Attached files
file | filename |
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EX-32.1 - Advaxis, Inc. | v177999_ex32-1.htm |
EX-31.1 - Advaxis, Inc. | v177999_ex31-1.htm |
EX-31.2 - Advaxis, Inc. | v177999_ex31-2.htm |
EX-32.2 - Advaxis, Inc. | v177999_ex32-2.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended January 31, 2010
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
For the
transition period from to ________________ to ________________
Commission
file number 000-28489
ADVAXIS,
INC.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
02-0563870
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification
No.)
|
The
Technology Centre of New Jersey, 675 Route 1, Suite 119, North Brunswick,
NJ 08902
|
(Address
of principal executive
offices)
|
(732)
545-1590
|
(Registrant’s
telephone number)
|
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
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 (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes ¨ 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 ¨
|
Non-accelerated
filer ¨
|
Smaller
Reporting Company x
|
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
number of shares of the registrant's common stock, $0.001 par value, outstanding
as of March 12, 2010 was 127,201,243.
INDEX
Page
No.
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Financial
Statements
|
|
Balance
Sheet at January 31, 2010 (unaudited) and October 31, 2009
|
2
|
|
Statements
of Operations for the three month periods ended January 31, 2010 and 2009
and the period March 1, 2002 (inception) to January 31, 2010
(unaudited)
|
3
|
|
Statements
of Cash Flow for the three month periods ended January 31, 2010 and 2009
and the period March 1, 2002 (inception) to January 31, 2010
(unaudited)
|
4
|
|
Supplemental
Schedule of Noncash Investing and Financing Schedules
|
5
|
|
Notes
to Financial Statements
|
6
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
18
|
Item
4T.
|
Controls
and Procedures
|
18
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
18
|
Item
1A.
|
Risk
Factors
|
18
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
18
|
Item
6.
|
Exhibits
|
19
|
SIGNATURES
|
20
|
All
other items called for by the instructions to Form 10-Q have been omitted
because the items are not applicable or the relevant information is not
material.
1
ADVAXIS,
INC.
(A
Development Stage Company)
BALANCE
SHEETS
January
31, 2010
|
October 31,
2009
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$
|
1,113,956
|
$
|
659,822
|
||||
Prepaid
expenses
|
42,910
|
36,445
|
||||||
Total
Current Assets
|
1,156,866
|
696,267
|
||||||
Deferred
expenses
|
247,536
|
288,544
|
||||||
Property
and Equipment (net of accumulated depreciation)
|
55,101
|
54,499
|
||||||
Intangible
Assets (net of accumulated amortization)
|
1,449,870
|
1,371,638
|
||||||
Deferred
Financing Cost
|
-
|
299,493
|
||||||
Other
Assets
|
6,138
|
3,876
|
||||||
TOTAL
ASSETS
|
$
|
2,919,511
|
$
|
2,714,317
|
||||
LIABILITIES
AND SHAREHOLDERS’ DEFICIENCY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$
|
2,659,522
|
$
|
2,368,716
|
||||
Accrued
expenses
|
673,017
|
917,250
|
||||||
Convertible
Bridge Notes and fair value of embedded derivative
|
2,645,990
|
2,078,851
|
||||||
Notes
payable – including interest payable
|
1,155,757
|
1,121,094
|
||||||
Total
Current Liabilities
|
7,134,286
|
6,485,911
|
||||||
Common
Stock Warrant
|
12,665,150
|
11,961,734
|
||||||
Total
Liabilities
|
$
|
19,799,436
|
$
|
18,447,645
|
||||
Shareholders’
Deficiency:
|
||||||||
Preferred
stock, $0.001 par value; 5,000,000 shares authorized; 145 shares issued
and outstanding
|
-
|
|||||||
Common
Stock - $0.001 par value; authorized 500,000,000 shares, issued and
outstanding 127,201,243 at January 31, 2010 and 115,638,243 at October 31,
2009
|
127,200
|
115,638
|
||||||
Additional
Paid-In Capital
|
5,619,739
|
754,834
|
||||||
Stock
subscription receivable
|
(1,965,710
|
)
|
-
|
|||||
Deficit
accumulated during the development stage
|
(20,665,154
|
)
|
(16,603,800
|
)
|
||||
Total
Shareholders' Deficiency
|
(16,883,925
|
)
|
(15,733,328
|
)
|
||||
TOTAL
LIABILITIES & SHAREHOLDERS’ DEFICIENCY
|
$
|
2,915,511
|
$
|
2,714,317
|
The
accompanying notes and the report of independent registered public accounting
firm should be read in conjunction with the financial statements.
2
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
(unaudited)
Three
Months
Ended
January
31,
|
Three
Months
Ended
January
31,
|
Period
from
March 1, 2002
(Inception) to
January
31,
|
||||||||||
2010
|
2009
|
2010
|
||||||||||
Revenue
|
$
|
-
|
$
|
$
|
1,354,862
|
|||||||
Research
& Development Expenses
|
997,335
|
179,174
|
11,170,876
|
|||||||||
General
& Administrative Expenses
|
589,015
|
545,454
|
13,298,715
|
|||||||||
Total
Operating expenses
|
1,586,350
|
724,628
|
24,469,591
|
|||||||||
Loss
from Operations
|
(1,586,350
|
)
|
(724,628
|
)
|
(23,114,729
|
)
|
||||||
Other
Income (expense):
|
||||||||||||
Interest
expense
|
(1,666,139
|
)
|
(15,396
|
)
|
(3,601,630
|
)
|
||||||
Other
Income
|
2,271
|
2
|
248,728
|
|||||||||
Gain
on note retirement
|
-
|
-
|
1,532,477
|
|||||||||
Net
changes in fair value of common stock warrant liability and embedded
derivative liability
|
(1,090,114
|
)
|
-
|
3,112,883
|
||||||||
Net
(Loss) before income tax benefit
|
(4,340,332
|
)
|
(740,022
|
)
|
(21,822,271
|
)
|
||||||
Income
tax benefit
|
278,978
|
922,020
|
1,201,001
|
|||||||||
Net
(Loss) Income
|
(4,061,354
|
)
|
181,998
|
(20,621,270
|
)
|
|||||||
Dividends
attributable to preferred shares
|
-
|
-
|
(43,884
|
)
|
||||||||
Net
Income (Loss) applicable to Common Stock
|
$
|
(4,061,354
|
)
|
$
|
181,998
|
$
|
(20,665,154
|
)
|
||||
Net
income (Loss) per share, basic
|
$
|
(.03
|
)
|
$
|
0.00
|
|||||||
Net
income (Loss) per share, diluted
|
$
|
(.03
|
)
|
$
|
0.00
|
|||||||
Weighted
average number of shares outstanding, basic
|
118,277,623
|
110,222,457
|
||||||||||
Weighted
average number of shares outstanding, diluted
|
118,277,623
|
110,222,457
|
The
accompanying notes are an integral part of these financial
statements.
3
ADVAXIS,
INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
(unaudited)
Three
Months
Ended
January 31,
|
Three
Months
Ended
January 31,
|
Period from
March 1, 2002
(Inception) to
January 31,
|
||||||||||
2010
|
2009
|
2010
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
income/(Loss)
|
$
|
(4,061,354
|
)
|
$
|
181,998
|
$
|
(20,621,270
|
)
|
||||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
||||||||||||
Non-cash
charges to consultants and employees for options and stock
|
188,177
|
52,676
|
2,612,932
|
|||||||||
Amortization
of deferred financing costs
|
-
|
260,000
|
||||||||||
Amortization
of deferred expenses
|
41,008
|
102,464
|
||||||||||
Amortization
of discount on Bridge Loans
|
225,320
|
349,166
|
||||||||||
Impairment
of intangible assets
|
26,087
|
26,087
|
||||||||||
Non-cash
interest expense
|
1,433,436
|
14,722
|
2,650,272
|
|||||||||
Loss
(Gain) on change in value of warrants and embedded
derivative
|
1,090,114
|
-
|
(3,112,883
|
)
|
||||||||
Value
of penalty shares issued
|
-
|
149,276
|
||||||||||
Depreciation
expense
|
9,412
|
9,162
|
138,150
|
|||||||||
Amortization
expense of intangibles
|
21,267
|
17,349
|
383,199
|
|||||||||
Gain
on note retirement
|
(1,532,477
|
)
|
||||||||||
Decrease
(Increase) in prepaid expenses
|
(6,464
|
)
|
11,498
|
(42,909
|
)
|
|||||||
Increase
in other assets
|
-
|
-
|
(3,876
|
)
|
||||||||
Increase
in accounts payable
|
441,848
|
61,774
|
3,299,748
|
|||||||||
(Decrease)
Increase in accrued expenses
|
(244,234
|
)
|
(65,014
|
)
|
233,384
|
|||||||
-
|
||||||||||||
(Decrease)
Increase in interest payable
|
-
|
-
|
18,291
|
|||||||||
Net
cash provided by (used in) operating activities
|
(861,470
|
)
|
310,252
|
(15,090,447
|
)
|
|||||||
INVESTING
ACTIVITIES
|
||||||||||||
Cash
paid on acquisition of Great Expectations
|
-
|
-
|
(44,940
|
)
|
||||||||
Purchase
of property and equipment
|
(10,014
|
)
|
-
|
(147,671
|
)
|
|||||||
Cost
of intangible assets
|
(99,500
|
)
|
(116,222
|
)
|
(1,934,109
|
)
|
||||||
Net
cash provided by (used in) Investing Activities
|
(109,514
|
)
|
(116,222
|
)
|
(2,126,720
|
)
|
||||||
FINANCING
ACTIVITIES
|
||||||||||||
Proceeds
from (repayment of) convertible secured debenture
|
-
|
-
|
960,000
|
|||||||||
Cash
paid for deferred financing costs
|
-
|
-
|
(559,493
|
)
|
||||||||
Principal
Payments on notes payable
|
(213,382
|
)
|
(53,985
|
)
|
(336,973
|
)
|
||||||
Proceeds
from notes payable
|
472,500
|
5,478,359
|
||||||||||
Payment
on notes payable
|
-
|
-
|
||||||||||
Net
proceeds of issuance of Preferred Stock
|
1,166,000
|
1,401,000
|
||||||||||
Cancellation
of Warrants
|
-
|
(600,000
|
)
|
|||||||||
Net
proceeds of issuance of Common Stock
|
-
|
11,988,230
|
||||||||||
Net
cash provided by Financing Activities
|
1,425,118
|
(53,985
|
)
|
18,331,124
|
||||||||
Net
increase (decrease) in cash
|
454,134
|
140,045
|
1,113,956
|
|||||||||
Cash
at beginning of period
|
659,822
|
59,738
|
||||||||||
Cash
at end of period
|
$
|
1,113,956
|
$
|
199,783
|
$
|
1,113,956
|
The
accompanying notes are an integral part of these financial
statements.
