x |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
36-3898269
(I.R.S.
Employer Identification No.)
|
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Unaudited
Condensed Consolidated Balance Sheets
|
4
|
Unaudited
Condensed Consolidated Statements of Operations
|
5
|
|
Unaudited
Condensed Consolidated Statement of Stockholders’ Equity
(Deficiency)
|
6
|
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
7
|
|
Notes
to Unaudited Condensed Consolidated Financial Statements
|
8
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
17
|
Item
3.
|
Quantitative
and Qualitative Disclosure About Market Risk
|
25
|
Item
4.
|
Controls
and Procedures
|
25
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1A.
|
Risk
Factors
|
26
|
Item
6.
|
Exhibits
|
26
|
Signatures
|
28
|
June
30,
|
December
31,
|
||||||
|
2007
|
2006
|
|||||
(Unaudited)
|
(See
Note 1)
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,790,589
|
$
|
3,029,118
|
|||
Prepaid
expenses
|
352,657
|
264,586
|
|||||
Total
current assets
|
5,143,246
|
3,293,704
|
|||||
Property
and equipment, net
|
62,904
|
83,743
|
|||||
Other
assets
|
70,506
|
70,506
|
|||||
Total
assets
|
$
|
5,276,656
|
$
|
3,447,953
|
|||
Liabilities
and Stockholders’ Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,001,849
|
$
|
1,393,296
|
|||
Accrued
expenses
|
1,528,406
|
550,029
|
|||||
Total
liabilities
|
2,530,255
|
1,943,325
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value. Authorized 1,500,000 shares; no shares
issued and
outstanding at June 30, 2007 and December 31, 2006
|
—
|
—
|
|||||
Common
stock, $.001 par value. Authorized 150,000,000 shares; 70,474,232
and
60,120,038 shares issued and outstanding at June 30, 2007 and December
31,
2006, respectively
|
70,474
|
60,120
|
|||||
Additional
paid-in capital
|
53,101,402
|
44,411,326
|
|||||
Deficit
accumulated during the development stage
|
(50,425,475
|
)
|
(42,966,818
|
)
|
|||
Total
stockholders’ equity
|
2,746,401
|
1,504,628
|
|||||
Total
liabilities and stockholders' equity
|
$
|
5,276,656
|
$
|
3,447,953
|
Cumulative
|
||||||||||||||||
period
from
|
||||||||||||||||
August 6, 2001
|
||||||||||||||||
(inception) to
|
||||||||||||||||
Three Months ended June 30,
|
Six months ended June 30,
|
June
30,
|
||||||||||||||
2007
|
2006
|
2007
|
2006
|
2007
|
||||||||||||
|
||||||||||||||||
Revenue
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Costs
and expenses:
|
||||||||||||||||
Research
and development
|
3,871,634
|
1,570,905
|
5,551,082
|
3,257,346
|
23,504,438
|
|||||||||||
General
and administrative
|
1,052,374
|
786,391
|
1,967,098
|
1,597,336
|
12,211,191
|
|||||||||||
In-process
research and development charge
|
-
|
—
|
—
|
—
|
11,887,807
|
|||||||||||
Impairment
of intangible assets
|
-
|
—
|
—
|
—
|
1,248,230
|
|||||||||||
Loss
on disposition of intangible assets
|
-
|
—
|
—
|
—
|
1,213,878
|
|||||||||||
Total
operating expenses
|
4,924,008
|
2,357,296
|
7,518,180
|
4,854,682
|
50,065,544
|
|||||||||||
Operating
loss
|
(4,924,008
|
)
|
(2,357,296
|
)
|
(7,518,180
|
)
|
(4,854,682
|
)
|
