þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
A Delaware Corporation | ||
(State or other jurisdiction of incorporation or organization) | 94-3078125 (I.R.S. Employer Identification No.) | |
3155 PORTER DRIVE PALO ALTO, CA (Address of principal offices) | 94304 (zip code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.01 par value | ||
Junior Preferred Stock Purchase Rights | Nasdaq Global Market |
o | þ | o | ||||
o |
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Item 1. | BUSINESS |
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Program Description and Objective | Status | |
CNS Program | ||
Cell-based therapeutics to restore or preserve function to central nervous system tissue by protecting, repairing or replacing dysfunctional or damaged cells. Initial indications are lysosomal storage diseases that affect the CNS, such as NCL, and disorders in which deficient myelination plays a central role, such as PMD. | Neuronal Ceroid Lipofuscinosis (also known as Batten disease) • • Demonstratedin vivoproof of principle by showing in a mouse model for infantile NCL that transplanted HuCNS-SC cells can: • continuously produce the enzyme that is deficient in infantile NCL • protect host neurons from death • extend the lifespan of the HuCNS-SC transplanted mice | |
Pelizeaus-Merzbacher Disease: | ||
• IND to initiate Phase I clinical trial approved by FDA in December 2008 • Demonstratedin vivoproof of principle by showing in the myelin deficient shiverer mouse that transplanted HuCNS-SC cells can: • integrate myelin producing oligodendrocytes into the mouse brain • tightly wrap the mouse nerve axons to form myelin sheath |
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Program Description and Objective | Status | |
Spinal Cord Injury: | ||
• Demonstratedin vivoproof of principle by showing in a mouse model for spinal cord injury that transplanted • restore motor function in injured animals • directly contribute to • become specialized oligodendrocytes and neurons | ||
Retinal Disorders: | ||
• Demonstratedin vivoproof of principle by showing in the • | ||
• prevent or slow loss of vision | ||
Liver Program | ||
Cellular therapy to restore function to liver tissue by replacing dysfunctional or damaged cells. Initial | • Demonstrated • Detected human serum albumin and alpha-1-antitrypsin in serum of transplanted animals • Detected structural elements of the liver (bile canaliculi) • Identified cell surface markers and methods for selection of hLEC from livers of a broad range of age | |
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• | U.S. Patent No. 5,968,829, entitled “Human CNS Neural Stem Cells,” which covers our composition of matter for human CNS stem cells; | |
• | U.S. Patent No. 7,361,505, entitled “Multipotent neural stem cell compositions,” which covers human neural stem cells derived from any tissue source, including embryonic, fetal, juvenile, or adult tissue; | |
• | U.S. Patent No. 7,153,686, entitled “Enriched Central Nervous System Stem Cell and Progenitor Cell Populations, and Methods for Identifying, Isolating and Enriching such Populations,” which claims the composition of matter of various antibody-selected neural stem cell populations; | |
• | U.S. Patent No. 6,777,233, entitled “Cultures of Human CNS Neural Stem Cells,” which discloses a neural stem cell culture with a doubling rate of 5 to 10 days; | |
• | U.S. Patent No. 6,497,872, entitled “Neural transplantation using proliferated multipotent neural stem cells and their progeny,” which covers transplanting any neural stem cells or their differentiated progeny, whether the cells have been cultured in suspension or as adherent cells, for the treatment of any disease; | |
• | U.S. Patent No. 6,468,794, entitled “Enriched central nervous system stem cell and progenitor cell populations, and methods for identifying, isolating and enriching for such populations,” which covers the identification and purification of the human CNS stem cell; | |
• | U.S. Patent Nos. 6,238,922 and 7,049,141, both entitled “Use of collagenase in the preparation of neural stem cell cultures,” which describe methods to advance thein vivo culture and passage of human CNS stem cells that result in a 100-fold increase in CNS stem and progenitor cell production after 6 passages; | |
• | U.S. Patent No. 5,851,832, entitled | |
• | U.S. Patent No. 6,294,346, entitled “Use of multipotent neural stem cells and their progeny for the screening of drugs and other biological agents,” which describes the use of human neural stem cells as a tool for screening the effects of drugs and other biological agents on such cells, such as small molecule toxicology studies; | |
• | U.S. Patent No. 7,211,404, entitled “Liver engrafting cells, assays, and uses thereof,” which covers the isolation and use of an enriched population of hepatic liver engrafting | |
• | U.S. Patent No. 7,381,261, entitled “Enriched central nervous system stem cell and progenitor cell populations, and methods for identifying, isolating and enriching for such populations,” which covers the use of additional monoclonal antibodies for the prospective isolation of rare cells |
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Steps | Considerations | |
1. Preclinical laboratory and animal tests | Preclinical tests include laboratory evaluation of the cells and the formulation intended for use in humans for quality and consistency.In vivostudies are performed in normal animals and specific disease models to assess the potential safety and efficacy of the cell therapy product. | |
2. Submission of an Investigational New Drug (IND) application | The IND is a regulatory document submitted to the FDA with preclinical and manufacturing data, a proposed development plan and a proposed protocol for a study in humans. The IND becomes effective 30 days following receipt by the FDA, provided there are no questions, requests for delay or objections from the FDA. If the FDA has questions or concerns, it notifies the sponsor, and the IND will then be on clinical hold until the sponsor responds satisfactorily. In general an IND must become effective before U.S. human clinical trials may commence. |
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3. Human clinical trials | Clinical trials involve the evaluation of a potential product under the supervision of a qualified physician, in accordance with a protocol that details the objectives of the study, the parameters to be used to monitor safety and the efficacy criteria to be evaluated. Each protocol is submitted to the FDA as part of the IND. The protocol for each clinical study must be approved by an independent Institutional Review Board (IRB) of the institution at which the study is conducted and the informed consent of all participants must be obtained. The IRB reviews the existing information on the product, considers ethical factors, the safety of human subjects, the potential benefits of the therapy, and the possible liability of the institution. The IRB is responsible for ongoing safety assessment of the subjects during the clinical investigation. | |
Clinical development is traditionally conducted in three sequential phases, Phase I, II and III. | ||
Phase I studies for a product are designed to evaluate safety in a small number of subjects in a selected patient population by assessing adverse effects, and may include multiple dose levels. This study may also gather preliminary evidence of a beneficial effect on the disease. |
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Steps | Considerations | |
Phase II studies typically involve a larger, but still limited, patient population to determine biological and clinical effects of the investigational product and to identify possible adverse effects and safety risks of the product in the selected patient population. | ||
Phase III studies are undertaken to demonstrate clinical benefit or effect in a statistically significant manner and to test further for safety within a broader patient population, generally at multiple study sites. | ||
The FDA continually reviews the clinical trial plans and results and may suggest changes or may require discontinuance of | ||
4. Submission of a Biologics Licensing Application (BLA) | The results of the preclinical studies and clinical studies are submitted to the FDA in an application for marketing approval authorization. | |
5. Regulatory Approval | The testing and approval process will require substantial time, effort and expense. The time for approval is affected by a number of factors, including relative risks and benefits demonstrated in clinical trials, the availability of alternative treatments and the severity of the disease. Additional animal studies or clinical trials may be requested during the FDA review period, which might add to that time. FDA approval of the application(s) is required prior to any commercial sale or shipment of the therapeutic product. Biologic product manufacturing facilities located in certain states also may be subject to separate regulatory and licensing |
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6. Post-marketing studies | After receiving FDA marketing approval for a product for an initial indication, further clinical trials may be required to gain approval for the use of the product for additional indications. The FDA may also require post-marketing testing and surveillance to monitor for adverse effects, which could involve significant expense, or the FDA may elect to grant only conditional approvals subject to collection of post-marketing data. In addition, the recently enacted FDA Amendments Act of 2007 provides the FDA with expanded authority over drug products after approval, including the authority to require post-approval studies and clinical trials, labeling changes based on new safety information, and compliance with risk evaluation and mitigation strategies approved by the FDA. |
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• | Irving L. Weissman, M.D., Chairman of our Scientific Advisory Board, is the Virginia and Daniel K. Ludwig Professor of Cancer Research, Professor of Pathology and Professor of Developmental Biology at Stanford University, Director of the Stanford University Institute for Stem Cell Biology and Regenerative Medicine, and Director of the Stanford Comprehensive Cancer Center, all in Stanford, California. Dr. Weissman’s lab was responsible for the discovery and isolation of the first ever mammalian tissue stem cell, the hematopoietic (blood-forming) stem cell. Dr. Weissman was responsible for the formation of three stem cell companies, SyStemix, Inc., StemCells, Inc. and Cellerant, Inc. Dr. Weissman co-discovered the mammalian and human hematopoietic stem cells and the human neural stem cell. He has extended these stem cell discoveries to cancer and leukemia, discovering the leukemic stem cells in human and mouse acute or blast crisis myeloid leukemias, and has enriched the cancer stem cells in several human brain cancers as well as human head and neck squamous cell carcinoma. Past achievements of Dr. Weissman’s laboratory include identification of the states of development between stem cells and mature blood cells, the discovery and molecular isolation and characterization of lymphocyte and stem cell homing receptors, and identification of the states of thymic lymphocyte development. His laboratory at Stanford has developed accurate mouse models of human leukemias, and has shown the central role of inhibition of programmed cell death in that process. He has also established the evolutionary origins of pre-vertebrate stem cells, and identified and cloned the transplantation genes that prevent their passage from one organism to another. Dr. Weissman has |
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been elected to the National Academy of Science, the Institute of Medicine of the National Academies, the American Academy of Arts and Sciences, the American Society of Microbiology, and several other societies. He has received the Kaiser Award for Excellence in Preclinical Teaching, the Pasarow Foundation Award for Cancer Research, the California Scientist of the Year (2002), the Kovalenko Medal of the National Academy of Sciences, the Elliott Joslin Medal for Diabetes Research, the de Villiers Award for Leukemia Research, the Irvington Award for Immunologist of the Year, the Bass Award of the Society of Neurosurgeons, the New York Academy of Medicine Award for Medical Research, the Alan Cranston Award for Aging Research, the Linus Pauling Award for Biomedical Research, the E. Donnall Thomas Award for Hematology Research, the van Bekkum Award for Stem Cell Research, the Outstanding Investigator Award from the National Institutes of Health, Robert Koch Award for research in the hemopoieteic system, and many other awards. |
• | David J. Anderson, Ph.D., is Roger W. Sperry Professor of Biology, California Institute of Technology, Pasadena, California and Investigator, Howard Hughes Medical Institute. His laboratory was the first to isolate a multipotent, self-renewing, stem cell for the peripheral nervous system, the first to identify instructive signals that promote the differentiation of these stem cells along various lineages, and the first to accomplish a direct purification of peripheral neural stem cells from uncultured tissue. Dr. Anderson’s laboratory also was the first to isolate transcription factors that act as master regulators of neuronal fate. More recently, he has identified signals that tell a neural stem cell to differentiate to oligodendrocytes, the myelinating glia of the central nervous system, as well as factors for astrocyte differentiation. Dr. Anderson is a co-founder of the Company and |
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• | Fred H. Gage, Ph.D., is Professor, Laboratory of Genetics, The Salk Institute for Biological Studies, La Jolla, California and Adjunct Professor, Department of Neurosciences, University of California, San Diego, California. Dr. Gage’s lab was the first to discover Neurogenesis in the adult human brain. His research focus is on the development of strategies to induce recovery of function following central nervous system damage. Dr. Gage is a co-founder of StemCells and of BrainCells, Inc., and a member of the scientific advisory board of each. Dr. Gage also serves on the Scientific Advisory Board of Ceregene, Inc, and he is a founding member of the scientific advisory board of the International Society for Stem Cell Research. Dr. Gage has been the recipient of numerous awards, including the 1993 Charles A. Dana Award for Pioneering Achievements in Health and Education, the Christopher Reeves Medal, the Decade of the Brain Medal, the Max-Planck research Prize, and the Pasarow Foundation Award. Professor Gage is a member of the Institute of Medicine, a member of the National Academy of Science, and a Fellow of the American Academy of Arts and Science. |
