Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED March 31, 2017
OR
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD
FROM ____
TO ____.
COMMISSION FILE NUMBER: 0-31265
MABVAX THERAPEUTICS HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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93-0987903
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(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
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(I.R.S. EMPLOYER
IDENTIFICATION NO.)
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11535 Sorrento Valley Road, Suite 400, San Diego, CA
92121
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP
CODE)
(858) 259-9405
(REGISTRANT’S 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 ☒ 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 (§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, a smaller
reporting company or an emerging growth company. See the
definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting
company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
(Do not check if a smaller reporting company)
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☐
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Smaller reporting company
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☒
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Emerging growth company
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☒
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
The
number of shares of common stock outstanding as of May 22, 2017 was
8,708,542.
Table of Contents
INDEX
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32
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Item 1. Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Balance Sheets
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March 31,
2017
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December 31,
2016
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Assets
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(Unaudited)
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(Note 1)
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Current
assets:
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Cash
and cash equivalents
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$596,761
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$3,979,290
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Prepaid
expenses
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198,756
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281,858
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Other
current assets
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10,000
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32,830
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Total
current assets
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805,517
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4,293,978
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Property
and equipment, net
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686,284
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731,712
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Goodwill
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6,826,003
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6,826,003
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Other
long-term assets
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337,240
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168,597
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Total
assets
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$8,655,044
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$12,020,290
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Liabilities and Stockholders’ (Deficit) Equity
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Current
liabilities:
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Accounts
payable
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$1,724,443
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$1,137,903
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Accrued
compensation
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704,322
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770,592
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Accrued
clinical operations and site costs
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1,596,836
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1,218,641
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Accrued
lease contingency fee
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590,504
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590,504
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Other
accrued expenses
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403,340
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315,034
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Interest
payable
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50,562
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51,295
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Current
portion of notes payable
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1,666,667
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1,589,661
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Current
portion of capital lease payable
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17,361
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17,004
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Total
current liabilities
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6,754,035
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5,690,634
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Long-term
liabilities:
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Long-term
portion of notes payable, net
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2,603,176
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2,774,627
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Long-term
portion of capital lease payable
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63,636
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68,113
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Other
long-term liabilities
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157,118
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144,394
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Total
long-term liabilities
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2,823,930
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2,987,134
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Total
liabilities
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9,577,965
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8,677,768
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Commitments
and contingencies
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Stockholders’
(Deficit) Equity:
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Series
D convertible preferred stock, $0.01 par value, 1,000,000 shares
authorized, 132,489 shares issued and outstanding with liquidation
preference of $1,325
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1,325
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1,325
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Series
E convertible preferred stock, $0.01 par value, 100,000 shares
authorized, 33,333 shares issued and outstanding with a liquidation
preference of $333
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333
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333
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Series
F convertible preferred stock, $0.01 par value, 1,559,252 shares
authorized, 665,281 shares issued and outstanding with a
liquidation preference of $6,653
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6,653
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6,653
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Common
stock, $0.01 par value; 150,000,000 shares authorized, 6,316,110
and 6,296,110 shares issued and outstanding as of March 31, 2017
and December 31, 2016, respectively
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63,161
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62,961
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Additional
paid-in capital
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82,622,722
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81,533,511
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Accumulated
deficit
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(83,617,115)
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(78,262,261)
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Total
stockholders’ (deficit) equity
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(922,921)
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3,342,522
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Total
liabilities and stockholders’ (deficit) equity
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$8,655,044
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$12,020,290
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See Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS
HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended
March 31,
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2017
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2016
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Revenues:
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Grants
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$—
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$148,054
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Total
revenues
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—
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148,054
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Operating
costs and expenses:
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Research
and development
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2,818,363
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1,700,512
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General
and administrative
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2,273,951
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2,651,837
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Total
operating costs and expenses
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5,092,314
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4,352,349
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Loss
from operations
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(5,092,314)
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(4,204,295)
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Interest
and other income (expense)
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(262,540)
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(200,475)
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Net
loss allocable to common stockholders
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$(5,354,854)
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$(4,404,770)
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Basic
and diluted net loss per share
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$(0.85)
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$(1.12)
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Shares
used to calculate basic and diluted net loss per share
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6,301,666
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3,947,053
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See Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ (Deficit)
Equity
For the Three Months Ended March 31, 2017
(Unaudited)
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Series D, E and F
Convertible Preferred Stock
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Common Stock
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Additional
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Accumulated
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Total
Stockholders'
(Deficit)
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Equity
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Balance at December 31, 2016
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831,103
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$8,311
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6,296,110
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$62,961
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$81,533,511
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$(78,262,261)
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$3,342,522
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Stock
issued for services
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—
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—
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20,000
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200
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56,400
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—
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56,600
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Stock-based
compensation
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—
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—
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—
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—
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1,032,811
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—
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1,032,811
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Net
loss
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—
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—
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—
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—
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—
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(5,354,854)
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(5,354,854)
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Balance at March 31, 2017
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831,103
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$8,311
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6,316,110
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$63,161
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$82,622,722
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$(83,617,115)
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$(922,921)
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See Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS HOLDINGS,
INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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For the Three Months
Ended March 31,
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2017
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2016
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Operating activities
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Net
loss
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$(5,354,854)
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$(4,404,770)
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation
and amortization
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41,823
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8,340
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Stock-based
compensation
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1,032,811
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1,533,888
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Issuance
of restricted stock for services
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56,600
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64,000
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Amortization
and accretion related to notes payable
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111,775
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71,547
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Increase
(decrease) in operating assets and liabilities:
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Grant
receivable
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—
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483,924
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Other
receivables
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22,831
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—
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Prepaid
expenses and other
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(810)
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69,650
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Accounts
payable
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540,413
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(1,060,796)
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Accrued
clinical operations and site costs
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378,195
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81,949
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Accrued
compensation
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(66,270)
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(98,927)
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Other
accrued expenses
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59,849
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339,565
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Net
cash used in operating activities
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(3,177,637)
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(2,911,630)
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Investing activities
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Purchases
of property and equipment
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—
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(153,899)
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Net
cash used in investing activities
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—
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(153,899)
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Financing activities
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Cash
received from issuance of note payable, net of financing
costs
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—
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4,610,324
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Principal
payments on note payable
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(138,889)
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—
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Principal
payments of financed insurance policies
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(61,883)
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—
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Principal
payments on capital lease
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(4,120)
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—
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Net
cash (used in) provided by financing activities
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(204,892)
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4,610,324
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Net
change in cash and cash equivalents
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(3,382,529)
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1,544,795
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Cash
and cash equivalents at beginning of period
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3,979,290
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4,084,085
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Cash
and cash equivalents at end of period
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$596,761
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$5,628,880
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Supplemental disclosures of non-cash investing and financing
information:
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Capital
lease in connection with purchases of equipment
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$—
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$95,656
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Purchase
of equipment in accounts payable
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$—
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$109,471
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Fair
value of warrants issued
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$—
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$607,338
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See Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS HOLDINGS,
INC.
Notes to Unaudited Condensed Consolidated Financial
Statements
1. Basis of Presentation
We
are a Delaware corporation, originally incorporated in 1988 under
the name Terrapin Diagnostics, Inc. in the State of Delaware, and
subsequently renamed “Telik, Inc.” in 1998, and
thereafter renamed MabVax Therapeutics Holdings, Inc.
(“MabVax”) in September 2014. Our principal corporate
office is located at 11535 Sorrento Valley Road, Suite 400, San
Diego, CA 92121 telephone: (858) 259-9405. On July 8, 2014, we
consummated a merger with MabVax Therapeutics, Inc. (“MabVax
Therapeutics”), pursuant to which our subsidiary Tacoma
Acquisition Corp. merged with and into MabVax Therapeutics, with
MabVax Therapeutics surviving as our wholly owned subsidiary. This
transaction is referred to as the
“Merger.” Unless the context otherwise
requires, references to “we,” “our,”
“us,” or the “Company” in this Quarterly
Report mean MabVax Therapeutics Holdings, Inc. on a condensed
consolidated financial statement basis with our wholly-owned
subsidiary following the Merger, MabVax Therapeutics, as
applicable. Beginning October 10, 2014, our common stock was quoted
on the OTCQB under the symbol “MBVX.” Since August 17,
2016, our common stock has been trading on The NASDAQ Capital
Market under the symbol “MBVX.”
The
balance sheet data at December 31, 2016, has been derived from
audited financial statements at that date. It does not include,
however, all the information and notes required by accounting
principles generally accepted in the United States of America
(“GAAP”) for complete financial statements. The
consolidated financial statements as presented reflect certain
reclassifications from previously issued financial statements to
conform to the current year presentation.
On
August 16, 2016, we filed a certificate of amendment to our Amended
and Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware in order to effectuate a reverse
stock split of our issued and outstanding common stock on a 1 for
7.4 basis, effective on August 16, 2016 (the “Reverse Stock
Split”). The Reverse Stock Split was effective with The
Financial Industry Regulatory Authority (FINRA) and the
Company’s common stock began trading on The NASDAQ Capital
Market at the open of business on August 17, 2016. All share and per share amounts, and number of
shares of common stock into which each share of preferred stock
will convert, in the financial statements and notes thereto have
been retroactively adjusted for all periods presented to give
effect to the Reverse Stock Split, including reclassifying an
amount equal to the reduction in par value of common stock to
additional paid-in capital.
MabVax
is a clinical stage biopharmaceutical company engaged in the
discovery, development and commercialization of proprietary human
monoclonal antibody products for the treatment of a variety of
cancers. We have discovered a pipeline of human monoclonal antibody
products based on the protective immune responses generated by
patients who have been vaccinated against targeted cancers with our
proprietary vaccines. We have the exclusive license to the vaccines
from Memorial Sloan Kettering Cancer Center (“MSK”). We
operate in only one business segment.
We
have incurred net losses since inception and expect to incur
substantial losses for the foreseeable future as we continue our
research, development and clinical activities. To date, we have
funded operations primarily through government grants, proceeds
from the sale of common and preferred stock, the issuance of debt,
the issuance of common stock in lieu of cash for services, payments
from collaborators, and interest income. The process of developing
products will require significant additional research and
development, preclinical testing and clinical trials, as well as
regulatory approvals. We expect these activities, together with
general and administrative expenses, to result in substantial
operating losses for the foreseeable future. We will not receive
substantial revenue unless we or our collaborative partners
complete clinical trials, obtain regulatory approvals and
successfully commercialize one or more products; or we license our
technology after achieving one or more milestones of interest to a
potential partner.
The
accompanying unaudited condensed consolidated financial statements
were prepared using GAAP for interim financial information and the
instructions to Regulation S-X. While these statements reflect all
normal recurring adjustments, which are, in the opinion of
management, necessary for a fair presentation of the results of the
interim period, they do not include all information or notes
required by GAAP for annual financial statements and should be read
in conjunction with the Audited Financial Statements of MabVax
Therapeutics Holdings, Inc. for the year ended December 31,
2016, filed in our Annual Report on Form 10-K on March 1,
2017.
The
preparation of condensed consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the
reported amounts of expenses during the reporting period.
Management believes that these estimates are reasonable; however,
actual results may differ from these estimates.
Recent Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-2, "Leases (Topic
842)." This update will increase transparency and
comparability by recognizing lease assets and lease liabilities on
the balance sheet and disclosing key information about leasing
arrangements. Under the new guidance, lessees will be
required to recognize the following for all leases (with the
exception of short-term leases) at the commencement date (i) a
lease liability, which is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis; and
(ii) a right-of-use asset, which is an asset that represents the
lessee’s right to use, or control the use of, a specified
asset for the lease term. Under the new guidance, lessor accounting
is largely unchanged, and it simplified the accounting for sale and
leaseback transactions. Lessees will no longer be provided with a
source of off-balance sheet financing. Lessees (for capital and
operating leases) and lessors (for sales-type, direct financing,
and operating leases) must apply a modified retrospective
transition approach for leases existing at, or entered into after,
the beginning of the earliest comparative period presented in the
financial statements. The modified retrospective approach would not
require any transition accounting for leases that expired before
the earliest comparative period presented. Lessees and lessors may
not apply a full retrospective transition approach. The standard is
effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. We are
currently in the process of assessing what impact this new standard
may have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09,
“Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting.”
This update includes multiple provisions intended to simplify
various aspects of the accounting for share-based payment
transactions including accounting for excess tax benefits and tax
deficiencies, classification of excess tax benefits in the
statement of cash flows and accounting for award forfeitures. This
update is effective for annual and interim reporting periods of
public entities beginning after December 15, 2016, with early
adoption permitted. The adoption of this new standard did
not have a material impact on our consolidated financial
statements.
In
August 2016, the FASB issued ASU No. 2016-15 (“ASU
2016-15”), “Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments.”
The standard provides guidance on eight (8) cash flow issues: (1)
debt prepayment or debt extinguishment costs; (2) settlement of
zero-coupon bonds; (3) contingent consideration payments after a
business combination; (4) proceeds from the settlement of insurance
claims; (5) proceeds from the settlement of corporate-owned life
insurance policies; (6) distributions received from equity method
investees; (7) beneficial interests in securitization transactions;
and (8) separately identifiable cash flows and application of the
predominance principle. ASU 2016-15 addresses how certain cash
receipts and cash payments are presented and classified in the
statement of cash flows. ASU 2016-15 is effective for fiscal years,
and interim periods within those years, beginning after December
15, 2017 with early adoption permitted. We expect the adoption of
this new standard will not have a material impact on our condensed
consolidated financial statements.
Management
believes that any other recently issued, but not yet effective,
accounting standards if currently adopted would not have a material
effect on the accompanying condensed consolidated financial
statements.
2. Liquidity and Going Concern
The
accompanying condensed consolidated financial statements have been
prepared on the going concern basis, which assumes that the Company
will continue to operate as a going concern and which contemplates
the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As
reflected in the accompanying condensed consolidated financial
statements, the Company had a net loss of $5,354,854, net cash used
in operating activities of $3,177,637, net cash used in investing
activities of $0, and net cash used by financing activities of
$204,892 for the three months ended March 31, 2017. As of March 31,
2017, the Company had $596,761 in cash and cash equivalents, a
working capital deficit of $5,948,518, an accumulated deficit of
$83,617,115, and a stockholders’ deficit of
$922,921.
On
January 15, 2016, we and Oxford Finance LLC, as collateral agent
and lender, entered into a Loan and Security Agreement providing
for senior secured term loans to the Company in an aggregate
principal amount of up to $10,000,000, subject to the terms and
conditions set forth in the Loan Agreement (the “January 2016
Term Loan”). On January 15, 2016, the Company
received an initial loan of $5,000,000 under the Loan Agreement,
before fees and issuance costs of approximately $390,000. The
option to draw the second $5,000,000 expired on September 30,
2016.
