ||||||
General
and administrative expense
|
6,388,212 | 3,709,299 | ||||||
Research
and development expense
|
711,780 | 166,671 | ||||||
Royalties
expense
|
1,223,825 | — | ||||||
Depreciation
and amortization expense
|
210,785 | 154,583 | ||||||
Gain
on disposal
|
— | (68,121 | ) | |||||
Impairment
of intangible assets
|
— | 172,222 | ||||||
Total
costs and expenses
|
18,714,025 | 13,348,426 | ||||||
Income
from operations
|
9,216,327 | 7,307,381 | ||||||
Other
income (expense)
|
||||||||
Interest
income, net
|
19,587 | 7,134 | ||||||
Other
income
|
2,036 | 295,550 | ||||||
Total
other income, net
|
21,623 | 302,684 | ||||||
Income
before income taxes and non-controlling interest
|
9,237,950 | 7,610,065 | ||||||
Provision
for income taxes
|
39,000 | 112,593 | ||||||
Net
income before non-controlling interest
|
9,198,950 | 7,497,472 | ||||||
Net
income attributable to non-controlling interest
|
(40,754 | ) | 45,834 | |||||
Net
income attributable to controlling interest
|
$ | 9,239,704 | $ | 7,451,638 |
Common
Stock
|
Additional
Paid-In
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Non-
Controlling
Interest
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2007
|
$ | 606 | 1,039,294 | $ | (2,750,000 | ) | $ | 4,085,711 | $ | 186,744 | $ | 2,562,355 | ||||||||||||
Stock
repurchase
|
— | — | (875,000 | ) | — | — | (875,000 | ) | ||||||||||||||||
Reissuance
of Treasury Stock
|
— | — | 99,000 | — | — | 99,000 | ||||||||||||||||||
Distributions
|
— | — | — | (2,842,125 | ) | — | (2,842,125 | ) | ||||||||||||||||
Transfer
of ownership
in
Gaine to Pernix
|
— | 122,086 | — | — | (122,086 | ) | — | |||||||||||||||||
Retirement
of treasury stock
|
(406 | ) | (1,161,580 | ) | 3,526,000 | (2,364,014 | ) | — | — | |||||||||||||||
Conversion
of $1 par value
common
stock to $0 par
value
common stock
|
(200 | ) | 200 | — | — | — | — | |||||||||||||||||
Net
income
|
— | — | — | 7,451,638 | 45,834 | 7,497,472 | ||||||||||||||||||
Balance
at December 31, 2008
|
$ | — | $ | — | $ | — | $ | 6,331,210 | $ | 110,492 | $ | 6,441,702 | ||||||||||||
Distributions
to stockholders:
|
||||||||||||||||||||||||
Transfer
of land and
buildings
to affiliate
|
— | 316,979 | — | (1,310,000 | ) | — | (993,021 | ) | ||||||||||||||||
Deconsolidation
of Macoven
|
— | — | — | (496,823 | ) | — | (496,823 | |||||||||||||||||
Distributions
|
— | — | — | (9,455,600 | ) | — | (9,455,600 | ) | ||||||||||||||||
Stock
compensation expense
|
— | 681,000 | — | — | — | 681,000 | ||||||||||||||||||
Net
income (loss)
|
— | — | — | 9,239,704 | (40,754 | ) | 9,198,950 | |||||||||||||||||
Balance
at December 31, 2009
|
$ | — | $ | 997,979 | $ | — | $ | 4,308,491 | $ | 69,738 | $ | 5,376,208 |
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 9,198,950 | $ | 7,497,472 | ||||
Adjustments
to reconcile net income to
net
cash provided by operating activities:
|
||||||||
Depreciation
and amortization
|
210,785 | 154,583 | ||||||
Provision
for allowance for returns
|
859,801 | 463,612 | ||||||
Impairment
of intangibles
|
— | 172,222 | ||||||
Stock
compensation expense
|
681,000 | — | ||||||
Gain
on disposition of equipment
|
— | (68,121 | ) | |||||
Gain
on extinguishment of accounts payable
|
— | (289,300 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(1,650,858 | ) | (238,731 | ) | ||||
Inventory
|
579,012 | 76,849 | ||||||
Prepaid
expenses and other assets
|
(1,709,378 | ) | (261,319 | ) | ||||
Other
assets – long term
|
(383,333 | ) | — | |||||
Accounts
payable
|
389,464 | (381,248 | ) | |||||
Accrued
expenses
|
1,767,629 | 1,082,074 | ||||||
Net
cash provided by operating activities
|
9,943,072 | 8,208,093 | ||||||
Cash
flows from investing activities:
|
||||||||
Proceeds
from sale of equipment
|
— | 206,077 | ||||||
Asset
acquisition of BROVEX
|
(450,000 | ) | — | |||||
Purchase
of intangible assets
|
(170,277 | ) | (260,000 | ) | ||||
Purchase
of equipment and payments for construction in progress
|
(112,183 | ) | (190,790 | ) | ||||
Net
cash used in investing activities
|
(732,460 | ) | (244,713 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Payments
on long-term debt
|
— | (292,580 | ) | |||||
Distributions
to stockholders
|
(9,455,600 | ) | (2,842,125 | ) | ||||
Deconsolidation
of Macoven
|
(50,832 | ) | — | |||||
Purchase
of treasury stock
|
— | (875,000 | ) | |||||
Reissuance
of treasury stock
|
— | 99,000 | ||||||
Net
cash used in financing activities
|
(9,506,432 | ) | (3,910,705 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
|
(295,820 | ) | 4,052,675 | |||||
Cash
and cash equivalents, beginning of year
|
4,874,296 | 821,621 | ||||||
Cash
and cash equivalents, end of year
|
$ | 4,578,476 | $ | 4,874,296 | ||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||
Interest
paid during the period
|
$ | — | $ | 14,454 | ||||
Non-cash
transactions:
|
||||||||
Distribution
of property including gain of approximately $317,000 recognized in
additional paid-in-capital
|
1,310,000 | — | ||||||
Deconsolidation
of Macoven
|
445,991 | — | ||||||
Retirement
of treasury stock
|
— | 3,526,000 | ||||||
Transfer
of ownership in Gaine to Pernix
|
— | 122,086 |
Note
1.
