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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO _____
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COMMISSION FILE NUMBER 000-25132
MYMETICS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 25-1741849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 CHESTNUT STREET
PROVIDENCE, RHODE ISLAND 02903
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 401-861-7604
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value of the voting common stock held by
non-affiliates of the Registrant (assuming officers, directors and 10%
stockholders are affiliates) was approximately U.S. $96,051,812.50 as of June
28, 2002, computed on the basis of the average of the bid and ask prices on such
date. The Registrant has no non-voting common stock.
As of March 24, 2003, there were 50,944,505 shares of the Registrant's
Common Stock outstanding (of which 16,393,316 shares are Exchangeable Preferred
Shares of the Registrant's subsidiary, 6543 Luxembourg S.A., which Exchangeable
Preferred Shares are directly convertible into the Registrant's Common Stock).
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2003 Proxy Statement to be filed within
120 days after December 31, 2002 are incorporated by reference into Part III of
this annual report on Form 10-K.
USE OF EUROS
The financial information contained in this Form 10-K is provided in
Euros (E) (except in "Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters" which is provided in United States Dollars, and except as
expressly indicated otherwise herein). See Note 1 to the Consolidated Financial
Statements contained in this Form 10-K for further explanation. As of March 26,
2003, 1 Euro was convertible into 1.06530 United States Dollars.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements, which are identified by the words
"believe," "expect," "anticipate," "intend," "plan" and similar expressions. The
statements contained herein which are not based on historical facts are
forward-looking statements that involve known and unknown risks and
uncertainties that could significantly affect our actual results, performance or
achievements in the future and, accordingly, such actual results, performance or
achievements may materially differ from those expressed or implied in any
forward-looking statements made by or on our behalf. These risks and
uncertainties include, but are not limited to, risks associated with our ability
to successfully develop and protect our intellectual property, our ability to
raise additional capital to fund future operations and compliance with
applicable laws and changes in such laws and the administration of such laws.
These risks are described below and in "Item 1. Business," "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Item 7A. Quantitative and Qualitative Disclosures About Market Risk" included
in this Form 10-K. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date the statements were
made.
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RISK FACTORS
You should carefully consider the risks described below together with
all of the other information included in this report on Form 10-K. An investment
in our common stock is very risky. If any of the following risks materialize,
our business, financial condition or results of operations could be adversely
affected. In such an event, the trading price of our common stock could decline,
and you may lose part or all of your investment.
We are a company engaged exclusively in research and development
activities, focusing primarily on human and veterinary biology and medicine.
When used in these risk factors, the terms "we" or "our" refer to Mymetics
Corporation and its subsidiaries.
IF WE ARE UNABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR RESEARCH AND
INTELLECTUAL PROPERTY, WE MAY NEVER GENERATE SIGNIFICANT REVENUES OR ACHIEVE
PROFITABILITY.
Our current objective is to develop vaccine and therapeutic compounds
and specific therapies for certain retroviral diseases or diseases with a viral
autoimmune content. All of our potential products and production technologies
are in the research or pre-development stages and no revenues have been
generated from product sales. The first products and applications target human
immunodeficiency virus, or HIV, and feline immunodeficiency virus, or FIV, the
precursors to human and feline acquired immunodeficiency syndrome, or AIDS. We
will not become profitable, if ever, unless we develop our intellectual property
to a point where it can be licensed to third parties on financially favorable
terms or applied in the creation and development of one or more products that
can generate revenues.
Although our due diligence has indicated that Mymetics S.A.'s (our
subsidiary) research and discovery regarding "mimicry" may lead to important
discoveries in the scientific community regarding the HIV infection process,
other discoveries may be necessary to develop an effective vaccine, and we may
never be able to develop our research and intellectual property into a
commercially profitable product.
Our success will depend on our ability to:
- effectively commercialize the research through collaborative
relationships with third parties;
- prepare acceptable protocols necessary to obtain regulatory
approvals;
- effectively conclude clinical trials;
- effectively establish commercial viability; and
- effectively establish marketing and manufacturing
relationships.
If we are unable to commercialize the current research, we do not have
other products from which to derive revenue.
WE MUST OVERCOME SIGNIFICANT OBSTACLES TO SUCCESSFULLY DEVELOP OR MARKET PRODUCT
CANDIDATES.
The development of product candidates is subject to significant risks
of failure, which are inherent in the development of new medical products and
products based on new technologies. These risks include:
- delays in pre-clinical testing, product development, clinical
testing or manufacturing;
- unplanned expenditures for product development, clinical
testing or manufacturing;
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- failure of the technologies and products being developed to
have the desired effect or an acceptable safety profile;
- failure to receive regulatory approvals;
- emergence of equivalent or superior products;
- inability to manufacture (directly or through third parties)
product candidates on a commercial scale;
- inability to market products due to third party proprietary
rights;
- inability to find collaborative partners to pursue product
development; and
- failure by future collaborative partners to successfully
develop products.
If these risks materialize, our research and development efforts may
not result in any commercially viable products.
WE HAVE A HISTORY OF OPERATING LOSSES AND WE EXPECT TO GENERATE OPERATING LOSSES
FOR THE FORESEEABLE FUTURE.
We currently are engaged in research and development activities, and do
not have any commercially marketed products. The product research and
development process requires significant capital expenditures, and we do not
have any other sources of revenue to off-set such expenditures. Accordingly, we
expect to generate additional operating losses at least until such time as we
are able to generate significant revenues.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO FUND OUR RESEARCH EFFORTS AND TO
FULLY DEVELOP COMMERCIALLY VIABLE PRODUCTS. WE CANNOT ASSURE YOU THAT WE WILL BE
ABLE TO OBTAIN ADDITIONAL CAPITAL WHEN NEEDED OR THAT SUCH CAPITAL WILL BE
AVAILABLE ON FAVORABLE TERMS, IF AT ALL. OUR BUSINESS WILL BE ADVERSELY AFFECTED
IF WE CANNOT RAISE ADDITIONAL CAPITAL WHEN NEEDED.
The costs for us to continue our research and to develop our
intellectual property will be substantial. We expect that our existing capital
resources will satisfy our capital requirements through approximately June 2003.
However, given the fact that we do not have any current sources of revenue,
substantial additional capital will likely be needed to continue the development
and commercialization of our intellectual property. Currently there are no
commitments for any additional financing. Any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may include
restrictive covenants and there can be no assurance that additional financing
will be available. While the amount of capital required cannot be estimated with
precision, we estimate it will require approximately 2 million Euros just to
move our business forward into a position of being prepared to initiate clinical
trials.
The availability of and the need for future capital will depend on many
factors, including:
- continued scientific progress in our research and development
program;
- results of pre-clinical tests;
- results of any clinical trials;
- the time and cost involved in obtaining regulatory approvals;
- future collaborative relationships; and
- the cost of manufacturing.
If adequate funds are not available, we may be required to curtail or
cease operations.
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COMMERCIALIZATION OF OUR INTELLECTUAL PROPERTY AND CREATION OF VIABLE PRODUCTS
DEPEND ON COLLABORATIONS WITH OTHERS. IF WE ARE UNABLE TO FIND COLLABORATORS IN
THE FUTURE, WE MAY NOT BE ABLE TO DEVELOP PROFITABLE PRODUCTS.
Our strategy for the research, development and commercialization of
products requires us to enter into contractual arrangements with corporate
collaborators, licensors, licensees and others. We do not have the funds to
develop products on our own, and intend to depend on collaborators to develop
products on our behalf. If collaborative relationships cannot be found, we may
not be able to continue our development programs.
Moreover, we could become involved in disputes with collaborative
partners, which could lead to delays or termination of development programs and
time-consuming, expensive and distracting litigation or arbitration. Even if we
fulfill our obligations under a collaborative agreement, a partner may terminate
the agreement. If any collaborative partner terminates or breaches an agreement
with us, or otherwise fails to complete its obligations in a timely manner, our
ability to successfully commercialize our intellectual property will be
adversely affected.
IF WE ARE NOT ABLE TO DEMONSTRATE THE RESULTS OF OUR RESEARCH IN CLINICAL
TRIALS, OR IF CLINICAL TRIALS ARE DELAYED, WE MAY NOT BE ABLE TO OBTAIN
REGULATORY CLEARANCE TO MARKET OUR PRODUCTS IN THE UNITED STATES OR IN FOREIGN
COUNTRIES ON A TIMELY BASIS, OR AT ALL.
Assuming we are able to successfully develop our research into
potential products, such products will require regulatory approval. Before
obtaining regulatory approvals for the commercial sale of any of the products
under development, pre-clinical studies and clinical trials must demonstrate
that the product is safe and effective for use in each target indication. If any
of the products fail in clinical trials, the approval of the United States Food
and Drug Administration (the "FDA") and similar agencies operating in foreign
countries will not be obtained for such products, and we will not be able to
generate revenues from such products.
Clinical testing is a long, expensive and uncertain process. One cannot
be certain that the data collected from the clinical trials will be sufficient
to support approval by the FDA or any foreign regulatory authorities, that the
clinical trials will be completed on schedule or, even if the clinical trials
are successfully completed and on schedule, that the FDA or any foreign
regulatory authorities will ultimately approve the product for commercial use.
Clinical trials could be delayed for a variety of reasons, including:
- delays in enrolling volunteers;
- lower than anticipated retention rate of volunteers in the
trials; and
- serious adverse events related to the products being
developed.
Our research is presently focused on developing vaccines and
therapeutics to prevent and treat HIV. Trials will be conducted on animals prior
to humans. Results of animal trials, even if successful, may not be relevant for
determining the preventive or therapeutic effect of any potential product
designed to prevent or treat HIV infection in humans. In addition, results from
early clinical trials are not necessarily indicative of future results. A number
of companies in the biotechnology and pharmaceutical industries have suffered
significant setbacks in late stage clinical trials even after promising results
in early stage development. Furthermore, pre-clinical and clinical data can be
interpreted in different ways, which could delay, limit or prevent regulatory
approvals. Negative or inconclusive results or interpretations could cause the
trials to be unacceptable for submission to regulatory authorities.
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IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY EMPLOYEES AND CONSULTANTS, WE WILL BE
UNABLE TO DEVELOP AND COMMERCIALIZE PRODUCTS.
We are dependent on the principal members of our management and
scientific staff. In order to successfully complete our research and development
activities and our commercialization plans, we will need to hire personnel with
experience in clinical testing, drug discovery, government regulation,
manufacturing, marketing and finance. We may not be able to attract and retain
personnel on acceptable terms given the intense competition for such personnel
among high technology enterprises, including biotechnology, pharmaceutical and
healthcare companies, universities and non-profit research institutions.
IF WE FAIL TO ENTER INTO SUCCESSFUL MARKETING ARRANGEMENTS WITH THIRD PARTIES,
WE WILL NOT BE ABLE TO COMMERCIALIZE PRODUCTS.
We do not currently have any sales or marketing infrastructure, and we
do not have significant experience in marketing, sales and distribution. Future
profitability will depend in part on plans to enter into successful marketing
arrangements with third parties. To the extent that we enter into marketing and
sales arrangements with other companies, revenues will depend on the efforts of
others. These efforts may not be successful. If we are unable to enter into
successful third-party arrangements, we may not be able to commercialize our
products.
IF WE DO NOT SUCCESSFULLY COMPETE IN THE DEVELOPMENT AND COMMERCIALIZATION OF
PRODUCTS AND KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE, WE WILL BE UNABLE TO
CAPTURE AND SUSTAIN A MEANINGFUL MARKET POSITION.
The biotechnology and pharmaceutical industries are highly competitive
and subject to significant and rapid technological change. We are aware of
several companies that are actively engaged in research and development in areas
related to our research focus. Many of these companies are addressing the same
diseases and disease indications that we are addressing. As a result of this
intense competition, any products that we develop may become obsolete before we
are able to recover the expenses incurred in their development. Moreover, many
of these companies, either alone or together with their collaborative partners,
have substantially greater financial resources and larger research and
development staffs. These competitors, either alone or together with their
collaborative partners, also have significantly greater experience in:
- developing products;
- undertaking pre-clinical testing and human clinical trials;
- obtaining FDA and other regulatory approvals of products; and
- manufacturing and marketing products.
IF OUR INTELLECTUAL PROPERTY DOES NOT ADEQUATELY PROTECT PRODUCT CANDIDATES, WE
COULD ENCOUNTER MORE DIRECT COMPETITION, WHICH COULD ADVERSELY IMPACT REVENUES.
Our success depends, in part, on our ability to:
- obtain and maintain patents or rights to patents;
- protect trade secrets;
- operate without infringing upon the proprietary rights of
others; and
- prevent others from infringing on our proprietary rights.
We will be able to protect proprietary rights from unauthorized use by
third parties only to the extent that our proprietary rights are covered by
valid and enforceable patents or are effectively maintained as trade secrets.
The patent position of biotechnology companies involves complex legal and
factual questions and, therefore, enforceability cannot be predicted with
certainty. Patents, if issued, may be challenged, invalidated or circumvented.
Thus, any patents that are owned or licensed from third parties may not provide
adequate protection
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against competitors. Pending patent applications, those applications that we may
file in the future, or those applications that may be licensed from third
parties, may not result in patents being issued. Also, patent rights may not
provide adequate proprietary protection or competitive advantages against
competitors with similar technologies. The laws of certain foreign countries do
not protect intellectual property rights to the same extent as do the laws of
the United States.
In addition to patents, we rely on trade secrets and proprietary
know-how. Protection of trade secrets and know-how is sought, in part, through
confidentiality and proprietary information agreements and customary principles
of "work-for-hire." These agreements may not provide meaningful protection or
adequate remedies in the event of unauthorized use or disclosure of confidential
and proprietary information. Failure to protect proprietary rights could
seriously impair our competitive position.
IF THIRD PARTIES CLAIM WE ARE INFRINGING THEIR INTELLECTUAL PROPERTY RIGHTS, WE
COULD BECOME SUBJECT TO SIGNIFICANT LITIGATION OR LICENSING EXPENSES OR BE
PREVENTED FROM MARKETING OUR PRODUCTS.
The areas in which we have focused our research and development have a
number of competitors. This has resulted in a number of issued patents and
still-pending patent applications. Patent applications in the United States are,
in most cases, maintained in secrecy until the patents issue. The publication of
discoveries in the scientific or patent literature frequently occurs
substantially later than the date on which the underlying discoveries were made.
Commercial success depends significantly on our ability to operate without
infringing the patents and other proprietary rights of third parties. In the
event of such infringement, we may be prevented from pursuing certain product
development or commercialization and may be required to obtain a license for the
use of the proprietary rights or patents. We may also be required to pay damages
for past infringement.