On
March 31, 2017, we and Oxford Finance LLC, signed a First Amendment
to Loan and Security Agreement (“Amendment”), providing
that the payment of principal of $138,889 on the January 2016 Term
Loan that otherwise would have been due on the Amortization Date of
April 1, 2017, will be due and payable on May 1, 2017 along with
any other payment of principal due on May 1, 2017. We are obligated
to pay a fully earned and non-refundable amendment fee of $15,000
to the Collateral Agent. On May 1, 2017, we paid the principal that
was due on May 1, 2017, along with the $15,000 amendment
fee.
On
August 22, 2016, we closed a public offering of 1,297,038 shares of
common stock and 665,281 shares of Series F Preferred Stock, and
warrants to purchase 1,962,319 shares of common stock at $5.55 per
share and warrants to purchase 1,962,319 shares of common stock at
$6.29 per share, at an offering price of $4.81 per share (the
“August 2016 Public Offering”). For every one
share of common stock or Series F Preferred Stock sold, we issued
one warrant to purchase one share of common stock at $5.55 per
share and one warrant to purchase one share of common stock at
$6.29 per share. We received $9,438,753 in gross proceeds,
before underwriting discounts and commissions and offering expenses
totaling $871,305. The gross proceeds include the
underwriters’ over-allotment option, which they exercised on
the closing date.
On May
3, 2017, we sold 850 shares of 0% Series H Convertible
Preferred Stock, or the Series H Preferred Stock, at a
stated value of $1,000 per share, representing an aggregate of
$850,000 in a private placement (the “May 3rd Private
Placement”), to certain existing investors. The shares of Series H Preferred Stock are
convertible into shares of common stock based on a conversion
calculation equal to the stated value of the Series H Preferred
Stock, plus all accrued and unpaid dividends (the “Base
Amount”), if any, on such Series H Preferred Stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series H Preferred Stock is $1,000
and the initial conversion price is $1.75 per share, each subject
to adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. This financing
is discussed in further detail in Note 12, Subsequent
Events.
On
May 19, 2017, we closed a public offering of 1,342,858 shares of
common stock and 1,000,000 shares of newly designated 0% Series G
Convertible Preferred Stock (the “Series G Preferred
Stock”), at $1.75 per share of common stock and Series G
Preferred Stock (the “May 2017 Public Offering”).
The Series G Preferred Stock is initially convertible into
1,000,000 shares of common stock, subject to adjustment for stock
splits, stock dividends, recapitalizations, combinations,
subdivisions or other similar events, to certain existing investors
in the offering who, as a result of their purchases of common
stock, would hold in excess of 4.99% of our issued and outstanding
common stock, and elect to receive shares of our Series G Preferred
Stock. We received $4,100,000 in gross proceeds, before
underwriting discounts and commissions and offering expenses
totaling $667,875. The May 2017 Public Offering is described in
more detail in Note 12, Subsequent Events.
We
anticipate that the Company will continue to incur net losses into
the foreseeable future as we: (i) continue our Phase I clinical
trial for our standalone therapeutic HuMab 5B1, designated as
MVT-5873 that was initiated in the first quarter of 2016; (ii)
continue our Positron Emission Tomography (“PET”)
imaging agent 89Zr-HuMab-5B1, designated as MVT-2163 that was
initiated in July 2016; (iii) initiate our clinical trial for the
development of our HuMab-based radioimmunotherapy, or RIT, product,
designated as MVT-1075; (iv) continue preclinical work on follow-on
antibody programs; and (iv) continue operations as a public
company. Based on receipt of $850,000 from our May 3rd Private
Placement, closing of the May 2017 Public Offering for $4.1
million, and management’s plans for continuing to develop our
existing pipeline of products, and without any other additional
funding or receipt of payments from potential licensing agreements,
we expect we will have sufficient funds to meet our obligations
through August 2017. These conditions give rise to substantial
doubt as to the Company’s ability to continue as a going
concern. The accompanying consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
We
plan to continue to fund the Company’s losses from operations
and capital funding needs through equity or debt financings,
strategic collaborations, licensing arrangements, government grants
or other arrangements. However, we cannot be sure that such
additional funds will be available on reasonable terms, or at all.
If we are unable to secure adequate additional funding, we may be
forced to make reductions in spending, extend payment terms with
suppliers, liquidate assets where possible, and/or suspend or
curtail planned programs. In addition, if the Company does not meet
its payment obligations to third parties as they come due, it may
be subject to litigation claims. Even if we are successful in
defending against these claims, litigation could result in
substantial costs and be a distraction to management. Any of these
actions could materially harm the Company’s business, results
of operations, and prospects.
If
the Company raises additional funds by issuing equity securities,
substantial dilution to existing stockholders would result. If the
Company raises additional funds by incurring debt financing, the
terms of the debt may involve significant cash payment obligations
as well as covenants and specific financial ratios that may
restrict the Company’s ability to operate its
business.
3. Cash and Cash Equivalents
We
consider all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The
Company limits its exposure to credit loss by holding cash in U.S.
dollars or, from time to time, placing cash and investments in U.S.
government, agency and government-sponsored enterprise
obligations.
4. Fair value of financial instruments
Our
financial instruments consist of cash and cash equivalents, grants
receivable and accounts payable, all of which are generally
considered to be representative of their respective fair values
because of the short-term nature of those instruments.
5. Convertible Preferred Stock, Common Stock and
Warrants
Dividends on Preferred Stock
We
immediately recognize the changes in the redemption value on
preferred stock as they occur and the carrying value of the
security is adjusted to equal what the redemption amount would be
as if redemption were to occur at the end of the reporting date
based on the conditions that exist as of that date.
No
dividends were ever declared by our Board of Directors since our
inception on any series of convertible preferred
stock.
Series D Preferred Stock
As
of March 31, 2017, and December 31, 2016, there were 132,489 shares
of Series D convertible preferred stock (“Series D Preferred
Stock”) issued and outstanding that are convertible into an
aggregate of 1,790,392 shares of common stock. The Series D
Preferred Stock had been issued on March 25, 2015, to certain
holders of the Company’s Series A-1 Preferred Stock and
Merger warrants (the “Series A-1 Exchange Securities”)
and holders of the Company’s Series B Preferred Stock and
Series B warrants (the “Series B Exchange Securities”
and, collectively with the Series A-1 Exchange Securities, the
“Exchange Securities”), all previously issued by the
Company. Pursuant to the exchange agreements, the holders exchanged
the Exchange Securities and relinquished any and all other rights
they may have had pursuant to the Exchange Securities, their
respective governing agreements and certificates of designation,
including any related registration rights, in exchange for an
aggregate of 342,906 shares of the Company’s common stock and
an aggregate of 238,156 shares of the Company’s newly
designated Series D Preferred Stock, convertible into 3,218,325
shares of common stock.
As
contemplated by the exchange agreements and as approved by the
Company’s Board of Directors, the Company filed with the
Secretary of State of the State of Delaware a Certificate of
Designation of Preferences, Rights and Limitations of Series D
Convertible Preferred Stock (the “Series D Certificate of
Designations”), on March 25, 2015. Pursuant to the
Series D Certificate of Designations, the Company designated
1,000,000 shares of its blank check preferred stock as Series D
Preferred Stock. Each share of Series D Preferred Stock has a
stated value of $0.01 per share. In the event of a
liquidation, dissolution or winding up of the Company, each share
of Series D Preferred Stock will be entitled to a per share
preferential payment equal to the stated value. Each share of
Series D Preferred Stock is convertible into 13.5135 shares of
common stock. The conversion ratio is subject to adjustment in
the event of stock splits, stock dividends, combination of shares
and similar recapitalization transactions. The Company is
prohibited from effecting the conversion of the Series D Preferred
Stock to the extent that, as a result of such conversion, the
holder beneficially would own more than 4.99% (provided that
certain investors elected to block their beneficial ownership
initially at 2.49% in the Exchange Agreements), in the aggregate,
of the issued and outstanding shares of the Company’s common
stock calculated immediately after giving effect to the issuance of
shares of common stock upon the conversion of the Series D
Preferred Stock. Each share of Series D Preferred Stock
entitles the holder to vote on all matters voted on by holders of
common stock. With respect to any such vote, each share of Series D
Preferred Stock entitles the holder to cast such number of votes
equal to the number of shares of common stock such shares of Series
D Preferred Stock are convertible into at such time, but not in
excess of the beneficial ownership limitations.
Series E Preferred Stock
As
of March 31, 2017, and December 31, 2016, there were 33,333 shares
of Series E convertible preferred stock (“Series E Preferred
Stock”) issued and outstanding, convertible into 519,751
shares of common stock.
On
March 30, 2015, the Company filed with the Secretary of State of
the State of Delaware a Certificate of Designation of Preferences,
Rights and Limitations of Series E Convertible Preferred Stock (the
“Series E Certificate of Designations”) to designate
100,000 shares of its blank check preferred stock as Series E
Preferred Stock.
The
shares of Series E Preferred Stock are convertible into shares of
common stock based on a conversion calculation equal to the stated
value of such preferred share, plus all accrued and unpaid
dividends, if any, on such share of Series E Preferred Stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series E Preferred Stock is $75 and
the initial conversion price is $5.55 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In addition,
during the period proscribed for in the Series E Certificate of
Designations, in the event the Company issues or sells, or is
deemed to issue or sell, shares of common stock at a per share
price that is less than the conversion price then in effect, the
conversion price shall be reduced to such lower price, subject to
certain exceptions. The Company is prohibited from effecting a
conversion of the share of Series E Preferred Stock to the extent
that, as a result of such conversion, such holder would
beneficially own more than 4.99% of the number of shares of common
stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the Series E Preferred
Stock, which beneficial ownership limitation may be increased by
the holder up to, but not exceeding, 9.99%. Each holder is entitled
to vote on all matters submitted to stockholders of the Company,
and shall have the number of votes equal to the number of shares of
common stock issuable upon conversion of such holder’s share
of Series E Preferred Stock, but not in excess of beneficial
ownership limitations. The shares of Series E Preferred Stock bear
no interest.
On
August 22, 2016, when the Company closed on the August 2016 Public
Offering, the current Series E Preferred Stock conversion price of
$5.55 per share was reduced to $4.81 per share under the terms of
the Series E Certificate of Designations, resulting in an increase
in the number of shares of common stock to 519,751 that the Series
E Preferred Stock may be converted into. There is no further
adjustment required by the Series E Certificate of Designations in
the event of an offering of shares below $4.81 per share by the
Company.
Series F Preferred Stock
As
of March 31, 2017, and December 31, 2016, there were 665,281 shares
of Series F Preferred Stock issued and outstanding, convertible
into 665,281 shares of common stock. In the event of a liquidation,
dissolution or winding up of the Company, each share of Series F
Preferred Stock will be entitled to a per share preferential
payment equal to the par value.
On
August 16, 2016, we filed a Certificate of Designations,
Preferences and Rights of the 0% Series F Convertible Preferred
Stock with the Delaware Secretary of State, designating 1,559,252
shares of preferred stock as 0% Series F Preferred Stock.
The
shares of Series F Preferred
Stock are convertible into shares of common stock based on a
conversion calculation equal to the stated value of such Series F
Preferred Stock, plus all
accrued and unpaid dividends, if any, on such Series F Preferred Stock, as of such date of
determination, divided by the conversion price. The stated value of
each share of Series F Preferred
Stock is $4.81 and the initial conversion price is $4.81 per
share, each subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, subdivisions or other
similar events. In the event of a liquidation, dissolution or
winding up of the Company, each share of Series F Preferred Stock will be entitled to a per
share preferential payment equal to the par value. All shares of
the Company’s capital stock will be junior in rank to Series
F Preferred Stock with respect
to the preferences as to dividends, distributions and payments upon
the liquidation, dissolution and winding-up of the Company, except
for the Company’s Series D Preferred Stock and Series E Preferred Stock.
The
holders of Series F Preferred
Stock will be entitled to receive dividends if and when
declared by our board of directors. The Series F Preferred Stock shall participate on an
“as converted” basis, with all dividends declared on
the Company’s common stock. In addition, if we grant, issue
or sell any rights to purchase our securities pro rata to all our
record holders of our common stock, each holder will be entitled to
acquire such securities applicable to the granted purchase rights
as if the holder had held the number of shares of common stock
acquirable upon complete conversion of all Series F Preferred Stock then held.
We are
prohibited from effecting a conversion of the Series F Preferred Stock to the extent that, as a
result of such conversion, the holder would beneficially own more
than 4.99% of the number of shares of common stock outstanding
immediately after giving effect to the issuance of shares of common
stock upon conversion of the Series F Preferred Stock, which beneficial ownership
limitation may be increased by the holder up to, but not exceeding,
9.99%. Each holder is entitled to vote on all matters submitted to
stockholders of the Company, and shall have the number of votes
equal to the number of shares of common stock issuable upon
conversion of such holder’s Series F Preferred Stock, but not in excess of the
beneficial ownership limitations.
Warrants Issued in Connection with April 2015 Private
Placement
As
of March 31, 2017, and December 31, 2016, there were warrants to
purchase 805,361 shares of common stock that were outstanding that
were remaining from our private offering in March and April 2015
(the “April 2015 Private Placement) in which we sold
$8,546,348 worth of units (the “Units”), net of
$668,150 in issuance costs, of which $2,500,000 of the Units
consisted of Series E Preferred Stock and the balance consisted of
1,660,271 shares of common stock, together with warrants to all
investors to purchase 1,055,361 shares of common stock at $11.10
per share. Each Unit was sold at a purchase price of
$5.55 per Unit. OPKO Health, Inc., the lead investor in the April
2015 Private Placement, purchased $2,500,000 worth of Units
consisting of all of the shares of the Series E Preferred Stock.
The warrants are exercisable upon issuance and expire October 10,
2017, and may be exercised for cash or on a cashless basis. The
warrant exercise price is subject to certain adjustments including
stock splits, dividends and reverse-splits. The Company is
prohibited from effecting the exercise of the warrants to the
extent that, as a result of such exercise, the holder beneficially
would own more than 4.99% in the aggregate, of the issued and
outstanding shares of the Company’s common stock calculated
immediately after giving effect to the issuance of shares of common
stock upon the exercise of the warrants. Investor rights of
participation in future financings by the Company expired on April
10, 2017. The warrants are not listed on any securities exchange or
other trading market.
Warrants Issued in Connection with October 2015 Public
Offering
As
of March 31, 2017, and December 31, 2016, there were warrants to
purchase 168,919 shares of common stock that were outstanding that
we issued in connection with our public offering on October 5,
2015, which consisted of 337,838 shares of common stock and
warrants to purchase 168,919 shares of common stock, at an offering
price of $8.14 per share. For every two shares of common
stock sold, the Company issued one warrant to purchase one share of
common stock. We received $2,750,000 in gross proceeds,
before underwriting discounts and commissions and offering expenses
totaling approximately $586,608. The shares and warrants were
separately issued and sold in equal proportions. The warrants are
immediately exercisable, expire September 30, 2018, and have an
exercise price of $9.77 per share. The warrants are not
listed on any securities exchange or other trading
market.