• | our annual report onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K, and all amendments to these reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission; | |
• | our policies related to corporate governance, including StemCells’ Code of Conduct and Ethics and Procedure for Submission of Complaints; and | |
• | the charters of the Audit Committee, the Compensation & Stock Option Committee and the Corporate Governance & Nominating Committee of our Board of Directors. |
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RISK FACTORS |
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• | survive and persist in the desired location; |
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• | provide the intended therapeutic benefit; | |
• | engraft into existing tissue in the desired manner; or | |
• | achieve therapeutic benefits equal to, or better than, the standard of treatment at the time of testing. |
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• | our ability to develop and test our technologies; | |
• | our ability to patent or obtain licenses to necessary technologies; | |
• | conditions and publicity regarding the industry in which we operate, as well as the specific areas our product candidates seek to address; |
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• | competition in our industry; | |
• | economic and other external factors or other disasters or crises; | |
• | price and volume fluctuations in the stock market at large that are unrelated to our operating performance; and | |
• | comments by securities analysts, or our failure to meet market expectations. |
Item 1B. | UNRESOLVED STAFF COMMENTS |
Item 2. | PROPERTIES |
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Item 3. | LEGAL PROCEEDINGS |
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Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
(a) | Market price and dividend information |
2007 | High | Low | ||||||
First Quarter | $ | 3.63 | $ | 2.36 | ||||
Second Quarter | $ | 3.09 | $ | 2.27 | ||||
Third Quarter | $ | 2.45 | $ | 1.90 | ||||
Fourth Quarter | $ | 2.53 | $ | 1.40 |
2006 | ||||||||||||||||
High | Low | |||||||||||||||
2008 | ||||||||||||||||
First Quarter | $ | 4.06 | $ | 3.45 | $ | 1.90 | $ | 1.00 | ||||||||
Second Quarter | $ | 3.58 | $ | 1.77 | $ | 1.75 | $ | 1.11 | ||||||||
Third Quarter | $ | 2.55 | $ | 1.90 | $ | 1.43 | $ | 1.00 | ||||||||
Fourth Quarter | $ | 3.49 | $ | 2.05 | $ | 2.48 | $ | 0.66 | ||||||||
2007 | ||||||||||||||||
First Quarter | $ | 3.63 | $ | 2.36 | ||||||||||||
Second Quarter | $ | 3.09 | $ | 2.27 | ||||||||||||
Third Quarter | $ | 2.45 | $ | 1.90 | ||||||||||||
Fourth Quarter | $ | 2.53 | $ | 1.40 |
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December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||
StemCells, Inc. | $ | 100.00 | $ | 181.65 | $ | 388.07 | $ | 316.51 | $ | 243.12 | $ | 137.61 | $ | 100.00 | $ | 213.64 | $ | 174.24 | $ | 133.84 | $ | 75.76 | $ | 68.69 | ||||||||||||||||||||||||||||||||||||
S&P 500 Index | $ | 100.00 | $ | 126.38 | $ | 137.75 | $ | 141.88 | $ | 161.20 | $ | 166.89 | $ | 100.00 | $ | 108.99 | $ | 112.26 | $ | 127.55 | $ | 132.06 | $ | 81.23 | ||||||||||||||||||||||||||||||||||||
Amex Biotechnology Index | $ | 100.00 | $ | 144.91 | $ | 160.92 | $ | 201.32 | $ | 223.01 | $ | 232.54 | $ | 100.00 | $ | 111.05 | $ | 138.93 | $ | 153.9 | $ | 160.48 | $ | 132.05 | ||||||||||||||||||||||||||||||||||||
(b) | Approximate Number of Holders of Common Stock |
(c) | Recent Sales of Unregistered Securities (last three years ending December 31, 2008) |
• | In September 2008, we issued 6,924 shares of common stock to the California Institute of Technology (Cal Tech) for payment of annual fees of $5,000 for each of two patent families to which we hold a license from |
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Cal Tech, payable in cash or stock at our choice. We elected to pay these fees in stock. The shares were issued in a transaction not involving any public offering pursuant to Section 4(2) of the Securities Act of 1933, as amended. |
• | In June 2007, we issued 3,865 shares of common stock to the California Institute of Technology (Cal Tech) for payment of annual fees of $5,000 for each of two |
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• | In August 2006, we issued 3,848 shares of common stock to the California Institute of Technology (Cal Tech) as payment of annual fees of $5,000 for each of two |
Equity Compensation Plan Information | ||||||||||||
Number of Securities | ||||||||||||
Number of Securities to | Remaining Available for | |||||||||||
be Issued Upon | Weighted-average | Future Issuance Under Equity | ||||||||||
Exercise of | Exercise Price of | Compensation Plans | ||||||||||
Outstanding Options, | Outstanding Options, | (Excluding Securities | ||||||||||
Warrants and Rights | Warrants and rights | Reflected in Column(a)) | ||||||||||
Plan category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders(1) | 9,028,810 | $ | 2.36 | 3,024,408 | ||||||||
Equity compensation arrangements not approved by security holders(2) | 100,000 | $ | 1.20 | N/A | ||||||||
Totals | 9,128,810 | $ | 2.33 | 3,024,408 | ||||||||
Equity Compensation Plan Information | ||||||||||||
Number of Securities to | Number of Securities | |||||||||||
be Issued Upon | Weighted-Average | Remaining Available for | ||||||||||
Exercise of | Exercise Price of | Future Issuance Under Equity | ||||||||||
Outstanding Stock | Outstanding Stock | Compensation Plans | ||||||||||
Options, | Options, | (Excluding Securities | ||||||||||
Warrants and Rights | Warrants and Rights | Reflected in Column(a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders(1) | 9,990,530 | $ | 1.93 | 4,571,429 |
(1) | Consists of stock options issued to employees and directors, restricted stock units issued to employees and stock options issued as compensation to consultants for consultation services. These stock options and restricted stock units were issued under our 1992 Equity Incentive Plan, Directors’ Stock Option Plan, StemCells, Inc. Stock Option Plan, or our 2001, 2004 and 2006 Equity Incentive Plans. | |
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Item 6. | SELECTED FINANCIAL DATA |
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Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||
(In thousands, except per share amounts) | (In thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||||
Consolidated Statement of Operations | ||||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||||||||||||||||||||||
Revenue from licensing agreements and grants | $ | 57 | $ | 93 | $ | 206 | $ | 141 | $ | 273 | $ | 232 | $ | 57 | $ | 93 | $ | 206 | $ | 141 | ||||||||||||||||||||
Research and development expenses | 19,937 | 13,600 | 8,226 | 7,844 | 5,479 | 17,808 | 19,937 | 13,600 | 8,226 | 7,844 | ||||||||||||||||||||||||||||||
General and administrative expenses | 7,927 | 7,154 | 5,540 | 4,870 | 4,056 | 8,296 | 7,927 | 7,154 | 5,540 | 4,870 | ||||||||||||||||||||||||||||||
Wind-down expenses | 783 | 709 | 2,827 | 2,827 | 2,885 | 866 | 783 | 709 | 2,827 | 2,827 | ||||||||||||||||||||||||||||||
License & settlement agreement income, net(2) | 551 | 103 | 3,736 | — | — | |||||||||||||||||||||||||||||||||||
Write down for other than temporary impairment of marketable securities(3) | 2,083 | — | — | — | — | |||||||||||||||||||||||||||||||||||
Loss on change in fair value of warrant liability(4) | 937 | — | — | — | — | |||||||||||||||||||||||||||||||||||
License & settlement agreement income, net(5) | — | 551 | 103 | 3,736 | — | |||||||||||||||||||||||||||||||||||
Gain on sale of marketable securities | 716 | — | — | — | — | — | 716 | — | — | — | ||||||||||||||||||||||||||||||
Loss before deemed dividends and cumulative effect of change in accounting principle | (25,023 | ) | (18,948 | ) | (11,738 | ) | (15,330 | ) | (12,291 | ) | ||||||||||||||||||||||||||||||
Net loss | (25,023 | ) | (18,948 | ) | (11,738 | ) | (15,330 | ) | (14,425 | ) | (29,087 | ) | (25,023 | ) | (18,948 | ) | (11,738 | ) | (15,330 | ) | ||||||||||||||||||||
Basic and diluted loss per share | $ | (0.31 | ) | $ | (0.25 | ) | $ | (0.18 | ) | $ | (0.31 | ) | $ | (0.45 | ) | $ | (0.35 | ) | $ | (0.31 | ) | $ | (0.25 | ) | $ | (0.18 | ) | $ | (0.31 | ) | ||||||||||
Shares used in computing basic and diluted loss per share amounts | 79,772 | 74,611 | 63,643 | 49,606 | 32,080 | 82,716 | 79,772 | 74,611 | 63,643 | 49,606 |
December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||
Consolidated Balance Sheet | ||||||||||||||||||||||||||||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 9,759 | $ | 51,795 | $ | 34,541 | $ | 41,060 | $ | 13,082 | $ | 30,043 | $ | 9,759 | $ | 51,795 | $ | 34,541 | $ | 41,060 | ||||||||||||||||||||
Marketable securities | 29,847 | 7,266 | 3,721 | — | — | 4,182 | 29,847 | 7,266 | 3,721 | — | ||||||||||||||||||||||||||||||
Total assets | 48,283 | 66,857 | 44,839 | 47,627 | 19,786 | 41,230 | 48,283 | 66,857 | 44,839 | 47,627 | ||||||||||||||||||||||||||||||
Accrued wind-down expenses | 6,143 | 6,750 | 7,306 | 5,528 | 3,823 | 5,513 | 6,143 | 6,750 | 7,306 | 5,528 | ||||||||||||||||||||||||||||||
Fair value of warrant liability(4) | 8,440 | — | — | — | — | |||||||||||||||||||||||||||||||||||
Long-term debt, including capital leases | 1,034 | 1,145 | 1,351 | 1,646 | 1,850 | 867 | 1,034 | 1,145 | 1,351 | 1,646 | ||||||||||||||||||||||||||||||
Stockholders’ equity | 35,212 | 54,376 | 32,376 | 36,950 | 10,964 | 21,809 | 35,212 | 54,376 | 32,376 | 36,950 |
(1) | Effective January 1, 2006, we adopted Statement of Financial Accounting Standards 123 (revised 2004) (SFAS 123R),Share-Based Payment, in accordance with the provisions of SFAS 123R, we elected to adopt the standard using the modified prospective method. SFAS 123R requires us to recognize in operating expenses, the fair value of our stock-based compensation awards. See Note 7 “Stock-Based Compensation” in the Notes to the Consolidated Financial Statements of Part II, Item 8 of thisForm 10-K for further information. | |
(2) | Relates to wind-down expenses in respect of our Rhode Island facility. See Note | |
Relates to | ||
(4) | Relates to the fair value of warrants issued as part of our financing in November 2008. See Note 10 “Warrant Liability” in the Notes to Consolidated Financial Statements of Part II, Item 8 of thisForm 10-K for further information. | |
(5) | Relates to an agreement with ReNeuron. See Note 2 “Financial Instruments” in the Notes to Consolidated Financial Statements of Part II, Item 8 of thisForm 10-K for further information. |
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Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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• | cumulative losses in recent years; | |
• | income/losses expected in future years; and | |
• | the applicable statute of limitations. |
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Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Versus 2006 | Versus 2005 | Versus 2007 | Versus 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | $ | % | $ | % | 2008 | 2007 | 2006 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Licensing agreements and grants | $ | 56,722 | $ | 92,850 | $ | 205,914 | $ | (36,128 | ) | (39 | )% | $ | (113,064 | ) | (55 | )% | $ | 231,730 | $ | 56,722 | $ | 92,850 | $ | 175,008 | 309 | % | $ | (36,128 | ) | (39 | )% | |||||||||||||||||||||||||
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Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Versus 2006 | Versus 2005 | Versus 2007 | Versus 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | $ | % | $ | % | 2008 | 2007 | 2006 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research & development | $ | 19,937,426 | $ | 13,600,433 | $ | 8,226,734 | $ | 6,336,993 | 47 | % | $ | 5,373,699 | 65 | % | $ | 17,808,009 | $ | 19,937,426 | $ | 13,600,433 | $ | (2,129,417 | ) | (11 | )% | $ | 6,336,993 | 47 | % | |||||||||||||||||||||||||||
General & administrative | 7,927,443 | 7,154,042 | 5,539,845 | 773,401 | 11 | % | 1,614,197 | 29 | % | 8,295,554 | 7,927,443 | 7,154,042 | 368,111 | 5 | % | 773,401 | 11 | % | ||||||||||||||||||||||||||||||||||||||
Wind-down expenses | 783,022 | 709,209 | 2,827,403 | 73,813 | 10 | % | (2,118,194 | ) | (75 | )% | 866,199 | 783,022 | 709,209 | 83,177 | 11 | % | 73,813 | 10 | % | |||||||||||||||||||||||||||||||||||||
Total expense | $ | 28,647,891 | $ | 21,463,684 | $ | 16,593,982 | $ | 7,184,207 | 33 | % | $ | 4,869,702 | 29 | % | ||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | $ | 26,969,762 | $ | 28,647,891 | $ | 21,463,684 | $ | (1,678,129 | ) | (6 | )% | $ | 7,184,207 | 33 | % | |||||||||||||||||||||||||||||||||||||||||
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Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Versus 2006 | Versus 2005 | Versus 2007 | Versus 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | $ | % | $ | % | 2008 | 2007 | 2006 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
License and settlement agreement | $ | 550,467 | $ | 103,359 | $ | 3,735,556 | $ | 447,108 | 433 | % | $ | (3,632,197 | ) | (97 | )% | |||||||||||||||||||||||||||||||||||||||||
License and settlement agreement, net | $ | — | $ | 550,467 | $ | 103,359 | $ | (550,467 | ) | (100 | )% | $ | 447,108 | 433 | % | |||||||||||||||||||||||||||||||||||||||||
Realized gain on sale of marketable securities | — | 715,584 | — | (715,584 | ) | (100 | )% | 715,584 | *% | |||||||||||||||||||||||||||||||||||||||||||||||
Other than temporary impairment of marketable securities | (2,082,894 | ) | — | — | (2,082,894 | ) | *% | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of warrant liability | (937,241 | ) | — | — | (937,241 | ) | *% | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 2,459,820 | 2,479,740 | 1,122,963 | (19,920 | ) | (1 | )% | 1,356,777 | 121 | % | 803,095 | 2,459,820 | 2,479,740 | (1,656,725 | ) | (67 | )% | (19,920 | ) | (1 | )% | |||||||||||||||||||||||||||||||||||
Interest expense | (123,606 | ) | (143,001 | ) | (171,909 | ) | 19,395 | (14 | )% | 28,908 | (17 | )% | (109,762 | ) | (123,606 | ) | (143,001 | ) | 13,844 | (11 | )% | 19,395 | (14 | )% | ||||||||||||||||||||||||||||||||
Gain on sale of investment | 715,584 | — | — | 715,584 | *% | — | *% | |||||||||||||||||||||||||||||||||||||||||||||||||
Other expense, net | (33,899 | ) | (17,644 | ) | (36,892 | ) | (16,255 | ) | 92 | % | 19,248 | (52 | )% | (21,943 | ) | (33,899 | ) | (17,644 | ) | 11,956 | (35 | )% | (16,255 | ) | 92 | % | ||||||||||||||||||||||||||||||
