UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2013
or
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 001-35560
ImmunoCellular Therapeutics, Ltd.
(Exact name of registrant as specified in its charter)
Delaware |
|
93-1301885 |
|
(State or other jurisdiction of incorporation or organization) |
|
(IRS Employer Identification No.) |
|
|
|
||
23622 Calabasas Road, Suite 300 Calabasas, California |
|
91302 |
|
(Address of principal executive offices) |
|
(Zip code) |
(818) 264-2300
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
¨ |
|
Accelerated Filer |
x |
|
|
|
|
|
Non-accelerated filer (Do not check if a smaller reporting company) |
¨ |
|
Smaller reporting company |
¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The Issuer had 57,095,788 shares of its common stock outstanding as of November 1, 2013.
ImmunoCellular Therapeutics, Ltd.
FORM 10-Q
Table of Contents
|
Page |
PART 1 |
|
3 |
|
|
|
3 |
|
|
|
Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations |
20 |
|
|
Item 3: Quantitative and Qualitative Disclosures About Market Risk |
25 |
|
|
25 |
|
|
|
PART II |
|
26 |
|
|
|
26 |
|
|
|
26 |
|
|
|
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds |
26 |
|
|
26 |
|
|
|
26 |
|
|
|
26 |
|
|
|
27 |
|
|
|
28 |
|
|
|
29 |
2
PART 1
Item 1. Condensed Financial Statements
ImmunoCellular Therapeutics, Ltd.
(A Development Stage Company)
Condensed Balance Sheets
|
September 30,
|
|
|
December 31,
|
|
||
|
(unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
29,433,560 |
|
|
$ |
26,216,668 |
|
Other assets |
|
401,962 |
|
|
|
714,508 |
|
Total current assets |
|
29,835,522 |
|
|
|
26,931,176 |
|
Property and equipment, net |
|
74,667 |
|
|
|
76,289 |
|
Deposits |
|
28,844 |
|
|
|
11,736 |
|
Total assets |
$ |
29,939,033 |
|
|
$ |
27,019,201 |
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
554,743 |
|
|
$ |
732,851 |
|
Accrued compensation and benefits |
|
296,262 |
|
|
|
309,345 |
|
Accrued expenses |
|
216,524 |
|
|
|
56,111 |
|
Total current liabilities |
|
1,067,529 |
|
|
|
1,098,307 |
|
Warrant liability |
|
3,690,609 |
|
|
|
2,852,880 |
|
Commitments and contingencies (Note 5) |
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
Common stock, $0.0001 par value; 149,000,000 shares and 99,000,000 shares authorized as of September 30, 2013 and 2012, respectively; 56,625,294 shares and 51,500,996 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively |
|
5,663 |
|
|
|
5,150 |
|
Additional paid-in capital |
|
77,261,623 |
|
|
|
66,231,694 |
|
Deficit accumulated during the development stage |
|
(52,086,391 |
) |
|
|
(43,168,830 |
) |
Total shareholders equity |
|
25,180,895 |
|
|
|
23,068,014 |
|
Total liabilities and shareholders equity |
$ |
29,939,033 |
|
|
$ |
27,019,201 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ImmunoCellular Therapeutics, Ltd.
(A Development Stage Company)
Condensed Statements of Operations
(unaudited)
|
For the Three Months Ended September 30, 2013 |
|
|
For the
|
|
|
For the Nine
|
|
|
For the Nine
|
|
|
February 25, 2004 (Inception) to September 30
|
|
|||||
Revenues |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
300,000 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
1,276,507 |
|
|
|
2,378,917 |
|
|
|
3,905,338 |
|
|
|
6,567,086 |
|
|
|
22,165,450 |
|
Stock based compensation |
|
156,277 |
|
|
|
33,887 |
|
|
|
500,351 |
|
|
|
382,611 |
|
|
|
9,216,363 |
|
General and administrative |
|
985,107 |
|
|
|
1,004,181 |
|
|
|
2,542,794 |
|
|
|
2,647,301 |
|
|
|
15,227,541 |
|
Total expenses |
|
2,417,891 |
|
|
|
3,416,985 |
|
|
|
6,948,483 |
|
|
|
9,596,998 |
|
|
|
46,609,354 |
|
Loss before other income (expense) and income taxes |
|
(2,417,891 |
) |
|
|
(3,416,985 |
) |
|
|
(6,948,483 |
) |
|
|
(9,596,998 |
) |
|
|
(46,309,354 |
) |
Interest income |
|
3,667 |
|
|
|
1,858 |
|
|
|
14,310 |
|
|
|
4,867 |
|
|
|
362,053 |
|
Financing expense |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(368,524 |
) |
|
|
(397,294 |
) |
Change in fair value of warrant liability |
|
(1,379,217 |
) |
|
|
2,777,500 |
|
|
|
(1,983,388 |
) |
|
|
(5,018,224 |
) |
|
|
(3,649,296 |
) |
Loss before income taxes |
|
(3,793,441 |
) |
|
|
(637,627 |
) |
|
|
(8,917,561 |
) |
|
|
(14,978,879 |
) |
|
|
(49,993,891 |
) |
Income taxes |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Net loss |
|
(3,793,441 |
) |
|
|
(637,627 |
) |
|
|
(8,917,561 |
) |
|
|
(14,978,879 |
) |
|
|
(49,993,891 |
) |
Deemed dividend on redemption of preferred stock |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(2,092,500 |
) |
Net loss attributable to common stock |
$ |
(3,793,441 |
) |
|
$ |
(637,627 |
) |
|
$ |
(8,917,561 |
) |
|
$ |
(14,978,879 |
) |
|
$ |
(52,086,391 |
) |
Net loss per share, basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.38 |
) |
|
$ |
(2.68 |
) |
Weighted average number of shares basic and diluted |
|
55,307,906 |
|
|
|
40,329,306 |
|
|
|
53,289,854 |
|
|
|
39,260,253 |
|
|
|
19,438,888 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ImmunoCellular Therapeutics, Ltd.
(A Development Stage Company)
Condensed Statements of Shareholders Equity (Deficit)
(unaudited)
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional
|
|
|
Promissory
|
|
|
Deficit
|
|
|
Total |
|
||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
||||||||||||
Initial capitalization at $0.00002 per share |
|
0 |
|
|
$ |
0 |
|
|
|
6,256,500 |
|
|
$ |
10 |
|
|
$ |
87 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
97 |
|
Common stock issued for cash during 2004 at $0.00078 per share |
|
0 |
|
|
|
0 |
|
|
|
193,500 |
|
|
|
15 |
|
|
|
135 |
|
|
|
0 |
|
|
|
0 |
|
|
|
150 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(11,741 |
) |
|
|
(11,741 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004 |
|
0 |
|
|
|
0 |
|
|
|
6,450,000 |
|
|
|
25 |
|
|
|
222 |
|
|
|
0 |
|
|
|
(11,741 |
) |
|
|
(11,494 |
) |
Common stock issued for cash during 2005 at $0.19 per share |
|
0 |
|
|
|
0 |
|
|
|
387,000 |
|
|
|
659 |
|
|
|
74,341 |
|
|
|
0 |
|
|
|
0 |
|
|
|
75,000 |
|
Common stock issued for cash during 2005 at $0.32 per share |
|
0 |
|
|
|
0 |
|
|
|
154,800 |
|
|
|
16 |
|
|
|
49,984 |
|
|
|
0 |
|
|
|
0 |
|
|
|
50,000 |
|
Common stock issued for research and development during 2005 at $0.99 per share |
|
0 |
|
|
|
0 |
|
|
|
154,800 |
|
|
|
15 |
|
|
|
152,745 |
|
|
|
0 |
|
|
|
0 |
|
|
|
152,760 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(246,004 |
) |
|
|
(246,004 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005 |
|
0 |
|
|
|
0 |
|
|
|
7,146,600 |
|
|
|
715 |
|
|
|
277,292 |
|
|
|
0 |
|
|
|
(257,745 |
) |
|
|
20,262 |
|
Common stock issued for services during 2006 at $0.50 per share |
|
0 |
|
|
|
0 |
|
|
|
73,093 |
|
|
|
7 |
|
|
|
36,539 |
|
|
|
0 |
|
|
|
0 |
|
|
|
36,546 |
|
Common stock issued for cash during 2006 in private placements at $1.00 per share, net of redemptions |
|
0 |
|
|
|
0 |
|
|
|
1,510,000 |
|
|
|
151 |
|
|
|
549,249 |
|
|
|
0 |
|
|
|
0 |
|
|
|
549,400 |
|
Common stock issued for research and development during 2006 at $1.00 per share |
|
0 |
|
|
|
0 |
|
|
|
694,000 |
|
|
|
69 |
|
|
|
693,931 |
|
|
|
0 |
|
|
|
0 |
|
|
|
694,000 |
|
Shares issued in connection with reverse merger |
|
0 |
|
|
|
0 |
|
|
|
825,124 |
|
|
|
83 |
|
|
|
(83 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Shares cancelled in connection with the sale of Optical Molecular Imaging, Inc. |
|
0 |
|
|
|
0 |
|
|
|
(2,059,100 |
) |
|
|
(206 |
) |
|
|
(64,794 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(65,000 |
) |
Exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
10,062 |
|
|
|
1 |
|
|
|
3,521 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,522 |
|
Stock based compensation (options) |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,103,645 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,103,645 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(5,152,713 |
) |
|
|
(5,152,713 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006 |
|
0 |
|
|
|
0 |
|
|
|
8,199,779 |
|
|
|
820 |
|
|
|
5,599,300 |
|
|
|
0 |
|
|
|
(5,410,458 |
) |
|
|
189,662 |
|
Common stock issued for cash during 2007 in private placements at $1.50 per share |
|
0 |
|
|
|
0 |
|
|
|
3,531,603 |
|
|
|
353 |
|
|
|
4,892,133 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,892,486 |
|
Exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
51,111 |
|
|
|
5 |
|
|
|
(5 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Reclassification of warrant derivative liability |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,233,600 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,233,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation (options) |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,296,714 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,296,714 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(3,614,753 |
) |
|
|
(3,614,753 |
) |
5
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional
|
|
|
Promissory
|
|
|
Deficit
|
|
|
Total |
|
||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2007 |
|
0 |
|
|
$ |
0 |
|
|
|
11,782,493 |
|
|
$ |
1,178 |
|
|
|
14,021,742 |
|
|
|
0 |
|
|
|
(9,025,211 |
) |
|
|
4,997,709 |
|
Common stock issued for research and development during 2008 at $0.53 per share |
|
0 |
|
|
|
0 |
|
|
|
800,000 |
|
|
|
80 |
|
|
|
423,920 |
|
|
|
0 |
|
|
|
0 |
|
|
|
424,000 |
|
Common stock issued for research and development during 2008 at $0.65 per share |
|
0 |
|
|
|
0 |
|
|
|
100,000 |
|
|
|
10 |
|
|
|
64,990 |
|
|
|
0 |
|
|
|
0 |
|
|
|
65,000 |
|
Stock based compensation (options) |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
513,357 |
|
|
|
0 |
|
|
|
0 |
|
|
|
513,357 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(3,059,730 |
) |
|
|
(3,059,730 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
0 |
|
|
|
0 |
|
|
|
12,682,493 |
|
|
|
1,268 |
|
|
|
15,024,009 |
|
|
|
0 |
|
|
|
(12,084,941 |
) |
|
|
2,940,336 |
|
Exercise of warrants |
|
0 |
|
|
|
0 |
|
|
|
1,970,992 |
|
|
|
197 |
|
|
|
462,551 |
|
|
|
0 |
|
|
|
0 |
|
|
|
462,748 |
|
Exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
214,357 |
|
|
|
22 |
|
|
|
64,460 |
|
|
|
(52,668 |
) |
|
|
0 |
|
|
|
11,814 |
|
Stock based compensation (options) |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
308,302 |
|
|
|
0 |
|
|
|
0 |
|
|
|
308,302 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(2,626,205 |
) |
|
|
(2,626,205 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
0 |
|
|
|
0 |
|
|
|
14,867,842 |
|
|
|
1,487 |
|
|
|
15,859,322 |
|
|
|
(52,668 |
) |
|
|
(14,711,146 |
) |
|
|
1,096,995 |
|
Common stock and warrants issued for cash during 2010 at $1.00 per share, net of offering costs |
|
0 |
|
|
|
0 |
|
|
|
4,230,910 |
|
|
|
423 |
|
|
|
3,248,315 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,248,738 |
|
Preferred stock and warrants issued for cash during 2010 at $10,000 per share, net of offering costs |
|
400 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Exercise of warrants in exchange for promissory note |
|
0 |
|
|
|
0 |
|
|
|
2,700,000 |
|
|
|
270 |
|
|
|
5,399,730 |
|
|
|
(5,400,000 |
) |
|
|
0 |
|
|
|
0 |
|
Redemption of preferred stock for repayment of promissory note |
|
(400 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,400,000 |
|
|
|
(2,092,500 |
) |
|
|
3,307,500 |
|
Exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
50,000 |
|
|
|
5 |
|
|
|
26,495 |
|
|
|
0 |
|
|
|
0 |
|
|
|
26,500 |
|
Cashless exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
297,156 |
|
|
|
30 |
|
|
|
(30 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Common stock issued for services during 2010 at $0.90 per share |
|
0 |
|
|
|
0 |
|
|
|
60,000 |
|
|
|
6 |
|
|
|
53,994 |
|
|
|
0 |
|
|
|
0 |
|
|
|
54,000 |
|
Common stock issued for services during 2010 at $1.06 per share |
|
0 |
|
|
|
0 |
|
|
|
7,694 |
|
|
|
0 |
|
|
|
8,156 |
|
|
|
0 |
|
|
|
0 |
|
|
|
8,156 |
|
Stock based compensation |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
745,697 |
|
|
|
0 |
|
|
|
0 |
|
|
|
745,697 |
|
Interest on promissory note |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(1,614 |
) |
|
|
0 |
|
|
|
(1,614 |
) |
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(6,150,142 |
) |
|
|
(6,150,142 |
) |
Balance at December 31, 2010 |
|
0 |
|
|
|
0 |
|
|
|
22,213,602 |
|
|
|
2,221 |
|
|
|
25,341,679 |
|
|
|
(54,282 |
) |
|
|
(22,953,788 |
) |
|
|
2,335,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and warrants issued for cash during 2011 at $1.55 per share, net of offering costs |
|
0 |
|
|
|
0 |
|
|
|
5,219,768 |
|
|
|
522 |
|
|
|
4,982,817 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,983,339 |
|
Exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
382,000 |
|
|
|
38 |
|
|
|
388,341 |
|
|
|
0 |
|
|
|
0 |
|
|
|
388,379 |
|
Cashless exercise of stock options |
|
0 |
|
|
|
0 |
|
|
|
667,077 |
|
|
|
67 |
|
|
|
(67 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Stock based compensation |
|
0 |
|
|
|
0 |
|
|
|
131,537 |
|
|
|
13 |
|
|
|
1,190,120 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,190,133 |
|
Interest on promissory note |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(352 |
) |
|
|
0 |
|
|
|
(352 |
) |
Redemption of promissory note |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
54,634 |
|
|
|
0 |
|
|
|
54,634 |
|
Net loss |
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(5,719,903 |
) |
|
|
(5,719,903 |
) |
6
The accompanying notes are an integral part of these unaudited condensed financial statements.
