Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-26534
VION PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3671221
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
4 Science Park
New Haven, Ct 06511
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 498-4210
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares outstanding of the registrant's common stock as of November
7, 2003 was 39,271,203.
Page 1
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
Vion Pharmaceuticals, Inc.
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)
September 30, December 31,
(In thousands, except share and per share data) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 18,415 $ 10,131
Interest receivable 10 10
Accounts receivable 11 48
Prepaid expenses 43 249
------------------------------------
Total current assets 18,479 10,438
Property and equipment, net 359 456
Security deposits 29 29
------------------------------------
Total assets $ 18,867 $ 10,923
====================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accrued payroll and payroll-related expenses $ 532 $ 411
Accounts payable and other accrued expenses 3,158 1,648
------------------------------------
Total current liabilities 3,690 2,059
------------------------------------
Shareholders' Equity:
Preferred stock, $0.01 par value, authorized: 5,000,000 shares; issued and
outstanding: none -- --
Common stock, $0.01 par value, authorized: 100,000,000 shares;
issued and outstanding: 39,271,203 and 28,908,872 shares
at September 30, 2003 and December 31, 2002, respectively 393 289
Additional paid-in-capital 127,192 112,447
Accumulated deficit (112,408) (103,872)
------------------------------------
15,177 8,864
------------------------------------
Total liabilities and shareholders' equity $ 18,867 $ 10,923
====================================
The accompanying notes are an integral part of these financial statements.
Page 2
Vion Pharmaceuticals, Inc.
(A Development Stage Company)
Condensed Statement of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended May 1, 1994 (Inception)
September 30, September 30, through
(In thousands, except per share data) 2003 2002 2003 2002 September 30, 2003
-------------------------- -------------------------- -----------------------
Revenues:
Contract research grants $ 14 $ 66 $ 152 $ 122 $ 2,344
Research support 74 -- 98 -- 5,601
Technology license fees 6 -- 12 28 4,443
Laboratory support services -- 8 3 8 146
------------------------- ------------------------ ---------
Total revenues 94 74 265 158 12,534
------------------------- ------------------------ ---------
Operating expenses:
Research and development 1,065 1,009 2,921 4,584 61,530
Clinical trials 1,446 1,129 4,043 3,877 25,410
------------------------- ------------------------ ---------
Total research and development 2,511 2,138 6,964 8,461 86,940
General and administrative 563 486 1,919 2,180 24,096
------------------------- ------------------------ ---------
Total operating expenses 3,074 2,624 8,883 10,641 111,036
------------------------- ------------------------ ---------
Interest income (32) (67) (87) (435) (4,824)
Interest expense -- -- -- -- 208
------------------------- ------------------------ ---------
Loss before income taxes (2,948) (2,483) (8,531) (10,048) (93,886)
Income taxes (benefit) 27 -- 5 (227) (222)
------------------------- ------------------------ ---------
Net loss (2,975) (2,483) (8,536) (9,821) (93,664)
Preferred stock dividends and accretion -- -- -- -- (18,489)
------------------------- ------------------------ ---------
Loss applicable to common shareholders $(2,975) $(2,483) $(8,536) $(9,821) $(112,153)
========================= ======================== =========
Loss applicable to common shareholders
per share $ (0.09) $ (0.09) $ (0.28) $ (0.34)
========================= ========================
Weighted-average number of shares of
common stock outstanding 33,631 28,892 30,628 28,886
========================= ========================
The accompanying notes are an integral part of these financial statements.
Page 3
Vion Pharmaceuticals, Inc.
