================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
10-K/A
Amendment No. 1
| | |
| þ | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
2009
| | |
| o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM ______ TO _____
----------
COMMISSION FILE NUMBER 000-25132
MYMETICS CORPORATION
(Exact
(Exact name of Registrant as specified in its charter)
| | |
|
| DELAWARE | | 25-1741849
(State |
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
European Executive Office
14, ruec/o Mymetics S.A.
Biopole
Route de la Colombiere
CH-1260 NyonCorniche, 4
1066 Epalinges (Switzerland)
(Address
(Address of principal executive offices)
REGISTRANT'S
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: 011 41 22 363 13 10
21 653 4535
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]o No [X]þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]o No [X]þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed be Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]þ No [ ]o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo
(the registrant is not yet required to submit Interactive Data)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large“large accelerated filer," "accelerated” “accelerated filer,"” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act. (Check one):
[ ] Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ]
[X] smaller
| | | | | | |
| Large accelerated filero | | Accelerated filero | | Non-accelerated filero | | Smaller reporting companyþ |
| | | | (Do not check if a smaller reporting company) | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]o No [X]þ.
The aggregate market value of the voting common stock held by non-affiliates of the Registrantregistrant (assuming officers and directors are affiliates) was approximately U.S. $ 32,453,000$27,707,184 as of June 30, 2008,2009, computed on the basis of the average of the bid and ask prices on such date.
As of
March 26, 2009,April 15, 2010, there were
195,313,630196,263,630 shares of the
Registrant'sregistrant’s Common Stock outstanding.
================================================================================
USE OF EUROS
The financial information contained in this
EXPLANATORY NOTE
On April 15 2010, Mymetics Corporation, a Delaware corporation (“Mymetics” or the “Company”) filed its annual report on Form 10-K is provided in
Euros (E) (except in "Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters" which is provided in United States Dollars, and except as
expressly indicated otherwise herein). See Note10-K. This Amendment No. 1 to the Consolidated Financial
Statements contained in this Form 10-K for further explanation. Asthe year ended December 31, 2009, hereby amends and restates the prior Form 10-K with certain modifications as a result of March 26,
2009, 1 Euro was convertible into 1.35 United States Dollars.
FORWARD-LOOKINGcomments by the SEC. There are no changes to the financial statements or the Company’s financial results for the year ended December 31, 2010.
This Form 10-K/A speaks as of the original filing date of the Form 10-K and does not reflect events that may have occurred subsequent to the original filing date.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"“safe harbor” for forward-looking statements, which are identified by the words "believe,"
"expect," "anticipate," "intend," "plan"“believe,” “expect,” “anticipate,” “intend,” “plan” and similar expressions. The statements contained herein which are not based on historical facts are forward-looking statements that involve known and unknown risks and uncertainties that could significantly affect our actual results, performance or achievements in the future and, accordingly, such actual results, performance or achievements may materially differ from those expressed or implied in any forward-looking statements made by or on our behalf. These risks and uncertainties include, but are not limited to, risks associated with our ability to successfully develop and protect our intellectual property, our ability to raise additional capital to fund future operations and compliance with applicable laws and changes in such laws and the administration of such laws. These risks are described below and in "Item“Item 1. Business," "Item” “Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations,"” and "Item“Item 7A. Quantitative and Qualitative Disclosures About Market Risk"Risk” included in this Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date the statements were made.
i
PART I
ITEM 1. BUSINESS
THE CORPORATION
OVERVIEW
We are a biotechnology researchvaccine company developing unique vaccines that focus on the mucosal layer as a first line of defense against viruses entering the blood stream and the development company devoted to fundamentalof virosomes as a new vaccine delivery platform. We believe that virosomes are the most promising vaccine delivery systems since they do not use live attenuated or killed pathogens and applied research inincrease the area of human biologyimmunogenicity and medicine. We were
incorporated in July 1994 pursuant to the lawsstability of the Commonwealth of
Pennsylvania under the name "PDG Remediation, Inc." In November 1996, we
reincorporated under the laws of the State of Delaware and changed our name to
"ICHOR Corporation." In July 2001, we changed our name to "Mymetics
Corporation."
We own all of the outstanding voting stock of: (i) Mymetics Management Sarl, a
company organized in 2007 under the laws of Switzerland and (ii) 6543 Luxembourg
S.A., a joint stock company organized in 2001 under the laws of Luxembourg. In
this document, unless the context otherwise requires, "Mymetics" and the
"Corporation" refer to Mymetics Corporation and its subsidiaries.vaccine.
We currently do not make, market or sell any products, or services, and thus,but we have no revenues.generate some limited revenue though the licensing of certain of our technology. We believe, however, that our research and development activities will result in valuable intellectual property that can generate significant revenues for us in the future such as by licensing. Vaccines are one of the fastest growing markets in the pharmaceutical industry. Vaccines have evolved from being an exclusively low price sector to one where substantial prices may be paid for some vaccine products. Our business model is to make sufficient progress in
our research and development so that one or more major pharmaceutical companies
active in either or both the fields of HIV-AIDS preventive vaccines and
therapies will enter into a partnership agreement with us.
HISTORY AND DEVELOPMENT OF THE COMPANY
From our inception in 1990 to December 1997, we operated in the environmental
services industry, focusing on thermal treatment, remediation services and waste
oil recycling. In February 1995, we completed an initial public offering. In
1998 and 1999, after disposing of our environmental services businesses, we
provided consulting services to an industrial customer in Europe. In June 1999,
we acquired a majority interest in Nazca Holdings Ltd., whose business involved
the exploration for and development of groundwater resources in Chile. Following
the disposal of our interest in Nazca
We were incorporated in July 2000,1994 pursuant to the laws of the Commonwealth of Pennsylvania under the name “PDG Remediation, Inc.” In November 1996, we did not have an operating
business.reincorporated under the laws of the State of Delaware and changed our name to “ICHOR Corporation.” In July 2001, we changed our name to “Mymetics Corporation.”
In March 2001, we acquired 99.9% of the outstanding shares of the French registered company Mymetics S.A. in consideration for shares of our common stock and shares of Class B Exchangeable Preferential Non-Voting Stock of 6543 Luxembourg S.A., which are convertible into shares of our common stock. In 2002, we acquired all but 0.01% of the remaining outstanding common stock of Mymetics S.A. pursuant to share exchanges with the remaining stockholders of Mymetics S.A. The terms of these share exchanges were substantially similar to the terms of the share exchange that occurred in March 2001. In 2004, all the remaining convertible shares of 6543 Luxembourg S.A. not already held by Mymetics Corporation were converted into shares of Mymetics Corporation. MYMETICS CORPORATION
Mymetics' primary objective is to develop vaccines and therapies to prevent and
treatOn February 7, 2006, the effects of certain retroviruses and other infectious diseases,
includingTribunal de Commerce in Lyon, France placed the human immunodeficiency virus, or HIV, the virus that leads to
acquired immunodeficiency syndrome, or AIDS.French subsidiary Mymetics has also recently acquired
from a close scientific partner an advanced malaria vaccine project currently in
phase II clinical trial. Additional applications of Mymetics' research include
potential treatments and/or vaccines for malaria, human oncoviral leukemias,
multiple sclerosis, and organ transplantation.
Prior to 2002, our activities such as designS.A., under receivership (“Redressement Judiciaire”).
We own all of the
prototype molecules,
synthesis,outstanding voting stock of: (i) Mymetics S.A., a company originally organized as Mymetics Management Sàrl in 2007 under the laws of Switzerland, (ii) 6543 Luxembourg S.A., a joint stock company organized in 2001 under the laws of Luxembourg,(iii) Bestewil Holding B.V. and
in vitro testing, had been conducted exclusively in Europe.