7
ImmunoCellular Therapeutics, Ltd.
(A Development Stage Company)
Condensed Statements of Cash Flows
(unaudited)
|
For the
|
|
|
For the
|
|
|
February 25, 2004 (Inception) to
|
|
|||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(8,917,561 |
) |
|
$ |
(14,978,879 |
) |
|
$ |
(49,993,891 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
35,682 |
|
|
|
34,331 |
|
|
|
110,967 |
|
Loss on disposal of assets |
|
3,817 |
|
|
|
0 |
|
|
|
3,817 |
|
Change in fair value of warrant liability |
|
1,983,388 |
|
|
|
5,018,224 |
|
|
|
3,649,296 |
|
Financing expense |
|
0 |
|
|
|
368,524 |
|
|
|
397,294 |
|
Stock-based compensation |
|
500,351 |
|
|
|
382,611 |
|
|
|
9,154,207 |
|
Common stock issued for services |
|
0 |
|
|
|
0 |
|
|
|
98,703 |
|
Common stock issued for research and development |
|
0 |
|
|
|
0 |
|
|
|
1,335,760 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
370,438 |
|
|
|
(501,714 |
) |
|
|
(421,969 |
) |
Accounts payable |
|
(178,108 |
) |
|
|
91,421 |
|
|
|
554,393 |
|
Accrued liabilities |
|
147,330 |
|
|
|
397,899 |
|
|
|
512,786 |
|
Net cash used in operating activities |
|
(6,054,663 |
) |
|
|
(9,187,583 |
) |
|
|
(34,598,637 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
(37,877 |
) |
|
|
(5,668 |
) |
|
|
(193,569 |
) |
Cash paid for sale of Optical Molecular Imaging, Inc. |
|
0 |
|
|
|
0 |
|
|
|
(25,000 |
) |
Net cash used in investing activities |
|
(37,877 |
) |
|
|
(5,668 |
) |
|
|
(218,569 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
141,631 |
|
|
|
20,500 |
|
|
|
592,344 |
|
Proceeds from exercise of warrants |
|
4,261,723 |
|
|
|
3,153,852 |
|
|
|
7,926,389 |
|
Payments on promissory note receivable |
|
0 |
|
|
|
0 |
|
|
|
53,018 |
|
Proceeds from issuance of common stock and warrants, net of offering costs |
|
4,906,078 |
|
|
|
9,371,370 |
|
|
|
51,899,857 |
|
Proceeds from issuance of preferred stock and warrants, net of offering costs |
|
0 |
|
|
|
0 |
|
|
|
3,779,158 |
|
Net cash provided by financing activities |
|
9,309,432 |
|
|
|
12,545,722 |
|
|
|
64,250,766 |
|
Increase in cash and cash equivalents |
|
3,216,892 |
|
|
|
3,352,471 |
|
|
|
29,433,560 |
|
Cash and cash equivalents, beginning of period |
|
26,216,668 |
|
|
|
6,653,168 |
|
|
|
0 |
|
Cash and cash equivalents, end of period |
$ |
29,433,560 |
|
|
$ |
10,005,639 |
|
|
$ |
29,433,560 |
|
Supplemental cash flows disclosures: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense paid |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Income taxes paid |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Supplemental non-cash financing disclosures: |
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants in exchange for promissory note |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,350,000 |
|
Redemption of preferred stock for repayment of promissory note |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,350,000 |
|
Deemed dividend on redemption of preferred stock |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,092,500 |
|
Warrant liability converted to additional paid-in capital upon exercise |
$ |
1,145,659 |
|
|
$ |
1,944,688 |
|
|
$ |
3,127,404 |
|
Deposits used to acquire property and equipment |
$ |
0 |
|
|
$ |
35,882 |
|
|
$ |
35,882 |
|
Deferred offering costs |
$ |
0 |
|
|
$ |
0 |
|
|
$ |
182,599 |
|
Common stock issued for license rights |
$ |
75,000 |
|
|
$ |
0 |
|
|
$ |
75,000 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
8
ImmunoCellular Therapeutics, Ltd.
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
1. Nature of Organization and Development Stage Operations
ImmunoCellular Therapeutics, Ltd. (the Company) is a development stage company that is seeking to develop and commercialize new therapeutics to fight cancer using the immune system.
Since the Companys inception on February 25, 2004, the Company has been primarily engaged in the acquisition of certain intellectual property, together with development of its product candidates and the recent clinical testing activities for one of its vaccine product candidates, and has not generated any recurring revenues. The Companys lead product candidate, ICT-107, is in Phase II clinical development. The Company has two other candidates, ICT-140 and ICT-121, that each have investigational new drug (IND) applications for initiation of clinical development. The Company has sustained operating losses and, as of September 30, 2013, the Company had an accumulated deficit of $52,086,391. The Company expects to incur significant research, development and administrative expenses before any of its products can be launched and recurring revenues generated.
Interim Results
The accompanying condensed financial statements as of September 30, 2013 and for the three and nine months periods ended September 30, 2013 and 2012 and for the period from February 25, 2004 (inception) to September 30, 2013 are unaudited, but include all adjustments, consisting of normal recurring entries, which the Companys management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2012 have been derived from the Companys audited financial statements included in its Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (SEC) on March 11, 2013.
The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the Companys audited financial statements in its Form 10-K for the year ended December 31, 2012. The Companys operating results will fluctuate for the foreseeable future. Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.
2. Summary of Significant Accounting Policies
Development Stage Enterprise The Company is a development stage enterprise and is devoting substantially all of its present efforts to research and development. All losses accumulated since inception are considered part of the Companys development stage activities.
Liquidity As of September 30, 2013, the Company had working capital of $28,767,993, compared to working capital of $25,832,869 as of December 31, 2012. The estimated cost of completing the development of any of our current vaccine product candidates and of obtaining all required regulatory approvals to market any of those product candidates is substantially greater than the amount of funds we currently have available. However, we believe that our existing cash balances will be sufficient to fund our operations for at least the next twelve months, although there is no assurance that such proceeds will be sufficient.
Cash and cash equivalents The Company considers all highly liquid instruments with an original maturity of 90 days or less at acquisition to be cash equivalents. As of September 30, 2013 and December 31, 2012, the Company had $25,910,858 and $23,646,922, respectively, of certificates of deposit. The Company places its cash and cash equivalents with various banks in order to maintain FDIC insurance on all of its investments.
Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method based on the estimated useful lives (generally three to five years) of the related assets. Computer and computer equipment are depreciated over three years. Management continuously monitors and evaluates the realizability of recorded long-lived assets to determine whether their carrying values have been impaired. The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the nondiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. Any impairment loss is measured by comparing the fair value of the asset to its carrying amount. Repairs and maintenance costs are expensed as incurred.
Research and Development Costs Research and development expenses consist of costs incurred for direct research and development and are expensed as incurred.
9
Stock Based Compensation The Company records the cost for all share-based payment transactions in the Companys financial statements.
Stock option grants issued prior to March 31, 2011 to employees and officers and directors were valued using the Black-Scholes pricing model. Stock option grants made subsequent to March 31, 2011 were valued using the binomial lattice simulation model.
Fair value was estimated at the date of grant using the following weighted average assumptions:
|
Nine months
|
|
|
Nine months
|
|
||
Risk-free interest rate |
|
1.61 |
% |
|
|
0.66 |
% |
Expected dividend yield |
|
None |
|
|
|
None |
|
Expected life |
|
5.12 Years |
|
|
|
4.42 Years |
|
Expected volatility |
|
90.6 |
% |
|
|
64.7 |
% |
Expected forfeitures |
|
0 |
% |
|
|
0 |
% |
The risk-free interest rate used is based on the implied yield currently available in U.S. Treasury securities at maturity with an equivalent term. The Company has not declared or paid any dividends and does not currently expect to do so in the future. The expected term of options represents the period that our stock-based awards are expected to be outstanding and was determined based on projected holding periods for the remaining unexercised shares. Consideration was given to the contractual terms of our stock-based awards, vesting schedules and expectations of future employee behavior. For the nine months ended September 30, 2013, the expected volatility is based upon the historical volatility of the Companys common stock. For the nine months ended September 30, 2012, the expected volatility is based on market prices of traded options for comparable entities within our industry. Forfeitures have been estimated to be nil.
The Companys stock price volatility and option lives involve managements best estimates, both of which impact the fair value of the option calculated and, ultimately, the expense that will be recognized over the life of the option.
When options are exercised, our policy is to issue previously unissued shares of common stock to satisfy share option exercises. As of September 30, 2013, the Company had approximately 56,617,706 million shares of authorized but unissued common stock.
No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for substantially all net deferred tax assets.
Income Taxes The Company accounts for federal and state income taxes under the liability method, with a deferred tax asset or liability determined based on the difference between the financial statement and tax basis of assets and liabilities, as measured by the enacted tax rates. The Companys provision for income taxes represents the amount of taxes currently payable, if any, plus the change in the amount of net deferred tax assets or liabilities. A valuation allowance is provided against net deferred tax assets if recoverability is uncertain on a more likely than not basis. As of September 30, 2013 and December 31, 2012, the Company fully reserved its deferred tax assets. The Company recognizes in its financial statements the impact of an uncertain tax position if the position will more likely than not be sustained upon examination by a taxing authority, based on the technical merits of the position. The Companys policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. The Companys tax returns for the years ended December 31, 2012, 2011 and 2010 remain open for possible review.
Fair Value of Financial Instruments The carrying amounts reported in the balance sheets for cash, cash equivalents, and accounts payable approximate their fair values due to their quick turnover. The fair value of warrant derivative liability is estimated using the Binomial Lattice option valuation model.
Fair value for financial reporting is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1quoted prices in active markets for identical assets or liabilities
Level 2quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
10
Warrant liabilities represent the only financial assets or liabilities recorded at fair value by the Company. The fair value of warrant liabilities are determined based on Level 3 inputs.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions about the future outcome of current transactions which may affect the reporting and disclosure of these transactions. Accordingly, actual results could differ from those estimates used in the preparation of these financial statements.
Basic and Diluted Loss per Common Share Basic and diluted loss per common share are computed based on the weighted average number of common shares outstanding. Common share equivalents (which consist of options and warrants) are excluded from the computation if the effect would be antidilutive. Common share equivalents which could potentially dilute earnings per share, and which were excluded from the computation of diluted loss per share, totaled 14,610,187 shares and 19,290,100 shares at September 30, 2013 and 2012 respectively.
Recently Issued Accounting Standards In June 2011, the Financial Accounting Standards Board (FASB) issued ASU No. 2011-5, which amends the Comprehensive Income Topic of the ASC. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 became effective for interim and annual periods beginning after December 15, 2011. In February 2013, the FASB issued ASU No. 2013-02, which further amends the Comprehensive Income Topic of the ASC. This amendment requires entities to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount is being reclassified in its entirety to net income. This standard became effective for periods beginning after December 15, 2012. The adoption of these ASUs did not have a material impact on the Companys results of operations, financial condition or liquidity.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities Exchange Commission (the SEC) did not or are not believed by management to have a material impact on the Companys present or future financial statements.
3. Property and Equipment
Property and equipment consist of the following:
|
September 30,
|
|
|
December 31,
|
|
||
Computers |
$ |
58,375 |
|
|
$ |
23,192 |
|
Research equipment |
|
120,505 |
|
|
|
128,381 |
|
|
|
178,880 |
|
|
|
151,573 |
|
Accumulated depreciation |
|
(104,213 |
) |
|
|
(75,284 |
) |
|
$ |
74,667 |
|
|
$ |
76,289 |
|
Depreciation expense was $13,998 and $11,443 for the three months ended September 30, 2013 and 2012, respectively. Depreciation expense was $35,682 and $34,331 for the nine months ended September 30, 2013 and 2012, respectively. Depreciation expense was $110,967 for the period from February 25, 2004 (date of inception) to September 30, 2013.
4. Related-Party Transactions
Cedars-Sinai Medical Center License Agreement
Dr. John Yu, our Chief Scientific Officer and former interim Chief Executive Officer, is a neurosurgeon at Cedars-Sinai Medical Center (Cedars-Sinai). In November 2006, the Company entered into a license agreement with Cedars-Sinai under which the Company acquired an exclusive, worldwide license to its technology for use as cellular therapies, including cancer stem cell and dendritic cell-based vaccines for neurological disorders that include brain tumors and neurodegenerative disorders and other cancers. This technology is covered by a number of issued and pending U.S. and foreign patents and applications, and the term of the license will be until the last to expire of any patent claims that are issued covering this technology.
