x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
68-0454536
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, $0.01 par value per share
|
NYSE Amex
|
Large accelerated filer
|
o |
Accelerated filer
|
o |
Non-accelerated filer
|
o |
Smaller reporting company
|
x |
Page
|
||
PART I
|
||
ITEM 1.
|
BUSINESS
|
4
|
ITEM 1A.
|
RISK FACTORS
|
11
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
24
|
ITEM 2.
|
PROPERTIES
|
24
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
24
|
ITEM 4.
|
(Removed and Reserved)
|
24
|
PART II
|
||
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
25
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
27
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
28
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
36
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
37
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
63
|
ITEM 9A
|
CONTROLS AND PROCEDURES
|
63
|
ITEM 9B.
|
OTHER INFORMATION
|
63
|
PART III
|
||
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
63
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
64
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
64
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
64
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
64
|
PART IV
|
||
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
65
|
ITEM 1.
|
BUSINESS
|
·
|
preclinical laboratory tests, animal studies, toxicology and formulation studies all performed in accordance with the FDA’s Good Laboratory Practice regulations;
|
·
|
submission to the FDA of an Investigational New Drug (IND) application for human clinical testing, which must become effective before human clinical trials may begin;
|
·
|
performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product candidate for each proposed indication; these clinical trials must be conducted in accordance with Good Clinical Practice (GCP) Guidelines, including Institutional Review Board oversight of the consent of subjects and registration of applicable studies with clinicaltrials.gov; clinical trials generally progress through Phases 1, 2 and 3, testing, respectively, initial safety, population and dose finding, and finally, testing of the anticipated commercial dose, formulation and indication at multiple sites in randomized, placebo-controlled studies that must provide replicate evidence of safety and effectiveness;
|
·
|
submission to the FDA of a New Drug Application (NDA) including payment of substantial User Fees;
|
·
|
satisfactory completion of an FDA inspection of the manufacturing facility or facilities, including those of third-parties, at which the product is produced to assess compliance with strictly enforced current GMP regulations, as well as FDA audit for GCP compliance of one or more clinical investigator sites; and
|
·
|
FDA review and approval of the NDA before any commercial marketing, sale or shipment of the product.
|
·
|
the FDA’s Quality Systems Regulations (QSRs), which require manufacturers to follow stringent design, testing, production, control, labeling, packaging, storage, shipping, documentation and other quality assurance procedures during all aspects of the manufacturing process;
|
·
|
labeling regulations which impose restrictions on labeling and promotional activities, and FDA prohibitions against the promotion of products for uncleared, unapproved, or “off-label” uses;
|
·
|
post-market surveillance requirements which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device;
|
·
|
the FDA Medical Device Reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and
|
·
|
notices of correction or removal, and recall regulations.
|
ITEM 1A
.
|
RISK FACTORS
|
·
|
the extent to which we receive milestone payments or other funding from Alcon and/or Galderma, if any;
|
·
|
the scope, rate of progress and cost of our pre-clinical studies and clinical trials and other research and development activities;
|
·
|
future clinical trial results;
|
·
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish;
|
·
|
the cost and timing of regulatory approvals;
|
·
|
the cost of establishing clinical and commercial supplies of our product candidates and any products that we may develop;
|
·
|
the effect of competing technological and market developments;
|
·
|
the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; and
|
·
|
the extent to which we acquire or invest in businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
|
·
|
conduct pre-clinical studies and clinical trials for our product candidates in different indications;
|
·
|
develop, formulate, manufacture and commercialize our product candidates either independently or with partners;
|
·
|
pursue, acquire or in-license additional compounds, products or technologies, or expand the use of our technology;
|
·
|
maintain, defend and expand the scope of our intellectual property; and
|
·
|
hire additional qualified personnel.
|
·
|
undertake and complete clinical trials to demonstrate the efficacy and safety of our product candidates;
|
·
|
maintain and expand our intellectual property rights;
|
·
|
obtain marketing and other approvals from the FDA and other regulatory agencies; and
|
·
|
select collaborative partners with suitable manufacturing and commercial capabilities.
|
·
|
the failure of our product candidates to demonstrate safety and efficacy;
|
·
|
the high cost of clinical trials and our lack of financial and other resources; and
|
·
|
our inability to partner with firms with sufficient resources to assist us in conducting clinical trials.
|
·
|
delays in identifying and agreeing on acceptable terms with prospective clinical trial sites;
|
·
|
slower than expected rates of patient recruitment and enrollment;
|
·
|
increases in time required to complete monitoring of patients during or after participation in a trial; and
|
·
|
unexpected need for additional patient-related data.
|
·
|
perceptions by members of the healthcare community, including physicians, about the safety and effectiveness of our products;
|
·
|
published studies demonstrating the cost-effectiveness of our products relative to competing products;
|
·
|
availability of reimbursement for our products from government or healthcare payers; and
|
·
|
effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.
|
·
|
developing drugs and devices;
|
·
|
conducting preclinical testing and human clinical trials;
|
·
|
obtaining FDA and other regulatory approvals of product candidates;
|
·
|
formulating and manufacturing products; and
|
·
|
launching, marketing, distributing and selling products.
|
·
|
develop and patent processes or products earlier than we will;
|
·
|
develop and commercialize products that are less expensive or more efficient than any products that we may develop;
|
·
|
obtain regulatory approvals for competing products more rapidly than we will; and
|
·
|
improve upon existing technological approaches or develop new or different approaches that render any technology or products we develop obsolete or uncompetitive.
|
·
|
the results of preclinical or clinical trials relating to our product candidates;
|
·
|
the announcement of new products by us or our competitors;
|
·
|
announcement of partnering arrangements by us or our competitors;
|
·
|
quarterly variations in our or our competitors’ results of operations;
|
·
|
announcements by us related to litigation;
|
·
|
changes in our earnings estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’ earning estimates;
|
·
|
developments in our industry; and
|
·
|
general, economic and market conditions, including the recent volatility in the financial markets and decrease in consumer confidence and other factors unrelated to our operating performance or the operating performance of our competitors.
|
·
|
a classified board so that only one of the three classes of directors on our Board of Directors is elected each year;
|
·
|
elimination of cumulative voting in the election of directors;
|
·
|
procedures for advance notification of stockholder nominations and proposals;
|
·
|
the ability of our Board of Directors to amend our bylaws without stockholder approval; and
|
·
|
the ability of our Board of Directors to issue up to 5,000,000 shares of preferred stock without stockholder approval upon the terms and conditions and with the rights, privileges and preferences as our Board of Directors may determine.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
(REMOVED AND RESERVED)
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2010
|
2009
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First Quarter
|
2.71 | 1.91 | 2.95 | 1.02 | ||||||||||||
Second Quarter
|
2.55 | 2.06 | 3.24 | 1.95 | ||||||||||||
Third Quarter
|
2.29 | 1.65 | 2.57 | 1.62 | ||||||||||||
Fourth Quarter
|
2.05 | 1.64 | 2.39 | 1.63 |
10/07 | 12/07 | 12/08 | 12/09 | 12/10 | ||||||||||||||||
NovaBay Pharmaceuticals, Inc.
|
100.00 | 103.84 | 28.18 | 56.91 | 45.86 | |||||||||||||||
NYSE Amex Composite
|
100.00 | 102.17 | 61.48 | 83.71 | 107.47 | |||||||||||||||
RDG MicroCap Biotechnology
|
100.00 | 82.27 | 37.88 | 42.38 | 36.95 |
ITEM 6.