During the second quarter(vi) its subsidiary Mymetics B.V. (formerly Virosome Biologicals B.V.) both of
2002, we launched programs in the United States in
an attempt to reinforce our intellectual property portfolio and to accelerate
the commercialization of our technology. Our previous management believed that
expanding our operating activities in the United States offered numerous
advantages, including greater access to expertise, grants, subsidies,
intellectual property and public and private research teams. Due to financial
constraints, the Company decided to limit these activities in January 2003.
Following the management changes of July 2003, our activities have again been
conducted exclusively in Europe, with certain pre-clinical tests being performed
in the United States by the National Institutes of Health (NIH).
Under our "best of class" business model, the overall research strategy, as well
as most original ideas, are defined and contributed by our own scientific team,
including Dr. Sylvain Fleury, Ph.D. (Chief Scientific Officer) , following
discussion with Key collaborators/partners. Any given project is first
subdivided into "technology modules" which are
then subcontracted to "bestorganized under the laws of
class" teams from academia, public or private laboratories or industry, all
chosen for their high standardsThe Netherlands and
specific knowledge. Most of the work that we
outsource is available through other vendors and to date there have not been any
providers that are the only source of expertise that we require.
1
We believe that having such specialized expertise in-house would make us
dependent on the staff required to carry out such tasks. We believe we benefit
from the established relationships with our partners and that it is a cost
effective approach to achieving our business plan. Mymetics pays for and
coordinates the work, consolidates the results and retains all intellectual
property associated with it. In certain limited cases, we will sign partnership
agreements with companies offering technologies that can enhance or add value to
our own products under development. Under this model, Mymetics retains all
intellectual property rightswere acquired in the combined research and applies for domestic
and international patents whenever justified. In limited cases, the patent
ownership is shared with certain partners such as the French INSERM (Institut
National de la Sante Et de la Recherche Medicale).2009. In this case,document, unless the context otherwise requires, “Mymetics” and the “Corporation” refer to Mymetics nevertheless received an exclusive license for the eventual exploitation of the
shared patents.
We also enter into scientific collaboration agreements with selected,
complementary partners such as Pevion Biotech Ltd., a Swiss company that granted
us exclusive licenses to use their unique virosome vaccine delivery technology
in conjunction with our AIDSCorporation and malaria preventive vaccines under development.
Under this agreement, Pevion Biotech is committed to supply the actual virosomes
and perform their integration with our antigens ("formulation"), which requires
proprietary know-how, at their premises. The agreement with Pevion Biotech
includes specific mechanisms to mitigate the risk of losing a key component of
our vaccines should Pevion become unable to live up to its commitment.
subsidiaries. MYMETICS MANAGEMENT Sarl.
S.A.
Our Swiss subsidiary MYMETICS MANAGEMENT SarlS.A. was founded in 2007 as MYMETICS MANAGEMENT Sàrl to facilitate the conduct of our business in Switzerland. This includes managing our staff retirement and social security contributions, leasing our Swiss premises and other such local tasks which a U.S. registered company cannot easily conduct without significant legal and organizational costs. The change in name and bylaws affected in 2009, from Société A Responsabilité Limitée (SARL) to Société Anonyme (SA) is indicative of the transition from a pure service company status of this unit to a development company in its own rights within Mymetics Corporation.
LUXEMBOURG 6543 S.A.
Our Luxembourg subsidiary, Luxembourg 6543 S.A., was founded in 2001 in connection with the acquisition of Mymetics S.A. of France (formerly Hippocampe S.A.) by Mymetics Corporation. Luxembourg 6543 S.A. is dormant.
BESTEWIL HOLDING B.V. and its subsidiary MYMETICS S.A.(defunct)B.V.
On February 7, 2006,April 1, 2009 we entered into an agreement with Norwood Immunology Limited (“NIL”) for the Tribunal de Commerce in Lyon, France placedacquisition of Bestewil Holding B.V. (“Bestewil”) from its parent, NIL, under a Share Purchase Agreement pursuant to which we agreed to purchase all issued and outstanding shares of capital stock (the “Bestewil Shares”) of Bestewil from its parent, NIL, and all issued and outstanding shares of capital stock of Virosome Biologicals B.V. which were held by Bestewil. Virosome Biologicals B.V., the French
subsidiary Mymetics S.A., under receivership ("Redressement Judiciaire") as a
resultname of an ongoing dispute between Mymetics Corporation and a former officer
and director. The companywhich was subsequently dissolvedchanged to Mymetics B.V., will continue to be engaged in research and development activities in its
2
own facilities in Leiden (Netherlands) under the controlmanagement of its founder, the original inventor of the French court appointed judicial administrator.
Under the ordervirosome technology.
PRODUCTS UNDER DEVELOPMENT
Our current pipeline has five vaccines in development. Four of the French court, Mymetics S.A. sold its patentsvaccines are proprietary: HIV-1, malaria, herpes simplex virus type I and II(HSV-1 and HSV-II) and respiratory syncytial virus (RSV), and one vaccine for intra-nasal influenza which is out-licensed to Lomastar
Technologies Sarl, a Swiss company incorporatedSolvay Pharmaceuticals. The vaccines in Nyon, for E80,000our portfolio are primarily prophylactic. The current stage of development of these vaccines is shown in order to
pay its creditors and the administration costs of the case. We do not believe
that the sale of the patents is significant to us since they expire in 2017 and
2018, the dates we first expect to be selling the vaccine. To protect the value
of our intellectual property, however, we are negotiating an exclusive worldwide
perpetual license with Lomastar Technologies with respect to these patents.
OVERVIEW OF HIVtable below:
| | | | | | |
| Vaccine | | Pre-Clinical | | Phase I | | Phase II |
| HIV-1 | | | | X | | |
| RSV | | X | | | | |
| HSV | | X | | | | |
| Malaria | | | | X | | X (ended in 2007) |
| Influenza | | | | X (finished) | | |
HIV-1 AND AIDS
HIV
HIV-1 (human immunodeficiency virus)virus type 1) is a retrovirus that gradually destroys the immune system and ultimately leads to AIDS. HIVHIV-1 is among the pathogens harboring the highest genetic variation, leading to millions of variants, each rapidly mutating. Indeed, HIVHIV-1 exists under many different versions (aka “clades”), like members of a large family,family; they are different from, but related to each other.
By sequencing the viral genomes (genes), researchers have been able to map out
the family tree of HIV. At the root of the tree, there are three groups called
M, N and O, group M being responsible for the
Our current
AIDS pandemic. Group M is
split into nine genetic subtypes, also called nine clades (designated A through
K, with no E or I). The original definition of clades was based on short genomic
sequences, mostly within the HIV envelope protein (Env: gp160).
These nine clades have uneven geographic distribution patterns. Clade C
circulates in South Africa, India and parts of China. Clade A and D are common
in East Africa and clade B is common in North & South America and Western
Europe. Looking at the global numbers, it emerges that four clades (A, B, C and
D) plus two recombinant forms called CRFs 01 and 02 (both of which are about 70%
clade A) account for over 90% of all infections worldwide. From this
perspective, diversity can be mostly limited to 4 key major clades, plus small
contributions from the non-A segments of these two CRFs. According to the
statistics, clade C represents the world's most dominant HIV (over 50%).
2
HIV attaches itself to the target host cell using a harpoon-like surface protein
called gp160. This protein spears the host cell's membrane, drawing them
together so that the virus can fuse with the host cell. Once attached, the virus
penetrates the cell and commandeers the cell's machinery. Then it rapidly
replicates itself.prophylactic HIV-1 is lethal since it targets the most central cell of the immune system, the
CD4+ T cells which produce the IL-2 cytokine, a key messenger for immune cells.