As an upfront licensing fee, the Company issued Cedars-Sinai 694,000 shares of its common stock and paid Cedars-Sinai $62,000. Additional specified milestone payments will be required to be paid to Cedars-Sinai when the Company initiates patient enrollment in its first Phase III clinical trial and when it receives FDA marketing approval for its first product.
11
The Company has agreed to pay Cedars-Sinai specified percentages of all of its sublicensing income and gross revenues from sales of products based on the licensed technology. To maintain its rights to the licensed technology, the Company must meet certain development and funding milestones. These milestones include, among others, commencing a Phase I clinical trial for a product candidate by March 31, 2007 and raising at least $5,000,000 in funding from equity or other sources by December 31, 2008. The Company satisfied the foregoing funding requirement in 2007 and commenced a Phase I clinical trial in May 2007, which was within the applicable cure period for the milestone requirement. Through December 31, 2009, the Company has paid Cedars-Sinai a total of $166,660 in connection with the Phase I clinical trial. The Company also was required to commence a Phase II clinical trial for a product candidate by December 31, 2008 and a waiver of this requirement was obtained from Cedars-Sinai (see Second Amendment below).
On June 16, 2008, the Company entered into a First Amendment to Exclusive License Agreement (the Amendment) with Cedars-Sinai. The Amendment amended the License Agreement to include in the Companys exclusive license from Cedars-Sinai under that agreement an epitope to CD133 and certain related intellectual property. This technology is covered by U.S. patent applications filed by both parties. Pursuant to the Amendment, the Company issued Cedars-Sinai 100,000 shares of the Companys common stock as an additional license fee for the licensed CD133 epitope technology, which will be subject to the royalty and other terms of the License Agreement.
On July 22, 2009, the Company entered into a Second Amendment to Exclusive License Agreement (the Second Amendment) with Cedars-Sinai to become effective August 1, 2009. The Second Amendment amended the License Agreement to revise the milestones set forth in the License Agreement that the Company must achieve in order to maintain its license rights under that agreement. The revised milestones include the replacement of a milestone that required commencement of a Phase II clinical trial for the Companys first product candidate by no later than December 31, 2008 with milestones that require commencement of a Phase I clinical trial for the Companys second product candidate by no later than June 30, 2010 and commencement of a Phase II clinical trial for one of the Companys product candidates by no later than March 31, 2012.
Effective March 23, 2010, the Company entered into a Third Amendment to Exclusive License Agreement (the Third Amendment) with Cedars-Sinai. The Third Amendment amended the License Agreement to revise the milestones set forth in the License Agreement that the Company must achieve in order to maintain its license rights under that agreement. The revised milestones include the replacement of a milestone that required commencement of a Phase I clinical trial for the Companys second product candidate by no later than June 30, 2010 and commencement of a Phase II clinical trial for one of the Companys product candidates by no later than March 31, 2012 with a requirement that by September 30, 2011 the Company either commence a Phase II clinical trial for its dendritic cell vaccine candidate or a Phase I clinical trial for its cancer stem cell vaccine candidate. The amendment also added a requirement that the Company obtain certain defined forms of equity or other funding in the amount of at least $2,500,000 by December 31, 2010 and a total of at least $5,000,000 by September 30, 2011. These funding requirements were fully satisfied as of June 30, 2011.
Effective September 1, 2012, the Company entered into a new agreement with Cedars-Sinai whereby Cedars-Sinai provided research support for CD133 experiments in support of ICT-121. The agreement expired on September 19, 2013 and the Company made payments to Cedars-Sinai of $329,832. The Company is currently in negotiations with Cedars-Sinai to extend this research agreement.
5. Commitments and Contingencies
Sponsored Research Agreements
In an effort to expand the Companys intellectual property portfolio to use antigens to create personalized vaccines, the Company has entered into various intellectual property and research agreements. Those agreements are long-term in nature and are discussed below.
Aptiv Solutions
The Company has contracted with Aptiv Solutions to provide certain services related to the Companys ICT-107 Phase II trial. The original agreement was entered into in August of 2010 and provided for estimated payments of approximately $3 million for services through September 2013. Subsequently, the Company and Aptiv entered into three contract amendments. Under the first amendment, effective January 20, 2011, Aptiv agreed to provide additional services in conjunction with the Phase II trial of ICT-107 for an additional fee of $469,807. The second amendment, effective February 4, 2012, extended the services to be provided by Aptiv and further increased the fees by $986,783. The second amendment also extended the term of the agreement to March 31, 2014. On January 11, 2013, the third amendment was finalized whereby the services were further extended and the fees were further increased by $608,201. The total aggregate fee pursuant to the original agreement and the three modifications is $5,078,169. As of September 30, 2013, the Companys remaining obligation under the existing commitment is approximately $962,190.
12
University of Pennsylvania
On February 13, 2012, the Company entered into a Patent License Agreement with The Trustees of the University of Pennsylvania under which the Company acquired an exclusive, worldwide license relating to intellectual property for the production, use and cryopreservation of high-activity dendritic cell cancer vaccines, including ICT-107, its lead dendritic cell-based cancer vaccine candidate for the treatment of glioblastoma multiforme.
Pursuant to the License Agreement, the Company paid an upfront licensing fee and will be obligated to pay annual license maintenance fees. In addition, the Company has agreed to make payments upon completion of specified milestones and to pay royalties of a specified percentage on net sales, subject to a specified minimum royalty, and sublicensing fees.
The Johns Hopkins University Licensing Agreement
On February 23, 2012, the Company entered into an Exclusive License Agreement, effective as of February 16, 2012, with The Johns Hopkins University (JHU) under which it received an exclusive, worldwide license to JHUs rights in and to certain intellectual property related to mesothelin-specific cancer immunotherapies.
Pursuant to the License Agreement, the Company agreed to pay an upfront licensing fee, payable half in cash and half in shares of its common stock, within 30 days of the effective date of the License Agreement and upon issuance of the first U.S. patent covering the subject technology. In addition, the Company has agreed to pay milestone license fees upon completion of specified milestones, customary royalties based on a specified percentage of net sales, sublicensing payments and annual minimum royalties. Effective September 24, 2013, the Company entered into an Amendment No. 1 to the Exclusive License Agreement that updated certain milestones.
The University of Pittsburgh Patent License Agreement
On March 20, 2012, the Company entered into an Exclusive License Agreement with the University of Pittsburgh under which the Company has licensed intellectual property surrounding EphA2, a tyrosine kinase receptor that is highly expressed by ovarian cancer and other advanced and metastatic malignancies. The License Agreement grants a worldwide exclusive license to the intellectual property for ovarian and pancreatic cancers; and a worldwide non-exclusive license to the intellectual property for brain cancer. The Company intends to employ the intellectual property in the development and commercialization of ICT-140, a multivalent, dendritic cell-based vaccine for the treatment of ovarian cancer.
Pursuant to the License Agreement, the Company agreed to pay an upfront nonrefundable and noncreditable licensing fee and nonrefundable and noncreditable maintenance fees due annually starting 12 months from the anniversary of the effective date of the License Agreement. In addition, the Company has agreed to make certain milestone payments upon completion of specified milestones and to pay customary royalties based on a specified percentage of net sales and sublicensing payments, as applicable.
Torrey Pines
On October 1, 2012, the Company entered into a Contract Services Agreement with Torrey Pines under which the Company has engaged Torrey Pines to determine the immunogenicity of certain peptides that are used in conjunction with the Companys ICT-107 Phase IIb trial and in the development of ICT-140. The Company agreed to pay an upfront nonrefundable and noncreditable fee and is obligated to pay the remainder at the conclusion of the contract. On April 1, 2013, the Company and Torrey Pines expanded the scope of work to be completed by Torrey Pines under an additional Contract Services Agreement. This supplemental agreement provides for the Company to pay an upfront fee and additional fees at the conclusion of the contract.
Cedars-Sinai Medical Center
In connection with the Cedars-Sinai Medical Center License Agreement, the Company has certain commitments as described in Note 4.
Employment Agreements
The Company has one-year employment agreements with its management that provide for a base salary, bonus and stock option grants. The aggregate annual base salary payable to this group is approximately $1,179,000 and the potential bonus is approximately $362,000. Additionally, during the nine months ended September 30, 2013, the Company issued an aggregate of 489,000 stock options to its management at a weighted average exercise price of $2.66 that vest over a period of four years.
13
Operating Lease
The Company entered into a lease for new office space effective June 15, 2013 and continuing through August 31, 2016 at an initial monthly rental of $8,063. The monthly rental will increase by 3% on each anniversary date of the lease. Rent for the months of August and September 2013 was abated. Rent expense was approximately $17,900 and $14,000 for the three months ended September 30, 2013 and 2012, respectively. Rent expense was approximately $55,000 and $40,000 for the nine months ended September 30, 2013 and 2012, respectively.
Future minimum rentals under the operating lease are as follows:
Years ending December 31, |
|
Amount |
|
|
2013 |
|
$ |
24,189 |
|
2014 |
|
|
97,724 |
|
2015 |
|
|
100,905 |
|
2016 |
|
|
68,432 |
|
Total |
|
$ |
291,250 |
|
6. Shareholders Equity
Common Stock
In March 2010, the Company raised $1,654,686 (after commissions and offering expenses) from the sale of 1,740,000 shares of common stock and warrants to purchase 696,000 shares of common stock at an exercise price of $1.15 per share, to various investors in a private placement. (See Warrants and Warrant Liabilities below.)
In May 2010, the Company raised $2,716,308 (after commissions and offering expenses) from the sale of 2,490,910 shares of common stock and warrants to purchase 1,245,455 shares of common stock at an exercise price of $1.50 per share, to various investors in a private placement. (See Warrants and Warrant Liabilities below)
In February 2011, the Company raised $7,460,129 (after commissions and offering expenses) from the sale of 5,219,768 shares of common stock and warrants to purchase 2,609,898 shares of common stock at an exercise price of $2.25 per share, to various investors in a private placement. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that certain future common stock issuances are made at a price less than $1.55. The January and October 2012 underwritten public offering (see below) provided for the issuance of shares at prices that were less than $1.55. Accordingly, the exercise price of these warrants was adjusted to $1.87 and the number of warrants was proportionally increased to 2,823,670 net of exercises. (See Warrants and Warrant Liabilities below)
In January 2012, the Company raised approximately $9,271,370 in an underwritten public offering, net of offering expenses of approximately $1.1 million, from the sale of 9,489,436 shares of common stock and warrants to purchase 4,744,718 shares of common stock at an exercise price of $1.41 per share, to various investors in an underwritten public offering. The warrants have a term of 60 months from the date of issuance. The warrants do not contain any features (such as net cash settlement or anti-dilution features) that would preclude the Company from accounting for these warrants as equity. Accordingly, the warrants are accounted for as equity.
In October 2012, the Company raised $19,359,553 in an underwritten public offering, net of offering expenses of approximately $1.6 million, from the sale of 10,000,000 shares of common stock and warrants to purchase 4,500,000 shares of common stock at an exercise price of $2.65 per share, to various investors in an underwritten public offering. The warrants have a term of 60 months from the date of issuance. The warrants do not contain any features (such as net cash settlement or anti-dilution features) that would preclude the Company from accounting for these warrants as equity. Accordingly, the warrants are accounted for as equity.
14
Controlled Equity Offering
On April 18, 2013, the Company entered into a Controlled Equity Offering SM Sales Agreement (the Sales Agreement) with Cantor Fitzgerald & Co., as agent (Cantor), pursuant to which the Company may offer from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $25.0 million (of which only $17.0 million is currently registered for offer and sale). Under the Sales Agreement, Cantor may sell shares by any method permitted by law and deemed to be an at-the-market offering as defined in Rule 415 promulgated under the Securities Act, as amended, including sales made directly on the NYSE MKT, on any other existing trading market for our common stock or to or through a market maker. The Company may instruct Cantor not to sell shares if the sales cannot be effected at or above the price designated by us from time to time. The Company is not obligated to make any sales of the shares under the Sales Agreement. The offering of shares pursuant to the Sales Agreement will terminate upon the earlier of (a) the sale of all of the shares subject to the Sales Agreement or (b) the termination of the Sales Agreement by Cantor or the Company, as permitted therein. Cantor will receive a commission rate of 3.0% of the aggregate gross proceeds from each sale of shares and the Company has agreed to provide Cantor with customary indemnification and contribution rights. The Company will also reimburse Cantor for certain specified expenses in connection with entering into the Sales Agreement. On April 22, 2013, NYSE MKT approved the listing of 10,593,220 shares of our common stock in connection with the Sales Agreement. Through September 30, 2013, we sold 1,862,142 shares of our common stock under the Sales Agreement that resulted in proceeds to the Company of approximately $4,906,078, less offering expenses of approximately $338,000. As of September 30, 2013, aggregate gross sales for additional common stock of approximately $11,754,071 remained available under the Sales Agreement .
Stock Options
In February 2005, the Company adopted an Equity Incentive Plan (the Plan). Pursuant to the Plan, a committee appointed by the Board of Directors may grant, at its discretion, qualified or nonqualified stock options, stock appreciation rights and may grant or sell restricted stock to key individuals, including employees, nonemployee directors, consultants and advisors. Option prices for qualified incentive stock options (which may only be granted to employees) issued under the plan may not be less than 100% of the fair market value of the common stock on the date the option is granted (unless the option is granted to a person who, at the time of grant, owns more than 10% of the total combined voting power of all classes of stock of the Company; in which case the option price may not be less than 110% of the fair market value of the common stock on the date the option is granted). Option prices for nonqualified stock options issued under the Plan are at the discretion of the committee and may be equal to, greater or less than fair market value of the common stock on the date the option is granted. The options vest over periods determined by the Board of Directors and are exercisable no later than ten years from date of grant (unless they are qualified incentive stock options granted to a person owning more than 10% of the total combined voting power of all classes of stock of the Company, in which case the options are exercisable no later than five years from date of grant). Initially, the Company reserved 6,000,000 shares of common stock for issuance under the Plan. On October 24, 2011, the Companys shareholders voted to increase the number of authorized shares reserved for the Plan to 8,000,000 shares. On September 20, 2013, the Companys shareholders voted to increase the number of authorized shares reserved for the Plan to 12,000,000 shares. Options to purchase 3,852,655 common shares have been granted under the Plan and are outstanding as of September 30, 2013. As of September 30, 2013, there were 5,644,347 options available for issuance under the Plan.