(50,065,544
|
)
|
||||||
Other
(income) expense:
|
||||||||||||||||
Interest
and other income
|
(29,608
|
)
|
(86,483
|
)
|
(59,998
|
)
|
(185,189
|
)
|
(769,714
|
)
|
||||||
Interest
expense
|
-
|
238
|
475
|
238
|
26,033
|
|||||||||||
Realized
gain on sale of marketable equity securities
|
-
|
—
|
—
|
(490
|
)
|
(76,032
|
)
|
|||||||||
Total
other income
|
(29,608
|
)
|
(86,245
|
)
|
(59,523
|
)
|
(185,441
|
)
|
(819,713
|
)
|
||||||
Net
loss
|
(4,894,400
|
)
|
(2,271,051
|
)
|
(7,458,657
|
)
|
(4,669,241
|
)
|
(49,245,831
|
)
|
||||||
Preferred
stock dividends (including imputed amounts)
|
-
|
—
|
—
|
—
|
(1,179,644
|
)
|
||||||||||
Net
loss applicable to common shares
|
$
|
(4,894,400
|
)
|
$
|
(2,271,051
|
)
|
$
|
(7,458,657
|
)
|
$
|
(4,669,241
|
)
|
$
|
(50,425,475
|
)
|
|
Net
loss per common share:
|
||||||||||||||||
Basic
and diluted
|
$
|
(0.07
|
)
|
$
|
(0.04
|
)
|
$
|
(0.11
|
)
|
$
|
(0.08
|
)
|
||||
Weighted
average shares of common stock outstanding:
|
||||||||||||||||
Basic
and diluted
|
70,463,543
|
60,116,174
|
65,377,865
|
60,104,500
|
Deficit
|
Dividends
|
Total
|
||||||||||||||||||||||||||||||||
Series A
|
accumulated
|
payable
in
|
Accumulated
|
stock-
|
||||||||||||||||||||||||||||||
convertible
|
Additional
|
during
|
Series
A
|
other
|
Unearned
|
holders'
|
||||||||||||||||||||||||||||
preferred stock
|
Common stock
|
paid-in
|
Subscription
|
development
|
preferred
|
comprehensive
|
consulting
|
equity
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
receivable
|
stage
|
shares
|
income
(loss)
|
services
|
(deficiency)
|
||||||||||||||||||||||||
Stock
issued at $0.0004 per share for subscription
receivable
|
—
|
$
|
—
|
10,167,741
|
$
|
10,168
|
$
|
(6,168
|
)
|
$
|
(4,000
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(56,796
|
)
|
—
|
—
|
—
|
(56,796
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2001
|
—
|
—
|
10,167,741
|
10,168
|
(6,168
|
)
|
(4,000
|
)
|
(56,796
|
)
|
—
|
—
|
—
|
(56,796
|
)
|
|||||||||||||||||||
Proceeds
from subscription receivable
|
—
|
—
|
—
|
—
|
—
|
4,000
|
—
|
—
|
—
|
—
|
4,000
|
|||||||||||||||||||||||
Stock
issued at $0.0004 per share for license rights
|
—
|
—
|
2,541,935
|
2,542
|
(1,542
|
)
|
—
|
—
|
—
|
—
|
—
|
1,000
|
||||||||||||||||||||||
Stock
options issued for consulting services
|
—
|
—
|
—
|
—
|
60,589
|
—
|
—
|
—
|
—
|
(60,589
|
)
|
—
|
||||||||||||||||||||||
Amortization
of unearned consulting services
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
22,721
|
22,721
|
|||||||||||||||||||||||
Common
stock issued at $0.63 per share, net of expenses
|
—
|
—
|
3,043,332
|
3,043
|
1,701,275
|
—
|
—
|
—
|
—
|
—
|
1,704,318
|
|||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,037,320
|
)
|
—
|
—
|
—
|
(1,037,320
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2002
|
—
|
—
|
15,753,008
|
15,753
|
1,754,154
|
—
|
(1,094,116
|
)
|
—
|
—
|
(37,868
|
)
|
637,923
|
|||||||||||||||||||||
Common
stock issued at $0.63 per share, net of expenses
|
—
|
—
|
1,321,806
|
1,322
|
742,369
|
—
|
—
|
—
|
—
|
—
|
743,691
|
|||||||||||||||||||||||