|
Organization
and Merger
|
Note
2.
|
Summary
of Significant Accounting Policies
|
Service
Life
|
|
Buildings
|
39
years
|
Machinery
and equipment
|
5-7
years
|
Furniture
and fixtures
|
5-7
years
|
Vehicles
|
5
years
|
Computer
software
|
3
years
|
2009
|
2008
|
|||||||
Gross
product sales
|
$ | 38,210,595 | $ | 26,310,204 | ||||
Collaboration
revenue
|
291,569 | — | ||||||
Sales
discounts
|
(2,937,791 | ) | (1,878,787 | ) | ||||
Sales
returns allowance
|
(2,809,897 | ) | (1,985,000 | ) | ||||
Medicaid
rebates
|
(4,824,124 | ) | (1,790,610 | ) | ||||
Net
sales
|
$ | 27,930,352 | $ | 20,655,807 |
Note
3.
|
Fair
Value Measurement
|
Level
1—
|
Quoted
prices in active markets for identical assets or
liabilities.
|
Level
2—
|
Observable
inputs other than Level 1 prices such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market
data for
substantially the full term of the assets or liabilities. |
Level
3—
|
Unobservable
inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. Level 3 assets
and liabilities include financial instruments whose value is determined
using
pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Note
4.
|
Asset
Acquisition
|
Inventories
|
$
|
211,000
|
||
Intangible
assets – trade name
|
239,000
|
|||
Total
|
$
|
450,000
|
Note
5.
|
Collaborations
|
December
31,
|
||||||
2009
|
2008
|
|||||
Net
product sales
|
$ | 27,638,783 | $ | 20,655,807 | ||
Collaboration
and other revenue
|
291,569 | — | ||||
Net
Sales
|
$ | 27,930,352 | $ | 20,655,807 |
Note
6.
|
Accounts
Receivable
|
December
31,
|
|||||||
2009
|
2008
|
||||||
Trade
accounts receivable
|
$ | 3,963,852 | $ | 2,496,167 | |||
Less
allowance for discounts
|
(127,573 | ) | (95,144 | ) | |||
$ | 3,836,279 | $ | 2,401,023 |
Note
7.
|
Inventory
|
December
31,
|
||||||||
2009
|
2008
|
|||||||
Purchased
finished goods
|
$ | 1,081,970 | $ | 1,520,928 | ||||
Purchased
samples
|
591,880 | 285,437 | ||||||
1,673,850 | 1,806,365 | |||||||
Less
allowance for samples inventory
|
(591,880 | ) | (285,437 | ) | ||||
$ | 1,081,970 | $ | 1,520,928 |
Note
8.
|
Property,
Plant & Equipment
|
December 31,
|
||||||||
2009
|
2008
|
|||||||
Land
|
$ | — | $ | 71,078 | ||||
Buildings
|
— | 179,363 | ||||||
Equipment
|
182,185 | 158,503 | ||||||
Furniture
and fixtures
|
24,596 | 24,596 | ||||||
Computer
software and website
|
88,500 | — | ||||||
295,281 | 433,540 | |||||||
Less
accumulated depreciation
|
(155,825 | ) | (160,217 | ) | ||||
$ | 139,456 | $ | 273,323 |
Note
9.
|
Prepaid
Expenses and Other Current Assets
|
December 31,
|
||||||||
2008
|
2008
|
|||||||
Prepaid
expenses
|
$ | 119,123 | $ | 16,847 | ||||
Deposits
on inventory
|
506,596 | 440,369 | ||||||
Deferred
taxes
|
61,000 | — | ||||||
Due
from collaboration arrangements (see Note 5)
|
297,078 | — | ||||||
Current
unamortized research and development fees related to Macoven contract (see
Note 5)
|
1,000,000 | — | ||||||
Total
|
$ | 1,983,797 | $ | 457,216 |
Note
10.
|
Employee
Compensation and Benefits
|
Note
11.
|
Major
Customers
|
Gross
Product Sales
|
For
the years ended
December 31,
|
|||||||
2009
|
2008
|
|||||||
Cardinal
Health, Inc.
|
37% | 36% | ||||||
McKesson
Corporation
|
32% | 33% | ||||||
Morris
& Dickson
|
13% | 14% | ||||||
Total
|
82% | 83% |
Accounts
Receivable
|
As
of December 31,
|
|||||||
2009
|
2008
|
|||||||
Cardinal
Health, Inc.
|
17% | 36% | ||||||
McKesson
Corporation
|
62% | 33% | ||||||
Morris
& Dickson
|
10% | 14% | ||||||
Total
|
89% | 83% |
Note
12.
|
Intangible
Assets
|
December 31,
|
|||||||||
Life
|
2009
|
2008
|
|||||||
Patent
|
12
years
|
$ | 500,000 | $ | 500,000 | ||||
Product
licenses and rights – Kiel technology
|
15
years
|
700,000 | 600,000 | ||||||
Product
license - Ubiquinone
|
3
years
|
— | 260,000 | ||||||
Non-compete
- Ubiquinone
|
2
years
|
250,000 | 260,000 | ||||||
Trademark
rights - Brovex
|
Infinite
|
238,758 | — | ||||||
1,688,758 | 1,360,000 | ||||||||
Accumulated
amortization
|
(279,421 | ) | (180,621 | ) | |||||
$ | 1,409,337 | $ | 1,179,379 |
Year
ending December 31,
|
Amount
|
|||
2010
|
$ | 219,000 | ||
2011
|
198,000 | |||
2012
|
94,000 | |||
2013
|
94,000 | |||
2014
|
94,000 | |||
Thereafter
|
472,000 | |||
$ | 1,171,000 |
Note
13.
|
Accrued
Allowances
|
December 31,
|
||||||||
2009
|
2008
|
|||||||
Accrued
returns allowance
|
|
$
|
3,975,000
|
|
|
$
|
2,385,333
|
|
Accrued
contracted vendor discounts
|
519,542
|
613,914
|
||||||
Accrued
Medicaid rebates
|
2,301,000
|
737,579
|
||||||
Total
|
$ |
6,795,542
|
$ |
3,736,826
|
Note
14.