4
Three
Months
Ended
January 31,
|
Three
Months
Ended
January 31,
|
Period from
March 1, 2002
(Inception) to
January 31,
|
||||||||||
2010
|
2009
|
2010
|
||||||||||
Equipment
acquired under notes payable
|
-
|
-
|
$
|
45,580
|
||||||||
Common
stock issued to Founders
|
-
|
-
|
$
|
40
|
||||||||
Notes
payable and accrued interest converted to Preferred Stock
|
-
|
-
|
$
|
15,969
|
||||||||
Stock
dividend on Preferred Stock
|
-
|
-
|
$
|
43,884
|
||||||||
Accounts
Payable from consultants settled with Common Stock
|
-
|
$
|
51,978
|
$
|
51,978
|
|||||||
Notes
payable and accrued interest converted to Common Stock
|
-
|
-
|
$
|
2,513,158
|
||||||||
Intangible
assets acquired with notes payable
|
-
|
-
|
$
|
360,000
|
||||||||
Debt
discount in connection with recording the original value of the embedded
derivative liability
|
$
|
267,800
|
-
|
$
|
2,350,242
|
|||||||
Allocation
of the original secured convertible debentures to warrants
|
-
|
-
|
$
|
214,950
|
||||||||
Allocation
of the warrants on Bridge Notes as debt discount
|
$
|
410,116
|
-
|
$
|
1,350,627
|
|||||||
Note
receivable in connection with exercise of warrants
|
$
|
1,965,710
|
-
|
$
|
1,965,710
|
|||||||
Warrants
Issued in connection with issuance of Common Stock
|
-
|
-
|
$
|
1,505,550
|
||||||||
Warrants
Issued in connection with issuance of Preferred Stock
|
-
|
-
|
$
|
3,587,625
|
The
accompanying notes are an integral part of these financial
statements.
5
NOTES
TO THE FINANCIAL STATEMENTS (unaudited)
1.
|
Nature of Operations and
Liquidity
|
Advaxis,
Inc. (the “Company”) is a development stage biotechnology company with the
intent to develop safe and effective cancer vaccines that utilize multiple
mechanisms of immunity. The Company is developing a live Listeria vaccine technology
under license from the University of Pennsylvania (“Penn”) which secretes a
protein sequence containing a tumor-specific antigen. The Company believes this
vaccine technology is capable of stimulating the body’s immune system to process
and recognize the antigen as if it were foreign, generating an immune response
able to attack the cancer. The Company believes this to be a broadly enabling
platform technology that can be applied to the treatment of many types of
cancers, infectious diseases and auto-immune disorders.
The
discoveries that underlie this innovative technology are based upon the work of
Yvonne Paterson, Ph.D., Professor of Microbiology at Penn. This
technology involves the creation of genetically engineered Listeria that stimulate the
innate immune system and induce an antigen-specific immune response involving
both arms of the adaptive immune system. In addition, this technology
supports, among other things, the immune response by altering tumors to make
them more susceptible to immune attack, stimulating the development of specific
blood cells that underlie a strong therapeutic immune response.
Since the
Company’s inception in 2002, it has focused its initial development efforts upon
therapeutic cancer vaccines targeting cervical cancer, its predecessor
condition, cervical intraepithelial neoplasia, head and neck cancer, breast
cancer, prostate cancer, and other cancers. Although no products have
been commercialized to date, research and development and investment continues
to be placed behind the pipeline and the advancement of this technology.
Pipeline development and the further exploration of the technology for
advancement entail risk and expense. It is anticipated that ongoing operational
costs for the Company will increase significantly as it expects to begin several
clinical trials starting this fiscal year.
At
January 31, 2010, the Company had $1,113,956 in cash, a deficit of $5,977,420 in
working capital, $3,801,747 in notes and interest payable, and stockholders’
deficiency of $16,883,925. The Company’s net loss before income tax benefit for
the three months ended January 31, 2010 was $4,340,332. This loss was partially
offset by $278,978 income the Company received in this period from the New
Jersey Technology Tax Certificate Transfer Program.
Since the
Company’s inception until January 31, 2010, it has reported accumulated net
losses of $20,621,270 and recurring negative cash flows from operations. Based
on the Company’s available cash of approximately $1,114,000 on January 31, 2010,
the $3,550,000 balance of its preferred stock equity line (as described below)
and its ongoing financing plans, the Company does not have adequate cash on hand
to cover its anticipated expenses for the next 12 months. In order to maintain
sufficient cash and investments to fund future operations, the Company is
seeking to raise additional investment over the next few months.
From
February 1, 2010 through March 12, 2010, the Company issued to certain
accredited investors (i) junior unsecured convertible promissory notes in the
aggregate principal face amount of $479,197, for an aggregate net purchase price
of $400,000 and (ii) warrants to purchase approximately 1,176,500 shares of
common stock at an exercise price of $0.17 per share. On March 15, 2010, the
Company delivered a tranche notice to Opitmus Life Sciences Capital Partners LLC
(“Optimus”) to sell 216 shares of its non-convertible, redeemable Series A
preferred stock at $10,000 per share ($2.16 million in the aggregate) pursuant
to the terms of the Purchase Agreement. The closing of the
transaction is expected to occur on or about March 29, 2010 subject to
satisfaction of the closing conditions as set forth in the Purchase
Agreement. (See also Note 9-Subsequent Events).
The gross
proceeds for the Series A preferred stock was $1,450,000. In
addition, the Company sold its New Jersey Net Operating Losses (“NOL”) and
research tax credits through October 30, 2008 to the New Jersey Economic
Development Administration (“NJEDA”) on January 4, 2010 for
$278,978.
2.
|
Basis of
Presentation
|
The
accompanying unaudited interim financial statements include all adjustments
(consisting only of those of a normal recurring nature) necessary for a fair
statement of the results of the interim period. These interim financial
statements should be read in conjunction with the Company’s Financial Statements
and Notes for the fiscal year ended October 31, 2009 filed on Form 10-K. The
Company believes these financial statements reflect all adjustments (consisting
only of normal, recurring adjustments) that are necessary for a fair
presentation of its financial position and results of operations for the periods
presented. Results of operations for the interim periods presented are not
necessarily indicative of results to be expected for the year.
6
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. There is a working capital deficiency and
recurring losses that raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments to the
carrying amount and classification of recorded assets and liabilities should the
Company be unable to continue operations.
The
Company’s short term financing plans consists of issuing convertible promissory
notes with maturity dates ranging between April 30, 2010 and July 31,
2010. In addition, the Company intends to draw down the remaining
$3,550,000 remaining under its $5,000,000 preferred stock equity line with
Optimus. The Company also intends to raise additional capital over the next few
months to cover the expense of its clinical trials.
If the
Company is successful in raising these funds it anticipates continuing its four
clinical trials to investigate the safety and efficacy of ADXS11-001: Two
clinical trials will be conducted in invasive cervical cancer, one Company
funded Phase II in India and one Phase I in the US with an unspecified start
date to be sponsored by and in collaboration with the National Institute of
Health Gynecologic Oncology Group (“NIH”& “GOG”). The Company will
collaborate with the GOG, a collaborative research group of the National Cancer
Institute (NCI), in a multi-center study. Both these clinical trials are in the
treatment of advanced cervix cancer in women who have failed prior cytotoxic
therapy, consistent with the Company’s completed Phase I Trial. This Phase II
trial will be conducted by GOG investigators and largely underwritten by the
NCI. Of the remaining two clinical trials, one will be a Company funded Phase II
trial in CIN (a pre cancerous indication) to be conducted in the U.S. with three
dosage arms. The patient population will treat CIN in woman who are otherwise
healthy patients. The other clinical trial is for the treatment of head and neck
cancer to be funded by the Cancer Research UK (CRUK), the UK philanthropy
dedicated to cancer research. This head and neck clinical trial will
also investigate the safety and efficacy of ADXS11-001 in
oropharyngeal (upper) head and neck cancer patients who have
previously failed treatment with surgery, radiotherapy and chemotherapy – alone
or in combination. The Company will provide the vaccines with all other
associated costs to be funded by CRUK.