Effect
of reverse acquisition
|
—
|
—
|
6,287,582
|
6,287
|
2,329,954
|
—
|
—
|
—
|
—
|
—
|
2,336,241
|
|||||||||||||||||||||||
Amortization
of unearned consulting costs
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
37,868
|
37,868
|
|||||||||||||||||||||||
Unrealized
loss on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,760
|
)
|
—
|
(7,760
|
)
|
|||||||||||||||||||||
Payment
for fractional shares for stock combination
|
—
|
—
|
—
|
—
|
(300
|
)
|
—
|
—
|
—
|
—
|
—
|
(300
|
)
|
|||||||||||||||||||||
Preferred
stock issued at $10 per share, net of expenses
|
1,000,000
|
1,000
|
—
|
—
|
9,045,176
|
—
|
—
|
—
|
—
|
—
|
9,046,176
|
|||||||||||||||||||||||
Imputed
preferred stock dividend
|
—
|
—
|
—
|
—
|
418,182
|
—
|
(418,182
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,960,907
|
)
|
—
|
—
|
—
|
(5,960,907
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2003
|
1,000,000
|
1,000
|
23,362,396
|
23,362
|
14,289,535
|
—
|
(7,473,205
|
)
|
—
|
(7,760
|
)
|
—
|
6,832,932
|
|||||||||||||||||||||
Exercise
of stock options
|
—
|
—
|
27,600
|
27
|
30,073
|
—
|
—
|
—
|
—
|
—
|
30,100
|
|||||||||||||||||||||||
Common
stock issued at $1.10, net of expenses
|
—
|
—
|
3,368,952
|
3,369
|
3,358,349
|
—
|
—
|
—
|
—
|
—
|
3,361,718
|
|||||||||||||||||||||||
Preferred
stock dividend accrued
|
—
|
—
|
—
|
—
|
—
|
—
|
(585,799
|
)
|
585,799
|
—
|
—
|
—
|
||||||||||||||||||||||
Preferred
stock dividends paid by issuance of shares
|
24,901
|
25
|
—
|
—
|
281,073
|
—
|
—
|
(282,388
|
)
|
—
|
—
|
(1,290
|
)
|
|||||||||||||||||||||
Conversion
of preferred stock to common stock at $1.10 per share
|
(170,528
|
)
|
(171
|
)
|
1,550,239
|
1,551
|
(1,380
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Warrants
issued for consulting services
|
—
|
—
|
—
|
—
|
125,558
|
—
|
—
|
—
|
—
|
(120,968
|
)
|
4,590
|
||||||||||||||||||||||
Amortization
of unearned consulting costs
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
100,800
|
100,800
|
|||||||||||||||||||||||
Unrealized
gain on short-term investments and reversal of unrealized loss
on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
20,997
|
—
|
20,997
|
|||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,896,031
|
)
|
—
|
—
|
—
|
(5,896,031
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2004
|
854,373
|
854
|
28,309,187
|
28,309
|
18,083,208
|
—
|
(13,955,035
|
)
|
303,411
|
13,237
|
(20,168
|
)
|
4,453,816
|
|||||||||||||||||||||
Common
stock issued at $1.11 and $1.15, net of expenses
|
—
|
—
|
11,917,680
|
11,918
|
12,238,291
|
—
|
—
|
—
|
—
|
—
|
12,250,209
|
|||||||||||||||||||||||
Common
stock issued to vendor at $1.11 per share in satisfaction of accounts
payable
|
—
|
—
|
675,675
|
676
|
749,324
|
—
|
—
|
—
|
—
|
—
|
750,000
|
|||||||||||||||||||||||
Exercise
of stock options
|
—
|
—
|
32,400
|
33
|
32,367
|
—
|
—
|
—
|
—
|
—
|
32,400
|
|||||||||||||||||||||||
Exercise
of warrants
|
—
|
—
|
279,845
|
279
|
68,212
|
—
|
—
|
—
|
—
|
—
|
68,491
|
|||||||||||||||||||||||
Preferred
stock dividend accrued
|
—
|
—
|
—
|
—
|
—
|
—
|
(175,663