(A Development Stage Company)
Condensed Statement of Changes in Shareholders' Equity
(Unaudited)
Accumulated
Additional Other Total
Common Stock Paid-in Comprehensive Accumulated Shareholders'
(In thousands, except share data) Shares Amount Capital Income (Loss) Deficit Equity
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 26,167,642 $ 262 $ 100,027 $ 120 $ (77,752) $ 22,657
Public offering of common stock -
August 2001 2,500,000 25 11,386 11,411
Exercise of stock options 191,527 2 777 779
Exercise of warrants 4,015 -- 14 14
Compensation associated with stock option
grants 111 111
Issuances under employee benefit plans 10,189 -- 62 62
Change in net unrealized gains and losses (126) (126)
Net loss (13,810) (13,810)
--------------
Comprehensive loss (13,936)
-------------------------------------------------------------------------------
Balance at December 31, 2001 28,873,373 $ 289 $ 112,377 $ (6) $ (91,562) $ 21,098
Exercise of stock options 10,395 -- 32 32
Issuances under employee benefit plans 25,104 -- 38 38
Change in net unrealized gains and losses 6 6
Net loss (12,310) (12,310)
--------------
Comprehensive loss (12,304)
-------------------------------------------------------------------------------
Balance at December 31, 2002 28,908,872 $ 289 $ 112,447 $ -- $(103,872) $ 8,864
Private placement of common stock - June 2003 3,846,150 38 4,411 4,449
Private placement of common stock -
September 2003 6,475,000 65 10,321 10,386
Issuances under employee benefit plans 41,181 1 13 14
Net loss (8,536) (8,536)
-------------------------------------------------------------------------------
Balance at September 30, 2003 39,271,203 $ 393 $ 127,192 $ -- $(112,408) $ 15,177
===============================================================================
The accompanying notes are an integral part of these financial statements.
Page 4
Vion Pharmaceuticals, Inc.
(A Development Stage Company)
Condensed Statement of Cash Flows
(Unaudited)
For The Period From
For the Nine Months May 1, 1994
Ended September 30, (Inception) through
(In thousands) 2003 2002 September 30, 2003
- --------------------------------------------------------------------------------------------------------------
Operating activities:
Net loss $ (8,536) $ (9,821) $ (93,664)
Adjustments to reconcile net loss to net cash used
in operating activities-
Depreciation and amortization 148 182 2,568
Loss on equipment disposals 8 -- 12
Non-cash compensation -- -- 1,068
Purchased research and development -- -- 4,481
Stock issued for services -- -- 600
Amortization of financing costs -- -- 346
Extension/reissuance of placement agent warrants -- -- 168
Changes in operating assets and liabilities-
Receivables and prepaid expenses 243 213 (63)
Other assets -- 1 (26)
Current liabilities 1,631 (184) 3,655
--------------------------------------------------
Net cash used in operating activities (6,506) (9,609) (80,855)
--------------------------------------------------
Investing activities:
Purchases of marketable securities -- (2,297) (83,351)
Maturities of marketable securities -- 18,302 83,351
Acquisition of property and equipment (59) (139) (1,995)
--------------------------------------------------
Net cash (used in) provided by investing activities (59) 15,866 (1,995)
--------------------------------------------------
Financing activities:
Initial public offering -- -- 9,696
Net proceeds from issuances of common stock 14,849 45 48,738
Net proceeds from issuance of preferred stock -- -- 20,716
Net proceeds from exercise of Class A Warrants -- -- 5,675
Net proceeds from exercise of Class B Warrants -- -- 17,538
Net proceeds from exercise of other warrants -- -- 115
Repayment of equipment capital leases -- -- (927)
Other financing activities, net -- -- (286)
--------------------------------------------------
Net cash provided by financing activities 14,849 45 101,265
--------------------------------------------------
Change in cash and cash equivalents 8,284 6,302 18,415
Cash and cash equivalents, beginning of period 10,131 6,645 --
--------------------------------------------------
Cash and cash equivalents, end of period $ 18,415 $ 12,947 $ 18,415
==================================================
The accompanying notes are an integral part of these financial statements.
Page 5
Vion Pharmaceuticals, Inc.
(A Development Stage Company)
Condensed Notes to Financial Statements
(Unaudited)
1. The Company
Vion Pharmaceuticals, Inc. (the "Company") is a development stage
biopharmaceutical company engaged in the research, development and
commercialization of therapeutics and technologies for the treatment of cancer.
The Company, formerly OncoRx, Inc., was incorporated in March 1992 as a Delaware
corporation and began operations on May 1, 1994.
2. Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q. They do not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the full year. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2002
(File No. 000-26534).