|
Commitments
and Contingencies
|
·
|
The
Company receives data packages on a monthly basis from a third party
provider. The Company is obligated to pay for these services in advance on
a quarterly basis. Pernix is contracted to pay approximately $16,000
quarterly for these services until the contract expires on
February 28, 2011.
|
·
|
The
Company utilizes a third-party warehousing and order processing service
provider that handles receipt and shipping of goods, return processing,
product recalls, as well as additional services. In addition to the
payment of weekly fees based on services rendered, Pernix paid
the third party a one-time implementation fee of approximately $11,000,
which is to be amortized over two years. Additionally, the third-party
will be used to service various reporting requirements which has an agreed
upon fee of $5,000.
|
Note
15.
|
Income
Taxes
|
Year
ending December 31,
|
||||||||
2009
|
2008
|
|||||||
Current:
|
||||||||
Federal
|
$ | (37,900 | ) | $ | 95,931 | |||
State
|
95,500 | 16,662 | ||||||
57,600 | 112,593 | |||||||
Deferred
Provision:
|
||||||||
Federal
|
(16,600 | ) | — | |||||
State
|
(2,000 | ) | — | |||||
(18,600 | ) | — | ||||||
$ | 39,000 | $ | 112,593 |
Note
16.
|
Stockholders’
Equity
|
·
|
$1,225
per share declared on February 29, 2008 and paid on May 1, 2008
representing a total distribution of
$233,975;
|
·
|
$3,650
per share declared and paid on April 3, 2008 representing a total
distribution of $1,208,150; and,
|
·
|
$7,000
per share declared and paid on December 1, 2008 representing a total
distribution of $1,400,000.
|
·
|
$15,538
per share declared and paid on March 3, 2009 representing a total
distribution of $3,107,600;
|
·
|
$5,000
per share declared and paid on April 17, 2009 representing a total
distribution of $1,000,000; and,
|
·
|
$10,000
per share declared and paid on June 22, 2009 representing a total
distribution of $2,000,000.
|
·
|
$16,740
per share declared on December 2, 2009 and paid on December 7, 2009,
representing a total distribution of
$3,348,000.
|
Note
17.
|
Restatement
|
·
|
The
combined and consolidated financial statements have been restated to
include Gaine. See Note 1.
|
·
|
In
addition to the inclusion of Gaine, the most significant adjustments and
reclassifications are as follows:
|
·
|
Correction
of an error for improperly recording sales returns and allowances which
had a net income impact for the year ended December 31, 2008 of
approximately $452,000.
|
·
|
Correction
of an error to properly record Medicaid rebate payable which had a net
income impact for the year ended December 31, 2008 of approximately
$34,000.
|
·
|
Correction
of an error in recording license purchase agreement to intangible assets
and accrued expenses of approximately $260,000 for the year ended
December 31, 2008.
|
·
|
Correction
of an error to reclass shareholder advances of approximately $2,842,000 to
dividends for the year ended December 31,
2008.
|
·
|
Correction
of error for certain prepaid expenses that were incorrectly expensed which
had a net income impact of approximately $373,000 for the year ended
December 31, 2008.
|
·
|
Reclassification
of Medicaid rebate expense to net sales from operating expenses of
approximately $1,791,000 for the year ended December 31,
2008.
|
·
|
Reclassification
of vendor rebates and discounts to accrued expenses from accounts
receivable of approximately $614,000 for the year ended December 31,
2008.
|
·
|
Reclassification
of sales discounts to sales from cost of sales of approximately $709,000
for the year ended December 31,
2008.
|
·
|
Certain
other adjustments, reclassifications and eliminating entries which were
immaterial individually and in the
aggregate.
|
As
of December 31, 2008
|
||||||||||||
Previously
Issued
|
Adjustments
|
As
restated
|
||||||||||
Balance
sheets:
|
||||||||||||
Cash
and cash equivalents
|
$ | 4,874,296 | $ | — | $ | 4,874,296 | ||||||
Accounts
receivable, net
|
1,768,394 | 632,629 | 2,401,023 | |||||||||
Inventory,
net
|
1,520,928 | — | 1,520,928 | |||||||||
Prepaid
expenses and other current assets
|
232,887 | 224,330 | 457,217 | |||||||||
Advances
to stockholders
|
2,842,125 | (2,842,125 | ) | — | ||||||||
Property
and equipment, net
|
273,323 | — | 273,323 | |||||||||
Intangible
assets, net
|
978,333 | 201,045 | 1,179,378 | |||||||||
Note
receivable
|
— | — | — | |||||||||
Assets
held for sale
|
778,679 | — | 778,679 | |||||||||
Total
assets
|
$ | 13,268,965 | $ | (1,784,121 | ) | $ | 11,484,844 | |||||
Accounts
payable and accrued expenses
|
$ | 1,799,921 | $ | 3,243,221 | $ | 5,043,142 | ||||||
Current
and long-term debt
|
— | — | — | |||||||||
Stockholders
equity
|
11,281,936 | (4,950,726 | ) | 6,331,210 | ||||||||
Noncontrolling
interests
|
187,108 | (76,616 | ) | 110,492 | ||||||||
Total
liabilities and stockholders’ equity
|
$ | 13,268,965 | $ | (1,784,121 | ) | $ | 11,484,844 |
Year
Ended December 31, 2008
|
||||||||||||
Previously
Issued
|
Adjustments
|
As
restated
|
||||||||||
Statements
of operations:
|
||||||||||||
Net
sales
|
$ | 22,859,248 | $ | (2,965,280 | ) | $ | 19,893,968 | |||||
Cost
of sales
|
4,695,060 | (675,282 | ) | 4,019,778 | ||||||||
Operating
expenses
|
10,976,690 | (2,409,882 | ) | 8,566,808 | ||||||||
Other
income (expense), net
|
316,738 | (14,055 | ) | 302,683 | ||||||||
Provision
for income taxes
|
(112,593 | ) | — | (112,593 | ) | |||||||
Net
income attributable to noncontrolling interests
|
102,780 | (56,946 | ) | 45,834 | ||||||||
Net
income attributable to controlling interests
|
$ | 7,288,863 | $ | 162,775 | $ | 7,451,638 |
Note
18.
