Attached files
As filed with the Securities and Exchange Commission
on May
8, 2017
Registration
No. 333-216016
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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Amendment
No. 4
to
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)
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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:
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Harvey Kesner, Esq.
Sichenzia Ross Ference Kesner LLP
61 Broadway, 32nd Fl.
New York, NY 10006
(212) 930-9700
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Richard A. Friedman, Esq.
Stephen Cohen, Esq.
Sheppard Mullin Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112
(212) 653-8700
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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.
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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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Indicate by
check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth
company ☒
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
CALCULATION OF
REGISTRATION FEE
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Title of Each Class
of
Securities to be
Registered
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Proposed Maximum Aggregate Offering
Price (1)
$
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Amount
of
Registration Fee (3) (5)
$
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Common stock, par value
$0.01 per share (2)(4)
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$5,175,001
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$600
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Series G Convertible
Preferred Stock, par value $0.01 per share(2)
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$999,999
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$116
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| Common Stock issuable upon conversion of Series G Convertible Preferred Stock, par value $0.01 per share (2) |
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-
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Total
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$6,175,000
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$716
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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
$6,175,000.
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(4)
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Includes shares subject to the
underwriter’s overallotment option
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(5)
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Previously Paid. |
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.
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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
MAY 8, 2017
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2,571,429 Shares of Common Stock
571,428 Shares of
Series G Convertible Preferred Stock Convertible Into 571,428
Shares of Common Stock
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We are offering $5,500,000 of
shares of our common stock at $1.75 per share.
Investors in the offering who, as a result of the purchase and
issuance of our common stock, would hold in excess of 4.99% of our
issued and outstanding common stock, may elect to
receive shares of our newly designated 0% Series G Convertible
Preferred Stock, or Series G Preferred Stock.
Our
common stock is quoted on The NASDAQ Capital Market under the
symbol “MBVX”. On May 3, 2017, the closing bid price of
our common stock on The NASDAQ Capital Market was $1.98 per
share. There is no established
public trading market for the Series G Preferred Stock, and we do
not expect a market to develop. In addition, we do not intend to
apply for listing of the Series G Preferred Stock on any national
securities exchange or other trading market. Without an
active trading market, the liquidity of the Series G Preferred
Stock will be limited.
Investing in our securities involves risks. You
should carefully read and consider the “Risk Factors”
beginning on page 6 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.
An existing investor has indicated
an interest in purchasing an aggregate of up to approximately $4.0
million of our shares of common stock and Series G
Preferred Stock in this offering at the offering price. However,
because indications of interest are not binding agreements or
commitments to purchase, these investors may determine to purchase
fewer shares than they indicate an interest in purchasing or not to
purchase any shares in this offering.
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Per Share
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Total
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Public offering
price
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$ 1.75
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$ 5,500,000
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Underwriting discount
(1)
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$ 0.04
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$ 205,000
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Proceeds, before
expenses, to us (2)
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$ 1.71
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$ 5,295,000
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(1)
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The presentation
in this table assumes the purchase of securities by an existing
investor who has indicated an interest in purchasing an aggregate
of up to approximately $4.0 million in securities in this offering
at the offering price. However, because indications of interest are
not binding agreements or commitments to purchase, this investor
may determine to purchase fewer securities than they had indicated
an interest in purchasing or not to purchase any securities in this
offering. See “Underwriting” beginning on
page 68 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 $490,000.
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The underwriter
may also purchase up to an additional 385,714 shares of our common
stock at the public offering price, less the underwriting discount,
within 45 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.
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Laidlaw & Company (UK)
Ltd.
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The date of this prospectus
is ______ , 2017
TABLE OF CONTENTS
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Page
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2
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6
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22
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23
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23
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23
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24
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25
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34
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44
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60
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61
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63
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68
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73
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73
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73
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74
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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 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 proprietary 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.
Our Clinical Development Programs and Plans for 2017
MVT-5873 – for the Treatment of Pancreatic
Cancer
In our
progress report released in November 2016, we stated that the
safety of our HuMab-5B1 antibody designated as MVT-5873 had been
established at three incremental dose levels in our phase I
clinical trial. The purpose of this phase I clinical trial,
initiated in February 2016, is to establish safety and
tolerability, and to determine the recommended phase II dose for
patients with locally advanced and metastatic pancreatic cancer or
other malignancies expressing the same cancer antigen known as
CA19-9. Patients entering this part of the trial were stage three
and stage four cancer patients who had failed all previous
treatments, and had progressive disease.
Study
protocol allows patients to remain on therapy beyond the initial
28-day treatment and safety assessment cycle based on acceptable
dose tolerability and investigator assessment of continued benefit
from the treatment. Every second treatment cycle the investigator
assesses disease status using RECIST 1.1 measurement criteria to
evaluate tumor response rate and duration of response.
After
establishing the current dosage safety level for MVT-5873 in Part 1
of the trial, we were able to initiate part 2 of our phase I study.
Part 2 combines MVT-5873 with a standard of care chemotherapy
regimen in newly diagnosed treatment naïve patients. The
dosage levels established in our MVT-5873 monotherapy trial also
have cleared all subsequent dose levels utilized in our Phase I
clinical study of MVT-2163 as an immuno-PET imaging agent as well
as the dose levels planned for our clinical study of our
radioimmunotherapy product MVT-1075 that combines MVT-5873 with a
radioactive substance.
Recent progress
– As of April 2017, we had enrolled 29 patients in Part 1 of
our phase I trial at three clinical sites. Twenty-five patients are
currently evaluable. We have seen an efficacy signal from early
study results primarily in patients who enter the trial with CA19-9
levels below 2,500 U/ml. In this group of patients, we observed
that the first cycle of treatment with MVT-5873 reduces CA19-9
levels by 95% or more and close to normal levels. We also observed
that approximately half of the patients with CA19-9 levels below
2,500 U/ml. convert from progressive disease to stable disease.
Further, approximately 30% of this responder set maintained stable
disease for four or more months. Patients continue to tolerate the
study drug reasonably well with drug infusion reactions being the
most common adverse event which is adequately addressed by slowing
the infusion rate and use of routine premedication. Increases in
liver function tests are seen early in a minority of patients and
appear reversible.
Plan for remainder of
2017 – We plan to conduct a small phase Ib study in
the second half of 2017 to evaluate the use of MVT-5873 as a
maintenance therapy for pancreatic cancer patients whose
chemotherapy treatments no longer provide improvement and are
experiencing increasing levels of toxicity. We believe we can
demonstrate proof-of-concept for this approach with a small cohort
of approximately 10 patients. Results from this study are
anticipated around year end 2017.
MVT-2163 –as an Imaging Agent for Pancreatic
Cancer
In our
progress report released in November 2016, we stated that we had
established interim safety, and acceptable pharmacokinetics and
biodistribution of our immuno-PET imaging agent that we designate
as MVT-2163 in our phase I clinical trial. MVT-2163 is comprised of
MVT-5873 conjugated to a radio label. We have completed the initial
two cohorts of patients as specified in our protocol. In the first
cohort, we administered MVT-2163 alone and in the second cohort we
administered MVT-2163 following a blocking dose of MVT-5873. We
reported that the initial PET images demonstrated target
specificity by correlation with lesions identified by conventional
computerized tomography (CT) scans. The biodistribution data
obtained in the first two cohorts demonstrated improvement in PET
images by pre-administration of MVT-5873, as has been observed with
other antibody based PET agents. We initiated the MVT-2163 phase I
trial in June 2016 to evaluate a next generation diagnostic PET
imaging agent in patients with locally advanced or metastatic
adenocarcinoma of the pancreas (PDAC) or other CA19-9 positive
malignancies. MVT-2163 (89Zr-HuMab-5B1) combines the
well-established PET imaging radiolabel Zirconium [89Zr] with the targeting specificity of
MVT-5873. We designed the trial to establish safety,
pharmacokinetics, biodistribution, optimal time to obtain the PET
image, and the amount of MVT-5873 to be used prior to
administration of MVT-2163 to obtain optimized PET scan images. We
continue to actively recruit patients and expect to establish the
optimal co-administration dose of MVT-5873 early in
2017.
Recent progress
– As of April of 2017 we had completed enrollments in the
phase 1a portion of our study in all three planned cohorts. We have
expanded cohort 3 to evaluate not only an increased blocking dose
but the impact of expanding the time interval between the
administration of a blocking dose and the MVT-2163 PET agent. We
have determined that a 47 mg. blocking dose and a time interval of
2 to 4 hours significantly improves the quality of the PET scan
image. We observed that the blocking dose helps to reduce the
accumulation of labeled antibody in the liver and spleen while also
improving accumulation of the labeled antibody on both tumor and
metastatic sites. Images seen from use of MVT-2163 appear to be
identifying smaller metastatic sites that are below the limit of
detection with CT scans.
Plan for remainder of
2017 – In consultation with our clinical
investigators, we plan to expand our phase 1 program for the
remainder of 2017 to include additional patients who will consent
to have the smaller potential metastatic sites being seen with
MVT-2163 images biopsied to provide evidence that MVT-2163 is
identifying previously unseen disease. Better understanding of the
extent and spread of the cancer will significantly improve the
clinical decision regarding eligibility for curative surgery. We
expect to have results of biopsies later in 2017.
MVT-1075 –as a Radioimmunotherapy for Pancreatic
Cancer
We are
developing HuMab-5B1 into a third potential product for use as a
radioimmunotherapy that we have designated as MVT-1075. MVT-1075
represents a unique product opportunity for MabVax by conjugating
MVT-5873 with a low-energy radiation emitter, 177Lu, which has a
relatively short tissue penetration range to minimize potential
side effects of the radiation. MVT-5873 provides the opportunity
for tumor-specific targeting of a more potent analog of MVT-5873.
We submitted our IND in late December 2016, and the IND was
authorized to proceed on January 27, 2017. We plan to initiate the
phase I trial of MVT-1075 in the first half of
2017.
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 and our telephone number is (858) 259-9405. 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.” Our internet address is www.mabvax.com.
Information on our website is not incorporated into this
prospectus.
Listing Reverse Split
On
August 2, 2016, the Board approved a 1-for-7.4 reverse stock split,
or the Listing Reverse Split. The Listing Reverse Split was
intended to allow us to meet the minimum share price requirement of
The NASDAQ Capital Market, or NASDAQ. On August 11, 2016, we
received approval from The NASDAQ Capital Market for the listing of
our common stock under the symbol “MBVX”, subject to
implementation of the Listing Reverse Split and closing of our
August 2016 public offering (the “August 2016 Public
Offering,” and the investors in the August 2016 Public
Offering, the “August 2016 Investors”). On August 16,
2016, we implemented the Listing Reverse Split, closed on the
August 2016 Public Offering and began trading on The NASDAQ Capital
Market at the open of business on August 17, 2016. Unless otherwise
stated herein, all per share amounts herein give effect to the
Listing Reverse Split.
Summary
of the Offering
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Securities offered by us
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3,142,857 shares of common stock (or, at the election of any
investor who, as a result of the purchase and ownership of common
stock, would hold in excess of 4.99% of our issued and outstanding
common stock, shares of Series G Preferred Stock which are
convertible into common stock on a 1 for 1
basis).
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Common stock outstanding after this offering
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11,905,777 shares at a public
offering price of $1.75 per share, and assuming that 2,900,000
shares of common stock will be issued to the August 2016 Investors
who make a minimum required investment in this public offering of
at least 50% of their investment in the August 2016 Public Offering
and who still hold 100% of the shares they received in the August
2016 Public Offering (12,291,491 shares if the underwriter's
over-allotment option is exercised in
full).
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Underwriter's 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 385,714
additional shares of our common stock at the public offering price
of $1.75 per share 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 23 of this prospectus.
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Risk factors
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See
“Risk Factors” beginning on page 6 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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Board Nomination
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The Company shall nominate
one candidate to the Board of Directors of the Company acceptable
to the holder of a majority of the Series G Preferred Stock
by December 31, 2017, and two current Board members will
resign.
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Executive Hire
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The
Company shall hire a new C-level executive in a leadership role by
July 15, 2017.
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| Board Compensation |
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The Company is obligated to issue an aggregate of 1,050,000 options
to certain employees and members of the Board, at a price not less
than $2.00 per share, and 50,000 options to each other Board member
at the current market price in connection with this offering. The
options shall be issued pursuant to the Company’s option plan
and are subject to the requisite approvals and subject to
availability under the plan. To the extent we need to increase the
number of shares available under such plan, we will need the
approval of our board and stockholders. All board fees will
be waived for 2017. |
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| Funds Held in Escrow |
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$500,000 of the funds from this offering will be held in escrow and released to one or more investor relations services acceptable to the Company following the closing of this offering. |
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The number of
shares of common stock shown above to be outstanding after this
offering is based on 6,434,348 shares outstanding as of May 4, 2017
(and assumes the public offering price of $1.75 per share), and
excludes as of that date:
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1,598,071 shares
of our common stock issuable upon exercise of outstanding options
under our equity incentive plans at a weighted-average exercise
price of $7.27 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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3,461,138 shares
of our common stock issuable upon conversion of outstanding shares
of our Series D Convertible Preferred Stock (“Series D
Preferred Stock”), Series E Convertible Preferred Stock
(“Series E Preferred Stock”), Series F Convertible
Preferred Stock (“Series F Preferred Stock”) and Series
H Convertible Preferred Stock (“Series H Preferred
Stock”).
●
271,036 shares of
our common stock that are reserved for equity awards that may be
granted under our equity incentive plans.
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107,240
shares of our common stock issuable upon vesting of restricted
stock units granted.
An
existing investor has indicated an interest in purchasing an
aggregate of up to approximately $4.0 million of our shares of
Series G Preferred Stock in this offering at the offering price.
However, because indications of interest are not binding agreements
or commitments to purchase, these investors may determine to
purchase fewer shares than they indicate an interest in purchasing
or not to purchase any shares in this offering.
Unless
otherwise indicated, the information in this prospectus gives
effect to 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.
Additionally, 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 as
the lead investor in our August 2016 Public Offering holds 50% or
more of the shares of common stock (or Series F Preferred
Stock) purchased by the lead investor in the August 2016
Public 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 (the
“Consent”). In connection with this offering, we have
agreed with the lead investor of the August 2016 Public Offering to
issue up to 2,900,000 shares of common stock to the August 2016
Investors, as incentive shares to those investors to make a minimum
required investment in this public offering of at least 50% of
their investment in the $9.4 million August 2016 Public Offering,
or the Minimum Required Investment, and who still hold 100% of the
shares of common stock. Such August 2016 Investors shall be
entitled to receive their pro rata share of 2,900,000 shares, after
the lead investor in this offering receives the first 10%. In the
event the August 2016 Investors purchased Series F Preferred Stock
and make the Minimum Required Investment and who still hold 100% of
the shares of Series F Preferred Stock at the closing of this
offering, then the conversion rate for the Series F Preferred Stock
would change only for those investors making the Minimum Required
Investment, resulting in an increase
of up to 1,163,291 in the number of shares of common stock that the
Series F Preferred Stock may be converted into, assuming all
holders of Series F Preferred Stock make the Minimum Required
Investment, or from 665,281 to 1,828,572 common share equivalents.
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 of $0.01
per share. There is no adjustment required by the Series F
Certificate of Designations as a result of pricing in financings,
and is being offered by the Company as an incentive for
participation in this financing by the holders of Series F
Preferred Stock.
The August 2016 Investors who still
hold 100% of their shares from the August 2016 Public Offering and
make the Minimum Required Investment in this offering in order to
receive a portion of the 2,900,000 shares, will have their
outstanding warrants, exercisable at a price of $5.55 and $6.29,
respectively, from the August 2016 Public Offering,
cancelled.
Further,
as an inducement for investors in our April 2015 financing to
participate in this financing, and provided the April 2015
investors invest at least 25% of their original investment in the
April 2015 financing and still hold 100% of their common stock or
Series E preferred stock from the April 2015 financing, then up to
805,361 warrants to purchase common stock at $11.10 per share that
were issued in that financing will be reduced to $2.00 per share
and the cashless exercise provision shall be removed. To the extent
there is less than 100% participation, the number of warrants
offered for repricing would be reduced pro rata.