These cells usually coordinate the cellular and humoral responses that are
directed to thwart the pathogen (HIV). When the number of such CD4+ T cells
decreases significantly over time, the amount of IL-2 becomes too low for an
efficient immune attack orchestration. Consequently, HIV as well as other
pathogens escape recognition by the immune system, leaving the host vulnerable
to disease.
HIV proves itself an elusive target because it:
- Reproduces itself at an extraordinary rate (several million new virus
particles are created daily)
- Mutates rapidly: as it reproduces itself, it makes mistakes that
produce new virus particles that are slightly different; these
differences make the virus harder to target by the immune system.
Mimicry
Normally, the immune system would respond to this attack: IL-2 would be secreted
mostly by activated CD4+ T cells to signal the alarm to the other T-cells
subtypes and B-cells for developing a strong immune response against the
invader. With HIV, this approach backfires. Why?
Mymetics has discovered a peculiar inter-reactivity between part of the virus'
"harpoon" and the host cell's "alarm" (IL-2). We call it "mimicry". Several
other homologies between HIV and human proteins have been reported. It has also
been reported that most of HIV infected subjects develop auto-antibodies
(antibodies recognizing HIV proteins but also your own proteins), even in early
phase of the infection. It has been postulated that some mimicries must exist
between HIV and human proteins, which could lead to such autoimmunity problems.
The shaft of the virus' harpoon, called gp41, actually appears to "mimic" the
host cell's IL-2. This dynamic enables the virus to attach itself to the host
cell membrane at a precise portal. An unusual consequence: when the "soldiers"
(antibodies against the viral gp41 protein) arrive to battle the virus, they can
potentially "confuse" the virus' gp41 with the host cell IL-2 and attack and
destroy them both.
As the immune system methodically kills its own soldiers, the HIV continues to
replicate swiftly. The equilibrium shifts and the HIV outpace our body's
defenses. Such events likely contribute to the development of AIDS, a fatal
disease that affects an increasing number of people worldwide. In light of these
reported observations, Mymetics is using this information to develop a safer HIV
vaccine that wouldwill be constituted of virosomes linked to antigens (epitopes) derived from the HIV-1 gp41 proteins, other viral proteins are under investigation. The vaccine subunits having minimal human
homologies.
TECHNOLOGY
Current Approaches
Current drug treatmentsis designed to trigger mucosal antibodies (IgG and IgA), for example in HIV focus on slowing or impeding the progressvagina, and blood antibodies (IgG). The rationale for the design of the virus once it has infectedvaccine was the body's host cells. Recent approaches seekobservation that certain people who are repeatedly exposed to develop therapies that preventHIV-1 do not contract infection; they were shown to have mucosal antibodies in the virus from fusing with host cells. If the
virus cannot fuse, it cannot enter inside the cell(infect) and reproduce,
thereby facilitating the successful fight of the body's immune systemsemen or vaginal secretions against the invasion.
HIV transmission generally occurs through sexual contact. Indeed, semen and
cervico-vaginal secretions may potentially transmit HIVHIV-1 gp41 that apparently protect them. Mymetics’ vaccine is trying to the gastrointestinal,
anorectal and genitourinary tracts because these fluids contain cell-free HIV
particles and numerous HIV-infected cells. Contracting HIV infection may be
subdivided into early and late events. Early events (less than 24h) are those
comprising mucosal exposure to HIV and viral translocation across mucosal
surfaces, leading to HIV penetration into the organism. Late events (over 24 h)
take place once HIV has infected target cells (ex. CD4+ T lymphocytes)just under
the mucosa tissue that it has crossed,reproduce “Mother Nature”. Key scientific results with subsequent additional infections and
migration of infected cells to proximal lymph nodes, ending to HIV spreading
into the body. Therefore, the HIV vaccine should ideally elicit immune responses
capableto date:
2005:“Proof of acting onConcept” for inducing mucosal antibodies. Vaccination of rabbits with P1 virosomes elicited mucosal antibodies in the
early eventsvagina and
not only on late events. Mymetics'
objective has always remainedintestinal mucosa. In a laboratory test, these antibodies strongly inhibited HIV-1 passage through the
same: to preventmucosal tissues, confirming the
virus from penetrating
the body from the first minutes or hours after exposure to the pathogen, rather
than trying to fight it after infection and its dissemination. Therefore,
Mymetics ispotential of developing an
HIVHIV-1 vaccine that
focuses on the induction of mucosal
antibody protection as the first line of defense, protecting the primary entry
sites, which corresponds to two important anatomically compartments:
genital-reproductive tracts and intestine/rectal mucosal tissues.
3
Vaccines or therapies for preventing these very early events at the mucosa
levels (e.g., Blocking transcytosis and early infections) became another
important research aspect.
Until recently, vaccine development was focusing on clade B strains, which
dominate the epidemic in industrialized countries but cause only about 12% of
infections globally whereas clade C is most prevalent throughout the world,
especially in developing nations in Africa and Asia. Development of non-clade B
candidates, having clade C as a key target became a priority for vaccine
companies. Mymetics intends to invest its research efforts in developing a
"universal" vaccine that will combat clade C strains.
Visit the IAVI web site (www.iavi.org) for more background information on AIDS.
Mymetics' Approach
Mymetics proposes an innovative AIDS vaccine that could prevent or reduce HIV
entryprevents infection at the mucosal level (primary entry: very early event) as well as
preventing cell infection by HIV at the mucosa level (early event)layer. 2006/2007:Mucosal antibodies in monkeys.
To achieve
this goal, Mymetics has combined three important concepts in the vaccine design
for eliciting different sets of antibodies:
1- Preferential induction ofMacaque monkeys (Macaca Mulatta),showed after vaccination with virosomes-P1, specific mucosal antibodies,
for protecting various
anatomical compartments
Mymetics postulates that the induction of protective mucosal antibodies such as
IgA and secretory IgA might block the early event of HIV entry across the
genito-reproductive and intestinal tracts. These mucosal antibodies could also
contribute to prevent the HIV infection of target cells located just under the
mucosal epithelium, thus preventing early HIV entry and spreading events in the
body. Neutralizing blood antibodies (systemic) such as IgG will also be elicited
by Mymetics' vaccine candidate. These blood antibodies will likely act into the
genital compartment and to lower extend into the gut compartment, as well as on
later events that may take place into secondary lymphoid organs like lymph
nodes, preventing the infection of target cells in the periphery, outside of the
mucosal system. These mucosal (mostly IgA) and blood (mostly IgG) antibodies,
each having their own niche distribution, should act synergistically for optimal
protection against HIV transmission and they may circulate to some extend from
one compartment to another one.
2- Focused antibody response against relevant conserved gp41 regions
To achieve this objective, Mymetics' HIV vaccine candidate is constituted of
gp41 peptides and recombinant proteins that are devoid of immunodistractive and
useless areas. Generally, the immune system develops immune responses toward all
possible regions of the foreign antigens (peptides, proteins, etc.). However,
antigens are often harboring several immunodominant regions, each eliciting an
immune response of different magnitude (low, intermediate or strong
recognition/affinity by the immune system) and frequency (region rarely,
sometimes or often recognized by the immune system). Therefore, it is common to
observe an immune response that preferentially recognizes some protein areas
(immunodominant), while others are neglected. Furthermore, viruses have
developed antigens that contain often immunodominant regions for distracting the
immune system. These immunodistractive regions may have little or no function
for the pathogen protein but may blind the immune system. Consequently, immune
responses against the pathogen might sometimes be useless. Mymetics is
developing vaccines that contain different antigens expressing limited and
useful immunodominant regions, while useless immunodistractive regions have been
removed or altered with minimal effect on the immunogenicity of the viral
antigen. Using this approach, it forces the antibody response to focus on
relevant viral protein regions.
