Filed Pursuant to Rule
424(b)(3)
Registration No. 333-162375
PROSPECTUS
Soligenix,
Inc.
36,755,075 Shares of Common
Stock
This
prospectus relates to the sale from time to time of up to 36,755,075 shares of
our common stock by the selling stockholders named in this prospectus in the
section “Selling Stockholders,” including their pledgees, assignees and
successors-in-interest, whom we collectively refer to in this document as the
“Selling Stockholders.” On September, 28, 2009, we completed a
private placement in which we issued to certain of the Selling Stockholders an
aggregate of 17,352,569 shares of our common stock, together with warrants to
purchase up to 8,557,788 shares of our common stock. As part of the
compensation received for its assistance in the private placement, the placement
agent received warrants to purchase 543,478 shares of our common stock. The
common stock offered by this prospectus shall be adjusted to cover any
additional securities as may become issuable to prevent dilution resulting from
stock splits, stock dividends or similar transactions. The prices at which the
Selling Stockholders may sell the shares will be determined by the prevailing
market price for the shares or in negotiated transactions. We will
not receive any of the proceeds from the sale of any of the shares covered by
this prospectus unless warrants are exercised. References in this prospectus to
the “Company,” “we,” “our,” and “us” refer to Soligenix, Inc.
Our
common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under
the symbol "SNGX." On April 21, 2010, the last quoted sale price for our common
stock as reported on the OTCBB was $0.29 per share.
Investing
in our common stock involves certain risks. See "Risk Factors" beginning on page
4 for a discussion of these risks.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
Soligenix,
Inc.
29
Emmons Drive, Suite C-10
Princeton,
New Jersey 08540
(609)
538-8200
The date of this prospectus is April
30, 2010
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Description
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F-1
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You
should rely only on the information contained or incorporated by reference in
this prospectus and in any accompanying prospectus supplement. We have not
authorized anyone to provide you with different information.
We have
not authorized the Selling Stockholders to make an offer of these shares of
common stock in any jurisdiction where the offer is not permitted.
You
should not assume that the information in this prospectus or prospectus
supplement is accurate as of any date other than the date on the front of this
prospectus.
FORWARD-LOOKING STATEMENTS
The
information contained in this prospectus, including the information incorporated
by reference into this prospectus, includes forward-looking statements. These
forward-looking statements are often identified by words such as “may,” “will,”
“expect,” “intend,” “anticipate,” “believe,” “estimate,” “continue,” “plan” and
similar expressions. These statements involve estimates, assumptions and
uncertainties that could cause actual results to differ materially from those
expressed for the reasons described in this prospectus. You should not place
undue reliance on these forward-looking statements.
You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including:
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our
ability to successfully complete the confirmatory Phase 3 clinical trial
of orBec® for the treatment of gastrointestinal Graft-versus-Host
disease;
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the
possibility that orBec® may not show therapeutic effect or an acceptable
safety profile in future clinical trials, or could take a significantly
longer time to gain regulatory approval than we expect or may never gain
approval;
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our
dependence on the expertise, effort, priorities and contractual
obligations of third parties in the clinical trials, manufacturing,
marketing, sales and distribution of our
products;
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significant
uncertainty inherent in developing vaccines against bioterror threats, and
manufacturing and conducting preclinical and clinical trials of
vaccines;
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our
ability to obtain regulatory
approvals;
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uncertainty
as to whether our technologies will be safe and
effective;
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our
ability to make certain that our cash expenditures do not exceed projected
levels;
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our
ability to obtain future financing or funds when
needed;
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that
product development and commercialization efforts will be reduced or
discontinued due to difficulties or delays in clinical trials or a lack of
progress or positive results from research and development
efforts;
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our
ability to successfully obtain further grants and awards from the U.S.
Government and other countries, and maintenance of our existing
grants;
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our
ability to enter into any biodefense procurement contracts with the U.S.
Government or other countries;
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our
ability to patent, register and protect our technology from challenge and
our products from competition;
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maintenance
or expansion of our license agreements with our current
licensors;
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changes
in healthcare regulation;
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changes
in the needs of biodefense procurement
agencies;
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maintenance
of a successful business strategy;
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the
possibility that orBec® may not gain market acceptance;
and
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that
others may develop technologies or products superior to our
products.
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You
should also consider carefully the statements under “Risk Factors” and other
sections of this prospectus, which address additional factors that could cause
our actual results to differ from those set forth in the forward-looking
statements and could materially and adversely affect our business, operating
results and financial condition. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the applicable cautionary
statements.
The
forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
About Our Company
Soligenix,
Inc., formerly known as DOR BioPharma, Inc., was incorporated in Delaware in
1987. We are a late-stage research and development biopharmaceutical company
focused on developing products to treat the life-threatening side effects of
cancer treatment and serious gastrointestinal diseases where there remains an
unmet medical need, as well as developing biodefense vaccines and therapeutics.
We maintain two active business segments: BioTherapeutics and BioDefense. Our
BioTherapeutics business segment intends to develop orBec® (oral
beclomethasone dipropionate, or oral BDP) and other biotherapeutic products,
including LPMTM
Leuprolide. Our BioDefense business segment intends to convert its ricin toxin
vaccine and radiation injury program from early stage development to advanced
development and manufacturing.
Our
business activities can be outlined as follows:
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complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute gastrointestinal Graft-versus-Host
disease (“GI GVHD”);
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identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau Pharmaceuticals, Inc. (“Sigma-Tau”) to
commercialize orBec®
in the U.S., Canada and Mexico;
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conduct
and complete a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
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evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal tract such as radiation enteritis,
radiation injury and Crohn’s
disease;
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reinitiate
development of our other biotherapeutics products, including LPMTM
Leuprolide;
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continue
to secure additional government funding for each of our BioDefense
programs through grants, contracts and
procurements;
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convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense
area;
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acquire
or in-license new clinical-stage compounds for development;
and
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explore
other business development and acquisition
strategies.
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Our
principal executive offices are located at 29 Emmons Drive, Suite C-10,
Princeton, New Jersey 08540 and our telephone number is (609)
538-8200.
The
following tables summarize the products that we are currently
developing:
BioTherapeutic
Products
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Soligenix Product
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Therapeutic Indication
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Stage of Development
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orBec®
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Treatment
of Acute GI GVHD
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Pivotal
Phase 3 confirmatory trial enrolling
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orBec®
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Prevention
of Acute GI GVHD
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Phase
2 trial enrolling
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orBec®
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Treatment
of Chronic GI GVHD
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Phase
2 trial potentially to be initiated in 2010
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SGX
201
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Acute
Radiation Enteritis
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Phase
1/2 trial initiated
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LPM™
Leuprolide
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Endometriosis
and Prostate Cancer
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Phase
1 trial potentially to be initiated in
2010
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BioDefense
Products
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Target
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Available Countermeasure
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Soligenix Product
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Ricin
Toxin
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No
vaccine or antidote
currently
FDA approved
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Injectable
ricin vaccine
Phase
1 clinical trial successfully completed
Second
Phase 1 trial enrolling
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Radiation
Injury
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No
vaccine or antidote
currently
FDA approved
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SGX
202 (pre-clinical)
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The
Offering
This
prospectus relates to the offer and sale, from time to time, of up to 36,755,075
shares of our common stock by the Selling Stockholders. We are also registering
for sale any additional shares of common stock which may become issuable by
reason of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration, which results in an
increase in the number of outstanding shares of our common stock.
The
Selling Stockholders may sell these shares in the over-the-counter market or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices. We will not receive any proceeds from the sale of shares by the Selling
Stockholders. See “Plan of Distribution.”
As of
April 21, 2010, there were 186,972,036 shares outstanding, including 17,352,569
of the 36,755,075 shares of our common stock offered by the Selling Stockholders
pursuant to this prospectus. The number of shares offered by this prospectus
represents approximately 19.66% of the total common stock outstanding as of
April 21, 2010.
You should carefully consider the
risks, uncertainties and other factors described below before you decide whether
to buy shares of our common stock. Any of the factors could materially and
adversely affect our business, financial condition, operating results and
prospects and could negatively impact the market price of our common stock.
Below are the significant risks and uncertainties of which we are aware.
Additional risks and uncertainties that we do not yet know of, or that we
currently think are immaterial, may also impair our business operations. You
should also refer to the other information contained in and incorporated by
reference into this prospectus, including our financial statements and the
related notes.
Risks Related to our
Industry
We
have had significant losses and anticipate future losses; if additional funding
cannot be obtained, we may reduce or discontinue our product development and
commercialization efforts.
We have
experienced significant losses since inception and have a significant
accumulated deficit. We expect to incur additional operating losses in the
future and expect our cumulative losses to increase. As of December 31, 2009, we
had $7.7 million in cash available. Based on our projected budgetary needs and
funding from existing grants over the next 18 months, we expect to be able to
maintain the current level of our operations beyond the first quarter of 2011
and conduct the pivotal Phase 3 confirmatory clinical trial of orBec® for
the treatment of acute GI GVHD.
We have
sufficient funds through our existing biodefense grant facilities from the
National Institute of Allergy and Infectious Diseases (“NIAID”), a division of
the National Institutes of Health (“NIH”), to finance our biodefense projects.
On September 21, 2009, we announced that we had received an NIAID grant for
approximately $9.4 million for the development of our biodefense programs. Our
biodefense grants have an overhead component that allows us an agency-approved
percentage over our incurred costs. We estimate that the overhead component,
which is approximately 22% above our subcontracted
expenses, will finance some fixed costs for direct employees working on the
grants and other administrative costs. We expect that our existing NIH
biodefense grants will cover approximately $600,000 of such fixed overhead costs
over the next several years.
Our
products are positioned for or are currently in clinical trials, and we have not
yet generated any significant revenues from sales or licensing of
them. From inception through December 31, 2009, we had expended
approximately $30.2 million developing our current product candidates for
pre-clinical research and development and clinical trials, and we currently
expect to spend at least $10 million over the next two years
in connection with the development of our therapeutic and vaccine products,
licenses, employment agreements, and consulting agreements. Unless and until we
are able to generate sales or licensing revenue from orBec®, our lead product
candidate, or another one of our product candidates, we will require additional
funding to meet these commitments, sustain our research and development efforts,
provide for future clinical trials, and continue our operations. There can be no
assurance we can raise such funds. If additional funds are raised through the
issuance of equity securities, stockholders may experience dilution of their
ownership interests, and the newly issued securities may have rights superior to
those of the common stock. If additional funds are raised by the issuance of
debt, we may be subject to limitations on our operations. If we cannot raise
such additional funds, we may have to delay or stop some or all of our drug
development programs.
If we are unsuccessful in developing
our products, our ability to generate revenues will be significantly
impaired.
To be
profitable, our organization must, along with corporate partners and
collaborators, successfully research, develop and commercialize our technologies
or product candidates. Our current product candidates are in various stages of
clinical and pre-clinical development and will require significant further
funding, research, development, pre-clinical and/or clinical testing, regulatory
approval and commercialization, and are subject to the risks of failure inherent
in the development of products based on innovative or novel technologies.
Specifically, each of the following is possible with respect to any of our
product candidates:
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we
may not be able to maintain our current research and development
schedules;
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we
may be unsuccessful in our efforts to secure profitable procurement
contracts from the U.S. government or others for our biodefense
products;
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we
may encounter problems in clinical trials or Named Patient Access programs
(“NPAP”); or
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the
technology or product may be found to be ineffective or
unsafe.
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If any of
the risks set forth above occur, or if we are unable to obtain the necessary
regulatory approvals as discussed below, we may not be able to successfully
develop our technologies and product candidates and our business will be
seriously harmed. Furthermore, for reasons including those set forth below, we
may be unable to commercialize or receive royalties from the sale of any other
technology we develop, even if it is shown to be effective, if:
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it
is not economical or the market for the product does not develop or
diminishes;
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we
are not able to enter into arrangements or collaborations to manufacture
and/or market the product;
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the
product is not eligible for third-party reimbursement from government or
private insurers;
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others
hold proprietary rights that preclude us from commercializing the
product;
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we
are not able to manufacture the product
reliably;
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others
have brought to market similar or superior products;
or
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the
product has undesirable or unintended side effects that prevent or limit
its commercial use.
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We received a
“not approvable letter” from the FDA for our lead product candidate
orBec®.
Our
business is subject to very stringent U.S., federal, foreign, state and local
government laws and regulations, including the Federal Food, Drug and Cosmetic
Act, the Environmental Protection Act, the Occupational Safety and Health Act,
and state and local counterparts to these acts. These laws and regulations may
be amended, additional laws and regulations may be enacted, and the policies of
the FDA and other regulatory agencies may change.
On
October 18, 2007, we received a “not approvable letter” from the FDA for our
lead product candidate, orBec®, for
the treatment of acute GI GVHD. The letter stated that the FDA
requested data from additional clinical trials to demonstrate the safety and
efficacy of orBec®. The
FDA also requested nonclinical and chemistry, manufacturing and controls
information as part of the not approvable letter. On October 19, 2007, we
requested an “End of Review Conference” with the FDA to further understand the
letter and gain clarity regarding the next steps. On December 7, 2007, we
announced the following guidance from that meeting: (1) a single, confirmatory,
Phase 3 clinical trial could provide sufficient evidence of efficacy provided
that it is well designed, well executed and provides clinically and
statistically meaningful findings; (2) we anticipated working quickly with the
FDA to finalize the design of the confirmatory trial under the Agency’s “Special
Protocol Assessment” process; and (3) the FDA would be agreeable to reviewing a
plan for a Treatment Investigational New Drug (“Treatment IND”) as
long as it does not interfere with patient accrual in a confirmatory trial, such
as potentially enrolling patients that would not be eligible for the Phase 3
study.
On
January 5, 2009, we reached an agreement with the FDA on the design of a
confirmatory, pivotal Phase 3 clinical trial evaluating our lead product
orBec®
for the treatment of acute GI GVHD. The agreement was made under the
FDA’s Special Protocol Assessment procedure. The confirmatory Phase 3 clinical
trial for the treatment of acute GI GVHD has been initiated and is expected to
complete in the first half of 2011.
Although
we intend to obtain FDA approval for orBec®,
there can be no assurances that the FDA will ever approve orBec® for
market launch. Furthermore, the FDA may mandate additional testing or data,
which may take additional time and expense to provide.
Our business is subject to extensive
governmental regulation, which can be costly, time consuming and subjects us to
unanticipated delays.
The
regulatory process applicable to our products requires pre-clinical and clinical
testing of any product to establish its safety and efficacy. This testing can
take many years and require the expenditure of substantial capital and other
resources. We may not be able to obtain, or we may experience difficulties and
delays in obtaining, necessary domestic and foreign governmental clearances and
approvals to market a product. Also, even if regulatory approval of a product is
granted, that approval may entail limitations on the indicated uses for which
the product may be marketed.
Following
any regulatory approval, a marketed product and its manufacturer are subject to
continual regulatory review. Later discovery of problems with a product or
manufacturer may result in restrictions on such product or manufacturer. These
restrictions may include withdrawal of the marketing approval for the product.
Furthermore, the advertising, promotion and export, among other things, of a
product are subject to extensive regulation by governmental authorities in the
U.S. and other countries. If we fail to comply with applicable regulatory
requirements, we may be subject to fines, suspension or withdrawal of regulatory
approvals, product recalls, seizure of products, operating restrictions and/or
criminal prosecution.
There
may be unforeseen challenges in developing our biodefense products.
For
development of biodefense vaccines and therapeutics, the FDA has instituted
policies that are expected to result in accelerated approval. This includes
approval for commercial use using the results of animal efficacy trials, rather
than efficacy trials in humans. However, we will still have to
establish that the vaccines we are developing are safe in humans at doses that
are correlated with the beneficial effect in animals. Such clinical trials will
also have to be completed in distinct populations that are subject to the
countermeasures; for instance, the very young and the very old, and in pregnant
women, if the countermeasure is to be licensed for civilian
use. Other agencies will have an influence over the risk benefit
scenarios for deploying the countermeasures and in establishing the number of
doses utilized in the Strategic National Stockpile. We may not be able to
sufficiently demonstrate the animal correlation to the satisfaction of the FDA,
as these correlates are difficult to establish and are often
unclear. Invocation of the animal rule may raise issues of confidence
in the model systems even if the models have been validated. For many of the
biological threats, the animal models are not available and we may have to
develop the animal models, a time-consuming research effort. There are few
historical precedents, or recent precedents, for the development of new
countermeasure for bioterrorism agents. Despite the Animal Rule, the FDA may
require large clinical trials to establish safety and immunogenicity before
licensure and it may require safety and immunogenicity trials in additional
populations. Approval of biodefense products may be subject to
post-marketing studies, and could be restricted in use in only certain
populations.
We will be dependent on government
funding, which is inherently uncertain, for the success of our biodefense
operations.
We are
subject to risks specifically associated with operating in the biodefense
industry, which is a new and unproven business area. We do not anticipate that a
significant commercial market will develop for our biodefense products. Because
we anticipate that the principal potential purchasers of these products, as well
as potential sources of research and development funds, will be the U.S.
government and governmental agencies, the success of our biodefense division
will be dependent in large part upon government spending decisions. The funding
of government programs is dependent on budgetary limitations, congressional
appropriations and administrative allotment of funds, all of which are
inherently uncertain and may be affected by changes in U.S. government policies
resulting from various political and military developments. Our successful
receipt of government funding is also dependant on our ability to adhere to the
terms and provisions of the original grant documents and other
regulations.
If
the parties we depend on for supplying our drug substance raw materials and
certain manufacturing-related services do not timely supply these products and
services, it may delay or impair our ability to develop, manufacture and market
our products. We do not have or are anticipating having internal manufacturing
capabilities.
We rely
on suppliers for our drug substance raw materials and third parties for certain
manufacturing-related services to produce material that meets appropriate
content, quality and stability standards, which material will be used in
clinical trials of our products and, after approval, for commercial
distribution. To succeed, clinical trials require adequate supplies of drug
substance and drug product, which may be difficult or uneconomical to procure or
manufacture. We and our suppliers and vendors may not be able to (i) produce our
drug substance or drug product to appropriate standards for use in clinical
studies, (ii) perform under any definitive manufacturing, supply or service
agreements with us or (iii) remain in business for a sufficient time to
successfully produce and market our product candidates. If we do not maintain
important manufacturing and service relationships, we may fail to find a
replacement supplier or required vendor or develop our own manufacturing
capabilities which could delay or impair our ability to obtain regulatory
approval for our products and substantially increase our costs or deplete profit
margins, if any. If we do find replacement manufacturers and vendors, 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 a new facility could be
qualified and registered with the FDA and foreign regulatory
authorities.
The
manufacture of our products is a highly exacting process, and if we or one of
our materials suppliers encounter problems manufacturing our products, our
business could suffer.
The FDA
and foreign regulators require manufacturers to register manufacturing
facilities. The FDA and foreign regulators also inspect these facilities to
confirm compliance with current Good Manufacturing Practice (“cGMP”) or similar
requirements that the FDA or foreign regulators establish. We, or our materials
suppliers, may face manufacturing or quality control problems causing product
production and shipment delays or a situation where we or the supplier may not
be able to maintain compliance with the FDA’s cGMP requirements, or those of
foreign regulators, necessary to continue manufacturing our drug substance. Any
failure to comply with cGMP requirements or other FDA or foreign regulatory
requirements could adversely affect our clinical research activities and our
ability to market and develop our products.
We
do not have sales and marketing experience and our lack of experience may
restrict our success in commercializing some of our product
candidates.
We do not
have experience in marketing or selling pharmaceutical products whether in the
U.S. or internationally. Although we have a collaboration agreement with
Sigma-Tau for the sales and marketing of orBec® in
North America, we may be unable to establish additional satisfactory
arrangements for marketing, sales and distribution capabilities necessary to
commercialize and gain market acceptance for orBec® or
our other product candidates. In addition, Sigma-Tau may not be able to
effectively commercialize orBec® if it
is approved. To obtain the expertise necessary to successfully market and sell
orBec®, or
any other product, potentially will require the development of our own
commercial infrastructure and/or collaborative commercial arrangements and
partnerships. Our ability to make that investment and also execute our current
operating plan is dependent on numerous factors, including, the performance of
third party collaborators with whom we may contract.
Our
products, if approved, may not be commercially viable due to change in health
care practice and third party reimbursement limitations.
Recent
initiatives to reduce the federal deficit and to change health care delivery are
increasing cost-containment efforts. We anticipate that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, price controls on pharmaceuticals, and other fundamental changes to
the health care delivery system. Any changes of this type could negatively
impact the commercial viability of our products, if approved. Our ability to
successfully commercialize our product candidates, if they are approved, will
depend in part on the extent to which appropriate reimbursement codes and
authorized cost reimbursement levels of these products and related treatment are
obtained from governmental authorities, private health insurers and other
organizations, such as health maintenance organizations. In the absence of
national Medicare coverage determination, local contractors that administer the
Medicare program may make their own coverage decisions. Any of our product
candidates, if approved and when commercially available, may not be included
within the then current Medicare coverage determination or the coverage
determination of state Medicaid programs, private insurance companies or other
health care providers. In addition, third-party payers are increasingly
challenging the necessity and prices charged for medical products, treatments
and services.
We may not be able to retain rights
licensed to us by third parties to commercialize key products or to develop the
third party relationships we need to develop, manufacture and market our
products.
We
currently rely on license agreements from the University of Texas Southwestern
Medical Center, the University of Texas Medical Branch at Galveston, and George
B. McDonald, MD for the rights to commercialize key product candidates. We may
not be able to retain the rights granted under these agreements or negotiate
additional agreements on reasonable terms, or at all.
Furthermore,
we currently have very limited product development capabilities and no
manufacturing, marketing or sales capabilities. For us to research, develop and
test our product candidates, we need to contract or partner with outside
researchers, in most cases with or through those parties that did the original
research and from whom we have licensed the technologies. If products are
successfully developed and approved for commercialization, then we will need to
enter into additional collaboration and other agreements with third parties to
manufacture and market our products. We may not be able to induce the third
parties to enter into these agreements, and, even if we are able to do so, the
terms of these agreements may not be favorable to us. Our inability to enter
into these agreements could delay or preclude the development, manufacture
and/or marketing of some of our product candidates or could significantly
increase the costs of doing so. In the future, we may grant to our development
partners rights to license and commercialize pharmaceutical and related products
developed under the agreements with them, and these rights may limit our
flexibility in considering alternatives for the commercialization of these
products. Furthermore, third-party manufacturers or suppliers may not be able to
meet our needs with respect to timing, quantity and quality for the
products.
Additionally,
if we do not enter into relationships with additional third parties for the
marketing of our products, if and when they are approved and ready for
commercialization, we would have to build our own sales force. If our
collaboration agreement with Sigma-Tau were to be terminated, we would need to
establish and build our own sales force in North America or enter into an
agreement for the commercialization of orBec® with
another company. Development of an effective sales force in any part of the
world would require significant financial resources, time and expertise. We may
not be able to obtain the financing necessary to establish a sales force in a
timely or cost effective manner, if at all, and any sales force we are able to
establish may not be capable of generating demand for our product candidates, if
they are approved.
We may suffer product and other
liability claims; we maintain only limited product liability insurance, which
may not be sufficient.