|
Subsequent
Events
|
PERNIX THERAPEUTICS HOLDINGS, INC. | |||
Dated: March
15, 2010
|
By:
|
/s/ Cooper Collins | |
Cooper Collins | |||
President and Chief Executive Officer | |||
Exhibit
No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger By and Among Golf Trust of America, Inc., GTA
Acquisition, LLC and Pernix Therapeutics, Inc. dated as of October 6, 2009
(previously filed as Exhibit 10.1 to our Current Report on Form 8-K filed
on October 7, 2009, and incorporated herein by
reference)
|
|
Articles
of Incorporation, as currently in effect
|
||
Bylaws,
as currently in effect
|
||
2009
Stock Incentive Plan
|
||
10.2
|
Pharmaceuticals
Agreement dated as of July 27, 2009, by and between Pernix Therapeutics,
Inc. and Macoven Pharmaceuticals, L.L.C.
|
|
Employment
and Non-Compete Agreement, dated December 31, 2008, by and between Pernix
Therapeutics, Inc. and Michael Venters
|
||
Employment
Non-Compete Agreement, dated June 1, 2008, by and between Pernix
Therapeutics, Inc. and Cooper Collins
|
||
10.5
|
Form
of Merger Partner Stockholder Agreement (previously filed as Exhibit A to
Exhibit 10.1 to our Current Report on Form 8-K filed on October 7, 2009,
and incorporated herein by reference)
|
|
Letter
from BDO Seidman to the SEC, dated March 12, 2010
|
||
Subsidiaries
of the Company
|
||
Consent
of Cherry, Bekaert & Holland, L.L.P.
|
||
Cowen
and Company Healthcare Conference Presentation Slides dated March 10,
2010
|
ARTICLE I Offices | 1 | ||||
Section 1. | Principal Office | 1 | |||
Section 2. | Additional Offices | 1 | |||
Section 3. | Fiscal and Taxable Years | 1 | |||
ARTICLE II Definitions | 1 | ||||
ARTICLE III Meetings of Stockholders
|
1 | ||||
Section 1. | Place | 1 | |||
Section 2. | Annual Meeting | 1 | |||
Section 3. | Special Meetings | 3 | |||
Section 4. | Notice | 3 | |||
Section 5. | Organization | 3 | |||
Section 6. | Quorum | 3 | |||
Section 7 | Voting | 3 | |||
Section 8. | Proxies | 3 | |||
Section 9. | Voting of Shares by Certain Holders | 4 | |||
Section 10. | Inspectors | 4 | |||
Section 11. |
Determination of Stockholders of Record
|
4 | |||
Section 12. |
Action Without a Meeting
|
5 | |||
Section 13. | Voting by Ballot | 5 | |||
Section 14. | Control Share Acquisition Statute | 5 |
ARTICLE IV Directors | 5 | ||||
Section 1. | General Powers | 5 | |||
Section 2. | Number, Tenure and Qualifications | 5 | |||
Section 3. | Changes in Number; Vacancies | 5 | |||
Section 4. | Resignations | 6 | |||
Section 5. | Removal of Directors | 6 | |||
Section 6. | Annual and Regular Meetings | 6 | |||
Section 7. | Special Meetings | 6 | |||
Section 8. |
Notice
|
6 | |||
Section 9. | Quorum | 6 | |||
Section 10. | Voting | 7 | |||
Section 11. | Telephone Meetings | 7 | |||
Section 12. |
Action Without a Meeting
|
7 | |||
Section 13. | Compensation | 7 | |||
ARTICLE V Committees | 7 | ||||
Section 1. | Committees of the Board | 7 | |||
Section 2. | Telephone Meetings | 8 | |||
Section 3. | Action By Committees Without a Meeting | 8 | |||
ARTICLE VI Officers | 8 | ||||
Section 1. | General Provisions | 8 | |||
Section 2. | Subordinate Officers, Committees and Agents | 8 | |||
Section 3. | Removal and Resignation | 8 | |||
Section 4. | Vacancies | 8 | |||
Section 5. | General Powers | 8 | |||
Section 6. | Chief Executive Officer | 8 |
Section 7. | Chief Operating Officer | 9 | |||
Section 8. | Chairman and Vice Chairman of the Board | 9 | |||
Section 9. | President | 9 | |||
Section 10. | Vice Presidents | 9 | |||
Section 11. | Secretary | 9 | |||
Section 12. | Chief Financial Officer or Treasurer | 9 | |||
Section 13. | Assistant Secretaries and Assistant Treasurers | 9 | |||
Section 14. | Salaries | 10 | |||
ARTICLE VII Contracts, Notes, Checks and Deposits | 10 | ||||
Section 1. | Contracts | 10 | |||
Section 2.
|
Checks and Drafts | 10 | |||
Section 3. | Deposits | 10 | |||
ARTICLE VIII Capital Shares | 10 | ||||
Section 1. | Certificates of Shares | 10 | |||
Section 3. | Lost Certificate | 10 | |||
Section 4. | Transfer Agents and Registrars | 10 | |||
Section 5. | Transfer of Shares | 11 | |||
Section 6. | Share Ledger | 11 | |||
ARTICLE IX Dividends | 11 | ||||
Section 1. |
Declaration
|
11 | |||
Section 2. | Contingencies | 11 | |||
ARTICLE X Indemnification and Limitation of Liability | 11 | ||||
Section 1. | Indemnification of Agents | 11 | |||
Section 2. | Insurance | 11 | |||
Section 3. | Indemnification Non-Exclusive | 11 | |||
Section 4. | Limitation of Liability | 12 | |||
ARTICLE XI Seal | 12 | ||||
Section 1. | Seal | 12 | |||
Section 2. | Affixing Seal | 12 | |||
ARTICLE XII Waiver of Notice | 12 | ||||
ARTICLE XIII Amendment of Bylaws | 12 |
(1) | As to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; |
(2) | As to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and a representation that the stockholder intends to appear in person or by proxy at the meeting to introduce such proposal; and |
(3) | As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owners, and (ii) the class and number of shares of the Corporation that are owned beneficially and of record by each stockholder and such beneficial owner. |
|
Introduction:
|
1.
|
DEFINITIONS
|
|
1.1.
|
“ACTION
OR PROCEEDING” means any action, suit, proceeding, arbitration, Order,
inquiry, hearing, assessment with respect to fines or penalties, or
litigation (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental or Regulatory
Authority.