Further, if this
offering is consummated for at least $10 million in capital from
investors who are not security holders from the August 2016 Public
Offering, the lead investor’s Consent right will terminate.
Should the Consent be required in connection with future offerings,
we may be required again to provide additional consideration,
including, but not limited to, consideration in the form of cash
and/or additional shares of our capital stock and/or securities
convertible into or exercisable for shares of our capital stock, in
order to obtain the Consent. If we are unable to obtain the
Consent when necessary for future offerings, we may be unable to
raise additional funds. An inability to raise additional funds
could have a material adverse effect on our financial condition,
results of operations, ability to conduct our business and on the
price of our common stock. We have also granted the lead investor
in this offering certain rights to approve future (i) issuances of
our securities, (ii) equity or debt financings and (iii) sales of
any development product assets currently held by us, subject to
certain exceptions, if such securities are sold at price below
$2.50 per share and for as long as the lead investor in the
offering holds 50% or more of the shares of Series G Preferred
Stock purchased by the lead investor in this
offering.
Our
ongoing capital requirements will depend on numerous factors,
including: the progress and results of preclinical testing and
clinical trials of our product candidates under development; the
costs of complying with the FDA and other domestic and foreign
regulatory agency requirements, the progress of our research and
development programs and those of our partners; the time and costs
expended and required to obtain any necessary or desired regulatory
approvals; the resources that we devote to manufacturing
expenditures; our ability to enter into licensing arrangements,
including any unanticipated licensing arrangements that may be
necessary to enable us to continue our development and clinical
trial programs; the costs and expenses of filing, prosecuting and,
if necessary, enforcing our patent claims, or defending against
possible claims of infringement by third-party patent or other
technology rights; the cost of commercialization activities and
arrangements, if any, that we undertake; and, if and when approved,
the demand for our products, which demand depends in turn on
circumstances and uncertainties that cannot be fully known,
understood or quantified unless and until the time of approval,
including the range of indications for which any product is granted
approval.
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 December 31, 2016, we had an outstanding principal balance of
$5 million. The option to draw the second $5
million expired on September 30, 2016. 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. As of May 4, 2017, we were in
compliance with all the covenants. 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 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, 2016, had an accumulated deficit of $78,262,261.
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, SEC compliance efforts,
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
●
the results from
clinical trials may not meet the level of statistical significance
or clinical benefit-to-risk ratio required by the FDA or other
regulatory agencies for marketing approval.
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 May 4, 2017, we have a total of 25 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 cGMPs. 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, 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 including in
foreign countries within our portfolio expired in 2014 and can no
longer be relied on for protection in those countries. As of May 4,
2017, we were the exclusive licensee or sole 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 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 many 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, because 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 about patents to
which we hold licenses or in suing to protect our own patents
against infringement.
We
require employees and the institutions that perform our preclinical
and clinical trials to enter confidentiality agreements with us.
Those agreements provide that all confidential information
developed or made known to a party to any such agreement during 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 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 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 license
agreements, including our license agreement with MSK, we could lose
our rights under these agreements. Any such dispute may not be
resolvable on favorable terms, or at all. Whether 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
because of our strategic collaborative agreements.
We
are party to collaborative research agreements, such as with
Rockefeller University and MSK, and expect to enter into agreements
with other parties in the future, each of which involve research
and development efforts. Under certain circumstances, we
may 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 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 because 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.
Additionally, 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 as
the lead investor in our August 2016 Public Offering holds 50% or
more of the shares of common stock (or Series F Preferred
Stock) purchased by the lead investor in the August 2016
Public 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 (the
“Consent”). In connection with this offering, we have
agreed with the lead investor to issue up to 2,900,000 shares of
common stock to the August 2016 Investors, as incentive shares to
those investors to make a minimum required investment in this
public offering of at least 50% of their investment in the $9.4
million August 2016 Public Offering, or the Minimum Required
Investment, and who still hold 100% of the shares of common stock.
Such August 2016 Investors shall be entitled to receive their pro
rata share of 2,900,000 shares, after the lead investor in this
offering receives the first 10%. In the event the August 2016
Investors purchased Series F Preferred Stock and make the Minimum
Required Investment and who still hold 100% of the shares of Series
F Preferred Stock at the closing of this offering, then the
conversion rate for the Series F Preferred Stock would change only
for those investors making the Minimum Required
Investment, resulting in an increase
of up to 1,163,291 in the number of shares of common stock that the
Series F Preferred Stock may be converted into, assuming all
holders of Series F Preferred Stock make the Minimum Required
Investment, or from 665,281 to 1,828,572 common share equivalents.
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 of $0.01
per share. There is no adjustment required by the Series F
Certificate of Designations as a result of pricing in financings,
and is being offered by the Company as an incentive for
participation in this financing by the holders of Series F
Preferred Stock. Should the Consent be required in
connection with future offerings, we may be required again to
provide additional consideration, including, but not limited to,
consideration in the form of cash and/or additional shares of our
capital stock and/or securities convertible into or exercisable for
shares of our capital stock, in order to obtain the Consent.
If we are unable to obtain the Consent when necessary for future
offerings, we may be unable to raise additional funds. An inability
to raise additional funds could have a material adverse effect on
our financial condition, results of operations, ability to conduct
our business and on the price of our common stock. We have also granted the lead
investor in this offering certain rights to approve future (i)
issuances of our securities, (ii) equity or debt financings and
(iii) sales of any development product assets currently held by us,
subject to certain exceptions, if such securities are sold at price
below $2.50 per share and for as long as the lead investor in the
offering holds 50% or more of the shares of Series G Preferred
Stock purchased by a lead investor in this
offering.
The
August 2016 Investors who still hold 100% of their shares from the
August 2016 Public Offering and make the Minimum Required
Investment in this offering in order to receive a portion of the
2,900,000 shares, will have their outstanding warrants, exercisable
at a price of $5.55 and $6.29, respectively, from the August 2016
Public Offering, cancelled.
Unless our common stock is listed on The NASDAQ Capital Market or
other national securities exchange, it will be deemed a
“penny stock,” which would make it more difficult for
our investors to sell their shares.
On
August 17, 2016, we began trading on The NASDAQ Capital Market. If
we fail to maintain our listing on The NASDAQ Capital Market or
other national securities exchange, our common stock will be
subject to the “penny stock” rules adopted under
Section 15(g) of the Exchange Act. The penny stock
rules generally apply to companies whose common stock is not
listed on the NASDAQ Capital Market or other national securities
exchange and trades at less than $4.00 per share, other than
companies that have had average revenue of at least $6,000,000 for
the last three years or that have tangible net worth of at least
$5,000,000 ($2,000,000 if the company has been operating for three
or more years). These rules require, among other things, that
brokers who trade penny stock to persons other than
“established customers” complete certain documentation,
make suitability inquiries of investors and provide investors with
certain information concerning trading in the security, including a
risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade penny stocks
because of the requirements of the penny stock rules and, 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.
Additionally, in order for our
Company to continue trading on the NASDAQ Capital Market, we must
maintain compliance with all of the criteria under at least one of
the three continued listing standards: the Equity Standard, which
includes a requirement for $2.5 million in stockholders’
equity; the Market Value of Listed Securities Standard, which
includes a requirement for a market value of listed securities of
at least $35 million; or the Net Income Standard, which includes a
requirement for net income of at least $500,000 from continuing
operations in the latest fiscal year or in two of the last three
fiscal years. As of March 31, 2017, which is prior to a private
placement of $850,000 in Series H Preferred Stock on May 3, 2017,
and prior to this offering, we met none of the three standards.
Following receipt of funds from our private placement on May 3,
2017 and this offering, we believe we will be able to meet the
Equity Standard for June 30, 2017. However, for future periods if
we do not have a market value of listed securities of at least $35
million, or do not meet the Equity Standard, then we may have to
enter into a license agreement on less favorable terms to generate
near term revenues, or raise additional capital, which could be
dilutive to the Company.
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.
The price of our common stock is volatile, and is likely to
continue to fluctuate due to reasons beyond our
control.
The
market price of our common stock has been, and likely will continue
to be, highly volatile. Factors, including our financial results or
our competitors’ financial results, clinical trial and
research development announcements and government regulatory action
affecting our potential products in both the United States and
foreign countries, have had, and may continue to have, a
significant effect on our results of operations and on the market
price of our common stock. We cannot assure you that any investment
in our common stock will not fluctuate significantly. One or more
of these factors could significantly harm our business and cause a
decline in the price of our common stock in the public market.
Sales of shares of common stock registered for resale or eligible
for resale pursuant to Rule 144 under the Securities Act as
amended, as well as future sales of our common stock by existing
stockholders, or the perception that sales may occur at any time,
could adversely affect the market price of our common
stock.
If we do not progress in our programs as anticipated, our stock
price could decrease.
For
planning purposes, we estimate the timing of a variety of clinical,
regulatory and other milestones, such as when a certain product
candidate will enter clinical development, when a clinical trial
will be completed or when an application for regulatory approval
will be filed. Our estimates are based on present facts and a
variety of assumptions. Many of the underlying assumptions are
outside of our control. If milestones are not achieved when we
estimated that they would be, investors could be disappointed, and
our stock price may decrease.
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 $3.03 per
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, Series F Preferred Stock, and
Series H Preferred Stock and, upon completion of this offering,
Series G Preferred Stock; these rights may have a negative effect
on the value of shares of our common stock.
The holders of
our Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series H Preferred Stock and, upon completion of
this offering, Series G 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 Preferred Stock
certificate of designations, Series E Preferred Stock certificate
of designations, Series F Preferred Stock certificate of
designations Series H Preferred Stock certificate of designations
and, upon completion of this offering, Series G Preferred
Stock 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 Preferred Stock, $0.01 per share or $333
for the Series E Preferred Stock, $0.01 per share or $6,653 for the
Series F Preferred Stock, $0.01 per share or $8.50 for the Series H
Preferred Stock and, upon completion of this offering, $0.01
per share or $5,714 for the Series G Preferred
Stock.
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 38% 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 May 4, 2017, we
had 6,434,348 shares of common stock issued and outstanding. Up to
an additional 3,461,138 shares may be issued upon conversion of our
Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock and Series H Preferred Stock, 5,125,391 shares
issuable upon exercise of warrants at a weighted average price of
$6.84, 1,598,071 shares upon exercise of all outstanding options to
purchase our common stock at a weighted average price of $7.27, and
107,240 shares issuable upon vesting of restricted
stock units granted, resulting in a total of up to
16,726,188 shares that may be issued and outstanding.
The issuance of any and all of the 10,291,840 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.
You may experience future dilution in the event of future equity
offerings
We
may in the future offer 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 our current shareholders. Further, in the
event we must again obtain the Consent, you may experience
additional dilution if we are required to issue additional shares
of our capital stock and/or securities convertible into or
exercisable for shares of our capital 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.
As previously disclosed, you will experience dilution as a result
of the additional shares issued the investors in the August 2016
Offering as a condition for obtaining the Consent.
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. Further, in the event we must again
obtain the Consent, you may experience additional dilution if we
are required to issue additional shares of our capital stock and/or
securities convertible into or exercisable for shares of our
capital stock.
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
OTCQB. 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 6 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 $4.8 million, or approximately $5.4 million if
the underwriter exercises its over-allotment option in full,
assuming the sale of 2,571,429 shares, or 2,957,143 shares assuming
exercise over-allotment option, of our common stock and 571,428
shares of Series G Preferred Stock at an assumed public offering
price of $1.75 per share, 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
$1.75 per share would increase (decrease) the expected net proceeds
of this offering by approximately $771,000, 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 $163,000, 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 three 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.
$500,000 of the
funds from this offering will be held in escrow and released to one
or more investor relations services acceptable to the Company
following the closing of this
offering.
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 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
|
$3.59
|
$2.10
|
On
May 3, 2017, the closing bid price of our common stock was
$1.98.
As
of May 3, 2017, there were 89 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.
DILUTION
If you
purchase shares of our common stock or Series G Preferred
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 December 31, 2016, was approximately
$(3.5 million), or approximately $(0.55) 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 2,571,429 shares of our common
stock and 571,428 shares of Series G Preferred Stock in this
offering at an assumed public offering price of $1.75 per
share and the issuance of 2,900,000 shares of common stock to the
August 2016 Investors who make a minimum required investment in
this public offering of at least 50% of their investment in the
August 2016 Public Offering and who still hold 100% of the shares
they received in the August 2016 Public Offering, and after
deducting the estimated underwriting discount and estimated
offering expenses payable by us, our as adjusted net tangible book
value as of December 31, 2016, would have been approximately
$1.3 million, or approximately $0.11 per share. This
represents an immediate increase in net tangible book value of
approximately $0.66 per share to existing stockholders and an
immediate dilution of approximately $1.64 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
|
|
|
|
|
$
|
1.75
|
|
|
|
Net
tangible book value per share as of December 31, 2016
|
|
$
|
(0.55
|
)
|
|
|
|
|
|
Increase
in net tangible book value per share attributable to this
offering
|
|
|
0.66
|
|
|
|
|
|
|
Pro
forma as adjusted net tangible book value per share after this
offering
|
|
|
|
|
|
|
0.11
|
|
|
Dilution
in pro forma net tangible book value per share to new
investors
|
|
|
|
|
|
$
|
1.64
|
|
A $0.25
increase in the assumed public offering price of $1.75 per
share would increase our as adjusted net tangible book value after
this offering by approximately $771,000, or approximately $0.07 per
share, and increase the dilution to new investors by approximately
$0.18 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 $1.75 per share would
decrease our as adjusted net tangible book value after this
offering by $771,000, or approximately $0.07 per share, and
decrease the dilution per share to new investors by approximately
$0.18 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 $163,000, or approximately $0.01 per share, and
increase (decrease) the dilution per share to new investors by
approximately $0.01 per share, assuming that the public
offering price of $1.75 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 underwriter
exercises in full its option to purchase 385,714 additional
shares in full at the assumed public offering price of $1.75 per
share, the as adjusted net tangible book value of our common stock
after this offering would increase from $0.11 per share to $0.16
per share, representing an immediate increase in net tangible book
value of approximately $0.05 per share to existing
stockholders and would decrease this dilution by $0.05 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 December 31, 2016, and exclude as of that
date:
●
851,375 shares of
our common stock issuable upon exercise of outstanding options
under our equity incentive plans at a weighted-average exercise
price of $10.94 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 Preferred Stock, Series E Preferred Stock and
Series F Preferred Stock;
●
66,693
shares of our common stock that are reserved for equity awards that
may be granted under our equity incentive plans;
and
●
205,478 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 22 of this
Prospectus, and see “Risk Factors” beginning on page 6
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. Therapeutic vaccines under
development were discovered at Memorial Sloan Kettering Cancer
Center, or MSK, and are exclusively licensed to MabVax
Therapeutics. We operate in only one business segment. We have
incurred substantial losses since inception, and we expect to incur
additional substantial losses for the foreseeable future as we
continue our research and development activities. To date, we have
funded our operations primarily through government grants, proceeds
from the sale of common and preferred stock, the issuance of debt,
the issuance of common stock in lieu of cash for services, payments
from collaborators and interest income. The process of
developing our product candidates will require significant
additional research and development, preclinical testing and
clinical trials, as well as regulatory approval. We expect these
activities, together with general and administrative expenses, to
result in substantial operating losses for the foreseeable future.
We will not receive product revenue unless we, or our collaborative
partners, complete clinical trials, obtain regulatory approval and
successfully commercialize one or more of our
products. We cannot provide assurance that we will ever
generate revenues or achieve and sustain profitability in the
future or obtain the necessary working capital for our
operations.
During the year ended December 31, 2016, our loss from
operations was $16,663,119 and our net loss was $17,660,483. Net
cash used in operating activities for the year ended
December 31, 2016 was $12,363,411 and cash and cash
equivalents at December 31, 2016 were $3,979,290. As of
December 31, 2016, we had an accumulated deficit of
$78,262,261.