August 2016 Public Offering
On
August 22, 2016, we closed a public offering of 1,297,038 shares of
common stock and 665,281 shares of Series F preferred stock, and
warrants to purchase 1,962,319 shares of common stock at $5.55 per
share and warrants to purchase 1,962,319 shares of common stock at
$6.29 per share, at an offering price of $4.81 per share. For
every one share of common stock or Series F preferred stock sold,
we issued one warrant to purchase one share of common stock at
$5.55 per share and one warrant to purchase one share of common
stock at $6.29 per share. We received $9,438,753 in gross
proceeds, before underwriting discounts and commissions and
offering expenses totaling $871,305. The gross proceeds include the
underwriter’s over-allotment option, which it exercised on
the closing date.
Consultant Grants
On
January 13, 2016, the Board of Directors approved the issuance of
13,514 shares of restricted stock valued at $64,000 to a consultant
for advisory services to the Company.
On
February 10, 2017, the Company entered into a consulting agreement
with MDM Worldwide, pursuant to which MDM Worldwide shall provide
investor relations services to the Company in consideration for an
immediate grant of 20,000 shares of the Company’s common
stock and a monthly cash retainer of $10,000 a month for ongoing
services for a period of one year. As the shares granted were fully
vested upon grant and the Company has no legal recourse to recover
the shares in the event of nonperformance, the Company recognized
the grant date fair value of the 20,000 shares or $56,600, as
investor relations expense upon grant during the first quarter of
2017.
On March 7, 2017, the Company entered into a consulting agreement
with Jenene Thomas Communications, pursuant to which Jenene Thomas
Communications shall provide investor relations services to the
Company. In consideration for the services, which begin on April 1,
2017, we will pay a monthly cash retainer of $12,500. Additionally,
we issued 20,000 restricted shares of common stock on April 1,
2017, to be vested at 5,000 per quarter over the four quarters of
services under the agreement beginning April 1, 2017. The shares
granted vest over a one-year period over which the services are
performed and, as such, will be amortized over the same period
beginning in April 1, 2017.
6. Notes Payable
On
January 15, 2016, we entered into a loan and security agreement
with Oxford Finance, LLC pursuant to which we had the option to
borrow $10,000,000 in two equal tranches of $5,000,000 each (the
“Loan Agreement”). The first tranche of
$5,000,000 was funded at close on January 15, 2016 (the “Term
A Loan”). The option to fund the second tranche of $5,000,000
(the “Term B Loan”) was upon the Company achieving
positive interim data on the Phase 1 HuMab-5B1 antibody trial in
pancreatic cancer and successfully uplisting to either the NASDAQ
Stock Market or NYSE MKT on or before September 30,
2016. The option for the Term B Loan expired on
September 30, 2016. The Company is not pursuing completion of any
additional debt financing with Oxford Finance, LLC at the present
time. The interest rate for the Term A Loan is set on a monthly
basis at the index rate plus 11.29%, where the index rate is the
greater of the 30-day LIBOR rate or 0.21%. Interest is
due on the first day of each month, in arrears, calculated based on
a 360-day year. The loan is interest only for the first
year after funding, and the principal amount of the loan is
amortized in equal principal payments, plus period interest, over
the next 36 months. A facility fee of 1.0% or $100,000
was due at closing of the transaction, and was earned and paid by
the Company on January 15, 2016. The Company is
obligated to pay a $150,000 final payment upon completion of the
term of the loan, and this amount is being accreted using the
effective interest rate method over the term of the loan. Each of
the term loans can be prepaid subject to a graduated prepayment
fee, depending on the timing of the prepayment.
Concurrent
with the closing of the transaction, the Company issued 225,226
common stock purchase warrants to Oxford Finance, LLC with an
exercise price of $5.55 per share. The warrants are
exercisable for five years and may be exercised on a cashless
basis, and expire on January 15, 2021. The Company recorded
$607,338 for the fair value of the warrants as a debt discount
within notes payable and an increase to additional paid-in capital
on the Company’s balance sheet. We used the
Black-Scholes-Merton valuation method to calculate the value of the
warrants. The debt discount is being amortized as interest expense
over the term of the loan using the effective interest
method.
We
granted Oxford Finance, LLC a perfected first priority lien on all
of the Company’s assets with a negative pledge on
intellectual property. The Company paid Oxford Finance, LLC a good
faith deposit of $50,000, which was applied towards the facility
fee at closing. The Company agreed to pay all costs,
fees and expenses incurred by Oxford Finance, LLC in the initiation
and administration of the facilities including the cost of loan
documentation.
At
the initial funding, the Company received net proceeds of
approximately $4,610,000 after fees and expenses. These fees and
expenses are being accounted for as a debt discount and classified
within notes payable on the Company’s condensed consolidated
balance sheet. The Company's transaction costs of approximately
$390,000 are presented in the condensed consolidated balance sheet
as a direct deduction from the carrying amount of the notes
payable, consistent with debt discounts. Debt discounts, issuance
costs and the final payment are being amortized or accreted as
interest expense over the term of the loan using the effective
interest method.
The
Loan Agreement also contains customary indemnification obligations
and customary events of default, including, among other things, our
failure to fulfill certain of the Company's obligations under the
Loan Agreement, the occurrence of a material adverse change, which
is defined as a material adverse change in the Company's business,
operations, or condition (financial or otherwise), a material
impairment of the prospect of repayment of any portion of the loan,
or a material impairment in the perfection or priority of the
Lenders’ lien in the collateral or in the value of such
collateral. In the event of default by the Company under the
Loan Agreement, the Lenders would be entitled to exercise their
remedies thereunder, including the right to accelerate payment of
the debt, upon which we may be required to repay all amounts then
outstanding under the Loan Agreement, which could harm the
Company's financial condition.
On
March 31, 2017, we and Oxford Finance, LLC signed a First Amendment
to Loan and Security Agreement (“Amendment”), providing
that the payment of principal on the January 2016 Term Loan that
otherwise would have been due on the Amortization Date will be due
and payable on May 1, 2017 along with any other payment of
principal due on May 1, 2017. We are obligated to pay a fully
earned and non-refundable amendment fee of $15,000 to the
Collateral Agent. On May 1, 2017, we paid the principal due on May
1, 2017, along with the $15,000 amendment fee.
The
Company was in compliance with all applicable covenants set forth
in the Loan Agreement as of March 31, 2017.
The
Company recorded interest expense related to the Loan Agreement of
$156,657 and $128,929 for the three months ended March 31, 2017 and
March 31, 2016, respectively. The annual effective interest rate on
the note payable, including the amortization of the debt discounts
and accretion of the final payment, but excluding the warrant
amortization, is approximately 13.5% as of March 31, 2017 and
2016.
Future
principal payments under the Loan Agreement as of March 31, 2017
are as follows:
Years ending December 31:
|
|
2017
(remaining)
|
$1,388,887
|
2018
|
1,666,667
|
2019
|
1,666,667
|
2020
|
138,889
|
Notes
payable, balance as of March 31, 2017
|
4,861,110
|
Unamortized
discount on notes payable
|
(591,267)
|
Notes
payable, balance as of March 31, 2017
|
4,269,843
|
Current
portion of notes payable
|
(1,666,667)
|
Non-current
portion of notes payable
|
$2,603,176
|
7. Related Party Transactions
On
April 1, 2016, the Company entered into a two-year consulting
agreement with Jeffrey Ravetch, M.D., Ph.D., a Board member, for
work beginning January 1, 2016 through December 31, 2017, at a rate
of $100,000 a year, in support of scientific and technical advice
on the discovery and development of technology and products for the
Company primarily related to monoclonal antibodies, corporate
development, and corporate partnering efforts. In April
2016, the Company paid Dr. Ravetch $100,000 for services to be
performed in 2016, and will pay quarterly thereafter beginning
January 1, 2017. During the three months ended March 31, 2017, the
Company recorded $25,000 in consulting expenses, as part of general
and administration expenses, related to this
agreement.
On
November 3, 2016, the Company granted 17,500 stock options to
Jeffrey Ravetch, M.D., Ph.D., a member of the board of directors,
for his ongoing consulting services to the Company. The option
award vests over a three-year period. During the three months ended
March 31, 2017, the Company recognized $3,826 of stock-based
compensation expense, as part of general and administration
expenses, related to this option grant.
8. Stock-based Activity
Amendment of Equity Incentive Plan
On
March 31, 2015, the Company approved a Second Amended and Restated
2014 Employee, Director and Consultant Equity Incentive Plan (the
“Plan”) to increase the number of shares reserved for
issuance under the Plan from 21,362 to 1,129,837 shares of common
stock. Additional changes to the Plan include:
●
An “evergreen” provision to reserve additional shares
for issuance under the Plan on an annual basis commencing on the
first day of fiscal 2016 and ending on the second day of fiscal
2024, such that the number of shares that may be issued under the
Plan shall be increased by an amount equal to the lesser of: (i)
1,081,081 or the equivalent of such number of shares after the
administrator, in its sole discretion, has interpreted the effect
of any stock split, stock dividend, combination, recapitalization
or similar transaction in accordance with the Plan; (ii) the number
of shares necessary such that the total shares reserved under the
Plan equals (x) 15% of the number of outstanding shares of common
stock on such date (assuming the conversion of all outstanding
shares of Preferred Stock (as defined in the Plan) and other
outstanding convertible securities and exercise of all outstanding
warrants to purchase common stock) plus (y) 30,946; and (iii) an
amount determined by the Board.
●
Provisions that no more than 405,406 shares may be granted to any
participant in any fiscal year.
●
Provisions to allow for performance based equity awards to be
issued by the Company in accordance with Section 162(m) of the
Internal Revenue Code.
●
On September 22,
2016, the Board of Directors ratified an automatic increase in the
number of shares reserved for issuance under the Plan, increasing
the total shares reserved from 1,129,837 to 1,208,307 shares of
common stock, under the annual evergreen provision for the Plan,
plus a fixed amount of 30,946.
●
On January 1, 2017, the Board of Directors
ratified an automatic increase in the number of shares reserved for
issuance under the Plan, effective January 1, 2017, increasing the
total shares reserved from 1,208,307 to 2,159,352 shares of common
stock, under the annual evergreen provision for the Plan ,
plus a fixed amount of 30,946.
●
On April 30, 2017, the Board of Directors approved a proposal to
increase in the number of shares reserved for issuance under the
Plan, subject to approval by the Company’s stockholders at
its annual meeting to be held on June 12, 2017, increasing the
total shares reserved under the Plan from 2,128,406 (including the
fixed amount of 30,946) to 4,128,406, and increasing the number of
shares that may be granted to any participant in any fiscal year to
900,000, from 405,406.
Stock-based Compensation
We
measure stock-based compensation expense for equity-classified
awards, principally related to stock options and restricted stock
units, or RSUs, based on the estimated fair value of the award on
the date of grant. We recognize the value of the portion of the
award that we ultimately expect to vest as stock-based compensation
expense over the requisite service period in our condensed
consolidated statements of operations. Due to limited activity in
2016 and 2015, we assumed a forfeiture rate of zero.
We
use the Black-Scholes model to estimate the fair value of stock
options granted. The expected term of stock options granted
represents the period of time that we expect them to be
outstanding. For the three months ended March 31, 2017 and 2016,
the following valuation assumptions were used:
|
2017
|
2016
|
Risk-free
interest rate
|
1.5 to
2.0 %
|
1.2 to
1.4 %
|
Dividend
yield
|
0 %
|
0 %
|
Expected
volatility
|
85
to 73 %
|
82 to
84 %
|
Expected
life of options, in years
|
1.4
to 6.0
|
1.0 to
6.0
|
Weighted
average grant date fair value
|
$2.2
|
$2.97
|
Total estimated stock-based compensation expense,
related to all the Company’s stock-based payment awards
recognized under ASC 718, “Compensation—Stock
Compensation” was
comprised of the following:
|
Three Months Ended March 31,
|
|
|
2017
|
2016
|
Research
and development
|
$320,675
|
$303,624
|
General
and administrative
|
712,136
|
1,230,264
|
Total
stock-based compensation expense
|
$1,032,811
|
$1,533,888
|
Stock-based
Award Activity
The
following table summarizes the Company’s stock option
activity during the three months ended March 31, 2017:
|
Options
Outstanding
|
Weighted-Average
Exercise Price
|
Outstanding
at December 31, 2016
|
851,375
|
$10.94
|
Granted
|
746,690
|
3.09
|
Exercised
|
—
|
—
|
Forfeited/cancelled/expired
|
—
|
—
|
Outstanding
and expected to vest at March 31, 2017
|
1,598,065
|
$7.27
|
Vested
and exercisable at March 31, 2017
|
228,606
|
$14.35
|
The
total unrecognized compensation cost related to unvested stock
option grants as of March 31, 2017, was $4,009,153 and the weighted
average period over which these grants are expected to vest is 2.32
years. The weighted average remaining contractual life of stock
options outstanding at March 31, 2017 and 2016 is 9.15 and 9.19
years, respectively.
During
the first three months of 2017, the Company granted 746,690 options
to officers and employees with a weighted average exercise price of
$3.09 and vesting over a three-year period with vesting starting at
the one-year anniversary of the grant date. During the
first three months of 2016, the Company granted 181,892 options to
officers and employees with a weighted average exercise price of
$5.62.
Stock
options granted to employees generally vest over a three-year
period with one third of the grants vesting at each one-year
anniversary of the grant date.
Because
the Company had a net operating loss carryforward as of March 31,
2017, no tax benefits for the tax deductions related to stock-based
compensation expense were recognized in the Company’s
condensed consolidated statements of operations. Additionally, no
stock options were exercised in the three months ended March 31,
2017 and 2016.
A summary of activity related to restricted stock grants under the
Plan for the quarter ended March 31, 2017 is presented
below:
|
Shares
|
Weighted
Average Grant-Date Fair Value
|
Non-vested
at December 31, 2016
|
205,478
|
$16.84
|
Granted
|
—
|
—
|
Vested
|
—
|
—
|
Forfeited
|
—
|
—
|
Non-vested
at March 31, 2017
|
205,478
|
$16.84
|
As
of March 31, 2017, there were 205,478 nonvested restricted
stock units remaining outstanding.
As
of March 31, 2017, and 2016, unamortized compensation expense
related to restricted stock grants granted in 2015 amounted to
$1,696,332 and $3,415,151, respectively, which is expected to be
recognized over a weighted average period of 1.02 and 2.02 years,
respectively.