The following is a summary of stock option grants issued outside the Plan:
In January 2007, the Company granted an option to purchase 1,500,000 shares of its common stock at an exercise price of $1.10 per share to the Chairman of the Companys Scientific Advisory Board.
In November 2006, the Company granted an option to purchase 300,000 shares of its common stock at an exercise price of $1.00 per share to an affiliate of the Companys then Chairman of the Board.
In November 2006, the Company granted an option to purchase 5,933,424 shares of its common stock at an exercise price of $1.00 per share to a Board member in connection with the Cedars-Sinai license acquisition.
The following table summarizes stock option activity for the Company during the nine months ended September 30, 2013:
|
Options |
|
|
Weighted
|
|
|
Weighted
|
|
|
Aggregate
|
|
|||
Outstanding December 31, 2012 |
10,581,194 |
|
|
$ |
1.16 |
|
|
|
0 |
|
|
|
0 |
|
Granted |
847,287 |
|
|
|
2.67 |
|
|
|
0 |
|
|
|
0 |
|
Exercised |
(422,401 |
) |
|
|
1.33 |
|
|
|
0 |
|
|
|
0 |
|
Forfeited or expired |
(120,000 |
) |
|
|
1.77 |
|
|
|
0 |
|
|
|
0 |
|
Outstanding September 30, 2013 |
10,886,080 |
|
|
$ |
1.34 |
|
|
|
3.74 |
|
|
$ |
13,830,748 |
|
Vested or expected to vest at September 30, 2013 |
8,806,043 |
|
|
$ |
1.06 |
|
|
|
2.98 |
|
|
$ |
13,394,524 |
|
15
As of September 30, 2013, the total unrecognized compensation cost related to unvested stock options amounted to $2,641,357, which will be amortized over the weighted-average remaining requisite service period of approximately 22 months.
Warrants
In connection with the March 2010 common stock private placement, the Company issued to the investors warrants to purchase 696,000 shares of the Companys common stock at $1.15 per share. The warrants had a term of 26 months from the date of issuance. As of September 30, 2013, these warrants have been fully exercised.
In connection with the May 2010 common stock private placement, the Company issued to the investors warrants to purchase 1,287,733 shares of the Companys common stock at $1.50 per share. The warrants have a term of 36 months from the date of issuance. As of September 30, 2013 these warrants have been fully exercised, except for warrants to purchase 4,000 shares of the Companys common stock that expired. (See Warrant Liabilities below.)
In connection with the sale of Preferred Stock in May 2010, the Company issued warrants to purchase 1,350,000 shares of common stock at an exercise price of $2.50. The warrants have a term of five-years from the date of issuance. As of September 30, 2013, warrants to purchase 1,290,996 shares of the Companys common stock at $2.50 remain outstanding related to this private placement. (See Warrant Liability below.)
In connection with the February 2011 common stock private placement, the Company issued to the investors warrants to purchase 2,818,675 shares of the Companys common stock at $2.25 per share. The warrants have a five-year term from the date of issuance and contain a provision that provides for an adjustment to the exercise price in the event the Company completes an equity financing at a per share price of its common stock that is less than $1.55. As a result of the January and October 2012 financings, the exercise price of the warrants was adjusted to $1.87 and the number of warrants was proportionately increased to 2,823,670 net of exercises. As of September 30, 2013, warrants to purchase 2,823,670 shares of the Companys common stock remain outstanding related to this private placement. (See Warrant Liability below.)
In connection with the January 2012 underwritten public offering, the Company issued to the investors warrants to purchase 4,744,718 shares of the Companys common stock at $1.41 per share. The warrants have a five-year term from the date of issuance. These warrants qualify for equity treatment since they do not have any provisions that would require the Company to redeem them for cash or that would result in an adjustment to the number of warrants. As of September 30, 2013, warrants to purchase 1,900,079 shares of the Companys common stock remain outstanding relating to this public offering.
In connection with the October 2012 underwritten public offering, the Company issued to the investors warrants to purchase 4,500,000 shares of the Companys common stock at $2.65 per share. The warrants have a five-year term from the date of issuance. These warrants qualify for equity treatment since they do not have any provisions that would require the Company to redeem them for cash or that would result in an adjustment to the number of warrants. As of September 30, 2013, warrants to purchase 4,480,750 shares of the Companys common stock remain outstanding relating to this public offering.
Warrant Liability
The Companys warrant liability is adjusted to fair value each reporting period and is influenced by several factors including the price of the Companys common stock as of the balance sheet date. On September 30, 2013, the price per share of Companys common stock was $2.57 per share compared to $1.92 per share at December 31, 2012 and $2.81 per share on September 30, 2012.
In connection with the March 2010 common stock private placement, the Company issued to the investors warrants to purchase 696,000 shares of the Companys common stock at $1.15 per share. Of the total proceeds from the March 2010 common stock private placement, $257,520 was allocated to the freestanding warrants associated with the units based upon the fair value of the warrants determined under the Black Scholes option pricing model. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that future common stock issuances are made at a price less than $1.00. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. The warrant liability was adjusted to fair value each reporting period, and any change in value is recognized in the statement of operations. Prior to 2011, the Company had concluded that Black-Scholes method of valuing the price adjustment feature does not materially differ from the valuation of such warrants using the lattice simulation model, and therefore, the use of the Black-Scholes valuation model was considered a reasonable method to value the warrants. The assumptions used in the Black Scholes model for determining the initial fair value of the warrants were as follows: (i) dividend yield of 0%; (ii) expected volatility of 102%, (iii) risk-free interest rate of 1.00%, and (iv) contractual life of 26 months. During the year ended December 31, 2011, the Company determined that it was more appropriate to value the warrants using a binomial lattice simulation model. During the six months ended June 30, 2012, the remaining warrants were fully exercised; however, the Company recognized an expense of $45,570 as the Company revalued the warrants at the date of exercise. For the three and nine months ended September 30, 2012, the Company recorded a charge to other expense of nil and $745,500, respectively.
16
In connection with the May 2010 common stock private placement, the Company issued to the investors warrants to purchase 1,287,773 shares of the Companys common stock at $1.50 per share. Of the total proceeds from the May 2010 common stock private placement, $834,455 was allocated to the freestanding warrants associated with the units based upon the fair value of the warrants determined under the Black Scholes option pricing model. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that future common stock issuances are made at a price less than $1.00. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. The warrant liability is adjusted to fair value each reporting period, and any change in value is recognized in the statement of operations. Prior to 2011, the Company had concluded that the Black-Scholes method of valuing the price adjustment feature does not materially differ from the valuation of such warrants using the binomial lattice simulation model, and therefore, the use of the Black-Scholes valuation model was considered a reasonable method to value the warrants. The assumptions used in the Black Scholes model for determining the initial fair value of the warrants were as follows: (i) dividend yield of 0%; (ii) expected volatility of 102%, (iii) risk-free interest rate of 1.375%, and (iv) contractual life of 36 months. Effective January 1, 2011, the Company determined that it was more appropriate to value the warrants using a binomial lattice simulation model. For the three months ended September 30, 2012, the Company recorded a credit to other income of $745,778 and for the nine months ended September 30, 2012, the Company recorded a charge to other expense of $1,181,075. During the six months ended June 30, 2013, the remaining warrants were fully exercised; however, the Company recognized a credit to other income of $403,665 as the Company revalued the warrants at the date of exercise. For the three and nine months ended September 30, 2013, the Company recorded a charge to other expense of nil and $583,134, respectively.
In connection with the sale of Preferred Stock in 2010, the Company vested warrants to purchase 1,350,000 shares of the Companys common stock at an exercise price of $2.50 per share. Of the total proceeds from the May 2010 preferred stock sale, $5,710,500 was allocated to the freestanding warrants associated with the units based upon the fair value of these warrants determined under the Black Scholes option pricing model. The warrants contain a provision whereby the warrant may be settled for cash in connection with a change of control with a private company. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. The warrant liability is adjusted to fair value each reporting period and any change in value is recognized in the statement of operations. Prior to 2011, the Company concluded that the Black-Scholes method of valuing the price adjustment feature does not materially differ from the valuation of such warrants using the Monte Carlo or binomial lattice simulation models, and therefore, the use of the Black-Scholes valuation model was considered a reasonable method to value the warrants. The assumptions used in the Black Scholes model for determining the initial fair value of the warrants were as follows: (i) dividend yield of 0%; (ii) expected volatility of 102%, (iii) risk-free interest rate of 2.50%, and (iv) contractual life of 60 months. Effective January 1, 2011, the Company determined that it was more appropriate to value the warrants using a binomial lattice simulation model. For the three months ended September 30, 2012, the Company recorded a credit to other income of $718,720 and for the nine months ended September 30, 2012, the Company recorded a charge to other expense of $732,750. As of September 30, 2013, the Company revalued the warrants using the binomial lattice simulation model assuming (i) dividend yield of 0%; (ii) expected volatility of 70%; (iii) risk free rate of 0.24% and (iv) expected term of 1.59 years. For the three and nine months ended September 30, 2013, the Company recorded a charge to other expense of $348,569 and $345,987, respectively. As of September 30, 2013, the carrying value of the warrant liability is $934,681.
In connection with the February 2011 common stock private placement, the Company issued to the investors warrants to purchase 2,818,675 shares of the Companys common stock at $2.25 per share. Of the total proceeds from the February 2011 common stock private placement, $2,476,790 was allocated to the freestanding warrants associated with the units based upon the fair value of the warrants determined under the Binomial lattice model. The warrants contain a provision whereby the warrant exercise price would be decreased in the event that certain future common stock issuances are made at a price less than $1.55. Due to the potential variability of their exercise price, these warrants do not qualify for equity treatment, and therefore are recognized as a liability. As a result of the January and October 2012 financings, the exercise price of the warrants was adjusted to $1.87 and the number of warrants was proportionately increased to 2,823,670 net of exercises. The Company recorded a charge to financing expense of $397,294 to reflect the issuance of the additional warrants. The warrant liability is adjusted to fair value each reporting period, and any change in value is recognized in the statement of operations. The Company initially valued these warrants using a binomial lattice simulation model assuming (i) dividend yield of 0%; (ii) expected volatility of 146%; (iii) risk free rate of 1.96% and (iv) expected term of 5 years. Based upon those calculations, the Company calculated the initial valuation of the warrants to be $2,476,790. For the three months ended September 30, 2012, the Company recorded a credit to other income of $1,313,003 and for the nine months ended September 30, 2012, the Company recorded a charge to other expense of $2,727,643, As of September 30, 2013, the Company revalued the warrants using the binomial lattice simulation model assuming (i) dividend yield of 0%; (ii) expected volatility of 73%; (iii) risk free rate of 0.45% and (iv) expected term of 2.39 years. For the three and nine months ended September 30, 2013, the Company recorded a charge to other expense of $1,030,649 and $1,054,268, respectively. As of September 30, 2013, the carrying value of the warrant liability is $2,755,928.
For the three and nine months ended September 30, 2013, the expected volatility is based upon the historical volatility of the Companys stock. For the three and nine months ended September 30, 2012, the expected volatility is based on market prices of traded options for comparable entities within our industry.
17
The following reconciliation of the beginning and ending balances for all warrant liabilities measured at fair market value on a recurring basis using significant unobservable inputs (level 3) during the period ended September 30, 2013 and 2012:
|
September 30,
|
|
|
September 30,
|
|
||
Balance January 1 |
$ |
2,852,880 |
|
|
$ |
2,157,408 |
|
Issuance of warrants and effect of repricing |
|
0 |
|
|
|
368,524 |
|
Exercise of warrants |
|
(1,145,659 |
) |
|
|
(1,944,688 |
) |
(Gain) or loss included in earnings |
|
1,983,388 |
|
|
|
5,018,224 |
|
Transfers in and out/or out of Level 3 |
|
|
|
|
|
|
|
Balance September 30 |
$ |
3,690,609 |
|
|
$ |
5,599,468 |
|
7. 401(k) Profit Sharing Plan
During 2011, the Company adopted a Profit Sharing Plan that qualifies under Section 401(k) of the Internal Revenue Code. Contributions to the plan are at the Companys discretion. The Company did not make any matching contributions during the three and nine months ended September 30, 2013 or September 30, 2012.
8. Income Taxes
Deferred taxes represent the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Temporary differences result primarily from the recording of tax benefits of net operating loss carry forwards and stock-based compensation.
As of September 30, 2013, the Company has an insufficient history to support the likelihood of ultimate realization of the benefit associated with its deferred tax assets. Accordingly, a valuation allowance has been established for the full amount of the net deferred tax asset.