The
clinical testing, manufacture and sale of our products involves an inherent risk
that human subjects in clinical testing or consumers of our products may suffer
serious bodily injury or death due to side effects, allergic reactions or other
unintended negative reactions to our products. As a result, product and other
liability claims may be brought against us. We currently have clinical trial and
product liability insurance with limits of liability of $5 million, which may
not be sufficient to cover our potential liabilities. Because liability
insurance is expensive and difficult to obtain, we may not be able to maintain
existing insurance or obtain additional liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Furthermore, if any
claims are brought against us, even if we are fully covered by insurance, we may
suffer harm such as adverse publicity.
We may not be able to compete
successfully with our competitors in the biotechnology
industry.
The
biotechnology industry is intensely competitive, subject to rapid change and
sensitive to new product introductions or enhancements. Most of our existing
competitors have greater financial resources, larger technical staffs, and
larger research budgets than we have, as well as greater experience in
developing products and conducting clinical trials. Our competition is
particularly intense in the gastroenterology and transplant areas and is also
intense in the therapeutic area of inflammatory bowel diseases. We face intense
competition in the biodefense area from various public and private companies and
universities as well as governmental agencies, such as the U.S. Army, which may
have their own proprietary technologies that may directly compete with our
technologies. In addition, there may be other companies that are currently
developing competitive technologies and products or that may in the future
develop technologies and products that are comparable or superior to our
technologies and products. We may not be able to compete successfully with our
existing and future competitors.
We may be unable to commercialize
our products if we are unable to protect our proprietary rights, and we may be
liable for significant costs and damages if we face a claim of intellectual
property infringement by a third party.
Our
success depends in part on our ability to obtain and maintain patents, protect
trade secrets and operate without infringing upon the proprietary rights of
others. In the absence of patent and trade secret protection, competitors may
adversely affect our business by independently developing and marketing
substantially equivalent or superior products and technology, possibly at lower
prices. We could also incur substantial costs in litigation and suffer diversion
of attention of technical and management personnel if we are required to defend
ourselves in intellectual property infringement suits brought by third parties,
with or without merit, or if we are required to initiate litigation against
others to protect or assert our intellectual property rights. Moreover, any such
litigation may not be resolved in our favor.
Although
we and our licensors have filed various patent applications covering the uses of
our product candidates, patents may not be issued from the patent applications
already filed or from applications that we might file in the future. Moreover,
the patent position of companies in the pharmaceutical industry generally
involves complex legal and factual questions, and recently has been the subject
of much litigation. Any patents we have obtained, or may obtain in the future,
may be challenged, invalidated or circumvented. To date, no consistent policy
has been developed in the U.S. Patent and Trademark Office regarding the breadth
of claims allowed in biotechnology patents.
In
addition, because patent applications in the U.S. are maintained in secrecy
until patents issue, and because publication of discoveries in the scientific or
patent literature often lags behind actual discoveries, we cannot be certain
that we and our licensors are the first creators of inventions covered by any
licensed patent applications or patents or that we or they are the first to
file. The Patent and Trademark Office may commence interference proceedings
involving patents or patent applications, in which the question of first
inventorship is contested. Accordingly, the patents owned or licensed to us may
not be valid or may not afford us protection against competitors with similar
technology, and the patent applications licensed to us may not result in the
issuance of patents.
It is
also possible that our patented technologies may infringe on patents or other
rights owned by others, licenses to which may not be available to us. We may not
be successful in our efforts to obtain a license under such patent on terms
favorable to us, if at all. We may have to alter our products or processes, pay
licensing fees or cease activities altogether because of patent rights of third
parties.
In
addition to the products for which we have patents or have filed patent
applications, we rely upon unpatented proprietary technology and may not be able
to meaningfully protect our rights with regard to that unpatented proprietary
technology. Furthermore, to the extent that consultants, key employees or other
third parties apply technological information developed by them or by others to
any of our proposed projects, disputes may arise as to the proprietary rights to
this information, which may not be resolved in our favor.
Our business could be harmed if we
fail to retain our current personnel or if they are unable to effectively run
our business.
We
currently have only 14 employees and we depend upon these employees to manage
the day-to-day activities of our business. Because we have such limited
personnel, the loss of any of them or our inability to attract and retain other
qualified employees in a timely manner would likely have a negative impact on
our operations. We will not be successful if our management team cannot
effectively manage and operate our business. Several members of our board of
directors are associated with other companies in the biopharmaceutical industry.
Stockholders should not expect an obligation on the part of these board members
to present product opportunities to us of which they become aware outside of
their capacity as members of our board of directors.
Instability
and volatility in the financial markets could have a negative impact on our
business, financial condition, results of operations, and cash
flows.
During
recent months, there has been substantial volatility and a decline in financial
markets due at least in part to the deteriorating global economic environment.
In addition, there has been substantial uncertainty in the capital markets and
access to additional financing is uncertain. Moreover, customer spending habits
may be adversely affected by the current economic crisis. These conditions could
have an adverse effect on our industry and business, including our financial
condition, results of operations, and cash flows.
To the
extent that we do not generate sufficient cash from operations, we may need to
issue stock or incur indebtedness to finance our plans for growth. Recent
turmoil in the credit markets and the potential impact on the liquidity of major
financial institutions may have an adverse effect on our ability to fund our
business strategy through borrowings, under either existing or newly created
instruments in the public or private markets on terms we believe to be
reasonable, if at all.
Risks
Related to our Common Stock
Our common stock price is highly
volatile.
The
market price of our common stock, like that of many other research and
development public pharmaceutical and biotechnology companies, has been highly
volatile and may continue to be so in the future due to a wide variety of
factors, including:
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announcements
by us or others of results of pre-clinical testing and clinical
trials;
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announcements
of technological innovations, more important bio-threats or new commercial
therapeutic products by us, our collaborative partners or our present or
potential competitors;
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our
quarterly operating results and
performance;
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developments
or disputes concerning patents or other proprietary
rights;
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litigation
and government proceedings;
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changes
in government regulations;
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our
available working capital;
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economic
and other external factors; and
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general
market conditions.
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Our stock
price has fluctuated over the last year between a high of $0.38 per share to a
low of $0.06 per share. As of April 21, 2010, our common stock traded at $0.29
per share. The fluctuation in the price of our common stock has sometimes been
unrelated or disproportionate to our operating performance. In addition,
potential dilutive effects of future sales of shares of common stock by the
Company, and subsequent sale of common stock by the holders of warrants and
options, could have an adverse effect on the market price of our
shares.
Our common stock trades on the
Over-the-Counter Bulletin Board.
Our
common stock trades on the Over-The-Counter Bulletin Board (“OTCBB”) securities
market under the symbol “SNGX.” The OTCBB is a decentralized market
regulated by the Financial Industry Regulatory Authority in which securities are
traded via an electronic quotation system that serves more than 3,000 companies.
On the OTCBB, securities are traded by a network of brokers or dealers who carry
inventories of securities to facilitate the buy and sell orders of investors,
rather than providing the order matchmaking service seen in specialist
exchanges. OTCBB securities include national, regional, and foreign equity
issues. Companies traded on the OTCBB must be current in their reports filed
with the Securities and Exchange Commission (“SEC”) and other regulatory
authorities.
If our
common stock is not listed on a national exchange or market, the trading market
for our common stock may become illiquid. Our common stock is subject to the
penny stock rules of the SEC, which generally are applicable to equity
securities with a price of less than $5.00 per share, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. The penny
stock rules require a broker-dealer, before a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with bid and ask quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer’s account. In addition, the penny stock rules require that, before
a transaction in a penny stock that is not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. As a result of these requirements, our common
stock could be priced at a lower price and our stockholders could find it more
difficult to sell their shares.
Shareholders may suffer substantial
dilution related to issued stock warrants and options.
We have a
number of agreements or obligations that may result in dilution to investors.
These include:
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warrants
to purchase a total of approximately 42,527,874 shares of our common stock
at a current weighted average exercise price of approximately $0.241;
and
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options
to purchase approximately 18,763,539 shares of our common stock at a
current weighted average exercise price of approximately
$0.242.
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To the
extent that warrants or options are exercised, our stockholders will experience
dilution and our stock price may decrease.
The
sale of our common stock to Fusion Capital may cause dilution and the sale of
the shares of common stock acquired by Fusion Capital could cause the price of
our common stock to decline.
On
February 14, 2008, we entered into an $8,500,000 common stock purchase agreement
with Fusion Capital. The Fusion Capital facility, as amended, allows
us to require Fusion Capital to purchase between $80,000 and $1.0 million,
depending on certain conditions, of our common stock up to an aggregate of $8.5
million over approximately a 43-month period, ending on October 31, 2011. As
part of that agreement, we issued Fusion Capital 1,275,000 shares of common
stock as a commitment fee. In connection with the execution of the common stock
purchase agreement, Fusion Capital purchased 2,777,778 common shares and a
four-year warrant to purchase 1,388,889 shares of common stock at $0.22 per
share, for an aggregate price of $500,000. Through April 2010, we
have issued an additional 2,015,290 shares of common stock and a
five-year warrant to purchase 100,000 shares of common stock at $0.303 per share
and received an additional $312,500 from the Fusion Capital
facility.
In
connection with entering into the agreement, we authorized the sale to Fusion
Capital of up to 25,327,778 shares of our common stock. The number of
shares ultimately offered for sale by Fusion Capital is dependent upon the
number of shares purchased by Fusion Capital under the agreement. The purchase
price for the common stock to be sold to Fusion Capital pursuant to the common
stock purchase agreement will fluctuate based on the price of our common stock.
All 25,327,778 shares registered for sale by Fusion Capital are freely
tradable. It is anticipated that those shares will be sold over a
period of up to 18 months from the date of this prospectus. Depending
upon market liquidity at the time, a sale of shares under the registration
statement at any given time could cause the trading price of our common stock to
decline. Fusion Capital may ultimately purchase all, some or none of the
approximately 18 million shares of common stock not yet issued. After
it has acquired such shares, it may sell all, some or none of such shares.
Therefore, sales to Fusion Capital by us under the agreement may result in
substantial dilution to the interests of other holders of our common stock. The
sale of a substantial number of shares of our common stock, or anticipation of
such sales, could make it more difficult for us to sell equity or equity-related
securities in the future at a time and at a price that we might otherwise wish
to effect sales. However, we have the right to control the timing and amount of
any sales of our shares to Fusion Capital and the agreement may be terminated by
us at any time at our discretion without any cost to us.
The common stock purchase agreement with Fusion Capital
also may be terminated in the event of a default under the
agreement. In addition, we cannot require Fusion Capital to purchase
any shares of our common stock if the purchase price is less than $0.10 per
share. Thus, we may be unable to sell shares of our common stock to
Fusion Capital when we need the funds, and that could severely harm our business
and financial condition and our ability to continue to develop and commercialize
our products. The closing price of our common stock on April 21, 2010
was $0.29 per share.
Our
shares of common stock are thinly traded, so stockholders may be unable to sell
at or near ask prices or at all if they need to sell shares to raise money or
otherwise desire to liquidate their shares.
Our
common stock has from time to time been “thinly-traded,” meaning that the number
of persons interested in purchasing our common stock at or near ask prices at
any given time may be relatively small or non-existent. This situation is
attributable to a number of factors, including the fact that we are a small
company that is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we become more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give stockholders any
assurance that a broader or more active public trading market for our common
shares will develop or be sustained, or that current trading levels will be
sustained.
Our Business
Overview
Soligenix,
Inc., formerly known as DOR BioPharma, Inc., was incorporated in Delaware in
1987. We are a late-stage research and development biopharmaceutical company
focused on developing products to treat the life-threatening side effects of
cancer treatment and serious gastrointestinal diseases where there remains an
unmet medical need, as well as developing biodefense vaccines and therapeutics.
We maintain two active business segments: BioTherapeutics and BioDefense. Our
BioTherapeutics business segment intends to develop orBec® (oral
beclomethasone dipropionate, or oral BDP) and other biotherapeutic products,
including LPMTM
Leuprolide. Our BioDefense business segment intends to convert its ricin toxin
vaccine and radiation injury program from early stage development to advanced
development and manufacturing.
Our
business activities can be outlined as follows:
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complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute gastrointestinal Graft-versus-Host
disease (“GI GVHD”);
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identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau Pharmaceuticals, Inc. to commercialize
orBec®
in the U.S., Canada and Mexico;
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conduct
and complete a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
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evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal tract such as radiation enteritis,
radiation injury and Crohn’s
disease;
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reinitiate
development of our other biotherapeutics products, including LPMTM
Leuprolide;
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continue
to secure additional government funding for each of our BioDefense
programs through grants, contracts and
procurements;
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convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense
area;
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acquire
or in-license new clinical-stage compounds for development;
and
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explore
other business development and acquisition
strategies.
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Our
principal executive offices are located at 29 Emmons Drive, Suite C-10,
Princeton, New Jersey 08540 and our telephone number is (609)
538-8200.
Our
Products in Development
The
following tables summarize the products that we are currently
developing:
BioTherapeutic
Products
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Soligenix Product
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Therapeutic Indication
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Stage of Development
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orBec®
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Treatment
of Acute GI GVHD
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Pivotal
Phase 3 confirmatory trial enrolling
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orBec®
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Prevention
of Acute GI GVHD
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Phase
2 trial enrolling
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orBec®
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Treatment
of Chronic GI GVHD
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Phase
2 trial potentially to be initiated in 2010
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SGX
201
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Acute
Radiation Enteritis
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Phase
1/2 trial initiated
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LPM™
Leuprolide
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Endometriosis
and Prostate Cancer
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Phase
1 trial potentially to be initiated in
2010
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BioDefense
Products
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Target
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Available Countermeasure
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Soligenix Product
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Ricin
Toxin
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No
vaccine or antidote
currently
FDA approved
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Injectable
ricin vaccine
Phase
1 clinical trial successfully completed
Second
Phase 1 trial enrolling
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Radiation
Injury
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No
vaccine or antidote
currently
FDA approved
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SGX
202 (pre-clinical)
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BioTherapeutics
Overview
orBec® and oral BDP
orBec®
represents a first-of-its-kind oral, locally acting
therapy tailored to treat the gastrointestinal manifestation of GI GVHD, the
organ system where GVHD is most frequently encountered and highly problematic.
orBec® is
intended to reduce the need for systemic immunosuppressive drugs to treat acute
GI GVHD. The active ingredient in orBec® is
beclomethasone dipropionate (“BDP”), a highly potent, topically active
corticosteroid that has a local effect on inflamed tissue. BDP has been marketed
in the U.S. and worldwide since the early 1970’s as the active pharmaceutical
ingredient in a nasal spray and in a metered-dose inhaler for the treatment of
patients with allergic rhinitis and asthma. orBec® is
specifically formulated for oral administration as a single product consisting
of two tablets. One tablet is intended to release BDP in the upper sections of
the GI tract and the other tablet is intended to release BDP in the lower
sections of the GI tract.
Based on
data from the prior Phase 3 study of orBec®, the
current confirmatory Phase 3 study is a highly powered, double-blind,
randomized, placebo-controlled, multi-center trial and will seek to enroll an
estimated 166 patients. The primary endpoint is the treatment failure
rate at Study Day 80. This endpoint was successfully measured as a secondary
endpoint (p-value 0.005) in the previous Phase 3 study as a key
measure of durability following a 50-day course of treatment with orBec®
(i.e., 30 days following cessation of treatment).
In
addition to issued patents and pending worldwide patent applications held by or
exclusively licensed to us, orBec® would
potentially benefit from orphan drug designations in the U.S. and in Europe for
the treatment of GI GVHD, as well as an orphan drug designation in the U.S for
the treatment of chronic GI GVHD. Orphan drug designations provide
for 7 and 10 years of market exclusivity upon approval in the U.S and Europe,
respectively.
Historical
Background
Two prior
randomized, double-blind, placebo-controlled Phase 2 and 3 clinical trials
support orBec®’s
ability to provide clinically meaningful outcomes when compared with the current
standard of care, including a lowered exposure to systemic corticosteroids
following allogeneic transplantation. Currently, there are no approved products
to treat GI GVHD. The first trial was a 60-patient Phase 2 single-center
clinical trial conducted at the Fred Hutchinson Cancer Research Center (“FHCRC”)
in Seattle, Washington. The second trial was a 129-patient pivotal Phase 3
multi-center clinical trial of orBec®
conducted at 16 leading bone marrow/stem cell transplantation centers in the
U.S. and France. Although orBec® did
not achieve statistical significance in the primary endpoint of its pivotal
trial, namely median time-to-treatment failure through Day 50 (p-value 0.1177),
orBec® did
achieve statistical significance in other key secondary endpoints such as the
proportion of patients free of GVHD at Day 50 (p-value 0.05) and Day 80 (p-value
0.005) and the median time-to-treatment failure through Day 80 (p-value 0.0226),
as well as a 66% reduction in mortality among patients randomized to orBec® at
200 days post-transplant with only 5 patient (8%) deaths in the orBec® group
compared to 16 patient (24%) deaths in the placebo group (p-value 0.0139).
Within one year after randomization in the pivotal Phase 3 trial, 18 patients
(29%) in the orBec® group
and 28 patients (42%) in the placebo group died (46% reduction in mortality,
p-value 0.04).
In the
Phase 2 study, the primary endpoint was the clinically relevant determination of
whether GI GVHD patients at Day 30 (the end of treatment) had a durable GVHD
treatment response as measured by whether or not they were able to consume at
least 70% of their estimated caloric requirement. The GVHD treatment response at
Day 30 was 22 of 31 (71%) vs. 12 of 29 (41%) in the orBec® and
placebo groups, respectively (p-value 0.02). Additionally, the GVHD treatment
response at Day 40 (10 days post cessation of therapy) was 16 of 31 (52%) vs. 5
of 29 (17%) in the orBec® and
placebo groups, respectively (p-value 0.007).
Based on
the data from the above referenced Phase 2 and Phase 3 studies, on September 21,
2006, we filed a new drug application (“NDA”) for our lead product orBec® with
the U.S. Food and Drug Administration (“FDA”) for the treatment of acute GI
GVHD. On October 18, 2007, we received a not approvable letter from the FDA in
response to our NDA for orBec® for
the treatment of acute GI GVHD. In the letter, the FDA requested additional
clinical trial data to demonstrate the safety and efficacy of orBec®. The
FDA also requested nonclinical and chemistry, manufacturing and controls
information as part of this letter.
In
December 2008, we reached agreement with the FDA on the design of a
confirmatory, pivotal Phase 3 clinical trial evaluating orBec® for
the treatment of acute GI GVHD under the FDA’s Special Protocol Assessment
(“SPA”) procedure. An agreement via the SPA procedure is an agreement with the
FDA that a Phase 3 clinical trial design (e.g., endpoints, sample size, control
group and statistical analyses) is acceptable to support a regulatory submission
seeking new drug approval. After the study begins, the FDA can only change a SPA
for very limited reasons. Further, in June 2009, we received Protocol Assistance
feedback from the European Medicines Agency (“EMEA”) on the design of the Phase
3 clinical trial for orBec®. The
EMEA agreed that should the new confirmatory Phase 3 study produce positive
results, the data would be sufficient to support a marketing authorization in
all 27 European Union member states. The confirmatory Phase 3 trial has been
initiated and is expected to complete in the first half of 2011.
If the
confirmatory Phase 3 trial is successful, we will file a complete response to
the FDA action letter. This response is expected to be designated a
class II response with a corresponding FDA review time frame of 6
months.
We have
entered into a collaboration agreement with
Numoda Corporation (“Numoda”) for the execution of our confirmatory Phase 3
clinical trial of orBec®. Collaborating
with Numoda will allow us to take advantage of a scope of services including
using their industry benchmarking capabilities to develop an operational and
financial plan including the use of a
proprietary management and oversight capabilities process. As part of the
collaboration, Numoda has agreed to accept
our common stock as payment in exchange for a portion of its services in
connection with the conduct of the confirmatory Phase 3 clinical trial. To date, we have issued 3,250,447 shares of common stock
to Numoda in partial payment for its services. Working with Numoda, we also will be able
to take full advantage of early reporting of results to potential licensing
partners and others.
We are
currently enrolling patients in a randomized, double blind, placebo-controlled,
Phase 2 clinical trial of orBec® for
the prevention of acute GVHD after allogeneic hematopoietic cell transplantation
(“HCT”) with myeloablative conditioning regimens. The trial is being conducted
by Paul Martin, M.D., at the FHCRC and is being supported, in large part, by a
grant from the National Institutes of Health. We will not receive any direct
monetary benefit from this grant, but if successful, this funded trial could
serve to increase the value of our orBec®/oral
BDP program. The Phase 2 trial will seek to enroll up to 138 (92
orBec® and
46 placebo) patients. The primary endpoint of the trial is the proportion of
subjects who develop acute GVHD with severity sufficient to require systemic
immunosuppressive treatment on or before day 90 after
transplantation. Patients in this study will begin dosing at the
start of the conditioning regimen and continue through day 75 following HCT.
This trial is expected to complete enrollment in the first half of
2010.
Mortality
Results
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Phase 3 Trial
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Phase 2 Trial
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orBec®
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Placebo
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orBec®
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Placebo
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Number
of patients randomized
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62
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67
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31
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29
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Number
(%) who died
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5
(8%)
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16
(24%)
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3
(10%)
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6
(21%)
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Hazard
ratio (95% confidence interval)
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0.33
(0.12, 0.89)
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0.47
(0.12, 1.87)
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Death
with infection*
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3
(5%)
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9
(13%)
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2
(6%)
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5
(17%)
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Death
with relapse*
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3
(5%)
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9
(13%)
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1
(3%)
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4
(14%)
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*Some
patients died with both infection and relapse of their underlying
malignancy.
Among the
data from the Phase 3 clinical study of orBec®
reported in the January 2007 issue of Blood, the peer-reviewed
Journal of the American
Society of Hematology, survival at the pre-specified endpoint of 200 days
post-transplantation showed a clinically meaningful and statistically
significant result. According to the manuscript, “the risk of mortality during
the 200-day post-transplantation period was 67% lower with orBec®
treatment compared to placebo treatment (hazard ratio 0.33; 95% CI: 0.12, 0.89;
p-value 0.03, Wald chi-square test).” The most common proximate causes of death
by transplantation day-200 were relapse of the underlying malignancy and
infection. Relapse of the underlying hematologic malignancy had contributed to
the deaths of 9/67 patients (13.4%) in the placebo arm and 3/62 patients (4.8%)
in the BDP arm. Infection contributed to the deaths of 9/67 patients (13.4%) in
the placebo arm and 3/62 (4.8%) in the BDP arm. Acute or chronic GVHD was the
proximate cause of death in 3/67 patients (4.5%) in the placebo arm and in 1/62
(1.6%) in the BDP arm.
In
addition, a subgroup analysis also revealed that patients dosed with orBec® who
had received stem cells from unrelated donors had a 94% reduction in the risk of
mortality 200 days post-transplantation.