|
SELECTED FINANCIAL DATA
|
Year Ended December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||||||
Statements of Operations Data:
|
||||||||||||||||||||
License and collaboration revenue:
|
$ | 9,754 | $ | 15,684 | $ | 6,722 | $ | 5,913 | $ | 1,533 | ||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development
|
8,616 | 7,337 | 9,595 | 7,421 | 4,087 | |||||||||||||||
General and administrative
|
5,654 | 5,607 | 5,636 | 4,368 | 2,972 | |||||||||||||||
Total operating expenses
|
14,270 | 12,944 | 15,231 | 11,789 | 7,059 | |||||||||||||||
Other income (expense), net
|
258 | (36 | ) | 397 | 488 | 240 | ||||||||||||||
Income (loss) before income taxes
|
(4,258 | ) | 2,704 | (8,112 | ) | (5,388 | ) | (5,286 | ) | |||||||||||
Provision for income taxes
|
(50 | ) | (7 | ) | (2 | ) | (12 | ) | — | |||||||||||
Net income (loss)
|
$ | (4,308 | ) | $ | 2,697 | $ | (8,114 | ) | $ | (5,400 | ) | $ | (5,286 | ) | ||||||
Net income (loss) per share:
|
||||||||||||||||||||
Basic
|
$ | (0.18 | ) | $ | 0.12 | $ | (0.38 | ) | $ | (0.60 | ) | $ | (0.92 | ) | ||||||
Diluted
|
$ | (0.18 | ) | $ | 0.12 | $ | (0.38 | ) | $ | (0.60 | ) | $ | (0.92 | ) | ||||||
Shares used in computing net income (loss) per share:
|
||||||||||||||||||||
Basic
|
23,326 | 22,404 | 21,312 | 8,974 | 5,715 | |||||||||||||||
Diluted
|
23,326 | 23,115 | 21,312 | 8,974 | 5,715 |
Year Ended December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$ | 12,806 | $ | 11,292 | $ | 12,099 | $ | 22,353 | $ | 11,086 | ||||||||||
Working capital
|
11,031 | 11,568 | 8,033 | 18,194 | 7,926 | |||||||||||||||
Total assets
|
15,516 | 17,523 | 13,969 | 23,922 | 11,866 | |||||||||||||||
Capital lease obligation—current and non-current
|
— | 7 | 49 | 86 | — | |||||||||||||||
Equipment loan—current and non-current
|
106 | 470 | 836 | 716 | — | |||||||||||||||
Deferred revenue—current and non-current
|
3,689 | 2,167 | 4,167 | 7,517 | 9,167 | |||||||||||||||
Convertible preferred stock
|
— | — | — | — | 192 | |||||||||||||||
Common stock and additional paid-in capital
|
38,703 | 37,236 | 33,933 | 32,797 | 14,683 | |||||||||||||||
Total stockholders’ equity
|
10,490 | 13,345 | 7,345 | 14,320 | 1,813 |
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Quarter Ended
|
||||||||||||||||||||||||||||||||
Dec. 31,
|
Sept. 30,
|
June 30,
|
March 31,
|
Dec. 31,
|
Sept. 30,
|
June 30,
|
March 31,
|
|||||||||||||||||||||||||
2010
|
2010
|
2010
|
2010
|
2009
|
2009
|
2009
|
2009
|
|||||||||||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||||
Statements of
Operations Data:
|
||||||||||||||||||||||||||||||||
License and collaboration revenue:
|
$ | 3,036 | $ | 2,086 | $ | 2,548 | $ | 2,084 | $ | 7,492 | $ | 3,224 | $ | 2,357 | $ | 2,611 | ||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||
Research and
development
|
2,009 | 2,245 | 2,129 | 2,233 | 2,528 | 2,004 | 1,444 | 1,361 | ||||||||||||||||||||||||
General and
administrative
|
1,087 | 1,487 | 1,611 | 1,469 | 1,528 | 1,309 | 1,191 | 1,579 | ||||||||||||||||||||||||
Total operating
expenses
|
3,096 | 3,732 | 3,740 | 3,702 | 4,056 | 3,313 | 2,635 | 2,940 | ||||||||||||||||||||||||
Other income
(expense), net
|
271 | 4 | (6 | ) | (11 | ) | (14 | ) | (22 | ) | (11 | ) | 11 | |||||||||||||||||||
Income (loss)
before income taxes
|
211 | (1,642 | ) | (1,198 | ) | (1,629 | ) | 3,422 | (111 | ) | (289 | ) | (318 | ) | ||||||||||||||||||
Provision for income
taxes
|
(50 | ) | — | — | — | (7 | ) | — | — | — | ||||||||||||||||||||||
Net income (loss)
|
$ | 161 | $ | (1,642 | ) | $ | (1,198 | ) | $ | (1,629 | ) | $ | 3,415 | $ | (111 | ) | $ | (289 | ) | $ | (318 | ) | ||||||||||
Net income (loss)
per share:
|
||||||||||||||||||||||||||||||||
Basic
|
$ | 0.01 | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.07 | ) | $ | 0.15 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||
Diluted
|
$ | 0.01 | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.07 | ) | $ | 0.14 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||
Shares used in computing net income (loss)
per share:
|
||||||||||||||||||||||||||||||||
Basic
|
23,352 | 23,335 | 23,315 | 23,300 | 23,253 | 23,251 | 21,931 | 21,620 | ||||||||||||||||||||||||
Diluted
|
23,352 | 23,335 | 23,315 | 23,300 | 23,935 | 23,251 | 21,931 | 21,620 |
Contractual Obligations
|
Total
|
Less than
1 year
|
1 - 3 years
|
3 - 5 years
|
More than
5 years
|
|||||||||||||||
Operating leases
|
$ | 4,741 | $ | 944 | $ | 2,948 | $ | 849 | $ | — | ||||||||||
Equipment loan
|
106 | 106 | — | — | — | |||||||||||||||
$ | 4,847 | $ | 1,050 | $ | 2,948 | $ | 849 | $ | — |
·
|
the scope, rate of progress and cost of our pre-clinical studies and clinical trials and other research and development activities;
|
·
|
future clinical trial results;
|
·
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish;
|
·
|
the cost and timing of regulatory approvals;
|
·
|
the cost of establishing clinical and commercial supplies of our product candidates and any products that we may develop;
|
·
|
the effect of competing technological and market developments;
|
·
|
the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; and
|
·
|
the extent to which we acquire or invest in businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
||
Page
|
||
Reports of Independent Registered Public Accounting Firms
|
38
|
|
Consolidated Balance Sheets as of December 31, 2010 and 2009
|
40
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008 and for the cumulative period from July 1, 2002 (inception) to December 31, 2010
|
41
|
|
Consolidated Statements of Stockholders’ Equity for the cumulative period from July 1, 2002 (inception) to December 31, 2010
|
42
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008 and for the cumulative period from July 1, 2002 (inception) to December 31, 2010
|
46
|
Vancouver, Canada
|
Chartered Accountants
|
March 26, 2010
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 11,534 | $ | 10,992 | ||||
Short-term investments
|
1,272 | 300 | ||||||
Accounts receivable
|
500 | 3,750 | ||||||
Prepaid expenses and other current assets
|
448 | 564 | ||||||
Total current assets
|
13,754 | 15,606 | ||||||
Property and equipment, net
|
1,588 | 1,812 | ||||||
Other assets
|
174 | 105 | ||||||
TOTAL ASSETS
|
$ | 15,516 | $ | 17,523 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 406 | $ | 272 | ||||