Use of Estimates - The
preparation of financial statements in conformity with generally accepted
accounting principles required management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and the differences could be
material. The most significant estimates impact the following transactions or
account balances: stock compensation, liabilities (including the embedded
derivative liability), warrant valuation, impairment of intangibles and fixed
assets and projected operating results.
3.
|
Intangible
Assets:
|
Intangible
assets primarily consist of legal and filing costs associated with obtaining
patents and licenses. The license and patent costs capitalized primarily
represent the value assigned to the Company’s 20-year exclusive worldwide
license agreement with Penn which are amortized on a straight-line basis over
their remaining useful lives which are estimated to be twenty years from the
effective date of Penn Agreement dated July 1, 2002. The value of the license
and patents are based on management’s assessment regarding the ultimate
recoverability of the amounts paid and the potential for alternative future
uses. This license now includes the exclusive right to exploit 25 patents issued
and 19 patents pending and applied for in most of the largest markets in the
world excluding the patents issued and applied for that we are no longer
pursuing. After careful review and analysis we decided not to pursue 4 patents
issued and 6 patent applications filed in small countries. Under the Second
Amendment to the Amended and Restated Agreement, there are an additional 27
patent applications. However according to this Second Agreement, we have
the option to acquire licenses relative to these patents for an estimated
$580,764, as of January 31, 2010, which includes the reimbursement of certain
legal and filing costs. We are still in negotiations with Penn
over the form of payment and expect to reach a conclusion at the close of our
next financial raise. These fees are currently unpaid and not in our
financial statements as of the January 31, 2010.
As of
January 31, 2010, all gross capitalized costs associated with the licenses and
patents filed and granted as well as and costs associated with patents pending
are $1,751,073 (excluding the Second Amendment costs) as shown under license and
patents on the table below. The expirations of the existing patents range from
2014 to 2023 but the expirations can be extended based on market approval if
granted and/or based on existing laws and regulations. Capitalized costs
associated with patent applications that are abandoned without future value are
charged to expense when the determination is made not to pursue the application.
No other patent applications with future value were abandoned and charged to
expense in the current or prior year. Amortization expense for licensed
technology and capitalized patent cost is included in general and administrative
expenses.
Under the
amended and restated agreement we are billed actual patent expenses as they are
passed through from Penn and or billed directly from our patent attorney. The
following is a summary of the intangibles assets as of the following fiscal
periods:
January
31,
2010
|
October
31,
2009
|
|||||||
License
|
$ | 641,274 | $ | 571,275 | ||||
Patents
|
1,109,798 | 1,080,299 | ||||||
Total
intangibles
|
1,751,073 | 1,651,574 | ||||||
Accumulated
Amortization
|
(301,203 | ) | (279,936 | ) | ||||
Intangible
Assets
|
$ | 1,449,870 | $ | 1,371,638 |
7
The
Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An asset is considered to be impaired when the sum of the
undiscounted future net cash flows expected to result from the use of the asset
and its eventual disposition exceeds its carrying amount. The amount of
impairment loss, if any, is measured as the difference between the net book
value of the asset and its estimated fair value.
4.
|
Net Loss Per
Share:
|
Basic net
income or basic net loss per common share is computed by dividing net income
available to common shareholders by the weighted average number of common shares
outstanding during the periods. Diluted earnings per share gives effect to
dilutive options, warrants, convertible debt and other potential common
stock outstanding during the period. Therefore, in the case of a net loss the
impact of the potential common stock resulting from warrants, outstanding stock
options and convertible debt are not included in the computation of diluted
loss per share, as the effect would be anti-dilutive. In the case of net income
the impact of the potential common stock resulting from these instruments that
have intrinsic value are included in the diluted earnings per share. The table
sets forth the number of potential shares of common stock that have been
excluded from diluted net loss per share. The warrants include anti-dilutive
provisions to adjust the number and price of the warrants based on certain types
of equity transactions.
As
of
January
31, 2010
|
As
of
January
31, 2009
|
|||||||
Warrants
|
98,267,159
|
97,187,400
|
||||||
Stock
Options
|
19,129,507
|
8,812,841
|
||||||
Total
|
117,396,666
|
106,000,241
|
5.
|
Notes Payable
and Derivative Instruments:
|
On
September 22, 2008, Advaxis entered into an agreement (the “Moore Agreement”)
with the Company’s Chief Executive Officer, Thomas Moore, pursuant to which the
Company agreed to sell to Mr. Moore, from time to time, the Moore Notes. On June
15, 2009, Mr. Moore and the Company amended the Moore Notes to increase the
amounts available pursuant to the Moore Agreement from $800,000 to $950,000 and
change the maturity date of the Moore Notes from June 15, 2009 to the earlier of
January 1, 2010 (the “Maturity Date”) or the Company’s next equity financing
resulting in gross proceeds to the Company of at least $6 million (“Subsequent
Equity Raise”). The balance of the Moore Agreement, including accrued interest,
approximates $ 1,075,000 as of January 31, 2010. The Moore Agreement was amended
per the terms of the June 18, 2009 Note Purchase Agreement (described below)
retroactively to include the same warrant provision provided to Investors in the
Note Purchase Agreement.
Effective
June 18, 2009 we entered into a Note Purchase Agreement with each of accredited
and/or sophisticated investors, pursuant to which it completed a private
placement whereby the Investors acquired senior convertible promissory notes of
the Company in the aggregate principal face amount of $1,131,353, for an
aggregate net purchase price of $961,650.
Additionally,
on October 26, and October 30, 2009 the Company entered into Bridge Note
agreements whereby Investors acquired junior subordinated convertible promissory
notes of the Company in the aggregate face amounts of $1,617,647 and $529,412
for aggregate net purchase prices of $1,375,000 and $450,000 respectively. Most
of these junior subordinated convertible promissory notes mature on April 30,
2010 subject to certain provisions in the note agreement. We refer to all Senior
and Junior Promissory Notes as “Bridge Notes”.
During
the first quarter, 2010 the Company entered into Bridge Note agreements whereby
Investors acquired junior subordinated convertible promissory notes of the
Company in the aggregate face amounts of $555,882 for aggregate net purchase
prices of $472,500. These junior subordinated convertible promissory notes
mature on dates ranging from March 16, 2010 through July 30, 2010 subject to
certain provisions in the note agreement.
8
During
the first quarter 2010 certain Bridge Note holders extended the term of
approximately $928,000 into February and March 2010. In exchange for the
agreement to extend the maturity date, the Company issued 1,228,441 additional
warrants and agreed to pay 5% of the amount extended by the holder. As a result
of this transaction the Company recorded $352,300 as the original fair value of
the extension broken down as follows: $46,400 interest, $202,492 warrant
liability and $103,400 embedded derivative liability. This fair value was
amortized over the life of the extension by changing interest expense in the
statement of operations a total of $185,061 in the January 31, 2010 period with
the balance to be recorded in the Fiscal Quarter ending April 30, 2010. In the
period ending January 31, 2010 the Company recorded $68,742 as income in its
statement of operation in the Net changes in fair value of common stock warrant
liability and embedded derivative liability line item as a result of the lower
fair value of the extension. Additionally, during the first quarter the Company
made payments of principal and interest totaling $203,382 to the above mentioned
June 18, 2009 Bridge Note holders.
As of
January 31, 2010, all Bridge Notes were originally issued with an original issue
discount of 15%. Each Investor paid $0.85 for each $1.00 of principal amount of
notes purchased at the closing. The bridge notes are convertible into shares of
the Company’s common stock at an exercise price contingent on the completion of
equity financing as described below. For every dollar invested, each Investor
received warrants to purchase 2 ½ shares of common stock (the “Bridge Warrants”)
at an original exercise price of $0.20 per share, subject to adjustments upon
the occurrence of certain events as more particularly described below and in the
form of Warrant. As of December 28, 2009 all Bridge Note warrants were ratcheted
from $0.20 per share to $0.17. They may be prepaid in whole or in part at the
option of the Company without penalty at any time prior to the Maturity Date.
The warrants may be exercised on a cashless basis under certain
circumstances.