In this
Phase 3 study, orBec®
showed continued survival benefit when compared to placebo one year after
randomization. Overall, 18 patients (29%) in the orBec® group
and 28 patients (42%) in the placebo group died within one year of randomization
(46% reduction in mortality, p-value 0.04). Results from the Phase 2
trial also demonstrated enhanced long-term survival benefit with orBec®
versus placebo. In that study, at one year after randomization, 6 of 31 patients
(19%) in the orBec® group
had died while 9 of 29 patients (31%) in the placebo group had died (45%
reduction in mortality, p-value 0.26). Pooling the survival data from both
trials demonstrated that the survival benefit of orBec®
treatment was sustained long after orBec® was
discontinued and extended well beyond 3 years after the transplantation. As of
September 25, 2005, median follow-up of patients in the two trials was 3.5 years
(placebo patients) and 3.6 years (orBec®
patients), with a range of 10.6 months to 11.1 years. The risk of mortality was
37% lower for patients randomized to orBec®
compared with placebo (p-value 0.03).
A
retrospective analysis of survival at 200 days post-transplantation in the
supportive Phase 2 clinical trial showed consistent response rates with the
Phase 3 trial; three patients (10%) who had been randomized to orBec® had
died, compared with six deaths (21%) among patients who had been randomized to
placebo, leading to a reduced hazard of day-200 mortality, although not
statistically significantly different. Detailed analysis of the
likely proximate cause of death showed that mortality with infection or with
relapse of underlying malignancy were both reduced in the same proportion after
treatment with orBec®
compared to placebo. By transplantation day-200, relapse of
hematologic malignancy had contributed to the deaths of 1 of 31 patients (3%) in
the orBec® arm
and 4 of 29 patients (14%) in the placebo arm. Infection contributed
to the deaths of 2 of 31 patients (6%) in the orBec® arm
and 5 of 29 patients (17%) in the placebo arm.
Safety
and Adverse Events
The
frequencies of severe adverse events, adverse events related to study drug, and
adverse events resulting in study drug discontinuation were all comparable to
that of the placebo group in both trials. Patients who remained on orBec® until
Day 50 in the Phase 3 study had a higher likelihood of having biochemical
evidence of abnormal hypothalamic-pituitary-adrenal axis function compared to
patients on placebo. This effect was far less pronounced than those seen in
patients on high dose prednisone.
Commercialization
and Market
We
anticipate the market potential for orBec® for
the treatment of acute GI GVHD to be approximately 50% of the more than 10,000
allogeneic bone marrow and stem cell transplantations that occur each year in
the U.S.
On February 11, 2009, we entered into a collaboration
and supply agreement with Sigma-Tau Pharmaceuticals, Inc. for the
commercialization of orBec®. Sigma-Tau is a pharmaceutical company that
develops novel therapies for the unmet needs of patients with rare diseases.
Pursuant to this agreement, Sigma-Tau has an
exclusive license to commercialize orBec® in the U.S., Canada and Mexico (the “Territory”).
Sigma-Tau is obligated to make payments upon the attainment of significant
milestones, as set forth in the agreement. The first milestone payment of
$1 million was made in connection with the enrollment of the first patient
in our confirmatory Phase 3 clinical trial of orBec® for
the treatment of acute GI GVHD in September 2009. Total additional milestone payments due from Sigma-Tau
for orBec® under the agreement could reach up to $9 million.
Sigma-Tau will pay us a 35% royalty (inclusive of drug supply) on net sales in
the Territory as well as pay for commercialization expenses, including launch
activities. In connection with the execution of the collaboration and
supply agreement, we entered into a common stock purchase agreement with
Sigma-Tau pursuant to which we sold 25 million shares of our common stock to
Sigma-Tau for $0.18 per share, for an aggregate price of
$4,500,000. The purchase price is equal to one hundred fifty percent
(150%) of the average trading price of our common stock over the five trading
days prior to February 11, 2009. On November 26, 2008, prior to
entering the collaboration agreement, we sold Sigma-Tau 16,666,667 common shares
at $0.09 per share (the market price at the time) for proceeds of $1,500,000 in
exchange for the exclusive right to negotiate a collaboration deal with us until
March 1, 2009.
Additionally, orBec® is currently available in Named Patient Access Programs
(“NPAPs”) in South Korea, Latin America, Canada, Singapore, Malaysia, Australia,
South Africa, New Zealand and the ASEAN countries. The NPAPs are
compassionate use drug supply programs under which medical practitioners can
legally supply investigational drugs to their eligible
patients. Under this program, drugs can be administered to patients
who are suffering from serious illnesses prior to the drug being approved by the
various regional regulatory authorities.
We believe the potential worldwide market for
orBec® to be approximately $400 million for all GVHD
applications, namely, treatment of acute and chronic GI GVHD and prevention of
acute GVHD.
About
GVHD
GVHD
occurs in patients following allogeneic stem cell transplantation in which
tissues of the host, most frequently the gut, liver, and skin, are attacked by
lymphocytes from the donor (graft) marrow. Patients with mild to moderate GI
GVHD present to the clinic with early satiety, anorexia, nausea, vomiting and
diarrhea. If left untreated, symptoms of GI GVHD persist and can progress to
necrosis and exfoliation of most of the epithelial cells of the intestinal
mucosa, frequently a fatal condition. Approximately 50% of the more than 10,000
annual allogeneic transplantation patients in the U.S. will develop some form of
acute GI GVHD.
GI GVHD
is one of the most common causes for the failure of stem cell transplantation.
These procedures are being increasingly utilized to treat leukemia and other
cancer patients with the prospect of eliminating residual disease and reducing
the likelihood of relapse. orBec®
represents a first-of-its-kind oral, locally acting therapy tailored to
treat the gastrointestinal manifestation of GVHD, the organ system where GVHD is
most frequently encountered and highly problematic. orBec® is
intended to reduce the need for systemic immunosuppressives to treat acute GI
GVHD. Currently used systemic immunosuppressives utilized to control GI GVHD
substantially inhibit the highly desirable Graft-versus-Leukemia (“GVL”) effect
of stem cell transplantations, leading to high rates of aggressive forms of
relapse, as well as substantial rates of mortality due to opportunistic
infection.
About
Allogeneic Hematopoietic Cell Transplantation
Allogeneic
hematopoietic cell transplantation (“HCT”) is considered a potentially curative
option for many leukemias as well as other forms of blood cancer. In
an allogeneic HCT procedure, hematopoietic stem cells are harvested from the
blood or bone marrow of a closely matched relative or unrelated person, and are
transplanted into the patient following either high-dose chemotherapy or intense
immunosuppressive conditioning therapy. The curative potential of
allogeneic HCT is now partly attributed to the GVL or Graft-versus-Tumor effects
of the newly transplanted donor cells to recognize and destroy malignant cells
in the recipient patient.
The use
of allogeneic HCT has grown substantially over the last decade due to advances
in human immunogenetics, the establishment of unrelated donor programs, the use
of cord blood as a source of hematopoietic stem cells and the advent of
non-myeloablative conditioning regimens, or mini-transplants, that avoid the
side effects of high-dose chemotherapy. Based on the latest
statistics available, it is estimated that there are more than 10,000 allogeneic
HCT procedures annually in the U.S. and a comparable number in
Europe. Estimates as to the current annual rate of increase in these
procedures are as high as 20%. High rates of morbidity and mortality occur in
this patient population. Clinical trials are also underway testing allogeneic
HCT for treatment of some metastatic solid tumors such as breast cancer, renal
cell carcinoma, melanoma and ovarian cancer. Allogeneic transplantation has also
been studied as a curative therapy for several genetic disorders, including
immunodeficiency syndromes, inborn errors of metabolism, and sickle cell
disease. The primary toxicity of allogeneic HCT, however, is GVHD in which the
newly transplanted donor cells damage cells in the recipient’s gastrointestinal
tract, liver and skin.
Future
Potential Indications of orBec® and
oral BDP
Based on
its pharmacological characteristics, orBec® may
have utility in treating other conditions of the gastrointestinal tract having
an inflammatory component. We have an issued U.S. patent 6,096,731 claiming the
use of oral BDP as a method for preventing and treating the tissue damage that
is associated with both GI GVHD following HCT, as well as GVHD which also occurs
following organ allograft transplantation. We initiated a Phase 2 trial of
orBec® in
the prevention of acute GVHD and are expecting to complete enrollment in the
first half of 2010. We expect to begin a Phase 2 clinical trial in chronic GI
GVHD in the second half of 2010. In addition, we are exploring the
possibility of testing oral BDP (the active ingredient in orBec®) for
local inflammation associated with Crohn’s Disease, Lymphocytic Colitis,
Irritable Bowel Syndrome, Ulcerative Colitis, among other
indications.
SGX201-
Time Release Formulation of oral BDP
We have
recently initiated a Phase 1/2 clinical trial in acute radiation enteritis for
which we have received “Fast Track” designation from the FDA. Fast Track is a
designation that the FDA reserves for a drug intended to treat a serious or
life-threatening condition and one that demonstrates the potential to address an
unmet medical need for the condition. Fast track designation is designed to
facilitate the development and expedite the review of new drugs. For instance,
should events warrant, we will be eligible to submit an NDA for SGX201 on a
rolling basis, permitting the FDA to review sections of the NDA prior to
receiving the complete submission. Additionally, NDAs for Fast Track development
programs ordinarily will be eligible for priority review, which implies an
abbreviated review time of six months.
SGX201
contains BDP, a highly potent, topically active corticosteroid that has a local
effect on inflamed tissue. BDP has been marketed in the U.S. and worldwide since
the early 1970s as the active pharmaceutical ingredient in inhalation products
for the treatment of patients with allergic rhinitis and asthma. BDP is
also the active ingredient in orBec®,
currently in Phase 3 and Phase 2 development by Soligenix for the treatment and
prevention of GI GVHD, respectively. SGX201 is a time-release
formulation of BDP specifically designed for oral use.
Patients
with rectal cancer who are scheduled to undergo concurrent radiation and
chemotherapy prior to surgery will be enrolled in four dose
groups. The objectives of the study are to evaluate the safety
and maximal tolerated dose of escalating doses of SGX201, as well as the
preliminary efficacy of SGX201 for prevention of signs and symptoms of acute
radiation enteritis. This program is supported in part by a $500,000 two-year
Small Business Innovation Research (“SBIR”) grant awarded by the
NIH.
The study
is expected to be completed in the first half of 2011.
About
Acute Radiation Enteritis
External
radiation therapy is used to treat most types of cancer, including cancer of the
bladder, uterine, cervix, rectum, prostate, and vagina. During
delivery of treatment, some level of radiation will also be delivered to healthy
tissue, including the bowel, leading to acute and chronic
toxicities. The large and small bowels are very sensitive to
radiation and the larger the dose of radiation the greater the damage to normal
bowel tissue. Radiation enteritis is a condition in which the lining of the
bowel becomes swollen and inflamed during or after radiation therapy to the
abdomen, pelvis, or rectum. Most tumors in the abdomen and pelvis
need large doses, and almost all patients receiving radiation to the abdomen,
pelvis, or rectum will show signs of acute enteritis.
Patients
with acute enteritis may have nausea, vomiting, abdominal pain and bleeding,
among other symptoms. Some patients may develop dehydration and
require hospitalization. With diarrhea, the gastrointestinal tract does not
function normally, and nutrients such as fat, lactose, bile salts, and vitamin
B12
are not well absorbed.
Symptoms
will usually resolve within 2-6 weeks after therapy has
ceased. Radiation enteritis is often not a self-limited illness, as
over 80% of patients who receive abdominal radiation therapy complain of a
persistent change in bowel habits. Moreover, acute radiation injury
increases the risk of development of chronic radiation enteropathy, and overall
5% to 15% of the patients who receive abdominal or pelvic irradiation will
develop chronic radiation enteritis.
There are
over 100,000 patients annually in the U.S. who receive abdominal or pelvic
external beam radiation treatment for cancer, and these patients are at risk of
developing acute and chronic radiation enteritis.
LPM™ –
Leuprolide
Our Lipid
Polymer Micelle (“LPM™”) oral drug delivery system is a proprietary platform
technology designed to allow for the oral administration of peptide drugs that
are water-soluble but poorly permeable through the gastrointestinal tract. We
have previously demonstrated in pre-clinical animal models that the LPM™
technology is adaptable to oral delivery of peptide drugs and that high systemic
levels after intestinal absorption can be achieved with the peptide hormone drug
leuprolide. The LPM™ system utilizes a lipid based delivery system that can
incorporate the peptide of interest in a thermodynamically stable configuration
called a “reverse micelle” that, through oral administration, can promote
intestinal absorption. Reverse micelles are structures that form when certain
classes of lipids come in contact with small amounts of water. This
results in a drug delivery system in which a stable clear dispersion of the
water soluble drug can be evenly dispersed within the lipid phase. LPM™ is
thought to promote intestinal absorption due to the ability of the micelles to
open up small channels through the epithelial layer of the intestines that allow
only molecules of a certain dimension to pass through while excluding extremely
large molecules such as bacteria and viruses. The reverse micelles
also structurally prevent the rapid inactivation of peptides by enzymes in the
upper gastrointestinal tract via a non-specific enzyme inhibition by
surfactant(s) in the formulation.
In
pre-clinical studies, the LPM™ delivery technology significantly enhanced the
ability of leuprolide to pass through the intestinal epithelium in comparison to
leuprolide alone. Leuprolide is a synthetic peptide agonist of gonadotropin
releasing hormone, which is used in the treatment of prostate cancer in men and
endometriosis in women. Leuprolide exhibits poor intestinal absorption from an
aqueous solution with the oral bioavailability being less than 5%. Utilizing
LPM™ in rats and dogs, the bioavailability of leuprolide averaged 30% compared
to 2.2% for the control oral solution. Based on these promising pre-clinical
data, we anticipate preparing for a Phase 1 study in humans to confirm these
findings.
An oral
version of leuprolide may provide a significant advantage over the currently
marketed “depot” formulations. Leuprolide is one of the most widely used
anti-cancer agents for advanced prostate cancer in men. Injectable
forms of leuprolide marketed under trade names such as Lupron® and
Eligard® had
worldwide annual sales of more than $1 billion in recent years. Injectable
leuprolide is also widely used in non-cancer indications, such as endometriosis
in women (a common condition in which cells normally found in the uterus become
implanted in other areas of the body), uterine fibroids in women (noncancerous
growths in the uterus) and central precocious puberty in children (a condition
causing children to enter puberty too soon). Leuprolide is currently available
only in injectable, injectable depot and subcutaneous implant routes of delivery
which limits its use and utility.
BioDefense
Overview
RiVax™
RiVax™ is
our proprietary vaccine developed to protect against exposure to ricin toxin,
and is the first and only ricin toxin vaccine to be clinically tested in humans.
Ricin is a recombinant derivative of the ricin A chain and a potent glycoprotein
toxin, derived from the beans of castor plants. It can be cheaply and easily
produced, is stable over long periods of time, is toxic by several routes of
exposure and thus has the potential to be used as a biological weapon against
military and/or civilian targets. As a bioterrorism agent, ricin could be
disseminated as an aerosol, by injection, or as a food supply contaminant. The
potential use of ricin toxin as a biological weapon of mass destruction has been
highlighted in a Federal Bureau of Investigations Bioterror report released in
November 2007 entitled Terrorism 2002-2005, which
states that "Ricin and the bacterial agent anthrax are emerging as the most
prevalent agents involved in WMD investigations" (http://www.fbi.gov/publications/terror/terrorism2002_2005.pdf).
The Centers for Disease Control (“CDC”) has classified ricin as a Category B
biological agent. Ricin works by first binding to glycoproteins found on the
exterior of a cell, and then entering the cell and inhibiting protein synthesis
leading to cell death. Once exposed to ricin toxin, there is no effective
therapy available to reverse the course of the toxin. Currently, there is no FDA
approved vaccine to protect against the possibility of ricin toxin being used in
a terrorist attack, or its use as a weapon on the battlefield, nor is there a
known antidote for ricin toxin exposure.
The
initial Phase 1 clinical trial of RiVax ™ was conducted by Dr. Ellen Vitetta at
the University of Texas Southwestern Medical Center (“UTSW”) at Dallas,
Soligenix's academic partner. The trial demonstrated that RiVax™ is well
tolerated and induces antibodies in humans that neutralize the ricin toxin. The
functional activity of the antibodies was confirmed by animal challenge studies
in mice which survived exposure to ricin toxin after being injected with serum
samples from the volunteers. The outcome of the study was published in the
Proceedings of the National Academy of Sciences. A second Phase 1 trial
supported by a grant to UTSW is currently underway utilizing an adjuvanted
formulation of RiVax™ and is expected to complete in the second half of
2010.
The
National Institutes of Health (“NIH”) has previously awarded us two grants: one
for $6.4 million and one for $5.2 million for a total of $11.6 million for the
development of RiVax™ covering process development, scale-up and current Good
Manufacturing Practice (“cGMP”) manufacturing, and pre-clinical toxicology
testing pursuant to the FDA’s “animal rule,” which has supported our research
from 2004 to present.
On
September 21, 2009, we announced that we were awarded a $9.4 Million grant from
the National Institute of Allergy and Infectious Diseases (“NIAID”), a division
of the NIH. The grant will fund, over a five-year period, the
development of formulation and manufacturing processes for
vaccines, including RiVaxTM,
that are stable at elevated temperatures. The grant will also fund
the development of improved thermostable adjuvants expected to result in rapidly
acting vaccines that can be given with fewer injections over shorter intervals.
The development of heat-stable vaccines will take advantage of combining several
novel formulation processes with well characterized adjuvants that have been
evaluated in numerous vaccine field trials. The formulation and
process technology funded by the grant will be applied to the further
development of RiVaxTM, a
subunit vaccine for prevention of ricin toxin lethality and
morbidity. The grant will also address the development of
manufacturing processes and animal model systems necessary for the pre-clinical
characterization of vaccine formulations. Further, the grant will
fund the concurrent development of at least one other protein subunit vaccine,
which is currently expected to be an anthrax vaccine. This could lead
to new subunit vaccines that would bypass current cold chain requirements for
storage and distribution. Vaccines to be stored in the Strategic
National Stockpile (“SNS”) and used under emergency situations for biodefense
are expected to have long-term shelf life.
On April
29, 2008, we announced the initiation of a comprehensive program to evaluate the
efficacy of RiVax™ in non-human primates. This study is taking place at the
Tulane University Health Sciences Center and will provide data that will further
aid in the interpretation of immunogenicity data obtained in the human
vaccination trials.
SGX202
– Oral BDP for GI Radiation Injury
On
September 12, 2007, we announced that our academic partner, the Fred Hutchinson
Cancer Research Center (“FHCRC”), received a $1 million grant from the NIH to
conduct pre-clinical studies of oral beclomethasone dipropionate (oral BDP, also
the active ingredient in orBec®) for
the treatment of GI radiation injury. While we will not receive any monetary
benefit from this grant, we will benefit if this work is successful and it will
enhance the value of our oral BDP programs. The purpose of the studies funded by
the grant, entitled “Improving Gastrointestinal Recovery after Radiation,” is to
evaluate the ability of three promising clinical-grade drugs, including oral
BDP, given alone or in combination, that are likely to significantly mitigate
the damage to the gastrointestinal epithelium caused by exposure to high doses
of radiation using a well-established dog model. The GI tract is highly
sensitive to ionizing radiation and the destruction of epithelial tissue is one
of the first effects of radiation exposure. The rapid loss of epithelial cells
leads to inflammation and infection that are often the primary cause of death in
acute radiation injury. This type of therapy, if successful, would benefit
cancer patients undergoing radiation, chemotherapy, or victims of
nuclear-terrorism. In most radiation scenarios, injury to the hematopoietic
(blood) system and gastrointestinal tract are the main determinants of survival.
The studies will compare overall survival and markers of intestinal cell
regeneration when the drug regimens are added to supportive care intended to
boost proliferation of blood cells. The principal investigator of the study is
George E. Georges, M.D., Associate Member of the FHCRC. Our rights to the use of
SGX202 are through our license with George McDonald.
The Drug Approval
Process
Before
marketing, each of our products must undergo an extensive regulatory approval
process conducted by the FDA and applicable agencies in other countries.
Testing, manufacturing, commercialization, advertising, promotion, export and
marketing, among other things, of the proposed products are subject to extensive
regulation by government authorities in the U.S. and other countries. All
products must go through a series of tests, including advanced human clinical
trials, which the FDA is allowed to suspend as it deems necessary to protect the
safety of subjects.
Our
products will require regulatory clearance by the FDA and by comparable agencies
in other countries, prior to commercialization. The nature and extent of
regulation differs with respect to different products. In order to test, produce
and market certain therapeutic products in the U.S., mandatory procedures and
safety standards, approval processes, manufacturing and marketing practices
established by the FDA must be satisfied.
An
Investigational New Drug (“IND”) application is required before human clinical
testing in the U.S. of a new drug compound or biological product can commence.
The IND application includes results of pre-clinical animal studies evaluating
the safety and efficacy of the drug and a detailed description of the clinical
investigations to be undertaken.
Clinical
trials are normally done in three phases, although the phases may overlap. Phase
1 trials are smaller trials concerned primarily with metabolism and
pharmacologic actions of the drug and with the safety of the product. Phase 2
trials are designed primarily to demonstrate effectiveness and safety in
treating the disease or condition for which the product is indicated. These
trials typically explore various doses and regimens. Phase 3 trials are expanded
clinical trials intended to gather additional information on safety and
effectiveness needed to clarify the product’s benefit-risk relationship and
generate information for proper labeling of the drug, among other things. The
FDA receives reports on the progress of each phase of clinical testing and may
require the modification, suspension or termination of clinical trials if an
unwarranted risk is presented to patients. When data is required from long-term
use of a drug following its approval and initial marketing, the FDA can require
Phase 4, or post-marketing, studies to be conducted.
With
certain exceptions, once successful clinical testing is completed, the sponsor
can submit an NDA for approval of a drug. The process of completing clinical
trials for a new drug is likely to take a number of years and require the
expenditure of substantial resources. Furthermore, the FDA or any foreign health
authority may not grant an approval on a timely basis, if at all. The FDA may
deny the approval of an NDA, in its sole discretion, if it determines that its
regulatory criteria have not been satisfied or may require additional testing or
information. Among the conditions for marketing approval is the requirement that
the prospective manufacturer’s quality control and manufacturing procedures
conform to good manufacturing practice regulations. In complying with standards
contained in these regulations, manufacturers must continue to expend time,
money and effort in the area of production, quality control and quality
assurance to ensure full technical compliance. Manufacturing facilities, both
foreign and domestic, also are subject to inspections by, or under the authority
of, the FDA and by other federal, state, local or foreign agencies.
Even
after initial FDA or foreign health authority approval has been obtained,
further studies, including Phase 4 post-marketing studies, may be required to
provide additional data on safety and will be required to gain approval for the
marketing of a product as a treatment for clinical indications other than those
for which the product was initially tested. Also, the FDA or foreign regulatory
authority will require post-marketing reporting to monitor the side effects of
the drug. Results of post-marketing programs may limit or expand the further
marketing of the products. Further, if there are any modifications to the drug,
including any change in indication, manufacturing process, labeling or
manufacturing facility, an application seeking approval of such changes will
likely be required to be submitted to the FDA or foreign regulatory
authority.
In the
U.S., the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act,
the Federal Trade Commission Act, and other federal and state statutes and
regulations govern or influence the research, testing, manufacture, safety,
labeling, storage, record keeping, approval, advertising and promotion of drug,
biological, medical device and food products. Noncompliance with applicable
requirements can result in, among other things, fines, recall or seizure of
products, refusal to permit products to be imported into the U.S., refusal of
the government to approve product approval applications or to allow the Company
to enter into government supply contracts, withdrawal of previously approved
applications and criminal prosecution. The FDA may also assess civil penalties
for violations of the Federal Food, Drug, and Cosmetic Act involving medical
devices.