Management Bonus Plan
On
February 16, 2016, our Compensation Committee approved a 2016
Management Bonus Plan (the “2016 Management Plan”)
outlining maximum target bonuses of the base salaries of certain of
our executive officers. Under the terms of the 2016 Management
Plan, the Company's Chief Executive Officer shall receive a maximum
target bonus of up to 50% of his annual base salary, and the Chief
Financial Officer and each of the Company's Vice Presidents shall
receive a maximum target bonus of up to 30% of their annual base
salary.
On
February 16, 2016, the Compensation Committee of the Board of
Directors of the Company approved the following
amendments to Company's policy for compensating non-employee
members of the Board:
●
The initial equity grant upon first appointment (or election) of
future non-employee directors to the Board shall be a 10-year
option to purchase 6,757 shares of the Company's common stock,
under the Company's Second Amended and Restated 2014 Equity
Incentive Plan with 3-year annual vesting and a strike price equal
the closing price of the Company's common stock on the effective
date of the appointment (or election);
●
The annual cash retainer for each non-employee director, paid
quarterly, is increased by $1,000 per calendar quarter to a total
of $7,000 per quarter, effective April 1, 2016; and
●
The additional annual cash retainer for the chairperson of each of
the Audit, Compensation, and Nominating and Governance Committees,
paid quarterly, is increased by $1,000 per calendar year, such that
each chairperson retainer shall be as follows, effective April 1,
2016: Audit Committee: $13,000; Compensation Committee: $9,000;
Nominating and Governance Committee: $6,000.
On
August 25, 2016, the Compensation Committee of the Board of
Directors of the Company approved the following amendments to
Company's policy for compensating non-employee members of the
Board:
●
The initial equity
grant upon first appointment (or election) of future non-employee
directors to the Board shall be a 10-year option to purchase 25,000
shares of the Company's common stock, under the Company's Second
Amended and Restated 2014 Equity Incentive Plan with 3-year annual
vesting and a strike price equal to the closing price of the
Company's common stock on the effective date of the appointment (or
election); and
●
The additional
automatic annual option grant to each non-employee director on the
date of the Company's annual meeting shall be a 10-year option to
purchase 17,500 shares of the Company's common stock, under the
Company's Second Amended and Restated 2014 Equity Incentive Plan
with 1-year vesting and a strike price equal to the closing price
of the Company's common stock on the date of the annual
meeting.
On
February 6, 2017, the Compensation Committee of the Board of
Directors of the Company approved the following amendments to
Company's policy for compensating non-employee members of the
Board:
●
The initial equity
grant upon first appointment (or election) of future non-employee
directors to the Board shall be a 10-year option to purchase 30,000
shares of the Company's Common Stock, under the Company's Second
Amended and Restated 2014 Equity Incentive Plan with 3-year annual
vesting and a strike price equal to the closing price of the
Company's common stock on the effective date of the appointment (or
election);
●
The additional
automatic annual option grant to each non-employee director on the
date of the Company's annual meeting shall be a 10-year option to
purchase 20,000 shares of the Company's Common Stock, under the
Company's Second Amended and Restated 2014 Equity Incentive Plan
with 1-year vesting and a strike price equal the closing price of
the Company's common stock on the date of the annual
meeting.
Common stock reserved for future issuance
Common
stock reserved for future issuance consists of the following at
March 31, 2017:
Common
stock reserved for conversion of preferred stock and
warrants
|
8,099,568
|
Common
stock options outstanding
|
1,598,066
|
Authorized
for future grant or issuance under the Stock Plan
|
271,048
|
Unvested
restricted stock
|
205,478
|
Total
|
10,174,160
|
9. Net Loss per Share
The
Company calculates basic and diluted net loss per share using the
weighted-average number of shares of common stock outstanding
during the period.
When
the Company is in a net loss position, it excludes from the
calculation of diluted net loss per share all potentially dilutive
stock options, preferred stock and warrants, and the diluted net
loss per share is the same as the basic net loss per share for such
periods. If the Company was to be in a net income position, the
weighted average number of shares used to calculate the diluted net
income per share would include the potential dilutive effect of
in-the-money securities, as determined using the treasury stock
method.
The
table below presents the potentially dilutive securities that would
have been included in the calculation of diluted net loss per share
if they were not antidilutive for the periods
presented.
|
As of March 31,
|
|
|
2017
|
2016
|
Stock
options
|
1,598,066
|
607,528
|
Preferred
stock
|
2,975,424
|
2,927,325
|
Unvested
restricted stock
|
205,478
|
310,926
|
Warrants
to purchase common stock
|
5,124,144
|
1,199,505
|
Total
|
9,903,112
|
5,045,284
|
10. Contracts and Agreements
Memorial Sloan Kettering Cancer Center, or MSK
Since 2008 the Company has engaged in various
research agreements and collaborations with MSK including licensed
rights to cancer vaccines and the blood samples from patients who
have been vaccinated with MSK’s cancer vaccines. Total
sponsored research contracts outstanding in 2016 amounting to
approximately $800,000 in 2016 were 100% complete as of the year
ended December 31, 2016. Such sponsored research agreements provide
support for preclinical work on the Company’s product
development programs. The work includes preparing
radioimmunoconjugates of the Company’s antibodies and
performing in vitro and in vivo pharmacology studies for our therapeutic antibody
product, imaging agent product and radioimmunotherapy product
programs. For the three months ended March 31, 2017, there were no
expenses incurred related to these contracts.
Life Technologies Licensing Agreement
On
September 24, 2015, the Company entered into a licensing agreement
with Life Technologies Corporation, a subsidiary of ThermoFisher
Scientific. Under the agreement MabVax agreed to license
certain cell lines from Life Technologies Corporation to be used in
the production of recombinant proteins for the Company’s
clinical trials. The amount of the contract is for
$450,000 and was fully expensed during 2015. This
agreement was fully paid as of December 31, 2016. For the three
months ended March 31, 2017, and 2016, the Company recorded no
expenses associated with the agreement.
Rockefeller
University Collaboration
In
July 2015, the Company entered into a research collaboration
agreement with Rockefeller University's Laboratory of Molecular
Genetics and Immunology. The Company provided antibody material to
Rockefeller University, which is exploring the mechanism of action
of constant region (Fc) variants of the HuMab 5B1 in the role of
tumor clearance. The Company may supply additional research
materials if requested by the University, which is evaluating ways
to optimize the function. For the three months ended March 31,
2017, and 2016, the Company recorded no expenses associated with
the agreement.
Patheon
Biologics LLC Agreement
On
April 14, 2014, the Company entered into a development and
manufacturing services agreement with Patheon (f.k.a. Gallus
Biopharmaceuticals) to provide a full range of manufacturing and
bioprocessing services, including cell line development, process
development, protein production, cell culture, protein
purification, bio-analytical chemistry and QC
testing. Total amount of the contract is estimated at
approximately $3.0 million. For the three months ended
March 31, 2017 and 2016, the Company recorded no expenses
associated with the agreement.
NCI PET Imaging Agent Grant
In
September 2013, the NCI awarded the Company a SBIR Program Contract
to support the Company’s program to develop a PET imaging
agent for pancreatic cancer using a fragment of the Company’s
5B1 antibody (the “NCI PET Imaging Agent Grant”). The
project period for Phase I of the grant award of approximately
$250,000 covered a nine-month period, which commenced in September
2013 and ended in June 2014.
On
August 25, 2014, the Company was awarded a $1.5 million contract
for the Phase II portion of the NCI PET Imaging Agent Grant. The
contract is intended to support a major portion of the preclinical
work being conducted by the Company, together with its
collaboration partner, MSK, to develop a novel Positron Emission
Tomography (“PET”) imaging agent for detection and
assessment of pancreatic cancer. The total contract amount for
Phase I and Phase II was approximately $1,749,000. The Company
recorded revenue associated with the NCI PET Imaging Agent Grant as
the related costs and expenses were incurred. For the three-month
periods ended March 31, 2017 and 2016, the Company recorded $0 and
$148,054 of revenue associated with the NCI PET Imaging Agent
Grant, respectively.
11. Commitments and contingencies
Capital Leases
On
March 21, 2016, the Company entered into a lease agreement with
ThermoFisher Scientific (“Lessor”). Under
the terms of the agreement, the Company agreed to lease two pieces
of equipment from the Lessor, a liquid chromatography system and an
incubator, totaling in cost of $95,656. The term of the
lease is five years (60 months), and the monthly lease payment is
$1,942. In addition, there is a $1.00 buyout option at the end of
the lease term.
Minimum
future annual capital lease obligations are as follows as of
March 31, 2017:
2017
(remaining)
|
$17,480
|
2018
|
23,306
|
2019
|
23,306
|
2020
|
23,306
|
2021
|
7,769
|
Less
interest
|
(14,170)
|
Principal
|
80,997
|
Less
current portion
|
(17,361)
|
Noncurrent
portion
|
$63,636
|
Operating Leases
In
connection with the Merger, the Company recorded a $590,504
contingent lease termination fee, in connection with the
termination by MabVax (f.k.a. Telik, Inc.) of the master lease and
sublease of 3165 Porter Drive in Palo Alto, California, which is
payable to ARE-San Francisco No. 24, if the Company receives $15
million or more in additional financing in the aggregate. The
additional financing was achieved in 2015 and the termination fee
is reflected on the condensed consolidated balance sheet as an
accrued lease contingency fee.
On September 2, 2015, the Company
entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises of office and laboratory space in buildings
located at 11535 Sorrento Valley Rd., San Diego, California, to
serve as the Company’s corporate offices and laboratories
(the “New Premises”). Because certain tenant
improvements needed to be made to the New Premises before the
Company could take occupancy, the term of the Lease did not
commence until the New Premises were ready for occupancy, which was
on February 4, 2016. The Lease terminates six years
after such term commencement date, unless earlier terminated in
accordance with the Lease. Pursuant to the terms of the Lease, the
monthly base rent is $35,631, subject to annual increases as set
forth in the Lease.
The
Company has an option to extend the Lease term for a single,
five-year period. If the Lease term is extended for the
optional five-year period, the monthly base rent will be adjusted
based on fair market rental value. In addition to rent,
the Company agreed to pay a portion of the taxes and utility,
maintenance and other operating costs paid or accrued in connection
with the ownership and operation of the property.
The
Company previously leased its corporate office and laboratory space
under an operating lease that, as amended on August 1, 2010,
expired on July 31, 2015.
The
Company recognized rent expense on a straight-line basis over the
term of the lease. Rent expense was $115,238 and $87,683 during the
quarters ended March 31, 2017 and 2016,
respectively.
Minimum
future annual operating lease obligations are as follows as of
March 31, 2017:
2017
(remaining)
|
$330,299
|
2018
|
451,409
|
2019
|
464,951
|
2020
|
478,900
|
2021
|
493,267
|
Thereafter
|
82,612
|
Total
|
$2,301,438
|
|
|
12. Subsequent Events
May 2017 Private Placement – On
May 3, 2017, we entered into separate subscription agreements with
accredited investors pursuant to which we sold an aggregate of
$850,000, or 850 shares, of Series H Preferred
Stock, at a stated value of $1,000 per share. The shares of Series H Preferred Stock are
convertible into shares of common stock based on a conversion
calculation equal to the stated value of the Series H Preferred
Stock, plus all accrued and unpaid dividends (the “Base
Amount”), if any, on such Series H Preferred Stock, as of
such date of determination, divided by the conversion price. The
initial conversion price is $1.75 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar
events.
In the event of a liquidation, dissolution or
winding up of the Company, each share of Series H Preferred Stock
will be entitled to a per share preferential payment equal to the
Base Amount. All shares of our
capital stock will be junior in rank to Series H Preferred Stock
with respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding-up of the
Company other than Series A through G Preferred Stock.
The holders of Series H Preferred
Stock will be entitled to receive dividends if and when declared by
our board of directors. The Series H Preferred Stock shall
participate on an “as converted” basis, with all
dividends declared on our common stock. In addition, if
we grant, issue or sell any rights to purchase our securities pro
rata to all our record holders of our common stock, each holder
will be entitled to acquire such securities applicable to the
granted purchase rights as if the holder had held the number of
shares of common stock acquirable upon complete conversion of all
Series H Preferred Stock then held.
We
are prohibited from effecting a conversion of the Series H
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series H Preferred Stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series H Preferred Stock, but not in excess of the
beneficial ownership limitations.
The
shares were offered and sold solely to “accredited
investors” in reliance on the exemption from registration
afforded by Rule 506 of Regulation D and Section 4(a)(2) of the
Securities Act of 1933, as amended (the “Securities
Act”). On the closing date, we entered into registration
rights agreements with each of the investors, pursuant to which we
agreed to undertake to file a registration statement to register
the resale of the shares within thirty (30) days following the
closing date, to cause such registration statement to be declared
effective by the Securities and Exchange Commission within sixty
(60) days of the closing date and to maintain the effectiveness of
the registration statement until all of such shares have been sold
or are otherwise able to be sold pursuant to Rule 144 under the
Securities Act, without any restrictions.
On May
10, 2017, we entered into exchange agreements (the “Exchange
Agreements”) with each of the holders (the
“Holders”) of our Series H Preferred Stock representing
an aggregate of $850,000 of our Series H Preferred Stock (the
“Exchange Securities”) with such exchange to be
effective on the closing of our May 2017 Public Offering. Prior to
the closing of the May 2017 Public Offering, we and the holders
rescinded and cancelled the Exchange Agreements and they have no
force and effect and no transaction contemplated by the Exchange
Agreements was consummated.
Series G Preferred Stock – On May
15, 2017, the Company filed a Certificate of Designations,
Preferences and Rights of the 0% Series G Convertible Preferred
Stock (the “Certificate of Designations”) with the
Delaware Secretary of State, designating 5,000,000 shares of
preferred stock as 0% Series G Convertible Preferred Stock (the
“Series G Preferred Stock”).
The
shares of Series G Preferred Stock are convertible into shares of
common stock based on a conversion calculation equal to the stated
value of the of such Series G Preferred Stock, plus all accrued and
unpaid dividends, if any, on such Series G Preferred Stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series G Preferred Stock is $1.75 and
the initial conversion price is $1.75 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In the event of
a liquidation, dissolution or winding up of the Company, each share
of Series G Preferred Stock will be entitled to a per share
preferential payment equal to the par value. All shares the
Company’s capital stock will be junior in rank to Series G
Preferred Stock with respect to the preferences as to dividends,
distributions and payments upon the liquidation, dissolution and
winding-up of the Company, except for the Company’s Series D
Preferred Stock, Series E Preferred Stock, and Series H Preferred
Stock.