|
)
|
175,663
|
—
|
—
|
—
|
||||||||||||||||||||||
Preferred
stock dividends paid by issuance of shares
|
41,781
|
42
|
—
|
—
|
477,736
|
—
|
—
|
(479,074
|
)
|
—
|
—
|
(1,296
|
)
|
|||||||||||||||||||||
Conversion
of preferred stock to common stock at $1.10 per share
|
(896,154
|
)
|
(896
|
)
|
8,146,858
|
8,147
|
(7,251
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Share-based
compensation
|
—
|
—
|
—
|
—
|
66,971
|
—
|
—
|
—
|
—
|
20,168
|
87,139
|
|||||||||||||||||||||||
Reversal
of unrealized gain on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(12,250
|
)
|
—
|
(12,250
|
)
|
|||||||||||||||||||||
Stock
issued in connection with acquisition of Tarpan Therapeutics,
Inc.
|
—
|
—
|
10,731,052
|
10,731
|
11,042,253
|
—
|
—
|
—
|
—
|
—
|
11,052,984
|
|||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(19,140,997
|
)
|
—
|
—
|
—
|
(19,140,997
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2005
|
—
|
—
|
60,092,697
|
60,093
|
42,751,111
|
—
|
(33,271,695
|
)
|
—
|
987
|
—
|
9,540,496
|
||||||||||||||||||||||
Cashless
exercise of warrants
|
—
|
—
|
27,341
|
27
|
(27
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||
Share-based
compensation
|
—
|
—
|
—
|
—
|
1,675,499
|
—
|
—
|
—
|
—
|
—
|
1,675,499
|
|||||||||||||||||||||||
Unrealized
loss on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(987
|
)
|
—
|
(987
|
)
|
|||||||||||||||||||||
Costs
associated with private placement
|
—
|
—
|
—
|
—
|
(15,257
|
)
|
—
|
—
|
—
|
—
|
—
|
(15,257
|
)
|
|||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(9,695,123
|
)
|
—
|
—
|
—
|
(9,695,123
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2006
|
—
|
—
|
60,120,038
|
60,120
|
44,411,326
|
—
|
(42,966,818
|
)
|
—
|
—
|
—
|
1,504,628
|
||||||||||||||||||||||
Common
stock issued at $0.84 and $0.90, net of expenses
|
—
|
—
|
10,185,502
|
10,186
|
7,843,967
|
—
|
—
|
—
|
—
|
—
|
7,854,153
|
|||||||||||||||||||||||
Common
stock issued to directors at $0.72 per share in satisfaction of
accounts
payable
|
—
|
—
|
27,776
|
28
|
19,972
|
—
|
—
|
—
|
—
|
20,000
|
||||||||||||||||||||||||
Common
stock issued in connection with in-licensing agreement at
$0.90 per share
|
—
|
—
|
125,000
|
125
|
112,375
|
—
|
—
|
—
|
—
|
—
|
112,500
|
|||||||||||||||||||||||
Share-based
compensation
|
—
|
—
|
—
|
—
|
706,549
|
—
|
—
|
—
|
—
|
—
|
706,549
|
|||||||||||||||||||||||
Exercise
of warrants
|
—
|
—
|
10,327
|
15
|
7,219
|
—
|
—
|
—
|
—
|
—
|
7,234
|
|||||||||||||||||||||||
Cashless
exercise of warrants
|
—
|
—
|
5,589
|
—
|
(6
|
)
|
—
|
—
|
—
|
—
|
—
|
(6
|
)
|
|||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
-
|
—
|
(7,458,657
|
)
|
—
|
—
|
—
|
(7,458,657
|
)
|
|||||||||||||||||||||
Balance
at June 30, 2007
|
—
|
$
|
—
|
70,474,232
|
$
|
70,474
|
$
|
53,101,402
|
$
|
—
|
$
|
(50,425,475
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
2,746,401
|
|
Cumulative
|
|||||||||
period
from
|
||||||||||
August 6, 2001
|
||||||||||
(inception) to
|
||||||||||
Six
months ended June 30,
|
June
30,
|
|||||||||
2007
|
2006
|
2007
|
||||||||
|
||||||||||
Cash