For the
development of biodefense vaccines, such as RiVaxTM, the
FDA has instituted policies that are expected to result in shorter pathways to
market. This potentially includes approval for commercial use using the results
of animal efficacy trials, rather than efficacy trials in humans. However, the
Company will still have to establish that the vaccine and countermeasures it is
developing are safe in humans at doses that are correlated with the beneficial
effect in animals. Such clinical trials will also have to be completed in
distinct populations that are subject to the countermeasures; for instance, the
very young and the very old, and in pregnant women, if the countermeasure is to
be licensed for civilian use. Other agencies will have an influence over the
benefit-risk scenarios for deploying the countermeasures and in establishing the
number of doses utilized in the Strategic National Stockpile. We may not be able
to sufficiently demonstrate the animal correlation to the satisfaction of the
FDA, as these correlates are difficult to establish and are often
unclear. Invocation of the animal rule may raise issues of confidence
in the model systems even if the models have been validated. For many of the
biological threats, the animal models are not available and the Company may have
to develop the animal models, a time-consuming research effort. There are few
historical precedents, or recent precedents, for the development of new
countermeasure for bioterrorism agents. Despite the Animal Rule, the FDA may
require large clinical trials to establish safety and immunogenicity before
licensure and it may require safety and immunogenicity trials in additional
populations. Approval of biodefense products may be subject to post-marketing
studies, and could be restricted in use in only certain
populations.
Marketing
Strategies
Pursuant to the
collaboration and supply agreement with Sigma-Tau, we granted an exclusive
license to Sigma-Tau to commercialize orBec® in the U.S., Canada and
Mexico.
We are
actively seeking a commercialization partner for orBec® and
oral BDP outside of North America as well as for our LPMTM –
Leuprolide program.
We have
had and are having strategic discussions with a number of pharmaceutical
companies regarding the partnering or sale of our biodefense vaccine products.
We may market our biodefense vaccine products directly to government agencies.
We believe that both military and civilian health authorities of the U.S. and
other countries will increase their stockpiling of therapeutics and vaccines to
treat and prevent diseases and conditions that could ensue following a
bioterrorism attack.
Competition
Our
competitors are pharmaceutical and biotechnology companies, most of whom have
considerably greater financial, technical, and marketing resources than we
currently have. Another source of competing technologies is universities and
other research institutions, including the U.S. Army Medical Research Institute
of Infectious Diseases, and we face competition from other companies to acquire
rights to those technologies.
orBec®
Competition
Competition
is intense in the gastroenterology and transplant areas. Companies are
attempting to develop technologies to treat GVHD by suppressing the immune
system through various mechanisms. Some companies, including Sangstat, Abgenix,
and PDL BioPharma, Inc., are developing monoclonal antibodies to treat GVHD.
Novartis, Medimmune, and Ariad are developing both gene therapy products and
small molecules to treat GVHD. All of these products are in various stages of
development. For example, Novartis currently markets Cyclosporin, and Sangstat
currently markets Thymoglobulin for transplant-related therapeutics. We face
potential competition from Osiris Therapeutics if its product Prochymal for the
treatment of GVHD is successful in reaching the market. Kiadis Pharma is also
developing products for the treatment of GVHD. In addition, there are
investigator-sponsored clinical trials exploring the use of approved drugs such
as Enbrel®,
which has been approved by the FDA for the treatment of rheumatoid arthritis, in
the treatment of GVHD. We believe that orBec®’s
unique release characteristics, intended to deliver topically active therapy to
both the upper and lower gastrointestinal systems, should make orBec® an
attractive alternative to existing therapies for inflammatory diseases of the
gastrointestinal tract.
Competition
is also intense in the therapeutic area of inflammatory bowel disease. Several
companies, including Centocor, Immunex, and Celgene, have products that are
currently FDA approved. For example, Centocor, a subsidiary of Johnson &
Johnson, markets the drug product RemicadeTM for
Crohn’s disease. Other drugs used to treat inflammatory bowel disease include
another oral locally active corticosteroid called budesonide, which is being
marketed by AstraZeneca in Europe and Canada and by Prometheus Pharmaceuticals
in the U.S. under the tradename of Entocort®. Entocort®
is structurally similar to beclomethasone dipropionate, and the FDA-approved
Entocort for Crohn’s disease late in 2001. In addition, Salix Pharmaceuticals,
Inc. markets an FDA-approved therapy for ulcerative colitis called Colazal®.
Chiesi Pharmaceuticals (“Chiesi”) markets a delayed-release oral formulation of
beclomethasone dipropionate, the active ingredient of orBec®,
called CLIPPERTM for
ulcerative colitis and may seek marketing approval in Italy and other European
countries. In the U.S., Eurand N.V. (“Eurand”) has licenses from Chiesi to the
same formulation as CLIPPERTM and
is developing it for ulcerative colitis. Eurand has also received Orphan Drug
Designation for the compound in pediatric ulcerative colitis
patients.
Several
companies have also established various colonic drug delivery systems to deliver
therapeutic drugs to the colon for treatment of Crohn’s disease. These companies
include Ivax Corporation, Inkine Pharmaceutical Corporation, and Elan
Pharmaceuticals, Inc. Other approaches to treat gastrointestinal disorders
include antisense and gene therapy. Isis Pharmaceuticals, Inc. is in the process
of developing antisense therapy to treat Crohn’s disease.
BioDefense
Vaccine Competition
We face
competition in the area of biodefense vaccines from various public and private
companies, universities and governmental agencies, such as the U.S. Army, some
of whom may have their own proprietary technologies which may directly compete
with the our technologies. Acambis, Inc., Dynavax, Emergent Biosolutions
(formerly Bioport Corporation), VaxGen, Inc., Chimerix, Inc., Human Genome
Sciences, Inc., Coley Pharmaceuticals, Inc., Avanir Pharmaceuticals, Inc.,
Dynport Vaccine Company, LLC., Pharmathene, SIGA Pharmaceuticals and others have
announced vaccine or countermeasure development programs for biodefense. Some of
these companies have substantially greater human and financial resources than we
do, and many of them have already received grants or government contracts to
develop anti-toxins and vaccines against bioterrorism. For example, Avecia
Biotechnology, Inc. has received NIH contracts to develop a next generation
injectable anthrax vaccine. VaxGen received an approximately $900 million
procurement order from the U.S. government to produce and deliver 75 million
doses of Anthrax vaccine. This contract was rescinded in January 2007 by the
U.S. Department of Health and Human Services (“HHS”) because of the inability of
Vaxgen to enter into Phase 2 clinical trials according to contract timelines.
Several companies have received development grants from the NIH for biodefense
products. For example, Coley Pharmaceuticals, Inc. has received a $6 million
Department of Defense (“DOD”) grant to develop vaccine enhancement technology.
Dynport Vaccine Company, LLC, a prime contractor with the DOD, currently has a
$200 million contract to develop vaccines for the U.S. military, including a
multivalent botulinum toxin vaccine. Although we have received significant grant
funding to date for product development, we have not yet been obtained contract
awards for government procurement of products.
Patents and Other Proprietary
Rights
Our goal
is to obtain, maintain and enforce patent protection for our products,
formulations, processes, methods and other proprietary technologies, preserve
our trade secrets, and operate without infringing on the proprietary rights of
other parties, both in the U.S. and in other countries. Our policy is to
actively seek to obtain, where appropriate, the broadest intellectual property
protection possible for our product candidates, proprietary information and
proprietary technology through a combination of contractual arrangements and
patents, both in the U.S. and elsewhere in the world.
We also
depend upon the skills, knowledge and experience of our scientific and technical
personnel, as well as that of our advisors, consultants and other contractors,
none of which is patentable. To help protect our proprietary knowledge and
experience that is not patentable, and for inventions for which patents may be
difficult to enforce, we rely on trade secret protection and confidentiality
agreements to protect our interests. To this end, we require all employees,
consultants, advisors and other contractors to enter into confidentiality
agreements, which prohibit the disclosure of confidential information and, where
applicable, require disclosure and assignment to us of the ideas, developments,
discoveries and inventions important to our business.
We are
the exclusive licensee of an issued U.S. patent that covers the use of
orBec® for
the prevention and treatment of GI GVHD. We also have “Orphan Drug” designations
for orBec® in
the U.S. and in Europe. Our Orphan Drug designations provide for seven years of
post approval marketing exclusivity in the U.S. and ten years exclusivity in
Europe for the use of orBec® in
the treatment of GI GVHD. We have pending patent applications for this
indication that, if granted, may extend our anticipated marketing exclusivity
beyond the seven year post-approval exclusivity provided by the Orphan Drug Act
of 1983.
orBec® License
Agreement
In
November 1998, we entered into an exclusive, worldwide, royalty bearing license
agreement with George B. McDonald, M.D., including the right to grant
sublicenses, for the rights to the intellectual property and know-how relating
to orBec®. In
addition, Dr. McDonald receives $80,000 per annum as a consultant.
We also
executed an exclusive license to patent applications for “Use of
Anti-Inflammatories to Treat Irritable Bowel Syndrome” from the University of
Texas Medical Branch-Galveston. Under the license agreements, we will be
obligated to make performance-based milestone payments, as well as royalty
payments on any net sales of oral BDP.
RiVax™ Intellectual
Property
In
January 2003, we executed a worldwide exclusive option to license patent
applications with University of Texas
Southwestern Medical Center (“UTSW”) for the nasal, pulmonary and oral uses of a
non-toxic ricin vaccine. In June 2004, we entered into a license agreement with
UTSW for the injectable rights to the ricin vaccine and, in October 2004, we
negotiated the remaining oral rights to the ricin vaccine. Our
license obligates us to pay $50,000 in annual license fees. Through this
license, we have rights to the issued patent number 7,175,848 entitled “Ricin A
chain mutants lacking enzymatic activity as vaccines to protect against
aerosolized ricin.” This patent includes methods of use and composition claims
for RiVax™.
Research
and Development Expenditure
We spent
approximately $4,500,000 and $1,600,000 in the years ended December 31, 2009 and
2008, respectively, on research and development. The amounts we spent
on research and development per product during the years ended December 31, 2009
and 2008 are set forth in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this prospectus.
Employees
As of
April 21, 2010, we had 14 full-time employees, 6 of whom are
Ph.D.s.
Legal
Proceedings
From time
to time, we are a party to claims and legal proceedings arising in the ordinary
course of business. Our management evaluates our exposure to these claims and
proceedings individually and in the aggregate and allocates additional monies
for potential losses on such litigation if it is possible to estimate the amount
of loss and if the amount of the loss is probable.
AND
RESULTS OF OPERATION
The following discussion and
analysis provides information that we believe is relevant to an assessment and
understanding of our results of operation and financial condition. You should
read this analysis in conjunction with our audited consolidated financial
statements and related notes and our unaudited consolidated interim financial
statements and their notes. This discussion and analysis contains statements of
a forward-looking nature relating to future events or our future financial
performance. These statements are only predictions, and actual events or results
may differ materially. In evaluating such statements, you should carefully
consider the various factors identified in this prospectus, which could cause
actual results to differ materially from those expressed in, or implied by, any
forward-looking statements, including those set forth in “Risk Factors" in this
prospectus. See "Forward-Looking Statements."
Our Business
Overview
Soligenix,
Inc., formerly known as DOR BioPharma, Inc., was incorporated in Delaware in
1987. We are a late-stage research and development biopharmaceutical company
focused on developing products to treat the life-threatening side effects of
cancer treatment and serious gastrointestinal diseases where there remains an
unmet medical need, as well as developing biodefense vaccines and therapeutics.
We maintain two active business segments: BioTherapeutics and BioDefense. Our
BioTherapeutics business segment intends to develop orBec® (oral
beclomethasone dipropionate, or oral BDP) and other biotherapeutic products,
including LPMTM
Leuprolide. Our BioDefense business segment intends to convert its ricin toxin
vaccine program and radiation injury program from early stage development to
advanced development and manufacturing.
Our
business activities can be outlined as follows:
|
·
|
complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute gastrointestinal Graft-versus-Host
disease (“GI GVHD”);
|
|
·
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau Pharmaceuticals, Inc. (“Sigma-Tau”) to
commercialize orBec®
in the U.S., Canada and Mexico;
|
|
·
|
conduct
and complete a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
|
|
·
|
evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal tract such as radiation enteritis,
radiation injury and Crohn’s
disease;
|
|
·
|
reinitiate
development of our other biotherapeutics products, including LPMTM
Leuprolide;
|
|
·
|
continue
to secure additional government funding for each of our BioDefense
programs through grants, contracts and
procurements;
|
|
·
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense
area;
|
|
·
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
·
|
explore
other business development and acquisition
strategies.
|
Critical Accounting
Policies
Our
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the U.S. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities and expenses,
and related disclosure of contingent assets and liabilities. We evaluate these
estimates and judgments on an on-going basis.
Intangible
Assets
One of
the most significant estimates or judgments that we make is whether to
capitalize or expense patent and license costs. We make this judgment based on
whether the technology has alternative future uses, as defined in Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
730, Research and
Development. Based on this consideration, we capitalized all applicable
outside legal and filing costs incurred in the procurement and defense of
patents.
We
capitalize and amortize intangibles over their expected useful life – generally
a period of 11 to 16 years. We capitalize legal costs associated with the
protection and maintenance of our patents and rights for our current products in
both the domestic and international markets. As a late stage research and
development company with drug and vaccine products in an often lengthy clinical
research process, we believe that patent rights are one of our most valuable
assets. Patents and patent applications are a key currency of intellectual
property, especially in the early stage of product development, as their
purchase and maintenance gives us access to key product development rights from
our academic and industrial partners. These rights can also be sold or
sub-licensed as part of our strategy to partner our products at each stage of
development. The legal costs incurred for these patents consist of work designed
to protect, preserve, maintain and perhaps extend the lives of the patents.
Therefore, our policy is to capitalize these costs and amortize them over the
remaining useful life of the patents. We capitalize intangible assets’
alternative future use as referred to in FASB ASC 350, Intangibles – Goodwill and Other
and FASB
ASC 730, Research and
Development.
These
intangible assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable or if the
underlying program is no longer being pursued. If the sum of the expected
undiscounted cash flows is less than the carrying value of the related asset or
group of assets, a loss is recognized for the difference between the fair value
and the carrying value of the related asset or group of assets.
Research and Development
Costs
Research
and development costs are charged to expense when incurred. Research and
development includes costs such as clinical trial expenses, contracted research
and license agreement fees with no alternative future use, supplies and
materials, salaries and employee benefits, equipment depreciation and allocation
of various corporate costs. Purchased in-process research and development
expense represents the value assigned or paid for acquired research and
development for which there is no alternative future use as of the date of
acquisition.
Revenue
Recognition
Our
revenues are generated from NIH grants, the achievement of licensing milestones,
and NPAP sales of orBec®. The
revenue from NIH grants are based upon subcontractor costs and internal costs
incurred that are specifically covered by the grant, plus a facilities and
administrative rate that provides funding for overhead expenses. These revenues
are recognized when expenses have been incurred by subcontractors or when we
incur internal expenses that are related to the grant. Licensing milestone
revenues are recorded when earned. Revenue from NPAP sales of orBec® are
recorded when the product is shipped.
Stock-Based
Compensation
From time
to time, we issue common stock to vendors, consultants, and employees as
compensation for services performed. These shares are typically issued as
restricted stock, unless issued to non-affiliates under the 2005 Equity
Incentive Plan, where the stock may be issued as unrestricted. The restricted
stock can only have the restrictive legend removed if the shares underlying the
certificate are sold pursuant to an effective registration statement, which we
must file and have approved by the SEC, if the shares underlying the certificate
are sold pursuant to Rule 144, provided certain conditions are satisfied, or if
the shares are sold pursuant to another exemption from the registration
requirements of the Securities Act of 1933, as amended.
We
determine stock-based compensation expense for options, warrants and shares of
common stock granted to non-employees in accordance with FASB ASC 718, Stock Compensation, and FASB
ASC 505-50, Equity-Based
Payments to Non-Employees, and represents the fair value of the
consideration received, or the fair value of the equity instruments issued,
whichever may be more reliably measured. For options that vest over future
periods, the fair value of options granted to non-employees is amortized as the
options vest. The option’s price is remeasured using the Black-Scholes model at
the end of each quarterly reporting period. Stock-based compensation expense
recognized during the period is based on the value of the portion of share-based
payment awards that is ultimately expected to vest during the
period.
New Accounting
Pronouncements
See Note
2, New Accounting Pronouncements, for a discussion of new accounting
pronouncements.
Material Changes in Results
of Operations
Year
Ended December 31, 2009 Compared to 2008
For the
year ended December 31, 2009, we had a net loss of $6,034,453 as compared to a
net loss of $3,422,027 for the prior year, representing an increase of
$2,612,426 or 76%. This increase is primarily attributed to increased spending
of $2,971,052 in research and development for the year ended December 31, 2009
over 2008 related to the preparation for and conduct of the confirmatory Phase 3
clinical trial of orBec® for
the treatment of acute GI GVHD. For the year ended December 31, 2009, there was
also an increase in general and administrative expenses of $339,532, which
reflects the $270,000 expense recorded in first quarter 2008 related to the
Fusion Capital commitment shares, offset by staffing and other corporate cost
increases this year.
For the
year ended December 31, 2009, revenues and associated costs relate to NIH grants
awarded in support of our ricin, botulinum and thermostable vaccines development
and from the NPAP sales of orBec®. For
the year ended December 31, 2009, we had revenues of $2,816,037 as compared to
$2,310,265 for the prior year, representing an increase of $505,772, or 22%.
During 2009, we received a $1 million clinical milestone payment from Sigma Tau,
our collaborative partner on the orBec® Phase
3 study. The increase in revenues generated by this one-time milestone payment
was offset by decreases in NIH grant revenues as we reached the end of our
earlier NIH grants before the work under our newer grants had commenced.
Included in those revenue figures for the year ended December 31, 2009, we also
recorded revenues of $56,000 from NPAP sales of orBec®,
compared to $40,618 recorded in the prior year.
We
incurred costs related to that revenue in the year ended December 31, 2009 and
2008 of $1,483,641 and $1,886,431, respectively, representing a decrease of
$402,790, or 21%. This decrease follows from the decrease in NIH
grant revenues discussed above.
Our gross
profit for the year ended December 31, 2009 was $1,332,396 as compared to
$423,834 for the prior year, representing an increase of $908,562, or 214%. This
increase is almost entirely explained by the $1 million clinical milestone
revenue recorded in 2009 for which there were no corresponding
costs.
Research
and development spending increased by $2,971,052, or 191%, to $4,523,375, for
the year ended December 31, 2009 as compared to $1,552,323 for the prior
year. This increase is primarily related to the preparation for and
conduct of the confirmatory Phase 3 clinical trial of orBec® for
the treatment of acute GI GVHD.
General
and administrative expenses increased $339,532, or 17%, to $2,281,251 for the
year ended December 31, 2009, as compared to $1,941,719 for the prior year
reflecting staffing and other corporate cost increases this year.
Stock-based
compensation expenses related to research and development increased $28,666, or
16%, to $210,834 for the year ended December 31, 2009, as compared to $182,168
for the prior year. Stock-based compensation expenses related to general and
administrative increased $164,784, or 81%, to $368,232 for the year ended
December 31, 2009, as compared to $203,448 for the prior year. These increases
were related to stock options that were issued to new employees hired in 2009
and for options issued in the last quarter of 2008 that began vesting in
2009.
Net
interest income for the year ended December 31, 2009 was $19,242 as compared to
$33,797 for the prior year, representing a decrease of $14,555, or 43%. This
decrease was due to substantially lower interest rates earned on cash balances
in 2009 versus the prior year.
Business
Segments
We had
two active business segments for the year ended December 31, 2009 and December
31, 2008: BioDefense and BioTherapeutics.
Revenues
for the BioDefense business segment for the year ended December 31, 2009 were
$1,670,536 as compared to $2,269,647 for the year ended December 31, 2008,
representing a decrease of $599,111, or 26%. This decrease is primarily
attributed to a reduction in NIH grant revenues as we reached the end of our
earlier NIH grants focusing on RiVax and botulinum vaccines before the work
under our new thermostable vaccine technology grant had
commenced. Revenues for the BioTherapeutics business segment for the
year ended December 31, 2009 were $1,145,501 as compared to $40,618 for the year
ended December 31, 2008, representing an increase of $1,104,883. This
substantial increase is a result of the receipt of a $1 million clinical
milestone payment from Sigma Tau in 2009 upon the initiation of enrollment in
the confirmatory Phase 3 clinical trial of orBec®.
Loss from
operations for the BioDefense business segment for the year ended December 31,
2009 was $389,157 as compared to $132,272 for the year ended December 31, 2008,
representing an increase of $256,885, or 194%. This increase is primarily
attributed to a reduction in NIH grant revenues as we reached the end of our
earlier NIH grants focusing on RiVax and botulinum vaccines before the work
under our new thermostable vaccine technology grant had
commenced. Loss from operations for the BioTherapeutics business
segment for the year ended December 31, 2009 was $3,444,838 as compared to
$1,556,429 for the year ended December 31, 2008, representing an increase of
$1,888,409, or 121%. This increase is primarily attributed the preparation for
and conduct of the confirmatory Phase 3 clinical trial of orBec®,
offset to some degree by the receipt of a $1 million clinical milestone payment
from Sigma Tau in 2009.
Amortization
and depreciation expense for the BioDefense business segment for the year ended
December 31, 2009 was $91,420 as compared to $85,354 for the year ended December
31, 2008, representing an increase of $6,066, or 7%, primarily related to newly
capitalized patent support costs in 2009. Amortization and depreciation expense
for the BioTherapeutics business segment for the year ended December 31, 2009
was $77,496 as compared to $58,829 for the year ended December 31, 2008,
representing an increase of $18,667, or 32%, primarily related to newly
capitalized patent support costs in 2009.
Financial Condition and
Liquidity
Cash
and Working Capital
As of
December 31, 2009, we had cash and cash equivalents of approximately $7,692,000
as compared to $1,475,000 as of December 31, 2008, representing an increase of
$6,217,000, or 421%, over the prior year. As of December 31, 2009, we had
working capital of approximately $6,690,000 as compared to working capital of
$537,000 as of December 31, 2008, representing an increase of
$6,153,000. The increase was the result of the $10.9 million in proceeds
from the sale of our common stock and warrants to accredited investors and a
collaborative partner, less the cash used in operating and investing activities
over the period. We have used equity instruments in the past to provide a
portion of the compensation due to our employees, vendors and collaborative
partners, and expect to continue to do so in the foreseeable future. For the
year ended December 31, 2009, our cash used in operating activities was
approximately $4,603,000, compared to $2,788,000 for the prior year,
representing an increase of $1,815,000, or 65%. This increase primarily relates
to the preparation for and conduct of our confirmatory Phase 3 clinical trial of
orBec® for
the treatment of acute GI GVHD.
Based on
our current rate of cash outflows, cash on hand, the timely collection of
milestone payments under collaboration agreements, proceeds from our
grant-funded programs, revenues collected under the NPAP’s, and potential
proceeds from the Fusion Capital transaction, we believe that our current cash
will be sufficient to meet the anticipated cash needs for working capital and
capital expenditures beyond the first quarter of 2011.