Total other income, net | $ | 3,568,366 | $ | 2,422,454 | $ | 4,649,718 | $ | 1,145,912 | 47 | % | $ | (2,227,264 | ) | (48 | )% | |||||||||||||||||||||||||||||||||||||||||
Total other income (expense), net | $ | (2,348,745 | ) | $ | 3,568,366 | $ | 2,422,454 | $ | (5,917,111 | ) | (166 | )% | $ | 1,145,912 | 47 | % | ||||||||||||||||||||||||||||||||||||||||
* | Calculation |
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40
Change in | Change in | Change in | Change in | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2008 | 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Versus 2006 | Versus 2005 | Versus 2007 | Versus 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | $ | % | $ | % | 2008 | 2007 | 2006 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
At December 31: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and highly liquid investments(1) | $ | 37,645,085 | $ | 51,795,529 | $ | 34,540,908 | $ | (14,150,444 | ) | (27 | )% | $ | 17,254,621 | 50 | % | $ | 34,037,775 | $ | 37,645,085 | $ | 51,795,529 | $ | (3,607,310 | ) | (10 | )% | $ | (14,150,444 | ) | (27 | )% | |||||||||||||||||||||||||
Year ended December 31: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash used in operating activities | $ | (20,856,746 | ) | $ | (16,104,120 | ) | $ | (11,870,568 | ) | $ | (4,752,626 | ) | 29 | % | $ | (4,233,552 | ) | 36 | % | $ | (22,740,421 | ) | $ | (20,856,746 | ) | $ | (16,104,120 | ) | $ | 1,883,475 | 9 | % | $ | 4,752,626 | 29 | % | ||||||||||||||||||||
Net cash used in investing activities | (27,155,656 | ) | (1,297,124 | ) | (847,505 | ) | (25,858,532 | ) | 1994 | % | (449,619 | ) | 53 | % | ||||||||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) investing activities | $ | 24,223,629 | $ | (27,155,656 | ) | $ | (1,297,124 | ) | $ | 51,379,285 | 189 | % | $ | 25,858,532 | 1994 | % | ||||||||||||||||||||||||||||||||||||||||
Net cash provided by financing activities | 5,976,042 | 34,655,865 | 6,199,449 | (28,679,823 | ) | (83 | )% | 28,456,416 | 459 | % | $ | 18,800,609 | $ | 5,976,042 | $ | 34,655,865 | $ | 12,824,567 | 215 | % | $ | (28,679,823 | ) | (83 | )% |
(1) | Cash and highly liquid investments include unrestricted cash, cash equivalents, and short-term and long-term marketable debt securities. Marketable equity securities, which are comprised of 4,821,924 ordinary shares of ReNeuron, are excluded from the amounts above. See Note 2, “Financial Instruments,” in the Notes to the Consolidated Financial Statements of Part II, Item 8 of thisForm 10-K for further information. |
39
41
• | In November 2008, we sold 13,793,104 units to institutional investors at a price of $1.45 per unit, for gross proceeds of $20,000,000. The units, each of which consisted of one share of common stock and a warrant to purchase 0.75 shares of common stock at an exercise price of $2.30 per share, were offered as a registered direct offering under an effective shelf registration statement previously filed with and declared effective by the Securities and Exchange Commission. We received total proceeds net of offering expenses and placement agency fees of approximately $18,637,000. | |
• | In April 2007, a warrant issued as part of | |
• | ||
• | ||
• | In March 2006, a warrant issued as part of | |
42
40
43
41
Payable in | Payable in | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 2013 | Total | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations | Payable in | Payable in | Payable in | Payable in | Payable in | and | Obligations | Payable in | Payable in | Payable in | Payable in | Payable in | and | |||||||||||||||||||||||||||||||||||||||||||
at 12/31/07 | 2008 | 2009 | 2010 | 2011 | 2012 | Beyond | at 12/31/08 | 2009 | 2010 | 2011 | 2012 | 2013 | Beyond | |||||||||||||||||||||||||||||||||||||||||||
Operating lease payments(1) | $ | 11,849,336 | $ | 3,469,017 | $ | 3,536,843 | $ | 1,767,304 | $ | 1,171,875 | $ | 1,171,875 | $ | 732,422 | $ | 8,380,319 | $ | 3,536,843 | $ | 1,767,304 | $ | 1,171,875 | $ | 1,171,875 | $ | 732,422 | $ | — | ||||||||||||||||||||||||||||
Capital lease (equipment) | 46,347 | 19,862 | 19,862 | 6,623 | — | — | — | 26,483 | 19,862 | 6,621 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Bonds Payable (principal & interest)(2) | 1,589,093 | 244,531 | 244,572 | 242,559 | 242,321 | 240,666 | 374,444 | 1,344,563 | 244,572 | 242,559 | 242,321 | 240,666 | 237,593 | 136,852 | ||||||||||||||||||||||||||||||||||||||||||
Total contractual cash obligations | $ | 13,484,776 | $ | 3,733,410 | $ | 3,801,277 | $ | 2,016,486 | $ | 1,414,196 | $ | 1,412,541 | $ | 1,106,866 | $ | 9,751,365 | $ | 3,801,277 | $ | 2,016,484 | $ | 1,414,196 | $ | 1,412,541 | $ | 970,015 | $ | 136,852 | ||||||||||||||||||||||||||||
(1) | Operating lease payments exclude space-sharing andsub-lease income. See “Off-Balance Sheet Arrangements — Operating Leases” above for further information. | |
(2) | See Note |
44
42
Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
45
Share | Share | |||||||||||||||||||||||||||||||||||||||||||||
No. of | price at | Exchange | Market | No. of | Price at | Exchange | Market | |||||||||||||||||||||||||||||||||||||||
Shares | December 31, | Rate at | Value | Expected | Shares | December 31, | Rate at | Value | Expected | |||||||||||||||||||||||||||||||||||||
at | 2007 | December 31, | in USD at | Future | at | 2008 | December 31, | in USD at | Future | |||||||||||||||||||||||||||||||||||||
Associated | December 31, | in | 2007 | December 31, | Cash | Associated | December 31, | in | 2008 | December 31, | Cash | |||||||||||||||||||||||||||||||||||
Company/Stock Symbol | Exchange | Risks | 2007 | GBP(£) | 1 GBP = USD | 2007 | Flows | Exchange | Risks | 2008 | GBP(£) | 1 GBP = USD | 2008 | Flows | ||||||||||||||||||||||||||||||||
ReNeuron Group plc/RENE | AIM (AIM is the London Stock Exchange’s Alternative Investment Market) | — Lower share price — Foreign currency translation — Liquidity — Bankruptcy | 4,821,924 | 0.205 | 1.9843 | $ | 1,961,469 | (1) | AIM (AIM is the London Stock Exchange’s Alternative Investment Market) | — Lower share price — Foreign currency translation — Liquidity — Bankruptcy | 4,821,924 | 0.0265 | 1.4619 | $ | 186,803 | (1 | ) |
(1) | It is our intention to liquidate this investment when we can do so at prices acceptable to us. Although we are not legally restricted from selling the stock, the share price is subject to change and the volume traded has often been very small since the stock was listed on the AIM on August 12, 2005. The performance of ReNeuron Group plc stock since its listing does not predict its future value. |
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44
Item 8. | FINANCIAL STATEMENTS AND |
Page | ||||
4547
4648
December 31, | ||||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,759,169 | $ | 51,795,529 | ||||
Marketable securities, current | 26,696,413 | 4,132,646 | ||||||
Other receivables | 264,631 | 482,850 | ||||||
Note receivable | 1,000,000 | — | ||||||
Prepaid assets | 1,032,482 | 1,119,467 | ||||||
Total current assets | 38,752,695 | 57,530,492 | ||||||
Marketable securities, non current | 3,150,971 | 3,133,632 | ||||||
Property, plant and equipment, net | 3,905,404 | 3,596,150 | ||||||
Other assets, non-current | 1,710,829 | 1,720,361 | ||||||
Intangible assets, net | 762,667 | 876,182 | ||||||
Total assets | $ | 48,282,566 | $ | 66,856,817 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,813,595 | $ | 620,765 | ||||
Accrued expenses and other liabilities | 2,462,252 | 2,053,902 | ||||||
Accrued wind-down expenses, current | 1,374,632 | 1,252,483 | ||||||
Deferred revenue, current | 43,909 | 16,826 | ||||||
Capital lease obligation, current | 17,530 | — | ||||||
Bonds payable, current | 136,250 | 205,833 | ||||||
Total current liabilities | 5,848,168 | 4,149,809 | ||||||
Capital lease obligation, non-current | 25,269 | — | ||||||
Bonds payable, non-current | 1,009,166 | 1,145,416 | ||||||
Deposits and other long-term liabilities | 527,804 | 547,392 | ||||||
Accrued wind-down expenses, non-current | 4,768,859 | 5,497,774 | ||||||
Deferred rent | 727,535 | 959,732 | ||||||
Deferred revenue, non-current | 163,865 | 180,691 | ||||||
Total liabilities | 13,070,666 | 12,480,814 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $.01 par value; 125,000,000 shares authorized; issued and outstanding 80,681,087 at December 31, 2007 and 78,046,304 at December 31, 2006 | 806,810 | 780,462 | ||||||
Additional paid-in capital | 264,603,711 | 255,299,508 | ||||||
Accumulated deficit | (229,914,747 | ) | (204,891,945 | ) | ||||
Accumulated other comprehensive income (loss) | (283,874 | ) | 3,187,978 | |||||
Total stockholders’ equity | 35,211,900 | 54,376,003 | ||||||
Total liabilities and stockholders’ equity | $ | 48,282,566 | $ | 66,856,817 | ||||
47
Year Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Revenue: | ||||||||||||
Revenue from licensing agreements and grants | $ | 56,722 | $ | 92,850 | $ | 205,914 | ||||||
Operating Expenses: | ||||||||||||
Research and development | 19,937,426 | 13,600,433 | 8,226,734 | |||||||||
General and administrative | 7,927,443 | 7,154,042 | 5,539,845 | |||||||||
Wind-down expenses | 783,022 | 709,209 | 2,827,403 | |||||||||
Total operating expenses | 28,647,891 | 21,463,684 | 16,593,982 | |||||||||
Operating losses | (28,591,169 | ) | (21,370,834 | ) | (16,388,068 | ) | ||||||
Other Income (expense): | ||||||||||||
License and settlement agreement, net | 550,467 | 103,359 | 3,735,556 | |||||||||
Realized gain on sale of marketable securities | 715,584 | — | — | |||||||||
Interest income | 2,459,820 | 2,479,740 | 1,122,963 | |||||||||
Interest expense | (123,606 | ) | (143,001 | ) | (171,909 | ) | ||||||
Other income (expense) | (33,898 | ) | (17,644 | ) | (36,892 | ) | ||||||
Total other income, net | 3,568,367 | 2,422,454 | 4,649,718 | |||||||||
Net loss | $ | (25,022,802 | ) | $ | (18,948,380 | ) | $ | (11,738,350 | ) | |||
Basic and diluted net loss per share | $ | (0.31 | ) | $ | (0.25 | ) | $ | (0.18 | ) | |||
Shares used to compute basic and diluted loss per share | 79,772,351 | 74,611,196 | 63,643,176 | |||||||||
48
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Deferred | Stockholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income (Loss) | Compensation | Equity | ||||||||||||||||||||||
Balances, December 31, 2004 | 62,129,407 | $ | 621,294 | $ | 211,419,300 | $ | (174,205,215 | ) | $ | — | $ | (885,832 | ) | $ | 36,949,547 | |||||||||||||
Comprehensive loss | ||||||||||||||||||||||||||||
Net loss | — | — | — | (11,738,350 | ) | — | — | (11,738,350 | ) | |||||||||||||||||||
Change in unrealized loss on securities available-for-sale | — | — | — | — | (254,147 | ) | — | (254,147 | ) | |||||||||||||||||||
Comprehensive loss | (11,992,497 | ) | ||||||||||||||||||||||||||
Expenses related to equity financing | — | — | (193,946 | ) | — | — | — | (193,946 | ) | |||||||||||||||||||
Common stock issued for external services | 2,022 | 20 | 8,310 | — | — | — | 8,330 | |||||||||||||||||||||
Common stock issued pursuant to employee benefit plan | 28,459 | 285 | 110,772 | — | — | — | 111,057 | |||||||||||||||||||||
Compensation expense from grant of options and stock (fair value) | — | — | 461,675 | — | — | — | 461,675 | |||||||||||||||||||||
Exercise of employee and consultant stock options | 393,509 | 3,935 | 733,753 | — | — | — | 737,688 | |||||||||||||||||||||
Exercise of warrants | 2,842,625 | 28,426 | 5,910,680 | — | — | — | 5,939,106 | |||||||||||||||||||||
Deferred compensation | — | — | (531,208 | ) | — | — | 531,208 | — | ||||||||||||||||||||
Amortization of deferred compensation | — | — | — | — | — | 354,624 | 354,624 | |||||||||||||||||||||
Balances, December 31, 2005 | 65,396,022 | 653,960 | 217,919,336 | (185,943,565 | ) | (254,147 | ) | — | 32,375,584 | |||||||||||||||||||
Comprehensive loss | ||||||||||||||||||||||||||||
Net loss | — | — | — | (18,948,380 | ) | — | — | (18,948,380 | ) | |||||||||||||||||||
Change in unrealized gain on securities available-for-sale | — | — | — | — | 3,442,125 | — | 3,442,125 | |||||||||||||||||||||
Comprehensive loss | (15,506,255 | ) | ||||||||||||||||||||||||||
Issuance of common stock related to equity financing net of issuance cost of $2,418,467 | 11,750,820 | 117,508 | 33,304,026 | — | — | — | 33,421,534 | |||||||||||||||||||||
Common stock issued for licensing agreements | 3,848 | 38 | 9,962 | — | — | — | 10,000 | |||||||||||||||||||||
Common stock issued pursuant to employee benefit plan | 50,120 | 501 | 121,955 | — | — | — | 122,456 | |||||||||||||||||||||
Compensation expense from grant of options and stock (fair value) | — | — | 2,409,509 | — | — | — | 2,409,509 | |||||||||||||||||||||
Exercise of employee and consultant stock options | 319,094 | 3,191 | 545,088 | — | — | — | 548,279 | |||||||||||||||||||||
Exercise of warrants | 526,400 | 5,264 | 989,632 | — | — | — | 994,896 | |||||||||||||||||||||
Balances, December 31, 2006 | 78,046,304 | 780,462 | 255,299,508 | (204,891,945 | ) | 3,187,978 | — | 54,376,003 | ||||||||||||||||||||
Comprehensive loss | ||||||||||||||||||||||||||||
Net loss | — | — | — | (25,022,802 | ) | — | — | (25,022,802 | ) | |||||||||||||||||||
Change in unrealized loss on securities available-for-sale | — | — | — | — | (3,471,852 | ) | — | (3,471,852 | ) | |||||||||||||||||||
Comprehensive loss | (28,494,654 | ) | ||||||||||||||||||||||||||
Issuance of common stock related to equity financing net of issuance cost of $297,465 | 1,807,000 | 18,070 | 4,816,983 | — | — | — | 4,835,053 | |||||||||||||||||||||
Common stock issued for licensing agreements | 3,865 | 39 | 9,961 | — | — | — | 10,000 | |||||||||||||||||||||
Common stock issued pursuant to employee benefit plan | 73,074 | 731 | 172,429 | — | — | — | 173,160 | |||||||||||||||||||||
Compensation expense from grant of options and stock (fair value) | — | — | 3,008,315 | — | — | — | 3,008,315 | |||||||||||||||||||||
Exercise of employee stock options | 175,186 | 1,752 | 208,521 | — | — | — | 210,273 | |||||||||||||||||||||
Exercise of warrants | 575,658 | 5,756 | 1,087,994 | — | — | — | 1,093,750 | |||||||||||||||||||||
Balances, December 31, 2007 | 80,681,087 | $ | 806,810 | $ | 264,603,711 | $ | (229,914,747 | ) | $ | (283,874 | ) | $ | — | $ | 35,211,900 | |||||||||||||
December 31, | ||||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 30,042,986 | $ | 9,759,169 | ||||
Marketable securities, current | 4,181,592 | 26,696,413 | ||||||
Other receivables | 164,204 | 264,631 | ||||||
Note receivable | 298,032 | 1,000,000 | ||||||
Prepaid assets | 645,242 | 1,032,482 | ||||||
Total current assets | 35,332,056 | 38,752,695 | ||||||
Marketable securities, non current | — | 3,150,971 | ||||||
Property, plant and equipment, net | 3,173,468 | 3,905,404 | ||||||
Other assets, non-current | 2,079,278 | 1,710,829 | ||||||
Intangible assets, net | 645,538 | 762,667 | ||||||