We
are subject to risks common to biopharmaceutical companies,
including the need for capital, risks inherent in our research,
development and commercialization efforts, preclinical testing,
clinical trials, uncertainty of regulatory and marketing approvals,
enforcement of patent and proprietary rights, potential competition
and retention of key employees. In order for a product to be
commercialized, it will be necessary for us to conduct preclinical
tests and clinical trials, demonstrate efficacy and safety of our
product candidates to the satisfaction of regulatory authorities,
obtain marketing approval, enter into manufacturing, distribution
and marketing arrangements, obtain market acceptance and, in many
cases, obtain adequate reimbursement from government and private
insurers. We cannot provide assurance that we will ever generate
revenues or achieve and sustain profitability in the future or
obtain the necessary working capital for our
operations.
Reverse Stock Split and Listing on NASDAQ
On
August 16, 2016, we filed a certificate of amendment to our Amended
and Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware in order to effectuate a reverse
stock split of our issued and outstanding common stock on a 1 for
7.4 basis, effective on August 16, 2016 The reverse split was
effective with The Financial Industry Regulatory Authority (FINRA),
and the Company’s common stock began trading on The NASDAQ
Capital Market at the open of business on August 17, 2016. All
share and per share amounts, and number of shares of common stock
into which each share of preferred stock will convert, in the
financial statements and notes thereto have been retroactively
adjusted for all periods presented to give effect to the Listing
Reverse Split, including reclassifying an amount equal to the
reduction in par value of common stock to additional paid-in
capital.
Our Clinical Development Programs and Plans for 2017
MVT-5873 – for the Treatment of Pancreatic
Cancer
In our
progress report released in November 2016, we stated that the
safety of our HuMab-5B1 antibody designated as MVT-5873 had been
established at three incremental dose levels in our phase I
clinical trial. The purpose of this phase I clinical trial,
initiated in February 2016, is to establish safety and
tolerability, and to determine the recommended phase II dose for
patients with locally advanced and metastatic pancreatic cancer or
other malignancies expressing the same cancer antigen known as
CA19-9. Patients entering this part of the trial were stage three
and stage four cancer patients who had failed all previous
treatments, and had progressive disease.
Study
protocol allows patients to remain on therapy beyond the initial
28-day treatment and safety assessment cycle based on acceptable
dose tolerability and investigator assessment of continued benefit
from the treatment. Every second treatment cycle the investigator
assesses disease status using RECIST 1.1 measurement criteria to
evaluate tumor response rate and duration of response.
After
establishing the current dosage safety level for MVT-5873 in Part 1
of the trial, we were able to initiate part 2 of our phase I study.
Part 2 combines MVT-5873 with a standard of care chemotherapy
regimen in newly diagnosed treatment naïve patients. The
dosage levels established in our MVT-5873 monotherapy trial also
have cleared all subsequent dose levels utilized in our Phase I
clinical study of MVT-2163 as an immuno-PET imaging agent as well
as the dose levels planned for our clinical study of our
radioimmunotherapy product MVT-1075 that combines MVT-5873 with a
radioactive substance.
Recent progress
– As of April 2017, we had enrolled 29 patients in Part 1 of
our phase I trial at three clinical sites. Twenty-five patients are
currently evaluable. We have seen an efficacy signal from early
study results primarily in patients who enter the trial with CA19-9
levels below 2,500 U/ml. In this group of patients, we observed
that the first cycle of treatment with MVT-5873 reduces CA19-9
levels by 95% or more and close to normal levels. We also observed
that approximately half of the patients with CA19-9 levels below
2,500 U/ml. convert from progressive disease to stable disease.
Further, approximately 30% of this responder set maintained stable
disease for four or more months. Patients continue to tolerate the
study drug reasonably well with drug infusion reactions being the
most common adverse event which is adequately addressed by slowing
the infusion rate and use of routine premedication. Increases in
liver function tests are seen early in a minority of patients and
appear reversible.
Plan for remainder of
2017 – We plan to conduct a small phase Ib study in
the second half of 2017 to evaluate the use of MVT-5873 as a
maintenance therapy for pancreatic cancer patients whose
chemotherapy treatments no longer provide improvement and are
experiencing increasing levels of toxicity. We believe we can
demonstrate proof-of-concept for this approach with a small cohort
of approximately 10 patients. Results from this study are
anticipated around year end 2017.
MVT-2163 –as an Imaging Agent for Pancreatic
Cancer
In our
progress report released in November 2016, we stated that we had
established interim safety, and acceptable pharmacokinetics and
biodistribution of our immuno-PET imaging agent that we designate
as MVT-2163 in our phase I clinical trial. MVT-2163 is comprised of
MVT-5873 conjugated to a radio label. We have completed the initial
two cohorts of patients as specified in our protocol. In the first
cohort, we administered MVT-2163 alone and in the second cohort we
administered MVT-2163 following a blocking dose of MVT-5873. We
reported that the initial PET images demonstrated target
specificity by correlation with lesions identified by conventional
computerized tomography (CT) scans. The biodistribution data
obtained in the first two cohorts demonstrated improvement in PET
images by pre-administration of MVT-5873, as has been observed with
other antibody based PET agents. We initiated the MVT-2163 phase I
trial in June 2016 to evaluate a next generation diagnostic PET
imaging agent in patients with locally advanced or metastatic
adenocarcinoma of the pancreas (PDAC) or other CA19-9 positive
malignancies. MVT-2163 (89Zr-HuMab-5B1) combines the
well-established PET imaging radiolabel Zirconium [89Zr] with the targeting specificity of
MVT-5873. We designed the trial to establish safety,
pharmacokinetics, biodistribution, optimal time to obtain the PET
image, and the amount of MVT-5873 to be used prior to
administration of MVT-2163 to obtain optimized PET scan images. We
continue to actively recruit patients and expect to establish the
optimal co-administration dose of MVT-5873 early in
2017.
Recent progress
– As of April of 2017 we had completed enrollments in the
phase 1a portion of our study in all three planned cohorts. We have
expanded cohort 3 to evaluate not only an increased blocking dose
but the impact of expanding the time interval between the
administration of a blocking dose and the MVT-2163 PET agent. We
have determined that a 47 mg. blocking dose and a time interval of
2 to 4 hours significantly improves the quality of the PET scan
image. We observed that the blocking dose helps to reduce
theaccumulation of labeled antibody in the liver and spleen while
also improving accumulation of the labeled antibody on both tumor
and metastatic sites. Images seen from use of MVT-2163 appear to be
identifying smaller metastatic sites that are below the limit of
detection with CT scans.
Plan for remainder of
2017 – In consultation with our clinical
investigators, we plan to expand our phase 1 program for the
remainder of 2017 to include additional patients who will consent
to have the smaller potential metastatic sites being seen with
MVT-2163 images biopsied to provide evidence that MVT-2163 is
identifying previously unseen disease. Better understanding of the
extent and spread of the cancer will significantly improve the
clinical decision regarding eligibility for curative surgery. We
expect to have results of biopsies later in 2017.
MVT-1075 –as a Radioimmunotherapy for Pancreatic
Cancer
We are
developing HuMab-5B1 into a third potential product for use as a
radioimmunotherapy that we have designated as MVT-1075. MVT-1075
represents a unique product opportunity for MabVax by conjugating
MVT-5873 with a low-energy radiation emitter, 177Lu, which has a
relatively short tissue penetration range to minimize potential
side effects of the radiation. MVT-5873 provides the opportunity
for tumor-specific targeting of a more potent analog of MVT-5873.
We submitted our IND in late December 2016, and the IND was
authorized to proceed on January 27, 2017. We plan to initiate the
phase I trial of MVT-1075 in the first half of
2017.
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. The National Institutes of Health, or NIH,
approved a grant of $1.75 million that we received in progress
payments between 2014 and 2016 to help offset the clinical trial
costs for the sarcoma trial. We have no plans 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.
Revenues
Revenues
for the years ended December 31, 2016 and 2015 were $148,054
and $1,267,036, respectively, primarily from grant revenues. 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
2016.
|
|
|
Years Ended December 31,
|
|
|
% change
|
|
||||||
|
|
|
2016
|
|
|
2015
|
|
|
2015 to 2016
|
|
|||
|
Revenues
|
|
$
|
148,054
|
|
|
$
|
1,267,036
|
|
|
|
(88
|
%)
|
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.
Research and Development Expenses
Research
and development expenses for the years ended December 31, 2016
and 2015 were $7,800,723 and $9,596,768, 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
|
|
||||||
|
|
|
2016
|
|
|
2015
|
|
|
2015 to 2016
|
|
|||
|
Research
and development
|
|
$
|
7,800,723
|
|
|
$
|
9,596,768
|
|
|
|
(19
|
%)
|
Total
research and development expenses for the year ended
December 31, 2016 decreased by 19%, or $1,796,045, compared to
the same period in 2015. Expenses for the year ended December 31,
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 year ended December
31, 2016 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 years ended December 31, 2016 and 2015 were $1,192,126
and $929,633, respectively.
We
expect our total research and development expenditures in the next
twelve months to increase as we continue to fund the clinical
studies of MVT-5873 and MVT-2163 and begin clinical trials in
MVT-1075 in 2017. In the event we are unable to obtain sufficient
funding for clinical development of our therapies, we will need to
defer completion of clinical trials until such funding is in place.
If we are unable to obtain additional funding for our trials to
complete clinical development, our total research and development
expenditures will decrease substantially until the additional
funding is raised.
The
process of conducting the clinical research necessary to obtain FDA
approval is costly and time consuming. Current FDA requirements for
a new human drug to be marketed in the United States
include:
●
the successful conclusion of preclinical laboratory and animal
tests, if appropriate, to gain preliminary information on the
product’s safety;
●
filing with the FDA of an IND, to conduct initial human clinical
trials for drug candidates;
●
the successful completion of adequate and well-controlled human
clinical trials to establish the safety and efficacy of the product
candidate; and
●
filing by the Company and acceptance and approval by the FDA of an
NDA for a product candidate to allow commercial distribution of the
drug, which is beyond the scope of our financial resources. We
intend on licensing or selling the technology prior to filing an
NDA.
We
consider the active management and development of our clinical
pipeline to be crucial to our long-term success. The actual
probability of success for each product candidate and clinical
program may be impacted by a variety of factors, including, among
others, the quality of the candidate, the validity of the target
and disease indication, early clinical data, investment in the
program, competition, manufacturing capability and commercial
viability. Due to these and other factors, it is difficult to give
accurate guidance on the anticipated proportion of our research and
development investments or the future cash inflows from these
programs.
General and Administrative Expenses
General
and administrative expenses for the years ended December 31,
2016 and 2015 were $9,010,450 and $9,795,163,
respectively.
|
|
|
Years Ended December 31,
|
|
|
% change
|
|
||||||
|
|
|
2016
|
|
|
2015
|
|
|
2015 to 2016
|
|
|||
|
General
and administrative
|
|
$
|
9,010,450
|
|
|
$
|
9,795,163
|
|
|
|
(8
|
%)
|
The
decrease in general and administrative expenses of 8%, or $784,713
in 2016, compared to the same period in 2015, was primarily due to
decreases of approximately $1,614,000 in business development
expenses primarily related to restricted stock grants to
consultants for services and approximately $915,000 in investor
relations expenses primarily related to restricted stock grants to
outside consultants, partially offset by increases of approximately
$516,000 in facility expenses associated with the larger space
starting in February 2016, approximately $797,000 in stock based
compensation costs, and approximately $392,000 in salaries and
wages primarily related to additional headcount in business
development.
Stock-based
compensation expense included in general and administrative
expenses for the years ended December 31, 2016 and 2015 was
$3,211,152 and $3,534,062, respectively. Stock-based compensation
expense for the year ended December 31, 2016 included $592,329 in
restricted stock for services.
We
expect future general and administrative expenses to stay
relatively stable in 2017.
Interest Income and Interest Expense
|
|
|
Years Ended December 31,
|
|
|
% change
|
|
||||||
|
|
|
2016
|
|
|
2015
|
|
|
2015 to 2016
|
|
|||
|
Interest
and other income (expense), net
|
|
$
|
(997,364
|
)
|
|
$
|
(227
|
)
|
|
|
*%
|
|
*Not meaningful
Interest
and other income and expense, net was $997,364 and $227 for the
years ended December 31, 2016 and 2015, respectively. Expenses
in 2016 consisted primarily of $603,893 of interest expense related
to interest on the Company’s term loan from Oxford Finance
LLC, $174,476 of financing cost amortization, and $219,040 of
warrant amortization partially offset by interest income of
$25.
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.
Warrant Liability
Change
in fair value of warrant liability for the year ended
December 31, 2016 and 2015 was $0 and $19,807, 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.
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
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 MabVax Therapeutics 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. grant awards are based upon internal research and
development costs incurred that are specifically covered by the
grant, and revenues are recognized when MabVax Therapeutics incurs
internal expenses that are related to the approved
grant.
Any
amounts received by MabVax Therapeutics 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, 2016, 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.
Liquidity and Capital Resources
From
inception to December 31, 2016, we have financed our operations
principally through net proceeds received from private equity and
preferred stock financings, debt financings, and grants through the
NIH and SBIR programs. We have experienced negative cash flows from
operations each year since our inception. As of December 31,
2016, we had an accumulated deficit of $78,262,261. 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.
|
|
2016
|
2015
|
|
December 31:
|
|
|
|
Cash
and cash equivalents
|
$ 3,979,290
|
$ 4,084,085
|
|
Working
capital/(deficit)
|
$ (1,396,656)
|
$ 350,621
|
|
Current
ratio
|
0.75:1
|
1.07:1
|
|
|
||
|
December 31:
|
|
|
|
Cash
provided by (used in):
|
|
|
|
Operating
activities
|
$ (12,363,411)
|
$ (10,525,182)
|
|
Investing
activities
|
$ (563,196)
|
$ (78,416)
|
|
Financing
activities
|
$ 12,821,812
|
$ 13,210,540
|
Sources and Uses of Cash
Due
to the significant research and development expenditures and the
lack of any approved products to generate revenue, we have not been
profitable and have generated operating losses since we
incorporated in 1988. As such, we have funded our research and
development operations through government grants and contracts,
sales of equity, debt, collaborative arrangements with corporate
partners, and interest earned on investments. At December 31,
2016, we had available cash and cash equivalents of $3,979,290. Our
cash and cash equivalents balances are held primarily in checking
accounts. Cash in excess of immediate requirements is invested with
regard to liquidity and capital preservation. Wherever possible, we
seek to minimize the potential effects of concentration and degrees
of risk.
Cash Flows
from Operating Activities. Cash
used in operating activities for 2016 was $12,363,411 compared to
$10,525,182 for the same period in 2015. Net loss of $17,660,483 in
2016 included non-cash charges of $4,403,278 for stock-based
compensation and $96,553 in depreciation and amortization. Cash
used in 2015 resulted from a net loss of $18,105,315 and included
non-cash charges of $4,463,695 for stock-based compensation and
$21,360 in depreciation, partially offset by a $19,807 reduction in
fair value of the Series B warrants.
Cash Flows
from Investing Activities. Cash used in investing activities for 2016 was
$563,196 compared to $78,416 during the same period in 2015. Cash
used in both 2016 and 2015 was primarily used to purchase property
and equipment.
Cash Flows
from Financing Activities. Cash provided by financing activities for 2016 was
$12,821,812 compared to $13,210,540 provided in 2015. Cash provided
by financing activities in 2016 included $4,610,324 from net
proceeds from the January 2016 Oxford Finance LLC Term Loan and
$8,567,448 from sale of common stock and warrants in a registered
offering completed in August 2016. Cash provided by financing
activities in 2015 included $10,709,740 from net proceeds from the
sale of common stock and warrants in a private placement completed
in April 2015, as well as a public offering completed in October
2015 for $2,500,000.
Working
Capital. Working capital decreased to a working capital
deficit of $1,396,656 at December 31, 2016 compared to a
working capital surplus of $350,621 at December 31, 2015. The
decrease in working capital was primarily due to increased capital
usage during 2016 primarily related to the company’s clinical
development programs.