Our plans
with respect to our liquidity management include the following:
|
·
|
We
have $10 million in active grant funding still available to support our
research programs in 2010 and beyond. Additionally, we have
submitted additional grant applications for further support of these
programs and others with various funding agencies, and have received
encouraging feedback to date on the likelihood of
funding.
|
|
·
|
We
have continued to use equity instruments to provide a portion of the
compensation due to vendors and collaboration partners and expect to
continue to do so for the foreseeable
future.
|
|
·
|
We
have approximately $7.7 million in available capacity under our Fusion
Capital equity facility. Although we have historically drawn
amounts in modest amounts under this agreement, we could draw more within
certain contractual parameters.
|
|
·
|
We
may seek additional capital in the private and/or public equity markets to
continue our operations, respond to competitive pressures, develop
new products and services, and to support new strategic
partnerships. We are currently evaluating additional equity financing
opportunities and may execute them when appropriate. However,
there can be no assurances that we can consummate such a transaction, or
consummate a transaction at favorable
pricing.
|
Expenditures
Under our
budget and based upon our existing product development agreements and license
agreements pursuant to letters of intent and option agreements, we expect our
research and development expenditures for the next 12 months to be approximately
$7,500,000. We anticipate grant revenues in the next year to offset
research and development expenses for the development of our thermostable
vaccine technology and the development of SGX201 in radiation enteritis in the
amount of approximately $1,600,000, with $700,000 of that total amount
contributing towards our overhead expenses.
The table
below details our costs by program for each of the two years ended December 31,
2009:
|
|
|
2009
|
|
|
2008
|
|
|
Research
& Development Expenses
|
|
|
|
|
|
|
|
orBec®
|
|
$ |
3,211,682 |
|
|
$ |
921,562 |
|
|
RiVax™ & Thermostable
Vaccines
|
|
|
1,264,218 |
|
|
|
312,486 |
|
|
BT-VACC™
|
|
|
31,167 |
|
|
|
201,529 |
|
|
Oraprine™
|
|
|
6,000 |
|
|
|
4,500 |
|
|
LPM™
Leuprolide
|
|
|
10,308 |
|
|
|
112,246 |
|
|
Total
|
|
$ |
4,523,375 |
|
|
$ |
1,552,323 |
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursed
under NIH Grants
|
|
|
|
|
|
|
|
|
|
orBec®
|
|
$ |
162,106 |
|
|
$ |
122,551 |
|
|
RiVax™ & Thermostable
Vaccines
|
|
|
1,321,535 |
|
|
|
1,681,274 |
|
|
BT-VACC™
|
|
|
- |
|
|
|
82,606 |
|
|
Total
|
|
$ |
1,483,641 |
|
|
$ |
1,886,431 |
|
|
Grand
Total
|
|
$ |
6,007,016 |
|
|
$ |
3,438,754 |
|
Effects of Inflation and
Foreign Currency Fluctuations
We do not
believe that inflation or foreign currency fluctuations significantly affected
our financial position and results of operations as of and for the years ended
December 31, 2009 or 2008.
Contractual
Obligations
We have a
contractual obligation of approximately $3.3 million as of December 31, 2009 in
connection with a collaboration agreement with Numoda for the execution of our
confirmatory Phase 3 clinical trial of orBec®
that began in September 2009 and is expected to complete in first half of
2011.
We have
several licensing agreements with consultants and universities, which upon
clinical or commercialization success may require the payment of milestones
and/or royalties if and when achieved; however, there can be no assurance that
clinical or commercialization success will occur.
On April
1, 2009, we entered into a sublease agreement through March 31, 2012 for office
space in Princeton, New Jersey. We were required to provide 4 months of rent as
a security deposit. The rent for the first 18 months will be approximately
$7,500 per month, or approximately $17.00 per square foot on an annualized
basis. This rent increases to approximately $7,650 per month, or approximately
$17.50 per square foot on an annualized basis, for the remaining 18
months.
On April
24, 2008, we signed a three-year lease for a copier.
Employees
with employment contracts have severance agreements that will provide separation
benefits from the Company if they are involuntarily separated from
employment.
As a
result of the above agreements, we have future contractual obligations over the
next five years as follows:
|
Year
|
|
Research and Development
|
|
|
Property and
Other Leases
|
|
|
Total
|
|
|
2010
|
|
$ |
3,013,640 |
|
|
$ |
95,398 |
|
|
$ |
3,109,038 |
|
|
2011
|
|
|
631,440 |
|
|
|
92,699 |
|
|
|
724,139 |
|
|
2012
|
|
|
155,000 |
|
|
|
22,950 |
|
|
|
177,950 |
|
|
2013
|
|
|
75,000 |
|
|
|
- |
|
|
|
75,000 |
|
|
2014
|
|
|
75,000 |
|
|
|
- |
|
|
|
75,000 |
|
|
Total
|
|
$ |
3,950,080 |
|
|
$ |
211,047 |
|
|
$ |
4,161,127 |
|
DIRECTORS
AND EXECUTIVE OFFICERS
The
following table contains information regarding the current members of the Board
of Directors and executive officers: The ages of individuals are
provided as of April 21, 2010:
|
|
|
|
|
Christopher J. Schaber,
Ph.D.
|
43
|
Chairman
of the Board, Chief Executive Officer and President
|
|
Cyrille
F. Buhrman
|
37
|
Director
|
|
Gregg
A. Lapointe, C.P.A., M.B.A.
|
51
|
Director
|
|
Robert
J. Rubin, M.D.
|
64
|
Director
|
|
Evan
Myrianthopoulos
|
45
|
Chief
Financial Officer, Senior Vice President and Director
|
|
Brian
L. Hamilton, M.D., Ph.D.
|
63
|
Chief
Medical Officer and Senior Vice President
|
|
Robert
N. Brey, Ph.D.
|
59
|
Chief
Scientific Officer and Senior Vice President
|
|
Christopher
P. Schnittker, C.P.A.
|
41
|
Vice
President of Administration, Controller and Corporate
Secretary
|
Christopher J. Schaber, Ph.D.
has been our President and Chief Executive Officer and a director since August
2006. He was appointed interim Chairman of the Board on October 8,
2009. Dr. Schaber has served on the boards of directors of both the
Alliance for BioSecurity and BioNJ since May 2008 and January 2009,
respectively, and represents Soligenix on the corporate councils of both the
National Organization for Rare Diseases (“NORD”) and the American Society for
Blood and Marrow Transplantation (“ASBMT”) since October 2009 and July 2009,
respectively. Prior to joining Soligenix, Dr. Schaber served from 1998 to
2006 as Executive Vice President and Chief Operating Officer of Discovery
Laboratories, Inc., where he was responsible for overall pipeline development
and key areas of commercial operations, including regulatory affairs, quality
control and assurance, manufacturing and distribution, pre-clinical and clinical
research, and medical affairs, as well as coordination of commercial launch
preparation activities. During his tenure at Discovery Laboratories, Inc., Dr.
Schaber played a significant role in raising in excess of $150 million through
both public offerings and private placements. From 1996 to 1998, Dr. Schaber was
a co-founder of Acute Therapeutics, Inc., and served as its Vice President of
Regulatory Compliance and Drug Development. From 1994 to 1996, Dr. Schaber was
employed by Ohmeda PPD, Inc., as Worldwide Director of Regulatory Affairs and
Operations. From 1989 to 1994, Dr. Schaber held a variety of regulatory,
development and operations positions with The Liposome Company, Inc., and
Elkins-Sinn Inc., a division of Wyeth-Ayerst Laboratories. Dr. Schaber received
his B.A. degree from Western Maryland College, his M.S. degree in Pharmaceutics
from Temple University School of Pharmacy and his Ph.D. degree in Pharmaceutical
Sciences from the Union Graduate School. Dr. Schaber was selected to serve
as a member of our Board of Directors because of his extensive experience in
drug development and pharmaceutical operations, including his experience as
executive senior officer with our Company and Discovery Laboratories, Inc., and
as a member of the boards of directors of the Alliance for BioSecurity and
BioNJ; because of his proven ability to raise funds and provide access to
capital; and because of his advanced degrees in science and
business.
Cyrille F. Buhrman has been a
director since June 2007. Mr. Buhrman is Chairman of the Pacific Healthcare
Group of Companies, a full-service regulatory affairs, commercialization and
distribution company, focusing on specialty pharmaceuticals, medical supplies,
medical technology, OTC and consumer health products across the Asian
region. In addition to serving on the Board of Soligenix, Mr. Buhrman
has served on the boards of directors of Canyon Pharmaceuticals, a
privately-held company specialty pharmaceutical company based in Basel,
Switzerland and serves on the boards of directors of several other
privately-held pharmaceutical and medical technology companies in the Asia
Pacific region. Mr. Buhrman also heads up his own private investment
fund that specializes in the biotechnology and pharmaceutical industries. Mr.
Buhrman is also one of our largest shareholders. Mr. Buhrman was selected to
serve as a member of our Board of Directors because of his experience as a CEO
of a pharmaceutical company, as a member of the boards of several
pharmaceutical, and medical device companies and as an investor in the
biotechnology and pharmaceutical industries.
Gregg Lapointe, C.P.A., M.B.A.
has been a director since March 10, 2009. Mr. Lapointe has served on the Board
of Directors of the Pharmaceuticals Research and Manufacturers of America
(“PhRMA”) and has been a member of the Corporate Council of NORD for several
years. He has served in varying roles for Sigma-Tau, a private biopharmaceutical
company, since September 2001, including Chief Operating Officer from November
2003 to April 2008 and Chief Executive Officer since April 2008. From May, 1996
to August, 2001, he served as Vice President of Operations and Vice President,
Controller of AstenJohnson, Inc. (formerly JWI Inc.). Prior to that, Mr.
Lapointe spent several years in the Canadian medical products industry in both
distribution and manufacturing. Mr. Lapointe began his career at Price
Waterhouse. Mr. Lapointe received his B.A. degree in Commerce from
Concordia University in Montreal, Canada, a graduate diploma in Accountancy from
McGill University and his M.B.A. degree from Duke University. He is a C.P.A. in
the state of Illinois and a Chartered Accountant in Ontario, Canada. Mr.
Lapointe was selected to serve as a member of our Board of Directors because of
his significant experience in the areas of global strategic planning and
implementation, business development, corporate finance, and acquisitions, and
his experience as an executive officer and board member in the pharmaceutical
medical products industries.
Robert J. Rubin, M.D. has been
a director since October 8, 2009. Dr. Rubin has also been a clinical
professor of medicine at Georgetown University since 1995. From 1987 to 2001, he
was president of the Lewin Group (purchased by Quintiles Transnational Corp. in
1996), an international health policy and management consulting firm. From 1994
to 1996, Dr. Rubin served as Medical Director of ValueRx, a pharmaceutical
benefits company. From 1992 to 1996, Dr. Rubin served as President of Lewin-VHI,
a health care consulting company. From 1987 to 1992, he served as President of
Lewin-ICF, a health care consulting company. From 1984 to 1987, Dr. Rubin served
as a principal for ICF, Inc., a health care consulting company. From 1981 to
1984, Dr. Rubin served as the Assistant Secretary for Planning and Evaluation at
the Department of Health and Human Services and as the Assistant Surgeon General
in the United States Public Health Service. Dr. Rubin is a board certified
nephrologist and internist. Dr. Rubin received an undergraduate degree in
Political Science from Williams College and his medical degree from Cornell
University Medical College. Dr. Rubin was selected to serve as a member of our
Board of Directors because of his vast experience in the health care industry,
including his experience as a nephrologist, internist, clinical professor of
medicine and Assistant Surgeon General, and his business experience in the
pharmaceutical industry.
Evan Myrianthopoulos has been
a director since 2002 and is currently our Chief Financial Officer and Senior
Vice President, after joining us in November of 2004 as President and Acting
Chief Executive Officer. From November 2001 to November 2004, he was President
and founder of CVL Advisors Group Inc., a financial consulting firm specializing
in the biotechnology sector. Prior to founding CVL Advisors Group, Inc., Mr.
Myrianthopoulos was a co-founder of Discovery Laboratories, Inc. During his
tenure at Discovery Laboratories, Inc. from June 1996 to November 2001, Mr.
Myrianthopoulos held the positions of Chief Financial Officer and Vice President
of Finance, where he was responsible for raising approximately $55 million in
four private placements. He also helped negotiate and manage Discovery
Laboratories, Inc.’s mergers with Ansan Pharmaceuticals and Acute Therapeutics,
Inc. Prior to co-founding Discovery Laboratories, Inc., Mr. Myrianthopoulos was
a Technology Associate at Paramount Capital Investments, L.L.C., a New York City
based biotechnology venture capital and investment banking firm from October
1995 to December 1997. Prior to joining Paramount Capital Investments, LLC, Mr.
Myrianthopoulos was a managing partner at a hedge fund and also held senior
positions in the treasury department at the National Australia Bank where he was
employed as a spot and derivatives currency trader. Mr. Myrianthopoulos holds a
B.S. degree in Economics and Psychology from Emory University. Mr.
Myrianthopoulos was selected to serve as a member of our Board of Directors
because of his experience as principal financial officer and principal executive
officer of our Company and Discovery Laboratories and his experience
in raising capital.
Brian L. Hamilton, M.D., Ph.D.
has been Chief Medical Officer and Senior Vice President since March 11,
2009. His academic career at the University of Washington and the
University of Miami focused on the use of bone marrow transplantation to treat
children with congenital immune deficiency, with research in the immunobiology
of GVHD. In the pharmaceutical industry, he has worked with both large
pharmaceutical companies (Astra, USA and Wyeth) and several biotechnology
companies. From December 2001 to June 2004, he was Senior Director of Clinical
Research with Wyeth Research. From June 2004 to March 2006, he was
Vice President for Clinical and Regulatory Affairs at Merrimack
Pharmaceutical. He was Chief Medical Officer with BioVex from
September 2006 to March 2007. He was a consultant in clinical
development as Medical Director with Biopharm Solutions, Inc. from March 2007 to
October 2008. From October 2008 to March 2009, he was Acting Vice
President of Medical Affairs with Ziopharm Oncology. He has expertise
in clinical development and regulatory affairs with small molecules, biologics,
vaccines, and genetically modified oncolytic viruses in oncology, hematology,
rheumatology, and immunology. At Astra, USA, he had a significant
role in the clinical development and registration of both Pulmicort Turbuhaler
for the treatment of patients with asthma and Rhinocort Aqua for the treatment
of patients with allergic rhinitis. Dr. Hamilton received his M.D.
and Ph.D. degrees from the University of Washington, with post-graduate training
in Pediatrics, Allergy, Immunology, and Oncology.
Robert N. Brey, Ph.D. has been
with the Company since January 1996, and is currently our Chief Scientific
Officer and Senior Vice President. He has also held the positions of Vice
President Vaccine Development and Vice President of Research and
Development. He also has held Scientific, Management and Project
Management positions in the Lederle-Praxis division of American Cyanamid, now a
division of Wyeth, in which he participated in the successful development of a
vaccine for Haemophilius
influenzae meningitis, and a vaccine for pneumonia. While at
Lederle-Praxis, Dr. Brey was Manager of Molecular Biology Research for vaccines
and Project Manager for development of oral vaccines from 1985 through 1993.
From 1993 through 1994, Dr. Brey served as Director of Research and Development
of Vaxcel, in which he was responsible for developing adjuvant technology and
formulations for improved vaccines. From 1994 through 1996, Dr. Brey established
an independent consulting group, Vaccine Design Group, to identify and develop
novel vaccine technologies and platforms. Before entering into drug and vaccine
delivery, he held senior scientific positions at Genex Corporation from 1982
through 1986. Dr. Brey received a B.S. degree in Biology from Trinity College in
Hartford, Connecticut, his Ph.D. degree in Microbiology from the University of
Virginia and performed postdoctoral studies at MIT with Nobel Laureate Salvador
Luria.
Christopher P. Schnittker, C.P.A.
has been our Vice President of Administration, Controller and Corporate
Secretary since July 2009. He has more than 19 years of financial
management experience primarily in publicly-held life science
companies. From June 2000 until joining Soligenix, Mr. Schnittker was
a Vice President and Chief Financial Officer of several publicly-held
biotechnology and specialty pharmaceutical companies, including: VioQuest
Pharmaceuticals Inc. (from July 2008 until joining Soligenix); Micromet, Inc.
(from October 2006 through December 2007); Cytogen Corporation (from September
2003 through May 2006); and Genaera Corporation (from June 2000 through August
2003). From December 1997 through June 2000, he was Director of
Finance and Controller of GSI Commerce, an e-commerce technology company. From
June 1995 through December 1997, he served in various financial reporting and
internal control manager roles with Rhône-Poulenc Rorer Pharmaceuticals Inc.
(now part of the Sanofi Aventis Group). From September 1990 through
June 1995, he was a member of the Audit and Assurance Services division at Price
Waterhouse LLP (now PricewaterhouseCoopers LLP), working largely with the firm’s
pharmaceutical and technology clients. Mr. Schnittker received his
Bachelor’s degree in Economics and Business, with a concentration in Accounting,
from Lafayette College in 1990 and is a currently-licensed Certified Public
Accountant in the State of New Jersey.
Summary
Compensation
The
following table contains information concerning the compensation paid during
each of the two years ended December 31, 2009 to our Chief Executive Officer and
each of the two other most highly compensated executive officers during 2009
(collectively, the “Named Executive Officers”).
Summary
Compensation
|
Name
|
Position
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Option Awards
|
|
|
All Other Compensation
|
|
|
Total
|
|
|
Christopher
J. Schaber1
|
CEO
& President
|
2009
|
|
$ |
337,709 |
|
|
$ |
120,000 |
|
|
|
- |
|
|
$ |
24,737 |
|
|
$ |
482,446 |
|
|
|
|
2008
|
|
$ |
300,000 |
|
|
$ |
100,000 |
|
|
$ |
127,120 |
|
|
$ |
24,844 |
|
|
$ |
551,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Evan
Myrianthopoulos2
|
CFO
& Senior
VP
|
2009
|
|
$ |
202,605 |
|
|
$ |
70,000 |
|
|
|
- |
|
|
$ |
24,811 |
|
|
$ |
297,416 |
|
|
|
|
2008
|
|
$ |
200,000 |
|
|
$ |
50,000 |
|
|
$ |
54,480 |
|
|
$ |
23,474 |
|
|
$ |
327,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
L. Hamilton3
|
CMO
& Senior VP
|
2009
|
|
$ |
206,400 |
|
|
$ |
60,000 |
|
|
$ |
87,400 |
|
|
$ |
26,843 |
|
|
$ |
380,643 |
|
____________
|
1
|
Dr.
Schaber deferred payment of his 2008 annual bonus of $100,000 until
February 28, 2009 and his 2009 annual bonus of $120,000 until January 15,
2010. Option award figures include the value of common stock option awards
at grant date as calculated under FASB ASC 718. Other compensation for
2008 and 2009 represent insurance
costs.
|
|
2
|
Mr.
Myrianthopoulos deferred payment of his 2008 annual bonus of $50,000 until
February 28, 2009 and his 2009 annual bonus of $70,000 until January 15,
2010. Option award figures include the value of common stock option awards
at grant date as calculated under FASB ASC 718. Other compensation for
2008 and 2009 represent insurance
costs.
|
|
3
|
Dr.
Hamilton joined the Company in April 2009. He deferred his 2009 annual
bonus of $60,000 until January 15, 2010. Option award figures include the
value of common stock option awards at grant date as calculated under FASB
ASC 718. Other compensation for 2009 represents insurance
costs.
|
Employment and Severance
Agreements
In August
2006, we entered into a three-year employment agreement with Christopher J.
Schaber, Ph.D. Pursuant to this employment agreement we agreed to pay Dr.
Schaber a base salary of $300,000 per year and a minimum annual bonus of
$100,000. This employment agreement was renewed in December 27, 2007 for a term
of three years. We agreed to issue him options to purchase 2,500,000 shares of
our common stock, with one third immediately vesting and the remainder vesting
over three years. Upon termination without “Just Cause” as defined by this
agreement, we would pay Dr. Schaber nine months of severance, as well as any
accrued bonuses, accrued vacation, and we would provide health insurance and
life insurance benefits for Dr. Schaber and his dependants. No unvested options
shall vest beyond the termination date. Dr. Schaber’s monetary compensation
(base salary of $300,000 and bonus of $100,000) remained unchanged from 2006
with the 2007 renewal. He will be paid nine months of severance upon
termination of employment. Upon a change in control of the Company
due to merger or acquisition, all of Dr. Schaber’s options shall become fully
vested, and be exercisable for a period of five years after such change in
control (unless they would have expired sooner pursuant to their
terms). In the event of his death during term of the agreement, all
of his unvested options shall immediately vest and remain exercisable for the
remainder of their term and become the property of Dr. Schaber’s immediate
family.
In
December 2004, we entered into a three-year employment agreement with Evan
Myrianthopoulos. Pursuant to this employment agreement we agreed to pay Mr.
Myrianthopoulos a base salary of $185,000 per year. After one year of service
Mr. Myrianthopoulos would be entitled to a minimum annual bonus of $50,000. This
employment agreement was renewed in December 27, 2007 for a term of three years.
We agreed to issue him options to purchase 500,000 shares of our common stock,
with the options vesting over three years. Upon termination without “Just Cause”
as defined by this agreement, we would pay Mr. Myrianthopoulos six months of
severance subject to set off, as well as any unpaid bonuses and accrued vacation
would become payable. No unvested options shall vest beyond the termination
date. Mr. Myrianthopoulos also received 150,000 options, vested immediately when
he was hired in November 2004, as President and Acting Chief Executive Officer.
Mr. Myrianthopoulos’ monetary compensation (base salary of $200,000 and bonus of
$50,000) remained unchanged from 2006 with the 2007 renewal. He will
be paid six months of severance upon termination of employment. Upon a change in
control of the Company due to merger or acquisition, all of Mr. Myrianthopoulos’
options shall become fully vested, and be exercisable for a period of three
years after such change in control (unless they would have expired sooner
pursuant to their terms). In the event of his death during term of
contract, all of his unvested options shall immediately vest and remain
exercisable for the remainder of their term and become property of Mr.
Myrianthopoulos’ immediate family.
In
February 2007, our Board of Directors authorized the issuance of the following
number of shares to each of Dr. Schaber, Mr. Myrianthopoulos and Dr. Brey
immediately prior to the completion of a transaction, or series or a combination
of related transactions negotiated by our Board of Directors whereby, directly
or indirectly, a majority of our capital stock or a majority of our assets are
transferred from the Company and/or our stockholders to a third
party: 1,000,000 common shares to Dr. Schaber and 750,000 common shares to
Mr. Myrianthopoulos. The amended agreements include our obligation to
issue such shares to the executives if such event occurs.
In March
2009, we entered into a two-year employment agreement with Brian L. Hamilton,
M.D., Ph.D. Pursuant to this employment agreement we agreed to pay Dr. Hamilton
a base salary of $270,000 per year and a minimum annual bonus of $70,000. We
agreed to issue him options to purchase 1,000,000 shares of our common stock,
with one quarter immediately vesting and the remainder vesting over three years.