The biotechnology and pharmaceutical industries have been characterized
by extensive litigation regarding patents and other intellectual property
rights. The defense and prosecution of intellectual property lawsuits, U.S.
Patent and Trademark Office interference proceedings and related legal and
administrative proceedings in the United States and in foreign countries involve
complex legal and factual questions. As a result, such proceedings are costly
and time consuming to pursue and their outcome is uncertain.
Litigation may be necessary in the future to:
- enforce patents that we own or license;
- protect trade secrets or know-how that we own or license; or
- determine the enforceability, scope and validity of the
proprietary rights of others.
We believe that our technology has been independently developed and
does not infringe upon the proprietary or intellectual property rights of
others. We cannot, however, guarantee that our technology does not, and will not
in the future, infringe upon the rights of third parties. We may be a party to
legal proceedings and claims relating to the proprietary information of others
from time to time in the ordinary course of our business. If we become involved
in any litigation, interference or other administrative proceedings, we will
incur substantial expense and the efforts of technical and management personnel
will be significantly diverted. An adverse determination may subject us to loss
of proprietary position or to significant liabilities, or require licenses that
may not be available from third parties. We may be restricted or prevented from
manufacturing and selling products, if any, in the event of an adverse
determination in a judicial or administrative proceeding or if we fail to obtain
necessary licenses. Costs associated with these arrangements may be substantial
and may include ongoing royalties. Furthermore, the necessary licenses may not
be available on satisfactory terms, if at all.
WE CAN NOT BE SURE THAT ANY FUTURE OR CURRENTLY PENDING PATENT APPLICATIONS
RELATING TO OUR PRODUCTS WILL ISSUE ON A TIMELY BASIS, IF EVER.
Since patent applications in the United States are maintained in
secrecy until 18 months from the priority date, and since publication of
discoveries in the scientific or patent literature often lag behind actual
discoveries, we
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cannot be certain that we were the first to develop the inventions covered by
each of our pending patent applications or that we were the first to file patent
applications for such inventions. Even if patents are issued, the degree of
protection afforded by such patents will depend upon the:
- scope of the patent claims;
- validity and enforceability of the claims obtained in such
patents; and
- our willingness and financial ability to enforce and/or defend
them.
EVEN IF WE OBTAIN REGULATORY APPROVAL TO MARKET AND SELL OUR PRODUCTS, WE WILL
BE SUBJECT TO ONGOING REGULATORY REVIEW, WHICH WILL BE EXPENSIVE AND MAY AFFECT
OUR ABILITY TO SUCCESSFULLY COMMERCIALIZE OUR PRODUCTS.
Even if regulatory approval for a product is secured, such approval may
be subject to limitations on the indicated uses for which the product may be
marketed. Such limitations may restrict the size of the available market for the
product or contain requirements for costly post-marketing surveillance studies.
Manufacturers of medical products are subject to continued review and periodic
inspections by the FDA and other regulatory authorities. The subsequent
discovery of previously unknown problems with the product, clinical trial
subjects, or with the manufacturer or its manufacturing facility may result in
the imposition of restrictions on the product or manufacturer, including
withdrawal of the product from the market. If we or any of our collaborative
partners fail to comply with applicable regulatory requirements, we may be
subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions and criminal prosecution.
IF OUR PRODUCTS ARE NOT ACCEPTED BY THE MARKET, WE ARE NOT LIKELY TO GENERATE
SIGNIFICANT REVENUES OR BECOME PROFITABLE.
Even if we are able to successfully develop a viable product and obtain
regulatory approval of such product, such product may not gain market acceptance
among physicians, patients, healthcare payors and the medical community. The
degree of market acceptance of any medical product depends on a number of
factors, including:
- demonstration of clinical efficacy and safety;
- cost-effectiveness;
- potential advantages over alternative therapies;
- reimbursement policies of government and third party payors;
- effectiveness of marketing and distribution capabilities; and
- the success of physician education programs.
Physicians will not recommend therapies using products until clinical
data or other factors demonstrate their safety and efficacy as compared to other
drugs or treatments. Even if the clinical safety and efficacy of therapies using
the products is established, physicians may elect not to recommend the therapies
for other reasons, including whether the mode of administration of products is
effective for certain indications.
RAW MATERIALS NECESSARY TO MANUFACTURE OUR PRODUCTS MAY NOT BE AVAILABLE, WHICH
MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
We believe we will have access to sufficient quantities of raw
materials to conduct and advance our research. We utilize third party
collaborators, licensors, licensees and others to conduct research on our
behalf, and we rely on these third parties to provide the necessary materials to
conduct such research. If we or our third-party
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collaborators are unable to obtain the necessary materials to conduct such
research, our business, financial condition and results of operations will be
adversely affected.
OUR STOCK PRICE MAY EXPERIENCE SIGNIFICANT VOLATILITY, WHICH COULD ADVERSELY
AFFECT THE VALUE OF YOUR INVESTMENT.
The market price of our common stock, like that of the common stock of
many other development stage biotechnology companies, may be highly volatile. In
addition, the stock market has experienced extreme price and volume
fluctuations. This volatility has significantly affected the market prices of
securities of many biotechnology and pharmaceutical companies for reasons
frequently unrelated to, or disproportionate to, the operating performance of
the specific companies. These broad market fluctuations may adversely affect the
market price of our common stock.
THE MARKET FOR OUR COMMON STOCK IS VERY LIMITED
Our common stock is currently traded only on the OTC Bulletin Board.
Accordingly, we cannot provide assurances as to the future liquidity of our
common stock or the price at which you would be able to sell your shares in any
available market.
THE ISSUANCE OF ADDITIONAL EQUITY SECURITIES MAY DILUTE YOUR INVESTMENT.
We currently have 50,944,505 shares of common stock outstanding
(assuming the conversion of all the outstanding Class B Exchangeable
Preferential Non-Voting Stock, or Preferential Shares, of our subsidiary, 6543
Luxembourg S.A., into 16,393,616 shares of our common stock), 1 share of Special
Voting Preferred Stock, options to purchase an aggregate of 381,250 shares of
common stock and warrants to purchase an aggregate of 80,166 shares of common
stock. We are authorized to issue up to 80 million shares of common stock and 5
million shares of preferred stock without additional stockholder approval. The
issuance of additional common stock or preferred stock will dilute our
stockholders' percentage ownership, and, depending on the offering price of such
stock, may also serve to dilute the value of such ownership interest.
WE CURRENTLY DO NOT INTEND TO PAY CASH DIVIDENDS ON OUR SHARES.
We have never declared or paid any cash dividends on our common stock,
nor do we intend on doing so in the foreseeable future. The payment of
dividends, if any, in the future is within the discretion of our board of
directors and will depend upon our earnings, capital requirements and financial
condition as well as other relevant factors. We currently intend to retain all
earnings, if any, to finance our continued growth and the development of our
business. Furthermore, our ability to declare or pay dividends may be limited in
the future by the terms of any then-existing credit facilities, which may
contain covenants that restrict the payment of cash dividends.
POLITICAL OR SOCIAL FACTORS MAY ADVERSELY IMPACT REVENUES BY DELAYING OR
IMPAIRING THE CORPORATION'S ABILITY TO MARKET ITS PRODUCTS.
We are focused on developing vaccines and products for the treatment
and prevention of HIV. Products developed to address the HIV/AIDS epidemic have
been, and may continue to be, subject to competing and changing political and
social pressures. The political and social response to the HIV/AIDS epidemic has
been emotionally charged and unpredictable. Such political and social forces may
serve to delay or prevent introduction of our products into the marketplace or
to place restrictions upon the pricing, availability and marketing of such
products.
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TABLE OF CONTENTS
PAGE
PART I
ITEM 1. BUSINESS.............................................................. 10
ITEM 2. PROPERTIES ........................................................... 20
ITEM 3. LEGAL PROCEEDINGS .................................................... 20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .................. 20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS................................................... 21
ITEM 6. SELECTED FINANCIAL DATA .............................................. 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................... 23
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK........................................................... 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .......................... 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE................................... 25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ................... 26
ITEM 11. EXECUTIVE COMPENSATION ............................................... 26
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT........................................................ 26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....................... 26
ITEM 14. CONTROLS AND PROCEDURES............................................... 26
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K........................................................... 27
SIGNATURES.............................................................................. 46
9
PART I
ITEM 1. BUSINESS
THE CORPORATION
We are a holding company conducting business through our subsidiaries
6543 Luxembourg S.A., a joint stock company organized in 2001 under the laws of
Luxembourg ("LuxCo"), Mymetics S.A. (formerly Hippocampe S.A.), a company
organized in 1990 under the laws of France ("Mymetics S.A.") and Mymetics
Deutschland GmbH, a company organized in 2002 under the laws of Germany. We were
incorporated in July 1994 pursuant to the laws of the Commonwealth of
Pennsylvania under the name "PDG Remediation, Inc." In November 1996, we
reincorporated under the laws of the State of Delaware and changed our name to
"ICHOR Corporation." In July 2001, we changed our name to "Mymetics
Corporation." We own all of the outstanding voting stock of LuxCo and Mymetics
GmbH, and Mymetics S.A. is a wholly-owned subsidiary of LuxCo. In this document,
unless the context otherwise requires, "Mymetics" and the "Corporation" refer to
Mymetics Corporation and its subsidiaries.
We currently do not make, market or sell any products or services, and
thus, we have no revenues. We believe that our research and development
activities, and the resulting intellectual property, will lead to the creation
of commercially viable products, which can generate revenues for us in the
future. If financially favorable terms are available, we may license or sell our
intellectual property to third parties. If we fail to develop our intellectual
property, we are unlikely to generate significant revenues.
DEVELOPMENT OF THE CORPORATION
From our inception in 1994 to December 1997, we operated in the
environmental services industry, focusing on thermal treatment (in Florida),
remediation services (in Florida and Pennsylvania) and waste oil recycling (in
Illinois). In February 1995, we completed an initial public offering. In 1998
and 1999, after disposing of our thermal treatment, remediation services and
waste oil recycling businesses, we provided consulting services to an industrial
customer in Europe. In June 1999, we acquired a majority interest in Nazca
Holdings Ltd., whose business involved the exploration for and development of
groundwater resources in Chile. Following the disposal of our interest in Nazca
in July 2000, we did not have an operating business.
In March 2001, we acquired 99.9% of the outstanding shares of Mymetics
S.A. in consideration for shares of our common stock and shares of Class B
Exchangeable Preferential Non-Voting Stock of LuxCo, or Preferential Shares,
which are convertible into shares of our common stock. In 2002, we acquired the
remaining 0.1% of the outstanding common stock of Mymetics S.A. pursuant to
share exchanges with the remaining stockholders of Mymetics S.A. The terms of
these recent share exchanges were substantially similar to the terms of the
share exchange that occurred in March 2001. Mymetics S.A. was, and continues to
be, a biotechnology research and development company.
On June 30, 2001, we closed on a private offering of 1,333,333 shares
of our common stock, at E1.77 (U.S. $1.50) per share, for an aggregate price of
E2,355,600 (U.S. $2,000,000). This private placement was exempt from
registration pursuant to Regulation S of the Securities Act of 1933, and the
shares were sold to foreign investors meeting the requirements of Regulation S.
In August, 2002 the Company formed Mymetics Deutschland GmbH for the purpose of
applying for German government support of research activities to be conducted in
Germany.
We own all the outstanding voting stock of LuxCo. There are also 15,372
Preferential Shares of LuxCo currently outstanding, which are convertible into
16,393,316 shares of our common stock. Holders of the Preferential Shares do not
have any voting rights with respect to LuxCo. However, pursuant to a Voting and
Exchange Trust Agreement dated March 28, 2001, the holders of the Preferential
Shares are entitled to vote on all matters to be voted on by the holders of our
common stock to the same extent as if they had converted the Preferential Shares
into shares of our common stock.
10
MYMETICS CORPORATION
Prior to 2002, our activities were primarily conducted in Europe.
During the second quarter of 2002, through our operations in the United States,
we launched programs in the United States in an attempt to reinforce our
intellectual property portfolio and to accelerate the commercialization of our
technology. This was done, in part, by attempting to target products and
business development in the United States. Again, prior to this time, activities
such as design of the prototype molecules, synthesis, and in vitro testing had
been conducted exclusively in Europe. We believed that expanding our operating
activities in the United States offered numerous advantages, including greater
access to expertise, grants, subsidies, intellectual property and public and
private research teams. Due to financial constraints, we were forced to limit
these activities in January 2003.
MYMETICS S.A.
Our subsidiary, Mymetics S.A., is a biotechnology research and
development company devoted to fundamental and applied research in the area of
human and veterinary biology and medicine. Mymetics S.A.'s primary objective is
to develop therapies to treat certain retroviruses, including the human
immunodeficiency virus, or HIV, the virus that leads to acquired
immunodeficiency syndrome, or AIDS. Additional applications of Mymetics S.A.'s
research include potential treatments and/or vaccines for animal AIDS, human and
animal oncoviral leukemias, multiple sclerosis and organ transplantation. To
date, Mymetics S.A. has conducted its fundamental research in Europe.
Mymetics S.A.'s research strategy is to structure and manage a network
of public and private best-in-class research teams, each with a clearly
delineated focus. Mymetics S.A. has segmented its primary research into modules,
which are then out-sourced, under its direct supervision, to high-level,
specialized and complementary public and private research teams. Mymetics S.A.
retains all intellectual property rights in the combined research and applies
for domestic and international patents whenever justified. As agreed and
coordinated by Mymetics S.A., the research teams are authorized to co-publish
their results.
MYMETICS GMBH
Mymetics Deutschland GmbH was formed in 2002 for the purpose of
applying for German government support of research activities to be conducted in
Germany. The German government offers subsidy programs as a means of attracting
business investment into parts of eastern Germany. In particular, Mymetics
Deutschland GmbH was organized to take advantage of (i) an investment matching
program offered by the German government, whereby the German government matches
the amount of certain investments made by companies in eastern Germany and (ii)
a broader program, whereby the German government offers significant amounts of
grant money to companies in eastern Germany that satisfy certain conditions.
Mymetics Deutschland GmbH solicited interest from existing research teams in
eastern Germany, formulated four distinct research programs and applied for
German government grants. In December 2002, Mymetics Deutschland GmbH was
informed that two of its programs would be eligible for matching grants.
However, the broader program described above, which may have served as a source
of substantial working capital, was suspended by the German government for
biotechnology companies. Consequently, we elected to suspend our planned
expansion of research activities into Germany.