We
believe our cash and cash equivalents as of December 31, 2016
will be sufficient to fund our projected operating requirements
through approximately April 2017. In order to continue our current
and future operations and continue our clinical product development
programs through 2017, we will depend on our ability to obtain
additional funding in a timely manner or if at all. We are
uncertain about our ability to raise sufficient funds to continue
our existing operations after April 2017. We continue to explore
alternatives that could include partnerships involving one or more
of our product candidates, licensing arrangements with one or more
of our product development candidates, merger with or acquisition
by another company, or some other arrangement through which the
value of our assets to stockholders could be enhanced. We may raise
funds through arrangements with collaborators or others that may
require us to relinquish rights to certain product candidates that
we might otherwise seek to develop or commercialize independently.
Our failure to raise capital when needed could materially harm our
business, financial condition and results of operations. See Risk
Factors.
Our
future capital uses and requirements depend on numerous factors,
including the following:
●
the progress and success of preclinical studies and clinical trials
of our product candidates;
●
the progress and number of research programs in
development;
●
the costs associated with conducting Phase I and II clinical
trials;
●
the costs and timing of obtaining regulatory
approvals;
●
our ability to establish, and the scope of, any new
collaborations;
●
our ability to meet the milestones identified in our collaborative
agreements that trigger payments;
●
the costs and timing of obtaining, enforcing and defending our
patent and intellectual property rights; and
●
competing technological and market developments.
Future Contractual Obligations
On
September 2, 2015, the Company entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises consisting of a total of approximately 14,971
square feet of office and laboratory space in buildings located at
11535-11585 Sorrento Valley Rd., San Diego, California, to
serve as the Company’s corporate offices and laboratories
(the “New Premises”). 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 5, 2015. The Lease terminates six years after
such term commencement date, unless earlier terminated in
accordance with the Lease. Pursuant to the terms of the Lease, the
current monthly base rent paid by the Company is $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 3165 Porter
Drive in Palo Alto, California (the “Porter Drive
Facility”) were terminated on February 28, 2013 and we
entered into a termination agreement with ARE-San Francisco
No. 24 (“ARE”) on February 19, 2013 to voluntarily
surrender its premises. 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, if we receive $15 million or more in additional
financing in the aggregate, an additional termination fee of
$590,504 will be due to ARE. The additional financing was achieved
in 2015 and the termination fee is reflected on the balance sheet
as an accrued lease contingency fee.
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 April
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.
Off-Balance Sheet Arrangements
We
have no material off-balance sheet arrangements as defined in
Regulation S-K 303(a)(4)(ii).
BUSINESS
Overview
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 and our telephone number is (858) 259-9405. 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.” Our internet address is www.mabvax.com.
Information on our website is not incorporated into this
prospectus.
Listing Reverse Split
On
August 2, 2016, the Board approved a 1-for-7.4 reverse stock split,
or the Listing Reverse Split. The Listing Reverse Split was
intended to allow us to meet the minimum share price requirement of
The NASDAQ Capital Market, or NASDAQ. On August 11, 2016, we
received approval from The NASDAQ Capital Market for the listing of
our common stock under the symbol “MBVX”, subject to
implementation of the Listing Reverse Split and closing of our
August 2016 Public Offering. On August 16, 2016,
we implemented the Listing Reverse Split, closed on the August
2016 Public Offering and began trading on The NASDAQ Capital Market
at the open of business on August 17, 2016.
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.
Recent Developments
In
November 2016, we reported on interim results of our two HuMab-5B1
antibody phase I clinical development programs evaluating the use
of our therapeutic antibody we designate as MVT-5873, and our
immuno-PET imaging agent we designate as MVT-2163, comprised of
MVT-5873 conjugated to a radio label. In December 2016, we
submitted an investigational new drug application, or IND, to the
U.S. Food and Drug Administration, or FDA, for our
radioimmunotherapy product candidate we designate as MVT-1075,
comprised of MVT-5873 conjugated to a low-energy radiation emitter
and received authorization to proceed on January 27, 2017. These
three product candidates 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.
In
early February 2017, we reported that out of the total of 22
patients treated to date, eight had stable disease after at least
two treatment cycles, or two months, seven continued to have stable
disease after at least four treatment cycles, or four months; and
three continued to have stable disease after at least six treatment
cycles, or six months.
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 IND with the FDA in late December 2016 and received an
authorization from the 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.
Financing Activities
May 2017 Private Placement – On
May 3, 2017, we entered into separate subscription agreements with
accredited investors pursuant to which we agreed to sell an
aggregate of $850,000 of 0% Series H Convertible
Preferred Stock (the “Series H Preferred
Stock”).
The
shares of Series H Preferred Stock are convertible into shares of
common stock based on a conversion calculation equal to the stated
value of the Series H Preferred Stock, plus all accrued and unpaid
dividends (the “Base Amount”), if any, on such Series H
Preferred Stock, as of such date of determination, divided by the
conversion price. The stated value of each share of Series H
Preferred Stock is $1,000 and the initial conversion price is $1.75
per share, each subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, subdivisions or other
similar events.
In the event of a liquidation, dissolution or
winding up of the Company, each share of Series H Preferred Stock
will be entitled to a per share preferential payment equal to the
Base Amount. All shares of our
capital stock will be junior in rank to Series H Preferred Stock
with respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding-up of the
Company other than Series A through G Preferred Stock.
The holders of Series H Preferred
Stock will be entitled to receive dividends if and when declared by
our board of directors. The Series H Preferred Stock shall
participate on an “as converted” basis, with all
dividends declared on our common stock. In addition, if
we grant, issue or sell any rights to purchase our securities pro
rata to all our record holders of our common stock, each holder
will be entitled to acquire such securities applicable to the
granted purchase rights as if the holder had held the number of
shares of common stock acquirable upon complete conversion of all
Series H Preferred Stock then held.
We
are prohibited from effecting a conversion of the Series H
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series H Preferred Stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series H Preferred Stock, but not in excess of the
beneficial ownership limitations.
The
shares were offered and sold solely to “accredited
investors” in reliance on the exemption from registration
afforded by Rule 506 of Regulation D and Section 4(a)(2) of the
Securities Act of 1933, as amended (the “Securities
Act”). On the closing date, we entered into registration
rights agreements with each of the investors, pursuant to which we
agreed to undertake to file a registration statement to register
the resale of the shares within thirty (30) days following the
closing date, to cause such registration statement to be declared
effective by the Securities and Exchange Commission within sixty
(60) days of the closing date and to maintain the effectiveness of
the registration statement until all of such shares have been sold
or are otherwise able to be sold pursuant to Rule 144 under the
Securities Act, without any restrictions.
August Public Offering
– On August 22, 2016, we closed
a public offering of 1,297,038 shares of common stock and 665,281
shares of Series F Preferred Stock, and warrants to purchase
1,962,319 shares of common stock at $5.55 per share and warrants to
purchase 1,962,319 shares of common stock at $6.29 per share, at an
offering price of $4.81 per share. For every one share of
common stock or Series F Preferred Stock sold, we issued one
warrant to purchase one share of common stock at $5.55 per share
and one warrant to purchase one share of common stock at $6.29 per
share. We received $9,438,753 in gross proceeds, before
underwriting discounts and commissions and offering expenses
totaling $871,305.
Oxford Loan – On January 15, 2016, we entered into a
loan and security agreement with Oxford Finance LLC (the
“Load and Security Agreement”) providing for senior
secured term loans to us in the aggregate principal amount of up to
$10,000,000. On January 15, 2016, we received
an initial loan of $5,000,000 under the Loan and Security
Agreement. The option to draw the second $5,000,000 expired on
September 30, 2016.
Underwritten Offering
– On September 30, 2015,
we entered into an underwriting agreement with Laidlaw &
Company (UK) Ltd. relating to the issuance and sale in a public
offering of 337,838 shares of our common stock and 168,919
three-year warrants to purchase 168,919 shares of our common stock
at an initial exercise price of $9.77 per share. The shares of
common stock were sold at a public offering price of $8.14 per
share and the warrants were sold at a price of $0.01 per warrant.
The offering closed on October 5, 2015 with total gross
proceeds to us of $2,750,000.
April Private Placement
– On March 31, 2015 and
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 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, such sale and issuance, the “April 2015 Private
Placement,” or the “Private Placement”). We
conducted an initial closing of the April 2015 Private Placement on
March 31, 2015, in which we sold an aggregate of $4,995,750 of
units. Following the initial closing we 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 into by all investors who
elected to continue their investment. A second closing was held on
April 10, 2015 in which we entered into separate subscription
agreements for the sale of an additional $6,718,751 of
units.
On
April 14, 2015, as a condition to participation by OPKO Health,
Inc. (“OPKO”) and Frost Gamma Investments Trust
(“FGIT”) in the April 2015 Private Placement, we
entered into an Escrow Deposit Agreement with Signature Bank N.A.
and OPKO, as amended on June 22, 2015, pursuant to which $3.5
million from the April 2015 Private Placement was deposited into
and held at Signature Bank. The escrowed funds were
released to us on June 30, 2015, as part of a letter agreement
giving OPKO the right, but not the obligation until June 30, 2016,
to nominate and have appointed up to two additional members of our
Board of Directors, or to approve the person(s) nominated by the
Company. The nominees selected were required to meet
certain standard corporate governance practices and applicable
national securities exchange requirements.
Preferred and Warrant Holders
Common Stock Exchange Agreements – On March 25, 2015, we entered into separate
exchange agreements (collectively, the “Exchange
Agreements”) with certain holders of our Series A-1
Convertible Preferred Stock (“Series A-1 Preferred
Stock”) and A-1 Warrants and holders of our Series B
Convertible Preferred Stock (“Series B Preferred
Stock”) and Series B Warrants, all previously issued by us.
Pursuant to the Exchange Agreements, the holders exchanged their
respective preferred shares and warrants and relinquished any and
all other rights they may have pursuant to such securities, 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
Preferred Stock (collectively, the “Exchange
Securities”).
Antibody Market Opportunity
The global monoclonal antibodies market was valued
at $85 billion in 2015 and is expected to reach a value of $138
billion by 2024 (The Pharma
Letter, February 11, 2016).
Over the past couple of decades, the US FDA has approved more than
a dozen monoclonal antibodies to treat certain cancers
(cancer.org). 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 that is over expressed
on many 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. The amount of antigen present in blood samples is
used to monitor patients as elevated levels occur in the blood due
to shedding into the blood from these cancer cells. Patients who
develop metastatic disease have a significantly poorer prognosis
for survival.
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 (seer.cancer.gov), the five-year survival
rate for patients with pancreatic cancer is just 7.7%. There are
53,000 new patients with pancreatic cancer diagnosed per year and
more than half of these patients present at initial diagnosis with
metastatic disease (Pancreatic Cancer Network’s Pancreatic
Facts 2016). In 2016 pancreatic cancer moved from the fourth
leading cause of cancer related death in the U.S. to third,
surpassing breast cancer (American Cancer Society Cancer statistics
2016 report,). According to the SEER database, there are about
134,000 patients diagnosed with cancer of the colon and rectum per
year in the US. The five-year survival rate for the 35% of patients
with metastatic colon cancer that is locally spread is 71% and the
five-year survival of the 35% of patients that have regional spread
is only 13.5%.
Pancreatic Cancer Imaging and Diagnosis
We
believe that our radiolabeled HuMab-5B1 PET imaging antibody
represents the only human derived agent in development specifically
aimed at improving imaging in pancreatic cancer diagnosis over the
standard of care (FDG-PET). Since the antigen targeted by the
HuMab-5B1 antibody is over expressed on metastatic pancreatic
cancer cells, this development effort represents a potentially
important step forward in the diagnosis, staging, and assessment of
the majority of patients newly diagnosed with pancreatic cancers.
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 that limitations in FDG-PET
imaging offers significant room for improvement in diagnostic
technique and that accurate determinations on extent of disease and
resectability are essential to improving outcomes in this cancer.
Improvements in the sensitivity and specificity over FDG-PET could
have a significant impact on improving diagnosis and clinical
outcome.
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, or RIT, product candidate as a potential
treatment for pancreatic cancer and other CA19-9 positive
tumors. Our preclinical animal studies have demonstrated the
potential feasibility and experimental proof of concept for this
new product candidate. We have learned from our 89Zr-HuMab-5B1 PET
imaging clinical development program that we have sufficient safety
and specificity of the product to proceed with clinical development
of our RIT program. We submitted an IND to FDA for this product in
December of 2016 and received FDA authorization in January 2017 to
proceed with our proposed clinical trial. 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. 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.
Life Technologies Licensing Agreement
On
September 24, 2015, we entered into a licensing agreement with Life
Technologies Corporation, a subsidiary of ThermoFisher Scientific
(“Life Technologies”). 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 with the remaining amount paid in
2016.
Rockefeller University Collaboration
In
July
2015, we entered into a research collaboration agreement with
Rockefeller University's Laboratory of Molecular Genetics and
Immunology (“Rockefeller”). We provided antibody
material to Rockefeller, 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 first option to negotiate a royalty
bearing license to Rockefeller’s technology or
Rockefellers’ interest in technology jointly owned with us to
improve our antibody for clinical and commercial
development. If we and Rockefeller fail to reach
agreement to a license of the drug candidate containing the
combined technologies within six months’ notice by either
party seeking a license, then either party may freely license
jointly owned property to any third party and share equally any
consideration received from the licensee.
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.
We are the exclusive licensee or sole 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 2 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 fully human
monoclonal antibodies.
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 Food, 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 or criminal
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.
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
a New Drug Application, or 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 as well
as a user fee of over $2 million. 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 and/or the active pharmaceutical ingredient 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 adverse experience
reports is required following FDA approval of an NDA. The FDA also
may require post-marketing testing, known as Phase 4 testing,
risk evaluation and minimization strategies, action plans and
surveillance, as well as annual reports on matters relating to the
NDA, to monitor the effects of an approved product or place
conditions on an approval that could restrict the distribution or
use of the product.
Outside
the United States, our ability to market a product is contingent
upon receiving marketing authorization from the appropriate
regulatory authorities. The requirements governing marketing
authorization, pricing and reimbursement vary widely from
jurisdiction to jurisdiction. At present, foreign marketing
authorizations are applied for at a national level, although within
the European Union registration procedures are available to
companies wishing to market a product in more than one European
Union member state.
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 May 4, 2017, we had 25 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
|
|
|
|
|
|
J. David Hansen
|
|
Chairman of the Board of Directors, President and Chief Executive
Officer
|
|
|
|
|
|
Kenneth M. Cohen
|
|
Director (1)(2)(3)(4)
|
|
|
|
|
|
Jeffrey F. Eisenberg
|
|
Director (4)
|
|
|
|
|
|
Robert E. Hoffman
|
|
Director (1)(2)(3)(4)
|
|
|
|
|
|
Philip O. Livingston, M.D.
|
|
Director, Chief Science Officer
|
|
|
|
|
|
Paul V. Maier
|
|
Director (1)(3)(4)
|
|
|
|
|
|
Jeffrey V. Ravetch, M.D., Ph.D.
|
|
Director
|
|
|
|
|
|
Thomas C. Varvaro
|
|
Director (1)(2)(3)(4)
|
|
(1)
|
Member of our audit committee
|
|
(2)
|
Member of our compensation committee
|
|
(3)
|
Member of our nominating and governance committee
|
|
(4)
|
Independent member of the board
|
The
following is a 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 in leadership roles with public and private
pharmaceutical companies 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 several 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 and Kura Oncology, Inc. (Nasdaq:
KURA), a biotechnology 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 approximately 140 peer-reviewed publications
and 7 issued patents concerning cancer vaccines. 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 for human 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, 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 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). 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 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' experience serving as CFO/financial
executive/board member of public and private life sciences and hi
tech companies. Since October 2016, Mr. Hanson has
served as a member of the board of directors of WCCT, Inc., a
private pharmaceutical contract research organization. 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. 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 gained substantial executive management experience that
helped qualify him in his role as CFO. For example, he
served as Senior Vice President of Brinson Patrick Securities,
where he opened 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, or PBA,
a central nervous system disorder. During 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 Arena
Pharmaceuticals. 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,
60, 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 2016, SEC filings and certain written
representations that no other reports were required during the
fiscal year ended December 31, 2016, our officers, directors and
greater than ten percent stockholders complied with all applicable
Section 16(a) filing requirement, except for Kenneth M.