|
|
1.2.
|
“APPLICABLE
LAWS” means all applicable statutes, ordinances, regulations, rules or
orders of any kind whatsoever of any government authority or court of
competent jurisdiction, including, without limitation, the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. §301 et
seq.),
|
|
1.3.
|
“PRODUCTS
” means any past, current, and/or future Zyber pharmaceutical product
including, generics for Zyber brand products
.
|
|
1.4.
|
“THIRD
PARTY” means any business entities or individuals other than Zyber or
Macoven Pharmaceuticals.
|
|
1.5.
|
“ADMINISTRATIVE
SERVICES” means any acts/services performed by Zyber, its subsidiaries,
affiliates, or its successor(s) in interest or any acts/services performed
on behalf of Zyber that are performed for the benefit of Macoven
Pharmaceuticals or any of its subsidiaries, affiliates, parents, and/or
successor(s) in interest, regarding the administration, distribution,
and/or management of distribution of any products sold by Macoven
Pharmaceuticals under the terms of this
AGREEMENT.
|
|
1.6.
|
“KNOW-HOW”
means all product specifications; manufacturing, physical chemistry and
formulation know-how; analytical testing methods and validations;
technical knowledge; expertise; skill; practices and procedures; formulae;
trade secrets; confidential information; analytical methodology;
processes; preclinical, clinical, stability and other data and results;
market studies; and all other experience and know-how, in each case in
tangible form and only to the extent related to Zyber and the PRODUCTS,
whether or not patentable, together with inventions and methods (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements to those inventions and
methods.
|
2.
|
TERMS
|
|
2.1.
|
Ownership: Subject
to the other terms and conditions of this AGREEMENT, Zyber and Macoven
Pharmaceuticals acknowledge, agree, and understand that Zyber currently
owns and will retain ownership in all rights of any kind, including but
not limited to intellectual property rights, trademarks, copyrights,
patents, KNOW-HOW, trade secrets, and the like in all of Zyber’s current,
past, and future PRODUCTS. This AGREEMENT does not assign,
transfer, convey, or change those ownership rights in any
way.
|
|
2.2.
|
License: Macoven
Pharmaceuticals acknowledges, agrees, and understands that this AGREEMENT
acts as a non-exclusive license agreement whereby for a one-time fee,
discussed herein pursuant to Section 6, and for a set term, as discussed
herein pursuant to Section 5, Macoven Pharmaceuticals is given the
non-exclusive right to develop, market, and sell generic pharmaceutical
products based on and/or derived from Zyber’s
PRODUCTS.
|
|
2.3.
|
Marketing: Subject
to the other terms and conditions of this AGREEMENT, Zyber and Macoven
Pharmaceuticals acknowledge, agree, and understand that Zyber, its
partners, affiliates, its subsidiaries, and/or its successors in
interests, shall have the right to use any marketing materials developed
by and/or for Macoven Pharmaceuticals for marketing and/or selling any
products developed as a result of this
AGREEMENT.
|
|
2.5.
|
Distribution: Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that
Macoven Pharmaceuticals is responsible for the distribution and marketing
of any products developed as a result of this
AGREEMENT. However, Zyber and Macoven Pharmaceuticals further
acknowledge, agree, and understand that Macoven Pharmaceuticals can choose
to pay Zyber an agreed upon fee, as discussed herein pursuant to Section
8, for Zyber to assist Macoven Pharmaceuticals by providing Administrative
Services, distribution, marketing, and/or other services for the benefit
of Macoven Pharmaceuticals.
|
3.
|
PRODUCT
COMMERCIALIZATION
|
|
3.1.
|
Subject
to the other terms and conditions of this AGREEMENT, Zyber and Macoven
Pharmaceuticals acknowledge, agree, and understand that Zyber retains
complete control over the commercialization and promotion of any and all
products developed, marketed, and sold as a result of this
AGREEMENT.
|
|
3.2.
|
Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that
Macoven Pharmaceuticals will consult with Zyber and obtain Zyber’s consent
prior to partaking in any activity that would be considered the
commercialization and/or promotion of any products developed as a result
of this AGREEMENT.
|
4.
|
MANUFACTURE
OF PRODUCTS
|
|
4.1.
|
Any
products developed as a result of this AGREEMENT will be manufactured at a
location that is acceptable to
Zyber.
|
|
4.2.
|
Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that Zyber
has the right and control to make all final approvals and/or other
decisions regarding the manufacturing of any products developed as a
result of this AGREEMENT.
|
|
4.3.
|
Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that
Macoven Pharmaceuticals is solely responsible for any and all payments to
any manufacturer for the development and/or manufacturing of any products
developed as a result of this
AGREEMENT.
|
5.
|
TERM
|
|
5.1.
|
The
initial term (“INITIAL TERM”) of this AGREEMENT is eighteen (18)
months.
|
|
5.3.
|
The
overall term of this AGREEMENT shall commence on the __________ day of
_____________, 2009, and expire after the INITIAL TERM, unless this
AGREEMENT is terminated sooner by Zyber or unless this AGREEMENT is
renewed pursuant to the terms and conditions
hereof.
|
|
5.4.
|
Zyber
has the right to terminate this AGREEMENT after the INITIAL TERM at
will. Macoven Pharmaceuticals can only terminate this AGREEMENT
with 90 days notice.
|
|
5.5.
|
Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that Zyber
must provide 30 days advance notice to Macoven Pharmaceuticals before
terminating this AGREEMENT.
|
|
5.6.
|
Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that if
both Zyber and Macoven Pharmaceuticals agree to terminate this AGREEMENT,
then this AGREEMENT may be terminated at
anytime.
|
6.
|
PAYMENTS
BY ZYBER TO MACOVEN PHARMACEUTICALS
|
|
6.1.
|
Zyber
agrees to pay to Macoven Pharmaceuticals a one time development and
service fee (“DEVELOPMENT FEE”) of One Million Five Hundred Thousand and
00/100 ($1,500,000.00) for developing, promoting, commercializing,
marketing, and selling any pharmaceutical products that are based on
and/or derived from Zyber’s PRODUCTS. This development and
service fee will be paid in full or partial payments within 10 days of a
request in writing by Macoven Pharmaceuticals. Zyber can deduct
this payment from credit that Zyber has with
Macoven.
