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EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - MABVAX THERAPEUTICS HOLDINGS, INC. | ex23-1.htm |
As filed with the Securities and Exchange Commission on February
10, 2017
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
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MABVAX THERAPEUTICS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
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2834
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93-0987903
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(State or other jurisdiction
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(Primary Standard Industrial
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(I.R.S. Employer
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of incorporation or organization)
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Classification Code Number)
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Identification Number)
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11535 Sorrento Valley Road, Suite 400
San Diego, CA 92121
(858) 259-9405
(Address, including zip
code, and telephone number, including area code, of
registrant’s principal executive offices)
J. David Hansen
Chief Executive Officer
MabVax Therapeutics Holdings, Inc.
11535 Sorrento Valley Road, Suite 400
San Diego, CA 92121
(858) 259-9405
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
With copies to:
Harvey Kesner, Esq.
Sichenzia Ross Ference Kesner LLP
61 Broadway, 32nd Fl.
New York, NY 10006
(212) 930-9700
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Approximate date of commencement of proposed sale to the
public:
As soon as practicable after this Registration Statement is
declared effective.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, check
the following box:
☒
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.
☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated
filer ☐
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Accelerated filer ☐
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Non-accelerated filer (Do not check if a smaller reporting
company) ☐
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Smaller reporting
company ☒
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CALCULATION OF REGISTRATION FEE
Title
of Each Class of
Securities
to be Registered
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Amount
to be Registered
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Proposed Maximum Aggregate Offering Price Per Share
$
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Proposed Maximum Aggregate Offering
Price (1)
$
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Amount of
Registration Fee (3)
$
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Common stock, par
value $0.01 per share (2)(4)
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$10,000,000
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$1,159
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Total
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$10,000,000
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$1,159
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(1)
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Estimated
pursuant to Rule 457(o) under the Securities Act of 1933, as
amended (the “Securities Act”), based on the proposed
maximum aggregate offering price.
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(2)
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Pursuant
to Rule 416 under the Securities Act, the securities being
registered hereunder include such indeterminate number of
additional shares of common stock as may be issued after the date
hereof as a result of stock splits, stock dividends or similar
transactions.
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(3)
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Estimated
solely for the purpose of calculating the registration fee pursuant
to Rule 457(g) under the Securities Act, based on an
estimated proposed maximum aggregate offering price of
$10,000,000.
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(4)
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Includes
shares subject to the underwriter’s overallotment
option
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The
Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of
1933, as amended, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission,
acting pursuant to Section 8(a), may determine.
The information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities and is not soliciting an offer to
buy these securities in any jurisdiction where the offer or sale is
not permitted.
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PRELIMINARY PROSPECTUS
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SUBJECT TO COMPLETION
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DATED FEBRUARY 10, 2017
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Shares common
stock
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We are
offering
shares of our common stock.
Our
common stock is quoted on The NASDAQ Capital Market under the
symbol “MBVX”. On February 9, 2017, the closing bid
price of our common stock on The NASDAQ Capital Market was $2.79
per share.
Investing
in our securities involves risks. You should carefully read and
consider the “Risk Factors” beginning on page 5 of this
prospectus before investing.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
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Per Share
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Total
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Public offering
price
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$
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$
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Underwriting
discount (1)
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$
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$
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Proceeds, before
expenses, to us(2)
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$
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$
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(1)
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The
underwriter will receive compensation in addition to the
underwriting discount listed above. See “Underwriting”
beginning on page 64 of this prospectus for a description of the
compensation payable to the underwriter.
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(2)
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We
estimate the total expenses of this offering payable by us,
excluding the underwriting discount, will be approximately
$
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The
underwriter may also purchase up to an
additional shares
of our common stock from us at the public offering price, less the
underwriting discount, within days from the date of this prospectus
to cover over-allotments, if any.
The
underwriter expects to deliver the shares against payment therefor
on or about ,
2017.
The
date of this prospectus is ______ , 2017
TABLE OF CONTENTS
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Page
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2
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5
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23
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31
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42
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57
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59
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60
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64
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66
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66
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66
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67
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You
should rely only on the information contained in this prospectus.
We have not, and the underwriter has not, authorized anyone to
provide you with any information other than that contained in this
prospectus. We are offering to sell, and seeking offers to buy, the
securities covered hereby only in jurisdictions where offers and
sales are permitted. The information in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of the securities covered
hereby. Our business, financial condition, results of operations
and prospects may have changed since that date. We are not, and the
underwriter is not, making an offer of these securities in any
jurisdiction where the offer is not permitted.
For
investors outside the United States: We have not, and the
underwriter has not, taken any action that would permit this
offering or possession or distribution of this prospectus in any
jurisdiction where action for that purpose is required, other than
in the United States. Persons outside the United States who come
into possession of this prospectus must inform themselves about,
and observe any restrictions relating to, the offering of the
securities covered hereby the distribution of this prospectus
outside the United States.
This
prospectus includes statistical and other industry and market data
that we obtained from industry publications and research, surveys
and studies conducted by third parties. Industry publications and
third-party research, surveys and studies generally indicate that
their information has been obtained from sources believed to be
reliable, although they do not guarantee the accuracy or
completeness of such information. We believe that the data obtained
from these industry publications and third-party research, surveys
and studies are reliable. We are ultimately responsible for all
disclosure included in this prospectus.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to the
registration statement of which this prospectus is a part were made
solely for the benefit of the parties to such agreement, including,
in some cases, for the purpose of allocating risk among the parties
to such agreements, and should not be deemed to be a
representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of
the date when made. Accordingly, such representations, warranties
and covenants should not be relied on as accurately representing
the current state of our affairs.
PROSPECTUS
SUMMARY
This summary highlights certain information contained elsewhere in
this prospectus. This summary is not intended to be complete and
does not contain all of the information that you should consider in
making your investment decision. You should carefully read this
entire prospectus, including our consolidated financial
statements and the related notes and the information set forth
under the headings “Risk Factors” and
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” contained in this
prospectus before making an investment decision.
Unless the context otherwise requires, references to
“we,” “our,” “us,” or the
“Company” in this prospectus mean MabVax Therapeutics
Holdings, Inc. on a consolidated basis with its wholly-owned
subsidiary, MabVax Therapeutics, Inc., as applicable.
Business Overview
We are
a clinical-stage biotechnology company focused on the development
of antibody-based products to address unmet medical needs in the
treatment of cancer. MabVax has discovered a pipeline of
human monoclonal antibody products based on the protective immune
responses generated by patients who have been vaccinated against
targeted cancers with our proprietary vaccines. MabVax's lead
development program is centered around our HuMab-5B1 antibody,
which is fully human and discovered from the immune response of
cancer patients vaccinated with an antigen-specific vaccine during
a Phase I trial at Memorial Sloan Kettering Cancer Center, or
MSK. The antigen the antibody targets is expressed on
more than 90% of pancreatic cancers, and also expressed in
significant percentages on small cell lung cancer, stomach, colon
and other cancers, making the antibody potentially broadly
applicable to many types of cancers. We have other antibody
candidates that are also in preclinical development.
Monoclonal
antibodies are produced from a single DNA sequence encoded into
multiple cells that all produce the same single antibody. We
generate our pipeline of antibody-based product candidates from
patients who have been vaccinated with propriety vaccines licensed
from MSK. Our approach involves surveying the protective immune
response from many patients to identify a monoclonal antibody
candidate against a specific target on the surface of a cancer
cell. We believe this approach provides us with a novel
next-generation human antibody technology platform. We believe our
approach to antibody discovery allows us to identify antibody
candidates with superior performance characteristics while
minimizing many of the toxicity and off target binding drawbacks
(phenomenon occurring when antibodies bind to non-cancer cells) of
other discovery technologies.
Our Growth and Core Business Strategy
Our
primary business strategy is to develop our early antibody product
candidates through proof of concept clinical trials, which may
represent either phase I or phase II clinical trials depending on
the program and extent of progress. We intend to then partner those
product candidates having the highest clinical and commercial
potential from our discovery library of antibody
candidates..
Clinical
Development Program Status and Plans
In
November 2016 we reported on progress of our two HuMab-5B1 antibody
phase I clinical development programs evaluating the use of our
antibody, designated MVT-5873, as a therapeutic antibody, and our
immuno-PET imaging agent, that we designate as MVT-2163, comprised
of MVT-5873 conjugated to a radio label. These two products are
intended for use in patients with locally advanced and metastatic
pancreatic cancer or other malignancies expressing the same cancer
antigen known as CA19.9.
MVT-5873
Clinical Development Program Progress in Treating Pancreatic
Cancer, and Near-term Plan
In our
progress report released in November 2016, we stated that the
safety of MVT-5873 had been established at three incremental dose
levels by treating 16 patients at three clinical sites. The purpose
of this phase I clinical trial, initiated in February 2016, is to
establish safety and tolerability, and to determine the recommended
phase II dose. Patients entering this part of the trial have
progressive locally advanced or metastatic disease and have failed
all previous treatments.
As of
mid-November 2016, we reported that 28 subjects had consented to
treatment, of which 16 subjects had been treated. Of the remaining
subjects, nine had failed the screening tests, and three were still
in the screening process. Of the 16 patients that had been treated
as of that date, six were continuing to receive treatment beyond
the study design of a 28-day treatment cycle. Patients are able to
remain on therapy beyond the initial 28-day treatment and safety
assessment cycle based on acceptable dose tolerability and
investigator assessment of continued benefit from the treatment.
Every second treatment cycle the investigator assesses disease
status using RECIST 1.1 measurement criteria to evaluate tumor
response rate and duration of response. Investigators report that
seven of the 16 patient patients converted from progressive disease
to stable disease lasting from three months to eight months. We
plan to continue to recruit patients in Part 1 of the study of
MVT-5873, which is intended to establish the recommended phase II
dose as a monotherapy.
As a
consequence of establishing the current dosage safety level for
MVT-5873 in Part 1 of the trial, we have established a sufficient
dosage safety margin to initiate part 2 of our phase I study. Part
2 combines our MVT-5873 with a standard of care chemotherapy
regimen in new diagnosed treatment naïve patients. The dosage
levels established in our MVT-5873 monotherapy trial have cleared
all subsequent dose levels utilized in our Phase I clinical study
of MVT-2163 as an immuno-PET imaging agent as well as the dose
levels planned for our clinical study of MVT-1075 that combines the
antibody with a radioactive metal as a radioimmunotherapy product.
We filed an Investigational New Drug Application, or IND, with the
U.S. Food and Drug Administration, or FDA, in late December 2016
and received an authorization from FDA on January 27, 2017 to
proceed with our phase I clinical trial in the first half of
2017.
MVT-2163
Clinical Development Program Progress in Imaging Pancreatic Cancer,
and Near-term Plan
In our
progress report released in November 2016, we stated that we had
established interim safety, and acceptable pharmacokinetics and
biodistribution of MVT-2163 in our phase I clinical trial. We have
completed the initial two cohorts of patients as specified in our
protocol. In the first cohort we administered MVT-2163 alone and in
the second cohort we administered MVT-2163 following a blocking
dose of MVT-5873. We reported that the initial PET images
demonstrated target specificity by correlation with lesions
identified by conventional computerized tomography (CT) scans. The
biodistribution data obtained in the first two cohorts demonstrated
improvement in PET images by pre-administration of MVT-5873, as has
been observed with other antibody based PET agents. We initiated
the MVT-2163 phase I trial in June 2016 to evaluate a next
generation diagnostic PET imaging agent in patients with locally
advanced or metastatic adenocarcinoma of the pancreas (PDAC) or
other CA19-9 positive malignancies. MVT-2163 (89Zr-HuMab-5B1)
combines the well-established PET imaging radiolabel Zirconium
[89Zr]
with the targeting specificity of MVT-5873. We designed the trial
to establish safety, pharmacokinetics, biodistribution, optimal
time to obtain the PET image, and the amount of MVT-5873 to be used
in co-administration to obtain optimized PET scan images. We
continue to actively recruit patients and expect to establish the
optimal co-administration dose of MVT-5873 early in
2017.
MVT-1075
Clinical Development Plan
We are developing HuMab-5B1 into a third
potential product for use as a radioimmunotherapy that we have
designated as MVT-1075. MVT-1075 represents a unique product
opportunity for MabVax by conjugating MVT-5873 with a low-energy
radiation emitter, 177Lu, which has a relatively short tissue
penetration range to minimize potential side effects of the
radiation. MVT-5873 provides the opportunity for tumor-specific
targeting of a more potent analog of MVT-5873. We submitted our IND
in late December 2016 and the IND was authorized to proceed on
January 27, 2017. We plan to initiate the phase I trial of MVT-1075
in the first half of 2017.
2016 Reverse Split
On
August 16, 2016, we implemented a reverse split of our issued
and outstanding common stock on a 1 for 7.4 basis in connection
with the listing of our common stock on The NASDAQ Capital Market
(the “Listing Reverse Split”). All per share amounts in
this prospectus have been adjusted to reflect the Listing Reverse
Split.
Company Background
We
are a Delaware corporation, originally incorporated in 1988 under
the name Terrapin Diagnostics, Inc. in the state of Delaware, and
subsequently renamed “Telik, Inc.” in 1998, and
thereafter renamed MabVax Therapeutics Holdings, Inc. in September
2014. Our principal corporate office is located at 11535 Sorrento
Valley Road, Suite 400, San Diego, CA 92121 telephone: (858)
259-9405. Our internet address is www.mabvax.com. On July 8, 2014,
we consummated a merger with MabVax Therapeutics, pursuant to which
our subsidiary Tacoma Acquisition Corp. merged with and into MabVax
Therapeutics, with MabVax Therapeutics surviving as our wholly
owned subsidiary. This transaction is referred to as the
“Merger.”
Summary
of the Offering
Common stock offered by us
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shares
of common stock (assuming a public offering price of
$ per share, the closing bid
price of our common stock on The NASDAQ Capital Market
on ,
2017).
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Common stock outstanding after this
offering
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shares
(assuming a public offering price of
$ per share, the closing bid
price of our common stock on The NASDAQ Capital Market
on ,
2017)
( shares
if the underwriter’s over-allotment option is exercised in
full).
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Underwriters option to purchase additional shares
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We have
granted the underwriter an option for a period of up to 45 days
from the date of this prospectus to purchase up
to additional
shares of our common stock (assuming a public offering price of
$ per share, the closing bid
price of our common stock on The NASDAQ Capital Market
on ,
2017) at the public offering price less the underwriting discount,
solely to cover over-allotments.
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Use of proceeds
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We
intend to use the net proceeds received from this offering to fund
three Phase I clinical trials: our antibody therapeutic, our
diagnostic and our radioimmunotherapy candidates;and for working
capital and general corporate purposes. See “Use of
Proceeds” on page 21 of this prospectus.
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Risk factors
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See
“Risk Factors” beginning on page 5 of this prospectus
for a discussion of factors you should carefully consider before
investing in our securities.
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NASDAQ trading symbol
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Our
common stock is quoted on The NASDAQ Capital Market under the
symbol “MBVX”.
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The number of
shares of common stock shown above to be outstanding after this
offering is based on 6,296,110 shares outstanding as of February 7,
2017, and excludes as of that date:
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1,587,971 shares
of our common stock issuable upon exercise of outstanding options
under our equity incentive plans at a weighted-average exercise
price of $ 7.29 per share;
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5,125,391 shares
of our common stock issuable upon exercise of outstanding warrants
with a weighted-average exercise price of $6.84 per
share;
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2.975,424 shares
of our common stock issuable upon conversion of outstanding shares
of our Series D Convertible Preferred Stock, Series E Convertible
Preferred Stock and Series F Convertible Preferred Stock;
and
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281,136 shares of
our common stock that are reserved for equity awards that may be
granted under our equity incentive plans.
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205,482 shares of
our common stock issuable upon vesting of restricted stock units
granted.
Unless
otherwise indicated, the information in this prospectus gives
effect to the 1 for 8 reverse split of our common stock effected on
September 8, 2014, and the Listing Reverse Split, and assumes no
exercise by the underwriter of its overallotment
option.
Any investment in our securities involves a high degree of risk.
Investors should carefully consider the risks described below and
all of the information contained in this prospectus before deciding
whether to purchase our securities. Our business, financial
condition and results of operations could be materially adversely
affected by these risks if any of them actually occur. This
prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward-looking statements as a
result of certain factors, including the risks we face as described
below and elsewhere in this prospectus.
We will be required to raise additional funds to finance our
operations and remain a going concern; we may not be able to do so
when necessary, and/or the terms of any financings may not be
advantageous to us.
Our
operations to date have consumed substantial amounts of cash.
Negative cash flows from our operations are expected to continue
over at least the next several years. Our cash utilization amount
is highly dependent on the progress of our product development
programs, particularly, the results of our preclinical and clinical
studies and those of our partners, the cost, timing and outcomes of
regulatory approval for our product candidates, and the rate of
recruitment of patients in our human clinical trials. In addition,
the further development of our ongoing clinical trials will depend
on upcoming analysis and results of those studies and our financial
resources at that time.
We
will require future additional capital infusions including public
or private financing, strategic partnerships or other arrangements
with organizations that have capabilities and/or products that are
complementary to our own capabilities and/or products, in order to
continue the development of our product candidates. However, there
can be no assurances that we will complete any financings,
strategic alliances or collaborative development agreements, and
the terms of such arrangements may not be advantageous to us. Any
additional equity financing will be dilutive to our current
stockholders and debt financing, if available, may involve
restrictive covenants. If we raise funds through collaborative or
licensing arrangements, we may be required to relinquish, on terms
that are not favorable to us, rights to some of our technologies or
product candidates that we would otherwise seek to develop or
commercialize. Our failure to raise capital when needed could
materially harm our business, financial condition and results of
operations.
In
connection with our financing that closed in August 2016, we
granted certain rights to a lead investor to approve future (i)
issuances of our securities, (ii) equity or debt financings and
(iii) sales of any development product assets currently held by us,
subject to certain exceptions, for as long as a lead investor in
the offering holds 50% or more of the securities purchased by such
lead investor in that offering or until a financing with net
proceeds to us of at least $7.5 million in which we are able to
sell our securities at a minimum per share price of $7.40 or
greater. There can be no assurance that such lead
investor will provide consent and this requirement may make it
difficult for us to raise capital, refinance indebtedness or borrow
additional funds.
Our
ongoing capital requirements will depend on numerous factors,
including: the progress and results of clinical trials of our
product candidates under development; the costs of complying with
the FDA and other domestic and foreign regulatory agency
requirements, the progress of our preclinical testing and research
and development programs and those of our partners; the time and
costs expended and required to obtain any necessary or desired
regulatory approvals; the resources that we devote to manufacturing
expenditures; our ability to enter into licensing arrangements,
including any unanticipated licensing arrangements that may be
necessary to enable us to continue our development and clinical
trial programs; the costs and expenses of filing, prosecuting and,
if necessary, enforcing our patent claims, or defending against
possible claims of infringement by third-party patent or other
technology rights; the cost of commercialization activities and
arrangements, if any, that we undertake; and, if and when approved,
the demand for our products, which demand depends in turn on
circumstances and uncertainties that cannot be fully known,
understood or quantified unless and until the time of approval,
including the range of indications for which any product is granted
approval.
The terms of our secured debt facility require us to meet certain
operating and financial covenants and place restrictions on our
operating and financial flexibility. If we raise additional capital
through debt financing, the terms of any new debt could further
restrict our ability to operate our business.
Effective
in January 2016, we entered into a $10 million loan and
security agreement with Oxford Finance LLC, or Oxford Finance that
is secured by a lien covering substantially all of our assets,
excluding intellectual property. As of September 30, 2016, we had
an outstanding principal balance of $5 million. The loan and
security agreement contains customary affirmative and negative
covenants and events of default. The affirmative covenants include,
among others, covenants requiring us to maintain our legal
existence and governmental approvals, deliver certain financial
reports and maintain insurance coverage. The negative covenants
include, among others, restrictions on transferring collateral,
changing our business, incurring additional indebtedness, engaging
in mergers or acquisitions, paying dividends or making other
distributions, making investments and creating other liens on our
assets, in each case subject to customary exceptions. If we default
under the loan agreement, the lenders may accelerate all of our
repayment obligations and take control of our pledged assets,
potentially requiring us to renegotiate our agreement on terms less
favorable to us or to immediately cease operations. Further, if we
are liquidated, the lender’s right to repayment would be
senior to the rights of the holders of our common stock and
preferred stock to receive any proceeds from the liquidation. The
lenders could declare a default upon the occurrence of any event
that they interpret as a material adverse change as defined under
the loan agreement, thereby requiring us to repay the loan
immediately or to attempt to reverse the declaration of default
through negotiation or litigation. Any declaration by the lenders
of an event of default could significantly harm our business and
prospects and could cause the price of our common stock to decline.
If we raise any additional debt financing, the terms of such
additional debt could further restrict our operating and financial
flexibility.
We have a history of losses, and we anticipate that we will
continue to incur losses in the future; our auditors have included
in their 2015 audit report an explanatory paragraph as to
substantial doubt as to our ability to continue as a going
concern.
We have
experienced net losses every year since our inception and, as of
December 31, 2015 and September 30, 2016, had an accumulated
deficit of $60,601,778 and $73,152,271, respectively. Our auditors
have included in their audit report a “going concern”
explanatory paragraph as to substantial doubt as to our ability to
continue as a going concern that assumes the realization of our
assets and the satisfaction of our liabilities and commitments in
the normal course of business. We anticipate continuing to incur
substantial additional losses over at least the next several years
due to, among other factors, expenses related to the following:
conducting Phase I clinical trials with the HuMab-5B1 antibody,
preclinical testing of follow-on antibody candidates, investor and
public relations, financing and public company costs and expenses,
anticipated research and development activities and the general and
administrative expenses associated with each of these activities.
We have not yet commercialized any product candidates. Our ability
to attain profitability will depend upon our ability to develop and
commercialize products that are effective and commercially viable,
to obtain regulatory approval for the manufacture and sale of our
products and to license or otherwise market our products
successfully. We may never achieve profitability, and even if we
do, we may not be able to sustain being profitable. If we are
unable to obtain additional capital we may be forced to license,
sell or terminate our activities with respect to promising
technologies which may require us to agree to disadvantageous terms
that will prevent us from realizing the potential value from the
results of our efforts and expenditures.
If we are unable to obtain required regulatory approvals, we will
be unable to market and sell our product candidates.
Our
product candidates are subject to extensive governmental
regulations relating to development, clinical trials,
manufacturing, oversight of clinical investigators, recordkeeping
and commercialization. Rigorous preclinical testing and clinical
trials and an extensive regulatory review and approval process are
required to be successfully completed in the United States and in
each foreign jurisdiction in which we offer our products before a
new drug or other product can be sold in such jurisdictions.
Satisfaction of these and other regulatory requirements is costly,
time consuming, uncertain, and subject to unanticipated delays. The
time required to obtain approval by the FDA, or the regulatory
authority in such other jurisdictions is unpredictable and often
exceeds five years following the commencement of clinical trials,
depending upon the complexity of the product candidate and the
requirements of the applicable regulatory agency.
In
connection with the clinical development of our product candidates,
we face risks that:
●
the product candidate may not prove to be safe and
efficacious;
●
patients may die or suffer serious adverse effects for reasons that
may or may not be related to the product candidate being
tested;
●
we may fail to maintain adequate records of observations and data
from our clinical trials, to establish and maintain sufficient
procedures to oversee, collect data from, and manage clinical
trials, or to monitor clinical trial sites and investigators to the
satisfaction of the FDA or other regulatory agencies;
●
the results of later-phase clinical trials may not confirm the
results of earlier clinical trials; and
Only
a small percentage of product candidates for which clinical trials
are initiated receive approval for commercialization. Furthermore,
even if we do receive regulatory approval to market a product
candidate, any such approval may be subject to limitations such as
those on the indicated uses for which we may market a particular
product candidate.
Our product candidates have not completed clinical trials, and may
never demonstrate sufficient safety and efficacy in order to do
so.
Our
product candidates are in the clinical and pre-clinical stages of
development. In order to achieve profitable operations, we alone,
or in collaboration with others, must successfully develop,
manufacture, introduce and market our products. The time frame
necessary to achieve market success for any individual product is
long and uncertain. The products we are currently developing will
require significant additional research, development and
preclinical and clinical testing prior to application for
commercial use or sale. A number of companies in the biotechnology
and pharmaceutical industries have suffered significant setbacks in
clinical trials, even after showing promising results in early or
later-stage studies or clinical trials. Although we have obtained
some favorable results to-date in preclinical studies and clinical
trials of certain of our potential products, such results may not
be indicative of results that will ultimately be obtained in or
throughout such clinical trials, and clinical trials may not show
any of our products to be safe or capable of producing a desired
result. Additionally, we may encounter problems in our clinical
trials that may cause us to delay, suspend or terminate those
clinical trials.
Further,
our research or product development efforts may not be successfully
completed, any compounds we currently have under development may
not be successfully developed into drugs, may not receive
regulatory approval on a timely basis, if at all, and competitors
may develop and bring to market products or technologies that
render our potential products obsolete. If any of these events
occur, our business would be materially and adversely
affected.
If clinical trials or regulatory approval processes for our product
candidates are prolonged, delayed or suspended, we may be unable to
commercialize our product candidates on a timely basis, which would
require us to incur additional costs and delay our receipt of any
revenue from potential product sales.
We
cannot predict whether we will encounter problems with any of our
completed, ongoing or planned clinical trials that will cause us or
any regulatory authority to delay or suspend those clinical trials
or delay the analysis of data derived from them. A number of
events, including any of the following, could delay the completion
of our ongoing and planned clinical trials and negatively impact
our ability to obtain regulatory approval for, and to market and
sell, a particular product candidate:
●
conditions
imposed on us by the FDA or another foreign regulatory authority
regarding the scope or design of our clinical trials;
●
delays
in obtaining, or our inability to obtain, required approvals from
institutional review boards or other reviewing entities at clinical
sites selected for participation in our clinical
trials;
●
insufficient supply of our product candidates or other materials
necessary to conduct and complete our clinical trials;
●
slow enrollment and retention rate of subjects in our clinical
trials;
●
serious and unexpected drug-related side effects related to the
product candidate being tested; and
●
delays in meeting manufacturing and testing standards required for
production of clinical trial supplies.
Commercialization
of our product candidates may be delayed by the imposition of
additional conditions on our clinical trials by the FDA or any
other applicable foreign regulatory authority or the requirement of
additional supportive studies by the FDA or such foreign regulatory
authority. In addition, clinical trials require sufficient patient
enrollment, which is a function of many factors, including the size
of the patient population, the nature of the trial protocol, the
proximity of patients to clinical sites, the availability of
effective treatments for the relevant disease, the conduct of other
clinical trials that compete for the same patients as our clinical
trials, and the eligibility criteria for our clinical trials. Our
failure to enroll patients in our clinical trials could delay the
completion of the clinical trial beyond its expectations. In
addition, the FDA could require us to conduct clinical trials with
a larger number of subjects than we may have projected for any of
our product candidates. We may not be able to enroll a sufficient
number of patients in a timely or cost-effective manner.
Furthermore, enrolled patients may drop out of our clinical trials,
which could impair the validity or statistical significance of the
clinical trials.
We
do not know whether our clinical trials will begin as planned, will
need to be restructured, or will be completed on schedule, if at
all. Delays in our clinical trials will result in increased
development costs for our product candidates, and our financial
resources may be insufficient to fund any incremental costs. In
addition, if our clinical trials are delayed, our competitors may
be able to bring products to market before we do and the commercial
viability of our product candidates could be limited. In cases
where an outside party, such as the NCI conducts a clinical trial
on our behalf, we may not have direct involvement in discussions
with the FDA regarding the factors discussed above.
We are substantially dependent on the success of our product
candidates, MVT-5873, MVT-2163 and MVT-1075, and we cannot provide
any assurance that any of our product candidates will be
commercialized.
To
date, our main focus and the investment of a significant portion of
our efforts and financial resources has been in the development of
our product candidates, MVT-5873, MVT-2163, and MVT-1075, which are
in clinical development. Our future success depends heavily on our
ability to successfully manufacture, develop, obtain regulatory
approval, and commercialize these product candidates, which may
never occur. Before commercializing either product
candidate, we will require additional clinical trials and
regulatory approvals for which there can be no guarantee that we
will be successful. We currently generate no revenues from our
product candidates, and we may never be able to develop or
commercialize a marketable drug.
Our product candidates will remain subject to ongoing regulatory
review even if they receive marketing approval, and if we fail to
comply with continuing regulations, we could lose these approvals
and the sale of any of our approved commercial products could be
suspended.
Even
if we receive regulatory approval to market a particular product
candidate, the manufacturing, labeling, packaging, adverse event
reporting, storage, advertising, promotion, and record keeping
related to the product will remain subject to extensive regulatory
requirements. If we fail to comply with the regulatory requirements
of the FDA and other applicable domestic and foreign regulatory
authorities or discover any previously unknown problems with any
approved product, manufacturer, or manufacturing process, we could
be subject to administrative or judicially imposed sanctions,
including:
●
restrictions on the products, manufacturers, or manufacturing
processes;
●
warning letters;
●
civil or criminal penalties;
●
fines;
●
injunctions;
●
product seizures or detentions;
●
pressure to initiate voluntary product recalls;
●
suspension or withdrawal of regulatory approvals; and
●
refusal to approve pending applications for marketing approval of
new products or supplements to approved applications.
Our industry is highly competitive, and our product candidates may
become obsolete.
We
are engaged in a rapidly evolving field. Competition from other
pharmaceutical companies, biotechnology companies and research and
academic institutions is intense and likely to increase. Many of
those companies and institutions have substantially greater
financial, technical and human resources than we do. Those
companies and institutions also have substantially greater
experience in developing products, conducting clinical trials,
obtaining regulatory approval and in manufacturing and marketing
pharmaceutical products. Our competitors may succeed in obtaining
regulatory approval for their products more rapidly than we do.
Competitors have developed or are in the process of developing
technologies that are, or in the future may be, the basis for
competitive products. We are aware of potential competitors
developing products similar to our sarcoma vaccine, ovarian cancer
vaccine and pancreatic cancer antibodies product candidates. Our
competitors may succeed in developing products that are more
effective and/or cost competitive than those we are developing, or
that would render our product candidates less competitive or even
obsolete. In addition, one or more of our competitors may achieve
product commercialization or patent protection earlier than we do,
which could materially adversely affect our business.
If physicians and patients do not accept our future products or if
the market for indications for which any product candidate is
approved is smaller than expected, we may be unable to generate
significant revenue, if any.
Even
if any of our product candidates obtain regulatory approval, they
may not gain market acceptance among physicians, patients, and
third-party payers. Physicians may decide not to recommend our
treatments for a variety of reasons including:
●
timing of market introduction of competitive products;
●
demonstration of clinical safety and efficacy compared to other
products;
●
cost-effectiveness;
●
limited or no coverage by third-party payers;
●
convenience and ease of administration;
●
prevalence and severity of adverse side effects;
●
restrictions in the label of the drug;
●
other potential advantages of alternative treatment methods;
and
●
ineffective marketing and distribution support of its
products.
If
any of our product candidates are approved, but fail to achieve
market acceptance or such market is smaller than anticipated, we
may not be able to generate significant revenue and our business
would suffer.
As we evolve from a company that is primarily involved in clinical
development to a company that is also involved in
commercialization, we may encounter difficulties in expanding our
operations successfully.
As
we advance our product candidates through clinical trials, we will
need to expand our development, regulatory, manufacturing,
marketing and sales capabilities and may need to further contract
with third parties to provide these capabilities. As our operations
expand, we likely will need to manage additional relationships with
such third parties, as well as additional collaborators,
distributors, marketers and suppliers.
Maintaining
third party relationships for these purposes will impose
significant added responsibilities on members of our management and
other personnel. We must be able to: manage our development efforts
effectively; recruit and train sales and marketing personnel;
manage our participation in the clinical trials in which our
product candidates are involved effectively; and improve our
managerial, development, operational and finance systems, all of
which may impose a strain on our administrative and operational
infrastructure.
If
we enter into arrangements with third parties to perform sales,
marketing or distribution services, any product revenues that we
receive, or the profitability of these product revenues to us, are
likely to be lower than if we were to market and sell any products
that we develop without the involvement of these third parties. In
addition, we may not be successful in entering into arrangements
with third parties to sell and market our products or in doing so
on terms that are favorable to us. We likely will have little
control over such third parties, and any of them may fail to devote
the necessary resources and attention to sell and market our
products effectively. If we do not establish sales and marketing
capabilities successfully, either on our own or in collaboration
with third parties, we will not be successful in commercializing
our products.
The uncertainty associated with pharmaceutical reimbursement and
related matters may adversely affect our business.
Market
acceptance and sales of any one or more of our product candidates
will depend on reimbursement policies and may be affected by future
healthcare reform measures in the United States and in foreign
jurisdictions. Government authorities and third-party payers, such
as private health insurers and health maintenance organizations,
decide which drugs they will cover and establish payment levels. We
cannot be certain that reimbursement will be available for any of
our product candidates. Also, we cannot be certain that
reimbursement policies will not reduce the demand for, or the price
paid for, our products. If reimbursement is not available or is
available on a limited basis, we may not be able to successfully
commercialize any product candidates that we develop.
In
the United States, the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, also called the Medicare Modernization
Act, or MMA, changed the way Medicare covers and pays for
pharmaceutical products. The legislation established Medicare Part
D, which expanded Medicare coverage for outpatient prescription
drug purchases by the elderly but provided authority for limiting
the number of drugs that will be covered in any therapeutic class.
The MMA also introduced a new reimbursement methodology based on
average sales prices for physician-administered drugs.
The
United States and several foreign jurisdictions are considering, or
have already enacted, a number of legislative and regulatory
proposals to change the healthcare system in ways that could affect
our ability to sell our products profitably. Among policy makers
and payers in the United States and elsewhere, there is significant
interest in promoting changes in healthcare systems with the stated
goals of containing healthcare costs, improving quality and/or
expanding access to healthcare. In the United States, the
pharmaceutical industry has been a particular focus of these
efforts and has been significantly affected by major legislative
initiatives. We expect to experience pricing pressures in
connection with the sale of any products that it develops due to
the trend toward managed healthcare, the increasing influence of
health maintenance organizations and additional legislative
proposals.
Moreover.
the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Affordability Reconciliation Act, or
collectively, ACA, is intended to reduce the cost of health care
and substantially change the way health care is financed by both
government and private insurers. While we cannot predict what
impact on federal reimbursement policies this legislation will have
in general or on our business specifically, the ACA may result in
downward pressure on pharmaceutical reimbursement, which could
negatively affect market acceptance of, and the price we charge
for, any products we develop that receive regulatory
approval.
Our ability to
generate product revenues will be diminished if our therapies sell
for inadequate prices or patients are unable to obtain adequate
levels of reimbursement.
Our
ability to commercialize our therapies, alone or with
collaborators, will depend in part on the extent to which
reimbursement will be available from private health maintenance
organizations and health insurers and other healthcare payers.
Significant uncertainty exists as to the reimbursement status of
newly approved healthcare products. Healthcare payers are
challenging the prices charged for medical products and services.
Cost control initiatives could decrease the price that we would
receive for any products in the future, which would limit our
revenue and profitability. Government and other healthcare payers
increasingly attempt to contain healthcare costs by limiting both
coverage and the level of reimbursement for drugs and therapeutics.
We might need to conduct post-marketing studies in order to
demonstrate the cost-effectiveness of any future products to such
payers’ satisfaction. Such studies might require us to commit
a significant amount of management time and financial and other
resources. Our future products might not ultimately be considered
cost-effective. Even if one of our product candidates is approved
by the FDA, insurance coverage may not be available, and
reimbursement levels may be inadequate, to cover such therapies. If
government and other healthcare payers do not provide adequate
coverage and reimbursement levels for one of our products, once
approved, market acceptance of such product could be
reduced.
We only have a limited number of employees to manage and operate
our business.
As
of February 7, 2017, we had a total of 24 full-time employees and
two part-time employees. Our focus on limiting cash utilization
requires us to manage and operate our business in a highly
efficient manner. We cannot assure you that we will be able to
retain adequate staffing levels to run our operations and/or to
accomplish all of the objectives that we otherwise would seek to
accomplish.
We depend heavily on our executive officers, directors, and
principal consultants and the loss of their services would
materially harm our business.
We
believe that our success depends, and will likely continue to
depend, upon our ability to retain the services of our current
executive officers, directors, principal consultants and others. In
addition, we have established relationships with universities,
hospitals and research institutions, which have historically
provided, and continue to provide, us with access to research
laboratories, clinical trials, facilities and patients. The loss of
the services of any of these individuals or institutions would have
a material adverse effect on our business.
Our internal computer systems, or those of our third-party service
providers, licensees, licensors, collaborators or other contractors
or consultants, may fail or suffer security breaches, which could
result in a material disruption in our business and
operations.
Despite
the implementation of security measures, our internal computer
systems and those of our current and future service providers,
licensees, licensors, collaborators and other contractors and
consultants are vulnerable to damage from computer viruses,
unauthorized access, natural disasters, terrorism, war and
telecommunication and electrical failures. While we are not aware
of any such material system failure, accident or security breach to
date, if such an event were to occur and cause interruptions in our
operations, it could result in a material disruption of our
development programs and our business operations. For example, the
loss of clinical trial data from completed, on-going or future
clinical trials could result in delays in our regulatory approval
efforts and significant costs to recover or reproduce the data.
Likewise, we rely on third parties to manufacture our drug
candidates and conduct clinical trials, and similar events relating
to their computer systems could also have a material adverse effect
on our business. To the extent that any disruption or security
breach were to result in a loss of, or damage to, our data or
applications, or inappropriate disclosure of confidential or
proprietary information, we could incur liabilities and the further
development and commercialization of our product candidates could
be delayed.
Due in part to our limited financial resources, we may fail to
select or capitalize on the most scientifically, clinically or
commercially promising or profitable indications or therapeutic
areas for our product candidates or those that are in-licensed,
and/or we may be unable to pursue the clinical trials that we would
like to pursue.
We
have limited technical, managerial and financial resources to
determine the indications on which we should focus the development
efforts related to our product candidates. Due to our limited
available financial resources, we may have curtailed clinical
development programs and activities that might otherwise have led
to more rapid progress of our product candidates through the
regulatory and development processes.
We
may make incorrect determinations with regard to the indications
and clinical trials on which to focus the available resources that
we do have. Furthermore, we cannot assure you that we will be able
to retain adequate staffing levels to run our operations and/or to
accomplish all of the objectives that we otherwise would seek to
accomplish. Our decisions to allocate our research, management and
financial resources toward particular indications or therapeutic
areas for our product candidates may not lead to the development of
viable commercial products and may divert resources from better
opportunities. Similarly, our decisions to delay or terminate drug
development programs may also cause us to miss valuable
opportunities.
If the third parties on which we rely for the conduct of our
clinical trials and results do not perform our clinical trial
activities in accordance with good clinical practices and related
regulatory requirements, we may be unable to obtain regulatory
approval for or commercialize our product candidates.
We
use independent clinical investigators and other third-party
service providers to conduct and/or oversee the clinical trials of
our product candidates and expect to continue to do so for the
foreseeable future. We rely heavily on these parties for successful
execution of our clinical trials. Nonetheless, we are responsible
for confirming that each of our clinical trials is conducted in
accordance with the FDA’s requirements and our general
investigational plan and protocol.
The
FDA requires us and our clinical investigators to comply with
regulations and standards, commonly referred to as good clinical
practices, for conducting and recording and reporting the results
of clinical trials to assure that data and reported results are
credible and accurate and that the trial participants are
adequately protected. Our reliance on third parties that we do not
control does not relieve us of these responsibilities and
requirements. Third parties may not complete activities on schedule
or may not conduct our clinical trials in accordance with
regulatory requirements or the respective trial plans and
protocols. The failure of these third parties to carry out their
obligations could delay or prevent the development, approval and
commercialization of our product candidates or result in
enforcement action against us.
We have limited manufacturing capacity and have relied on, and
expect to continue to rely on, third-party manufacturers to produce
our product candidates.
We
do not own or operate manufacturing facilities for the production
of clinical or commercial quantities of our product candidates, and
we lack the resources and the capabilities to do so. As a result,
we currently rely, and expect to rely for the foreseeable future,
on third-party manufacturers to supply our product candidates.
Reliance on third-party manufacturers entails risks to which we
would not be subject if we manufactured our product candidates or
products ourselves, including:
●
reliance on third-parties for manufacturing process development,
regulatory compliance and quality assurance;
●
limitations on supply availability resulting from capacity and
scheduling constraints of third-parties;
●
the possible breach of manufacturing agreements by third-parties
because of factors beyond our control; and
●
the possible termination or non-renewal of the manufacturing
agreements by the third-party, at a time that is costly or
inconvenient to us.
If
we do not maintain our key manufacturing relationships, we may fail
to find replacement manufacturers or develop our own manufacturing
capabilities, which could delay or impair our ability to obtain
regulatory approval for our products and substantially increases
our costs or deplete profit margins, if any. If we do find
replacement manufacturers, we may not be able to enter into
agreements with them on terms and conditions favorable to us and
there could be a substantial delay before new facilities could be
qualified and registered with the FDA and other foreign regulatory
authorities.
The
FDA and other foreign regulatory authorities require manufacturers
to register manufacturing facilities. The FDA and corresponding
foreign regulators also inspect these facilities to confirm
compliance with current good manufacturing practice, or cGMP,
regulations. Contract manufacturers may face manufacturing or
quality control problems causing drug substance production and
shipment delays or a situation where the contractor may not be able
to maintain compliance with the applicable cGMP requirements. Any
failure to comply with cGMP requirements or other FDA, the European
Medicines Agency, or EMA, and comparable foreign regulatory
requirements could adversely affect our clinical research
activities and our ability to develop our product candidates and
market our products following approval.
Our
current and anticipated future dependence upon others for the
manufacture of our product candidates may adversely affect our
future profit margins and our ability to develop our product
candidates and commercialize any products that receive regulatory
approval on a timely basis.
It is difficult and costly to protect our proprietary rights, and
we may not be able to ensure their protection.
We have
been issued patents, applied for other patents, and intend on
continuing to seek additional patent protection for our families of
antibodies from our antibody development program, our vaccines,
methods of use and other compounds that we
discover. However, any or all of such compounds, methods
or new uses of known compounds may not be subject to effective
patent protection. Further, the development of regimens for the
administration of our vaccines, which involve specifications for
the frequency, timing and amount of dosages, has been, and we
believe may continue to be, important to our efforts, although
those processes, as such, may not be patentable. In addition, our
issued patents may be declared invalid or our competitors may find
ways to avoid the claims in the patents.
Our
commercial success will depend, in part, on our ability to obtain
and maintain patent protection, protect our trade secrets and
operate without infringing on the proprietary rights of others. Our
commercial success will also depend, in part, on our ability to
market our product candidates during the term of our patent
protection. For example, certain patents primarily in
foreign countries within our portfolio expired in 2014 and can no
longer be relied on for protection in those countries. As
of February 7, 2017, we were the exclusive licensee, sole
assignee or co-assignee of 14 granted United States patents, 2
pending United States patent applications, 7 international patents
and 19 pending international patent applications. The
patent position of pharmaceutical and biotechnology firms like us
are generally highly uncertain and involves complex legal and
factual questions, resulting in both an apparent inconsistency
regarding the breadth of claims allowed in United States patents
and general uncertainty as to their legal interpretation and
enforceability. No absolute policy regarding the breadth
of claims allowed in biopharmaceutical patents has emerged to date
in the United States or in many foreign jurisdictions. Changes in
either the patent laws or in interpretations of patent laws in the
United States and foreign jurisdictions may diminish the value of
our intellectual property. Accordingly, we cannot predict the
breadth of claims that may be enforced in the patents that we
currently own or that may be issued from the applications we have
filed or may file in the future or that we have licensed or may
license from third parties, including MSK for the vaccine antigen
patents. Further, if any patents we obtain or license are deemed
invalid or unenforceable, it could impact our ability to
commercialize or license our technology. Thus, patent
applications assigned or exclusively licensed to us may not result
in patents being issued, any issued patents assigned or exclusively
licensed to us may not provide us with competitive protection or
may be challenged by others, and the current or future granted
patents of others may have an adverse effect on our ability to do
business and achieve profitability.
One of our issued US patents is directed to a candidate antibody
product that will expire in 2034. Other previously filed antibody
patent applications will, if issued, have patent expiration dates
depending on country and filing date between 2034 and
2035. It is possible that the term of the antibody
patent and certain patents issuing from the antibody patent
applications may be extended for a portion of the time the
candidate product was under regulatory review. Patents covering
components of the sarcoma vaccine will expire in
2022. Patents covering the polyvalent ovarian vaccine
will expire between 2018 and 2025. We believe that our
product candidates are eligible for Orphan Drug designation from
FDA depending on the indication for which it is approved by
FDA. Each product that receives an Orphan Drug
designation would be eligible for up to 7 additional years of
patent protection.
The
degree of future protection for our proprietary rights is uncertain
because legal means afford only limited protection and may not
adequately protect our rights or permit us to gain or keep our
competitive advantage. For example:
●
others may be able to make compounds that are similar to our
vaccines and monoclonal antibody-based candidates and any future
product candidates we may seek to develop but that are not covered
by the claims of our patents;
●
if we encounter delays in our clinical trials, the period of time
during which we could market our vaccines and monoclonal
antibody-based candidates under patent protection would be
reduced;
●
we might not have been the first to conceive, make or disclose the
inventions covered by our patents or pending patent
applications;
●
we might not have been the first to file patent applications for
these inventions;
●
any patents that we obtain may be invalid or unenforceable or
otherwise may not provide us with any competitive advantages;
or
●
the patents of others may have a material adverse effect on our
business.
Due
to the patent laws of a country, or the decisions of a patent
examiner in a country, or our own filing strategies, we may not
obtain patent coverage for all of the product candidates that may
be disclosed or methods involving these candidates that may be
disclosed in the parent patent application. We plan to pursue
divisional patent applications and/or continuation patent
applications in the United States and many other countries to
obtain claim coverage for inventions that were disclosed but not
claimed in the parent patent application, but may not succeed in
these efforts.
Composition
of matter patents on the active biological component are generally
considered to be the strongest form of intellectual property
protection for biopharmaceutical products, as such patents
generally provide protection without regard to any method of use.
We cannot be certain that the claims in our patent applications
covering composition-of-matter of our candidates will be considered
patentable by the U.S. Patent and Trademark Office, or USPTO,
courts in the United States or by the patent offices and courts in
foreign countries. Method of use patents protect the use of a
product for the method recited in the claims. This type of patent
does not prevent a competitor from making and marketing a product
that is identical to our product for an indication that is outside
the scope of the patented method. Moreover, even if competitors do
not actively promote their product for our targeted indications,
physicians may prescribe these products “off-label.”
Although off-label prescriptions may infringe or contribute to or
induce the infringement of method of use patents, the practice is
common and such infringement is difficult to prevent or prosecute.
Interference proceedings provoked by third parties or brought by
the USPTO may be necessary to determine the priority of inventions
with respect to our patents or patent applications or those of our
collaborators or licensors. An unfavorable outcome could require us
to cease using the related technology or to attempt to license
rights to it from the prevailing party. Our business could be
harmed if the prevailing party does not offer us a license on
commercially reasonable terms. Litigation or interference
proceedings may fail, resulting in harm to our business, and, even
if successful, may result in substantial costs and distract our
management and other employees.
There
have been numerous changes to the patent laws and proposed changes
to the rules of the USPTO, which may have a significant impact on
our ability to protect our technology and enforce our intellectual
property rights. For example, in September 2011, President Obama
signed the America Invents Act that codifies several significant
changes to the U.S. patent laws, including, among other things,
changing from a “first to invent” to a “first
inventor to file” system, limiting where a patent holder may
file a patent suit, replacing interference or “first to
invent” proceedings with derivation proceedings and creating
inter partes review and post-grant opposition proceedings to
challenge the validity of patents after they have been issued. The
effects of these changes are currently unclear as the USPTO only
recently has adopted regulations implementing the changes, the
courts have yet to address most of these provisions, and the
applicability of the act and new regulations on specific patents
and patent applications discussed herein have not been determined
and would need to be reviewed.
Periodic
maintenance fees on any issued patent are due to be paid to the
USPTO and foreign patent agencies in several stages over the
lifetime of the patent. The USPTO and various foreign governmental
patent agencies require compliance with a number of procedural,
documentary, fee payment and other similar provisions during the
patent application process. While an inadvertent lapse can in many
cases be cured by payment of a late fee or by other means in
accordance with the applicable rules, there are situations in which
noncompliance can result in abandonment or lapse of the patent or
patent application, resulting in partial or complete loss of patent
rights in the relevant jurisdiction. Noncompliance events that
could result in abandonment or lapse of a patent or patent
application include, but are not limited to, failure to respond to
official actions within prescribed time limits, non-payment of fees
and failure to properly legalize and submit formal documents. In
such an event, our competitors might be able to enter the market,
which would have a material adverse effect on our
business.
We
also rely on trade secrets to protect our technology, especially
where we do not believe patent protection is appropriate or
obtainable. However, trade secrets are difficult to protect.
Although we use reasonable efforts to protect our trade secrets,
our employees, consultants, contractors, licensees, licensors,
outside scientific collaborators and other advisors may
unintentionally or willfully disclose our information such that our
competitors may obtain it. Enforcing a claim that a third party
illegally obtained and is using any of our trade secrets is
expensive and time consuming, and the outcome is unpredictable.
Moreover, our competitors may independently develop equivalent
knowledge, methods and know-how, such as new therapies, including
therapies for the indications we are targeting. If others seek to
develop similar therapies, their research and development efforts
may inhibit our ability to conduct research in certain areas and to
expand our intellectual property portfolio, and also have a
material adverse effect on our business.
Moreover,
because some of the basic research relating to one or more of our
patent applications and/or patents were performed at various
universities and/or funded by grants, one or more universities,
employees of such universities and/or grantors could assert that
they have certain rights in such research and any resulting
products. Further, others may independently develop similar
products, may duplicate our products, or may design around our
patent rights. In addition, as a result of the assertion of rights
by a third-party or otherwise, we may be required to obtain
licenses to patents or other proprietary rights of others in or
outside of the United States. Any licenses required under any such
patents or proprietary rights may not be made available on terms
acceptable to us, if at all. If we do not obtain such licenses, we
could encounter delays in product market introductions during our
attempts to design around such patents or could find that the
development, manufacture or sale of products requiring such
licenses is foreclosed. In addition, we could incur substantial
costs in defending suits brought against us or in connection with
patents to which we hold licenses or in bringing suit to protect
our own patents against infringement.
We
require employees and the institutions that perform our preclinical
and clinical trials to enter into confidentiality agreements with
us. Those agreements provide that all confidential information
developed or made known to a party to any such agreement during the
course of the relationship with us be kept confidential and not be
disclosed to third-parties, except in specific circumstances. Any
such agreement may not provide meaningful protection for our trade
secrets or other confidential information in the event of
unauthorized use or disclosure of such information.
With
respect to our vaccine programs we have in-licensed rights from
third parties. If these license agreements terminate or expire, we
may lose the licensed rights to some or all of our vaccine product
candidates. We may not be able to continue to develop them or, if
they are approved, market or commercialize them.
We
depend on license agreements with third-parties for certain
intellectual property rights relating to our product candidates,
including, but not limited to, the license of certain intellectual
property rights from MSK. In general, our license agreements
require us to make payments and satisfy performance obligations in
order to keep these agreements in effect and retain our rights
under them. These payment obligations can include upfront fees,
maintenance fees, milestones, royalties, patent prosecution
expenses, and other fees. These performance obligations typically
include diligence obligations. If we fail to pay, be diligent or
otherwise perform as required under our license agreements, we
could lose the rights under the patents and other intellectual
property rights covered by these agreements. If disputes arise
under any of our in-licenses, including our in-licenses from MSK,
we could lose our rights under these agreements. Any such dispute
may not be resolvable on favorable terms, or at all. Whether or not
any disputes of this kind are favorably resolved, our
management’s time and attention and our other resources could
be consumed by the need to attend to these disputes and our
business could be harmed by the emergence of such a
dispute.
If
we lose our rights under these agreements, we might not be able to
develop any related product candidates further, or following
regulatory approval, if any, we might be prohibited from marketing
or commercializing these product candidates. In particular, patents
previously licensed to us might, after termination of an agreement,
be used to stop us from conducting these activities.
We are dependent on MSK for the establishment of our intellectual
property rights related to the vaccine program, and if MSK has not
established our intellectual property rights with sufficient scope
to protect our vaccine candidates, we may have limited or no
ability to assert intellectual property rights to our vaccine
candidates.
Under
our agreement with MSK, MSK was responsible for establishing the
intellectual property rights to the vaccine antigen conjugates,
mixtures of vaccine antigen conjugates that make up polyvalent
vaccine candidates and methods of use. As we were not responsible
for the establishment of our intellectual property rights to these
vaccine antigen conjugates, mixtures of vaccine antigen conjugates
and methods of use, we have less visibility into the strength of
our intellectual property rights to our vaccine candidates than if
we had been responsible for the establishment of these rights. If
MSK did not establish those rights so they are of sufficient scope
to protect the vaccine candidates, then we may not be able to
prevent others from using or commercializing some or all of our
vaccine candidates, and others may be able to assert intellectual
property rights in our vaccine candidates and prevent us from
further pursuing the development and commercialization of our
vaccine candidates.
We may not obtain exclusive rights to intellectual property created
as a result of our strategic collaborative agreements.
We
are party to collaborative research agreements with Heidelberg
Pharma GmbH and Rockefeller University, and expect to enter into
agreements with other parties in the future, each of which involve
research and development efforts. Under our existing
agreements, we do not have exclusive rights to jointly developed
intellectual property and would have to license the collaborative
partner’s interest in the jointly developed intellectual
property to obtain exclusive rights. We may not be able to
license our collaborative partner’s interest or license their
interest at reasonable terms. If we are unable to
license their interest we would not have exclusive rights to the
jointly developed intellectual property and, in some
collaborations, the collaborative partner may be free to license
their interest in the jointly developed intellectual property to a
competitor. In other collaborations, if we are unable to
license the collaborative partner’s interest we may not have
sufficient rights to practice the jointly developed intellectual
property. Such provisions to the jointly developed
intellectual property may limit our ability to gain commercial
benefit from some of or all of the intellectual property we jointly
develop with our collaborative partners and may lead to costly or
time-consuming disputes with parties with whom we have
collaborative relationships over rights to certain innovations or
with other third parties that may result from the activities of the
collaborative arrangements.
We may incur substantial costs as a result of litigation or other
proceedings relating to patent and other intellectual property
rights and we may be unable to enforce or protect our rights to, or
use, our technology.
If
we choose to go to court to stop another party from using the
inventions claimed in any patents we obtain, that individual or
company has the right to ask the court to rule that such patents
are invalid or should not be enforced. These lawsuits are expensive
and would consume time and resources and divert the attention of
managerial and scientific personnel even if we were successful in
stopping the infringement of such patents or sustaining their
validity and enforceability. In addition, there is a risk that the
court will decide that such patents are not valid and that we do
not have the right to enforce them. There is also the risk that,
even if the validity of such patents is upheld, the court will
refuse to stop the other party on the grounds that such other
party’s activities do not infringe such patents. In addition,
the United States Court of Appeals for the Federal Circuit and the
Supreme Court of the United States continue to address issues under
the United States patent laws, and the decisions of those and other
courts could adversely affect our ability to sustain the validity
of our issued or licensed patents and obtain new
patents.
Furthermore,
a third party may claim that we or our manufacturing or
commercialization partners or customers are using inventions
covered by the third party’s patent rights and may go to
court to stop us or our partners and/or customers from engaging in
our operations and activities, including making or selling our
vaccine and monoclonal antibody-based candidates and any future
product candidates we may seek to develop. These lawsuits are
costly and could affect our results of operations and divert the
attention of managerial and scientific personnel. There is a risk
that a court would decide that we or our commercialization partners
or customers are infringing the third party’s patents and
would order us or our partners or customers to stop the activities
covered by the patents. In that event, we or our commercialization
partners or customers may not have a viable way around the patent
and may need to halt commercialization or use of the relevant
product. In addition, there is a risk that a court will order us or
our partners or customers to pay the other party damages for having
violated the other party’s patents or obtain one or more
licenses from third parties, which may be impossible or require
substantial time and expense. We cannot predict whether any license
would be available at all or whether it would be available on
commercially reasonable terms. Furthermore, even in the absence of
litigation, we may need to obtain licenses from third parties to
advance our research or allow commercialization of our candidates,
and we have done so from time to time. We may fail to obtain any of
these licenses at a reasonable cost or on reasonable terms, if at
all. In such events, we would be unable to further develop and
commercialize one or more of our drug candidates, which could harm
our business significantly. In the future, we may agree to
indemnify our commercial partners and/or customers against certain
intellectual property infringement claims brought by third parties
which could increase our financial expense, increase our
involvement in litigation and/or otherwise materially adversely
affect our business.
Because
of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our
confidential information could be compromised by disclosure during
this type of litigation, which could adversely affect our
intellectual property rights and our business. In addition, there
could be public announcements of the results of hearings, motions
or other interim proceedings or developments. If securities
analysts or investors perceive these results to be negative, it
could have a substantial adverse effect on the price of our common
stock.