flows from operating activities:
|
||||||||||
Net
loss
|
$
|
(7,458,657
|
)
|
$
|
(4,669,241
|
)
|
$
|
(49,245,831
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||
Share-based
compensation
|
706,549
|
619,128
|
2,630,576
|
|||||||
Shares
issued in connection with in-licensing agreement
|
112,500
|
—
|
112,500
|
|||||||
Amortization
of intangible assets
|
—
|
—
|
145,162
|
|||||||
Gain
on sale of marketable equity securities
|
—
|
(490
|
)
|
(76,032
|
)
|
|||||
Depreciation
|
29,974
|
29,484
|
177,454
|
|||||||
Non
cash portion of in-process research and development charge
|
—
|
—
|
11,721,623
|
|||||||
Loss
on impairment and disposition of intangible assets
|
—
|
—
|
2,462,108
|
|||||||
Other
|
—
|
—
|
5,590
|
|||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||||
Increase
in prepaid expenses and other current assets
|
(88,071
|
)
|
(780,863
|
)
|
(294,412
|
)
|
||||
Increase
in other assets
|
—
|
—
|
(70,506
|
)
|
||||||
Increase/(decrease)
in accounts payable
|
(371,447
|
)
|
345,243
|
1,422,063
|
||||||
Increase
in accrued expenses
|
978,377
|
203,778
|
988,085
|
|||||||
Net
cash used in operating activities
|
(6,090,775
|
)
|
(4,252,961
|
)
|
(30,021,620
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Purchase
of property and equipment
|
(9,135
|
)
|
(12,832
|
)
|
(230,636
|
)
|
||||
Cash
acquired (paid) in connection with acquisitions, net
|
—
|
—
|
(26,031
|
)
|
||||||
Proceeds
from sale (payments for purchase)of short-term investments,
net
|
—
|
500,000
|
435,938
|
|||||||
Proceeds
from sale of license
|
—
|
—
|
200,001
|
|||||||
Net
cash provided by (used in) investing activities
|
(9,135
|
)
|
487,168
|
379,272
|
||||||
Cash
flows from financing activities:
|
||||||||||
Repayments
of notes payable to stockholders
|
—
|
—
|
(884,902
|
)
|
||||||
Payment
for fractional shares for preferred stock dividends
|
—
|
—
|
(2,286
|
)
|
||||||
Proceeds
related to sale of common stock, net
|
7,854,153
|
(15,256
|
)
|
25,898,230
|
||||||
Proceeds
from sale of preferred stock, net
|
—
|
—
|
9,046,176
|
|||||||
Proceeds
from exercise of warrants and stock options
|
7,228
|
—
|
138,219
|
|||||||
Other,
net
|
—
|
—
|
237,500
|
|||||||
Net
cash (used in) provided by financing activities
|
7,861,381
|
(15,256
|
)
|
34,432,937
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
1,761,471
|
(3,781,049
|
)
|
4,790,589
|
||||||
Cash
and cash equivalents at beginning of period
|
3,029,118
|
9,826,336
|
—
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
4,790,589
|
$
|
6,045,287
|
$
|
4,790,589
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Interest
paid
|
$
|
475
|
$
|
238
|
$
|
26,033
|
||||
Supplemental
disclosure of noncash investing and financing activities:
|
||||||||||
Common
stock issued in satisfaction of accounts payable
|
$
|
20,000
|
$
|
—
|
$
|
770,000
|
||||
Imputed
preferred stock dividend
|
—
|
—
|
418,182
|
|||||||
Preferred
stock dividends accrued
|
—
|
—
|
761,462
|
|||||||
Conversion
of preferred stock to common stock
|
—
|
—
|
9,046,176
|
|||||||
Preferred
stock dividends paid by issuance of shares