Total assets | $ | 41,230,340 | $ | 48,282,566 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,078,123 | $ | 1,813,595 | ||||
Accrued expenses and other liabilities | 2,261,245 | 2,462,252 | ||||||
Accrued wind-down expenses, current | 1,420,378 | 1,374,632 | ||||||
Deferred revenue, current | 43,909 | 43,909 | ||||||
Capital lease obligation, current | 18,739 | 17,530 | ||||||
Deferred rent, current | 346,930 | 290,391 | ||||||
Bonds payable, current | 149,167 | 136,250 | ||||||
Total current liabilities | 5,318,491 | 6,138,559 | ||||||
Capital lease obligation, non-current | 6,529 | 25,269 | ||||||
Bonds payable, non-current | 860,000 | 1,009,166 | ||||||
Fair value of warrant liability | 8,439,931 | — | ||||||
Deposits and other long-term liabilities | 466,211 | 527,804 | ||||||
Accrued wind-down expenses, non-current | 4,092,939 | 4,768,859 | ||||||
Deferred rent, non-current | 90,215 | 437,144 | ||||||
Deferred revenue, non-current | 147,039 | 163,865 | ||||||
Total liabilities | 19,421,355 | 13,070,666 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $.01 par value; 250,000,000 shares authorized; issued and outstanding 94,945,603 at December 31, 2008 and 80,681,087 at December 31, 2007 | 949,455 | 806,810 | ||||||
Additional paid-in capital | 279,868,802 | 264,603,711 | ||||||
Accumulated deficit | (259,001,524 | ) | (229,914,747 | ) | ||||
Accumulated other comprehensive loss | (7,748 | ) | (283,874 | ) | ||||
Total stockholders’ equity | 21,808,985 | 35,211,900 | ||||||
Total liabilities and stockholders’ equity | $ | 41,230,340 | $ | 48,282,566 | ||||
49
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Revenue: | ||||||||||||
Revenue from licensing agreements and grants | $ | 231,730 | $ | 56,722 | $ | 92,850 | ||||||
Operating expenses: | ||||||||||||
Research and development | 17,808,009 | 19,937,426 | 13,600,433 | |||||||||
General and administrative | 8,295,554 | 7,927,443 | 7,154,042 | |||||||||
Wind-down expenses | 866,199 | 783,022 | 709,209 | |||||||||
Total operating expenses | 26,969,762 | 28,647,891 | 21,463,684 | |||||||||
Operating loss | (26,738,032 | ) | (28,591,169 | ) | (21,370,834 | ) | ||||||
Other income (expense): | ||||||||||||
License and settlement agreement, net | — | 550,467 | 103,359 | |||||||||
Realized gain on sale of marketable securities | — | 715,584 | — | |||||||||
Other than temporary impairment of marketable securities | (2,082,894 | ) | — | — | ||||||||
Change in fair value of warrant liability | (937,241 | ) | — | — | ||||||||
Interest income | 803,095 | 2,459,820 | 2,479,740 | |||||||||
Interest expense | (109,762 | ) | (123,606 | ) | (143,001 | ) | ||||||
Other expense, net | (21,943 | ) | (33,898 | ) | (17,644 | ) | ||||||
Total other income (expense), net | (2,348,745 | ) | 3,568,367 | 2,422,454 | ||||||||
Net loss | $ | (29,086,777 | ) | $ | (25,022,802 | ) | $ | (18,948,380 | ) | |||
Basic and diluted net loss per share | $ | (0.35 | ) | $ | (0.31 | ) | $ | (0.25 | ) | |||
Shares used to compute basic and diluted loss per share | 82,716,455 | 79,772,351 | 74,611,196 | |||||||||
50
Accumulated | ||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
Balances, December 31, 2005 | 65,396,022 | $ | 653,960 | $ | 217,919,336 | $ | (185,943,565 | ) | $ | (254,147 | ) | $ | 32,375,584 | |||||||||||
Comprehensive loss | ||||||||||||||||||||||||
Net loss | — | — | — | (18,948,380 | ) | — | (18,948,380 | ) | ||||||||||||||||
Change in unrealized gain on securities available-for-sale | — | — | — | — | 3,442,125 | 3,442,125 | ||||||||||||||||||
Comprehensive loss | (15,506,255 | ) | ||||||||||||||||||||||
Issuance of common stock related to equity financing net of issuance cost of $2,418,467 | 11,750,820 | 117,508 | 33,304,026 | — | — | 33,421,534 | ||||||||||||||||||
Common stock issued for licensing agreements | 3,848 | 38 | 9,962 | — | — | 10,000 | ||||||||||||||||||
Common stock issued pursuant to employee benefit plan | 50,120 | 501 | 121,955 | — | — | 122,456 | ||||||||||||||||||
Compensation expense from grant of options and stock (fair value) | — | — | 2,409,509 | — | — | 2,409,509 | ||||||||||||||||||
Exercise of employee and consultant stock options | 319,094 | 3,191 | 545,088 | — | — | 548,279 | ||||||||||||||||||
Exercise of warrants | 526,400 | 5,264 | 989,632 | — | — | 994,896 | ||||||||||||||||||
Balances, December 31, 2006 | 78,046,304 | 780,462 | 255,299,508 | (204,891,945 | ) | 3,187,978 | 54,376,003 | |||||||||||||||||
Comprehensive loss | ||||||||||||||||||||||||
Net loss | — | — | — | (25,022,802 | ) | — | (25,022,802 | ) | ||||||||||||||||
Change in unrealized loss on securities available-for-sale | — | — | — | — | (3,471,852 | ) | (3,471,852 | ) | ||||||||||||||||
Comprehensive loss | (28,494,654 | ) | ||||||||||||||||||||||
Issuance of common stock related to equity financing net of issuance cost of $297,465 | 1,807,000 | 18,070 | 4,816,983 | — | — | 4,835,053 | ||||||||||||||||||
Common stock issued for licensing agreements | 3,865 | 39 | 9,961 | — | — | 10,000 | ||||||||||||||||||
Common stock issued pursuant to employee benefit plan | 73,074 | 731 | 172,429 | — | — | 173,160 | ||||||||||||||||||
Compensation expense from grant of options and stock (fair value) | — | — | 3,008,315 | — | — | 3,008,315 | ||||||||||||||||||
Exercise of employee stock options | 175,186 | 1,752 | 208,521 | — | — | 210,273 | ||||||||||||||||||
Exercise of warrants | 575,658 | 5,756 | 1,087,994 | — | — | 1,093,750 | ||||||||||||||||||
Balances, December 31, 2007 | 80,681,087 | 806,810 | 264,603,711 | (229,914,747 | ) | (283,874 | ) | 35,211,900 | ||||||||||||||||
Comprehensive loss | ||||||||||||||||||||||||
Net loss | — | — | — | (29,086,777 | ) | — | (29,086,777 | ) | ||||||||||||||||
Change in unrealized loss on securities available-for-sale | — | — | — | — | 276,126 | 276,126 | ||||||||||||||||||
Comprehensive loss | (28,810,651 | ) | ||||||||||||||||||||||
Issuance of common stock and warrants, net of issuance cost of $1,432,539 | 13,998,704 | 139,987 | 11,184,188 | — | — | 11,324,175 | ||||||||||||||||||
Common stock issued for licensing agreements | 6,924 | 69 | 9,931 | — | — | 10,000 | ||||||||||||||||||
Common stock issued pursuant to employee benefit plan | 144,188 | 1,442 | 189,724 | — | — | 191,166 | ||||||||||||||||||
Compensation expense from grant of options, restricted stock units and stock (fair value) | — | — | 3,754,871 | — | — | 3,754,871 | ||||||||||||||||||
Exercise of employee and director stock options | 114,700 | 1,147 | 126,377 | — | — | 127,524 | ||||||||||||||||||
Balances, December 31, 2008 | 94,945,603 | $ | 949,455 | $ | 279,868,802 | $ | (259,001,524 | ) | $ | (7,748 | ) | $ | 21,808,985 | |||||||||||
51
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net loss | $ | (25,022,802 | ) | $ | (18,948,380 | ) | $ | (11,738,350 | ) | $ | (29,086,777 | ) | $ | (25,022,802 | ) | $ | (18,948,380 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 1,174,510 | 1,044,688 | 1,082,793 | 1,186,428 | 1,174,510 | 1,044,688 | ||||||||||||||||||
Amortization of deferred compensation | — | — | 354,624 | |||||||||||||||||||||
Issue of shares and options in exchange for services | 3,181,475 | 2,531,966 | 581,062 | 3,946,037 | 3,181,475 | 2,531,966 | ||||||||||||||||||
(Gain) loss on disposal of fixed assets | (1,500 | ) | 1,573 | 1,377 | — | (1,500 | ) | 1,573 | ||||||||||||||||
Non-cash income from license and settlement agreement, net | — | (550,467 | ) | (103,359 | ) | |||||||||||||||||||
Gain on sale of marketable securities | (715,584 | ) | — | — | — | (715,584 | ) | — | ||||||||||||||||
Non-cash income from license and settlement agreement, net | (550,467 | ) | (103,359 | ) | (3,974,941 | ) | ||||||||||||||||||
Other than temporary impairment of marketable securities | 2,082,894 | — | — | |||||||||||||||||||||
Change in fair value of warrant liability | 937,241 | — | — | |||||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Accrued interest and other receivables | 218,219 | (280,931 | ) | (20,956 | ) | |||||||||||||||||||
Other receivables | 100,427 | 218,219 | (280,931 | ) | ||||||||||||||||||||
Prepaid assets | 86,985 | (732,501 | ) | (177,892 | ) | 387,240 | 86,985 | (732,501 | ) | |||||||||||||||
Intangible and other assets, net | 19,532 | 56,270 | (47,053 | ) | ||||||||||||||||||||
Other assets, net | (358,449 | ) | 19,532 | 56,270 | ||||||||||||||||||||
Accounts payable and accrued expenses | 1,601,180 | 554,245 | 48,135 | (936,479 | ) | 1,601,180 | 554,245 | |||||||||||||||||
Accrued wind-down expenses | (606,766 | ) | (555,469 | ) | 1,777,697 | (630,174 | ) | (606,766 | ) | (555,469 | ) | |||||||||||||
Deferred revenue | 10,257 | 197,517 | — | (16,826 | ) | 10,257 | 197,517 | |||||||||||||||||
Deferred rent | (232,198 | ) | 105,735 | 330,196 | (290,390 | ) | (232,198 | ) | 105,735 | |||||||||||||||
Deposits and other long-term liabilities | (19,587 | ) | 24,526 | (87,260 | ) | (61,593 | ) | (19,587 | ) | 24,526 | ||||||||||||||
Net cash used in operating activities | (20,856,746 | ) | (16,104,120 | ) | (11,870,568 | ) | (22,740,421 | ) | (20,856,746 | ) | (16,104,120 | ) | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Purchase of marketable securities | (27,861,561 | ) | — | — | ||||||||||||||||||||
Proceeds from sale of marketable securities | 3,074,654 | — | — | |||||||||||||||||||||
Purchase of marketable debt securities | (4,822,684 | ) | (37,029,744 | ) | — | |||||||||||||||||||
Sales or maturity of marketable debt securities | 28,681,708 | 9,168,183 | — | |||||||||||||||||||||
Proceeds from sale of marketable equity securities | — | 3,074,654 | — | |||||||||||||||||||||
Repayment received under note receivable | 1,000,000 | — | — | |||||||||||||||||||||
Advance made under note receivable | (1,000,000 | ) | — | — | (298,032 | ) | (1,000,000 | ) | — | |||||||||||||||
Purchases of property, plant and equipment, net | (1,319,374 | ) | (1,258,749 | ) | (817,505 | ) | ||||||||||||||||||
Purchase of other assets | (49,375 | ) | (38,375 | ) | (30,000 | ) | ||||||||||||||||||
Purchases of property, plant and equipment | (312,988 | ) | (1,319,374 | ) | (1,258,749 | ) | ||||||||||||||||||
Purchase of intangibles and other assets | (24,375 | ) | (49,375 | ) | (38,375 | ) | ||||||||||||||||||
Net cash used in investing activities | (27,155,656 | ) | (1,297,124 | ) | (847,505 | ) | ||||||||||||||||||
Net cash provided by (used in) investing activities | 24,223,629 | (27,155,656 | ) | (1,297,124 | ) | |||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Proceeds (expense) from issuance of common stock, net | 4,835,053 | 33,421,534 | (193,946 | ) | ||||||||||||||||||||
Proceeds from issuance of common stock, net | 18,826,865 | 4,835,053 | 33,421,534 | |||||||||||||||||||||
Proceeds from the exercise of stock options | 210,273 | 548,279 | 737,688 | 127,524 | 210,273 | 548,279 | ||||||||||||||||||
Proceeds from the exercise of warrants | 1,093,750 | 994,896 | 5,939,106 | — | 1,093,750 | 994,896 | ||||||||||||||||||
Proceeds (repayments) of capital lease obligations | 42,799 | (54,676 | ) | (39,232 | ) | (17,531 | ) | 42,799 | (54,676 | ) | ||||||||||||||
Repayments of debt obligations | (205,833 | ) | (254,168 | ) | (244,167 | ) | ||||||||||||||||||
Repayments of bonds payable | (136,249 | ) | (205,833 | ) | (254,168 | ) | ||||||||||||||||||
Net cash provided by financing activities | 5,976,042 | 34,655,865 | 6,199,449 | 18,800,609 | 5,976,042 | 34,655,865 | ||||||||||||||||||
Increase (decrease) in cash and cash equivalents | (42,036,360 | ) | 17,254,621 | (6,518,624 | ) | 20,283,817 | (42,036,360 | ) | 17,254,621 | |||||||||||||||
Cash and cash equivalents at beginning of year | 51,795,529 | 34,540,908 | 41,059,532 | 9,759,169 | 51,795,529 | 34,540,908 | ||||||||||||||||||
Cash and cash equivalents at end of the year | $ | 9,759,169 | $ | 51,795,529 | $ | 34,540,908 | $ | 30,042,986 | $ | 9,759,169 | $ | 51,795,529 | ||||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||||||||||
Interest paid | $ | 123,606 | $ | 143,001 | $ | 171,909 | $ | 109,762 | $ | 123,606 | $ | 143,001 | ||||||||||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||||||||||||||||||
Stock issued for licensing agreements(1) | $ | 10,000 | $ | 10,000 | — | |||||||||||||||||||
Stock issued for licensing agreements(1) | $ | 10,000 | $ | 10,000 | $ | 10,000 | ||||||||||||||||||
(1) | Under terms of a license agreement with the California Institute of Technology (Cal Tech), annual fees of $5,000 were due on each of two patents to which StemCells holds a license from Cal Tech, payable in cash or stock at our choice. We elected to pay the fees in common stock and issued shares of 6,924 in 2008, 3,865 in 2007 and 3,848 in 2006 to Cal Tech. |
5052
Note 1. | Summary of Significant Accounting Policies |
• | Accrued wind-down expenses (See Note | |
• | The | |
• | Valuation allowance against net deferred tax assets (See Note | |
• | The fair value of warrants recorded as a liability in accordance with Emerging Issues Task Force IssueNo. 00-19,Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own StockEITF 00-19. The warrants were issued as part of our November 2008 financing (See Note 10). |
53
51
Building and improvements | 3 - 20 years | |||||||
Machinery and equipment | 3 - 10 years | |||||||
Furniture and fixtures | 3 - 10 years |
54
52
55
53
• | Cumulative losses in recent years; | |
• | Income/losses expected in future years; | |
• | The applicable statute of limitations. |
56
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net loss | $ | (25,022,802 | ) | $ | (18,948,380 | ) | $ | (11,738,350 | ) | $ | (29,086,777 | ) | $ | (25,022,802 | ) | $ | (18,948,380 | ) | ||||||
Weighted average shares outstanding used to compute basic and diluted net loss per share | 79,772,351 | 74,611,196 | 63,643,176 | 82,716,455 | 79,772,351 | 74,611,196 | ||||||||||||||||||
Basic and diluted net loss per share | $ | (0.31 | ) | $ | (0.25 | ) | $ | (0.18 | ) | $ | (0.35 | ) | $ | (0.31 | ) | $ | (0.25 | ) |
54
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Outstanding options | 9,028,810 | 8,501,503 | 6,608,109 | 8,340,530 | 9,028,810 | 8,501,503 | ||||||||||||||||||
Restricted stock units | 1,650,000 | — | — | |||||||||||||||||||||
Outstanding warrants | 1,355,000 | 1,930,658 | 2,521,400 | 11,599,828 | 1,355,000 | 1,930,658 | ||||||||||||||||||
Total | 10,383,810 | 10,432,161 | 9,129,509 | 21,590,358 | 10,383,810 | 10,432,161 | ||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
(Decrease) increase in unrealized gains/(losses) on marketable securities | $ | (2,756,268 | ) | $ | 3,442,125 | $ | (254,147 | ) | ||||||||||||||||
(Decrease) increase in unrealized gains(losses) on marketable securities | $ | (1,806,768 | ) | $ | (2,756,268 | ) | $ | 3,442,125 | ||||||||||||||||
Recognition in net loss, other than temporary impairment of marketable securities | 2,082,894 | — | — | |||||||||||||||||||||