This type of new engineered gp41 molecules should be able to elicit antibodies
with a broad spectrum of action (cross-clade neutralization like A, B and C):
blocking virus translocation across the mucosal barrier and/or to inhibit cell
infection, thus preventing HIV-1 infection.(300)
Based on our recent research results, we believe that Mymetics's HIV vaccine
candidate and strategies places us amongst the most advanced teams devoted to
AIDS prophylactic vaccine research that aims to prevent HIV transmission across
the mucosal barrier.(301)
Mymetics' findings further apply to a range of additional diseases, including
certain oncoviruses often associated with leukemia.
3- Minimal mimicry
This concept is intended to remove in part or entirely the human protein
homologies naturally present in many HIV proteins that serve as a vaccine
component. To achieve that objective, Mymetics intends to use as a candidate
vaccine the smallest engineered viral antigen sequence for two main reasons.
First, the smaller the protein, the more limited are the homologies with human
proteins. Second, it is easier to remove human homologies into a small viral
protein or peptide because of their limited distribution.
4
Using this approach, Mymetics believes that an HIV vaccine constituted of viral
antigens or genes encoding viral antigens with minimal human homologies should
reduce the risk of developing potential long-term autoimmunity side-effects
after HIV vaccination.
How to trigger the protective immune response?
Mymetics' vaccine uses the technology of virosomes, a lipid-like structure
highly efficient for delivering the vaccine's active ingredients.
The virosome-based vaccine is constituted of two types of virosomes, each with
surface anchored gp41-derived conserved antigens, each eliciting different
antibodies not mutually exclusive with a broad activity spectrum:
- Virosomes with peptides corresponding to the conserved Membrane
Proximal Region (MPR) of gp41 for triggering protective mucosal
antibodies (mostly IgA) against a broad spectrum of HIV isolates.
- Virosomes with soluble/stable recombinant gp41 without the MPR
for eliciting complementary neutralizing IgA and IgG antibodies.
This virosomes technology is already market approvedwhich were detected in more than 43 countries90% of the animals. 2008:Full protection of monkeys against multiple vaginal challenges with excellent safety profilelive heterologous clade B virus. Macaque monkeys were vaccinated with both virosomes-P1 and no mucosal adjuvant is required for triggering
mucosal antibodies.
Mymetics obtained an exclusive license agreement dated March 1, 2007virosomes-rgp41 and received multiple intra-vaginal challenges with Pevion
Biotech for the uselive SHIVSF162P3 virus. The vaccinated animals were not infected with the virus, while the non-vaccinated control group was fully infected.
Dec 2008:Approval to start Phase I clinical trials. After the ground breaking results of
virosomesthe monkey study in
2006 and 2008, we extended the
production of our HIV vaccine. We
believe that our exclusive agreement with Pevion Biotech provides a competitive
advantage by allowing us to avoid using a mucosal adjuvant for our HIV vaccine.
We believe that mucosal adjuvants have not sufficiently advanced to allow
clinical testing for our HIV vaccines.
AIDS: Summary of Our Achievements
The vast majority of pathogens enter their target hosts through mucosal surfaces
such as the respiratory, genito-urinary or gastrointestinal tracts. Many mucosal
pathogens remain a major human health problem, as there are no vaccines capable
of preventing the colonization and/or penetration of these pathogensmonkey studies, while at the
mucosal epithelium. Therefore, most infections occur at or start with exposure
of an unprotected mucosal surface to e.g. Mycoplasma pneumoniae, influenza
virus, Chlamydia, herpes simplex virus, and HIV.
Over the last twenty years of research in HIV-1 vaccine field, more than one
hundred vaccine candidates have been investigated. During that period,
scientists have pursued vaccines that induce an immune protection against
infection events that take place only after HIV-1 transmission, meaning once the
virus has crossed the mucosal tissues and has already infected cells. These
vaccines were developed for triggering blood IgG antibodies or CTL, two
important defence mechanisms. Today, it is believed that blood IgG and CTL
protections are thought to act too late on infection events, explaining in part
why past vaccines could not protect. However, the failuressame time preparing a first Phase I clinical trial. After submission of the
past twenty
years provide also a greater understanding of this complex disease, which has
improved our knowledge in various research fields.
The scientific community is now searching for vaccines that might target earlier
transmission and infection events that take place during the first minutes or
hours following exposure to HIV 1, therefore improving the chance of blocking or
slowing down HIV-1 transmission. Mymetics is the first and most advanced company
in the field of mucosal antibody protection against HIV. Mymetics' approach
mimics what is already found in Mother Nature: mucosal antibody protection as
observed in some naturally resistant subjects. Mymetics' pre-clinical results
achieved in 2005-2008 on mucosal antibodies in rabbits and monkeys were a major
breakthrough. Previous HIV antibody vaccines failed because they were designed
for inducing mostly blood antibodies and not MUCOSAL antibodies. This represents
a major flaw in the original vaccine strategy against HIV because this pathogen
enters mainly through the mucosal barriers. Now, it is becoming more evident
that acting on earlier transmission events could improve the chance of blocking
or slowing down HIV transmission.
From 1997 to 2001,complete file, we
documented the existence of an important three-dimensional
molecular mimicry between the gp41 glycoprotein of HIV-1 and the human
interleukin-2 (IL-2) cytokine, a mimicry also found in lentiviruses causing AIDS
in other animal species. Mymetics has explored this mimicry as the starting
point for developing a safe HIV-1 candidate vaccine capable of eliciting
protective antibodies, while preventing potential harmful cross-reactivities
toward host proteins such as the human IL-2 (Mymetics US Patent 6,455,265). We
believe that this innovative concept may render vaccines from the 21st century
as efficacious as those from the 20th century, in addition to being safer.
5
In September 2003 we, together with Protein eXpert S.A., succeeded in
engineering and producing in bacteria E. Coli the first gp41 generation which
forms soluble and stable gp41 trimers that closely resemble the native gp41
found in HIV-1. This first generation of gp41 immunogen is devoid of the cluster
I and 2F5/4E10 epitopes, in addition of being mutated in one important IL-2
mimicry area. The design of the first gp41 generation was intended to identify
new important epitopes as well as to focus the immune response on possible
neutralizing epitopes different from the 2F5/4E10 previously identified by other
teams.
In 2004, we started a collaboration with Dr. Morgane Bomsel(Cochin Institute,
Paris, France), a renowned scientist in the field of HIV transcytosis and
mucosal immunity. Dr Bomsel had few monoclonal IgA antibodies obtained from a
phage display libraries issued from B cells of HIV resistant women. These
monoclonal IgA antibodies were found later capable of preventing HIV
transcytosis and HIV infection of primary isolates. Interestingly, these IgA
have recognized epitopes on our gp41 first generation devoid of the 2F5/4E10
epitopes, meaning that other potential neutralizing epitopes exist and they are
not limited to IgG isotypes.
From January to August 2004, we tested the first gp41 generation in rabbits for
its capacity to elicit neutralizing antibodies toward HIV-1. Such antibodies
were obtained in large quantities and their neutralizing potential was evaluated
by our academic collaborators. Thus, Dr. Morgane Bomsel obtained 60% inhibition
of HIV-1 transcytosis with primary strains. Sera were also tested in the
laboratory of Dr. Christiane Moog (Institut Pasteur, Strasbourg, France), a
recognized specialist in neutralizing antibodies in the HIV field. In the
performed assay, primary T cells infection by primary HIV-1 strains from clade B
(Bx-08 and SF-162) and clade C (TV1) were respectively neutralized at 70%, 80%
and 90% by low sera dilutions.