Accrued liabilities
|
726 | 1,228 | ||||||
Capital lease obligation
|
— | 7 | ||||||
Equipment loan
|
106 | 364 | ||||||
Deferred revenue
|
1,485 | 2,167 | ||||||
Total current liabilities
|
2,723 | 4,038 | ||||||
Deferred revenue - non-current
|
2,204 | — | ||||||
Deferred rent
|
99 | — | ||||||
Equipment loan - non-current
|
— | 106 | ||||||
Deferred tax liability
|
— | 34 | ||||||
Total liabilities
|
5,026 | 4,178 | ||||||
Stockholders' Equity:
|
||||||||
Preferred stock, $0.01 par value; 5,000 shares authorized; none
outstanding at December 31, 2010 and 2009
|
— | — | ||||||
Common stock, $0.01 par value; 65,000 shares authorized at
December 31, 2010 and 2009; 23,392 and 23,254 shares issued
and outstanding at December 31, 2010 and 2009, respectively
|
234 | 233 | ||||||
Additional paid-in capital
|
38,469 | 37,003 | ||||||
Accumulated other comprehensive loss
|
(14 | ) | — | |||||
Accumulated deficit during development stage
|
(28,199 | ) | (23,891 | ) | ||||
Total stockholders' equity
|
10,490 | 13,345 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 15,516 | $ | 17,523 |
Cumulative Period
|
||||||||||||||||
from July 1, 2002
|
||||||||||||||||
(inception) to
|
||||||||||||||||
Year Ended December 31,
|
December 31,
|
|||||||||||||||
2010
|
2009
|
2008
|
2010
|
|||||||||||||
License and collaboration revenue:
|
$ | 9,754 | $ | 15,684 | $ | 6,722 | $ | 39,606 | ||||||||
Operating Expenses:
|
||||||||||||||||
Research and development
|
8,616 | 7,337 | 9,595 | 40,960 | ||||||||||||
General and administrative
|
5,654 | 5,607 | 5,636 | 28,225 | ||||||||||||
Total operating expenses
|
14,270 | 12,944 | 15,231 | 69,185 | ||||||||||||
Operating income (loss)
|
(4,516 | ) | 2,740 | (8,509 | ) | (29,579 | ) | |||||||||
Other income (expense), net
|
258 | (36 | ) | 397 | 1,451 | |||||||||||
Income (loss) before income taxes
|
(4,258 | ) | 2,704 | (8,112 | ) | (28,128 | ) | |||||||||
Income tax provision
|
(50 | ) | (7 | ) | (2 | ) | (71 | ) | ||||||||
Net income (loss)
|
$ | (4,308 | ) | $ | 2,697 | $ | (8,114 | ) | $ | (28,199 | ) | |||||
Net income (loss) per share:
|
||||||||||||||||
Basic
|
$ | (0.18 | ) | $ | 0.12 | $ | (0.38 | ) | ||||||||
Diluted
|
$ | (0.18 | ) | $ | 0.12 | $ | (0.38 | ) | ||||||||
Shares used in computing net income (loss) per share:
|
||||||||||||||||
Basic
|
23,326 | 22,404 | 21,312 | |||||||||||||
Diluted
|
23,326 | 23,115 | 21,312 |
Addit-
ional
|
Stock
Sub-
|
Accum-
ulated
Other
Compre-
hensive
|
Accum-
ulated
Deficit
During
Develop-
|
Total
Stock-
|
||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In |
scri
ption
|
Income
|
ment
|
holders'
|
||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Receivable |
(Loss)
|
Stage | Equity | ||||||||||||||||||||||||||||
Balance at July 1, 2002
|
— | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (544 | ) | (544 | ) | |||||||||||||||||||||||||
Total comprehensive
loss
|
(544 | ) | ||||||||||||||||||||||||||||||||||
Issuance of Series A
preferred stock and
common stock for
acquisition of LLC
|
2,723 | 27 | 3,902 | 39 | 462 | — | — | — | 528 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to non-
employee stock options
|
— | — | — | — | 15 | — | — | — | 15 | |||||||||||||||||||||||||||
Sale of stock warrants
|
— | — | — | — | 10 | — | — | — | 10 | |||||||||||||||||||||||||||
Balance at December 31, 2002
|
2,723 | 27 | 3,902 | 39 | 487 | — | — | (544 | ) | 9 | ||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (977 | ) | (977 | ) | |||||||||||||||||||||||||
Total comprehensive
loss
|
(977 | ) | ||||||||||||||||||||||||||||||||||
Issuance of Series A
preferred stock
|
492 | 5 | — | — | 192 | — | — | — | 197 | |||||||||||||||||||||||||||
Issuance of Series B
preferred stock net of
issuance costs of $86
|
3,258 | 33 | — | — | 1,413 | — | — | — | 1,446 | |||||||||||||||||||||||||||
Issuance of stock
|
— | — | 25 | — | 7 | — | — | — | 7 | |||||||||||||||||||||||||||
Issuance of stock for
option exercises
|
— | — | 40 | 1 | 7 | — | — | — | 8 | |||||||||||||||||||||||||||
Issuance of stock for
warrant exercises
|
— | — | 137 | 1 | 109 | — | — | — | 110 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to non-employee
stock options
|
— | — | — | — | 2 | — | — | — | 2 | |||||||||||||||||||||||||||
Balance at December 31, 2003
|
6,473 | 65 | 4,104 | 41 | 2,217 | — | — | (1,521 | ) | 802 | ||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (2,804 | ) | (2,804 | ) | |||||||||||||||||||||||||
Total comprehensive loss
|
(2,804 | ) | ||||||||||||||||||||||||||||||||||
Issuance of Series B
preferred stock net of
issuance costs of $127
|
2,694 | 27 | — | — | 1,112 | — | — | — | 1,139 | |||||||||||||||||||||||||||
Issuance of Series B
preferred stock upon
conversion of notes
|
913 | 9 | — | — | 420 | — | — | — | 429 | |||||||||||||||||||||||||||
Issuance of Series C
preferred stock net of
issuance costs of $123
|
6,311 | 63 | — | — | 5,178 | (873 | ) | — | — | 4,368 | ||||||||||||||||||||||||||
Issuance of stock for
option exercises
|
— | — | 5 | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||||
Issuance of stock for
warrant exercises
|
— | — | 31 | — | 37 | — | — | — | 37 | |||||||||||||||||||||||||||
Issuance of stock for
Series B offering costs
|
— | — | 368 | 4 | 106 | — | — | — | 110 | |||||||||||||||||||||||||||
Issuance of stock for
services
|
— | — | 15 | — | 4 | — | — | — | 4 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to non-
employee stock options
|
— | — | — | — | 7 | — | — | — | 7 | |||||||||||||||||||||||||||
Balance at December 31, 2004
|
16,391 | 164 | 4,523 | 45 | 9,082 | (873 | ) | — | (4,325 | ) | 4,093 |
Addit-
ional
|
Stock
Sub-
|
Accum-
ulated
Other
Compre-
hensive
|
Accum-
ulated
Deficit
During
Develop-
|
Total
Stock-
|
||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | scription | Income | ment | holders' | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Receivable | (Loss) | Stage | Equity | ||||||||||||||||||||||||||||
Addit-
ional
|
Stock
Sub-
|
Accum-
ulated
Other
Compre-
hensive
|
Accum-
ulated
Deficit
During
Develop-
|
Total
Stock-
|
||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | scription | Income | ment | holders' | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Receivable | (Loss) | Stage | Equity | ||||||||||||||||||||||||||||