Cohen, Jeffrey F. Eisenberg, Robert E. Hoffman, Paul V. Maier, Jeffrey V.
Ravetch, and Thomas C.
Varvaro who were late on a
Section 16(a) filing that took place on July 28,
2016.
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
|
404,746
|
141,400
|
—
|
393,702
|
35,717
|
975,565
|
|
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
|
299,342
|
62,790
|
—
|
99,743
|
15,055
|
476,930
|
|
Chief
Financial Officer
|
2015
|
271,819
|
77,175
|
1,075,480
|
773,006
|
19,742
|
2,217,222
|
|
Wolfgang
W. Scholz, Ph.D.
|
|
|
|
|
|
|
|
|
Vice President, Antibody
Discovery (1)
|
2015
|
225,443
|
43,125
|
700,925
|
503,793
|
13,950
|
1,487,236
|
|
Paul
W. Maffuid
|
2016
|
294,519
|
61,950
|
—
|
91,213
|
34,121
|
481,803
|
|
Vice
President, Pharmaceutical Development and Operations
|
2015
|
268,154
|
53,438
|
768,200
|
552,147
|
33,476
|
1,675,415
|
|
Paul
F. Resnick
|
2016
|
212,000
|
44,094
|
—
|
323,532
|
20,680
|
600,306
|
|
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-
|
59.94
|
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, Mr. 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
matching contributions to the 401(k) Plan in 2015 or
2016.
Hansen Employment Agreement
The
employment agreement with Mr. Hansen (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
employment agreement with Mr. Hanson (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
$59.94 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 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 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
|
$74,412
|
$—
|
$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, 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 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;
and
●
The additional annual cash retainer for the chairperson of each of
the Audit, Compensation, and Nominating and Governance Committees,
paid quarterly, is increased by $1,000 per calendar year, such that
each chairperson retainer shall be as follows, effective April 1,
2016: Audit Committee: $13,000; Compensation Committee:
$9,000; Nominating and Governance Committee: $6,000
On
August 25, 2016, the Compensation Committee of the Board of
Directors of the Company approved the following amendments to
Company's policy for compensating non-employee members of the
Board:
●
The initial equity
grant upon first appointment (or election) of future non-employee
directors to the Board shall be a 10-year option to purchase 25,000
shares of the Company's common stock, under the Company's Second
Amended and Restated 2014 Equity Incentive Plan with 3-year annual
vesting and a strike price equal 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 6,434,348 shares outstanding as of May 4,
2017, adjusted as required by rules promulgated by the
SEC.
An existing
investor has indicated an interest in purchasing an aggregate of up
to approximately $4.0 million of our shares of common stock and
Series G Preferred Stock in this offering at the offering price. At
the assumed public offering price of $1.75 per share, this entity
would purchase all shares of Series G Preferred Stock being offered
in this offering based on these indications of interest. However,
because indications of interest are not binding agreements or
commitments to purchase, these investors may determine to purchase
fewer shares than they indicate an interest in purchasing or not to
purchase any shares in this offering. The following table does not
reflect any potential purchases by this
investor.
|
Name and Address of Beneficial Owner
|
Number of Shares of
Common Stock
|
Percentage of
Common Stock
|
|
5% Stockholders
|
|
|
|
Dr.
Phillip Frost, M.D. (12)
|
422,334
|
6.56%
|
|
Barry Honig
(13)
|
391,648
|
6.09%
|
|
Michael
Brauser (14)
|
342,614
|
5.32%
|
|
Directors and Executive Officers
|
|
|
|
Philip
O. Livingston, M.D. (1)
|
196,286
|
3.05%
|
|
Jeffrey
Ravetch, M.D., Ph.D. (2)
|
17,134
|
*
|
|
J.
David Hansen (3)
|
176,678
|
2.70%
|
|
Robert
E. Hoffman (4)
|
18,486
|
*
|
|
Kenneth
M. Cohen (5)
|
27,843
|
*
|
|
Paul
V. Maier (6)
|
17,810
|
*
|
|
Gregory
P. Hanson (7)
|
80,608
|
1.24%
|
|
Paul
W. Maffuid, Ph.D. (8)
|
59,469
|
*
|
|
Thomas
C. Varvaro (9)
|
15,632
|
*
|
|
Jeffrey
F. Eisenberg (10)
|
6,983
|
*
|
|
Paul
Resnick (11)
|
25,226
|
*
|
|
All executive officers and directors as a group (11
persons)
|
642,155
|
9.51%
|
|
*
|
Less than 1%.
|
|
(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 May 4, 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 14,048 shares subject to options exercisable within 60
days of May 4, 2017.
|
|
(3)
|
Includes 108,967 shares subject to options exercisable within 60
days of May 4, 2017, and 6,238 common stock warrants purchased in
the August 2016 financing transaction.
|
|
|
|
|
(4)
|
Includes 14,048 shares subject to options exercisable within 60
days of May 4, 2017.
|
|
|
|
|
(5)
|
Includes 14,048
shares subject to options exercisable within 60 days of May 4,
2017, and 6,238 common stock warrants purchased in the August 2016
financing transaction.
|
|
|
|
|
(6)
|
Includes 14,048
shares subject to options exercisable within 60 days of May 4,
2017.
|
|
(7)
|
Includes 45,054 shares subject to options exercisable within 60
days of May 4, 2017, and 6,238 common stock warrants purchased in
the August 2016 financing transaction.
|
|
(8)
|
Includes 34,007 shares subject to options exercisable within 60
days of May 4, 2017, and 4,158 common stock warrants purchased by
the executive in the August 2016 financing
transaction.
|
|
(9)
|
Includes 12,546 shares subject to options exercisable within 60
days of May 4, 2017.
|
|
(10)
|
Includes 6,893 shares subject to options exercisable within 60 days
of May 4, 2017.
|
|
(11)
|
Includes 25,226 shares subject to options exercisable within 60
days of May 4, 2017.
|
|
(12)
|
Based solely upon a Schedule 13G/A filed with the SEC on February
3, 2017. Represents 422,334 shares of common stock held by
Frost Gamma Investments Trust (“FGIT”). Excludes (i)
596,000 shares of common stock underlying Series D Convertible
Preferred Stock held by FGIT which contains a 4.99% beneficial
ownership blocker and (ii) 505,890 shares of common stock
underlying warrants held by FGIT which contains a 4.99% beneficial
ownership blocker.
Dr. Frost is the trustee of FGIT. Frost Gamma L.P. is the sole and
exclusive beneficiary of FGIT. Dr. Frost is one of two limited
partners of Frost Gamma L.P. The general partner of Frost Gamma
L.P. is Frost Gamma, Inc., and the sole shareholder of Frost Gamma,
Inc. is Frost-Nevada Corporation. Dr. Frost is the sole shareholder
of Frost-Nevada Corporation. The reporting person disclaims
beneficial ownership of these securities, except to the extent of
any pecuniary interest therein and this report shall not be deemed
an admission that the reporting person is the beneficial owner of
these securities for purposes of Section 16 or for any other
purpose.
|
|
(13)
|
Based solely upon a Schedule 13G filed with the SEC on February 17,
2017. Represents (i) 61,537 shares of common stock held by
GRQ Consultants, Inc. Roth 401K FBO Barry Honig (“Roth
401K”), for which Barry Honig is trustee and over which
securities he holds voting and dispositive power, (ii) 36,000
shares of common stock held by GRQ Consultants, Inc. 401K
(“401K”), for which Barry Honig is trustee and over
which securities he holds voting and dispositive power and (iii)
47,074 shares of common stock held by Barry & Renee Honig
Charitable Foundation (the “Foundation”), for which
Barry Honig is trustee and over which securities he holds voting
and dispositive power. Does not include (i) 103,950 shares of
common stock issuable upon conversion of the Company’s Series
F Convertible Preferred Stock held by Roth 401K or (ii) 145,530
shares of common stock issuable upon conversion of the
Company’s Series F Convertible Preferred Stock held by GRQ
Consultants, Inc. Roth 401K FBO Renee Honig (“Renee
401K”), for which Barry Honig’s spouse, Renee Honig, is
trustee and over which securities she holds voting and dispositive
power. The Series F Convertible Preferred Stock contains a 4.99%
beneficial ownership blocker. Additionally, does not include (i)
207,900 shares of common stock underlying warrants held by Roth
401K, (ii) 70,166 shares of common stock underlying warrants held
by 401K, (iii) 415,800 shares of common stock underlying warrants
held by Renee 401K or (iv) 62,370 shares of common stock underlying
warrants held by the Foundation. All of these warrants contain a
4.99% beneficial ownership blocker.
|
|
(14)
|
Based solely upon a Schedule 13G filed with the SEC on February 2,
2017. Includes 5,000 shares of common stock held by Michael
& Betsy Brauser Tenants by Entirety (“MBTBE”) and
248,582 shares of common stock held by Grander Holdings, Inc. 401K
of which the reporting person is a trustee (“Grander
401K”). Excludes 513,514 shares of common stock underlying
Series D Convertible Preferred Stock held by Brauser which contains
a 4.99% beneficial ownership blocker; (ii) 207,900 shares of common
stock underlying Series F Convertible Preferred Stock held by
Grander 401K which contains a 4.99% beneficial ownership blocker
and (iii) 415,800 shares of common stock underlying warrants held
by Grander 401K which contain a 4.99% beneficial ownership
blocker.
|
Securities Authorized for Issuance under Equity Compensation
Plans
The
following table provides certain information with respect to all
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) 4,628 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.
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 May 4, 2017, there were (i)
6,434,348 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 (iv) 665,281 shares of Series F Preferred
Stock outstanding that are convertible into 665,281 shares of
common stock and (v) 850 shares of Series H Preferred Stock
outstanding that are convertible into 485,715 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 H Convertible Preferred Stock
Pursuant
to a Series H Preferred Stock Certificate of Designations, on May
3, 2017, we designated 2,000 shares of our blank check preferred
stock as Series H Preferred Stock. The shares of Series H Preferred
Stock are convertible into shares of common stock based on a
conversion calculation equal to the stated value of the Series H
Preferred Stock, plus all accrued and unpaid dividends (the
“Base Amount”), if any, on such Series H Preferred
Stock, as of such date of determination, divided by the conversion
price. The stated value of each share of Series H Preferred Stock
is $1,000 and the initial conversion price is $1.75 per share, each
subject to adjustment for stock splits, stock dividends,
recapitalizations, combinations, subdivisions or other similar
events.
In the event of a liquidation, dissolution or
winding up of the Company, each share of Series H Preferred Stock
will be entitled to a per share preferential payment equal to the
Base Amount. All shares of our
capital stock will be junior in rank to Series H Preferred Stock
with respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding-up of the
Company other than Series A through G Preferred Stock.
The holders of Series H Preferred
Stock will be entitled to receive dividends if and when declared by
our board of directors. The Series H Preferred Stock shall
participate on an “as converted” basis, with all
dividends declared on our common stock. In addition, if
we grant, issue or sell any rights to purchase our securities pro
rata to all our record holders of our common stock, each holder
will be entitled to acquire such securities applicable to the
granted purchase rights as if the holder had held the number of
shares of common stock acquirable upon complete conversion of all
Series H Preferred Stock then held.
-63-
Table of
Contents
We
are prohibited from effecting a conversion of the Series H
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series H Preferred Stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series H Preferred Stock, but not in excess of the
beneficial ownership limitations.
As of
May 4, 2017, there were 850 shares of Series H Preferred Stock
outstanding convertible into 485,714 shares of common
stock.
0% Series G Convertible Preferred Stock
Pursuant
to a Series G Preferred Stock Certificate of Designations, we will
designate 5,000,000 shares of our blank check preferred stock as
Series G Preferred Stock. The shares of Series G Preferred Stock
are convertible into shares of common stock based on a conversion
calculation equal to the stated value of the of such Series G
Preferred Stock, plus all accrued and unpaid dividends, if any, on
such Series G Preferred Stock, as of such date of determination,
divided by the conversion price. The stated value of each share of
Series G Preferred Stock is $1.75 and the initial conversion price
is $1.75 per share, each subject to adjustment for stock splits,
stock dividends, recapitalizations, combinations, subdivisions or
other similar events. The holder of a
majority of the Series G Preferred Stock shall have the right to
nominate a candidate for the Board, such right to expire on
December 31, 2017.
In the event of a liquidation, dissolution or
winding up of the Company, each share of Series G Preferred Stock
will be entitled to a per share preferential payment equal to the
par value. All shares our
capital stock will be junior in rank to Series G Preferred Stock
with respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding-up of the
Company, except for the Company’s Series D Convertible
Preferred Stock, Series E Convertible Preferred Stock and Series F
Convertible Preferred Stock. The holders of Series G Preferred Stock will
be entitled to receive dividends if and when declared by our board
of directors. The Series G 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 G Preferred Stock
then held.
We
are prohibited from effecting a conversion of the Series G
Preferred Stock to the extent that, as a result of such conversion,
the holder would beneficially own more than 4.99% of the number of
shares of common stock outstanding immediately after giving effect
to the issuance of shares of common stock upon conversion of the
Series G Preferred Stock, which beneficial ownership limitation may
be increased by the holder up to, but not exceeding, 9.99%. Each
holder is entitled to vote on all matters submitted to stockholders
of the Company, and shall have the number of votes equal to the
number of shares of common stock issuable upon conversion of such
holder’s Series G Preferred Stock, but not in excess of the
beneficial ownership limitations.
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 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
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 May 4, 2017, there were 665,281 shares of Series F
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 May 4,
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
Preferred Stock.
As
of May 4, 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 May 4, 2017, there were approximately 2,147,595 of common stock
reserved for issuance under our stock option and equity plans. Of
this number, approximately 1,705,311 shares are
reserved for issuance upon exercise of outstanding options and
restricted stock units that have been granted under our equity
plans, and 271,036 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 May
3¸ 2017, the last reported bid price for our common stock on
The NASDAQ Capital Market was $1.98 per share. As of May 3,
2017, we had approximately 89 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
We
have entered into an underwriting agreement with Laidlaw &
Company (UK) Ltd. with respect to the shares of common stock
and Series G Preferred Stock subject to this offering.
Subject to certain conditions, we have agreed to sell to the
underwriter, and the underwriter has agreed to purchase, the number
of shares of common stock and
Series G Preferred Stock provided below opposite its
name.
|
Underwriter
|
|
Number of Shares
(including Series G Preferred Stock)
|
|
|
|
Laidlaw
& Company (UK) Ltd.
|
|
3,142,857
|
|
|
|
Total
|
|
3,142,857
|
|
|
The
underwriter is offering the shares of common stock
and
Series G Preferred Stock subject to its acceptance of
the shares of common stock and
Series G Preferred Stock from us and subject to prior
sale. The underwriting agreement provides that the
obligation of the underwriter to pay for and accept delivery of the
shares of common stock and
Series G Preferred Stock offered by this prospectus
is subject to the approval of certain legal matters by its counsel
and to certain other conditions. The underwriter is
obligated to take and pay for all of the shares of common stock
and
Series G Preferred Stock if any such shares are
taken. However, the underwriter is not required to take
or pay for the shares of common stock covered by the
underwriter’s over-allotment option described
below.
Over-Allotment Option
We
have granted the underwriter a 45-day option to purchase up to
an additional 385,714 shares of our common stock at a price of
$1.75 per share, to cover over-allotments, if any, of the shares of
our common stock offered by this prospectus. If the
underwriter exercises this option, the underwriter will be
obligated, subject to certain conditions, to purchase the
additional shares for which the option has been
exercised. However, because our common stock is publicly
traded, the underwriter may satisfy some or all of the
overallotment of shares of our common stock, if any, by purchasing
shares in the open market and will have no obligation to exercise
the overallotment option with respect to our common
stock.