When total rabbit antibodies were purified from the serum, a neutralizing
activity of 80% was obtained with an antibody concentration of 20ug/ml, using
three primary HIV-1 strains. These results are similar to those obtained with
the 2F5 monoclonal antibody (over 90% inhibition), one of the most potent
neutralizing antibodies so far identified. Infection of primary human
macrophages by primary HIV-1 strains was also strongly inhibited (over 90%) with
a low antibody concentration (less than 2ug/ml). We found these preliminary
results highly encouraging, considering that the first gp41 generation of
immunogen did not include the 2F5/4E10 epitopes.
During Winter 2004 and Spring 2005 we engineered a third generation of
recombinant gp41 proteins based on the experience we acquired over the first
three years (2003-2005. In parallel to the protein approach, during Winter 2004
and Spring 2005 and in collaboration with Pevion Biotech Ltd. and Dr. Bomsel, we
formulated the second vaccine prototype. This prototype consisted of using
peptides derived from the conserved proximal membrane region of the gp41
ectodomain grafted in an oriented manner onto biosynthetic stable lipidic
spheres called virosomes. Rabbit immunizations in France were launched from May
to November 2005 for targeting the mucosal immune response. Biological samples
were analyzed and all rabbits have produced specific antibodies toward the gp41
peptides. More importantly, when these samples were tested into transcytosis
assays, most of these vaginal and rectal secretions (diluted 10-fold for the
assay) contained antibodies that were able to prevent translocation
(transcytosis) of primary R5 clades B and C with an efficiency of 70-90%, which
is close to what is observed with human secretions isolated from HIV-resistant
women.
From March to September 2006, based on this successful rabbit study, sixteen
female macaques (non-human primates) in animal facilities in Beijing, China were
immunized four times (40ug/100ul injected) over six months. We were hoping to
reproduce the same results with virosomes-gp41 peptides with as we did with the
rabbit immunizations. We achieved the following:
- Our vaccine based on virosomes-gp41 peptides elicited mucosal IgA and
blood IgG antibodies in over 90% of vaccinated macaques.
- These IgA and IgG antibodies were able to be redistributed into the
genital and intestinal compartments, even in animals vaccinated by
intra-muscular injection in the absence of a mucosal adjuvant.
- These antibodies were also capable of preventing at least 60% of HIV
entry across a human mucosal epithelium in vitro and up to 98% in two
out of sixteen animals. Significant inhibitions were obtained with
primary HIV from clades B and C.
- Antibodies from secretions have been purified and their neutralizing
capacity were as good as the 2F5/4E10 mAbs, when IC50% were compared.
We believe that such success in the macaque animal model, in the absence of a
mucosal adjuvant, is a major breakthrough which is highly encouraging to us for
future human clinical trials.
6
From 2005 to 2007, we designed and produced a fourth generation of rgp41. Based
on epitope studies we believe that such antigen will be a very good HIV vaccine
candidate, especially when incorporated into virosomes.
In October 2007 we launched a second non-human primate study at the Institute of
Laboratory Animal Science & Chinese Academy of Medical Science (ILAS) in China,
using macaques for evaluating the full vaccine. Animal vaccinations were
scheduled over a six month period. We reproduced the results from the first
macaque study done in 2006-2007 with macaques either protected against the
SHIV162p3 or having a viremia between 1-2 log lower than the control group.
During 2008, we performed a viral challenge (vaginal route) on those animals
having received our second generation (two components) AIDS vaccine. The results
were better than expected and have been announced in detail at the 16th
Conference on Retroviruses and Opportunistic Infections held in Montreal
(Canada) in February 2009. We expect to make other presentations at appropriate
scientific conferences later in 2009.
We received approval in sixteen days from the Competent national regulatory
agency, and launched, a clinical trial phase I in Q4 2008local Regulatory Agency in Belgium for testingPhase I clinical trial with P1 virosomes. Sep.-Oct. 2009:Production of the GMP-grade vaccine (virosomes-P1) for Phase I clinical trials in Belgium. European competent authorities require GMP-grade products for clinical phase I. In the U.S., only GLP-grade products are required at this stage, with GMP-grade only being required from phase II onwards. GMP-grade products are notoriously more difficult and costly to produce than GLP-grade ones.
Nov.-Dec. 2009:Phase I volunteer recruitment and the first vaccination. This study will involve two groups of women (24 in total) vaccinated over a six-month period: a low dose group at 10g/injection and a high dose group 50g/injection. Both groups will also have an equal number of people injected with a placebo. The final report is expected in January 2011. The Phase I clinical trial will test the safety and tolerance of the HIV-1 vaccine in healthy women. The initial results from the vaccinations are that there were no safety concerns raised.
Next steps:
We will seek funding either through grants or through a partnership agreement to perform these studies. The monkey study will be extended to USA with the collaborators Dr. Chris Miller, University of California, Davis, Dr. Ruth Ruprecht from the Dana Farber Cancer Institute at Harvard University, USA and Dr Morgane Bomsel, Cochin Institute, France. First results are expected by Q4 2010, confirming the results obtained in China.
3
2009 — 2011:Further development of HIV-1 prophylactic vaccine. In parallel to the P1 clinical trial, we intend to further develop and optimize the HIV-1 prophylactic vaccine by adding additional epitopes. In its R&D program, we launched in 2007 the development of two additional antigens compatible with virosomes and the up-scale process.
2010 — 2011: Vaccination studies for investigating the role of each antigen and the defense mechanisms behind the protection will be conducted in monkeys(Chris Miller study in USA). Information obtained during these studies will be used as supportive data for the product development and for answering to some issues addressed in the EMEA guidelines.
Phase II clinical trials are expected to start by Q4 2013, with Phase III trials to follow in 2016, and an eventual market launch anticipated in 2021.
Intranasal Influenza
Approach:The intranasal influenza vaccine consists of the reconstituted membrane of influenza virus, also containing a lipopeptide adjuvant. In mice, intranasal application of virosomes without adjuvant does not induce immunity to influenza; however, incorporation of the lipopeptide in the virosomes produces a candidate vaccine that does induce cellular immunity, as well as serum and mucosal antibodies to the virus. The vaccine was licensed to Solvay Pharmaceuticals, a major European pharmaceutical company.
Key results to date:
2005:The vaccine completed pre-clinical trials. A first milestone payment was received from Solvay in the same year.
2006:Successful completion of Phase I trial. The vaccine was shown to be safe and well tolerated and induced an immune response which was at least as good as that obtained with an off-the-shelf injected vaccine. Subsequent milestone payment was received.
Next steps:
Solvay is planning a Phase II clinical trial under an out-licensing agreement with Mymetics. The recent acquisition process of Solvay by an Abbott Laboratories has slowed down the vaccine trials.
From a cost perspective, there are little to no costs involved for us to further develop this vaccine candidate, while Solvay will make a milestone payment after Phase III clinical trials and royalty payments following the commercial launch of the vaccine.
Malaria
Approach: The malaria vaccine design is based on optimized mimicry of the native parasite protein structure and eliciting antibodies against two stages of the parasite life cycle, unlike 90% of vaccine candidates, which target only one or the other parasite. It is today the only malaria vaccine able to also boost existing immune responses (it has both prophylactic and therapeutic effects) in subjects that were previously exposed to malaria.