3. Private Placements of Common Stock
In June 2003, the Company completed a private placement of 3,846,150
shares of its common stock at $1.30 per share and warrants to purchase 1,923,075
shares of common stock at $2.20 per share. The net proceeds of $4.4 million from
this offering were allocated between common stock and the warrants based on
their relative fair values. The warrants expire June 25, 2008.
In September 2003, the Company completed an additional private
placement of 6,475,000 shares of its common stock at $1.75 per share and
warrants to purchase 6,475,000 shares of common stock at $2.50 per share. A
warrant to purchase an additional 100,000 shares of common stock at $2.50 per
share was issued to the placement agent. The net proceeds of $10.4 million from
this offering were allocated between common stock and the warrants based on
their relative fair values. The warrants expire September 19, 2008. Beginning
March 20, 2005, the Company may, at its option, call any unexercised warrants if
the trading price of the Company's common stock exceeds $3.50 for a period of 20
consecutive trading days.
Page 6
4. Per Share Data - Antidilution
The Company has outstanding warrants and stock options that were
antidilutive and not included in the calculation of the diluted loss applicable
to common shareholders per share.
5. Income Taxes
For the nine-month period ended September 30, 2003, the Company
recognized a state tax provision of $5,000 which reflected a current state
income tax provision of $27,000 net of a state tax benefit of $22,000. For the
nine-month period ended September 30, 2002, the Company recognized a state tax
benefit of $227,000. The state tax benefits reflect the sale of certain research
and development tax credits to the State of Connecticut.
6. Stock-Based Compensation
The Company follows Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25") and related Interpretations
in accounting for its employee stock options. Under APB 25, if the terms of the
option are fixed and the exercise price of the Company's employee stock options
equals the fair value of the underlying stock on the date of grant, no
compensation expense is recognized. For the nine-month periods ended September
30, 2003 and 2002, no compensation expense was required to be recorded.
For purposes of pro forma disclosures computed under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation,
the estimated fair value of employee stock option grants is amortized to expense
over the options' vesting periods. Pro forma information (as restated for
periods prior to March 31, 2003) follows (in thousands, except per share
amounts):
From Inception
For the Three Months For the Nine Months (May 1, 1994)
Ended September 30, Ended September 30, through
2003 2002 2003 2002 Sept. 30, 2003
----------------------- --------------------- ---------------
Net loss, as reported ................................ $ (2,975) $ (2,483) $ (8,536) $ (9,821) $ (93,664)
Add: Stock-based employee
compensation expense
included in reported net loss ............... -- -- -- -- 768
Deduct: Total stock-based employee
compensation expense
determined under fair value
based method for all awards ................. (1,189) (1,776) (3,876) (5,136) (24,141)
--------------------------------------------------------------
Pro forma net loss ................................... (4,164) (4,259) (12,412) (14,957) (117,037)
Pro forma preferred stock dividend
and accretion ............................... -- -- -- -- (18,489)
--------------------------------------------------------------
Pro forma loss applicable to common
shareholders ................................ $ (4,164) $ (4,259) $(12,412) $ (14,957) $(135,526)
==============================================================
Pro forma basic and diluted loss applicable
to common shareholders per share ............ $ (0.12) $ (0.15) $ (0.41) $ (0.52)
==================================================
Page 7
7. Gifts to Yale University
In July 2003, the Company made a gift of $0.2 million to support
research projects at a Yale University research laboratory headed by one of its
directors. The gift is payable in three installments with the last installment
payable on January 1, 2004. In accordance with Statement of Financial Accounting
Standards No. 116, Accounting for Contributions Received and Contributions Made,
the Company recorded the total amount of the gift as research and development
expense in the three-month period ended September 30, 2003.
In November 2003, the Company made an additional gift of $0.2 million
to support research projects at a Yale University research laboratory headed by
one of its directors. The gift is payable in four equal quarterly installments
beginning April 1, 2004. In accordance with Statement of Financial Accounting
Standards No. 116, Accounting for Contributions Received and Contributions Made,
the Company will record the total amount of the gift as research and development
expense in the three-month period ended December 31, 2003.
8. Employment Agreement
In October 2003, the Company entered into a new two-year employment
agreement commencing on January 1, 2004 with Mr. Kessman. The new employment
agreement has substantially the same terms as the current employment agreement.