In the
event the Company consummates an equity financing after August 1, 2009 and prior
to the second business day immediately preceding the Maturity Date, in which it
sells shares of its stock with aggregate gross proceeds of not less than
$2,000,000, then prior to the Maturity Date, the Investors shall have the option
to convert all or a portion of the Bridge Notes into the same securities sold in
the Qualified Equity Financing (“QEF”), at an effective per share conversion
price equal to 90% of the per share purchase price of the securities
issued in the QEF. In the event the Company does not consummate a QEF
from and after August 1, 2009 and prior to the second business day immediately
preceding the Maturity Date, then the Investors shall have the option to convert
all or a portion of the Bridge Notes into shares of common stock, at an
effective per share conversion price equal to 50% of the volume-weighted average
price (“VWAP”) per share of the common stock over the five (5) consecutive
trading days immediately preceding the third business day prior to the Maturity
Date. To the extent an Investor does not elect to convert its Bridge Note as
described above, the principal amount of the Bridge Note not so converted shall
be payable in cash on the Maturity Date. (See also Note 10, Subsequent Events.)
Bridge
Note – Principal Value - Issued
|
3,834,294
|
|||
Principal
payments on Bridge Notes
|
(203,382
|
)
|
||
Original
Issue Discount, net of accreted interest
|
(225,
977
|
)
|
||
Fair
Value of Attached Warrants at issuance
|
(1,350,629)
|
|||
Fair
Value of Embedded Derivatives at issuance
|
(2,159,304
|
)
|
||
Accreted
interest on embedded derivative and warrant liabilities
|
2,301,933
|
|||
Convertible
Bridge Notes- as of January 31, 2010
|
$
|
2,196,935
|
||
Embedded
Derivatives Liability at January 31, 2010
|
449,055
|
|||
Convertible Bridge
Notes and fair value of embedded derivative
|
$
|
2,645,990
|
As of
January 31, 2010, there were outstanding warrants to purchase 98,267,159 shares
of our common stock (adjusted for anti-dilution provision to-date) with exercise
prices ranges from $0.17 to $0.287 per share. The table below lists the
Company’s derivative instruments as of January 31, 2010:
Description
|
Principal
|
Original
Issue
Discount
|
Warrant
Liability
|
Embedded
Derivative
Liability
|
||||||||||||
Bridge
Note I-June 18, 2009
|
$
|
1,131,353
|
$
|
169,703
|
$
|
250,392
|
$
|
711,258
|
||||||||
Bridge
Note II & III-October 26 & 30, 2009
|
2,147,059
|
322,059
|
690,119
|
868,388
|
||||||||||||
Optimus
September 24, 2009
|
-
|
-
|
3,587,625
|
-
|
||||||||||||
Other
outstanding warrants
|
-
|
-
|
12,785,695
|
-
|
||||||||||||
Total
Valuation at Origination
|
$
|
3,278,412
|
$
|
491,762
|
$
|
17,313,831
|
$
|
1,579,646
|
||||||||
Change
in fair value
|
-
|
-
|
(5,352,097
|
)
|
(493,132
|
)
|
||||||||||
Accreted
interest
|
-
|
(123,846
|
)
|
-
|
-
|
|||||||||||
Total
Valuation as of October 31, 2009
|
$
|
3,278,412
|
$
|
367,916
|
$
|
11,961,734
|
$
|
1,086,514
|
||||||||
Bridge
Notes IV – December 1, 2009 through January 31, 2010
|
555,882
|
83,382
|
207,617
|
164,400
|
||||||||||||
Bridge
Note I- Extension of Maturity Date
|
202,500
|
103,400
|
||||||||||||||
Change
in fair value
|
1,995,372
|
(905,259)
|
||||||||||||||
Accreted interest
|
(225,321)
|
|||||||||||||||
Exercise
of Common Stock Warrants
|
(1,702,073)
|
|||||||||||||||
Total Valuation
as of January 31, 2010
|
$
|
3,834,294
|
$
|
225,977
|
$
|
12,665,150
|
$
|
449,055
|
9
These
warrants include 11,030,960 warrants issued to Bridge Notes holders at an
exercise price of $0.17 (subject to adjustment) per warrant and 22,187,000
issued to Optimus at an exercise price of $0.20 (subject to adjustment) per
warrant.
During
January 2010 Optimus exercised 11,563,000 (of the previously issued 33,750,000)
warrants at a price of $.17 in exchange for a note with a principal amount of
$1,965,710. The note bears interest at 2% and is due in four years.
Accordingly, the Company issued 11,563,000 shares of its Common
Stock. While the remaining 22,187,000 warrants contain a repricing
provision they do not contain a ratchet provisions that would increase the
number of warrants.
At
January 31, 2010 there were warrants outstanding to purchase approximately 75.6
million shares of common stock issued by the Company in connection with our
private placements consummated on October 17, 2007 (the “2007 Warrants”) and the
warrants issued in connection with our Bridge Notes contain “full-ratchet”
anti-dilution provisions originally set at $0.20 with a term of five
years. The Optimus exercise of warrants on January 11, 2010 triggered the
anti dilution provisions of the warrant agreements requiring a reset of both the
price of these warrants (from $.20 to $.17) and an increase in amount of
warrants (approximately 11.3 million). Therefore, any future financial
offering or instrument issuance below $0.17 per share of the Company’s common
stock or warrants (subject to certain exceptions) will trigger further
anti-dilution provisions in the above mentioned 75.6 million
outstanding warrants. Additionally, the Company had approximately 31.4 million
warrants expire during November and December 2009.
Accounting for
Stock-Based Compensation
Plans
|
The
Company records compensation expense associated with stock options based on the
estimated fair value of each option award that was granted using the
Black-Scholes option valuation model.
As
of
January
31,
2010
|
As
of
January
31,
2009
|
|||||||
Research
and development
|
$
|
22,790
|
$
|
16,382
|
||||
General
and Administrative
|
165,387
|
36,293
|
||||||
Total
stock compensation expense recognized
|
$
|
188,177
|
$
|
52,675
|
Total
unrecognized estimated compensation expense related to non-vested stock options
granted and outstanding as of January 31, 2010 was $564,500 which are expected
to be recognized over a weighted-average period of one year and two
months.
No
options were exercised over the three months ended January 31, 2010 and 2009.
For the three months ended January 31, 2010, the Company granted 1,750,000
options. No options were granted for the three months ended January 31,
2009.
7.
|
Commitments
and Contingencies
|
Pursuant
to multiple consulting agreements and a licensing agreement, the Company is
contingently liable for the following:
Under an
amended and restated 20-year exclusive worldwide (July 1, 2002 effective date)
license agreement, the Company is obligated to pay (a) $525,000 in aggregate,
divided over a three-year period as a minimum royalty after the first commercial
sale of a product. Such payments are not anticipated within the next five years.
(b) On December 31, 2008 the Company is also obligated to pay annual license
maintenance fees of $50,000 increasing to a maximum of $100,000 per year until
the first commercial sale of a licensed product. As of the date of this filing
the Company didn’t pay this fee. (c) Upon the initiation of a phase III
clinical trial and the regulatory approval for the first Licensor
product the Company is obligated to pay milestone payments of $400,000 and
$600,000, respectively. (d) Upon the achievement of the first sale of a product
in certain fields, the Company shall be obligated to pay certain milestone
payments, as follows: $2,500,000 shall be due for first commercial sale of the
first product in the cancer field (of which $1,000,000 shall be paid within
forty-five (45) days of the date of the first commercial sale, $1,000,000 shall
be paid on the first anniversary of the first commercial sale; and $500,000
shall be paid on the second anniversary of the date of the first commercial
sale). In addition, $1,000,000 shall be due and payable within forty-five (45)
days following the date of the first commercial sale of a product in each
of the following fields (a) infectious disease, (b) allergy, (c) autoimmune
disease, and (d) any other therapeutic indications for which licensed products
are developed. Therefore, the maximum total potential amount of milestone
payments is $3,500,000 in a cancer field. The milestone payments related to
first sales are not expected prior to obtaining a regulatory approval to market
and sell the Company’s vaccines, and such regulatory approval is not expected
within the next 5 years. In addition, the Licensor is entitled to receive a
non-refundable $157,134 payment of historical license costs. Under a licensing
agreement, the Licensor is also entitled to receive royalties of 1.5% on net
sales in all countries. In addition, we are obligated to reimburse the
Licensor for all attorneys fees, expenses, official fees and other charges
incurred in the preparation, prosecution and maintenance of the
patents licensed from the Licensor.
10
This
license agreement has been amended, from time to time, and was amended and
restated on February 13, 2007. We have acquired and paid for the First
Amended and Restated Patent License Agreement. However, the Second
Amendment that we mutually agreed to enter into on March 26, 2007 to exercise
our option to license an additional 12 other dockets or approximately 40 or more
additional patent applications for Listeria and LLO-based vaccine dockets was
not finalized. In order to purchase this Second Amendment as of January 31,
2010 we are contingently liable for $580,764 including the reimbursement of
certain legal and filing costs. We are still in negotiations
with Penn over the form of payment, some combination of stock or cash, and
expect to reach a conclusion at the close of our next financial
raise. These fees are currently unpaid and are not recorded in our
financial statements as of the January 31, 2010. While we consider our
relationship with Penn good we are in frequent communications over payment of
past due invoices and other payables due to our lack of cash. If we fail to
reach a mutual understanding Penn may issue a default notice and we will have 60
days to cure the breach or be subject to the termination of the
agreement.