Key results to date:
2007:Mymetics acquired a Malaria vaccine project from Pevion Biotech (Bern, Switzerland). A human clinical trial Phase Ia for the vaccine with two antigens (AMA-1 and CSP-1) anchored to virosomes was successfully completed on adults in Switzerland. Results showed good safety and tolerability, and the induction of blood antibodies.
Since 2008:Phase Ib in Tanzania on children and young adults. The clinical trial Phase Ib in Tanzania is evaluating the safety of the same antigens with virosomes on children and young adults under “native” (endemic) conditions. Data from the interim report are very encouraging, showing good tolerance in children, the final report is expected in March 2010.
Next steps:
Further development of the malaria vaccine will only be done if based on grants or through an out-licensing agreement. If funds become thus available, the following projects are proposed:
| • | | Launching antigen interference study with various combinations |
|
| • | | Launching toxicology studies with the best formulation susceptible to offer an improved protection in human exposed toPlasmodium falciparum. |
|
| • | | Launching a new Phase I trial with four or five antigens (peptides and proteins) at the Swiss Tropical Institute. |
Respiratory Syncytial Virus (RSV)
Approach:The RSV vaccine consists of the reconstituted membrane of RS virus, including also a lipopeptide, or other, adjuvant. In mice, Our RSV vaccine was shown to induce cellular and humoral immunity to the virus, with a balanced Th1/Th2 response, resulting in protection against a live virus challenge, and without inducing “enhanced
4
disease” (a skewed Th1/Th2 response being the hallmark of enhanced disease). In cotton rats, a better model than mice for RSV, the vaccine protected against a live virus challenge, without inducing enhanced disease. In a direct comparison with the 1960’s vaccine, another group of cotton rats was immunized with formaldehyde-inactivated virus, and developed enhanced disease after vaccination and challenge.
Key Results to date:
2007: Completed pre-clinical research on our second generationRSV vaccine.
2008 and 2009: MedImmune repeated key experiments in order to obtain their own validation of the results. Results were beyond their expectation but MedImmune decided not to continue the program.
Next steps: Our goal is to bring the product to Phase I in 2011. A potential Phase II in 2012 will then follow, after which the Company will seek to enter into a license agreement with a major pharmaceutical company for a Phase III starting in 2013/2014 and a potential market launch in 2016.
We will continue process development during 2010 for the vaccine formulatedproviding, for example, in-line virus purification and inactivation procedures, and develop improved formulations of the vaccine, with virosomes.
augmented long term product stability. The additional costs of this program to us are minor. The product will then pass into clinical development: up-scale production, toxicology and GMP batch for Phase I, which will represent substantial cost.
We will also develop versions of the RSV vaccine which are based on enhancing the immune response to selected epitopes, while reducing the potential for cross-reactivity with human proteins, along the lines of our HIV-1 program to serve as future improved vaccines.
Herpes Simplex Virus (HSV)
Approach: The current HSV vaccine candidate consists of the reconstituted membrane of HSV-1 or HSV-2, also containing a lipopeptide, or other adjuvant. In mice, the virosome vaccine induces better immunity than repeated near-lethal live virus infections, resulting in the induction of neutralizing antibodies, with predominantly a Th1 profile, cellular immunity, and vaginal IgA. Different routes of application are possible (intranasal, intramuscular).
Key results to date:
2010: Completion of pre-clinical research is projected.
Next steps:We have identified a third potentialthe key elements of the vaccine component, which will undergo
pre-clinical study during 2009.
Malaria: Summarythat induce the protective immune response. A version of Achievements
The most advanced product from the current Mymetics' pipelinevaccine containing those elements is the malaria
(Plasmodium falciparum) vaccine candidate which we acquired in 2007 from Pevion
Biotech Ltd. This vaccine has successfully completed phase I (in Switzerland)being produced and II trials (in the UK) with two antigens. A new phase Ib is currently
undergoing in Tanzania under endemic conditions on children and teenagers. At
the end of January 2009, 10 adults have completed the trial and by the end of
March 2009, 40 children should also successfully complete the trial. The final
monitoring and close out visit is scheduled for April/May 2009. The final study
report should be completed by September 2009. A more elaborated vaccine
formulation with five antigens targeting the two parasite forms will be tested in preclinical experiments. A sale or out-licensing of the vaccine is likely anticipated during or after a Phase I clinical trial. We expect to start Phase I clinical trial in Q4 2011, to be followed by Phase II and Phase III clinical trials later, resulting in expected market launch around 2018.
STRATEGY
Our strategy is to extend the application of our key scientific approaches to new vaccines by:
| • | | Exploiting the results and knowledge of mucosal protection based vaccines |
|
| • | | Leveraging the effective and safe virosome vaccine technology and know-how |
|
| • | | Advancing existing vaccine candidates only through Phase II clinical trials |
|
| • | | Maintaining a comprehensive IP portfolio |
|
| • | | Adopting a flexible cost model based on a combination of in-house expertise and best-in-class outsourcing |
|
| • | | Entering into strategic partnerships with leading pharmaceutical companies |
Our vision is to become the market leader in the development of new generation mucosal and virosomes based vaccines. We develop preventative vaccines that generate an efficient mucosal protection through mucosal antibodies as first line of defense, while blood antibodies would act synergistically, as a second line of defense.
To date, our focus has been on achieving very favorable results from the development of a core vaccine pipeline of HIV-1 and malaria, while securing the IP and know-how for the virosome technology and the mucosal based approach.
By using a lean and flexible operational platform and contracting best-in-class partners, we have avoided the upfront cost of in-house resources and gained access to the best existing know-how. This has maximized the return on development and research.
MATERIAL THIRD PARTY AGEREEMENTS
For the development of its vaccines the Company has entered into several agreements in the form of license agreements, exploitation agreements or co-ownership agreements with third parties. These third parties provide specific experience and capabilities or provide access to specific know how, which are not the core competence of Mymetics. The Company believes that the following third party agreements are material. The following summaries of their material terms are qualified in their entirety by reference to the agreements filed as exhibits
5
to prior SEC filings by the Company as set forth under Item 15 (Exhibits and Financial Statement Schedules).
INSERM
Co-Ownership Agreement dated January 8, 2008 for two patents PCT IB2005/001180 and PCT IB2005/001182, related to Mymetcs’ HIV vaccine. Each party has a 50% ownership in the patents. Mymetics pays all related maintenance charges for the two patents.
Exploitation Agreement dated January 8, 2008 that allows Mymetics to have global rights to develop, promote, produce, co-produce, sell and distribute HIV products based on any of the following three patents: PCT IB2005/001180, PCT IB2005/001182 and PCT IB 2006/000466.
Milestone payments:
End of phase I: E70,000.
End of phase II: E120,000.
End of Phase III: E300,000.
First commercialization: E500,000.
Royalty payments in case of direct commercialization:
For sales below E250,000,000: a maximum of 1.5%.
For sales between E250,000,000 and E500,000,000: a maximum of 2.5%
For sales more than E500,000,000: a maximum of 4%.
Royalty payments in case of indirect commercialization, e.g. through Mymetics licensing of third parties, is 40%.
PEVION
License Agreement dated March 1, 2007 for the exclusive use by Mymetics of the Pevion virosomes for its HIV vaccine.
Milestone payments:
10% of all monetary consideration (excluding royalties) received from third Parties.
E400,000 if Mymetics starts phase I clinical trial.
Royalties: 10% of all monetary consideration received by Mymetics.
Acquisition and License Agreement dated May 19, 2008 for the Pevion virosomes and peptides for the malaria vaccine.
Milestone payments: E2,000,000 start of phase II clinical trial in Q1 2010Africa.
Royalties: maximum of 15% on all income generated from markets in which the malaria vaccine is sold on a commercial basis.