9. License Agreement
In October 2003, the Company entered into a license agreement with
Beijing Pason Pharmaceuticals, Inc. ("Pason") related to the exclusive rights to
develop, manufacture and market Triapine'r' for anticancer and antiviral uses in
the mainland of People's Republic of China, Taiwan, Hong Kong and Macao (the
"Territory").
Under the terms of the agreement, the Company received an initial
payment of $500,000 in November 2003 and the Company will receive $4.75 million
in additional milestone payments and royalty payments of 11% of any Triapine
revenues in the Territory. Pason will fund the preclinical and clinical
development necessary for regulatory approval of Triapine in the Territory.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
All statements other than statements of historical fact included in
this Quarterly Report on Form 10-Q, including without limitation statements
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations," regarding our financial position, business strategy, and plans
and objectives of our management for future operations, are forward-looking
statements. When used in this Quarterly Report on Form 10-Q, words such as
"may," "will," "should," "could," "potential," "seek," "project,"
Page 8
"predict," "anticipate," "believe," "estimate," "expect," "intend" and similar
expressions, as they relate to us or our management, identify forward-looking
statements. Forward-looking statements are based on the beliefs of our
management as well as assumptions made by and information currently available to
our management. Such statements are subject to certain risk factors which may
cause our plans to differ or results to vary from those expected, including our
ability to secure external sources of funding to continue operations, the
inability to access capital and funding on favorable terms, continued operating
losses and the inability to continue operations as a result, our dependence on
regulatory approval for our products, delayed or unfavorable results of drug
trials, the possibility that favorable results of earlier clinical trials are
not predictive of safety and efficacy results in later clinical trials, the need
for additional research and testing, and a variety of other risks set forth from
time to time in our filings with the U.S. Securities and Exchange Commission
including, but not limited to, the detailed discussion of risks attendant to the
forward-looking statements included under Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual Report
on Form 10-K for the year ended December 31, 2002. The information contained in
this Quarterly Report on Form 10-Q is believed to be current as of the date of
filing with the U.S. Securities and Exchange Commission. Except in special
circumstances in which a duty to update arises under law when prior disclosure
becomes materially misleading in light of subsequent events, we do not intend to
update any of these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Overview
We are a development stage biopharmaceutical company committed to the
development and commercialization of therapeutics and technologies for the
treatment of cancer. Our activities to date have consisted primarily of research
and product development, obtaining regulatory approval for clinical trials,
conducting clinical trials, negotiating and obtaining collaborative agreements,
and obtaining financing in support of these activities. Our current revenues
consist of contract research grants. Since inception, we have generated minimal
revenues and have incurred substantial operating losses from our activities. We
expect to incur substantial operating losses for the foreseeable future due to
expenses associated with our activities.
Our plan of operations for the next 12 months includes the following
elements:
o Conduct Phase I clinical studies for safety and dosage of Triapine'r' in
conjunction with standard chemotherapy treatments;
o Conduct Phase II clinical studies of Triapine in conjunction with standard
chemotherapy treatments;
o Conduct Phase II clinical studies of Triapine as a single agent;
o Conduct Phase I clinical studies for safety and dosage of VNP40101M;
Page 9
o Conduct Phase I clinical studies for safety and dosage of VNP40101M in
conjunction with standard chemotherapy treatments;
o Conduct Phase II clinical studies of VNP40101M;
o Develop second generation TAPET'r' vectors;
o Continue to conduct internal research and development with respect to our
core technologies and other product candidates that we may identify;
o Continue to support research and development being performed at Yale
University and by other collaborators. The Company has received inquiries
from Yale University about minimum royalties under certain licensing
agreements; and
o Continue to seek collaborative partnerships, joint ventures,
co-promotional agreements or other arrangements with third parties.
Critical Accounting Policies and Estimates
There were no changes in our critical accounting policies from those
discussed in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations", in our Annual Report on Form 10-K for the
year ended December 31, 2002 and no significant changes in any accounting
estimates during the periods referred to below.
Results of Operations
Comparison of the Three-Month Periods Ended September 30, 2003 and 2002
Revenues. Revenues were $94,000 for the three-month period ended
September 30, 2003, as compared to $74,000 for the same period in 2002. The
increase was due primarily to higher revenues from research support partially
offset by lower revenues from contract research grants.