|
—
|
—
|
759,134
|
|||||||
Issuance
of common stock for acquisitions
|
—
|
—
|
13,389,226
|
|||||||
Issuance
of common stock in connection with in-licensing agreement
|
112,500
|
—
|
112,500
|
|||||||
Marketable
equity securities received in connection with sale of
license
|
—
|
—
|
359,907
|
|||||||
Net
liabilities assumed over assets acquired in business
combination
|
—
|
—
|
(675,416
|
)
|
||||||
Cashless
exercise of warrants
|
6
|
27
|
33
|
(1) |
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
(2) |
LIQUIDITY
|
(3) |
COMPUTATION
OF NET LOSS PER COMMON
SHARE
|
(4) |
SHARE-BASED
COMPENSATION
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
General
and administrative expense:
|
|||||||||||||
Share-based
employee compensation cost
|
$
|
249,623
|
$
|
252,361
|
$
|
471,544
|
$
|
444,977
|
|||||
Share-based
consultant and non-employee (credit) cost
|
—
|
(28,450
|
)
|
10,550
|
(22,861
|
)
|
|||||||
$
|
249,623
|
$
|
223,911
|
$
|
482,094
|
$
|
422,116
|
||||||
Research
and development expense
|
|||||||||||||
Share-based
employee compensation cost
|
$
|
121,531
|
$
|
105,147
|
$
|
231,449
|
$
|
200,472
|
|||||
Share-based
consultant and non-employee (credit) cost
|
185
|
(21,842
|
)
|
(6,994
|
)
|
(3,460
|
)
|
||||||
$
|
121,716
|
$
|
83,305
|
$
|
224,455
|
$
|
197,012
|
||||||
Total
share-based cost
|
$
|
371,339
|
$
|
307,216
|
$
|
706,549
|
$
|
619,128
|
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Expected
Volatility
|
79.7
- 93.2
|
%
|
55
|
%
|
79.7
- 93.2
|
%
|
55
|
%
|
|||||
Dividend
yield
|
—
|
—
|
—
|
—
|
|||||||||
Expected
term (in years)
|
6
- 8
|
4
|
6
- 8
|
4
|
|||||||||
Risk-free
interest rate
|
4.56%
- 4.96
|
%
|
4.88
|
%
|
4.56%
- 4.96
|
%
|
4.88
|
%
|
Shares
|
Weighted
average
exercise
price
|
Weighted
Average Remaining Contractual
Term
(years)
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
at
|
|||||||||||||
December
31, 2006
|
7,000,504
|
$
|
1.31
|
||||||||||
Granted
|
|||||||||||||
Officers
|
870,000
|
||||||||||||
Directors
|
300,000
|
||||||||||||
Employees
|
172,500
|
||||||||||||
Total
Granted
|
1,342,500
|
0.88
|
|||||||||||
Exercised
|
-
|
-
|
|||||||||||
Cancelled
|
(109,166
|
)
|
0.95
|
||||||||||
Outstanding
at
|
|||||||||||||
June
30, 2007
|
8,233,838
|
$
|
1.25
|
7.43
|
$
|
387,171
|
|||||||
Options
exercisable at
|
|||||||||||||
June
30, 2007
|
5,102,546
|
$
|
1.30
|
6.95
|
$
|
341,821
|
|||||||
Weighted-average
|
|||||||||||||
fair
value of options
|
|||||||||||||
granted
during the
|
|||||||||||||
six
months ended
|
|||||||||||||
June
30, 2007
|
$
|
0.63
|
(5) |
COMMITMENTS
|
(6) |
RECENTLY
COMPLETED IN-LICENSING
TRANSACTIONS
|
(7) |
PRIVATE
PLACEMENT OF COMMON SHARES
|
(8) |
SUBSEQUENT
EVENTS
|
·
|
Topical
PTH (1-34) for the treatment of
psoriasis;
|
·
|
Altoderm,
a proprietary formulation of topical cromolyn sodium for the
treatment of
atopic dermatitis;
|
·
|
Altolyn,
a proprietary site specific tablet formulation of oral cromolyn
sodium for
the treatment of mastocytosis;
|
·
|
and
Hedrin, a novel, non-insecticide treatment for head
lice.