The Companys effective income tax rate differs from the amount computed by applying the federal statutory income tax rate to loss before income taxes as follows:
|
September 30, 2013 |
|
|
September 30, 2012 |
|
||
Income tax benefit at the federal statutory rate |
|
-34 |
% |
|
|
-34 |
% |
State income tax benefit, net of federal tax benefit |
|
-6 |
% |
|
|
-6 |
% |
Change in fair value of warrant liability |
|
9 |
% |
|
|
14 |
% |
Change in valuation allowance for deferred tax assets |
|
31 |
% |
|
|
26 |
% |
Total |
|
0 |
% |
|
|
0 |
% |
|
September 30,
|
|
|
December 31,
|
|
||
Net operating loss carryforwards |
$ |
15,759,274 |
|
|
$ |
12,821,749 |
|
Stock-based compensation |
|
1,931,443 |
|
|
|
1,796,954 |
|
Less valuation allowance |
|
(17,690,717 |
) |
|
|
(14,618,703 |
) |
Net deferred tax asset |
$ |
0 |
|
|
$ |
|
|
As of September 30, 2013 and December 31, 2012, the Company had federal and California income tax net operating loss carryforwards of approximately $38 million. These net operating losses will begin to expire in 2022 and 2016, respectively, unless previously utilized.
Section 382 of the Internal Revenue Code can limit the amount of net operating losses which may be utilized if certain changes to a companys ownership occur. While the Company underwent an ownership change in 2012 as defined by Section 382 of the Internal Revenue Code, management estimated that the Company had not incurred any limitations on its ability to utilize its net operating losses under Section 382 of the Internal Revenue Code during 2012. The Company may incur limitations in the future if there is a change in ownership.
18
9. Subsequent Events
Warrant Exercises
Subsequent to September 30, 2013, certain warrant holders exercised 198,550 warrants for cash and the Company received $279,956.
Stock Option Exercises
Subsequent to September 30, 2013, the Company issued 18,157 shares of common stock upon the cashless exercise of stock options to purchase 24,000 shares of common stock. Additionally, the Company issued 267,387 shares of common stock as a result of the exercise of stock options and the Company received cash proceeds of $66,847.
19
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Throughout this Quarterly Report on Form 10-Q, the terms we, us, our, and our company refer to ImmunoCellular Therapeutics, Ltd., a Delaware corporation.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements, which reflect the views of our management with respect to future events and financial performance. These forward-looking statements are subject to a number of uncertainties and other factors that could cause actual results to differ materially from such statements. Forward-looking statements are identified by words such as anticipates, believes, estimates, expects, plans, projects, targets and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on the information available to management at this time and which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under the heading Risk Factors in our Form 10-K for the year ended December 31, 2012. The identification in this Quarterly Report of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
Overview and Plan of Operation
ImmunoCellular Therapeutics, Ltd. (the Company) is a development stage company that is seeking to develop and commercialize new therapeutics to fight cancer using the immune system.
Since the Companys inception on February 25, 2004, the Company has been primarily engaged in the acquisition of certain intellectual property, together with development of its product candidates and the recent clinical testing activities for one of its vaccine product candidates, and has not generated any recurring revenues. The Companys lead product candidate, ICT-107 is in Phase II clinical development. The Company has two other candidates, ICT-140 and ICT-121, that each have investigational new drug (IND) applications for initiation of clinical development. The Company has sustained operating losses and, as of September 30, 2013, the Company had an accumulated deficit of $52,086,391. The Company expects to incur significant research, development and administrative expenses before any of its products can be launched and recurring revenues generated.
On January 31, 2006, we completed a merger, pursuant to which Spectral Molecular Imaging, Inc. became our wholly owned subsidiary. At the time of the merger, we had virtually no assets or liabilities, and we had not conducted any business operations for several years. In connection with the merger, we changed our name from Patco Industries, Ltd. to Optical Molecular Imaging, Inc. and replaced our officers and directors with those of Spectral Molecular Imaging. Although we acquired Spectral Molecular Imaging in the merger, for accounting purposes the merger was treated as a reverse merger since the stockholders of Spectral Molecular Imaging acquired a majority of our outstanding shares of common stock and the directors and executive officers of Spectral Molecular Imaging became our directors and executive officers. Accordingly, our financial statements contained in this Report and the description of our results of operations and financial condition reflect the operations of Spectral Molecular Imaging through September 2006, when we sold that subsidiary and all of its operations to a third party.
In November 2006, we acquired an exclusive, worldwide license from Cedars-Sinai Medical Center for certain cellular-based therapy technology that we are developing for the potential treatment of brain tumors and other forms of cancer. We have completed a Phase I clinical trial of a vaccine product candidate for the treatment of glioblastoma multiforme based on this technology and in January 2011, we initiated a Phase II clinical trial. During 2012, we completed our patient enrollment for this trial.
In February 2008, we acquired certain monoclonal antibody related technology owned by Molecular Discoveries LLC. This technology consists of (1) a platform technology referred to by Molecular Discoveries as differential immunization for antigen and antibody discovery for the potentially rapid discovery of targets (antigens) and monoclonal antibodies for diagnosis and treatment of diverse human diseases and (2) certain monoclonal antibody candidates for the potential detection and treatment of multiple myeloma, small cell lung, pancreatic and ovarian cancers. These monoclonal antibody programs are at a pre-clinical stage of development and will require further development before an IND can be potentially filed for human testing. We do not plan to develop these technologies for our own use, but we may choose to license or discontinue them in the future.
In February 2012, we acquired an exclusive worldwide license from the University of Pennsylvania related to intellectual property for the production, use and cryopreservation of high-activity dendritic cell cancer vaccines, including ICT-107, our lead dendritic cell-based cancer vaccine candidate for the treatment of glioblastoma multiforme.
20
Also in February 2012, we acquired an exclusive, worldwide license from The John Hopkins University to certain intellectual property related to mesothelin-specific cancer immunotherapies.
In January 2013, the U.S. Food and Drug Administration allowed our IND for a clinical trial for ICT-140 Phase II open-label safety study to initially enroll 30 ovarian cancer patients with an option to enroll another 30 patients at our discretion. The study is designed with a 2-to-1 randomization, whereby for every 2 patients who will receive the treatment 1 patient will receive the current standard of care. All of the patients participating in the study will have been previously treated with standard chemotherapeutic agents. This trial is expected to include five clinical sites in the United States and we expect to initiate the trial in the first quarter of 2014.
On July 30, 2013, we announced the initiation of a Phase I clinical trial of cancer vaccine ICT-121 as a potential treatment for patients with recurrent glioblastoma multiforme.
Since our inception on February 25, 2004, we have been primarily engaged in the acquisition of certain intellectual property, together with the recent clinical testing activities for our vaccine product candidates, and have not generated any recurring revenues. As a result, we have incurred operating losses and, as of September 30, 2013 we had an accumulated deficit of $52,086,391. We expect to incur significant research, development and administrative expenses before any of our products can be launched and recurring revenues, if ever, are generated.
Critical Accounting Policies
Managements discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, including finite lived intangible assets, accrued liabilities, fair value of warrant derivatives and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.
Our significant accounting policies are summarized in Note 2 of our financial statements for the period from February 25, 2004 to September 30, 2013. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:
Development Stage Enterprise
We are a development stage enterprise as defined by FASB ASC Topic 915, Accounting and Reporting by Development Stage Enterprises. We are devoting substantially all of our present efforts to research and development. All losses accumulated since inception are considered as part of our development stage activities.
Research and Development Costs
Although we believe that our research and development activities and underlying technologies have continuing value, the amount of future benefits to be derived from them is uncertain. Research and development costs are therefore expensed as incurred rather than capitalized. During the nine months ended September 30, 2013 and 2012 we recorded an expense of $3,905,338 and $6,567,086, respectively related to research and development activities. We expect our research and development expenses during the remainder of 2013 to remain relatively constant with the first half of the year.
Stock-Based Compensation
Stock-based compensation expense is estimated as of the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally equals the vesting period, based on the number of awards that are expected to vest. Estimating the fair value for stock options requires judgment, including the expected term of our stock options, volatility of our stock, expected dividends, risk-free interest rates over the expected term of the options and the expected forfeiture rate. In connection with our performance based programs, we make assumptions principally related to the number of awards that are expected to vest after assessing the probability that certain performance criteria will be met.
21
Income Taxes
The Company accounts for federal and state income taxes under the liability method, with a deferred tax asset or liability determined based on the difference between the financial statement and tax basis of assets and liabilities, as measured by the enacted tax rates. The Companys provision for income taxes represents the amount of taxes currently payable, if any, plus the change in the amount of net deferred tax assets or liabilities. A valuation allowance is provided against net deferred tax assets if recoverability is uncertain on a more likely than not basis. The Company recognizes in its financial statements the impact of an uncertain tax position if the position will more likely than not be sustained upon examination by a taxing authority, based on the technical merits of the position. The Companys policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company is not currently under examination by any taxing authority nor has it been notified of an impending examination. The Companys tax returns for the years ended December 31, 2012, 2011 and 2010, remain open for possible review.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for cash, cash equivalents, and accounts payable approximate their fair values due to their quick turnover. The fair value of warrant liability is estimated using the Binomial Lattice option valuation model.
Results of Operations
Three months ended September 30, 2013 and 2012
Net Loss
We incurred a net loss of $3,793,441 and $637,627 for the three months ended September 30, 2013 and 2012, respectively. The increase in the net loss is primarily due to a charge during the three months ended September 30, 2013 of $1,379,217 related to the increase in the fair value of the warrant liability, compared to a credit of $2,777,500 to revalue the warrant liability during the same period last year. This increase was partially offset by reductions in our research and development expenses during the current period.
Revenues
We did not have any revenue during the three months ended September 30, 2013 and 2012 and we do not expect to have any revenue in 2013.
Expenses
General and administrative expenses for the three months ended September 30, 2013 and 2012 were $985,107 and $1,004,181, respectively. During the three months ended September 30, 2013, we optimized our spending in the areas of investor relations, travel and professional fees, which resulted in a decrease in expense. These decreases were partially offset by increases in personnel related expenses as we hired additional employees and we concluded a litigation matter. The Company and certain officers and directors were the defendants in a lawsuit. The plaintiff alleged that the Company and our directors breached their fiduciary duty for making inadequate disclosures in our proxy statement related to the proposed amendment to our 2006 Equity Incentive Plan. The litigation was settled during the quarter ended September 30, 2013 and the Company does not expect to incur any additional expenses related to this matter.
Research and development expenses for the three months ended September 30, 2013 and 2012 were $1,276,507 and $2,378,917, respectively. During the three months ended September 30, 2012, we completed our enrollment by enrolling 39 new patients in our Phase II clinical trial of ICT-107 bringing the total number of enrolled patients to 278. Since a significant amount of the expenses that we incur to treat patients are incurred shortly after enrollment, our patient treatment costs for ICT-107 were substantially higher during the three months ended September 30, 2012. The decrease in the amounts expended for ICT-107 was partially offset by certain pre-clinical expenses we incurred related to ICT-121 and ICT-140. Our future research and development expenses are heavily dependent on the outcome of our Phase II trial of ICT-107. Depending on the outcome of that trial, we may need to conduct a Phase III trial with a patient enrollment that will likely be significantly larger than the Phase II trial. The number of patients to be enrolled and the ultimate cost will be dependent on factors that are not presently known by us. We will incur additional costs as we enroll patients in our ICT-121 and ICT-140 clinical trials .
We had $1,549,492 of non-cash expenses during the three months ended September 30, 2013, consisting of $1,379,217 related to the increase in our warrant liabilities, $156,277 of stock based compensation and $13,998 of depreciation expense. We had $45,330 of non-cash expenses for the three months ended September 30, 2012, consisting of $33,887 of stock based compensation and $11,443 of depreciation expense. During the three months ended September 30, 2012, we recorded $2,777,500 of other income related to the decrease in the fair value of our warrant liabilities.
22
Nine months ended September 30, 2013 and 2012
Net Loss
We incurred a net loss of $8,917,561 and $14,978,879 for the nine months ended September 30, 2013 and 2012, respectively. The decrease in the net loss is primarily due to reductions in research and development expenses and a reduced charge to other expense related to the increase in the fair value of the warrant liability.
Revenues
We did not have any revenue during the nine months ended September 30, 2013 and 2012 and we do not expect to have any revenue in 2013.
Expenses
General and administrative expenses for the nine months ended September 30, 2013 and 2012 were $2,542,794 and $2,647,301, respectively. During the three months ended September 30, 2013, we optimized our spending in the areas of investor relations, travel and professional fees, which resulted in a decrease in expense. These decreases were partially offset by increases in personnel related expenses as we hired additional employees and we concluded a litigation matter .
Research and development expenses for the nine months ended September 30, 2013 and 2012 were $3,905,338 and $6,567,086, respectively. During the nine months ended September 30, 2012, we completed our enrollment by enrolling 39 new patients in our Phase II clinical trial of ICT-107 bringing the total number of enrolled patients to 278. Additionally, we had two manufacturing facilities and 25 Phase II trial clinical sites that were operational. Since we completed our ICT-107 patient enrollment during the third quarter of 2012, we did not incur certain expenses related to product manufacturing or quality control during the nine months ended September 30, 2013. However, we continued to incur other trial related expenses related to ICT-107. The decrease in the amounts expended for ICT-107 was partially offset by certain pre-clinical expenses we incurred related to ICT-121 and ICT-140. We expect our research and development expenses to increase during the remainder of 2013 as we incur on-going expenses related to our Phase II trial of ICT-107 and as we begin enrolling patients in our clinical trials for ICT-121 and ICT-140.
We had $2,523,238 of non-cash expenses during the nine months ended September 30, 2013, consisting of $1,983,388 related to the increase in our warrant liabilities, $500,351 of stock based compensation, $3,817 loss on disposal of assets and $35,682 of depreciation expense. We had $5,435,166 of non-cash expenses for the nine months ended September 30, 2012, consisting of $5,018,224 related to the increase in our warrant liability, $382,611 of stock based compensation and $34,331 of depreciation expense.
Liquidity and Capital Resources
As of September 30, 2013, we had working capital of $28,767,993, compared to working capital of $25,832,869 as of December 31, 2012. The estimated cost of completing the development of either of our current vaccine product candidates and of obtaining all required regulatory approvals to market either of those product candidates is substantially greater than the amount of funds we currently have available. However, we believe that our existing cash balances will be sufficient to fund our operations for at least the next twelve months, although there is no assurance that such proceeds will be sufficient.