RECENT INDUSTRY DEVELOPMENTS
In late 2002, it became apparent that one of our major competitors
would be receiving approval from the United States Food and Drug Administration
of its fusion inhibitor candidate drug in the first quarter of 2003. This
development, combined with advances in our research activities, served to
validate our basic technology in the area of fusion inhibitors and, in
particular, the efficacy of gp41-derived peptide product. Given this validation,
as well as (i) advances in the our research and development efforts, (ii) poor
worldwide capital market conditions and (iii) lack of sufficient long term
working capital, we have decided to re-direct our business development strategy:
rather than independently funding the completion of research and development
programs prior to the sale or licensing of our technology to a major
international pharmaceutical or biotechnology firm, we have opted to accelerate
the exploration of potential partnerships with major international
pharmaceutical and biotechnology firms. We have also accelerated the development
of our patent portfolio.
11
SCIENCE OVERVIEW
Virus. A virus is a noncellular organism consisting of deoxyribonucleic
acid ("DNA") or ribonucleic acid ("RNA") and a protein coat. During the free and
infectious stage of their life cycle, viruses do not perform the usual functions
of living cells, such as respiration and growth. Rather, when viruses enter a
living plant, animal or bacterial cell, they utilize the host cell's chemical
energy and synthesizing ability to replicate. After the replication of the viral
components by the infected host cell, virus particles are released and the host
cell is often destroyed. The approximately 2,450 viral species identified to
date are divided into about 75 groups. HIV belongs to the group of retroviruses,
so called because they contain a reverse transcriptase that copies viral RNA
back into DNA (the reverse of what usually occurs when DNA is copied into RNA).
Retroviruses include spumaviruses, oncoviruses (causing cancers) and
lentiviruses (viruses with a slow pathogenic action, e.g. AIDS-associated
lentiviruses).
HIV. HIV is a type of retrovirus, a virus of the family Retroviridae
that has RNA as its nucleic acid and uses the enzyme reverse transcriptase to
copy its genome into the DNA of the host cells chromosomes. Once inside the T
cell, HIV uses the cell's machinery to copy its RNA into DNA by means of the
reverse transcriptase. HIV is characterized by an inability to mount a normal
immune response and is the cause of the fatal illness known as AIDS. AIDS is the
late stage of infection caused by HIV.
Two strains of HIV have been identified, HIV-1 and HIV-2. The genetic
material of these two strains is approximately 60% identical. Each strain
contains a number of subtypes, which are slight genetic variations of the virus.
At least 32 sub-types have been identified to date. These variations result from
the high mutation rate of HIV's genetic material. Most variations occur in the
gene encoding the GP120 protein, and these mutations can alter the protein's
structure. HIV-1 or Type 1 classified as a lentivirus is a subgroup of
retroviruses that have been isolated and recognized as the cause of a disease
that induces AIDS. HIV-1, like most viruses and all bacteria, plants and
animals, has genetic codes made up of DNA, which uses RNA to build specific
proteins. HIV's genetic material is the RNA itself. HIV inserts its own RNA into
the host cell's DNA, preventing the host cell from performing its natural
functions and transforming it into an HIV virus factory.
AIDS. AIDS is a fatal epidemic disease caused by an infection by HIV
(HIV-1 or HIV-2). In most cases, HIV slowly attacks and destroys the immune
system, the body's defense against disease, leaving the infected individual
vulnerable to malignancies and infections that eventually cause death.
Propagation of HIV results from the invasion of the host cell and its use of the
host cell's protein synthesis capability. The immune system's response
(antibodies and cellular immune response) is usually sufficient to temporarily
arrest progress of the infection and reduce levels of the virus in the blood.
Virus replication continues, however, and gradually destroys the immune system
by infecting and destroying critical white blood cells known as CD4 cells. The
main cellular target of HIV is a special class of white blood cells critical to
the immune system, known as helper T lymphocytes, or T4 helper cells. These
cells play a principal role in normal immune responses by stimulating or
activating virtually all of the other cells involved in immune protection. These
cells include B lymphocytes, the cells that produce antibodies needed to fight
infection; cytotoxic T lymphocytes, which destroy cells infected with virus; and
macrophages and other effector cells, which attack invading pathogens. Once HIV
has entered the helper T cell, it can impair the functioning of or destroy the
cell. A hallmark of the onset of AIDS is a drastic reduction in the number of
helper T cells in the body. HIV also can infect other cells, including certain
monocytes and macrophages, as well as brain cells. Among those cells are CD4,
HIV's preferred target cells due to a docking molecule called cluster
designation 4 on their surfaces. Cells with this molecule are known as CD4+
cells. These cells normally orchestrate the immune response, signaling other
cells in the immune system to perform their special functions. Destruction of
CD4+ lymphocytes is the major cause of the immunodeficiency observed in AIDS,
and decreasing CD4+ lymphocyte levels appear to be the best indicator of
morbidity in these patients. As the infection progresses, the immune system's
control of HIV levels weakens, the level of the virus in the blood rises and the
level of critical T cells declines to a fraction of their normal level.
Viral Envelope of HIV. The viral envelope of HIV is covered with
mushroom-shaped spikes that enable the virus to attach itself to the target
cell. The cap of each "mushroom" is comprised of GP120 molecules and its stem is
comprised of GP41 molecules. GP120 is a glycoprotein that protrudes from the
surface of HIV and binds to the CD4 receptor of the CD4+ T-cells. In a two-step
process that allows HIV to breach the membrane of T-cells, the GP120-CD4 complex
refolds to reveal a second structure that binds to CCR5 or CXCR4, one of several
chemokine co-receptors used by the virus to gain entry into T cells. GP41 is a
glycoprotein embedded in the outer envelope of HIV and plays a key role in HIV's
infection of cells by carrying out the fusion of the viral and cell membranes.
GP160 is a glycoprotein, which is the precursor of HIV envelope proteins GP120
and GP41.
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Immune System. The immune system functions to protect the body against
infection and foreign substances, including viruses and bacteria. This defensive
function is performed by the body's white blood cells (leukocytes) and by a
number of accessory cells, including B lymphocytes, the cells that produce the
antibodies needed to fight infection, and cytotoxic T lymphocytes, which destroy
cells infected with viruses. When an immunocompetent cell recognizes foreign
material or a biological invader presented by the macrophages, it normally
induces a response. This recognition function relies on the immune system's
ability to recognize specific foreign molecular configurations, generically
referred to as antigens. T4 lymphocytes, as the central cells of the immune
system, specifically recognize foreign invaders presented by macrophages. After
specific recognition of a presented antigen, T4 lymphocytes play a major role in
the immune response, producing interleukine-2 ("IL-2"), a central interleukine
that activates all of the accessory cells previously described and the overall
immune response.
BUSINESS STRATEGY
Our current objective is to develop a platform of both therapeutic
compounds and vaccines. We have made a series of discoveries about how the
body's immune system responds to retroviruses, specifically HIV. The foundation
of our platform technology and product pipeline is our discovery of a subtle
mimicry between the virus and the host cells. By understanding the precise
dynamics of the virus's GP41 and the host-cell's IL-2, we believe we have the
potential to design and develop specific therapeutic molecules and antibodies to
disrupt or even prevent the disease. In addition to targeting HIV and AIDS, we
plan to apply these findings to the potential treatment or even prevention of a
range of additional diseases, including certain oncoviruses like leukemia.
Some biotechnology companies are focusing on slowing or impeding the
progress of the virus once it has infected the body's host cells. Other
biotechnology firms are attempting to develop therapies that prevent the virus
from fusing with host cells. If the virus cannot fuse, it cannot reproduce, and
the body's immune system then succeeds in arresting the invasion. Our approach
is also based on the concept of preventing viral fusion. Our scientific strategy
is unique in that its design is based on a series of discoveries involving
mimicry, and, in particular, on the inter-reaction between the viral envelope
glycoprotein GP41 and the host cell's IL-2. We have discovered that a piece of
the virus closely resembles or "mimics" the host cell's IL-2. By exploiting this
mimicry, we believe the virus unlocks the host cell and gains access to the
cell's machinery. The body's immune system responds to the invasion, but fails
to differentiate between the viral GP41 and the host cell's IL-2. As a result,
we believe that the immune system attacks both of them with equal vigor. The
unfortunate consequence is that the body, in turning on itself, undercuts its
own defenses. By better understanding these precise dynamics, we believe we will
be able to design and develop specific therapeutic molecules, vaccines and
antibodies to disrupt the mimicry, prevent HIV from entering the host cell and
enable the body's immune system to recognize HIV. Our current scientific
strategy is to create therapeutic peptides and antibodies to disrupt the
mimicry, block the fusion, and condition the body's immune system to recognize
GP41 as separate and distinct from IL-2. If this can be accomplished, the body's
immune system should be able to identify and attack the virus instead of the
healthy cells.
The Discovered Molecular Mimicry Between Trimeric GP41 AND IL-2. We
have discovered a molecular mimicry between the trimeric ectodomain of the
transmembrane protein of immunosuppressive lentiviruses (HIV-SIV-FIV) and IL-2.
Our initial results were published with the French Academy of Sciences in
November 2000.
Autoimmune Consequences for HIV Infected Subjects. We have found some
of the expected autoimmune consequences of the described virus-host molecular
mimicry in HIV infected subjects. As expected, HIV positive sera recognize human
IL-2, and cross-reactivity was found between the structurally and physically
antigenic analogous sites of GP41 (HIV-1) and human IL-2. The tests included
2,352 HIV+ and HIV-sera, and the results demonstrated that 100% of HIV+ patients
(stages II, III and IV) were positive for the anti IL-2 response. The first
results were presented in the Journal of Autoimmunity in 2001 and were also
presented in a poster session at the Cold Springs Harbor, New York meeting on
infectious disease in December 2001.
13
THERAPEUTIC AND VACCINAL USE OF THE MIMICRY DISCOVERY
Our current research modules focus on the following four fields:
- FUNDAMENTAL RESEARCH. We believe that our insight into the
GP41/IL-2 mimicry can help explain, in large part, the main
AIDS-associated disorders: drop of peripheral IL-2, decrease
of non-infected T helper lymphocytes, lymphoproliferation
disorders and a2 microglobulin increase and
hypergammaglobulinemia. Some of the possible effects of the
tridimensional GP41 (HIV-1)/human IL-2 molecular mimicry on
the AIDS-associated disorders are being evaluated by our
research teams. These teams are also studying molecular
mimicry in FIV, between the viral envelope protein gp36 and
feline IL-2.
- THERAPEUTIC MOLECULES. Based on insights into mimicry, we have
developed a series of synthetic peptides that potently inhibit
the fusion between HIV and its target cell in an infected
subject. These synthetic peptides have been effective in both
HIV and FIV contexts. These therapeutic molecules would
prevent the virus from binding to the target cell, inhibiting
its attempts to reproduce. Having demonstrated that the
transmission of HIV depends on the viral load, and that no
transmission has been observed below 1500 viral copies/ml.,
treatment with therapeutic agents may provide a strategy to
control AIDS epidemicity. This application would complement
available antiretroviral drugs, or may even provide a
substitute for the available antiretroviral drugs. In a series
of independent in vitro experiments, our rationally-designed
peptide compounds were proven to effectively block viral
fusion. These compounds also showed a potency that is
equivalent to the gp41 compound recently approved by the
United States Food and Drug Administration, or FDA. A poster
presentation given at Interscience Conference on Antimicrobal
Agents and Chemotherapy in San Diego CA in September 2002
communicated the relative potency of our compounds. An
additional poster presentation at the International Feline
Retrovirus Research Symposium conference in December 2002
showed the potency of a series of OUR FIV gp36-derived
peptides, and in particular highlighted the surprising potency
of a short compound (consisting of 8 amino acids). Results
were also recently published in the Journal of Virology (March
2003) in an article entitled "Antiviral Activity and
Conformational Features of an Octapeptide Derived from the
membrane-Proximal Ectodomain of the Feline Immunodefeciency
Virus Transmembrane Glycoprotein." An additional poster
presentation at the annual International Retrovirus Conference
in Boston in February 2003 communicated the results of a
series of benchmarking in vitro assays, highlighting the
potency of our peptide compounds across a wide array of clades
or strains of the virus. These data appear to validate our
strategy of creating compounds from well-conserved,
IL-2-homologous regions, for the greatest possible application
for patients worldwide. Based on the success of in vitro
compounds, we launched our first in vivo tests in the feline
model, collaborating with research partners at the Retroviral
Center at the University of Pisa, Italy. These tests are
expected to provide valuable insight into the actual efficacy
of the potential peptides, in particular the shorter peptides,
which would offer a number of practical advantages in terms of
commercialization, including less complexity, lower cost to
manufacture, less immunogenicity, and potential greater
bio-availability.
- THERAPEUTIC AND PREVENTIVE VACCINES. We believe that our
discovery of the host-virus autoimmune mimicry opens the door
to novel therapeutic and preventive vaccine strategies for
both humans and animals. We believe that properly mutated
trimeric gp41 and gp36 represent an excellent candidate for
vaccines, because of their well-conserved and immunogenic
properties. Our specific preventive vaccine would be
"universal" in that it would train the body's immune system to
recognize and defeat a broad array of strains of the virus.
Recent advances in designing and producing soluble, trimeric
gp41 and gp36, have accelerated the vaccine program, and we
expect to initiate in vivo and in vitro testing later this
year.
- AIDS CARTRIDGE. We have developed a number of therapeutic
immunocartridges that would help patients infected with AIDS
by reducing the viral load. These immunocartridges have been
tested and approved by the Ethics Committee for the Treatment
of Systemic Lupus Erythematosus and Hemophilia A. Our research
has demonstrated that the anti IL-2 antibodies in HIV infected
subjects recognize some sites of IL-2 that are crucial for its
bioactivity. Therefore, we believe that the development of an
"AIDS cartridge" could be efficient in the restoration of the
immune system (CD4/CD8-viral load) of HIV infected subjects.
14
We currently have several compound prototypes potentially capable of
commercialization, including:
- Therapeutic molecules (pharmacological agents) - administered
to infected subjects to prevent cell infection by HIV and FIV.
- Therapeutic vaccines (immunotherapeutic agents) - administered
to infected subjects to orient the immune system into
recognizing the transmembrane glycoprotein of the virus and
not the host cell's IL-2.
- Preventive vaccines - administered to healthy subjects to
prevent infection by HIV or FIV.
- AIDS cartridge - administered to infected subjects to
selectively remove the identified immunosuppressive antibodies
present in the serum of AIDS patients, using some peptides
that have been tested for activity.
The Company is exploring both HIV and FIV in parallel, and gaining insight into
product design through the synergies between these two programs.
KEY STAFF
Our management team has changed over the past few months. Peter P.