|
Six month
period ended June 30, 2007 |
Six month
period ended June 30, 2006 |
Increase
(decrease) |
% Increase
(decrease) |
||||||||||
Costs
and expenses
|
|||||||||||||
Research
and development
|
|||||||||||||
Stock
based compensation
|
$
|
224,000
|
$
|
197,000
|
$
|
27,000
|
13.7
|
%
|
|||||
In-license
and related fees
|
$
|
1,803,000
|
$
|
250,000
|
$
|
1,553,000
|
621.2
|
%
|
|||||
Other
research and development expense
|
$
|
3,524,000
|
$
|
2,810,000
|
$
|
714,000
|
25.4
|
%
|
|||||
Total
research and development expense
|
$
|
5,551,000
|
$
|
3,257,000
|
$
|
2,294,000
|
70.4
|
%
|
|||||
General
and administrative
|
|||||||||||||
Stock
based compensation
|
$
|
482,000
|
$
|
422,000
|
$
|
60,0000
|
14.2
|
%
|
|||||
Other
general and administrative expense
|
$
|
1,485,000
|
$
|
1,175,000
|
$
|
310,000
|
26.4
|
%
|
|||||
Total
general and administrative expense
|
$
|
1,967,000
|
$
|
1,597,000
|
$
|
370,000
|
23.2
|
%
|
|||||
Other
income
|
$
|
60,000
|
$
|
185,000
|
$
|
(125,000
|
)
|
(67.6
|
)%
|
||||
Net
loss
|
$
|
7,458,000
|
$
|
4,669,000
|
$
|
2,789,000
|
59.7
|
%
|
Quarter
ended June 30, 2007 |
Quarter
ended June 30, 2006 |
Increase
(decrease) |
% Increase
(decrease) |
||||||||||
Costs
and expenses
|
|||||||||||||
Research
and development
|
|||||||||||||
Stock
based compensation
|
$
|
122,000
|
$
|
83,000
|
$
|
39,000
|
47.0
|
%
|
|||||
In-license
and related fees
|
$
|
1,803,000
|
$
|
250,000
|
$
|
1,553,000
|
621.2
|
%
|
|||||
Other
research and development expense
|
$
|
1,947,000
|
$
|
1,238,000
|
$
|
709,000
|
57.3
|
%
|
|||||
Total
research and development expense
|
$
|
3,872,000
|
$
|
1,571,000
|
$
|
2,301,000
|
146.5
|
%
|
|||||
General
and administrative
|
|||||||||||||
Stock
based compensation
|
$
|
250,000
|
$
|
224,000
|
$
|
26,000
|
11.6
|
%
|
|||||
Other
general and administrative expense
|
$
|
802,000
|
$
|
562,000
|
$
|
240,000
|
42.7
|
%
|
|||||
Total
general and administrative expense
|
$
|
1,052,000
|
$
|
786,000
|
$
|
266,000
|
33.8
|
%
|
|||||
Other
income
|
$
|
30,000
|
$
|
86,000
|
$
|
(56,000
|
)
|
(65.1
|
)%
|
||||
Net
loss
|
$
|
4,894,000
|
$
|
2,271,000
|
$
|
2,623,000
|
115.5
|
%
|
Nominee
|
Votes For
|
Votes Withheld
|
|||||
Douglas
Abel
|
35,536,892
|
65,132
|
|||||
Neil
Herskowitz
|
35,376,093
|
225,931
|
|||||
Malcolm
Hoenlein
|
35,518,495
|
83,529
|
|||||
Timothy
McInerney
|
35,538,692
|
63,332
|
|||||
Joan
Pons Gimbert
|
35,154,378
|
447,646
|
|||||
Richard
I. Steinhart
|
35,529,736
|
72,288
|
|||||
Michael
Weiser
|
34,493,245
|
1,108,779
|
Exhibit No.