The
holders of Series G Preferred Stock will be entitled to receive
dividends if and when declared by the Company’s board of
directors. The Series G Preferred Stock shall participate on an
“as converted” basis, with all dividends declared on
the Company’s common stock. In addition, if the Company
grants, issues or sells any rights to purchase its securities pro
rata to all its record holders of its common stock, each holder
will be entitled to acquire such securities applicable to the
granted purchase rights as if the holder had held the number of
shares of common stock acquirable upon complete conversion of all
Series G Preferred Stock then held.
The
Company is prohibited from effecting a conversion of the Series G
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series G Preferred Stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series G Preferred Stock, but not in excess of the
beneficial ownership limitations.
May 2017 Public Offering –
On May 19, 2017, we closed a public
offering of 1,342,858 shares of common stock and 1,000,000 shares
of newly designated 0% Series G Convertible Preferred Stock, or
Series G Preferred Stock, at $1.75 per share of common stock and
Series G Preferred Stock. The Series G Preferred Stock is
initially convertible into 1,000,000 shares of common stock,
subject to adjustment for stock splits, stock dividends,
recapitalizations, combinations, subdivisions or other similar
events and was purchased by certain existing investors of the
Company who, as a result of their purchases of common stock, would
hold in excess of 4.99% of our issued and outstanding common stock.
We received $4,100,000 in gross proceeds, before underwriting
discounts and commissions and offering expenses totaling
$667,875.
The May 2017 Public
Offering was consummated pursuant to an underwriting agreement (the
“Underwriting Agreement”) that we signed on May 15,
2017, with Laidlaw & Company (UK) Ltd. (“Laidlaw”),
as underwriter (the
“Underwriter”) pursuant to which, among other things,
we agreed to issue and sell to the Underwriter, and the Underwriter
agreed to purchase from us, in an underwritten public offering, an
aggregate of 1,342,858 shares of common stock and 1,000,000 shares
of Series G Preferred Stock. We have granted the
Underwriters an option for a period of up to 45 days from the date
of our prospectus to purchase up to an aggregate of 201,428
additional shares of our common stock at the public offering price
of $1.75 per share, less the underwriting discount, solely to cover
overallotments.
In connection with the May 2017 Public Offering,
we agreed with the lead investor of the August 2016 Public Offering
(the “Lead Investor”) pursuant to a Letter Agreement,
dated May 18, 2017, to issue 2,900,000 shares of common stock (the
“Inducement Shares”) to the investors in the August
2016 Public Offering (the “August 2016 Investors”), as
incentive shares to those investors to make a minimum required
investment in this public offering of at least 50% of their
investment in the $9.4 million August 2016 Public Offering, or the
Minimum Required Investment, and who still hold 100% of the shares
of common stock previously acquired. Such August 2016 Investors
shall be entitled to receive their pro rata share of 2,900,000
shares, after the Lead Investor in this offering receives the first
10%. For the August 2016 Investors who purchased Series F Preferred
Stock and made the Minimum Required Investment and who still held
100% of the shares of Series F Preferred Stock at the closing of
the May 2017 Public Offering, they may, instead of receiving a pro
rata share of the 2,610,000 shares remaining after the Lead
Investor receives the first 290,000 shares, elect to receive their
Inducement Shares in the form of a new series I convertible
preferred Stock (the “Series I Preferred Stock”) to be
created with similar rights as currently exist in the Series G
Preferred Stock. The stated value of each share of Series I
Preferred Stock will be $1.75 and the initial conversion price will
be $1.75 per share, each subject to adjustment for stock splits,
stock dividends, recapitalizations, combinations, subdivisions or
other similar events. In the event of a liquidation, dissolution or
winding up of the Company, each share of Series I Preferred Stock
will be entitled to a per share preferential payment equal to the
par value, or $0.01 per share. All shares of the Company’s
capital stock will be junior in rank to the Series I Preferred
Stock at the time of creation, with respect to the preferences as
to dividends, distributions and payments upon the liquidation,
dissolution and winding-up of the Company, except for the
Company’s Series D Preferred Stock, Series E Preferred Stock,
Series G Preferred Stock, and Series H Preferred
Stock.
Also in
connection with the May 2017 Public Offering, for these August 2016
Investors to receive the Inducement Shares, each of them must also
agree to the cancellation of the warrants issued to them in the
August 2016 Public Offering. Investors in the Company’s 2015
private offering that invest at least 25% of their original
investment from such private financing in the May 2017 Public
Offering and still hold 100% of their common stock or Series E
preferred stock from the private 2015 financing also must agree to
amend the terms of their outstanding warrants that currently have
an exercise price of $11.10 per share, such that the amended
warrants shall have an exercise price of $2.00 per share and no
cashless exercise feature (as amended, the “Inducement
Amended Warrants”). The Company agreed with the Lead Investor
to register for resale on a registration statement all the
Inducement Shares and shares of common stock underlying the
Inducement Amended Warrants, and to issue the Inducement Shares to
each investor meeting the investment and ownership terms described
above.
Based
on the closing of the Offering, and election of certain prior
investors who made the Minimum Required Investment and elect to
take Series I Preferred Stock upon its creation, 931,336 Inducement
Shares of common stock were reserved for issuance and 1,968,664
Inducement Shares were reserved for issuance in the form of Series
I Preferred Stock that will be created following the closing of the
May 2017 Public Offering and will be issued following verification
with each investors that the terms of the Inducement Shares have
been met.
Letter Agreement Dated May 15,
2017 – As a condition to
the Lead Investor leading an investment in the May 2017 Public
Offering, including the requirement that we offer incentive shares
to August 2016 Investors who participate in making the Minimum
Required Investment in the May 2017 Public Offering, we have agreed
to the following:
Board Nomination
|
|
The
Company shall nominate one candidate to the Board of Directors of
the Company acceptable to the holder of a majority of the Series G
Preferred Stock by December 31, 2017, and two current Board members
will resign.
|
|
|
|
Executive Hire
|
|
The Company shall hire a new C-level executive in a leadership role
by July 15, 2017.
|
|
|
|
Board Compensation
|
|
The
Company is obligated to issue an aggregate of 1,050,000 options to
certain employees and members of the Board, at a price not less
than $2.00 per share, and 50,000 options to each other Board member
at the current market price in connection with this offering. The
options shall be issued pursuant to the Company’s option plan
and are subject to the requisite approvals and subject to
availability under the plan. To the extent we need to increase the
number of shares available under such plan, we will need the
approval of our board and stockholders. All board fees will
be waived for 2017.
|
|
|
|
Funds Held in Escrow
|
|
$500,000 of the funds from this offering will be held in escrow and
released to one or more investor relations services acceptable to
the Company following the closing of this offering.
|
Additionally we
granted the Lead Investor in
the May 2017 Public Offering certain rights to approve future (i)
issuances of our securities, (ii) equity or debt financings and
(iii) sales of any development product assets currently held by us,
subject to certain exceptions, if such securities are sold at price
below $2.50 per share and for as long as the Lead Investor in the offering holds 50% or
more of the shares of Series G Preferred Stock purchased by the
Lead Investor in this offering
(the “May 2017 Consent Right”). All other prior consent
rights of the Lead Investor
have been superseded by the May 2017 Consent Right.
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
FORWARD LOOKING STATEMENTS
The
following discussion should be read in conjunction with our
condensed consolidated financial statements and other financial
information appearing elsewhere in this quarterly report. In
addition to historical information, the following discussion and
other parts of this quarterly report contain forward-looking
statements. You can identify these statements by forward-looking
words such as “plan,” “may,”
“will,” “expect,” “intend,”
“anticipate,” believe,” “estimate”
and “continue” or similar words. Forward-looking
statements include information concerning possible or assumed
future business success or financial results. You should read
statements that contain these words carefully because they discuss
future expectations and plans, which contain projections of future
results of operations or financial condition or state other
forward-looking information. We believe that it is important to
communicate future expectations to investors. However, there may be
events in the future that we are not able to accurately predict or
control. Accordingly, we do not undertake any obligation to update
any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future
and thus you should not unduly rely on these
statements.
The
forward-looking statements included herein are based on current
expectations that involve several risks and uncertainties set forth
under “Risk Factors” in our Annual Report on Form 10-K
as of and for the year ended December 31, 2016, Part II, Section
1A, herein, and other periodic reports filed with the United States
Securities and Exchange Commission (“SEC”).
Accordingly, to the extent that this Report contains
forward-looking statements regarding the financial condition,
operating results, business prospects or any other aspect of the
Company, please be advised that the Company’s actual
financial condition, operating results and business performance may
differ materially from that projected or estimated by the Company
in forward-looking statements and thus you should not unduly rely
on these statements.
Overview
We
have been engaged in the discovery and development of proprietary
human monoclonal antibody products for the diagnosis and treatment
of a variety of cancers. We have discovered a pipeline of human
monoclonal antibody products based on the protective immune
responses generated by patients who have been vaccinated against
targeted cancers. Therapeutic vaccines under development were
discovered at Memorial Sloan Kettering Cancer Center, or MSK, and
are exclusively licensed to MabVax Therapeutics. We operate in only
one business segment. We have incurred substantial losses since
inception, and we expect to incur additional substantial losses for
the foreseeable future as we continue our research and development
activities. To date, we have funded our operations primarily
through government grants, proceeds from the sale of common and
preferred stock, the issuance of debt, the issuance of common stock
in lieu of cash for services, payments from collaborators and
interest income. The process of developing our product
candidates will require significant additional research and
development, preclinical testing and clinical trials, as well as
regulatory approval. We expect these activities, together with
general and administrative expenses, to result in substantial
operating losses for the foreseeable future. We will not receive
product revenue unless we, or our collaborative partners, complete
clinical trials, obtain regulatory approval and successfully
commercialize one or more of our products. We cannot
provide assurance that we will ever generate revenues or achieve
and sustain profitability in the future or obtain the necessary
working capital for our operations.
During
the three months ended March 31, 2017, our loss from operations was
$5,092,314 and our net loss was $5,354,854. Net cash used in
operating activities for the three months ended March 31, 2017 was
$3,177,637, cash and cash equivalents and working capital deficit
as of March 31, 2017 were $596,761 and $5,948,518,
respectively. As of March 31, 2017, we had
an accumulated deficit of $83,617,115 and a
stockholders’ deficit of $922,921.
We
are subject to risks common to biopharmaceutical companies,
including the need for capital, risks inherent in our research,
development and commercialization efforts, preclinical testing,
clinical trials, uncertainty of regulatory and marketing approvals,
enforcement of patent and proprietary rights, potential competition
and retention of key employees. In order for a product to be
commercialized, it will be necessary for us to conduct preclinical
tests and clinical trials, demonstrate efficacy and safety of our
product candidates to the satisfaction of regulatory authorities,
obtain marketing approval, enter into manufacturing, distribution
and marketing arrangements, obtain market acceptance and, in many
cases, obtain adequate reimbursement from government and private
insurers. We cannot provide assurance that we will ever generate
revenues or achieve and sustain profitability in the future or
obtain the necessary working capital for our
operations.
Reverse Stock Split and Listing on NASDAQ
On
August 16, 2016, we filed a certificate of amendment to our Amended
and Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware in order to effectuate a reverse
stock split of our issued and outstanding common stock on a 1 for
7.4 basis, effective on August 16, 2016. The reverse split was
effective with The Financial Industry Regulatory Authority (FINRA),
and the Company’s common stock began trading on The NASDAQ
Capital Market at the open of business on August 17, 2016. All
share and per share amounts, and number of shares of common stock
into which each share of preferred stock will convert, in the
financial statements and notes thereto have been retroactively
adjusted for all periods presented to give effect to the Listing
Reverse Split, including reclassifying an amount equal to the
reduction in par value of common stock to additional paid-in
capital.
Our Clinical Development Programs and Plans for 2017
MVT-5873 – for the Treatment of Pancreatic
Cancer
In our
progress report released in November 2016, we stated that the
safety of our HuMab-5B1 antibody designated as MVT-5873 had been
established at three incremental dose levels in our phase I
clinical trial. The purpose of this phase I clinical trial,
initiated in February 2016, is to establish safety and
tolerability, and to determine the recommended phase II dose for
patients with locally advanced and metastatic pancreatic cancer or
other malignancies expressing the same cancer antigen known as
CA19-9. Patients entering this part of the trial were stage three
and stage four cancer patients who had failed all previous
treatments, and had progressive disease.
Study
protocol allows patients to remain on therapy beyond the initial
28-day treatment and safety assessment cycle based on acceptable
dose tolerability and investigator assessment of continued benefit
from the treatment. Every second treatment cycle the investigator
assesses disease status using RECIST 1.1 measurement criteria to
evaluate tumor response rate and duration of response.
After establishing the current dosage safety level for MVT-5873 in
Part 1 of the trial, we were able to initiate part 2 of our phase I
study. Part 2 combines MVT-5873 with a standard of care
chemotherapy regimen in newly diagnosed treatment naïve
patients. The dosage levels established in our MVT-5873 monotherapy
trial also have cleared all subsequent dose levels utilized in our
Phase I clinical study of MVT-2163 as an immuno-PET imaging agent
as well as the dose levels planned for our clinical study of our
radioimmunotherapy product MVT-1075 that combines MVT-5873 with a
radioactive substance.
Recent
progress – As of April 2017, we had enrolled 29
patients in Part 1 of our phase I trial at three clinical sites.
Twenty-five patients are currently evaluable. We have seen an
efficacy signal from early study results primarily in patients who
enter the trial with CA19-9 levels below 2,500 U/ml. In this group
of patients, we observed that the first cycle of treatment with
MVT-5873 reduces CA19-9 levels by 95% or more and close to normal
levels. We also observed that approximately half of the patients
with CA19-9 levels below 2,500 U/ml. convert from progressive
disease to stable disease. Further, approximately 30% of this
responder set maintained stable disease for four or more months.
Patients continue to tolerate the study drug reasonably well with
drug infusion reactions being the most common adverse event, which
is adequately addressed by slowing the infusion rate and use of
routine premedication. Increases in liver function tests are seen
early in a minority of patients and appear reversible.
Plan for
remainder of 2017 – We plan to conduct a small phase
Ib study in the second half of 2017 to evaluate the use of MVT-5873
as a maintenance therapy for pancreatic cancer patients whose
chemotherapy treatments no longer provide improvement and are
experiencing increasing levels of toxicity. We believe we can
demonstrate proof-of-concept for this approach with a small cohort
of approximately 10 patients. Results from this study are
anticipated around year end 2017.