The
pharmaceutical and biotechnology industries have produced a
proliferation of patents, and it is not always clear to industry
participants, including us, which patents cover various types of
products or methods of use. The coverage of patents is subject to
interpretation by the courts, and the interpretation is not always
uniform. If we are sued for patent infringement, we would need to
demonstrate that our products or methods either do not infringe the
patent claims of the relevant patent or that the patent claims are
invalid or unenforceable, and we may not be able to do this.
Proving invalidity or unenforceability is difficult. For example,
in the United States, proving invalidity requires a showing of
clear and convincing evidence to overcome the presumption of
validity enjoyed by issued patents.
Because
some patent applications in the United States may be maintained in
secrecy until the patents are issued, because patent applications
in the United States and many foreign jurisdictions are typically
not published until eighteen months after filing, because searches
and examinations of patent applications by the USPTO and other
patent offices may not be comprehensive, and because publications
in the scientific literature often lag behind actual discoveries,
we cannot be certain that others have not filed patent applications
for technology covered by our patents or pending applications. Our
competitors may have filed, and may in the future file, patent
applications and may have obtained patents covering technology
similar to ours. Any such patents or patent application may have
priority over our patent applications, which could further require
us to obtain or license rights to issued patents covering such
technologies. If another party has obtained a U.S. patent or filed
a U.S. patent application on inventions similar to ours, we may
have to participate in a proceeding before the USPTO or in the
courts to determine which patent or application has priority. The
costs of these proceedings could be substantial, and it is possible
that our application or patent could be determined not to have
priority, which could adversely affect our intellectual property
rights and business.
We
have received confidential and proprietary information from
collaborators, prospective licensees and other third parties. In
addition, we employ individuals who were previously employed at
other biotechnology or pharmaceutical companies. We may be subject
to claims that we or our employees, consultants or independent
contractors have improperly used or disclosed confidential
information of these third parties or our employees’ former
employers. Litigation may be necessary to defend against these
claims. Even if we are successful in defending against these
claims, litigation could result in substantial cost and be a
distraction to our management and employees. If we are not
successful, our ability to continue our operations and our business
could be materially, adversely affected.
Some
of our competitors may be able to sustain the costs of complex
intellectual property litigation more effectively than we can
because they have substantially greater resources. In addition, any
uncertainties resulting from the initiation and continuation of any
litigation could have a material adverse effect on our ability to
raise the funds necessary to continue our operations, on our
ability to hire or retain employees, or otherwise on our
business.
If product liability lawsuits are successfully brought against us,
we may incur substantial liabilities and may be required to limit
commercialization of our product candidates and any products that
we may develop.
The
testing and marketing of medical products entail an inherent risk
of product liability. Although we are not aware of any historical
or anticipated product liability claims or specific causes for
concern, if we cannot successfully defend ourselves against product
liability claims, we may incur substantial liabilities or be
required to limit commercialization of our product candidates and
any products that we may develop. In addition, product liability
claims may also result in withdrawal of clinical trial volunteers,
injury to our reputation and decreased demand for any products that
we may commercialize. We currently carry product liability
insurance that covers our clinical trials up to a $5.0 million
annual aggregate limit. We will need to increase the amount of
coverage if and when we have a product that is commercially
available. If we are unable to obtain sufficient product liability
insurance at an acceptable cost, potential product liability claims
could prevent or inhibit the commercialization of any products that
we may develop, alone or with corporate partners.
Our restated certificate of incorporation, our amended and restated
by-laws and Delaware law could deter a change of our management
which could discourage or delay offers to acquire us; certain
restrictions in our agreements with existing stockholders could
also discourage or delay offers to acquire us.
Certain
provisions of Delaware law and of our restated certificate of
incorporation, as amended, and amended and restated by-laws, could
discourage or make it more difficult to accomplish a proxy contest
or other change in our management or the acquisition of control by
a holder of a substantial amount of our voting stock. It is
possible that these provisions could make it more difficult to
accomplish, or could deter, transactions that stockholders may
otherwise consider to be in their best interests or in our best
interests. These provisions include:
●
establishing a classified board of directors requiring that members
of the board be elected in different years, which lengthens the
time needed to elect a new majority of the board;
●
authorizing the issuance of “blank check” preferred
stock that could be issued by our board of directors to increase
the number of outstanding shares or change the balance of voting
control and thwart a takeover attempt;
●
prohibiting cumulative voting in the election of directors, which
would otherwise allow for less than a majority of stockholders to
elect director candidates;
●
limiting the ability of stockholders to call special meetings of
the stockholders;
●
prohibiting stockholder action by written consent and requiring all
stockholder actions to be taken at a meeting of our stockholders;
and
●
establishing 90 to 120-day advance notice requirements for
nominations for election to the board of directors and for
proposing matters that can be acted upon by stockholders at
stockholder meetings.
In
connection with our financing that closed in August 2016, we
granted certain rights to approve future (i) issuances of our
securities, (ii) equity or debt financings and (iii) sales of any
development product assets currently held by us, subject to certain
exceptions, for as long a lead investor in the offering holds 50%
or more of the securities purchased by such lead investor in that
offering or until a financing with net proceeds to us of at least
$7.5 million in which we are able to sell our securities at a
minimum per share price of $7.40 or greater. There
can be no assurance that such lead investor will provide consent
and this requirement may make it difficult for us to raise capital,
refinance indebtedness or borrow additional funds.
Unless our common stock is listed on The NASDAQ Capital Market or
other national securities exchange, it will be deemed a
“penny stock,” which would make it more difficult for
our investors to sell their shares.
On
August 17, 2016, we began trading on The NASDAQ Capital Market. If
we fail to maintain our listing on The NASDAQ Capital Market or
other national securities exchange, our common stock will be
subject to the “penny stock” rules adopted under
Section 15(g) of the Exchange Act. The penny stock
rules generally apply to companies whose common stock is not
listed on the NASDAQ Stock Market or other national securities
exchange and trades at less than $4.00 per share, other than
companies that have had average revenue of at least $6,000,000 for
the last three years or that have tangible net worth of at least
$5,000,000 ($2,000,000 if the company has been operating for three
or more years). These rules require, among other things, that
brokers who trade penny stock to persons other than
“established customers” complete certain documentation,
make suitability inquiries of investors and provide investors with
certain information concerning trading in the security, including a
risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade penny stocks
because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market
makers in such securities is limited. If we remain subject to the
penny stock rules for any significant period, it could have an
adverse effect on the market, if any, for our securities. If our
securities are subject to the penny stock rules, investors will
find it more difficult to dispose of our securities.
Substantial future sales of our common stock by us or by our
existing stockholders could cause our stock price to
fall.
Additional
equity financings or other share issuances by us, including shares
issued in connection with strategic alliances and corporate
partnering transactions, could adversely affect the market price of
our common stock. Sales by existing stockholders of a large number
of shares of our common stock in the public market or the
perception that additional sales could occur could cause the market
price of our common stock to drop.
Our stock price may be volatile; you may not be able to resell your
shares at or above your purchase price.
Our
stock prices and the market prices for securities of biotechnology
companies in general have been highly volatile, with recent
significant price and volume fluctuations, and may continue to be
highly volatile in the future. For example, during the year ended
December 31, 2016, our common stock traded between $3.03per
share and $6.51 per share. The following factors, in addition to
other risk factors described in this section, may have a
significant impact on the market price of our common stock, some of
which are beyond our control:
●
developments regarding, or the results of, our clinical
trials;
●
announcements of technological innovations or new commercial
products by our competitors or us;
●
our issuance of equity or debt securities, or disclosure or
announcements relating thereto;
●
developments concerning proprietary rights, including
patents;
●
developments concerning our collaborations;
●
publicity regarding actual or potential medical results relating to
products under development by our competitors or us;
●
regulatory developments in the United States and foreign
countries;
●
litigation;
●
economic and other external factors or other disaster or crisis;
or
●
period-to-period fluctuations in our financial
results.
We have been, and in the future may be, subject to securities class
action lawsuits and shareholder derivative actions. These, and
potential similar or related litigation, could result in
substantial damages and may divert management’s time and
attention from our business.
We
have been, and may in the future be, the target of securities class
actions or shareholder derivative claims. Any such actions or
claims could result in substantial damages and may divert
management’s time and attention from our
business.
The rights of our common stockholders are limited by and
subordinate to the rights of the holders
of Series D Preferred Stock, Series E Preferred
Stock and Series F Preferred Stock; these rights may have a
negative effect on the value of shares of our common
stock.
The holders of the Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock have
rights and preferences generally superior to those of the holders
of common stock. The existence of these superior rights and
preferences may have a negative effect on the value of shares of
our common stock. These rights are more fully set forth in the
Series D certificate of designations, Series E certificate of
designations and Series F certificate of designations,
respectively, and include, but are not limited to the right to
receive a liquidation preference, prior to any distribution of our
assets to the holders of our common stock, in an amount equal to
$0.01 per share or $1,325 for the Series D Convertible
Preferred Stock, $0.01 per share or $333 for the Series E
Convertible Preferred Stock and $0.01 per share or $6,653 for the
Series F Convertible Preferred Stock, as of February 7,
2017.
A
limited public trading market may cause volatility in the price of
our common stock.
On
August 17, 2016, we began trading on The NASDAQ Capital Market. If
we fail to maintain the listing of our common stock on The NASDAQ
Capital Market, our common stock will be quoted on the OTCQB
marketplace. The quotation of our common stock on the
OTCQB marketplace does not assure that a meaningful, consistent and
liquid trading market currently exists, and in recent years such
market has experienced extreme price and volume fluctuations that
have particularly affected the market prices of many smaller
companies like us. Our common stock is subject to this volatility.
Sales of substantial amounts of common stock, or the perception
that such sales might occur, could adversely affect prevailing
market prices of our common stock and our stock price may decline
substantially in a short time and our stockholders could suffer
losses or be unable to liquidate their holdings. If our common
stock does not trade on a national securities exchange in the
future, our common stock will be subject to the securities laws of
the various states and jurisdictions of the United States in
addition to federal securities law. While we may register our
common stock or qualify for exemptions for our common stock in one
of more states, if we fail to do so the investors in those states
where we have not taken such steps may not be allowed to purchase
our stock or those who presently hold our stock may not be able to
resell their shares without substantial effort and expense. These
restrictions and potential costs could be significant burdens on
our stockholders.
The number of shares of issued and outstanding common stock
represents approximately 39% of our fully diluted shares of common
stock. Additional issuances of shares of common stock
upon conversion and/or exercise of preferred stock, options to
purchase common stock and warrants to purchase common stock will
cause substantial dilution to existing stockholders.
At February 7, 2017, we had 6,296,110 shares of common stock issued
and outstanding. Up to an additional 2,975,424 shares
may be issued upon conversion of our Series D, Series E and Series
F Convertible Preferred Stock; 5,125,391 shares issuable upon
exercise of warrants at a weighted average price of $6.84;1,587,971
shares upon exercise of all outstanding options to purchase our
common stock at a weighted average price of $7.29; and 205,482
shares issuable upon vesting of restricted stock units granted,
resulting in a total of up to 16,190,378 shares that may be issued
and outstanding. The issuance of any and all of
the 9,894,268 shares issuable upon exercise or conversion of
our outstanding convertible securities will cause substantial
dilution to existing stockholders and may depress the market price
of our common stock.
Risks Related to the Offering
You will experience immediate and substantial
dilution.
Since
the public offering price of the securities offered pursuant to
this prospectus is higher than the net tangible book value per
share of our common stock, you will suffer substantial dilution in
the net tangible book value of the common stock you purchase in
this offering. See “Dilution” in this prospectus for a
more detailed discussion of the dilution you will incur if you
purchase securities in this offering. In the event that you
exercise your warrants, you will experience additional dilution to
the extent that the exercise price of the warrants is higher than
the tangible book value per share of our common stock. In
addition, we may have issued options and warrants to acquire common
stock at prices below the expected public offering price of the
shares of common stock offered hereby, although no warrants at the
present time are below the current offering price. To the extent
outstanding options, warrants or other derivative securities are
ultimately exercised or converted, or if we issue restricted stock
to our employees under our equity incentive plans, there will be
further dilution to investors who purchase shares in this
offering.
Management will have broad discretion as to the use of the net
proceeds from this offering, and we may not use these proceeds
effectively.
We
have not designated any portion of the net proceeds from this
offering to be used for any particular purposes. Our management
will have broad discretion in the application of the net proceeds
from this offering and could spend the proceeds in ways that do not
improve our results of operations or enhance the value of our
common stock. Accordingly, you will be relying on the judgment of
our management with regard to the use of these net proceeds, and
you will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used
appropriately. Our failure to apply these funds effectively could
have a material adverse effect on our business, delay the
development of our product candidates and cause the price of our
common stock to decline.
You will experience future dilution as a result of future equity
offerings
We
may in the future offer additional shares of our common stock or
other securities convertible into or exchangeable for our common
stock. Although no assurances can be given that we will
consummate a financing, in the event we do, or in the event we sell
shares of common stock or other securities convertible into shares
of our common stock in the future, additional and substantial
dilution will occur. In addition, investors purchasing
shares or other securities in the future could have rights superior
to investors in this offering.
If
we are not able to comply with the applicable continued listing
requirements or standards of NASDAQ, NASDAQ could delist our common
stock.
On
August 17, 2016, we began trading on The NASDAQ Capital Market. In
order to maintain that listing, we must satisfy minimum financial
and other continued listing requirements and standards, including
those regarding director independence and independent committee
requirements, minimum stockholders’ equity, minimum share
price, and certain corporate governance requirements. There can be
no assurances that we will be able to comply with the applicable
listing standards.
In the event that our common stock is delisted
from the NASDAQ Capital Market and is not eligible to be listed on
another national securities exchange, trading of our common stock
could be conducted in the over-the-counter market or on an
electronic bulletin board established for unlisted securities such
as the Pink Sheets or the OTC Bulletin Board. In such event, it
could become more difficult to dispose of, or obtain accurate price
quotations for, our common stock, and there would likely also be a
reduction in our coverage by securities analysts and the news
media, which could cause the price of our common stock to decline
further. Also, it may be difficult for us to raise additional
capital if we are not listed on a major exchange.
If our common stock is not listed on a national securities
exchange, compliance with applicable state securities laws may be
required for subsequent offers, transfers and sales of the shares
of common stock offered hereby.
The
securities offered hereby are being offered pursuant to one or more
exemptions from registration and qualification under applicable
state securities laws. Because our common stock is listed on The
NASDAQ Capital Market, we are not required to register or qualify
in any state the subsequent offer, transfer or sale of the common
stock. If our common stock is delisted from The NASDAQ Capital
Market and is not eligible to be listed on another national
securities exchange, subsequent transfers of the shares of our
common stock offered hereby by U.S. holders may not be exempt from
state securities laws. In such event, it will be the responsibility
of the holder of shares or warrants to register or qualify the
shares for any subsequent offer, transfer or sale in the United
States or to determine that any such offer, transfer or sale is
exempt under applicable state securities laws.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements, which reflect the
views of our management with respect to future events and financial
performance. These forward-looking statements are subject to a
number of uncertainties and other factors that could cause actual
results to differ materially from such statements. Forward-looking
statements are identified by words such as
“anticipates,” “believes,”
“estimates,” “expects,”
“intends,” “plans,” “projects,”
“targets” and similar expressions. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which are based on the information available to
management at this time and which speak only as of this date. We
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. For a discussion of some of the factors that may
cause actual results to differ materially from those suggested by
the forward-looking statements, please read carefully the
information under “Risk Factors.” Examples of our
forward-looking statements include:
●
Our need for additional capital to fund our
operations;
●
Our history of losses and our expectation of future
losses;
●
The clinical development of our product candidates and our
expectations for the completion of associated clinical
trials;
●
Our expectations regarding the safety and efficacy of our product
candidates;
●
The expected costs of our clinical trials;
●
Our expectations regarding the use of our existing cash and the
expected net proceeds of this offering;
●
Our expectations regarding our ability to obtain regulatory
approval for any of our product candidates and any requirements
that may be imposed in connection with any regulatory approval we
receive;
●
Our plans to commercialize any product candidate that receives
regulatory approval;
●
Expectations regarding the willingness of doctors to use any
approved product and the availability and amount of any third party
reimbursement for such use;
●
Our expectations regarding the cost and effect of ongoing
regulatory oversight for any approved product;
●
The effect of the loss of any of our executive officers, directors
and principal consultants on our business;
●
Our expectations regarding the ability of our clinical research
organizations to properly oversee our clinical trials;
●
Our expectations regarding the ability of our contract
manufacturers to manufacture sufficient amounts of product
candidates to satisfy our needs in accordance with cGMP, including
the availability of raw materials and intermediates used to
manufacture our product candidates;
●
Our ability to obtain and enforce patents and other proprietary
rights to our technology; and
●
The performance by third party collaborators of their obligations
under their agreements with us
You
should read this prospectus and the documents that we have filed as
exhibits to the registration statement, of which this prospectus is
a part, completely and with the understanding that our actual
future results may be materially different from what we
expect. You should assume that the information appearing in
this prospectus is accurate as of the date on the front cover of
this prospectus only. Because the risk factors referred to above
could cause actual results or outcomes to differ materially from
those expressed in any forward-looking statements made by us or on
our behalf, you should not place undue reliance on any
forward-looking statements. These risks and uncertainties,
along with others, are described above under the heading
“Risk Factors” beginning on page 5 of this
prospectus. We qualify all of the information presented
in this prospectus, and particularly our forward-looking
statements, by these cautionary statements.
USE OF PROCEEDS
We estimate
that the net proceeds of this offering will be approximately
$ million,
or approximately
$ million
if the underwriter exercise its over-allotment option in full,
assuming the sale
of shares
of our common stock at an assumed public offering price of
$ per share, the closing
bid price of our common stock on The NASDAQ Capital Market
on ,
2017, after deducting the estimated underwriting discount and
estimated offering expenses payable by us.
A
$0.25 increase (decrease) in the assumed public offering price of
$ per
share would increase (decrease) the expected net proceeds of this
offering by approximately
$ million,
assuming the number of shares offered by us remains the same and
after deducting the estimated underwriting discount and estimated
offering expenses payable by us. A 100,000 increase (decrease) in
the assumed number of shares of our common stock sold in this
offering would increase (decrease) the expected net proceeds of
this offering by approximately
$ million,
assuming the assumed public offering price per share remains the
same.
We
intend to use the net proceeds received from this offering to fund
the two Phase I clinical trials of our lead antibody therapeutic
and diagnostic candidates, and for working capital and general
corporate purposes.
We have
not yet determined the amount of net proceeds to be used
specifically for any of the foregoing purposes. Accordingly, we
will retain broad discretion over the use of these
proceeds. Pending any use as described above, we intend
to invest the net proceeds in high-quality, short-term,
interest-bearing securities.
PRICE RANGE OF COMMON
STOCK
Our
common stock has been listed on The NASDAQ Capital Market since
August 17, 2016 under the symbol “MBVX” and, prior to
that, on the OTCQB under the symbol “MBVX”. The
following table sets forth the high and low bid prices for our
common stock for the periods indicated. The prices set forth below
represent inter-dealer quotations, without adjustment for retail
mark-up, mark-down or commission, and may not represent the prices
of actual transactions. All stock prices included in the
following table are adjusted for the 1 for 8 reverse split of our
common stock effected on September 8, 2014 and the Listing
Reverse Split.
|
High
|
Low
|
2015
|
|
|
Quarter
ended March 31, 2015
|
$19.76
|
$6.14
|
Quarter
ended June 30, 2015
|
$36.56
|
$13.32
|
Quarter
ended September 30, 2015
|
$20.87
|
$7.77
|
Quarter
ended December 31, 2015
|
$8.29
|
$4.51
|
|
|
|
2016
|
|
|
Quarter
ended March 31, 2016
|
$6.51
|
$3.03
|
Quarter
ended June 30, 2016
|
$6.44
|
$3.48
|
Quarter
ended September 30, 2016
|
$6.05
|
$3.86
|
Quarter
ended December 31, 2016
|
$4.50
|
$3.10
|
2017
|
|
|
Quarter
ended March 31, 2017 (through , 2017)
|
$
|
$
|
On
February 9, 2017, the closing bid price of our common stock was
$2.79.
As
of February 7, 2017, there were 104 stockholders of record of our
common stock, one of which is Cede & Co., a nominee for
Depository Trust Company, or DTC. Shares of common stock that are
held by financial institutions as nominees for beneficial owners
are deposited into participant accounts at DTC, and are considered
to be held of record by Cede & Co. as one
stockholder.
Dividend
Policy
We
have never paid our stockholders cash dividends, and we do not
anticipate paying any cash dividends in the foreseeable future as
we intend to retain any earnings for use in our business. Any
future determination to pay dividends will be at the discretion of
our board of directors.
D
ILUTION
If you
purchase shares of our common stock in this offering, you will
experience dilution to the extent of the difference between the
price per share you pay in this offering and the net tangible book
value per share of our common stock immediately after this
offering. The net tangible book value of our common stock on
September 30, 2016, was approximately $ , or approximately $ per
share. Net tangible book value per share is equal to the amount of
our total tangible assets, less total liabilities, divided by the
aggregate number of shares of our common stock
outstanding.
After
giving effect to the assumed sale by us
of shares
of common stock in this offering at an assumed public offering
price of
$ per
share (the closing bid price of our common stock on The NASDAQ
Capital Market
on ,
2017), and after deducting the estimated underwriting discount and
estimated offering expenses payable by us, our as adjusted net
tangible book value as of September 30, 2016, would have been
approximately
$ million,
or approximately
$ per
share. This represents an immediate increase in net tangible book
value of approximately
$ per
share to existing stockholders and an immediate dilution of
approximately
$ per
share to new investors purchasing shares of our common stock in
this offering. The following table illustrates this per share
dilution:
Assumed public
offering price per share
|
|
$
|
Pro forma net
tangible book value per share as of September 30, 2016
|
$
|
|
Increase in net
tangible book value per share attributable to this
offering
|
|
|
Pro forma as
adjusted net tangible book value per share after this
offering
|
|
|
Dilution in pro
forma net tangible book value per share to new
investors
|
|
$
|
A $0.25
increase in the assumed public offering price of
$ per
share would increase our as adjusted net tangible book value after
this offering by approximately
$ million,
or approximately
$ per share, and
increase the dilution to new investors by approximately
$ per
share, assuming that the number of shares of common stock offered
by us, as set forth above, remains the same and after deducting the
estimated underwriting discount and estimated offering expenses
payable by us. A $0.25 decrease in the assumed public
offering price of
$ per
share would decrease our as adjusted net tangible book value after
this offering by
$ million,
or approximately
$ per
share, and decrease the dilution per share to new investors by
approximately
$ per
share, assuming that the number of shares of common stock offered
by us, as set forth above, remains the same and after deducting the
estimated underwriting discount and estimated offering expenses
payable by us. We may also increase or decrease the
number of shares of common stock we are offering from the assumed
number of shares set forth above. An increase (decrease) of 100,000
in the assumed number of shares of common stock sold in this
offering would increase (decrease) our as adjusted net tangible
book value after this offering by approximately
$ million,
or approximately
$ per
share, and increase (decrease) the dilution per share to new
investors by approximately
$ per
share, assuming that the public offering price of
$ per
share remains the same. The information discussed above is
illustrative only and will adjust based on the actual public
offering price, the actual number of shares of common stock that we
offer in this offering, and other terms of this offering determined
at pricing.
If the
underwriters exercise in full their option to
purchase additional
shares in full at the assumed public offering price of
$ per
share, the as adjusted net tangible book value of our common stock
after this offering would be
$ per
share, representing an immediate increase in net tangible book
value of approximately
$ per
share to existing stockholders and an immediate dilution of
$ per
share to the investors in this offering, after deducting the
underwriting discount and estimated offering expenses payable by
us.
This
table does not take into account further dilution to new investors
that could occur upon the exercise of outstanding options and
warrants having a per share exercise price less than the public
offering price per share in this offering. In addition,
we may choose to raise additional capital due to market conditions
or strategic considerations even if we believe we have sufficient
funds for our current or future operating plans. To the extent that
additional capital is raised through the sale of equity or
convertible debt securities, the issuance of these securities could
result in further dilution to our stockholders.
The table and discussion above are based on 6,296,110 shares
outstanding as of September 30, 2016, and excludes as of that
date:
●
815,412 shares of
our common stock issuable upon exercise of outstanding options
under our equity incentive plans at a weighted-average exercise
price of $6.84 per share;
●
5,125,391 shares
of our common stock issuable upon exercise of outstanding warrants
with a weighted-average exercise price of $6.84 per
share;
●
2,975,424 shares
of our common stock issuable upon conversion of outstanding shares
of our Series D Convertible Preferred Stock, Series E Convertible
Preferred Stock and Series F Convertible Preferred Stock;
and
●
22,443 shares of
our common stock that are reserved for equity awards that may be
granted under our equity incentive plans.
●
205,482 shares of our common stock issuable upon
vesting of restricted stock units
granted.
MANAGEMENT’S DISCUSSION AND
ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and
results of operations should be read together with our consolidated
financial statements and accompanying notes appearing elsewhere in
this Prospectus. This Management’s Discussion and Analysis
contains forward-looking statements that involve risks and
uncertainties. Please see “Cautionary Note Regarding
Forward-Looking Statements” set forth on page 20 of this
Prospectus, and see “Risk Factors” beginning on page 5
for a discussion of certain risk factors applicable to our
business, financial condition, and results of operations. Operating
results are not necessarily indicative of results that may occur in
future periods.
Overview
We
have been engaged in the discovery and development of proprietary
human monoclonal antibody products for the diagnosis and treatment
of a variety of cancers. We have discovered a pipeline of human
monoclonal antibody products based on the protective immune
responses generated by patients who have been vaccinated against
targeted cancers with our proprietary vaccines exclusively licensed
from MSK. Three of our antibody product candidates have advanced
into Phase I clinical trials. We operate in only one business
segment. We have incurred substantial losses since inception, and
we expect to incur additional substantial losses for the
foreseeable future as we continue our research and development
activities. To date, we have funded our operations primarily
through government grants, proceeds from the sale of common and
preferred stock, the issuance of debt, the issuance of common stock
in lieu of cash for services, and interest income. The
process of developing our product candidates will require
significant additional research and development, preclinical
testing and clinical trials, as well as regulatory approval. We
expect these activities, together with general and administrative
expenses, to result in substantial operating losses for the
foreseeable future. We will not receive product revenue unless we
license our product development candidates to strategic partners
that continue to develop and successfully commercialize our
products. We cannot provide assurance that we will ever
generate revenues or achieve and sustain profitability in the
future or obtain the necessary working capital for our
operations.
During
the year ended December 31, 2015, our loss from operations was
$18,124,895 and our net loss was $18,105,315. Net cash used in
operating activities for the year ended December 31, 2015 was
$10,525,182 and cash and cash equivalents at December 31, 2015
were $4,084,085. As of December 31, 2015, we had an
accumulated deficit of $60,601,778.
During
the nine months ended September 30, 2016, our loss from operations
was $11,821,162 and our net loss was $12,550,493. Net cash used in
operating activities for the nine months ended September 30, 2016
was $9,622,309, and cash and cash equivalents as of September 30,
2016 were $6,941,213. As of September 30, 2016, we had
an accumulated deficit of $73,152,271.
2014 Merger Agreement
On
July 8, 2014, we consummated a merger with MabVax
Therapeutics, pursuant to which our subsidiary, Tacoma Acquisition
Corp., merged with and into MabVax Therapeutics, with MabVax
Therapeutics surviving as our wholly-owned subsidiary (the
“Merger”).
As
a result of the consummation and upon the closing of the Merger,
the former stockholders, option holders and warrant holders of
MabVax Therapeutics were issued, based on the methodology set forth
in the merger agreement (which excluded certain out-of-the-money
convertible securities and calculated others on a net-exercise or
cashless basis under the terms of the convertible securities),
approximately 85% of the outstanding shares of our common stock on
a fully diluted basis and our stockholders, option holders and
warrant holders immediately prior to the Merger owned approximately
15% of the outstanding shares of our common stock on a fully
diluted basis (such percentages calculated based on the methodology
set forth in the merger agreement). As a result of the Merger, a
change of control of MabVax Therapeutics Holdings
occurred.
The
total consideration for the transaction was valued at
$6,416,000.
The
issuance of shares of our common stock and preferred stock in the
Merger were approved by our stockholders in the stockholders’
meeting held on July 7, 2014.
For
accounting purposes, the Merger is treated as a “reverse
acquisition” and MabVax Therapeutics is considered the
accounting acquirer. As a result, the historical financial
statements of the private company MabVax Therapeutics constitute
the historical financial statements of the merged companies. The
transaction is considered a business combination as the accounting
acquirer, MabVax Therapeutics Holdings, is considered an operating
entity. For accounting purposes, the private company MabVax
Therapeutics is treated as the continuing reporting
entity.
Critical Accounting Policies and Significant Judgments and
Estimates
Our
management’s discussion and analysis of our financial
condition and results of operations are based on our consolidated
financial statements, which have been prepared in accordance with
generally accepted accounting principles in the United States
(“GAAP”). The preparation of these consolidated
financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements as well as the reported revenues
and expenses during the reporting periods. On an on-going basis, we
evaluate our estimates and judgments related to our operating
costs. We base our estimates on historical experience and on
various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ significantly from these estimates under different
assumptions or conditions.
Our critical accounting policies include:
Revenue
recognition. Revenue from
grants is based upon internal and subcontractor costs incurred that
are specifically covered by the grant, including a facilities and
administrative rate that provides funding for overhead expenses.
NIH grants are recognized when we incur internal expenses that are
specifically related to each grant, in clinical trials at the
clinical trial sites, by subcontractors who manage the clinical
trials, and provided the grant has been approved for payment. U.S.
grant awards are based upon internal research and development costs
incurred that are specifically covered by the grant, and revenues
are recognized when we incur internal expenses that are related to
the approved grant.
Any
amounts received by us pursuant to the NIH grants prior to
satisfying our revenue recognition criteria are recorded as
deferred revenue.
Clinical
trial expenses. We accrue
clinical trial expenses based on work performed. In determining the
amount to accrue, we rely on estimates of total costs incurred
based on the enrollment of subjects, the completion of trials and
other events defined in contracts. We follow this method because we
believe reasonably dependable estimates of the costs applicable to
various stages of a clinical trial can be made. However, the actual
costs and timing of clinical trials are highly uncertain, subject
to risks, and may change depending on a number of factors.
Differences between the actual clinical trial costs and the
estimated clinical trial costs that we have accrued in any prior
period are recognized in the subsequent period in which the actual
costs become known. Historically, these differences have not been
material; however, material differences could occur in the
future.
Stock-based
compensation. Our
stock-based compensation programs include grants of stock options
and restricted stock to employees, non-employee directors and
non-employee consultants. Stock-based compensation cost is measured
at the grant date, based on the calculated fair value of the award,
and is recognized as an expense, under the straight-line method,
over the employee, non-employee director or non-employee
consultant’s requisite service period (generally the vesting
period of the equity grant).
We
account for equity instruments, including stock options and
restricted stock, issued to employees and non-employees in
accordance with authoritative guidance for equity based payments.
Stock options issued are accounted for at their estimated fair
value determined using the Black-Scholes-Merton option-pricing
model and restricted stock is accounted for using the grant date
fair value of our common stock granted. The fair value of options
and restricted stock granted to non-employees is re-measured as
they vest, and the resulting increase in value, if any, is
recognized as expense during the period the related services are
rendered.
Warrant
liability. We calculate the value of our warrant liability on
a quarterly basis, or when other events and circumstances occur,
using as a first step the Black-Scholes-Merton valuation model,
taking into consideration the warrant exercise price, the
probability of certain exercise price re-pricing scenarios, the
market price for the common stock on the date of measurement, the
risk-free interest rate, the dividend yield, the volatility of a
comparable period in which the warrant may be exercised, and the
remaining life of the warrant, and then as a second step we test
our valuation for reasonableness based on settlement offers we have
received from the holder of the warrant. If the settlement offer is
within a reasonable period of time from when we do our calculation,
and is not materially different from the value we recorded using
the Black-Scholes-Merton model, then we retain the value
established with our model. If the settlement offer were to reflect
a materially different amount near the date of our calculation,
then we would record the settlement offer.
Income
taxes. Significant
judgment is required by management to determine our provision for
income taxes, our deferred tax assets and liabilities, and the
valuation allowance to record against our net deferred tax assets,
which are based on complex and evolving tax regulations throughout
the world. Our tax calculation is impacted by tax rates in the
jurisdictions in which we are subject to tax and the relative
amount of income earned in each jurisdiction. Our deferred tax
assets and liabilities are determined using the enacted tax rates
expected to be in effect for the years in which those tax assets
are expected to be realized.
The
effect of an uncertain income tax position is recognized as the
largest amount that is “more-likely-than-not” to be
sustained under audit by the taxing authority. An uncertain income
tax position will not be recognized if it has less than a 50%
likelihood of being sustained.
The
realization of our deferred tax assets is dependent upon our
ability to generate sufficient future taxable income. We establish
a valuation allowance when it is more-likely-than-not that the
future realization of all or some of the deferred tax assets will
not be achieved. The evaluation of the need for a valuation
allowance is performed on a jurisdiction-by-jurisdiction basis, and
includes a review of all available evidence, both positive and
negative. As of December 31, 2015, MabVax Therapeutics
concluded that it was more-likely-than-not that its deferred tax
assets would not be realized, and a full valuation allowance has
been recorded.
Results of Operations
Comparison of the Years Ended December 31, 2015 and
2014
Revenues
Revenues
for the years ended December 31, 2015 and 2014 were $1,267,036
and $314,175, respectively, primarily from grant revenues. Future
revenues will depend upon the extent to which we obtain approval of
new grants or enter into new collaborative research agreements and
the amounts of payments relating to such
agreements.
|
Years Ended December 31,
|
% change
|
|
|
2015
|
2014
|
2014 to 2015
|
Revenues
|
$1,267,036
|
$314,175
|
303%
|
For
the year ended December 31, 2015, we recognized revenues of
$1,267,036, as compared to $314,175 for the same period in the
prior year. This increase was primarily due to more work performed
on grant contracts in 2015 as compared to work performed on grants
in 2014. Revenues earned in 2015 and 2014 were from different
phases of the NIH Imaging Contract, which began on
September 20, 2013 and continued in 2014 and 2015 with a Phase
II portion of the SBIR contract from NCI being awarded for $1.5
million.
Research and Development Expenses
Research
and development expenses for the years ended December 31, 2015
and 2014 were $9,596,768 and $3,502,730, respectively. Our research
and development costs consist primarily of clinical trial site
costs, clinical data management and statistical analysis support,
drug manufacture, storage and distribution, regulatory services and
other outside services related to drug development.
|
Years Ended December 31,
|
% change
|
|
|
2015
|
2014
|
2014 to 2015
|
Research
and development
|
$9,596,768
|
$3,502,730
|
174%
|
Total
research and development expenses for the year ended
December 31, 2015 increased by 174%, or $6,094,038, compared
to the same period in 2014 and were primarily related to Good
Manufacturing Practices, or GMP, manufacturing development of our
lead antibody candidate HuMab-5B1 at Patheon (f.k.a. Gallus
BioPharmaceuticals), clinical consulting costs for use of outside
experts in our antibody programs, cell line licensing costs during
the quarter, increased staffing to support in-house management of
patient monitoring for the sarcoma clinical trial, as well as
increased stock based compensation costs due to annual grant to
employees during the current quarter. Expenses in the same period a
year ago were primarily for direct labor, supplies and third party
costs in connection with the sarcoma vaccine trial, antibody
manufacturing costs, as well as the initial contract expenses under
the imaging contract with NIH.
Stock-based
compensation expense included in research and development expenses
for the years ended December 31, 2015 and 2014 was $929,633
and $163,019, respectively.
We
expect our total research and development expenditures in the next
twelve months to increase as we fund our Phase I clinical trials of
HuMab-5B1 in humans, including our therapeutic candidate, MVT-5873,
which started its clinical trial in the first quarter of 2016, and
our diagnostic candidate, MVT-2163, which is expected to begin its
clinical trial in May 2016.
The
process of conducting the clinical research necessary to obtain FDA
approval is costly and time consuming. We consider the active
management and development of our clinical pipeline to be crucial
to our long-term success.
General and Administrative Expenses
General
and administrative expenses for the years ended December 31,
2015 and 2014 were $9,795,163 and $5,204,341,
respectively.
|
Years Ended December 31,
|
% change
|
|
|
2015
|
2014
|
2014 to 2015
|
General
and administrative
|
$9,795,163
|
$5,204,341
|
88%
|
The
increase in general and administrative expenses of 88%, or
$4,590,822 in 2015, compared to the same period in 2014, was
primarily due to an increase of approximately $2,470,000 in
business development expenses primarily related to restricted stock
grants to consultants for services, $1,460,000 in investor
relations expenses related to restricted stock grants, $782,000 in
salaries and wages related to increased headcount primarily in
finance and accounting areas, and $1,326,000 in employee benefit
and stock based compensation costs. The increase in
general and administrative expenses was partially offset by lower
legal costs of approximately $1,278,000 compared to the same period
in the prior year primarily resulting from legal costs related to
the merger being recorded in the previous year.
Stock-based
compensation expense included in general and administrative
expenses for the years ended December 31, 2015 and 2014 was
$3,534,062 and $441,957, respectively.
We
expect future general and administrative expenses to decrease in
2016 primarily as a result of lower anticipated stock based
compensation expenses, partially offset by increased rent and
facility expenses.
Interest Income and Interest Expense
|
Years Ended December 31,
|
% change
|
|
|
2015
|
2014
|
2014 to 2015
|
Interest
and other income (expense), net
|
$(227)
|
$(379)
|
-40%
|
Interest
and other income and expense, net was $227 and $379 for the years
ended December 31, 2015 and 2014, respectively.
Warrant Liability
Change
in fair value of warrant liability for the years ended
December 31, 2015 and 2014 was $19,807 and $475,422,
respectively. The decrease was mainly due to the restructuring the
Company’s capital structure resulting in the elimination of
the warrant liability as of December 31, 2015. We calculate the
value of our warrant liability on a quarterly basis, or when other
events and circumstances occur, using the Black-Scholes-Merton
valuation model.
Comparison of the Three and Nine Months Ended September 30, 2016
and 2015
Revenues:
|
Three Months Ended
September 30,
|
%
Increase/
|
Nine Months Ended
September 30,
|
%
Increase/
|
||
|
2016
|
2015
|
(Decrease)
|
2016
|
2015
|
(Decrease)
|
Revenues
|
$—
|
$133,318
|
(100%)
|
$148,054
|
$509,474
|
(71%)
|
For
the three months ended September 30, 2016, we recognized no
revenues, as compared to $133,318 for the same period in the prior
year. This decrease was primarily due to the completion of the
current phase of our contract with the National Institutes of
Health, or NIH (the “NIH Imaging Contract”), during the
first quarter of the current year.
For the nine months ended September 30, 2016, we recognized
revenues of $148,054, as compared to $509,474 for the same period
in the prior year. This decrease was primarily due to the
completion of the current phase of the NIH Imaging Contract during
the first quarter of the current year.
Research and development expenses:
|
Three Months Ended
September
30,
|
%
Increase/
|
Nine Months Ended
September
30,
|
%
Increase/
|
||
|
2016
|
2015
|
(Decrease)
|
2016
|
2015
|
(Decrease)
|
Research
and development
|
$1,671,181
|
$3,127,173
|
(47%)
|
$4,967,695
|
$7,178,703
|
(31%)
|
For
the three months ended September 30, 2016, we incurred research and
development expenses of $1,671,181, as compared to $3,127,173 for
the same period a year ago. Expenses for the current quarter in
2016 were primarily for our Phase I clinical trials of MVT-5873 as
a therapeutic and MVT-2163 as a diagnostic for pancreatic cancer
and other CA 19.9 malignancies, and in-house staffing to support
preclinical and clinical development efforts in support of our
programs. Expenses in the same period a year ago were
primarily for GMP manufacturing development of our lead antibody
candidate HuMab 5B1, now designated as MVT-5873, at Patheon (f.k.a.
Gallus BioPharmaceuticals). In addition, during the current quarter
the Company negotiated a release of approximately $363,000 of
previously accrued manufacturing costs related to failed
manufacturing batches.
Stock-based
compensation expense included in research and development expenses
for the three months ended September 30, 2016 and 2015 was
$301,985 and $307,892, respectively.
For
the nine months ended September 30, 2016, we incurred research and
development expenses of $4,967,695, as compared to $7,178,703 for
the same period a year ago. Expenses for the first nine months in
2016 were primarily for our clinical trials, and in-house staffing
to support preclinical and clinical development efforts in support
of our programs. Expenses in the same period a year ago
were primarily for GMP manufacturing development of our lead
antibody candidate HuMab 5B1 at Patheon (f.k.a. Gallus
BioPharmaceuticals). In addition, during the current quarter the
Company negotiated a release of approximately $363,000 of
previously accrued manufacturing costs related to failed
manufacturing batches.
Stock-based
compensation expense included in research and development expenses
for the nine months ended September 30, 2016 and 2015 was $889,666
and $633,593, respectively.
General and administrative
expenses:
|
Three Months
Ended
September 30,
|
%
Increase/
|
Nine Months Ended
September
30,
|
%
Increase/
|
||
|
2016
|
2015
|
(Decrease)
|
2016
|
2015
|
(Decrease)
|
General
and administrative
|
$2,420,516
|
$2,286,315
|
6%
|
$7,001,521
|
$7,473,416
|
(6%)
|
For
the three months ended September 30, 2016, we incurred general and
administrative expenses of $2,420,516, as compared to $2,286,315
for the same period a year ago. The increase in general and
administrative expenses was primarily due to higher investor
relations expenses of $369,555, higher facility operating costs of
$140,020 and higher payroll related costs of $119,526. These
increases were partially offset by lower stock-based compensation
expenses of $520,375.
Stock-based compensation expense included in general and
administrative expenses for the three months ended
September 30, 2016 and 2015 was $666,556 and $1,186,931,
respectively.
For the nine months ended September 30, 2016, we incurred general
and administrative expenses of $7,001,521, as compared to
$7,473,416 for the same period a year ago. The decrease in general
and administrative expenses was primarily due to lower stock-based
compensation expenses of $237,316, lower investor relations
expenses of $850,998 primarily related to stock issued for services
in the same period last year, as well as lower consulting and
business development expenses of $662,450 primarily related to
stock issued for services in the same period last
year. These decreases were partially offset by increased
facility operating costs of $407,493, professional fees related to
consulting, audit and tax services of $195,589, and increased
business development costs of $396,346.
Stock-based compensation expense included in general and
administrative expenses for the nine months ended September 30,
2016 and 2015 was $2,570,326 and $2,333,010,
respectively. Stock-based compensation expense for the
nine months ended September 30, 2016 included $592,329 in
restricted stock for services.
Interest income and other income (expense):
|
Three Months
Ended
September 30,
|
%
Increase/
|
Nine Months Ended
September
30,
|
%
Increase/
|
||
|
2016
|
2015
|
(Decrease)
|
2016
|
2015
|
(Decrease)
|
Interest
and other expense, net
|
$(266,051)
|
$(84)
|
*%
|
$(729,331)
|
$(269)
|
*%
|
*Not
meaningful
Interest
expense, partially offset by other income, amounted to $266,051 and
$84 for the quarters ended September 30, 2016 and 2015,
respectively. The amount for the three months ended September 30,
2016, consisted primarily of $158,735 of interest expense related
to interest on the Company’s term loan from Oxford Finance,
LLC, $47,584 of financing cost amortization, and $59,738 of warrant
amortization.
The amount for the nine months ended September 30, 2016, was
$729,331, and consisted primarily of $443,175 interest expense
related to interest on the Company’s term loan from Oxford
Finance, LLC, $126,891 of financing cost amortization, and $159,302
of warrant amortization partially offset by interest income of
$18.
The
fair value of the warrants issued to Oxford Finance, LLC related to
the term loan was recorded as a discount to the value of the note
payable, and is amortized over the term of the loan. In
addition, financing costs incurred related to the term loan are
amortized over the term of the loan.
Liquidity
and Capital Resources
To
date, we have funded our operations primarily through government
grants, proceeds from the sale of common and preferred stock, the
issuance of debt, the issuance of common stock in lieu of cash for
services, payments from collaborators and interest income. We have
experienced negative cash flow from operations each year since our
inception. As of September 30, 2016, we had an accumulated deficit
of $73,152,271. We expect to continue to incur increased expenses,
resulting in losses, over at least the next several years due to,
among other factors, our continuing and planned clinical trials and
anticipated research and development activities. We had cash and
cash equivalents of $6,941,213 as of September 30,
2016.
|
September 30,
2016
|
December 31,
2015
|
Cash
and cash equivalents
|
$6,941,213
|
$4,084,085
|
Working
capital
|
$3,143,459
|
$350,621
|
Current
ratio
|
1.73:1
|
1.07:1
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
2015
|
Cash
provided by (used in):
|
|
|
Operating
activities
|
$(9,622,309)
|
$(7,917,332)
|
Investing
activities
|
$(412,498)
|
$(68,279)
|
Financing
activities
|
$12,891,935
|
$11,047,148
|
Sources and Uses of Net Cash for the Nine Months Ended September
30, 2016
Net
cash used in operating activities was $9,622,309 for the nine-month
period ended September 30, 2016, compared to $7,917,332 in the
comparable period in 2015. The net cash used in both periods was
primarily attributable to the net losses, adjusted to exclude
certain non-cash items, primarily stock-based compensation and
amortization of finance costs related to the term loan. Net cash
used in operating activities for the nine months ended September
30, 2016 was also impacted by a decrease of $2,476,130 in accounts
payable related primarily to research contract services and receipt
of $757,562 in connection with government grants and government
contracts.
The net cash used in investing activities for the
nine-month periods ended September 30, 2016 and 2015, amounted to
$412,498 and $68,279, respectively, primarily as a result of
purchase of lab equipment in the corresponding
periods.
Net
cash provided by financing activities was $12,891,935 for the nine
months ended September 30, 2016, compared to $11,047,148 in the
comparable period in 2015. Net cash provided by financing
activities for the nine months ended September 30, 2016 was
attributable to the net proceeds from the equity financing
transaction completed in August 2016 and the term loan initiated
during the first quarter of 2016. Net cash provided by financing
activities for the nine months ended September 30, 2015 was
attributable to the net proceeds from the sale of common stock and
warrants in a private placement completed in April
2015.
Future Contractual
Obligations
The Company had rental payment obligations under an operating lease
that expired on July 31, 2015 related to its facility at 11588
Sorrento Valley Road. The Company continued to occupy those
premises until February 4, 2016, and continued the lease on a
month-to-month basis.
On September 2, 2015, the Company entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises consisting of a total of approximately 14,971
square feet of office and laboratory space in buildings located at
Suite 400, 11535 Sorrento Valley Rd., San Diego, California,
to serve as the Company’s corporate offices and laboratories
(the “New Premises”). Due to the fact that certain
tenant improvements needed to be made to the New Premises before
the Company could occupy the New Premises, the term of the Lease
commenced on February 4, 2015. The Lease terminates six years after
such term commencement date, unless earlier terminated in
accordance with the Lease. Pursuant to the terms of the Lease, the
monthly base rent is $35,631, subject to annual increases as set
forth in the Lease.
The
Company has an option to extend the Lease term for a single,
five-year period. If the Lease term is extended for the optional
five-year period, the monthly base rent will be adjusted based on
fair market rental value. In addition to rent, the Company agreed
to pay a portion of the taxes and utility, maintenance and other
operating costs paid or accrued in connection with the ownership
and operation of the property.
Our master lease and sublease of our facility located at the Porter
Drive Facility were terminated on February 28, 2013 and we entered
into a termination agreement with the landlord on February 19, 2013
to voluntarily surrender its premises. As a result of the
termination agreement, we were relieved of further obligations
under the master lease and further rights to rental income under
the sublease and paid a termination fee of approximately $700,000.
In addition to the termination fee, an additional termination fee
of $590,504 is due to the landlord following the Company’s
receipt of $15 million or more in additional financing, in the
aggregate, which was achieved on August 22 ,2016.
We anticipate that we will continue to incur substantial net losses
into the foreseeable future as we: (i) continue our Phase I
clinical trial for our stand-alone therapeutic HuMab 5b-1, or
MVT-5873, which was initiated in the first quarter of 2016, (ii)
initiate our Phase I clinical trial of our PET imaging agent
89Zr-HuMab-5B1, or MVT-2163, (iii) continue to conduct preclinical
development activities related to other product development
candidates in our library, and (iv) monitor patients in clinical
trials that have already completed their treatment regimens. Based
on management’s assumptions for continuing to develop its
existing pipeline of products without additional funding, we expect
we will have sufficient funds to meet our obligations through May
2017.
We plan to continue to fund our research and development and
operating activities through public or private equity financings,
debt financings, strategic partnerships or other arrangements with
organizations that have capabilities and/or products that are
complementary to our own capabilities and/or products, licensing
arrangements, government grants, or other arrangements. However, we
cannot be sure that such additional funds will be available on
reasonable terms, or at all. If we are unable to secure adequate
additional funding, we may be forced to reduce spending, extend
payment terms with suppliers, liquidate assets where possible,
and/or suspend or curtail planned programs. In addition, if we do
not meet our payment obligations to third parties as they come due,
we may be subject to litigation claims. Even if we are successful
in defending against these claims, litigation could result in
substantial costs and be a distraction to our management. Any of
these actions could materially harm our business, results of
operations, and future prospects.
If
we raise additional funds by issuing equity securities, substantial
dilution to our existing stockholders would result. If we raise
additional funds by incurring debt financing, the terms of the debt
may involve significant cash payment obligations as well as
covenants and specific financial ratios that may restrict our
ability to operate our business.
Recent Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-2, "Leases (Topic
842)." This update will increase transparency and
comparability by recognizing lease assets and lease liabilities on
the balance sheet and disclosing key information about leasing
arrangements. Under the new guidance, lessees will be
required to recognize the following for all leases (with the
exception of short-term leases) at the commencement date: (i) a
lease liability, which is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis and
(ii) a right-of-use asset, which is an asset that represents the
lessee’s right to use, or control the use of, a specified
asset for the lease term. Under the new guidance, lessor accounting
is largely unchanged, and it simplified the accounting for sale and
leaseback transactions. Lessees will no longer be provided with a
source of off-balance sheet financing. Lessees (for capital and
operating leases) and lessors (for sales-type, direct financing,
and operating leases) must apply a modified retrospective
transition approach for leases existing at, or entered into after,
the beginning of the earliest comparative period presented in the
financial statements. The modified retrospective approach would not
require any transition accounting for leases that expired before
the earliest comparative period presented. Lessees and lessors may
not apply a full retrospective transition approach. The standard is
effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. We are
currently in the process of assessing what impact this new standard
may have on our consolidated financial statements.
In
March 2016, the FASB issued ASU 2016-09,
“Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting.”
This update includes multiple provisions intended to simplify
various aspects of the accounting for share-based payment
transactions including accounting for excess tax benefits and tax
deficiencies, classification of excess tax benefits in the
statement of cash flows and accounting for award forfeitures. This
update is effective for annual and interim reporting periods of
public entities beginning after December 15, 2016, with early
adoption permitted. The Company is evaluating the impact of ASU
2016-09 on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15
(“ASU 2016-15”), Statement of Cash Flows (Topic
230): Classification of Certain Cash Receipts and Cash
Payments. The standard provides
guidance on eight (8) cash flow issues: (1) debt prepayment or debt
extinguishment costs; (2) settlement of zero-coupon bonds; (3)
contingent consideration payments after a business combination; (4)
proceeds from the settlement of insurance claims; (5) proceeds from
the settlement of corporate-owned life insurance policies; (6)
distributions received from equity method investees; (7) beneficial
interests in securitization transactions; and (8) separately
identifiable cash flows and application of the predominance
principle. ASU 2016-15 addresses how certain cash receipts and cash
payments are presented and classified in the statement of cash
flows. ASU 2016-15 is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2017 with
early adoption permitted. We do not expect the adoption of this new
standard to have a material impact on our consolidated financial
statements.
Management
does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a
material effect on the accompanying condensed consolidated
financial statements.
Off-Balance Sheet Arrangements
We
have no material off-balance sheet arrangements.
BUSINESS
Overview
We are
a clinical-stage biotechnology company focused on the development
of antibody-based products to address unmet medical needs in the
treatment of cancer. MabVax has discovered a pipeline of
human monoclonal antibody products based on the protective immune
responses generated by patients who have been vaccinated against
targeted cancers with our proprietary vaccines. MabVax's lead
development program is centered around our HuMab-5B1 antibody,
which is fully human and discovered from the immune response of
cancer patients vaccinated with an antigen-specific vaccine during
a Phase I trial at Memorial Sloan Kettering Cancer Center, or
MSK. The antigen the antibody targets is expressed on
more than 90% of pancreatic cancers, and also expressed in
significant percentages on breast, stomach, colon and other
cancers, making the antibody potentially broadly applicable to many
types of cancers. We have other antibody candidates that are
also in development.
Monoclonal
antibodies are produced from a single DNA sequence encoded into
multiple cells that all produce the same single antibody. We
generate our pipeline of antibody-based product candidates from
patients who have been vaccinated with propriety vaccines
exclusively licensed from MSK. Our approach involves surveying the
protective immune response from many patients to identify a
monoclonal antibody candidate against a specific target on the
surface of a cancer cell. We believe this approach provides us with
a novel next-generation human antibody technology platform. We
believe our approach to antibody discovery allows us to identify
antibody candidates with superior performance characteristics while
minimizing many of the toxicity and off target binding drawbacks
(phenomenon occurring when antibodies bind to non-cancer cells) of
other discovery technologies.
All
of the antibody products in our development portfolio currently
meet the criteria for Orphan Drug designation by
FDA. Orphan Drug designation provides for up to seven
years of product marketing exclusivity. Individual
products are also eligible for Orphan Drug grants as well as
accelerated review by FDA. We plan to file for Orphan
Drug designation provided clinical utility in early phase clinical
trials has been demonstrated.
Clinical Product Development – Recent Updates
MVT-5873 Interim Phase I Data in Pancreatic Cancer
The MVT-5873 phase I clinical trial initiated in
February 2016 is designed to establish safety and tolerability, and
to determine the recommended phase II dose (RP2D) for MVT-5873 as
both as monotherapy in patients with locally advanced or
metastatic adenocarcinoma of the pancreas (PDAC) and other CA19-9
positive malignancies. Initiation of
Part 2 required establishing three safe dose levels for MVT-5873 as
monotherapy in patients with relapsed or refractory locally
advanced or metastatic pancreatic cancer. In November 2016 the
Company reported that the safety of MVT-5873 had been established
at three incremental dose levels by treating 16 patients at three
clinical sites. While patients continue to be recruited to
establish the RP2D, the Company also initiated Part 2 of the
clinical trial to include patients with previously untreated
pancreatic cancer receiving a standard of care chemotherapy as
defined in the protocol.
MVT-2163 Interim Phase I Data in Pancreatic Cancer
The
MVT-2163 phase I trial initiated in June 2016 is designed to
evaluate a next generation diagnostic PET imaging agent in patients
with locally advanced or metastatic adenocarcinoma of the pancreas
(PDAC) and other CA19-9 positive malignancies. MVT-2163
(89Zr-HuMab-5B1) combines the well-established PET imaging
radiolabel Zirconium [89Zr] with the targeting specificity of
MVT-5873. This trial is designed to establish safety,
pharmacokinetics, biodistribution, and the amount of MVT-5873 to be
used in co-administration to obtain optimized PET scan images. In
November 2016 we reported that the trial had demonstrated interim
safety, pharmacokinetics, and biodistribution by completing the
initial two cohorts of patients: the first cohort administered
MVT-2163 alone and the second cohort administered MVT-2163
following a blocking dose of MVT-5873. We also reported that the
initial PET images demonstrated target specificity by correlation
with lesions identified by conventional computerized tomography
(CT) scans. The biodistribution data obtained in the first two
cohorts demonstrates improvement in PET images by
pre-administration of MVT-5873, as has been observed with other
antibody based PET agents. We continue to recruit patients and
expect to establish the optimal co-administration dose of MVT-5873
early in 2017.
MVT-1075 Phase I Clinical Trial Status
On
January 7, 2017, we announced that we had filed an Investigational
New Drug (IND) application with the FDA for MVT-1075
(177Lu-CHX-A″-DTPA-HuMab5B1), our novel fully human antibody
radioimmunotherapy (RIT) product candidate. In February 2017 we
announced that we had the FDA’s authorization to proceed with
initiation of our clinical trials. Our phase I clinical trial will
be in patients with histologically confirmed, previously treated,
locally-advanced or metastatic CA19-9 positive adenocarcinoma of
the pancreas (PDAC) or other CA19-9 positive malignancies. We
expect to begin enrolling patients in the first half of 2017. This
is the third IND filed by us that builds on the tumor targeting
characteristics of the HuMab-5B1 antibody discovered from immune
responses of cancer patients vaccinated with the Company’s
proprietary cancer vaccines.
The
MVT-1075 RIT agent combines the targeting specificity of the
HuMab-5B1 antibody for an antigen overexpressed on pancreatic
cancer and other CA19-9 positive cancers with 177Lutetium to target
delivery of therapeutic radiation to cancer cells. Preclinical
studies have demonstrated marked suppression and in some instances
regression in xenograft animal models of pancreatic cancer,
potentially making it an important new therapeutic agent in the
treatment of pancreatic cancer and other cancers expressing the
same antigen, CA19-9.