Discount, Commissions and Expenses
The
underwriter has advised us that they propose to offer the shares of
common stock and
Series G Preferred Stock at the public offering price
set forth on the cover page of this prospectus and, in the case of
common stock and
Series G Preferred Stock sold to investors introduced
to us by the underwriter, to certain dealers at that price less a
concession not in excess of $0.1225 per share. The
underwriter may allow, and certain dealers may re-allow, a discount
from the concession not in excess of $0.1225 per share to certain
brokers and dealers. After this offering, the combined
public offering price, concession and reallowance to dealers may be
changed by the underwriter. No such change shall change
the amount of proceeds to be received by us as set forth on the
cover page of this prospectus. The shares of common
stock and
Series G Preferred Stock are offered by the
underwriter as stated herein, subject to receipt and acceptance by
it and subject to its right to reject any order in whole or in
part. The underwriter has informed us that they do not
intend to confirm sales to any accounts over which they exercise
discretionary authority.
The
following table shows the underwriting discount payable to the
underwriter by us in connection with this offering. Such
amounts are shown assuming both no exercise and full exercise of
the underwriter’s over-allotment option to purchase
additional shares.
|
|
Per
Share (including Series G Preferred Stock)
|
Total
Without Exercise of Over-Allotment Option
|
Total
With Exercise of Over-Allotment Option
|
|
Public offering
price
|
$ 1.7500
|
$ 5,500,000
|
$ 6,175,000
|
|
Underwriting
discount (1)(2)(3)
|
$ 0.1225
|
$ 205,000
|
$ 252,250
|
__________________________
1.
The
underwriter will receive a discount of 7% of the public offering
price on sales to investors introduced by the
underwriter.
2.
The
underwriter will receive no fee or underwriting discount with
respect to sales to certain existing investors unless such existing
investors participate in the offering in the aggregate minimum
amount of $2,000,000, in which case the underwriter will receive a
flat fee of $100,000 in lieu of any underwriting discount for sales
made to such existing investors.
3.
The presentation in this table
assumes the purchase of securities by an existing investor who has
indicated an interest in purchasing an aggregate of up to
approximately $4.0 million in securities in this offering at the
offering price. However, because indications of interest are not
binding agreements or commitments to purchase, this investor may
determine to purchase fewer securities than they had indicated an
interest in purchasing or not to purchase any securities in this
offering.
We
have agreed to reimburse Laidlaw & Company (UK) Ltd., for
certain out-of-pocket expenses (including the reasonable fees and
disbursements of counsel to the underwriter) not to exceed $80,000,
upon the successful completion of this offering, without our prior
written consent, such consent not to be unreasonably
withheld. We estimate that expenses payable by us in
connection with this offering, including reimbursement of Laidlaw
& Company (UK) Ltd.’s expenses but excluding the
underwriting discount referred to above, will be approximately
$490,000.
Indemnification
We
have agreed to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, or the Securities Act, and liabilities arising
from breaches of representations and warranties contained in the
underwriting agreement, or to contribute to payments that the
underwriter may be required to make in respect of those
liabilities.
Lock-up Agreements
We,
our officers and our directors have agreed, subject to limited
exceptions, for a period of 90 days after the date of the
underwriting agreement, not to offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or
otherwise dispose of, directly or indirectly any shares of common
stock or any securities convertible into or exchangeable for our
common stock either owned as of the date of the underwriting
agreement or thereafter acquired without the prior written consent
of Laidlaw & Company (UK) Ltd. Laidlaw & Company
(UK) Ltd. may, in its sole discretion and at any time or from time
to time before the termination of the lock-up period, without
notice, release all or any portion of the securities subject to
lock-up agreements.
Price Stabilization, Short Positions and Penalty Bids
In
connection with the offering the underwriter may engage in
stabilizing transactions, over-allotment transactions, syndicate
covering transactions and penalty bids in accordance with
Regulation M under the Exchange Act:
●
Stabilizing
transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified
maximum.
●
Over-allotment
involves sales by the underwriter of securities in excess of the
number of securities the underwriter is obligated to purchase,
which creates a syndicate short position. The short position may be
either a covered short position or a naked short position. In a
covered short position, the number of securities over-allotted by
the underwriter are not greater than the number of securities that
they may purchase in the over-allotment option. In a naked short
position, the number of securities involved is greater than the
number of securities in the over-allotment option. The underwriter
may close out any covered short position by either exercising its
over-allotment option and/or purchasing securities in the open
market.
●
Syndicate covering
transactions involve purchases of securities in the open market
after the distribution has been completed in order to cover
syndicate short positions. In determining the source of securities
to close out the short position, the underwriter will consider,
among other things, the price of securities available for purchase
in the open market as compared to the price at which it may
purchase securities through the over-allotment option. If the
underwriter sells more securities than could be covered by the
over-allotment option, a naked short position, the position can
only be closed out by buying securities in the open market. A naked
short position is more likely to be created if the underwriter is
concerned that there could be downward pressure on the price of the
securities in the open market after pricing that could adversely
affect investors who purchase in the offering.
●
Penalty bids
permit the underwriter to reclaim a selling concession from a
syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate
covering transaction to cover syndicate short
positions.
These stabilizing
transactions, syndicate covering transactions and penalty bids may
have the effect of raising or maintaining the market prices of our
common stock or preventing or retarding a decline in the market
price of the common stock. As a result, the price of our common
stock may be higher than the prices that might otherwise exist in
the open market. Neither we nor the underwriter make any
representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the
prices of our common stock. In addition, neither we nor the
underwriter make any representations that the underwriter will
engage in these stabilizing transactions or that any transaction,
once commenced, will not be discontinued without
notice.
Listing and Transfer Agent
Our
common stock is quoted on The NASDAQ Capital Market under the
symbol “MBVX.” The transfer agent of our common stock
is Computershare Trust Company, N.A.
Electronic Distribution
This
prospectus in electronic format may be made available on websites
or through other online services maintained by the underwriter, or
by its affiliates. Other than this prospectus in
electronic format, the information on the underwriter’s
website and any information contained in any other website
maintained by the underwriter is not part of this prospectus or the
registration statement of which this prospectus forms a part, has
not been approved and/or endorsed by us or the underwriter in its
capacity as underwriter, and should not be relied upon by
investors.
Other
From
time to time, the underwriter and/or its affiliates may have
provided, and may in the future provide, various investment banking
and other financial services for us for which services it may have
received and, may in the future receive, customary
fees. In the course of its business, the underwriter and
its affiliates may actively trade our securities or loans for their
own account or for the accounts of customers, and, accordingly, the
underwriter and its affiliates may at any time hold long or short
positions in such securities or loans. Except for
services provided in connection with this offering, the underwriter
has not provided any investment banking or other financial services
to us during the 180-day period preceding the date of this
prospectus and we do not expect to retain the underwriter to
perform any investment banking or other financial services for at
least 90 days after the date of this prospectus.
NOTICE TO INVESTORS
Notice to Investors in the United Kingdom
In relation to each Member
State of the European Economic Area which has implemented the
Prospectus Directive (each, a “Relevant Member State”)
an offer to the public of any securities which are the subject of
the offering contemplated by this prospectus may not be made in
that Relevant Member State except that an offer to the public in
that Relevant Member State of any such securities may be made at
any time under the following exemptions under the Prospectus
Directive, if they have been implemented in that Relevant Member
State:
|
|
(a)
|
to legal entities which are
authorized or regulated to operate in the financial markets or, if
not so authorized or regulated, whose corporate purpose is solely
to invest in securities;
|
|
|
(b)
|
to any legal entity which has two
or more of (1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than
€50,000,000, as shown in its last annual or consolidated
accounts;
|
|
|
(c)
|
by the
underwriter to fewer than 100 natural or legal persons (other than
qualified investors as defined in the Prospectus Directive);
or
|
|
|
(d)
|
in any other
circumstances falling within Article 3(2) of the Prospectus
Directive, provided that no such offer of these securities shall
result in a requirement for the publication by the issuer or the
underwriter of a prospectus pursuant to Article 3 of the Prospectus
Directive.
|
For the purposes of this
provision, the expression an “offer to the public” in
relation to any of the securities in any Relevant Member State
means the communication in any form and by any means of sufficient
information on the terms of the offer and any such securities to be
offered so as to enable an investor to decide to purchase any such
securities, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State
and the expression “Prospectus Directive” means
Directive 2003/71/EC and includes any relevant implementing measure
in each Relevant Member State.
The underwriter has
represented, warranted and agreed that:
|
|
(a)
|
it has only
communicated or caused to be communicated and will only communicate
or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the
Financial Services and Markets Act 2000 (the FSMA)) received by it
in connection with the issue or sale of any of the securities in
circumstances in which section 21(1) of the FSMA does not apply to
the issuer; and
|
|
|
(b)
|
it has complied
with and will comply with all applicable provisions of the FSMA
with respect to anything done by it in relation to the securities
in, from or otherwise involving the United Kingdom.
|
European Economic Area
In particular, this document
does not constitute an approved prospectus in accordance with
European Commission’s Regulation on Prospectuses no. 809/2004
and no such prospectus is to be prepared and approved in connection
with this offering. Accordingly, in relation to each Member State
of the European Economic Area which has implemented the Prospectus
Directive (being the Directive of the European Parliament and of
the Council 2003/71/EC and including any relevant implementing
measure in each Relevant Member State) (each, a Relevant Member
State), with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State
(the Relevant Implementation Date) an offer of securities to the
public may not be made in that Relevant Member State prior to the
publication of a prospectus in relation to such securities which
has been approved by the competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including the
Relevant Implementation Date, make an offer of securities to the
public in that Relevant Member State at any time:
|
●
|
to
legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities;
|
|
●
|
to any
legal entity which has two or more of (1) an average of at least
250 employees during the last financial year; (2) a total balance
sheet of more than €43,000,000; and (3) an annual net
turnover of more than €50,000,000, as shown in the last
annual or consolidated accounts; or
|
|
●
|
in any
other circumstances which do not require the publication by the
Issuer of a prospectus pursuant to Article 3 of the Prospectus
Directive.
|
For the purposes of this
provision, the expression an “offer of securities to the
public” in relation to any of the securities in any Relevant
Member State means the communication in any form and by any means
of sufficient information on the terms of the offer and the
securities to be offered so as to enable an investor to decide to
purchase or subscribe for the securities, as the same may be varied
in that Member State by any measure implementing the Prospectus
Directive in that Member State. For these purposes the securities
offered hereby are “securities.”
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. Sheppard Mullin Richter & Hampton LLP, New
York, New York, is acting as counsel to the Laidlaw & Company
(UK) Ltd. in this offering.
EXPERTS
The
consolidated financial statements of MabVax Therapeutics Holdings,
Inc. as of December 31, 2016 and 2015, 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.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
F-1
|
|
|
|
|
F-2
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-8
|
|
|
|
|
F-9
|
|
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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, 2016 and 2015, and the related consolidated
statements of operations, redeemable convertible preferred stock,
convertible preferred stock and stockholders’ equity, 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, 2016 and 2015, 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
1, 2017
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Balance Sheets
|
|
December 31,
|
|
|
|
2016
|
2015
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$3,979,290
|
$4,084,085
|
|
Grants
receivable
|
—
|
757,562
|
|
Prepaid
expenses
|
281,858
|
419,751
|
|
Other
current assets
|
32,830
|
47,586
|
|
Total
current assets
|
4,293,978
|
5,308,984
|
|
Property
and equipment, net
|
731,712
|
135,486
|
|
Goodwill
|
6,826,003
|
6,826,003
|
|
Other
long-term assets
|
168,597
|
126,654
|
|
Total
assets
|
$12,020,290
|
$12,397,127
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$1,137,903
|
$3,002,497
|
|
Accrued
compensation
|
770,592
|
562,755
|
|
Accrued
clinical operations and site costs
|
1,218,641
|
391,041
|
|
Accrued
lease contingency fee
|
590,504
|
590,504
|
|
Other
accrued expenses
|
315,034
|
411,566
|
|
Interest
payable
|
51,295
|
—
|
|
Current
portion of notes payable
|
1,589,661
|
—
|
|
Current
portion of capital lease payable
|
17,004
|
—
|
|
Total
current liabilities
|
5,690,634
|
4,958,363
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
Long-term
portion of notes payable, net
|
2,774,627
|
—
|
|
Long-term
portion of capital lease payable
|
68,113
|
—
|
|
Other
long-term liabilities
|
144,394
|
—
|
|
Total
long-term liabilities
|
2,987,134
|
—
|
|
Total
liabilities
|
8,677,768
|
4,958,363
|
|
|
|
|
|
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 as of
December 31, 2016 and 2015, respectively, with liquidation
preference of $1,325 and $1,915 as of December 31, 2016 and 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 as of
December 31, 2016 and 2015, with a liquidation preference of
$333 as of December 31, 2016 and 2015
|
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 December 31,
2016 and 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 December 31,
2016 and 2015, respectively
|
62,961
|
38,366
|
|
Additional
paid-in capital
|
81,533,511
|
67,999,928
|
|
Accumulated
deficit
|
(78,262,261)
|
(60,601,778)
|
|
Total
stockholders’ equity
|
3,342,522
|
7,438,764
|
|
Total
liabilities and stockholders’ equity
|
$12,020,290
|
$12,397,127
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
|
|
For the Years Ended December 31,
|
|
|
|
2016
|
2015
|
|
Revenues:
|
|
|
|
Grants
|
$148,054
|
$1,267,036
|
|
Total
revenues
|
148,054
|
1,267,036
|
|
|
|
|
|
Operating
costs and expenses:
|
|
|
|
Research
and development
|
7,800,723
|
9,596,768
|
|
General
and administrative
|
9,010,450
|
9,795,163
|
|
Total
operating costs and expenses
|
16,811,173
|
19,391,931
|
|
Loss
from operations
|
(16,663,119)
|
(18,124,895)
|
|
Interest
and other expenses, net of income
|
(997,364)
|
(227)
|
|
Change
in fair value of warrant liability
|
—
|
19,807
|
|
Net
loss
|
(17,660,483)
|
(18,105,315)
|
|
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
|
$(17,660,483)
|
$(36,051,470)
|
|
Basic
and diluted net loss per share
|
$(3.64)
|
$(13.44)
|
|
Shares
used to calculate basic and diluted net loss per share
|
4,857,753
|
2,681,740
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Redeemable Convertible Preferred Stock,
Convertible Preferred Stock and Stockholders’ Equity
|
|
Redeemable Convertible Preferred Stock
|
Convertible Preferred Stock
|
|||||
|
|
MabVax Series B
|
|
MabVax Series A-1
|
MabVax Series C
|
|||
|
|
Shares
|
Amount
|
Total
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Balance at December 31, 2014
|
1,250,000
|
$1,838,025
|
$1,838,025
|
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
|
(106,437)
|
(160,380)
|
(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
|
—
|
8,655,998
|
8,655,998
|
—
|
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
|
(1,143,563)
|
(10,379,128)
|
(10,379,128)
|
—
|
—
|
|
—
|
|
Private
Placement Issuance of 900,136 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
|
—
|
—
|
—
|
—
|
—
|
|
—
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Redeemable Convertible Preferred Stock,
Convertible Preferred Stock and Stockholders’
Equity
|
|
Redeemable Convertible Preferred Stock
|
Convertible Preferred Stock
|
|||||
|
|
MabVax Series B
|
|
MabVax Series A-1
|
MabVax Series C
|
|||
|
|
Shares
|
Amount
|
Total
|
Shares
|
Amount
|
Shares
|
Amount
|
|
Balance at December 31, 2015
|
—
|
$—
|
$—
|
—
|
$—
|
—
|
$—
|
|
Issuance
of warrants in connection with note payable transaction on January
15, 2016
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Issuance
of whole in lieu of fractional shares resulting from reverse split
in August 2016
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Issuance
of Series F convertible preferred stock, warrants and common stock
in August public offering, net of $871,305 in issuance
costs
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Issuance
of additional common stock related to April 2015
financing
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Stock
issued for services
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Conversion of
Series D Preferred Stock to common stock
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Stock
issued upon vesting of restricted stock units in April, July and
August of 2016, net of payroll taxes
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Stock-based
compensation
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
Balance at December 31, 2016
|
—
|
$—
|
$—
|
—
|
$—
|
|
$—
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS,
INC.