McCann, Ph.D., resigned as our Chief Executive Officer, President and Director
on February 14, 2003. Michael K. Allio, our Chairman, has assumed the
responsibilities of day-to-day operations until a replacement Chief Executive
Officer and President is named. On December 25, 2000, Patrice Pactol resigned
from our board of directors. In addition, as of January 31, 2003, Joseph D.
Mosca, Ph.D. is no longer employed as our Vice President of Development. At this
time, we do not anticipate hiring a new Vice President of Development.
Research and Development activities continue to be spearheaded by Dr.
Pierre-Francois Serres, our Chief Scientific Officer. Dr. Serres is an
experienced research and development scientist in the field of immunology and
AIDS. Dr. Serres became our Chief Scientific Officer on February 7, 2002, and
has been a member of our board of directors since March 28, 2001. He has
previously served as our Chief Executive Officer and President, and was the
founder, President and Chief Executive Officer of our subsidiary, Mymetics S.A.
Dr. Serres has over 25 years experience in laboratory research and
development. He began his career as a professor and researcher at the medical
faculty of the University of Lyon in France. His professional experience
includes positions at institutions such as the Institut Pasteur, and the Jules
Courmont Hospital (Faculty of Medicine). He has published numerous articles in
scientific journals including the French "Academie des Sciences" and has
authored a number of patents in the fields of biology and medicine. These
include applications in clinical diagnostic-therapeutic treatments and vaccines.
Dr. Serres holds qualifications in Medical Psychology, Pathology, Biological
Engineering and Human Biology from the Institut National des Sciences Appliquees
(INSA) in France. His research over the past 20 years has addressed immunology
and organ transplantation, metabolic diseases, hemophilia, and AIDS.
RESEARCH AND DEVELOPMENT EXPENSES
For the year ended December 31, 2002, we focused on research and
development and, as a result, did not generate any revenues or engage in any
marketing activities. For the years ended December 31, 2002, December 31, 2001
and December 31, 2000, we spent E 1,878,000, E 482,000 and E 101,000,
respectively, on research and development activities.
INTELLECTUAL PROPERTY
We are the exclusive owner of intellectual property relating to our
core research, which is focused on the development of novel HIV and FIV
therapeutics and vaccines. Particularly, we own one issued European patent and
corresponding granted patents in Austria, Belgium, Denmark, Germany, France,
Italy, Luxembourg, the Netherlands, Sweden, Switzerland, and the United Kingdom.
We own six pending French patent applications. We
15
also filed four Patent Cooperation Treaty, or PCT, applications, which claim
priority to four of our six pending French applications, and two national phase
United States patent applications based on the PCT applications. Recently, one
of our United States applications was allowed by the United States Patent and
Trademark Office. We have seven pending United States provisional applications,
and a continuation application which we recently filed based on our allowed
United States application. Additionally, we filed regional national applications
based on one of our PCT applications in the European, Eurasian, OAPI, and ARIPO
regional systems and in Canada and South Africa.
We rely primarily on a combination of patent, copyright, trademark and
trade secret laws, as well as contractual restrictions, to protect our
intellectual property. These legal protections afford limited protection. We
generally require employees, strategic research partners and consultants with
access to our intellectual property to execute confidentiality agreements.
Despite our efforts to protect our intellectual property, unauthorized parties
may attempt to copy the research and research methods that form the basis of our
intellectual property. The laws of many countries do not afford the same level
of protection as those provided by United States intellectual property laws.
Litigation may be necessary to protect and enforce our rights in our
intellectual property.
COMPETITION
We have not yet developed an actual product or generated any revenues.
Our future competitive position depends on our ability to successfully develop
our intellectual property, and to either use such intellectual property to
produce one or more products capable of generating significant revenues or to
license or sell such intellectual property to third parties on financially
favorable terms. Although we believe that the results of our research and
development activities have been favorable, there are numerous entities and
individuals conducting research and development activities in the area of human
and veterinary biology and medicine all of which could be considered
competitors. While many of these individuals and entities have greater
financial, manufacturing, technical, human resource, marketing and distribution
capabilities, and greater experience in conducting pre-clinical and clinical
trials and in obtaining regulatory and FDA approvals, we believe that our
technologies nonetheless provide us with a competitive advantage.
Further, we may face significant competition in the design and
development of some of our therapeutic compounds and preventive vaccines.
Therapeutic Molecules (pharmacological agents). The biopharmaceutical
industry is intensely competitive, especially in the field of HIV. If we are
successful in developing and proving our therapeutic agents, we will compete
with existing developed and approved therapies. The FDA has approved 16
antiviral drugs to treat HIV and AIDS, which fall into two categories depending
on whether they target one or two viral enzymes: either HIV protease or reverse
transcriptase ("RT"). RT drugs aim to block reverse transcriptases and prevent
transcription of the virus' generic material from RNA to DNA. There are two
classes of RT drugs: nucleoside analogues inhibitors and non-nucleoside
inhibitors. The approved nucleoside analogues inhibitors include drugs such as
Retrovir (ziduvodine; AZT), Videx (didanosine; ddl), Hivid (zalcitabine; ddc),
Zerit (stavudine; d4T), Epivir (larnivudine; 3TC), Combivir (ziduvodine +
lamivudine), Ziagen (abacavir; ABC). These drugs are manufactured by companies
such as Glaxo Wellcome Plc, Bristol-Myers Squibb Company, Roche Holding AG and
BioChem Pharma Inc. The approved non-nucleoside inhibitors include drugs such as
Viramuno (nevlrapine), Rescriptor (delavirdine), Sustiva (efavirenz; EFV) which
are produced by Boehringer Ingelhelm Gmbh, Pharmacia & Upjohn Inc. and E. I. Du
Pont de Nemours and Company. The objective of approved protease inhibitor drugs
is to prevent the assembly of new virus particles. The approved protease
inhibitors include drugs such as Invirase (saquinavir), Fortovase (saquinavir),
Norvir (ritonavir), Crixivan (indinavir), Viracept (nellinavir) and Agenerase
(amprenavir), which are manufactured by companies including Roche Holding AG,
Abbot Laboratories, Merck & Co. Inc., Agouron Pharmaceuticals Inc., Vertex
Pharmaceuticals Incorporated and Glaxo Wellcome Plc.
Both HIV protease and RT drugs have demonstrated their efficacy in
terms of HIV blood concentration and HIV-positive period and are used to slow
the progression of the disease. Furthermore, efficacy has been higher with drug
combinations. None of these drugs are, however, a cure, and mutations of HIV's
envelope produce viral strains resistant to both classes of drugs. These drugs
also produce toxic side effects on the peripheral nervous system and
gastrointestinal tract. Non-compliance on combination therapies and
interruptions in dosing could have an effect on, and trigger, accelerated viral
replication.
16
If successful in developing and validating our therapeutic molecules,
we believe that there are significant existing and future markets for the
treatment of HIV and AIDS. There can be no assurance that currently approved
drugs or products developed in the future for the treatment of HIV/AIDS by our
competitors (which may include Roche Holding AG, Abbot Laboratories, Merck & Co.
Inc., Agouron Pharmaceuticals Inc., Vertex Pharmaceuticals Incorporated, Glaxo
Wellcome Plc, Bristol-Myers Squibb Company, Trimeris, Inc., Progenics, Inc., and
BioChem Pharma Inc.) will not be effectively marketed and sold. We believe,
however, that our unique approach and fundamental understanding of molecular
mimicry will provide an advantage over existing and future competitors.
The recent progress of Trimeris Inc. in securing FDA approval for its
fusion inhibitor product, "Fuzeon", a gp41-derived peptide comprised of 36 amino
acids, represents excellent proof-of-concept for us by demonstrating, through
human trials, that such a compound is safe and effective in lowering viral load.
Industry experts estimate that the annual revenue generated from this drug may
reach U.S. $500,000,000 - U.S. $750,000,000, which confirms the significant
demand for fusion inhibitor drugs. The media has also, however, published that
Trimeris and its partner Roche face significant challenges and limitations,
including prohibitive cost of goods, a complex manufacturing process involving
106 separate steps in chemical synthesis, an elevated retail price (recent
estimates exceed $20,000 per patient per annum, more than double the cost of
current therapies), significant supply shortages (year one capacity will likely
not exceed 15,000 patients, less than 7.5% market share in the United States
alone), and difficult delivery of the drug (requiring subcutaneous injection
twice/day of 90 mg. of the drug). These challenges suggest that a drug that can
be made less expensively, and delivered more easily, will have significant
competitive advantages.
Therapeutic Molecules (immunotherapeutic agent). We believe that our
targeted immunotherapeutic vaccines may be innovative within the field of
therapeutic research related to AIDS.
Preventive Vaccines. We are conducting research aimed at developing a
preventive vaccine for the HIV-1 virus, which vaccine will provide protection
against a broad array of viral strains.
In the field of HIV vaccines, the recent failure of the VAXGEN product
in Phase III clinical trials underscores the need for an effective solution to
the global challenge posed by HIV. As this particular candidate was based on
technology unrelated to our technology, we do not feel that the cessation of
clinical trials with respect to VAXGEN negatively impacts our prospects for
developing a viable preventive vaccine.
In the field of FIV vaccines, Ft. Dodge, a division of Wyeth
Pharmaceuticals, launch the industry's first FIV preventive vaccine in late
2002. We consider this development as further validation of the demand and
viability of this product category. Press releases issued by Ft. Dodge cite a
significant potential market for this drug. Like the Trimeris product, the Ft.
Dodge feline vaccine appears to suffer from a range of drawbacks, so we consider
the competitive threat of Ft. Dodge's FIV preventive vaccine to be moderate.
The worldwide vaccine market is dominated by four large multinational
companies: Merck & Co., SmithKline Beecham Plc, Wyeth Lederle Vaccines &
Pediatrics (a division of American Home Products Corporation), and Aventis S.A.
Pasteur. Companies such as The Immune Response Corporation, VaxGen Inc.,
Trimeris, Inc., and Progenics Pharmaceuticals, Inc. are also developing
preventive vaccines.
We believe that while these companies have greater financial,
manufacturing, technical, human resource, marketing and distribution
capabilities, and greater experience in conducting pre-clinical and clinical
trials and in obtaining regulatory and FDA approvals, our technologies,
nonetheless, provide us with a competitive advantage. Our innovative approach to
vaccine development is based on the observed immunological cross-reactivity (or
mimicry) between the well preserved, antigenic and immunodominant domain of GP41
and IL-2, and relies on the observation of expected autoimmune consequences in
HIV infected subjects.
17
We believe that our approach is most promising in comparison with the
approaches that have been pursued so far, including:
- Sub-unit vaccine: a technology addressing a piece of the outer
surface of HIV, such as GP160 or GP120, produced by genetic
engineering.
- Live vector vaccine: a live bacterium or virus such as
vaccinia (used in the smallpox vaccine) modified so it cannot
cause disease, but can transport into the body one or more
genes that makes one or more HIV proteins.
- Vaccine combination: an example includes a "prime-boost
strategy", use of a recombinant vector vaccine to induce
cellular immune responses followed by booster shots of a
sub-unit vaccine to stimulate antibody production.
- Peptide vaccine: chemically synthesized pieces of HIV proteins
(peptides) known to stimulate HIV-specific immunity.
- Virus-like particle vaccine (pseudovirion vaccine): a
non-infectious HIV look-alike that has one or more, but not
all, HIV proteins.
- DNA vaccine: direct injection of genes coding for HIV
proteins.
- Whole-killed virus vaccine: HIV that has been inactivated by
chemicals, irradiation or other means rendering it
non-infectious.
- Live-attenuated virus vaccine: live HIV from which one or more
apparent disease-promoting genes of the virus have been
deleted.
Cartridge. We believe that our cartridge or therapeutic plasmapheresis
is significantly different from the cartridges being developed and provided by
competitors. The more specific technique for antibody removal is known as
immunoadsorption, yet all existing systems are non-specific in removal of
antibodies, which limits their effectiveness and may have serious side effects.
Current immunoadsorption systems selectively remove antibodies by the
interposition of affinity columns in the devices. These cartridges are
expensive, large, require trained technicians and are not protein specific. In
addition, the cartridge is based on a biocompatible membrane based on a
discovery of antibody binding, which perform a highly specific extra-corporeal
immunoadsorption. When specific (as compared with selective) there is the
definitive advantage of removing only the targeted pathogenic antibodies while
leaving the other antibodies essential to the patients normal immune systems,
and defense against infection. The main competitor with respect to cartridges
appears to be Aethlon Medical with its HIV Hemopurifier.
GOVERNMENTAL REGULATION
We contract with third parties to perform research projects related to
our business. These third parties are located in various countries and are
subject to the applicable laws and regulations of their respective countries.
Accordingly, regulation by government authorities in the United States and
foreign countries is a significant factor in the development, manufacture and
marketing of our proposed products and in our ongoing research and product
development activities. Any products that we develop will require regulatory
approval by government agencies prior to commercialization. In particular, human
therapeutic products are subject to rigorous pre-clinical studies and clinical
trials and other approval procedures of the FDA and similar regulatory
authorities in foreign countries. In addition, various federal and state
statutes and regulations will also govern or influence testing, manufacturing,
safety, labeling, storage and record keeping related to such products and their
marketing. The process of obtaining these approvals and the subsequent
substantial compliance with appropriate federal and state statutes and
regulations require the expenditure of substantial time and financial resources.
The success of our business will depend on our ability to obtain and maintain
the necessary regulatory approvals.
Pre-clinical studies generally are conducted on laboratory animals to
evaluate the potential safety and the efficacy of a product. In the United
States, we must submit the results of pre-clinical studies to the FDA as a part
of an investigational new drug application, or IND, which application must
become effective before we can begin clinical trials in the United States. An
IND becomes effective 30 days after receipt by the FDA unless the FDA objects to
it. Typically, clinical evaluation involves a time-consuming and costly
three-phase process.
18
Phase I. Refers typically to closely monitored clinical trials and
includes the initial introduction of an investigational new drug into human
patients or normal volunteer subjects. Phase I clinical trials are designed to
determine the metabolism and pharmacologic actions of a drug in humans, the side
effects associated with increasing drug doses and, if possible, to gain early
evidence on effectiveness. Phase I trials also include the study of
structure-activity relationships and mechanism of action in humans, as well as
studies in which investigational drugs are used as research tools to explore
biological phenomena or disease processes. During Phase I clinical trials,
sufficient information about a drug's pharmacokinetics and pharmacological
effects should be obtained to permit the design of well-controlled,
scientifically valid, Phase II studies. The total number of subjects and
patients included in Phase I clinical trials varies, but is generally in the
range of 20 to 80 people.