On April 18, 2013, we entered into a Controlled Equity Offering SM Sales Agreement (the Sales Agreement) with Cantor Fitzgerald & Co., as agent (Cantor), pursuant to which we may offer and sell, from time to time through Cantor, shares of our common stock having an aggregate offering price of up to $25.0 million (of which only $17.0 million was initially registered for offer and sale). Under the Sales Agreement, Cantor may sell shares by any method permitted by law and deemed to be an at-the-market offering as defined in Rule 415 promulgated under the Securities Act, as amended, including sales made directly on the NYSE MKT, on any other existing trading market for our common stock or to or through a market maker. We may instruct Cantor not to sell shares if the sales cannot be effected at or above the price designated by us from time to time. We are not obligated to make any sales of the shares under the Sales Agreement. The offering of shares pursuant to the Sales Agreement will terminate upon the earlier of (a) the sale of all of the shares subject to the Sales Agreement or (b) the termination of the Sales Agreement by Cantor or the Company, as permitted therein. We will pay Cantor a commission rate of 3.0% of the aggregate gross proceeds from each sale of shares and have agreed to provide Cantor with customary indemnification and contribution rights. We will also reimburse Cantor for certain specified expenses in connection with entering into the Sales Agreement. On April 22, 2013, NYSE MKT approved the listing of 10,593,220 shares of our common stock in connection with the Sales Agreement. During the nine months ended September 30, 2013, we issued 1,862,142 shares and received net proceeds of $4,906,078. As of September 30, 2013, we had $11,754,071 remaining under the registration statement. See additional discussion in Note 6 to the unaudited condensed financial statements which are included in Part 1 of this Form 10-Q.
23
In October 2012, we raised $19,359,553 in an underwritten public offering, net of offering expenses of approximately $1.6 million, of 10 million units priced at $2.10 per unit. Each unit consisted of one share of common stock and a warrant to purchase .45 of a share of our common stock at an exercise price of $2.65 per share. In January 2012, we raised approximately $9,271,370 in an underwritten public offering, net of offering expenses of approximately $1.1 million, of 9,489,436 units at a price of $1.10 per unit. Each unit consists of one share of stock and a warrant to purchase 0.5 of a share of our common stock at an exercise price of $1.41 per share. In February 2011, we raised $7,460,129 (after commissions and offering expenses) from the sale of 5,219,768 units at a price of $1.55 per unit, with each unit consisting of one share of our common stock and a warrant to purchase 0.5 of a share of our common stock at an exercise price of $2.25 per share. In May 2010, we raised $2,716,308 (after commissions and offering expenses) from the sale of 2,490,910 shares of common stock and warrants to purchase 1,245,455 shares of common stock at an exercise price of $1.50 per share. In March 2010, we raised $1,654,686 (after commissions and offering expenses) from the sale of 1,740,000 shares of common stock and warrants to purchase 696,000 shares of common stock at an exercise price of $1.15 per share.
We may also seek to obtain funding through strategic alliances with larger pharmaceutical or biomedical companies. We cannot be sure that we will be able to obtain any additional funding from either financings or alliances, or that the terms under which we may be able to obtain such funding will be beneficial to us. If we are unsuccessful or only partly successful in our efforts to secure additional financing, we may find it necessary to suspend or terminate some or all of our product development and other activities.
As of September 30, 2013, we did not have any bank credit lines, long-term debt obligations, capital lease obligations, or other similar long-term liabilities. We have various purchase commitments for sponsored research and license fees. We have no financial guarantees, debt or lease agreements or other arrangements that could trigger a requirement for an early payment or that could change the value of our assets, and we do not engage in trading activities involving non-exchange traded contracts.
Contractual Obligations
The following is a summary of our contractual obligations including those entered into subsequent to September 30, 2013.
|
Total |
|
|
Less than
|
|
|
1-3
|
|
|
3-5
|
|
|
More than
|
|
|||||
Unconditional purchase obligations |
$ |
1,099,016 |
|
|
$ |
1,099,016 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Operating lease obligation |
|
291,250 |
|
|
|
96,998 |
|
|
|
194,252 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
1,390,266 |
|
|
$ |
1,196,014 |
|
|
$ |
194,252 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Cash Flows
We used $6,054,663 of cash in our operations for the nine months ended September 30, 2013, compared to $9,187,583 for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, we greatly expanded our research and development activities, expanded our investor relations program and obtained a listing on NYSE MKT. Since we completed our ICT-107 patient enrollment during the third quarter of 2012, we did not incur certain expenses related to product manufacturing or quality control during the nine months ended September 30, 2013. During the nine months ended September 30, 2013, we incurred non-cash expenses consisting primarily of a valuation adjustment to our warrant liabilities of $1,983,388 and stock based compensation of $500,351. During the nine months ended September 30, 2012, we incurred non-cash expenses consisting primarily of a valuation adjustment to our warrant liabilities of $5,018,224. Additionally, during the nine months ended September 30, 2012, we recorded a non-cash financing expense of $368,524 related to the issuance of additional warrants triggered by the January 2012 stock issuance.
We used $37,877 cash from our investing activities during the nine months ended September 30, 2013 primarily to purchase computer equipment and a telephone system. During the nine months ended September 30, 2012, we used $5,668 of cash from our investing activities to acquire office equipment.
During the nine months ended September 30, 2013, we received net proceeds of $141,631 from the exercise of stock options and $4,261,723 from the exercise of warrants. We also received $4,906,078 in net proceeds from our controlled equity offering. During the nine months ended September 30, 2012, we received net proceeds of $9,271,370, excluding $100,000 of deferred offering costs that were previously advanced by the Company, from the issuance of common stock and warrants and we received $3,153,852 of proceeds from the exercise of warrants.
Inflation and changing prices have had no effect on our income or losses from operations over our two most recent fiscal years.
Off-Balance Sheet Arrangements
We are not party to any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
24
Item 3. Quantitative and Qualitative Disclosures About Market Risk
During the three months ended September 30, 2013, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 11, 2013 with the SEC.
Item 4. Controls a nd Procedures
As of the end of the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, regarding the effectiveness of the design and operation of our disclosure controls and procedures pursuant to SEC Rule 15d-15(b) of the Exchange Act. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2013, (i) our disclosure controls and procedures were effective to ensure that information that is required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported or submitted within the time period specified in the rules and forms of the SEC and (ii) our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Exchange Act was accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. The design of any system of controls also is based in part upon assurance that any design will succeed in achieving its stated goals under all potential future conditions. However, controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
25
PART II
OTHER INFORMATION
None.
You should read and consider the risk factors included under Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 11, 2013 with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about the Companys repurchases of its common stock during the quarter ended September 30, 2013.
Month |
|
Total Number of
|
|
|
Average Price
(or Unit) |
|
|
Total Number of Shares
|
|
|
Maximum
(or Units)
that May Yet be
|
|
||||
July |
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
|
0 |
|
August |
|
|
99,331 |
|
|
$ |
0 |
|
|
|
0 |
|
|
|
0 |
|
September |
|
|
5,491 |
|
|
$ |
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
104,822 |
|
|
$ |
0 |
|
|
|
0 |
|
|
|
0 |
|
(1) |
These shares are deemed to be repurchased through the cashless exercise of warrants and stock options during the quarter ended September 30, 2013. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
None.
26
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of ImmunoCellular Therapeutics, Ltd. (1) |
|
|
|
10.1 |
|
Employment Agreement dated August 19, 2013 between Anthony Gringeri and ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.2 |
|
Amendment No. 1 to the Exclusive License Agreement between the Johns Hopkins University and ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.3 |
|
Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.4 |
|
Amendment No. 1 to Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.5 |
|
Form of Stock Option Grant Notice for the 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd. |
|
|
|
31.1 |
|
Certification of the Registrants Principal Executive Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2 |
|
Certification of the Registrants Principal Financial Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1 |
|
Certification of the Registrants Principal Executive Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2 |
|
Certification of the Registrants Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101.INS |
|
XBRL Instance Document |
|
|
|
101.SCH |
|
XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Labels Linkbase Document |
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document |
(1) |
Previously filed by us on September 24, 2013 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference. |
|
Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by us with the Securities and Exchange Commission. The omitted portions of the exhibit have been separately filed by us with the Securities and Exchange Commission. |
27
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 7, 2013 |
|
IMMUNOCELLULAR THERAPEUTICS, LTD. |
|
|
|
||
|
By: |
|
/s/ Andrew Gengos |
|
Name: |
|
Andrew Gengos |
|
Title: |
|
President and Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
|
By: |
|
/s/ David Fractor |
|
Name: |
|
David Fractor |
|
Title: |
|
Principal Accounting Officer (Principal Financial and Accounting Officer) |
28
IMMUNOCELLULAR THERAPEUTICS, LTD.
FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2013
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of ImmunoCellular Therapeutics, Ltd. (1) |
|
|
|
10.1 |
|
Employment Agreement dated August 19 ,2013 between Anthony Gringeri and ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.2 |
|
Amendment No. 1 to the Exclusive License Agreement between the Johns Hopkins University and ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.3 |
|
Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.4 |
|
Amendment No. 1 to Amended and Restated 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd. |
|
|
|
10.5 |
|
Form of Stock Option Grant Notice for the 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd. |
|
|
|
31.1 |
|
Certification of the Registrants Principal Executive Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2 |
|
Certification of the Registrants Principal Financial Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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32.1 |
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Certification of the Registrants Principal Executive Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2 |
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Certification of the Registrants Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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101.INS |
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XBRL Instance Document |
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101.SCH |
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XBRL Taxonomy Extension Schema Document |
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101.CAL |
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XBRL Taxonomy Extension Calculation Linkbase Document |
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101.LAB |
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XBRL Taxonomy Extension Labels Linkbase Document |
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101.PRE |
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XBRL Taxonomy Extension Presentation Linkbase Document |
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101.DEF |
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XBRL Taxonomy Extension Definition Linkbase Document |
(1) |
Previously filed by us on September 24, 2013 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference. |
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Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by us with the Securities and Exchange Commission. The omitted portions of the exhibit have been separately filed by us with the Securities and Exchange Commission. |
29
Exhibit 10.1
ImmunoCellular Therapeutics, Ltd.
EXECUTIVE EMPLOYMENT AGREEMENT
for
Anthony Gringeri
This Executive Employment Agreement (the Agreement ), made between ImmunoCellular Therapeutics, Ltd. (the Company ) and Anthony Gringeri (the Executive ) ( collectively, the Parties ), is effective as of August 19, 2013.
Whereas , the Company desires for Executive to provide services to the Company, and wishes to provide Executive with certain compensation and benefits in return for such employment services; and
Whereas , Executive wishes to be employed by the Company and to provide personal services to the Company in return for certain compensation and benefits;
Now, Therefore , in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
1. Employment by the Company. |
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1.1 Position. Executive shall serve as the Companys Senior Vice President of Strategic Resources. During the term of Executives employment with the Company, Executive will devote Executives best efforts and substantially all of Executives business time and attention to the business of the Company, except for approved time off permitted by the Companys general employment policies. |
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1.2 Duties and Location. Executive shall perform such duties as are required by the Chief Executive Officer, to whom Executive will report. Executives primary office location will be the Companys headquarters. The Company reserves the right to reasonably require Executive to perform Executives duties at places other than Executives primary office location from time to time, and to require reasonable business travel. The Company may modify Executives job title and duties as it deems necessary and appropriate in light of the Companys needs and interests from time to time. |
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1.3 Policies and Procedures. The employment relationship between the Parties shall be governed by the general employment policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Companys general employment policies or practices, this Agreement shall control. |
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2. Compensation. |
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2.1 Salary. For services to be rendered hereunder, Executive shall receive a base salary at the rate of Three Hundred Ten Thousand Dollars ($310,000) per year (the Base Salary ), subject to standard payroll deductions and withholdings and payable in accordance with the Companys regular payroll schedule. |
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2.2 Stock Option Grant. Subject to approval by the Board of Directors (the Board ), Executive shall be granted an option to purchase 300,000 shares of Common Stock in the Company at the fair market value on the date of grant (the Option). The Option shall be governed in all respects by the terms of the governing equity plan documents and option agreement between Executive and the Company, and shall be subject to a vesting schedule whereby one-quarter (1/4) of the shares subject to the Option shall vest one year after grant, with the remaining shares vesting in equal monthly installments over the following three years thereafter, subject to Executives continuous service. |
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1
2
3
4
5
6
In Witness Whereof , the Parties have executed this Agreement on the day and year first written above.
ImmunoCellular Therapeutics, Ltd. |
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By: |
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Andrew Gengos |
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Chief Executive Officer |
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Executive |
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Anthony Gringeri |
7
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Exhibit 10.2
AMENDMENT NO. 1 to the
EXCLUSIVE LICENSE AGREEMENT
Between
THE JOHNS HOPKINS UNIVERSITY
&
IMMUNOCELLULAR THERAPEUTICS, LTD.
This Amendment No. 1 ( Amendment No. 1 ) is made effective as of the date the last party hereto has executed this Amendment No. 1 (the Amendment No. 1 Effective Date ) by and between Immunocellular Therapeutics, LTD, a Delaware corporation, having an address at 23622 Calabasas Road, Suite 300, Calabasas, CA 91302 ( Company ) and The Johns Hopkins University, a corporation of the state of Maryland, having a principal place of business for the purposes of this Amendment No. 1 at 100 N. Charles Street, Baltimore, Maryland 21201 ( JHU ).
RECITALS
Whereas , JHU and Company (the Parties ) are parties to that certain Exclusive License Agreement JHU Ref. No. A20530 effective February 16, 2012 (the Agreement ); and
Whereas , the Parties now desire to amend the Agreement as set forth below.