In
this initial phase I trial we plan to evaluate the safety,
dosimetry, and pharmacokinetics of MVT-1075. Patients enrolled in
the study will have been diagnosed with recurrent locally advanced
or metastatic pancreatic ductal adenocarcinoma (PDAC) or other
CA19-9 positive malignancies. Patient disease status will be
evaluated based on tumor measurements using RECIST 1.1 measurement
criteria. The investigative sites will include MSK in New York
City.
Historical Information on Work Conducted on Cancer
Vaccines
From
2010 to 2015 we and our collaborative partners were engaged in
enrolling patients in two phase II multi-center clinical trials of
cancer vaccines that targeted recurrent sarcoma (soft tissue
cancer) and ovarian cancer. In 2015 all vaccinations in
the two studies had been completed, and since then, we and are
partners have been engaged in the monitoring of patients to assess
overall survival, or OS. Both the sarcoma and ovarian cancer
vaccine trials were randomized, double-blind, multicenter phase II
trials that had enrolled 136 and 164 patients
respectively. Both trials were designed to yield
statistically significant evidence that vaccination of trial
subjects can provide 50% improvement in progression free survival,
or PFS, and extend OS. We and our collaboration partners in
these studies are no longer performing significant work on these
studies other than to monitor patients for OS.
An
independent Drug Safety and Monitoring Board, or DSMB, composed of
experts in the field analyzed the sarcoma clinical trial data in
March of 2013 and determined that the PFS endpoint of a 50%
increase in the time to progression was not reached. At the
suggestion of the DSMB we have continued to monitor patients for OS
and plan to issue a final report on our findings in
2017. We received a National Institutes of Health, or
NIH, grant of $2 million to help offset the clinical trial costs
for the sarcoma trial. We have no plan at this time to engage in
additional clinical studies for this vaccine.
At
the American Society of Clinical Oncology meeting in June 2016 the
sponsors of the Phase II trial in ovarian cancer, the Gynecologic
Oncology Group, or GOG, a consortium of clinical trial
investigators and sites working in collaboration with the NCI,
reported that the primary endpoint of improvement in PFS was not
reached. We suggested that the GOG continue to monitor the trial
subjects in the ovarian cancer vaccine trial for OS. The ovarian
vaccine trial has been fully funded by a grant from the NIH. We
have no financial obligation for this trial or the follow-on
monitoring. If the OS endpoint were to be achieved, we
would pursue out-licensing the product. We have no plan
at this time to engage in additional clinical studies for this
vaccine.
Antibody Product Candidates
HuMab-5B1 Antibody Program
The carbohydrate antigen sialyl Lewisa (sLea) is
recognized by monoclonal antibody CA19-9 and is widely expressed on
tumors of the gastrointestinal tract. These tumor types are
generally classified as epithelial tumors (a broad classification
of tumor types) and include pancreatic, colon, stomach, ovarian,
breast, and small cell lung cancers. A CA19-9 serum test is the
only FDA validated marker for pancreatic cancer and is a commercial
test that is readily available and used frequently to aid in the
monitoring of pancreatic cancer patients. Circulating epithelial
cancer cells over-express sLea (abbreviation for the antigen sialyl
Lewis A); and as a ligand (binding partner) for E
selectin (a structure in the inner lining of blood vessels), this
antigen facilitates tumor—tissue interactions that are key
events for tumor metastasis. Patient outcomes appear to be worse in
patients with metastatic tumors expressing higher levels of sLea
according to articles published by T. Ben-David and colleagues in
Immunology Letters in 2008 and YI Kawamura in Cancer Research in
2005. Because these tumor types express very high numbers of the
sLea antigen on their cell surface, we believe the antigen is an
attractive target for development of a potential therapeutic
intervention.
We
have created a series of fully human monoclonal antibodies against
sLea. One particular antibody, HuMab-5B1, demonstrated
high affinity and specificity for sLea, and has shown efficacy in
multiple tumor xenograft models (human cancer cells engrafted into
mice) in studies conducted by MSK on MabVax’s
behalf. HuMab-5B1 is a fully human full-length
monoclonal antibody we discovered from the immune responses of
seven stage IV breast cancer patients who were being vaccinated in
a Phase I trial in 2008 at MSK with one of our licensed vaccine
candidates.
We have conducted tissue microarray work (normal
and cancer tissue samples placed on slides treated with the
antibody to determine if an antibody binds to such tissue samples)
with commercially available tissue samples of both normal and
cancer tissues. The results of this work indicated that the
HuMab-5B1 antibody bound to multiple types of epithelial tumors,
including pancreatic, colon, bladder, ovarian, breast, and small
cell lung cancer tissues. The antibody did not bind to normal
tissues except for the exocrine cells at the ductal border of
secretory cells (primarily cells in the gastrointestinal tract that
face into the digestive system and not inward to the body) in
epithelial tissues; those sites are less accessible to the immune
system. This experimental work was confirmed in FDA mandated good
laboratory practice, or GLP, tissue cross-reactivity studies done
in both human and cynomolgus monkey tissues by an independent
research organization. Both characteristics combined with the
significant cytotoxicity demonstrated in in vitro testing led us to move to xenographic animal
model testing. HuMab-5B1 has demonstrated in our pre-clinical
studies good anti-tumor activity in a variety of animal models with
multiple tumor types. Specifically, we have obtained positive
results from animal models examining human pancreatic, colon, and
small cell lung cancers.
We
entered into a manufacturing agreement with Patheon Biologics LLC
(f.k.a. Gallus BioPharmaceuticals) to manufacture current good
manufacturing practices, or GMP compliant, clinical supplies of the
antibody which were completed in 2015. In May 2015, we
announced the results of our GLP toxicology study for the HuMab-5B1
antibody. In the study, we treated primates with multiple dose
levels to assess drug pharmacokinetics, as well as with repeated
doses of the antibody to identify any adverse toxicology
signals. These studies were conducted using what we
believe are the most relevant animal models and with material
produced by our GMP manufacturing partner. The final study report
showed that there were no significant adverse findings in the
animal model. Following completion of this study, we
submitted an IND for the therapeutic product candidate in November
of 2015 and in December 2015, we received FDA authorization to
initiate the Phase I trial. We initiated patient
enrollments in the clinical trial of MVT-5873 in the first quarter
of 2016 to determine the safety and pharmacokinetics (assessment of
the distribution and metabolism of a drug) of the HuMab-5B1
antibody in patients with pancreatic cancer. We announced
preliminary results of this clinical trial in November 2016,
including that we had established safety and tolerability of
MVT-5873, with full results expected in 2017.
HuMab-5B1 Imaging Program
Circulating
biomarkers (substances released by certain cells that can be
measured to assess if a patient has or is likely to have a
particular type of cancer) such as CA19-9 are important clinical
tools for early detection and diagnosis as well as monitoring of
therapeutic progress and detection of tumor recurrence in oncology.
However, false positive readings due to biomarker production from
benign disorders in unrelated host tissues are a significant
problem that could limit the utility of these biomarkers. We
believe that probing the site(s) of biomarker secretion with an
imaging tool could enhance the fidelity of diagnosis and staging of
cancers such as pancreatic ductal adenocarcinoma, or PDAC, which is
difficult to diagnose and treat. Moreover, such a tool
could guide patient stratification for directed therapeutic
intervention, surgical planning and act as an aide in the
evaluation of tumor response to chemotherapy and radiation therapy.
To address this opportunity clinically, together with
Dr. Jason Lewis’ radiochemistry laboratory at MSK, we
developed 89Zr-HuMab-5B1, a fully human, antibody-based
radiotracer (combined antibody and radiolabel) targeting
tumor-associated CA19-9. In preclinical studies, 89Zr- HuMab-5B1
localized to tumors in multiple models representing diseases with
both undetectable and clinical relevant circulating CA19-9 serum
levels. Among these, 89Zr- HuMab-5B1 detected tumor in an
orthotopic model (xenograph model where human cancer cells are
surgically implanted in the corresponding organ of the mouse) of
PDAC. In preliminary experiments, 89Zr- HuMab-5B1
demonstrated better tumor specificity (targeting only a specific
type of cancer cell) compared to the commonly used
2-deoxy-2-(18F)-fluoro-D-glucose, or FDG, imaging agent, which is
known to lack sensitivity and specificity in pancreas cancers and
other slow growing cancers.
To
facilitate the development of the HuMab-5B1 based antibody
conjugated to a radiolabel as a novel PET imaging agent for
pancreatic cancer, we applied for and received a development
contract from the National Institutes of Health, or NIH, pursuant
to which NIH provided $1.75 million in non-dilutive funding
for this project. We submitted an IND for the imaging product
candidate in December 2015 and in January 2016, we received FDA
authorization to initiate the Phase I trial. We began
patient enrollments in a Phase I study of MVT-2163 in July of 2016,
and announced preliminary results demonstrating targeting
specificity of MVT-5873 in November 2016, with full Phase I results
expected in 2017.
HuMab-5B1 Antibody Drug Conjugate Program
We
observed in our preclinical studies that certain types of cancer
cells internalized the HuMab-5B1 antibody. These were primarily
pancreatic cancer tumor types and other CA19-9 positive
malignancies. We believe that this characteristic of the HuMab-5B1
antibody could be highly useful in constructing an antibody-drug
conjugate, or ADC, and are in discussions with potential partners
experienced with ADCs who could potentially use our HuMab-5B1
antibody as a targeting mechanism for CA19-9 positive
malignancies.
1B7 and 31F9 Antibody Programs
We have discovered multiple fully-human antibodies
to the antigen GD2, which is over expressed on sarcoma, melanoma,
and neuroblastoma. These three related cancers are classified as
neuroectodermal cancers. We discovered these antibodies by
examining the immune response from more than 60 patients who
participated in our sarcoma vaccine trial over the last three
years. According to an article published in the New England Journal
of Medicine by Alice L. Yu and colleagues in 2010, antibodies
against GD2 have been validated as effective therapeutic agents in
a well-controlled Phase III clinical trial that produced
statistically significant improvement in time to progression of
disease in children suffering from neuroblastoma. In our
preclinical work, each of the two potential development candidates
has demonstrated specificity and affinity for the GD2 target and
the ability to kill cancer cells that express GD2. Each antibody
has a unique set of characteristics and, as part of the preclinical
evaluation program, researchers at MSK will provide
further in vitro and in vivo testing in multiple models of disease to
help us decide which candidate to move forward toward clinical
testing. We are currently targeting sarcoma as the primary
indication for which we plan to develop an anti-GD2 antibody
product.
An anti-GD2 antibody has been approved for use by
the FDA in patients with neuroblastoma. In addition, in
a study sponsored by NCI and published in the New England Journal of
Medicine (N Engl J Med
2010;363:1324-34), the use of an antibody therapy targeting GD2 in
neuroblastoma demonstrated effectiveness in extending the time to
recurrence of neuroblastoma as well as extending overall survival
of study subjects. With 61% of the number of expected events
observed, the study met the criteria for early termination due to
efficacy. The median duration of follow up was 2.1 years.
Immunotherapy was superior to standard therapy with regard to rates
of event-free survival (66±5% vs. 46±5% at 2 years, P =
0.01) and overall survival
(86±4% vs. 75±5% at 2 years, P = 0.02 without
adjustment for interim analyses).
Other Antibody Discovery Programs
We
have discovered multiple fully human antibodies to eleven separate
antigenic targets over expressed on multiple types of cancer. The
antigenic targets are incorporated in various combinations making
up the eight vaccines that were licensed from MSK. Each vaccine has
been in at least one Phase I clinical trial. To date, six separate
vaccines have entered early stage clinical programs and we have
received antibody discovery material from all patients who
participated in five of the trials. Exclusive access to these
patient samples is covered under separate licenses with MSK. We
have discovered multiple antibodies to important cancer targets
such as MUC1, GD3, GM2, Fucosyl-GM1, Globo-H, Tn, sTn, and TF. As
we continue to raise additional capital and add capacity, it is our
intention to begin moving these early product development
candidates forward toward clinical evaluation.
Antibody Market Opportunity
Therapeutic Antibodies
Antibodies
used as targeted therapeutic treatments for cancer accounted for
more than $25 billion in worldwide revenue in
2013. Focused development of new monoclonal antibody
based drugs is expected to continue for multiple
reasons. Over the last few years much has been learned
about using the human immune system to treat
cancer. Several recently approved antibody therapies
have demonstrated efficacy in stimulating the human immune system
to attack certain cancers. Targeted therapies can attack cancer
cells while minimizing damage to normal cells in the patient.
Antibodies are complex molecules and are difficult and expensive to
duplicate with biosimilars and therefore have a potentially longer
commercial life. Currently approved monoclonal antibodies are
reimbursed at favorable levels from federal, state, and private
insurance providers.
Our
lead antibody candidate targets an antigen over expressed on
metastatic pancreatic, colon, breast, and small cell lung cancers.
The term "over expressed" refers to the antigen being present on
the surface of the cancer cell in very large numbers. Patients
who develop metastatic disease with these cancers have a
significantly poorer prognosis. According to the NCI SEER database,
there are approximately 100,000 patients annually who develop
metastatic disease from these cancers.
We
believe there is a critical unmet medical need for new and better
treatment for metastatic pancreatic and colon cancer. According to
NCI’s SEER database, the five-year survival rate for patients
with metastatic pancreatic cancer is just 2.6%. There are 53,000
new pancreatic cancer patients per year and more than half of them
present at initial diagnosis with metastatic disease. According to
the SEER database, the five-year survival rate for patients with
metastatic colon cancer is only slightly better at 13.5%. While
most of the 134,000 new patients can be treated successfully
initially, almost half of all colon cancer patients will develop
metastatic disease. Thus, adding the number of metastatic disease
patients for these two cancers alone represent 96,000 new
metastatic cancer patients per year.
Pancreatic Cancer Imaging and Diagnosis
We
believe that our radiolabeled HuMab-5B1 antibody represents the
only human derived agent in development specifically aimed at
improving imaging in pancreatic cancer diagnosis. Since the antigen
targeted by the HuMab-5B1 antibody is over expressed on metastatic
pancreatic cancer, this development effort represents a potentially
important step forward in the diagnosis, staging, and assessment of
the majority of pancreatic cancer patients. We believe that the
market opportunity for
a HuMab-5B1antibody-based radiopharmaceutical is
significant in multiple ways. The ability of physicians to
accurately diagnose, stage, and assess treatment outcomes in
pancreatic cancer would be very important. Accurate determinations
on the extent of disease and resectability are essential to improve
outcomes in this cancer. We believe almost all patients diagnosed
with pancreatic cancer could potentially benefit
from 89Zr-HuMab-5B1 scan. Accordingly, improvements in
the sensitivity and specificity of one of the primary diagnostic
tools could have a significant impact on clinical
outcome.
To
our knowledge, our radiolabeled HuMab-5B1 antibody represents one
of the only agents in development specifically aimed at improving
imaging in pancreatic cancer. Since the antigen targeted by the
HuMab-5B1 antibody is over expressed on metastatic pancreatic
cancer, this development effort represents a potentially important
step forward in the diagnosis, staging, and assessment of the
majority of pancreatic cancer patients. We believe that
an imaging agent that is specific for a pancreatic cancer antigen
would provide improved sensitivity and specificity and would be
preferable to the currently available indirect marker that can
produce false positive results in high metabolic rate tissues
(tissues where there is an elevated metabolism of sugar due to a
variety of causes including cancer) or a false negative in slow
growing cancers. We believe that the market opportunity for a
HuMab-5B1 antibody-based radiopharmaceutical is significant because
it would enable physicians to more accurately diagnose, stage, and
assess treatment outcomes in pancreatic cancer. We
believe that accurate determinations on extent of disease and
resectability are essential to improving outcomes in this
cancer.
Radioimmunotherapy: Therapeutic Treatment Product
In
addition to developing our HuMab-5B1 as a stand-alone therapeutic
agent as well as a PET imaging agent, we are developing a HuMab-5B1
based radioimmunotherapy product candidate as a potential treatment
for pancreatic cancer and other CA19-9 positive
tumors. Using what we have learned from our
89Zr-HuMab-5B1 imaging program, our preclinical animal studies have
demonstrated the potential feasibility and experimental proof of
concept for this new product candidate. Our recent release of early
results from our phase I clinical trial demonstrate safety and
specificity of the product. We submitted an IND to FDA for this
product in December of 2016 and received FDA authorization to
proceed with our trial in January 2017. We anticipate
initiating our clinical trial in the first half of
2017.
License and Development Agreements
Memorial Sloan Kettering
We
have licensed from MSK the exclusive world-wide developmental and
commercial rights to receive biological materials from vaccinated
clinical trial participants enrolled in any of the clinical trials
involving the vaccines licensed to us, allowing us to discover
human monoclonal antibody-based therapeutics. MSK has issued
patents or has pending patent applications on the vaccine antigen
conjugates, mixtures of vaccine antigen conjugates and methods of
use. This patent portfolio includes 20 issued patents in the US and
the rest of world along with 1 patent application. We
own all monoclonal antibodies produced by the antibody discovery
program and we generally file patent applications directed to these
antibodies once their potential therapeutic utility has been
sufficiently demonstrated in animal models. A United States and an
international patent application for each of the anti-sLea
antibodies and the anti GD2 antibodies described in this document
has been filed.
We
have licensed exclusive rights from MSK to exploit key aspects of
the work of Dr. Livingston (who is also a member of our board
of directors) and colleagues, who over the last 30 years have
developed a series of monovalent (targeting a single tumor cell
surface antigen) cancer vaccines against cancers of neuroectodermal
and epithelial (breast, ovarian colon, pancreatic) origin as well
as small cell lung cancer, or SCLC. These target molecules on
malignant cells, known as carbohydrate antigens, are the most
extensively expressed antigenic targets on the cell surface of
these types of cancers and play a key role in tissue
invasion and metastasis. We expect to benefit from the years
of work and significant expense already invested in the development
and testing of the vaccines incorporating these antigens.
Researchers at MSK have progressively developed highly immunogenic
monovalent vaccines to each of the 11 validated target antigens
that comprise the licensed vaccines. These monovalent vaccines or
the combination of the monovalent forms into polyvalent vaccines
(targeting multiple antigens) have been tested and refined not only
in animal models but also in multiple clinical trials establishing
immunogenicity, tolerability, and therapeutic utility. Our license
agreement with MSK calls for MSK to complete all preclinical and
Phase I clinical trial work at MSK’s expense at which point
the IND would be transferred to us for continued
development.
Our
lead cancer vaccines targeting recurrent sarcoma and ovarian cancer
are currently in proof of concept Phase II multi-center clinical
trials. Both trials are fully enrolled, and have received
substantial federal grant monies to support their
development.
Life Technologies Licensing Agreement
On
September 24, 2015, we entered into a licensing agreement with Life
Technologies Corporation, a subsidiary of ThermoFisher
Scientific. Under the agreement we agreed to license
certain cell lines from Life Technologies to be used in the
production of recombinant proteins for our clinical
trials. The amount of the contract is for $450,000 and
was fully expensed during 2015. We paid $225,000 during
2015 related to this contract.
Rockefeller University Collaboration
In July
2015, we entered into a research collaboration agreement with
Rockefeller University's Laboratory of Molecular Genetics and
Immunology. We provided antibody material to Rockefeller
University, which is exploring the mechanism of action of constant
region (Fc) variants of the HuMab 5B1 in the role of tumor
clearance. We will supply additional research materials as
requested by the university, which is evaluating ways to optimize
the function. Rockefeller is using that material to explore
the mechanism of action of constant region (Fc) variants of the
HuMab-5B1 in the role of tumor clearance and to seek to optimize
the therapeutic effect. The current agreement
allows researchers at Rockefeller to conduct research on antibodies
discovered by us with the objective of improving their ability to
kill cancer cells. If a viable drug candidate emerges
from this collaboration, we have the right to enter into
negotiations with Rockefeller for the right to exclusively license
the technology used to improve our antibody for clinical and
commercial development. If we and Rockefeller fail to
reach agreement on terms for a license to the drug candidate that
contains the combined technologies, Rockefeller does not have the
right to license the drug candidate to a third party without our
consent because the drug candidate contains our intellectual
property embodied in the antibody.
Juno Option Agreement
On
August 29, 2014, we entered into an Option Agreement with Juno
Therapeutics, Inc. (“Juno”) in exchange for a one-time
up-front option fee in the low five figures. Pursuant to the option
agreement, we granted Juno the option to obtain an exclusive,
world-wide, royalty-bearing license authorizing Juno to develop,
make, have made, use, import, have imported, sell, have sold, offer
for sale and otherwise exploit certain patents we developed with
respect to fully human antibodies with binding specificity against
human GD2 or sialyl-Lewis A antigens and certain of our controlled
biologic materials. As of June 30, 2016 the option agreement
expired and Juno no longer has a contractual right for use of our
binding domains for use in the construction of CAR
T-cells.
Patents
We
strive to protect the proprietary technology that we believe is
important to our business, including seeking and maintaining
patents intended to cover our vaccines and monoclonal
antibody-based candidates, their methods of use and processes for
their manufacture and any other inventions that are commercially
important to the development of our business. We also rely on trade
secrets to protect aspects of our business that are not amenable
to, or that we do not consider appropriate for, patent
protection.
As of February 7, 2017, we are the exclusive
licensee, sole assignee or co-assignee of 14 granted United States
patents, 2 pending United States patent applications, 7
international patents and 19 pending international patent
applications. The patents and patent applications
include claims to vaccine antigen conjugates, mixtures of vaccine
antigen conjugates that makeup polyvalent vaccine candidates,
processes for their preparation and their use as a
vaccine. Two of the pending patent applications in the
United States and 13 international patent applications have claims
to human anti-sLea and anti-GD2 monoclonal antibodies, nucleic
acids encoding the human anti-sLea and anti-GD2 monoclonal antibodies,
processes for their preparation and their use as therapeutic
agents.
Our
success will depend significantly on our ability to obtain and
maintain patents and other proprietary protection for commercially
important technology, inventions and know-how related to our
business, defend and enforce our patents, maintain our licenses to
use intellectual property owned by third parties, preserve the
confidentiality of our trade secrets and operate without infringing
the valid and enforceable patents and other proprietary rights of
third parties. We also rely on know-how, continuing technological
innovation and in-licensing opportunities to develop, strengthen,
and maintain our proprietary position in the field of anti-fungal
agents.
We
believe that we have a sufficient intellectual property position
and substantial know-how relating to the development and
commercialization of our vaccine and monoclonal antibody-based
candidates in the markets described herein, consisting of patents
or patent applications that we have licensed from MSK or that we
have filed ourselves. We cannot be sure that patents will be
granted with respect to any of our pending patent applications or
with respect to any patent applications filed by us in the future,
nor can we be sure that any of our existing patents or any patents
that may be granted to us in the future will be commercially useful
in protecting our technology.
Our
objective is to continue to expand our intellectual property estate
by filing patent applications directed to our vaccine and
monoclonal antibody programs. We intend to pursue, maintain, and
defend patent rights, whether developed internally or licensed from
third parties, and to protect the technology, inventions, and
improvements that are commercially important to the development of
our business.
Marketing and Sales
We
currently do not have an internal sales force and do not intend to
commercialize on our own any of our product candidates that receive
FDA approval. We intend to license, or enter into
strategic alliances with, larger companies in the biopharmaceutical
businesses, which are equipped to manufacture, market and/or sell
our products, if any, through their well-developed manufacturing
capabilities and distribution networks. We intend to license some
or all of our worldwide patent rights to more than one third party
to achieve the fullest development, marketing and distribution of
any products we develop.
Manufacturing and Raw Materials
We
currently use, and expect to continue the use of, contract
manufacturers for the manufacture of our product candidates. Our
contract manufacturers are subject to extensive governmental
regulation. Regulatory authorities in our markets require that
pharmaceutical products be manufactured, packaged and labeled in
conformity with current cGMPs. We intend to establish a quality
control and quality assurance program, which will include a set of
standard operating procedures and specifications designed to ensure
that our products are manufactured in accordance with cGMPs, and
other applicable domestic and foreign regulations.
We
currently do not have any clinical or commercial antibody-based
therapeutic manufacturing capabilities. We may or may not
manufacture the products we develop, if any. We intend to use
contract manufacturers for the manufacture of our product
candidates.
Competition
The
drug development and medical diagnostic industries are
characterized by rapidly evolving technology and intense
competition. Our competitors include development and
diagnostic companies that have significantly more financial,
technical, and marketing resources. In addition,
there are a significant number of biotechnology companies working
on evolving technologies that may supplant our technology or make
it obsolete. Academic institutions, government agencies, and
other public and private research organizations are also conducting
research activities and may commercialize product candidates either
on their own or through joint ventures that compete with one or
more of our product candidates. We are aware of certain
development projects for products to prevent or treat certain
diseases targeted by us. The existence of these potential
products or other products or treatments of which we are not aware,
or products or treatments that may be developed in the future, may
adversely affect the desirability and commercial success of any
product candidate for which we receive FDA approval.
There
are a number of companies working in the area of human antibody
development and imaging that could compete in similar clinical
areas, including disease detection, therapeutic response monitoring
and minimal disease detection. These companies include
AbCellera Biologics, Inc., Agenus Inc., Atreca, Inc., Immunomedics,
Inc., Theraclone Sciences Inc., and Trellis
Bioscience.
Government Regulation
In
the United States, pharmaceutical products are subject to extensive
regulation by the FDA. The Federal Drug and Cosmetic Act and other
federal and state statutes and regulations, govern, among other
things, the research, development, testing, manufacture, storage,
recordkeeping, approval, labeling, promotion and marketing,
distribution, post-approval monitoring and reporting, sampling, and
import and export of pharmaceutical products. The FDA has very
broad enforcement authority and failure to abide by applicable
regulatory requirements can result in administrative or judicial
sanctions being imposed on us, including warning letters, refusals
of government contracts, clinical holds, civil penalties,
injunctions, restitution, disgorgement of profits, recall or
seizure of products, total or partial suspension of production or
distribution, withdrawal of approval, refusal to approve pending
applications, and criminal prosecution.
Our
antibody and vaccine product candidates are regulated by the
FDA’s Center for Drug Evaluation and Research. Accordingly,
we will be required to file a New Drug Application, or NDA, for
approval of any product candidate. We believe that our product
candidates meet the criterial for Orphan Drug status. We may decide
to seek Orphan Drug treatment for one or more product candidates
and, depending on clinical developments, additional expedited
review programs provided by the FDA.
FDA Approval Process
We
believe that our product candidates will be regulated by the FDA as
drugs. No manufacturer may market a new drug until it has submitted
an NDA to the FDA, and the FDA has approved it. The steps required
before the FDA may approve an NDA generally include:
●
preclinical laboratory tests and animal tests conducted in
compliance with FDA’s good laboratory practice
requirements;
●
development, manufacture and testing of active pharmaceutical
product and dosage forms suitable for human use in compliance with
current good manufacturing practices, or GMP;
●
the submission to the FDA of an investigational new drug
application, or IND, for human clinical testing, which must become
effective before human clinical trials may begin;
●
adequate and well-controlled human clinical trials to establish the
safety and efficacy of the product for its specific intended
use(s);
●
the submission to the FDA of a New Drug Application, or NDA;
and
●
FDA review and approval of the NDA.
Preclinical
tests include laboratory evaluation of the product candidate, as
well as animal studies to assess the potential safety and efficacy
of the product candidate. The conduct of the pre-clinical tests
must comply with federal regulations and requirements including
good laboratory practices. We must submit the results of the
preclinical tests, together with manufacturing information,
analytical data and a proposed clinical trial protocol to the FDA
as part of an IND, which must become effective before we may
commence human clinical trials. The IND will automatically become
effective 30 days after its receipt by the FDA, unless the FDA
raises concerns or questions before that time about the conduct of
the proposed trials. In such a case, we must work with the FDA to
resolve any outstanding concerns before clinical trials can
proceed. We cannot be sure that submission of an IND will result in
the FDA allowing clinical trials to begin, or that, once begun,
issues will not arise that suspend or terminate such trials. The
study protocol and informed consent information for patients in
clinical trials must also be submitted to an institutional review
board for approval. An institutional review board may also require
the clinical trial at the site to be halted, either temporarily or
permanently, for failure to comply with the institutional review
board’s requirements or may impose other
conditions.
Clinical
trials involve the administration of the product candidate to
humans under the supervision of qualified investigators, generally
physicians not employed by or under the trial sponsor’s
control. Clinical trials are typically conducted in three
sequential phases, though the phases may overlap or be combined. In
Phase 1, the initial introduction of the drug into healthy
human subjects, the drug is usually tested for safety (adverse
effects), dosage tolerance and pharmacologic action, as well as to
understand how the drug is taken up by and distributed within the
body. Phase 2 usually involves studies in a limited patient
population (individuals with the disease under study)
to:
●
evaluate preliminarily the efficacy of the drug for specific,
targeted conditions;
●
determine dosage tolerance and appropriate dosage as well as other
important information about how to design larger Phase 3 trials;
and
●
identify possible adverse effects and safety risks.
Phase 3
trials generally further evaluate clinical efficacy and test for
safety within an expanded patient population. The conduct of the
clinical trials is subject to extensive regulation, including
compliance with good clinical practice regulations and
guidance.
The
FDA may order the temporary or permanent discontinuation of a
clinical trial at any time or impose other sanctions if it believes
that the clinical trial is not being conducted in accordance with
FDA requirements or presents an unacceptable risk to the clinical
trial patients. We may also suspend clinical trials at any time on
various grounds.
The
results of the preclinical and clinical studies, together with
other detailed information, including the manufacture and
composition of the product candidate, are submitted to the FDA in
the form of an NDA requesting approval to market the drug. FDA
approval of the NDA is required before marketing of the product may
begin in the U.S. If the NDA contains all pertinent information and
data, the FDA will “file” the application and begin
review. The FDA may “refuse to file” the NDA if it does
not contain all pertinent information and data. In that case, the
applicant may resubmit the NDA when it contains the missing
information and data. Once the submission is accepted for filing,
the FDA begins an in-depth review. The FDA has agreed to certain
performance goals in the review of new drug applications. Most such
applications for non-priority drug products are reviewed within
10 months. The review process, however, may be extended by FDA
requests for additional information, preclinical or clinical
studies, clarification regarding information already provided in
the submission, or submission of a risk evaluation and mitigation
strategy. The FDA may refer an application to an advisory committee
for review, evaluation and recommendation as to whether the
application should be approved. The FDA is not bound by the
recommendations of an advisory committee, but it considers such
recommendations carefully when making decisions. Before approving
an NDA, the FDA will typically inspect the facilities at which the
product candidate is manufactured and will not approve the product
candidate unless GMP compliance is satisfactory. FDA also typically
inspects facilities responsible for performing animal testing, as
well as clinical investigators who participate in clinical trials.
The FDA may refuse to approve an NDA if applicable regulatory
criteria are not satisfied, or may require additional testing or
information. The FDA may also limit the indications for use and/or
require post-marketing testing and surveillance to monitor the
safety or efficacy of a product. Once granted, product approvals
may be withdrawn if compliance with regulatory standards is not
maintained or problems are identified following initial
marketing.
The
testing and approval process requires substantial time, effort and
financial resources, and our product candidates may not be approved
on a timely basis, if at all. The time and expense required to
perform the clinical testing necessary to obtain FDA approval for
regulated products can frequently exceed the time and expense of
the research and development initially required to create the
product. The results of preclinical studies and initial clinical
trials of our product candidates are not necessarily predictive of
the results from large-scale clinical trials, and clinical trials
may be subject to additional costs, delays or modifications due to
a number of factors, including difficulty in obtaining enough
patients, investigators or product candidate supply. Failure by us
to obtain, or any delay in obtaining, regulatory approvals or in
complying with requirements could adversely affect the
commercialization of product candidates and our ability to receive
product or royalty revenues.
Other Regulatory Requirements
After
approval, drug products are subject to extensive continuing
regulation by the FDA, which include company obligations to
manufacture products in accordance with Good Manufacturing
Practice, or GMP, maintain and provide to the FDA updated safety
and efficacy information, report adverse experiences with the
product, keep certain records and submit periodic reports, obtain
FDA approval of certain manufacturing or labeling changes, and
comply with FDA promotion and advertising requirements and
restrictions. Failure to meet these obligations can result in
various adverse consequences, both voluntary and FDA-imposed,
including product recalls, withdrawal of approval, restrictions on
marketing, and the imposition of civil fines and criminal penalties
against the NDA holder. In addition, later discovery of previously
unknown safety or efficacy issues may result in restrictions on the
product, manufacturer or NDA holder.
We
and any manufacturers of our products are required to comply with
applicable FDA manufacturing requirements contained in the
FDA’s GMP regulations. GMP regulations require among other
things, quality control and quality assurance as well as the
corresponding maintenance of records and documentation. The
manufacturing facilities for our products must meet GMP
requirements to the satisfaction of the FDA pursuant to a
pre-approval inspection before we can use them to manufacture our
products. We and any third-party manufacturers are also subject to
periodic inspections of facilities by the FDA and other
authorities, including procedures and operations used in the
testing and manufacture of our products to assess our compliance
with applicable regulations.
With
respect to post-market product advertising and promotion, the FDA
imposes a number of complex regulations on entities that advertise
and promote pharmaceuticals, which include, among others, standards
for direct-to-consumer advertising, promoting drugs for uses or in
patient populations that are not described in the drug’s
approved labeling (known as “off-label use”),
industry-sponsored scientific and educational activities, and
promotional activities involving the internet. Failure to comply
with FDA requirements can have negative consequences, including
adverse publicity, enforcement letters from the FDA, mandated
corrective advertising or communications with doctors, and civil or
criminal penalties. Although physicians may prescribe legally
available drugs for off-label uses, manufacturers may not market or
promote such off-label uses.
Changes
to some of the conditions established in an approved application,
including changes in indications, labeling, or manufacturing
processes or facilities, require submission and FDA approval of a
new NDA or NDA supplement before the change can be implemented. An
NDA supplement for a new indication typically requires clinical
data similar to that in the original application, and the FDA uses
the same procedures and actions in reviewing NDA supplements as it
does in reviewing NDAs.
Adverse
event reporting and submission of periodic reports is required
following FDA approval of an NDA. The FDA also may require
post-marketing testing, known as Phase 4 testing, risk
minimization action plans and surveillance to monitor the effects
of an approved product or place conditions on an approval that
could restrict the distribution or use of the product.
We
are also subject to various environmental, health and safety
regulations including those governing laboratory procedures and the
handling, use, storage, treatment, and disposal of hazardous
materials. From time to time, and in the future, our operations may
involve the use of hazardous materials.
Orphan Drugs
Under
the Orphan Drug Act of 1983, the FDA may grant orphan drug
designation to drugs or biologics intended to treat a rare disease
or condition, which is generally defined as a disease or condition
that affects fewer than 200,000 individuals in the United States.
Orphan drug designation must be requested before submitting an NDA.
After the FDA grants orphan drug designation, the generic identity
of the drug and its potential orphan use are disclosed publicly by
the FDA. Orphan drug designation does not convey any advantage in,
or shorten the duration of, the regulatory review and approval
process. The first applicant to receive FDA approval for a
particular active ingredient to treat a particular disease with FDA
orphan drug designation is entitled to a seven-year exclusive
marketing period in the United States for that product, for that
indication. During the seven-year exclusivity period, the FDA may
not approve any other applications to market the same drug or
biologic for the same disease, except in limited circumstances,
such as a showing of clinical superiority to the product with
orphan drug exclusivity. Orphan drug exclusivity does not prevent
the FDA from approving a different drug or biologic for the same
disease or condition, or the same drug or biologic for a different
disease or condition. Among the other benefits of orphan drug
designation are tax credits for certain research and a waiver of
the NDA application user fee.
Non-U.S. Regulation
Before
our products can be marketed outside of the United States, they are
subject to regulatory approval of the respective authorities in the
country in which the product should be marketed. The requirements
governing the conduct of clinical trials, product licensing,
pricing and reimbursement vary widely from country to country. No
action can be taken to market any product in a country until an
appropriate application has been approved by the regulatory
authorities in that country. The current approval process varies
from country to country, and the time spent in gaining approval
varies from that required for FDA approval. In certain countries,
the sales price of a product must also be approved. The pricing
review period often begins after market approval is granted. Even
if a product is approved by a regulatory authority, satisfactory
prices might not be approved for such product.
In
Europe, marketing authorizations may be submitted at a centralized,
a decentralized or national level;however, the centralized
procedure is mandatory for the approval of biotechnology products
and provides for the grant of a single marketing authorization that
is valid in all European Union member states. There can be no
assurance that the chosen regulatory strategy will secure
regulatory approval on a timely basis or at all.
While
we intend to market our products outside the United States in
compliance with our respective license agreements, we have not made
any applications with non-U.S. authorities and have no timeline for
such applications or marketing.
Properties
We
entered into a lease agreement in August 2012 as amended in August
2015 with a lease term that ended on September 30, 2015, for 5,955
square feet of office space at 11588 Sorrento Valley Road in San
Diego, California. Upon expiration of the lease in September 2015,
prior to the availability of our new facility, we continued
to lease this space on a month-to-month basis from October
2015 through January 2016 at the rate of $11,017 per
month.
In
September 2015 we entered into a lease agreement with AGP Sorrento
Business Complex, L.P. for a lease of approximately 14,971 rentable
square feet of office and research facilities located at 11535
Sorrento Valley Road, San Diego, California 92121 to serve as our
corporate offices and laboratories. Due to the fact that
certain tenant improvements needed to be made to the premises
before we could take occupancy, the facilities were not ready until
early 2016. We moved from our previous facility at 11588
Sorrento Valley Road, into our new space in and took occupancy on
February 4, 2016. Monthly rent commenced upon occupancy
at $2.38 per square foot, totaling $35,631, and will escalate
at an annual rate of 3% a year over the six-year term of the lease
as set forth in the Lease.
Legal Proceedings
From
time to time, we have become involved in various legal proceedings
that arise in the ordinary course of business or otherwise.
Legal proceedings are subject to inherent uncertainties as to
timing, outcomes, costs, expenses and time expenditures by our
management and others on our behalf. Although there can be no
assurance, based on information currently available, we believe
that the outcome of legal proceedings that are pending or
threatened against us will not have a material effect on our
financial condition. However, the outcome of any of these matters
is neither probable nor reasonably estimable.
On
September 18, 2015, an Order and Final Judgment was entered by the
Superior Court of the State of California, approving a settlement
of a class action lawsuit commenced on May 30, 2014, in Santa Clara
County Superior Court, State of California, on behalf of Cadillac
Partners and others similarly situated, naming as defendants,
MabVax Therapeutics, us and our directors, Hudson Bay Capital
Management LP, Bio IP Ventures LLC, Hudson Bay Master Fund Ltd.,
and Hudson Bay IP Opportunities Master Fund LP, together the
“Parties”, alleging the defendants breached certain
fiduciary duties, or aided and abetted a breach of fiduciary
duties, in connection with our Merger with MabVax Therapeutics. The
plaintiff sought to enjoin the Merger and obtain damages as well as
attorneys’ and expert fees and costs. No expenses
were incurred in 2016 in connection with this lawsuit or
settlement.
Employees
As
of February 7, 2017, we had 24 full time employees and two
part-time employees. Our employees are not represented by any
collective bargaining unit, and we believe our relations with our
employees are good.
MANAGEMENT
Board of Directors
Name
|
|
Position
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|
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J. David Hansen
|
|
Chairman of the Board of Directors, President and Chief Executive
Officer
|
|
|
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Kenneth M. Cohen
|
|
Director (1)(2)(3)(4)
|
|
|
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Jeffrey F. Eisenberg
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Director (4)
|
|
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Robert E. Hoffman
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Director (1)(2)(3)(4)
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Philip O. Livingston, M.D.
|
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Director, Chief Science Officer
|
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Paul V. Maier
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Director (1)(3)(4)
|
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Jeffrey V. Ravetch, M.D., Ph.D.
|
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Director
|
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Thomas C. Varvaro
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Director (1)(2)(3)(4)
|
(1)
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Member of our audit committee
|
(2)
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Member of our compensation committee
|
(3)
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Member of our nominating and governance committee
|
(4)
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Independent member of the board
|
The
following is a brief summary of the background of each of our
directors:
J. David Hansen, 65,
serves as our President, Chief Executive Officer
(“CEO”), and as Chairman of our Board of Directors and,
prior to the merger with Telik, Inc. on July 8, 2014 (the
“Merger”), served as President, CEO, and Chairman of
the Board of Directors of MabVax Therapeutics, Inc. after
co-founding the Company in 2006. Mr. Hansen is an experienced
biopharmaceutical executive with more than 30 years of industry
experience. He has held senior management roles in both private
start-up companies as well as small to mid-sized public companies.
His senior level experience includes executive management, finance
and accounting, corporate development, sales and marketing. During
his career, Mr. Hansen has executed a wide variety of in and out
licensing agreements, research and development collaborations,
joint ventures, divestitures, and acquisitions. Mr. Hansen has
developed expertise in the therapeutic areas of immunology,
oncology, and infectious disease. Mr. Hansen gained executive
management experience at several life sciences companies prior to
co-founding the Company that make him particularly suited for his
leadership role in the Company. For example, he was a corporate
officer of Avanir Pharmaceuticals where he held the titles of Vice
President of Commercial Development, Senior Vice President of
Corporate Development, and President and Chief Operations Officer
of the Avanir Subsidiary Xenerex Biosciences. Prior to Avanir, Mr.
Hansen served in multiple roles at Dura Pharmaceuticals including
National Sales Director, Director of Marketing, and Director of
Business Development. He has additional management experience with
Merck & Co. (Schering-Plough), Key Pharmaceuticals, and Bristol
Myers Squibb. We believe that Mr. Hansen’s extensive
experience with public and private pharmaceutical companies in a
leadership role qualifies him to serve as the Chairman of our Board
of Directors and as our President and Chief Executive
Officer.
Kenneth M. Cohen,
61, serves as a member of our Board of Directors and, prior
to the Merger, served as a member of the Board of Directors of
MabVax Therapeutics, Inc. since July of 2014. Since
2007, Mr. Cohen has served either as a board member, executive
officer or advisor to various companies, entrepreneurs and
investors in the life sciences area. From January 2011
to August 2014 he served as a member of the Board of Directors of
Adamis Pharmaceuticals Corporation (Nasdaq: ADMP). He was a
co-founder of publicly held Somaxon Pharmaceuticals, and served as
its President and CEO from 2003 through 2007 and continued as a
director until June 2008. Prior to Somaxon Pharmaceuticals, Mr.
Cohen gained executive management and board experience through
various executive positions that make him suitable for membership
on the Board of Directors of the Company. For example,
he was President and CEO of Synbiotics Corporation; Executive Vice
President and Chief Operating Officer for Canji Incorporated, a
human gene-therapy company that was acquired by Schering-Plough
Corporation; Vice President of Business Affairs at Argus
Pharmaceuticals, Inc.; and Vice President of Marketing and Business
Development for LifeCell Corporation. Mr. Cohen began
his career at Eli Lilly and Company where, among many different
responsibilities over ten years, he directed business planning for
the Medical Instrument Systems Division and managed the launch of
Prozac. He received an A.B. in biology and chemistry from Dartmouth
College and an M.B.A. from the Wharton School of the University of
Pennsylvania. We believe that Mr. Cohen’s 20 years of
experience serving as an executive officer including chief
executive officer of several life sciences companies, and serving
as a member of the board of several life sciences companies
qualifies him to serve as a member of the Board of
Directors.
Jeffrey F. Eisenberg,
51, has served as a member of our Board of Directors
since February 2016. Mr. Eisenberg has served
in a variety of senior management positions, and has developed
significant experience in the areas of corporate transactions,
strategic alliances, product development, commercialization,
manufacturing and talent management. From July 2016 to
the present, Mr. Eisenberg has served as a director of Xenetic
Biosciences, Inc., a biotech company based in Lexington, MA, and
from December 2016 to the present, Mr. Eisenberg has served as
Chief Operating Officer of Xenetic. From November 1998 to December
2015 Mr. Eisenberg held various executive management positions
including President, CEO and a board member of Noven
Pharmaceuticals, Inc., the U.S. prescription pharmaceutical
division of Hisamitsu Pharmaceutical Inc., a Japanese
pharmaceutical company and the world's largest manufacturer of
transdermal drug patches. Mr. Eisenberg led the
post-acquisition integration of JDS Pharmaceuticals, a private
specialty pharmaceutical company purchased by Noven in 1997, as
well as the integration of Noven and Hisamitsu following the 2009
acquisition. From 2007 to August 2014 Mr. Eisenberg also
served as President of Novogyne Pharmaceuticals, a Women's Health
commercial joint venture between Noven and Novartis Pharmaceuticals
Corporation. Mr. Eisenberg was appointed President and Chief
Executive Officer of Noven following Hisamitsu's acquisition of
Noven. Prior to Noven Pharmaceuticals, Inc., Mr.
Eisenberg gained extensive legal experience serving as Associate
General Counsel and then as Acting General Counsel of IVAX
Corporation, at the time a publicly-traded pharmaceutical company
with global operations. Prior to serving at IVAX, Mr. Eisenberg was
a lawyer in the corporate securities department of
the Florida law firm of Steel Hector & Davis, where
he began his professional career in 1990.
Mr.
Eisenberg is an expert in corporate governance, having advised the
boards of IVAX, Noven and others through a number of significant
internal and external issues, including mergers and acquisitions,
corporate financings, strategic alliances, CEO transitions,
securities class action lawsuits, FDA warning letters and consent
decrees, and development and implementation of corporate governance
policies. Mr. Eisenberg holds a BS, Economics degree from the
Wharton School of the University of Pennsylvania, and a JD
degree from Columbia University Law School. We
believe that Mr. Eisenberg’s extensive experience in
corporate transactions, product development, corporate governance
and executive leadership, qualifies him to serve as a member of our
Board of Directors.
Robert E. Hoffman,
51, has served as a member of our Board of Directors since
September 2014. Mr. Hoffman is the Executive Vice
President and Chief Financial Officer (“CFO”) of
Innovus Pharmaceuticals, Inc. a position he has held since
September 2016. Mr. Hoffman was CFO of AnaptysBio from July 2015 to
September 2016. He was part of the founding management
team of Arena Pharmaceuticals, Inc. (Nasdaq: ARNA), a
biopharmaceutical company, in 1997, serving as Senior Vice
President, Finance and CFO until July 2015, except for the period
of March 2011 to August 2011, where he served as CFO for Polaris
Group, a biopharmaceutical drug company. Mr. Hoffman is a member of
the board of directors of CombiMatrix Corporation (Nasdaq: CBMX), a
molecular diagnostics company, Kura Oncology, Inc. (Nasdaq: KURA),
a biotechnology company, and MabVax Therapeutics Holdings, Inc.
(Nasdaq: MBVX), a biopharmaceutical company. He also was a member
of the Financial Accounting Standards Board’s Small Business
Advisory Committee until 2015 and is a member of the steering
committee of the Association of Bioscience Financial Officers. Mr.
Hoffman received his B.B.A. from St. Bonaventure University, and is
licensed as a C.P.A. (inactive) in the State of California. We
believe that Mr. Hoffman’s extensive experience in financial
matters as a chief financial officer in the biopharmaceutical
industry qualifies him to serve as a member of our Board of
Directors, and as an Audit Committee financial expert.
Philip O. Livingston,
M.D., 74, serves as a
member of our Board of Directors and our Chief Science Officer and,
prior to the Merger, served as a member of the Board of Directors
and Chief Science Officer of MabVax Therapeutics, Inc. since 2012.
He received his MD degree from Harvard Medical School and was
Professor of Medicine in the Joan and Sanford Weill Medical College
at Cornell University and Attending Physician and Member in
Memorial Sloan-Kettering Cancer Center where he treated melanoma
patients and ran the Cancer Vaccinology Laboratory research lab for
over 30 years until his retirement from MSK October 1, 2011. Dr.
Livingston’s research focused on: identification of suitable
targets for immunotherapy of a variety of cancers, construction of
polyvalent conjugate vaccines specifically designed to augment
antibody responses against these targets, and identification of
optimal immunological adjuvants to further augment the potency of
these vaccines. He has over 108 publications and 4 issued and 3
pending patents concerning cancer vaccines. Recently, Dr.
Livingston helped establish MabVax Therapeutics, Inc., and another
biotech company, Adjuvance Technologies, Inc. MabVax supports two
randomized Phase II trials with these MSK polyvalent vaccines and
establishment of human monoclonal antibodies from the blood of
immunized patients. We believe that Dr. Livingston’s
extensive expertise in immunotherapy qualifies him to serve as a
member of our Board of Directors and our Chief Science
Officer.
Paul
V. Maier, 69, joined
our Board of Directors in July 2014. Since 2007, Mr.
Maier has served as a member of the Board of Directors of
International Stem Cell Corporation (OTCQB: ISCO) and currently
serves as the Chairperson of its Audit Committee and as a member of
its Compensation and Governance Committees. Since 2012 Mr. Maier
has served as Chairman of the Audit Committee and a member of the
Governance Committee of the Board of Directors of Apricus
Biosciences, Inc. (Nasdaq: APRI). Since 2015, Mr. Maier has served
as Chairman of the Audit Committee and member of the Compensation
Committee of the Board of Directors of Ritter Pharmaceuticals
(Nasdaq: RTTR). Mr. Maier also serves as a Director of Biological
Dynamics, a private life science company. From 2009 to
June 2014, Mr. Maier served as the CFO of Sequenom, Inc., (acquired
by Laboratory Corporation of America Holdings). Prior to Sequenom,
Inc., Mr. Maier gained executive management experience
through various management positions that make him suitable for
membership on the Board of Directors of the Company. For
example, Mr. Maier served
as Senior Vice President and CFO of Ligand Pharmaceuticals, Inc.,
where he helped build Ligand from a venture stage company to a
commercial, integrated biopharmaceutical
organization. Prior to Ligand Pharmaceuticals, Inc., he
held various management and finance positions at ICN
Pharmaceuticals. Mr. Maier received his M.B.A. from Harvard
Business School and a B.S. from Pennsylvania State University. We
believe that Mr. Maier’s over 25 years of experience in life
sciences as a chief financial officer and serving on the board of
several life sciences public companies qualifies him to serve as a
member of the Board of Directors and as chair of the Audit
Committee.
Jeffrey V. Ravetch, M.D.,
Ph.D., 65, serves as
a member of our Board of Directors and, prior to the Merger, served
as a member of the Board of Directors of MabVax Therapeutics, Inc.
since March 2014. Dr. Ravetch has served as the Theresa
and Eugene Lang Professor at the Rockefeller University and Head of
the Leonard Wagner Laboratory of Molecular Genetics and Immunology
since 1997. Dr. Ravetch, a native of New York City, received his
undergraduate training in molecular biophysics and biochemistry at
Yale University, earning his B.S. degree in 1973, working with
Donald M. Crothers on the thermodynamic and kinetic properties of
synthetic oligoribonucleotides. Dr. Ravetch continued his training
at the Rockefeller University—Cornell Medical School MD/Ph.D.
program, earning his doctorate in 1978 in genetics with Norton
Zinder and Peter Model, investigating the genetics of viral
replication and gene expression for the single stranded DNA
bacteriophage f1 and in 1979 he earned his M.D. from Cornell
University Medical School. Dr. Ravetch pursued postdoctoral studies
at the NIH with Phil Leder where he identified and characterized
the genes forhuman antibodies and the DNA elements involved in
switch recombination. From 1982 to 1996 Dr. Ravetch was a member of
the faculty of Memorial Sloan-Kettering Cancer Center and Cornell
Medical College. His laboratory has focused on the mechanisms by
which antibodies mediate their diverse biological activities in
vivo, establishing the pre-eminence of FcR pathways in host
defense, inflammation and tolerance and describing novel inhibitory
signaling pathways to account for the paradoxical roles of
antibodies as promoting and suppressing inflammation. His work
extended into clinical applications for the treatment of
neoplastic, inflammatory and infectious diseases.
Dr.
Ravetch has received numerous awards including the
Burroughs-Wellcome Scholar Award, the Pew Scholar Award, the Boyer
Award, the NIH Merit Award, the Lee C. Howley, Sr. Prize (2004),
the AAI-Huang Foundation Meritorious Career Award (2005), the
William B. Coley Award (2007), the Sanofi-Pasteur Award (2012) and
the Gairdner International Prize (2012). He has presented numerous
named lectures including the Kunkel Lecture, the Ecker Lecture, the
Goidl Lecture, the Grabar Lecture, the Dyer Lecture and the
Heidelberger/Kabat Lecture. He has received an honorary doctorate
from Freidrich-Alexander University, Nuremberg/Erlangen. He is a
member of National Academy of Sciences (2006), the Institute of
Medicine (2007), a Fellow of the American Academy of Arts and
Sciences (2008) and a Fellow of the American Association for the
Advancement of Science (2009).
Dr.
Ravetch has contributed extensively to the scientific community by
serving as a member of the Scientific Advisory Boards of the Cancer
Research Institute, the Irvington Institute for Medical Research
and the Damon Runyon Foundation. He has been active in
biotechnology for the last two decades, having served as a
consultant or member of the Scientific Advisory Boards of
Millennium Pharmaceuticals, Exelexis Pharmaceuticals, Regeneron
Pharmaceuticals, Medimmune, Genentech, Novartis, Merck, Micromet,
Xencor, Suppremol, Igenica, Portola Pharmaceuticals and Momenta
Pharmaceuticals, Inc. We believe Dr. Ravetch’s extensive
scientific knowledge and training qualify him to serve as a member
of our Board of Directors.
Thomas
C. Varvaro, 47, has
served as a member of our Board of Directors since April
2015. Mr. Varvaro has served as the CFO of ChromaDex
Corp. (Nasdaq: CDXC) since January 2004 and as its Secretary since
March 2006. He also has served as a director of ChromaDex
Corporation from March 2006 until May 2010. Mr. Varvaro is
responsible for overseeing all aspects of ChromaDex’s
accounting, information technology, intellectual property
management and human resources management. Mr. Varvaro has
extensive process-mapping and business process improvement skills,
along with a solid information technology background that includes
management and implementation experiences ranging from custom
application design to enterprise wide system deployment. Mr.
Varvaro also has hands-on experience in integrating acquisitions
and in new facility startups. In working with manufacturing
organizations, Mr. Varvaro has overseen plant automation, reporting
and bar code tracking implementations. Mr. Varvaro also has broad
legal experience in intellectual property, contract and employment
law. Prior to ChromaDex, Mr. Varvaro gained substantial management
experience in a number of positions that make him suitable
for membership on the Board of Directors of the
Company. For example, he was employed by Fast Heat Inc., a
Chicago, Illinois based Global supplier to the plastics, HVAC,
packaging, and food processing industries, where he began as
controller and was promoted to chief information officer and then
chief financial officer during his tenure. During his time there
Mr. Varvaro was responsible for all financial matters including
accounting, risk management and human resources. Earlier in his
career Mr. Varvaro gained additional experience in other areas of
information technology and accounting roles. For
example, Mr. Varvaro was employed by Maple Leaf Bakery, Inc.,
Chicago, Illinois, during its rise to becoming a national leader in
specialty bakery products. During his tenure, Mr. Varvaro served in
information technology and accounting roles, helping to shepherd
the company from a single facility to national leader in specialty
food products. Mr. Varvaro has a B.S. in Accounting from University
of Illinois, Urbana-Champaign and is a Certified Public
Accountant. We believe Mr. Varvaro’s extensive
industry experience as an officer and director, as well as his
extensive financial and accounting training and management
experience qualify him to serve as a member of our Board of
Directors, and as an Audit Committee financial
expert.
Family Relationships
None
of our Directors are related by blood, marriage, or adoption to any
other Director, executive officer, or other key
employees.
Other
Directorships
Other
than as disclosed above, none of the Directors of the Company are
also directors of issuers with a class of securities registered
under Section 12 of the Exchange Act (or which otherwise are
required to file periodic reports under the Exchange
Act).
Legal Proceedings
We
are not aware of any of our directors or officers being involved in
any legal proceedings in the past ten years relating to any matters
in bankruptcy, insolvency, criminal proceedings (other than traffic
and other minor offenses) or being subject to any of the items set
forth under Item 401(f) of Regulation S-K.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
BOARD LEADERSHIP STRUCTURE
The
Board of Directors is currently chaired by the President and Chief
Executive Officer of the Company, Mr. Hansen. The Company believes
that combining the positions of Chief Executive Officer and
Chairman of the Board of Directors helps to ensure that the Board
of Directors and management act with a common purpose. Integrating
the positions of Chief Executive Officer and Chairman can provide a
clear chain of command to execute the Company’s strategic
initiatives. The Company also believes that it is advantageous to
have a Chairman with an extensive history with and knowledge of the
Company, and extensive technical and industry experience.
Notwithstanding the combined role of Chief Executive Officer and
Chairman, key strategic initiatives and decisions involving the
Company are discussed and approved by the entire Board of
Directors. In addition, meetings of the independent directors of
the Company are regularly held, which Mr. Hansen does not attend.
The Company believes that the current leadership structure and
processes maintains an effective oversight of management and
independence of the Board of Directors as a whole without separate
designation of a lead independent director. However, the Board of
Directors will continue to monitor its functioning and will
consider appropriate changes to ensure the effective independent
function of the Board of Directors in its oversight
responsibilities.