Consolidated Statements of Redeemable Convertible Preferred Stock,
Convertible Preferred Stock and Stockholders’
Equity
Total
Stockholders’
Equity
|
|
Series D, E & F
Convertible
Preferred
Stock
|
Common
Stock
|
Additional
Paid-in
|
Accumulated
|
Total
Stockholders'
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
|
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
|
117,582
|
1,176
|
299,108
|
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)
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Redeemable Convertible Preferred Stock,
Convertible Preferred Stock and Stockholders’
Equity
|
|
Series D, E & 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 $871,305 in issuance
costs
|
665,281
|
6,653
|
1,297,038
|
12,970
|
8,547,825
|
—
|
8,567,448
|
|
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
|
—
|
—
|
—
|
—
|
4,403,278
|
—
|
4,403,278
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(17,660,483)
|
(17,660,483)
|
|
Balance at December 31, 2016
|
831,103
|
$8,311
|
6,296,110
|
$62,961
|
$81,533,511
|
$(78,262,261)
|
$3,342,522
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
|
|
For the Years Ended December 31,
|
|
|
|
2016
|
2015
|
|
Operating activities
|
|
|
|
Net
loss
|
$(17,660,483)
|
$(18,105,315)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation
and amortization
|
96,553
|
21,360
|
|
Stock-based
compensation
|
4,403,278
|
4,463,695
|
|
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
|
413,676
|
—
|
|
Increase
(decrease) in operating assets and liabilities:
|
|
|
|
Grants
receivable
|
757,562
|
(673,218)
|
|
Other
receivables
|
—
|
2,275
|
|
Prepaid
expenses and other
|
340,187
|
(199,377)
|
|
Accounts
payable
|
(1,898,520)
|
1,631,305
|
|
Accrued
clinical operations and site costs
|
827,600
|
(103,069)
|
|
Accrued
compensation
|
207,837
|
332,374
|
|
Other
accrued expenses
|
(15,101)
|
166,145
|
|
Net
cash used in operating activities
|
(12,363,411)
|
(10,525,182)
|
|
Investing activities
|
|
|
|
Purchases
of property and equipment
|
(563,196)
|
(78,416)
|
|
Net
cash used in investing activities
|
(563,196)
|
(78,416)
|
|
Financing activities
|
|
|
|
Issuances
of preferred stock, net of issuance costs
|
—
|
2,500,000
|
|
Proceeds
from exercise of stock options
|
—
|
800
|
|
Principal
payments on financed insurance policies
|
(167,597)
|
—
|
|
Principal
payments on capital lease
|
(10,540)
|
—
|
|
Purchase
of vested employee stock in connection with tax withholding
obligation
|
(177,823)
|
—
|
|
Cash
receipts from bank loan, net of financing costs
|
4,610,324
|
—
|
|
Proceeds
from issuance of preferred stock, common stock and warrants, net of
issuance costs
|
8,567,448
|
10,709,740
|
|
Net
cash provided by financing activities
|
12,821,812
|
13,210,540
|
|
Net
change in cash and cash equivalents
|
(104,795)
|
2,606,942
|
|
Cash
and cash equivalents at beginning of year
|
4,084,085
|
1,477,143
|
|
Cash
and cash equivalents at end of year
|
$3,979,290
|
$4,084,085
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
Cash
paid during the year 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
|
$95,657
|
$—
|
|
Fair
value of warrants issued
|
$607,338
|
$—
|
|
Accretion
of redemption value for Series A-1 and B preferred
stock
|
$—
|
$93,234
|
|
Conversion
of Series B redeemable preferred stock into common
stock
|
$—
|
$160,380
|
|
Conversion
of Series D preferred stock into common stock
|
$7,974
|
$6,306
|
|
Conversion
of Series A-1 preferred stock into common stock
|
$—
|
$162,968
|
|
Exchange
of Series A-1 preferred stock and warrants to common stock and
Series D convertible preferred stock
|
$—
|
$13,111,280
|
|
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
|
$—
|
$12,198
|
|
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
|
|
Property and equipment accrued in accounts payable
|
$33,934
|
$21,376
|
See
Accompanying Notes to Consolidated Financial
Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Notes
to Consolidated Financial Statements
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”) (NASDAQ: 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, Inc. on a
consolidated financial statement basis with our wholly owned
subsidiary following the Merger, MabVax Therapeutics, as
applicable. On October 9, 2014, the Financial Industry
Regulatory Authority (FINRA) approved
the Company’s stock symbol change request and the Company
began trading on the OTCQB under the symbol MBVX on October 10,
2014. On August 17, 2016, our common stock began trading on The
NASDAQ Capital Market under the symbol
“MBVX.”
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 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 hereto
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.
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, debt financing, 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.
The
preparation of 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
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.
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 $17,660,483, net cash used in operating activities of
$12,363,411 and net cash used in investing activities of $563,196
for the year ended December 31, 2016. As of December 31,
2016, the Company had $3,979,290 in cash and cash equivalents and
an accumulated deficit of $78,262,261.
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 $871,305. 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) initiate our clinical trial for the
development of 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. Management believes that the Company has sufficient funds
to meet its obligations through April 2017. These conditions give
rise to substantial doubt as to the Company’s ability to
continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
We
plan to continue to fund the Company’s losses from operations
and capital funding needs through equity or debt financings,
strategic collaborations, licensing arrangements, government grants
or other arrangements. However, we cannot be sure that such
additional funds will be available on reasonable terms, or at all.
If we are unable to secure adequate additional funding, we may be
forced to make reductions in spending, extend payment terms with
suppliers, liquidate assets where possible, and/or suspend or
curtail planned programs. In addition, if the Company does not meet
its payment obligations to third parties as they come due, it may
be subject to litigation claims. Even if we are successful in
defending against these claims, litigation could result in
substantial costs and be a distraction to management. Any of these
actions could materially harm the Company’s business, results
of operations, and 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.
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. As of December 31, 2016, cash and cash
equivalents exceeded federally insured limits by approximately $3.7
million. 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 represented 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. There were no grant receivable amounts
outstanding as of December 31, 2016.
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 seven 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,
2016 and 2015.
Impairment of Goodwill
The Company applies
the GAAP principles related to Intangibles – Goodwill and
Other related to
performing a test for goodwill impairment annually. For the years
ended December 31, 2016 and 2015, the Company performed a step 1
analysis and assessed the market value of the Company to determine
whether an impairment had taken place. Based upon the analysis
performed no impairment was noted, therefore performing step 2 was
not required. The Company has concluded that no impairment of
Goodwill has taken place for the years ended December 31, 2016 and
2015. Further, in performing a qualitative assessment, the Company
concluded no events and circumstances have taken place that would
have indicated that an impairment had taken place.
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. 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
common stock and 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 common stock and
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, 2016 and 2015, 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 November 2015,
the FASB issued Accounting Standards Update No. 2015-17, Income
Taxes. Current GAAP requires an entity to separate deferred income
tax liabilities and assets into current and noncurrent amounts in a
classified balance sheet. The new standard simplifies the
presentation of deferred tax assets and liabilities and requires
that deferred tax assets and liabilities be classified as
noncurrent in a classified balance sheet. This ASU is effective for
financial statements issued for fiscal years beginning after
December 15, 2015, with early adoption permitted. This ASU affected
our disclosures relating to deferred tax assets and liabilities.
The Company has applied this guidance prospectively and it did not
have a material impact on the consolidated balance
sheets.
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. We do not expect the adoption of this
new standard to have a material impact on our consolidated
financial statements.
In August 2016, the
FASB issued ASU No. 2016-15 (“ASU 2016-15”),
“Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments.” The standard
provides guidance on eight (8) cash flow issues: (1) debt
prepayment or debt extinguishment costs; (2) settlement of
zero-coupon bonds; (3) contingent consideration payments after a
business combination; (4) proceeds from the settlement of insurance
claims; (5) proceeds from the settlement of corporate-owned life
insurance policies; (6) distributions received from equity method
investees; (7) beneficial interests in securitization transactions;
and (8) separately identifiable cash flows and application of the
predominance principle. ASU 2016-15 addresses how certain cash
receipts and cash payments are presented and classified in the
statement of cash flows. ASU 2016-15 is effective for fiscal years,
and interim periods within those years, beginning after December
15, 2017 with early adoption permitted. The adoption of this new
standard did not have a material impact on our consolidated
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.”
This standard provides guidance on management’s
responsibility in evaluating whether there is substantial doubt
about a company’s ability to continue as a going
concern and to provide related footnote disclosures. ASU No.
2014-15 is effective for fiscal years ending after December 15,
2016 and for interim and annual periods therein with early adoption
permitted. The adoption of this new standard did not 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 consolidated financial
statements.
4. Property and Equipment, Net
Property
and equipment consisted of the following as of December 31,
2016 and 2015:
|
|
December 31,
|
|
|
|
2016
|
2015
|
|
Furniture
and fixtures
|
$51,909
|
$8,979
|
|
Office
equipment
|
52,547
|
52,547
|
|
Lab
equipment
|
894,942
|
400,301
|
|
Capital
lease equipment
|
95,657
|
—
|
|
Leasehold
improvement
|
59,555
|
—
|
|
|
1,154,610
|
461,827
|
|
Less
accumulated depreciation and amortization
|
(422,898)
|
(326,341)
|
|
Totals
|
$731,712
|
$135,486
|
Depreciation
expense for the years ended December 31, 2016 and 2015 was
$96,553 and $21,360, respectively.
5. Reverse Stock Split
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 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 hereto
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.
6. Notes Payable, Net
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
Capital 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 a rate equal to the greater of: the index rate plus
11.29%, where the index rate is the 30-day LIBOR rate; or 11.5%.
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
incurred 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. The amount being accreted is included in the
long-term portion of notes payable, net, on the balance sheet 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 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 December 31, 2016.
The
Company recorded interest expense related to the term loan of
$997,389 for the year ended December 31, 2016. 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
12.4%.
As
of December 31, 2016, the Company has one insurance premium
note outstanding with a balance totaling $61,883, 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 December 31, 2016 are as follows:
|
Years
ending December 31:
|
|
|
2017
|
$1,589,661
|
|
2018
|
1,666,667
|
|
2019
|
1,666,667
|
|
2020
|
138,889
|
|
Notes
payable, balance as of December 31, 2016
|
5,061,884
|
|
Unamortized
discount on notes payable
|
(697,596)
|
|
Notes
payable, net, balance as of December 31, 2016
|
4,364,288
|
|
Current
portion of notes payable, net
|
(1,589,661)
|
|
Long-term
portion of notes payable, net
|
$2,774,627
|
7. Redeemable Convertible Preferred Stock, Convertible Preferred
Stock, Common Stock and Warrants
MabVax Therapeutics Holdings Series B Redeemable Convertible
Preferred Stock and Warrants (Pre-Merger MabVax Therapeutics
Issuances)
On
May 12, 2014, MabVax Therapeutics Holdings entered into a
securities purchase agreement with certain purchasers pursuant to
which MabVax Therapeutics Holdings agreed to issue and sell,
subject to customary closing conditions, an aggregate of 1,250,000
shares of MabVax Therapeutics Series B 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 Preferred Stock and related Series B
Common Warrants.
As
a result of the Series B Common Warrants’ anti-dilution
provision, the Series B Common 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
Common Warrants were re-valued at $72,656 prior to being exchanged
into shares of common stock and Series D Preferred Stock and the
warrant liability was eliminated and the Company recorded a gain of
$19,807 for the year ended December 31, 2015.
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
|
$—
|
At
December 31, 2016 and 2015, there were no financial instruments
requiring fair value measurement.
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 Preferred Stock and Series B Preferred
Stock for the year ended December 31, 2016 and 2015, was an
increase of none and $93,234, respectively.
Since
the Company’s inception, no dividends were ever declared or
paid by the Company’s Board of Directors on either of the
Company’s Series A Preferred Stock or Series B Preferred
Stock.
Conversion of Preferred Stock into Common Stock
During
quarter ended March 31, 2015, holders of Series A-1 Preferred
Stock, Series B Preferred Stock, 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 Preferred Stock, Series B
Preferred Stock, and Series C Preferred Stock
outstanding.
Exchange of
Series A-1 Preferred
Stock 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 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 Preferred Stock and
B Preferred Stock as part of the consideration for elimination of
the Series A-1 Preferred Stock, 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 December 31, 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 par 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 December 31, 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. In the event of a liquidation,
dissolution or winding up of the Company, each share of Series E
preferred stock will be entitled to a per share preferential
payment equal to the stated value. There is no further adjustment
required by the Series E Certificate of Designations in the event
of an offering of shares below $4.81 per share by the
Company.
Series F Preferred Stock
As
of December 31, 2016 and December 31, 2015, there were 665,281 and
0 shares of Series F Preferred Stock issued and outstanding,
convertible into 665,281 and 0 shares of common stock,
respectively. In the event of a liquidation, dissolution or winding
up of the Company, each share of Series F Preferred Stock will be
entitled to a per share preferential payment equal to the par
value.
On August 16, 2016,
we filed a Certificate of Designations, Preferences and Rights of
the 0% Series F Convertible Preferred Stock with the Delaware
Secretary of State, designating 1,559,252 shares of preferred stock
as 0% Series F Preferred
Stock.
The shares of
Series F Preferred Stock are
convertible into shares of common stock based on a conversion
calculation equal to the stated value of such Series F Preferred Stock, plus all accrued and
unpaid dividends, if any, on such Series F Preferred Stock, as of such date of
determination, divided by the conversion price. The stated value of
each share of Series F Preferred
Stock is $4.81 and the initial conversion price is $4.81 per
share, each subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, subdivisions or other
similar events. In the event of a liquidation, dissolution or
winding up of the Company, each share of Series F Preferred Stock will be entitled to a per
share preferential payment equal to the par value. All shares of
the Company’s capital stock will be junior in rank to Series
F Preferred Stock with respect
to the preferences as to dividends, distributions and payments upon
the liquidation, dissolution and winding-up of the Company, except
for the Company’s Series D Preferred Stock and Series E Preferred Stock.
The holders of
Series F Preferred Stock will
be entitled to receive dividends if and when declared by our board
of directors. The Series F Preferred
Stock shall participate on an “as converted”
basis, with all dividends declared on the Company’s common
stock. In addition, if we grant, issue or sell any rights to
purchase our securities pro rata to all our record holders of our
common stock, each holder will be entitled to acquire such
securities applicable to the granted purchase rights as if the
holder had held the number of shares of common stock acquirable
upon complete conversion of all Series F Preferred Stock then held.
We are prohibited
from effecting a conversion of the Series F Preferred Stock to the extent that, as a
result of such conversion, the holder would beneficially own more
than 4.99% of the number of shares of common stock outstanding
immediately after giving effect to the issuance of shares of common
stock upon conversion of the Series F Preferred Stock, which beneficial ownership
limitation may be increased by the holder up to, but not exceeding,
9.99%. Each holder is entitled to vote on all matters submitted to
stockholders of the Company, and shall have the number of votes
equal to the number of shares of common stock issuable upon
conversion of such holder’s Series F Preferred Stock, but not in excess of the
beneficial ownership limitations.
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 December 31, 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 December 31,
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
convertible into 665,281 shares of common stock, and warrants to
purchase 1,962,319 shares of common stock at $5.55 per share and
warrants to purchase 1,962,319 shares of common stock at $6.29 per
share, at an offering price of $4.81 per share. For every one
share of common stock or Series F Preferred Stock sold, we issued
one warrant to purchase one share of common stock at $5.55 per
share and one warrant to purchase one share of common stock at
$6.29 per share. We received $9,438,753 in gross proceeds,
before underwriting discounts and commissions and offering expenses
totaling $871,305. The gross proceeds include the
underwriter’s over-allotment option, which they exercised on
the closing date.
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.
Consultant Grants
On
April 5, 2015, the Company entered into 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 second quarter of 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
December 31, 2016, the Company expensed $32,569 related to these
grants. As of December 31, 2016, the expected future compensation
expense related to these grants is $24,571 based upon the
Company’s stock price on December 31, 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 that was fully recognized upon
issuance.