MVT-2163
–as an Imaging Agent for Pancreatic
Cancer
In our progress report released in November 2016, we stated that we
had established interim safety, and acceptable pharmacokinetics and
biodistribution of our immuno-PET imaging agent that we designate
as MVT-2163 in our phase I clinical trial. MVT-2163 is comprised of
MVT-5873 conjugated to a radio label. We have completed the initial
two cohorts of patients as specified in our protocol. In the first
cohort, we administered MVT-2163 alone and in the second cohort we
administered MVT-2163 following a blocking dose of MVT-5873. We
reported that the initial PET images demonstrated target
specificity by correlation with lesions identified by conventional
computerized tomography (CT) scans. The biodistribution data
obtained in the first two cohorts demonstrated improvement in PET
images by pre-administration of MVT-5873, as has been observed with
other antibody based PET agents. We initiated the MVT-2163 phase I
trial in June 2016 to evaluate a next generation diagnostic PET
imaging agent in patients with locally advanced or metastatic
adenocarcinoma of the pancreas (PDAC) or other CA19-9 positive
malignancies. MVT-2163 (89Zr-HuMab-5B1) combines the
well-established PET imaging radiolabel Zirconium [89Zr] with the
targeting specificity of MVT-5873. We designed the trial to
establish safety, pharmacokinetics, biodistribution, optimal time
to obtain the PET image, and the amount of MVT-5873 to be used
prior to administration of MVT-2163 to obtain optimized PET scan
images. We continue to actively recruit patients and expect to
establish the optimal co-administration dose of MVT-5873 early in
2017.
Recent progress
– As of April 2017, we had completed enrollments in the phase
1a portion of our study in all three planned cohorts. We have
expanded cohort 3 to evaluate not only an increased blocking dose
but the impact of expanding the time interval between the
administration of a blocking dose and the MVT-2163 PET agent. We
have determined that a 47 mg. blocking dose and a time interval of
2 to 4 hours significantly improves the quality of the PET scan
image. We observed that the blocking dose helps to reduce the
accumulation of labeled antibody in the liver and spleen while also
improving accumulation of the labeled antibody on both tumor and
metastatic sites. Images seen from use of MVT-2163 appear to be
identifying smaller metastatic sites that are below the limit of
detection with CT scans.
Plan for
remainder of 2017 – In consultation with our clinical
investigators, we plan to expand our phase 1 program for the
remainder of 2017 to include additional patients who will consent
to have the smaller potential metastatic sites being seen with
MVT-2163 images biopsied to provide evidence that MVT-2163 is
identifying previously unseen disease. Better understanding of the
extent and spread of the cancer will significantly improve the
clinical decision regarding eligibility for curative surgery. We
expect to have results of biopsies later in 2017.
MVT-1075
–as a Radioimmunotherapy for Pancreatic
Cancer
We are
developing HuMab-5B1 into a third potential product for use as a
radioimmunotherapy that we have designated as MVT-1075. MVT-1075
represents a unique product opportunity for MabVax by conjugating
MVT-5873 with a low-energy radiation emitter, 177Lu, which has a
relatively short tissue penetration range to minimize potential
side effects of the radiation. MVT-5873 provides the opportunity
for tumor-specific targeting of a more potent analog of MVT-5873.
We submitted our IND in late December 2016, and the IND was
authorized to proceed on January 27, 2017. We plan to initiate the
phase I trial of MVT-1075 in the first half of
2017.
RESULTS OF OPERATIONS
We
are providing the following information about our revenues,
expenses, and cash and liquidity.
Comparison of the Three-Month Periods Ended March 31, 2017 and
2016
Revenues:
|
|
Three Months Ended March 31,
|
|
|
% Increase/
(Decrease)
|
|
||||||
|
|
2017
|
|
|
2016
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||
Revenues
|
|
$
|
—
|
|
|
$
|
148,054
|
|
|
|
*
|
|
*not
meaningful
For
the three months ended March 31, 2017, we recognized no revenues,
as compared to $148,054 for the same period in the prior year. This
decrease was primarily due to the completion of the current phase
of our contract with the National Institutes of Health, or NIH (the
“NIH Imaging Contract”), during the first quarter of
the prior year.
Research and development expenses:
|
|
Three Months Ended March 31,
|
|
|
% Increase/
(Decrease)
|
|
||||||
|
|
2017
|
|
|
2016
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||
Research
and development
|
|
$
|
2,818,363
|
|
|
$
|
1,700,512
|
|
|
|
66
|
%
|
For
the three months ended March 31, 2017, the Company incurred
research and development expenses of $2,818,363, as compared to
$1,700,512 for the same period a year ago. Increased expenses in
the three months ended March 31, 2017, compared to the same period
in the prior year are primarily due to increased spending on our
Phase I clinical trials of MVT-5873 as a therapeutic and MVT-2163
as a diagnostic for pancreatic cancer and other CA 19.9
malignancies, and in-house staffing to support preclinical and
clinical development efforts in support of our
programs.
Stock-based
compensation expense included in research and development expenses
for the three months ended March 31, 2017 and 2016 was
$320,675 and $303,624, respectively.
General and administrative expenses:
|
|
Three Months Ended March 31,
|
|
|
% Increase/
(Decrease)
|
|
||||||
|
|
2017
|
|
|
2016
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||
General and administrative
|
|
$
|
2,273,951
|
|
|
$
|
2,651,837
|
|
|
|
(14
|
%)
|
For
the three months ended March 31, 2017, the Company incurred general
and administrative expenses of $2,273,951, as compared to
$2,651,837 for the same period a year ago. The decrease in general
and administrative expenses was primarily due to a decrease in
business development related expenses of $517,000, a decrease in
consulting expenses of $143,000 and a decrease in legal fees of
$59,000. The Company also incurred a facility relocation expense of
$36,000 in the same period a year ago. The decreases in expenses
were partially offset by an increase in salaries and benefits of
$142,000 due to increase in headcount primarily related to business
development, increase in patent costs of $74,000, and an increase
in rent expense of $28,000 for the three months ended March 31,
2017, compared with the same period a year ago.
Stock-based
compensation expense included in general and administrative
expenses for the three months ended March 31, 2017 and 2016
was $712,136 and $1,230,264, respectively. Stock-based
compensation expense for the three months ended March 31, 2016
included $573,425 in restricted stock for services.
Interest income and other income (expense):
|
|
Three Months Ended March 31,
|
|
|
% Increase/
(Decrease)
|
|
||||||
|
|
2017
|
|
|
2016
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||
Interest
and other income (expense), net
|
|
$
|
(262,540
|
)
|
|
$
|
(200,475
|
)
|
|
|
31
|
%
|
Interest
and other income (expense), net was ($262,540) and ($200,475) for
the three months ended March 31, 2017 and 2016, respectively.
The amount for the three months ended March 31, 2017, consisted
primarily of $156,658 interest expense related to interest on the
Company’s term loan from Oxford Finance, $47,144 of financing
cost amortization, and $59,185 related to warrant amortization,
partially offset by other income of $447. The amount for the three
months ended March 31, 2016, consisted primarily of $128,929
interest expense related to interest on the Company’s term
loan from Oxford Finance, $31,725 of financing cost amortization,
and $39,825 warrant amortization partially offset by interest
income of $4. The fair value of the warrants issued to Oxford
Finance related to the term loan was recorded as a discount to the
value of the note payable, and is being amortized over the term of
the loan. Financing costs incurred related to the term
loan are also amortized over the term of the loan.
Critical Accounting Policies and Significant Judgments and
Estimates
Our
management’s discussion and analysis of our financial
condition and results of operations are based on our consolidated
financial statements, which have been prepared in accordance with
generally accepted accounting principles in the United States
(“GAAP”). The preparation of these consolidated
financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements as well as the reported revenues
and expenses during the reporting periods. On an on-going basis, we
evaluate our estimates and judgments related to our operating
costs. We base our estimates on historical experience and on
various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ significantly from these estimates under different
assumptions or conditions.
Our critical accounting policies include:
Revenue
recognition. Revenue from
grants is based upon internal and subcontractor costs incurred that
are specifically covered by the grant, including a facilities and
administrative rate that provides funding for overhead expenses.
NIH grants are recognized when we incur internal expenses that are
specifically related to each grant, in clinical trials at the
clinical trial sites, by subcontractors who manage the clinical
trials, and provided the grant has been approved for payment. U.S.
grant awards are based upon internal research and development costs
incurred that are specifically covered by the grant, and revenues
are recognized when we incur internal expenses that are related to
the approved grant.
Any
amounts received by us pursuant to the NIH grants prior to
satisfying our revenue recognition criteria are recorded as
deferred revenue.
Clinical
trial expenses. We accrue
clinical trial expenses based on work performed. In determining the
amount to accrue, we rely on estimates of total costs incurred
based on the enrollment of subjects, the completion of trials and
other events defined in contracts. We follow this method because we
believe reasonably dependable estimates of the costs applicable to
various stages of a clinical trial can be made. However, the actual
costs and timing of clinical trials are highly uncertain, subject
to risks, and may change depending on several factors. Differences
between the actual clinical trial costs and the estimated clinical
trial costs that we have accrued in any prior period are recognized
in the subsequent period in which the actual costs become known.
Historically, these differences have not been material; however,
material differences could occur in the future.
Stock-based
compensation. Our
stock-based compensation programs include grants of stock options
and restricted stock to employees, non-employee directors and
non-employee consultants. Stock-based compensation cost is measured
at the grant date, based on the calculated fair value of the award,
and is recognized as an expense, under the straight-line method,
over the employee, non-employee director or non-employee
consultant’s requisite service period (generally the vesting
period of the equity grant).
We
account for equity instruments, including stock options and
restricted stock, issued to employees and non-employees in
accordance with authoritative guidance for equity based payments.
Stock options issued are accounted for at their estimated fair
value determined using the Black-Scholes-Merton option-pricing
model, and restricted stock is accounted for using the grant date
fair value of our common stock granted. The fair value of options
and restricted stock granted to non-employees is re-measured as
they vest, and the resulting increase in value, if any, is
recognized as expense during the period the related services are
rendered.
Income
taxes. Significant
judgment is required by management to determine our provision for
income taxes, our deferred tax assets and liabilities, and the
valuation allowance to record against our net deferred tax assets,
which are based on complex and evolving tax regulations throughout
the world. Our tax calculation is impacted by tax rates in the
jurisdictions in which we are subject to tax and the relative
amount of income earned in each jurisdiction. Our deferred tax
assets and liabilities are determined using the enacted tax rates
expected to be in effect for the years in which those tax assets
are expected to be realized.
The
effect of an uncertain income tax position is recognized as the
largest amount that is “more-likely-than-not” to be
sustained under audit by the taxing authority. An uncertain income
tax position will not be recognized if it has less than a 50%
likelihood of being sustained.
The
realization of our deferred tax assets is dependent upon our
ability to generate sufficient future taxable income. We establish
a valuation allowance when it is more-likely-than-not that the
future realization of all or some of the deferred tax assets will
not be achieved. The evaluation of the need for a valuation
allowance is performed on a jurisdiction-by-jurisdiction basis, and
includes a review of all available evidence, both positive and
negative. As of March 31, 2017, the Company concluded that it was
more-likely-than-not that its deferred tax assets would not be
realized, and a full valuation allowance has been
recorded.
The above listing is not intended to be a comprehensive list of all
our accounting policies. In many cases, the accounting treatment of
a transaction is specifically dictated by GAAP. See our
audited consolidated financial statements and notes thereto
included in our 2016 Annual Report on Form 10-K, which contain
additional accounting policies and other disclosures required by
GAAP.
LIQUIDITY AND CAPITAL RESOURCES
To
date, we have funded our operations primarily through government
grants, proceeds from the sale of common and preferred stock, the
issuance of debt, the issuance of common stock in lieu of cash for
services, payments from collaborators and interest income. We have
experienced negative cash flow from operations each year since our
inception. As of March 31, 2017, we had an accumulated deficit of
$83,617,115. We expect to continue to incur increased expenses,
resulting in losses, over the next several years due to, among
other factors, our continuing and planned clinical trials and
anticipated research and development activities, unless we can
achieve a major license of one or more of our products under
development. There can be no assurance that we will be able to
achieve a license and earn revenues large enough to offset our
operating expenses. We had cash of $596,761 and a working capital
deficit of $5,948,518 as of March 31, 2017.
|
March 31,
2017
|
December 31,
2016
|
Cash
and cash equivalents
|
$596,761
|
$3,979,290
|
Working
capital
|
$(5,948,518)
|
$(1,396,656)
|
Current
ratio
|
0.12:1
|
0.75:1
|
|
Three Months Ended
March 31,
|
|
|
2017
|
2016
|
Cash
provided by (used in):
|
|
|
Operating
activities
|
$(3,177,637)
|
$(2,911,630)
|
Investing
activities
|
$—
|
$(153,899)
|
Financing
activities
|
$(204,892)
|
$4,610,324
|
Sources and Uses of Net Cash for the Three-Month Period Ended March
31, 2017
Net
cash used in operating activities was $3,177,637 for the three
months ended March 31, 2017, compared to $2,911,630 for the same
period a year ago. The net cash used in both periods was primarily
attributable to the net losses, adjusted to exclude certain
non-cash items, primarily stock-based compensation and amortization
of finance costs related to the term loan. Net cash used in
operating activities for the three months ended March 31, 2017 was
also impacted by an increase of $540,413 in accounts payable
related primarily to research contract services and an increase in
accrued clinical operation and site costs of
$378,195.
The
net cash used in investing activities for the three
months ended March 31, 2017 and 2016, amounted to $0 and $153,899,
respectively. We purchased lab equipment for the three months ended
March 31, 2016.
Net
cash used by financing activities for the three months ended March
31, 2017 was $204,892. Net cash provided by financing activities
was $4,610,324 for the three months ended March 31,
2016. Net cash used by financing activities for the
three-month period ended March 31, 2017 related to principal
payments on a note payable, financing arrangements for insurance
policies, and a capital lease. Net cash provided by financing
activities for the three months ended March 31, 2016 was
attributable to the net proceeds from the Loan
Agreement.
Future Contractual Obligations
On
September 2, 2015, the Company entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises consisting of a total of approximately 14,971
square feet of office and laboratory space in buildings located at
11535-11585 Sorrento Valley Rd., San Diego, California, to
serve as the Company’s corporate offices and laboratories
(the “New Premises”). Because certain tenant
improvements needed to be made to the New Premises before the
Company could occupy the New Premises, the term of the Lease
commenced on February 5, 2015. The Lease terminates six years after
such term commencement date, unless earlier terminated in
accordance with the Lease. Pursuant to the terms of the Lease, the
current monthly base rent paid by the Company is $36,699, subject
to annual increases as set forth in the Lease.
The
Company has an option to extend the Lease term for a single,
five-year period. If the Lease term is extended for the optional
five-year period, the monthly base rent will be adjusted based on
fair market rental value. In addition to rent, the Company agreed
to pay a portion of the taxes and utility, maintenance and other
operating costs paid or accrued in connection with the ownership
and operation of the property.