ROLE OF THE BOARD IN RISK OVERSIGHT
One
of the Board of Director’s key functions is informed
oversight of the Company’s risk management process. The Board
of Directors does not have a standing risk management committee,
but rather administers this oversight function directly through the
Board of Directors as a whole, as well as through various Board of
Directors standing committees that address risks inherent in their
respective areas of oversight. In particular, our Board of
Directors is responsible for monitoring and assessing strategic
risk exposure, including a determination of the nature and level of
risk appropriate for the Company. The Audit Committee considers and
discusses with management the Company’s major financial risk
exposures and related monitoring and control of such exposures as
well as compliance with legal and regulatory requirements. The
Nominating & Governance Committee monitors the effectiveness of
our corporate governance guidelines. The Compensation Committee
assesses and monitors whether our compensation policies and
programs have the potential to encourage excessive risk-taking. Any
findings regarding material risk exposure to the Company are
reported to and discussed with the Board of Directors.
INDEPENDENCE OF THE BOARD OF DIRECTORS AND ITS
COMMITTEES
|
After review of all relevant transactions or
relationships between each director and nominee for director, or
any of his or her family members, and the Company, its senior
management and its Independent Registered Public Accounting Firm,
the Board of Directors has determined that all of the
Company’s directors and the Company’s nominees for
director are independent within the meaning of the applicable
NASDAQ listing standards, except Mr. Hansen, the Chairman of the
Board of Directors, Chief Executive Officer and President, of the
Company, Dr. Livingston, Chief Science Officer; and Dr. Ravetch. As
required under the NASDAQ listing standards, the Company’s
independent directors meet in regularly scheduled executive
sessions at which only independent directors are present. The Board
of Directors met 6 times and
acted by unanimous written consent 11 times during the fiscal year ended December 31,
2016. Each member of the Board of Directors attended 75%
or more of the aggregate of the meetings of the Board of Directors
held in the last fiscal year during the period for which he was a
director and of the meetings of the committees on which he served,
held in the last fiscal year during the period for which he was a
committee member except Philip Livingston who was unable to attend certain meetings due to
travel and other commitments.
The
Board of Directors has three committees: the Audit Committee, the
Compensation Committee and the Nominating & Governance
Committee. Below is a description of each committee of the Board of
Directors. The Board of Directors has determined that each member
of each committee meets the applicable rules and regulations
regarding “independence” and that each member is free
of any relationship that would interfere with his individual
exercise of independent judgment with regard to the
Company.
AUDIT COMMITTEE
The
Audit Committee of the Board of Directors oversees the
Company’s corporate accounting and financial reporting
process. For this purpose, the Audit Committee performs several
functions. The Audit Committee, among other things: evaluates the
performance, and assesses the qualifications, of the Independent
Registered Public Accounting Firm; determines and pre-approves the
engagement of the Independent Registered Public Accounting Firm to
perform all proposed audit, review and attest services; reviews and
pre-approves the retention of the Independent Registered Public
Accounting Firm to perform any proposed, permissible non-audit
services; determines whether to retain or terminate the existing
Independent Registered Public Accounting Firm or to appoint and
engage a new Independent Registered Public Accounting Firm for the
ensuing year; confers with management and the Independent
Registered Public Accounting Firm regarding the effectiveness of
internal controls over financial reporting; establishes procedures,
as required under applicable law, for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and
the confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; reviews the
financial statements to be included in the Company’s Annual
Report on Form 10-K and recommends whether or not such financial
statements should be so included; and discusses with management and
the Independent Registered Public Accounting Firm the results of
the annual audit and review of the Company’s quarterly
financial statements.
The Audit Committee is currently composed of four
outside directors: Mr. Maier, Mr. Cohen, Mr. Hoffman and Mr.
Varvaro, as of December 31, 2016. The Audit Committee met 5
times during the fiscal year ended December 31, 2016.
The Audit Committee Charter was last amended in March 2015 and is
available on the Company’s website,
www.mabvax.com.
The
Board of Directors periodically reviews the NASDAQ listing
standards’ definition of independence for Audit Committee
members and has determined that all members of the Company’s
Audit Committee are independent (as independence is currently
defined in Rule 5605(c)(2)(A) of the NASDAQ listing standards and
Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as
amended). Although the Company is not currently NASDAQ-listed we
believe it is in the Company’s interests to comply with these
NASDAQ standards as a matter of good governance. The Board of
Directors has determined that Mr. Maier qualifies as an
“audit committee financial expert,” as defined in
applicable SEC rules. The Board of Directors made a qualitative
assessment of Mr. Maier’s level of knowledge and experience
based on a number of factors, including his formal education and
his service in executive capacities having financial oversight
responsibilities. These positions include Chief Financial Officer,
Senior Vice President, and member of the boards of directors and
audit committees of, a number of biotechnology and genomics
companies, pursuant to which he has experience preparing, reviewing
and supervising the preparation of financial reports. In addition,
Mr. Maier holds an M.B.A from Harvard Business School. For further
information on Mr. Maier’s experience, please see his
biography above.
COMPENSATION COMMITTEE
The
Compensation Committee of the Board of Directors reviews, modifies
and approves the overall compensation strategy and policies for the
Company. The Compensation Committee, among other things: reviews
and approves corporate performance goals and objectives relevant to
the compensation of the Company’s officers; determines and
approves the compensation and other terms of employment of the
Company’s Chief Executive Officer; determines and approves
the compensation and other terms of employment of the other
officers of the Company; and administers the Company’s stock
option and purchase plans, pension and profit sharing plans and
other similar programs.
As of December 31, 2016, the Compensation
Committee was composed of four outside directors: Mr. Cohen, Mr.
Eisenberg, Mr. Hoffman, and Mr. Varvaro. On May 6, 2016,
Mr. Eisenberg was appointed to the Compensation
Committee. All members of the Compensation Committee are
independent (as independence is currently defined in Rule
5605(a)(2) of the NASDAQ listing standards). The Compensation
Committee met 4 times and acted
3 times by written consent
during the fiscal year ended December 31, 2016. The Compensation
Committee Charter was last amended in March 2015 and is available
on the Company’s website, www.mabvax.com.
Compensation
Committee Interlocks and Insider Participation
No
member of our compensation committee has at any time been an
employee of ours. None of our executive officers serves as a member
of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of our
board of directors or compensation committee.
NOMINATING & GOVERNANCE COMMITTEE
The
Nominating & Governance Committee of the Board of Directors is
responsible for, among other things: identifying, reviewing and
evaluating candidates to serve as directors of the Company;
reviewing, evaluating and considering incumbent directors;
recommending to the Board of Directors for selection candidates for
election to the Board of Directors; making recommendations to the
Board of Directors regarding the membership of the committees of
the Board of Directors; and assessing the performance of the Board
of Directors.
The Nominating & Governance Committee is
currently composed of five outside directors: Messrs. Cohen,
Eisenberg, Hoffman, Maier and Varvaro, as of December 31,
2016. On May 6, 2016, Mr. Eisenberg was appointed to the
Nominating & Governance Committee. All members
of the Nominating & Governance Committee are independent (as
independence is currently defined in Rule 5605(a)(2) of the NASDAQ
listing standards). The Nominating & Governance Committee met
3 times during the fiscal year
ended December 31, 2016. The Nominating & Governance Committee
Charter was last amended in March 2015 and is available on the
Company’s website, www.mabvax.com.
The
Nominating & Governance Committee has not established any
specific minimum qualifications that must be met for recommendation
for a position on the Board of Directors. Instead, in considering
candidates for director the Nominating & Governance Committee
will generally consider all relevant factors, including among
others the candidate’s applicable education, expertise and
demonstrated excellence in his or her field, the usefulness of the
expertise to the Company, the availability of the candidate to
devote sufficient time and attention to the affairs of the Company,
the candidate’s reputation for personal integrity and ethics
and the candidate’s ability to exercise sound business
judgment. Other relevant factors, including diversity, experience
and skills, will also be considered. Candidates for director are
reviewed in the context of the existing membership of the Board of
Directors (including the qualities and skills of the existing
directors), the operating requirements of the Company and the
long-term interests of its stockholders.
The
Nominating & Governance Committee considers each
director’s executive experience leading biopharmaceutical
companies, his familiarity and experience with the various
operational, scientific and/or financial aspects of managing
companies in our industry, and his involvement in building
collaborative biopharmaceutical development and commercialization
relationships.
With
respect to diversity, the Nominating & Governance Committee
seeks a diverse group of individuals who have executive leadership
experience in life sciences companies, and a complementary mix of
backgrounds and skills necessary to provide meaningful oversight of
the Company’s activities. As a clinical stage drug
development company focused on discovering and developing small
molecule drugs, we seek directors who have experience in the
medical, regulatory and pharmaceutical industries in general, and
also look for individuals who have experience with the operational
issues that we face in our dealings with clinical and pre-clinical
drug development, collaborations with third parties and
commercialization and manufacturing issues. Some of our directors
have strong financial backgrounds and experience in dealing with
public companies, to help us in our evaluation of our operations
and our financial model. We also face unique challenges as we
implement our strategy to develop, manufacture and commercialize
our products by entering into relationships with pharmaceutical
companies. The Nominating & Governance Committee annually
reviews the Board’s composition in light of the
Company’s changing requirements. The Nominating &
Governance Committee uses the Board of Director’s network of
contacts when compiling a list of potential director candidates and
may also engage outside consultants. Pursuant to its charter, the
Nominating & Governance Committee will consider, but not
necessarily recommend to the Board of Directors, potential director
candidates recommended by stockholders. All potential director
candidates are evaluated based on the factors set forth above, and
the Nominating & Governance Committee has established no
special procedure for the consideration of director candidates
recommended by stockholders.
Director Nominations
There
have been no material changes to the procedures by which a
stockholder may recommend nominees to the Board of Directors since
our last disclosure of these procedures.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The
Nominating & Governance Committee of the Board of Directors has
adopted a process by which stockholders may communicate with the
Board of Directors or any of its individual directors. Stockholders
who wish to communicate with the Board of Directors may do so by
sending a written communication addressed as follows: Board
Communication, MabVax Therapeutics Holdings, Inc., 11535 Sorrento
Valley Rd., Suite 400, San Diego, CA 92121. All communications must
state the number and class(es) of shares owned by the stockholder
making the communication. The Company’s Secretary
or other officer will review each communication and forward the
communication to the Board of Directors, to any individual director
to whom the communication is addressed, and/or to any other officer
of the Company considered to be necessary or
appropriate.
EXECUTIVE OFFICERS
The
following table sets forth information regarding the
Company’s executive officers and key personnel.
Executive Officers:
Name
|
|
Position
|
J. David Hansen
|
|
Chairman of the Board of Directors, President and Chief Executive
Officer
|
|
|
|
Gregory P. Hanson, CMA, MBA
|
|
Chief Financial Officer
|
|
|
|
Paul W. Maffuid, Ph.D.
|
|
Executive Vice President of Research and Development
|
|
|
|
Paul Resnick, M.D., MBA
|
|
Vice President and Chief Business Officer
|
The following is a brief summary of the background of each of our
executive officers.
J. David Hansen. Biographical
information regarding Mr. Hansen is provided above under Board of
Directors.
Gregory P. Hanson, CMA,
MBA, 70, serves as our CFO, and prior to the Merger served
as CFO of MabVax Therapeutics, Inc. since February of 2014. Mr.
Hanson has over 30 years serving as CFO/financial executive/board
member of public and private life sciences and hi tech
companies. From January 2008 to February 2014 Mr. Hanson
was Managing Director of First Cornerstone, a board and management
advisory service to companies and executives. From
November 2009 to November 2016, Mr. Hanson served as Advisory Board
Member of Menon International, Inc., and from October 2011 to
September 2016, served on the Life Sciences Advisory Board of
Brinson Patrick Securities, a boutique investment
bank. He also serves either as a board member, mentor or
confidential advisor to several other tech and life sciences
companies. Mr. Hanson is Past-President and 10-year Member of the
Board of Directors of San Diego Financial Executives International
(FEI), and a member of the Capital Formation Committee at BIOCOM
since 2011. Earlier in his career Mr. Hanson was able to gain
substantial executive management experience that help qualify him
in his role as CFO. For example, he served as Senior
Vice President of Brinson Patrick Securities, where he opened up
the San Diego branch and introduced at-the-market financing
strategies to public life sciences companies. Prior to Brinson
Patrick Securities, Mr. Hanson served as Senior Vice President and
CFO of Mast Therapeutics (MSTX—NYSE MKT), and prior to Mast
Therapeutics was Vice President and CFO, Chief Accounting Officer,
Compliance Officer and Corporate Secretary of Avanir
Pharmaceuticals, Inc. (acquired by Otsuka Holdings Co., Ltd.), the
developer of the cold sore product Abreva™, and
Neudexta™, for the treatment of Pseudobulbar Affect, a
central nervous system disorder. During the course of his career,
Mr. Hanson has completed approximately $1 billion in financing,
licensing and partnering arrangements. Mr. Hanson was a founding
and 6-year member of the Small Business Advisory Committee to the
Financial Accounting Standards Board, and has spoken at various
national conferences, industry organizations and panels on
financing strategy and mergers and acquisitions, and twice spoken
to the SEC’s Committee on Improvements to Financial
Reporting.
Mr.
Hanson has passed the examination for Certified Public Accountants
and is a Certified Management Accountant. He has an MBA
with distinction from the University of Michigan, and a BS in
Mechanical Engineering from Kansas State
University. From 2008 to September 2016 Mr. Hanson
maintained Series 7 & Series 63 securities
licenses.
Paul W. Maffuid, Ph.D.,
61, serves as Executive Vice President of Research and
Development. Dr. Maffuid joined the Company in July
2014. From 2011 to June 2014, he worked for AAIPHARMA
Services Corporation where he held various management positions
including Executive Vice President, Pharma Operations. His
responsibilities included formulation, process development,
technology transfer, stability and analytical services for clients
developing biologic and small molecule therapeutics. He was a
member of the Executive Team that transformed a declining business
into one of the world’s leading providers of integrated
development services for the biopharmaceutical
sector. Dr. Maffuid has been able to gain extensive
experience to qualify him in his executive leadership role over
research and development at the Company. For example,
prior to joining AAIPHARMA he was the founder of Biopharmalogics,
Inc. a consulting service providing Chemistry Manufacturing and
Controls (CMC) as well as Drug Metabolism-Pharmacokinetics (DMPK)
services for the development of pharmaceutical products which he
operated from 2008 to 2011. Earlier in his career Dr. Maffuid was
Senior Vice President of Irvine Pharmaceutical Services, Inc., and
Vice President of Pharmaceutical Development for
ArenaPharmaceuticals. While at Arena Pharmaceuticals Dr. Maffuid
was a member of the Executive Management team responsible for all
CMC and DMPK in support of discovery, development, and commercial
operations. He led the design and construction of a 40,000 sq. ft.
cGMP compliant pilot manufacturing facility. Dr. Maffuid had
management roles at Magellan Laboratories, Cabrillo Laboratories,
and Amylin Pharmaceuticals.
Paul F. Resnick, M.D., MBA,
59, serves as Vice President and Chief Business
Officer. Dr. Resnick joined the Company in March
2016. From January 2013 to March 2016 Dr. Resnick was
Senior Vice President, Business Development for Juventas
Therapeutics, where he was responsible for business and commercial
strategy and working with executive management overseeing corporate
clinical development, and financial and business
strategies. From February 2012 to December 2012, Dr.
Resnick was an advisor to several companies in the life sciences
area. From January 2008 to January 2012 he was Vice
President, Business Development for Intellikine, Inc. (acquired by
Takeda Pharmaceuticals), responsible for managing alliances and
leading the business development strategy that resulted in securing
an acquisition by Takeda Pharmaceuticals. During the
course of Dr. Resnick’s career, he has been able to gain
extensive experience to qualify him in his executive leadership
role for business development for the Company. For
example, Dr. Resnick held Senior Director positions for Worldwide
Business Development, and for Strategic Alliances, at Pfizer Inc.,
where he was responsible for networking with leaders from
biotechnology companies, universities, and research institutions to
gain early insights into emerging technologies, and for leading
technical and business diligence, negotiations, and alliance
management of science and technology initiatives for Pfizer’s
Biotechnology and Bio-innovation Center. Prior to Pfizer
Dr. Resnick held Director and Senior Director positions at Rinat
Neuroscience (acquired by Pfizer), Intermune, Inc. and Roche
Pharmaceuticals. Dr. Resnick has an M.D. from The
Medical College of Wisconsin and an MBA from The Wharton School of
the University of Pennsylvania.
Code of Conduct
We
have adopted the MabVax Therapeutic Holdings, Inc. Code of Conduct,
a code of ethics with which every person who works for us is
expected to comply, including without limitation our principal
executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar
functions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than
ten percent of a registered class of our equity securities, to file
with the SEC initial reports of ownership and reports of changes in
ownership of our common stock and our other equity securities.
Officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file.
Based
solely on a review of the copies of such forms furnished to us
during 2015, SEC filings and certain written representations that
no other reports were required during the fiscal year ended
December 31, 2015, our officers, directors and greater than ten
percent stockholders complied with all applicable Section 16(a)
filing requirement, except for Paul Maffuid who was late on a
Section 16(a) filing that took place on January 8,
2015.
EXECUTIVE COMPENSATION
2016 Summary Compensation Table
The
following table sets forth, for the fiscal years 2016 and 2015,
compensation awarded or paid to, or earned by, our Chief Executive
Officers, our Chief Financial Officer and our other two executive
officers at December 31, 2016 (the “Named Executive
Officers” or “NEOs”).
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Restricted Stock Unit
Awards
($)(3)
|
Option Awards
($)(4)
|
All Other Compensation
($)
|
Total
($)
|
J.
David Hansen
|
2016
|
418,538
|
141,400
|
—
|
393,702
|
35,717
|
989,257
|
President,
Chief Executive Officer and Chairman
|
2015
|
375,601
|
149,625
|
2,077,475
|
1,493,194
|
87,770
|
4,183,665
|
Gregory
P. Hanson
|
2016
|
276,014
|
62,790
|
—
|
99,743
|
15,055
|
453,602
|
Chief
Financial Officer
|
2015
|
271,819
|
77,175
|
1,075,480
|
773,006
|
19,742
|
2,217,222
|
Wolfgang
W. Scholz, Ph.D.
|
2016
|
—
|
—
|
—
|
—
|
—
|
—
|
Vice
President, Antibody Discovery (1)
|
2015
|
225,443
|
43,125
|
700,925
|
503,793
|
13,950
|
1,487,236
|
Paul
W. Maffuid
|
2016
|
278,737
|
61,950
|
—
|
91,213
|
34,121
|
466,021
|
Executive
Vice President, Pharmaceutical Development, Operations, Research
and Development
|
2015
|
268,154
|
53,438
|
768,200
|
552,147
|
33,476
|
1,675,415
|
Paul
F. Resnick
|
2016
|
210,781
|
44,094
|
—
|
323,532
|
20,680
|
599,087
|
Vice
President, Chief Business Officer (2)
|
2015
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
Effective as of March 8, 2016, Dr. Scholz is no longer considered a
NEO.
|
(2)
|
Mr. Resnick was appointed as Vice President and Chief Business
Officer of the Company in March 2016.
|
(3)
|
The amounts in this column represent the aggregate full grant date
fair value of restricted stock units (RSUs) granted. Such RSU
awards were granted during 2015 with vesting dates after
2015.
|
(4)
|
The amounts in this column represent the aggregate full grant date
fair values of stock options granted, computed in accordance with
Accounting Standards Codification 718, or ASC 718,
“Compensation—Stock Compensation” using the
Black-Scholes option valuation model.
|
Outstanding Equity Awards at 2016 Fiscal Year-End
The
following table summarizes the number of outstanding equity awards
held by each of our Named Executive Officers at December 31, 2016
and after giving effect to the Listing Reverse Split. Each option
grant is shown separately for each Named Executive Officer. The
vesting schedule for each option grant is shown following this
table.
Name and Principal Position
|
Option Grant Date
|
Number of Securities Underlying Unexercised Options Exercisable
(#)
|
Number of Securities Underlying Unexercised Options Un-exercisable
(#)
|
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
|
Option Exercise Price per Share ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)
|
J.
David Hansen
|
2/1/2010
|
1,690
|
-0-
|
-0-
|
5.33
|
2/1/2020
|
-0-
|
-0-
|
President,
Chief Executive Officer
|
2/28/2013
|
3,239
|
141
|
-0-
|
10.66
|
2/28/2023
|
-0-
|
-0-
|
and
Chairman
|
4/2/2015
|
40,687
|
81,374
|
-0-
|
17.02
|
4/2/2025
|
81,374
|
275,044
|
|
2/16/2016
|
-0-
|
67,569
|
-0-
|
3.63
|
2/16/2026
|
-0-
|
-0-
|
|
8/29/2016
|
-0-
|
63,400
|
-0-
|
5.00
|
8/29/2026
|
-0-
|
-0-
|
Gregory
P. Hanson
|
3/13/2014
|
1,807
|
822
|
-0-
|
59.91
|
3/13/2024
|
-0-
|
-0-
|
Chief
Financial Officer
|
4/2/2015
|
21,063
|
42,127
|
-0-
|
17.02
|
4/2/2025
|
42,127
|
142,389
|
|
2/16/2016
|
-0-
|
2,703
|
-0-
|
3.63
|
2/16/2026
|
-0-
|
-0-
|
|
8/29/2016
|
-0-
|
26,400
|
-0-
|
5.00
|
8/29/2026
|
-0-
|
-0-
|
Wolfgang
W. Scholz, Ph.D. (1)
|
2/1/2010
|
939
|
-0-
|
-0-
|
5.33
|
2/1/2020
|
-0-
|
-0-
|
Vice
President, Antibody
|
2/28/2013
|
2,160
|
94
|
-0-
|
10.66
|
2/28/2023
|
-0-
|
-0-
|
Discovery |
4/2/2015
|
13,728
|
27,455
|
-0-
|
17.02
|
4/2/2025
|
27,455
|
92,798
|
|
2/16/2016
|
-0-
|
8,109
|
-0-
|
3.63
|
2/16/2026
|
-0-
|
-0-
|
|
8/29/2016
|
-0-
|
18,800
|
-0-
|
5.00
|
8/29/2026
|
-0-
|
-0-
|
Paul
W. Maffuid
|
9/8/2014
|
1,056
|
822
|
-0-
|
62.75
|
9/8/2024
|
-0-
|
-0-
|
Executive
Vice President,
|
4/2/2015
|
15,045
|
30,091
|
-0-
|
17.02
|
4/2/2025
|
30,091
|
101,708
|
Research and Development |
2/16/2016
|
-0-
|
8,109
|
-0-
|
3.63
|
2/16/2026
|
-0-
|
-0-
|
|
8/29/2016
|
-0-
|
20,100
|
-0-
|
5.00
|
8/29/2026
|
-0-
|
-0-
|
Paul
F. Resnick (2)
|
3/16/2016
|
-0-
|
45,406
|
-0-
|
5.48
|
3/16/2026
|
-0-
|
-0-
|
Vice
President, Chief
|
3/16/2016
|
-0-
|
30,271
|
-0-
|
12.95
|
3/16/2026
|
-0-
|
-0-
|
Business Officer |
8/29/2016
|
-0-
|
15,200
|
-0-
|
5.00
|
8/29/2026
|
-0-
|
-0-
|
(1)
|
Effective
as of March 8, 2016, Dr. Scholz is no longer considered a
NEO.
|
|
(2)
|
Mr. Resnick was appointed as Vice President and Chief Business
Officer of the Company in March 2016
|
Retirement Plans
The
Company does not maintain any defined benefit or defined
contribution pension or retirement plans, other than a 401(k) Plan
that is offered through our payroll provider. The Company made no
contributions to the 401(k) Plan in 2015 or 2016.
Hansen Employment Agreement
The
Hansen Employment Agreement, which became effective July 1, 2014,
has an initial term of 3 years, with an option to renew or extend
the terms if notice is provided by either Mr. Hansen or the Company
at least 60 days prior to the end of the term. Under the terms of
his agreement, Mr. Hansen received an initial base salary of
$315,660. Mr. Hansen’s base salary may be
increased at the discretion of the Board of Directors or the
Compensation Committee. Mr. Hansen is also entitled to an annual
cash bonus, based on certain performance-based objectives
established by the Compensation Committee of the
Board.
The
Hansen Employment Agreement may be terminated upon death,
disability, with or without Cause (as defined by the Hansen
Employment Agreement) by the Company, with Good Reason (as defined
in the Hansen Employment Agreement), and upon a Change in Control
(as defined in the Employment Agreement), by Mr. Hansen or at
either party’s election not to renew the employment
agreement. In the event the Hansen Employment Agreement is
terminated as a result of Mr. Hansen’s death, Mr.
Hansen’s authorized representative shall be entitled to
receive all Accrued Obligations (as defined in the employment
agreement), full acceleration of vesting of all issued and
outstanding stock options, benefits for up to one year, any unpaid
annual bonus amounts and a pro rata bonus payment. In the event the
Hansen Employment Agreement is terminated by the Company for
Disability or without Cause, by Mr. Hansen for Good Reason,
non-renewal by the Company or in connection with a Change in
Control, Mr. Hansen would be entitled to receive all Accrued
Obligations, full acceleration of vesting of all issued and
outstanding stock options, unpaid bonus amounts and a pro rata
bonus payment, benefits for up to one year or until Mr. Hansen
obtains coverage through subsequent employment (whichever is
earlier) and severance payments equal to Mr. Hansen’s annual
base salary payable in 12 equal monthly installments. In the event
the employment agreement is terminated by the Company for Cause,
without Good Reason by Mr. Hansen, or the parties elect not to
renew the agreement, Mr. Hansen will be entitled to payment of any
base salary earned but unpaid through the date of termination and
any other payment or benefit to which he is entitled under the
applicable terms of any applicable company arrangement during the
30-day period following the termination of the Hansen Employment
Agreement.
Hanson Employment Agreement
The
Hanson Employment Agreement, which became effective July 1, 2014,
has an initial term of 3 years, with an option to renew or extend
the terms if notice is provided by either Mr. Hanson or us at least
60 days prior to the end of the term. Under the terms of his
agreement, Mr. Hanson was entitled to receive an initial annual
base salary of $215,000, which may be increased at the discretion
of the Board of Directors or the Compensation Committee. Mr. Hanson
is also entitled to an annual cash bonus, based on certain
performance-based objectives established by the Company. In
addition, prior to the merger MabVax Therapeutics had granted Mr.
Hanson options which are currently exercisable to purchase up to
2,629 shares of the Company common stock at an exercise price of
$59.91 under the terms of the Company 2014 Employee, Director and
Consultant Equity Incentive Plan as assumed by the Company pursuant
to the Merger Agreement.
The
Hanson Employment Agreement may be terminated upon death,
disability, with or without Cause (as defined by the Hanson
Employment Agreement) by the Company, with Good Reason (as defined
in the Hanson Employment Agreement), and upon a Change in Control
(as defined in the Employment Agreement), by Mr. Hanson or at
either party’s election not to renew the employment
agreement. In the event the Hanson Employment Agreement is
terminated as a result of Mr. Hanson’s death, Mr.
Hanson’s authorized representative shall be entitled to
receive all Accrued Obligations (as defined in the employment
agreement), full acceleration of vesting of all issued and
outstanding stock options, benefits for up to 1 year, any unpaid
annual bonus amounts and a pro rata bonus payment. In the event the
Hanson Employment Agreement is terminated by the Company for
Disability or without Cause, by Mr. Hanson for Good Reason,
non-renewal by the Company or in connection with a Change in
Control, Mr. Hanson would be entitled to receive all Accrued
Obligations, full acceleration of vesting of all issued and
outstanding stock options, unpaid bonus amounts and a pro rata
bonus payment, benefits for up to one year or until Mr. Hanson
obtains coverage through subsequent employment (whichever is
earlier) and severance payments equal to Mr. Hanson’s annual
base salary payable in 12 equal monthly installments. In the event
the employment agreement is terminated by the Company for Cause,
without Good Reason by Mr. Hanson, or the parties elect not to
renew the agreement, Mr. Hanson will be entitled to payment of any
base salary earned but unpaid through the date of termination and
any other payment or benefit to which he is entitled under the
applicable terms of any applicable company arrangement during the
30-day period following the termination of the Hanson Employment
Agreement.
Maffuid Employment Agreement
On
July 21, 2014, we entered into an Employment Agreement with Paul
Maffuid, Ph.D., or the Maffuid Employment Agreement. The Maffuid
Employment Agreement has an initial term of 3 years, with an option
to renew or extend the terms if notice is provided by either Dr.
Maffuid or the Company at least 60 days prior to the end of the
term. Under the terms of his agreement, Dr. Maffuid was entitled to
receive an initial base salary of $225,000 which may be increased
at the discretion of the Board of Directors or the Compensation
Committee. Dr. Maffuid is also entitled to an annual bonus, based
on certain performance-based objectives established by the
Company’s Chief Executive Officer. In addition, the Company
previously granted Dr. Maffuid options to purchase up to 1,878
shares of the Company’s common stock at an exercise price of
$62.75 per share under the terms of the Amended and Restated 2014
Employee, Director and Consultant Equity Incentive Plan which was
assumed by the Company pursuant to the Merger
Agreement.
The
Maffuid Employment Agreement may be terminated upon death,
disability, with or without Cause (as defined by the Maffuid
Employment Agreement) by the Company, with Good Reason (as defined
in the Maffuid Employment Agreement and upon a Change in Control
(as defined in the Employment Agreement), by Dr. Maffuid or at
either party’s election not to renew the employment
agreement. In the event the Maffuid Employment Agreement is
terminated as a result of Dr. Maffuid’s death, Dr.
Maffuid’s authorized representative shall be entitled to
receive all Accrued Obligations (as defined in the employment
agreement), full acceleration of vesting of all issued and
outstanding stock options, benefits for up to 1 year, any unpaid
annual bonus amounts and a pro rata bonus payment. In the event the
Maffuid Employment Agreement is terminated by the Company for
Disability or without Cause, by Dr. Maffuid for Good Reason,
non-renewal by the Company or in connection with a Change in
Control, Dr. Maffuid would be entitled to receive all Accrued
Obligations, full acceleration of vesting of all issued and
outstanding stock options, unpaid bonus amounts and a pro rata
bonus payment, benefits for up to one year or until Dr. Maffuid
obtains coverage through subsequent employment (whichever is
earlier) and severance payments equal to Dr. Maffuid’s annual
base salary payable in 12 equal monthly installments. In the event
the employment agreement is terminated by the Company for Cause,
without Good Reason by Dr. Maffuid, or the parties elect not to
renew the agreement, Dr. Maffuid will be entitled to payment of any
base salary earned but unpaid through the date of termination and
any other payment or benefit to which he is entitled under the
applicable terms of any applicable company arrangement during the
30-day period following the termination of the Maffuid Employment
Agreement.
Resnick Employment Agreement
On
March 16, 2016, we entered into an Employment Agreement with Paul
F. Resnick, M.D., or the Resnick Employment
Agreement. The Resnick Employment Agreement provides
that Dr. Resnick’s employment is “at-will” and is
not for any specified term or length of time. Under the terms of
his agreement, Dr. Resnick was entitled to receive an initial base
salary of $265,000 which may be increased at the discretion of the
Company. Dr. Resnick is also entitled to an annual bonus of up to
30% of his base salary. In connection with hiring Dr. Resnick, the
Company granted Dr. Resnick options to purchase up to 30,271 shares
of the Company’s common stock at an exercise price of
$12.95 per share and 45,406 shares of the Company’s
common stock at an exercise price of $5.48 per share under the
terms of the Amended and Restated 2014 Employee, Director and
Consultant Equity Incentive Plan.
The
Resnick Employment Agreement may be terminated upon death,
disability, with or without Cause (as defined by the Resnick
Employment Agreement) by the Company, with Good Reason (as defined
in the Resnick Employment Agreement), and upon a Change in Control
(as defined in the Employment Agreement) or at either party’s
election to terminate upon 30 days’ prior written notice. In
the event the Resnick Employment Agreement is terminated as a
result of Dr. Resnick’s death, Dr. Resnick’s authorized
representative shall be entitled to receive all Accrued Obligations
(as defined in the employment agreement), full acceleration of
vesting of all issued and outstanding stock options, benefits for
up to 1 year, any unpaid annual bonus amounts and a pro rata bonus
payment. In the event the Resnick Employment Agreement is
terminated by the Company for Disability or without Cause, by Dr.
Resnick for Good Reason, or in connection with a Change in Control,
Dr. Resnick would be entitled to receive all Accrued Obligations,
full acceleration of vesting of all issued and outstanding stock
options, unpaid bonus amounts and a pro rata bonus payment,
benefits for up to one year or until Dr. Resnick obtains coverage
through subsequent employment (whichever is earlier) and severance
payments equal to Dr. Resnick’s annual base salary payable in
12 equal monthly installments.
2015 Management Bonus Plan
On
April 2, 2015, our Compensation Committee approved the 2015
Management Bonus Plan outlining maximum target bonuses of the base
salaries of certain of our executive officers. Under the
terms of the 2015 Management Bonus Plan, the Company’s Chief
Executive Officer shall receive a maximum target bonus of up to 50%
of his annual base salary, the Chief Financial Officer shall
receive a maximum target bonus of up to 35% of his annual base
salary and the Company’s Vice President shall receive a
maximum target bonus of up to 25% of his annual base salary.
On February 16, 2016, our Compensation Committee approved a 2016
Management Bonus Plan outlining maximum target bonuses of the base
salaries of certain of our executive officers. Under the terms of
the Management Plan, the Company's Chief Executive Officer shall
receive a maximum target bonus of up to 50% of his annual base
salary, and the Chief Financial Officer and each of the Company's
Vice Presidents of Discovery and Development shall receive a
maximum target bonus of up to 30% of his annual base
salary.
DIRECTOR
COMPENSATION
Non-employee
directors do not receive any separate compensation for their board
of director activities, other than Dr. Ravetch. In April
2015, Dr. Ravetch received 17,770 shares of fully vested
restricted common stock valued at $302,450 in exchange for future
services of at least one year. On April 1, 2016, we
entered into a two-year consulting agreement with Dr. Ravetch,
whereby Dr. Ravetch will provide key technology, predevelopment,
corporate development, and other consulting services in exchange
for $100,000 in cash compensation each year of the
agreement. During the year ended December 31, 2016,
non-named-executive-officer directors received the compensation
described below for their services as director.
2016 Director Compensation Table
Name of Director
|
Fees Earned or Paid in Cash ($)
|
Option Awards ($) (1)
|
Stock Awards ($) (3)
|
Total ($)
|
Philip
O. Livingston, M.D. (2)
|
—
|
—
|
$—
|
$—
|
Robert
E. Hoffman (4)(7)
|
$31,500
|
$27,778
|
$—
|
$59,278
|
Jeffrey
Ravetch, M.D. (4)(5)(7)
|
$26,000
|
$74,712
|
$—
|
$100,412
|
Paul
V. Maier (4)(7)
|
$38,500
|
$27,778
|
$—
|
$66,278
|
Kenneth
M. Cohen (4)(7)
|
$34,500
|
$27,778
|
$—
|
$62,278
|
Tom
Varvaro (4)(8)
|
$26,000
|
$26,812
|
$—
|
$52,812
|
Jeffrey
F. Eisenberg (6)
|
$16,703
|
$38,939
|
$—
|
$55,642
|
(1)
|
The amounts in this column represent the aggregate full grant date
fair values of stock options granted to each of the non-employee
directors computed in accordance with Accounting Standards
Codification 718, or ASC 718, “Compensation—Stock
Compensation,” excluding the effect of estimated forfeitures.
The amounts reported for these options may not represent the actual
economic values that the Company’s non-employee directors
will realize from these options, as the actual value realized will
depend on the Company’s performance, stock price and their
continued services.
|
(2)
|
Dr. Livingston does not receive any cash compensation as a
director. Dr. Livingston’s employee compensation in
2016 consisted of $60,000 in cash compensation. In addition,
Dr. Livingston received 700 options on August 29, 2016. Dr.
Livingston had 3,705 options outstanding at December 31,
2016.
|
(3)
|
Represents the aggregate grant date fair value of restricted stock
and restricted stock units granted in accordance with Accounting
Standards Codification 718, or ASC 718,
“Compensation—Stock Compensation.”
|
(4)
|
Non-employee directors serving on the board during 2016 were each
granted 4,730 options on June 29, 2016 at an exercise price of
$4.07 per share with a grant date fair value of $13,437 vesting
over one year. In addition, Mr. Cohen, Mr. Hoffman, Mr. Maier and
Dr. Ravetch each were granted 4,100 options, Mr. Eisenberg was
granted 2,300 options, and Mr. Varvaro was granted 3,800 options on
August 29, 2016 at an exercise price of $5.00 with grant date fair
values of $14,431, $8,095, and $13,375, respectively, vesting over
three years.
|
(5)
|
In addition to the options granted to all non-employee directors,
on November 3, 2016, Dr. Ravetch was granted 17,500 options with an
exercise price of $3.75 per share with a grant date fair value of
$46,544 vesting over three years. Dr. Ravetch has 37,192 options
and 3,086 restricted stock units outstanding at December 31,
2016.
|
(6)
|
Mr. Eisenberg was appointed to the board of directors in February
of 2016. In addition to the options granted to all non-employee
directors, he was granted 6,757 options on February 19, 2016 at an
exercise price of $3.70 per share with a grant date fair value of
$17,407 vesting over three years, 4,730 options on June 29, 2016 at
an exercise price of $4.07 per share with a grant date fair value
of $13,347 vesting over one year, and 2,300 options on August 29,
2016 at an exercise price of $5.00 with a grant date fair value of
$8,095 vesting over three years. Mr. Eisenberg had 13,787 awards
outstanding at December 31, 2016.
|
(7)
|
Mr. Hoffman, Mr. Maier and Mr. Cohen each had a total of
19,692 options and 3,086 restricted stock units outstanding at
December 31, 2016.
|
(8)
|
Mr. Varvaro had a total of 17,889 options and 3,086 restricted
stock units outstanding at December 31, 2016.
|
Amended and Restated Director Compensation
Policy
In
2015, under our Non-Employee Director Compensation Policy, or the
Policy, members of the Board of Directors who are not employees of,
or compensated consultants to the Company or any of its affiliates,
(an “Outside Director”) were entitled to receive
certain stock option grants.
Under
the Policy, each newly appointed or elected Outside Director was
granted a non-qualified stock option to purchase up to 1,502 shares
of our common stock on the date of his or her initial appointment
or election to our Board of Directors. These initial option grants
were fully vested on the date of the grant, and had an exercise
price equal to the fair market value of shares of our common stock
as determined in the Stock Plan on the date of grant.
Under
the Policy in 2015, our Outside Directors were entitled to receive
annual cash payments of $12,000 payable on a monthly pro-rata basis
and cash payments of $1,250 per meeting attended in person and $750
per meeting attended telephonically. On April 3, 2015, the Board
ratified the Compensation Committee’s amendment to the Policy
and implementation of the below compensation for all Outside
Directors:
●
Each Non-employee Board member shall receive a cash retainer of
$24,000 per year. Chairmen of each committee shall receive an
additional cash retainer as follows: (i) $12,000 for the Chairman
of the Audit Committee; (ii) $8,000 for the Chairman of the
Compensation Committee; and (iii) $5,000 for the Chairman of the
Nominating Committee. All such retainers will be paid on a
quarterly basis;
●
Each current Board member received a one-time grant, and each new
member going forward shall receive an initial one time grant of:
9,257 shares of common stock, half of which shall be comprised of
restricted stock units and half of which shall be comprised of
stock option with three year annual vesting; and
●
Each Non-employee Board member will also receive an automatic
annual grant of 4,780 stock options, with one year
vesting.
●
On April 3, 2015, the Board approved the following Non-Employee
Director Policy with respect to an incumbent non-employee member of
the Board that is replaced before their term expires:
●
A one-time issuance of 2,703 restricted shares of common
stock;
●
The issuance of all vested options and restricted stock grants held
on such date; and
●
The payment of all earned but unpaid cash compensation for their
services on the Board and its committees, as of such
date.
On
February 16, 2016, the Compensation Committee of the Board of
Directors of the Company approved the following
amendments to Company's policy for compensating non-employee
members of the Board:
●
The initial equity grant upon first appointment (or election) of
future non-employee directors to the Board shall be a 10-year
option to purchase 6,757 shares of the Company's Common Stock,
under the Company's Second Amended and Restated 2014 Equity
Incentive Plan with 3-year annual vesting and a strike price equal
the closing price of the Company's common stock on the effective
date of the appointment (or election);
●
The annual cash retainer for each non-employee director, paid
quarterly, is increased by $1,000 per calendar quarter to a total
of $7,000 per quarter, effective April 1, 2016;
●
The additional annual cash retainer for the chairperson of each of
the Audit, Compensation, and Nominating and Governance Committees,
paid quarterly, is increased by $1,000 per calendar year, such that
each chairperson retainer shall be as follows, effective April 1,
2016: Audit Committee: $13,000 Compensation Committee: $9,000
Nominating and Governance Committee: $6,000
On
August 25, 2016, the Compensation Committee of the Board of
Directors of the Company approved the following amendments to
Company's policy for compensating non-employee members of the
Board:
The
initial equity grant upon first appointment (or election) of future
non-employee directors to the Board shall be a 10-year option to
purchase 25,000 shares of the Company's Common Stock, under the
Company's Second Amended and Restated 2014 Equity Incentive Plan
with 3-year annual vesting and a strike price equal the closing
price of the Company's common stock on the effective date of the
appointment (or election);
The
additional automatic annual option grant to each non-employee
director on the date of the Company's annual meeting shall be a
10-year option to purchase 17,500 shares of the Company's Common
Stock, under the Company's Second Amended and Restated 2014 Equity
Incentive Plan with 1-year vesting and a strike price equal the
closing price of the Company's common stock on the date of the
annual meeting.
On
February 6, 2017, the Compensation Committee of the Board of
Directors of the Company approved the following amendments to
Company's policy for compensating non-employee members of the
Board:
The
initial equity grant upon first appointment (or election) of future
non-employee directors to the Board shall be a 10-year option to
purchase 30,000 shares of the Company's Common Stock, under the
Company's Second Amended and Restated 2014 Equity Incentive Plan
with 3-year annual vesting and a strike price equal the closing
price of the Company's common stock on the effective date of the
appointment (or election);
The
additional automatic annual option grant to each non-employee
director on the date of the Company's annual meeting shall be a
10-year option to purchase 20,000 shares of the Company's Common
Stock, under the Company's Second Amended and Restated 2014 Equity
Incentive Plan with 1-year vesting and a strike price equal the
closing price of the Company's common stock on the date of the
annual meeting.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information known to us concerning the
beneficial ownership of our common stock for:
●
each person known by us to beneficially own more than 5% of our
common stock;
●
each of our directors;
●
each of our executive officers; and
●
all of our directors and executive officers as a
group.
Beneficial
ownership is determined in accordance with the rules and
regulations of the SEC. In general, a person is deemed to be the
beneficial owner of (i) any shares of the Company’s common
stock over which such person has sole or shared voting power or
investment power, plus (ii) any shares which such person has the
right to acquire beneficial ownership of within 60 days of the
above date, whether through the exercise of options, warrants or
otherwise. Percentage ownership calculations for beneficial
ownership are based on 6,296,110 shares outstanding as of February
7, 2017, adjusted as required by rules promulgated by the
SEC.
Name and Address of Beneficial Owner
|
Number of Shares of
Common Stock
|
Percentage of
Common Stock
|
5% Stockholders
|
|
|
None
|
—
|
—%
|
|
|
|
Directors and Executive Officers
|
|
|
Philip
O. Livingston, M.D. (1)
|
196,286
|
3.12%
|
Jeffrey
Ravetch, M.D., Ph.D. (2)
|
10,861
|
*
|
J.
David Hansen (3)
|
152,734
|
2.38%
|
Robert
E. Hoffman (4)
|
12,213
|
*
|
Kenneth
M. Cohen (5)
|
21,570
|
*
|
Paul
V. Maier (6)
|
11,537
|
*
|
Gregory
P. Hanson (7)
|
67,981
|
1.07%
|
Paul
W. Maffuid, Ph.D. (8)
|
50,392
|
*
|
Thomas
C. Varvaro (9)
|
9,359
|
*
|
Jeffrey
F. Eisenberg (10)
|
25,226
|
*
|
Paul
Resnick (11)
|
2,253
|
*
|
All executive officers and directors as a group (10
persons)
|
644,923
|
9.67%
|
(1)
|
Consists of (i) 176,675 shares held by RTP Venture Fund, (ii)
14,885 shares held by Philip O. Livingston, (iii) 1,721 shares held
by the Joan L. Tweedy 2011 Revocable Trust, or the Tweedy Trust,
and (iv) 3,005 shares subject to options exercisable within 60 days
of February 7, 2017 held by Philip O. Livingston. Voting and
dispositive decisions of RTP Venture Fund, LLC are made by Philip
Livingston, and Philip O. Livingston is a trustee of the Tweedy
Trust. The address for RTP Venture Fund, LLC is 156 E. 79th Street,
Apt. 6C, New York, NY 10075.
|
(2)
|
Includes 9,318 shares subject to options exercisable within 60
days of February 7, 2017, and 1,543 shares of restricted stock
units vesting within 60 days of February 7,
2016.
|
(3)
|
Includes 108,967 shares subject to options exercisable within 60
days of February 7, 2017, 6,238 common stock warrants purchased in
the August 2016 financing transaction, and 40,687 shares of
restricted stock units vesting within 60 days of February 7,
2016.
|
|
|
(4)
|
Includes 9,318 shares subject to options exercisable within 60 days
of February 7, 2017, and 1,543 shares of restricted stock units
vesting within 60 days of February 7, 2016.
|
|
|
(5)
|
Includes 9,318 shares subject to options exercisable within 60 days
of January 2, 2017, 6,238 common stock warrants purchased in the
August 2016 financing transaction, and 1,543 shares of restricted
stock units vesting within 60 days of February 7,
2016.
|
|
|
(6)
|
Includes 9,318 shares subject to options exercisable within 60 days
of February 7, 2017, and 1,543 shares of restricted stock units
vesting within 60 days of February 7, 2016.
|
|
|
(7) | Includes 44,999 shares subject to options exercisable within 60 days of February 7, 2017, 6,238 common stock warrants purchased in the August 2016 financing transaction, and 21,064 shares of restricted stock units vesting within 60 days of February 7, 2016. |
|
|
(8)
|
Includes 33,967 shares subject to options exercisable within 60 days of February 7, 2017, 4,158 common stock warrants purchased in the August 2016 financing transaction, and 15,045 shares of restricted stock units vesting within 60 days of February 7, 2016. |
|
|
(9)
|
Includes 7,816 shares subject to options exercisable within 60 days
of February 7, 2017 and 1,543 shares of restricted stock units
vesting within 60 days of February 7, 2016.
|
(10)
|
Includes 2,593 shares subject to options exercisable within 60 days
of February 7, 2017.
|
(11)
|
Includes 25,226 shares subject to options exercisable within 60
days of February 7, 2017.
|
Securities Authorized for Issuance under Equity Compensation
Plans
The
following table provides certain information with respect to all of
the Company’s equity compensation plans in effect as of
December 31, 2016.
|
(a)
|
(b)
|
(c)
|
Plan Category
|
Number of
Securities
to be Issued
Upon Exercise
of Outstanding
Options,
Warrants and Rights
|
Weighted-average
Exercise
Price of
Outstanding
Options,
Warrants and Rights
|
Number of
Securities
Remaining
Available
for Future
Issuance Under
Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a)
|
Equity
compensation plans approved by security holders (1)
|
851,376
|
$10.94
|
66,693
|
Equity
compensation plans not approved by security holders
|
—
|
N/A
|
—
|
Total
|
851,376
|
|
66,693
|
(1)
|
The information presented in this table is as of December 31, 2016
and after giving effect to the Listing Reverse Split.
|
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
We
entered into Separation and Release Agreements and are and were
parties to the employment agreements with each of our officers as
set forth in the section entitled “Executive and Director
Compensation” above. Pursuant to our Audit Committee Charter,
the Audit Committee is responsible for reviewing and approving,
prior to our entry into any such transaction, all transactions in
which we are a participant and in which any parties related to us
have or will have a direct or indirect material
interest.
Ravetch Grant
On April
3, 2015, the Board approved the issuance of an additional
restricted stock award of 17,770 shares to Jeffrey
Ravetch. This award is for future services covering at least a
one-year period. The award was granted in addition to the prior
award to Dr. Ravetch on April 2, 2015 of: (i) 4,629 restricted
shares and (ii) options to purchase 4,629 shares of common stock
with an exercise price of $17.02 per share, for a total grant
of 27,028 restricted shares and options.
Livingston Grant
On
March 23, 2015, the Board of Directors approved a restricted stock
award by the Company of 135,135 shares of common stock, to be
negotiated with Phil Livingston, Ph.D. for his continuing service
to the Company. On April 4, 2015, the Company awarded
and issued the shares to Dr. Livingston by virtue of a common stock
purchase agreement, in exchange for Dr. Livingston’s ongoing
services as a member of the Company’s Board of
Directors. On May 13, 2015, the Compensation Committee
of the Board clarified that the award is being granted in
consideration for at least one year of Dr. Livingston’s
services.
Ravetch Agreement
On
April 1, 2016 we entered into a consulting agreement with Dr.
Ravetch to provide key technology and product development, as well
as corporate development and consulting services, in addition to
his services as a Board member. The term of the
agreement is 2 years beginning January 1, 2016, and Dr. Ravetch
will receive $100,000 cash compensation per year.
Director Independence
After
review of all relevant transactions or relationships between each
director and nominee for director, or any of his or her family
members, and the Company, its senior management and its Independent
Registered Public Accounting Firm, the Board of Directors has
determined that all of the Company’s directors are
independent, as of December 31, 2016 within the meaning of the
applicable SEC rules and the NASDAQ listing standards, except Mr.
Hansen, the Chairman of the Board of Directors and Chief Executive
Officer and President of the Company, Dr. Livingston, Chief Science
Officer of the Company; and Dr. Ravetch.
DESCRIPTION OF
SECURITIES
The following summary description of our capital stock is based on
the provisions of our amended and restated certificate of
incorporation, or certificate of incorporation, and amended and
restated bylaws, or bylaws, and the applicable provisions of the
Delaware General Corporation Law. This information is qualified
entirely by reference to the applicable provisions of our
certificate of incorporation, bylaws and the Delaware General
Corporation Law. Copies of our certificate of
incorporation and our bylaws, copies have been filed as exhibits to
the registration statement of which this prospectus is a
part. See “Where You Can Find More
Information.”
Authorized Capital Stock
Our
authorized capital stock consists of 150 million shares of
common stock, $0.01 par value, and 15 million shares of
preferred stock, $0.01 par value. As of February 7, 2017, there
were (i) 6,296,110 shares of common stock outstanding, (ii) 132,489
shares of Series D Preferred Stock outstanding that are convertible
into 1,790,392 shares of common stock, (iii) 33,333 shares of
Series E Preferred Stock outstanding that are convertible into
519,751 shares of common stock and 665,281 shares of Series F
Preferred Stock outstanding that are convertible into 665,281
shares of common stock.
Common Stock
The
holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the
stockholders and do not have cumulative voting rights. Accordingly,
holders of a majority of the shares of common stock and preferred
stock entitled to vote in any election of directors may elect all
of the directors standing for election. Subject to preferences that
may be applicable to any outstanding shares of preferred stock, the
holders of common stock are entitled to receive ratably such
dividends as may be declared by the board of directors out of funds
legally available therefor. Upon the liquidation, dissolution or
winding up of the Company, holders of our common stock are entitled
to share ratably in all assets remaining after payment of
liabilities and the liquidation preferences of any outstanding
shares of preferred stock. Holders of common stock have no
preemptive rights and no right to convert their common stock into
any other securities. Our common stock has no redemption or sinking
fund provisions. All outstanding shares of common stock are fully
paid and non-assessable.
Preferred Stock
Pursuant
to our certificate of incorporation, our board of directors has the
authority, without further action by the stockholders, to issue up
to 15 million shares of preferred stock, in one or more
series. Our board shall determine the rights, preferences,
privileges and restrictions of the preferred stock, including
dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of any
series. The issuance of preferred stock could adversely affect the
voting power, conversion or other rights of holders of common
stock. Preferred stock could be issued quickly with terms
calculated to delay or prevent a change in control of our company
or make removal of our management more difficult. Additionally, the
issuance of preferred stock may have the effect of decreasing the
market price of our common stock.
0% Series F Convertible Preferred Stock
Pursuant
to a Series F Preferred Stock Certificate of Designations, on
August 16, 2016, we designated 1,559,252 shares of our blank check
preferred stock as Series F Preferred Stock. The shares of Series F
Preferred Stock are convertible into shares of common stock based
on a conversion calculation equal to the stated value of the of
such Series F Preferred Stock, plus all accrued and unpaid
dividends, if any, on such Series F Preferred Stock, as of such
date of determination, divided by the conversion price. The stated
value of each share of Series F Preferred Stock is $4.81 and the
initial conversion price is $4.81 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events.
In the event of a liquidation, dissolution or
winding up of the Company, each share of Series F Preferred Stock
will be entitled to a per share preferential payment equal to the
par value. All shares our capital
stock will be junior in rank to Series F Preferred Stock with
respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding-up of the
Company, except for the Company’s Series D Convertible
Preferred Stock and Series E Convertible Preferred Stock.
The holders of Series F Preferred
Stock will be entitled to receive dividends if and when declared by
our board of directors. The Series F Preferred Stock shall
participate on an “as converted” basis, with all
dividends declared on our common stock. In addition, if
we grant, issue or sell any rights to purchase our securities pro
rata to all our record holders of our common stock, each holder
will be entitled to acquire such securities applicable to the
granted purchase rights as if the holder had held the number of
shares of common stock acquirable upon complete conversion of all
Series F Preferred Stock then held.
We
are prohibited from effecting a conversion of the Series F
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series F Preferred Stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series F Preferred Stock, but not in excess of the
beneficial ownership limitations.
As
of February 7, 2017, there were 665,281 shares of Series F
Convertible Preferred Stock outstanding convertible into 665,281
shares of common stock.
0% Series E Convertible Preferred Stock
On
March 30, 2015, we filed a Certificate of Designations,
Preferences and Rights of the 0% Series E Convertible Preferred
Stock with the Delaware Secretary of State, designating one hundred
thousand shares of preferred stock as 0% Series E Convertible
Preferred Stock.
The
Series E Preferred Shares are convertible into shares of common
stock based on a conversion calculation equal to the stated value
of the of such Series E Preferred Share, plus all accrued and
unpaid dividends, if any, on such Series E Preferred Share, as of
such date of determination, divided by the conversion price. The
stated value of each Series E Preferred Share is $75 and the
initial conversion price is $5.55 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In addition,
during the period proscribed by the Certificate of Designations,
subject to certain exceptions, in the event the Company issues or
sells, or is deemed to issue or sell, shares of common stock at a
per share price that is less than the conversion price then in
effect, the conversion price shall be reduced to such lower price.
On
August 16, 2016, we revised the conversion price to $4.81 per share
as a result of entering into an underwriting agreement at $4.81 per
share on the date. As a result of listing on the Nasdaq stock
market on August 17, 2016, the provision for price adjustment is no
longer in effect. We are prohibited from effecting a
conversion of the Series E Preferred Shares to the extent that, as
a result of such conversion, the holder would beneficially own more
than 4.99% of the number of shares of common stock outstanding
immediately after giving effect to the issuance of shares of common
stock upon conversion of the Series E Preferred Shares, which
beneficial ownership limitation may be increased by the holder up
to, but not exceeding, 9.99%. Each holder is entitled to vote on
all matters submitted to stockholders of the Company, and shall
have the number of votes equal to the number of shares of common
stock issuable upon conversion of such holder’s Series E
Preferred Shares, but not in excess of the beneficial ownership
limitations. The Series E Preferred Shares bear no
interest.
As
of April 10, 2015, we entered into separate subscription
agreements with accredited investors relating to the issuance and
sale of $11,714,498 of units at a purchase price of
$5.55 per unit, with each unit consisting of one share
of common stock (or, at the election of any investor
who, as a result of receiving common stock would hold in excess of
4.99% of our issued and outstanding common stock, shares of our
newly designated Series E Preferred Shares) and a thirty month
warrant to purchase one half of one share of common stock at an
initial exercise price of $11.10 per share. In connection with the
above described offering we issued $2,500,000 of units consisting
of Preferred Shares on April 10, 2015.
We
have also granted each investor, prior to the expiration of 24
months following the final closing date of the offering, a right of
participation in our financings. In the event we conduct certain
private or public offerings of our securities, each investor has
agreed, if requested by the underwriter or placement agent so
engaged by us in connection with such offering, to refrain from
selling any of our securities for a period of up to 60
days.
On
April 14, 2015, as a condition to participation by OPKO and Frost
Gamma Investments Trust, or FGIT, in the offering, we entered into
an Escrow Deposit Agreement with Signature Bank N.A. and OPKO
pursuant to which the subscriptions of OPKO and FGIT, totaling,
$3.5 million, were deposited into and held at Signature Bank as
escrowed funds for a period of 10 weeks, to be released subject to
the approval of OPKO. On June 22, 2015, the term of the
escrow was extended to 16 weeks. As further
consideration for the amendment, on June 30, 2015, we entered into
a letter agreement with OPKO pursuant to which we granted OPKO the
right, but not the obligation, until June 30, 2016, to nominate and
appoint up to two additional members to our Board of Directors, or
to approve the person(s) nominated by us pursuant to the agreement
in consideration for the release of the escrowed funds. The
nominees will be subject to the satisfaction of standard corporate
governance practices and any applicable national securities
exchange requirements. Upon signing the agreement, the
escrowed funds were released to us.