Reclassification adjustment for gains on marketable securities included in net income | (715,584 | ) | — | — | — | (715,584 | ) | — | ||||||||||||||||
Other comprehensive income (loss) | $ | (3,471,852 | ) | $ | 3,442,125 | $ | (254,147 | ) | $ | 276,126 | $ | (3,471,852 | ) | $ | 3,442,125 | |||||||||
57
5558
Note 2. | Financial Instruments |
Gross Unrealized | Gross Unrealized | Gross | Gross | |||||||||||||||||||||||||||||
Amortized Cost | Gains | Losses | Fair Value | Amortized | Unrealized | Unrealized | ||||||||||||||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||
Cash | $ | 243,883 | $ | — | $ | — | $ | 243,883 | ||||||||||||||||||||||||
Cash equivalents (money market accounts) | 29,799,103 | — | — | 29,799,103 | ||||||||||||||||||||||||||||
Marketable debt securities, current (maturity within 1 year) | 4,002,537 | — | (7,748 | ) | 3,994,789 | |||||||||||||||||||||||||||
Marketable equity securities, current | 186,803 | — | — | 186,803 | ||||||||||||||||||||||||||||
Total cash, cash equivalents, and marketable securities | $ | 34,232,326 | $ | — | $ | (7,748 | ) | $ | 34,224,578 | |||||||||||||||||||||||
December 31, 2007 | December 31, 2007 | |||||||||||||||||||||||||||||||
Cash | $ | 549,544 | $ | — | $ | — | $ | 549,544 | $ | 549,544 | $ | — | $ | — | $ | 549,544 | ||||||||||||||||
Money market accounts | 5,079,564 | — | — | 5,079,564 | 5,079,564 | — | — | 5,079,564 | ||||||||||||||||||||||||
Marketable debt securities (maturity within 90 days) | 4,130,404 | — | (343 | ) | 4,130,061 | 4,130,404 | — | (343 | ) | 4,130,061 | ||||||||||||||||||||||
Total cash equivalents | 9,209,968 | — | (343 | ) | 9,209,625 | 9,209,968 | — | (343 | ) | 9,209,625 | ||||||||||||||||||||||
Marketable debt securities (maturity within 1 year) | 26,680,824 | 19,137 | (3,548 | ) | 26,696,413 | 26,680,824 | 19,137 | (3,548 | ) | 26,696,413 | ||||||||||||||||||||||
Total marketable securities, current | 26,680,824 | 19,137 | (3,548 | ) | 26,696,413 | 26,680,824 | 19,137 | (3,548 | ) | 26,696,413 | ||||||||||||||||||||||
Marketable debt securities | 1,180,394 | 9,109 | — | 1,189,503 | 1,180,394 | 9,109 | — | 1,189,503 | ||||||||||||||||||||||||
Marketable equity securities | 2,269,697 | — | (308,229 | ) | 1,961,468 | 2,269,697 | — | (308,229 | ) | 1,961,468 | ||||||||||||||||||||||
Total marketable securities, non-current | 3,450,091 | 9,109 | (308,229 | ) | 3,150,971 | 3,450,091 | 9,109 | (308,229 | ) | 3,150,971 | ||||||||||||||||||||||
Total cash, cash equivalents, and marketable securities | $ | 39,890,427 | $ | 28,246 | $ | (312,120 | ) | $ | 39,606,553 | $ | 39,890,427 | $ | 28,246 | $ | (312,120 | ) | $ | 39,606,553 | ||||||||||||||
December 31, 2006 | ||||||||||||||||||||||||||||||||
Cash | $ | 162,685 | $ | — | $ | — | $ | 162,685 | ||||||||||||||||||||||||
Money market accounts | 51,632,844 | — | — | 51,632,844 | ||||||||||||||||||||||||||||
Total cash and cash equivalents | 51,795,529 | — | — | 51,795,529 | ||||||||||||||||||||||||||||
Marketable equity securities, current | 2,319,505 | 1,813,141 | — | 4,132,646 | ||||||||||||||||||||||||||||
Marketable equity securities, non-current | 1,758,795 | 1,374,837 | — | 3,133,632 | ||||||||||||||||||||||||||||
Total cash, cash equivalents, and marketable securities | $ | 55,873,829 | $ | 3,187,978 | $ | — | $ | 59,061,807 | ||||||||||||||||||||||||
56
59
Less than 12 Months | 12 Months of Greater | Total | Less than 12 Months | 12 Months of Greater | Total | |||||||||||||||||||||||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||
Marketable debt securities | $ | 9,418,713 | $ | (3,891 | ) | $ | — | $ | (— | ) | $ | 9,418,713 | $ | (3,891 | ) | $ | 3,994,789 | $ | (7,748 | ) | $ | — | $ | — | $ | 3,994,789 | $ | (7,748 | ) | |||||||||||||||||||
Marketable equity securities | 1,961,468 | (308,229 | ) | 1,961,468 | (308,229 | ) | 186,803 | — | — | — | 186,803 | — | ||||||||||||||||||||||||||||||||||||
Total | $ | 11,380,181 | $ | (312,120 | ) | $ | — | $ | (— | ) | $ | 11,380,181 | $ | (312,120 | ) | $ | 4,181,592 | $ | (7,748 | ) | $ | — | $ | — | $ | 4,181,592 | $ | (7,748 | ) | |||||||||||||||||||
60
Note 3. | Fair Value Measurement |
5761
Fair Value Measurement | ||||||||||||
at Reporting Date Using | ||||||||||||
Quoted Prices | ||||||||||||
in Active Markets for | Significant Other | As of | ||||||||||
Identical Assets | Observable Inputs | December 31, | ||||||||||
(Level 1) | (Level 2) | 2008 | ||||||||||
Assets | ||||||||||||
Cash Equivalents: | ||||||||||||
Money market funds | $ | 356,000 | $ | — | $ | 356,000 | ||||||
U.S. Treasury obligations | 29,443,103 | — | 29,443,103 | |||||||||
Marketable Securities: | ||||||||||||
Equity securities | 186,803 | — | 186,803 | |||||||||
Corporate bonds | — | 2,798,580 | 2,798,580 | |||||||||
Asset-backed securities | — | 1,196,209 | 1,196,209 | |||||||||
Total assets | $ | 29,985,906 | $ | 3,994,789 | $ | 33,980,695 | ||||||
Liabilities | ||||||||||||
Bond obligation | $ | — | $ | 1,009,166 | $ | 1,009,166 | ||||||
Note | Property, Plant and Equipment |
2007 | 2006 | 2008 | 2007 | |||||||||||||
Building and improvements | $ | 3,397,639 | $ | 3,369,775 | $ | 3,404,969 | $ | 3,397,639 | ||||||||
Machinery and equipment | 6,002,945 | 4,712,950 | 6,308,603 | 6,002,945 | ||||||||||||
Furniture and fixtures | 369,068 | 366,053 | 369,068 | 369,068 | ||||||||||||
9,769,652 | 8,448,778 | 10,082,640 | 9,769,652 | |||||||||||||
Less accumulated depreciation and amortization | (5,864,248 | ) | (4,852,628 | ) | (6,909,172 | ) | (5,864,248 | ) | ||||||||
Net property, plant and equipment, net | $ | 3,905,404 | $ | 3,596,150 | ||||||||||||
Property, plant and equipment, net | $ | 3,173,468 | $ | 3,905,404 | ||||||||||||
62
Note | Intangible and Other Assets |
Gross Carrying | Accumulated | Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||||||
Intangible Asset Class | amount | Amortization | Net Carrying Amount | Amount | Amortization | Amount | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
Patents | $ | 979,612 | $ | (515,255 | ) | $ | 464,357 | |||||||||||||||||
License agreements | 1,785,998 | (1,604,817 | ) | 181,181 | ||||||||||||||||||||
Total intangible assets | $ | 2,765,610 | $ | (2,120,072 | ) | $ | 645,538 | |||||||||||||||||
2007 | ||||||||||||||||||||||||
Patents | $ | 979,612 | $ | (459,452 | ) | $ | 520,160 | $ | 979,612 | $ | (459,452 | ) | $ | 520,160 | ||||||||||
License agreements | 1,761,623 | (1,519,116 | ) | 242,507 | 1,761,623 | (1,519,116 | ) | 242,507 | ||||||||||||||||
Total intangible assets | $ | 2,741,235 | $ | (1,978,568 | ) | $ | 762,667 | $ | 2,741,235 | $ | (1,978,568 | ) | $ | 762,667 | ||||||||||
2006 | ||||||||||||||||||||||||
Patents | $ | 979,612 | $ | (403,650 | ) | $ | 575,962 | |||||||||||||||||
License agreements | 1,712,248 | (1,412,028 | ) | 300,220 | ||||||||||||||||||||
Total intangible assets | $ | 2,691,860 | $ | (1,815,678 | ) | $ | 876,182 | |||||||||||||||||
For the year ending December 31: | ||||||||||||
2008 | $ | 107,249 | ||||||||||
2009 | $ | 107,249 | $ | 119,687 | ||||||||
2010 | $ | 107,249 | $ | 107,499 | ||||||||
2011 | $ | 69,468 | $ | 69,718 | ||||||||
2012 | $ | 68,295 | $ | 68,545 | ||||||||
2013 | $ | 66,212 |
2007 | 2006 | 2008 | 2007 | |||||||||||||
Prepaid royalties | $ | 180,250 | $ | 189,782 | $ | 551,199 | $ | 180,250 | ||||||||
Security deposit (building lease) | 752,500 | 752,500 | 750,000 | 752,500 | ||||||||||||
Restricted cash (letter of credit) | 778,079 | 778,079 | 778,079 | 778,079 | ||||||||||||
Total other long-term assets | $ | 1,710,829 | $ | 1,720,361 | ||||||||||||
Total other non-current assets | $ | 2,079,278 | $ | 1,710,829 | ||||||||||||
58
Note | Accrued Expenses and Other |
2007 | 2006 | 2008 | 2007 | |||||||||||||
External services | $ | 360,340 | $ | 323,162 | $ | 466,360 | $ | 360,340 | ||||||||
Employee compensation | 1,885,249 | 1,570,915 | 1,526,115 | 1,885,249 | ||||||||||||
Other | 216,663 | 159,825 | 268,770 | 216,663 | ||||||||||||
Total other accrued liabilities | $ | 2,462,252 | $ | 2,053,902 | ||||||||||||
Total accrued expenses and other liabilities | $ | 2,261,245 | $ | 2,462,252 | ||||||||||||
Note | Stock-Based Compensation |
63
2007 | 2006 | 2008 | 2007 | 2006 | ||||||||||||||||
Research and development expense | $ | 1,347,239 | $ | 1,048,697 | $ | 1,845,523 | $ | 1,347,239 | $ | 1,048,697 | ||||||||||
General and administrative expense | 1,558,056 | 1,236,334 | 1,909,348 | 1,558,056 | 1,236,334 | |||||||||||||||
Total employee stock-based compensation expense and effect on net loss | $ | 2,905,295 | $ | 2,285,031 | ||||||||||||||||
Total stock-based compensation expense and effect on net loss | $ | 3,754,871 | $ | 2,905,295 | $ | 2,285,031 | ||||||||||||||
Effect on basic and diluted net loss per common share | $ | (0.04 | ) | $ | (0.03 | ) | ||||||||||||||
59
2005 | ||||
Net loss: | ||||
Net loss, as reported | $ | (11,738,350 | ) | |
Deduct: Stock-based employee compensation expense determined under fair value-based method for all awards | (1,019,120 | ) | ||
Pro forma net loss | $ | (12,757,470 | ) | |
Basic and diluted earnings per common share: | ||||
As reported | $ | (0.18 | ) | |
Pro forma | $ | (0.20 | ) | |
Shares used in computing basic and diluted loss per share | 63,643,176 | |||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Expected life (years)(1) | 6.25 | 6.25 | 5.00 | 7.24 | 6.25 | 6.25 | ||||||||||||||||||
Risk-free interest rate(2) | 4.36 | % | 4.72 | % | 4.14 | % | 3.23 | % | 4.36 | % | 4.72 | % | ||||||||||||
Expected volatility(3) | 95.2 | % | 109.0 | % | 100.7 | % | 94.0 | % | 95.2 | % | 109.0 | % | ||||||||||||
Expected dividend yield(4) | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % |
(1) | The expected term represents the period during which our stock-based awards are expected to be outstanding. In 2008 we estimated this amount based on historical experience of similar awards, giving consideration to the contractual terms of the awards, vesting requirements, and expectation of future employee behavior, including post-vesting terminations. The expected term in 2007 and 2006 is equal to the average of the contractual life of the stock option and its vesting period as of the date of grant. | |
(2) | The risk-free interest rate is based on U.S. Treasury debt securities with maturities close to the expected term of the option as of the date of grant. | |
(3) | Expected volatility is based on historical volatility over the most recent historical period equal to the length of the expected term of the option as of the date of grant. | |
(4) | We have neither declared nor paid dividends on any share of common stock and we do not expect to do so in the foreseeable future. |
64
60
Outstanding Options | Outstanding Options | |||||||||||||||||||||||||||||||||||
Weighted- | Weighted-Average | Aggregate | Weighted- | Weighted-Average | Aggregate | |||||||||||||||||||||||||||||||
Shares Available | Number | Average | remaining | Intrinsic | Number | Average | Remaining | Intrinsic | ||||||||||||||||||||||||||||
for Grant | of Shares | Exercise Price | contractual term | Value(1) | of Shares | Exercise Price | Contractual Term | Value(1) | ||||||||||||||||||||||||||||
Balance at December 31, 2004 | 6,339,406 | 6,682,201 | $ | 2.67 | ||||||||||||||||||||||||||||||||
Granted | (1,075,481 | ) | 1,075,481 | $ | 4.75 | |||||||||||||||||||||||||||||||
Exercised | (423,989 | ) | $ | 1.76 | ||||||||||||||||||||||||||||||||
Cancelled (forfeited and expired) | 725,584 | (725,584 | ) | $ | 3.11 | |||||||||||||||||||||||||||||||
Balance at December 31, 2005 | 5,989,509 | 6,608,109 | $ | 3.02 | 6,608,109 | $ | 3.02 | |||||||||||||||||||||||||||||
Granted | (2,818,684 | ) | 2,818,684 | $ | 2.38 | 2,818,684 | $ | 2.38 | ||||||||||||||||||||||||||||
Exercised | (369,214 | ) | $ | 1.82 | (369,214 | ) | $ | 1.82 | ||||||||||||||||||||||||||||
Cancelled (forfeited and expired) | 556,076 | (556,076 | ) | $ | 2.82 | (556,076 | ) | $ | 2.82 | |||||||||||||||||||||||||||
Balance at December 31, 2006 | 3,726,901 | 8,501,503 | $ | 2.88 | 8,501,503 | $ | 2.88 | |||||||||||||||||||||||||||||
Granted | (2,484,100 | ) | 2,484,100 | $ | 2.33 | 2,484,100 | $ | 2.33 | ||||||||||||||||||||||||||||
Exercised | (175,186 | ) | $ | 1.20 | (175,186 | ) | $ | 1.20 | ||||||||||||||||||||||||||||
Cancelled (forfeited and expired) | 1,781,607 | (1,781,607 | ) | $ | 4.91 | (1,781,607 | ) | $ | 4.91 | |||||||||||||||||||||||||||
Balance at December 31, 2007 | 3,024,408 | 9,028,810 | $ | 2.36 | 7.26 | $ | 826,558 | 9,028,810 | $ | 2.36 | 7.26 | $ | 826,558 | |||||||||||||||||||||||
Granted | 353,000 | $ | 1.24 | |||||||||||||||||||||||||||||||||
Exercised | (114,700 | ) | $ | 1.11 | ||||||||||||||||||||||||||||||||
Cancelled (forfeited and expired) | (926,580 | ) | $ | 2.44 | ||||||||||||||||||||||||||||||||
Exercisable at December 31, 2007 | 4,600,618 | $ | 2.24 | 5.68 | $ | 826,558 | ||||||||||||||||||||||||||||||
Balance at December 31, 2008 | 8,340,530 | $ | 2.32 | 6.55 | $ | 692,739 | ||||||||||||||||||||||||||||||
Exercisable at December 31, 2008 | 5,726,441 | $ | 2.33 | 5.76 | $ | 635,969 | ||||||||||||||||||||||||||||||
Vested and expected to vest(2) | 8,337,077 | $ | 2.34 | 7.34 | $ | 826,558 | 7,927,918 | $ | 2.32 | 6.46 | $ | 685,157 | ||||||||||||||||||||||||
(1) | Aggregate intrinsic value represents the value of the closing price per share of our common stock on the last trading day of the fiscal period in excess of the exercise price multiplied by the number of options outstanding or exercisable. | |
(2) | Shares include options vested and those expected to vest net of estimated forfeitures. |
Weighted average | Weighted Average | |||||||||||||||
grant date fair | Grant Date Fair | |||||||||||||||
Unvested Options | Number of options | value | Number of Options | Value | ||||||||||||
Unvested options at December 31, 2006 | 3,598,784 | $ | 2.16 | |||||||||||||
Unvested options at December 31, 2007 | 4,428,209 | $ | 2.01 | |||||||||||||
Granted | 2,484,100 | 1.85 | 353,000 | 1.00 | ||||||||||||
Vested | (1,485,573 | ) | 2.14 | (1,792,976 | ) | 2.05 | ||||||||||
Cancelled | (169,119 | ) | 1.88 | (374,144 | ) | 1.95 | ||||||||||
Unvested options at December 31, 2007 | 4,428,192 | $ | 2.00 | |||||||||||||
Unvested options at December 31, 2008 | 2,614,089 | $ | 1.85 | |||||||||||||
6165
Options outstanding at December 31, 2007 | ||||||||||||||||||||||||||||||||
Options Outstanding at December 31, 2008 | Options Outstanding at December 31, 2008 | |||||||||||||||||||||||||||||||
Weighted Average | Weighted Average | Weighted Average | Weighted Average | Aggregate Intrinsic | ||||||||||||||||||||||||||||
Range of | Remaining | Exercise | Remaining | Exercise | Value at December 31, | |||||||||||||||||||||||||||