Now, Therefore , in consideration of the premises and mutual covenants and agreements contained herein, and for good and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, do hereby agree as follows:
1. |
Amendment to Paragraph 5.4 Developmental Obligations . |
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Paragraph 5.4 shall be deleted in its entirety from the Agreement and replaced with the following: |
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5.4 |
Developmental Obligations. Best efforts shall be demonstrated, among other ways, by the achievement of the following diligence milestones: |
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Event |
Date |
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(i) |
the first screened patient in any trial |
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subsequent to the current trial |
July 1, 2017 |
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For clarity, first screened patient shall mean the first patient screened for histocompatibility status prior to dosing.
With regard to the diligence milestone specified in Paragraph 5.4(i), Company may extend such milestone by one (1) year with written notice to JHU prior to the due date thereof specified in Paragraph 5.4(i) and upon paying JHU a non-creditable, nonrefundable fee of [ * ] within thirty (30) days after such notice. The Company may extend the milestone for an additional one (1) year period by written notice to JHU prior to expiration of the initial one (1) year extension period and payment to JHU of a non-creditable, non-refundable fee of [ * ] within thirty (30) days after such written notice.
Company shall provide JHU with notice, as provided hereunder in Paragraph 10.6, within thirty (30) days of achieving the diligence milestone.
Unless otherwise specifically defined in this Amendment No. 1, all capitalized terms used herein shall have the meaning given to such terms in the Agreement. Except as explicitly amended by this Amendment No. 1, all other terms and conditions of the Agreement shall remain in full force and effect and apply fully to the terms of this Amendment No. 1 as if part of the Agreement.
In Witness Whereof, the Parties, intending to be legally bound, have caused this Amendment No. 1 to be executed by their respective duly authorized representatives.
THE JOHNS HOPKINS UNIVERSITY |
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IMMUNOCELLULAR THERAPEUTICS, LTD. |
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By: |
/s/ Wesley D. Blakeslee J.D. CLP |
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By: |
/s/ Andrew Gengos |
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Wesley D. Blakeslee J.D. CLP |
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Andrew Gengos |
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Executive Director |
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President and CEO |
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Date: |
9/24/2013 |
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Date: |
9/17/2013 |
2
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Exhibit 10.3
2006 EQUITY INCENTIVE PLAN
OF
IMMUNOCELLULAR THERAPEUTICS, LTD.
(As Amended and Restated as of June 14, 2013)
(Approved by Stockholders on September 20, 2013)
1. |
PURPOSES OF THE PLAN |
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The purposes of the 2006 Equity Incentive Plan (Plan) of IMMUNOCELLULAR THERAPEUTICS, LTD., a Delaware corporation formerly known as Patco Industries, Ltd. and Optical Molecular Imaging, Inc. (the Company), are to: |
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1.1 Encourage selected employees, directors, consultants and advisers to improve operations and increase the profitability of the Company; and |
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1.2 Encourage selected employees, directors, consultants and advisers to accept or continue employment or association with the Company or its Affiliates. |
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2. |
TYPES OF AWARDS; ELIGIBLE PERSONS |
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2.1 The Administrator (as defined below) may, from time to time, take the following action, separately or in combination, under the Plan: (i) grant incentive stock options (ISOs) intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the Code); (ii) grant non-qualified options (NQOs, and together with ISOs, Options); (iii) grant or sell Common Stock subject to restrictions (restricted stock) and (iv) grant stock appreciation rights (in general, the right to receive the excess of the fair market value of Common Stock on the exercise date over its fair market value on the grant date (SARs)), either in tandem with Options or as separate and independent grants. Any such awards may be made to employees, including employees who are officers or directors, and to individuals described in Section 1 of this Plan who the Administrator believes have made or will make a contribution to the Company or any Affiliate (as defined below); provided, however, that only a person who is an employee of the Company or any Affiliate at the date of the grant of an Option is eligible to receive ISOs under the plan. The term Affiliate as used in this Plan means a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Code. The term employee includes an officer or director who is an employee of the Company. The term consultant includes persons employed by, or otherwise affiliated with, a consultant. The term adviser includes persons employed by, or otherwise affiliated with, an adviser. |
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2.2 Except as otherwise expressly set forth in this Plan, no right or benefit under this Plan shall be subject in any manner to anticipation, alienation, hypothecation, or charge, and any such attempted action shall be void. No right or benefit under this Plan shall in any manner be liable for or subject to debts, contracts, liabilities, or torts of any option holder or any other person except as otherwise may be expressly required by applicable law. |
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3. |
STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS |
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Subject to the provisions of Sections 6.1.1 and 8.2 of this Plan, the total number of shares of Common Stock which may be offered, or issued as restricted stock or on the exercise of Options or SARs under the Plan shall not exceed twelve million (12,000,000) shares of Common Stock. The shares subject to an Option or SAR granted under the Plan which expire, terminate or are cancelled unexercised shall become available again for grants under this Plan. If shares of restricted stock awarded under the Plan are forfeited to the Company or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan. Where the exercise price of an Option is paid by means of the optionees surrender of previously owned shares of Common Stock or the Companys withholding of shares otherwise issuable upon exercise of the Option as may be permitted herein, only the net number of shares issued and which remain outstanding in connection with such exercise shall be deemed issued and no longer available for issuance under this Plan. No eligible person shall be granted Options or other awards during any twelve-month period covering more than seven hundred twenty-five thousand (725,000) shares. |
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ADMINISTRATION |
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4.1 This Plan shall be administered by the Board of Directors of the Company (the Board) or by a committee (the Committee) to which administration of this Plan, or of part of this Plan, is delegated by the Board (in either case, the Administrator). The Board shall appoint and remove members of the Committee in its discretion in accordance with applicable laws. At the Boards discretion, the Committee may be comprised solely of non-employee directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act), or outside directors within the meaning of Section 162(m) of the Code. The Administrator may delegate non-discretionary administrative duties to such employees of the Company as the Administrator deems proper and the Board, in its absolute discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under this Plan. |
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4.2 Subject to the other provisions of this Plan, the Administrator shall have the authority, in its discretion: (i) to grant Options and SARs and grant or sell restricted stock; (ii) to determine the fair market value of the Common Stock subject to Options or other awards; (iii) to determine the exercise price of Options granted, the economic terms of SARs granted, or the offering price of restricted stock; (iv) to determine the persons to whom, and the time or times at which, Options or SARs shall be granted or restricted stock granted or sold, and the number of shares subject to each Option or SAR or the number of shares of restricted stock granted or sold; (v) to construe and interpret the terms and provisions of this Plan, of any applicable agreement and all Options and SARs granted under this Plan, and of any restricted stock award under this Plan; (vi) to prescribe, amend, and rescind rules and regulations relating to this Plan; (vii) to determine the terms and provisions of each Option and SAR granted and award of restricted stock (which need not be identical), including but not limited to, the time or times at which Options and SARs shall be exercisable or the time at which the restrictions on restricted stock shall lapse; (viii) with the consent of the grantee, to rescind any award or exercise of an Option or SAR and to modify or amend the terms of any Option, SAR or restricted stock; (ix) to reduce the exercise price of any Option, the base value from which appreciation is to be determined with respect to an SAR or the purchase price of restricted stock, provided that any such reduction shall not be less than provided with Sections 6.2.1 and 6.3.1; (x) to accelerate or defer (with the consent of the grantee) the exercise date of any Option or SAR or the date on which the restrictions on restricted stock lapse; (xi) to issue shares of restricted stock to an optionee in connection with the accelerated exercise of an Option by such optionee; (xii) to authorize any person to execute on behalf of the Company any instrument evidencing the grant of an Option. SAR or award of restricted stock; (xiii) to determine the duration and purposes of leaves of absence which may be granted to participants without constituting a termination of their employment for the purposes of the Plan; and (xiv) to make all other determinations deemed necessary or advisable for the administration of this Plan, any applicable agreement, Option, SAR or award of restricted stock. |
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4.3 All questions of interpretation, implementation, and application of this Plan or any agreement or Option, SAR or award of restricted stock shall be determined by the Administrator, which determination shall be final and binding on all persons. |
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5. |
GRANTING OF OPTIONS AND SARS; AGREEMENTS |
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5.1 No Options or SARs shall be granted under this Plan after ten (10) years from the date of adoption of this Plan by the Board. No SARs shall be granted under the Plan unless and until the common stock of the Company is publicly traded. |
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5.2 Each Option and SAR shall be evidenced by a written agreement, in form satisfactory to the Administrator, executed by the Company and the person to whom such grant is made. In the event of a conflict between the terms or conditions of an agreement and the terms and conditions of this Plan, the terms and conditions of this Plan shall govern. |
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5.3 Each agreement shall specify whether the Option it evidences is an NQO or an ISO, provided, however, all Options granted under this Plan to non -employee directors, consultants and advisers of the Company are intended to be NQOs. |
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5.4 Subject to Section 6.3.3 with respect to ISOs, the Administrator may approve the grant of Options or SARs under this Plan to persons who are expected to become employees, directors, consultants or advisers of the Company, but are not employees, directors, consultants or advisers at the date of approval. |
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2
TERMS AND CONDITIONS OF OPTIONS AND SARS |
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Each Option and SAR granted under this Plan shall be subject to the terms and conditions set forth in Section 6.1. NQOs and SARs shall also be subject to the terms and conditions set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall also be subject to the terms and conditions set forth in Section 6.3, but not those set forth in Section 6.2. SARs shall be subject to the terms and conditions of Section 6.4. |
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6.1 Terms and Conditions to Which All Options and SARs Are Subject. All Options and SARs granted under this Plan shall be subject to the following terms and conditions: |
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6.1.1 Changes in Capital Structure. Subject to Section 6.1.2, if the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, or if the Company effects a spin-off of the Companys subsidiary, appropriate adjustments shall be made by the Administrator, in its sole discretion, in (a) the number and class of shares of stock subject to this Plan and each Option and SAR outstanding under this Plan, and (b) the exercise price of each outstanding Option; provided, that the Company shall not be required to issue fractional shares as a result of any such adjustments. Any adjustment, however, in an outstanding Option shall be made without change in the total price applicable to the unexercised portion of the Option but with a corresponding adjustment in the price for each share covered by the unexercised portion of the Option. Adjustments under this Section 6.1.1 shall be made by the Administrator, whose determination as to the nature of the adjustments that shall be made, and the extent thereof, shall be final, binding, and conclusive. If an adjustment under this Section 6.1.1 would result in a fractional share interest under an option or any installment, the Administrators decision as to inclusion or exclusion of that fractional share interest shall be final, but no fractional shares of stock shall be issued under the Plan on account of any such adjustment. |
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6.1.2 Corporate Transactions. Except as otherwise provided in the applicable agreement, in the event of a Corporate Transaction (as defined below), the Administrator shall notify each holder of an Option or SAR at least thirty (30) days prior thereto or as soon as may be practicable. To the extent not then exercised all Options and SARs shall terminate immediately prior to the consummation of such Corporate Transaction unless the Administrator determines otherwise in its sole discretion; provided. however, that the Administrator, in its sole discretion, may (i) permit exercise of any Options or SARs prior to their termination, even if such Options or SARs would not otherwise have been exercisable, and/or (ii) provide that all or certain of the outstanding Options and SARs shall be assumed or an equivalent Option or SAR substituted by an applicable successor corporation or entity or any Affiliate of the successor corporation or entity. A Corporate Transaction means (i) a liquidation or dissolution of the Company; (ii) a merger or consolidation of the Company with or into another corporation or entity (other than a merger with a wholly-owned subsidiary); (iii) a sale of all or substantially all of the assets of the Company; or (iv) a purchase or other acquisition of more than 50% of the outstanding stock of the Company by one person or by more than one person acting in concert. |
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6.1.3 Time of Option or SAR Exercise. Subject to Section 5 and Section 6.3.4, an Option or SAR granted under the Plan shall be exercisable (a) immediately as of the effective date of the of the applicable agreement or (b) in accordance with a schedule or performance criteria as may be set by the Administrator and specified in the applicable agreement. However, in no case may an Option or SAR be exercisable until a written agreement in form and substance satisfactory to the Company is executed by the Company and the grantee. |
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6.1.4 Grant Date. The date of grant of an Option or SAR under the Plan shall be the effective date of the applicable agreement. |
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6.1.5 Non-Transferability of Rights. Except with the express written approval of the Administrator, which approval the Administrator is authorized to give only with respect to NQOs and SARs, no Option or SAR granted under this Plan shall be assignable or otherwise transferable by the grantee except by will or by the laws of descent and distribution. During the life of the grantee, an Option or SAR shall be exercisable only by the grantee. |
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3
4
5
MANNER OF EXERCISE |
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7.1 An optionee wishing to exercise an Option or SAR shall give written notice to the Company at its principal executive office, to the attention of the officer of the Company designated by the Administrator, accompanied by payment of the exercise price and/or withholding taxes as provided in Sections 6.1.6 and 6.1.7. The date the Company receives written notice of an exercise hereunder accompanied by the applicable payment will be considered as the date such Option or SAR was exercised. |
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7.2 Promptly after receipt of written notice of exercise and the applicable payments called for by Section 7.1, the Company shall, without stock issue or transfer taxes to the holder or other person entitled to exercise the Option or SAR, deliver to the holder or such other person a certificate or certificates for the requisite number of shares of Common Stock. A holder or permitted transferee of an Option or SAR shall not have any privileges as a stockholder with respect to any shares of Common Stock to be issued until the date of issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of such shares. |
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8. |
RESTRICTED STOCK |
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8.1 Grant or Sale of Restricted Stock. |
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8.1.1 No awards of restricted stock shall be granted under this Plan after ten (10) years from the date of adoption of this Plan by the Board. |