Our
master lease and sublease of our facility located at 3165 Porter
Drive in Palo Alto, California were terminated on February 28,
2013, and we entered into a termination agreement with ARE-San
Francisco No. 24 (“ARE”) on February 19, 2013 to
voluntarily surrender its premises. Because of the termination
agreement, we were relieved of further obligations under the master
lease and further rights to rental income under the sublease and
paid a termination fee of approximately $700,000. In addition to
the termination fee, if we receive $15 million or more in
additional financing, in the aggregate, an additional termination
fee of $590,504 will be due to ARE. The additional financing was
achieved in 2015 and the termination fee is reflected on the
condensed consolidated balance sheet as an accrued lease
contingency fee.
Financings in May 2017
On May
3, 2017, we sold 850 shares of Series H Preferred
Stock at a stated value of $1,000 per share, representing an
aggregate of $850,000 in a private placement, or the May 3rd
Private Placement, to certain existing investors. The shares of Series H Preferred Stock are
convertible into shares of common stock based on a conversion
calculation equal to the stated value of the Series H Preferred
Stock, plus all accrued and unpaid dividends (the “Base
Amount”), if any, on such Series H Preferred Stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series H Preferred Stock is $1,000
and the initial conversion price is $1.75 per share, each subject
to adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. The May
3rd Private Placement is discussed in
further detail in Note 12, Subsequent Events, to the Financial
Statements included with this Quarterly Report.
On
May 19, 2017, we closed a public offering of 1,342,858 shares of
common stock and 1,000,000 shares of newly designated 0% Series G
Convertible Preferred Stock (the “Series G Preferred
Stock”), at $1.75 per share of common stock and Series G
Preferred Stock (the “May 2017 Public Offering”).
The Series G Preferred Stock is initially convertible into
1,000,000 shares of common stock, subject to adjustment for stock
splits, stock dividends, recapitalizations, combinations,
subdivisions or other similar events, and was purchased by certain
existing investors in the Company who, as a result of their
purchases of common stock, would hold in excess of 4.99% of our
issued and outstanding common stock. We received $4,100,000 in
gross proceeds, before underwriting discounts and commissions and
offering expenses totaling $667,875.
The May 2017 Public Offering is in connection with
an underwriting agreement (the “Underwriting
Agreement”) that we signed on May 15, 2017, with Laidlaw
& Company (UK) Ltd. (“Laidlaw”), as underwriter
(the “Underwriter”) pursuant to which, among other
things, we agreed to issue and sell to the Underwriter, and the
Underwriter agreed to purchase from us, in an underwritten public
offering, an aggregate of 1,342,858 shares of common stock and
1,000,000 shares of Series G Preferred Stock. We have
granted the Underwriters an option for a period of up to 45 days
from the date of our prospectus to purchase up to an aggregate of
201,428 additional shares of our common stock at the public
offering price of $1.75 per share, less the underwriting discount,
solely to cover overallotments. The
May 2017 Public Offering is discussed in further detail in Note 12,
Subsequent Events, to the Financial Statements included with this
Quarterly Report.
We
anticipate that the Company will continue to incur net losses into
the foreseeable future as we: (i) continue our Phase I clinical
trial for our standalone therapeutic HuMab 5B1, designated as
MVT-5873 that was initiated in the first quarter of 2016; (ii)
continue our Positron Emission Tomography (“PET”)
imaging agent 89Zr-HuMab-5B1, designated as MVT-2163 that was
initiated in July 2016; (iii) initiate our clinical trial for the
development of our HuMab-based radioimmunotherapy, or RIT, product,
designated as MVT-1075; (iv) continue preclinical work on follow-on
antibody programs; and (iv) continue operations as a public
company. Based on receipt of $850,000 from our May 3rd Private
Placement, closing of the May 2017 Public Offering for $4.1
million, and management’s plans for continuing to develop our
existing pipeline of products, and without any other additional
funding or receipt of payments from potential licensing agreements,
we expect we will have sufficient funds to meet our obligations
through August 2017. These conditions give rise to substantial
doubt as to the Company’s ability to continue as a going
concern. The accompanying consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
We
plan to continue to fund our research and development and operating
activities through public or private equity financings, debt
financings, strategic partnerships or other arrangements with
organizations that have capabilities and/or products that are
complementary to our own capabilities and/or products, licensing
arrangements, government grants, or other arrangements. However, we
cannot be sure that such additional funds will be available on
reasonable terms, or at all. If we are unable to secure adequate
additional funding, we may be forced to reduce spending, extend
payment terms with suppliers, liquidate assets where possible,
and/or suspend or curtail planned programs. In addition, if we do
not meet our payment obligations to third parties as they come due,
we may be subject to litigation claims. Even if we are successful
in defending against these claims, litigation could result in
substantial costs and be a distraction to our management. Any of
these actions could materially harm our business, results of
operations, and prospects.
If
we raise additional funds by issuing equity securities, substantial
dilution to our existing stockholders would result. If we raise
additional funds by incurring debt financing, the terms of the debt
may involve significant cash payment obligations as well as
covenants and specific financial ratios that may restrict our
ability to operate our business.
Recent Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-2,"Leases (Topic
842)." This update will increase transparency and
comparability by recognizing lease assets and lease liabilities on
the balance sheet and disclosing key information about leasing
arrangements. Under the new guidance, lessees will be
required to recognize the following for all leases (except for
short-term leases) at the commencement date (i) a lease liability,
which is a lessee’s obligation to make lease payments arising
from a lease, measured on a discounted basis; and (ii) a
right-of-use asset, which is an asset that represents the
lessee’s right to use, or control the use of, a specified
asset for the lease term. Under the new guidance, lessor accounting
is largely unchanged, and it simplified the accounting for sale and
leaseback transactions. Lessees will no longer be provided with a
source of off-balance sheet financing. Lessees (for capital and
operating leases) and lessors (for sales-type, direct financing,
and operating leases) must apply a modified retrospective
transition approach for leases existing at, or entered into after,
the beginning of the earliest comparative period presented in the
financial statements. The modified retrospective approach would not
require any transition accounting for leases that expired before
the earliest comparative period presented. Lessees and lessors may
not apply a full retrospective transition approach. The standard is
effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. We are
currently in the process of assessing what impact this new standard
may have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09,
“Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting.”
This update includes multiple provisions intended to simplify
various aspects of the accounting for share-based payment
transactions including accounting for excess tax benefits and tax
deficiencies, classification of excess tax benefits in the
statement of cash flows and accounting for award forfeitures. This
update is effective for annual and interim reporting periods of
public entities beginning after December 15, 2016, with early
adoption permitted. The adoption of this new standard did
not have a material impact on our consolidated financial
statements.
In
August 2016, the FASB issued ASU No. 2016-15 (“ASU
2016-15”), “Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments.”
The standard provides guidance on eight (8) cash flow issues: (1)
debt prepayment or debt extinguishment costs; (2) settlement of
zero-coupon bonds; (3) contingent consideration payments after a
business combination; (4) proceeds from the settlement of insurance
claims; (5) proceeds from the settlement of corporate-owned life
insurance policies; (6) distributions received from equity method
investees; (7) beneficial interests in securitization transactions;
and (8) separately identifiable cash flows and application of the
predominance principle. ASU 2016-15 addresses how certain cash
receipts and cash payments are presented and classified in the
statement of cash flows. ASU 2016-15 is effective for fiscal years,
and interim periods within those years, beginning after December
15, 2017 with early adoption permitted. We expect the adoption of
this new standard will not have a material impact on our condensed
consolidated financial statements.
Management
believes that any other recently issued, but not yet effective,
accounting standards if currently adopted would not have a material
effect on the accompanying condensed consolidated financial
statements.
Off-Balance Sheet Arrangements
We
have no material off-balance sheet arrangements.
Item 3.
|
Quantitative and Qualitative
Disclosures About Market Risk.
|
Interest Rate Sensitivity
Our
cash and cash equivalents of $596,761 at March 31, 2017 consisted
of cash and money market funds, all of which will be used for
working capital purposes. We do not enter into investments for
trading or speculative purposes. Our primary exposure to market
risk is related to the variability of interest rates on our term
loan we entered into with Oxford Finance, LLC in January
2016. Under the loan agreement the interest rate for the
term loan is set monthly at an Index Rate plus 11.29%, where the
Index Rate is the greater of the 30-day LIBOR rate or
0.21%. Interest is due on the first day of each month,
in arrears, calculated based on a 360-day year. In addition,
interest income on our deposits are affected by changes in the
general level of interest rates in the United States. Because of
the short-term nature of our cash and cash equivalents, we do not
believe that we have any material exposure to changes in their fair
values as a result of changes in interest rates. The continuation
of historically low interest rates in the United States will limit
our earnings on investments held in U.S. dollars.
We
do not hold any derivative financial instruments or commodity-based
instruments.
Item 4.
|
Controls and Procedures.
|
Disclosure Controls and Procedures
As
required by Rules 13a-15 and 15d-15 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), the Company
has evaluated, with the participation of management, including the
Chief Executive Officer and the Chief Financial Officer, the
effectiveness of its disclosure controls and procedures (as defined
in such rules) as of the end of the period covered by this report.
The Chief Executive Officer and Chief Financial Officer concluded
that the Company’s disclosure controls and procedures are
effective as of March 31, 2017.
Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate. Management recognizes that
any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures.
Changes in Internal Control over Financial Reporting
As
required by Rule 13a-15(d) of the Exchange Act, our management,
including our principal executive officer and our principal
financial officer, conducted an evaluation of the internal control
over financial reporting to determine whether any changes occurred
during the period covered by this Quarterly Report on Form 10-Q
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting. Based on that evaluation, our principal
executive officer and principal financial officer concluded there
were no changes in our internal controls over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act) that could
significantly affect internal controls over financial reporting as
of March 31, 2017.
PART II. OTHER
INFORMATION
Item 1.
|
Legal Proceedings.
|
None.
Item 1A.
|
Risk Factors.
|
RISK FACTORS
We will be required to raise additional funds to finance our
operations and remain a going concern; we may not be able to do so
when necessary, and/or the terms of any financings may not be
advantageous to us.
Our
operations to date have consumed substantial amounts of cash.
Negative cash flows from our operations are expected to continue
over at least the next several years. Our cash utilization amount
is highly dependent on the progress of our product development
programs, particularly, the results of our preclinical and clinical
studies and those of our partners, the cost, timing and outcomes of
regulatory approval for our product candidates, and the rate of
recruitment of patients in our human clinical trials. In addition,
the further development of our ongoing clinical trials will depend
on upcoming analysis and results of those studies and our financial
resources at that time.
We
will require future additional capital infusions including public
or private financing, strategic partnerships or other arrangements
with organizations that have capabilities and/or products that are
complementary to our own capabilities and/or products, in order to
continue the development of our product candidates. However, there
can be no assurances that we will complete any financings,
strategic alliances or collaborative development agreements, and
the terms of such arrangements may not be advantageous to us. Any
additional equity financing will be dilutive to our current
stockholders and debt financing, if available, may involve
restrictive covenants. If we raise funds through collaborative or
licensing arrangements, we may be required to relinquish, on terms
that are not favorable to us, rights to some of our technologies or
product candidates that we would otherwise seek to develop or
commercialize. Our failure to raise capital when needed could
materially harm our business, financial condition and results of
operations.
In
connection with our May 2017 Public Offering, we have agreed with
the Lead Investor of our May 2017 Public Offering and August 2016
Public Offering pursuant to a Letter Agreement, dated May 15, 2017,
to issue up to 2,900,000 shares of common stock to the August 2016
Investors, as incentive shares to those investors to make a minimum
required investment in our May 2017 Public Offering of at least 50%
of their investment in the $9.4 million August 2016 Public
Offering, or the Minimum Required Investment, and who still hold
100% of the shares of common stock. Such August 2016 Investors
shall be entitled to receive their pro rata share of 2,900,000
shares, after the Lead Investor in our May 2017 Public Offering
receives the first 10%.
Based
on the closing of the Offering, and election of certain prior
investors who made the Minimum Required Investment and elect to
take Series I Preferred Stock upon its creation, 931,336 Inducement
Shares of common stock were reserved for issuance and 1,968,664
Inducement Shares were reserved for issuance in the form of Series
I Preferred Stock that will be created following the closing of the
May 2017 Public Offering and will be issued following verification
with each investors that the terms of the Inducement Shares have
been met.
Also
upon closing of the 2017 Public Offering, rights to consent under
the August 2016 Letter Agreement and the March 2017 Consent (and
any restrictions on the Company contained therein) shall terminate
and be of no force and effect, provided however, the Lead Investor
shall have the right to approve future (i) issuances of the
Company’s securities, (ii) equity or debt financings and
(iii) sales of any development product assets currently held by the
Company, subject to certain exceptions, if such securities are sold
at price below $2.50 per share and for as long as the Lead Investor
holds 50% or more of the shares of Series G Preferred Stock
purchased by the Lead Investor in the 2017 Public Offering (the
“Consent”). In addition, each of the matters set forth
in the May 2017 Letter Agreement, shall be enforceable by the Lead
Investor and continue in full force and effect following closing of
the 2017 Public Offering.
Should
the Consent be required in connection with future offerings, we may
be required again to provide additional consideration, including,
but not limited to, consideration in the form of cash and/or
additional shares of our capital stock and/or securities
convertible into or exercisable for shares of our capital stock, in
order to obtain the Consent. If we are unable to obtain the
Consent when necessary for future offerings, we may be unable to
raise additional funds. An inability to raise additional funds
could have a material adverse effect on our financial condition,
results of operations, ability to conduct our business and on the
price of our common stock.
Our
ongoing capital requirements will depend on numerous factors,
including: the progress and results of preclinical testing and
clinical trials of our product candidates under development; the
costs of complying with the FDA and other domestic and foreign
regulatory agency requirements, the progress of our research and
development programs and those of our partners; the time and costs
expended and required to obtain any necessary or desired regulatory
approvals; the resources that we devote to manufacturing
expenditures; our ability to enter into licensing arrangements,
including any unanticipated licensing arrangements that may be
necessary to enable us to continue our development and clinical
trial programs; the costs and expenses of filing, prosecuting and,
if necessary, enforcing our patent claims, or defending against
possible claims of infringement by third-party patent or other
technology rights; the cost of commercialization activities and
arrangements, if any, that we undertake; and, if and when approved,
the demand for our products, which demand depends in turn on
circumstances and uncertainties that cannot be fully known,
understood or quantified unless and until the time of approval,
including the range of indications for which any product is granted
approval.
Our restated certificate of incorporation, our amended and restated
by-laws and Delaware law could deter a change of our management
which could discourage or delay offers to acquire us; certain
restrictions in our agreements with existing stockholders could
also discourage or delay offers to acquire us.