Upon termination without “Just Cause” as defined by this agreement, we would pay
Dr. Hamilton six months of severance, as well as any accrued bonuses, accrued
vacation, and we would provide health insurance and life insurance benefits for
Dr. Hamilton and his dependants. No unvested options shall vest beyond the
termination date. Upon a change in control of the Company due to merger or
acquisition, all of Dr. Hamilton’s options shall become fully vested, and be
exercisable for a period of three years after such change in control (unless
they would have expired sooner pursuant to their terms). In the event
of his death during term of the agreement, all of his unvested options shall
immediately vest and remain exercisable for the remainder of their term and
become the property of Dr. Hamilton’s immediate family.
On March
27, 2009, the Compensation Committee approved the increase in salaries for Dr.
Schaber to $350,000 and Mr. Myrianthopoulos to $230,000. On December 1, 2009,
the Compensation Committee approved the increase in salaries for Dr. Hamilton to
$280,000, effective January 1, 2010. Dr. Schaber’s and Mr. Myrianthopoulos’
salaries were not changed at this time.
Outstanding Equity Awards at
Fiscal Year-End
The
following table contains information concerning unexercised options, stock that
has not vested, and equity incentive plan awards for the Named Executive
Officers outstanding at December 31, 2009. We have never issued Stock
Appreciation Rights.
Outstanding
Equity Awards at Fiscal Year-End
| |
|
Number
of Securities
Underlying
Unexercised
Options
(#)
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned |
|
|
Option
Exercise |
|
Option
Expiration |
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options (#)
|
|
|
Price
($)
|
|
Date
|
|
Christopher
J. Schaber
|
|
|
2,500,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.27 |
|
8/28/2016
|
|
|
|
|
731,250 |
|
|
|
168,750 |
|
|
|
168,750 |
|
|
$ |
0.47 |
|
8/29/2017
|
|
|
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
$ |
0.06 |
|
12/17/2018
|
|
Evan
Myrianthopoulos
|
|
|
150,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.35 |
|
11/14/2012
|
|
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.90 |
|
9/15/2013
|
|
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.58 |
|
6/11/2014
|
|
|
|
|
150,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.47 |
|
11/10/2014
|
|
|
|
|
500,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.49 |
|
12/13/2014
|
|
|
|
|
400,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.35 |
|
5/10/2016
|
|
|
|
|
446,875 |
|
|
|
103,125 |
|
|
|
103,125 |
|
|
$ |
0.47 |
|
8/29/2017
|
|
|
|
|
600,000 |
|
|
|
600,000 |
|
|
|
600,000 |
|
|
$ |
0.06 |
|
12/17/2018
|
|
Brian
L. Hamilton
|
|
|
437,500 |
|
|
|
562,500 |
|
|
|
562,500 |
|
|
$ |
0.11 |
|
3/10/2019
|
Compensation of
Directors
The
following table contains information concerning the compensation of the
non-employee directors during the fiscal year ended December 31,
2009.
Compensation
of Directors
|
Name
|
Fees
Earned Paid in Cash1
|
Option Awards2
|
Total
|
|
Gregg
A. Lapointe
|
$16,000
|
$30,413
|
$46,413
|
|
James
S. Kuo
|
$12,000
|
$27,950
|
$39,950
|
|
Cyrille
F. Buhrman
|
$13,000
|
$27,950
|
$40,950
|
|
Robert
J. Rubin
|
$3,000
|
$75,720
|
$78,720
|
___________
|
1
|
Directors
who are compensated as full-time employees receive no additional
compensation for service on our Board of Directors. Each independent
director who is not a full-time employee is paid $2,000 for each board or
committee meeting attended ($1,000 if such meeting was attended
telephonically).
|
|
2
|
We maintain a stock option grant
program pursuant to the nonqualified stock option plan, whereby members of
our Board of Directors or its committees who are not full-time employees
receive an initial grant of fully vested options to purchase 300,000
shares of common stock, and subsequent prorated annual grants of fully
vested options to purchase 150,000 shares of common stock after
re-election to our Board of Directors. Option award figures include the
value of common stock option awards at grant date as calculated under FASB
ASC 718.
|
For 2010,
non-employee directors will be paid $20,000 annually, on a prorated basis, for
their service on our Board of Directors, the chairman of our Audit
Committee will be paid $7,500 annually, on a prorated basis, and the
chairman of our Compensation and Nominating Committees will be paid $5,000
annually, on a prorated basis. This compensation will be paid quarterly,
in arrears.
The table
below provides information regarding the beneficial ownership of the common
stock as of April 21, 2010 of (1) each person or entity who owns beneficially 5%
or more of the shares of our outstanding common stock, (2) each of our
directors, (3) each of the Named Executive Officers, and (4) our directors and
officers as a group. Except as otherwise indicated, and subject to applicable
community property laws, we believe the persons named in the table have sole
voting and investment power with respect to all shares of common stock held by
them.
Beneficial
Ownership
|
Name of Beneficial Owner
|
Shares of Common Stock Beneficially
Owned**
|
Percent of Class
|
|
Sigma-Tau
Pharmaceuticals, Inc.1
|
47,595,521
|
25.19%
|
|
Biotex
Pharma Investments, LLC2
|
37,395,000
|
18.07%
|
|
BAM
Opportunity Fund, L.P.3
|
14,509,828
|
7.60%
|
|
Cyrille
F. Buhrman4
|
5,375,020
|
2.87%
|
|
Christopher
J. Schaber5
|
5,430,093
|
2.83%
|
|
Evan
Myrianthopoulos 6
|
2,715,405
|
1.43%
|
|
Robert
N. Brey7
|
1,237,500
|
*
|
|
Christopher
P. Schnittker8
|
328,125
|
*
|
|
Robert
J. Rubin9
|
300,000
|
*
|
|
Gregg
A. Lapointe10
|
337,500
|
*
|
|
Brian
L. Hamilton11
|
562,500
|
*
|
|
All
directors and executive officers as a group (8 persons)
|
16,286,143
|
8.24%
|
_______________
|
1
|
Includes
45,619,237 shares of common stock and warrants to purchase 1,976,284
shares of common stock exercisable within 60 days of April 21, 2010. The
amount does not include 1,546,870 shares of common stock held by Paolo
Cavazza, one of the principal owners of Sigma-Tau. The address of
Sigma-Tau Pharmaceuticals, Inc. is c/o Sigma-Tau Pharmaceuticals, Inc.,
9841 Washingtonian Boulevard, Suite 500, Gaithersburg, Maryland
20878.
|
|
2
|
Includes
17,395,000 shares of common stock and warrants to purchase 20,000,000
shares of common stock exercisable within 60 days of April 21, 2010. The
address of Biotex Pharma Investments, LLC is c/o Biotex Pharma
Investments, LLC, 220 West 42nd Street 6th Floor New York, New York
10036.
|
|
3
|
Includes
10,557,259 shares of common stock and warrants to purchase 3,952,569
shares of common stock exercisable within 60 days of April 21, 2010. The
address of BAM Opportunity Fund, L.P. is 44 Wall Street, Suite 1603, New
York, NY 10005.
|
|
4
|
Includes
4,900,020 shares of common stock and options to purchase 475,000 shares of
common stock exercisable within 60 days of April 21, 2010. The address of
Mr. Buhrman is c/o Soligenix, 29 Emmons Drive, Suite C-10, Princeton, New
Jersey 08540.
|
|
5
|
Includes
471,817 shares of common stock owned by Dr. Schaber, options to purchase
4,918,750 shares of common stock exercisable within 60 days of April 21,
2010, and warrants to purchase 39,526 shares of common stock exercisable
within 60 days of April 21, 2010. The address of Dr. Schaber is c/o
Soligenix, 29 Emmons Drive, Suite C-10, Princeton, New Jersey
08540.
|
|
6
|
Includes
224,780 shares of common stock owned by Mr. Myrianthopoulos and his wife
and options to purchase 2,490,625 shares of common stock exercisable
within 60 days of April 21, 2010. The address of Mr. Myrianthopoulos is
c/o Soligenix, 29 Emmons Drive, Suite C-10, Princeton, New Jersey
08540.
|
|
7
|
Includes
options to purchase 1,237,500 shares of common stock exercisable within 60
days of April 21, 2010. The address of Dr. Brey is c/o Soligenix, 29
Emmons Drive, Suite C-10, Princeton, New Jersey
08540.
|
|
8
|
Includes
options to purchase 328,125 shares of common stock owned by Mr. Schnittker
exercisable within 60 days of April 21, 2010. The address of Mr.
Schnittker is c/o Soligenix, 29 Emmons Drive, Suite C-10, Princeton, New
Jersey 08540.
|
|
9
|
Includes
options to purchase 300,000 shares of common stock exercisable within 60
days of April 21, 2010. The address of Dr. Rubin is c/o Soligenix, 29
Emmons Drive, Suite C-10, Princeton, New Jersey
08540.
|
|
10
|
Includes
options to purchase 337,500 shares of common stock exercisable within 60
days of April 21, 2010. The address of Mr. Lapointe is c/o Soligenix, 29
Emmons Drive, Suite C-10, Princeton, New Jersey
08540.
|
|
11
|
Includes
options to purchase 562,500 shares of common stock exercisable within 60
days of April 21, 2010. The address of Dr. Hamilton is c/o Soligenix, 29
Emmons Drive, Suite C-10, Princeton, New Jersey
08540.
|
|
*
|
Indicates
less than 1%.
|
|
**
|
Beneficial
ownership is determined in accordance with the rules of the SEC. Shares of
common stock subject to options or warrants currently exercisable or
exercisable within 60 days of April 21, 2010 are deemed outstanding for
computing the percentage ownership of the stockholder holding the options
or warrants, but are not deemed outstanding for computing the percentage
ownership of any other stockholder. Percentage of ownership is based on
186,972,036 shares of common stock outstanding as of April 21,
2010.
|
Equity Compensation Plan
Information
In
December 2005, our Board of Directors approved the 2005 Equity Incentive Plan,
which was approved by stockholders on December 29, 2005. In September 2007, our
stockholders approved an amendment to the 2005 Equity Incentive Plan to increase
the maximum number of shares of our common stock available for issuance under
the plan by 10,000,000 shares, bringing the total shares reserved for issuance
under the plan to 20,000,000 shares. The following table provides information,
as of December 31, 2009, with respect to options outstanding under our 1995
Amended and Restated Omnibus Incentive Plan and our 2005 Equity Incentive
Plan.
|
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 the first column)
|
|
|
Equity
compensation plans approved by security holders1
|
|
|
19,311,539 |
|
|
$ |
0.24 |
|
|
|
454,831 |
|
|
Equity
compensation plans not approved by security holders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
TOTAL
|
|
|
19,311,539 |
|
|
$ |
0.24 |
|
|
|
454,831 |
|
_________
|
1
|
Includes
our 1995 Amended and Restated Omnibus Incentive Plan and our 2005 Equity
Incentive Plan. Our 1995 Plan expired in 2005 and thus no
securities remain available for future issuance under that plan. Under the
amended 2005 equity incentive plan, we have issued 1,482,669 shares to
individuals as payment for services in the amount of $380,342 as allowed
in the plan.
|
The
following table presents information as of April 21, 2010 and sets forth the
number of shares of common stock beneficially owned by each of the Selling
Stockholders. We are not able to estimate the amount of shares that will be held
by each Selling Stockholder after the completion of this offering because: (1)
the Selling Stockholders may sell less than all of the shares registered under
this prospectus; (2) the Selling Stockholders may exercise less than all of
their warrants; and (3) to our knowledge, the Selling Stockholders currently
have no agreements, arrangements or understandings with respect to the sale of
any of their shares. The following table assumes that all of the shares being
registered pursuant to this prospectus will be sold. The Selling Stockholders
are not making any representation that any shares covered by this prospectus
will be offered for sale. Except as otherwise indicated, based on information
provided to us by each Selling Stockholder, the Selling Stockholders have sole
voting and investment power with respect to their shares of common
stock. Except as otherwise noted, none of the Selling Stockholders
nor any of their affiliates have held a position or office, or had any other
material relationship, with us.
On
February 11, 2009, we entered into a collaboration and supply agreement with
Sigma-Tau for the commercialization of orBec®. Pursuant to this agreement,
Sigma-Tau has an exclusive license to commercialize orBec® in the Territory. The
first milestone payment of $1 million was made in connection with the
enrollment of the first patient in our confirmatory Phase 3 clinical trial of
orBec® for the treatment of acute GI GVHD. Total additional milestone payments
due from Sigma-Tau for orBec® under the agreement could reach up to $9 million.
Sigma-Tau will pay us a 35% royalty (inclusive of drug supply) on net sales in
the Territory as well as pay for commercialization expenses, including launch
activities. On November 26, 2008, prior to entering the collaboration agreement,
we sold Sigma-Tau 16,666,667 common shares at $0.09 per share (the market price
at the time) for proceeds of $1,500,000 in exchange for the exclusive right to
negotiate a collaboration deal with us until March 1, 2009.
In
connection with the private placement of common stock and warrant, on September
23, 2009, we granted BAM Opportunity Fund, L.P. and Iroquois Capital Management,
LLC the right to participate in our next equity financing within 12 months from
September 28, 2009.
|
Name
of Selling Stockholder
|
|
Number
of Shares of Common Stock Owned Before the Offering (1)
|
|
|
Percent
of
Common
Stock Owned Before
the
Offering
|
|
|
Shares
Available for Sale Under This Prospectus (2)
|
|
|
Number
of Shares of Common Stock To Be Owned After Completion
of
the Offering
|
|
|
Percent
of Common Stock to be Owned After Completion
of
the Offering
|
|
|
BAM
Opportunity Fund, L.P.
|
|
9,328,090
|
(3)
|
|
|
7.6
|
%
|
|
|
11,857,707
|
|
|
|
2,652,121
|
|
|
|
1.4
|
%
|
|
Sigma-Tau
Pharmaceuticals, Inc.
|
|
47,595,521
|
(4)
|
|
|
25.2
|
%
|
|
|
5,928,854
|
|
|
|
41,666,667
|
|
|
|
22.3
|
%
|
|
Iroquois
Capital Management, LLC
|
|
4,446,640
|
(5)
|
|
|
2.4
|
%
|
|
|
4,446,640
|
|
|
|
--
|
|
|
|
*
|
|
|
JW
Partners, LP
|
|
296,442
|
(6)
|
|
|
*
|
|
|
|
296,442
|
|
|
|
--
|
|
|
|
*
|
|
|
Revach
Fund LP
|
|
1,152,985
|
(7)
|
|
|
*
|
|
|
|
355,731
|
|
|
|
797,254
|
|
|
|
*
|
|
|
Christopher
J. Schaber
|
|
5,430,093
|
|
|
|
2.8
|
%
|
|
|
118,577
|
|
|
|
5,311,516
|
|
|
|
2.8
|
%
|
|
Vasili
Myrianthopoulos/Elisabeth Myrianthopoulos JTWROS
|
|
445,831
|
|
|
|
*
|
|
|
|
118,577
|
|
|
|
327,254
|
|
|
|
*
|
|
|
Richard
Molinsky
|
|
300,660
|
|
|
|
*
|
|
|
|
148,221
|
|
|
|
152,439
|
|
|
|
*
|
|
|
John
Raphael
|
|
315
,000
|
|
|
|
*
|
|
|
|
315
,000
|
|
|
|
--
|
|
|
|
*
|
|
|
John
Raphael, Trustee of the Tara Raphael 2005 Trust
|
|
150,000
|
|
|
|
*
|
|
|
|
150,000
|
|
|
|
--
|
|
|
|
*
|
|
|
John
Raphael, Trustee of the Michael Raphael 2008 Trust
|
|
150,000
|
|
|
|
*
|
|
|
|
150,000
|
|
|
|
--
|
|
|
|
*
|
|
|
John
J. Gorman, Trustee of the Tejas Securities Group, Inc. 401K Plan and Trust
FBO John J. Gorman
|
|
450,000
|
|
|
|
*
|
|
|
|
450,000
|
|
|
|
--
|
|
|
|
*
|
|
|
Michelle
Whalen
|
|
300,000
|
|
|
|
*
|
|
|
|
300,000
|
|
|
|
--
|
|
|
|
*
|
|
|
Hal
Tunick
|
|
750,000
|
|
|
|
*
|
|
|
|
750,000
|
|
|
|
--
|
|
|
|
*
|
|
|
Symmetry
Parallax Fund
|
|
355,731
|
(8)
|
|
|
*
|
|
|
|
355,731
|
|
|
|
--
|
|
|
|
*
|
|
|
Alison
Bawden
|
|
12,676
|
|
|
|
*
|
|
|
|
5,930
|
|
|
|
6,746
|
|
|
|
*
|
|
|
Joseph
Rosen
|
|
296,442
|
|
|
|
*
|
|
|
|
296,442
|
|
|
|
--
|
|
|
|
*
|
|
|
Moody
Capital, LLC
|
|
54,348
|
(9)
|
|
|
*
|
|
|
|
54,348
|
|
|
|
--
|
|
|
|
*
|
|
|
BioMed
Cap, LLC
|
|
489,130
|
(10)
|
|
|
*
|
|
|
|
489,130
|
|
|
|
--
|
|
|
|
*
|
|
|
Little
Gem Life Sciences Fund LLC
|
|
17
,743
|
(11)
|
|
|
*
|
|
|
|
17
,743
|
|
|
|
--
|
|
|
|
*
|
|
|
Griffin
Securities, Inc.
|
|
150,000
|
(12)
|
|
|
*
|
|
|
|
150,000
|
|
|
|
--
|
|
|
|
*
|
|
|
Biotex
Pharma Investments, LLC
|
|
37,395,000
|
(13)
|
|
|
18.1
|
%
|
|
|
10,000,000
|
|
|
|
27,395,000
|
|
|
|
13.9
|
%
|
_____________________
|
*
|
Less
than 1%.
|
|
|
|
|
**
|
Beneficial
ownership is determined in accordance with the rules of the SEC. Shares of
common stock subject to options or warrants currently exercisable or
exercisable within 60 days of April 21, 2010, are deemed outstanding for
computing the percentage ownership of the stockholder holding the options
or warrants, but are not deemed outstanding for computing the percentage
ownership of any other stockholder. Percentage of ownership is based on
186,972,036 shares of common stock outstanding as of April 21,
2010.
|
|
|
|
|
(1)
|
The
shares of common stock issuable upon the exercise of warrants are as
follows: BAM Opportunity Fund, LP - 3,952,569; Sigma-Tau Pharmaceuticals,
Inc. - 1,976,285; Iroquois Capital Management, LLC - 1,482,213; JW
Partners, LP - 98,814; Revach Fund LP - 118,577; Christopher Schaber -
39,526; Vasili Myrianthopoulos/Elisabeth Myrianthopoulos JTWROS - 39,526;
Richard Molinsky - 49,407; John Raphael - 115,000 ; John Raphael, Trustee
of the Tara Raphael 2005 Trust - 50,000; John Raphael, Trustee of the
Michael Raphael 2008 Trust - 50,000; John J. Gorman, Trustee of the
Tejas Securities Group, Inc. 401K Plan and Trust FBO John J. Gorman -
150,000; Michelle Whalen - 100,000; Hal Tunick - 250,000; Symmetry
Parallax Fund - 118,577; Alison Bawden - 1,977; Joseph Rosen - 98,814;
Moody Capital, LLC - 54,348 ; BioMed Cap, LLC 489,130; Little Gem Life
Sciences Fund LLC - 17,743; Griffin Securities, Inc. - 150,000; and Biotex
Pharma Investments, LLC - 20,000,000.
|
|
|
|
|
(2)
|
The
shares of common stock issuable upon the exercise of warrants are as
follows: BAM Opportunity Fund, LP - 3,952,569; Sigma-Tau Pharmaceuticals,
Inc. - 1,976,285; Iroquois Capital Management, LLC - 1,482,213; JW
Partners, LP - 98,814; Revach Fund LP - 118,577; Christopher Schaber -
39,526; Vasili Myrianthopoulos/Elisabeth Myrianthopoulos JTWROS - 39,526;
Richard Molinsky - 49,407; John Raphael - 115,000 ; John Raphael, Trustee
of the Tara Raphael 2005 Trust - 50,000; John Raphael, Trustee of the
Michael Raphael 2008 Trust - 50,000; John J. Gorman, Trustee of the Tejas
Securities Group, Inc. 401K Plan and Trust FBO John J. Gorman - 150,000;
Michelle Whalen - 100,000; Hal Tunick - 250,000; Symmetry Parallax Fund -
118,577; Alison Bawden - 1,977; Joseph Rosen - 98,814; Moody Capital,
LLC - 54,348; BioMed Cap, LLC 489,130 ; Little Gem Life Sciences Fund
LLC - 17,743; Griffin Securities, Inc. - 150,000; and Biotex Pharma
Investments, LLC - 10,000,000.
|
|
|
|
|
(3)
|
Includes
1,422,952 shares of common stock underlying warrants that are presently
exercisable and does not include 2,529,617 shares of common stock
underlying warrants that can only be exercised if the exercise of such
warrants does not give BAM Opportunity Fund, L.P. beneficial ownership of
more than 4.99% of the Company’s issued and outstanding shares of common
stock at the time the warrants are exercised or BAM Opportunity Fund, L.P.
provides the Company with 61 days prior notice of its desire to waive the
4.99% ownership restriction. BAM Capital, LLC, BAM Management,
LLC, Ross Berman and Hal Mintz exercise voting or dispositive power with
respect to the shares held of record by BAM Opportunity Fund,
L.P. Each of the foregoing disclaims beneficial ownership
except to the extent of its or his pecuniary interest.
|
|
|
|
|
(4)
|
Gregg
Lapointe, Paolo Cavazza and Claudio Cavazza exercise voting or dispositive
power with respect to the shares held of record by Sigma-Tau
Pharmaceuticals, Inc. The amount does not include 1,546,870
shares of common stock held by Paolo Cavazza.
|
|
|
|
|
(5)
|
Joshua
Silverman exercises voting or dispositive power with respect to the shares
held of record by Iroquois Capital Management, LLC.
|
|
|
|
|
(6)
|
Jason
Wild exercises voting or dispositive power with respect to the shares held
of record by JW Partners, LP.
|
|
|
|
|
(7)
|
Chaim
Davis exercises sole voting or dispositive power with respect to the
shares held of record by Revach Fund LP.
|
|
|
|
|
(8)
|
Kellie
Seringer exercises voting or dispositive power with respect to the shares
held of record by Symmetry Parallax Fund.
|
|
|
|
|
(9)
|
Timothy
Moody exercises sole voting or dispositive power with respect to the
shares held of record by Moody Capital, LLC.
|
|
|
|
|
(10)
|
David
Coherd exercises sole voting or dispositive power with respect to the
shares held of record by BioMed Cap, LLC.
|
|
|
|
|
(11)
|
Jeffrey
Benison is the principal of Little Gem Life Sciences Fund LLC, and is
deemed to be the beneficial owner of all of the shares of common stock
owned by Little Gem Life Sciences Fund LLC. Mr. Benison
exercises voting or dispositive power with respect to the shares held of
record by Little Gem Life Sciences Fund LLC.
|
|
|
|
|
(12)
|
Adrian
Stecyk exercises voting or dispositive power with respect to the shares
held of record by Griffin Securities, Inc.
|
|
|
|
|
(13)
|
Robert
Kessler exercises voting or dispositive power with respect to the shares
held of record by Biotex Pharma Investments,
LLC.
|
This
prospectus relates to shares of our common stock that may be offered and sold
from time to time by the Selling Stockholders. We will receive no proceeds from
the sale of shares of common stock in this offering. However, we may receive up
to approximately $5,399,196
in proceeds from the exercise of the warrants to purchase our common stock. We
intend to use the net proceeds from the exercise of the warrants as working
capital to cover costs associated with the completion of the confirmatory Phase
3 clinical trial for orBec®, other research and development expenses, and
general overhead costs including salaries until such time, if ever, as we are
able to generate a positive cash flow from operations.