Phase II. Refers to controlled clinical trials conducted to evaluate
the effectiveness of a drug for a particular indication or indications in
patients with a disease or condition under study and to determine the common
short-term side effects and risks associated with the drug. These clinical
trials are typically well-controlled, closely monitored and conducted in a
relatively small number of patients, usually involving no more than several
hundred subjects.
Phase III. Refers to expanded controlled clinical trials, which many
times are designated as "pivotal trials" designed to reach end points that the
FDA has agreed in advance, if met, would allow approval for marketing. These
clinical trials are performed after preliminary evidence suggesting
effectiveness of a drug has been obtained. They are intended to gather
additional information about the effectiveness and safety that is needed to
evaluate the overall benefit-risk relationship of the drug and to provide an
adequate basis for physician labeling. Phase III trials can include from several
hundred to several thousand subjects depending on the specific indication being
treated.
The FDA closely monitors the progress of each of the three phases of
clinical trials that are conducted in the United States and may, at its
discretion, reevaluate, alter, suspend or terminate the testing based upon the
data accumulated to that point and the FDA's assessment of the risk/benefit
ratio to the patient. We have not yet conducted any clinical trials and are
currently focused on research.
Once Phase III trials are completed, drug developers submit the results
of pre-clinical studies and clinical trials to the FDA, in the form of an new
drug application, or NDA, for approval to commence commercial sales. In
response, the FDA may grant marketing approval, request additional information
or deny the application if the FDA determines that the application does not meet
the predetermined study end points and other regulatory approval criteria.
Furthermore, the FDA may prevent a drug developer from marketing a product under
a label for its desired indications, which may impair commercialization of the
product.
If the FDA approves the new drug application, the drug becomes
available for physicians to prescribe in the United States. After approval, the
drug developer must submit periodic reports to the FDA, including descriptions
of any adverse reactions reported. The FDA may request additional studies, known
as Phase IV trials, to evaluate long-term effects. We will be required to comply
with similar regulatory procedures in countries other than the United States.
In addition to studies requested by the FDA after approval, a drug
developer may conduct other trials and studies to explore use of the approved
compound for treatment of new indications. The purpose of these trials and
studies and related publications is to broaden the application and use of the
drug and its acceptance in the medical community.
We will have to complete an approval process, similar to the one
required in the United States, in virtually every foreign target market in order
to commercialize our product candidates in those countries. The approval
procedure and the time required for approval vary from country to country and
may involve additional testing. Approvals (both foreign and in the United
States) may not be granted on a timely basis, or at all. In addition, regulatory
approval of prices is required in most countries other than the United States.
We face the risk that the resulting prices would be insufficient to generate an
acceptable return to us or our collaborators. A failure to obtain or maintain
the necessary regulatory approvals will have an materially adverse effect on our
business.
19
EMPLOYEES
As of December 31, 2002, Mymetics S.A. had seven full-time employees
and Mymetics Corporation had two full-time employees.
WWW.MYMETICS.COM
News and information about Mymetics Corporation and its subsidiaries are
available on our web site, www.mymetics.com. In addition to news and other
information about the Corporation, we provide access (free of charge) through
this site to our annual reports on Form 10-K, our quarterly reports on Form
10-Q, our current reports on Form 8-K and all amendments to those reports as
soon as reasonably practicable after we file or furnish them electronically with
the United States Securities and Exchange Commission.
ITEM 2. PROPERTIES
Mymetics S.A. currently leases approximately 170 square meters of
office space in Saint-Genis Laval, France, in which the Corporation's European
administrative activities are conducted. The current all inclusive rent is
approximately E 1,641 per month, and the lease expires on January 31, 2006. Up
until January 31, 2003, we leased approximately 250 square feet of space in
Annapolis, Maryland. The rent under our Annapolis lease was $1,000 per month
prior to its termination. We are temporarily using a small amount of space at
the office of our Chairman, Michael K. Allio, for our principal executive
office. This space is being provided by Mr. Allio at no charge. All of the
Corporation's research activities are conducted at the properties of third
parties with whom the Corporation contracts to perform research projects.
ITEM 3. LEGAL PROCEEDINGS
We are subject to routine litigation incidental to our business. We do
not believe that the outcome of such litigation will have a material adverse
effect on our business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Information. The Corporation's common stock is quoted on the
OTC Bulletin Board under the trading symbol "MYMX". The Corporation's trading
symbol changed from ICHR to MYMX in July 2001, pursuant to a corporate name
change from ICHOR Corporation to Mymetics Corporation. The following table sets
forth the quarterly high and low sale price per share of the Corporation's
common stock for the periods indicated. The prices represent inter-dealer
quotations, which do not include retail mark-up, mark-down or commission and may
not necessarily represent actual transactions.
FISCAL QUARTER ENDED HIGH LOW
2001
March 31......................................... $ 3.25 $ 1.88
June 30.......................................... 3.50 2.35
September 30..................................... 4.10 2.50
December 31...................................... 3.95 2.00
2002
March 31......................................... $ 3.85 $ 2.15
June 30.......................................... 3.70 2.70
September 30..................................... 3.45 0.06
December 31...................................... 0.36 0.09
(b) Stockholders. At March 24, 2003, the Corporation had approximately
646 holders of record of its common stock, some of which are securities clearing
agencies and intermediaries.
(c) Dividends. The Corporation has not paid any dividends on its common
stock and does not anticipate that it will pay any dividends in the foreseeable
future.
(d) Securities Authorized for Issuance Under Equity Compensation Plans.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the common stock that
may be issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of December 31, 2002.
- ----------------------------------------------------------------------------------------------------------------------
Number of Securities
remaining available for
Number of Securities to be Weighted Average Exercise issuance under equity
issued upon exercise of Price of Outstanding compensation plans
Outstanding Options, Options, Warrants and (excluding securities
Warrants and Rights Rights reflected in column (a))
Plan Category (a) (b) (c)
- ----------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Approved by Security
Holders (1) 381,250(2) U.S. $1.38 4,782,500
- ----------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans not
Approved by Security Holders
(3) 80,166 U.S. $1.725 N/A(4)
- ----------------------------------------------------------------------------------------------------------------------
Total 461,416 U.S. $1.44 4,782,500
- ----------------------------------------------------------------------------------------------------------------------
21
(1) Equity compensation plans approved by our security holders include (i) our
1994 Amended and Restated Stock Option Plan, (ii) our 1995 Qualified Incentive
Stock Option Plan and (iii) our 2001 Stock Option Plan. Our 1994 Amended and
Restated Stock Option Plan and our 1995 Qualified Incentive Stock Option Plan
were both terminated in March 2001, but some options granted under these plans
prior to such termination remain outstanding and are included in this table.
(2) Includes (i) 217,500 shares of common stock underlying options granted under
our 2001 Stock Option Plan, (ii) 100,000 shares of common stock underlying
options granted under our 1995 Qualified Incentive Stock Option Plan and (iii)
63,750 shares of common stock underlying options granted under our 1994 Amended
and Restated Stock Option Plan.
(3) From time to time we have granted our lender, MFC Merchant Bank S.A.,
warrants to purchase shares of our common stock. These warrants are granted in
connection with certain credit facilities provided to us by MFC Merchant Bank
S.A., and placement services provided by MFC Merchant Bank S.A. in connection
with a private placement of our securities in June 2001. These warrants were not
granted pursuant to any formal equity compensation plan approved by our board of
directors, but rather, each grant was an individual equity compensation
arrangement, authorized by our board of directors and granted as compensation
for services provided. All of the outstanding warrants were granted pursuant to
similar forms of warrants, and each has an exercise price of U.S. $1.725.
(4) We do not have any formal equity compensation plan that has not been
authorized by our stockholders. These grants are made on an individual basis and
are approved by our board of directors. Accordingly, there are no shares of
common stock reserved for issuance under these arrangements.
ISSUANCES OF UNREGISTERED SECURITIES
Set forth below is information regarding our sales of unregistered
securities during the period commencing on January 1, 2002 and ending on
December 31, 2002. These issuances were made in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as
transactions by an issuer not involving any public offering.
- - In June 2002, we granted Peter P. McCann options to purchase 10,000 shares
of common stock at $3.50 per share. These options were granted under our
2001 Stock Option Plan.
- - In August 2002, we issued 46,925 shares of our common stock to Gilles
Rossi, Marianne Rossi, Jean-Loup Rossi and Alessandro Zuccato in connection
with the Share Exchange Agreement dated July 30, 2002 among the
Corporation, Michele Rossi, Gilles Rossi, Marianne Rossi, Jean-Loup Rossi
and Alessandro Zuccato.
- - In July 2002, we granted each of John M. Musacchio, Robert Demers,
Pierre-Francois Serres, Patrice Pactol, Peter P. McCann and Michael K.
Allio options to purchase 1,250 shares of common stock at $3.50 per share.
These options were granted under our 2001 Stock Option Plan.
- - In June 2002, we granted MFC Merchant Bank S.A. warrants to purchase
26,775 shares of our common stock at an exercise price of E 0.23 per share.
- - In July 2002, we issued MFC Merchant Bank S.A. (i) 1,602,174 shares of our
common stock for E 0.23 per share and (ii) 23,393 shares of our common
stock for U.S. $1.725 per share, all in connection with the exercise of
warrants by MFC Merchant Bank S.A. The aggregate amount to be paid by MFC
Merchant Bank S.A. in connection with these exercises was not paid in
cash, but, rather, was used to reduce our revolving credit debt to MFC
Merchant Bank in an amount of E 412,000.
- - On August 21, 2002, we granted Michael K. Allio options to purchase 100,000
shares of our common stock at $0.55 per share in connection with a
Consulting Agreement we entered into with Mr. Allio.
22
ITEM 6. SELECTED FINANCIAL DATA
The following table reflects selected consolidated financial data for
the Corporation for the fiscal years ended December 31, 2002, 2001, 2000, 1999
and 1998, respectively.
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
(EUROS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA
Operating revenues ..................... 8 26 13 47 42
Research & Development Expenses ........ 1,878 482 101 94 70
General & Administrative Expenses ...... 1,293 1,034 351 37 38
Loss from continuing operations ........ (3,622) (15,701) (1,314) (99) (68)
COMMON SHARE DATA(1)
Loss from continuing operations per
common share ........................ (0.07) (0.37) (0.04) (0.00) (0.00)
Weighted average common shares
outstanding (in thousands) .......... 50,046 42,460 33,311 33,311 33,311
BALANCE SHEET DATA
Working capital ........................ (2,306) 565 (652) (24) (40)
Total assets ........................... 477 1,692 625 146 77
Long-term obligations .................. 242 242 242 242 138
Total stockholders' equity ............. (2,349) 693 (765) (257) (158)
- ----------------
(1) Basic and diluted common share data is the same.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and
financial condition of Mymetics Corporation for the years ended December 31,
2002, 2001 and 2000 should be read in conjunction with the Corporation's audited
consolidated financial statements and related notes included elsewhere herein.
RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED
DECEMBER 31, 2001
Revenues of the year ended December 31, 2002 were E8,000 compared to E26,000 for
the year ended December 31, 2001.
Costs and expenses decreased to E3,630,000 for the year ended December 31, 2002
compared to E15,727,000 for year ended December 31, 2001 as a result of a
decrease in bank fees to E63,000 for the year ended December 31, 2002 from
E14,063,000 in the comparative period in 2001, primarily as a result of reverse
purchase transaction in 2001. Research and development expenses increased to
E1,878,000 in the current year from E482,000 in the
23
comparative period of 2001 as a result of an increase in research activities.
General and administrative expenses increased to E1,293,000 in the year ended
December 31, 2002 from E1,034,000 in the comparative period of 2001. The
Corporation reported a net loss of E3,622,000 or E0.07 per share, for the year
ended December 31, 2002, compared to E15,701,000 or E0.37, for the year ended
December 31, 2001.
RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED
DECEMBER 31, 2000
Revenues of the year ended December 31, 2001 were E26,000 compared to E13,000
for the year ended December 31, 2000. Sales for the year ended December 31, 2001
were nil compared to E13,000 for the comparative period in last year, primarily
as a result of decreased contract research activity. Interest income was E26,000
and nil for the years ended December 31, 2001 and 2000, respectively.
Costs and expenses increased to E15,727,000 for the year ended December 31, 2001
compared to E1,326,000 for year ended December 31, 2000. Research and
development expenses increased to E482,000 in the current year from E101,000 in
the comparative period of 2000 as a result of an increase in research
activities. General and administrative expenses increased to E1,034,000 in the
year ended December 31, 2001 from E351,000 in the comparative period of 2000,
primarily as a result of the expenses related to the reverse purchase
transaction in current year. Bank fees increased to E14,063,000 for the year
ended December 31, 2001 from E806,000 in the comparative period in 2000,
primarily as a result of reverse purchase transaction.
The Corporation reported a net loss of E15,701,000 or E0.37 per share, for the
year ended December 31, 2001, compared to E1,314,000 or E0.04, for the year
ended December 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation had cash E183,000 at December 31, 2002, compared to E888,000 at
December 31, 2001.
Net cash used by operating activities was E3,235,000 for the year ended December
31, 2002, compared to E2,000,000 for the year ended December 31, 2001. An
increase in accounts payable provided cash of E16,000 for the year ended
December 31, 2002 compared to a decrease of the same used cash of E508,000 for
the year ended December 31, 2001.
Investing activities provided cash E252,000 for the year ended December 31, 2002
compared to used cash of E237,000 for the same period last year. Short term
investment provided cash of E354,000 for the year ended December 31, 2002
compared to used cash of E205,000 for the year ended December 31, 2001.
Financing activities provided cash of E2,181,000 for the year ended December 31,
2002 compared to E2,840,000 in the same period last year. Proceeds from issuance
of common stock provided cash of E8,000 for the year ended December 31, 2002
compared to E2,724,000 in the same period last year. Increases in borrowing
pursuant to a non-revolving term facility and other short term advances provided
cash of E2,173,000 in current year and E116,000 in the comparative period last
year. The non-revolving term facility is in the principal amount of up to E2.8
million and matures on August 31, 2003. At December 31, 2002, Mymetics had
borrowed an aggregate of E1,989,000 pursuant to this non-revolving term
facility.
The Corporation expects that it will require substantial additional capital to
continue its research and development, clinical studies and regulatory
activities necessary to bring its potential products to market and to establish
production, marketing and sales capabilities. The Corporation anticipates its
operations will require approximately E2.0 million in the year ending December
31, 2003. The Corporation will seek to raise the required capital from lenders,
equity or debt issuances and/or potential partnerships with major international
pharmaceutical and biotechnology firms. However, there can be no assurance that
the Corporation will be able to raise additional capital on terms satisfactory
to the Corporation, or at all, to finance its operations. In the event that the
Corporation is not able to obtain such additional capital, it would be required
to restrict or even halt its operations.