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 an investor relations consulting firm. In exchange for
the shares granted and a monthly retainer, the consulting firm will
perform investor relations 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.
8. Related Party Transactions
On
November 3, 2016, the Company granted 17,500 stock options to
Jeffrey Ravetch, M.D., Ph.D., a Board member, for his ongoing
consulting services to the Company. The option award vests over a
three-year period.
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 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, M.D., Ph.D., a Board member, for
consulting services.
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 April Private
Placement, 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.
●
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
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” was comprised of the
following:
|
|
Years Ended December 31,
|
|
|
|
2016
|
2015
|
|
Research
and development
|
$1,192,126
|
$929,633
|
|
General
and administrative
|
3,211,152
|
3,534,062
|
|
Total
stock-based compensation expense
|
$4,403,278
|
$4,463,695
|
Stock-based Award Activity
The
following table summarizes the Company’s stock option
activity for the years ended December 31, 2016 and
2015:
|
|
Options
Outstanding
|
Weighted
Average
Exercise Price
|
|
Outstanding
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
|
|
Granted
|
449,542
|
5.13
|
|
Exercised
|
—
|
—
|
|
Forfeited/cancelled/expired
|
(36,415)
|
15.28
|
|
Outstanding
and expected to vest at December 31, 2016
|
851,375
|
$10.94
|
|
Vested
and exercisable at December 31, 2016
|
167,291
|
$17.29
|
The
total unrecognized compensation cost related to unvested stock
option grants as of December 31, 2016 was $3,007,785 and the
weighted average period over which these grants are expected to
vest is 1.96 years. Due to limited activity in 2016, the Company
has assumed a forfeiture rate of zero. The weighted average
remaining contractual life of stock options outstanding at
December 31, 2016 and 2015 is 8.82 years and 9.13 years,
respectively.
Stock
options granted to employees generally vest over a three-year
period with one third of the grants vesting at each one-year
anniversary of the grant date.
During
2016, the Company granted 449,542 options to its directors,
officers, employees with a weighted average exercise price of $5.13
and vesting over a three-year period with vesting starting at the
one-year anniversary of the grant date. During 2015,
there were 407,547 options and 310,926 shares of restricted stock
granted to directors, officers, employees and consultants from the
2014 Plan. During the year ended December 31, 2016,
105,448 shares of restricted stock units have vested and the
balance will vest in two equal installments on the anniversary of
the grant date over the next two years. During the year ended
December 31, 2016, the Company has recognized $1,628,405 in stock
based compensation expense related to restricted stock units. 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 years December 31, 2016 and 2015 is presented
below:
|
|
Shares
|
Weighted Average Grant-Date Fair Value
|
|
Non-vested
at December 31, 2014
|
—
|
$—
|
|
Granted
|
310,926
|
16.84
|
|
Vested
|
—
|
—
|
|
Forfeited
|
—
|
—
|
|
Non-vested
at December 31, 2015
|
310,926
|
16.84
|
|
Granted
|
—
|
—
|
|
Vested
|
(105,448)
|
16.84
|
|
Forfeited
|
—
|
—
|
|
Non-vested
at December 31, 2016
|
205,478
|
$16.84
|
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
33,848 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 December 31, 2016, there were
205,478 nonvested restricted stock units remaining
outstanding.
As
of December 31, 2016 and 2015, unamortized compensation expense
related to restricted stock grants amounted to $2,214,859 and
$3,843,264, which is expected to be recognized over a weighted
average period of 1.27 and 2.27 years, respectively.
Valuation Assumptions
The
Company used the Black-Scholes-Merton option valuation model, or
the Black-Scholes model, to determine the stock-based compensation
expense for stock options recognized under ASC 718 and ASC 505. 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,
|
|
|
|
2016
|
2015
|
|
|
|
|
|
Risk-free
interest rate
|
0.9 to 1.4 %
|
0.9 to 1.8 %
|
|
Dividend
yield
|
0%
|
0%
|
|
Expected
volatility
|
71
to 86%
|
81
to 87%
|
|
Expected
life of options, in years
|
1.61 to 6.0
|
5.5 and 6.0
|
|
Weighted
average grant date fair value
|
$3.16
|
$1.56
|
Because
the Company had a net operating loss carryforward as of
December 31, 2015 and 2016, 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 2016.
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, 2016 and 2015, the
Company accrued and expensed $458,586 and $323,363, respectively
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.
On
February 16, 2016, our Compensation Committee approved a 2016
Management Bonus Plan (the “2016 Management Plan”)
outlining maximum target bonuses of the base salaries of certain of
our executive officers. Under the terms of the 2016 Management
Plan, the Company's Chief Executive Officer shall receive a maximum
target bonus of up to 50% of his annual base salary, and the Chief
Financial Officer and each of the Company's Vice Presidents shall
receive a maximum target bonus of up to 30% of their annual base
salary.
On
February 16, 2016, the Compensation Committee of the Board of
Directors of the Company approved the following
amendments to Company's policy for compensating non-employee
members of the Board:
●
The
initial equity grant upon first appointment (or election) of future
non-employee directors to the Board shall be a 10-year option to
purchase 6,757 shares of the Company's common stock, under the
Company's Second Amended and Restated 2014 Equity Incentive Plan
with 3-year annual vesting and a strike price equal the closing
price of the Company's common stock on the effective date of the
appointment (or election);
●
The
annual cash retainer for each non-employee director, paid
quarterly, is increased by $1,000 per calendar quarter to a total
of $7,000 per quarter, effective April 1, 2016; and
●
The
additional annual cash retainer for the chairperson of each of the
Audit, Compensation, and Nominating and Governance Committees, paid
quarterly, is increased by $1,000 per calendar year, such that each
chairperson retainer shall be as follows, effective April 1, 2016:
Audit Committee: $13,000; Compensation Committee: $9,000;
Nominating and Governance Committee: $6,000.
On August 25, 2016,
the Compensation Committee of the Board of Directors of the Company
approved the following amendments to Company's policy for
compensating non-employee members of the Board:
●
The initial equity
grant upon first appointment (or election) of future non-employee
directors to the Board shall be a 10-year option to purchase 25,000
shares of the Company's common stock, under the Company's Second
Amended and Restated 2014 Equity Incentive Plan with 3-year annual
vesting and a strike price equal to the closing price of the
Company's common stock on the effective date of the appointment (or
election); and
●
The additional
automatic annual option grant to each non-employee director on the
date of the Company's annual meeting shall be a 10-year option to
purchase 17,500 shares of the Company's common stock, under the
Company's Second Amended and Restated 2014 Equity Incentive Plan
with 1-year vesting and a strike price equal to the closing price
of the Company's common stock on the date of the annual
meeting.
Common Stock Reserved for Future Issuance
Common
stock reserved for future issuance consists of the following at
December 31, 2016:
|
Common
stock reserved for conversion of preferred stock and
warrants
|
8,099,568
|
|
Common
stock options outstanding
|
851,375
|
|
Authorized
for future grant or issuance under the Stock Plan
|
66,693
|
|
Unvested
restricted stock
|
205,478
|
|
Total
|
9,223,114
|
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,
|
|
|
|
2016
|
2015
|
|
Stock
options
|
851,375
|
438,248
|
|
Preferred
stock
|
2,975,424
|
3,038,163
|
|
Unvested
restricted stock
|
205,478
|
310,926
|
|
Warrants
to purchase common stock
|
5,124,144
|
974,280
|
|
Total
|
9,156,421
|
4,761,617
|
11. 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 100% complete as
of the year ended December 31, 2016. Such sponsored research
agreements provide support for preclinical work on the
Company’s product development programs. The work includes
preparing radioimmunoconjugates of the Company’s antibodies
and performing in vitro and in vivo pharmacology studies for our therapeutic antibody
product, imaging agent product and radioimmunotherapy product
programs.
Life Technologies Licensing Agreement
On
September 24, 2015, the Company entered into a licensing agreement
with Life Technologies Corporation (“Life
Technologies”), a subsidiary of ThermoFisher
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. In each
of the years ended December 31, 2015 and 2016, the Company paid
$225,000 and $225,000, respectively, 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.
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 years ended December
31, 2016 and 2015, the Company recorded $0 and $2,556,278 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 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 was approximately $1,749,000. The Company
recorded revenue associated with the NCI PET Imaging Agent Grant as
the related costs and expenses were incurred. For the years ended
December 31, 2016 and 2015, the Company recorded $148,054 and
$1,141,451 of revenue associated with the NCI PET Imaging Agent
Grant, respectively. No additional activities are required or
planned under the contract and all monies available under the
contract have been requested and received.
Juno Therapeutics 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 years ended December 31, 2016 and 2015, no revenues had been
earned under the Option Agreement.
12. 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.
Capital Leases
On March 21, 2016,
the Company entered into a lease agreement with ThermoFisher
Scientific (“Lessor”). Under the terms of the
agreement, the Company agreed to lease two pieces of equipment from
the Lessor, a liquid chromatography system and an incubator,
totaling in cost of $95,656. The term of the lease is five years
(60 months), and the monthly lease payment is $1,942. In addition,
there is a $1.00 buyout option at the end of the lease
term.
Minimum
future annual capital lease obligations are as follows as of
December 31, 2016:
|
2017
|
$23,306
|
|
2018
|
23,306
|
|
2019
|
23,306
|
|
2020
|
23,306
|
|
2021
|
7,769
|
|
Less
interest
|
(15,876)
|
|
Principal
|
85,117
|
|
Less
current portion
|
(17,004)
|
|
Noncurrent
portion
|
$68,113
|
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. The additional financing was achieved in 2015 and the
termination fee is reflected on the balance sheet as an accrued
lease contingency fee.
On September 2, 2015, the Company
entered into a lease (the
“Lease”) with AGP Sorrento Business Complex, L.P., for
certain premises of office and laboratory space in buildings
located at 11535 Sorrento Valley Rd., San Diego, California, to
serve as the Company’s corporate offices and laboratories
(the “New Premises”). 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.
We
recognize rent expense on a straight-line basis over the term the
lease. Rent expense of $433,397 and $122,236 was recognized in the
years ended December 31, 2016 and 2015,
respectively.
Minimum
future annual operating lease obligations are as follows as of
December 31, 2016:
|
2017
|
$439,330
|
|
2018
|
452,510
|
|
2019
|
466,085
|
|
2020
|
480,068
|
|
2021
|
494,469
|
|
Thereafter
|
41,306
|
|
Total
|
$2,373,768
|
|
|
|
13. Income Taxes
During
the years ended December 31, 2016 and 2015, 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, 2016 and
2015:
|
|
2016
|
2015
|
|
Deferred
tax assets:
|
|
|
|
Net
operating loss carryforwards
|
$20,169,000
|
$14,502,000
|
|
Tax
credits
|
5,065,000
|
4,803,000
|
|
Accrued
expenses and other
|
2,667,900
|
1,861,300
|
|
Total
deferred tax assets
|
27,901,900
|
21,166,300
|
|
Less
valuation allowance
|
(27,901,900)
|
(21,166,300)
|
|
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 $27,901,900 against its deferred tax assets
as of December 31, 2016. 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, 2016, the Company had net operating loss
carryforwards of approximately $50,576,000 and $50,994,000 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 $525,500 and $6,878,000 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, 2016
and 2015 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 2016 and 2015)
to income taxes as follows:
|
|
2016
|
2015
|
|
Tax
benefit computed at 34%
|
$(6,004,000)
|
$(6,155,300)
|
|
State
tax provision, net of federal tax benefit
|
(989,344)
|
(1,551,444)
|
|
Change
in valuation allowance
|
6,735,600
|
7,335,300
|
|
Other
|
257,744
|
371,444
|
|
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.
2,571,429 Shares of Common
Stock
571,428
Shares of Series G Convertible Preferred Stock
Convertible into
571,428 Shares of Common Stock
PROSPECTUS
|
Laidlaw &
Company (UK) Ltd.
|
, 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
|
$ 716
|
|
FINRA
filing fee
|
6,142
|
|
Legal
fees and expenses
|
230,000
|
|
Accounting
fees and expenses
|
50,000
|
|
Transfer
agent and registrar fees
|
10,000
|
|
Printing
and engraving expenses
|
30,000
|
|
Miscellaneous
fees and expenses
|
163,142
|
|
Total
|
$490,000
|
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
May 2017 Private Placement
On May 3, 2017, we
entered into separate subscription agreements with accredited
investors pursuant to which we agreed to sell an aggregate of
$850,000 of 0% Series H Convertible
Preferred Stock. The shares of
Series H Preferred Stock are convertible into shares of common
stock based on a conversion calculation equal to the stated value
of the Series H Preferred Stock, plus all accrued and unpaid
dividends (the “Base Amount”), if any, on such Series H
Preferred Stock, as of such date of determination, divided by the
conversion price. The stated value of each share of Series H
Preferred Stock is $1,000 and the initial conversion price is $1.75
per share, each subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, subdivisions or other
similar events.
On the closing date, we entered into
separate registration rights agreements (the “Registration
Rights Agreements”) with each of the investors, pursuant to
which we agreed to undertake to file a registration statement to
register the resale of the shares within thirty (30) days following
the closing date, to cause such registration statement to be
declared effective by the Securities and Exchange Commission within
sixty (60) days of the closing date and to maintain the
effectiveness of the registration statement until all of such
shares of Common Stock have been sold or are otherwise able to be
sold pursuant to Rule 144 under the Securities Act, without any
restrictions.
The securities referenced above were
issued in reliance on the exemption from registration afford by
Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities
Act as a transaction by an issuer not involving a public
offering.
Consulting Shares
On
January 13, 2016, we issued 13,514 shares of common stock as
payment for consulting services received.
On September 1, 2016, we issued 22,130
shares of common stock as partial payment for consulting services
performed in 2016.
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 797,312 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 Preferred Stock, Series B Preferred Stock,
and Series C Preferred Stock into common stock
For
the three months ended March 31, 2015, holders of Series A-1
Preferred Stock, Series B Preferred Stock, and Series C Convertible
Preferred Stock (“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 $4,995,750
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 Series E 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 Series E Preferred
Stock 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)
4,628 restricted shares of common stock 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.
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.
II-3
Table of Contents
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 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.
Item 16. Exhibits and Financial
Statement Schedules
(a)
Exhibits.
|
Exhibit
No.
|
|
Description
|
|
Form
|
|
Filing
Date/Period
End
|
|
Exhibit
Number
|
|
|
|
|
|
|
|
|
||
|
1.1
|
**
|
Underwriting Agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Designations, Preferences and Rights of Series G Convertible Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.7
|
|
Form of Certificate of Designations, Preferences and Rights of Series H Convertible Preferred Stock |
|
8-K
|
|
5/3/2017
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
3.8
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
10.46
|
|
Form of Subscription Agreement between the Company and the
subscribers set forth on the signature pages
thereto
|
|
8-K
|
|
5/3/2017
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
10.47
|
|
Form
of Registration Rights Agreement between the Company and the
subscribers set forth on the signature pages
thereto
|
|
8-K
|
|
5/3/2017
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
*
**
|
Filed herewith
Previously
filed
|
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 Amendment No. 4 to 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 8th day of May, 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
Pursuant to the
requirements of the Securities Act of 1933, this Amendment No. 4 to
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)
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/ Gregory P.
Hanson
Gregory
P. Hanson
|
|
Chief
Financial Officer
(Principal
financial and accounting officer)
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/
*
Kenneth
M. Cohen
|
|
Director
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/
*
Robert
E. Hoffman
|
|
Director
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/
*
Philip
O. Livingston, M.D.
|
|
Director
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/
*
Paul V.
Maier
|
|
Director
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/
*
Jeffrey
V. Ravetch, M.D., Ph.D.
|
|
Director
|
|
May 8,
2017
|
|
|
|
|
|
|
|
/s/
*
Thomas
Varvaro
|
|
Director
|
|
May 8,
2017
|
|
/s/
*
Jeffrey
Eisenberg
|
|
Director
|
|
May 8,
2017
|
* By:
/s/ Gregory P.
Hanson
Gregory P. Hanson
II-10