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The Selling Stockholders may
use any one or more of the following methods when selling shares:
|
|
•
|
ordinary
brokerage transactions and transactions in which the broker dealer
solicits investors;
|
|
|
•
|
block
trades in which the broker dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
•
|
purchases
by a broker dealer as principal and resale by the broker dealer for its
account;
|
|
|
•
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
•
|
privately
negotiated transactions;
|
|
|
•
|
to
cover short sales and other hedging transactions made after the date that
the registration statement of which this prospectus is a part is declared
effective by the Securities and Exchange Commission;
|
|
|
•
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share;
|
|
|
•
|
a
combination of any such methods of sale; and
|
|
|
•
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker
dealers engaged by the Selling Stockholders may arrange for other brokers
dealers to participate in sales. Broker dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker dealer
acts as agent for the investor of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of common stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of Selling
Stockholders to include the pledgee, transferee or other successors in interest
as Selling Stockholders under this prospectus.
Upon our
being notified in writing by a Selling Stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing
(i) the name of each such Selling Stockholder and of the participating
broker-dealer(s), (ii) the number of shares involved, (iii) the price at which
such shares of common stock were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus, and (vi) other facts
material to the transaction. In addition, upon our being notified in
writing by a Selling Stockholder that a donee or pledge intends to sell more
than 500 shares of common stock, a supplement to this prospectus will be filed
if then required in accordance with applicable securities law.
The
Selling Stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
Selling Stockholders and any broker dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any
commissions received by such broker dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, that can be
attributed to the sale of securities will be paid by the Selling Stockholders
and/or the purchasers of the securities.
Each
Selling Stockholder that is affiliated with a registered broker-dealer has
confirmed to us that, at the time it acquired the securities subject to the
registration statement of which this prospectus is a part, it did not have any
agreement or understanding, directly or indirectly, with any person to
distribute any of such securities. The Company has advised each
Selling Stockholder that it may not use shares registered on the registration
statement of which this prospectus is a part to cover short sales of our common
stock made prior to the date on which such registration statement was declared
effective by the SEC.
We are
required to pay certain fees and expenses incident to the registration of the
shares. We have agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act. We agreed to keep this prospectus effective until the
earlier of (i) the date on which the shares may be resold by the Selling
Stockholders without registration and without regard to any volume limitations
by reason of Rule 144(e) under the Securities Act or any other rule of similar
effect and (ii) such time as all of the shares have been publicly
sold.
Our
authorized capital stock consists of 405,000,000 shares of capital stock, of
which 400,000,000 shares are common stock, par value $0.001 per share, 4,600,000
shares are preferred stock, par value $0.001 per share, 200,000 are Series B
Convertible Preferred Stock, par value $0.05 per share, and 200,000 shares are
Series C Convertible Preferred Stock, par value $0.05 per share. As of April 21,
2010, there were issued and outstanding 186,972,036 shares of common stock,
options to purchase 18,763,539 shares of common stock and warrants to purchase
42,527,874 shares of common stock. The amount outstanding includes the
17,352,569 shares of common stock issued to the Selling
Stockholders.
Common
Stock
Holders
of our common stock are entitled to one vote for each share held in the election
of directors and in all other matters to be voted on by the
stockholders. There is no cumulative voting in the election of
directors. Holders of common stock are entitled to receive dividends
as may be declared from time to time by our board of directors out of funds
legally available therefor. In the event of liquidation, dissolution or winding
up of the corporation, holders of common stock are to share in all assets
remaining after the payment of liabilities. Holders of common stock
have no pre-emptive or conversion rights and are not subject to further calls or
assessments. There are no redemption or sinking fund provisions
applicable to the common stock. The rights of the holders of the
common stock are subject to any rights that may be fixed for holders of
preferred stock. All of the outstanding shares of common stock are
fully paid and non-assessable.
Preferred
Stock
Our
Certificate of Incorporation authorizes the issuance of 4,600,000 shares of
preferred stock with designations, rights, and preferences as may be determined
from time to time by the board of directors. The board of directors
is empowered, without stockholder approval, to designate and issue additional
series of preferred stock with dividend, liquidation, conversion, voting or
other rights, including the right to issue convertible securities with no
limitations on conversion, which could adversely affect the voting power or
other rights of the holders of our common stock, substantially dilute a common
stockholder’s interest and depress the price of our common stock.
No shares
of the Series B Convertible Preferred Stock or the Series C Convertible
Preferred Stock are outstanding.
Our
common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under
the symbol "SNGX." Prior to September 30, 2009, around the time of our corporate
name change, our stock was quoted under the symbol “DORB.” The following table
sets forth, for the periods indicated, the high and low sales prices per share
of our common stock as reported by the OTCBB.
| |
|
Price Range
|
|
|
Period
|
|
High
|
|
|
Low
|
|
|
Year
Ended December 31, 2008:
|
|
|
First Quarter
|
|
$ |
0.25 |
|
|
$ |
0.16 |
|
|
Second Quarter
|
|
$ |
0.19 |
|
|
$ |
0.11 |
|
|
Third Quarter
|
|
$ |
0.15 |
|
|
$ |
0.09 |
|
|
Fourth Quarter
|
|
$ |
0.12 |
|
|
$ |
0.04 |
|
|
Year
Ended December 31, 2009:
|
|
|
First Quarter
|
|
$ |
0.18 |
|
|
$ |
0.06 |
|
|
Second Quarter
|
|
$ |
0.24 |
|
|
$ |
0.09 |
|
|
Third Quarter
|
|
$ |
0.38 |
|
|
$ |
0.17 |
|
|
Fourth Quarter
|
|
$ |
0.36 |
|
|
$ |
0.18 |
|
As of
April 21, 2010, the last reported price of our common stock quoted on the OTCBB
was $0.29 per share. The OTCBB prices set forth above represent inter-dealer
quotations, without adjustment for retail mark-up, mark-down or commission, and
may not represent the prices of actual transactions. As of April 21, 2010, we
have approximately 986 stockholders of record
of our common stock.
Dividends
We have
never declared nor paid any cash dividends, and currently intend to retain all
our cash and any earnings for use in our business and, therefore, do not
anticipate paying any cash dividends in the foreseeable future. Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon our consolidated financial
condition, results of operations, capital requirements and such other factors as
the Board of Directors deems relevant.
ACT
LIABILITIES
Section
102(b)(7) of the Delaware General Corporation Law allows companies to limit the
personal liability of its directors to the company or its stockholders for
monetary damages for breach of a fiduciary duty. Article IX of the
Company’s Certificate of Incorporation, as amended, provides for the limitation
of personal liability of the directors of the Company as follows:
“A
Director of the Corporation shall have no personal liability to the Corporation
or its stockholders for monetary damages for breach of his fiduciary duty as a
Director; provided, however, this Article shall not eliminate or limit the
liability of a Director (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) for the unlawful payment of dividends or unlawful stock repurchases under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the Director derived an improper personal benefit. If
the General Corporation Law is amended after approval by the stockholders of
this Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so
amended.”
Article
VIII of the Company’s Bylaws, as amended and restated, provide for
indemnification of directors and officers to the fullest extent permitted by the
Delaware General Corporation Law.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
The
audited consolidated financial statements of Soligenix, Inc. and subsidiaries
included in the Registration Statement have been audited by Amper, Politziner
& Mattia, LLP, an independent registered public accounting firm, as set
forth in their report appearing herein. Such financial statements
have been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The
validity of the shares of our common stock offered by the Selling Stockholders
will be passed upon by the law firm of Edwards Angell Palmer & Dodge LLP,
West Palm Beach, Florida.
SOLIGENIX,
INC. AND SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
Table
of Contents
|
|
Page
|
|
|
|
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-2
|
| |
|
|
Consolidated
Statements of Operations for the Years Ended December 31, 2009 and
2008
|
F-3
|
| |
|
|
Consolidated
Statements of Changes in Shareholders’ Equity for the Years Ended December
31, 2009 and 2008
|
F-4
|
| |
|
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008
|
F-5
|
| |
|
|
Notes
to Financial Statements
|
F-6
|
| |
|
|
Report
of Independent Registered Public Accounting Firms
|
F-21
|
Soligenix,
Inc. and Subsidiaries
Consolidated
Balance Sheets
As
of December 31,
|
|
|
2009
|
|
|
2008
|
|
| Assets |
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
7,692,011 |
|
|
$ |
1,475,466 |
|
|
Grants
receivable
|
|
|
23,632 |
|
|
|
278,316 |
|
|
Inventory,
net
|
|
|
42,865 |
|
|
|
82,182 |
|
|
Prepaid
expenses
|
|
|
141,313 |
|
|
|
86,837 |
|
|
Total
current assets
|
|
|
7,899,821 |
|
|
|
1,922,801 |
|
|
|
|
|
|
|
|
|
|
|
|
Office
furniture and equipment, net
|
|
|
21,172 |
|
|
|
21,217 |
|
|
Intangible
assets, net
|
|
|
1,463,289 |
|
|
|
1,418,717 |
|
|
Total
assets
|
|
$ |
9,384,282 |
|
|
$ |
3,362,735 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
844,857 |
|
|
$ |
1,015,005 |
|
|
Accrued
compensation
|
|
|
365,199 |
|
|
|
370,614 |
|
|
Total
current liabilities
|
|
|
1,210,056 |
|
|
|
1,385,619 |
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
|
Preferred
stock; 5,000,000 shares authorized; none issued or
outstanding
|
|
|
- |
|
|
|
- |
|
|
Common
stock, $.001 par value; 400,000,000 shares authorized; 185,655,720 shares
and 118,610,704 shares
issued
and outstanding in 2009 and 2008, respectively
|
|
|
185,656 |
|
|
|
118,610 |
|
|
Additional
paid-in capital
|
|
|
116,340,770 |
|
|
|
104,176,253 |
|
|
Accumulated
deficit
|
|
|
(108,352,200 |
) |
|
|
(102,317,747 |
) |
|
Total
shareholders’ equity
|
|
|
8,174,226 |
|
|
|
1,977,116 |
|
|
Total
liabilities and shareholders’ equity
|
|
$ |
9,384,282 |
|
|
$ |
3,362,735 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc. and Subsidiaries
Consolidated
Statements of Operations
For
the Years Ended December 31,
|
|
|
2009
|
|
|
2008
|
|
|
Revenues,
principally from grants
|
|
$ |
2,816,037 |
|
|
$ |
2,310,265 |
|
|
Cost
of revenues
|
|
|
(1,483,641 |
) |
|
|
(1,886,431 |
) |
|
Gross
profit
|
|
|
1,332,396 |
|
|
|
423,834 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
4,523,375 |
|
|
|
1,552,323 |
|
|
General
and administrative
|
|
|
2,281,251 |
|
|
|
1,941,719 |
|
|
Stock-based
compensation - research and development
|
|
|
210,834 |
|
|
|
182,168 |
|
|
Stock-based
compensation - general and administrative
|
|
|
368,232 |
|
|
|
203,448 |
|
|
Total
operating expenses
|
|
|
7,383,692 |
|
|
|
3,879,658 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(6,051,296 |
) |
|
|
(3,455,824 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
21,920 |
|
|
|
37,073 |
|
|
Interest
expense
|
|
|
(2,678 |
) |
|
|
(3,276 |
) |
|
Other
expense
|
|
|
(2,399 |
) |
|
|
- |
|
|
Total
other income (expense)
|
|
|
16,843 |
|
|
|
33,797 |
|
|
Net
loss
|
|
$ |
(6,034,453 |
) |
|
$ |
(3,422,027 |
) |
|
Basic
and diluted net loss per share
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
Basic
and diluted weighted average common shares outstanding
|
|
|
167,515,043 |
|
|
|
101,881,991 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc. and Subsidiaries
Consolidated
Statements of Changes in Shareholders’ Equity (Deficit)
For
the Years Ended December 31, 2009 and 2008
|
|
|
Common Stock
|
|
|
Additional
Paid–In
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance,
January 1, 2008
|
|
|
94,996,547 |
|
|
$ |
94,996 |
|
|
$ |
101,391,090 |
|
|
$ |
(98,895,720 |
) |
|
$ |
(2,590,366 |
) |
|
Issuance
of common stock from private placement
|
|
|
3,658,890 |
|
|
|
3,659 |
|
|
|
654,940 |
|
|
|
- |
|
|
|
658,599 |
|
|
Issuance
of common stock for commitment shares - Fusion
|
|
|
1,369,125 |
|
|
|
1,369 |
|
|
|
(1,369 |
) |
|
|
- |
|
|
|
- |
|
|
Issuance
of common stock for execution of letter of intent
|
|
|
16,666,667 |
|
|
|
16,667 |
|
|
|
1,483,333 |
|
|
|
- |
|
|
|
1,500,000 |
|
|
Issuance
of common stock pursuant to equity line agreement - Fusion
|
|
|
993,084 |
|
|
|
993 |
|
|
|
126,507 |
|
|
|
- |
|
|
|
127,500 |
|
|
Issuance
of common stock to vendors
|
|
|
758,082 |
|
|
|
758 |
|
|
|
110,440 |
|
|
|
- |
|
|
|
111,198 |
|
|
Issuance
of common stock as payment to employees
|
|
|
168,309 |
|
|
|
168 |
|
|
|
25,696 |
|
|
|
- |
|
|
|
25,864 |
|
|
Stock-based
compensation expense
|
|
|
- |
|
|
|
- |
|
|
|
385,616 |
|
|
|
- |
|
|
|
385,616 |
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,422,027 |
) |
|
|
(3,422,027 |
) |
|
Balance,
December 31, 2008
|
|
|
118,610,704 |
|
|
$ |
118,610 |
|
|
$ |
104,176,253 |
|
|
$ |
(102,317,747 |
) |
|
$ |
1,977,116 |
|
|
Issuance
of common stock from private placements, net of expenses of
$347,000
|
|
|
38,266,602 |
|
|
|
38,267 |
|
|
|
6,488,995 |
|
|
|
- |
|
|
|
6,527,262 |
|
|
Issuance
of common stock for collaboration and supply agreement with Sigma
Tau
|
|
|
25,000,000 |
|
|
|
25,000 |
|
|
|
4,375,000 |
|
|
|
- |
|
|
|
4,400,000 |
|
|
Issuance
of common stock pursuant to equity line agreement - Fusion
|
|
|
708,989 |
|
|
|
709 |
|
|
|
114,292 |
|
|
|
- |
|
|
|
115,001 |
|
|
Issuance
of common stock to vendors
|
|
|
2,500,000 |
|
|
|
2,500 |
|
|
|
297,500 |
|
|
|
- |
|
|
|
300,000 |
|
|
Issuance
of common stock warrants to vendors
|
|
|
- |
|
|
|
- |
|
|
|
190,655 |
|
|
|
- |
|
|
|
190,655 |
|
|
Issuance
of common stock to former employee
|
|
|
569,425 |
|
|
|
570 |
|
|
|
119,009 |
|
|
|
- |
|
|
|
119,579 |
|
|
Stock-based
compensation expense
|
|
|
- |
|
|
|
- |
|
|
|
579,066 |
|
|
|
- |
|
|
|
579,066 |
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,034,453 |
) |
|
|
(6,034,453 |
) |
|
Balance,
December 31, 2009
|
|
|
185,655,720 |
|
|
$ |
185,656 |
|
|
$ |
116,340,770 |
|
|
$ |
(108,352,200 |
) |
|
$ |
8,174,226 |
|
The
accompanying notes are an integral part of these financial
statements.
Soligenix,
Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
For
the Years Ended December 31,
|
|
|
2009
|
|
|
2008
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(6,034,453 |
) |
|
$ |
(3,422,027 |
) |
|
Adjustments
to reconcile net loss to net cash use in
operating activities:
|
|
|
|
|
|
|
|
|
|
Amortization
and depreciation
|
|
|
175,604 |
|
|
|
149,183 |
|
|
Inventory reserve
|
|
|
50,000 |
|
|
|
100,000 |
|
|
Stock or warrants issued in
exchange for services
|
|
|
490,654 |
|
|
|
137,062 |
|
|
Stock-based
compensation
|
|
|
579,066 |
|
|
|
385,616 |
|
|
Stock issued to former
employee
|
|
|
119,579 |
|
|
|
- |
|
|
Loss on disposal of fixed
assets
|
|
|
2,399 |
|
|
|
- |
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Grants receivable
|
|
|
254,684 |
|
|
|
(180,471 |
) |
|
Inventory
|
|
|
(10,683 |
) |
|
|
(182,182 |
) |
|
Prepaid expenses
|
|
|
(54,476 |
) |
|
|
32,341 |
|
|
Accounts payable
|
|
|
(170,148 |
) |
|
|
167,396 |
|
|
Accrued
compensation
|
|
|
(5,415 |
) |
|
|
24,710 |
|
|
Total adjustments
|
|
|
1,431,264 |
|
|
|
633,655 |
|
|
Net cash used in operating
activities
|
|
|
(4,603,189 |
) |
|
|
(2,788,372 |
) |
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of intangible assets
|
|
|
(206,799 |
) |
|
|
(237,113 |
) |
|
Purchase
of office equipment
|
|
|
(15,730 |
) |
|
|
(5,277 |
) |
|
Net cash used in investing
activities
|
|
|
(222,529 |
) |
|
|
(242,390 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
Net
proceeds from sale of common stock
|
|
|
10,927,262 |
|
|
|
2,158,600 |
|
|
Proceeds
from sale of common stock pursuant to equity line
|
|
|
115,001 |
|
|
|
127,500 |
|
|
Net cash provided by financing
activities
|
|
|
11,042,263 |
|
|
|
2,286,100 |
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
6,216,545 |
|
|
|
(744,662 |
) |
|
Cash
and cash equivalents at beginning of period
|
|
|
1,475,466 |
|
|
|
2,220,128 |
|
|
Cash and cash equivalents at end
of period
|
|
$ |
7,692,011 |
|
|
$ |
1,475,466 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow:
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$ |
2,678 |
|
|
$ |
3,276 |
|
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
|
Issuance of commitment
shares
|
|
$ |
- |
|
|
$ |
272,484 |
|
The
accompanying notes are an integral part of these financial
statements
Soligenix,
Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
Note 1. Nature of
Business
Basis of
Presentation
Soligenix,
Inc. (the “Company”), formerly known as DOR BioPharma, Inc., is a late-stage
biopharmaceutical company that was incorporated in 1987 and is focused on
developing products to treat the life-threatening side effects of cancer
treatments and serious gastrointestinal diseases where there remains an unmet
medical need, as well as developing biodefense vaccines and therapeutics. The
Company maintains two active business segments: BioTherapeutics and BioDefense.
Soligenix’s BioTherapeutics business segment intends to develop orBec® (oral
beclomethasone dipropionate, or oral BDP) and other biotherapeutic products,
including LPMTM-Leuprolide.
Soligenix’s BioDefense business segment intends to convert its ricin and
botulinum toxin vaccine programs and radiation injury program from early stage
development to advanced development and manufacturing.
The
Company generates revenues from the National Institutes of Health under three
active BioDefense grants, the successful achievement of development milestones
under collaborative agreements, and its Named Patient Access Program (“NPAP”)
partners for orBec®.
The
Company is subject to risks common to companies in the biotechnology industry
including, but not limited to, development of new technological innovations,
dependence on key personnel, protections of proprietary technology, compliance
with FDA regulations, litigation, and product liability.
Liquidity
As of
December 31, 2009, the Company had cash and cash equivalents of $7,692,011 as
compared to $1,475,466 as of December 31, 2008, representing an increase of
$6,216,545. As of December 31, 2009, the Company had working capital of
$6,689,765 as compared to working capital of $537,182 as of December 31, 2008,
representing an increase of $6,152,583. The increase was the result
of the execution of our collaboration agreement and ensuing sale of our common
stock to our commercialization partner Sigma-Tau of $4.5 million, plus the $6.5
million in proceeds from the sale of our common stock and warrants to accredited
investors, less the cash used in operating and investing activities over the
period.
For the
year ended December 31, 2009, the Company’s cash used in operating activities
was $4,603,189, as compared to $2,788,372 for the same period in 2008. The
increase in spending was attributable to the preparation for and conduct of the
confirmatory Phase 3 clinical trial of orBec® in
the treatment of GI GVHD.
Management’s
business activities can be outlined as follows:
|
·
|
complete
the pivotal Phase 3 confirmatory clinical trial for orBec®
in the treatment of acute gastrointestinal Graft-versus-Host
disease (“GI GVHD”);
|
|
·
|
identify
a development and marketing partner for orBec®
for territories outside of North America, as we have granted an exclusive
license to Sigma-Tau Pharmaceuticals, Inc. (“Sigma-Tau”) to
commercialize orBec®
in the U.S., Canada and Mexico;
|
|
·
|
conduct
and complete a Phase 2 clinical trial of orBec®
for the prevention of acute GVHD;
|
|
·
|
evaluate
and initiate additional clinical trials to explore the effectiveness of
oral BDP in other therapeutic indications involving inflammatory
conditions of the gastrointestinal tract such as radiation enteritis,
radiation injury and Crohn’s
disease;
|
|
·
|
reinitiate
development of our other biotherapeutics products, including LPMTM
Leuprolide;
|
|
·
|
continue
to secure additional government funding for each of our BioDefense
programs through grants, contracts and
procurements;
|
|
·
|
convert
our biodefense vaccine programs from early stage development to advanced
development and manufacturing with the potential to collaborate and/or
partner with other companies in the biodefense
area;
|
|
·
|
make
orBec® available
worldwide through the Named Patient Access Program for the treatment of
acute GI GVHD;
|
|
·
|
acquire
or in-license new clinical-stage compounds for development;
and
|
|
·
|
explore
other business development and acquisition
strategies.
|
Based on
the Company’s current rate of cash outflows, cash on hand, the timely collection
of milestone payments under collaboration agreements, proceeds from our grant
programs, and potential minimal proceeds from the Fusion Capital
transaction, management believes that its current cash will be sufficient to
meet the anticipated cash needs for working capital and capital expenditures
beyond the first quarter of 2011.
The
Company’s plans with respect to its liquidity management include the
following:
|
·
|
We
have $10 million in active grant funding still available to support our
research programs in 2010 and beyond. Additionally, we have
submitted additional grant applications for further support of these
programs and others with various funding agencies, and received
encouraging feedback to date on the likelihood of
funding.
|
|
·
|
We
have continued to use equity instruments to provide a portion of the
compensation due to vendors and collaboration partners and expect to
continue to do so for the foreseeable
future.
|
|
·
|
We
have approximately $7.7 million in available capacity under our Fusion
Capital equity facility. Although we have historically drawn
amounts in modest amounts under this agreement, we could draw more within
certain contractual parameters.
|
|
·
|
We
may seek additional capital in the private and/or public equity markets to
continue our operations, respond to competitive pressures, develop
new products and services, and to support new strategic
partnerships. We are currently evaluating additional equity financing
opportunities and may execute them when appropriate. However,
there can be no assurances that we can consummate such a transaction, or
consummate a transaction at favorable
pricing.
|
Note 2. Summary of Significant Accounting
Policies
Principles of
Consolidation
The
consolidated financial statements include Soligenix, Inc., and its wholly and
majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated as a result of consolidation.