|
|
6.2.
|
Upon
execution of this AGREEMENT by the Parties, Zyber agrees to pay Macoven
Pharmaceuticals Twenty Thousand and 00/100 ($20,000.00) dollars
representing payment of a portion of the DEVELOPMENT FEE set forth in
section 6.1 of this AGREEMENT. If for any reason, this
AGREEMENT terminates during the first SIX (6) months, then Macoven
Pharmaceuticals acknowledges, agrees, and understands that Zyber is only
required to pay Macoven Pharmaceuticals one-third (1/3) or thirty-three
percent (33%) of the DEVELOPMENT
FEE.
|
|
6.3.
|
Zyber
agrees to pay Macoven Pharmaceuticals the full DEVELOPMENT FEE by the end
of the INITIAL TERM, unless the AGREEMENT is terminated prior to the
expiration of the INITIAL TERM. In the event that this
AGREEMENT is terminated prior to the INITIAL TERM, payment will be
governed by Section 6.4 of this
AGREEMENT.
|
|
6.4.
|
In
the event of a termination of this AGREEMENT prior to the INITIAL TERM,
Zyber will be responsible for paying Macoven Pharmaceuticals a percentage
of the DEVELOPMENT FEE
|
|
based
upon the number of months that this AGREEMENT has been in effect (“PARTIAL
DEVELOPMENT FEE”).
|
7.
|
PAYMENTS
BY MACOVEN PHARMACEUTICALS TO ZYBER/ OWNERSHIP OF
SALES
|
|
7.1.
|
Macoven
Pharmaceuticals acknowledges, agrees, and understands that all proceeds up
to 1.5 million dollars during the initial term will be the sole and
exclusive property of Zyber.
|
|
7.2.
|
Macoven
Pharmaceuticals acknowledges, agrees, and understands that any and all
payments submitted to Macoven Pharmaceuticals and/or any of its
affiliates, employees, officers, directors, agents, subsidiaries, or
successors, from any THIRD PARTIES for any orders of any products
developed as a result of this AGREEMENT and placed after the execution of
this AGREEMENT are the exclusive property of
Zyber.
|
|
7.3.
|
Macoven
Pharmaceuticals acknowledges, agrees, and understands that at the time of
termination of this AGREEMENT for any reason, any outstanding invoices and
accounts receivables relating to the sale of any products developed as a
result of this AGREEMENT will be the exclusive property of and belong to
Zyber. Macoven Pharmaceuticals hereby assigns to Zyber full
ownership of any accounts receivables and outstanding invoices relating to
sales of any products developed as a result of this
AGREEMENT.
|
|
7.4.
|
Macoven
Pharmaceuticals acknowledges, agrees, and understands that it is
responsible for any and all costs and fees, including but not limited to
attorney’s fees, incurred and/or associated with collecting any sales
proceeds associated with the sale of any products developed as a result of
this AGREEMENT. Macoven Pharmaceuticals acknowledges and agrees
that it will reimburse Zyber for any costs and/or fees, including but not
limited to attorney’s fees, incurred and/or expended by Zyber in
collecting sales proceeds associated with the sale of any products
developed as a result of this
AGREEMENT.
|
|
7.5.
|
Macoven
Pharmaceuticals agrees to forward all payments due Zyber pursuant to the
terms of Sections 7.1 to 7.4 to Zyber on at least the 15
th
and 30
th
of each month
|
8.
|
PAYMENT
FOR ZYBER’S ADMINISTRATIVE SERVICES
|
|
8.1.
|
Zyber
and Macoven Pharmaceuticals acknowledge, agree, and understand that
Macoven Pharmaceuticals will pay Zyber ten percent (10%) of net profit for
Zyber providing ADMINISTRATIVE SERVICES and managing all of Macoven
Pharmaceuticals generic products.
|
9.
|
MISCELLANEOUS
|
|
9.1.
|
The
scope of this AGREEMENT shall include all pages of this AGREEMENT along
with any and all attachments and/or
exhibits.
|
|
9.2.
|
All
notices to be given under this AGREEMENT shall be in writing and shall be
deemed to be fully given by a party when sent by certified or registered
mail, postage prepaid, or by
reputable
|
|
overnight
carrier to the other party at the respective address shown below or to
such other address as a party hereto shall supply to the other in
writing:
|
If to Zyber:
Zyber
Pharmaceuticals, Inc.
208
East Bank Drive
Gonzales,
Louisiana 70737
Attention:
Cooper Collins
|
If to
Macoven Pharmaceuticals
:
Macoven
Pharmaceuticals, LLC .
COOPER
NEED ADDRESS
Attention: Mike
Venters
|
|
9.3.
|
All
terms and provisions of this AGREEMENT shall survive any change of control
for both Zyber and Macoven Pharmaceuticals. In addition all
terms and provisions of this AGREEMENT shall apply to any change of
ownership for both Zyber and Macoven
Pharmaceuticals.
|
|
9.4.
|
This
AGREEMENT may be executed in any number of counterparts and by facsimile,
each of which will be deemed an original, but all of which together will
constitute one and the same
instrument.
|
10.
|
CONFIDENTIALITY
|
|
10.1.
|
Confidential
Information. Each party acknowledges and agrees that it will
have access to, or become acquainted with, Confidential Information of the
other party in connection with the performance of the services required by
this AGREEMENT. For the purposes of this AGREEMENT,
“Confidential Information” shall mean any information of the disclosing
party or any affiliate thereof, which gives the disclosing party an
advantage over its competitors who do not possess such information and
constitutes valuable trade secrets and proprietary data which was revealed
to the receiving party as a result of entering into or performing its
obligations under this AGREEMENT, including but not limited to,
information which relates to the PRODUCTS, designs, methods, discoveries,
improvements, documents, trade secrets, proprietary rights, business
affairs, customer information or employee
information. Confidential Information shall not include any
information that:
|
10.1.1.
|
was
known to the receiving party prior to the date of this AGREEMENT, without
an obligation to keep it
confidential;
|
10.1.2.
|
was
lawfully obtained by the receiving party from a third party without any
obligation of confidentiality;
|
10.1.3.