As
of February 7, 2017, 33,333 shares of our Series E Preferred Stock
are outstanding and convertible into 519,751 shares of our common
stock.
0% Series D Convertible Preferred Stock
Pursuant
to the Series D Certificate of Designations, we designated
1,000,000 shares of our blank check preferred stock as Series D
preferred stock. Each share of Series D preferred stock has a
stated value of $0.01 per share. In the event of a liquidation,
dissolution or winding up of our company, each share of Series D
preferred stock will be entitled to a per share preferential
payment equal to the stated value. Each share of Series D preferred
stock is convertible into 14 shares of common stock. The
conversion ratio is subject to adjustment in the event of stock
splits, stock dividends, combination of shares and similar
recapitalization transactions. We are prohibited from effecting the
conversion of the Series D preferred stock to the extent that, as a
result of such conversion, the holder beneficially owns more than
4.99% (provided that certain investors elected to block their
beneficial ownership initially at 2.49%, in the aggregate, of the
issued and outstanding shares of our common stock calculated
immediately after giving effect to the issuance of shares of common
stock upon the conversion of the Series D preferred stock. Each
share of Series D preferred stock entitles the holder to vote on
all matters voted on by holders of common stock. With respect to
any such vote, each share of Series D preferred stock entitles the
holder to cast such number of votes equal to the number of shares
of common stock such shares of Series D preferred stock are
convertible into at such time, but not in excess of the beneficial
ownership limitation.
On
March 25, 2015, we entered into separate exchange agreements with
certain holders of our then outstanding Series A-1 Preferred Stock
and A-1 Warrants and holders of our Series B Preferred Stock and
Series B Warrants, all previously issued by us. Pursuant to the
exchange agreements, the holders exchanged such securities and
relinquished any and all other rights they may in connection
therewith, their respective governing agreements and certificates
of designation, including any related registration rights, in
exchange for an aggregate of 342,906 shares of our common stock,
and an aggregate of 238,156 shares of our newly designated Series D
Convertible Preferred Stock.
As
of February 7, 2017, 132,489 shares of our Series D Preferred Stock
are outstanding and convertible into 1,790,392 shares of our common
stock.
Stock Options and Restricted Stock Units under Equity
Plans
As
of February 7, 2017, there were approximately 2,147,595 of common
stock reserved for issuance under our stock option and equity
plans. Of this number, approximately 1,808,473 shares are
reserved for issuance upon exercise of outstanding options and
restricted stock units that have been granted under our equity
plans, and 271,836 shares may be granted in the future under
our equity plans.
Anti-Takeover Effects of Provisions of Delaware Law and Our Charter
Documents.
Delaware Takeover
Statute. We are subject to the
provisions of Section 203 of the Delaware General Corporation
Law, or the DGCL. In general, the statute prohibits a publicly held
Delaware corporation from engaging in a business combination with
an interested stockholder for a period of three years after the
date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a
prescribed manner. For purposes of Section 203, a business
combination includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and
an interested stockholder is a person who, together with affiliates
and associates, owns (or within three years prior, did own) 15% or
more of the corporation’s voting stock.
Charter
Documents. Our certificate of
incorporation requires that any action required or permitted to be
taken by its stockholders must be effected at a duly called annual
or special meeting of stockholders and may not be effected by a
consent in writing. Additionally, our amended and restated
certificate of incorporation:
●
substantially limits the use of cumulative voting in the election
of directors;
●
provides for a board of directors, classified into three classes of
directors;
●
provides that the authorized number of directors may be changed
only by resolution of our board of directors;
●
our board of directors may appoint new directors to fill vacancies
or newly created directorships; and
●
authorizes our board of directors to issue blank check preferred
stock to increase the amount of outstanding shares.
Our
bylaws provide that candidates for director may be nominated only
by our board of directors or by a stockholder who gives written
notice to us no later than 90 days prior to nor earlier than
120 days prior to the first anniversary of the last annual
meeting of stockholders, provided, however, that in the event that
the date of the annual meeting is advanced more than 30 days
prior to or delayed by more than 30 days after the anniversary
of the preceding year’s annual meeting, notice should be
delivered not earlier than 120 days prior to the annual
meeting nor later than the later of 90 days prior to such
annual meeting or 10 days after the first public announcement
of the date of such annual meeting. Our bylaws also limit who may
call a special meeting of stockholders.
Delaware
law and these charter provisions may have the effect of deterring
hostile takeovers or delaying changes in control of our management,
which could depress the market price of our common
stock.
Listing
Our common
stock is listed on The NASDAQ Capital Market under the symbol
“MBVX.” On February 9¸2017, the last reported bid
price for our common stock on The NASDAQ Capital Market was $2.79
per share. As of February 7, 2017, we had approximately 104
stockholders of record.
Transfer Agent and Registrar
The
transfer agent and registrar for our common stock is Computershare
Trust Company, N.A. Its address is 250 Royall Street, Canton, MA
02021 and its telephone number is (800) 884-4225.
UNDERWRITING
is
acting as the sole book-running manager of this offering and as
representative of the underwriters, or the Representative. Subject
to the terms and conditions set forth in an underwriting agreement
among us and the underwriters,
we have agreed to sell to the underwriters, and each of the
underwriters has agreed, severally and not jointly, to purchase
from us, at the public offering price per share less the
underwriting discount set forth on the cover page of this
prospectus, the number of shares of common stock set forth opposite
its name below.
Underwriters
|
|
Number
of Shares
of
Common Stock
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Subject
to the terms and conditions set forth in the underwriting
agreement, the underwriters have agreed, severally and not jointly,
to purchase all of the common stock sold under the underwriting
agreement if any of these securities are purchased. If an
underwriter defaults, the underwriting agreement provides that the
purchase commitments of the non-defaulting underwriters may be
increased or the underwriting agreement may be
terminated.
We have
agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, relating to losses or claims resulting from
material misstatements in or omissions from this prospectus, the
registration statement of which this prospectus forms a part,
certain free writing prospectuses and testing-the-waters
communications that may be used in this offering and in any
marketing materials used in connection with this offering, and to
contribute to payments the underwriters may be required to make in
respect of those liabilities.
The
underwriters are offering the common stock, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval
of legal matters by their counsel, including the validity of the
common stock, and other conditions contained in the underwriting
agreement, such as the receipt by the underwriters of
officers’ certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the
public and to reject orders in whole or in part.
Commissions and Discounts
The
Representative has advised us that the underwriters propose
initially to offer the common stock to the public at the public
offering price set forth on the cover page of this prospectus and
to dealers at that price less a concession not in excess of $ per
share. The underwriters also may allow, and dealers may reallow, a
concession not in excess of $ per share to brokers and dealers.
After the initial offering, the public offering price, concession
or any other term of this offering may be changed.
The
following table shows the public offering price, underwriting
discount and proceeds before expenses to us. The information
assumes either no exercise or full exercise by the underwriters of
their overallotment option.
|
|
Total
|
|
|
Per
Share of Common Stock
|
Without
Overallotment Exercise
|
With
Overallotment Exercise
|
Public offering
price
|
$
|
$
|
$
|
Underwriting
discount paid by us
|
|
|
|
Proceeds, before
expenses, to us
|
|
|
|
The
expenses of this offering, not including the underwriting discount,
are estimated at $ .
In
addition, we have agreed to reimburse the underwriters at closing
for legal and other out-of-pocket accountable expenses incurred by
them in connection with this offering in an amount not to exceed $
in the aggregate.
Overallotment Option
We have
granted an option to the underwriters to purchase up to $ of
additional securities solely to cover overallotments, if any. The
underwriters may exercise this option for 45 days from the date of
the underwriting agreement solely to cover any overallotments. If
the underwriters exercise this option, each will be obligated,
subject to conditions contained in the underwriting agreement, to
purchase a number of additional securities proportionate to that
underwriter's initial amount reflected in the above
table.
No Sales of Similar Securities
All of
our executive officers and directors and certain other existing
security holders have agreed that they will not, without the prior
written consent of the Representative, offer, sell, contract to
sell, pledge or otherwise transfer or dispose of (or enter into any
transaction which is designed to, or might reasonably be expected
to, result in the disposition of (whether by actual disposition or
effective economic disposition due to cash settlement or
otherwise), by such person or any affiliate of such person or any
person in privity with such personor any affiliate of such person,
directly or indirectly, including the filing (or participation in
the filing) of a registration statement with the Securities and
Exchange Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of our common stock or any securities
convertible into, or exercisable or exchangeable for our common
stock, or publicly announce an intention to effect any such
transaction, for a period ending on the date that is days after the
date of the underwriting agreement. The lock-up agreements contain
certain exceptions. The lock-up provisions apply to shares of our
common stock owned now or acquired later by the person executing
the agreement or for which the person executing the agreement later
acquires the power of disposition;provided, however, that if the person is not one
of our officers or directors, the lock-up provision will generally
not apply to shares of our common stock acquired in a directed
share program instituted in connection with this offering, if any,
or in open market transactions after the completion of this
offering.
Price Stabilization, Short Positions and Penalty Bids
Until
the distribution of the securities is completed, Securities and Exchange Commission rules
may limit underwriters and selling group members from bidding for
and purchasing our securities. However, the Representative may
engage in transactions that stabilize the price of our securities,
such as bids or purchases to peg, fix or maintain that
price.
In
connection with this offering, the underwriters may purchase and
sell our securities in the open market. These transactions may
include short sales, purchases on the open market to cover
positions created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in this
offering. “Covered” short sales are sales made in an
amount not greater than the underwriters' overallotment option
described above. The underwriters may close out any covered short
position by either exercising their overallotment option or
purchasing shares in the open market. In determining the source of
shares to close out the covered short position, the underwriters
will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which
they may purchase shares through the overallotment option.
“Naked” short sales are sales in excess of the
overallotment option. The underwriters must close out any naked
short position by purchasing shares in the open market. A naked
short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of our
common stock in the open market after pricing that could adversely
affect investors who purchase in this offering. Stabilizing
transactions consist of various bids for or purchases of our
securities made by the underwriters in the open market prior to the
closing of this offering.
The
underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the
underwriting discount received by it because the Representative has
repurchased securities sold by or for the account of such
underwriter in stabilizing or short covering
transactions.
Similar
to other purchase transactions, the underwriters' purchases to
cover the syndicate short sales may have the effect of raising or
maintaining the market price of our common stock or preventing or
retarding a decline in the market price of our common stock. As a
result, the price of our common stock may be higher than the price
that might otherwise exist in the open market. The underwriters may
conduct these transactions on The NASDAQ Stock Market LLC, in the
over-the-counter market or otherwise.
Neither
we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of our common
stock. In addition, neither we nor any of the underwriters make any
representation that the Representative will engage in these
transactions or that these transactions, once commenced, will not
be discontinued without notice.
Electronic Offer, Sale and Distribution of Securities
In
connection with this offering, certain of the underwriters or
securities dealers may distribute prospectuses by electronic means,
such as e-mail. In addition, one or more of the underwriters may
facilitate Internet distribution for this offering to certain of
their Internet subscriptioncustomers. Any such underwriter may
allocate a limited number of securities for sale to its online
brokerage customers. An electronic prospectus is available on the
Internet websites maintained by any such underwriter. Other than
the prospectus in electronic format, the information on the
websites of any such underwriter is not part of this
prospectus.
Other Relationships
The
underwriters and their respective affiliates are full service
financial institutions engaged in various activities, which may
include securities trading, commercial and investment banking,
financial advisory, investment management, investment research,
principal investment, hedging, financing and brokerage activities.
Certain of the underwriters and their affiliates have engaged in,
and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with us or
our affiliates. They have received, or may in the future receive,
customary fees and commissions for these transactions.
In the
ordinary course of their various business activities, the
underwriters and their respective affiliates may make or hold a
broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial
instruments (including bank loans) for their own account and for
the accounts of their customers, and such investment and securities
activities may involve securities and/or instruments of the issuer.
The underwriters and their respective affiliates may also make
investment recommendations and/or publish or express independent
research views in respect of such securities or instruments and may
at any time hold, or recommend to clients that they acquire, long
and/or short positions in such securities and
instruments.
LEGAL
MATTERS
The
validity of the securities being offered by this prospectus has
been passed upon for us by Sichenzia Ross Ference Kesner LLP, New
York, New York.
EXPERTS
The
consolidated financial statements of MabVax Therapeutics Holdings,
Inc. as of December 31, 2015 and 2014, and for the years then
ended included in this registration statement have been so included
in reliance on the report of CohnReznick LLP, an independent
registered public accounting firm, which included an explanatory
paragraph about MabVax Therapeutics Holdings, Inc.’s ability
to continue as a going concern, given on the authority of said firm
as experts in auditing and accounting.
WHERE YOU CAN FIND MORE
INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act with respect to the
securities offered hereby. This prospectus, which constitutes a
part of the registration statement, does not contain all of the
information set forth in the registration statement or the exhibits
filed with the registration statement. For further information
about us and the securities offered hereby, we refer you to the
registration statement and the exhibits filed with the registration
statement. Statements contained in this prospectus regarding the
contents of any contract or any other document that is filed as an
exhibit to the registration statement are not necessarily complete,
and each such statement is qualified in all respects by reference
to the full text of such contract or other document filed as an
exhibit to the registration statement. A copy of the registration
statement and the filed exhibits may be inspected without charge at
the public reference room maintained by the SEC, located at 100 F
Street, NE, Washington, DC 20549, and copies of all or any part of
the registration statement may be obtained from that office at
prescribed rates. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference room. The SEC also maintains
a website that contains reports, proxy and information statements
and other information regarding registrants that file
electronically with the SEC. The address of the website is
www.sec.gov.
We
are subject to the information and reporting requirements of the
Exchange Act and, in accordance with this law, are required to file
periodic reports, proxy statements and other information with the
SEC. These periodic reports, proxy statements and other information
are available for inspection and copying at the SEC’s public
reference facilities and the website of the SEC referenced above.
We make available free of charge, on or through the investor
relations section of our website, annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such material with, or
furnish it to, the SEC. The information found on our website is not
part of this prospectus.
MABVAX
THERAPEUTICS HOLDINGS, INC.
|
|
|
|
|
|
|
F-1
|
|
|
|
|
F-2
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-23
|
|
|
|
|
F-24
|
|
|
|
|
F-25
|
|
|
|
|
F-26
|
|
|
|
|
F-35
|
|
|
|
|
F-36
|
|
PART 1. FINANCIAL
INFORMATION
Item
1. Financial
Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
|
September 30,
|
December 31,
|
|
2016
|
2015
|
|
(Unaudited)
|
(Note 1)
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash equivalents
|
$6,941,213
|
$4,084,085
|
Grants
receivable
|
—
|
757,562
|
Prepaid expenses
|
485,785
|
419,751
|
Other current assets
|
10,000
|
47,586
|
Total
current assets
|
7,436,998
|
5,308,984
|
Property and equipment, net
|
665,588
|
135,486
|
Goodwill
|
6,826,003
|
6,826,003
|
Other long-term assets
|
168,597
|
126,654
|
Total
assets
|
$15,097,186
|
$12,397,127
|
Liabilities and Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts payable
|
$608,374
|
$3,002,497
|
Accrued compensation
|
640,192
|
562,755
|
Accrued clinical operations and site costs
|
666,146
|
391,041
|
Accrued lease contingency fee
|
590,504
|
590,504
|
License fee payable
|
—
|
225,000
|
Other accrued expenses
|
488,254
|
186,566
|
Interest payable
|
49,229
|
—
|
Current portion of notes payable
|
1,234,186
|
—
|
Current portion of capital leases payable
|
16,654
|
—
|
Total
current liabilities
|
4,293,539
|
4,958,363
|
Long-term
liabilities:
|
|
|
Long-term
portion of notes payable
|
3,083,971
|
—
|
Long-term portion of capital leases
|
72,498
|
—
|
Other long-term liabilities
|
133,057
|
—
|
Total
long-term liabilities
|
3,289,526
|
—
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
Series D convertible preferred stock, $0.01 par value, 1,000,000
shares authorized, 132,489 and 191,490 shares issued and
outstanding, with a liquidation preference of $1,325 and $1,915 as
of September 30, 2016, and December 31, 2015,
respectively
|
1,325
|
1,915
|
Series E convertible preferred stock, $0.01 par value, 100,000
shares authorized, 33,333 shares issued and outstanding with a
liquidation preference of $333
|
333
|
333
|
Series
F convertible preferred stock, $0.01 par value, 1,559,252 shares
authorized, 665,281 shares and none issued and outstanding,
with a liquidation preference of $6,653 and none as of September
30, 2016 and December 31, 2015, respectively
|
6,653
|
—
|
Common
stock, $0.01 par value; 150,000,000 shares authorized, 6,296,110
and 3,836,631 shares issued and outstanding as of September 30,
2016 and December 31, 2015, respectively
|
62,961
|
38,366
|
Additional
paid-in capital
|
80,595,120
|
67,999,928
|
Accumulated
deficit
|
(73,152,271)
|
(60,601,778)
|
Total
stockholders' equity
|
7,514,121
|
7,438,764
|
Total
liabilities and stockholders' equity
|
$15,097,186
|
$12,397,127
|
See
Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
(Unaudited)
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
Revenues:
|
|
|
|
|
Grants
|
$—
|
$133,318
|
$148,054
|
$509,474
|
Total
revenues
|
—
|
133,318
|
148,054
|
509,474
|
|
|
|
|
|
Operating
costs and expenses:
|
|
|
|
|
Research and development
|
1,671,181
|
3,127,173
|
4,967,695
|
7,178,703
|
General and administrative
|
2,420,516
|
2,286,315
|
7,001,521
|
7,473,416
|
Total
operating costs and expenses
|
4,091,697
|
5,413,488
|
11,969,216
|
14,652,119
|
Loss
from operations
|
(4,091,697)
|
(5,280,170)
|
(11,821,162)
|
(14,142,645)
|
Interest
and other expense, net
|
(266,051)
|
(84)
|
(729,331)
|
(269)
|
Change
in fair value of warrant liability
|
—
|
—
|
—
|
19,807
|
Net
loss
|
$(4,357,748)
|
$(5,280,254)
|
$(12,550,493)
|
$(14,123,107)
|
Deemed
dividend on Series A-1 preferred stock
|
—
|
—
|
—
|
(9,017,512)
|
Deemed
dividend on Series A-1 warrant
|
—
|
—
|
—
|
(179,411)
|
Deemed
dividend on Series B preferred stock
|
—
|
—
|
—
|
(8,655,998)
|
Accretion
of preferred stock dividends
|
—
|
—
|
—
|
(93,234)
|
Net
loss allocable to common stockholders
|
$(4,357,748)
|
$(5,280,254)
|
$(12,550,493)
|
$(32,069,262)
|
Basic
and diluted net loss per share
|
$(0.86)
|
$(1.51)
|
$(2.87)
|
$(13.96)
|
Shares
used to calculate basic and diluted net loss per share
|
5,041,408
|
3,486,318
|
4,374,801
|
2,297,496
|
See
Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
For the Nine Months Ended September 30, 2016
(Unaudited)
|
Series D, E and F
Convertible Preferred Stock
|
Common Stock
|
Additional
Paid-in
|
Accumulated
|
Total
Stockholders'
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2015
|
224,823
|
$2,248
|
3,836,631
|
$38,366
|
$67,999,928
|
$(60,601,778)
|
$7,438,764
|
Issuance
of warrants in connection with note payable transaction on January
15, 2016
|
—
|
—
|
—
|
—
|
607,338
|
—
|
607,338
|
Issuance
of whole in lieu of fractional shares resulting from reverse split
in August 2016
|
—
|
—
|
2,426
|
24
|
(24)
|
—
|
—
|
Issuance
of Series F convertible preferred stock, warrants and common stock
in August public offering, net of $866,410 in issuance
costs
|
665,281
|
6,653
|
1,297,038
|
12,970
|
8,552,720
|
—
|
8,572,343
|
Issuance
of additional common stock related to April 2015
financing
|
—
|
—
|
255,459
|
2,555
|
(2,555)
|
—
|
—
|
Stock
issued for services
|
—
|
—
|
35,644
|
356
|
163,644
|
—
|
164,000
|
Conversion of
Series D Preferred Stock to common stock
|
(59,001)
|
(590)
|
797,312
|
7,974
|
(7,384)
|
—
|
—
|
Stock
issued upon vesting of restricted stock units in April, July and
August of 2016, net of payroll taxes
|
—
|
—
|
71,600
|
716
|
(178,539)
|
—
|
(177,823)
|
Stock-based
compensation
|
—
|
—
|
—
|
—
|
3,459,992
|
—
|
3,459,992
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(12,550,493)
|
(12,550,493)
|
Balance
at September 30, 2016
|
831,103
|
$8,311
|
6,296,110
|
$62,961
|
$80,595,120
|
$(73,152,271)
|
$7,514,121
|
See
Accompanying Notes to Condensed Consolidated Financial
Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
(Unaudited)
|
For the Nine
Months
Ended September 30,
|
|
|
2016
|
2015
|
Operating activities
|
|
|
Net
loss
|
$(12,550,493)
|
$(14,123,107)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
and amortization
|
60,058
|
15,412
|
Stock-based
compensation
|
3,459,992
|
2,966,603
|
Change
in fair value of warrants
|
—
|
(19,807)
|
Issuance
of restricted common stock for services
|
164,000
|
1,958,450
|
Amortization
and accretion related to notes payable
|
337,151
|
—
|
Increase
(decrease) in operating assets and liabilities:
|
|
|
Grants
receivable
|
757,562
|
(48,974)
|
Other
receivables
|
—
|
2,275
|
Prepaid
expenses and other
|
122,522
|
(191,619)
|
Accounts
payable
|
(2,476,130)
|
749,258
|
Accrued
clinical operations and site costs
|
275,105
|
(120,913)
|
Accrued
compensation
|
77,437
|
258,732
|
Other
accrued expenses
|
150,487
|
636,358
|
Net
cash used in operating activities
|
(9,622,309)
|
(7,917,332)
|
Investing activities
|
|
|
Purchases
of property and equipment
|
(412,498)
|
(68,279)
|
Net
cash used in investing activities
|
(412,498)
|
(68,279)
|
Financing activities
|
|
|
Cash
receipt from bank loan, net of financing costs
|
4,610,324
|
—
|
Issuances
of common stock, preferred stock and warrants, net of issuance
costs
|
8,572,343
|
11,046,348
|
Proceeds
from exercise of stock options
|
—
|
800
|
Principal
payments on short-term note
|
(106,405)
|
—
|
Principal
payments on capital lease
|
(6,504)
|
—
|
Purchase
of vested employee stock in connection with tax withholding
obligation
|
(177,823)
|
—
|
Net
cash provided by financing activities
|
12,891,935
|
11,047,148
|
Net
change in cash and cash equivalents
|
2,857,128
|
3,061,537
|
Cash
and cash equivalents at beginning of period
|
4,084,085
|
1,477,143
|
Cash
and cash equivalents at end of period
|
$6,941,213
|
$4,538,680
|
|
|
|
Supplemental disclosure:
|
|
|
Cash
paid during the period for income taxes
|
$24,626
|
$1,600
|
Supplemental disclosures of non-cash investing and financing
information:
|
|
|
Deemed
dividend on beneficial conversion feature for preferred
stock
|
$—
|
$17,852,921
|
Capital
lease in connection with purchase of equipment
|
$95,656
|
$—
|
Purchases
of property and equipment included in Accounts Payable
|
$82,006
|
$—
|
Accretion
of redemption value for Series A-1 and B convertible preferred
stock
|
—
|
93,234
|
Conversion
of Series A-1 redeemable preferred stock into common
stock
|
$—
|
$162,968
|
Conversion
of Series C preferred stock to common stock
|
$—
|
$966
|
Conversion
of Series B preferred stock to common stock
|
$—
|
$160,380
|
Conversion
of Series D preferred stock to common stock
|
$7,974
|
$467
|
Exchange
of Series A-1 preferred stock and warrants into common stock and
Series D convertible preferred stock
|
$—
|
$13,111,280
|
Exchange
of Series B preferred stock and warrants into common stock and
Series D convertible preferred stock
|
$—
|
$10,451,784
|
Fair
value of warrants issued
|
$607,338
|
$—
|
Warrants
exercised to purchase common stock on a cashless basis
|
$—
|
$12,198
|
Elimination
of warrant liability in exchange transaction
|
$—
|
$72,656
|
Financing
transaction costs not yet paid
|
$2,500
|
$586,608
|
See
Accompanying Notes to Condensed Consolidated Financial
Statements
________________________________________________________________________________________________________________________________________
MABVAX THERAPEUTICS HOLDINGS, INC.
Notes to Unaudited Condensed Consolidated Financial
Statements
1. Basis of Presentation
We
are a Delaware corporation, originally incorporated in 1988 under
the name Terrapin Diagnostics, Inc. in the State of Delaware, and
subsequently renamed “Telik, Inc.” in 1998, and
thereafter renamed MabVax Therapeutics Holdings, Inc.
(“MabVax Therapeutics Holdings”) in September 2014. Our
principal corporate office is located at 11535 Sorrento Valley
Road, Suite 400, San Diego, CA 92121 telephone: (858) 259-9405. On
July 8, 2014, we consummated a merger (the “Merger”)
with MabVax Therapeutics, Inc. (“MabVax Therapeutics”),
pursuant to which our subsidiary Tacoma Acquisition Corp. merged
with and into MabVax Therapeutics, with MabVax Therapeutics
surviving as our wholly owned subsidiary. This transaction is
referred to as the “Merger.” Unless the
context otherwise requires, references to “we,”
“our,” “us,” or the “Company”
in this Quarterly Report mean MabVax Therapeutics Holdings on a
condensed consolidated financial statement basis with our wholly
owned subsidiary following the Merger, MabVax Therapeutics, as
applicable. Beginning October 10, 2014, our common stock was quoted
on the OTCQB under the symbol “MBVX.” Since August 17,
2016, our common stock has been trading on The NASDAQ Capital
Market under the symbol “MBVX.”
The
balance sheet data at December 31, 2015, has been derived from
audited financial statements at that date. It does not include,
however, all of the information and notes required by accounting
principles generally accepted in the United States of America
(“GAAP”) for complete financial statements. The
consolidated financial statements as presented reflect certain
reclassifications from previously issued financial statements to
conform to the current year presentation.
On
August 16, 2016, we filed a certificate of amendment to our Amended
and Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware in order to effectuate a reverse
stock split of our issued and outstanding common stock on a 1 for
7.4 basis, effective on August 16, 2016 (the “Reverse Stock
Split”). The Reverse Stock Split was effective with The
Financial Industry Regulatory Authority (FINRA) and the
Company’s common stock began trading on The NASDAQ Capital
Market at the open of business on August 17, 2016. All share and per share amounts, and number of
shares of common stock into which each share of preferred stock
will convert, in the financial statements and notes thereto have
been retroactively adjusted for all periods presented to give
effect to the reverse split, including reclassifying an amount
equal to the reduction in par value of common stock to additional
paid-in capital.
The
Company is a clinical stage biopharmaceutical company engaged in
the discovery, development and commercialization of proprietary
human monoclonal antibody products for the diagnosis and treatment
of a variety of cancers. The Company has discovered a pipeline of
human monoclonal antibody products based on the protective immune
responses generated by patients who have been vaccinated against
targeted cancers. The vaccines were discovered at Memorial Sloan
Kettering Cancer Center (“MSK”) and are exclusively
licensed to MabVax Therapeutics. The Company operates in only one
business segment.
We
have incurred net losses since inception and expect to incur
substantial losses for the foreseeable future as we continue our
research and development activities. To date, we have funded
operations primarily through government grants, proceeds from the
sale of common and preferred stock, the issuance of debt, the
issuance of common stock in lieu of cash for services, payments
from collaborators, and interest income. The process of developing
products will require significant additional research and
development, preclinical testing and clinical trials, as well as
regulatory approvals. We expect these activities, together with
general and administrative expenses, to result in substantial
operating losses for the foreseeable future. We will not receive
substantial revenue unless we or our collaborative partners
complete clinical trials, obtain regulatory approvals and
successfully commercialize one or more products; or we license our
technology after achieving one or more milestones of interest to a
potential partner.
The
accompanying unaudited condensed consolidated financial statements
were prepared using GAAP for interim financial information and the
instructions to Regulation S-X. While these statements reflect all
normal recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of the
interim period, they do not include all information or notes
required by GAAP for annual financial statements and should be read
in conjunction with the Audited Financial Statements of MabVax
Therapeutics Holdings for the year ended December 31, 2015 in
our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 14, 2016.
The
preparation of condensed consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the
reported amounts of expenses during the reporting period.
Management believes that these estimates are reasonable; however,
actual results may differ from these estimates.
Recent Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board, or FASB,
issued ASU 2016-2, "Leases (Topic 842)." This update
will increase transparency and comparability by recognizing lease
assets and lease liabilities on the balance sheet and disclosing
key information about leasing arrangements. Under the
new guidance, lessees will be required to recognize the following
for all leases (with the exception of short-term leases) at the
commencement date: (i) a lease liability, which is a lessee’s
obligation to make lease payments arising from a lease, measured on
a discounted basis; and (ii) a right-of-use asset, which is an
asset that represents the lessee’s right to use, or control
the use of, a specified asset for the lease term. Under the new
guidance, lessor accounting is largely unchanged, and it simplified
the accounting for sale and leaseback transactions. Lessees will no
longer be provided with a source of off-balance sheet financing.
Lessees (for capital and operating leases) and lessors (for
sales-type, direct financing, and operating leases) must apply a
modified retrospective transition approach for leases existing at,
or entered into after, the beginning of the earliest comparative
period presented in the financial statements. The modified
retrospective approach would not require any transition accounting
for leases that expired before the earliest comparative period
presented. Lessees and lessors may not apply a full retrospective
transition approach. The standard is effective for fiscal years
beginning after December 15, 2018, including interim periods within
those fiscal years. We are currently in the process of assessing
what impact this new standard may have on our condensed
consolidated financial statements.
In
March 2016, the FASB issued ASU 2016-09,
“Compensation—Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting.”
This update includes multiple provisions intended to simplify
various aspects of the accounting for share-based payment
transactions including accounting for excess tax benefits and tax
deficiencies, classification of excess tax benefits in the
statement of cash flows and accounting for award forfeitures. This
update is effective for annual and interim reporting periods of
public entities beginning after December 15, 2016, with early
adoption permitted. The Company is evaluating the impact of ASU
2016-09 on its consolidated financial statements.
Management
does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a
material effect on the accompanying condensed consolidated
financial statements.
2. Liquidity and Going Concern
The
accompanying condensed consolidated financial statements have been
prepared on the going concern basis, which assumes that the Company
will continue to operate as a going concern and which contemplates
the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As
reflected in the accompanying condensed consolidated financial
statements, the Company had a net loss of $12,550,493, net cash
used in operating activities of $9,622,309, net cash used in
investing activities of $412,498, and net cash provided by
financing activities of $12,891,935 for the nine months ended
September 30, 2016. As of September 30, 2016, the Company had
$6,941,213 in cash and cash equivalents and an accumulated deficit
of $73,152,271.
On
January 15, 2016, the Company and Oxford Finance, LLC, as
collateral agent and lender, entered into a loan and security
agreement (the “Loan Agreement”) providing for senior
secured term loans to the Company in an aggregate principal amount
of up to $10,000,000, subject to the terms and conditions set forth
in the Loan Agreement (the “January 2016 Term
Loan”). On January 15, 2016, the Company received
an initial loan of $5,000,000 under the Loan Agreement, before fees
and issuance costs of approximately $390,000.
On
August 22, 2016, we closed a public offering of 1,297,038 shares of
common stock and 665,281 shares of Series F Preferred Stock, and
warrants to purchase 1,962,319 shares of common stock at $5.55 per
share and warrants to purchase 1,962,319 shares of common stock at
$6.29 per share, at an offering price of $4.81 per share (the
“August 2016 Public Offering”). For every one
share of common stock or Series F Preferred Stock sold, we issued
one warrant to purchase one share of common stock at $5.55 per
share and one warrant to purchase one share of common stock at
$6.29 per share. We received $9,438,753 in gross proceeds,
before underwriting discounts and commissions and offering expenses
totaling $866,410. The gross proceeds include the
underwriters’ over-allotment option, which they exercised on
the closing date.
We
anticipate that the Company will continue to incur net losses into
the foreseeable future as we: (i) continue our Phase I clinical
trial for our standalone therapeutic HuMab 5b-1, designated as
MVT-5873 that was initiated in the first quarter of 2016; (ii)
continue our Positron Emission Tomography (“PET”)
imaging agent 89Zr-HuMab-5B1, designated as MVT-2163 that was
initiated in July 2016; (iii) prepare for filing with the Food and
Drug Administration, or FDA, an Investigational New Drug, or IND,
application for our HuMab-based radioimmunotherapy product,
designated as MVT-1075; (iv) continue preclinical work on several
other programs; and (iv) continue operations as a public
company. After giving effect to the net proceeds received from the
January 2016 Term Loan and the August 2016 Public Offering,
management believes that the Company has sufficient funds to meet
its obligations through May 2017. These conditions give rise to
substantial doubt as to the Company’s ability to continue as
a going concern. The accompanying condensed consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
We
plan to continue to fund the Company’s losses from operations
and capital funding needs through equity or debt financings,
strategic collaborations, licensing arrangements, asset sales,
government grants or other arrangements. However, we cannot be sure
that such additional funds will be available on reasonable terms,
or at all. If we are unable to secure adequate additional funding,
we may be forced to make reductions in spending, extend payment
terms with suppliers, liquidate assets where possible, and/or
suspend or curtail planned programs. In addition, if the Company
does not meet its payment obligations to third parties as they come
due, it may be subject to litigation claims. Even if we are
successful in defending against these claims, litigation could
result in substantial costs and be a distraction to management. Any
of these actions could materially harm the Company’s
business, results of operations, and future prospects.
If
the Company raises additional funds by issuing equity securities,
substantial dilution to existing stockholders would result. If the
Company raises additional funds by incurring debt financing, the
terms of the debt may involve significant cash payment obligations
as well as covenants and specific financial ratios that may
restrict the Company’s ability to operate its
business.
3. Cash and Cash Equivalents
The
Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
The Company limits its exposure to credit loss by holding cash in
U.S. dollars, or, from time to time, placing cash and investments
in U.S. government, agency and government-sponsored enterprise
obligations.
4. Fair value of financial instruments
The
Company’s financial instruments consist of cash and cash
equivalents, grants receivable, prepaid expenses and other current
assets and accounts payable, the carrying amount of which are
generally considered to be representative of their respective fair
values because of the short-term nature of those
instruments.
5. Convertible Preferred Stock, Common Stock and
Warrants
MabVax Therapeutics Series B Preferred Stock and Warrants
(Pre-Merger MabVax Therapeutics Issuances)
Due
to the anti-dilution protection in our Series B warrants (described
below), the Series B warrants were recorded as a current liability
in the amount of $92,463 on the Company’s consolidated
balance sheet as of December 31, 2014. On March 25,
2015, the Series B warrants were re-valued at $72,656 prior to
being exchanged into shares of common stock and Series D
convertible preferred stock on a one for one basis, and the warrant
liability was eliminated and the Company recorded a gain of $19,807
for the three months ended March 31, 2015.
Dividends on Preferred Stock
The
Company immediately recognizes the changes in the redemption value
on preferred stock as they occur, and the carrying value of the
security is adjusted to equal what the redemption amount would be
as if redemption were to occur at the end of the reporting date
based on the conditions that exist as of that date. The value
adjustment made to the Series B preferred stock redemption value
and preferred stock dividends for the three months ended March 31,
2015, was an increase of $93,234, and was no longer outstanding
after March 25, 2015.
Since
the Company’s inception, no dividends were ever declared by
the Company’s Board of Directors on either of the
Company’s Series A redeemable convertible preferred stock or
Series B redeemable convertible preferred stock.
Conversion of Preferred Stock into Common Stock
During
the nine months ended September 30, 2015, holders of Series A-1,
Series B, and Series C preferred stock converted 64,019, 106,437,
and 96,571 shares into 5,197, 37,417, and 16,313 shares of common
stock, respectively.
Exchange of Series A-1 and Series B Preferred Stock and Warrants
into Common Stock and Series D Convertible Preferred
Stock
On
March 25, 2015, the Company entered into separate exchange
agreements with certain holders of the Company’s Series A-1
preferred stock and warrants received in the Merger (the
“Series A-1 Exchange Securities”) and holders of the
Company’s Series B preferred stock and Series B warrants (the
“Series B Exchange Securities” and, collectively with
the Series A-1 Exchange Securities, the “Exchange
Securities”), all previously issued by the Company, to
eliminate the Exchange Securities. Pursuant to the exchange
agreements, the holders exchanged the Exchange Securities and
relinquished any and all other rights they may have had pursuant to
the Exchange Securities, their respective governing agreements and
certificates of designation, including any related registration
rights, in exchange for an aggregate of 342,906 shares of the
Company’s common stock and an aggregate of 238,156 shares of
the Company’s newly designated Series D convertible preferred
stock (the “Series D preferred stock”), convertible
into 3,218,325 shares of common stock. No cash was
exchanged in the transaction. The Company recorded
deemed dividends of $9,017,512, $8,655,998 and $179,411
representing the excess fair value of the common stock issued over
the original conversion terms of the Series A-1 and Series B
preferred stock as part of the consideration for elimination of the
Series A-1, Series B preferred stock and Series A-1 warrant,
respectively.
As
of March 25, 2015, pursuant to the terms of the exchange
agreements, the Series A-1 Purchase Agreement, dated February 12,
2014; the Series A-1 Registration Rights Agreement, dated February
12, 2014; the Series B Purchase Agreement, dated May 12, 2014; and
the Series B Registration Rights Agreement, dated May 12, 2014; all
of which have been described as part of the Company’s annual
report on Form 10-K, were terminated, and all rights covenants,
agreements and obligations contained therein, are of no further
force or effect.
No
commission or other payment was received by the Company in
connection with the exchange agreements.
Series D Preferred Stock
As
of September 30, 2016, there were 132,489 shares of Series D
preferred stock issued and outstanding that are convertible into an
aggregate of 1,790,392 shares of common stock, as compared to
191,490 that were convertible into 2,587,703 shares of common stock
as of December 31, 2015.
As
contemplated by the exchange agreements and as approved by the
Company’s Board of Directors, the Company filed with the
Secretary of State of the State of Delaware a Certificate of
Designation of Preferences, Rights and Limitations of Series D
Convertible Preferred Stock (the “Series D Certificate of
Designations”), on March 25, 2015. Pursuant to the
Series D Certificate of Designations, the Company designated
1,000,000 shares of its blank check preferred stock as Series D
preferred stock. Each share of Series D preferred stock has a
stated value of $0.01 per share. In the event of a
liquidation, dissolution or winding up of the Company, each share
of Series D preferred stock will be entitled to a per share
preferential payment equal to the stated value. Each share of
Series D preferred stock is convertible into 13.5135 shares of
common stock. The conversion ratio is subject to adjustment in
the event of stock splits, stock dividends, combination of shares
and similar recapitalization transactions. The Company is
prohibited from effecting the conversion of the Series D preferred
stock to the extent that, as a result of such conversion, the
holder beneficially would own more than 4.99% (provided that
certain investors elected to block their beneficial ownership
initially at 2.49% in the exchange agreements), in the aggregate,
of the issued and outstanding shares of the Company’s common
stock calculated immediately after giving effect to the issuance of
shares of common stock upon the conversion of the Series D
preferred stock. Each share of Series D preferred stock
entitles the holder to vote on all matters voted on by holders of
common stock. With respect to any such vote, each share of Series D
preferred stock entitles the holder to cast such number of votes
equal to the number of shares of common stock such shares of Series
D preferred stock are convertible into at such time, but not in
excess of the beneficial ownership limitations.
Series E Preferred Stock
As
of September 30, 2016 and December 31, 2015, there were 33,333
shares of Series E preferred stock issued and outstanding,
convertible into 519,751 and 450,446 shares of common stock,
respectively.
On
March 30, 2015, the Company filed with the Secretary of State of
the State of Delaware a Certificate of Designation of Preferences,
Rights and Limitations of Series E Convertible Preferred Stock (the
“Series E Certificate of Designations”) to designate
100,000 shares of its blank check preferred stock as Series E
preferred stock.
The
shares of Series E preferred stock are convertible into shares of
common stock based on a conversion calculation equal to the stated
value of such preferred share, plus all accrued and unpaid
dividends, if any, on such share of Series E preferred stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series E preferred stock is $75 and
the initial conversion price is $5.55 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In addition,
during the period proscribed for in the Series E Certificate of
Designations, in the event the Company issues or sells, or is
deemed to issue or sell, shares of common stock at a per share
price that is less than the conversion price then in effect, the
conversion price shall be reduced to such lower price, subject to
certain exceptions. The Company is prohibited from effecting a
conversion of the share of Series E preferred stock to the extent
that, as a result of such conversion, such holder would
beneficially own more than 4.99% of the number of shares of common
stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the Series E preferred
stock, which beneficial ownership limitation may be increased by
the holder up to, but not exceeding, 9.99%. Each holder is entitled
to vote on all matters submitted to stockholders of the Company,
and shall have the number of votes equal to the number of shares of
common stock issuable upon conversion of such holder’s share
of Series E preferred stock, but not in excess of beneficial
ownership limitations. The shares of Series E preferred stock bear
no interest.
On
August 22, 2016, when the Company closed on the August 2016 Public
Offering, the current Series E preferred stock conversion price of
$5.55 per share was reduced to $4.81 per share under the terms of
the Series E Certificate of Designations, resulting in an increase
in the number of shares of common stock to 519,751 that the Series
E preferred stock may be converted into. There is no further
adjustment required by the Series E Certificate of Designations in
the event of an offering of shares below $4.81 per share by the
Company.
April 2015 Private Placement
On
March 31, 2015, the Company consummated the first closing of a
private offering (the “April 2015 Private Placement”)
and sold $4,714,726 worth of units (the “Unit(s)”), net
of $281,023 in issuance costs. The Units consisted of 900,136
shares of common stock and warrants to purchase 450,068 shares of
common stock with an exercise price of $11.10 per
share. The Units were sold at a price of $5.55 per
Unit.
On
April 10, 2015, the Company consummated the second and final
closing of the April 2015 Private Placement and sold $3,831,622
worth of Units, net of $387,127 in issuance costs, of which
$2,500,000 of the Units consisted of Series E preferred stock and
the balance of it consisting of 760,135 shares of common stock,
together with warrants to all investors to purchase 605,293 shares
of common stock at $11.10 per share. Each Unit was sold
at a purchase price of $5.55 per Unit.
The
Company paid commissions to broker-dealers in the aggregate amount
of approximately $574,000 in the April 2015 Private
Placement.
OPKO
Health, Inc., or OPKO, was the lead investor in the April 2015
Private Placement, purchasing $2,500,000 worth of Units consisting
of Series E preferred stock.
As
a condition to OPKO’s and Frost Gama Investment
Trust’s, or FGIT’s, participation in the April 2015
Private Placement, each of the other investors in the April 2015
Private Placement agreed to execute lockup agreements restricting
the sale of 50% of the securities underlying the Units purchased by
them for a period of six months and the remaining 50% prior to the
expiration of one year following the final closing date of the
April 2015 Private Placement.
On
April 10, 2015, the Company agreed that $3.5 million of the net
proceeds of such closing would be paid into and held under the
terms of an escrow agreement with Signature Bank, N.A. pending the
approval of a representative of OPKO or 10 weeks thereafter, unless
released sooner or extended by the Company and OPKO. On
June 22, 2015, the Company and OPKO extended the termination date
of the escrow to 16 weeks from the final closing of the April 2015
Private Placement. In connection with the OPKO investment, Steven
Rubin, Esq. was appointed advisor to the Company. The escrowed
funds were to be returned to the applicable investors and the
Company shall have no further obligation to issue Units to such
investors in the event certain release conditions are not met. On
June 30, 2015, the Company and OPKO entered into a letter agreement
pursuant to which the Company granted the representative the right,
but not the obligation, until June 30, 2016, to nominate and
appoint up to two additional members of the Company’s Board
of Directors, or to approve the person(s) nominated by the Company
pursuant to the agreement in consideration for the release of the
escrowed funds. The nominees will be subject to the satisfaction of
standard corporate governance practices and any applicable national
securities exchange requirements. Upon signing the
agreement, the escrowed funds were released to the
Company.
The
warrants are exercisable upon issuance and expire October 10, 2017,
and may be exercised for cash or on a cashless basis. The warrants
have a per share exercise price of $11.10, subject to certain
adjustments including stock splits, dividends and reverse-splits.
The Company is prohibited from effecting the exercise of the
warrants to the extent that, as a result of such exercise, the
holder beneficially would own more than 4.99% in the aggregate, of
the issued and outstanding shares of the Company’s common
stock calculated immediately after giving effect to the issuance of
shares of common stock upon the exercise of the
warrants.
In
connection with the April 2015 Private Placement, the Company also
entered into registration rights agreements (the
“Registration Rights Agreements”) with the investors in
the April 2015 Private Placement pursuant to which the Company
agreed to file a registration statement with the SEC covering the
resale of 25% of common stock issued pursuant to the subscription
agreements including 25% of the common stock issuable upon
conversion of the Series E preferred stock, in the event the
investors elect to receive Series E preferred stock instead of
common stock (together, the “Registrable Securities”),
no later than 60 days following the final closing date of the April
2015 Private Placement, and to use its commercially reasonable best
efforts to have such registration statement declared effective
within 120 days after filing. Investors in the April 2015
Private Placement also may be required under certain circumstances
to agree to refrain from selling securities underlying the
purchased Units. The liquidated damages for failure to achieve
effectiveness of the Registerable Securities is 1% per month
beginning 120 days after filing, and provided management has not
used commercially reasonable best efforts to have the registration
statement declared effective within that time frame.
On
June 9, 2015, the Company and investors holding over 60% of the
outstanding Registrable Securities entered into an amendment
agreement to the Registration Rights Agreements in order to extend
the filing date of the registration statement to waive any payments
that may be due to the investors as a result of the Company not
filing a registration statement on or before the original filing
date. On August 4, 2015, the Company and investors
holding over 70% of the outstanding Registrable Securities entered
into a second amendment agreement to further extend the filing date
to October 9, 2015.
On
October 12, 2015, the Company and investors holding over 60% of the
outstanding Registerable Securities entered into a third amendment
agreement to the Registration Rights Agreements to suspend the
Company’s registration obligations under the Registration
Rights Agreements and related subscription agreements during any
period when the “standstill” provision set forth in the
subscription agreements is in effect.
On
January 28, 2016, the Company filed a Registration Statement on
Form S-1, registering 527,680 shares of common stock for resale,
including 112,613 shares of common stock, which are issuable upon
conversion of the Company’s Series E preferred stock issued
in the April 2015 Private Placement.
Except
for certain issuances, for a period beginning on the closing date
of the April 2015 Private Placement and ending on the date that is
the earlier of (i) 24 months from the final closing date of the
April 2015 Private Placement, (ii) the date the Company consummates
a financing (excluding proceeds from the April 2015 Private
Placement) in which the Company receives gross proceeds of at least
$10,000,000 and (iii) the date the common stock is listed for
trading on a national securities exchange (such period until the
earlier date, the “Price Protection Period”), in the
event that the Company issues any shares of common stock or
securities convertible into common stock at a price per share or
conversion price or exercise price per share that is less than
$5.55, the Company shall issue to the investors in the April 2015
Private Placement such additional number of shares of common stock
such that the investor shall own an aggregate total number of
shares of common stock as if they had purchased the Units at the
price of the lower price issuance. No adjustment in the warrants is
required in connection with a lower price issuance.
Effective
with the Company’s entry into an agreement with the
underwriter for the Company’s August 2016 Public Offering,
which closed on August 22, 2016, the Company issued 255,459 shares
of common stock to the holders of record of the shares purchased in
the Company’s April 2015 Private Placement under the Price
Protection Period, representing the shares the investors would have
received had they purchased their shares at $4.81 per share,
instead of $5.55 per share. Effective August 17, 2016, the date of
listing of the Company’s stock on the Nasdaq Capital Market,
the Price Protection Period came to an end.
The
Company has also granted each investor a right of participation in
the Company’s financings for a period of 24
months.
Between
April 13, 2015, and April 14, 2015, certain holders of warrants
issued in the April 2015 Private Placement to purchase an aggregate
of 250,000 shares of common stock exercised such warrants on a
cashless basis for an aggregate issuance of 164,835 shares of
common stock. As of September 30, 2016, there were 805,361 warrants
outstanding from the April 2015 Private Placement to purchase
common stock at $11.10 per share.
October 2015 Public Offering
On
October 5, 2015, the Company closed a public offering of 337,838
shares of common stock and warrants to purchase 168,919 shares of
common stock, at an offering price of $8.14 per share. For
every two shares of common stock sold, the Company issued one
warrant to purchase one share of common stock. The Company
received $2,750,000 in gross proceeds, before underwriting
discounts and commissions and offering expenses totaling
approximately $586,608, and without giving effect to any exercise
of the underwriters’ over-allotment option. The Company
used the net proceeds from this offering to fund the HuMab-5B1
human antibody program preclinical development and for
working capital and general corporate purposes.
The
shares and warrants were separately issued and sold in equal
proportions. The warrants are immediately exercisable, expire
September 30, 2018, and have an exercise price of $9.77 per
share. The warrants are not listed on any securities
exchange or other trading market. As of September 30,
2016, there were warrants to purchase 168,919 shares of common
stock outstanding. The Company granted the underwriters a 30-day
option to purchase up to an additional 50,676 shares of common
stock and up to an additional 25,338 warrants at the same price to
cover over-allotments, if any.
Under
the terms of the underwriting agreement entered into between the
Company and the underwriter in the public offering, the Company,
without the prior written consent of the underwriter, was
prohibited, for a period of 90 days after execution of the
underwriting agreement, from issuing any equity securities, subject
to certain exceptions.
August 2016 Public Offering
On
August 22, 2016, we closed a public offering of 1,297,038 shares of
common stock and 665,281 shares of Series F preferred stock, and
warrants to purchase 1,962,319 shares of common stock at $5.55 per
share and warrants to purchase 1,962,319 shares of common stock at
$6.29 per share, at an offering price of $4.81 per share. For
every one share of common stock or Series F preferred stock sold,
we issued one warrant to purchase one share of common stock at
$5.55 per share and one warrant to purchase one share of common
stock at $6.29 per share. We received $9,438,753 in gross
proceeds, before underwriting discounts and commissions and
offering expenses totaling $866,410. The gross proceeds include the
underwriter’s over-allotment option, which they exercised on
the closing date.
On
August 16, 2016, we filed a Certificate of Designations,
Preferences and Rights of the 0% Series F Convertible Preferred
Stock with the Delaware Secretary of State, designating 1,559,252
shares of preferred stock as 0% Series F convertible preferred
stock.
The
shares of Series F preferred stock are convertible into shares of
common stock based on a conversion calculation equal to the stated
value of such Series F preferred stock, plus all accrued and unpaid
dividends, if any, on such Series F preferred stock, as of such
date of determination, divided by the conversion price. The stated
value of each share of Series F preferred stock is $4.81 and the
initial conversion price is $4.81 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In the event of
a liquidation, dissolution or winding up of the Company, each share
of Series F preferred stock will be entitled to a per share
preferential payment equal to the par value. All shares of the
Company’s capital stock will be junior in rank to Series F
preferred stock with respect to the preferences as to dividends,
distributions and payments upon the liquidation, dissolution and
winding-up of the Company, except for the Company’s Series D
preferred stock and Series E preferred stock.
The
holders of Series F preferred stock will be entitled to receive
dividends if and when declared by our board of directors. The
Series F preferred stock shall participate on an “as
converted” basis, with all dividends declared on the
Company’s common stock. In addition, if we grant, issue or
sell any rights to purchase our securities pro rata to all our
record holders of our common stock, each holder will be entitled to
acquire such securities applicable to the granted purchase rights
as if the holder had held the number of shares of common stock
acquirable upon complete conversion of all Series F preferred stock
then held.
We are
prohibited from effecting a conversion of the Series F preferred
stock to the extent that, as a result of such conversion, the
holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series F preferred stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series F preferred stock, but not in excess of the
beneficial ownership limitations.
Issuance of Common Stock under a 2014 Common Stock Purchase
Agreement
In
connection with a financing by the Company in July 2014 (the
“July 2014 Financing Transaction”), the Company assumed
certain obligations as per the original agreement to issue
additional shares to investors in the July 2014 Financing
Transaction if a subsequent financing or issuance of shares was at
a price per share lower than the price per share in the July 2014
Financing Transaction. The Company issued on March 31, 2015, an
aggregate of 11,904 shares of common stock that were required to be
issued in connection with the July 2014 Financing Transaction as a
result of the issuance of shares at a lower share price than in the
July 2014 Financing Transaction.
Grant of Restricted Shares
Rubin Grant
On
April 3, 2015, the Company entered into a consulting agreement with
Steve Rubin pursuant to which he agreed to provide advisory
services in connection with corporate strategy, licensing and
business development estimated to be for a period of 12
months. In exchange for his services, the Company
provided him with a one-time grant of 27,027 shares of the
Company’s restricted common stock, valued at $17.02 per
share. As the shares granted were fully vested upon
grant and the Company has no legal recourse to recover the shares
in the event of nonperformance, the Company recognized the grant
date fair value of the shares as consulting expense upon grant
during the second quarter of 2015.
Ravetch Grant
On
April 4, 2015, the Board of Directors approved the issuance of an
additional restricted stock award of 17,770 shares to Jeffrey
Ravetch, M.D., Ph. D, who is one of the Company’s board
members. This award is for future services covering at
least a one-year period. The award was granted in addition to the
prior award to Dr. Ravetch on April 2, 2015 of (i) 4,628 restricted
shares and (ii) options to purchase 4,628 shares of common stock
with an exercise price of $17.02 per share, for a total grant of
27,028 restricted shares and options. As the 17,770 shares granted
were fully vested upon grant and the Company has no legal recourse
to recover the shares in the event of nonperformance, the Company
recognized the grant date fair value of the shares as consulting
expense upon grant during the second quarter of 2015.
Livingston
Grant
On
April 4, 2015, the Board of Directors approved the issuance of a
restricted stock award by the Company of 135,135 shares of common
stock, valued at $17.02 per share, to Philip Livingston, Ph.D. for
his continuing service to the Company. On May 13, 2015,
the Compensation Committee of the Board of Directors clarified that
the award was being granted in consideration for at least one year
of Dr. Livingston’s services. The committee
further clarified that the vesting of the common stock shall be on
the one-year anniversary of the Board of Directors’ approval
of the award, or April 4, 2016. The Company expensed the
grant date fair value of the award over the vesting period of one
year.
Consulting Agreements
On
April 5, 2015, the Company entered into a consulting agreements
with two investor relations consultants to provide relations
services to the Company in consideration for an immediate grant of
40,541 shares of the Company’s restricted common stock and a
monthly cash retainer of $12,000 a month for ongoing services for a
period of one year. The consultants also received an additional
27,027 shares of the Company’s restricted common stock upon
the Company’s achieving a milestone based on its
fully-diluted market capitalization. As the shares granted were
fully vested upon grant and the Company has no legal recourse to
recover the shares in the event of nonperformance, the Company
recognized the grant date fair value of the 40,541 shares or
$690,000, as investor relations expense upon grant during the
second quarter of 2015. The performance condition for the 27,027
shares became probable and the market capitalization metric was met
during the second quarter; therefore, the Company recognized an
additional $460,000 of expense during the quarter ended June 30,
2015.
Also
during 2015, the Board of Directors approved the issuance of
restricted stock awards to two other consultants totaling 16,217
shares with vesting terms ranging from one to three years, valued
from $13.10 to $15.76 per share. The Company is
expensing each of the grant date fair value of the awards over the
performance period for the award, which will be re-measured at the
end of each quarter until the performance is complete. As of
September 30, 2016, the Company expensed $33,124 related to these
grants. As of September 30, 2016, the expected future compensation
expense related to these grants is $35,636 based upon the
Company’s stock price on September 30, 2016.
On
January 13, 2016, the Board of Directors approved the issuance of
13,514 shares of restricted stock valued at $64,000 to a consultant
for advisory services to the Company.
On
September 1, 2016, the Board of Directors approved the issuance of
22,130 shares of common stock with a date of issuance fair value of
$100,000 to another investor relations consulting firm. In exchange
for the shares granted and a monthly retainer, the consulting firm
will perform investor relation services on behalf of the Company.
As the shares granted were fully vested upon grant and the Company
has no legal recourse to recover the shares in the event of
nonperformance, the Company recognized the grant date fair value of
the 22,130 shares of $100,000 as investor relations expense upon
grant during the third quarter of 2016.