Balance at December 31, 2006
|
19,227 | 192 | 6,311 | 63 | 14,620 | — | 12 | (13,074 | ) | 1,813 | ||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (5,400 | ) | (5,400 | ) | |||||||||||||||||||||||||
Change in unrealized
gains (losses) on
investments
|
— | — | — | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||||||||||||
Total comprehensive
loss
|
(5,415 | ) | ||||||||||||||||||||||||||||||||||
Conversion of preferred
stock to common stock
in connection with IPO
|
(19,227 | ) | (192 | ) | 9,614 | 96 | 96 | — | — | — | — | |||||||||||||||||||||||||
Issuance of stock and
warrants in connection
with IPO, net of offering
costs
|
— | — | 5,000 | 50 | 17,120 | — | — | — | 17,170 | |||||||||||||||||||||||||||
Issuance of stock for
option exercises
|
— | — | 298 | 3 | 111 | — | — | — | 114 | |||||||||||||||||||||||||||
Issuance of stock for
services
|
— | — | 38 | — | 92 | — | — | — | 92 | |||||||||||||||||||||||||||
Issuance of stock for
director compensation
|
— | — | 8 | — | 29 | — | — | — | 29 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to employee and
director stock options
|
— | — | — | — | 399 | — | — | — | 399 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to non-employee
stock options
|
— | — | — | — | 118 | — | — | — | 118 | |||||||||||||||||||||||||||
Balance at December 31, 2007
|
— | — | 21,269 | 212 | 32,585 | — | (3 | ) | (18,474 | ) | 14,320 | |||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | (8,114 | ) | (8,114 | ) | |||||||||||||||||||||||||
Change in unrealized
gains (losses) on
investments
|
— | — | — | — | — | — | 3 | — | 3 | |||||||||||||||||||||||||||
Total comprehensive
loss
|
(8,111 | ) | ||||||||||||||||||||||||||||||||||
Compensation expense
for warrants issued for
services
|
67 | 67 | ||||||||||||||||||||||||||||||||||
Issuance of stock for
option exercises
|
— | — | 123 | 1 | 148 | — | — | — | 149 | |||||||||||||||||||||||||||
Issuance of stock for
services
|
— | — | 30 | 1 | 84 | — | — | — | 85 | |||||||||||||||||||||||||||
Issuance of stock for
director compensation
|
— | — | 49 | 1 | 123 | — | — | — | 124 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to employee and
director stock options
|
— | — | — | — | 721 | — | — | — | 721 | |||||||||||||||||||||||||||
Stock-based
compensation expense
related to non-employee
stock options
|
— | — | — | — | (11 | ) | — | — | — | (11 | ) | |||||||||||||||||||||||||
Tax benefit from stock
plans
|
— | — | — | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||||
Balance at December 31, 2008
|
— | — | 21,471 | 215 | 33,718 | — | — | (26,588 | ) | 7,345 |
Common Stock |
Addit-
ional
Paid-In
|
Stock
Sub-
scription
|
Accum-
ulated
Other
Compre-
hensive
Income
|
Accum-
ulated
Deficit
During
Develop-
ment
|
Total
Stock-
holders'
|
|||||||||||||||||||||||
Shares | Amount | Capital | Receivable | (Loss) | Stage | Equity | ||||||||||||||||||||||
Balance at December 31, 2008
|
21,471 | 215 | 33,718 | — | — | (26,588 | ) | 7,345 | ||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||
Net income
|
— | — | — | — | — | 2,697 | 2,697 | |||||||||||||||||||||
Change in unrealized
gains (losses) on
investments
|
— | — | — | — | — | — | — | |||||||||||||||||||||
Total comprehensive
loss
|
— | — | — | — | — | — | 2,697 | |||||||||||||||||||||
Issuance of common
stock in connection
with shelf offering, net
of offering costs
|
1,225 | 12 | 1,932 | — | — | — | 1,944 | |||||||||||||||||||||
Issuance of stock for
option exercises
|
119 | 1 | 73 | — | — | — | 74 | |||||||||||||||||||||
Compensation expense
for warrants issued for
services
|
— | — | 88 | — | — | — | 88 | |||||||||||||||||||||
Stock-based
compensation expense
related to employee
and director stock
and stock options
|
130 | 1 | 919 | — | — | — | 920 | |||||||||||||||||||||
Stock-based
compensation expense
related to non-
employee stock
and stock options
|
309 | 4 | 269 | — | — | — | 273 | |||||||||||||||||||||
Other
|
— | — | 4 | — | — | — | 4 | |||||||||||||||||||||
Balance at December 31, 2009
|
23,254 | 233 | 37,003 | — | — | (23,891 | ) | 13,345 | ||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | (4,308 | ) | (4,308 | ) | |||||||||||||||||||
Change in unrealized
losses on investments
|
— | — | — | — | (14 | ) | (14 | ) | ||||||||||||||||||||
Total comprehensive
loss
|
(4,322 | ) | ||||||||||||||||||||||||||
Costs related
to shelf offering
|
— | — | (2 | ) | — | — | — | (2 | ) | |||||||||||||||||||
Compensation expense
for warrants issued for
services
|
— | — | 7 | — | — | — | 7 | |||||||||||||||||||||
Issuance of stock for
option exercises
|
105 | 1 | 80 | — | — | — | 81 | |||||||||||||||||||||
Stock-based
compensation expense
related to employee and
director stock options
|
— | — | 1,129 | — | — | — | 1,129 | |||||||||||||||||||||
Stock-based
compensation expense
related to non-
employee stock
and stock options
|
33 | — | 263 | — | — | — | 263 | |||||||||||||||||||||
Other
|
— | — | (11 | ) | — | — | — | (11 | ) | |||||||||||||||||||
Balance at December 31, 2010
|
23,392 | $ | 234 | $ | 38,469 | $ | — | $ | (14 | ) | $ | (28,199 | ) | $ | 10,490 |
Year Ended December 31,
|
Cumulative
Period from
July 1, 2002
(inception) to
December 31,
|
|||||||||||||||
2010
|
2009
|
2008
|
2010
|
|||||||||||||
Cash flows from operating activities:
|
||||||||||||||||
Net income (loss)
|
$ | (4,308 | ) | $ | 2,697 | $ | (8,114 | ) | $ | (28,199 | ) | |||||
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||||||||||
Depreciation and amortization
|
427 | 373 | 304 | 1,504 | ||||||||||||
Accretion and amortization of short-term investments
|
10 | 42 | (57 | ) | (252 | ) | ||||||||||
Loss on disposal of property and equipment
|
— | — | — | 121 | ||||||||||||
Stock-based compensation expense for options and stock issued to
employees and directors
|
1,129 | 920 | 845 | 3,634 | ||||||||||||
Compensation expense for warrants issued for services
|
7 | 88 | 67 | 162 | ||||||||||||
Stock-based compensation expense for options and stock issued to
non-employees
|
263 | 273 | (13 | ) | 888 | |||||||||||
Taxes paid by LLC
|
— | — | — | 1 | ||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
(Increase) decrease in accounts receivable
|
3,250 | (3,750 | ) | — | (500 | ) | ||||||||||
(Increase) decrease in prepaid expenses and other assets
|
47 | (221 | ) | 88 | (500 | ) | ||||||||||