Under a
consulting agreement with the Company’s scientific inventor, the Company is
obligated to pay $3,000 per month until the Company closes a $3,000,000 equity
financing, $5,000 per month pursuant to a $3,000,000 equity financing, $7,000
per month pursuant to a $6,000,000 equity financing, and $9,000 per month
pursuant to a $9,000,000 equity financing. Currently the scientific inventor is
earning $7,000 per month based on the agreement and milestones
achieved.
Pursuant
to a Clinical Research Service Agreement, the Company is obligated to pay
service fees related to our Phase I clinical trial totaling of $697,000. As of
January 31, 2010 the Company has an outstanding balance of $219,131 on this
agreement.
We are
party to a consulting agreement with The Sage Group, a health-care strategy
consultant assisting us with a program to commercialize our
vaccines. The initial agreement was entered into in January 2009 and
subsequently amended on July 22, 2009. Pursuant to the terms of
agreement, as amended, we have agreed to pay Sage (i) $5,000 per month (which we
began paying in January 2009) until an aggregate of $120,000 has been paid to
Sage under the consulting agreement and (ii) a 5% commission for certain
transaction if completed in the first 24 months of the term of the agreement,
reduced to 2% if completed in the 12 months thereafter. The Sage Group has been
paid approximately $20,600 through January 31, 2010.
On June
19, 2009 we entered into a Master Agreement and on July 8, 2009 we entered into
a Project Agreement with Numoda, a leading clinical trial and logistics
management company, to oversee Phase II clinical activity with ADXS11-001 for
the treatment of invasive cervical cancer and CIN. Numoda will be
responsible for integrating oversight and logistical functions with the clinical
research organizations, contract laboratories, academic laboratories and
statistical groups involved. The scope of this agreement covers over
three years and is estimated to cost $8.0 million for both trials The Company
owes Numoda approximately $1,186,000 at January 31, 2010.
The
Company operates under a month to month lease for its laboratory and office
space. There are no aggregate future minimum payments due as of January 31,
2010.
Shareholders’
Equity
|
Preferred
Equity Financing
On
January 11, 2010, the Company issued and sold 145 shares of non-convertible,
redeemable Series A preferred stock to Optimus Life Sciences Capital Partners,
LLC (“Optimus”) pursuant to the terms of a Preferred Stock Purchase Agreement
between the Company and Optimus dated September 24, 2009 (the “ Purchase
Agreement ”). The Company received net proceeds of $1,166,000 from this
transaction. The aggregate purchase price for the Series A preferred stock was
$1.45 million (less $285,000 representing an administrative fee and the balance
of a commitment fee due and owing to Optimus under the Purchase Agreement and
legal fees). Under the terms of the Purchase Agreement, Optimus
remains obligated, from time to time until September 24, 2012, to purchase up to
an additional 355 shares of Series A preferred stock at a purchase price of
$10,000 per share upon notice from the Company to Optimus, and subject to the
satisfaction of certain conditions, as set forth in the Purchase
Agreement.
11
In
connection with the foregoing transaction, an affiliate of Optimus was granted
33,750,000 warrants on September 24, 2009 at an exercise price of $0.20 to be
exercised and priced upon the draw down date of each tranche. On January 11,
2010, the draw down date of the first tranche, Optimus exercised warrants to
purchase 11,563,000 shares of common stock at an adjusted exercise price of
$0.17 per share. The Company and Optimus agreed to waive certain
terms and conditions in the Purchase Agreement and the warrant in order to
permit the affiliate of Optimus to exercise the warrants at such adjusted
exercise price prior to the closing of the purchase of the Preferred Stock and
acquire beneficial ownership of more than 4.99% of the Company’s common stock on
the date of exercise. As permitted by the terms of such warrants, the
aggregate exercise price of $1,965,710 received by the Company is payable
pursuant to a four year full recourse promissory note bearing interest at the
rate of 2% per year and has been recorded as a stock subscription receivable on
the balance sheet as of January 31, 2010.
Warrants
As a
result of anti-dilution protection provisions contained in certain of the
Company’s outstanding warrants, the Company has (i) reduced the exercise price
from $0.20 per share to $0.17 per share with respect to an aggregate of
approximately 62.0 million warrant shares to purchase the Company’s Common Stock
and (ii) correspondingly adjusted the amount of warrant shares issuable pursuant
to certain warrants such that approximately 11.6 million additional warrant
shares are issuable at $0.17 per share.
9.
|
Subsequent
Events
|
On March
15, 2010, the Company delivered a tranche notice (a “Tranche Notice”) to Optimus
to sell 216 shares of its non-convertible, redeemable Series A preferred stock
at $10,000 per share ($2.16 million in the aggregate) pursuant to the terms of
the Purchase Agreement. The closing of the transaction is expected to
occur on or about March 29, 2010 and is subject to the satisfaction of the
closing conditions contained in the purchase agreement, including that Optimus
will not be obligated to purchase the Series A preferred stock if the closing
price of the Company’s common stock during the nine trading days following
delivery of the Tranche Notice falls below 75% of the closing bid price of the
Company’s common stock on the trading day prior to the date of the Tranche
Notice. Under the terms of the Purchase Agreement, Optimus will
remain obligated, from time to time until September 24, 2012, to purchase 139
shares of Series A preferred stock at a purchase price of $10,000 per share upon
notice from the Company to Optimus, and subject to the satisfaction of certain
conditions, as set forth in the Purchase Agreement.
In
connection with the foregoing transaction, an affiliate of Optimus exercised
warrants to purchase 12,678,261, shares of common stock at an adjusted exercise
price of $0.23 per share. The Company and Optimus agreed to waive
certain terms and conditions in the Purchase Agreement and the warrant in order
to permit the affiliate of Optimus to exercise the warrants at such adjusted
exercise price prior to the closing of the purchase of the Series A preferred
stock and acquire beneficial ownership of more than 4.99% of the Company’s
common stock on the date of exercise. As permitted by the terms of
such warrants, the aggregate exercise price of $2,916,000 received by the
Company is payable pursuant to a four-year full recourse promissory note bearing
interest at the rate of 2% per year.
From
February 1, 2010 through March 12, 2010, the Company issued to certain
accredited investors (i) junior unsecured convertible promissory notes in the
aggregate principal face amount of $479,197, for an aggregate net purchase price
of $400,000 and (ii) warrants to purchase approximately 1,176,500 shares of
common stock at an exercise price of $0.17 per share, subject to adjustments
upon the occurrence of certain events. These junior bridge notes were
issued with original issue discounts ranging from 15% to 18% (OID) and are
convertible into shares of common stock on the same terms as the Company’s
outstanding junior bridge notes. The maturity dates of these notes
range between April 16 and November 30, 2010. The indebtedness
represented by these junior bridge notes is expressly subordinate to the
Company’s currently outstanding senior secured indebtedness (including the June
2009 senior bridge notes), as well as any future senior indebtedness of any
kind. The Company will not make any payments to the holders of these
junior bridge notes until the earlier of the repayment in full or conversion of
the senior indebtedness.
During
February and March 2010, the Company repaid $821,870 related to the outstanding
Bridge Notes. In addition, holders of the remaining $150,000 of the
Company’s June 2009 senior bridge notes agreed to extend the maturity date to
March 31, 2010.
Cautionary
Note Regarding Forward Looking Statements
The
Company has included in this Quarterly Report certain “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995 concerning the Company’s business, operations and financial condition.
“Forward-looking statements” consist of all non-historical information, and the
analysis of historical information, including the references in this Quarterly
Report to future revenues, collaborative agreements, future expense growth,
future credit exposure, earnings before interest, taxes, depreciation and
amortization, future profitability, anticipated cash resources, anticipated
capital expenditures, capital requirements, and the Company’s plans for future
periods. In addition, the words “could”, “expects”, “anticipates”, “objective”,
“plan”, “may affect”, “may depend”, “believes”, “estimates”, “projects” and
similar words and phrases are also intended to identify such forward-looking
statements. Such factors include the risk factors included in the Company’s
Annual Report on Form 10-K for the fiscal year ended October 31, 2009 and other
factors discussed in connection with any forward-looking
statement.
12
Actual
results could differ materially from those projected in the Company’s
forward-looking statements due to numerous known and unknown risks and
uncertainties, including, among other things, the Company’s ability to raise
capital unanticipated technological difficulties, the length, scope and outcome
of our clinical trial, costs related to intellectual property, cost of
manufacturing and higher consulting costs, product demand, changes in domestic
and foreign economic, market and regulatory conditions, the inherent uncertainty
of financial estimates and projections, the uncertainties involved in certain
legal proceedings, instabilities arising from terrorist actions and responses
thereto, and other considerations described as “Risk Factors” in other filings
by the Company with the SEC. Such factors may also cause substantial volatility
in the market price of the Company’s Common Stock. All such forward-looking
statements are current only as of the date on which such statements were made.
The Company does not undertake any obligation to publicly update any
forward-looking statement to reflect events or circumstances after the date on
which any such statement is made or to reflect the occurrence of unanticipated
events.