Exercise Prices | Number Outstanding | Term (Yrs.) | Price | Aggregate Intrinsic Value | Number Outstanding | Term (Yrs.) | Price | 2008 | ||||||||||||||||||||||||
Less than $2.00 | 2,383,594 | 5.4 | $ | 1.19 | $ | 826,558 | 2,340,086 | 5.5 | $ | 1.17 | $ | 692,739 | ||||||||||||||||||||
$2.00 — $3.99 | 5,882,631 | 8.1 | $ | 2.45 | — | 5,312,661 | 7.1 | $ | 2.44 | — | ||||||||||||||||||||||
$4.00 — $5.99 | 762,585 | 7.0 | $ | 5.23 | — | 687,783 | 6.1 | $ | 5.27 | — | ||||||||||||||||||||||
9,028,810 | $ | 826,558 | 8,340,530 | $ | 2.32 | $ | 692,739 | |||||||||||||||||||||||||
Options vested at December 31, 2007 | ||||||||||||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||||||||||
Range of | Remaining | Exercise | ||||||||||||||||||||||||||||||
Exercise Prices | Number Outstanding | Term (Yrs.) | Price | Aggregate Intrinsic Value | ||||||||||||||||||||||||||||
Less than $2.00 | 2,100,174 | 5.1 | $ | 1.14 | $ | 826,558 | ||||||||||||||||||||||||||
$2.00 — $3.99 | 1,999,056 | 6.1 | $ | 2.65 | — | |||||||||||||||||||||||||||
$4.00 — $5.99 | 501,388 | 6.7 | $ | 5.17 | — | |||||||||||||||||||||||||||
4,600,618 | $ | 826,558 | ||||||||||||||||||||||||||||||
Options expected to vest after at December 31, 2007 | ||||||||||||||||||||||||||||||||
Weighted Average | Weighted Average | |||||||||||||||||||||||||||||||
Range of | Remaining | Exercise | ||||||||||||||||||||||||||||||
Exercise Prices | Number Outstanding | Term (Yrs.) | Price | Aggregate Intrinsic Value | ||||||||||||||||||||||||||||
Less than $2.00 | 232,886 | 7.5 | $ | 1.61 | $ | — | ||||||||||||||||||||||||||
$2.00 — $3.99 | 3,278,971 | 9.1 | $ | 2.35 | — | |||||||||||||||||||||||||||
$4.00 — $5.99 | 224,602 | 7.7 | $ | 5.34 | — | |||||||||||||||||||||||||||
3,736,459 | $ | — | ||||||||||||||||||||||||||||||
Vested Options Outstanding at December 31, 2008 | ||||||||
Range of Exercise Prices | Number Outstanding | Weighted Average Exercise Price | ||||||
Less than $2.00 | 1,981,126 | $ | 1.16 | |||||
$2.00 — $3.99 | 3,161,619 | $ | 2.53 | |||||
$4.00 — $5.99 | 583,696 | $ | 5.26 | |||||
5,726,441 | $ | 2.33 | ||||||
Weighted-Average | ||||||||
Number of RSUs | Grant Date Fair Value | |||||||
Outstanding at January 1, 2008 | — | — | ||||||
Granted | 1,650,000 | $ | 1.26 | |||||
Exercised | — | — | ||||||
Cancelled | — | — | ||||||
Outstanding at December 31, 2008 | 1,650,000 | $ | 1.26 | |||||
Vested RSUs outstanding at December 31, 2008 | — | — |
6266
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average Exercise | Average Exercise | |||||||||||||||
Number | Price | Number | Price | |||||||||||||
Outstanding at January 1 | 1,564,599 | $ | 2.00 | — | — | |||||||||||
Granted | — | — | 1,564,599 | $ | 2.00 | |||||||||||
Exercised | — | — | — | — | ||||||||||||
Forfeited and expired | (86,380 | ) | — | — | — | |||||||||||
Outstanding SARs at December 31 | 1,478,219 | $ | 2.00 | 1,564,599 | $ | 2.00 | ||||||||||
SARs exercisable at December 31 | 47,370 | $ | 2.00 | — | — | |||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Number | Price | Number | Price | Number | Price | |||||||||||||||||||
Outstanding at January 1, | 1,478,219 | $ | 2.00 | 1,564,599 | $ | 2.00 | — | — | ||||||||||||||||
Granted | — | — | — | — | 1,564,599 | $ | 2.00 | |||||||||||||||||
Exercised | — | — | — | — | — | — | ||||||||||||||||||
Forfeited | (47,390 | ) | (86,380 | ) | $ | 2.00 | — | — | ||||||||||||||||
Outstanding at December 31, | 1,430,829 | $ | 2.00 | 1,478,219 | $ | 2.00 | 1,564,599 | $ | 2.00 | |||||||||||||||
Exercisable at December 31, | 864,467 | $ | 2.00 | 506,754 | $ | 2.00 | — | — | ||||||||||||||||
Note | Wind-down and exit costs |
2007 | 2006 | 2008 | 2007 | |||||||||||||
Accrued wind-down reserve at beginning of period | $ | 5,512,000 | $ | 6,098,000 | $ | 4,875,000 | $ | 5,512,000 | ||||||||
Less actual expenses recorded against estimated reserve during the period | (1,420,000 | ) | (1,295,000 | ) | (1,293,000 | ) | (1,420,000 | ) | ||||||||
Additional expense recorded to revise estimated reserve at period-end | 783,000 | 709,000 | 866,000 | 783,000 | ||||||||||||
Revised reserve at period-end | 4,875,000 | 5,512,000 | 4,448,000 | 4,875,000 | ||||||||||||
Add deferred rent at period end | 1,268,000 | 1,238,000 | 1,065,000 | 1,268,000 | ||||||||||||
Total accrued wind-down expenses at period-end (current and non current) | $ | 6,143,000 | $ | 6,750,000 | $ | 5,513,000 | $ | 6,143,000 | ||||||||
Accrued wind-down expenses, current | $ | 1,374,000 | $ | 1,252,000 | ||||||||||||
Non current | 4,769,000 | 5,498,000 | ||||||||||||||
Accrued wind-down expenses, current portion | $ | 1,420,000 | $ | 1,374,000 | ||||||||||||
Non current portion | 4,093,000 | 4,769,000 | ||||||||||||||
Total accrued wind-down expenses | $ | 6,143,000 | $ | 6,750,000 | $ | 5,513,000 | $ | 6,143,000 | ||||||||
6367
Note | Commitments and Contingencies |
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Rent expense | $ | 2,963,339 | $ | 2,967,911 | $ | 2,983,879 | $ | 3,077,430 | $ | 3,077,431 | $ | 2,967,911 | ||||||||||||
Sublease income | (492,306 | ) | (616,600 | ) | (962,757 | ) | (809,065 | ) | (606,398 | ) | (616,600 | ) | ||||||||||||
Rent expense, net | $ | 2,471,033 | $ | 2,351,311 | $ | 2,021,122 | $ | 2,268,365 | $ | 2,471,033 | $ | 2,351,311 | ||||||||||||
6468
Bonds | Capital | Operating | Sublease | Bonds | Capital | Operating | Sublease | |||||||||||||||||||||||||
Payable | Leases | Leases | Income | Payable | Leases | Leases | Income | |||||||||||||||||||||||||
2008 | $ | 244,531 | $ | 19,862 | $ | 3,469,017 | $ | 388,989 | ||||||||||||||||||||||||
2009 | 244,572 | 19,862 | 3,536,843 | 387,210 | $ | 244,572 | $ | 19,862 | $ | 3,536,843 | $ | 652,624 | ||||||||||||||||||||
2010 | 242,559 | 6,623 | 1,767,304 | 97,508 | 242,559 | 6,623 | 1,767,304 | 97,508 | ||||||||||||||||||||||||
2011 | 242,321 | — | 1,171,875 | — | 242,321 | — | 1,171,875 | — | ||||||||||||||||||||||||
2012 | 240,666 | — | 1,171,875 | — | 240,666 | — | 1,171,875 | — | ||||||||||||||||||||||||
2013 | 237,593 | — | 732,422 | — | ||||||||||||||||||||||||||||
Thereafter | 374,444 | — | 732,422 | — | 136,852 | — | — | — | ||||||||||||||||||||||||
Total minimum lease payments | 1,589,093 | 46,347 | $ | 11,849,336 | $ | 873,707 | 1,344,563 | 26,485 | $ | 8,380,319 | $ | 750,132 | ||||||||||||||||||||
Less amounts representing interest | 443,677 | 3,548 | 335,396 | 1,217 | ||||||||||||||||||||||||||||
Present value of bonds payable payments | 1,145,416 | 42,799 | ||||||||||||||||||||||||||||||
Present value of bonds payable and capital lease payments | 1,009,167 | 25,268 | ||||||||||||||||||||||||||||||
Less current maturities | 136,250 | 17,530 | 149,167 | 18,739 | ||||||||||||||||||||||||||||
Bonds payable, less current maturities | $ | 1,009,166 | $ | 25,269 | $ | 860,000 | $ | 6,529 | ||||||||||||||||||||||||
65
69
Note | Warrant Liability |
To Calculate | ||||||||
To Calculate | Fair Value at | |||||||
Fair Value on | December 31, | |||||||
Date of Issuance | 2008 | |||||||
Expected life (years) | 5.5 | 5.4 | ||||||
Risk-free interest rate | 2.42 | % | 1.60 | % | ||||
Expected volatility | 83.8 | % | 84.5 | % | ||||
Expected dividend yield | 0 | % | 0 | % |
Change in Fair Value | ||||||||||||
of Warrant Liability | ||||||||||||
At December 31, | At November 17, | at December 31, | ||||||||||
2008 | 2008 | 2008 | ||||||||||
Fair value of warrant liability | $ | 8,439,931 | $ | 7,502,690 | $ | 937,241 |
Note 11. | Common Stock |
70
• | In November 2008, we sold 13,793,104 units to institutional investors at a price of $1.45 per unit, for gross proceeds of $20,000,000. The units, each of which consisted of one share of common stock and a warrant to purchase 0.75 shares of common stock at an exercise price of $2.30 per share, were offered as a registered direct offering under an effective shelf registration statement previously filed with and declared effective by the Securities and Exchange Commission. We received total proceeds net of offering expenses and placement agency fees of approximately $18,637,000. | |
• | In April 2007, a warrant issued as part of | |
• | ||
• | ||
• | In March 2006, a warrant issued as part of | |
66
71
Shares reserved for | ||||
Shares reserved for warrants related to financing transactions | ||||
Shares reserved for license agreements | ||||
Total | ||||
Note | Grant Revenue |
Note | 401(k) Plan |
Note | Income Taxes |
6772
2007 | 2006 | 2008 | 2007 | |||||||||||||
Deferred tax assets: | ||||||||||||||||
Capitalized research and development costs | $ | 31,779,000 | $ | 25,058,000 | $ | 38,670,000 | $ | 31,779,000 | ||||||||
Net operating losses | 42,730,000 | 41,015,000 | 42,247,000 | 42,716,000 | ||||||||||||
Research and development credits | 6,103,000 | 5,671,000 | 6,671,000 | 6,103,000 | ||||||||||||
Accrued wind down cost | 1,950,000 | 2,205,000 | 1,780,000 | 1,950,000 | ||||||||||||
Stock-based compensation | 245,000 | 180,000 | 465,000 | 245,000 | ||||||||||||
Impaired asset | 833,000 | — | ||||||||||||||
Other | 315,000 | 361,000 | 458,000 | 329,000 | ||||||||||||
83,122,000 | 74,490,000 | 91,124,000 | 83,122,000 | |||||||||||||
Valuation allowance | (83,122,000 | ) | (74,490,000 | ) | (91,124,000 | ) | (83,122,000 | ) | ||||||||
Net deferred tax assets | $ | — | $ | — | $ | — | $ | — | ||||||||
• | Net operating loss carry forwards for federal income tax purposes of approximately | |
• | Federal research and development tax credits of approximately | |
• | Net operating loss carry forwards for state income tax purposes of approximately | |
• | State research and development tax credits of approximately |
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Statutory federal income tax (benefit) rate | (34 | )% | (34 | )% | (34 | )% | (34 | )% | (34 | )% | (34 | )% | ||||||||||||
State income tax (benefit) rate | (6 | ) | (6 | ) | (6 | ) | (6 | ) | (6 | ) | (6 | ) | ||||||||||||
Increase (decrease) resulting from: | ||||||||||||||||||||||||
Increase resulting from: | ||||||||||||||||||||||||
Expenses not deductible for taxes | 4.9 | 5.3 | 2.8 | 5.8 | 4.9 | 5.3 | ||||||||||||||||||
Increase in valuation allowance | 35.1 | 34.7 | 37.2 | 34.2 | 35.1 | 34.7 | ||||||||||||||||||
Effective tax (benefit) rate | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||
6873
Note 15. | Subsequent Events |
74
2008 Quarter Ended | ||||||||||||||||||||||||||||||||
2007 Quarter Ended | December 31 | September 30 | June 30 | March 31 | ||||||||||||||||||||||||||||
December 31 | September 30 | June 30 | March 31 | (In thousands, except per share amounts) | ||||||||||||||||||||||||||||
Total revenue | $ | 30 | $ | 13 | $ | 8 | $ | 6 | $ | 172 | $ | 12 | $ | 30 | $ | 17 | ||||||||||||||||
Operating expenses(1) | 8,353 | 7,749 | 6,041 | 6,505 | 7,270 | 5,857 | 6,929 | 6,914 | ||||||||||||||||||||||||
Other income, net | 497 | 582 | 609 | 1,880 | ||||||||||||||||||||||||||||
Other income (expense), net(2) | (2,985 | ) | 101 | 183 | 352 | |||||||||||||||||||||||||||
Net loss | (7,825 | ) | (7,154 | ) | (5,424 | ) | (4,620 | ) | (10,082 | ) | (5,744 | ) | (6,716 | ) | (6,545 | ) | ||||||||||||||||
Basic and diluted loss per share | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.06 | ) | ||||||||||||||||||||
Basic and diluted net loss per share | $ | (0.11 | ) | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.09 | ) |
2007 Quarter Ended | ||||||||||||||||||||||||||||||||
2006 Quarter Ended | December 31 | September 30 | June 30 | March 31 | ||||||||||||||||||||||||||||
December 31 | September 30 | June 30 | March 31 | (In thousands, except per share amounts) | ||||||||||||||||||||||||||||
Total revenue | $ | 12 | $ | 18 | $ | 21 | $ | 42 | $ | 30 | $ | 13 | $ | 8 | $ | 6 | ||||||||||||||||
Operating expenses(1) | 6,583 | 5,581 | 4,775 | 4,525 | 8,353 | 7,749 | 6,041 | 6,505 | ||||||||||||||||||||||||
Other income, net | 668 | 699 | 765 | 291 | 497 | 582 | 609 | 1,880 | ||||||||||||||||||||||||
Net loss | (5,903 | ) | (4,863 | ) | (3,989 | ) | (4,193 | ) | (7,826 | ) | (7,154 | ) | (5,424 | ) | (4,619 | ) | ||||||||||||||||
Basic and diluted (loss) per share | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.06 | ) | ||||||||||||||||||||
Basic and diluted net loss per share | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.06 | ) |
(1) | Includes adjustment of wind-down accrual — see Note | |
(2) | Other expense, net, for the quarter ended December 31, 2008, includes a loss of $937,241 relating to the change in fair value of our warrant liability — see Note 10, and a $2,082,894 other than temporary impairment of marketable securities — see Note 2. |
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Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Item 9A. | CONTROLS AND PROCEDURES |
• | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; | |
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and | |
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
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Item 9B. | Other Information |
Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
Martin M. McGlynn, President and Chief Executive Officer | Martin M. McGlynn joined the company on January 2001, when he was appointed President and Chief Executive Officer of the company and of its wholly-owned subsidiary, StemCells California, Inc. He was elected to the Board of Directors in February 2001. | |||||
Ann Tsukamoto, Research and Development | Ann Tsukamoto, Ph.D., joined the company in November 1997 as Senior Director of Scientific Operations; was appointed Vice President, Scientific Operations in June | |||||
Rodney K.B. Young, Chief Financial Officer and Finance and Administration | Rodney K.B. Young joined the company in September 2005 as Chief Financial Officer and Vice President, Finance. In November 2006 he became CFO and Vice President, Finance and | |||||
Stewart Craig, Ph.D. Senior Vice President, Development and Operations | 47 | Stewart Craig, Ph.D., joined the company in September 2008 with responsibilities for Development, Manufacturing, Regulatory, Quality Systems and Facilities. From 2005 to 2008, Dr. Craig was Chief Technology Officer and Vice President of Progenitor Cell Therapy, a contract services provider for research, development, manufacture and commercialization of cell-based therapies, prior to which he has held executive positions at Xcyte Therapies, Osiris Therapeutics and SyStemix. | ||||
Kenneth Stratton, JD General Counsel | 40 | Kenneth Stratton, JD, joined the company in February 2007 as General Counsel, with responsibility for corporate compliance and legal affairs. In March 2008, he assumed responsibilities for the Human Resources function. Prior to StemCells, Mr. Stratton served as Deputy General Counsel for Threshold Pharmaceuticals and as Senior Legal Counsel for Medtronic’s Vascular business unit. |