Increase (decrease) in accounts payable and accrued liabilities
|
(319 | ) | (70 | ) | 289 | 1,208 | ||||||||||
Increase (decrease) in deferred revenue
|
1,522 | (2,000 | ) | (3,351 | ) | 3,688 | ||||||||||
Net cash provided by (used in) operating activities
|
2,028 | (1,648 | ) | (9,942 | ) | (18,245 | ) | |||||||||
Cash flows from investing activities:
|
||||||||||||||||
Purchases of property and equipment
|
(203 | ) | (731 | ) | (610 | ) | (3,094 | ) | ||||||||
Proceeds from disposal of property and equipment
|
— | 2 | — | 46 | ||||||||||||
Purchases of short-term investments
|
(2,446 | ) | (3,975 | ) | (32,097 | ) | (100,965 | ) | ||||||||
Proceeds from maturities and sales of short-term investments
|
1,455 | 3,635 | 43,571 | 99,937 | ||||||||||||
Cash acquired in purchase of LLC
|
— | — | — | 516 | ||||||||||||
Net cash provided by (used in) investing activities
|
(1,194 | ) | (1,069 | ) | 10,864 | (3,560 | ) | |||||||||
Cash flows from financing activities:
|
||||||||||||||||
Proceeds from preferred stock issuances, net
|
— | — | — | 11,160 | ||||||||||||
Proceeds from common stock issuances, net
|
— | — | — | 17 | ||||||||||||
Proceeds from exercise of options and warrants
|
81 | 74 | 153 | 1,916 | ||||||||||||
Initial public offering costs, net of costs
|
— | — | — | 17,077 | ||||||||||||
Proceeds from shelf offering, net of costs
|
(2 | ) | 1,944 | — | 1,942 | |||||||||||
Proceeds from stock subscription receivable
|
— | — | — | 873 | ||||||||||||
Proceeds from issuance of notes
|
— | — | — | 405 | ||||||||||||
Principal payments on capital lease
|
(7 | ) | (42 | ) | (37 | ) | (157 | ) | ||||||||
Proceeds from borrowings under equipment loan
|
— | — | 422 | 1,216 | ||||||||||||
Principal payments on equipment loan
|
(364 | ) | (366 | ) | (302 | ) | (1,110 | ) | ||||||||
Net cash provided by (used in) financing activities
|
(292 | ) | 1,610 | 236 | 33,339 | |||||||||||
Net increase (decrease) in cash and cash equivalents
|
542 | (1,107 | ) | 1,158 | 11,534 | |||||||||||
Cash and cash equivalents, beginning of period
|
10,992 | 12,099 | 10,941 | — | ||||||||||||
Cash and cash equivalents, end of period
|
$ | 11,534 | $ | 10,992 | $ | 12,099 | $ | 11,534 |
Year Ended December 31,
|
Cumulative
Period from
July 1, 2002
(inception) to
December 31,
|
|||||||||||||||
2010
|
2009
|
2008
|
2010
|
|||||||||||||
Supplemental disclosure of non cash information
|
||||||||||||||||
Interest paid
|
$ | 32 | $ | 77 | $ | 102 | $ | 255 | ||||||||
Income taxes paid
|
$ | 52 | $ | — | $ | — | $ | 52 | ||||||||
Non-cash financing and investing activities
|
||||||||||||||||
Property and equipment acquired under capital lease obligations
|
$ | — | $ | — | $ | 62 | $ | 219 |
Year Ended December 31,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Net income (loss)
|
$ | (4,308 | ) | $ | 2,697 | $ | (8,114 | ) | ||||
Basic shares
|
23,326 | 22,404 | 21,312 | |||||||||
Add: shares issued upon assumed exercise of stock options
|
— | 711 | — | |||||||||
Diluted shares
|
23,326 | 23,115 | 21,312 | |||||||||
Basic EPS
|
$ | (0.18 | ) | $ | 0.12 | $ | (0.38 | ) | ||||
Diluted EPS
|
$ | (0.18 | ) | $ | 0.12 | $ | (0.38 | ) |
Year Ended December 31,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Stock options
|
4,968 | 3,436 | 3,371 | |||||||||
Stock warrants
|
1,375 | 1,875 | 650 |
December 31, 2010
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Market
|
|||||||||||||
(in thousands)
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
Corporate bonds
|
$ | 767 | $ | 19 | $ | (14 | ) | $ | 772 | |||||||
Certificates of deposit
|
500 | — | — | 500 | ||||||||||||
$ | 1,267 | $ | 19 | $ | (14 | ) | $ | 1,272 | ||||||||
December 31, 2009
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Market
|
|||||||||||||
(in thousands)
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
Certificates of deposit
|
$ | 300 | $ | — | $ | — | $ | 300 | ||||||||
$ | 300 | $ | — | $ | — | $ | 300 |
Fair Value Measurements
|
||||||||||||||||
(in thousands)
|
Balance at
December 31,
2010
|
Quoted
Prices in
Active
Markets for
Identical Items
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Cash equivalents
|
$ | 11,534 | $ | 11,534 | $ | — | $ | — | ||||||||
Short-term investments:
|
||||||||||||||||
Corporate bonds
|
772 | — | 772 | — | ||||||||||||
Certificates of deposit
|
500 | — | 500 | — | ||||||||||||
Total short-term investments
|
1,272 | — | 1,272 | — | ||||||||||||
Total
|
$ | 12,806 | $ | 11,534 | $ | 1,272 | $ | — |
(in thousands)
|
December 31,
2010
|
December 31,
2009
|
||||||
Office and laboratory equipment
|
$ | 2,620 | $ | 2,430 | ||||
Furniture and fixtures
|
113 | 113 | ||||||
Software
|
144 | 133 | ||||||
Leasehold improvement
|
149 | 147 | ||||||
Total property and equipment, at cost
|
3,026 | 2,823 | ||||||
Less: accumulated depreciation
|
(1,438 | ) | (1,011 | ) | ||||
Total property and equipment, net
|
$ | 1,588 | $ | 1,812 |
(in thousands)
|
December 31,
2010
|
December 31,
2009
|
||||||
Research and development
|
$ | 103 | $ | 118 | ||||
Employee payroll and benefits
|
550 | 744 | ||||||
Professional fees
|
22 | 58 | ||||||
Other
|
51 | 308 | ||||||
Total accrued liabilities
|
$ | 726 | $ | 1,228 |
Loan
|
||||
(in thousands)
|
Commitment
|
|||
Minimum loan payments in 2011
|
$ | 109 | ||
Less: amount representing interest
|
(3 | ) | ||
Present value of minimum loan payments
|
$ | 106 |
Lease
|
||||
(in thousands)
|
Commitment
|
|||
Year ending December 31:
|
||||
2011
|
$ | 944 | ||
2012
|
963 | |||
2013
|
983 | |||
2014
|
1,002 | |||
2015
|
849 | |||
Total lease commitment
|
$ | 4,741 |
(in thousands, except per share data)
|
Warrants
|
Weighted-
Average
Exercise
Price
|
||||||
Outstanding at December 31, 2007
|
350 | $ | 4.00 | |||||
Warrants granted
|
300 | $ | 4.00 | |||||
Outstanding at December 31, 2008
|
650 | $ | 4.00 | |||||
Warrants granted
|
1,225 | $ | 2.75 | |||||
Outstanding at December 31, 2009
|
1,875 | $ | 3.18 | |||||
Warrants expired
|
(500 | ) | $ | 4.00 | ||||
Outstanding at December 31, 2010
|
1,375 | $ | 2.89 |
(in thousands, except per share data)
|
Options
|
Weighted-
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life (years)
|
Aggregate
Intrinsic
Value
|
|||||||||||
Outstanding at December 31, 2007
|
2,896 | $ | 1.57 | ||||||||||||
Options granted
|
903 | $ | 2.39 | ||||||||||||