General
We were
originally incorporated in the state of Colorado on June 5, 1987 under the name
Great Expectations, Inc. We were administratively dissolved on January 1, 1997
and reinstated June 18, 1998 under the name Great Expectations and Associates,
Inc. In 1999, we became a reporting company under the Securities Exchange
Act of 1934, as amended. We were a publicly-traded “shell” company without any
business until November 12, 2004 when we acquired Advaxis, Inc., a Delaware
corporation (“Advaxis”), through a Share Exchange and Reorganization Agreement,
dated as of August 25, 2004 (the “Share Exchange”), by and among Advaxis, the
stockholders of Advaxis and us. As a result of such acquisition, Advaxis became
our wholly owned subsidiary and our sole operating Company. On December 23,
2004, we amended and restated our articles of incorporation and changed our name
to Advaxis, Inc. On June 6, 2006 our shareholders approved the reincorporation
of our Company from the state of Colorado to the state of Delaware by merging us
into our wholly owned subsidiary, which was effected on June 20, 2006. As
used herein, the words “Company” and Advaxis refer to the current
Delaware corporation only unless the context references such entity prior to the
June 20, 2006 reincorporation into Delaware. Our principal executive offices are
located at Technology Centre of NJ, 675 US Highway One, North Brunswick, NJ
08902 and our telephone number is (732) 545-1590.
On July
28, 2005 we began trading on the Over-The-Counter Bulletin Board (OTC: BB) under
the ticker symbol ADXS.
We are a
development stage biotechnology company with the intent to develop safe and
effective cancer vaccines that utilize multiple mechanisms of immunity. We are
developing a live Listeria vaccine technology
under license from the University of Pennsylvania (“Penn”) which secretes a
protein sequence containing a tumor-specific antigen. We believe this vaccine
technology is capable of stimulating the body’s immune system to process and
recognize the antigen as if it were foreign, generating an immune response able
to attack the cancer. We believe that this to be a broadly enabling platform
technology that can be applied to the treatment of many types of cancers,
infectious diseases and auto-immune disorders.
The
discoveries that underlie this innovative technology are based upon the work of
Yvonne Paterson, Ph.D., Professor of Microbiology at Penn. This technology
involves the creation of genetically engineered Listeria that stimulate the
innate immune system and induce an antigen-specific immune response involving
both arms of the adaptive immune system. In addition, this technology supports
among other things the immune response by altering tumors to make them more
susceptible to immune attack stimulating the development of specific
blood cells that underlie a strong therapeutic immune response.
We have
no customers. Since our inception in 2002, we have focused our development
efforts upon understanding our technology and establishing a product development
pipeline that incorporates this technology in the therapeutic cancer vaccines
area targeting cervical, head and neck, prostate, breast, and a pre cancerous
indication of cervical intraepithelial neoplasia, which we refer to as CIN.
Although no products have been commercialized to date, research and development
and investment continues to be placed behind the pipeline and the advancement of
this technology. Pipeline development and the further exploration of the
technology for advancement entail risk and expense. We anticipate that our
ongoing operational costs will increase significantly as we expect to begin
several clinical trials starting this fiscal year.
Recent
Financings
On
March 15, 2010, the Company delivered a tranche notice (a “Tranche Notice”) to
Optimus Life Sciences Capital Partners, LLC (“Optimus”) to sell 216 shares
of its non-convertible, redeemable Series A preferred stock at $10,000 per share
($2.16 million in the aggregate) pursuant to the terms of a Preferred Stock
Purchase Agreement between the Company and Optimus dated September 24, 2009 (the
“Purchase Agreement”). The closing of the transaction is expected to
occur on or about March 29, 2010 and is subject to the satisfaction of the
closing conditions contained in the purchase agreement, including that Optimus
will not be obligated to purchase the Series A preferred stock if the closing
price of the Company’s common stock during the nine trading days following
delivery of the Tranche Notice falls below 75% of the closing bid price of the
Company’s common stock on the trading day prior to the date of the Tranche
Notice. Under the terms of the Purchase Agreement, Optimus will
remain obligated, from time to time until September 24, 2012, to purchase 139
shares of Series A preferred stock at a purchase price of $10,000 per share upon
notice from the Company to Optimus, and subject to the satisfaction of certain
conditions, as set forth in the Purchase Agreement.
13
In
connection with the foregoing transaction, an affiliate of Optimus exercised
warrants to purchase 12,678,261, shares of common stock at an adjusted exercise
price of $0.23 per share. The Company and Optimus agreed to waive
certain terms and conditions in the Purchase Agreement and the warrant in order
to permit the affiliate of Optimus to exercise the warrants at such adjusted
exercise price prior to the closing of the purchase of the Series A preferred
stock and acquire beneficial ownership of more than 4.99% of the Company’s
common stock on the date of exercise. As permitted by the terms of
such warrants, the aggregate exercise price of $2,916,000 received by the
Company is payable pursuant to a four-year full recourse promissory note bearing
interest at the rate of 2% per year.
From
February 1, 2010 through March 12, 2010, we issued to certain accredited
investors (i) junior unsecured convertible promissory notes in the aggregate
principal face amount of $479,197, for an aggregate net purchase price of
$400,000 and (ii) warrants to purchase approximately 1,176,500 shares of our
common stock at an exercise price of $0.17 per share, subject to adjustments
upon the occurrence of certain events. These bridge notes were issued with
original issue discounts ranging from 15% to 18% (OID) and are convertible into
shares of our common stock. The maturity dates of these notes
range between April 16 and November 30, 2010. The indebtedness
represented by the bridge notes is expressly subordinate to our currently
outstanding senior secured indebtedness (including our senior bridge notes
issued in June 2009), as well as any future senior indebtedness of any
kind. We will not make any payments to the holders of these bridge
notes until the earlier of the repayment in full or conversion of the senior
indebtedness.
During
February and March 2010, we repaid $821,870 related to our outstanding senior
bridge notes. In addition, holders of the remaining $150,000 of our
senior bridge notes agreed to extend the maturity date to March 31,
2010.
On
February 15, 2010, we agreed to amend the terms of the Moore Notes such that (i)
Mr. Moore may elect, at his option, to receive accumulated interest thereon on
or after March 17, 2010 (which we expect will amount to approximately $130,000),
(ii) we will begin to make monthly installment payments of $100,000 on the
outstanding principal amount beginning on April 15, 2010; provided, however,
that the balance of the principal will be repaid in full on consummation of our
next equity financing resulting in gross proceeds to us of at least $6.0 million
and (iii) we will retain $200,000 of the repayment amount for investment in our
next equity financing.
Other
Developments
On
February 9, 2010 we announced that Cancer Research UK (CRUK), the UK
philanthropy dedicated to cancer research, has agreed to fund the cost of a
clinical trial to investigate the use of ADXS11-001, our lead human papilloma
virus (HPV)-directed vaccine candidate, for the treatment of head and neck
cancer. This sponsored-clinical trial will investigate the safety and
efficacy of ADXS11-001 in head and neck cancer patients who have previously
failed treatment with surgery, radiotherapy and chemotherapy – alone or in
combination. We will provide the vaccines with all other associated costs to be
funded by CRUK. The study is to be conducted at Aintree Hospital at
the University of Liverpool, Royal Marsden Hospital in London, and Cardiff
Hospital at the University of Wales. Patient enrollment is slated for the latter
part 2010. At such time, enrollment officials anticipate recruiting a maximum of
forty-five (45) patients.
Results of
Operations
Three
Months Ended January 31, 2010 Compared to the Three Months Ended January 31,
2009
Revenue. We did not record
any revenue for the three months ended January 31, 2010 (“Fiscal 2010 Quarter”)
nor any for the three months ended January 31, 2009 (“Fiscal 2009
Quarter”)
Research and Development
Expenses. Research and development expenses increased by $818,161, or
over 456%, to $997,335 for the Fiscal 2010 Quarter as compared with $179,174 for
the Fiscal 2009 Quarter, principally attributable to the following:
·
|
Clinical trial expenses increased
by $732,397, to $733,434 from $1,037, primarily due to our close out of
our phase I trial in the Fiscal 2008
Quarter.
|
·
|
Wages, options and lab costs
increased by $119,419, or 97% to $242,960 from $123,541, primarily as a
result of the recording of $122,747 reversal of a salary bonus accrued but
not paid in Fiscal 2009 Quarter. No bonus accrual was recorded nor paid in
Fiscal 2010 Quarter.
|
·
|
Consulting expenses decreased by
$24,557, or 78%, to $7,013 from $31,570, primarily resulting from the fact
that no fees were paid in the Fiscal 2010 Quarter compared to the same
period last year, for a consultant’s agreement expired and lower option
expense.
|
·
|
Manufacturing expenses decreased
by $9,098, or 40% to $13,928 from $23,026, primarily as a result of the
completion of our clinical supply program for the upcoming clinical trials
prior to Fiscal 2010 Quarter compared to the manufacturing program which
was ongoing in the Fiscal 2009
Quarter.
|
14
We
anticipate a significant increase in R&D expenses as a result of expanded
development and commercialization efforts primarily related to clinical trials,
and product development, and expenses to be incurred in the development of
strategic and other relationships required to license manufacture and distribute
of our product candidates.