Research and Development. Total research and development expenses
(which include clinical trials expenses and other research and development
expenses) were $2.5 million for the three-month period ended September 30, 2003,
compared with $2.1 million for the same 2002 period. Clinical trials expenses
increased to $1.4 million for the third quarter of 2003 from $1.1 million for
the comparable 2002 period due primarily to higher patient enrollment and
start-up costs associated with new clinical trials of Triapine'r'. Other
research and development expenses increased by $0.1 million primarily due to
higher expense for external research support partially offset by a decrease in
employee-related expenses due to fewer employees.
Page 10
General and Administrative. General and administrative expenses
increased to $0.6 million for the three-month period ended September 30, 2003
from $0.5 million for the comparable 2002 period. The increase was primarily due
to higher legal fees.
Interest Income. Interest income was $32,000 for the three-month period
ended September 30, 2003, as compared to $67,000 for the same period in 2002.
The decrease was primarily due to lower interest rates.
Income Taxes. For the three-month period ended September 30, 2003, a
current state income tax provision of $27,000 was recorded. No income tax
provision was recorded for the three-month period ended September 30, 2002.
Net Loss. The net loss was $3.0 million, or $0.09 per share, for the
three-month period ended September 30, 2003, compared to a net loss of $2.5
million, or $0.09 per share, for the same period in 2002. Weighted-average
common shares outstanding during the periods were 33.6 million and 28.9 million,
respectively.
Comparison of the Nine-Month Periods Ended September 30, 2003 and 2002
Revenues. Revenues were $265,000 for the nine-month period ended
September 30, 2003, as compared to $158,000 for the same period in 2002. The
increase was primarily due to higher revenues from research support and grants.
Research and Development. Total research and development expenses
(which include clinical trials expenses and other research and development
expenses) were $7.0 million for the nine-month period ended September 30, 2003,
compared with $8.5 million for the same 2002 period. Clinical trials expenses
were $4.0 million for the nine-month period ended September 30, 2003, as
compared to $3.9 million for the same period in 2002. Other research and
development expenses were $2.9 million for the nine months ended September 30,
2003, compared with $4.6 million for the same period in 2002 primarily due to a
decrease in employee-related expenses due to fewer employees and, to a lesser
extent, a decrease in expense for external research support.
General and Administrative. General and administrative expenses were
$1.9 million for the nine-month period ended September 30, 2003, as compared to
$2.2 million for the comparable 2002 period. The decrease was due primarily to
lower patent and professional fees, partially offset by higher legal fees.
Interest Income. Interest income was $87,000 for the nine-month period
ended September 30, 2003, as compared to $435,000 for the same period in 2002.
The 2003 decrease in interest income was due to a lower average level of
invested funds and lower interest rates.
Page 11
Income Taxes. For the nine-month period ended September 30, 2003, a
state income tax provision of $5,000 was recorded, which reflected a current
state income tax provision of $27,000 net of a state tax benefit of $22,000. For
the nine-month period ended September 30, 2002, a state tax benefit of $227,000
was recorded. The state tax benefits reflect the sale of certain research and
development tax credits to the State of Connecticut.
Net Loss. The net loss was $8.5 million, or $0.28 per share, for the
nine-month period ended September 30, 2003, compared to a net loss of $9.8
million, or $0.34 per share, for the same period in 2002. Weighted-average
common shares outstanding during the periods were 30.6 million and 28.9 million,
respectively.
Liquidity and Capital Resources
At September 30, 2003, we had cash and cash equivalents of $18.4
million compared to cash and cash equivalents of $10.1 million at December 31,
2002. The increase in 2003 was due to net proceeds of $14.8 million from private
placements of securities in June and September 2003, described below, offset by
cash used to fund operating activities of $6.5 million.