6. Notes Payable
On
January 15, 2016, we entered into a loan and security agreement
with Oxford Finance, LLC pursuant to which we had the option to
borrow $10,000,000 in two equal tranches of $5,000,000 each (the
“Loan Agreement”). The first tranche of
$5,000,000 was funded at close on January 15, 2016 (the “Term
A Loan”). The option to fund the second tranche of $5,000,000
(the “Term B Loan”) was upon the Company achieving
positive interim data on the Phase 1 HuMab-5B1 antibody trial in
pancreatic cancer and successfully uplisting to either the NASDAQ
Stock Market or NYSE MKT on or before September 30,
2016. The option for the Term B Loan expired on
September 30, 2016. The Company is not pursuing completion of any
additional debt financing with Oxford Finance, LLC at the present
time. The interest rate for the Term A Loan is set on a monthly
basis at the index rate plus 11.29%, where the index rate is the
greater of the 30-day LIBOR rate or 0.21%. Interest is
due on the first day of each month, in arrears, calculated based on
a 360-day year. The loan is interest only for the first
year after funding, and the principal amount of the loan is
amortized in equal principal payments, plus period interest, over
the next 36 months. A facility fee of 1.0% or $100,000
was due at closing of the transaction, and was earned and paid by
the Company on January 15, 2016. The Company is
obligated to pay a $150,000 final payment upon completion of the
term of the loan, and this amount is being accreted using the
effective interest rate method over the term of the loan. Each of
the term loans can be prepaid subject to a graduated prepayment
fee, depending on the timing of the prepayment.
Concurrent
with the closing of the transaction, the Company issued 225,226
common stock purchase warrants to Oxford Finance, LLC with an
exercise price of $5.55 per share. The warrants are
exercisable for five years and may be exercised on a cashless
basis, and expire on January 15, 2021. The Company recorded
$607,338 for the fair value of the warrants as a debt discount
within notes payable and an increase to additional paid-in capital
on the Company’s balance sheet. We used the
Black-Scholes-Merton valuation method to calculate the value of the
warrants. The debt discount is being amortized as interest expense
over the term of the loan using the effective interest
method.
We
granted Oxford Finance, LLC a perfected first priority lien on all
of the Company’s assets with a negative pledge on
intellectual property. The Company paid Oxford Finance, LLC a good
faith deposit of $50,000, which was applied towards the facility
fee at closing. The Company agreed to pay all costs,
fees and expenses incurred by Oxford Finance, LLC in the initiation
and administration of the facilities including the cost of loan
documentation.
At
the initial funding, the Company received net proceeds of
approximately $4,610,000 after fees and expenses. These fees and
expenses are being accounted for as a debt discount and classified
within notes payable on the Company’s condensed consolidated
balance sheet. The Company's transaction costs of approximately
$390,000 are presented in the condensed consolidated balance sheet
as a direct deduction from the carrying amount of the notes
payable, consistent with debt discounts. Debt discounts, issuance
costs and the final payment are being amortized or accreted as
interest expense over the term of the loan using the effective
interest method.
The
Loan Agreement also contains customary indemnification obligations
and customary events of default, including, among other things, our
failure to fulfill certain of the Company's obligations under the
Loan Agreement, the occurrence of a material adverse change, which
is defined as a material adverse change in the Company's business,
operations, or condition (financial or otherwise), a material
impairment of the prospect of repayment of any portion of the loan,
or a material impairment in the perfection or priority of the
Lenders’ lien in the collateral or in the value of such
collateral. In the event of default by the Company under the
Loan Agreement, the Lenders would be entitled to exercise their
remedies thereunder, including the right to accelerate payment of
the debt, upon which we may be required to repay all amounts then
outstanding under the Loan Agreement, which could harm the
Company's financial condition.
The
Company was in compliance with all applicable covenants set forth
in the Loan Agreement as of September 30, 2016.
The
Company recorded interest expense related to the term loan of
$266,057 and $729,350 for the three and nine months ended September
30, 2016, respectively. The annual effective interest rate on the
note payable, including the amortization of the debt discounts and
accretion of the final payment, but excluding the warrant
amortization, is approximately 13.8%.
As
of September 30, 2016, the Company has one insurance premium
note outstanding with a balance totaling $123,075, which
matures in April 2017. This note bears interest at a
rate of 4.5% per annum, and the monthly payments are
$20,783.
Future
principal payments under the Loan Agreement and insurance premium
note as of September 30, 2016 are as follows:
Years ending December 31:
|
|
2016
|
$61,192
|
2017
|
1,589,660
|
2018
|
1,666,667
|
2019
|
1,666,667
|
2020
|
138,889
|
Notes
payable, balance as of September 30, 2016
|
5,123,075
|
Unamortized
discount on notes payable
|
(804,918)
|
Notes
payable, net, balance as of September 30, 2016
|
4,318,157
|
Current
portion of notes payable
|
(1,234,186)
|
Non-current
portion of notes payable
|
$3,083,971
|
7. Related Party Transactions
On
April 1, 2016, the Company entered into a two-year consulting
agreement with Jeffrey Ravetch, M.D., Ph.D., a Board member, for
work beginning January 1, 2016 through December 31, 2017, at a rate
of $100,000 a year, in support of scientific and technical advice
on the discovery and development of technology and products for the
Company primarily related to monoclonal antibodies, corporate
development, and corporate partnering efforts. In April
2016, the Company paid Dr. Ravetch $100,000 for services to be
performed in 2016, and will pay quarterly thereafter beginning
January 1, 2017.
In
April 2015, the Company granted a restricted stock award of 135,135
shares to Phil Livingston, Ph.D., an employee and member of the
Board of Directors, for his continuing services to the Company, and
the value of this award has been amortized over a period of one
year.
8. Stock-based Activity
Amendment of Equity Incentive Plan
On
March 31, 2015, the Company approved a Second Amended and Restated
2014 Employee, Director and Consultant Equity Incentive Plan (the
“Plan”) to increase the number of shares reserved for
issuance under the Plan from 21,362 to 1,129,837 shares of common
stock. Additional changes to the Plan include:
●
An “evergreen” provision to reserve additional shares
for issuance under the Plan on an annual basis commencing on the
first day of fiscal 2016 and ending on the second day of fiscal
2024, such that the number of shares that may be issued under the
Plan shall be increased by an amount equal to the lesser of: (i)
1,081,081 or the equivalent of such number of shares after the
administrator, in its sole discretion, has interpreted the effect
of any stock split, stock dividend, combination, recapitalization
or similar transaction in accordance with the Plan; (ii) the number
of shares necessary such that the total shares reserved under the
Plan equals (x) 15% of the number of outstanding shares of common
stock on such date (assuming the conversion of all outstanding
shares of Preferred Stock (as defined in the Plan) and other
outstanding convertible securities and exercise of all outstanding
warrants to purchase common stock) plus (y) 30,946; and (iii) an
amount determined by the Board.
●
Provisions that no more than 405,406 shares may be granted to any
participant in any fiscal year.
●
Provisions to allow for performance based equity awards to be
issued by the Company in accordance with Section 162(m) of the
Internal Revenue Code.
●
On
September 22, 2016, the Board of Directors ratified an automatic
increase in the number of shares reserved for issuance under the
Plan, increasing the total shares reserved from 1,129,837 to
1,208,307 shares of common stock, under the annual evergreen
provision for the Plan.
Stock-based Compensation
We
measure stock-based compensation expense for equity-classified
awards, principally related to stock options and restricted stock
units, or RSUs, based on the estimated fair values of the awards on
the date of grant. We recognize the value of the portion of the
award that we ultimately expect to vest as stock-based compensation
expense over the requisite service period in our condensed
consolidated statements of operations. Due to limited activity in
2016 and 2015, we assumed a forfeiture rate of zero.
We
use the Black-Scholes-Merton model to estimate the fair value of
stock options granted. The expected term of stock options granted
represents the period of time that we expect them to be
outstanding. For the three and nine months ended
September 30, 2016 we used volatility of 70.98% to 85.91%, dividend
rate of 0%, expected term of 2.9 to 6 years, and risk-free interest
rate of 0.87% to 1.43% in our Black-Scholes-Merton calculations.
For the three and nine months ended September 30, 2015, we used
volatility of 81.03% to 86.62%, dividend rate of 0%, expected term
of 5.5 to 6 years, and risk-free interest rate of 0.87% to 1.05% in
our Black-Scholes-Merton calculations.
Total estimated stock-based compensation expense,
related to all of the Company’s stock-based payment awards
recognized under ASC 718, “Compensation—Stock
Compensation” and ASC 505, “Equity” comprised the
following:
|
Three Months
Ended
|
Three Months
Ended
|
Nine Months
Ended
|
Nine Months
Ended
|
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
2016
|
2015
|
2016
|
2015
|
Research
and development
|
$301,985
|
$307,892
|
$889,666
|
$633,593
|
General
and administrative
|
666,556
|
1,186,931
|
2,570,326
|
2,333,010
|
Total
stock-based compensation expense
|
$968,541
|
$1,494,823
|
$3,459,992
|
$2,966,603
|
Stock-based Award Activity
The
following table summarizes the Company’s stock option
activity during the nine months ended September 30,
2016:
|
Options
Outstanding
|
Weighted-Average Exercise Price
|
Outstanding
at December 31, 2015
|
438,249
|
$17.46
|
Granted
|
413,578
|
5.21
|
Exercised
|
—
|
—
|
Forfeited/cancelled/expired
|
(36,415)
|
15.28
|
Outstanding
and expected to vest at September 30, 2016
|
815,412
|
11.32
|
Vested
and exercisable at September 30, 2016
|
164,588
|
$17.58
|
The
total unrecognized compensation cost related to nonvested
stock option grants as of September 30, 2016, was $3,496,364, and
the weighted average period over which these grants are expected to
vest is 2.18 years. The Company has assumed a forfeiture rate of
zero. The weighted average remaining contractual life of stock
options outstanding at September 30, 2016, is 9.0
years.
During
the first nine months of 2016, the Company granted 413,578 options
to officers and employees with a weighted average exercise price of
$5.21 and vesting over a three-year period with vesting starting at
the one-year anniversary of the grant date. During the
first nine months of 2015, there were 407,547 options and 310,926
shares of restricted stock granted to directors, officers,
employees and consultants.
Because
the Company had a net operating loss carryforward as of September
30, 2016, no tax benefits for the tax deductions related to
stock-based compensation expense were recognized in the
Company’s condensed consolidated statements of operations.
Additionally, there were no stock options exercised in the three
and nine months ended September 30, 2016 and there were 376 stock
options exercised during the three and nine months ended September
30, 2015.
A
summary of activity related to restricted stock grants under the
Plan for the nine months ended September 30, 2016 is presented
below:
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
Nonvested
at December 31, 2015
|
310,926
|
$16.84
|
Granted
|
—
|
—
|
Vested
|
(105,448)
|
18.82
|
Forfeited
|
—
|
—
|
Nonvested
at September 30, 2015
|
205,478
|
$16.85
|
As
of September 30, 2016, unamortized compensation expense related to
restricted stock grants amounted to $2,553,920, which is expected
to be recognized over a weighted average period of 1.5
years.
Management Bonus Plan
On
April 2, 2015, the Compensation Committee of the Board of Directors
approved the 2015 Management Bonus Plan (the “Management
Plan”) outlining maximum target bonuses of the base salaries
of certain of the Company’s executive
officers. Under the terms of the Management Plan, the
Company’s Chief Executive Officer shall receive a maximum
target bonus of up to 50% of his annual base salary, the Chief
Financial Officer shall receive a maximum target bonus of up to 35%
of his annual base salary and the Company’s Vice President
shall receive a maximum target bonus of up to 25% of his annual
base salary.
On
April 4, 2015, the Board approved the following Non-Employee
Director Policy (the “Incumbent Director Policy”) with
respect to incumbent non-employee members of the Board in the event
that they are replaced before their term expires:
●
a one-time issuance of 2,703 restricted shares of common
stock;
●
the vesting of all options and restricted stock grants held on such
date; and
●
the payment of all earned but unpaid cash compensation for their
services on the Board and its committees, as of such
date.
On
April 4, 2015, in connection with his resignation from the Board of
Directors, Michael Wick received a one-time restricted stock grant
of 2,703 shares under the Incumbent Director
Policy.
On
February 16, 2016, our Compensation Committee approved a 2016
Management Bonus Plan (the “2016 Management Plan”)
outlining maximum target bonuses of the base salaries of certain of
our executive officers. Under the terms of the 2016 Management
Plan, the Company's Chief Executive Officer shall receive a maximum
target bonus of up to 50% of his annual base salary, and the Chief
Financial Officer and each of the Company's Vice Presidents shall
receive a maximum target bonus of up to 30% of their annual base
salary.
Stock Issued Upon Vesting of Restricted Stock Grants
On
April 2 and April 3, 2016, 98,237 shares of restricted stock units
vested upon the one-year anniversary of restricted stock units
granted. Accordingly, 64,392 shares were issued to the
Company’s directors and officers, and the Company withheld
33,845 shares for the employee portion of taxes and remitted
$177,823 to the tax authorities in order to satisfy tax liabilities
related to this issuance on behalf of the officers. In
addition, in July and August of 2016, 7,208 shares were issued to
outside consultants upon vesting of previously issued restricted
stock units. As of September 30, 2016, there were
205,478 nonvested restricted stock units remaining
outstanding.
Common Stock Reserved for Future Issuance
Common
stock reserved for future issuance consists of the following at
September 30, 2016:
Common
stock reserved for conversion of preferred stock
|
2,975,424
|
Common
stock reserved for exercise of warrants
|
5,124,144
|
Common
stock options outstanding
|
815,412
|
Authorized
for future grant or issuance under the Stock Plan
|
22,443
|
Nonvested
restricted stock
|
205,478
|
Total
|
9,142,901
|
9. Net Loss per Share
The
Company calculates basic and diluted net loss per share using the
weighted-average number of shares of common stock outstanding
during the period.
When
the Company is in a net loss position, it excludes from the
calculation of diluted net loss per share all potentially dilutive
stock options, preferred stock and warrants, and the diluted net
loss per share is the same as the basic net loss per share for such
periods. If the Company was to be in a net income position, the
weighted average number of shares used to calculate the diluted net
income per share would include the potential dilutive effect of
in-the-money securities, as determined using the treasury stock
method.
The
table below presents the potentially dilutive securities that would
have been included in the calculation of diluted net loss per share
if they were not antidilutive for the periods
presented.
|
As of September 30,
|
|
|
2016
|
2015
|
Stock
options
|
815,412
|
438,249
|
Restricted
stock awards
|
205,478
|
610,926
|
Preferred
stock
|
2,975,424
|
3,038,162
|
Common
stock warrants
|
5,124,144
|
805,361
|
Total
|
9,120,458
|
4,892,698
|
10. Contracts and Agreements
Memorial Sloan Kettering Cancer Center, or MSK
Since 2008 the Company has engaged in various
research agreements and collaborations with MSK including licensed
rights to cancer vaccines and the blood samples from patients who
have been vaccinated with MSK’s cancer vaccines. Total
sponsored research contracts outstanding in 2016 amounting to
approximately $800,000 in 2016 were approximately 89% complete as
of September 30, 2016. Such sponsored research agreements provide
support for preclinical work on the Company’s product
development programs. The work includes preparing
radioimmunoconjugates of the Company’s antibodies and
performing in vitro and in vivo pharmacology studies for our therapeutic antibody
product, imaging agent product and radioimmunotherapy product
programs.
Life Technologies Licensing Agreement
On
September 24, 2015, the Company entered into a licensing agreement
with Life Technologies Corporation, a subsidiary of ThermoFisher
Scientific. Under the agreement the Company agreed to
license certain cell lines from Life Technologies Corporation to be
used in the production of recombinant proteins for the
Company’s clinical trials. The amount of the
contract is for $450,000 and was fully expensed during
2015. The Company paid $225,000 during 2015 related to
this contract, and the remaining amount of $225,000 was paid during
the quarter ended September 30, 2016.
Rockefeller University Collaboration
In
July 2015, the Company entered into a research collaboration
agreement with Rockefeller University's Laboratory of Molecular
Genetics and Immunology. The Company provided antibody material to
Rockefeller University, which is exploring the mechanism of action
of constant region (Fc) variants of the HuMab 5B1 in the role of
tumor clearance. The Company will supply additional research
materials as requested by the university, which is evaluating ways
to optimize the function.
Juno Option Agreement
On
August 29, 2014, the Company entered into an option agreement (the
“Option Agreement”) with Juno Therapeutics, Inc.
(“Juno”) in exchange for a one-time up-front option fee
in the low five figures. Pursuant to the Option Agreement, the
Company granted Juno the option to obtain an exclusive, world-wide,
royalty-bearing license authorizing Juno to develop, make, have
made, use, import, have imported, sell, have sold, offer for sale
and otherwise exploit certain patents the Company developed with
respect to fully human antibodies with binding specificity against
human GD2 or sialyl-Lewis A antigens and certain Company controlled
biologic materials. As of June 30, 2016, the Option Agreement
expired and Juno no longer has a contractual right for use of
Company binding domains for use in the construction of CAR T-cells.
During the three and nine months ended September 30, 2016, no
revenues had been earned under the Option Agreement.
Patheon Biologics LLC Agreement
On April 14, 2014, the Company entered into a development and
manufacturing services agreement (the “Services
Agreement”) with Patheon (f.k.a. Gallus Biopharmaceuticals)
to provide a full range of manufacturing and bioprocessing
services, including cell line development, process development,
protein production, cell culture, protein purification,
bio-analytical chemistry and quality control, or QC,
testing. Total amount of the contract is estimated at
approximately $3.0 million. For the three and nine
months ended September 30, 2016, the Company had no additional
expenses associated with the agreement. The company
recorded no expenses related to this Services Agreement in 2016.
For the three and nine months ended September 30, 2015, the Company
recorded $751,931 and $1,987,006 of expense, respectively,
associated with the Services Agreement. During the third quarter of
2016, the Company negotiated a reduction in the amount previously
recorded and owed to Patheon related to manufacturing batches that
have failed, resulting in the reduction in R&D expenses of
approximately $363,000 during the quarter.
NCI PET Imaging Agent Grant
In
September 2013, the National Cancer Institute (“NCI”)
awarded the Company a Small Business Innovation Research, or SBIR,
Program Contract to support the Company’s program to develop
a Positron Emission Tomography (“PET”) imaging agent
for pancreatic cancer using a fragment of the Company’s 5B1
antibody (the “NCI PET Imaging Agent Grant”). The
project period for Phase I of the grant award of approximately
$250,000 covered a nine-month period which commenced in September
2013 and ended in June 2014.
On
August 25, 2014, the Company was awarded a $1.5 million contract
for the Phase II portion of the NCI PET Imaging Agent Grant. The
contract was intended to support a major portion of the preclinical
work being conducted by the Company, together with its
collaboration partner, MSK, to develop a novel PET imaging agent
for detection and assessment of pancreatic cancer. The total
contract amount for Phase I and Phase II of approximately
$1,749,000 supports research work through June 2016. The
contract has been successfully completed at the end of
2015. No additional activities are required or planned
under the contract and all monies available under the contract have
been requested and received.
The
Company records revenue associated with the NCI PET Imaging Agent
Grant as the related costs and expenses are incurred. For the three
and nine months ended September 30, 2016 and 2015, the Company
recorded none, $148,054, $133,318 and $509,474 of revenue
associated with the NCI PET Imaging Agent Grant,
respectively.
11. Commitments and contingencies
Litigation
On
September 18, 2015, an Order and Final Judgment was entered by the
Superior Court of the State of California, approving a settlement
of a class action lawsuit commenced on May 30, 2014, in Santa Clara
County Superior Court, State of California, on behalf of Cadillac
Partners and others similarly situated, naming as defendants,
MabVax Therapeutics, the Company and the Company’s directors,
Hudson Bay Capital Management LP, Bio IP Ventures LLC, Hudson Bay
Master Fund Ltd., and Hudson Bay IP Opportunities Master Fund LP,
together the “Parties,” alleging the defendants
breached certain fiduciary duties, or aided and abetted a breach of
fiduciary duties, in connection with the Company’s Merger
with MabVax Therapeutics. The plaintiff sought to enjoin the Merger
and obtain damages as well as attorneys’ and expert fees and
costs. We expect to incur no expenses in 2016 or
thereafter in connection with this lawsuit or
settlement.
Operating Leases
In
connection with the Merger, the Company recorded a $590,504
contingent lease termination fee, in connection with the
termination by MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) of
the master lease and sublease of our facility located at 3165
Porter Drive in Palo Alto, California (the “Porter Drive
Facility”), which is payable to ARE-San Francisco No. 24
(“ARE”) following the Company’s receipt of $15
million or more in additional financing, in the aggregate, which
was achieved on August 22 ,2016.
On September 2, 2015, the Company
entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises of office and laboratory space in buildings
located at 11535 Sorrento Valley Rd., San Diego, California, to
serve as the Company’s corporate offices and laboratories
(the “New Premises”). Due to the fact that
certain tenant improvements needed to be made to the New Premises
before the Company could take occupancy, the term of the Lease did
not commence until the New Premises were ready for occupancy, which
was on February 4, 2016. The Lease terminates six years
after such term commencement date, unless earlier terminated in
accordance with the Lease. Pursuant to the terms of the Lease, the
monthly base rent is $35,631, subject to annual increases as set
forth in the Lease.
The
Company has an option to extend the Lease term for a single,
five-year period. If the Lease term is extended for the
optional five-year period, the monthly base rent will be adjusted
based on fair market rental value. In addition to rent,
the Company agreed to pay a portion of the taxes and utility,
maintenance and other operating costs paid or accrued in connection
with the ownership and operation of the property.
The
Company previously leased its corporate office and laboratory space
under an operating lease that, as amended on August 1, 2010,
expired on July 31, 2015. The lease contained an option to
cancel at various dates prior to the termination date by paying a
cancellation penalty. The Company has provided a refundable
security deposit of $11,017 to secure its obligations under the
lease, which was included in other long-term assets in the
accompanying condensed consolidated financial statements. We
recognize rent expense on a straight-line basis over the term the
lease.
During
the three and nine months ended September 30, 2016, the Company
recorded rent expense of $115,238 and $318,159, respectively, and
during the three and nine months ended September 30, 2015, the
Company recorded rent expense of $31,627 and $89,156,
respectively.
Minimum
future annual operating lease obligations are as follows as of
September 30, 2016:
2016
(remaining)
|
$106,893
|
2017
|
439,330
|
2018
|
452,510
|
2019
|
466,085
|
2020
|
480,068
|
Thereafter
|
535,776
|
Total
|
$2,480,662
|
Capitalized Leases
On
March 21, 2016, the Company entered into a lease agreement with
ThermoFisher Scientific (“Lessor”). Under
the terms of the agreement, the Company agreed to lease two pieces
of equipment from the Lessor, a liquid chromatography system and an
incubator, totaling in cost of $95,656. The term of the
lease is five years (60 months), and the monthly lease payment is
$1,942. In addition, there is a $1.00 buyout option at the end of
the lease term.
As
of September 30, 2016, future minimum lease payments due in fiscal
years under capitalized leases are as follows:
2016 (remainder of)
|
$5,826
|
2017
|
23,306
|
2018
|
23,306
|
2019
|
23,306
|
2020
|
23,306
|
2021
and thereafter
|
7,904
|
Less
interest
|
(17,802)
|
Principal
|
89,152
|
Less
current portion
|
(16,654)
|
Noncurrent
portion
|
$72,498
|
To
the Board of Directors and Stockholders
MabVax
Therapeutics Holdings, Inc.
We
have audited the accompanying consolidated balance sheets of MabVax
Therapeutics Holdings, Inc. (the “Company”) as of
December 31, 2015 and 2014, and the related consolidated
statements of operations, redeemable convertible preferred stock,
convertible preferred stock and stockholders’ equity
(deficit), and cash flows for the years then ended. MabVax
Therapeutics Holdings, Inc.’s management is responsible for
these consolidated financial statements. Our responsibility is to
express an opinion on these consolidated financial statements based
on our audits.
We
conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (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. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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 MabVax Therapeutics Holdings, Inc. as of
December 31, 2015 and 2014, and the results of its operations
and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the
Company has incurred recurring operating losses and is dependent on
additional financing to fund operations. These conditions raise
substantial doubt about the Company’s ability to continue as
a going concern. Management’s plans in regard to these
matters are described in Note 1 to the consolidated financial
statements. The consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
/s/
CohnReznick LLP
San
Diego, California
March
14, 2016 (except for the effects of the matter discussed in the
first paragraph of Note 14 to the consolidated financial
statements, as to which the date is August 16,
2016)
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Balance
Sheets
|
December 31,
|
|
|
2015
|
2014
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$4,084,085
|
$1,477,143
|
Grants
receivable
|
757,562
|
84,344
|
Prepaid
expenses
|
419,751
|
334,629
|
Other
current assets
|
47,586
|
14,675
|
Total
current assets
|
5,308,984
|
1,910,791
|
Property
and equipment, net
|
135,486
|
57,053
|
Goodwill
|
6,826,003
|
6,826,003
|
Other
long-term assets
|
126,654
|
11,017
|
Total
assets
|
$12,397,127
|
$8,804,864
|
Liabilities, Redeemable Convertible Preferred Stock and
Stockholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$3,002,497
|
$1,313,247
|
Accrued
compensation
|
562,755
|
230,381
|
Accrued
clinical operations and site costs
|
391,041
|
494,110
|
Accrued
lease contingency fee
|
590,504
|
590,504
|
Other
accrued expenses
|
411,566
|
245,421
|
Warrant
liability
|
—
|
92,463
|
Total
current liabilities
|
4,958,363
|
2,966,126
|
Commitments
and contingencies
|
|
|
Redeemable
convertible preferred stock:
|
|
|
MabVax
Therapeutics Holdings Series B redeemable convertible preferred
stock, 1,250,000 shares authorized, none and 1,250,000 issued and
outstanding as of December 31, 2015 and 2014, respectively,
with a liquidation preference of $2,627,123 as of December 31,
2014
|
—
|
1,838,025
|
Total
redeemable convertible preferred stock
|
—
|
1,838,025
|
Stockholders’
equity (deficit):
|
|
|
Series
A-1 convertible preferred stock, 2,763,000 shares authorized, none
and 1,593,389 shares issued and outstanding as of December 31,
2015 and 2014, respectively, with a liquidation preference of
$2,860,233 as of December 31, 2014
|
—
|
4,029,576
|
Series
C convertible preferred stock, 200,000 shares authorized, none and
96,571 shares issued and outstanding as of December 31, 2015
and 2014, respectively, with no liquidation preference
|
—
|
966
|
Series
D convertible preferred stock, $0.01 par value, 1,000,000 shares
authorized, 191,491 and no shares issued and outstanding as of
December 31, 2015 and 2014, respectively, with a liquidation
preference of $1,915 as of December 31, 2015
|
1,915
|
—
|
Series
E convertible preferred stock, $0.01 par value, 100,000 shares
authorized, 33,333 and no shares issued and outstanding as of
December 31, 2015 and 2014, respectively, with a liquidation
preference of $333 as of December 31, 2015
|
333
|
—
|
Common
stock, $0.01 par value; 150,000,000 shares authorized as of
December 31, 2015, 3,836,632 and 378,766 shares issued and
outstanding as of December 31, 2015 and 2014,
respectively
|
38,366
|
3,787
|
Additional
paid-in capital
|
67,999,928
|
24,516,692
|
Accumulated
deficit
|
(60,601,778)
|
(24,550,308)
|
Total
stockholders’ equity
|
7,438,764
|
4,000,713
|
Total
liabilities, redeemable convertible preferred stock and
stockholders’ equity
|
$12,397,127
|
$8,804,864
|
See Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of
Operations
|
For the Years Ended December 31,
|
|
|
2015
|
2014
|
Revenues:
|
|
|
Grants
|
$1,267,036
|
$304,175
|
Other
|
—
|
10,000
|
Total
revenues
|
1,267,036
|
314,175
|
|
|
|
Operating
costs and expenses:
|
|
|
Research
and development
|
9,596,768
|
3,502,730
|
General
and administrative
|
9,795,163
|
5,204,341
|
Total
operating costs and expenses
|
19,391,931
|
8,707,071
|
Loss
from operations
|
(18,124,895)
|
(8,392,896)
|
Interest
and other income (expense)
|
(227)
|
(379)
|
Change
in fair value of warrant liability
|
19,807
|
475,422
|
Net
loss
|
(18,105,315)
|
(7,917,853)
|
Deemed
dividend on Series A-1 preferred stock
|
(9,017,512)
|
(2,214,911)
|
Deemed
dividend on Series A-1 warrant
|
(179,411)
|
—
|
Deemed
dividend on Series B preferred stock
|
(8,655,998)
|
—
|
Accretion
of preferred stock dividends
|
(93,234)
|
(444,992)
|
Net
loss allocable to common stockholders
|
$(36,051,470)
|
$(10,577,756)
|
Basic
and diluted net loss per share
|
$(13.44)
|
$(70.36)
|
Shares
used to calculate basic and diluted net loss per share
|
2,681,740
|
150,336
|
See Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS,
INC.
Consolidated Statements of Redeemable Convertible Preferred Stock,
Convertible Preferred Stock and Stockholders’ Equity
(Deficit)
|
|
Redeemable Convertible Preferred Stock
|
|
|||||||||||||||||||||||||||||||||
|
|
MabVax Series A
|
|
|
MabVax Series B
|
|
|
MabVax Series C-1
|
|
|
Series B
|
|
|
|
|
|||||||||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Total
|
|
|||||||||
Balance at December 31, 2013
|
|
|
956,240
|
|
|
$
|
5,787,906
|
|
|
|
891,485
|
|
|
$
|
6,737,276
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
12,525,182
|
|
Exercise
of Series B warrant in January at $0.01 per share
|
|
|
—
|
|
|
|
—
|
|
|
|
194,281
|
|
|
|
1,942
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,942
|
|
Conversion
of $240,000 in accounts payable into 6,009 shares of common stock
on February 12, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Issuance
of MabVax Series C-1 preferred stock in February at $0.84 per
share, net of issuance costs of $126,345
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,697,702
|
|
|
|
2,973,655
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,973,655
|
|
Deemed
dividend related to beneficial conversion feature of MabVax Series
C-1 preferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,214,911
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,214,911
|
|
Issuance
of common stock at $68.97 per share, net of issuance costs of
$156,303 in June and July
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Reclassification
of Series A and Series B to equity in June
|
|
|
(956,240
|
)
|
|
|
(5,787,906
|
)
|
|
|
(1,085,766
|
)
|
|
|
(6,739,218
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,527,124
|
)
|
Conversion
of Series A to common stock on July 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series B to common stock on July 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accretion
of redemption value for Series C-1 to July 8,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
99,200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
99,200
|
|
Exercise
of Series C-1 warrant on July 7, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,827,979
|
|
|
|
1,472,502
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,472,502
|
|
Accretion
of redemption value for Series C-1 warrant to July 8,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,120
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,120
|
|
Conversion
of Series C-1 into Series A-1 on July 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,525,681
|
)
|
|
|
(6,807,388
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,807,388
|
)
|
Accretion
of redemption value for Series A-1 from July 8 to December 31,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Acquisition
of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) at exchange
ratio of 2.223284 shares of MabVax Therapeutics Holdings for every
share of MabVax, including 568,299 common and 1,250,000 Series
B preferred stock outstanding in July
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,250,000
|
|
|
|
1,710,902
|
|
|
|
1,710,902
|
|
Accretion
of redemption value for Series B from May 12,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
127,123
|
|
|
|
127,123
|
|
Exchange
of common stock for Series C on September 3, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Elimination
of fractional shares resulting from Reverse Split on
September 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Shares
issued in connection with exercise of warrants on a cashless basis
in September and October
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series A-1 into common stock from November 13 to December
31, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series C into common stock from October to December
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at December 31, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,250,000
|
|
|
|
1,838,025
|
|
|
|
1,838,025
|
|
Conversion
of Series A-1 into common stock on January 10 and February 25,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series C into common stock on January 10, 2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series B into common stock between March 3 and March 20,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(106,437
|
)
|
|
|
(160,380
|
)
|
|
|
(160,380)
|
|
Accretion
of redemption value for Series A-1 from January 1 to March 25,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accretion
of redemption value for Series B from January 1 to March 25,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,485
|
|
|
|
45,485
|
|
Deemed
dividend related to exchange of common stock for Series A-1, Series
A-1 Warrants, and Series B on March 25, 2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,655,998
|
|
|
|
8,655,998
|
|
Exchange of Series A-1 and Series A-1 Warrants into common and
Series D on March 25, 2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Exchange of Series B into Common and Series D on March 25,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,143,563
|
)
|
|
|
(10,379,128
|
)
|
|
|
(10,379,128)
|
|
||||||||||||||||||||||||||||||||||||||
Private Placement Issuance of 900,135 shares at $5.55 per share,
net of issuance costs of $281,023 on March 31,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Issuance of additional common stock in March 2015 under common
stock Purchase Agreement in relation to financing on July 7,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Private Placement Issuance of 760,135 shares at $5.55 per share,
net of issuance costs of $387,127 on April 10,
2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Private
Placement Issuance of 33,333 shares at $75 per share of Series E
Preferred Stock on April 10, 2015
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Issuance
of restricted common stock in April 2015 for services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Issuance
of restricted common stock to former board member on April 3, 2015
upon termination
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Conversion
of Series D Preferred Stock to common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Stock
option exercise
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Shares
issued in connection with exercise of warrants on a cashless
basis
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Elimination
of warrant liability in exchange transaction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2015
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
See Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements
of Redeemable Convertible Preferred Stock, Convertible Preferred
Stock and Stockholders’ Equity (Deficit)
|
Convertible Preferred Stock
|
|
|||||||||||||||||||||
|
MabVax Series A
|
|
MabVax Series B
|
|
|
Series A-1
|
|
Series C
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||
Balance at December 31, 2013
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
Exercise
of Series B warrant in January at $0.01 per share
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Conversion
of $240,000 in accounts payable into 6,009 shares of common stock
on February 12, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Issuance
of MabVax Series C-1 preferred stock in February at $0.84 per
share, net of issuance costs of $126,345
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Deemed
dividend related to beneficial conversion feature of MabVax Series
C-1 preferred
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Issuance
of common stock at $68.97 per share, net of issuance costs of
$156,303 in June and July
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Reclassification
of Series A and Series B to equity in June
|
956,240
|
|
|
5,787,906
|
|
1,085,766
|
|
|
6,739,218
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Conversion
of Series A to common stock on July 8, 2014
|
(956,240
|
)
|
|
(5,787,906
|
)
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Conversion
of Series B to common stock on July 8, 2014
|
—
|
|
|
—
|
|
(1,085,766
|
)
|
|
(6,739,218
|
)
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Accretion
of redemption value for Series C-1 to July 8,
2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Exercise
of Series C-1 warrant on July 7, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Accretion
of redemption value for Series C-1 warrant to July 8,
2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Conversion
of Series C-1 into Series A-1 on July 8, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
2,762,841
|
|
|
|
6,807,388
|
|
—
|
|
|
—
|
|
Accretion
of redemption value for Series A-1 from July 8 to December 31,
2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
171,549
|
|
—
|
|
|
—
|
|
Acquisition
of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) at exchange
ratio of 2.223284 shares of MabVax Therapeutics Holdings for every
share of MabVax, including 568,299 common and 1,250,000 Series B
preferred stock outstanding in July
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Accretion
of redemption value for Series B from May 12,
2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Exchange
of common stock for Series C on September 3, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
118,970
|
|
|
1,190
|
|
Elimination
of fractional shares resulting from reverse split on
September 8, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
Shares
issued in connection with exercise of warrants on a cashless basis
in September and October
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Conversion
of Series A-1 into common stock from November 13 to December
31, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
(1,169,452
|
)
|
|
|
(2,949,361
|
)
|
|
—
|
|
|
—
|
|
Conversion
of Series C into common stock from October to December
2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(22,399
|
)
|
|
(224)
|
|
Stock-based
compensation
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net
loss
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Balance at December 31, 2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
1,593,389
|
|
|
|
4,029,576
|
|
|
96,571
|
|
|
966
|
|
Conversion
of Series A-1 into common stock on January 10 and February 25,
2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
(64,019
|
)
|
|
|
(162,968)
|
|
|
—
|
|
|
—
|
|
Conversion
of Series C into common stock on January 10, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(96,571
|
)
|
|
(966)
|
|
Conversion
of Series B into common stock between March 3 and March 20,
2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Accretion
of redemption value for Series A-1 from January 1 to March 25,
2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
47,749
|
|
|
—
|
|
|
—
|
|
Accretion
of redemption value for Series B from January 1 to March 25,
2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Deemed
dividend related to exchange of common stock for Series A-1, Series
A-1 Warrants, and Series B on March 25, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
9,196,923
|
|
|
—
|
|
|
—
|
|
Exchange
of Series A-1 and Series A-1 Warrants into common and Series D
on March 25, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
(1,529,370)
|
|
|
|
(13,111,280
|
)
|
|
—
|
|
|
—
|
|
Exchange
of Series B into common and Series D on March 25, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private
Placement Issuance of 900,135 shares at $5.55 per share, net of
issuance costs of $281,023 on March 31, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Issuance
of additional common stock in March 2015 under common stock
Purchase Agreement in relation to financing on July 7,
2014
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private
Placement Issuance of 760,135 shares at $5.55 per share, net of
issuance costs of $387,127 on April 10, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Private
Placement Issuance of 33,333 shares at $75 per share of Series E
Preferred Stock on April 10, 2015
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Issuance
of restricted common stock in April 2015 for services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Issuance
of restricted common stock to former board member on April 3, 2015
upon termination
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series D Preferred Stock to common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Stock
option exercise
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Shares
issued in connection with exercise of warrants on a cashless
basis
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Elimination
of warrant liability in exchange transaction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance at December 31, 2015
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
See Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Redeemable Convertible Preferred
Stock, Convertible Preferred Stock and Stockholders’ Equity
(Deficit)
|
|
Series D & E Convertible Preferred Stock
|
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholders' Equity
|
|
|||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
(Deficit)
|
|
|||||||
Balance at December 31, 2013
|
|
|
—
|
|
|
$
|
—
|
|
|
|
31,149
|
|
|
$
|
311
|
|
|
$
|
609,907
|
|
|
$
|
(13,972,552
|
)
|
|
$
|
(13,362,334
|
)
|
Exercise
of Series B warrant in January at $0.01 per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of $240,000 in accounts payable into 6,009 shares of common stock
on February 12, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
6,009
|
|
|
|
60
|
|
|
|
239,940
|
|
|
|
—
|
|
|
|
240,000
|
|
Issuance
of MabVax Series C-1 preferred stock in February at $0.84 per
share, net of issuance costs of $126,345
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Deemed
dividend related to beneficial conversion feature of MabVax Series
C-1 preferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,214,911
|
)
|
|
|
(2,214,911
|
)
|
Issuance
of common stock at $68.97 per share, net of issuance costs of
$156,303 in June and July
|
|
|
—
|
|
|
|
—
|
|
|
|
44,090
|
|
|
|
441
|
|
|
|
2,883,892
|
|
|
|
—
|
|
|
|
2,884,333
|
|
Reclassification
of Series A and Series B to equity in June
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,527,124
|
|
Conversion
of Series A to common stock on July 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
35,912
|
|
|
|
359
|
|
|
|
5,787,547
|
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series B to common stock on July 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
40,776
|
|
|
|
408
|
|
|
|
6,738,810
|
|
|
|
—
|
|
|
|
—
|
|
Accretion
of redemption value for Series C-1 to July 8,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(99,200
|
)
|
|
|
(99,200
|
)
|
Exercise
of Series C-1 warrant on July 7, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accretion
of redemption value for Series C-1 warrant to July 8,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(47,120
|
)
|
|
|
(47,120
|
)
|
Conversion
of Series C-1 into Series A-1 on July 8, 2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,807,388
|
|
Accretion
of redemption value for Series A-1 from July 8 to December 31,
2014
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(171,549
|
)
|
|
|
—
|
|
Acquisition
of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) at exchange
ratio of 2.223284 shares of MabVax Therapeutics Holdings for every
share of MabVax, including 568,299 common and 1,250,000 Series B
preferred stock outstanding in July
|
|
—
|
|
|
—
|
|
|
77,413
|
|
|
774
|
|
|
4,704,952
|
|
|
—
|
|
|
|
4,705,726
|
|
Accretion
of redemption value for Series B from May 12,
2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127,123
|
)
|
|
|
(127,123
|
)
|
Exchange
of common stock for Series C on September 3, 2014
|
|
—
|
|
|
—
|
|
|
(20,096
|
)
|
|
(201
|
)
|
|
(989
|
)
|
|
—
|
|
|
|
—
|
|
Elimination
of fractional shares resulting from Reverse Split on
September 8, 2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(293
|
)
|
|
—
|
|
|
|
(293
|
)
|
Shares
issued in connection with exercise of warrants on a cashless basis
in September and October
|
|
—
|
|
|
—
|
|
|
66,035
|
|
|
660
|
|
|
(660
|
)
|
|
—
|
|
|
|
—
|
|
Conversion
of Series A-1 into common stock from November 13 to December
31, 2014
|
|
—
|
|
|
—
|
|
|
93,694
|
|
|
937
|
|
|
2,948,424
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series C into common stock from October to December
2014
|
|
—
|
|
|
—
|
|
|
3,784
|
|
|
38
|
|
|
186
|
|
|
—
|
|
|
|
—
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
604,976
|
|
|
—
|
|
|
|
604,976
|
|
Net
loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,917,853
|
)
|
|
|
(7,917,853
|
)
|
Balance at December 31, 2014
|
|
—
|
|
|
—
|
|
|
378,766
|
|
|
3,787
|
|
|
24,516,692
|
|
|
(24,550,308
|
)
|
|
|
4,000,713
|
|
Conversion
of Series A-1 into common stock on January 10 and February 25,
2015
|
|
—
|
|
|
—
|
|
|
5,197
|
|
|
52
|
|
|
162,916
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series C into common stock on January 10, 2015
|
|
—
|
|
|
—
|
|
|
16,313
|
|
|
163
|
|
|
803
|
|
|
—
|
|
|
|
—
|
|
Conversion
of Series B into common stock between March 3 and March 20,
2015
|
|
—
|
|
|
—
|
|
|
37,416
|
|
|
374
|
|
|
160,006
|
|
|
—
|
|
|
|
160,380
|
|
Accretion
of redemption value for Series A-1 from January 1 to March 25,
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,749
|
)
|
|
|
—
|
|
Accretion
of redemption value for Series B from January 1 to March 25,
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,485
|
)
|
|
|
(45,485
|
)
|
Deemed
dividend related to exchange of common stock for Series A-1, Series
A-1 Warrants, and Series B on March 25, 2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(17,852,921
|
)
|
|
|
(8,655,998
|
)
|
Exchange
of Series A-1 and Series A-1 Warrants into common and Series D
on March 25, 2015
|
|
117,583
|
|
|
1,176
|
|
|
299,109
|
|
|
|
2,991
|
|
|
|
13,107,113
|
|
|
|
—
|
|
|
|
—
|
|
Exchange
of Series B into common and Series D on March 25, 2015
|
|
120,573
|
|
|
1,206
|
|
|
43,797
|
|
|
|
438
|
|
|
|
10,377,484
|
|
|
|
—
|
|
|
|
10,379,128
|
|
Private
Placement Issuance of 900,135 shares at $5.55 per share, net of
issuance costs of $281,023 on March 31, 2015
|
|
—
|
|
|
—
|
|
|
900,135
|
|
|
|
9,001
|
|
|
|
4,705,725
|
|
|
|
—
|
|
|
|
4,714,726
|
|
Issuance
of additional common stock in March 2015 under common stock
Purchase Agreement in relation to financing on July 7,
2014
|
|
—
|
|
|
—
|
|
|
11,904
|
|
|
|
119
|
|
|
|
(119
|
)
|
|
|
—
|
|
|
|
—
|
|
Private
Placement Issuance of 760,135 shares at $5.55 per share, net of
issuance costs of $387,127 on April 10, 2015
|
|
—
|
|
|
—
|
|
|
760,135
|
|
|
|
7,601
|
|
|
|
3,824,021
|
|
|
|
—
|
|
|
|
3,831,622
|
|
Private
Placement Issuance of 33,333 shares at $75 per share of Series E
Preferred Stock on April 10, 2015
|
|
33,333
|
|
|
333
|
|
|
—
|
|
|
|
—
|
|
|
|
2,499,667
|
|
|
|
—
|
|
|
|
2,500,000
|
|
Issuance
of restricted common stock in April 2015 for services
|
|
—
|
|
|
—
|
|
|
247,500
|
|
|
|
2,476
|
|
|
|
1,909,974
|
|
|
|
—
|
|
|
|
1,912,450
|
|
Issuance
of restricted common stock to former board member on April 3, 2015
upon termination
|
|
—
|
|
|
—
|
|
|
2,703
|
|
|
|
27
|
|
|
|
45,973
|
|
|
|
—
|
|
|
|
46,000
|
|
Conversion
of Series D Preferred Stock to common stock
|
|
(46,665
|
)
|
|
(467
|
)
|
|
630,608
|
|
|
|
6,306
|
|
|
|
(5,839
|
)
|
|
|
—
|
|
|
|
—
|
|
Stock
option exercise
|
|
—
|
|
|
—
|
|
|
376
|
|
|
|
4
|
|
|
|
796
|
|
|
|
—
|
|
|
|
800
|
|
Shares
issued in connection with exercise of warrants on a cashless
basis
|
|
—
|
|
|
—
|
|
|
164,835
|
|
|
|
1,648
|
|
|
|
(1,648
|
)
|
|
|
—
|
|
|
|
—
|
|
Elimination
of warrant liability in exchange transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
72,656
|
|
|
|
—
|
|
|
|
72,656
|
|
Issuance
of shares in registered offering in October 2015, net of issuance
costs
|
|
—
|
|
|
—
|
|
|
337,838
|
|
|
|
3,379
|
|
|
|
2,160,013
|
|
|
|
—
|
|
|
|
2,163,392
|
|
Stock-based
compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
4,463,695
|
|
|
|
—
|
|
|
|
4,463,695
|
|
Net
loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,105,315
|
)
|
|
|
(18,105,315
|
)
|
Balance at December 31, 2015
|
|
224,824
|
|
$
|
2,248
|
|
|
3,836,632
|
|
|
$
|
38,366
|
|
|
$
|
67,999,928
|
|
|
$
|
(60,601,778
|
)
|
|
$
|
7,438,764
|
|
See Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Cash
Flows
|
|
For the Years Ended December 31,
|
|
|||||
|
|
2015
|
|
|
2014
|
|
||
Operating activities
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(18,105,315
|
)
|
|
$
|
(7,917,853
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
21,360
|
|
|
|
12,241
|
|
Stock-based
compensation
|
|
|
4,463,695
|
|
|
|
604,976
|
|
Change
in fair value of warrants
|
|
|
(19,807
|
)
|
|
|
(475,422
|
)
|
Issuance
of restricted common stock for services
|
|
|
1,958,450
|
|
|
|
—
|
|
Increase
(decrease) in operating assets and liabilities excluding effects of
the Merger:
|
|
|
|
|
|
|
|
|
Grants
receivable
|
|
|
(673,218
|
)
|
|
|
(84,344
|
)
|
Other
receivables
|
|
|
2,275
|
|
|
|
28,316
|
|
Prepaid
expenses and other
|
|
|
(199,377
|
)
|
|
|
(117,004
|
)
|
Accounts
payable
|
|
|
1,631,305
|
|
|
|
1,246,270
|
|
Accrued
clinical operations and site costs
|
|
|
(103,069)
|
|
|
|
(279,413
|
)
|
Accrued
compensation
|
|
|
332,374
|
|
|
|
(789,014
|
)
|
Other
accrued expenses
|
|
|
166,145
|
|
|
|
109,228
|
|
Net
cash used in operating activities
|
|
|
(10,525,182
|
)
|
|
|
(7,662,019
|
)
|
Investing activities
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
(78,416
|
)
|
|
|
(44,807
|
)
|
Proceeds
from acquisition of Telik, Inc.
|
|
|
—
|
|
|
|
1,497,283
|
|
Net
cash provided by (used in) investing activities
|
|
|
(78,416
|
)
|
|
|
1,452,476
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Issuances
of preferred stock, net of issuance costs
|
|
|
2,500,000
|
|
|
|
2,973,655
|
|
Proceeds
from exercise of MabVax Series B warrant
|
|
|
—
|
|
|
|
1,942
|
|
Proceeds
from exercise of MabVax Series C-1 warrants
|
|
|
—
|
|
|
|
1,472,502
|
|
Proceeds
from exercise of stock options
|
|
|
800
|
|
|
|
—
|
|
Proceeds
from issuance of common stock, net of issuance costs
|
|
|
10,709,740
|
|
|
|
2,884,333
|
|
Net
cash provided by financing activities
|
|
|
13,210,540
|
|
|
|
7,332,432
|
|
Net
change in cash and cash equivalents
|
|
|
2,606,942
|
|
|
|
1,122,889
|
|
Cash
and cash equivalents at beginning of year
|
|
|
1,477,143
|
|
|
|
354,254
|
|
Cash
and cash equivalents at end of year
|
|
$
|
4,084,085
|
|
|
$
|
1,477,143
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash
paid during the year for income taxes
|
|
$
|
1,600
|
|
|
$
|
800
|
|
Supplemental disclosures of non-cash investing and financing
information:
|
|
|
|
|
|
|
|
|
Deemed
dividend on beneficial conversion feature for preferred
stock
|
|
$
|
17,852,921
|
|
|
$
|
2,214,911
|
|
Goodwill
on acquisition of Telik, Inc.
|
|
$
|
—
|
|
|
$
|
6,826,003
|
|
Warrant
liability upon acquisition of Telik, Inc.
|
|
$
|
—
|
|
|
$
|
567,885
|
|
Accretion
of redemption value for Series A-1, B and C-1 preferred
stock
|
|
$
|
93,234
|
|
|
$
|
444,992
|
|
Issuance
of common stock for accounts payable
|
|
$
|
—
|
|
|
$
|
240,000
|
|
Conversion
of Series A and Series B redeemable preferred stock into common
stock
|
|
$
|
160,380
|
|
|
$
|
12,527,124
|
|
Conversion
of Series C-1 redeemable preferred stock into Series A-1 preferred
stock
|
|
$
|
—
|
|
|
$
|
6,807,388
|
|
Conversion
of Series D preferred stock into common stock
|
|
$
|
467
|
|
|
$
|
—
|
|
Conversion
of Series A-1 preferred stock and warrants into common stock and
Series D preferred stock
|
|
$
|
162,968
|
|
|
$
|
—
|
|
Acquisition
of MabVax Therapeutics Holdings in relation to the
merger
|
|
$
|
—
|
|
|
$
|
4,705,726
|
|
Exchange
of Series A-1 preferred stock and warrants to common stock and
Series D convertible preferred stock
|
|
$
|
13,111,280
|
|
|
$
|
2,949,361
|
|
Exchange
of Series B preferred stock and warrants to common stock and Series
D convertible preferred stock
|
|
$
|
10,451,784
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Warrants
exercised to purchase common stock on a cashless basis to purchase
66,035 shares of common stock.
|
|
$
|
12,198
|
|
|
$
|
4,887
|
|
Conversion
of common stock to Series C preferred stock
|
|
$
|
—
|
|
|
$
|
1,190
|
|
Elimination
of warrant liability in exchange transaction
|
|
$
|
72,656
|
|
|
$
|
—
|
|
Financing
transaction not yet paid
|
|
$
|
36,570
|
|
|
$
|
—
|
|
Conversion
of Series C preferred stock to common stock
|
|
$
|
966
|
|
|
$
|
224
|
|
Property and equipment
accrued in accounts payable
|
|
$
|
21,376
|
|
|
$
|
—
|
|
See Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
1. Nature of Operations and Basis of Presentation
MabVax Therapeutics Holdings, Inc. (f.k.a. Telik, Inc. and referred
to herein as “MabVax Therapeutics Holdings” or the
“Company”) (OTCQB: MBVX) was incorporated in the state
of Delaware on October 20, 1988. On July 8, 2014, Tacoma
Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of MabVax Therapeutics Holdings (“Tacoma
Corp.”) merged with MabVax Therapeutics, Inc., a Delaware
corporation (“MabVax Therapeutics”) pursuant to an
Agreement and Plan of Merger, dated May 12, 2014, by and among
MabVax Therapeutics Holdings, Tacoma Corp. and MabVax Therapeutics,
as amended by that certain Amendment No. 1 to the Merger
Agreement, dated June 30, 2014, by and among the parties
thereto and by that certain Amendment No. 2 to the Merger
Agreement, dated July 7, 2014, by and among the parties
thereto (such agreement as amended, the “Merger
Agreement”; such Merger, the “Merger”). Unless
the context otherwise requires, references to “we,”
“our,” “us,” or the “Company”
in this Annual Report mean MabVax Therapeutics Holdings on a
consolidated financial statement basis with our wholly owned
subsidiary following the Merger, MabVax Therapeutics, as
applicable. On October 9, 2014 FINRA approved The Company’s
stock symbol change request and the Company began trading under the
symbol MBVX (OTCQB: MBVX) on October 10, 2014.
The Company is a clinical stage biopharmaceutical company engaged
in the discovery, development and commercialization of proprietary
human monoclonal antibody products and vaccines for the treatment
of a variety of cancers. The Company has discovered a pipeline of
human monoclonal antibody products based on the protective immune
responses generated by patients who have been immunized against
targeted cancers. Therapeutic vaccines under development were
discovered at Memorial Sloan Kettering Cancer Center
(“MSK”) and are exclusively licensed to MabVax
Therapeutics. The Company operates in only one business
segment.
The Company has incurred net losses since inception and expects to
incur substantial losses for the foreseeable future as it continues
its research and development activities. To date, the Company has
funded operations primarily through government grants, the sale of
preferred stock and equity securities, non-equity payments from
collaborators and interest income. The process of developing
products will require significant additional research and
development, preclinical testing and clinical trials, as well as
regulatory approvals. The Company expects these activities,
together with general and administrative expenses, to result in
substantial operating losses for the foreseeable future. The
Company will not receive substantial revenue unless the Company or
its collaborative partners' complete clinical trials, obtain
regulatory approvals and successfully commercialize one or more
products; or the Company licenses its technology after achieving
one or more milestones of interest to a potential
partner.
Liquidity and Going Concern
The accompanying consolidated financial statements have been
prepared on the going concern basis, which assumes that the Company
will continue to operate as a going concern and which contemplates
the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As reflected in the
accompanying consolidated financial statements, the Company had a
net loss of $18,105,315, net cash used in operating activities of
$10,525,182 and net cash used by investing activities of $78,416,
for the year ended December 31, 2015. As of December 31,
2015, the Company had $4,084,085 in cash and cash equivalents and
an accumulated deficit of $60,601,778.
On March 31, 2015 and April 10, 2015, we closed on a financing
transaction by entering into separate subscription agreements with
accredited investors relating to the issuance and sale of an
aggregate of $11,714,498 of units (the
“Units”) at a purchase price of $5.55 per Unit, with
each Unit consisting of one share of common stock, par value $0.01
per share (or, at the election of any investor who, as a
result of receiving common stock would hold in excess of 4.99% of
the Company’s issued and outstanding common stock, shares of
the Company’s newly designated 0% Series E Convertible
Preferred Stock) and a thirty-month warrant to purchase
one half of one share of common stock at an initial exercise price
of $11.10 per share, as further described in the Notes to Financial
Statements – Equity, (the “April 2015 Private
Placement”).
The initial closing of the April 2015 Private Placement took place
on March 31, 2015, in which the Company sold an aggregate of
$4,995,749 of Units. Following the initial closing The Company
entered into separate reconfirmation agreements with the investors
in order to extend the initial closing date, increase the offering
amount, and adopt a lockup agreement, which was entered by all
investors who elected to continue their investment. The
second closing was completed on April 10, 2015 for an additional
$6,718,751 of Units. The Company issued $2,500,000 of Units
consisting of Series E Convertible Preferred Stock on April 10,
2015 and the remainder of Units issued in the April
2015 Private Placement were in the form of common stock
Units. Of the total cash received in the second closing
on April 10, 2015, $3,500,000 was initially held in escrow under
the terms of an escrow agreement with Signature Bank, N.A for a
period of 10 weeks pending the approval of a representative of one
of the lead investors to release the funds. On June 22,
2015, the Company, Signature Bank, N.A. and OPKO Health, Inc.
(“OPKO”) extended the term of the escrow to 16 weeks
from the closing of the April 2015 Private Placement. As
further consideration for the amendment, on June 30, 2015, the
Company and OPKO entered into a letter agreement pursuant to which
the Company granted OPKO the right, but not the obligation, until
June 30, 2016, to nominate and appoint up to two additional members
of the Company’s board of directors (the “Board”
or the “Board of Directors”), or to approve the
person(s) nominated by the Company pursuant to the agreement in
consideration for the release of the escrowed funds. The nominees
will be subject to the satisfaction of standard corporate
governance practices and any applicable national securities
exchange requirements. Upon signing the agreement, the
escrowed funds were released to the Company.
On October 5, 2015, we closed a public offering of 337,838 shares
of common stock and warrants to purchase 168,919 shares of common
stock, at an offering price of $8.14 per share. For every two
shares of common stock sold, the Company issued one warrant to
purchase one share of common stock. The Company received
$2,750,000 in gross proceeds, before underwriting discounts and
commissions and offering expenses totaling approximately $586,608,
and without giving effect to the exercise of the
underwriters’ over-allotment option. The Company
intends to use the net proceeds from this offering to fund the
HuMab-5B1 human antibody program through Phase I clinical
development and for working capital and general corporate
purposes.
The shares and warrants were separately issued and sold in equal
proportions. The warrants are immediately exercisable, expire
September 30, 2018, and have an exercise price of $9.77 per
share. The warrants will not be listed on any securities
exchange or other trading market. The underwriters did not exercise
a 30-day option to purchase up to an additional 50,676 shares of
common stock and up to an additional 25,338 warrants at the same
price to cover over-allotments, if any.