24
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates which
could affect our financial condition and results of operations. We have not
entered into derivative contracts for our own account to hedge against such
risk.
INTEREST RATE RISK
Fluctuations in interest rates may affect the fair value of financial
instruments. An increase in market interest rates may increase interest payments
and a decrease in market interest rates may decrease interest payments of such
financial instruments. We have debt obligations which are sensitive to interest
rate fluctuations. The following tables provide information about our exposure
to interest rate fluctuations for the carrying amount of such debt obligations
as of December 31, 2002 and 2001 and expected cash flows from these debt
obligations.
EXPECTED FUTURE CASH FLOW
-------------------------
YEAR ENDING DECEMBER 31, 2002
(IN THOUSANDS)
--------------
CARRYING FAIR
VALUE VALUE 2003 2004 2005 2006 2007 THEREAFTER
----- ----- ---- ---- ---- ---- ---- ----------
Debt obligations...... E1,989 E1,989 E2,082 E-- E-- E-- E-- E--
YEAR ENDING DECEMBER 31, 2001
(IN THOUSANDS)
--------------
CARRYING FAIR
VALUE VALUE 2002 2003 2004 2005 2006 THEREAFTER
----- ----- ---- ---- ---- ---- ---- ----------
Debt obligations...... E228 E228 E244 E-- E-- E-- E-- E--
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required
with respect to this Item 8, and as identified in Item 14 of this annual report,
are included in this annual report commencing on page 31.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Corporation's definitive proxy
statement to be filed within 120 days of the end of the Corporation's 2002
fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Corporation's definitive proxy
statement to be filed within 120 days of the end of the Corporation's 2002
fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Corporation's definitive proxy
statement to be filed within 120 days of the end of the Corporation's 2002
fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Corporation's definitive proxy
statement to be filed within 120 days of the end of the Corporation's 2002
fiscal year.
ITEM 14. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. Within 90 days
prior to the filing date of this report, the Corporation's principal executive
officer and principal financial officer, carried out an evaluation of the
effectiveness and design of the Corporation's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) and have concluded
that, based on such evaluation, the Corporation's disclosure controls and
procedures were adequate and effective to ensure that material information
relating to the Corporation, including its consolidated subsidiaries, was made
known to them by others within those entities, particularly during the period in
which this annual report on Form 10-K was being prepared.
(b) Changes in Internal Controls. There were no significant changes in
the Corporation's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, nor were there
any significant deficiencies or material weaknesses in the Corporation's
internal controls. Accordingly, no corrective actions were required or
undertaken.
26
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Index to Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a)(2) ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT
APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR
NOTES THERETO.
(3) List of Exhibits
2.1 Share Exchange Agreement dated December 13, 2001 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page thereto (1)
2.2 Share Exchange Agreement dated December 13, 2001 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page thereto (1)
2.3 Purchase Agreement dated October 17, 1998 between the
Corporation and the majority stockholders of Nazca Holdings Ltd.
(2)
2.4 Amendment to the Purchase Agreement dated October 17, 1998
between the Corporation and the majority stockholders of Nazca
Holdings Ltd. (3)
2.5 Revised Purchase Agreement dated July 28, 1999 between the
Corporation and the majority stockholders of Nazca Holdings Ltd.
(4)
2.6 Share Exchange Agreement dated July 30, 2002 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page therto (5)
3(i) Articles of Incorporation of the Corporation (as amended through
May 10, 2002) (6)
3(ii) Bylaws (7)
4 Form of Specimen Stock Certificate (8)
9 Voting and Exchange Trust Agreement dated March 28, 2001, among
the Corporation, 6543 Luxembourg S.A. and MFC Merchant Bank S.A.
(8)
10.1 Services Agreement dated May 31, 2001, between the Corporation
and MFC Merchant Bank, S.A.(7)
10.2 Employment Agreement dated May 3, 2001, between Pierre-Francois
Serres and the Corporation (7)
10.3 Indemnification Agreement dated March 28, 2001, between the
Corporation and MFC Bancorp Ltd. (7)
10.4 Agreement dated for reference May 15, 2000, between the
Corporation and Maarten Reidel (7)
27
10.5 Preferred Stock Redemption and Conversion Agreement dated for
reference December 21, 2000, between the Corporation and Sutton
Park International Ltd. (10)
10.6 Preferred Stock Conversion Agreement dated for reference
December 21, 2000, between the Corporation and Med Net
International Ltd. (11)
10.7 Preferred Stock Conversion Agreement dated December 21, 2000,
between the Corporation and Dresden Papier GmbH (11)
10.8 Assignment Agreement dated December 29, 2000, among the
Corporation, Mymetics S.A. and MFC Merchant Bank S.A. (1)
10.9 Credit Facility Agreement dated July 27, 2000, between MFC
Merchant Bank, S.A. and the Corporation (1)
10.10 Amended Credit Facility Agreement dated for reference August 13,
2001, between MFC Merchant Bank, S.A. and the Corporation
10.11 Second Amended Credit Facility Agreement dated for reference
February 27, 2002, between MFC Merchant Bank, S.A. and the
Corporation
10.12 Amended and Restated Credit Facility Agreement dated for
reference February 28, 2003, among MFC Merchant Bank, S.A., MFC
Bancorp Ltd., and the Corporation
10.13 Guarantee dated for reference February 28, 2003, by MFC Bancorp
Ltd. to MFC Merchant Bank S.A.
10.14 Shareholder Agreement dated March 28, 2001, among the
Corporation, the Holders of Class B Exchangeable Preferential
Non-Voting Shares of 6543 Luxembourg S.A. signatory thereto and
6543 Luxembourg S.A.(8)
10.15 Support Agreement dated March 28, 2001, between the Corporation
and 6543 Luxembourg S.A. (8)
10.16 1995 Qualified Incentive Stock Option Plan (12)
10.17 Amended 1994 Stock Option Plan (13)
10.18 2001 ICHOR Corporation Stock Option Plan (7)
10.19 Employment Agreement dated March 18, 2002, between the
Corporation and Peter P. McCann (14)
10.20 Consulting Agreement dated August 31, 2001, between the
Corporation and Michael K. Allio (8)
10.21 Amendment to Consulting Agreement dated August 21, 2002, between
the Corporation and Michael K. Allio
10.22 Employment Agreement dated March 18, 2002, between the
Corporation and Dr. Joseph D. Mosca (15)
10.23 Separation Agreement and Release dated January 31, 2003, between
the Corporation and Peter P. McCann
28
10.24 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Robert Demers (8)
10.25 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Michael K. Allio (8)
10.26 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and John M. Musacchio (8)
10.27 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Patrice Pactol (8)
10.28 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Pierre-Francois Serres (8)
10.29 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Pierre-Francois Serres
10.30 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Patrice Pactol
10.31 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Robert Demers
10.32 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and John M. Musacchio
10.33 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Michael K. Allio
10.34 Director and Non-Employee Stock Option Agreement dated August
21, 2002, between the Corporation and Michael K. Allio
10.35 Director and Non-Employee Stock Option Agreement dated June 20,
2002, between the Corporation and Peter P. McCann
10.36 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Peter P. McCann
10.37 Director and Non-Employee Stock Option Agreement dated February
6, 2003, between the Corporation and Peter P. McCann
10.38 Patent Pledge Agreement dated November __, 2002 among Mymetics
S.A., Mymetics Deutschland GmbH, the Corporation and MFC
Merchant Bank S.A.
11 Statement Regarding Calculation of Per Share Earnings.
21 List of Subsidiaries
24.1 Power of Attorney for Pierre-Francois Serres
24.2 Power of Attorney for Robert Demers
24.3 Power of Attorney for Michael K. Allio
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
29
- ----------------
(1) Incorporated by reference to the Corporation's Schedule 14C filed with
the Securities and Exchange Commission on April 26, 2001.
(2) Incorporated by reference to the Corporation's report on Form 8-K filed
with the Securities and Exchange Commission on October 22, 1998.
(3) Incorporated by reference to the Corporation's report on Form 8-K/A
filed with the Securities and Exchange Commission on April 15, 1999.
(4) Incorporated by reference to the Corporation's report on Form 8-K/A
filed with the Securities and Exchange Commission on August 13, 1999.
(5) Incorporated by reference to the Corporation's Amendment No. 1 to Form
S-1 filed with the Securities and Exchange Commission on August 8,
2002.
(6) Incorporated by reference to the Corporation's report on Form 10-Q for
the quarter ended March 31, 2002, filed with the Securities and
Exchange Commission on May 15, 2002.
(7) Incorporated by reference to the Corporation's report on Form 10-Q for
the quarter ended June 30, 2001, filed with the Securities and Exchange
Commission on August 14, 2001.
(8) Incorporated by reference to the Corporations Registration Statement on
Form S-1, File No. 333-88782, filed with the Securities and Exchange
Commission on May 22, 2002.
(9) Incorporated by reference to the Corporation's report on Form 8-K/A
filed with the Securities and Exchange Commission on August 9, 2000.
(10) Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd.
with the Securities and Exchange Commission on dated January 2, 2001.
(11) Incorporated by reference to the Corporation's report on Form 10-K for
the fiscal year ended December 31, 2000, filed with the Securities and
Exchange Commission on March 14, 2001.
(12) Incorporate by reference to the Corporation's Registration Statement on
Form S-8, File No. 333-15831, filed with the Securities and Exchange
Commission on November 8, 1996.
(13) Incorporated by reference to the Corporation's Registration Statement
on Form S-8, File No. 333-15829, filed with the Securities and
Exchange Commission on November 8, 1996.
(14) Incorporated by reference to the Corporation's report on Form 10-K for
the fiscal year ended December 31, 2001, and filed with the Securities
and Exchange Commission on March 14, 2001.
(15) Incorporated by reference to the Corporation's report on Form 10-Q for
the quarter ended March 31, 2002, filed with the Securities and
Exchange Commission on May 15, 2002.
(b) Reports on Form 8-K
None.
30
PETERSON SULLIVAN PLLC
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Mymetics Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Mymetics
Corporation (a development stage company) and Subsidiaries as of December 31,
2002 and 2001, and the related consolidated statements of operations and
comprehensive loss, changes in shareholders' equity, and cash flows for the
years ended December 31, 2002, 2001 and 2000, and for the period from May 2,
1990 (inception) to December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Mymetics Corporation
(a development stage company) and Subsidiaries as of December 31, 2002 and 2001,
and the results of their operations and their cash flows for the years ended
December 31, 2002, 2001 and 2000, and for the period from May 2, 1990
(inception) to December 31, 2002, in conformity with accounting principles
generally accepted in the United States.
The accompanying 2002 consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company has not developed a
commercially viable product and has not been able to generate revenues and as a
result has experienced significant losses. These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Peterson Sullivan PLLC
Peterson Sullivan PLLC
Seattle, Washington
March 12, 2003
31
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
(In Thousands of Euros)
ASSETS 2002 2001
--------- ---------
Current Assets
Cash E 183 E 888
Short-term investments - 354
Receivables 59 49
Prepaid expenses 36 31
--------- ---------
Total current assets 278 1,322
Patents 199 161
Goodwill - 209
--------- ---------
E 477 E 1,692
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable E 452 E 436
Taxes and social costs payable 119 83
Note payable 1,989 228
Other 24 10
--------- ---------
Total current liabilities 2,584 757
Payable to Shareholders 242 242
--------- ---------
Total liabilities 2,826 999
Shareholders' Equity
Common stock, U.S. $.01 par value; 80,000,000 shares
authorized; issued and outstanding 50,944,505
at December 31, 2002 and 49,261,962 at
December 31, 2001 579 562
Additional paid-in capital 17,888 17,422
Deficit accumulated during the development stage (21,013) (17,391)
Accumulated other comprehensive income 197 100
--------- ---------
(2,349) 693
--------- ---------
E 477 E 1,692
========= =========
The accompanying notes are an integral part of these financial statements.
32
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the
Years Ended December 31, 2002, 2001 and 2000,
and the Period from May 2, 1990 (Inception) to December 31, 2002
(In Thousands of Euros, Except Per Share Data)
Total
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
2002 2001 2000 2002)
------------- ------------- ------------- --------------------
Revenues
Sales E - E - E 13 E 224
Interest 8 26 - 34
------------- ------------- ------------- --------------------
8 26 13 258
Expenses
Research and development 1,878 482 101 2,722
General and administrative 1,293 1,034 351 2,908
Bank fee 63 14,063 806 14,932
Interest 60 79 16 155
Goodwill impairment 209 - - 209
Amortization 64 51 52 258
Directors' fees 63 18 - 81
------------- ------------- ------------- --------------------
3,630 15,727 1,326 21,265
------------- ------------- ------------- --------------------
Loss before income tax provision (3,622) (15,701) (1,313) (21,007)
Income tax provision - - 1 6
------------- ------------- ------------- --------------------
Net loss (3,622) (15,701) (1,314) (21,013)
Other comprehensive income
Foreign currency translation
adjustment 97 100 - 197
------------- ------------- ------------- --------------------
Comprehensive loss E (3,525) E (15,601) E (1,314) E (20,816)
============= ============= ============= ====================
Basic and diluted loss per share E (0.07) E (0.37) E (0.04) E (0.59)
============= ============= ============= ====================
The accompanying notes are an integral part of these financial statements.