|
is,
at the time of disclosure, in the public
knowledge;
|
10.1.4.
|
becomes
part of the public knowledge after disclosure by publication or otherwise
except by breach of this AGREEMENT;
|
10.1.5.
|
is
developed by the receiving party independently by persons who did not have
access to the Confidential information and apart from this
AGREEMENT.
|
10.1.6.
|
is
otherwise knowledge possessed by the receiving party or its employees as
the result of their industry experience or
education.
|
|
10.2.
|
The
receiving party shall keep all Confidential Information in confidence and
shall not, at any time during or for a period of five (5) years from the
termination of this AGREEMENT, without the disclosing party’s prior
written consent, disclose or otherwise make available, directly or
indirectly, any item of Confidential Information to anyone other than its
employees (and its legal counsel and consultants provided they are bound
by similar obligations of confidentiality) who need to know the same in
connection with fulfilling the purposes of this AGREEMENT. The
receiving party shall use the Confidential Information only in connection
with fulfilling the purposes of this AGREEMENT and for no other
purpose. Each party shall inform its employees of the trade
secret, proprietary and confidential nature of the Confidential
Information.
|
|
10.3.
|
Extraordinary
Relief. Any violation by either Zyber or Macoven
Pharmaceuticals of its obligations pursuant to the confidentiality
provisions herein shall not be adequately compensable by monetary damages
and the non-violating party shall be entitled to an injunction order or
other appropriate decree specifically enforcing such party’s obligations
pursuant to the confidentiality provisions of this
AGREEMENT. The rights granted by this Section 10.3 are in
addition to all other remedies and rights available at law or in
equity.
|
|
10.4.
|
Upon
termination of this AGREEMENT, each party will return the other party’s
Confidential Information which is under its control or in its
possession.
|
11.
|
ENFORCEMENT,
RENEWAL, TERMINATION, AND/OR
GENERAL
|
|
11.1.
|
This
AGREEMENT shall be governed by, and interpreted under, the laws of the
State of Louisiana without giving effect to the conflicts of laws
principles. In the event of a dispute(s), claim(s) or matter(s)
in question of any kind whatsoever arising out of or related or collateral
to the provisions and/or subject matter of this AGREEMENT or the breach
thereof, it is agreed that the parties to this AGREEMENT will attempt to
resolve such dispute(s), claim(s) or other matter(s) in question amicably
by informal discussions and negotiations within a seven (7) day
period. All dispute(s), claim(s) or other matter(s) in question
that can not be settled by negotiations among the parties within such time
shall upon demand of, and at the election of Zyber be submitted by the
parties to arbitration to take place in the state of
Louisiana.
|
|
11.2.
|
In
the event that arbitration is not elected by Zyber, then any dispute(s),
claim(s), controversy, or other matter(s), shall be resolved without a
jury in a court located in the State of Louisiana. The parties
consent to jurisdiction in such courts, waive any objection to such venue
and waive trial by jury. The parties stipulate and agree that
any judgment relating to this AGREEMENT which is entered in a court in the
State of Louisiana shall be binding throughout the world. Legal
Process may be served on either party by Certified Mail, Return Receipt
Requested or any other method permitted by the rules of the Court in which
an action is commenced.
|
|
11.3.
|
In
the event that this matter proceeds to arbitration or litigation, the
prevailing party shall be entitled to collect reasonable attorney’s fees
for the arbitration and/or
litigation.
|
|
11.4.
|
In
the event that any provision of this AGREEMENT shall be held invalid or
unenforceable, it shall be deemed modified, but only to the extent
necessary to make it lawful. To effect such modification, the
said provision shall be deemed deleted, added to and/or rewritten,
whichever shall most fully preserve the intentions of the parties as
originally expressed herein.
|
|
11.5.
|
The
obligations of the parties under this AGREEMENT shall be binding upon
their legal assigns and successors, but this AGREEMENT may not be assigned
by a party to this AGREEMENT to a THIRD PARTY except with the prior
written consent of the other party.
|
12.
|
REPRESENTATIONS
AND WARRANTIES
|
|
12.1.
|
Macoven
Pharmaceuticals and Zyber represent and warrant that they have the right
and authority to enter into this AGREEMENT with one
another.
|
|
12.2.
|
This
AGREEMENT (and any Exhibits attached hereto) supersedes all prior
discussions and agreements, both written and oral, among the Parties with
respect to the subject matter hereof and contain the sole and entire
agreement among the Parties with respect to the subject matter
hereof.
|
|
12.3.
|
Macoven
Pharmaceuticals represents and warrants that there are no Actions or
Proceedings pending, threatened or reasonably anticipated against Macoven
Pharmaceuticals or its Affiliates that relate to (a) pharmaceutical
products currently or previously sold by Macoven Pharmaceuticals; (b) this
Agreement; or (c) the transactions contemplated by this
Agreement. Macoven Pharmaceuticals is not subject to any Order
that could reasonably be expected to materially impair or delay the
ability of Macoven Pharmaceuticals to perform its obligations
hereunder.
|
|
12.4.
|
Paragraph/Section
headings herein are for convenience only and do not control or affect the
meaning or interpretation of any terms of provisions of this
AGREEMENT.
|
|
12.5.
|
No
waiver of any provision of this AGREEMENT will be considered unless it is
in a signed writing, and no such waiver will constitute a waiver of any
other provision(s) or of the same provision on another
occasion.
|
13.
|
INDEMNIFICATION
|
|
13.1.