Under the terms of the underwriting agreement entered into between
the Company and the underwriter in the public offering, the
Company, without the prior written consent of the underwriter, was
prohibited, for a period of 90 days after execution of the
underwriting agreement, from issuing any equity securities, subject
to certain exceptions.
On October 12, 2015, the Company and investors holding over 60% of
the outstanding Registerable Securities (as such term is defined in
the Registration Rights Agreements) issued in the April 2015
Private Placement entered into a third amendment agreement to the
Registration Rights Agreements to suspend the Company’s
registration obligations under the Registration Rights Agreements
and related subscription agreements during any period when the
“Standstill” provision set forth in 5(u) of the related
subscription agreements is in effect. On January 28, 2016, we filed
a registration statement with the SEC; and we gave notification of
effectiveness of the registration statement on February 10,
2016.
On January 15, 2016, the Company and Oxford Finance LLC, as
collateral agent and lender, entered into a Loan and Security
Agreement providing for senior secured term loans to the Company in
an aggregate principal amount of up to $10,000,000, subject to the
terms and conditions set forth in the Loan Agreement (the
“January 2016 Term Loan”). On January 15,
2016, the Company received an initial loan of $5,000,000 under the
Loan Agreement, before fees and issuance costs of approximately
$381,000.
We anticipate that the Company will continue to incur net losses
into the foreseeable future as we: (i) initiate in the first
quarter 2016 Phase I clinical trials planned for our stand-alone
therapeutic HuMab 5b-1 and early in 2016 our PET imaging agent
89Zr-HuMab-5B1, (ii) continue to conduct preclinical efforts on
several other programs, and (iii) continue operations as a
public company. After giving effect to the net proceeds received
from the January 2016 Term Loan, management believes that the
Company has sufficient funds to meet its obligations through
September 2016. These conditions give rise to substantial doubt as
to the Company’s ability to continue as a going concern. The
accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
We plan to continue to fund the Company’s losses from
operations and capital funding needs through equity or debt
financings, strategic collaborations, licensing arrangements, asset
sales, government grants or other arrangements. However, we cannot
be sure that such additional funds will be available on reasonable
terms, or at all. If we are unable to secure adequate additional
funding, we may be forced to make reductions in spending, extend
payment terms with suppliers, liquidate assets where possible,
and/or suspend or curtail planned programs. In addition, if the
Company does not meet its payment obligations to third parties as
they come due, it may be subject to litigation claims. Even if we
are successful in defending against these claims, litigation could
result in substantial costs and be a distraction to management. Any
of these actions could materially harm the Company’s
business, results of operations, and future prospects.
If we raise additional funds by issuing equity securities,
substantial dilution to existing stockholders would result. If we
raise additional funds by incurring debt financing, the terms of
the debt may involve significant cash payment obligations as well
as covenants and specific financial ratios that may restrict the
Company’s ability to operate its business.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements reflect all of
our activities, including those of our wholly owned subsidiaries.
All material intercompany accounts and transactions have been
eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America (“GAAP”) requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
expenses during the reporting period. Management believes that
these estimates are reasonable; however, actual results may differ
from these estimates.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The
Company minimizes its credit risk associated with cash and cash
equivalents by periodically evaluating the credit quality of its
primary financial institution. The balance at times may exceed
federally insured limits. The Company has not experienced any
losses on such accounts.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash
equivalents, grants receivable, other receivable, accounts payable,
all of which are generally considered to be representative of their
respective fair values because of the short-term nature of those
instruments.
Grants Receivable
Grants receivable at December 31, 2015 represent amounts due
under the NIH Imaging Contract Phase II with the National Cancer
Institute (the “NCI”), a division of the National
Institutes of Health, or NIH (collectively, the “NIH
Grants”). The Company considers the grants receivable to be
fully collectible; accordingly, no allowance for doubtful accounts
has been established. Grants receivable balances may include
unbilled amounts for which work was completed by the Company as of
the balance sheet date. If amounts become uncollectible, they are
charged to operations.
Property and Equipment
Property and equipment are carried at cost less accumulated
depreciation. Depreciation of property and equipment is computed
using the straight-line method over the estimated useful lives of
the assets, which are generally three to five years. Leasehold
improvements are amortized over the lesser of the life of the lease
or the life of the asset.
Impairment of Long-lived Assets
We evaluate the Company’s long-lived assets with definite
lives, such as property and equipment, for impairment. We record
impairment losses on long-lived assets used for operations when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the
carrying value of the assets. There have not been any impairment
losses of long-lived assets for the years ended December 31,
2015 and 2014.
Impairment of Goodwill
We apply Generally Accepted Accounting Principles
(“GAAP”) related to Intangibles – Goodwill and
Other to test for goodwill impairment annually. The Company has
conducted the annual impairment test and evaluated goodwill as of
December 31, 2015, and concluded that no impairment of goodwill has
taken place for the year ended December 31, 2015.
Revenue Recognition
Revenue from grants is based upon internal and subcontractor costs
incurred that are specifically covered by the grant, including a
facilities and administrative rate that provides funding for
overhead expenses. NIH Grants are recognized when the Company
incurs internal expenses that are specifically related to each
grant, in clinical trials at the clinical trial sites, by
subcontractors who manage the clinical trials, and provided the
grant has been approved for payment. U.S. Treasury grant awards are
based upon internal research and development costs incurred that
are specifically covered by the grant, and revenues are recognized
when the Company incurs internal expenses that are related to the
approved grant. The Company records revenue associated with the NIH
Grants as the related costs and expenses are incurred. Any amounts
received by the Company pursuant to the NIH Grants prior to
satisfying the Company’s revenue recognition criteria are
recorded as deferred revenue.
Research and Development Costs
Research and development expenses, which consist primarily of
salaries and other personnel costs, clinical trial costs and
preclinical study fees, manufacturing costs for non-commercial
products, and the development of earlier-stage programs and
technologies, are expensed as incurred when these expenditures have
no alternative future uses. A significant portion of the
development activities are outsourced to third parties, including
contract research organizations. In such cases, the Company may be
required to estimate related service fees incurred.
Stock-based Compensation
The Company’s stock-based compensation programs include
grants of stock options to employees, non-employee directors and
non-employee consultants. Stock-based compensation cost is measured
at the grant date, based on the calculated fair value of the award,
and is recognized as an expense, under the straight-line method,
over the employee’s requisite service period (generally the
vesting period of the equity grant).
The Company accounts for equity instruments, including stock
options, issued to non-employees in accordance with authoritative
guidance for equity based payments to non-employees. Stock options
issued to non-employees are accounted for at their estimated fair
value determined using the Black-Scholes-Merton option-pricing
model. The fair value of options granted to non-employees is
re-measured as they vest, and the resulting increase in value, if
any, is recognized as expense during the period the related
services are rendered.
Income Taxes
The Company uses the asset and liability method of accounting for
income taxes. Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to basis
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
As of December 31, 2015 and 2014, all deferred tax assets were
fully offset by a valuation allowance.
The Company accrues interest and penalties, if any, on underpayment
of income taxes related to unrecognized tax benefits as a component
of income tax expense in its consolidated statements of
operations.
Fair Value Measurements
Level 1 fair value inputs are quoted prices for identical items in
active, liquid and visible markets such as stock exchanges.
Level 2 fair value inputs are observable information for
similar items in active or inactive markets, and appropriately
consider counterparty creditworthiness in the valuations. Level 3
fair value inputs reflect our best estimate of inputs and
assumptions market participants would use in pricing an asset or
liability at the measurement date. The inputs are unobservable in
the market and significant to the valuation estimate.
3. Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue
from Contracts with Customers” (Topic 606). ASU
No. 2014-09 supersedes the revenue recognition requirements in
Topic 605, “Revenue Recognition,” and most
industry-specific revenue recognition guidance throughout the
Industry Topics of the Accounting Standards Codification.
Additionally, this update supersedes some cost guidance included in
Subtopic 605-35, “Revenue Recognition-Construction-Type and
Production-Type Contracts.” The core principle of the
guidance is that an entity should recognize revenue to depict the
transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. It is effective
for the first interim period within annual reporting periods
beginning after December 15, 2016, and early adoption is not
permitted. In July 2015, the FASB affirmed its proposal to defer
the effective date of this standard to annual reporting periods
(and interim reporting periods within those years) beginning after
December 15, 2017. Entities are permitted to apply the new revenue
standard early, but not before the original effective date of
annual periods beginning after December 15, 2016. Entities may
choose from two adoption methods, with certain practical
expedients. The Company is currently reviewing this standard to
assess the impact on its future financial statements and evaluating
the available adoption methods.
In June 2014, the FASB issued ASU No. 2014-12,
“Compensation—Stock Compensation” (Topic 718):
“Accounting for Share-Based Payments When the Terms of an
Award Provide That a Performance Target Could Be Achieved after the
Requisite Service Period,” which requires that a performance
target that affects vesting, and that could be achieved after the
requisite service period, be treated as a performance condition. As
such, the performance target should not be reflected in estimating
the grant date fair value of the award. ASU No. 2014-12 is
effective for annual reporting periods beginning after
December 15, 2015, including interim periods within that
reporting period, although early adoption is permitted. We are
currently reviewing this standard to assess the impact on the
Company’s future financial statements.
In August 2014, the FASB issued ASU No. 2014-15, (“ASU
2014-15”), “Disclosure of Uncertainties About an
Entity’s Ability to Continue as a Going Concern”.
ASU 2014-15 requires management to perform interim and
annual assessments of an entity’s ability to continue as a
going concern within one year of the date the financial statements
are issued and provides guidance on determining when and how to
disclose going concern uncertainties in the financial statements.
Certain disclosures will be required if conditions give rise to
substantial doubt about an entity’s ability to continue as a
going concern. ASU 2014-15 applies to all entities and is
effective for annual and interim reporting periods ending after
December 15, 2016, with early adoption permitted. Management
is currently evaluating the impact of the adoption of the updated
standard on the financial statements and disclosures.
In February 2016, the FASB issued ASU 2016-2,"Leases (Topic
842)". This update will increase transparency and
comparability by recognizing lease assets and lease liabilities on
the balance sheet and disclosing key information about leasing
arrangements. Under the new guidance, lessees will be
required to recognize the following for all leases (with the
exception of short-term leases) at the commencement date (i) a
lease liability, which is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis; and
(ii) a right-of-use asset, which is an asset that represents the
lessee’s right to use, or control the use of, a specified
asset for the lease term. Under the new guidance, lessor accounting
is largely unchanged, and it simplified the accounting for sale and
leaseback transactions. Lessees will no longer be provided with a
source of off-balance sheet financing. Lessees (for capital and
operating leases) and lessors (for sales-type, direct financing,
and operating leases) must apply a modified retrospective
transition approach for leases existing at, or entered into after,
the beginning of the earliest comparative period presented in the
financial statements. The modified retrospective approach would not
require any transition accounting for leases that expired before
the earliest comparative period presented. Lessees and lessors may
not apply a full retrospective transition approach. The standard is
effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. We are
currently in the process of assessing what impact this new standard
may have on our consolidated financial statements.
Management does not believe that any other recently issued, but not
yet effective, accounting standards if currently adopted would have
a material effect on the accompanying consolidated financial
statements.
4. Property and Equipment, Net
Property and equipment consisted of the following as of
December 31, 2015 and 2014:
|
|
December 31,
|
|
|||||
|
|
2015
|
|
|
2014
|
|
||
Furniture
and fixtures
|
|
$
|
8,979
|
|
|
$
|
8,979
|
|
Office
equipment
|
|
|
52,547
|
|
|
|
31,170
|
|
Lab
equipment
|
|
|
400,301
|
|
|
|
321,884
|
|
|
|
|
461,827
|
|
|
|
362,033
|
|
Less
accumulated depreciation and amortization
|
|
|
(326,341
|
)
|
|
|
(304,980
|
)
|
Totals
|
|
$
|
135,486
|
|
|
$
|
57,053
|
|
Depreciation expense for the years ended December 31, 2015 and
2014 was $21,360 and $12,241, respectively.
5. Reverse Stock Split, Name Change and Increase in Authorized
Shares
On September 8, 2014, MabVax Therapeutics Holdings filed an
amended and restated certificate of incorporation to increase the
authorized number of shares of our common stock to a new total of
150,000,000 shares, increase the number of shares of our preferred
stock to a new total of 15,000,000 shares, and change the name of
the Company from “Telik, Inc.” to “MabVax
Therapeutics Holdings, Inc.” The amendment and
restatement of the certificate of incorporation effectuating the
name change and above authorized share increases were approved by
our stockholders at the special stockholder meeting on
September 8, 2014 and by our Board of Directors at a meeting
of the Board held on September 8, 2014.
On September 8, 2014, following the filing of the amended and
restated certificate disclosed above, MabVax Therapeutics Holdings
filed a certificate of amendment to the amended and restated
certificate of incorporation to effect an 8-for-1 reverse stock
split on common stock (the “Reverse Split”), effective
as of 4:01 p.m. Eastern Time (the “Effective Time”) on
September 8, 2014 (the “Effective Date”). The
Reverse Split was approved by our stockholders at the special
stockholder meeting held on September 8, 2014 and by the Board
of Directors at a meeting of the Board held on September 8,
2014.
On the Effective Date, immediately and without further action by
our stockholders, every 8 shares of our common stock, issued and
outstanding immediately prior to the Effective Time, were
automatically converted into 1 share of our common stock. As a
result of the Reverse Split and calculated as of the Record Date,
the number of outstanding shares of our common stock was reduced
from 13,932,937 to 1,741,617, excluding outstanding and unexercised
share options and warrants and subject to adjustment for fractional
shares. No fractional shares were issued as a result of the Reverse
Split and, in lieu of these fractional shares, any holder of less
than 1 share of our common stock was entitled to receive cash for
such holder’s fractional share equal to the product of such
fraction multiplied by the average of the last reported bid and ask
prices of our common stock at 4:00 p.m., Eastern time, end of
regular trading hours on OTCQB marketplace, during the
10 consecutive trading days ending on the last trading day
prior to the Effective Date. Further, any options, warrants and
contractual rights outstanding as of the Effective Date that were
subject to adjustment were adjusted in accordance with their terms.
These adjustments included, without limitation, changes to the
number of shares of our common stock that may be obtained upon
exercise or conversion of these securities, and changes to the
applicable exercise or purchase price of such
securities.
Shares of our common stock began to trade on the OTCQB marketplace
on a post-split basis under the name MabVax Therapeutics Holdings,
Inc. on September 10, 2014 under the new CUSIP number
55414P108. MabVax Therapeutics Holdings retained the same CUSIP
number when its common stock began trading on the OTCQB marketplace
under the trading symbol MBVX on October 10,
2014.
All prior periods in these consolidated financial statements have
been adjusted to reflect the effects of the Merger and the Reverse
Split, unless otherwise indicated.
6. Merger with MabVax Therapeutics, Inc.
On May 12, 2014, the Company entered into a Merger Agreement.
Upon the terms and subject to the satisfaction of the conditions
described in the Merger Agreement, Tacoma Corp. was merged with and
into private company MabVax Therapeutics on July 8, 2014, with
MabVax Therapeutics surviving the Merger as a wholly owned
subsidiary of MabVax Therapeutics Holdings. The Merger is intended
to qualify as a tax-free reorganization for U.S. federal income tax
purposes.
On July 7, 2014, the stockholders of MabVax Therapeutics
Holdings approved the Merger, and the Merger closed and became
effective on July 8, 2014. At the effective date of the
Merger: (a) all shares of MabVax Therapeutics Series A
preferred stock and all shares of MabVax Therapeutics Series B
preferred stock were automatically converted into shares of MabVax
Therapeutics Holdings common stock, (b) all outstanding shares
of MabVax Therapeutics common stock were converted into and
exchanged for shares of MabVax Therapeutics Holdings common stock
at an exchange rate calculated in accordance with the methodology
set forth in the Merger Agreement, which resulted in 2.223284
shares of MabVax Therapeutics Holdings common stock for every share
of MabVax Therapeutics common stock, (c) all outstanding
shares of MabVax Therapeutics Series C-1 preferred stock were
converted into and exchanged for shares of MabVax Therapeutics
Holdings Series A-1 preferred stock at a rate of two shares of
MabVax Therapeutics Series C-1 per each share of MabVax
Therapeutics Holdings Series A-1 preferred stock, (d) each
outstanding MabVax Therapeutics option and warrant to purchase
MabVax Therapeutics common stock became options and warrants to
purchase shares of MabVax Therapeutics Holdings common stock (and
the number of such shares and exercise price was adjusted as
calculated in accordance with the methodology set forth in the
Merger Agreement), and (e) each outstanding MabVax
Therapeutics warrant to purchase MabVax Therapeutics preferred
stock was cancelled for no consideration.
As a result of the consummation of the Merger, as of the closing
date, the former stockholders, option holders and warrant holders
of MabVax Therapeutics were issued, based on the methodology set
forth in the Merger Agreement (which excluded certain
out-of-the-money convertible securities and calculated others on a
net-exercise or cashless basis under the terms of the convertible
securities) approximately 85% of the outstanding shares of MabVax
Therapeutics Holdings common stock on a fully diluted basis and the
stockholders, option holders and warrant holders of MabVax
Therapeutics Holdings prior to the Merger owned approximately 15%
of the outstanding shares of MabVax Therapeutics Holdings common
stock on a fully diluted basis (such percentages calculated based
on the methodology set forth in the Merger Agreement). As a result
of the Merger, a change of control of MabVax Therapeutics Holdings
occurred.
For accounting purposes, the Merger is treated as a “reverse
acquisition”. The private company MabVax Therapeutics is
considered the accounting acquirer, and the public company MabVax
Therapeutics Holdings is considered the legal acquirer and
accounting acquiree. The private company MabVax Therapeutics is the
accounting acquirer because it owns a majority of the merged
company (approximately 85%). As a result, the historical financial
statements of the private company MabVax Therapeutics constitute
the historical financial statements of the merged companies. The
transaction is considered a business combination as MabVax
Therapeutics Holdings is considered an operating entity. For
accounting purposes, MabVax Therapeutics is treated as the
continuing reporting entity.
The issuance of shares of our common stock and preferred stock in
the Merger was approved by our stockholders in the annual
stockholder meeting held on July 7, 2014. Amendments to our
amended and restated certificate of incorporation related to an
increase in the authorized number of shares of our common stock and
preferred stock and a proposed reverse stock split to maintain
NASDAQ listing maintenance standards and other transactions
contemplated by the Merger Agreement were not approved at this
meeting. As a result of our not getting stockholder approval
of a proposed reverse stock split at the July 7, 2014 annual
stockholders’ meeting, we were unable to meet all of the
listing requirements for the NASDAQ Exchange and our common stock
began trading on the OTCQB market under the stock symbol MBVX.
There is no impact on accounting for the Merger on July 8,
2014, as a result of not getting stockholder approval on all
matters presented at the July 7, 2014 annual
meeting.
The purchase price is based upon the fair value of MabVax
Therapeutics Holdings (f.k.a. Telik, Inc.) common stock outstanding
of 77,418 shares as of July 8, 2014, multiplied by the stock
closing price at July 8, 2014 of $82.88, or approximately
$6,416,000. The consideration transferred is based on the market
price of MabVax Therapeutics Holdings since management has
determined that this was the most reliable measure of fair value,
taking into consideration a third party valuation we received for
financial reporting purposes as outlined under the Financial
Accounting Standards Board Accounting Standards Codification Topic
805: “Business Combination” in connection with the
Merger.
The
total estimated purchase price of the acquisition as of
July 8, 2014 is as follows:
Purchase Consideration:
(In thousands)
|
|
|
|
|
|
||
Purchase
Consideration
|
|
|
|
|
$
|
6,416
|
|
Telik
Assets:
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
$
|
1,497
|
|
|
|
|
Accounts
Receivable
|
|
|
31
|
|
|
|
|
Prepaids
and Other Current Assets
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
(1,710
|
)
|
Telik
Liabilities:
|
|
|
|
|
|
|
|
Accrued
Compensation
|
|
|
850
|
|
|
|
|
Accrued
Liabilities
|
|
|
111
|
|
|
|
|
Accrued
Contingent Termination Fee
|
|
|
591
|
|
|
|
|
Warrant
Liability
|
|
|
568
|
|
|
|
|
|
|
|
|
|
|
2,120
|
|
Goodwill
|
|
|
|
|
$
|
6,826
|
|
7. Redeemable Convertible Preferred Stock, Convertible Preferred
Stock, Common Stock and Warrants
MabVax Therapeutics Series A and MabVax Therapeutics Series B
preferred stock (Pre-Merger MabVax Therapeutics
Issuances)
In January 2014, holders of warrants to purchase shares of MabVax
Therapeutics Series B redeemable convertible preferred stock
exercised their rights to purchase 194,281 shares of MabVax
Therapeutics Series B redeemable convertible preferred stock for
proceeds of $1,942.
In February 2014, the holders of MabVax Therapeutics Series A
redeemable convertible preferred stock and MabVax Therapeutics
Series B redeemable convertible preferred stock waived any rights
to all prior accrued dividends they may have had a right to receive
and amended the MabVax Therapeutics certificate of incorporation to
eliminate their right to accrue dividends in the future as an
inducement to buyers in the MabVax Therapeutics Series C-1
Preferred Stock Financing. The effect of this change reduced the
liquidation preference for the MabVax Therapeutics Series A
redeemable convertible preferred stock by $2,187,762 and the MabVax
Therapeutics Series B redeemable convertible preferred stock by
$486,938 as of February 12, 2014.
No dividends were ever declared by the MabVax Therapeutics Board of
Directors since MabVax Therapeutics’ inception on either of
the MabVax Therapeutics Series A redeemable convertible preferred
stock or the MabVax Therapeutics Series B redeemable convertible
preferred stock.
Removal of Redemption Rights
In March 2014, the majority of holders, or more than 60%, of the
MabVax Therapeutics Series A redeemable convertible preferred stock
and MabVax Therapeutics Series B redeemable convertible preferred
stock agreed by letter commitment to MabVax Therapeutics to
relinquish the MabVax Therapeutics Redemption Right, and MabVax
Therapeutics reclassified the presentation on the consolidated
balance sheets as permanent equity following the
agreement.
Series C-1 preferred stock purchase agreement
On February 12, 2014, MabVax Therapeutics entered into a
Securities Purchase Agreement (the “MabVax Therapeutics
Securities Purchase Agreement”) and issued 3,697,702 shares
of MabVax Therapeutics Series C-1 preferred stock, warrants to
purchase 2,055,260 shares of MabVax Therapeutics common stock at
$3.62 a share (the “MabVax Therapeutics Series C Common
Warrants”) and warrants to purchase 1,848,851 shares of
MabVax Therapeutics Series C-1 preferred stock at $0.84 a share
(the “MabVax Therapeutics Series C Preferred Warrants”)
for aggregate gross proceeds of $3,100,000, less issuance costs of
$126,345 (the “MabVax Therapeutics Series C-1
Financing”). The MabVax Therapeutics Series C Common Warrants
and Preferred Warrants were exercisable immediately. The MabVax
Series C Common Warrants would have expired on February 13,
2022, and the MabVax Therapeutics Series C Preferred Warrants would
have expired upon registration of the shares of MabVax Therapeutics
common stock (or a successor entity) under the Securities Act.
Because the warrants are immediately convertible at the option of
the holder, MabVax Therapeutics recorded a deemed dividend of
$2,214,911 from the beneficial conversion feature associated with
the issuance of the MabVax Series C-1 preferred stock and the
MabVax Therapeutics Series C Common Stock Warrants and the MabVax
Therapeutics Series C Preferred Stock Warrants.
In connection with the MabVax Therapeutics Series C-1 Financing,
MabVax Therapeutics agreed to use its reasonable best efforts to
raise at least an additional $3,000,000 through the sale and
issuance of shares of MabVax Therapeutics common stock initially
intended to be at $15.08 per share (the “Subsequent Capital
Raise”). Substantially all of the investors in the MabVax
Therapeutics Series C-1 Financing executed a financing commitment
letter (such letters, the “Financing Commitment
Letters”) to purchase a pro rata number of shares of MabVax
Therapeutics common stock at the purchase price of $111.59 per
share, representing in the aggregate at least $750,000, subject to
certain terms and conditions, including a condition that MabVax
Therapeutics raise at least $3,000,000 from new investors in the
Subsequent Capital Raise. In addition, each such commitment letter
provided that, in the event that less than $3,000,000 was raised
from new investors in the Subsequent Capital Raise and subject to
certain terms and conditions, each investor party to such letter
was required to purchase shares of MabVax Therapeutics preferred
stock to be designated as MabVax Therapeutics Series C-2
convertible preferred stock at $111.59 per share and in the
aggregate amount of up to $3,000,000 (the “Backstop Capital
Raise”).
On May 12, 2014, MabVax Therapeutics and certain investors
amended the MabVax Therapeutics Securities Purchase Agreement to,
among other things, (i) lower the price per share of the
Subsequent Capital Raise from $111.59 to $73.48 per share, and
(ii) provide that the price per share payable by investors as
set forth in the Financing Commitment Letters would henceforth be
the lower of (A) $111.59 a share and (B) the lowest price
paid in the Subsequent Capital Raise. The price per share of the
Backstop Capital Raise was not changed as a result of the
amendment. On July 7, 2014, prior to the Merger, MabVax
Therapeutics raised over $3.0 million from the sale of common
stock and the Backstop Capital Raise was no longer in
effect.
The MabVax Therapeutics Series C-1 preferred stock allowed the
holders to require that MabVax Therapeutics redeem their shares of
MabVax Therapeutics Series C-1 preferred stock, including any
accrued but unpaid dividends, upon the occurrence of any of the
following events (each, a “Triggering Event”):
(i) the suspension of trading of common stock following
registration of such shares, (ii) the failure to issue shares
of MabVax Therapeutics common stock upon conversion of any MabVax
Therapeutics Series C-1 preferred stock, (iii) the
failure to authorize sufficient shares of MabVax Therapeutics
common stock to permit the conversion of all outstanding shares of
MabVax Therapeutics Series C-1 preferred stock and exercise of all
MabVax Therapeutics Series C Common Warrants and MabVax
Therapeutics Series C Warrants, (iv) failure to make certain
required payments to the holders in excess of $25,000, (v) a
default on indebtedness in the aggregate amount of $100,000,
(vi) bankruptcy events, (vii) judgments requiring
payments in excess of $100,000, (viii) consummation of a
change of control with an entity which did not have a class of
securities registered for trading, (ix) failure of MabVax
Therapeutics to initiate the process of becoming publicly traded
(either through a merger into a public company or the filing of a
registration statement) within 4 months of the closing of the
MabVax Therapeutics Series C-1 Financing, (x) failure to
complete such Merger within one year or such registration within 4
months of the closing of the MabVax Therapeutics Series C-1
Financing, (xi) issuance of common stock in violation of
certain restrictions relating to employee equity,
(xii) issuance of debt in violation of any agreement relating
to the MabVax Therapeutics Series C-1 Financing,
(xiii) failure to convert MabVax Therapeutics Series A
preferred stock or MabVax Therapeutics Series B preferred stock on
or prior to the date shares of MabVax Therapeutics common stock
became publicly tradable, (xiv) any deviation of 20% or more
from the annual budget approved by such holders, (xv) any
deviation of 5% or more with respect to auditing and
investors’ relations expenses, (xvi) failure to deliver
the 2013 audited financials within 45 days of the closing of the
MabVax Therapeutics Series C-1 Financing, (xvii) any deviation
of any line item of the 2013 audited financials from those set
forth in the 2013 unaudited financials delivered in connection with
the MabVax Therapeutics Series C-1 Financing or (xviii) a
breach of any representation, warranty, covenant or other term or
condition of any agreement relating to the MabVax Therapeutics
Series C-1 Financing. Certain Triggering Events had occurred as of
May 9, 2014, but were subsequently waived by the holders of
the MabVax Therapeutics Series C-1 preferred stock.
On July 8, 2014, the date of the Merger, all MabVax
Therapeutics Series C-1 preferred stock was converted into shares
of MabVax Therapeutics Holdings Series A-1 preferred stock, and the
Triggering Events were removed. Because of the removal of the
Triggering Events as of the Merger date, the MabVax Therapeutics
Holdings Series A-1 convertible preferred stock is presented on the
consolidated balance sheet as permanent equity as of
December 31, 2014.
Registration of Common Stock Issuable upon Conversion of Series A-1
Preferred Stock, and Conversions
On October 14, 2014, the Company filed an Amendment No. 1
to a Registration Statement on Form S-1 (the “Form
S-1”) that was initially filed on September 29, 2014,
for the purpose of registering additional shares of MabVax
Therapeutics Holdings common stock issuable upon conversion of
outstanding shares of MabVax Therapeutics Holdings Series A-1
preferred stock. The Form S-1, as amended, to register 218,253
shares of common stock, was declared effective by the SEC at 4:00
p.m. Eastern Standard Time on November 12, 2014.
From November 13, 2014, to December 31, 2014, holders of
Series A-1 preferred stock converted 1,169,452 shares into 93,694
shares of common stock.
Exercise of MabVax Therapeutics Series C Preferred
Warrants
On July 7, 2014, MabVax Therapeutics received $1.5 million in
exchange for the exercise by holders of the MabVax Therapeutics
Series C Preferred warrants to purchase 1,827,979 shares of MabVax
Therapeutics Series C-1 preferred stock.
MabVax Therapeutics Holdings Series B Redeemable Convertible
Preferred Stock
On May 12, 2014 (the “Closing Date”), MabVax
Therapeutics Holdings entered into a securities purchase agreement
(the “Series B Purchase Agreement”) with certain
purchasers (the “Purchasers”) pursuant to which MabVax
Therapeutics Holdings agreed to issue and sell to the Purchasers,
subject to customary closing conditions, an aggregate of 1,250,000
shares of MabVax Therapeutics Series B redeemable convertible
preferred stock and warrants (the “Series B Common
Warrants”) to purchase up to an additional 10,557 shares of
MabVax Therapeutics Holdings common stock, with an aggregate
purchase price of $2,500,000, or $2.00 for each share of our Series
B redeemable convertible preferred stock and related Series B
Common Warrant (such transaction collectively, the “Series B
Private Placement”). The closing of the Series B Private
Placement took place on the Closing Date.
On May 8, 2014, MabVax Therapeutics Holdings filed a
certificate of designation for the MabVax Therapeutics Holdings
Series B preferred stock with the Secretary of State of the State
of Delaware. The certificate of designations authorized 1,250,000
shares of Series B preferred stock. Holders of MabVax Therapeutics
Series B redeemable convertible preferred stock
(the “Holders”) are entitled to cumulative
dividends on each share held at a rate of 8% per annum on the
Stated Value (as defined in the certificate of designations). Upon
a liquidation event, the Holders are entitled to a liquidation
preference per share, prior to any distribution of the
Company’s assets to the holders of its common stock, in an
amount equal to the Stated Value plus accrued and unpaid dividends.
After payment to the Holders of the full preferential amount, the
Holders will, on a pari passu basis with the holders of the
Company’s common stock, participate in the distribution of
any remaining assets of the Company, subject to certain
limitations. Each Holder may elect to convert their Series B
preferred stock into shares of the Company’s common stock at
the applicable conversion rate in effect at the time of such
conversion. However, the Company shall not effect conversion of the
Series B redeemable convertible preferred stock to the extent such
conversion would result in the beneficial owner acquiring
beneficial ownership of more than 4.99% of the Company’s
outstanding common stock post-conversion, including any shares of
its common stock issuable upon exercise or conversion of other
convertible securities held by such beneficial owner. The Company
obtained stockholder approval for the securities being issued in
the Series B Private Placement at the annual stockholder meeting
held on July 7, 2014. The conversion rate is subject to full
ratchet anti-dilution protection upon certain dilutive issuances of
our common stock or convertible securities of the Company. Such
conversion price will be subject to adjustment from and after the
earlier of: (i) the date that some or all of the Registerable
Securities (as defined below) have become registered pursuant to an
effective registration statement and (ii) six months after the
Closing Date at which time the conversion price of the Series B
preferred stock shall equal the lower of (a) the initial
conversion price and (b) 90% of the average of the 10 lowest
weighted average prices of the Company’s common stock during
the 20 trading days immediately preceding applicable date of the
conversion, of which the latter condition was reached on November
14, 2014. The Holders may also require the Company to redeem their
shares of Series B redeemable convertible preferred stock prior to
a change of control, as set forth in the certificate of
designations. The certificate of designations further provides that
the Holders are entitled to certain participation rights on
issuances by the Company to holders of common stock in order to
maintain their proportionate ownership, subject to certain
customary exclusions, such as issuances pursuant to Company option
plans, and in connection with the Merger.
The Series B Common Warrants became exercisable six months from the
Closing Date, or November 12, 2014, expire five years from the
Closing Date and may be exercised for cash or otherwise may be
net-exercised. The Series B Common Warrants initially had a per
share exercise price of $197.14. On the 60th day following the
earlier of (i) the date all of the shares underlying the
Warrants become registered pursuant to an effective registration
statement and (ii) six months following the Closing Date (in
each case, the “Reset Date”), the exercise price shall
be reset to equal the lower of (i) the current exercise price
and (ii) 90% of the average of the 10 lowest weighted average
prices of Common Stock during the 20 trading days immediately
preceding the Reset Date. The price was reset to $11.62 on
January 11, 2015. The exercise price is subject to full
ratchet anti-dilution adjustment for any issuances of common stock
and convertible securities for common stock below the current
conversion price, consistent with the terms of the Series B
preferred stock.
In connection with the Series B Private Placement, the Company also
entered into a Registration Rights Agreement with the Purchasers
(the “Series B Registration Rights Agreement”).
Pursuant to the Series B Registration Rights Agreement, the Company
agreed to file a registration statement with the SEC covering
resales of the Warrant Shares and the shares issuable upon
conversion of the Series B preferred stock (together, the
“Series B Registerable Securities”) by the Purchasers
no later than 60 days following the Closing Date, and to use its
commercially reasonable best efforts to have such registration
statement declared effective as soon as practicable. The Company
bears all expenses of such registration of the resale of the
Registerable Securities. On September 3, 2014, the Required
Holders (as defined in the Series B preferred stock certificate of
designations) temporarily waived the 60-day registration deadline
for a five-day period.
As a result of the Series B Warrants’ anti-dilution
provision, the Series B Warrants are recorded as a current
liability on our consolidated balance sheet. The outstanding
warrant was valued at $92,463 and $567,885 as of December 31,
2014, and July 8, 2014 or the acquisition date, respectively.
Our outstanding warrants are revalued on each balance sheet date,
with changes in the fair value between reporting periods recorded
in the consolidated statements of operations.
Warrants were valued using the Black-Scholes-Merton model. The
warrant had only partial down round protection, as it has a price
reset only on a down round financing, and not an increase in number
of shares convertible with the warrant. The Company concluded that
using the Black-Scholes-Merton model for the valuation as of
December 31, 2014, is fairly accurate compared to a recent
buyout offer. The fair value of warrants is estimated using the
following assumptions, which, except for risk-free interest rate,
are Level 3 inputs:
Warrant liability valuation assumptions
|
|
As of
December 31, 2014
|
|
|
As of
July 8, 2014
|
|
||
|
|
|
||||||
Risk-free
interest rate
|
|
|
1.75
|
%
|
|
|
1.60
|
%
|
Dividend
yield
|
|
|
—
|
%
|
|
|
—
|
%
|
Expected
volatility
|
|
|
86.67
|
%
|
|
|
101.60
|
%
|
Expected
life of options, in years
|
|
|
4.36
|
|
|
|
4.90
|
|
Market
price for common stock
|
|
$
|
13.47
|
|
|
$
|
85.84
|
|
Warrant
exercise price, adjusted
|
|
$
|
13.32
|
|
|
$
|
197.14
|
|
At December 31, 2015 and 2014, financial instruments requiring fair
value measurement totaled zero and $92,463,
respectively.
As a result of the Series B warrants’ anti-dilution
provision, the Series B warrants were recorded as a current
liability in the amount of $92,463 on our consolidated balance
sheet as of December 31, 2014. On March 25, 2015, the Series B
warrants were re-valued at $72,656 prior to being exchanged into
shares of common stock and Series D convertible preferred stock on
a one for one basis and the warrant liability was eliminated and
the Company recorded a gain of $19,807 for the year ended December
31, 2015.
The following table presents information about our financial
instruments that are measured at fair value on a recurring basis as
of December 31, 2014 and indicates the fair value hierarchy of
the valuation techniques utilized to determine such fair
value:
|
|
Basis of Fair Value Measurement at December 31,
2014
|
|
|||||||||||||
|
|
December 31,
2014
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
||||
Financial
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
$
|
92,463
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
92,463
|
|
Total
financial liabilities
|
|
$
|
92,463
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
92,463
|
|
The changes in the value of the warrant liability during the year
ended December 31, 2015 were as follows:
Fair
value – beginning of year
|
|
$
|
92,463
|
|
Change
in fair value
|
|
|
(19,807
|
)
|
Cancellation
of warrants
|
|
|
(72,656
|
)
|
Fair
value – end of year
|
|
$
|
—
|
|
The changes in the value of the warrant liability during the year
ended December 31, 2014 were as follows:
Fair
value - beginning of year
|
|
$
|
—
|
|
Fair
value on acquisition
|
|
|
567,885
|
|
Change
in fair value
|
|
|
(475,422
|
)
|
Fair
value - end of year
|
|
$
|
92,463
|
|
There were no transfers between Level 1 and Level 2 measurements
for the years ended December 31, 2015 and 2014.
Dividends on Preferred Stock
The Company immediately recognizes the changes in the redemption
value on preferred stock as they occur and the carrying value of
the security is adjusted to equal what the redemption amount would
be as if redemption were to occur at the end of the reporting
period based on the conditions that exist as of that date. The
value adjustment made to the redemption value and preferred stock
dividends on the Series A-1 and Series B Preferred Stock for the
year ended December 31, 2015 and 2014, was an increase of $93,234
and $444,992, respectively.
Conversion of Preferred Stock into Common Stock
During quarter ended March 31, 2015, holders of Series A-1, Series
B, and Series C preferred stock converted 64,019, 106,437, and
96,571 shares into 5,197, 37,417, and 16,313 shares of common
stock, respectively; such conversions eliminated all outstanding
Series A-1, Series B, and Series C preferred stock
outstanding.
Exchange of Series A-1 and Series B Preferred Stock and Warrants
into Common Stock and Series D Preferred Stock
On March 25, 2015, the Company entered into separate exchange
agreements with certain holders of the Company’s Series A-1
preferred stock and Merger warrants (the “Series A-1 Exchange
Securities”) and holders of the Company’s Series B
preferred stock and Series B warrants (the “Series B Exchange
Securities” and, collectively with the Series A-1 Exchange
Securities, the “Exchange Securities”), all previously
issued by the Company. Pursuant to the exchange agreements, the
holders exchanged the Exchange Securities and relinquished any and
all other rights they may have had pursuant to the Exchange
Securities, their respective governing agreements and certificates
of designation, including any related registration rights, in
exchange for an aggregate of 342,906 shares of the Company’s
common stock and an aggregate of 238,156 shares of the
Company’s newly designated Series D Convertible preferred
stock (the “Series D preferred stock”), convertible
into 3,218,325 shares of common stock. No cash was
exchanged in the transaction. The Company recorded
deemed dividends of $9,017,512, $8,655,998 and $179,411
representing the excess fair value of the common stock issued over
the original conversion terms of the Series A-1 and B preferred
stock as part of the consideration for elimination of the Series
A-1, Series B convertible preferred stock and Series A-1 warrant,
respectively.
Additionally, for as long as a certain principal holder of Exchange
Securities holds securities issued pursuant to the exchange
agreements, subject to certain exceptions, the Company is
restricted from issuing any shares of common stock or securities
convertible into common stock, enter into any equity line of credit
or issue any floating or variable priced equity linked
instrument.
No commission or other payment was received by the Company in
connection with the exchange agreements.
MabVax Common Stock Financing
On March 31, 2015, the Company consummated the first closing of the
April 2015 Private Placement and sold $4,714,726 of Units, net of
$281,023 in issuance costs, consisting of 900,135 shares of common
stock and warrants to purchase 450,068 shares of common stock at
$11.10 a share. The Units were sold at a price of $5.55
per Unit.
On April 10, 2015, the Company consummated the second and final
closing of the April 2015 Private Placement and sold $3,831,622 of
Units, net of $387,127 in issuance costs, of which $2,500,000 of
the Units consisted of Series E preferred stock and the balance
consisted of 760,135 shares of common stock, together with warrants
to all investors to purchase 605,293 shares of common stock at
$11.10 a share. Each Unit was sold at a purchase price
of $5.55 per Unit.
The Company paid commissions to broker-dealers in the aggregate
amount of approximately $574,000 in the April 2015 Private
Placement.
OPKO was the lead investor in the April 2015 Private Placement,
purchasing $2,500,000 of Units consisting of Series E preferred
stock.
As a condition to OPKO’s participation in the April 2015
Private Placement, each of the other investors in the April 2015
Private Placement agreed to execute lockup agreements restricting
the sale of 50% of the securities underlying the Units purchased by
them for a period of six months and the remaining 50% prior to the
expiration of one year following the final closing date of the
April 2015 Private Placement.
On April 10, 2015, the Company agreed that $3.5 million of the net
proceeds of such closing would be paid into and held under the
terms of an escrow agreement with Signature Bank, N.A pending the
approval of a representative of OPKO or 10 weeks thereafter, unless
released sooner or extended by the Company and OPKO. On
June 22, 2015 the Company and OPKO extended the termination date of
the escrow to 16 weeks from the final closing of the April 2015
Private Placement. In connection with the OPKO investment, Steven
Rubin, Esq. was appointed advisor to the Company. The escrowed
funds were to be returned to the applicable investors and the
Company shall have no further obligation to issue Units to such
investors in the event certain release conditions are not met. On
June 30, 2015 the Company and OPKO entered into a letter agreement
pursuant to which the Company granted the representative the right,
but not the obligation, until June 30, 2016, to nominate and
appoint up to two additional members of the Company’s Board,
or to approve the person(s) nominated by the Company pursuant to
the agreement in consideration for the release of the escrowed
funds. The nominees will be subject to the satisfaction of standard
corporate governance practices and any applicable national
securities exchange requirements. Upon signing the
agreement, the escrowed funds were released to the
Company.
The warrants are exercisable upon issuance and expire 30 months
thereafter and may be exercised for cash or on a cashless basis.
The warrants have a per share exercise price of $11.10, subject to
certain adjustments typical of warrants, namely stock splits,
dividends and reverse-splits. The Company is prohibited from
effecting the exercise of the warrants to the extent that, as a
result of such exercise, the holder beneficially would own more
than 4.99% in the aggregate, of the issued and outstanding shares
of the Company’s common stock calculated immediately after
giving effect to the issuance of shares of common stock upon the
exercise of the warrants.
In connection with the April 2015 Private Placement, the Company
also entered into a registration rights agreements (the
“Registration Rights Agreements”) with the investors in
the April 2015 Private Placement pursuant to which the Company has
agreed to file a registration statement with the SEC covering
resales of up to 25% of common stock issued under the Subscription
Agreements and shares issuable upon conversion of the Series E
preferred stock, in the event the investors elect to receive Series
E preferred stock instead of common stock (together, the
“Registrable Securities”), no later than 60 days
following the final closing date of the April 2015 Private
Placement, and to use its commercially reasonable best efforts to
have such registration statement declared effective with 120 days
after filing. The Company will bear all expenses of such
registration of the resale of the Registrable
Securities. Investors in the Private Placement also may
be required under certain circumstances to agree to refrain from
resales of a percentage of their securities upon request of an
underwriter or placement agent in a future offering. The liquidated
damages for failure to achieve effectiveness of the Registerable
Securities is 1% a month 120 days after filing, and provided
management has not used commercially reasonable best efforts to
have the registration statement declared effective within that time
frame.
On June 9, 2015 the Company and investors holding over 60% of the
outstanding Registrable Securities (as such term is defined in the
Registration Rights Agreements) entered into an amendment agreement
to the Registration Rights Agreements in order to: (i) amend the
definition of “Filing Date” for the initial
registration statement such that such term shall be defined as
“August 5, 2015” and (ii) waive any payments that may
be due to the investors as a result of the Company not filing a
registration statement on or before the Filing Date, as such term
was originally defined. On August 4, 2015, the Company
and investors holding over 70% of the outstanding Registrable
Securities entered into a second amendment agreement to further
extend the Filing Date to October 9, 2015.
On October 12, 2015, the Company and investors holding over 60% of
the outstanding Registerable Securities (as such term is defined in
the Registration Rights Agreements) entered into a third amendment
agreement to the Registration Rights Agreements to suspend the
Company’s registration obligations under the Registration
Rights Agreements and related subscription agreements during any
period when the “Standstill” provision set forth in
5(u) of the subscription agreements is in
effect.
On January 28, 2016, the Company filed a Registration Statement on
Form S-1, registering 527,680 shares of common stock for resale
representing 25% of shares issued in the April 2015 Private
Placement, 415,068 shares of common stock and 112,613 shares of
common stock which are issuable upon conversion of the
Company’s Series E Convertible Preferred Stock.
Except for certain issuances, for a period beginning on the closing
date of the April 2015 Private Placement and ending on the date
that is the earlier of (i) 24 months from the final closing date of
the April 2015 Private Placement, (ii) the date the Company
consummates a financing (excluding proceeds from the April 2015
Private Placement) in which the Company receives gross proceeds of
at least $10,000,000 and (iii) the date the common stock is listed
for trading on a national securities exchange (such period until
the earlier date, the “Price Protection Period”), in
the event that the Company issues any shares of common stock or
securities convertible into common stock at a price per share or
conversion price or exercise price per share that is less than
$5.55, the Company shall issue to the investors in the April 2015
Private Placement such additional number of shares of common stock
such that the investor shall own an aggregate total number of
shares of common stock as if they had purchased the Units at the
price of the lower price issuance. No adjustment in the warrants is
required in connection with a lower price issuance.
The Company has also granted each investor prior to the expiration
of 24 months following the final closing date of the April 2015
Private Placement, a right of participation in the Company’s
financings.
In the event the Company conducts certain private or public
offerings of its securities, each investor has agreed, if requested
by the underwriter or placement agent so engaged by the Company in
connection with such offering, to refrain from selling any
securities of the Company for a period of up to 60
days.
Between April 13, 2015, and April 14, 2015, certain holders of
warrants issued in the April 2015 Private Placement to purchase an
aggregate of 250,000 shares of common stock exercised such warrants
on a cashless basis for an aggregate issuance of 164,835 shares of
common stock. As of December 31, 2015, there were 805,361 warrants
outstanding to purchase common stock at $11.10 a
share.
On October 5, 2015, the Company closed a public offering of 337,838
shares of common stock and warrants to purchase 168,919 shares of
common stock, at an offering price of $8.14 per share. For
every two shares of common stock sold, the Company issued one
warrant to purchase one share of common stock. The Company
received $2,750,000 in gross proceeds, before underwriting
discounts and commissions and offering expenses totaling
approximately $586,608, and without giving effect to the exercise
of the underwriters’ over-allotment option. The Company
intends to use the net proceeds from this offering to fund the
HuMab-5B1 human antibody program through Phase I clinical
development and for working capital and general corporate
purposes.
The shares and warrants were separately issued and sold in equal
proportions. The warrants are immediately exercisable, expire
September 30, 2018, and have an exercise price of $9.77 per
share. The warrants will not be listed on any securities
exchange or other trading market. As of December 31,
2015, there were warrants to purchase 168,919 shares of common
stock outstanding. The Company granted the underwriters a 30-day
option to purchase up to an additional 50,676 shares of common
stock and up to an additional 25,338 warrants at the same price to
cover over-allotments, if any.
Under the terms of the underwriting agreement entered into between
the Company and the underwriter in the public offering, the
Company, without the prior written consent of the underwriter, is
prohibited, for a period of 90 days after execution of the
underwriting agreement, from issuing any equity securities, subject
to certain exceptions.
On October 12, 2015, the Company and investors holding over 60% of
the outstanding Registerable Securities (as such term is defined in
the Registration Rights Agreements) issued in the April 2015
Private Placement entered into a third amendment agreement to the
Registration Rights Agreements to suspend the Company’s
registration obligations under the Registration Rights Agreements
and related subscription agreements during any period when the
“Standstill” provision set forth in 5(u) of the related
subscription agreements is in effect.
Series D Preferred Stock
As of December 31, 2015, there were 191,491 shares of Series D
preferred stock issued and outstanding which are convertible into
an aggregate of 2,587,717 shares of common stock.
As contemplated by the exchange agreements governing the issuance
of the Series D preferred stock and as approved by the
Company’s Board of Directors, the Company filed with the
Secretary of State of the State of Delaware a Certificate of
Designation of Preferences, Rights and Limitations of Series D
Convertible Preferred Stock (the “Series D Certificate of
Designations”), on March 25, 2015. Pursuant to the Series D
Certificate of Designations, the Company designated 1,000,000
shares of its blank check preferred stock as Series D preferred
stock. Each share of Series D preferred stock has a stated value of
$0.01 per share. In the event of a liquidation, dissolution or
winding up of the Company, each share of Series D preferred stock
will be entitled to a per share preferential payment equal to the
stated value. Each share of Series D preferred stock is convertible
into 14 shares of common stock. The conversion ratio is subject to
adjustment in the event of stock splits, stock dividends,
combination of shares and similar recapitalization transactions.
The Company is prohibited from effecting the conversion of the
Series D preferred stock to the extent that, as a result of such
conversion, the holder beneficially would own more than 4.99%
(provided that certain investors elected to block their beneficial
ownership initially at 2.49% in the exchange agreements), in the
aggregate, of the issued and outstanding shares of the
Company’s common stock calculated immediately after giving
effect to the issuance of shares of common stock upon the
conversion of the Series D preferred stock. Each share of Series D
preferred stock entitles the holder to vote on all matters voted on
by holders of common stock. With respect to any such vote, each
share of Series D preferred stock entitles the holder to cast such
number of votes equal to the number of shares of common stock such
shares of Series D preferred stock are convertible into at such
time, but not in excess of the beneficial ownership
limitations.
Series E Preferred Stock
As of December 31, 2015, there were 33,333 shares of Series E
preferred stock issued and outstanding, convertible into 450,446
shares of common stock.
On March 30, 2015, the Company filed with the Secretary of State of
the State of Delaware a Certificate of Designation of Preferences,
Rights and Limitations of Series E Convertible preferred stock to
designate 100,000 shares of its blank check preferred stock as
Series E preferred stock.
The shares of Series E preferred stock are convertible into shares
of common stock based on a conversion calculation equal to the
stated value of such preferred share, plus all accrued and unpaid
dividends, if any, on such share of Series E preferred stock, as of
such date of determination, divided by the conversion price. The
stated value of each share of Series E preferred stock is $75 and
the initial conversion price is $5.55 per share, each subject to
adjustment for stock splits, stock dividends, recapitalizations,
combinations, subdivisions or other similar events. In addition,
during the Price Protection Period, in the event the Company issues
or sells, or is deemed to issue or sell, shares of common stock at
a per share price that is less than the conversion price then in
effect, the conversion price shall be reduced to such lower price,
subject to certain exceptions. The Company is prohibited from
effecting a conversion of the share of Series E preferred stock to
the extent that, as a result of such conversion, such holder would
beneficially own more than 4.99% of the number of shares of common
stock outstanding immediately after giving effect to the issuance
of shares of common stock upon conversion of the Series E preferred
stock, which beneficial ownership limitation may be increased by
the holder up to, but not exceeding, 9.99%. Each holder is entitled
to vote on all matters submitted to stockholders of the Company,
and shall have the number of votes equal to the number of shares of
common stock issuable upon conversion of such holder’s share
of Series E preferred stock, but not in excess of beneficial
ownership limitations. The shares of Series E preferred stock bear
no interest.
Issuance of Common Stock under Common Stock Purchase
Agreement
In connection with a financing that took place in July 2014, or the
July 2014 Financing Transaction, the Company assumed certain
obligations as per the original agreement to issue additional
shares to investors in the July 2014 Financing Transaction if a
subsequent financing was at a price per share lower than the price
per share in the July 2014 Financing Transaction. The Company
therefore issued on March 31, 2015, an aggregate of 11,904 shares
of common stock that were required to be issued in connection with
the July 2014 Financing Transaction, as a result of the lower share
price in the April 2015 Private Placement.
Grant of Restricted Shares
Rubin Grant
On April 3, 2015, the Company entered into a consulting agreement
with Steve Rubin pursuant to which he agreed to provide advisory
services in connection with corporate strategy, licensing and
business development estimated to be for a period of 12
months. In exchange for his services, the Company
provided him with a one-time grant of 27,027 shares of the
Company’s restricted common stock, valued at $17.02 a
share. As the shares granted were fully vested upon
grant and the Company has no legal recourse to recover the shares
in the event of nonperformance, the Company recognized the grant
date fair value of the shares as consulting expense upon grant
during the second quarter of 2015.
Ravetch Grant
On April 4, 2015, the Board approved the issuance of an additional
restricted stock award of 17,770 shares to Jeffrey
Ravetch. This award is for future services covering at
least a one-year period. The award was granted in addition to the
prior award to Dr. Ravetch on April 2, 2015 of: (i) 4,629
restricted shares and (ii) options to purchase 4,629 shares of
common stock with an exercise price of $17.02 per share, for a
total grant of 27,028 restricted shares and options. As the 17,770
shares granted were fully vested upon grant and the Company has no
legal recourse to recover the shares in the event of
nonperformance, the Company recognized the grant date fair value of
the shares as consulting expense upon grant during the second
quarter of 2015.
Livingston Grant
On April 4, 2015, the Board of Directors approved a restricted
stock award by the Company of 135,135 shares of common stock,
valued at $17.02 a share, to be issued to Phil Livingston, Ph.D.
for his continuing service to the Company. On May 13,
2015, the Compensation Committee of the Board clarified that the
award is being granted in consideration for at least one year of
Dr. Livingston’s services. The committee further
clarified that the vesting of the common stock shall be on the
one-year anniversary of the Board of Directors’ approval of
the award, or April 4, 2016. The Company is expensing
the grant date fair value of the award over the vesting period of
one year.
Consulting Agreement
On
April 5, 2015, the Company entered into a consulting agreement with
The Del Mar Consulting Group, Inc. and Alex Partners, LLC,
together, the “Investor Relations Consultants”,
pursuant to which such Investor Relations Consultants shall provide
investor relations services to the Company in consideration for an
immediate grant of 40,541 shares of the Company’s restricted
common stock and a monthly cash retainer of $12,000 a month for
ongoing services for a period of one year. The consultants also
received an additional 27,027 shares of the Company’s
restricted common stock upon the Company’s achieving a
milestone based on its fully-diluted market capitalization. As the
shares granted were fully vested upon grant and the Company has no
legal recourse to recover the shares in the event of
nonperformance, the Company recognized the grant date fair value of
the 40,451 shares or $690,000, as investor relations expense upon
grant during the second quarter of 2015. The performance condition
for the 27,027 shares became probable and the market capitalization
metric was met during the second quarter; therefore, the Company
recognized an additional $460,000 of expense during the quarter
ended June 30, 2015.
Consultant Grants
During 2015, the Board of Directors approved the issuance of
restricted stock awards to two consultants totaling 16,217 shares
with vesting terms ranging from one to three years, valued from
$13.10 to $15.76 per share. The Company is expensing
each of the grant date fair value of the awards over the
performance period for the award, which will be re-measured at the
end of each quarter until the performance is complete. For the year
ended December 31, 2015, the Company expensed $11,809 related to
these grants. As of December 31, 2015, the expected future
compensation expense related to these grants is $70,991 based upon
the Company’s stock price on December 31, 2015.
8. Related Party Transactions
In April 2015, the Company has granted a restricted stock award of
135,135 shares to Phil Livingston, Ph.D., an employee and Board
member, for his continuing services to the Company. In
addition, in April 2015, the Company has granted a restricted stock
award of 17,770 shares for Jeffrey Ravetch, a Board member, for
future consulting services.
In February 2014, MabVax Therapeutics issued approximately 5,946
shares of common stock to related parties in settlement of $240,000
in related party liabilities for consulting services.
In connection with the Merger, MabVax Therapeutics Holdings (f.k.a.
Telik, Inc.) signed separation agreements in May 2014 with nine
employees and agreed to pay severances and health benefits upon
closing of the Merger subject to certain provisions in the
agreement. The total in severance and benefits costs paid
subsequent to the Merger is approximately $748,000. At
December 31, 2015 and 2014, the accrued severance and benefits
costs are approximately none and $6,000, respectively.
9. Stock-based Compensation
Stock Incentive Plan
In September 2008, the Company’s stockholders approved the
2008 Stock Incentive Plan (the “2008 Plan”) which
became effective in September 2008 and under which 8,853 shares of
the Company’s common stock were initially reserved for
issuance to employees, non-employee directors and consultants of
the Company. In November 2012, the Company increased the authorized
shares under the plan to 21,067. On February 14, 2013, the
2008 Plan terminated and no further grants of equity may be made
thereunder.
In June 2014, MabVax Therapeutics Inc.’s stockholders
approved the amended 2014 Stock Incentive Plan (the “2014
Plan”) which became effective and was adopted by the Company
in the Merger in July 2014. The 2014 Plan authorized the issuance
of up to 47,493 shares, 20,543 of which are contingent upon the
forfeiture, expiration or cancellation of the 2008 Reserved
Shares.
The 2014 Plan provided for the grant of incentive stock options,
non-incentive stock options, stock appreciation rights, restricted
stock awards, and restricted stock unit awards to eligible
recipients. The maximum term of options granted under the Stock
Plan is ten years.