33
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the
Period from May 2, 1990 (Inception) to December 31, 2002
(In Thousands of Euros)
Date of Number of
Transaction Shares Par Value
--------------------- ------------ ----------
Balance at May 2, 1990 E -
Shares issued for cash June 1990 33,311,361 119
Net losses to December 31, 1999 - -
------------ ----------
Balance at December 31, 1999 33,311,361 119
Bank fee - -
Net loss for the year - -
------------ ----------
Balance at December 31, 2000 33,311,361 119
Effect on capital structure resulting from a business combination March 2001 8,165,830 354
Issuance of stock purchase warrants for bank fee March 2001 - -
Issuance of shares for bank fee March 2001 1,800,000 21
Issuance of shares for bank fee June 2001 225,144 3
Issuance of shares for cash June 2001 1,333,333 15
Exercise of stock purchase warrants in repayment of debt June 2001 1,176,294 13
Exercise of stock purchase warrants for cash December 2001 3,250,000 37
Net loss for the year - -
Translation adjustment - -
------------ ----------
Balance at December 31, 2001 49,261,962 562
Exercise of stock options March 2002 10,000 -
Issuance of stock purchase warrants for bank fee June 2002 - -
Exercise of stock purchase warrants in repayment of debt and
for cash July 2002 1,625,567 16
Issuance of remaining shares from 2001 business combination August 2002 46,976 1
Net loss for the year - -
Translation adjustment - -
------------ ----------
Balance at December 31, 2002 50,944,505 E 579
============ ==========
Accumulated
Other
Deficit Comprehensive
Accumulated Income - Foreign
Additional During the Currency
Paid-in Development Translation
Capital Stage Adjustment
----------- --------------- ----------------
Balance at May 2, 1990 E - E - E -
Shares issued for cash - - -
Net losses to December 31, 1999 - (376) -
----------- --------------- ----------------
Balance at December 31, 1999 - (376) -
Bank fee 806 - -
Net loss for the year - (1,314) -
----------- --------------- ----------------
Balance at December 31, 2000 806 (1,690) -
Effect on capital structure resulting from a business combination (354) - -
Issuance of stock purchase warrants for bank fee 14,063 - -
Issuance of shares for bank fee (21) - -
Issuance of shares for bank fee (3) - -
Issuance of shares for cash 2,109 - -
Exercise of stock purchase warrants in repayment of debt 259 - -
Exercise of stock purchase warrants for cash 563 - -
Net loss for the year - (15,701) -
Translation adjustment - - 100
----------- --------------- ----------------
Balance at December 31, 2001 17,422 (17,391) 100
Exercise of stock options 8 - -
Issuance of stock purchase warrants for bank fee 63 - -
Exercise of stock purchase warrants in repayment of debt 396 - -
Issuance of remaining shares from 2001 business combination (1) - -
Net loss for the year - (3,622) -
Translation adjustment - - 97
----------- --------------- ----------------
Balance at December 31, 2002 E 17,888 E (21,013) E 197
=========== =============== ================
Total
------------
Balance at May 2, 1990 E -
Shares issued for cash 119
Net losses to December 31, 1999 (376)
------------
Balance at December 31, 1999 (257)
Bank fee 806
Net loss for the year (1,314)
------------
Balance at December 31, 2000 (765)
Effect on capital structure resulting from a business combination -
Issuance of stock purchase warrants for bank fee 14,063
Issuance of shares for bank fee -
Issuance of shares for bank fee -
Issuance of shares for cash 2,124
Exercise of stock purchase warrants in repayment of debt 272
Exercise of stock purchase warrants for cash 600
Net loss for the year (15,701)
Translation adjustment 100
------------
Balance at December 31, 2001 693
Exercise of stock options 8
Issuance of stock purchase warrants for bank fee 63
Exercise of stock purchase warrants in repayment of debt 412
Issuance of remaining shares from 2001 business combination -
Net loss for the year (3,622)
Translation adjustment 97
------------
Balance at December 31, 2002 E (2,349)
============
The accompanying notes are an integral part of these financial statements.
34
MYMETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2002, 2001 and 2000 and the Period
from May 2, 1990 (Inception) to December 31, 2002
(In Thousands of Euros)
Total
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
2002 2001 2000 2002)
---------- ------------ ---------- ---------------
Cash Flows from Operating Activities
Net loss E (3,622) E (15,701) E (1,314) E (21,013)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Amortization 64 51 52 258
Goodwill impairment 209 - - 209
Fees paid in warrants 63 14,063 - 14,126
Fee paid in common stock - - 806 806
Changes in current assets and liabilities
net of effects from reverse purchase
Receivables (10) 53 7 (21)
Accounts payable 16 (508) 546 154
Taxes and social costs payable 36 (26) 55 119
Other 9 68 (7) 36
---------- ------------ ---------- ---------------
Net cash provided by (used in)
operating activities (3,235) (2,000) 145 (5,326)
Cash Flows from Investing Activities
Patents and other (102) (45) (128) (337)
Short-term investments 354 (205) (122) -
Cash acquired in reverse purchase - 13 - 13
---------- ------------ ---------- ---------------
Net cash provided by (used in)
investing activities 252 (237) (250) (324)
Cash Flows from Financing Activities
Proceeds from the issuance of common stock 8 2,724 - 2,851
Borrowings from shareholders - - - 242
Increase in note payable and other
short-term advances 2,173 116 384 2,673
Loan fees - - (130) (130)
---------- ------------ ---------- ---------------
Net cash provided by financing activities 2,181 2,840 254 5,636
Effect of exchange rate changes on cash 97 100 - 197
---------- ------------ ---------- ---------------
Net increase (decrease) in cash (705) 703 149 183
Cash, beginning of period 888 185 36 -
---------- ------------ ---------- ---------------
Cash, end of period E 183 E 888 E 185 E 183
========== ============ ========== ===============
The accompanying notes are an integral part of these financial statements.
35
MYMETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
Basis of Presentation
The amounts in the notes are rounded to the nearest thousand except for per
share amounts.
Mymetics Corporation ("the Company") was created for the purpose of engaging in
research and development of human health products. Its main research efforts
have been concentrated in the prevention and treatment of the AIDS virus. The
Company has established a network which enables it to work with education
centers, research centers, pharmaceutical laboratories and biotechnology
companies.
These financial statements have been prepared treating the Company as a
development stage company. As of December 31, 2002, the Company had not
performed any clinical testing and a commercially viable product is not expected
for several more years. As such, the Company has not generated significant
revenues. Revenues reported by the Company consist of incidental serum
by-products of the Company's research and development activities and interest
income. For the purpose of these financial statements, the development stage
started May 2, 1990.
These financial statements have also been prepared assuming the Company will
continue as a going concern. The Company has experienced significant losses
since inception resulting in a deficit in shareholders' equity of E2,349 at
December 31, 2002. Deficits in operating cash flows since inception have been
financed through debt and equity funding sources. In order to remain a going
concern and continue the Company's research and development activities,
management intends to seek additional funding. But there can be no assurance
that management will be successful in these efforts.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Significant intercompany accounts and transactions have been
eliminated.
36
Foreign Currency Translation
The Company translates non-Euro assets and liabilities of its subsidiary at the
rate of exchange at the balance sheet date. Revenues and expenses are translated
at the average rate of exchange throughout the year. Unrealized gains or losses
from these translations are reported as a separate component of comprehensive
income. Transaction gains or losses are included in general and administrative
expenses in the consolidated statements of operations. The translation
adjustments do not recognize the effect of income tax because the Company
expects to reinvest the amounts indefinitely in operations. The Company's
reporting currency is the Euro because a substantial portion of the Company's
activities have been conducted in Europe.
Cash
Cash balances are occasionally in excess of insured amounts. Interest paid was
E60 in 2002, E42 in 2001 and none in 2000. Income tax paid in 2002, 2001 and
2000 was nil.
Short-Term Investments
Short-term investments consisted of certificates of deposit stated at cost. The
fair value approximates cost based on the length to maturity and interest rate.
Revenue Recognition
The Company records the sale of products when the products are delivered and the
Company has only a security interest in the products should a customer default
on payment.
Receivables
Receivables are stated at their outstanding principal balances. Management
reviews the collectibility of receivables on a periodic basis and determines the
appropriate amount of any allowance. Based on this review procedure, management
has determined that the allowances at December 31, 2002 and 2001, are
sufficient. The Company charges off receivables to the allowance when management
determines that a receivable is not collectible.
Goodwill and Other Intangibles
As required, the Company adopted Statement of Financial Standards ("SFAS") No.
142, "Goodwill and Other Intangible Assets," beginning January 1, 2002. Under
this standard, goodwill of a reporting unit and intangible assets that have
indefinite useful lives are not amortized but are tested annually for
impairment. Intangible assets with a finite life are amortized over their
estimated useful lives.
Research and Development
Research and development costs are expensed as incurred.
37
Taxes on Income
The Company accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax consequences, the
Company generally considers all expected future events other than enactments of
changes in the tax laws or rates.
Earnings per Share
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. The weighted average number of shares was 50,045,658 for the year ended
December 31, 2002, 42,459,784 for the year ended December 31, 2001, and
33,311,361 for 2000. The weighted average number of shares for the period May 2,
1990 through December 31, 2002, was 35,354,881. Diluted earnings per share takes
into consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive securities. Warrants and options were not
included in the computation of diluted earnings per share because their effect
would be anti-dilutive due to net losses incurred.
Stock-Based Compensation
The Company has a stock-based employee compensation plan, which is described
more fully in Note 7. The Company accounts for the plan under the recognition
and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations. No stock-based employee compensation
cost is reflected in net income, as all options granted under the plan had an
exercise price equal to or greater than the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on
net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," to stock-based employee compensation.
Total Accumulated
During Development
Stage (May 2, 1990
2002 2001 2000 to December 31, 2002)
---------- --------- ---------- ---------------------
Net Income (Loss)
- -----------------
As reported E (3,622) E (15,701) E (1,314) E (21,013)
Deduct: Total stock-based employee
compensation expense determined under
fair value based methods for all
awards, net of any related tax effects (72) (221) - (293)
---------- --------- ---------- -------------
Pro forma E (3,694) E (15,922) E (1,314) E (21,306)
========== ========= ========== =============
Basic and Diluted Earnings (Loss) Per Share
- -------------------------------------------
As reported E (.07) E (.37) E (.04) E (.59)
Pro forma E (.07) E (.38) E (.04) E (.60)
38
Estimates
The preparation of financial statements in conformity with United States
generally accepted accounting principles 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 financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
New Accounting Standards
SFAS No. 145 and 146 are generally modifications to previously adopted
standards. A part of SFAS 145 is effective for years beginning after May 15,
2002, and SFAS 146 is effective for years beginning after December 31, 2002.
These new standards do not have an effect on the Company's consolidated
financial statements.
Note 2. Receivables
2002 2001
---------------- ---------------
Trade receivables (including E23 from a
shareholder in 2002 and 2001) E 37 E 37
Refunds due from suppliers - 6
Value added tax 41 31
Other 15 9
--------------- ---------------
93 83
Allowance for doubtful accounts (34) (34)
--------------- ---------------
E 59 E 49
=============== ===============
Note 3. Goodwill and Other Intangible Assets
Prior to January 1, 2002, the Company was amortizing goodwill over a five-year
period. In accordance with current accounting standards, goodwill is not to be
amortized beginning January 1, 2002. Goodwill was acquired during 2001 at a cost
of E247 and amortization amounted to E38 for the year ended December 31, 2001.
Had goodwill not been amortized in 2001, net loss would have amounted to
E(15,663) and basic and diluted loss per share would not have changed. No
additional acquisitions have occurred. Based on a review of the fair value of
the Company's only reporting unit at December 31, 2002, management has
determined that the goodwill is fully impaired. Accordingly, an impairment loss
is recorded in the 2002 statement of operations.
39
Other intangible assets consist of patents which are stated at cost of the fees
paid to the French patent office. At December 31, 2002 and 2001, the carrying
amount of patents was E199 and E161 net of accumulated amortization of E125 and
E61, respectively. Amortization expense relating to patents was E64, E13 and E52
for 2002, 2001 and 2000, respectively. Amortization expense is expected to
amount to E64 during each of the next three years and E7 during 2006, which will
completely amortize this asset.
Note 4. Taxes and Social Costs Payable
2002 2001
--------------- ---------------
Social security and other social benefits E 113 E 75
Value added tax - 3
Other 6 5
--------------- ---------------
E 119 E 83
=============== ===============
Note 5. Transactions With Affiliates
During 2000, the Company agreed to pay a fee in common stock to MFC Merchant
Bank SA ("MFC Bank") for services provided in a business combination
transaction. The parent of MFC Bank was a shareholder of the Company. The common
shares were not issued in 2000. The fair value of the shares at the measurement
date, amounting to E806 (which may not be indicative of the value of the Company
as a whole), was included in additional paid-in capital at December 31, 2000. In
2001, a total of 2,025,144 common shares were issued to MFC Bank which resulted
in E24 being reclassified to common stock based on the par value of the shares.
The Company has a non-revolving term credit facility with MFC Bank which allowed
the Company to borrow up to E2,800 at LIBOR plus 4% (approximately 7.0% at
December 31, 2002) repayable on August 31, 2003, as extended, collateralized by
all of the Company's assets plus any future patents. The Company owed E1,989 and
E228 under this facility as of December 31, 2002 and 2001, respectively. The
fair value of this note approximates carrying value because the note is
short-term and has a market rate of interest. MFC Bank had also advanced E400 to
the Company in a prior year which was paid in 2001.
In connection with the term credit facility, the Company agreed to pay MFC Bank
an arrangement fee of E130 and E10 per month for nine months as a retainer fee.
The arrangement fee was amortized over the original term of the loan and the
retainer fee was expensed monthly beginning August 2000.
The Company incurred fees of E155 to MFC Bank in 2002 related to management
services.
40
In March 2001, the Company granted warrants under the agreements with MFC Bank
which entitle MFC Bank to purchase 6,001,693 of the Company's common shares. The
warrants allow MFC Bank to convert to shares an amount equal to the maximum of
the credit facility including unpaid interest plus the arrangement and retainer
fees. The warrants are exercisable within a three-year period beginning August
2000 at approximately E.2319 per common share. The fair value of the beneficial
conversion feature amounting to E14,063 (which may not be indicative of the
value of the Company as a whole) was calculated on March 28, 2001, the grant
date, using the Black-Scholes model. This amount was recorded as paid-in capital
of E14,063 and allocated to bank fee expense in 2001. During 2001, MFC Bank
exercised warrants to acquire 1,176,294 common shares in exchange for the
arrangement fee and the retainer fee plus E52 in accrued interest. MFC also
exercised warrants to acquire 3,250,000 common shares for cash in 2001. In 2002,
the Company granted 26,775 additional warrants under the original agreements
with MFC Bank. The fair value of the beneficial conversion feature on these
warrants was calculated using the Black-Scholes model which amounted to E63.
This amount was recorded as paid-in capital of E63 and allocated to bank fee
expense in 2002. During 2002, MFC Bank exercised the remaining warrants to
acquire 1,602,174 common shares. This resulted in a decrease of E372 due on the
revolving term credit facility with MFC Bank. This is a non-cash transaction for
purposes of the statement of cash flows.
In June 2001, the Company issued additional warrants to MFC Bank to purchase
103,559 common shares at U.S. $1.725 per share exercisable during a three-year
period. These warrants were issued in connection with MFC Bank's placement of
1,333,333 of the Company's common shares. The warrants were valued at E118 based
on the fair value of the placement fees rendered and was a cost of the
placement. In 2002, MFC Bank exercised warrants to acquire 23,393 common shares.
This resulted in a decrease of E40 due on the revolving term credit facility
with MFC Bank. This is a non-cash transaction for purposes of the statement of
cash flows.