PX Therapeutics
Gp41 Manufacturing Technology Agreement dated 26 January 2009 between PX Therapeutics and Mymetics under which PX Therapeutics agrees to manufacture recombinant Gp41 for Mymetics’ HIV vaccine.
Annual retainer of E200,000 until the earlier of five years or when the HIV vaccine is market approved.
Milestone payments:
E600,000 after knowledge transfer
E900,000 when Mymetics has deposited and has received acceptance of the IMPD (or IND) with regulatory authorities, such as the FDA in the United States, to start a clinical trial.
Royalty payments: 1% on all income generate from the commercialization of the product.
NORWOOD IMMUNOLOGY
Share Purchase Agreement dated March 5, 2009 pursuant to which Mymetics acquired Mymetics B.V. from Norwood Immunology Ltd. Payments to Norwood are for Mymetics’ intranasal influenza vaccine, Mymetics’ RSV vaccine and Mymetics’ HSV vaccine.
Intranasal Influenza vaccine: a milestone payment of E3,000,000 at the Swiss Tropical institute in Basel (Switzerland).
This gradual methodology is necessarystart of a phase III clinical trial of Mymetics’ intranasal influenza vaccine if the phase III clinical trial commences before April 1, 2013.
RSV vaccine: a milestone payment of E2,800,000 if Mymetics enters into a license agreement for both scientific a RSV vaccine with a third party before April 1, 2011.
6
and ethical reasons
since African countries, which have inroyalty payments of 50% on all income generated by Mymetics after the past been used as testing ground
without their fully informed consent, now demand that any human test be first
performed in developed countries.
Among various malaria candidate vaccines currently under development, Mymetics'
vaccine is among the rare approaches designed for targeting the two formscommercialization of the parasite: sporozoites (infecting liver cells)RSV vaccine.
HSV vaccine: payments of 25% of all income generated by Mymetics. This includes all upfront, milestone and merozoites (infecting red
blood cells). Other approaches target only one form of the parasite.
royalty income received for Mymetics’ HSV vaccine.
RESEARCH AND DEVELOPMENT EXPENSES
Research and Development Expenses of E2,692,000E6,364,000 in 20082009 include E480,000E668,500 scientific staff expenses and fees of our scientific consultants, E205,000 paid to scientific partners and suppliers of scientific services, E50,000E2,461,500 for support of virosomes licenses and the malaria license and preventive vaccine project and E1,870,000E3,029,000 related to our AIDS vaccine clinical trial phase I.
INTELLECTUAL PROPERTY
We are the exclusive owner of intellectual property relating to our core
business which is focused on the development of novel HIV-AIDS and malaria
preventive and therapeutic vaccines. We have:
- Two issued French patents FR99 06528 and FR01 15424 on IL-2 mimicry.
- One European issued patent EP1034000 on IL-2 mimicry.
- One U.S. issued patent US 6,455,265 on gp41 & IL-2 mimicry and its
corresponding national filings and divisional filings in various
countries including Europe, the United States, Japan, Canada and
Israel.
- Filed two patents under the Patent Cooperation Treaty, or PCT:
- WO 03/048187 (PCT/US02/38152 filed on November 27, 2002 for
peptides rich in tryptophane as inhibitors of HIV infection from
PFS).
- WO 03/104262 (PCT/US03/18251 filled on June 10, 2003 for
describing gp41 peptides or proteins to block HIV
fusion/infection), with national phases in the United States and
EP.
7
- Filed four United States provisional applications related to the HIV
field.
- On July 29, 2004, applied for a new PCT (PCT/IB2004/002433 or
WO2005010033) which covers our mutated, trimeric, stable recombinant
gp41 protein.
- A US Provisional was filed on February 6th 2009 by the USPTO. This
application describes the "splitting gp41" to explain Mymetics' HIV-1
vaccine strategies. Dr. Sylvain Fleury, CSO of Mymetics is the only
Inventor.
We have also shared with key scientific partners the ownership of certain patent
applications. In every such instance, we have obtained the exclusive license
rights over our partners' shares at very favorable conditions. We have:
- On May 2, 2005, applied with INSERM for a new PCT (PCT/IB05/001182),
which covers the description of IgA antibodies against our recombinant
gp41 protein.
- On March 3, 2006, applied with INSERM and Pevion for a new PCT which
covers our latest prototype HIV-AIDS preventive vaccine based on the
usage of the virosome technology with HIV peptides and proteins.
- A US Provisional was filed on February 6th 2009 by the USPTO. This
application describes the recombinant "gp41 4th generation" that is
expected be used in the HIV-1 preventive vaccine. The inventors are
from Protein'eXpert and from Mymetics Corporation.
| • | | WO/1999/025377 (GP41 mutée) Method for obtaining vaccines for preventing the pathogenic effects related to a retroviral infection Mymetics Corp. Expiration date 16.11.2018 |
|
| • | | WO/2005/010033 (GP41 ter) New soluble and stabilized trimeric form of GP 41 polypeptide Mymetics Corp. Expiration date 28.07.2024 |
|
| • | | WO/2006/117586 (IgA GP41 eng loop) Antibody or a fragment thereof, having neutralizing activity against HIV but not against IL2 Mymetics Corp + INSERM Expiration date 01.05.2025 |
|
| • | | WO/2006/117584 (Iga CDR3 long) Antibody or a fragment thereof, having neutralizing activity against HIV INSERM Expiration date 01.05.2025 |
|
| • | | WO/2007/099446 (Virosome-P1) Virosome-like vesicles comprising gp41 — derived antigens Mymetics Corp. + INSERM + Pevion Expiration date 01.03.2027 |
|
| • | | US/61/202 215 (GP41 4th gen) Mymetics Corp. Expiration date 05.02.2029 |
|
| • | | US/61/202 219 (Splitting GP41) Mymetics Corp. Expiration date 05.02.2029 |
|
| • | | WO/2004/106366 (UK39) Methods for synthetizing conformationally constrained peptides, peptidomimetics and use of such peptidomimetics as synthetic vaccines Mymetics Corp. Expiration date 01.06.2024 |
|
| • | | WO/2004/078099 (AMA49) Compositions and methods for the generation of immune response against Malaria Mymetics Corp. Expiration date 02.03.2023 |
|
| • | | WO/1995/032706 (INEX) Virosome-mediated intracellular delivery of therapeutic agents Bestewil BV Expiration date 31.05.2015 |
|
| • | | WO/2004/045641 (APRECS) Antigen-complexes Bestewil BV Expiration date 19.11.2023 |
|
| • | | WO/2004/110486 (Lipopeptide) Functionally reconstituted viral membranes containing adjuvant Bestewil BV Expiration date 17.06.2024 |
|
| • | | WO/2005/117958 (RSV) Vaccine compositions comprising virosomes and a saponin adjuvant Bestewil BV Expiration date 25.05.2025 |
|
| • | | WO/2004071492 (DCPC) Virosome-like particles Bestewil BV Expiration date 12.02.2023 |
COMPETITION
We have not yet developed an actual product or generated
anysignificant revenues. Our future competitive position depends on our ability to successfully develop our intellectual property, and to license or sell such intellectual property to third parties on financially favorable terms. Although we believe that the results of our research and development activities have been favorable, there are numerous entities and individuals conducting research and development activities in the area of human biology and medicine, all of which could be considered competitors.
Mymetics' strategies consist of focusing the immune response on relevant regions
of the pathogen proteins by designing specific peptides or recombinant proteins
having irrelevant and immunodistractive parts removed. Most of current malaria
vaccines under development or investigation are still designed to induce
antibodies against only one malaria antigen (merozoite or sporozoite), which
will likely offer only a limited protection against this complex parasite.