|
Indemnification
by Macoven Pharmaceuticals . Macoven
Pharmaceuticals shall defend, indemnify and hold Zyber, its
affiliates, subsidiaries, successors, directors, officers, employees and
agents harmless from and against any and all claims, suits, actions,
damages, assessments, interest charges, penalties, costs or expenses,
including reasonable attorney’s fees (collectively, the “
Indemnified Amounts
,”)
arising out of (a) the material breach by Macoven Pharmaceuticals of any
of its obligations, representations or warranties under this AGREEMENT,
including, without limitation, Macoven Pharmaceuticals’ failure to submit
payments to Zyber pursuant to Sections 7 and 8 of this AGREEMENT, (b) a
negligent or willful act or omission on the part of Macoven
Pharmaceuticals (including any employee or agent of Macoven
Pharmaceuticals), (c) any federal or state claims or assessment for
nonpayment or late payment by Macoven Pharmaceuticals of any tax or
contribution based on compensation or other benefits owed to any employees
of Macoven Pharmaceuticals, including, without limitation, a claim or
assessment that Zyber should have withheld any amounts related thereto,
(d) requests by Macoven Pharmaceuticals or by third parties (in connection
with a claim against Macoven Pharmaceuticals ) pursuant to a subpoena or
court order for the production by Zyber of documents or any other
materials or to interview, depose and/or elicit testimony from Zyber
employees on any matters related to or involving this AGREEMENT,
including, but not limited to, the ADMINISTRATIVE SERVICES, (e) any
violation by Macoven Pharmaceuticals of any and all APPLICABLE LAWS of any
governmental body having jurisdiction over the exercise of rights under
this AGREEMENT, or (f) any misuse or misappropriation of any products
distributed by Macoven
Pharmaceuticals.
|
14.
|
INSURANCE
|
|
14.1.
|
Macoven
Pharmaceuticals Insurance Coverage Required. During any term of
this AGREEMENT, and with respect to liability hereunder for any post
termination period during which a claim could be asserted against Macoven
Pharmaceuticals, up to 5 years after termination, Macoven Pharmaceuticals
shall maintain at its sole expense insurance coverage as
follows:
|
14.1.1.
|
Product
liability insurance with respect to any products developed as a result of
this AGREEMENT with coverage limits of not less than $5 million per
occurrence and $5 million in the aggregate;
and
|
14.1.2.
|
Commercial
General Liability insurance including with a combined single limit of
$1,000,000, minimum liability of $1,000,000 each occurrence and $2,000,000
in the aggregate.
|
14.1.3.
|
The
foregoing insurance shall be maintained with responsible carriers and
their terms of coverage shall be evidenced by certificates of insurance to
be furnished by Macoven Pharmaceuticals to Zyber within 30 days of the
date of this AGREEMENT. Such certificates of insurance shall
provide that at least 30 days’ written notice shall be
given
|
|
to
Zyber prior to cancellation or modification of any of the material terms
of coverage of any policy.
|
15.
|
FORCE
MAJEURE
|
|
15.1.
|
Neither
party shall be deemed to have breached this AGREEMENT or to be liable for
any damages caused by failure to perform or by delay in rendering
performance hereunder arising out of any occurrence or contingency beyond
its reasonable control, including but not limited to, (a) flood,
earthquake, hurricane, fire, war, strikes, labor unrest, riot, civil
commotion, power or communication line failure, computer equipment failure
or operational failure, (b) failure of independent contractors under
agreement with Zyber to perform or (c) prohibition(s) or restriction(s)
imposed by applicable regulatory authority, the judgment, ruling or order
of a court or agency of competent jurisdiction, or the enactment of or
change in any law or regulation.
|
Zyber, Inc.
By: Cooper Collins
|
Macoven Pharmaceuticals,
LLC
.
By: Mike Venters
|
|||
/s/
Cooper Collins
|
/s/
Mike Venters
|
|||
Name:
Cooper Collins
|
Name: Mike
Venters
|
|||
Title:
President
|
Title:
President
|
|||
Date: July 27, 2009 | Date: July 27, 2009 |
If to Employee, to: |
Michael
Venters
|
|
|
If to Employer, to: |
Zyber
Pharmaceuticals, Inc.
1838
Fern St.
New
Orleans, Louisiana 70118
Attn: James
E. Smith, Jr.
|
|
|
With a copy to: |
Cooper
Collins
32126
Edgewater Drive
Magnolia,
Texas 77354
|
|
|
With a copy to: |
Elkins,
P.L.C.
201
St. Charles Ave; Ste. 4400
New
Orleans, Louisiana 70170
Attn:
Jordan B. Monsour, Esq.
|
WITNESSES: |
EMPLOYER:
|
||
Print
Name: _____________________________________
|
ZYBER PHARMACEUTICALS, INC. | ||
|
|||
|
By:
|
/s/ Cooper Collins | |
Name: Cooper Collins | |||
Print Name: ______________________________________ | Its: President | ||
WITNESSES:
______________________________________________
|
EMPLOYER:
|
||
Print Name: _____________________________________ | ZYBER PHARMACEUTICALS, INC. | ||
|
|||
|
By:
|
/s/ Michael Venters | |
_______________________________________________ | MICHAEL VENTERS | ||
Print Name: ______________________________________ |
If to Employee, to: |
Cooper Collins
32126 Edgewater Drive
Magnolia, Texas 77354
|
|
|
With a copy to: |
Law Office of Eddie Pullaro
1054 West Tunnel Blvd.
Houma, Louisiana 70360
Attn: Eddie N. Pullaro, Esq.
|
If to Employer, to: |
Zyber Pharmaceuticals, Inc.
1838 Fern St.
New Orleans, Louisiana 70118
Attn: James E. Smith, Jr.
|
With a copy to: |
Elkins, P.L.C.
201 St. Charles Ave; Ste. 4400
New Orleans, Louisiana 70170
Attn: Jordan B. Monsour, Esq.
|
WITNESSES: |
EMPLOYER:
|
||
Print Name: _____________________________________
|
ZYBER PHARMACEUTICALS, INC. | ||
|
|||
|
By:
|
/s/James E. Smith, Jr. | |
Name: James E. Smith, Jr. | |||
Print Name: ______________________________________ | Its: Sole Shareholder | ||
WITNESSES:
______________________________________________
|
EMPLOYER:
|
||
Print Name: _____________________________________ | |||
|
|||
|
By:
|
/s/ Cooper Collins | |
_______________________________________________ | COOPER COLLINS | ||
Print Name: ______________________________________ | |||
Products
|
Active Categories
|
Aldex Family
|
Cold/Cough
|
Brovex Family
|
Cold/Cough
|
Cedax
|
Antibiotic
|
Hylatopic
|
Dermatology
|
Pediatex Family
|
Cold/Cough
|
QuinZyme*
|
Cardiovascular
|
ReZyst IM
|
Gastro-Probiotic
|
TussiNAC*
|
Cold/Cough
|
Z-Cof Family
|
Cold/Cough
|