Certain
provisions of Delaware law and of our restated certificate of
incorporation, as amended, and amended and restated by-laws, could
discourage or make it more difficult to accomplish a proxy contest
or other change in our management or the acquisition of control by
a holder of a substantial amount of our voting stock. It is
possible that these provisions could make it more difficult to
accomplish, or could deter, transactions that stockholders may
otherwise consider to be in their best interests or in our best
interests. These provisions include:
●
establishing a classified board of directors requiring that members
of the board be elected in different years, which lengthens the
time needed to elect a new majority of the board;
●
authorizing the issuance of “blank check” preferred
stock that could be issued by our board of directors to increase
the number of outstanding shares or change the balance of voting
control and thwart a takeover attempt;
●
prohibiting cumulative voting in the election of directors, which
would otherwise allow for less than a majority of stockholders to
elect director candidates;
●
limiting the ability of stockholders to call special meetings of
the stockholders;
●
prohibiting stockholder action by written consent and requiring all
stockholder actions to be taken at a meeting of our stockholders;
and
●
establishing 90 to 120-day advance notice requirements for
nominations for election to the board of directors and for
proposing matters that can be acted upon by stockholders at
stockholder meetings.
In
connection with our May 2017 Public Offering, we have agreed with
the Lead Investor of our May 2017 Public Offering and August 2016
Public Offering pursuant to a Letter Agreement, dated May 15, 2017,
to issue up to 2,900,000 shares of common stock to the August
2016Investors, as incentive shares to those investors to make a
minimum required investment in our May 2017 Public Offering of at
least 50% of their investment in the $9.4 million August 2016
Public Offering, or the Minimum Required Investment, and who still
hold 100% of the shares of common stock. Such August 2016 Investors
shall be entitled to receive their pro rata share of 2,900,000
shares, after the Lead Investor in our May 2017 Public Offering
receives the first 10%.
Based
on the closing of the Offering, and election of certain prior
investors who made the Minimum Required Investment and elect to
take Series I Preferred Stock upon its creation, 931,336 Inducement
Shares of common stock were reserved for issuance and 1,968,664
Inducement Shares were reserved for issuance in the form of Series
I Preferred Stock that will be created following the closing of the
May 2017 Public Offering and will be issued following verification
with each investors that the terms of the Inducement Shares have
been met.
Also
upon closing of the 2017 Public Offering, rights to consent under
the August 2016 Letter Agreement and the March 2017 Consent (and
any restrictions on the Company contained therein) shall terminate
and be of no force and effect, provided however, the Lead Investor
shall have the right to approve future (i) issuances of the
Company’s securities, (ii) equity or debt financings and
(iii) sales of any development product assets currently held by the
Company, subject to certain exceptions, if such securities are sold
at price below $2.50 per share and for as long as the Lead Investor
holds 50% or more of the shares of Series G Preferred Stock
purchased by the Lead Investor in the 2017 Public Offering (the
“Consent”). In addition, each of the matters set forth
in the May 2017 Letter Agreement, shall be enforceable by the Lead
Investor and continue in full force and effect following closing of
the 2017 Public Offering.
Also
part of the Letter Agreement, we have
agreed to the following additional conditions:
Board Nomination
|
|
The
Company shall nominate one candidate to the Board of Directors of
the Company acceptable to the holder of a majority of the Series G
Preferred Stock by December 31, 2017, and two current Board members
will resign.
|
|
|
|
Executive Hire
|
|
The Company shall hire a new C-level executive in a leadership role
by July 15, 2017.
|
|
|
|
Board Compensation
|
|
The
Company is obligated to issue an aggregate of 1,050,000 options to
certain employees and members of the Board, at a price not less
than $2.00 per share, and 50,000 options to each other Board member
at the current market price in connection with this offering. The
options shall be issued pursuant to the Company’s option plan
and are subject to the requisite approvals and subject to
availability under the plan. To the extent we need to increase the
number of shares available under such plan, we will need the
approval of our board and stockholders. All board fees will
be waived for 2017.
|
|
|
|
Funds Held in Escrow
|
|
$500,000 of the funds from this offering will be held in escrow and
released to one or more investor relations services acceptable to
the Company following the closing of this offering.
|
Should the Consent
be required in connection with future offerings, we may be required
again to provide additional consideration, including, but not
limited to, consideration in the form of cash and/or additional
shares of our capital stock and/or securities convertible into or
exercisable for shares of our capital stock, in order to obtain the
Consent. If we are unable to obtain the Consent when
necessary for future offerings, we may be unable to raise
additional funds. An inability to raise additional funds could have
a material adverse effect on our financial condition, results of
operations, ability to conduct our business and on the price of our
common stock.
Unless our common stock is listed on The NASDAQ Capital Market or
other national securities exchange, it will be deemed a
“penny stock,” which would make it more difficult for
our investors to sell their shares.
On
August 17, 2016, we began trading on The NASDAQ Capital Market. If
we fail to maintain our listing on The NASDAQ Capital Market or
other national securities exchange, our common stock will be
subject to the “penny stock” rules adopted under
Section 15(g) of the Exchange Act. The penny stock
rules generally apply to companies whose common stock is not
listed on the NASDAQ Capital Market or other national securities
exchange and trades at less than $4.00 per share, other than
companies that have had average revenue of at least $6,000,000 for
the last three years or that have tangible net worth of at least
$5,000,000 ($2,000,000 if the company has been operating for three
or more years). These rules require, among other things, that
brokers who trade penny stock to persons other than
“established customers” complete certain documentation,
make suitability inquiries of investors and provide investors with
certain information concerning trading in the security, including a
risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade penny stocks
because of the requirements of the penny stock rules and,
thus, the number of broker-dealers willing to act as market makers
in such securities is limited. If we remain subject to the penny
stock rules for any significant period, it could have an
adverse effect on the market, if any, for our securities. If our
securities are subject to the penny stock rules, investors will
find it more difficult to dispose of our securities.
Additionally,
in order for our Company to continue trading on the NASDAQ Capital
Market, we must maintain compliance with all of the criteria under
at least one of the three continued listing standards: the Equity
Standard, which includes a requirement for $2.5 million in
stockholders’ equity; the Market Value of Listed Securities
Standard, which includes a requirement for a market value of listed
securities of at least $35 million; or the Net Income Standard,
which includes a requirement for net income of at least $500,000
from continuing operations in the latest fiscal year or in two of
the last three fiscal years. As of March 31, 2017, which is prior
to our May 3rd Private Placement of $850,000 in Series H Preferred
Stock, and prior to the closing of our May 2017 Public Offering, we
met none of the three standards. Following receipt of funds from
our May 3rd Private Placement and closing of our May 2017 Public
Offering, we believe we meet the Equity Standard for March 31,
2017, on a pro forma basis, and expect to be able to meet the
Equity Standard for June 30, 2017. However, for future periods if
we do not have a market value of listed securities of at least $35
million, or do not meet the Equity Standard, then we may have to
enter into a license agreement on less favorable terms to generate
near term revenues, or raise additional capital, which could be
dilutive to the Company.
Other
than set forth above, there have been no material changes to the
Risk Factors set forth in our Annual Report on Form 10-K for the
year ended December 31, 2016.
Item 2.
|
Unregistered Sales of Equity Securities and Use of
Proceeds.
|
May 2017 Private Placement
On May 3, 2017, we
entered into separate subscription agreements with accredited
investors pursuant to which we agreed to sell an aggregate of
$850,000 of 0% Series H Convertible
Preferred Stock, or the Series H Preferred Stock.
The shares of Series H Preferred Stock
are convertible into shares of common stock based on a conversion
calculation equal to the stated value of the Series H Preferred
Stock, plus all accrued and unpaid dividends (the “Base
Amount”), if any, on such Series H Preferred Stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series H Preferred Stock is $1,000
and the initial conversion price is $1.75 per share, each subject
to adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar
events.
On the
closing date, we entered into separate registration rights
agreements with each of the investors, pursuant to which we agreed
to undertake to file a registration statement to register the
resale of the shares within thirty (30) days following the closing
date, to cause such registration statement to be declared effective
by the Securities and Exchange Commission within sixty (60) days of
the closing date and to maintain the effectiveness of the
registration statement until all of such shares of Common Stock
have been sold or are otherwise able to be sold pursuant to Rule
144 under the Securities Act, without any
restrictions.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Item 3.
|
Defaults Upon Senior Securities.
|
None.
Item 4.
|
Mine Safety Disclosures.
|
None.
Item 5.
|
Other Information.
|
As
described in Note 12 herein, on May
19, 2017, we closed a public offering of 1,342,858 shares of common
stock and 1,000,000 shares of newly designated 0% Series G
Convertible Preferred Stock, or Series G Preferred Stock, at $1.75
per share of common stock and Series G Preferred Stock (the
“May 2017 Public Offering”).
In connection with the May 2017 Public Offering,
we agreed with the Lead Investor of the August 2016 Public Offering
on May 18, 2017 to issue 2,900,000 shares of common stock to the
investors in the August 2016 Public Offering (the “August
2016 Investors”), as incentive shares to those investors to
make a minimum required investment in this public offering of at
least 50% of their investment in the $9.4 million August 2016
Public Offering, or the Minimum Required Investment, and who still
hold 100% of the shares of common stock. Such August 2016 Investors
shall be entitled to receive their pro rata share of 2,900,000
shares, after the Lead Investor in this offering receives the first
10%. For the August 2016 Investors who purchased Series F Preferred
Stock and made the Minimum Required Investment and who still held
100% of the shares of Series F Preferred Stock at the closing of
the May 2017 Public Offering, they may, instead of receiving a pro
rata share of the 2,610,000 shares remaining (the “Inducement
Shares”) after the Lead Investor receives the first 290,000
shares, elect to receive their Inducement Shares in the form of a
new series I convertible preferred Stock (the “Series I
Preferred Stock”) to be created with similar rights as
currently exist in the Series G Preferred Stock. The stated
value of each share of Series I Preferred Stock will be $1.75 and
the initial conversion price will be $1.75 per share, each subject
to adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In the event of
a liquidation, dissolution or winding up of the Company, each share
of Series I Preferred Stock will be entitled to a per share
preferential payment equal to the par value, or $0.01 per share.
All shares of the Company’s capital stock will be junior in
rank to the Series I Preferred Stock at the time of creation, with
respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding-up of the
Company, except for the Company’s Series D Preferred Stock,
Series E Preferred Stock, Series G Preferred Stock, and Series H
Preferred Stock.
Also in
connection with the May 2017 Public Offering, each of these
investors in our August 2016 Public Offering must agree to the
cancellation of the warrants issued to them in the August 2016
Public Offering. These investors additionally must agree to amend
the terms of their outstanding warrants that currently have an
exercise price of $11.10 per share, such that the amended warrants
shall have an exercise price of $2.00 per share and no cashless
exercise feature (as amended, the “Inducement Amended
Warrants”). The Company agreed to register for resale on a
registration statement the Inducement Shares and shares of common
stock underlying the Inducement Amended Warrants.
As
previously disclosed on a Current Report on Form 8-K filed on May
10, 2017, on May 10, 2017, we entered into Exchange Agreements with
each of the Holders of our Series H Preferred Stock representing an
aggregate of $850,000 of our Series H Preferred Stock (the
“Exchange Securities”) with such exchange to be
effective on the closing of our May 2017 Public Offering. Prior to
the closing of the May 2017 Public Offering, we and the holders
rescinded and cancelled the Exchange Agreements and they have no
force and effect and no transaction contemplated by the Exchange
Agreements was consummated.
As
a condition to the Lead Investor leading an investment in the May
2017 Public Offering, including the requirement that we offer
incentive shares to August 2016 Investors who participate in making
the Minimum Required Investment in the May 2017 Public Offering, we
have agreed to the following:
Board Nomination
|
|
The
Company shall nominate one candidate to the Board of Directors of
the Company acceptable to the holder of a majority of the Series G
Preferred Stock by December 31, 2017, and two current Board members
will resign.
|
|
|
|
Executive Hire
|
|
The Company shall hire a new C-level executive in a leadership role
by July 15, 2017.
|
|
|
|
Board Compensation
|
|
The
Company is obligated to issue an aggregate of 1,050,000 options to
certain employees and members of the Board, at a price not less
than $2.00 per share, and 50,000 options to each other Board member
at the current market price in connection with this offering. The
options shall be issued pursuant to the Company’s option plan
and are subject to the requisite approvals and subject to
availability under the plan. To the extent we need to increase the
number of shares available under such plan, we will need the
approval of our board and stockholders. All board fees will
be waived for 2017.
|
|
|
|
Funds Held in Escrow
|
|
$500,000 of the funds from this offering will be held in escrow and
released to one or more investor relations services acceptable to
the Company following the closing of this offering.
|
Additionally we
granted the Lead Investor in
the May 2017 Public Offering certain rights to approve future (i)
issuances of our securities, (ii) equity or debt financings and
(iii) sales of any development product assets currently held by us,
subject to certain exceptions, if such securities are sold at price
below $2.50 per share and for as long as the Lead Investor in the offering holds 50% or
more of the shares of Series G Preferred Stock purchased by the
Lead Investor in this offering
(the “May 2017 Consent Right”). All other prior consent
rights of the Lead Investor
have been superseded by the May 2017 Consent Right.
The foregoing
descriptions of our agreements with our lead investor, the
agreements to rescind and cancel the Exchange Agreements and other
agreements with existing investors are incomplete and are subject
to, and qualified in their entirety by, the full text of the
Investor Consent dated May 18, 2017, the Form of Rescission
Agreement and the Form of Letter Agreement dated May 22, 2017,
which are filed as Exhibits 10.2, 10.3, and 10.4 hereto,
respectively, and incorporated herein by
reference.
EXHIBIT INDEX
Exhibit
No.
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
First Amendment to Loan and Security Agreement with Oxford Finance
LLC as of March 31, 2017*
|
|
|
|
|
|
|
|
|
10.2
|
Investor Consent dated May 18, 2017* |
|
|
|
|
|
|
|
|
10.3
|
Form of
Rescission Agreement dated May 19, 2017*
|
|
|
|
|
|
|
|
|
10.4
|
Form of
Letter Agreement dated May 22, 2017*
|
|
|
|
|
|
|
|
|
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
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002**
|
|
|
|
|
|
|
|
|
101
|
Interactive data file*
|
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*Filed herewith
**Furnished herewith
SIGNATURES
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.
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Date: May 22, 2017
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MABVAX THERAPEUTICS HOLDINGS, INC.
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By:
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/s/ J. David Hansen
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J. David Hansen
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President and Chief Executive Officer (Principal Executive Officer
authorized to sign on behalf of the registrant)
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By:
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/s/ Gregory P. Hanson
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Gregory P. Hanson
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Chief Financial Officer (Principal Financial and Accounting Officer
authorized to sign on behalf of the registrant)
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