Operating
Segments
Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated on a regular basis by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources to an individual segment and in assessing the performance of
the segment. The Company divides its operations into two operating segments:
BioTherapeutics and BioDefense.
Grants
Receivable
Receivables
consist of unbilled amounts due from grants from the National Institute of
Health of the U.S. Federal Government for costs incurred prior to the period end
under reimbursement contracts. The amounts were billed in the month
subsequent to period end and collected shortly thereafter. The Company considers
the grants receivable to be fully collectible; accordingly, no allowance for
doubtful amounts has been established. If amounts become uncollectible, they are
charged to operations.
Intangible
Assets
One of
the most significant estimates or judgments that the Company makes is whether to
capitalize or expense patent and license costs. The Company makes this judgment
based on whether the technology has alternative future uses, as defined in
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 730, Research and
Development. Based on this consideration, the Company capitalizes
payments made to legal firms that are engaged in filing and protecting rights to
intellectual property and rights for our current products in both the domestic
and international markets. The Company believes that patent rights are one of
its most valuable assets. Patents and patent applications are a key component of
intellectual property, especially in the early stage of product development, as
their purchase and maintenance gives the Company access to key product
development rights from Soligenix’s academic and industrial partners. These
rights can also be sold or sub-licensed as part of its strategy to partner its
products at each stage of development as the intangible assets have alternative
future use. The legal costs incurred for these patents consist of work designed
to protect, preserve, maintain and perhaps extend the lives of the patents. The
Company capitalizes such costs and amortizes intangibles over their expected
useful life – generally a period of 11 to 16 years.
The
Company capitalized $206,799 and $237,113
in patent related costs during the years ended December 31, 2009 and 2008, respectively.
Impairment of Long-Lived
Assets
Office
furniture and equipment and intangible assets are evaluated and reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The Company recognizes impairment of
long-lived assets in the event the net book value of such assets exceeds the
estimated future undiscounted cash flows attributable to such assets. If the sum
of the expected undiscounted cash flows is less than the carrying value of the
related asset or group of assets, a loss is recognized for the difference
between the fair value and the carrying value of the related asset or group of
assets. Such analyses necessarily involve significant judgment.
The
Company did not record any impairment of intangible assets for the years ended
December 31, 2009 or 2008.
Inventory
Inventories
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method and includes the cost of materials and
overhead. Inventory consists of finished goods related to the orBec® NPAP.
The Company records an allowance as needed for excess
inventory. During 2008 and 2009 allowances of $100,000 and $150,000,
respectively, were provided. This allowance will be evaluated on a periodic
basis and adjustments will be made as required.
Fair Value of Financial
Instruments
Accounting
principles generally accepted in the U.S. require that fair values be disclosed
for the Company’s financial instruments. The carrying amounts of the Company’s
financial instruments, which include grants receivable and current liabilities,
are considered to be representative of their respective fair
values.
Revenue
Recognition
The
Company’s revenues are generated from NIH grants, the achievement of licensing
milestones and NPAP sales of orBec®. The
revenue from NIH grants are based upon subcontractor costs and internal costs
incurred that are specifically covered by the grants, plus a facilities and
administrative rate that provides funding for overhead expenses. These revenues
are recognized when expenses have been incurred by subcontractors or when the
Company incurs internal expenses that are related to the grant. Licensing
milestone revenues are recorded when earned. Revenue from NPAP sales of
orBec® are
recognized when the product is shipped.
Research and Development
Costs
Research
and development costs are charged to expense when incurred. Research and
development includes costs such as clinical trial expenses, contracted research
and license agreement fees with no alternative future use, supplies and
materials, salaries and employee benefits, equipment depreciation and allocation
of various corporate costs. Purchased in-process research and development
expense represents the value assigned or paid for acquired research and
development for which there is no alternative future use as of the date of
acquisition.
Stock-Based
Compensation
Stock
options are issued with an exercise price equal to the market price on the date
of issuance. Stock options issued to directors are fully vested upon issuance.
Stock options issued to employees generally vest 25% upfront, then 25% each year
for a period of three years. Stock options vest over each three month period
from the date of issuance to the end of the three year period. These options
have a ten year life for as long as the individuals remain employees or
directors. In general when an employee or director terminates their position the
options will expire within six months, unless otherwise extended by the
Board.
The fair
value of options in accordance with FASB ASC 718, Stock Compensation, was
estimated using the Black-Scholes option-pricing model and the following
weighted-average assumptions:
|
·
|
an
expected life of 4 years;
|
|
·
|
volatilities
ranging from 126% to 130% for 2009 and 115% for 2008;
and
|
|
·
|
average
risk-free interest rates of 1.8% and 1.1% in 2009 and 2008,
respectively.
|
The
Company estimates these values based on the assumptions that have been
historically available. The fair value of each option grant made during 2009 and
2008 was estimated on the date of each grant using the Black-Scholes option
pricing model and amortized ratably over the option’s vesting periods, which
approximates the service period. The Company awarded 3,712,500 and 6,800,000
stock options in 2009 and 2008, respectively.
Stock
compensation expense for options, warrants and shares of common stock granted to
non-employees has been determined in accordance with FASB ASC 718, Stock Compensation, and FASB
ASC 505-50, Equity-Based
Payments to Non-Employees, and represents the fair value of the
consideration received, or the fair value of the equity instruments issued,
whichever may be more reliably measured. For options that vest over future
periods, the fair value of options granted to non-employees is amortized as the
options vest. The option’s price is re-measured using the Black-Scholes model at
the end of each three month reporting period.
Upon
exercise, shares are issued from the amended 2005 equity incentive plan and
increase the number of shares the Company has outstanding. There were no stock
option exercises during 2009 or 2008. There were forfeitures or expirations of
620,000 and 100,000 stock options during 2009 and 2008, respectively. The
intrinsic value of the stock options outstanding at December 31, 2009 was
zero.
The
intrinsic value was calculated as the difference between the Company’s common
stock closing price on the Over-the-Counter Bulletin Board at December 31, 2009
and the exercise price of the stock option issued multiplied by the number of
shares underlying the stock options. The Company’s common stock price at
December 31, 2009 was $0.25.
From time
to time, the Company issues common stock to vendors, consultants, and employees
as compensation for services performed. These shares are typically issued as
restricted stock, unless issued to non-affiliates under the 2005 Equity
Incentive Plan, where the stock may be issued as unrestricted. The restricted
stock can only have the restrictive legend removed if the shares underlying the
certificate are sold pursuant to an effective registration statement, which the
Company must file and have approved by the SEC, if the shares underlying the
certificate are sold pursuant to Rule 144, provided certain conditions are
satisfied, or if the shares are sold pursuant to another exemption from the
registration requirements of the Securities Act of 1933, as
amended. Stock-based compensation expense recognized during the
period is based on the value of the common stock at the date of grant and the
portion of share-based payment awards that is ultimately expected to vest during
the period.
Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. A valuation
allowance is established when it is more likely than not that all or a portion
of a deferred tax asset will not be realized. A review of all available positive
and negative evidence is considered, including the Company’s current and past
performance, the market environment in which the Company operates, the
utilization of past tax credits, and the length of carryback and carryforward
periods. Deferred tax assets and liabilities are measured utilizing
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. No current or
deferred income taxes have been provided through December 31, 2009 due to the
net operating losses incurred by the Company since its inception. Additionally,
the Company has not recorded a liability for unrecognized tax benefits for
December 31, 2009 and 2008.
Earnings Per
Share
Basic
earnings per share (“EPS”) excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that shared in the earnings of the entity. Since there is a large number
of options and warrants outstanding, fluctuations in the actual market price can
have a variety of results for each period presented.
|
|
For
the Year Ended
|
|
For
the Year Ended
|
|
|
December 31, 2009
|
|
December 31, 2008
|
|
|
Net Loss
|
Shares
|
EPS
|
|
Net Loss
|
Shares
|
EPS
|
|
Basic
& Diluted EPS
|
($6,034,453)
|
167,515,043
|
($0.04)
|
|
($3,422,027)
|
101,881,991
|
($0.03)
|
Options
and warrants outstanding at December 31, 2009 and 2008 were 19,311,539 and
16,370,039 options, and 42,472,874 and 20,350,148 warrants, respectively. No
options and warrants were included in the 2009 and 2008 computations of diluted
earnings per share because their effect would be anti-dilutive as a result of
losses in each of those years.
Use of Estimates and
Assumptions
The
preparation of financial statements in conformity with accounting principles
generally accepted in the U.S. requires management to make estimates and
assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
New Accounting
Pronouncements
In June
2009, the FASB issued ASC 105,
Generally Accepted Accounting Principles, which establishes the FASB
Accounting Standards Codification as the sole source of authoritative generally
accepted accounting principles. The Codification supersedes existing GAAP for
nongovernmental entities. Pursuant to the provisions of FASB ASC 105, the
Company has updated references to GAAP in its financial statements issued for
the period ended September 30, 2009 and thereafter. The implementation of these
standards did not have any effect on the Company’s consolidated financial
statements.
In
October 2009, the FASB issued ASC 605-25, Revenue Recognition – Multiple
Element Arrangements, which defines a milestone and clarifies whether a
vendor may recognize arrangement consideration earned from the achievement of a
milestone in its entirety in the period in which the milestone is achieved.
A milestone is defined as an event for which there is “substantial”
uncertainty at the date the arrangement is entered into that the event will be
achieved. The consideration earned from the achievement of a milestone is
commensurate with either the vendor’s performance to achieve the milestone or
the enhancement of the value of the delivered item and relates solely to past
performance and is reasonable relative to the deliverables and payment terms
within the arrangement. The guidance in this accounting policy does not require
use of the milestone method, and instead provides guidance on one method of
accounting that could be used to account for the arrangements that fall within
its scope. The effective date of this consensus is for fiscal years
beginning after December 15, 2009, with early adoption permitted. The Company is
evaluating if the adoption of this standard will have a material impact on its
financial statements.
In
December 2009, the FASB updated ASC 810, Consolidations, which changes
how a reporting entity determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The determination of whether a reporting entity is required to
consolidate another entity is based on, among other things, the other entity’s
purpose and design and the reporting entity’s ability to direct the activities
of the other entity that most significantly impact the other entity’s economic
performance. SFAS No. 167 will require a reporting entity to provide
additional disclosures about its involvement with variable interest entities and
any significant changes in risk exposure due to that involvement. A reporting
entity will be required to disclose how its involvement with a variable interest
entity affects the reporting entity’s financial statements. SFAS No. 167 will be
effective at the start of a reporting entity’s first fiscal year beginning after
November 15, 2009, or January 1, 2010, for a calendar year-end entity. Early
application is not permitted. The Company is evaluating if the adoption of this
standard will have a material impact on its financial statements.
Note 3. Office Furniture and
Equipment
Office
furniture and equipment are stated at cost. Depreciation is computed on a
straight-line basis over five years. Office and laboratory equipment consisted
of the following as of December 31:
|
|
|
2009
|
|
|
2008
|
|
|
Office
equipment
|
|
$ |
31,567 |
|
|
$ |
124,849 |
|
|
Office
furniture
|
|
|
2,889 |
|
|
|
5,756 |
|
|
Laboratory
equipment
|
|
|
- |
|
|
|
23,212 |
|
|
|
|
|
34,456 |
|
|
|
153,817 |
|
|
Less:
Accumulated depreciation
|
|
|
(13,284 |
) |
|
|
(132,600 |
) |
|
Office furniture and equipment,
net
|
|
$ |
21,172 |
|
|
$ |
21,217 |
|
During
2009 laboratory equipment and office equipment of with an original cost and
accumulated depreciation of $135,092 and $132,693, respectively, was written
off, resulting in a loss on disposal of $2,399 for 2009. Depreciation
expense was $13,377 and $10,001 for the years ended December 31, 2009 and 2008,
respectively.
Note 4. Intangible
Assets
The
following is a summary of intangible assets which consists of licenses and
patents:
|
|
|
Weighted
Average Amortization period
(years)
|
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net Book Value
|
|
|
December
31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
10.7 |
|
|
$ |
462,234 |
|
|
$ |
170,231 |
|
|
$ |
292,003 |
|
|
Patents
|
|
|
6.2 |
|
|
|
2,077,401 |
|
|
|
906,115 |
|
|
|
1,171,286 |
|
|
Total
|
|
|
7.0 |
|
|
$ |
2,539,635 |
|
|
$ |
1,076,346 |
|
|
$ |
1,463,289 |
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
11.7 |
|
|
$ |
462,234 |
|
|
$ |
142,994 |
|
|
$ |
319,240 |
|
|
Patents
|
|
|
9.0 |
|
|
|
1,870,603 |
|
|
|
771,126 |
|
|
|
1,099,477 |
|
|
Total
|
|
|
9.5 |
|
|
$ |
2,332,837 |
|
|
$ |
914,120 |
|
|
$ |
1,418,717 |
|
Amortization
expense was $162,227 and $139,183 in 2009 and 2008, respectively.
Based on
the balance of licenses and patents at December 31, 2009, the annual
amortization expense for each of the succeeding five years is estimated to be as
follows:
|
Year
|
|
Amortization Expense
|
|
|
2010
|
|
$ |
178,000 |
|
|
2011
|
|
|
178,000 |
|
|
2012
|
|
|
178,000 |
|
|
2013
|
|
|
178,000 |
|
|
2014
|
|
|
178,000 |
|
License
fees and royalty payments are expensed annually as incurred as the Company does
not attribute any future benefits other than within that period.
Note
5. Inventory
In the
third quarter of 2008, the Company purchased and recorded inventory for the
first time, because of the development of the NPAP programs which provided the
Company the ability to sell orBec® for
the first time. Inventory consists of finished goods. For the years
ended December 31, 2009 and 2008 the Company also recorded an allowance for
excess inventory of $150,000 and $100,000, respectively.
Note 6. Income
Taxes
Deferred
tax assets consisted of the following as of December 31:
|
|
|
2009
|
|
|
2008
|
|
|
Net
operating loss carry forwards
|
|
$ |
24,249,000 |
|
|
$ |
26,300,000 |
|
|
Orphan
drug and research and development credit carry forwards
|
|
|
3,339,000 |
|
|
|
2,000,000 |
|
|
Other
|
|
|
2,312,000 |
|
|
|
3,300,000 |
|
|
Total
|
|
|
29,000,000 |
|
|
|
31,600,000 |
|
|
Valuation
allowance
|
|
|
(29,900,000 |
) |
|
|
(31,600,000 |
) |
|
Net
deferred tax assets
|
|
$ |
- |
|
|
$ |
- |
|
At
December 31, 2009, the Company had net operating loss carry forwards of
approximately $82,000,000 for federal and state tax purposes, portions of which
are currently expiring each year until 2029. In addition, the Company had
$3,600,000 of various tax credits that start expiring from December 2009 to
December 2029. The Company may be able to utilize their NOLs to reduce future
federal and state income tax liabilities. However, these NOLs are
subject to various limitations under Internal Revenue Code (“IRC”) Section
382. IRC Section 382 limits the use of NOLs to the extent there has
been an ownership change of more than 50 percentage points. In addition, the NOL
carryforwards are subject to examination by the taxing authority and could be
adjusted or disallowed due to such exams. Although the Company has
not undergone an IRC Section 382 analysis, it is possible that the utilization
of the NOLs may be limited.
The
Company and one or more of its subsidiaries files income tax returns in the U.S.
Federal jurisdiction, and various state and local jurisdictions. The Company is
no longer subject to income tax assessment for years before 2004. However, since
the Company has incurred net operating losses in every tax year since inception,
all its income tax returns are subject to examination by the Internal Revenue
Service and state authorities for purposes of determining the amount of net
operating loss carryforward that can be used to reduce taxable
income.
The net
change in the valuation allowance for the year ended December 31, 2009 and
December 31, 2008 was a decrease of approximately $1,700,000 and increase of
$1,600,000, respectively, resulting primarily from net operating losses expiring
and generated. As a result of the Company’s continuing tax losses, the Company
has recorded a full valuation allowance against a net deferred tax
asset.
Reconciliations
of the difference between income tax benefit computed at the federal and state
statutory tax rates and the provision for income tax benefit for the years ended
December 31, 2009 and 2008 was as follows:
|
|
|
2009
|
|
|
2008
|
|
|
Income
tax loss at federal statutory rate
|
|
|
(34.00 |
)% |
|
|
(34.00 |
)% |
|
State
taxes, net of federal benefit
|
|
|
(6.50 |
) |
|
|
(6.50 |
) |
|
Valuation
allowance
|
|
|
40.50 |
|
|
|
40.50 |
|
|
Provision
for income taxes (benefit)
|
|
|
- |
% |
|
|
- |
% |
The
Company adopted FASB ASC 740-10, Uncertainty in Income Taxes.
This standard prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. The adoption did not have an effect on the
consolidated financial statements.
Note 7. Shareholders’
Equity
Preferred
Stock
The
Company has 5 million authorized shares of preferred stock, none are issued or
outstanding.
Common
Stock
The
following items represent transactions in the Company’s common stock for the
year ended December 31, 2009:
|
·
|
In
11 separate transactions during 2009, the Company issued an aggregate of
708,989 shares of common stock under its existing Fusion Capital equity
facility. The Company received an aggregate of $115,001 in proceeds which
approximated the shares’ fair market value on the date of
issuance.
|
|
·
|
In
September 2009, the Company received $4,390,200 from the completed private
placement of common stock and warrants to accredited investors. Under the
terms of the agreements, the Company sold 17,352,567 common shares
together with five year warrants to purchase up to 8,676,284 shares of the
Company’s common stock at $0.278 per share, for an aggregate price of
$4,390,200, or $0.253 per share, representing the market price as
determined by the five-day average closing price of the Company’s common
stock prior to the date of the agreements. The expiration date of the
warrants can be accelerated at the option of the Company if the Company's
common stock meets certain price thresholds. The Company would receive
additional gross proceeds of approximately $2,412,000 if they are all
exercised. The Company’s North American collaboration partner, Sigma-Tau
Pharmaceuticals, Inc., led this offering with an investment of $1
million.
|
|
·
|
In
August 2009, 569,425 shares of the Company’s common stock were issued to
the former controller, treasurer and secretary of the Company in partial
settlement of certain compensation and severance liabilities pursuant to
the employee’s employment agreement. The aggregate number of shares is
subject to future adjustment for a six month period following the
separation date should the market price fall below the original issuance
price. The former employee was granted standard piggyback registration
rights with respect to those shares. Compensation expense of $119,579 was
recorded in General & Administrative Expense for 2009 related to this
issuance, representing the fair market value of the shares at the date of
issuance.
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In
March 2009, the Company issued 2,500,000 shares of common stock pursuant
to the $400,000 ($300,000 of which was issued on this date) common stock
equity investment agreement with its clinical trials management partner,
Numoda Corporation (“Numoda”). These shares were priced at the then
current market price of $0.12 per share. The remaining $100,000 investment
was completed in January 2010 and was paid in cash. The
investment follows the collaboration between the Company and Numoda
announced in June 2008 and represents partial payment by the Company under
its collaboration agreement. The Company recognized $400,000 of research
and development costs during March 2009 as a result of this
transaction.
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In February 2009, the Company entered into a
collaboration and supply agreement with Sigma-Tau for the
commercialization of orBec®.In
connection with the execution of the collaboration agreement, the Company
entered into a common stock purchase agreement with Sigma-Tau pursuant to
which the Company sold 25,000,000 shares of common stock to Sigma-Tau for
$0.18 per share, representing an aggregate price of $4,500,000. The
purchase price was equal to one hundred fifty percent (150%) of the
average trading price of the Company’s common stock over the five trading
days prior to closing. As part of the transaction, the Company granted
Sigma-Tau certain demand and piggy-back registration
rights.
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In
January 2009, the Company received $2,384,200 from the completed private
placement of common stock and warrants to accredited investors. Under the
terms of the agreement, the Company sold 20,914,035 common shares together
with five year warrants to purchase up to 20,914,035 shares of the
Company’s common stock at $0.14 per share, for an aggregate price of
$2,384,200, or $0.114 per share, representing a premium to the Company’s
common stock market price on the date of the agreements. The expiration
date of the warrants can be accelerated if the Company's common stock
meets certain price thresholds and the Company would receive additional
gross proceeds of approximately $2,900,000 if they are all
exercised.
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Equity
Line
In
February 2008, the Company entered into a common stock purchase agreement with
Fusion Capital Fund II, LLC (“Fusion Capital”). The Fusion Capital equity
facility allows the Company to require Fusion Capital to purchase between
$80,000 and $1.0 million of the Company’s common stock every two business days,
up to an aggregate of $8.0 million over approximately a 25-month period
depending on certain conditions, including the quoted market price of the
Company’s common stock on such date. As part of the agreement, the Company
issued Fusion Capital 1,275,000 shares of common stock as a commitment fee. In
connection with the execution of the common stock purchase agreement, Fusion
Capital made an initial purchase of 2,777,778 common shares and received a four
year warrant to purchase 1,388,889 shares of common stock for $0.22 per share,
representing an aggregate price of $500,000. The Company issued an additional
75,000 shares of common stock as a commitment fee in connection with this
$500,000 purchase.
If the
Company’s stock price exceeds $0.15, then the amount required to be purchased
may be increased under certain conditions as the price of the Company’s common
stock increases. The Company cannot require Fusion Capital to purchase any
shares of the Company’s common stock on any trading days that the market price
of the Company’s common stock is less than $0.10 per share. Furthermore, for
each additional purchase by Fusion, additional commitment shares in commensurate
amounts up to a total of 1,275,000 shares will be issued based upon the relative
proportion of purchases compared to the total commitment maximum of 18.5 million
shares. The total issuance of common stock related to commitment shares for 2008
was 1,369,125 shares, which were issued to Fusion Capital and consisted of
1,275,000 shares as a commitment fee, 75,000 shares as a commitment fee for the
$500,000 invested, and 19,125 shares for the commitment fee shares on the equity
line draws totaling $127,500.
During
the year ended December 31, 2008, the Company issued 993,084 shares of common
stock under the Fusion Capital equity facility. In connection with these
issuances the Company received $127,500 in proceeds which approximated the
shares’ fair market value on the dates of issuance.
Note
8. Stock Option Plans and Warrants to Purchase Common Stock
Stock Option
Plans
The
Amended and Restated 1995 Omnibus Plan is divided into four separate equity
programs:
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1)
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the
Discretionary Option Grant Program, under which eligible persons may, at
the discretion of the Plan Administrator, be granted options to purchase
shares of common stock,
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2)
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the
Salary Investment Option Grant Program, under which eligible employees may
elect to have a portion of their base salary invested each year in options
to purchase shares of common stock,
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3)
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the
Automatic Option Grant Program, under which eligible nonemployee Board
members will automatically receive options at periodic intervals to
purchase shares of common stock,
and
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4)
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the
Director Fee Option Grant Program, under which non-employee Board members
may elect to have all, or any portion, of their annual retainer fee
otherwise payable in cash applied to a special option
grant.
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