Options exercised
|
(122 | ) | $ | 1.18 | |||||||||||
Options forfeited/cancelled
|
(306 | ) | $ | 2.66 | |||||||||||
Outstanding at December 31, 2008
|
3,371 | $ | 1.70 | ||||||||||||
Options granted
|
1,196 | $ | 1.80 | ||||||||||||
Options exercised
|
(119 | ) | $ | 0.62 | |||||||||||
Options forfeited/cancelled
|
(301 | ) | $ | 2.42 | |||||||||||
Outstanding at December 31, 2009
|
4,147 | $ | 1.71 | ||||||||||||
Options granted
|
1,087 | $ | 1.90 | ||||||||||||
Options exercised
|
(104 | ) | $ | 0.85 | |||||||||||
Options forfeited/cancelled
|
(162 | ) | $ | 1.80 | |||||||||||
Outstanding at December 31, 2010
|
4,968 | $ | 1.78 | 6.7 | $ | 1,356 | |||||||||
Vested and expected to vest at December 31, 2010
|
4,896 | $ | 1.78 | 6.7 | $ | 1,347 | |||||||||
Vested at December 31, 2010
|
3,127 | $ | 1.64 | 5.5 | $ | 1,347 | |||||||||
Exercisable at December 31, 2010
|
3,127 | $ | 1.64 | 5.5 | $ | 1,331 |
Year Ended December 31,
|
||||||||||||
Assumption
|
2010
|
2009
|
2008
|
|||||||||
Expected price volatility
|
89.70 | % | 87.10 | % | 70.30 | % | ||||||
Expected term (in years)
|
5.9 | 6.1 | 6.1 | |||||||||
Risk-free interest rate
|
2.09 | % | 2.40 | % | 3.10 | % | ||||||
Dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | ||||||
Weighted-average fair value of options granted during the period
|
$ | 1.43 | $ | 1.31 | $ | 1.56 |
Year Ended December 31,
|
||||||||||||
Assumption
|
2010
|
2009
|
2008
|
|||||||||
Expected price volatility
|
90.86 | % | 87.20 | % | 70.00 | % | ||||||
Expected term (in years)
|
5.7 | 5.6 | 6.1 | |||||||||
Risk-free interest rate
|
2.31 | % | 1.90 | % | 3.10 | % | ||||||
Dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | ||||||
Weighted-average fair value of options granted during the period
|
$ | 1.39 | $ | 1.42 | $ | 1.26 |
Year ended December 31,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Research and development
|
$ | 616 | $ | 565 | $ | 413 | ||||||
General and administrative
|
776 | 628 | 419 | |||||||||
Total stock-based compensation expense
|
$ | 1,392 | $ | 1,193 | $ | 832 |
Year Ended December 31,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Amortization of Upfront Technology Access Fee
|
$ | 1,667 | $ | 2,500 | $ | 2,500 | ||||||
On-going Research and Development
|
5,419 | 4,322 | 2,700 | |||||||||
Materials, Equipment, and Contract Study Costs
|
562 | 1,349 | 1,386 | |||||||||
Milestone payment
|
— | 1,000 | — | |||||||||
$ | 7,648 | $ | 9,171 | $ | 6,586 |
Year Ended December 31,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Amortization of Upfront Technology Access Fee
|
$ | 786 | $ | 500 | $ | — | ||||||
On-going Research and Development
|
850 | 1,200 | — | |||||||||
Materials, Equipment, and Contract Study Costs
|
470 | 1,063 | — | |||||||||
Milestone payments
|
— | 3,750 | — | |||||||||
$ | 2,106 | $ | 6,513 | $ | — |
Year Ended December 31,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Amortization of Upfront Technology Access Fee
|
$ | - | $ | - | $ | 128 | ||||||
On-going Research and Development
|
- | - | 8 | |||||||||
Materials, Equipment, and Contract Study Costs
|
- | - | - | |||||||||
$ | - | $ | - | $ | 136 |
Year Ending December 31
|
|||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
||||||||||
Current
|
|||||||||||||
Federal
|
$ | — | $ | — | $ | — | |||||||
State
|
50 | 7 | 2 | ||||||||||
Other
|
— | — | — | ||||||||||
Total current tax expense
|
50 | 7 | 2 | ||||||||||
Deferred
|
|||||||||||||
Federal
|
— | — | — | ||||||||||
State
|
— | — | — | ||||||||||
Other
|
— | — | — | ||||||||||
Total deferred tax expense
|
— | — | — | ||||||||||
Income tax provision
|
$ | 50 | $ | 7 | $ | 2 |
December 31
|
|||||||||
(in thousands)
|
2010
|
2009
|
|||||||
Deferred tax assets:
|
|||||||||
Net operating losses
|
$ | 9,515 | $ | 7,780 | |||||
Accruals
|
268 | 296 | |||||||
Deferred revenue
|
— | 664 | |||||||
Stock options
|
564 | 406 | |||||||
Other deferred tax assets
|
86 | 54 | |||||||
Total deferred tax assets
|
10,433 | 9,200 | |||||||
Deferred tax liabilities:
|
|||||||||
Property and equipment
|
(376 | ) | (322 | ) | |||||
Total deferred tax liabilities
|
(376 | ) | (322 | ) | |||||
Valuation allowance
|
(10,057 | ) | (8,878 | ) | |||||
Net deferred taxes
|
$ | — | $ | — |
2010
|
2009
|
2008
|
||||||||
$ | 1,179 | $ | (1,130 | ) | $ | 2,978 |
Expiration
|
||||||||
Amount
|
Years
|
|||||||
Net operating losses, federal
|
$ | 24,217 | 2024 - 2030 | |||||
Net operating losses, state
|
$ | 25,321 | 2016 - 2030 |
Year Ending December 31
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Income tax benefit at federal statutory rate
|
$ | (1,320 | ) | $ | 950 | $ | (2,758 | ) | ||||
State tax
|
(187 | ) | 152 | (435 | ) | |||||||
ISO-related expense for GAAP
|
384 | 196 | 207 | |||||||||
Change in valuation allowance
|
1,179 | (1,130 | ) | 2,978 | ||||||||
Other
|
(6 | ) | (161 | ) | 10 | |||||||
Total
|
$ | 50 | $ | 7 | $ | 2 |
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
||
Page
|
||
Reports of Independent Registered Public Accounting Firm
|
38
|
|
Consolidated Balance Sheets as of December 31, 2010 and 2009
|
40
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008 and for the cumulative period from July 1, 2002 (inception) to December 31, 2010
|
41
|
|
Consolidated Statements of Stockholder's Equity for the cumulative period from July 1, 2002 (inception) to December 31, 2010
|
42
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008 and for the cumulative period from July 1, 2002 (inception) to December 31, 2010
|
46
|
Date:
March 9, 2011
|
NOVABAY PHARMACEUTICALS, INC.
|
|
By:
|
/S/ RAMIN NAJAFI
|
|
Ramin (Ron) Najafi
|
||
Chairman and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/S/ RAMIN NAJAFI
|
Chairman of the Board and Chief Executive Officer
(principal executive officer)
|
March 8, 2011
|
||
Ramin (Ron) Najafi
|
||||
/S/ THOMAS PAULSON
|
Chief Financial Officer and Treasurer (principal
financial and accounting officer)
|
March 8, 2011
|
||
Thomas J. Paulson
|
||||
/S/ CHARLES J. CASHION
|
Director
|
March 8, 2011
|
||
Charles J. Cashion
|
||||
/S/ ANTHONY DAILLEY
|
Director
|
March 8, 2011
|
||
Anthony Dailley, DDS
|
||||
/S/ PAUL FREIMAN
|
Director
|
March 9, 2011
|
||
Paul E. Freiman
|
||||
/S/ ALEX MCPHERSON
|
Director
|
March 7, 2011
|
||
Alex McPherson, MD, Ph.D.