In June 2003, we completed a private placement of 3,846,150 shares of
our Common Stock at $1.30 per share. The investors also received warrants to
purchase 1,923,075 shares of Common Stock at $2.20 per share, with these
warrants expiring on June 25, 2008. In September 2003, we completed a private
placement of 6,475,000 shares of our Common Stock at $1.75 per share. The
investors also received warrants to purchase 6,475,000 shares of Common Stock at
$2.50 per share and the placement agent received a warrant to purchase an
additional 100,000 shares of Common Stock at $2.50 per share. These warrants
expire on September 19, 2008. The net proceeds from the private placements
totaling $14.8 million will be used to fund clinical and research development
activities, working capital and general corporate purposes.
On August 1, 2003, we reinstated the full salaries of our senior
management, a portion of which had been deferred in connection with our May 2002
realignment plan. The salary deferrals will be paid in equal installments over
the twelve-month period beginning August 1, 2003. As of September 30, 2003, the
salary deferral amounted to $340,000 and was included in accrued payroll and
payroll-related expenses in the accompanying balance sheet.
We will need to raise additional capital or consummate a strategic
transaction, such as an acquisition or business partnership in order for our
operations to continue beyond December 31, 2004. We are actively seeking
additional financing and other strategic alternatives. We cannot assure you that
we will be able to raise additional capital or otherwise complete another form
of transaction to allow us to continue our operations after December 31, 2004,
nor can we predict what the terms of any financing or other transaction might
be. Any financing or other strategic transaction could be at prices below the
market price of our common stock and could be extremely dilutive to our current
stockholders.
Page 12
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
For information regarding our exposure to certain market risks, see
Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", in our
Annual Report on Form 10-K for the year ended December 31, 2002. There have been
no significant changes in our market risk exposure since then.
ITEM 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures - As of the end of
the period covered by this quarterly report, we carried out an evaluation, under
the supervision and with the participation of our chief executive officer and
chief financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in our periodic filings with the Securities
and Exchange Commission. It should be noted that the design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of
how remote.
(b) Changes in internal control over financial reporting - There have
been no significant changes in our internal control over financial reporting or
in other factors that could significantly affect those controls subsequent to
the date of their last evaluation.
PART II
OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds
In September 2003, the Company issued 6,475,000 shares of its Common
Stock in a private placement in reliance on an exemption under Section 4(2) of
the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.
The investors also received warrants to purchase 6,475,000 shares of Common
Stock and the placement agent received a warrant to purchase 100,000 shares of
Common Stock at $2.50 per share, expiring on September 19, 2008. The Company has
subsequently registered the resale of these shares by the investors pursuant to
an effective registration statement on Form S-3.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Page 13
10.34 Research Services Agreement Between Vion Pharmaceuticals,
Inc. and Eli Lilly and Company dated as of September 8,
2003. (1)
10.35 License Agreement Between Vion Pharmaceuticals, Inc. and
Beijing Pason Pharmaceuticals, Inc. dated as of September
12, 2003. (1)
10.36 Employment Agreement Between Vion Pharmaceuticals, Inc. and
Alan Kessman dated as of November 3, 2004.
31.1 Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
----------
(1) Certain portions of this exhibit have been omitted pursuant to a
request for an order granting confidential treatment by the
Securities and Exchange Commission.
(b) Reports on Form 8-K.
The Registrant filed the following reports on Form 8-K
during the quarter ended September 30, 2003:
1. On July 23, 2003 under Item 5 and Item 7 to announce the
Company initiated a Phase I trial of VNP40101M and Ara-C in
patients with advanced leukemia.
2. On August 13, 2003 under Item 5 and Item 7 to announce the
Company's 2003 second quarter financial results.
3. On September 8, 2003 under Item 5 and Item 7 to announce the
Company entered into a research services agreement with Eli
Lilly and Company ("Lilly") related to Phase II trials of
its anticancer agent Triapine'r' in combination with Lilly's
anticancer agent Gemzar'r'.
4. On September 10, 2003 under Item 5 and Item 7 to announce
the Company entered into a Securities Purchase Agreement
with certain
Page 14
purchasers relating to the private placement of shares of
Common Stock and Warrants, and a Registration Rights
Agreement relating thereto.
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.
Dated: November 13, 2003
Vion Pharmaceuticals, Inc.
By: /s/ HOWARD B. JOHNSON
-----------------------------
Howard B. Johnson
Vice President, Finance and
Chief Financial Officer
Page 15
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as......................'r'