General and Administrative
Expenses. General and administrative expenses increased by $43,561, or
8%, to $589,015 for the Fiscal 2010 Quarter as compared with $545,454 for the
Fiscal 2009 Quarter, primarily attributable to the following:
·
|
Wages, Options and benefit
expenses increased by $46,991, or 20% to $280,252 from $233,262
principally due to the recording higher option expense of $71,552 due to
issuance of new options in Fiscal 2009 third Quarter and an adjustment of
$35,932 to bonus expenses caused by reversal of accrued for but not paid
in Fiscal 2009 Quarter. No bonus was accrued for in Fiscal 2010
Year. These higher expenses were partially offset by lower
compensation expenses: $55,000 due to an adjustment in the prior Fiscal
2009 Quarter and lower 401K expenses of
$8,360.
|
·
|
Consulting fees decreased by
$27,000 or 100%, to $0from $27,000. This decrease was due to the
expiration of our financial advisor agreement in Fiscal 2009
Quarter.
|
·
|
Offering expenses increased by
$4,016 or 18% to $26,097 from $22,081 primarily due to higher activity in
Fiscal 2010 Quarter compared to the same period in the prior
year.
|
·
|
An increase in legal, accounting,
professional and public relations expenses of $8,515, or 5%, to $177,399
from $168,884, primarily as a result of higher legal fees of $63,833 due
to the ongoing financial raises partially offset by lower patent expenses
of $42,487 and public relations of $10,757 in Fiscal 2010 Quarter compared
to Fiscal 2009 Quarter Overall the higher legal expense in Fiscal 2010
Quarter due to the cost of filing a registration statement not required in
Fiscal 2009 Quarter was essentially offset by the cost of writing off
patent expenses that we decided to abandon in Fiscal 2009
Quarter.
|
·
|
Amortization of intangibles and
depreciation of fixed assets increased by $4,168, or 16%, to $30,679 from
$26,511 primarily due to an increase in fixed assets and intangibles in
the Fiscal 2010 Quarter compared to the Fiscal 2009
Quarter.
|
·
|
Overall occupancy and conference
related expenses increased by $6,860 or 10% to $74,577 from $67,717.
Overall conference expense has increased by $6,415 in the Fiscal 2010
Quarter due to higher participation in cancer conferences. Additional
expenses required in connection with the patent hearing in Fiscal 2009
Quarter were more than offset by lower dues and office expenses in the
Fiscal 2010 Quarter.
|
Other Income (expense). Other
Income (expense) increased by $2,738,588 to $2,753,928 in expense for Fiscal
2010 Quarter from income of $15,394 for the Fiscal 2009 Quarter.
In Fiscal
2010 Quarter interest expense increased by $1,650,743, to $1,666,139 from
$15,396 primarily due to a the recording of expenses related to the Bridge
Notes, Notes and the amortization of the warrant liabilities and embedded
derivatives related to the notes as well as the Optimus warrants issued in its
preferred stock issuance. The change in fair value of the common stock warrants
and embedded derivatives increase in expense by $1,090,114 to $1,090,114 in
Fiscal 2010 Quarter compared to $0 in Fiscal 2009 Quarter because the accounting
required for certain financial instruments were not required in the prior
period. This change in fair value measures the value of the warrant
liabilities and embedded derivatives at each reporting period and any change in
value from the prior period is recorded in the statement of operation as income
if the value decreases and expense if the value increase. The fair value
measures the additional cost of the financial instrument attributed to the
warrants attached and the embedded derivative contained in the Bridge Notes as
well as the existing warrants that include anti-dilutive clauses. In Fiscal 2010
Quarter other income increased by $2,269 to $2,271 from $2 due to interest
earned due to higher cash balances in Fiscal 2010 Quarter compared to Fiscal
2009 Quarter.
Income
Tax Benefit
In the
Fiscal 2010 Quarter other income decreased by $643,044, to $278,978 income from
$922,022 primarily due to a gain recorded from the receipt of a NOL tax credit
and research tax credit received from the State of New Jersey tax program in
Fiscal 2010 Quarter of $278,978 compared to the $922,020 received in Fiscal 2009
Quarter. The decrease in the income from the program received in
Fiscal 2010 Quarter compared to Fiscal 2009 Quarter was attributed to Fiscal
2009 Quarters NOL was the first time we received money from the program and it
covered all prior years NOL’s from our inception whereas Fiscal 2010 Quarter
covered only the current year’s NOL and prior two years of the research tax
credit.
Liquidity
and Capital Resources
Since our
inception until January 31, 2010, the Company has reported accumulated net
losses of $20,621,270 and recurring negative cash flows from operations.
We anticipate that we will continue to generate significant losses from
operations for the foreseeable future.
15
Preferred
Equity Financing
On
January 11, 2010, the Company issued and sold 145 shares of non-convertible,
redeemable Series A preferred stock to Optimus Life Sciences Capital Partners
LLC (“Optimus”) pursuant to the terms of a Preferred Stock Purchase Agreement
between the Company and Optimus dated September 24, 2009 (the “ Purchase
Agreement ”). The Company received net proceeds of $1,320,000 from this
transaction. The aggregate purchase price for the Series A preferred stock was
$1.45 million (less $130,000 representing an administrative fee and the balance
of a commitment fee due and owing to Optimus under the Purchase
Agreement). Under the terms of the Purchase Agreement, Optimus
remains obligated, from time to time until September 24, 2012, to purchase up to
an additional 355 shares of Series A preferred stock at a purchase price of
$10,000 per share upon notice from the Company to Optimus, and subject to the
satisfaction of certain conditions, as set forth in the Purchase
Agreement.
In
connection with the foregoing transaction, an affiliate of Optimus was granted
33,750,000 warrants on September 24, 2009 at an exercise price of $0.20 to be
exercised and priced upon the draw down date of each tranche. On January 11,
2010, the draw down date of the first tranche, Optimus exercised warrants to
purchase 11,563,000 shares of common stock at an adjusted exercise price of
$0.17 per share. The Company and Optimus agreed to waive certain
terms and conditions in the Purchase Agreement and the warrant in order to
permit the affiliate of Optimus to exercise the warrants at such adjusted
exercise price prior to the closing of the purchase of the Preferred Stock and
acquire beneficial ownership of more than 4.99% of the Company’s common stock on
the date of exercise. As permitted by the terms of such warrants, the
aggregate exercise price of $1,965,710 received by the Company is payable
pursuant to a four year full recourse promissory note bearing interest at the
rate of 2% per year.
Warrants
As a
result of anti-dilution protection provisions contained in certain of the
Company’s outstanding warrants, the Company has (i) reduced the exercise price
from $0.20 per share to $0.17 per share with respect to an aggregate of
approximately 62.0 million warrant shares to purchase the Company’s Common Stock
and (ii) correspondingly adjusted the amount of warrant shares issuable pursuant
to certain warrants such that approximately 11.6 million additional warrant
shares are issuable at $0.17 per share.
The
Company received $278,978 from the New Jersey Economic Development
Authority. Under the State of New Jersey Program for small business
we received this cash amount on January 15, 2010 from the sale of our State Net
Operating Losses (“NOL”) through December 31, 2008 and our research tax credit
for fiscal years 2007 and 2008.
Our net
income after taxes was $4,061,354 for the three months ended January 31, 2010
which includes a $278,978 gain from the sale of our State of New Jersey NOL and
research tax credit.
Our
limited capital resources and operations to date have been funded primarily with
the proceeds from public and private equity and debt financings, NOL tax sale
and income earned on investments and grants. We have sustained losses
from operations in each fiscal year since our inception, and we expect losses to
continue for the indefinite future, due to the substantial investment in
research and development. As of January 31, 2010 and 2009, we had an
accumulated deficit of $20,665,154 and shareholders’ deficiency of $16,883,925.
Based on our available cash of approximately $1,114,000 on January 31, 2010, we
do not have adequate cash on hand to cover our anticipated expenses for the next
12 months. If we fail to raise a significant amount of capital, we may need to
significantly curtail operations in the near future. These conditions
raised substantial doubt about our ability to continue as a going
concern. Consequently, the audit report prepared by our independent
public accounting firm relating to our financial statements for the year ended
October 31, 2009 included a going concern explanatory paragraph.
Our
business will require substantial additional investment that we have not yet
secured, and our failure to raise capital and/or pursue partnering opportunities
will materially adversely affect our business, financial condition and results
of operations. We expect to spend substantial additional sums on the continued
administration and research and development of proprietary products and
technologies, including conducting clinical trials for our product candidates,
with no certainty that our products will become commercially viable or
profitable as a result of these expenditures. Further, we will not
have sufficient resources to develop fully any new products or technologies
unless we are able to raise substantial additional financing on acceptable terms
or secure funds from new partners. We cannot be assured that financing will be
available at all. Any additional investments or resources required would be
approached, to the extent appropriate in the circumstances, in an incremental
fashion to attempt to cause minimal disruption or dilution. Any
additional capital raised through the sale of equity or convertible debt
securities will result in dilution to our existing stockholders. No
assurances can be given, however, that we will be able to achieve these goals or
that we will be able to continue as a going concern.
We are
pursuing additional investments, grants, partnerships as well as collaborations
and exploring other financing options, with the objective of minimizing dilution
and disruption.