|
Description
|
|
4.1
|
Form
of warrant issued to investors in March 30, 2007 private placement
(incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed
April 5, 2007).
|
|
4.2
|
Form
of warrant issued to placement agent in connection with the
March 30, 2007
private placement (incorporated by reference to Exhibit 4.2
of the
Company’s Form 8-K filed April 5, 2007).
|
|
10.1
|
Summary
of terms of non-employee director compensation (incorporated
by reference
to Exhibit 10.1 of the Company’s Form 8-K filed February 5,
2007).
|
10.2
|
Form
of subscription agreement between the Company and investors
in the March
30, 2007 private placement (incorporated by reference to Exhibit
10.1 of
the Company’s Form 8-K filed April 5, 2007).
|
|
10.3
|
Exclusive
License Agreement for “Altoderm” between Thornton & Ross Ltd. and
Manhattan Pharmaceuticals, Inc. dated April 3, 2007.
|
|
10.4
|
Exclusive
License Agreement for “Altolyn” between Thornton & Ross Ltd. and
Manhattan Pharmaceuticals, Inc. dated April 3, 2007.
|
|
10.5
|
Exclusive
License Agreement for “Hedrin” between Thornton & Ross Ltd., Kerris,
S.A. and Manhattan Pharmaceuticals, Inc. dated June 26,
2007.
|
|
10.6
|
Supply
Agreement for “Hedrin” between Thornton & Ross Ltd. and Manhattan
Pharmaceuticals, Inc. dated June 26, 2007.
|
|
31.1
|
Certification
of Chief Executive Officer
|
|
31.2
|
Certification
of Chief Financial Officer
|
|
32.1
|
Certifications
of Chief Executive Officer and Chief Financial Officer pursuant
to Section
906 of the Sarbanes-Oxley Act of 2002.
|
MANHATTAN PHARMACEUTICALS, INC. | ||
|
|
|
Date: August 14, 2007 | By: | /s/ Douglas Abel |
Douglas Abel |
||
President and Chief Executive Officer |
|
|
|
Date: August 14, 2007 | By: | /s/ Michael G. McGuinness |
Michael G. McGuinness |
||
Chief Financial Officer |
Description
|
||
10.3
|
Exclusive License Agreement for “Altoderm” between Thornton & Ross Ltd. and Manhattan Pharmaceuticals, Inc. dated April 3, 2007. | |
|
||
10.4
|
Exclusive License Agreement for “Altolyn” between Thornton & Ross Ltd. and Manhattan Pharmaceuticals, Inc. dated April 3, 2007. | |
|
||
10.5
|
Exclusive License Agreement for “Hedrin” between Thornton & Ross Ltd., Kerris, S.A. and Manhattan Pharmaceuticals, Inc. dated June 26, 2007. | |
|
||
10.6
|
Supply Agreement for “Hedrin” between Thornton & Ross Ltd. and Manhattan Pharmaceuticals, Inc. dated June 26, 2007. | |
31.1
|
Certification
of Chief Executive Officer
|
|
Certification
of Chief Financial Officer
|
||
32.1
|
Certifications
of Chief Executive Officer and Chief Financial Officer pursuant
to Section
906 of the Sarbanes-Oxley Act of
2002.
|