Employee option grants generally vest 25% on the first anniversary
of the original vesting date, and the balance vests monthly over
the following three years. The vesting schedules for grants to
non-employee directors and consultants is determined by the
Company’s Compensation Committee. Stock options are generally
not exercisable prior to the applicable vesting date, unless
otherwise accelerated under the terms of the applicable stock plan
agreement.
Amendment of Equity Incentive Plan
On March 31, 2015 the Company approved a Second Amended and
Restated 2014 Employee, Director and Consultant Equity Incentive
Plan (the “Plan”), effective as of and contingent upon
the consummation of the initial closing of the sale of Units
pursuant to the Subscription Agreement, to increase the number of
shares reserved for issuance under the Plan from 21,361 to
1,129,837 shares of common stock. Additional changes to the Plan
include:
●
An “evergreen” provision to reserve additional shares
for issuance under the Plan on an annual basis commencing on the
first day of fiscal 2016 and ending on the second day of fiscal
2024, such that the number of shares that may be issued under the
Plan shall be increased by an amount equal to the lesser of: (i)
1,081,082 or the equivalent of such number of shares after the
administrator, in its sole discretion, has interpreted the effect
of any stock split, stock dividend, combination, recapitalization
or similar transaction in accordance with the Plan; (ii) the number
of shares necessary such that the total shares reserved under the
Plan equals (x) 15% of the number of outstanding shares of
common stock on such date (assuming the conversion of all
outstanding shares of Preferred Stock (as defined in the Plan) and
other outstanding convertible securities and exercise of all
outstanding warrants to purchase common stock) plus (y) 30,946; and
(iii) an amount determined by the Board.
●
Provision that no more than 405,406 shares may be granted to any
participant in any fiscal year.
●
Provisions to allow for performance based equity awards to be
issued by the Company in accordance with Section 162(m) of the
Internal Revenue Code.
Stock-based Compensation
Total estimated stock-based compensation expense, related to all of
the Company’s stock-based payment awards recognized under ASC
718, “Compensation—Stock
Compensation” was comprised of the
following:
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|||||
|
|
2015
|
|
|
2014
|
|
||
Research
and development
|
|
$
|
929,633
|
|
|
$
|
163,019
|
|
General
and administrative
|
|
|
3,534,062
|
|
|
|
441,957
|
|
Total
share-based compensation expense
|
|
$
|
4,463,695
|
|
|
$
|
604,976
|
|
Stock-based Award Activity
The following table summarizes the Company’s stock option
activity for the years ended December 31, 2015 and 2014 giving
effect to the reverse stock split:
|
|
Options
Outstanding
|
|
|
Weighted
Average
Exercise Price
|
|
||
Outstanding
at December 31, 2013
|
|
|
20,543
|
|
|
$
|
8.81
|
|
Granted
|
|
|
12,280
|
|
|
|
62.68
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
Forfeited/cancelled/expired
|
|
|
—
|
|
|
|
—
|
|
Outstanding
and expected to vest at December 31, 2014
|
|
|
32,823
|
|
|
$
|
29.00
|
|
Granted
|
|
|
407,547
|
|
|
|
16.50
|
|
Exercised
|
|
|
(376
|
)
|
|
|
2.15
|
|
Forfeited/cancelled/expired
|
|
|
(1,746
|
)
|
|
|
54.91
|
|
Outstanding
and expected to vest at December 31, 2015
|
|
|
438,248
|
|
|
$
|
17.46
|
|
Vested
and exercisable at December 31, 2015
|
|
|
24,054
|
|
|
$
|
26.57
|
|
The total unrecognized compensation cost related to unvested stock
option grants as of December 31, 2015 was $3,964,320 and the
weighted average period over which these grants are expected to
vest is 2.12 years. Due to limited activity in 2015, the Company
has assumed a forfeiture rate of zero. The weighted average
remaining contractual life of stock options outstanding at
December 31, 2015 and 2014 is 9.13 years and 7.9 years,
respectively.
Stock options granted to employees generally vest over a four-year
period and vesting does not start until the one-year anniversary of
the grant date. During the year ended December 31, 2014, the
Company granted five new Board members appointed in connection with
the Merger an aggregate of 7,511 in stock options, which were
immediately vested on the grant date. There were no grants of stock
options during the year ended December 31, 2015 with immediate
vesting.
During 2015, the Company granted 407,548 options and 310,926 shares
of restricted stock to its directors, officers, employees and
consultants from the 2014 Plan. In addition, the Company
granted 250,203 shares of restricted stock outside of the plan for
consulting and investor relation services during the second quarter
of 2015.
A summary of activity related to restricted stock grants under the
Plan for the year December 31, 2015 is presented
below:
|
|
Shares
|
|
|
Weighted Average Grant-Date Fair Value
|
|
||
Non-vested at December 31, 2014
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
310,926
|
|
|
|
16.87
|
|
Vested
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
Non-vested at December 31, 2015
|
|
|
310,926
|
|
|
$
|
16.87
|
|
As of December 31, 2015, unamortized compensation expense related
to restricted stock grants amounted to $3,843,264, which is
expected to be recognized over a weighted average period of 2.27
years.
Valuation Assumptions
The Company used the Black-Scholes-Merton option valuation model,
or the Black-Scholes model, to determine the stock-based
compensation expense recognized under ASC 718. The Company’s
expected stock-price volatility assumption was based solely on the
weighted average of the historical and implied volatility of
comparable companies whose share prices are publicly available. The
expected term of stock options granted was based on the simplified
method in accordance with Staff Accounting Bulletin No. 110,
or SAB 110, as the Company’s historical share option exercise
experience did not provide a reasonable basis for estimation. The
risk-free interest rate was based on the U.S. Treasury yield for a
period consistent with the expected term of the stock award in
effect at the time of the grant.
|
|
Years Ended December 31,
|
|
|||||
|
|
2015
|
|
|
2014
|
|
||
Risk-free
interest rate
|
|
0.9 to 1.8
|
%
|
|
0.1 to 2 %
|
|
||
Dividend
yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected
volatility
|
|
81 to 87
|
%
|
|
84 to 100
|
%
|
||
Expected
life of options, in years
|
|
5.5 and 6.0
|
|
|
5 and 6.25
|
|
||
Weighted
average grant date fair value
|
|
$
|
1.56
|
|
|
$
|
4.73
|
|
Because the Company had a net operating loss carryforward as of
December 31, 2015, no tax benefits for the tax deductions
related to stock-based compensation expense were recognized in the
Company’s consolidated statements of operations.
Additionally, there were 376 stock options exercised during the
year ended December 31, 2015, and there were no stock option
exercises in the corresponding period of 2014.
Management Bonus Plan
On April 2, 2015, the Compensation Committee of the Board of
Directors approved the 2015 Management Bonus Plan (the
“Management Plan”) outlining maximum target bonuses of
the base salaries of certain of the Company’s executive
officers. Under the terms of the Management Plan, the
Company’s Chief Executive Officer shall receive a maximum
target bonus of up to 50% of his annual base salary, the Chief
Financial Officer shall receive a maximum target bonus of up to 35%
of his annual base salary and the Company’s Vice President
shall receive a maximum target bonus of up to 25% of his annual
base salary. During the year ended December 31, 2015, the Company
accrued and expensed $323,363 related to the Management
Plan.
On April 4, 2015, the Board approved the following Non-Employee
Director Policy (the “Incumbent Director Policy”) with
respect to incumbent non-employee members of the Board in the event
that they are replaced before their term expires:
●
A one-time issuance of 2,703 restricted shares of common
stock;
●
The vesting of all options and restricted stock grants held on such
date; and
●
The payment of all earned but unpaid cash compensation for their
services on the Board and its committees, as of such
date.
On April 4, 2015, in connection with his resignation from the
Board, Michael Wick received a one-time restricted stock grant of
2,703 shares under the Incumbent Director Policy.
Common Stock Reserved for Future Issuance
Common stock reserved for future issuance consists of the following
at December 31, 2015:
Common
stock reserved for conversion of preferred stock and
warrants
|
|
|
4,012,442
|
|
Common
stock options outstanding
|
|
|
438,249
|
|
Authorized
for future grant or issuance under the Stock Plan
|
|
|
401,353
|
|
Unvested
restricted stock
|
|
|
310,926
|
|
Total
|
|
|
5,162,970
|
|
10. Net Loss per Share
The Company calculates basic and diluted net loss per share using
the weighted average number of shares of common stock outstanding
during the period.
When the Company is in a net loss position, it excludes from the
calculation of diluted net loss per share all potentially dilutive
stock options, preferred stock and warrants, and the diluted net
loss per share is the same as the basic net loss per share for such
periods. If the Company was to be in a net income position, the
weighted average number of shares used to calculate the diluted net
income per share would include the potential dilutive effect of
in-the-money securities, as determined using the treasury stock
method.
The table below presents the potentially dilutive securities that
would have been included in the calculation of diluted net loss per
share if they were not antidilutive for the periods
presented.
|
|
Years Ended December 31,
|
|
|||||
|
|
2015
|
|
|
2014
|
|
||
Stock
options
|
|
|
438,248
|
|
|
|
6,030
|
|
MabVax
Series A redeemable convertible preferred stock
|
|
|
—
|
|
|
|
18,596
|
|
MabVax
Series B redeemable convertible preferred stock
|
|
|
—
|
|
|
|
21,114
|
|
MabVax
Series C-1 redeemable convertible preferred stock
|
|
|
—
|
|
|
|
55,736
|
|
Series
B redeemable convertible preferred stock
|
|
|
—
|
|
|
|
13,905
|
|
Series
A-1 preferred stock
|
|
|
—
|
|
|
|
100,359
|
|
Series
C preferred stock
|
|
|
—
|
|
|
|
6,355
|
|
Series
D preferred stock
|
|
|
2,587,717
|
|
|
|
—
|
|
Series
E preferred stock
|
|
|
450,446
|
|
|
|
—
|
|
Unvested
restricted stock
|
|
|
310,926
|
|
|
|
—
|
|
Warrants
to purchase common stock
|
|
|
974,280
|
|
|
|
—
|
|
Total
|
|
|
4,761,617
|
|
|
|
222,095
|
|
11. Contracts and Agreements
Life Technologies Licensing Agreement
On September 24, 2015, the Company entered into a licensing
agreement with Life Technologies Corporation (“Life
Technologies”), a subsidiary of Thermo Fisher
Scientific. Under the agreement, MabVax agreed to
license certain cell lines from Life Technologies to be used in the
production of recombinant proteins for the Company’s clinical
trials. The amount of the contract is for $450,000 and
was fully expensed during the year ended December 31, 2015. The
Company paid $225,000 during the year ended December 31, 2015,
related to this contract.
Rockefeller University Collaboration
In July 2015, the Company entered into a research collaboration
agreement with Rockefeller University's Laboratory of Molecular
Genetics and Immunology. The Company provided antibody material to
Rockefeller University, which is exploring the mechanism of action
of constant region (Fc) variants of the HuMab-5B1 in the role of
tumor clearance. The Company will supply additional research
materials as requested by the university, which is evaluating ways
to optimize the function.
NCI Neuroblastoma Vaccine Grant
In July 2012, the NCI awarded the Company a SBIR Program grant to
support the Company’s program to manufacture the clinical
material and develop an Investigational New Drug Application for a
vaccine to prevent the recurrence of Neuroblastoma (the “NCI
Neuroblastoma Vaccine Grant”). The project period for Phase I
of the grant ended in December 2012 and the Company received a
one-year extension on the project. The Company records revenue
associated with the NIH Grants as the related costs and expenses
are incurred. For the year ended December 31, 2014, the
Company recorded $32,355 of revenue associated with the NCI
Neuroblastoma Vaccine Grant.
NCI PET Imaging Agent Grant
In September 2013, the NCI awarded the Company a SBIR Program
Contract to support the Company’s program to develop a PET
imaging agent for pancreatic cancer using a fragment of the
Company’s HuMab-5B1 antibody (the “NCI PET Imaging
Agent Grant”). The project period for Phase I of the grant
award of approximately $250,000 covered a nine-month period which
commenced in September 2013 and ended in June 2014.
On August 25, 2014, the Company was awarded a $1.5 million
contract for the Phase II portion of the NCI PET Imaging Agent
Grant. The contract is intended to support a major portion of
the preclinical work being conducted by the Company, together with
its collaboration partner, MSK, to develop a novel Positron
Emission Tomography (“PET”) imaging agent for detection
and assessment of pancreatic cancer. The total contract amount for
Phase I and Phase II of approximately $1,749,000 supports research
work through June 2016.
The Company records revenue associated with the NCI PET Imaging
Agent Grant as the related costs and expenses are incurred. For the
years ended December 31, 2015 and 2014, the Company recorded
$1,141,451 and $271,820 of revenue associated with the NCI PET
Imaging Agent Grant, respectively.
Juno Therapeutics Option Agreement
On August 29, 2014, MabVax Therapeutics entered into an Option
Agreement (the “Option Agreement”) with Juno
Therapeutics, Inc. (“Juno”). Pursuant to the Option
Agreement, MabVax Therapeutics granted Juno the option to obtain an
exclusive, world-wide, royalty-bearing license (the
“License”) authorizing Juno to develop, make, have
made, use, import, have imported, sell, have sold, offer for sale
and otherwise exploit certain patents MabVax Therapeutics developed
with respect to fully human antibodies with binding specificity
against human GD2 or sialyl Lewis A antigens (the
“Patents”) and certain MabVax Therapeutics controlled
biologic materials. Juno may exercise its option to purchase the
License until the earlier of June 30, 2016 or 90 days from the
date MSK completes its research with respect to the Patents in
accordance with the terms of agreements by and between MSK and
MabVax Therapeutics.
During the years ended December 31, 2015 and 2014, no revenues had
been earned under the Option Agreement; however, the Option
Agreement remains valid and active.
The Option Agreement may be terminated by either party
(i) upon material breach of the other party if the breach is
not cured within 30 days, or (ii) with 60 days’ prior
written notice in the event the other party becomes the subject of
a voluntary or involuntary petition in bankruptcy. Juno may
terminate the Option Agreement at any time upon 30 days’
prior written notice. MabVax Therapeutics may terminate the Option
Agreement if Juno, or any Juno employee or affiliate, is a party to
any action or proceeding in which Juno, or any Juno employee or
affiliate, opposes the Patents or otherwise seeks a determination
that any of the Patents are invalid or unenforceable if Juno, or as
applicable, its employee and/or affiliate, fails to discontinue its
involvement in such an action within 10 days of receiving notice
from MabVax Therapeutics.
As consideration for the grant of the exclusive option to purchase
the License, Juno has agreed to pay MabVax Therapeutics a one-time
up-front option fee in the low five figures. Should the option be
exercised, MabVax Therapeutics would expect to negotiate with Juno
to pay amounts that include MabVax Therapeutics license fees,
milestone payments, and royalty-based compensation in connection
with entering into a License. The terms of the License including
the financial terms are expected to be agreed upon at a future
date.
12. Commitments and contingencies
Litigation
On May 30, 2014, a class action lawsuit was commenced in Santa
Clara County Superior Court, State of California, on behalf of
Cadillac Partners and others similarly situated, naming as
defendants, MabVax Therapeutics, the Company and the
Company’s directors, Hudson Bay Capital Management LP, Bio IP
Ventures LLC, Hudson Bay Master Fund Ltd., and Hudson Bay IP
Opportunities Master Fund LP, together the “Parties”.
The suit alleged the defendants breached certain fiduciary duties,
or aided and abetted a breach of fiduciary duties, in connection
with the Company’s Merger with MabVax Therapeutics. In
support of their purported claims, the plaintiff alleged, among
other things, that the Company’s Board has historically
failed to fulfill its fiduciary duty to its stockholders, and
claiming with respect to the Series B Private Placement and the
Merger, that such transactions involved an inadequate sales process
and included preclusive deal protection devices, and that the
Company’s Board of Directors would receive personal benefits
not available to its public stockholders as a result of the Merger.
The plaintiff sought to enjoin the Merger and obtain damages as
well as attorneys’ and expert fees and costs.
On June 29, 2014, the parties entered into a Stipulation and
Settlement (the “Settlement”), pursuant to which the
Company agreed to file with the SEC certain supplemental
disclosures in connection with the Merger. The Settlement was
subject to certain confirmatory discovery to be undertaken by the
plaintiff and to the Parties’ agreement on the payment of the
plaintiff’s attorneys’ fees and expenses.
On July 16, 2014, the Company and all other parties to the
litigation entered into an agreement which, if consummated, would
settle the litigation (the “Proposed Settlement”).
Among many other terms, under the Proposed Settlement the Company
and all defendants will receive a broad release of any and all
claims pertaining to the Series B Private Placement, the Merger,
the prior disclosure and a wide variety of other matters. The
Proposed Settlement also calls for the parties to ask the court to,
among other things, enter orders enjoining other stockholders from
bringing similar actions, certifying the putative settlement class,
and approving the Proposed Settlement as a fair, final, and binding
resolution of the litigation. Under the Proposed Settlement, the
Company and the other defendants have expressly denied the
allegations of the complaint and denied engaging in any other
misconduct, nor will any of them make any payment or in any respect
amend the negotiated terms of the since-consummated Series B
Private Placement and Merger. Finally, under the Proposed
Settlement, the Company and the other defendants have not agreed to
pay any legal fees, or reimburse any expenses, allegedly incurred
by the plaintiffs who filed the complaint; instead, the Company
expects that counsel for those plaintiffs will present any such
disputed claim for legal fees and expenses to the court for
resolution.
On April 20, 2015, the Parties made an application for an Order for
Notice and Scheduling of Hearing of Settlement in accordance with a
Stipulation of Settlement dated as of April 20, 2015 (the
“Action”), which sets forth the terms and conditions
for settlement and which provides for dismissal of the Action with
prejudice. The Order after Hearing on June 12, 2015,
provided preliminary approval of the settlement that was agreed to
by the Parties, in which the Company provided supplemental
disclosures in the definitive proxy filed with the SEC on June 30,
2014. Notice of the action as a class action was sent to
class members in July 2015.
On September 18, 2015, an Order and Final Judgment was entered by
the Superior Court of the State of California, approving the
settlement that was agreed upon by both parties and closing the
case. The Company anticipates that there will be no
additional future expenses incurred in this action by the Company
after the December 31, 2015 balance sheet date which would not be
offset by insurance.
Operating Leases
In connection with the Merger, the Company recorded a $590,504
contingent lease termination fee, related to the termination of the
master lease and sublease of the Porter Drive Facility by MabVax
Therapeutics Holdings (f.k.a. Telik, Inc.), which is payable to
ARE-San Francisco No. 24 (“ARE”) if the Company
receives $15 million or more in additional financing in the
aggregate, but otherwise forgiven.
On September 2, 2015, the Company
entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises of office and laboratory space in buildings
located at 11535 Sorrento Valley Rd., San Diego, California, to
serve as the Company’s corporate offices and laboratories
(the “New Premises”). Due to the fact that
certain tenant improvements needed to be made to the New Premises
before the Company could take occupancy, the term of the Lease did
not commence until the New Premises were ready for occupancy, on
February 4, 2016. The Lease terminates six years after
such term commencement date, unless earlier terminated in
accordance with the Lease. Pursuant to the terms of the Lease, the
monthly base rent will be $35,631, subject to annual increases as
set forth in the Lease.
The Company has an option to extend the Lease term for a single,
five-year period. If the Lease term is extended for the
optional five-year period, the monthly base rent will be adjusted
based on fair market rental value. In addition to rent,
the Company agreed to pay a portion of the taxes and utility,
maintenance and other operating costs paid or accrued in connection
with the ownership and operation of the property.
The Company previously leased its corporate office and laboratory
space under an operating lease that, as amended on August 1,
2010, expired on July 31, 2015. The lease contained an option
to cancel at various dates prior to the termination date by paying
a cancellation penalty. The Company has provided a refundable
security deposit of $11,017 to secure its obligations under the
lease, which was included in other long-term assets in the
accompanying consolidated financial statements. We recognize rent
expense on a straight-line basis over the term the lease. Rent
expense of $122,236 and $115,118 was recognized in the years ended
December 31, 2015 and 2014, respectively.
Minimum future annual operating lease obligations are as follows as
of December 31, 2015:
2016
|
|
$
|
391,941
|
|
2017
|
|
|
439,330
|
|
2018
|
|
|
452,510
|
|
2019
|
|
|
466,085
|
|
2020
|
|
|
480,068
|
|
Thereafter
|
|
|
535,776
|
|
Total
|
|
$
|
2,765,710
|
|
|
|
|
|
|
Restructuring Plan upon Closing of the Merger
In connection with the Merger, the Company signed separation
agreements in May 2014 with nine employees and agreed to pay
severances and health benefits upon closing of the Merger subject
to certain provisions in the agreements. As of December 31, 2015
and 2014, zero and approximately $6,000 in severance and benefits
costs remained.
13. Income Taxes
During
the years ended December 31, 2015 and 2014, the Company did not
record a provision or benefit for current or deferred income taxes
in the consolidated statement of operations due to its cumulative
net losses.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company’s net
deferred tax assets are as follows as of December 31, 2015 and
2014:
|
|
2015
|
|
|
2014
|
|
||
Deferred
tax assets:
|
|
|
|
|
|
|
|
|
Net
operating loss carryforwards
|
|
$
|
14,502,000
|
|
|
$
|
9,478,000
|
|
Tax
credits
|
|
|
4,803,000
|
|
|
|
4,128,000
|
|
Accrued
expenses and other
|
|
|
1,861,300
|
|
|
|
225,000
|
|
Total
deferred tax assets
|
|
|
21,166,300
|
|
|
|
13,831,000
|
|
Less
valuation allowance
|
|
|
(21,166,300
|
)
|
|
|
(13,831,000
|
)
|
Net
deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company has evaluated the available evidence supporting the
realization of its gross deferred tax assets, including the amount
and timing of future taxable income, and has determined that it is
more likely than not that the deferred tax assets will not be
realized. Due to such uncertainties surrounding the realization of
the Company’s deferred tax assets, the Company maintains a
valuation allowance of $21,166,300 against its deferred tax assets
as of December 31, 2015. Realization of the deferred tax assets
will be primarily dependent upon the Company’s ability to
generate sufficient taxable income prior to the expiration of its
net operating losses.
During the year ended December 31, 2014, MabVax Therapeutics, Inc.
merged with Telik, Inc. in a tax-free reorganization. As a result
of the merger, all components of Telik’s deferred tax assets
are now included as deferred tax assets of MabVax Therapeutics,
Inc. These pre-merger deferred tax assets are net operating loss
carryforwards of $1,588,000, research and development credit
carryforwards of $4,457,000, in total equaling $6,045,000. The
current year change in these assets has been reflected in the
provision for income taxes.
As of December 31, 2015, the Company had net operating loss
carryforwards of approximately $36,375,000 and $36,616,000 for
federal and state income tax purposes, respectively. These may be
used to offset future taxable income and will begin to expire in
varying amounts in 2028 to 2035. The Company also has research and
development credits of approximately $297,000 and $6,827,000 for
federal and state income tax purposes, respectively. The federal
credits may be used to offset future taxable income and will begin
to expire at various dates beginning in 2030 through 2035. The
state credits may be used to offset future taxable income, and such
credits carry forward indefinitely.
The Company is subject to taxation in the U.S. and California
jurisdictions. Currently, no historical years are under
examination. The Company’s tax years ending December 31, 2015
and 2014 are subject to examination by the U.S. and state taxing
authorities due to the carryforward of unutilized net operating
losses and research and development credits.
Utilization of the Company’s net operating loss carryforwards
and research and development credit carryforwards may be subject to
a substantial annual limitation due to an “ownership
change” that may have occurred, or that could occur in the
future, as defined and required by Section 382 of the Internal
Revenue Code of 1986, as amended, as well as similar state
provisions. These ownership changes may limit the amount of net
operating loss carryforwards and research and development credit
carryforwards, and other tax attributes that can be utilized
annually to offset future taxable income and tax, respectively. Any
limitation may result in the expiration of a portion of the net
operating loss carryforwards or research and development credit
carryforwards before utilization. The net operating loss
carryforwards and research and development credit carryforwards
inherited as a result of the merger with Telik, Inc. have been
severely limited under these rules and will likely not be
realized.
In general, an “ownership change” results from a
transaction or series of transactions over a three-year period
resulting in an ownership change of more than 50% of the
outstanding stock of a company by certain stockholders or public
groups. The Company intends to complete a study in the future to
assess whether an ownership change has occurred or whether there
have been multiple ownership changes since the Company’s
formation, and will complete such study before the use of any of
the aforementioned attributes.
The provision for income taxes differs from the amount computed by
applying the U.S. federal statutory tax rate (34% in 2015 and 2014)
to income taxes as follows:
|
|
2015
|
|
|
2014
|
|
||
Tax
benefit computed at 34%
|
|
$
|
(6,155,300
|
)
|
|
$
|
(2,692,100
|
)
|
State
tax provision, net of federal tax benefit
|
|
|
(1,551,444
|
)
|
|
|
(462,800
|
)
|
Change
in valuation allowance
|
|
|
7,335,300
|
|
|
|
3,146,000
|
|
Other
|
|
|
371,444
|
|
|
|
8,900
|
|
Tax
provision (benefit)
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company has adopted ASC 740-10-25. This interpretation
clarifies the criteria for recognizing income tax benefits under
ASC 740, “Accounting for Income
Taxes”, and requires
additional disclosures about uncertain tax positions. Under ASC
740-10-25 the financial statement recognition of the benefit for a
tax position is dependent upon the benefit being more likely than
not to be sustainable upon audit by the applicable taxing
authority. If this threshold is met, the tax benefit is then
measured and recognized at the largest amount that is greater than
50 percent likely of being realized upon ultimate
settlement.
14. Subsequent Events
On August 16, 2016, the Company effected a 1-for-7.4 reverse stock
split of its common stock. All share and per share
amounts, and number of shares of common stock into which each share
of preferred stock will convert, in the consolidated financial
statements and notes thereto have been retroactively adjusted for
all periods presented to give effect to the reverse stock split,
including reclassifying an amount equal to the reduction in par
value of common stock to additional paid-in
capital.
On January 15, 2016, the Company and Oxford Finance LLC, as
collateral agent and lender (the “Lender” or
“Collateral Agent”) entered into a Loan and Security
Agreement (the “Loan Agreement”) providing for senior
secured term loans to the Company in an aggregate principal amount
of up to $10,000,000, subject to the terms and conditions set forth
in the Loan Agreement. On January 15, 2016, the Company
received an initial loan of $5,000,000 (“Term A Loan”)
under the Loan Agreement, before fees and issuance costs of
approximately $381,000.
Under the Loan Agreement, if the Company achieves (a) positive
interim data on the Phase 1a HuMab-5B1 antibody trial in pancreatic
cancer and (b) uplisting of its common stock onto the NASDAQ Stock
Market or New York Stock Exchange (the “Term B Event”)
then until the earliest to occur of 60 days from the Term B Event
or September 30, 2016, and provided there has been no event of
default, the Company may request a second tranche in the amount of
$5,000,000 under the Loan Agreement (“Term B Loan” and
together with Term Loan A the “Term
Loans”).
Interest on the Term Loans accrues at a rate equal to the greater
of (i) 11.50% and (ii) the sum of (a) the thirty (30) day U.S.
LIBOR rate reported in The Wall Street Journal
on the last Business Day of the month
that immediately precedes the month in which the interest will
accrue, plus (b) 11.29%. Interest is payable monthly in arrears.
The Term Loans mature on February 1, 2020. Upon the
occurrence of an Event of Default, the interest rate under the Term
Loans shall be equal to 5% plus the Interest Rate then in
effect.
The Term Loans are secured by a security interest in all of the
assets of the Company and its current and future subsidiaries,
excluding intellectual property but including proceeds of
intellectual property.
The Company may prepay all but not less than all of the Term loans
advanced under the Loan Agreement, provided that the Company
provides written notice to the Collateral Agent at least 30 days
prior to such prepayment, and pays the lender an amount equal to
the outstanding principal of the Term Loans, plus accrued and
unpaid interest through the prepayment date, the Final Payment and
the prepayment fee equal to (i) 3% of the outstanding balance, if
the loan is prepaid within 18 months of the funding date, (ii) 2%
of the outstanding balance, if the loan is prepaid 18 months after
through and including the second anniversary of the funding date
and (iii) 1% of the outstanding balance if the loan is prepaid
after the second anniversary of the funding date and prior to the
maturity date of the loan (the “Prepayment Fee”) and
all other obligations that are due and payable under the Loan
Agreement including any applicable expenses of the
lender. The Final Payment is an amount equal to the
original principal of the Term Loan multiplied by 3%.
The Loan Agreement contains customary representations and covenants
that, subject to exceptions, restrict the Company’s ability
to: pay dividends (other than dividends payable solely in capital
stock) or redeem or repurchase any capital stock, make investments,
incur additional liens, engage in mergers, acquisitions, and
transact with affiliates, undergo a change in control, add or
change business locations and engage in businesses that are not
related to existing businesses.
The Company also issued the Lender five-year warrants to purchase
an aggregate of 225,226 shares of the Company’s common stock
at $5.55 per share.
In connection with the execution of the Loan Agreement, the Company
entered into an amendment of Sections 8(a) and 8(b) of certain
Exchange Agreements with the Company dated March 25, 2015 held by a
certain holder of the Company’s Series D Preferred
Stock. The Amendment requires the Company to obtain
consent of the Holder for certain future equity or debt issuances,
and modifies the termination date for this requirement to be the
earlier to occur of: (a) April 1, 2017; (b) the date on which the
Company has raised $10 million in equity financing; (c) the date on
which the Company has closed one or more licensing agreements with
corporate partners pursuant to which the Company is entitled to
receive in total a minimum of $10,000,000 in initial licensing or
equity investments under such agreements; and (d) the date on which
shares of the Company's common stock are listed on a national
securities exchange. The Company issued 13,514 shares of common
stock to the Holder in connection with the Amendment.
PROSPECTUS
, 2017
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and
Distribution
The
following table sets forth all expenses to be paid by the
Registrant, other than estimated underwriter fees and commissions,
in connection with our public offering. All amounts shown are
estimates except for the SEC registration fee and the Financial
Industry Regulatory Authority, Inc. (“FINRA”)
fee:
SEC registration fee
|
|
$
|
1,159
|
|
FINRA filing fee
|
|
$
|
*
|
|
Legal fees and expenses
|
|
$
|
*
|
|
Accounting fees and expenses
|
|
$
|
*
|
|
Transfer agent and registrar fees
|
|
$
|
*
|
|
Printing and engraving expenses
|
|
$
|
*
|
|
Miscellaneous fees and expenses
|
|
$
|
*
|
|
Total
|
|
$
|
*
|
|
*To be filed by amendment.
Item 14. Indemnification of
Directors and Officers
Subsection
(a) of Section 145 of the General Corporation Law of
Delaware, or the DGCL, empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of
the fact that he is or was a director, employee or agent of the
corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Subsection
(b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including
attorneys’ fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and
except that no indemnification may be made with respect to any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 145
of the DGCL further provides that to the extent a director,
officer, employee or agent of a corporation has been successful on
the merits or otherwise in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in
the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys’ fees)
actually and reasonably incurred by him in connection therewith;
that indemnification or advancement of expenses provided for by
Section 145 shall not be deemed exclusive of any other rights
to which the indemnified party may be entitled; and empowers the
corporation to purchase and maintain insurance on behalf of a
director, officer, employee or agent of the corporation against any
liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such
liabilities under Section 145.
Reference
is also made to Section 102(b)(7) of the DGCL, which enables a
corporation in its certificate of incorporation to eliminate or
limit the personal liability of a director for monetary damages for
violations of a director’s fiduciary duty, except for
liability (i) for any breach of the director’s duty of
loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (providing for liability of directors
for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which the
director derived an improper personal benefit. Our amended and
restated certificate of incorporation provides that we must
indemnify our directors to the fullest extent under applicable law.
Pursuant to Delaware law, this includes elimination of liability
for monetary damages for breach of the directors’ fiduciary
duty of care to MabVax Holdings and its stockholders. However, our
directors may be personally liable for liability:
●
for any breach of duty of loyalty to us or to our
stockholders;
●
for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
●
for unlawful payment of dividends or unlawful stock repurchases or
redemptions; or
●
for any transaction from which the director derived an improper
personal benefit.
In
addition, our amended and restated bylaws provide
that:
●
we are required to indemnify our directors and executive officers
to the fullest extent not prohibited by Delaware law or any other
applicable law, subject to limited exceptions;
●
we may indemnify our other officers, employees and other agents as
set forth in Delaware law or any other applicable law;
●
we are required to advance expenses to our directors and executive
officers as incurred in connection with legal proceedings against
them for which they may be indemnified; and
●
the rights conferred in the amended and restated bylaws are not
exclusive.
Item 15. Recent Sales of
Unregistered Securities
Consulting Shares
On
January 13, 2016, we issued 13,514 shares of common stock as
payment for consulting services received.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Series D Conversions
During
the year ended December 31, 2016, holders of Series D preferred
stock converted an aggregate of 59,001 shares of Series D preferred
stock into an aggregate of 797,314 shares of common stock. During
the year ended 2015, holders of Series D preferred stock converted
an aggregate of 46,665 shares of Series D preferred stock into an
aggregate of 630,608 shares of common stock.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Oxford Loan
On
January 15, 2016, the Company entered into a Loan and Security
Agreement (the “Loan Agreement”) with Oxford Finance
LLC providing for senior secured term loans to the Company in the
aggregate principal amount of up to $10,000,000. In
connection with the foregoing loan agreement, the Company issued
Oxford Finance LLC five year warrants to purchase an aggregate of
225,226 shares of the Company’s common stock at $5.55 per
share.
In
connection with the execution of the Loan Agreement, the Company
entered into an amendment of Sections 8(a) and 8(b) of certain
Exchange Agreements with the Company dated March 25, 2015 held by a
certain holder of the Company’s Series D Preferred
Stock. The amendment requires the Company to obtain
consent of the holder for certain future equity or debt issuances,
and modifies the termination date for this requirement to be the
earlier to occur of: (a) April 1, 2017; (b) the date on which the
Company has raised $10 million in equity financing; (c) the date on
which the Company has closed one or more licensing agreements with
corporate partners pursuant to which the Company is entitled to
receive in total a minimum of $10,000,000 in initial licensing or
equity investments under such agreements; and (d) the date on which
shares of the Company's common stock are listed on a national
securities exchange. The Company issued 13,514 shares of common
stock in connection with the foregoing.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Exercise of Warrants into common stock
Between
April 13, 2015 and April 14, 2015, several holders of warrants
issued in the April Private Placement exercised their warrants on a
cashless basis to purchase an aggregate of 164,835 shares of common
stock by exercising an aggregate of 250,000 warrants to
purchase shares of common stock in accordance with the terms of the
warrant agreement.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Conversion of Series A-1, Series B, and Series C Preferred Stock
into common stock
For
the three months ended March 31, 2015, holders of Series A-1,
Series B, and Series C preferred stock converted 64,019, 106,437,
and 96,571 shares into 5,197, 37,417, and 16,313 shares of
common stock, respectively.
The securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering
Issuance of common stock under common stock Purchase
Agreement
We
issued, on March 31, 2015, an aggregate of 11,904 shares
of common stock that were required to be issued in connection with
the July 2014 financing transaction, as a result of the lower share
price in an offering.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Private Placement
On
March 31, 2015 the Company sold an aggregate of $4,995,749 of
units at a purchase price of $5.55 per unit, with each
unit consisting of one share of our common stock (or, at the
election of any investor who, as a result of receiving common stock
would hold in excess of 4.99% of our issued and outstanding common
stock, shares of our newly designated 0% Series E Convertible
Preferred Stock) and a thirty month warrant to purchase one half of
one share of common stock at an initial exercise price of $11.10
per share. A second closing was held on April 3, 2015 in which
we entered into separate Subscription Agreements for an additional
$6,718,751 of units. Of the Subscription Agreements accepted,
investors elected, and we issued, $2,500,000 of units consisting of
Preferred Shares on April 3, 2015.
The
securities referenced above were issued in reliance on the
exemption from registration afford by Rule 506 of Regulation D
and/or Section 4(a)(2) of the Securities Act as a transaction by an
issuer not involving a public offering.
Rubin Grant
On
April 3, 2015, we entered into a consulting agreement with Steve
Rubin pursuant to which he agreed to provide advisory services in
connection with corporate strategy, licensing and business
development estimated to be for a period of 12
months. In exchange for his services, we provided
him with a one-time grant of 27,027 shares of our restricted
common stock.
Ravetch
Grant
On April
4, 2015, the Board approved the issuance of an additional
restricted stock award of 17,770 shares of common stock to
Jeffrey Ravetch. This award is for future services covering
at least one-year period. The award was granted in
addition to the prior award to Dr. Ravetch on April 2, 2015 of: (i)
4,629 restricted shares of common stock and (ii) options to
purchase 4,629 shares of common stock with an exercise price of
$17.02 per share, for a total grant of 27,028 restricted
shares and options.
Livingston Grant
On
April 4, 2015, the Board of Directors approved a restricted stock
award by the Company of 135,135 shares of common stock to be issued
to Phil Livingston, Ph.D. for his continuing service to the
Company. On May 13, 2015, the Compensation Committee of
the Board clarified that the award is being granted in
consideration for at least one year of Dr. Livingston’s
services. The committee further clarified that the
vesting of the common stock shall be on the one-year anniversary of
the Board of Directors’ approval of the award, or April 4,
2016.
Consulting Agreement
On
April 5, 2015, we entered into a consulting agreement with The Del
Mar Consulting Group, Inc. and Alex Partners, LLC in consideration
for 40,541 shares of our restricted common stock. The consultants
also received an additional 27,027 shares of our restricted
common stock upon the Company’s achieving a milestone based
on its fully-diluted market capitalization.
Preferred and Warrant Exchanges
On
March 25, 2015, we exchanged certain of our issued and outstanding
Series A-1 Preferred Stock, A-1 Warrants, Series B Preferred Stock,
and Series B warrant in exchange for an aggregate of
342,906 shares of our common stock, and an aggregate of
238,156 shares of our newly designated Series D Convertible
Preferred Stock.
The
issuance of the securities set forth above was deemed to be exempt
from registration pursuant to Section 3(a)(9) of the
Securities Act.
Preferred Stock Issuances
On
July 8, 2014, we issued to MabVax Therapeutics’
stockholders, and assumed existing MabVax Therapeutics options and
warrants that represented, an aggregate of approximately 157,936
shares of our common stock, 2,762,841 shares of Series A-1
preferred stock, warrants to purchase up to an aggregate
of 277,738 shares of our common stock, and options exercisable
into 26,228 shares of our common stock.
On
May 12, 2014, we issued an aggregate of 1,250,000 shares of
Series B Preferred Stock and warrants to purchase up to an
additional 10,557 shares of our common stock, with an
aggregate purchase price of $2,500,000, or $2.00 for each share of
Series B Preferred Stock and related warrant.
The
sales of the securities set forth above were deemed to be exempt
from registration under the Securities Act by virtue of
Section 4(2) or Rule 506 promulgated under Regulation D
promulgated thereunder. Each of the recipients of securities in
these transactions was an accredited investor within the meaning of
Rule 501 of Regulation D under the Securities Act and had adequate
access, through employment, business or other relationships, to
information about us. No underwriters were involved in these
transactions.
Series C Preferred Exchanges
On
September 3, 2014, we exchanged approximately 20,096 shares of
our common stock for an aggregate of approximately 118,970 shares
of newly designated Series C convertible preferred
stock.
The
issuance of the securities set forth below was deemed to be exempt
from registration pursuant to Section 3(a)(9) of the
Securities Act.
Series C-1 Preferred Stock Purchase Agreement
On February 12,
2014, we issued 3,697,702 shares of MabVax Therapeutics Series C-1
preferred stock, warrants to purchase 2,055,260 shares of MabVax
Therapeutics common stock at $3.62 a share and warrants to purchase
1,848,851 shares of MabVax Therapeutics Series C-1 preferred stock
at $0.84 a share, respectively, for aggregate gross proceeds of
$3,100,000, less issuance costs of $126,345.
The
sales of the securities set forth above were deemed to be exempt
from registration under the Securities Act by virtue of
Section 4(2) or Rule 506 promulgated under Regulation D
promulgated thereunder. Each of the recipients of securities in
these transactions was an accredited investor within the meaning of
Rule 501 of Regulation D under the Securities Act and had adequate
access, through employment, business or other relationships, to
information about us. No underwriters were involved in these
transactions.
Item 16. Exhibits and Financial
Statement Schedules
(a)
Exhibits.
Exhibit
No.
|
|
Description
|
|
Form
|
|
Filing
Date/Period
End
|
|
Exhibit
Number
|
|
|
|
|
|
|
|
||
2.1
|
|
Agreement and Plan of Merger and Reorganization, dated May 12,
2014, between the Company, Tacoma Acquisition Corp., Inc. and
MabVax Therapeutics, Inc.
|
|
8-K
|
|
5/12/2014
|
|
2.1
|
|
|
|
|
|
|
|
|
|
2.2
|
|
Amendment No.1, dated as of June 30, 2014, by and between the
Company and MabVax Therapeutics, Inc.
|
|
8-K
|
|
7/1/2014
|
|
2.1
|
|
|
|
|
|
|
|
|
|
2.3
|
|
Amendment No.2 to the Agreement and Plan of Merger, dated July 7,
2014, by and among the Company, Tacoma Acquisition Corp. and MabVax
Therapeutics, Inc.
|
|
8-K
|
|
7/9/2014
|
|
2.1
|
|
|
|
|
|
|
|
|
|
3.1
|
**
|
Amended and Restated Certificate of Incorporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws
|
|
8-K
|
|
12/14/2007
|
|
3.2
|
|
|
|
|
|
|
|
|
|
3.3
|
|
Form of Certificate of Designations, Preferences and Rights of
Series D Convertible Preferred Stock
|
|
8-K
|
|
3/26/2015
|
|
3.1
|
|
|
|
|
|
|
|
|
|
3.4
|
|
Form of Certificate of Designations, Preferences and Rights of
Series E Convertible Preferred Stock
|
|
8-K
|
|
4/6/2015
|
|
4.2
|
|
|
|
|
|
|
|
|
|
3.5
|
|
Form of Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock
|
|
8-K
|
|
8/17/2016
|
|
3.2
|
|
|
|
|
|
|
|
|
|
3.6
|
|
Form of Certificate of Amendment to Amended and Restated
Certificate of Incorporation
|
|
8-K
|
|
8/17/2016
|
|
3.1
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Securities Purchase Agreement, dated as of February 12, 2014,
between MabVax Therapeutics, Inc. and the purchasers set forth on
the signature pages thereto including that certain Amendment No. 1
to Securities Purchase Agreement, dated as of May 12, 2014, between
MabVax Therapeutics, Inc. and the persons and entities identified
on the signature pages thereto
|
|
8-K
|
|
5/12/2014
|
|
10.3
|
|
|
|
|
|
|
|
|
|
4.2
|
|
Registration Rights Agreement, dated as of February 12, 2014,
between MabVax Therapeutics, Inc. and the persons and entities
identified on the signature pages thereto
|
|
8-K
|
|
5/12/2014
|
|
10.2
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Form of Exchange Agreement
|
|
8-K
|
|
9/3/2014
|
|
10.1
|
|
|
|
|
|
|
|
|
|
4.4
|
|
Form of Waiver Letter
|
|
8-K
|
|
9/3/2014
|
|
10.2
|
4.5
|
|
Form of Common Stock Certificate
|
|
S-1
|
|
9/29/2014
|
|
4.1
|
|
|
|
|
|
|
|
|
|
4.6
|
|
Form of Waiver Extension Letter
|
|
8-K
|
|
9/30/2014
|
|
10.1
|
|
|
|
|
|
|
|
|
|
4.7
|
|
Form of Subscription Agreement, dated March 31, 2015, between the
Company and the subscribers set forth on the signature pages
thereto
|
|
10-K
|
|
3/31/2015
|
|
4.11
|
|
|
|
|
|
|
|
|
|
4.8
|
|
Form of Common Stock Purchase Warrant
|
|
10-K
|
|
3/31/2015
|
|
4.12
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Form of Registration Rights Agreement, dated March 31, 2015,
between the Company and the persons and entities identified on the
signature pages thereto
|
|
10-K
|
|
3/31/2015
|
|
4.13
|
4.10
|
|
Form of Secured Promissory Note
|
|
8-K
|
|
1/19/2016
|
|
4.1
|
|
|
|
|
|
|
|
|
|
4.11
|
|
Form of Warrant
|
|
8-K
|
|
1/19/2016
|
|
4.2
|
|
|
|
|
|
|
|
|
|
4.12
|
|
Form of Warrant Agency Agreement between MabVax Therapeutics
Holdings, Inc. and Equity Stock Transfer LLC and the Form of
Warrant Certificate
|
|
S-1
|
|
8/25/2015
|
|
4.10
|
|
|
|
|
|
|
|
|
|
5.1
|
**
|
Opinion of Sichenzia Ross Ference Kesner LLP, as to the legality of
the securities being registered
|
|
|
|
|
|
|
10.1
|
|
Separation Agreement and Release, dated May 12, 2014, between
Michael M. Wick and the Company
|
|
8-K
|
|
5/12/2014
|
|
10.4
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Separation Agreement and Release, dated May 12, 2014, between
William P. Kaplan and the Company
|
|
8-K
|
|
5/12/2014
|
|
10.5
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Separation Agreement and Release, dated May 12, 2014, between
Steven R. Schow and the Company
|
|
8-K
|
|
5/12/2014
|
|
10.6
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Separation Agreement and Release, dated May 12, 2014, between
Wendy K. Wee and the Company
|
|
8-K
|
|
5/12/2014
|
|
10.7
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Michael Wick Resignation Letter, dated July 7, 2014
|
|
8-K
|
|
7/9/2014
|
|
99.1
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Edward W. Cantrall Resignation Letter, dated July 7,
2014
|
|
8-K
|
|
7/9/2014
|
|
99.2
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Steven R. Goldring Resignation Letter, dated July 7,
2014
|
|
8-K
|
|
7/9/2014
|
|
99.3
|
10.9
|
|
Richard B. Newman Resignation Letter, dated July 7,
2014
|
|
8-K
|
|
7/9/2014
|
|
99.4
|
|
|
|
|
|
|
|
|
|
10.10
|
|
Employment Agreement, dated July 1, 2014, by and between MabVax
Therapeutics, Inc. and J. David Hansen
|
|
10-Q
|
|
8/8/2014
|
|
10.9
|
|
|
|
|
|
|
|
|
|
10.11
|
|
Employment Agreement, dated July 1, 2014, by and between MabVax
Therapeutics, Inc. and Gregory P. Hanson
|
|
10-Q
|
|
8/8/2014
|
|
10.10
|
|
|
|
|
|
|
|
|
|
10.12
|
|
Employment Agreement, dated July 1, 2014, by and between MabVax
Therapeutics, Inc. and Wolfgang W. Scholz, Ph.D.
|
|
10-Q
|
|
8/8/2014
|
|
10.11
|
|
|
|
|
|
|
|
|
|
10.13
|
|
Securities Purchase Agreement, dated July 8, 2014, by and between
MabVax Therapeutics, Inc. and certain institutional investors set
forth therein
|
|
10-Q
|
|
8/8/2014
|
|
10.12
|
|
|
|
|
|
|
|
|
|
10.14
|
|
Form of Indemnification Agreement
|
|
8-K
|
|
9/9/2014
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.15
|
|
Second Amended and Restated MabVax Therapeutics Holdings, Inc. 2014
Employee, Director and Consultant Equity Incentive
Plan
|
|
10-K
|
|
3/31/2015
|
|
10.15
|
10.16
|
|
Form of Exchange Agreement (Series A-1 Preferred Stock and Series
A-1 Warrants).
|
|
8-K
|
|
3/26/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.17
|
|
Form of Exchange Agreement (Series B Preferred Stock and Series B
Warrants).
|
|
8-K
|
|
3/26/2015
|
|
10.2
|
10.18
|
|
2008 Equity Incentive Plan
|
|
10-K
|
|
3/31/2015
|
|
10.29
|
|
|
|
|
|
|
|
|
|
10.19
|
|
Form of Option Agreement, 2008 Equity Incentive Plan
|
|
10-K
|
|
3/31/2015
|
|
10.30
|
|
|
|
|
|
|
|
|
|
10.20
|
|
Form of Lockup Agreement dated as of April 3, 2015
|
|
8-K
|
|
4/6/2015
|
|
10.3
|
|
|
|
|
|
|
|
|
|
10.21
|
|
Consulting Agreement with The Del Mar Consulting Group, Inc.
and Alex Partners, LLC dated as of April 5, 2015
|
|
8-K
|
|
4/6/2015
|
|
10.4
|
10.22
|
|
Form of Escrow Deposit Agreement dated as of April 14,
2015
|
|
8-K
|
|
4/15/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.23
|
|
Form of Amendment Agreement to Registration Rights
Agreement
|
|
8-K
|
|
6/10/2015
|
|
10.1
|
10.24
|
|
Amendment to Escrow Deposit Agreement dated June 22,
2015
|
|
8-K
|
|
6/24/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.25
|
|
Letter Agreement dated June 30, 2015 between MabVax Therapeutics,
Inc. and OPKO Health, Inc.
|
|
8-K
|
|
7/1/205
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.26
|
|
Form of Proposed Lease Agreement with AGP Sorrento Business
Complex, L.P
|
|
S-1
|
|
8/25/2015
|
|
10.37
|
|
|
|
|
|
|
|
|
|
10.27
|
|
Form of Amendment Agreement No. 2 to Registration Right s
Agreement
|
|
8-K
|
|
8/4/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.28
|
|
Non-Employee Director Compensation Policy
|
|
10-Q/A
|
|
8/12/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.29
|
|
Standard Industrial Net Lease, dated as of May 23, 2008, by
and between MabVax Therapeutics, Inc. and Sorrento
Square
|
|
10-Q/A
|
|
8/12/2015
|
|
10.2
|
10.30
|
|
First Amendment to that Standard Industrial Net Lease, dated May 6,
2010, by and between MabVax Therapeutics, Inc. and Sorrento
Square
|
|
10-Q/A
|
|
8/12/2015
|
|
10.3
|
|
|
|
|
|
|
|
|
|
10.31
|
|
Second Amendment to that Standard Industrial Net Lease, dated
August 1, 2012, by and between the Company and Sorrento
Square
|
|
10-Q/A
|
|
8/12/2015
|
|
10.4
|
|
|
|
|
|
|
|
|
|
10.32
|
|
Employment Agreement, dated July 21, 2014, by and between
MabVax Therapeutics, Inc. and Paul Maffuid, Ph.D.
|
|
10-Q/A
|
|
8/12/2015
|
|
10.5
|
|
|
|
|
|
|
|
|
|
10.33
|
|
Development and Manufacturing Services Agreement, dated April 15,
2014, by and between MabVax Therapeutics, Inc. and Gallus
BioPharmaceuticals NJ, LLC
|
|
10-Q/A
|
|
8/12/2015
|
|
10.6
|
|
|
|
|
|
|
|
|
|
10.34
|
|
Exclusive License Agreement for “Polyvalent Conjugate
Vaccines for Cancer” (SK#14491), dated as of June 30,
2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering
Institute for Cancer Research
|
|
10-Q/A
|
|
8/12/2015
|
|
10.7
|
|
|
|
|
|
|
|
|
|
10.35
|
|
Research and License Agreement, dated as of April 7, 2008, by
and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute
for Cancer Research
|
|
10-Q/A
|
|
8/12/2015
|
|
10.8
|
|
|
|
|
|
|
|
|
|
10.36
|
|
Exclusive License to Unimolecular Antibodies, dated October 13,
2011, by and between MabVax Therapeutics, Inc. and Sloan-Kettering
Institute for Cancer Research
|
|
10-Q/A
|
|
8/12/2015
|
|
10.9
|
10.37
|
|
Option Agreement, dated August 29, 2014, by and between MabVax
Therapeutics, Inc. and Juno Therapeutics, Inc.
|
|
10-Q/A
|
|
8/12/2015
|
|
10.10
|
|
|
|
|
|
|
|
|
|
10.38
|
|
SBIR Contract from National Cancer Institute
|
|
10-Q/A
|
|
8/12/2015
|
|
10.11
|
10.39
|
|
Lease by and between AGP Sorrento Business Complex, L.P., and
MabVax Therapeutics Holdings, Inc., dated as of September 2,
2015
|
|
8-K
|
|
9/3/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.40
|
|
Form of Amendment Agreement No.3 to Registration Rights
Agreement
|
|
8-K
|
|
10/13/2015
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.41
|
|
Loan and Security Agreement dated as of January 15,
2016
|
|
8-K
|
|
1/19/2016
|
|
10.1
|
10.42
|
|
Form of Amendment Agreement
|
|
10-K
|
|
3/14/2016
|
|
10.54
|
|
|
|
|
|
|
|
|
|
10.43
|
|
Consulting Agreement, dated April 1, 2016, by and between MabVax
Therapeutics Holdings, Inc. and Jeffrey Ravetch, M.D.,
Ph.D.
|
|
8-K
|
|
4/7/2016
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.44
|
|
Employment Agreement, dated March 16, 2016, by and
between MabVax Therapeutics Holdings, Inc. and Paul Resnick,
M.D.
|
|
10-K/A
|
|
4/19/2016
|
|
10.56
|
|
|
|
|
|
|
|
|
|
10.45
|
|
Non-Employee Director Compensation Policy, as amended through
August 25, 2016
|
|
8-K
|
|
8/31/2016
|
|
10.1
|
|
|
|
|
|
|
|
|
|
11.1
|
|
Statement of per share earnings
|
|
S-1
|
|
9/29/2014
|
|
11.1
|
|
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant
|
|
S-1
|
|
9/29/2014
|
|
21.1
|
|
|
|
|
|
|
|
|
|
23.1
|
*
|
Consent of Independent Registered Public Accounting
Firm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.2
|
**
|
Consent of Sichenzia Ross Ference Kesner LLP. (included as part of
Exhibit 5.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
*
|
Power of Attorney (included on signature page)
|
|
|
|
|
|
|
*
**
|
Filed herewith
To be filed by amendment
|
Item 17. Undertakings
(a)
The
undersigned registrant hereby undertakes:
|
(1)
|
To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration
Statement:
|
|
(i)
|
To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
|
|
(ii)
|
To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the
effective registration statement; and
|
|
(iii)
|
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
|
|
(2)
|
That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
|
|
(3)
|
To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
|
|
(4)
|
That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used
to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities
to such purchaser:
|
|
(i)
|
Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424 (§230.424 of this chapter);
|
|
(ii)
|
Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
|
|
(iii)
|
The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
|
|
(iv)
|
Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
|
(b)
Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of
the SEC such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c)
The
undersigned registrant hereby undertakes that:
(1)
For
purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this registration statement as of the time
it was declared effective.
(2)
For
the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of San Diego, State of California on the 10th day of February,
2017.
|
MABVAX THERAPEUTICS HOLDINGS, INC.
|
||
|
|||
|
|
||
|
By
|
/s/ J. David Hansen
|
|
|
J. David Hansen
|
||
|
President and Chief Executive Officer
(Principal executive officer)
|
||
|
|
||
|
/s/ Gregory P. Hanson
|
|
|
|
Gregory P. Hanson
|
||
|
Chief Financial Officer
|
||
|
(Principal financial and accounting
officer)
|
POWER OF ATTORNEY
We, the
undersigned officers and directors of MabVax Therapeutics Holdings,
Inc. hereby severally constitute and appoint J. David Hansen and
Gregory P. Hanson, our true and lawful attorney-in-fact and agents,
with full power of substitution and resubstitution for him and in
his name, place and stead, and in any and all capacities, to sign
for us and in our names in the capacities indicated below any and
all amendments (including post-effective amendments) to this
registration statement (or any other registration statement for the
same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file
the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite
or necessary to be done inand about the premises, as full to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent,
or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the
requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ J. David
Hansen
J.
David Hansen
|
|
Chairman
of the Board, President and
Chief
Executive Officer
(Principal
executive officer)
|
|
February
10, 2017
|
|
|
|
|
|
/s/ Gregory P.
Hanson
Gregory
P. Hanson
|
|
Chief
Financial Officer
(Principal
financial and accounting officer)
|
|
February
10, 2017
|
|
|
|
|
|
/s/ J. Kenneth M.
Cohen
Kenneth
M. Cohen
|
|
Director
|
|
February
10, 2017
|
|
|
|
|
|
/s/ J. Robert E.
Hoffman
Robert
E. Hoffman
|
|
Director
|
|
February
10, 2017
|
|
|
|
|
|
/s/ Philip O.
Livingston
Philip
O. Livingston, M.D.
|
|
Director
|
|
February
10, 2017
|
|
|
|
|
|
/s/ Paul V.
Maier
Paul V.
Maier
|
|
Director
|
|
February
10, 2017
|
|
|
|
|
|
/s/ J. Jeffrey V.
Ravetch
Jeffrey
V. Ravetch, M.D., Ph.D.
|
|
Director
|
|
February
10, 2017
|
|
|
|
|
|
/s/ Thomas
Varvaro
Thomas
Varvaro
|
|
Director
|
|
February
10, 2017
|
/s/ Jeffrey
Eisenberg
Jeffrey
Eisenberg
|
|
Director
|
|
February
10, 2017
|
II-10