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8.1.2 The Administrator may issue shares under the Plan as a grant or for such consideration (including services, and, subject to the Sarbanes-Oxley Act of 2002, promissory notes) as determined by the Administrator. Shares issued under the Plan shall be subject to the terms, conditions and restrictions determined by the Administrator. The restrictions may include restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued, together with such other restrictions as may be determined by the Administrator. If shares are subject to forfeiture or repurchase by the Company, all dividends or other distributions paid by the Company with respect to the shares may be retained by the Company until the shares are no longer subject to forfeiture or repurchase, at which time all accumulated amounts shall be paid to the recipient. All Common Stock issued pursuant to this Section 8 shall be subject to a purchase or grant agreement, which shall be executed by the Company and the prospective recipient of the shares prior to the delivery of certificates representing such shares to the recipient. The purchase or grant agreement may contain any terms, conditions, restrictions, representations and warranties required by the Administrator. The certificates representing the shares shall bear any legends required by the Administrator. The Administrator may require any purchaser of restricted stock to pay to the Company in cash upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the purchaser fails to pay the amount demanded, the Administrator may withhold that amount from other amounts payable by the Company to the purchaser, including salary, subject to applicable law. With the consent of the Administrator in its sole discretion, a purchaser may deliver Common Stock to the Company to satisfy this withholding obligation. Upon the issuance of restricted stock, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued. |
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8.2 Changes in Capital Structure. In the event of a change in the Company s capital structure, as described in Section 6.1.1, appropriate adjustments shall be made by the Administrator, in its sole discretion, in the number and class of restricted stock subject to this Plan and the restricted stock outstanding under this Plan; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments. |
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8.3 Corporate Transactions. In the event of a Corporate Transaction, as defined in Section 6.1.2 hereof, to the extent not previously forfeited, all restricted stock shall be forfeited immediately prior to the consummation of such Corporate Transaction unless the Administrator determines otherwise in its sole discretion; provided, however, that the Administrator, in its sole discretion, may remove any restrictions as to any restricted stock. The Administrator may, in its sole discretion, provide that all outstanding restricted stock participate in the Corporate Transaction with an equivalent stock substituted by an applicable successor corporation subject to the restriction. |
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6
EMPLOYMENT OR CONSULTING RELATIONSHIP |
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Nothing in this Plan or any Option granted hereunder shall interfere with or limit in any way the right of the Company or of any of its Affiliates to terminate the employment, consulting or advising of any optionee or restricted stock holder at any time, nor confer upon any optionee or restricted stock holder any right to continue in the employ of, or consult or advise with, the Company or any of its Affiliates. |
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10. |
CONDITIONS UPON ISSUANCE OF SHARES |
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10.1 Securities Act. Shares of Common Stock shall not be issued pursuant to the exercise of an Option or the receipt of restricted stock unless the exercise of such Option or such receipt of restricted stock and the issuance and delivery of such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended (the Securities Act). |
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10.2 Non-Compete Agreement. As a further condition to the receipt of Common Stock pursuant to the exercise of an Option or the receipt of restricted stock, the optionee or recipient of restricted stock may be required not to render services for any organization, or engage directly or indirectly in any business, competitive with the Company at any time during which (i) an Option is outstanding to such Optionee and for six (6) months after any exercise of an Option or the receipt of Common Stock pursuant to the exercise of an Option and (ii) restricted stock is owned by such recipient and for six (6) months after the restrictions on such restricted stock lapse. Failure to comply with this condition shall cause such Option and the exercise or issuance of shares thereunder and/or the award of restricted stock to be rescinded and the benefit of such exercise, issuance or award to be repaid to the Company. |
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11. |
NON-EXCLUSIVITY OF THIS PLAN |
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The adoption of this Plan shall not be construed as creating any limitations on the power of the Company to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options other than under this Plan. |
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12. |
MARKET STAND-OFF |
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Each optionee, holder of an SAR or recipient of restricted stock, if so requested by the Company or any representative of the underwriters in connection with any registration of the offering of any securities of the Company under the Securities Act, shall not sell or otherwise transfer any shares of Common Stock acquired upon exercise of Options, SARs or receipt of restricted stock during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such restriction shall apply only to a registration statement of the Company which includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act and the restriction period shall not exceed 90 days after the registration statement becomes effective. |
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13. |
AMENDMENTS TO PLAN |
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The Board may at any time amend, alter, suspend or discontinue this Plan. Without the consent of an optionee, holder of an SAR or holder of restricted stock, no amendment, alteration, suspension or discontinuance may adversely affect such persons outstanding Option(s), SAR(s) or the terms applicable to restricted stock except to conform this Plan and ISOs granted under this Plan to the requirements of federal or other tax laws relating to incentive stock options. No amendment, alteration, suspension or discontinuance shall require stockholder approval unless (a) stockholder approval is required to preserve incentive stock option treatment for federal income tax purposes or (b) the Board otherwise concludes that stockholder approval is advisable. |
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7
EFFECTIVE DATE OF PLAN; TERMINATION |
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This Plan shall become effective upon adoption by the Board; provided, however, that no Option or SAR shall be exercisable unless and until written consent of the stockholders of the Company, or approval of stockholders of the Company voting at a validly called stockholders meeting, is obtained within twelve (12) months after adoption by the Board. If any Options or SARs are so granted and stockholder approval shall not have been obtained within twelve (12) months of the date of adoption of this Plan by the Board, such Options and SARs shall terminate retroactively as of the date they were granted. Awards may be made under this Plan and exercise of Options and SARs shall occur only after there has been compliance with all applicable federal and state securities laws. This Plan (but not Options and SARs previously granted under this Plan) shall terminate within ten (10) years from the date of its adoption by the Board. Termination shall not affect any outstanding Options or SARs or the terms applicable to previously awarded restricted stock. |
8
Exhibit 10.4
Amendment No. 1
to
2006 Equity Incentive Plan
of
ImmunoCellular Therapeutics, Ltd.
(As Amended and Restated as of June 14, 2013)
This Amendment No. 1 (this Amendment ) to the 2006 Equity Incentive Plan of ImmunoCellular Therapeutics, Ltd., as amended and restated as of June 14, 2013, dated as of September 20, 2013 (the Effective Date ), is made by ImmunoCellular Therapeutics, Ltd., a Delaware corporation (the Company ).
WHEREAS, the Company maintains the 2006 Equity Incentive Plan, as amended and restated as of June 14, 2013 (the Plan ); and
WHEREAS , all capitalized terms not defined herein will have the meanings ascribed to such terms in the Plan; and
WHEREAS , the Company desires to amend the Plan to provide that, effective as of the Effective Date, the Expiration Date of any Options or SARs granted on or after the Effective Date will be extended to a later date (not to exceed ten years from the date the Option or SAR is granted) if the Expiration Date occurs during a one of the Companys Blackout Periods (as defined below); and
WHEREAS , Section 13 of the Plan authorizes the Board of Directors of the Company (the Board ) to so amend the Plan .
NOW, THEREFORE, the Board hereby amends the Plan as follows:
1. Amendment to Section 6.1.10 . Section 6.1.10 is hereby deleted in its entirety and replaced with the following sentences.
Option and SAR Term . No Option or SAR shall be exercisable more than 10 years after the date of grant, or such lesser period of time as is set forth in the applicable agreement (the end of the maximum exercise period stated in the agreement is referred to in this Plan as the Expiration Date ). Notwithstanding the preceding sentence, with respect to any Option or SAR granted on or after September 20, 2013, if the Expiration Date of any such Option or SAR occurs during a period in which the sale of any Common Stock received upon exercise of an Option or SAR would violate the Companys insider trading policy (each, a Blackout Period ) and the holder of such Option or SAR has not terminated employment or service with the Company or any Affiliate on or prior to the Expiration Date set forth in the preceding sentence (the Original Expiration Date ), the Original Expiration Date will automatically be extended to the earlier of (i) the date that occurs thirty (30) days after the expiration of the applicable Blackout Period, and (ii) the day before the tenth anniversary (or if the Option is an ISO granted to any Ten Percent Stockholder, the fifth anniversary) of the date on which the Option or SAR was granted (in either case, the Extended Expiration Date ). For the sake of clarity, the preceding sentence will not apply to any holder of an Option or SAR who terminates employment or service with the Company or any Affiliate on or prior to the Original Expiration Date, notwithstanding the fact that such date may occur during a Blackout Period.
2. Ratification . All other provisions of the Plan remain unchanged and are hereby ratified by the Company and the Board.
3. Effective Date . This Amendment shall be effective as of the date set forth in the first sentence of this Amendment.
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Exhibit 10.5
I mmuno C ellular T herapeutics , L td .
S tock O ption G rant N otice
(2006 E quity I ncentive P lan )
ImmunoCellular Therapeutics, Ltd. (the Company ), pursuant to its 2006 Equity Incentive Plan (the Plan ), hereby grants to Optionholder an option to purchase the number of shares of the Companys Common Stock set forth below. This option is subject to all of the terms and conditions as set forth in this notice, in the Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Option Agreement will have the same definitions as in the Plan or the Option Agreement. If there is any conflict between the terms in this notice and the Plan, the terms of the Plan will control.
Optionholder: |
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Date of Grant: |
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Vesting Commencement Date: |
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Number of Shares Subject to Option: |
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Exercise Price (Per Share): |
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Total Exercise Price: |
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Expiration Date: |
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Type of Grant: |
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Incentive Stock Option1 |
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Nonstatutory Stock Option |
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Exercise Schedule : |
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Same as Vesting Schedule |
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Early Exercise Permitted |
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Vesting Schedule : |
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Payment: |
By one or a combination of the following items (described in the Option Agreement): |
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By cash, check, bank draft, money order or wire transfer payable to the Company |
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A cashless exercise pursuant to a Regulation T Program |
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By delivery of already-owned shares |
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If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Companys consent at the time of exercise, by a net exercise arrangement |
Term:
Optionholder may not exercise this option before the Date of Grant or after the expiration of this options term. The term of this option expires, subject to the provisions of Sections 6.1.10, 6.2.2 and 6.3.5 of the Plan, upon the earliest of the following:
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(a) immediately upon the termination of Optionholder s employment for Cause (as defined below); |
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1 If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option.
(b) ______ after Optionholder s employment with the Company or any of its Affiliates terminates for any reason except for Cause; provided, however, that if during any part of such ______ period this option is not exercisable solely because of the condition set forth in Section 6 of the Option Agreement relating to Securities Law Compliance, this option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of ______ after Optionholders employment terminates; provided further, if during any part of such ______ period, the sale of any Common Stock received upon exercise of this option would violate the Companys insider trading policy, then this option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of ______ after Optionholders employment terminates during which the sale of the Common Stock received upon exercise of this option would not be in violation of the Companys insider trading policy; |
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(c) the Expiration Date indicated in this Grant Notice; or |
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(d) the day before the tenth (10th) anniversary of the Date of Grant. |
Cause will have the meaning ascribed to such term in any written agreement between Optionholder and the Company defining such term and, in the absence of such agreement, such term shall mean termination of Optionholders employment with the Company or any of its Affiliates due to Optionholders willful breach or habitual neglect or continued incapacity to perform Optionholders required duties, or commission of acts of dishonesty, fraud, misrepresentation or other acts of moral turpitude as would prevent the effective performance of Optionholders duties.
If this option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of Optionholders option exercise, Optionholder must be an employee of the Company or an Affiliate, except in the event of Optionholders death or permanent and total disability, as defined in Section 22(e)(3) of the Code. The Company has provided for extended exercisability of this option under certain circumstances for Optionholders benefit but cannot guarantee that this option will necessarily be treated as an Incentive Stock Option if Optionholder continues to provide services to the Company or an Affiliate as a consultant or director after Optionholders employment terminates or if Optionholder otherwise exercises this option more than three (3) months after the date Optionholders employment with the Company or an Affiliate terminates.
Additional Terms/Acknowledgements:
Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan. Optionholder acknowledges and agrees that this Stock Option Grant Notice and the Option Agreement may not be modified, amended or revised except as provided in the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding this option award and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder, (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (iii) any written employment or severance arrangement that would provide for vesting acceleration of this option upon the terms and conditions set forth therein. By accepting this option, Optionholder consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
Attachments : Option Agreement, 2006 Equity Incentive Plan and Notice of Exercise
A ttachment I
O ption A greement
A ttachment II
2006 E quity I ncentive P lan
A ttachment III
N otice of E xercise
Exhibit 31.1
Certification of the Principal Executive Officer Under Section 302 of the Sarbanes-Oxley Act
I, Andrew Gengos, certify that:
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I have r eviewed this Form 10-Q of ImmunoCellular Therapeutics, Ltd.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
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The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting. |
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Date: November 7, 2013 |
By: |
/s/ Andrew Gengos
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Name: |
Andrew Gengos |
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Title: |
President and Chief Executive Officer |
Exhibit 31.2
Certification of the Principal Financial Officer Under Section 302 of the Sarbanes-Oxley Act
I, David Fractor, certify that:
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I have r eviewed this Form 10-Q of ImmunoCellular Therapeutics, Ltd.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
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The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting. |
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Date: November 7, 2013 |
By: |
/s/ David Fractor
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Name: |
David Fractor |
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Title: |
Principal Financial and Accounting Officer |
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
Pursuant to the requirement set forth in Rule 13a -14(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. § 1350), the undersigned officer of ImmunoCellular Therapeutics, Ltd. (the Company) hereby certifies that, to the best of his knowledge:
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The Companys Quarterly Report on Form 10-Q for the period ended September 30, 2013 (Periodic Report) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and |
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The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 7, 2013 |
By: |
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/s/ Andrew Gengos |
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Name: |
Andrew Gengos |
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Title: |
President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. § 1350), the undersigned officer of ImmunoCellular Therapeutics, Ltd. (the Company) hereby certifies that, to the best of his knowledge:
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The Companys Quarterly Report on Form 10-Q for the period ended September 30, 2013 (Periodic Report) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and |
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The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 7, 2013 |
By: |
/s/ David Fractor |
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Name: |
David Fractor |
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Title: |
Principal Financial and Accounting Officer |