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Eric H. Bjerkholt | Eric H. Bjerkholt was elected to the Board of Directors in March 2004. Mr. Bjerkholt joined Sunesis Pharmaceuticals, Inc., in 2004 as Senior Vice President and Chief Financial Officer. Since February 2007, he has served as Senior Vice President, Corporate Development and Finance, and Chief Financial Officer. From 2002 to 2004, Mr. Bjerkholt was Senior Vice President and Chief Financial Officer at IntraBiotics Pharmaceuticals, Inc. | |||||
Ricardo B. Levy, Ph.D. | Ricardo B. Levy, Ph.D. was elected to the Board of Directors in September 2001. He currently serves on several boards of directors. | |||||
Martin M. McGlynn | Martin M. McGlynn was elected to the Board of Directors in February 2001. He is President and Chief Executive Officer of the Company, a position he has held since January 2001. | |||||
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Roger Perlmutter, M.D., Ph.D. | Roger M. Perlmutter, M.D., Ph.D., was elected to the Board of Directors in December 2000. He is Executive Vice President, Research and Development, of Amgen, Inc., a position he has held since January 2001. | |||||
John J. Schwartz, Ph.D. | John J. Schwartz, Ph.D., was elected to the Board of Directors in December 1998 and was elected Chairman of the Board at the same time. He is currently President of Quantum Strategies Management Company. | |||||
Irving Weissman, M.D. | Irving L. Weissman, M.D., was elected to the Board of Directors in September 1997. He is the Virginia and Daniel K. Ludwig Professor of Cancer Research, Professor of Pathology and Professor of Developmental Biology at Stanford. |
Item 11. | EXECUTIVE COMPENSATION |
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
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Item 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | The following documents are included as part of this Annual Report on Form10-K. |
Exhibit No. | Title or Description | |||
3 | .1- | Restated Certificate of Incorporation of the Registrant | ||
3 | .2-- | Amended and Restated By-Laws of the Registrant | ||
4 | .1ˆˆ | Specimen common stock Certificate | ||
4 | .2{*} | Warrant to Purchase common stock — Riverview Group, LLC | ||
4 | .3XXXX | Warrant to Purchase common stock — Cantor Fitzgerald & Co. | ||
4 | .4&2 | Warrant to Purchase common stock — Riverview Group, LLC | ||
4 | .5&4 | Form of Warrant Certificate issued to a certain purchasers of the Registrant’s common stock in November 2008 | ||
10 | .1 | Form of at-will Employment Agreement between the Registrant and most of its employees | ||
10 | .2* | Form of Agreement for Consulting Services between the Registrant and members of its Scientific Advisory Board | ||
10 | .3 | Form of Nondisclosure Agreement between the Registrant and its Contractors | ||
10 | .4* | 1992 Equity Incentive Plan | ||
10 | .5* | 1992 Stock Option Plan for Non-Employee Directors | ||
10 | .6+ | Research Agreement, dated as of March 16, 1994, between NeuroSpheres, Ltd. and Registrant | ||
10 | .7+ | Lease Agreement between the Registrant and Rhode Island Industrial Facilities Corporation, dated as of August 1, 1992 | ||
10 | .8+ | First Amendment to Lease Agreement between Registrant and The Rhode Island Industrial Facilities Corporation dated as of September 15, 1994 | ||
10 | .9# | Lease Agreement, dated as of November 21, 1997, by and between Hub RI Properties Trust, as Landlord, and CytoTherapeutics, Inc., as Tenant | ||
10 | .10! | Consulting Agreement, dated as of September 25, 1997, between Dr. Irving Weissman and the Registrant | ||
10 | .11!!! | StemCells, Inc. 1996 Stock Option Plan | ||
10 | .12!!! | 1997 StemCells Research Stock Option Plan (the “1997 Plan”) | ||
10 | .13!!! | Form of Performance-Based Incentive Option Agreement issued under the 1997 Plan | ||
10 | .14XX | License Agreement, dated as of October 30, 2000, between the Registrant and NeuroSpheres Ltd. | ||
10 | .15XX | Letter Agreement, dated January 2, 2001, between the Registrant and Martin McGlynn |
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80
Exhibit No. | Title or Description | |||
3 | .1- | Restated Certificate of Incorporation of the Registrant | ||
3 | .2-- | Amended and Restated By-Laws of the Registrant | ||
4 | .1^ ^ | Specimen common stock Certificate | ||
4 | .2++ | Form of Warrant Certificate issued to a certain purchaser of the Registrant’s common stock in April 1995 | ||
4 | .3X | common stock Purchase Warrant | ||
4 | .4X | Callable Warrant | ||
4 | .5XXX | Callable Warrant, dated June 21, 2001, issued to Millennium Partners, L.P. | ||
4 | .6XXX | Common stock Purchase Warrant, Class A, dated June 21, 2001, issued to Millennium Partners, L.P. | ||
4 | .7{*} | Certificate of Designations of the Powers, Preferences and Relative, Participating, Optional and other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of 3% Cumulative Convertible Preferred Stock for StemCells, Inc. | ||
4 | .8{*} | Warrant to Purchase common stock — Riverview Group, LLC | ||
4 | .9XXXX | Warrant to Purchase common stock — Cantor Fitzgerald & Co. | ||
4 | .10&& | Warrant to Purchase common stock — Riverview Group, LLC | ||
10 | .1* | Form of at-will Employment Agreement between the Registrant and most of its employees | ||
10 | .2* | Form of Agreement for Consulting Services between the Registrant and members of its Scientific Advisory Board | ||
10 | .3* | Form of Nondisclosure Agreement between the Registrant and its Contractors | ||
10 | .4* | 1992 Equity Incentive Plan | ||
10 | .5* | 1992 Stock Option Plan for Non-Employee Directors | ||
10 | .7+ | Research Agreement, dated as of March 16, 1994, between NeuroSpheres, Ltd. and Registrant | ||
10 | .8+ | Lease Agreement between the Registrant and Rhode Island Industrial Facilities Corporation, dated as of August 1, 1992 | ||
10 | .9+ | First Amendment to Lease Agreement between Registrant and The Rhode Island Industrial Facilities Corporation dated as of September 15, 1994 | ||
10 | .10# | Lease Agreement, dated as of November 21, 1997, by and between Hub RI Properties Trust, as Landlord, and CytoTherapeutics, Inc., as Tenant | ||
10 | .11!! | CTI individual stockholders option agreement, dated as of July 10, 1996, among the Company and the individuals listed therein | ||
10 | .12! | Consulting Agreement, dated as of September 25, 1997, between Dr. Irving Weissman and the Registrant | ||
10 | .13!!! | StemCells, Inc. 1996 Stock Option Plan | ||
10 | .14!!! | 1997 StemCells Research Stock Option Plan (the “1997 Plan”) | ||
10 | .15!!! | Form of Performance-Based Incentive Option Agreement issued under the 1997 Plan | ||
10 | .16$** | License Agreement, dated as of October 27, 1998, between The Scripps Research Institute and the Registrant | ||
10 | .17$** | License Agreement, dated as of October 27, 1998, between The Scripps Research Institute and the Registrant | ||
10 | .18$** | License Agreement, dated as of November 20, 1998, between The Scripps Research Institute and the Registrant | ||
10 | .19++** | License Agreement, dated as of June 199,9 between The Scripps Research Institute and the Registrant | ||
10 | .20++** | License Agreement, dated as of June 1999, between The Scripps Research Institute and the Registrant | ||
10 | .21XX | License Agreement, dated as of October 30, 2000, between the Registrant and NeuroSpheres Ltd. | ||
10 | .22XX | Letter Agreement, dated January 2, 2001, between the Registrant and Martin McGlynn | ||
10 | .23XX | Lease, dated February 1, 2001, between the Board of Trustees of Stanford University and the Registrant | ||
10 | .24$$ | 2001 Equity Incentive Plan | ||
10 | .25& | Agreement, dated as of April 9, 2003, between the Registrant and Riverview Group, L.L.C. | ||
10 | .26&& | Form of Registration Rights Agreement between the Registrant and Riverview Group, L.L.C. |
73
Exhibit No. | Title or Description | |||
10 | .27&&& | Securities Purchase Agreement, dated as of May 7, 2003, between the Registrant and Riverview Group, L.L.C. | ||
10 | .28% | Securities Purchase Agreement, dated as of December 9, 2003, between the Registrant and Riverview Group, L.L.C. | ||
10 | .29^ ^ ^ | Form of Securities Purchase Agreement, dated as of June 16, 2004, between the Registrant and certain Purchasers parties thereto | ||
10 | .30^ ^ ^ | Form of Warrant | ||
10 | .31^ ^ ^ ^ | Amended and Restated 2004 Equity Incentive Plan of the Registrant | ||
10 | .32§ | License Agreement, dated as of July 1, 2005, between the Registrant and ReNeuron Limited | ||
10 | .33§§ | Letter Agreement, effective as of September 6, 2005, between the Registrant and Rodney K.B. Young | ||
10 | .34§§ | Consulting Agreement, effective as of September 6, 2005, between the Registrant and Judi R. Lum | ||
10 | .35^ | Sales Agreement with Cantor Fitzgerald | ||
10 | .36XX | Side Letter, dated March 17, 2001, between the Company and Oleh S. Hnatiuk regarding NeuroSpheres License Agreement, dated October 30, 2000 | ||
10 | .37 | Note Purchase Agreement with Progenitor Cell Therapy, LLC, dated December 3, 2007. | ||
10 | .38@ | License Agreement, dated April 1, 1997, by and among Registrant, NeuroSpheres Ltd. and NeuroSpheres Holdings Ltd. | ||
14 | .1%% | Code of Ethics | ||
21 | X | Subsidiaries of the Registrant | ||
23 | .1 | Consent of Grant Thornton, LLP , Independent Registered Public Accounting Firm | ||
31 | .1 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
31 | .2 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) | ||
32 | .1 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
32 | .2 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) |
Exhibit No. | Title or Description | |||
10 | .16XX | Lease, dated February 1, 2001, between the Board of Trustees of Stanford University and the Registrant | ||
10 | .17$$ | 2001 Equity Incentive Plan | ||
10 | .18ˆˆˆ | Form of Securities Purchase Agreement, dated as of June 16, 2004, between the Registrant and certain Purchasers parties thereto | ||
10 | .19ˆˆˆ | Form of Warrant | ||
10 | .20ˆˆˆˆ | Amended and Restated 2004 Equity Incentive Plan of the Registrant | ||
10 | .21§ | License Agreement, dated as of July 1, 2005, between the Registrant and ReNeuron Limited | ||
10 | .22§§ | Letter Agreement, effective as of September 6, 2005, between the Registrant and Rodney K.B. Young | ||
10 | .23XX | Side Letter, dated March 17, 2001, between the Company and Oleh S. Hnatiuk regarding NeuroSpheres License Agreement, dated October 30, 2000 | ||
10 | .24@ | License Agreement, dated April 1, 1997, by and among Registrant, NeuroSpheres Ltd. and NeuroSpheres Holdings Ltd. | ||
10 | .25§§§ | Indemnification Agreement, dated July 9, 2008, by and between registrant and NeuroSpheres Holdings, LTD. | ||
10 | .26 | Facility Agreement, dated December 23, 2008, by and among registrant and Stem Cell Sciences Plc | ||
10 | .27 | Second Facility Agreement, dated March 1, 2009, by and among registrant, Stem Cell Sciences Plc and Stem Cell Sciences Holdings Limited | ||
10 | .28 | Asset Purchase Agreement, dated March 1, 2009, by and between registrant and Stem Cell Sciences Plc | ||
14 | .1 | Code of Ethics | ||
21 | X | Subsidiaries of the Registrant | ||
23 | .1 | Consent of Grant Thornton, LLP , Independent Registered Public Accounting Firm | ||
31 | .1 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
31 | .2 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) | ||
32 | .1 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
32 | .2 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) |
! | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 1997 and filed on November 14, 1997. | |
!! | Previously filed with the Commission as an Exhibit to and incorporated by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 1996. | |
!!! | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-8, FileNo. 333-37313. | |
$ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s annual report onForm 10-K for the fiscal year ended December 31, 1998 and filed on March 31, 1999. | |
$$ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s definitive proxy statement filed May 1, 2001. | |
% | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on December 10, 2003. |
81
%% | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K for the fiscal year ended December 31, 2003 | |
&1 | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on April 15, 2003. | |
&2 | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on May 13, 2003. | |
&3 | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on May 15, 2003. | |
&4 | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on November 12, 2008. | |
* | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, Registration Statement onForm S-1, FileNo. 33-45739. | |
** | Confidential treatment requested as to certain portions. The term “confidential treatment” and the mark “**” as used throughout the indicated Exhibits mean that material has been omitted and separately filed with the Commission. | |
ˆ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on December 29, 2006. | |
ˆˆ | Previously filed with the Commission as an Exhibit to, and incorporated by reference to, the Registrant’s Registration Statement onForm S-3, FileNo. 333-151891. | |
ˆˆˆ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K filed on June 17, 2004. | |
ˆˆˆˆ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrants Registration Statement onForm S-8, FileNo. 333-118263. | |
{*} | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K filed on December 7, 2001. | |
+ | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-1, FileNo. 33-85494. | |
++ | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-1, FileNo. 33-91228. |
82
- | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K for the fiscal year ended December 31, 2006 and filed on March 15, 2007. | |
-- | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on May 7, 2007. | |
§ | Previously filed with the Commission as an Exhibit to and incorporated herein by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2005. | |
§§ | Previously filed with the Commission as an Exhibit to and incorporated herein by reference to, the Registrant’s current report onForm 8-K filed on September 7, 2005. | |
§§§ | Previously filed with the Commission as an Exhibit to and incorporated herein by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2008 | |
X | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-1, FileNo. 333-45496. | |
XX | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K for the fiscal year ended December 31, 2000 and filed on April 2, 2001. | |
XXX | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Registration Statement filed onForm S-1 as amended toForm S-3, FileNo. 333-61726. | |
XXXX | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Registration Statement filed onForm S-3, FileNo. 333-75806. | |
@ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K/A for the fiscal year ended December 31, 2006 and filed on April 1, 1997. | |
# | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s annual report onForm 10-K for the fiscal year ended December 31, 1997 and filed on March 30, 1998. |
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By: | /s/ MARTIN MCGLYNN |
Signature | Capacity | Date | ||||
/s/ Martin McGlynn Martin McGlynn | President and Chief Executive Officer and Director (principal executive officer) | March 13, 2009 | ||||
/s/ Rodney K.B. Young Rodney K.B. Young | Chief Financial Officer (principal financial officer) | March 13, 2009 | ||||
/s/ George Koshy George Koshy | Chief Accounting Officer (principal accounting officer) | March 13, 2009 | ||||
/s/ Eric Bjerkholt Eric Bjerkholt | Director | March 13, 2009 | ||||
/s/ Ricardo B. Levy, Ph.D Ricardo B. Levy, Ph.D. | Director | March 13, 2009 | ||||
/s/ Roger M. Perlmutter, M.D. Roger M. Perlmutter, M.D. | Director | March 13, 2009 | ||||
/s/ John J. Schwartz, Ph. D. John J. Schwartz, Ph.D. | Director, Chairman of the Board | March 13, 2009 | ||||
/s/ Irving L. Weissman, M.D. Irving L. Weissman, M.D. | Director | March 13, 2009 |
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Exhibit No. | Title or Description | |||
3 | .1- | Restated Certificate of Incorporation of the Registrant | ||
3 | .2-- | Amended and Restated By-Laws of the Registrant | ||
4 | .1ˆˆ | Specimen common stock Certificate | ||
4 | .2{*} | Warrant to Purchase common stock — Riverview Group, LLC | ||
4 | .3XXXX | Warrant to Purchase common stock — Cantor Fitzgerald & Co. | ||
4 | .4&2 | Warrant to Purchase common stock — Riverview Group, LLC | ||
4 | .5&4 | Form of Warrant Certificate issued to a certain purchasers of the Registrant’s common stock in November 2008 | ||
10 | .1 | Form of at-will Employment Agreement between the Registrant and most of its employees | ||
10 | .2* | Form of Agreement for Consulting Services between the Registrant and members of its Scientific Advisory Board | ||
10 | .3 | Form of Nondisclosure Agreement between the Registrant and its Contractors | ||
10 | .4* | 1992 Equity Incentive Plan | ||
10 | .5* | 1992 Stock Option Plan for Non-Employee Directors | ||
10 | .6+ | Research Agreement, dated as of March 16, 1994, between NeuroSpheres, Ltd. and Registrant | ||
10 | .7+ | Lease Agreement between the Registrant and Rhode Island Industrial Facilities Corporation, dated as of August 1, 1992 | ||
10 | .8+ | First Amendment to Lease Agreement between Registrant and The Rhode Island Industrial Facilities Corporation dated as of September 15, 1994 | ||
10 | .9# | Lease Agreement, dated as of November 21, 1997, by and between Hub RI Properties Trust, as Landlord, and CytoTherapeutics, Inc., as Tenant | ||
10 | .10! | Consulting Agreement, dated as of September 25, 1997, between Dr. Irving Weissman and the Registrant | ||
10 | .11!!! | StemCells, Inc. 1996 Stock Option Plan | ||
10 | .12!!! | 1997 StemCells Research Stock Option Plan (the “1997 Plan”) | ||
10 | .13!!! | Form of Performance-Based Incentive Option Agreement issued under the 1997 Plan | ||
10 | .14XX | License Agreement, dated as of October 30, 2000, between the Registrant and NeuroSpheres Ltd. | ||
10 | .15XX | Letter Agreement, dated January 2, 2001, between the Registrant and Martin McGlynn | ||
10 | .16XX | Lease, dated February 1, 2001, between the Board of Trustees of Stanford University and the Registrant | ||
10 | .17$$ | 2001 Equity Incentive Plan | ||
10 | .18ˆˆˆ | Form of Securities Purchase Agreement, dated as of June 16, 2004, between the Registrant and certain Purchasers parties thereto | ||
10 | .19ˆˆˆ | Form of Warrant | ||
10 | .20ˆˆˆˆ | Amended and Restated 2004 Equity Incentive Plan of the Registrant | ||
10 | .21§ | License Agreement, dated as of July 1, 2005, between the Registrant and ReNeuron Limited | ||
10 | .22§§ | Letter Agreement, effective as of September 6, 2005, between the Registrant and Rodney K.B. Young | ||
10 | .23XX | Side Letter, dated March 17, 2001, between the Company and Oleh S. Hnatiuk regarding NeuroSpheres License Agreement, dated October 30, 2000 | ||
10 | .24@ | License Agreement, dated April 1, 1997, by and among Registrant, NeuroSpheres Ltd. and NeuroSpheres Holdings Ltd. | ||
10 | .25§§§ | Indemnification Agreement, dated July 9, 2008, by and between registrant and NeuroSpheres Holdings, LTD. | ||
10 | .26 | Facility Agreement, dated December 23, 2008, by and among registrant and Stem Cell Sciences Plc |
Exhibit No. | Title or Description | |||
10 | .27 | Second Facility Agreement, dated March 1, 2009, by and among registrant, Stem Cell Sciences Plc and Stem Cell Sciences Holdings Limited | ||
10 | .28 | Asset Purchase Agreement, dated March 1, 2009, by and between registrant and Stem Cell Sciences Plc | ||
14 | .1 | Code of Ethics | ||
21 | X | Subsidiaries of the Registrant | ||
23 | .1 | Consent of Grant Thornton, LLP , Independent Registered Public Accounting Firm | ||
31 | .1 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
31 | .2 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) | ||
32 | .1 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
32 | .2 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) |
! | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 1997 and filed on November 14, 1997. | |
!! | Previously filed with the Commission as an Exhibit to and incorporated by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 1996. | |
!!! | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-8, FileNo. 333-37313. | |
$ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s annual report onForm 10-K for the fiscal year ended December 31, 1998 and filed on March 31, 1999. | |
$$ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s definitive proxy statement filed May 1, 2001. | |
% | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on December 10, 2003. | |
%% | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K for the fiscal year ended December 31, 2003 | |
Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on April 15, 2003. | ||
Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on May 13, 2003. |
74
Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on May 15, 2003. | ||
&4 | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on November 12, 2008. | |
* | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, Registration Statement onForm S-1, FileNo. 33-45739. |
** | Confidential treatment requested as to certain portions. The term “confidential treatment” and the mark “**” as used throughout the indicated Exhibits mean that material has been omitted and separately filed with the Commission. | |
Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on December 29, 2006. | ||
Previously filed with the Commission as an Exhibit to, and incorporated by reference to, the Registrant’s Registration Statement onForm S-3, FileNo. | ||
Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K filed on June 17, 2004. | ||
Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrants Registration Statement onForm S-8, FileNo. 333-118263. | ||
{*} | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K filed on December 7, 2001. | |
+ | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-1, FileNo. 33-85494. | |
++ | Previously filed with the Commission as Exhibits to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-1, FileNo. 33-91228. | |
- | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K for the fiscal year ended December 31, 2006 and filed on March 15, 2007. | |
-- | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s current report onForm 8-K on May 7, 2007. | |
§ | Previously filed with the Commission as an Exhibit to and incorporated herein by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2005. | |
§§ | Previously filed with the Commission as an Exhibit to and incorporated herein by reference to, the Registrant’s current report onForm 8-K filed on September 7, 2005. | |
§§§ | Previously filed with the Commission as an Exhibit to and incorporated herein by reference to, the Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2008. | |
X | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Registration Statement onForm S-1, FileNo. 333-45496. |
XX | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K for the fiscal year ended December 31, 2000 and filed on April 2, 2001. | |
XXX | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Registration Statement filed onForm S-1 as amended toForm S-3, FileNo.333-61726. | |
XXXX | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Registration Statement filed onForm S-3, FileNo. 333-75806. | |
@ | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s Annual Report onForm 10-K/A for the fiscal year ended December 31, 2006 and filed on April 1, 1997. | |
# | Previously filed with the Commission as an Exhibit to, and incorporated herein by reference to, the Registrant’s annual report onForm 10-K for the fiscal year ended December 31, 1997 and filed on March 30, 1998. |
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Exhibit No. | Title or Description | |||
3 | .1- | Restated Certificate of Incorporation of the Registrant | ||
3 | .2-- | Amended and Restated By-Laws of the Registrant | ||
4 | .1^ ^ | Specimen common stock Certificate | ||
4 | .2++ | Form of Warrant Certificate issued to a certain purchaser of the Registrant’s common stock in April 1995 | ||
4 | .3X | common stock Purchase Warrant | ||
4 | .4X | Callable Warrant | ||
4 | .5XXX | Callable Warrant, dated June 21, 2001, issued to Millennium Partners, L.P. | ||
4 | .6XXX | Common stock Purchase Warrant, Class A, dated June 21, 2001, issued to Millennium Partners, L.P. | ||
4 | .7{*} | Certificate of Designations of the Powers, Preferences and Relative, Participating, Optional and other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of 3% Cumulative Convertible Preferred Stock for StemCells, Inc. | ||
4 | .8{*} | Warrant to Purchase common stock — Riverview Group, LLC | ||
4 | .9XXXX | Warrant to Purchase common stock — Cantor Fitzgerald & Co. | ||
4 | .10&& | Warrant to Purchase common stock — Riverview Group, LLC | ||
10 | .1* | Form of at-will Employment Agreement between the Registrant and most of its employees | ||
10 | .2* | Form of Agreement for Consulting Services between the Registrant and members of its Scientific Advisory Board | ||
10 | .3* | Form of Nondisclosure Agreement between the Registrant and its Contractors | ||
10 | .4* | 1992 Equity Incentive Plan | ||
10 | .5* | 1992 Stock Option Plan for Non-Employee Directors | ||
10 | .7+ | Research Agreement, dated as of March 16, 1994, between NeuroSpheres, Ltd. and Registrant | ||
10 | .8+ | Lease Agreement between the Registrant and Rhode Island Industrial Facilities Corporation, dated as of August 1, 1992 | ||
10 | .9+ | First Amendment to Lease Agreement between Registrant and The Rhode Island Industrial Facilities Corporation dated as of September 15, 1994 | ||
10 | .10# | Lease Agreement, dated as of November 21, 1997, by and between Hub RI Properties Trust, as Landlord, and CytoTherapeutics, Inc., as Tenant | ||
10 | .11!! | CTI individual stockholders option agreement, dated as of July 10, 1996, among the Company and the individuals listed therein | ||
10 | .12! | Consulting Agreement, dated as of September 25, 1997, between Dr. Irving Weissman and the Registrant | ||
10 | .13!!! | StemCells, Inc. 1996 Stock Option Plan | ||
10 | .14!!! | 1997 StemCells Research Stock Option Plan (the “1997 Plan”) | ||
10 | .15!!! | Form of Performance-Based Incentive Option Agreement issued under the 1997 Plan | ||
10 | .16$** | License Agreement, dated as of October 27, 1998, between The Scripps Research Institute and the Registrant | ||
10 | .17$** | License Agreement, dated as of October 27, 1998, between The Scripps Research Institute and the Registrant | ||
10 | .18$** | License Agreement, dated as of November 20, 1998, between The Scripps Research Institute and the Registrant | ||
10 | .19++** | License Agreement, dated as of June 199,9 between The Scripps Research Institute and the Registrant | ||
10 | .20++** | License Agreement, dated as of June 1999, between The Scripps Research Institute and the Registrant | ||
10 | .21XX | License Agreement, dated as of October 30, 2000, between the Registrant and NeuroSpheres Ltd. | ||
10 | .22XX | Letter Agreement, dated January 2, 2001, between the Registrant and Martin McGlynn | ||
10 | .23XX | Lease, dated February 1, 2001, between the Board of Trustees of Stanford University and the Registrant | ||
10 | .24$$ | 2001 Equity Incentive Plan | ||
10 | .25& | Agreement, dated as of April 9, 2003, between the Registrant and Riverview Group, L.L.C. |
77
Exhibit No. | Title or Description | |||
10 | .26&& | Form of Registration Rights Agreement between the Registrant and Riverview Group, L.L.C. | ||
10 | .27&&& | Securities Purchase Agreement, dated as of May 7, 2003, between the Registrant and Riverview Group, L.L.C. | ||
10 | .28% | Securities Purchase Agreement, dated as of December 9, 2003, between the Registrant and Riverview Group, L.L.C. | ||
10 | .29^ ^ ^ | Form of Securities Purchase Agreement, dated as of June 16, 2004, between the Registrant and certain Purchasers parties thereto | ||
10 | .30^ ^ ^ | Form of Warrant | ||
10 | .31^ ^ ^ ^ | Amended and Restated 2004 Equity Incentive Plan of the Registrant | ||
10 | .32§ | License Agreement, dated as of July 1, 2005, between the Registrant and ReNeuron Limited | ||
10 | .33§§ | Letter Agreement, effective as of September 6, 2005, between the Registrant and Rodney K.B. Young | ||
10 | .34§§ | Consulting Agreement, effective as of September 6, 2005, between the Registrant and Judi R. Lum | ||
10 | .35^ | Sales Agreement with Cantor Fitzgerald | ||
10 | .36XX | Side Letter, dated March 17, 2001, between the Company and Oleh S. Hnatiuk regarding NeuroSpheres License Agreement, dated October 30, 2000 | ||
10 | .37 | Note Purchase Agreement with Progenitor Cell Therapy, LLC, dated December 3, 2007. | ||
10 | .38@ | License Agreement, dated April 1, 1997, by and among Registrant, NeuroSpheres Ltd. and NeuroSpheres Holdings Ltd. | ||
14 | .1%% | Code of Ethics | ||
21 | X | Subsidiaries of the Registrant | ||
23 | .1 | Consent of Grant Thornton, LLP , Independent Registered Public Accounting Firm | ||
31 | .1 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
31 | .2 | Certification Pursuant to Securities Exchange ActRule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) | ||
32 | .1 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Martin McGlynn, Chief Executive Officer) | ||
32 | .2 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rodney K.B. Young, Chief Financial Officer) |
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