16
On
July 1, 2002 (effective date) we entered into a 20-year exclusive worldwide
license, with Penn with respect to the innovative work of Yvonne Paterson,
Ph.D., Professor of Microbiology in the area of innate immunity, or the immune
response attributable to immune cells, including dendritic cells, macrophages
and natural killer cells, that respond to pathogens non-specifically. This
agreement has been amended from time to time and was amended and
restated on February 13, 2007. We have acquired and paid for the First
Amended and Restated Patent License Agreement. However, the Second
Amendment that we mutually agreed to enter into on March 26, 2007 to exercise
our option to license an additional 12 other dockets or approximately 40 or more
additional patent applications for Listeria and LLO-based vaccine dockets was
not finalized. In order to purchase this Second Amendment as of January 31,
2010 we are contingently liable for $580,764 including the reimbursement of
certain legal and filing costs. We are still in negotiations
with Penn over the form of payment, some combination of stock or cash, and
expect to reach a conclusion at the close of our next financial
raise. These fees are currently unpaid and are not recorded in our
financial statements as of the January 31, 2010. While we consider our
relationship with Penn good we are in frequent communications over payment of
past due invoices and other payables due to our lack of cash. If we fail to
reach a mutual understanding Penn may issue a default notice and we will have 60
days to cure the breach or be subject to the termination of the agreement.
Excluding the Second Amendment our license now includes the exclusive right to
strategically exploit 25 patents issued and 19 pending filed in some of the
largest markets in the world (including the patents issued and applied for that
we are no longer pursing in smaller markets). After careful review
and analysis we decided not to pursue several patents issued and patent
applications filed in smaller countries.
Off-Balance
Sheet Arrangements
As of
January 31, 2010, we had no off-balance sheet arrangements, other than our lease
for space. There were no changes in significance contractual obligation during
the three months ended January 31, 2010.
Critical
Accounting and New Accounting Pronouncements
Critical Accounting
Estimates
The
preparation of financial statements in accordance with generally accepted
accounting principles accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts and related
disclosures in the financial statements. Management considers an accounting
estimate to be critical if:
·
|
It
requires assumption to be made that were uncertain at the time the
estimate was made, and
|
|
·
|
Changes
in the estimate of difference estimates that could have been selected
could have material impact in our results of operations or financial
condition.
|
Actual
results could differ from those estimates and the differences could be material.
The most significant estimates impact the following transactions or account
balances: stock compensation, liabilities, warrant valuation, impairment of
intangibles and fixed assets and projected operating results.
Share-Based Payments -The
Company records compensation expense associated with stock options in accordance
with ASC 718-10-25 (SFAS No. 123R, “Share Based Payment,” which is a revision of
SFAS No. 123). The Company adopted the modified prospective transition method
provided under SFAS No. 123R. Under this transition method, compensation expense
associated with stock options recognized in the first quarter of fiscal year
2007, and in subsequent quarters, includes expense related to the remaining
unvested portion of all stock option awards granted prior to April 1, 2006, the
estimated fair value of each option award granted was determined on the date of
grant using the Black-Scholes option valuation model, based on the grant date
fair value estimated in accordance with the original provisions of SFAS No.
123.
We
estimate the value of stock options awards on the date of grant using the
Black-Scholes-Merton option-pricing model. The determination of the fair value
of the share-based payment awards on the date of grant is affected by our stock
price as well as assumptions regarding a number of complex and subjective
variables. These variables include our expected stock price volatility over the
term of the awards, expected term, risk-free interest rate, expected dividends
and expected forfeiture rates. The forfeiture rate is estimated using historical
option cancellation information, adjusted for anticipated changes in expected
exercise and employment termination behavior. Our outstanding awards do not
contain market or performance conditions; therefore we have elected to recognize
share based employee compensation expense on a straight-line basis over the
requisite service period.
If
factors change and we employ different assumptions in the application of SFAS
123(R) in future periods, the compensation expense that we record under SFAS
123(R) relative to new grants may differ significantly from what we have
recorded in the current period. There is a high degree of subjectivity involved
when using option-pricing models to estimate share-based compensation under SFAS
123(R). Consequently, there is a risk that our estimates of the fair values of
our share-based compensation awards on the grant dates may bear little
resemblance to the actual values realized upon the exercise, expiration, early
termination or forfeiture of those share-based payments in the future. Employee
stock options may expire worthless or otherwise result in zero intrinsic value
as compared to the fair values originally estimated on the grant date and
reported in our financial statements. Alternatively, value may be realized from
these instruments that are significantly in excess of the fair values originally
estimated on the grant date and reported in our financial
statements.
17
Warrants – Warrants issued in
connection with the equity financings completed in October 2007. At the balance
sheet date we estimated the fair value of these instruments using the
Black-Scholes model, which takes into account a variety of factors, including
historical stock price volatility, risk-free interest rates, remaining term and
the closing price of our common stock. Changes in assumptions used to estimate
the fair value of these derivative instruments could result in a material change
in the fair value of the instruments. We believe the assumptions used to
estimate the fair values of the warrants are reasonable.
New Accounting
Pronouncements
In June
2008, the FASB ratified ASC 815-40-15 (formerly Emerging Issues Task Force
(EITF) Issue No 07-5), “Determining Whether an Instrument (or Embedded Feature)
is Indexed to an Entity’s Own Stock” (EITF 07-5). EITF 07-5 mandates a two-step
process for evaluating whether an equity-linked financial instrument or embedded
feature indexed to the entities own stock. It is effective for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years, which is our first quarter of fiscal year 2010. EITF 07-5 did not have an
effect on the financial statements as the Company is already accounting for all
convertible instruments as liabilities.
Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
Item
3. Quantitative And Qualitative Disclosures About Market
Risk
Not
Applicable
Item
4T. Controls And Procedures
Evaluation
of Disclosure Controls and Procedures
As of the
end of the period covered by this report, we conducted an evaluation, under the
supervision and with the participation of our chief executive officer and chief
financial officer of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation,
our chief executive officer and chief financial officer concluded that our
disclosure controls and procedures were not effective to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is: (1) accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate to allow
timely decisions regarding required disclosure; and (2) recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms.
Changes
in Internal Control over Financial Reporting
During
the quarter ended January 31, 2010, there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
As of the
date hereof, there are no material pending legal proceedings to which we are a
party or of which any of our property is the subject. In the ordinary
course of our business we may become subject to litigation regarding our
products or our compliance with applicable laws, rules, and
regulations.
Item
1A. Risk Factors
There
have been no material changes in our risk factors disclosed in our Annual Report
on Form 10-K for the year ended October 31, 2009.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
During
the first fiscal quarter of 2010, we issued to certain accredited
investors (i) junior bridge notes in the aggregate principal face amount of
$555,882 , for an aggregate net purchase price of $472,500 and (ii) warrants to
purchase approximately 1,389,706 shares of our common stock at an exercise price
of $0.17 per share, subject to adjustments upon the occurrence of certain
events. The notes are convertible into shares of our common stock as
described elsewhere in this report. The junior bridge notes mature on
dates ranging from March 16, 2010 through July 30, 2010. The junior
bridge notes were issued in transactions exempt from the registration
requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof
and/or Regulation D promulgated thereunder.
18
Item 5. Other
Information.
On March
15, 2010, the Company delivered a tranche notice (a “Tranche Notice”) to Optimus
to sell 216 shares of its non-convertible, redeemable Series A preferred stock
at $10,000 per share ($2.16 million in the aggregate) pursuant to the terms of
the Purchase Agreement. The closing of the transaction is expected to
occur on or about March 29, 2010 and is subject to the satisfaction of the
closing conditions contained in the purchase agreement, including that Optimus
will not be obligated to purchase the Series A preferred stock if the closing
price of the Company’s common stock during the nine trading days following
delivery of the Tranche Notice falls below 75% of the closing bid price of the
Company’s common stock on the trading day prior to the date of the Tranche
Notice. Under the terms of the Purchase Agreement, Optimus will
remain obligated, from time to time until September 24, 2012, to purchase 139
shares of Series A preferred stock at a purchase price of $10,000 per share upon
notice from the Company to Optimus, and subject to the satisfaction of certain
conditions, as set forth in the Purchase Agreement.
In
connection with the foregoing transaction, an affiliate of Optimus exercised
warrants to purchase 12,678,261, shares of common stock at an adjusted exercise
price of $0.23 per share. The Company and Optimus agreed to waive
certain terms and conditions in the Purchase Agreement and the warrant in order
to permit the affiliate of Optimus to exercise the warrants at such adjusted
exercise price prior to the closing of the purchase of the Series A preferred
stock and acquire beneficial ownership of more than 4.99% of the Company’s
common stock on the date of exercise. As permitted by the terms of
such warrants, the aggregate exercise price of $2,916,000 received by the
Company is payable pursuant to a four-year full recourse promissory note bearing
interest at the rate of 2% per year.
Item
6. Exhibits.
31.1
|
Certification
of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley
Act of 2002
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to section 906 of the
Sarbanes-Oxley Act of 2002
|
19
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ADVAXIS,
INC.
Registrant
|
||
Date: March
19, 2010
|
By:
|
/s/ Thomas
Moore
|
Thomas
Moore
Chief
Executive Officer and Chairman of the Board
|
||
By:
|
/s/
Mark J. Rosenblum
|
|
Mark
J. Rosenblum
Chief
Financial Officer, Senior Vice President and
Secretary
|
20