|
||||
/S/ ROBERT R. TUFTS
|
Director
|
March 8, 2011
|
||
Robert R. Tufts
|
||||
/S/ TONY WICKS
|
Director
|
March 8, 2011
|
||
Tony Wicks
|
||||
/S/ GAIL MADERIS
|
Director
|
March 7, 2011
|
||
Gail Maderis
|
Exhibit
No.
|
Description
|
|
2.1
|
Agreement and Plan of Merger between NovaBay Pharmaceuticals, Inc., a California corporation, and NovaBay Pharmaceuticals, Inc., a Delaware corporation, dated as of June 25, 2010 (Incorporated by reference to the exhibit of the same number from the Company’s Post-Effective Amendment No. 2 to the registration statement on Form S-3 filed with the SEC on July 1, 2010 (File Nos. 333-159917))
|
|
3.1
|
Certificate of Incorporation of NovaBay Pharmaceuticals, Inc., a Delaware corporation (Incorporated by reference to the exhibit of the same number from the Company’s current report on Form 8-K, as filed with the SEC on June 29, 2010 (SEC File No. 001-33678))
|
|
3.2
|
Bylaws of NovaBay Pharmaceuticals, Inc., a Delaware corporation (Incorporated by reference to the exhibit of the same number from the Company’s current report on Form 8-K as filed with the SEC on June 29, 2010 (SEC File No. 001-33678))
|
|
4.1*
|
Specimen common stock certificate
|
|
4.2
|
Form of Form of Common Stock Purchase Warrant issued in August 2009. (Incorporated by reference to Exhibit 4.3 to the Company’s current report on Form 8-K as filed with the SEC on August 21, 2009 (SEC File No. 001-33678).)
|
|
10.1*+
|
2002 Stock Option Plan, and forms of agreements thereto
|
|
10.2*+
|
2005 Stock Option Plan, and forms of agreements thereto
|
|
10.3*+
|
2007 Omnibus Incentive Plan, and forms of agreements thereto (
(the Plan is incorporated by reference to Exhibit 10.1 from the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 as filed with the SEC on August 14, 2008
(SEC File No. 001-33678)
, and the forms of agreements thereto are incorporated by reference to the exhibit referencing the Plan from the Company’s amendment to registration statement of Form S-1 (File No. 333-140714) filed with the Securities and Exchange Commission on May 29, 2007, as amended.)
|
|
10.4*+
|
Employment Agreement dated January 1, 2007 by and between the Company and Ramin (Ron) Najafi
|
|
10.5*+
|
Employment Agreement dated January 1, 2007 by and between the Company and John (Jack) O’Reilly
|
|
10.6*+
|
Employment Agreement dated January 1, 2007 by and between the Company and Behzad Khosrovi
|
|
10.7+
|
NovaBay Pharmaceuticals, Inc. Employee Incentive Cash Compensation Plan (
Incorporated by reference to Exhibit of the same number from the Company’s annual report on Form 10-K for the year end December 31, 2009 as filed with the SEC on March 30, 2010 (SEC File No. 001-33678).)
.
|
|
10.8+
|
Employment Agreement dated January 9, 2008 by and between the Company and Thomas J. Paulson (Incorporated by reference to Exhibit 10.18 from the Company’s annual report on Form 10-K for the year end December 31, 2007 as filed with the SEC on March 14, 2008 (SEC File No. 001-33678).)
|
|
10.10*
|
Office Lease dated June 3, 2004 by and between the Company and Emery Station Associates II, LLC, as amended
|
|
10.11
|
Fifth Amendment dated November 20, 2007 to Office Lease dated June 3, 2004 by and between the Company and Emery Station Associates II, LLC, as amended (Incorporated by reference to Exhibit 10.20 from the Company’s annual report on Form 10-K for the year ended December 31, 2007 as filed with the SEC on March 14, 2008 (SEC File No. 001-33678).)
|
|
10.12
|
Sixth Amendment to Lease between Emery Station Office II, LLC and Novacal Pharmaceuticals, Inc., effective September 1, 2008. (Incorporated by reference to Exhibit 10.1 from the Company’s quarterly report on Form 10-Q/A for the quarter ended September 30, 2008 as filed with the SEC on November 14, 2008 (SEC File No. 001-33678)).
|
|
10.13†
|
Collaboration and License Agreement, by a
nd between the
Company
and Galderma S.A., dated as of March 20, 2009
(Incorporated by reference to Exhibit 10.2 from the Company’s quarterly report on Form 10-Q/A for the quarter ended March 31, 2009, as filed with the SEC on August 4, 2009 (SEC File No. 001-33678)).
|
10.14+
|
Director Compensation Plan
(
Incorporated by reference to Exhibit of the same number from the Company’s annual report on Form 10-K for the year end December 31, 2009 as filed with the SEC on March 30, 2010 (SEC File No. 001-33678))
.
|
|
10.15*†
|
Collaboration and License Agreement dated August 29, 2006 by and between the Company and Alcon Manufacturing, Ltd.
|
|
10.16*
|
Master Security Agreement dated April 23, 2007 by and between the Company and General Electric Capital Corporation
|
|
10.17*
|
Form of Common Stock Purchase Warrant by and between the Company and the underwriters
|
|
10.18†
|
Amendment No. 1 to the Collaboration and License Agreement, dated as of December 1, 2009, between the Company and Galderma S.A.
(
Incorporated by reference to Exhibit of the same number from the Company’s annual report on Form 10-K for the year end December 31, 2009 as filed with the SEC on March 30, 2010 (SEC File No. 001-33678))
.
|
|
10.19+
|
Executive Officer Cash Compensation Arrangements
(
Incorporated by reference to Exhibit of the same number from the Company’s annual report on Form 10-K for the year end December 31, 2009 as filed with the SEC on March 30, 2010, and the description in Item 5.02 of the Company’s current report on Form 8-K as filed with the SEC on February 25, 2011 (SEC File No. 001-33678))
.
|
|
10.20+
|
Employment Agreement, dated July 28, 2009, between the Company and Roy Wu
(
Incorporated by reference to Exhibit of the same number from the Company’s annual report on Form 10-K for the year end December 31, 2009 as filed with the SEC on March 30, 2010 (SEC File No. 001-33678))
.
|
|
10.21
|
Placement Agent Agreement, dated August 21, 2009, by and between the Company and Maxim Group LLC (
Incorporated by reference to Exhibit 1.1 from the Company’s quarterly report on Form 8-K as filed with the SEC on August 21, 2009 (SEC File No. 001-33678)).
|
|
10.22+
|
Employment Agreement, dated October 15, 2009, between the Company and Mark Anderson
(
Incorporated by reference to Exhibit of the same number from the Company’s annual report on Form 10-K for the year end December 31, 2009 as filed with the SEC on March 30, 2010 (SEC File No. 001-33678))
.
|
|
10.23+
|
Form of Indemnification Agreement between NovaBay Pharmaceuticals, Inc. and its Directors and Officers. (Incorporated by reference to Exhibit 10.1 from the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2010, as filed with the SEC on August 12, 2010 (SEC File No. 001-33678).)