The amounts payable to shareholders bear no interest, have no collateral, and
are repayable upon the Company becoming profitable. Since the timing of the
Company becoming profitable cannot be determined, the fair value of the amounts
payable to shareholders cannot be determined. The Company is not expected to
become profitable in the near-term, therefore, the amounts payable to
shareholders have been classified as long-term.
During 2002 and 2001, the Company incurred fees to its Chairman of E275 and E82
for consulting from a company owned by him, and E27 in 2001 from a company owned
by the former Chief Financial Officer of the Company. Accounts payable at
December 31, 2002 and 2001, includes E23 and E14 of these fees, respectively.
41
Note 6. Income Taxes
The reconciliation of income tax on income computed at the federal statutory
rates to income tax expense is as follows:
2002 2001 2000
--------------- ---------------- ---------------
U.S. Federal statutory rates on loss from
operations E (1,231) E (5,338) E (446)
Nondeductible fee paid in warrants and common
stock 21 4,781 275
Effect of U.S. tax on French losses 378 550 -
Change in valuation allowance 890 (6) 172
Other (58) 13 -
--------------- --------------- ---------------
Income tax expense E - E - E 1
=============== =============== ===============
Deferred tax asset is composed of the following:
2002 2001
--------------- ---------------
Difference in book and tax basis of amounts payable to shareholder E 82 E 82
Net operating loss carryforward 1,063 173
--------------- ---------------
1,145 255
Less valuation allowance for deferred tax asset (1,145) (255)
--------------- ---------------
Net deferred tax asset E - E -
=============== ===============
The Company's provision for income taxes was derived from U.S. and French
operations. The Company had no net operating loss carryforwards as of December
31, 2002, in France and E3,128 in the United States which expire beginning in
year 2021.
42
Note 7. Stock Option Plans
1994 Amended Stock Option Plan
The Company's 1994 stock option plan provided for the issuance of up to 350,000
shares of the Company's common stock to employees and non-employee directors.
The plan was terminated during 2002. The following table summarizes information
with respect to this plan:
Weighted
Average
Number of Shares Exercise Price
----------------- ----------------
Outstanding and exercisable at December 31, 2001 and 2000 73,750 U.S. $ .82
==============
Exercised in 2002 (10,000)
---------------
Outstanding and exercisable at December 31, 2002 63,750 U.S. $ .83
=============== ==============
Reserved for future grants at December 31, 2002 -
===============
1995 Qualified Incentive Stock Option Plan
The Company's board of directors approved a stock option plan on August 15, 1996
which provided for the issuance of up to 150,000 shares of the Company's common
stock to key employees. The plan was terminated during 2002. The following table
summarizes information with respect to this plan:
Weighted
Average
Number of Shares Exercise Price
----------------- ----------------
Outstanding and exercisable at December 31, 2002, 2001 and 2000 100,000 U.S. $ .75
=============== ==============
Reserved for future grants at December 31, 2002 -
===============
43
2001 Qualified Incentive Stock Option Plan
The Company's board of directors approved a stock option plan on June 15, 2001,
which provides for the issuance of up to 5,000,000 shares of the Company's
common stock to employees and non-employee directors. The weighted average fair
value of these options at the grant dates were E.62 and E2.24 per option in 2002
and 2001, respectively. The following table summarizes information with respect
to this plan:
Weighted
Average
Number of Shares Exercise Price
----------------- ----------------
Granted in 2001 100,000 U.S. $ 2.86
---------------
Outstanding and exercisable at December 31, 2001 100,000 U.S. $ 2.86
==============
Granted in 2002 117,500 U.S. $ .99
---------------
Outstanding and exercisable at December 31, 2002 217,500 U.S. $ 1.83
=============== ==============
Reserved for future grants at December 31, 2002 4,782,500
===============
Almost all options have an expiration date ten and a half years after issuance.
The fair value of each option granted was estimated for proforma purposes on the
grant date using the Black-Scholes Model (use of this Model for proforma
purposes is not intended to indicate the value of the Company as a whole). The
assumptions used in calculating fair value are as follows:
2002 2001
------------------------ -----------------------
Risk-free interest rate 4.75% 4.5%
Expected life of the options 7 years 8 years
Expected volatility 71.10% - 243.12% 63.91% - 160.97%
Expected dividend yield 0% 0%
Note 8. Commitments and Contingencies
The Company leases property under noncancelable operating leases through January
2006. Future minimum lease payments under noncancelable operating leases are as
follows:
2003 E 7
2004 7
2005 7
2006 1
------------
E 22
=============
44
Total rent expense per year was E30 for 2002 and E7 for 2001 and 2000.
The Company is involved in various matters of litigation arising in the ordinary
course of business. In the opinion of management, the estimated outcome of such
issues will not have a material effect on the Company's financial statements.
45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 27, 2003 MYMETICS CORPORATION
By: /s/ MICHAEL K. ALLIO
----------------------------------
Michael K. Allio
Interim Chief Executive Officer
and Director
(Principal Executive Officer)
By: /s/ JOHN M. MUSACCHIO
------------------------------------
John M. Musacchio
Chief Financial Officer,
Secretary and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ JOHN M. MUSACCHIO March 27, 2003
----------------------------------------------
John M. Musacchio
Chief Financial Officer,
Secretary and Director
Pierre-Francois Serres
Chief Scientific Officer and
Director
By: /s/ JOHN M. MUSACCHIO March 27, 2003
----------------------------------------------
Signing on behalf of
Pierre-Francois Serres pursuant
to a Power of Attorney
Robert Demers
Director
By: /s/ JOHN M. MUSACCHIO March 27, 2003
----------------------------------------------
Signing on behalf of
Robert Demers pursuant
to a Power of Attorney
Michael K. Allio
Chairman, Interim Chief Executive Officer
and Director
By: /s/ JOHN M. MUSACCHIO March 27, 2003
----------------------------------------------
Signing on behalf of
Michael K. Allio pursuant
to a Power of Attorney
46
INTERIM CHIEF EXECUTIVE OFFICER
I, Michael K. Allio, certify that:
1. I have reviewed this annual report on Form 10-K of Mymetics Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ Michael K. Allio
-----------------------------
Date: March 27, 2003 By:
Interim Chief Executive Officer
47
CHIEF FINANCIAL OFFICER
I, John M. Musacchio, certify that:
1. I have reviewed this annual report on Form 10-K of Mymetics Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ John M. Musacchio
----------------------------
Date: March 27, 2003 By:
Chief Financial Officer
Principal financial and chief
accounting officer
48
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Share Exchange Agreement dated December 13, 2001 between the Corporation and
the stockholders of Mymetics S.A. listed on the signature page thereto (1)
2.2 Share Exchange Agreement dated December 13, 2001 between the Corporation and
the stockholders of Mymetics S.A. listed on the signature page thereto (1)
2.3 Purchase Agreement dated October 17, 1998 between the Corporation and the
majority stockholders of Nazca Holdings Ltd. (2)
2.4 Amendment to the Agreement dated October 17, 1998 between the Corporation and
the majority stockholders of Nazca Holdings Ltd. (3)
2.5 Revised Purchase Agreement dated July 28, 1999 between the Corporation and the
majority stockholders of Nazca Holdings Ltd. (4)
2.6 Share Exchange Agreement dated July 30, 2002 between the Corporation and the
stockholders of Mymetics S.A. listed on the signature page thereto (5)
3(i) Articles of Incorporation of the Corporation (as amended through May 10, 2002)
(6)
3(ii) Bylaws (7)
4 Form of Specimen Stock Certificate (8)
9 Voting and Exchange Trust Agreement dated March 28, 2001, among the
Corporation, 6543 Luxembourg S.A. and MFC Merchant Bank S.A. (8)
10.1 Services Agreement dated May 31, 2001, between the Corporation and MFC Merchant
Bank, S.A.(7)
10.2 Employment Agreement dated May 3, 2001, between Pierre-Francois Serres and the
Corporation (7)
10.3 Indemnification Agreement dated March 28, 2001, between the Corporation and MFC
Bancorp Ltd. (7)
10.4 Agreement dated for reference May 15, 2000, between the Corporation and Maarten
Reidel (7)
10.5 Preferred Stock Redemption and Conversion Agreement dated for reference
December 21, 2000, between the Corporation and Sutton Park International Ltd.
(10)
10.6 Preferred Stock Conversion Agreement dated for reference December 21, 2000,
between the Corporation and Med Net International Ltd. (11)
10.7 Preferred Stock Conversion Agreement dated December 21, 2000, between the
Corporation and Dresden Papier GmbH (11)
10.8 Assignment Agreement dated December 29, 2000, among the Corporation, Mymetics
S.A. and MFC Merchant Bank S.A. (1)
10.9 Credit Facility Agreement dated July 27, 2000, between MFC Merchant Bank, S.A.
and the Corporation (1)
10.10 Amended Credit Facility Agreement dated for reference August 13, 2001, between
MFC Merchant Bank, S.A. and the Corporation
10.11 Second Amended Credit Facility Agreement dated for reference February 27, 2002,
between MFC Merchant Bank, S.A. and the Corporation
10.12 Amended and Restated Credit Facility Agreement dated for reference February 28, 2003,
among MFC Merchant Bank, S.A., MFC Bancorp Ltd., and the Corporation
10.13 Guarantee dated for reference February 28, 2003, by MFC Bancorp Ltd. to MFC
Merchant Bank S.A.
10.14 Shareholder Agreement dated March 28, 2001, among the Corporation, the Holders
of Class B Exchangeable Preferential Non-Voting Shares of 6543 Luxembourg S.A.
signatory thereto and 6543 Luxembourg S.A.(8)
10.15 Support Agreement dated March 28, 2001, between the Corporation and 6543
Luxembourg S.A. (8)
10.16 1995 Qualified Incentive Stock Option Plan (12)
10.17 Amended 1994 Stock Option Plan (13)
10.18 2001 ICHOR Corporation Stock Option Plan (7)
10.19 Employment Agreement dated March 18, 2002, between the Corporation and Peter P.
McCann (14)
10.20 Consulting Agreement dated August 31, 2001, between the Corporation and Michael
K. Allio (8)
10.21 Amendment to Consulting Agreement dated August 21, 2002, between the
Corporation and Michael K. Allio
10.22 Employment Agreement dated March 18, 2002, between the Corporation and Dr.
Joseph D. Mosca (15)
10.23 Separation Agreement and Release dated January 31, 2003, between the
Corporation and Peter P. McCann
10.24 Director and Non-Employee Stock Option Agreement dated July 19, 2001, between
the Corporation and Robert Demers (8)
10.25 Director and Non-Employee Stock Option Agreement dated July 19, 2001, between
the Corporation and Michael K. Allio (8)
10.26 Director and Non-Employee Stock Option Agreement dated July 19, 2001, between
the Corporation and John M. Musacchio (8)
10.27 Director and Non-Employee Stock Option Agreement dated July 19, 2001, between
the Corporation and Patrice Pactol (8)
10.28 Director and Non-Employee Stock Option Agreement dated July 19, 2001, between
the Corporation and Pierre-Francois Serres (8)
10.29 Director and Non-Employee Stock Option Agreement dated July 23, 2002, between
the Corporation and Pierre-Francois Serres
10.30 Director and Non-Employee Stock Option Agreement dated July 23, 2002, between
the Corporation and Patrice Pactol
10.31 Director and Non-Employee Stock Option Agreement dated July 23, 2002, between
the Corporation and Robert Demers
10.32 Director and Non-Employee Stock Option Agreement dated July 23, 2002, between
the Corporation and John M. Musacchio
10.33 Director and Non-Employee Stock Option Agreement dated July 23, 2002, between
the Corporation and Michael K. Allio
10.34 Director and Non-Employee Stock Option Agreement dated August 21, 2002, between
the Corporation and Michael K. Allio
10.35 Director and Non-Employee Stock Option Agreement dated June 20, 2002, between
the Corporation and Peter P. McCann
10.36 Director and Non-Employee Stock Option Agreement dated July 23, 2002, between
the Corporation and Peter P. McCann
10.37 Director and Non-Employee Stock Option Agreement dated February 6, 2003,
between the Corporation and Peter P. McCann
10.38 Patent Pledge Agreement dated November __, 2002 among Mymetics S.A., Mymetics
Deutschland GmbH, the Corporation and MFC Merchant Bank S.A.
11 Statement Regarding Calculation of Per Share Earnings.
21 List of Subsidiaries
24.1 Power of Attorney for Pierre-Francois Serres
24.2 Power of Attorney for Robert Demers
24.3 Power of Attorney for Michael K. Allio
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- ---------------
(1) Incorporated by reference to the Corporation's Schedule 14C filed with
the Securities and Exchange Commission on April 26, 2001.
(2) Incorporated by reference to the Corporation's report on Form 8-K filed
with the Securities and Exchange Commission on October 22, 1998.
(3) Incorporated by reference to the Corporation's report on Form 8-K/A
filed with the Securities and Exchange Commission on April 15, 1999.
(4) Incorporated by reference to the Corporation's report on Form 8-K/A
filed with the Securities and Exchange Commission on August 13, 1999.
(5) Incorporated by reference to the Corporation's Amendment No. 1 to Form
S-1 filed with the Securities and Exchange Commission on August 8, 2002.
(6) Incorporated by reference to the Corporation's report on Form 10-Q for
the quarter ended March 31, 2002, filed with the Securities and Exchange
Commission on May 15, 2002.
(7) Incorporated by reference to the Corporation's report on Form 10-Q for
the quarter ended June 30, 2001, filed with the Securities and Exchange
Commission on August 14, 2001.
(8) Incorporated by reference to the Corporations Registration Statement on
Form S-1, File No. 333-88782, filed with the Securities and Exchange
Commission on May 22, 2002.
(9) Incorporated by reference to the Corporation's report on Form 8-K/A
filed with the Securities and Exchange Commission on August 9, 2000.
(10) Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd.
with the Securities and Exchange Commission on dated January 2, 2001.
(11) Incorporated by reference to the Corporation's report on Form 10-K for
the fiscal year ended December 31, 2000, filed with the Securities and
Exchange Commission on March 14, 2001.
(12) Incorporate by reference to the Corporation's Registration Statement on
Form S-8, File No. 333-15831, filed with the Securities and Exchange
Commission on November 8, 1996.
(13) Incorporated by reference to the Corporation's Registration Statement
on Form S-8, File No. 333-15829, filed with the Securities and Exchange
Commission on November 8, 1996.
(14) Incorporated by reference to the Corporation's report on Form 10-K for
the fiscal year ended December 31, 2001, and filed with the Securities
and Exchange Commission on March 14, 2001.
(15) Incorporated by reference to the Corporation's report on Form 10-Q for
the quarter ended March 31, 2002, filed with the Securities and Exchange
Commission on May 15, 2002.