|
|
10.24††
|
Amendment No. 2 to the Collaboration and License Agreement, dated as of December 2, 2010, between the Company and Galderma S.A.
|
|
10.25††
|
Amendment No. 1 to the Collaboration and License Agreement dated November 18, 2010 by and between the Company and Alcon Manufacturing, Ltd.
|
|
23.1
|
Consent of Odenberg, Ullakko, Muranishi & Co. LLP
|
|
23.2
|
Consent of Davidson & Co, LLP
|
|
24.1
|
Power of Attorney (included on the signature pages hereto)
|
|
31.1
|
Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification of the chief executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2
|
Certification of the chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
*
|
Incorporated by reference to the exhibit of the same description from the Company’s registration statement of Form S-1 (File No. 333-140714) initially filed with the Securities and Exchange Commission on February 14, 2007, as amended.
|
+
|
Indicates a management contract or compensatory plan or arrangement
|
†
|
NovaBay Pharmaceuticals, Inc. has been granted confidential treatment with respect to certain portions of this exhibit (indicated by asterisks), which have been separately filed with the Securities and Exchange Commission.
|
††
|
NovaBay Pharmaceuticals, Inc. has requested confidential treatment with respect to certain portions of this exhibit (indicated by asterisks), which have been separately filed with the Securities and Exchange Commission.
|
1.
|
The Parties acknowledge and agree that pursuant to the Certificate of Merger effective June 29, 2010, a copy of which is attached as Exhibit A, NovaBay assumed and hereby assumes all rights and obligations of NovaBay California under this Amendment No. 2 and the Agreement.
|
2.
|
Definitions
. Unless otherwise defined in this Amendment 2, all terms appearing herein with a capital letter shall have the meaning set forth in the Agreement.
|
3.
|
Continuation
. Galderma hereby elects to continue the Collaboration beyond the Initial Period as provided in Section 8.2 of the Agreement. Accordingly, Galderma shall pay the Continuation Fee in the amount of $3,250,000 within eight (8) business days of the Amendment 2 Effective Date. For clarity and notwithstanding anything in Section 8.2.1 to the contrary, NovaBay agrees the Continuation Fee despite being paid after 1 October 2010 shall be $3,250,000.
|
4.
|
FTE Funding: Development Activities
.
|
5.
|
Expansion of the Field
. The Parties acknowledge that the Field as defined in this Amendment 2 has been expanded to include onychomycosis. In consideration of such expansion, Galderma agrees to pay to NovaBay the following:
|
Milestone Event
|
Onychomycosis
Product
|
|||
1. Acceptance of an IND
|
[ | ***] | ||
2. First successful completion of a Phase II Clinical Trial
|
$ | [ | ***] | |
3. First initiation of any Phase III Clinical Trial
|
$ | [ | ***] | |
4. First filing of an MAA in a Major Market
|
$ | [ | ***] | |
5. First receipt of a Marketing Approval in a Major Market
|
$ | [ | ***] |
6.
|
Expansion of the Galderma Territory for Impetigo Products
. The Parties acknowledge that Galderma is interested that the Galderma Territory with respect to the Impetigo Products be expanded to include Asia-Pacific territory. In consideration of such expansion, Galderma agrees to pay to NovaBay the following:
|
7.
|
Payment of the Impetigo Reimbursement Amount
. Notwithstanding Section 8.2.2, the payment of the Impetigo Reimbursement Amount shall become due and payable by Galderma to NovaBay upon decision by Galderma to initiate a Phase III Clinical Trial for an Impetigo Product, which decision shall occur no later than 30 September 2012. The Parties hereby agree that the Impetigo Reimbursement Amount shall be $[***].
|
8.
|
Payment of the Milestone Payment for Milestone Event 2 for an Impetigo Product
. Notwithstanding Section 8.4, the payment of Milestone Event 2 for an Impetigo Product shall be due and payable upon the successful completion of the first Phase II Clinical Trial for an Impetigo Product initiated after the Amendment 2 Effective Date.
|
9.
|
No Other Amendment
. Except as otherwise provided in this Amendment 2, all other terms and conditions of the Agreement shall remain in full force and effect.
|
GALDERMA | NOVABAY | ||||
By: | /s/Humberto C Antunes | By: | /s/ Ramin Najafi | ||
Name: | Humberto C Antunes | Name: | Ramin "Ron" Najafi, Ph.D. | ||
Title: | CEO | Title: | CEO & Chairman | ||
China, The People’s Republic
|
|
(including Hong Kong and Macao)
|
Maldives
|
Cook Islands
|
Marshall Islands
|
East Timor
|
Micronesia
|
Fiji
|
Mongolia
|
India
|
Myanmar
|
Indonesia
|
Nauru
|
Iran
|
Nepal
|
Iraq
|
Niue
|
Israel*
|
North Korea
|
Jordan*
|
Oman
|
Kazakhstan
|
Pakistan
|
Palau
|
Taiwan (Republic of China)
|
Palestine*
|
Tajikistan
|
Papua New Guinea
|
Thailand
|
Philippines
|
Tonga
|
Qatar
|
Turkey*
|
Samoa
|
Turkmenistan
|
Saudi Arabia*
|
Tuvalu
|
Singapore
|
United Arab Emirates*
|
Solomon Islands
|
Uzbekistan
|
South Korea
|
Vanuatu
|
Sri Lanka
|
Viet Nam
|
Syria*
|
Yemen
|
Bangladesh
|
Tonga
|
Bhutan
|
Tuvalu
|
Brunei
|
Vanuatu
|
Cambodia
|
Viet Nam
|
China, The People’s Republic
|
|
(including Hong Kong and Macao)
|
|
Cook Islands
|
|
East Timor
|
|
Fiji
|
|
India
|
|
Indonesia
|
|
Kiribati
|
|
Laos
|
|
Malaysia
|
|
Maldives
|
|
Marshall Islands
|
|
Micronesia
|
|
Mongolia
|
|
Myanmar
|
|
Nauru
|
Nepal
|
|
Niue
|
|
North Korea
|
|
Palau
|
|
Papua New Guinea
|
|
Philippines
|
|
Samoa
|
|
Singapore
|
|
Solomon Islands
|
|
South Korea
|
|
Sri Lanka
|
|
Taiwan (Republic of China)
|
|
Thailand
|
NOVABAY PHARMACEUTICALS, INC. | ALCON RESEARCH, LTD. | ||
By: /s/Ron Najafi | By: /s/Sabri Markabi | ||
Name: Ron Najafi, Ph.D | Name: Sabri Markabi, M.D. | ||
Title: Chairman & Chief Executive Officer |
Title:
Senior Vice President and Chief
Medical Officer
|
||
Date: 11/18/10 | Date: |
/s/Ramin Najafi
Ramin Najafi
President
/s/Robert R. Tufts
Robert R. Tufts
Secretary
|
Name
|
State of Incorporation
|
|
NovaBay Pharmaceuticals, Inc.
|
California
|
|
NovaBay Pharmaceuticals, Inc.
|
Delaware
|
Alcon Research, Ltd.,
a Delaware corporation
By:
/s/Elaine E. Whitbeck
Elaine E. Whitbeck, Senior VicePresident,
General Counsel, andCorporate Secretary
|
Vancouver, Canada
|
Chartered Accountants
|
March 9, 2011
|
/s/ Ramin Najafi
|
/s/ Thomas J. Paulson
|
/s/ Ramin Najafi
|
/
s/ Thomas J. Paulson
|