Present malaria vaccines tested have induced a limited protection period of
about 3 months. The best observed protection after vaccination (from
GlaxoSmithKline Biologicals, RTS,S/AS02A vaccine) was maintained for about 6-12
months after which has proven difficult to maintain a high level of immune
response, as the amount of antibodies goes down and remains at a low level.
Therefore, protection with the vaccine might be for a short period. The ideal
vaccine should elicit an immune response toward various proteins of the two
parasite forms (sporozoites and merozoites) for optimizing the chance to reduce
significantly the infection rate of target cells and parasite development. The
combination of several target antigens in one vaccine is believed to induce
synergistic protective effects and to reduce the risk of the selection of
resistant strains.
The malaria vaccine proposed by Mymetics/Pevion Biotech induces antibodies
toward various proteins from the two parasite forms; increasing the chance of
double protection
We are conducting research aimed at developing a preventive vaccine that could
elicit protective mucosal and blood antibodies against HIV, with a primary
interest for the clade B, which is present in most industrialized countries, and
clades A and C because of their world dominance. Mymetics' vaccine may be
adapted to the most important HIV-1 clades such as A, B, C and D.
In the field of HIV vaccines, the failure in 2003 of the VAXGEN product in Phase
III clinical trial and more recently the Merck adeno-based vaccine triggering
cytotoxic T cells (CTL) protection underscores the need for an effective
solution to the global challenge posed by HIV. As these particular HIV vaccine
candidates were respectively focusing on blood IgG antibodies and CTL, using
technology unrelated to our technology (virosomes), we do not believe that the
cessation of clinical trials with respect to VAXGEN and Merck negatively impacts
our prospects for developing a viable preventive vaccine. On the contrary, most
of current HIV vaccine trials are oriented to the induction of CTL for killing
HIV-infected cells. Therefore we see no serious alternative projects in the
pipeline of competitors and major companies in the HIV field are now forced to
look for new innovative projects. We believe that this will benefit Mymetics
since it is a leader in the development of a vaccine for protecting the main
points of access for HIV in humans, which are the mucosal compartments.
8
The worldwide vaccine market is dominated by fourfive large multinational companies: Sanofi Pasteur S.A. (formerly Aventis Pasteur S.A.), Merck & Co., GlaxoSmithKline Plc, Pfizer-Wyeth and Novartis-Chiron Inc. Other companies such as Progenics Pharmaceuticals, Inc., are developing therapeutic HIV vaccines, i.e.
7
vaccines that target HIV-infected persons in an attempt to control the development of the disease.
While many of these individuals and entities have greater financial and scientific capabilities, and greater experience in conducting pre-clinical and clinical trials, we believethe Company believes that ourits innovative approach to vaccine development is very competitive. Our approach is based on three main aspects: 1) design of
lipid membrane anchored-antigens forming dimers, trimers and tetramers that
force the immune system to focus the response only on key relevant conserved
regions; 2) the induction of protective antibodies not only in the blood but
most importantly in the genito-reproductive and intestinal mucosal compartments
(primary HIV entry site) and; 3) minimizing potential autoimmune side effects by
removing most of the human protein homologies present onto the well preserved,
antigenic and immunodominant domain of GP41, such as IL-2 homologies, Overall,
Mymetics' HIV vaccine candidate should provide an advantage over existing and
future approaches that have been pursued so far because all our competitors are
using DNA, viral vectors, recombinant proteins or peptides with native viral
sequences with no or limited deletion of human sequence homologies (linear or
tridimensional) and poorly induce mucosal immunity. Therefore, all these vaccine
prototypes are potentially harmful on a long-term basis for human health and do
not target properly mucosal tissues. Vaccine candidates under development of
investigation include:
- - Sub-unit vaccine: a technology addressing a piece of the outer surface of
HIV, such as GP160, GP140 or GP120, produced by genetic engineering.
- - Live vector vaccine: a live bacterium or virus such as vaccinia (used in
the smallpox vaccine) and adeno modified so it cannot cause disease, but
can transport into the body one or more genes that makes one or more HIV
proteins.
- - Vaccine combination: an example includes a "prime-boost strategy", use of
a recombinant vector vaccine to induce cellular immune responses followed
by booster shots of a sub-unit vaccine to stimulate antibody production.
- - Peptide vaccine: chemically synthesized pieces of HIV proteins (peptides)
known to stimulate HIV-specific immunity.
- - Virus-like particle vaccine (pseudovirion vaccine): a non-infectious HIV
look-alike that has one or more, but not all, HIV proteins.
- - DNA vaccine: direct injection of genes coding for HIV proteins.
- - Whole-killed virus vaccine: HIV that has been inactivated by chemicals,
irradiation or other means rendering it non-infectious.
- - Live-attenuated virus vaccine: live HIV from which one or more apparent
disease-promoting genes of the virus have been deleted.
GOVERNMENTAL REGULATION
Our strategy was crafted in part to minimize the risks usually associated with phasePhase III clinical trials, regulatory approvals and marketing, which we would
expectare expected to be borne by one or more future partners.
We contract with third parties to perform research projects related to our business. These third parties are located in various countries and are subject to the applicable laws and regulations of their respective countries. Accordingly, regulation by government authorities in the United States, the European Union and other foreign countries is a significant factor in the development, manufacture and marketing of our proposed products by our future partners and therefore has a direct impact on our ongoing research and product development activities.
Any products that will be developed by our future partners based on our technology will require regulatory approval by government agencies prior to commercialization. In particular,
like human therapeutic products,
vaccines are subject to rigorous pre-clinical studies and clinical trials and other approval procedures of the FDA and similar regulatory authorities in foreign countries. In addition, various federal and state statutes and regulations will also govern, or influence testing, manufacturing, safety, labeling, storage and record keeping related to such products and their marketing. The process of obtaining these approvals and the subsequent substantial compliance with appropriate federal and state statutes and regulations require the expenditure of substantial time and financial resources. Obtaining royalties in the future will depend on our future
partners'partners’ ability to obtain and maintain the necessary regulatory approvals.
9
Pre-clinical studies are generally are conducted on laboratory animals to evaluate the potential safety and the efficacy of a product. In light of our limited financial resources, we are conducting clinical trials of our HIV and malaria
vaccines are conducted first in Europe under the European Union ("EU"(“EU”) guidelines, a quicker and less expensive approach than seeking FDA approval, which we intend to do after EU approval is granted and we expect our financial resources willto be greater. There is however no certainty that such EU approval will be granted, however.granted. The Phase I, II and III EU clinical trials are similar to those required for FDA approval. We will address theThe FDA requirements are addressed in this discussion since we
intend to submit our vaccines for FDA review and approval.
In the United States, we must submit the results of pre-clinical studies to the
FDA as a part of an investigational new drug application, or IND, which
application must become effective before we can begin clinical trials in the
United States. An IND becomes effective 30 days after receipt by the FDA unless
the FDA objects to it. Typically, clinical evaluation involves a time-consuming
and costly three-phase process. At this time, neither we nor any of our partners
have submitted any of our pre-clinical results to the FDA and we have only
recently received European Approval to begin Phase I human clinical trials for
our HIV vaccine.discussion.
The process which is described below is therefore to be considered as generic background information which is relevant to the industry as a whole. As such process applies to drugs as well as vaccines, the term "drugs"“drugs” as used hereafter refers also to vaccines.
In the United States, any company developing new drugs must submit the results of pre-clinical studies to the FDA as a part of an investigational new drug application, or IND, which application must become effective before it can begin clinical trials in the United States. An IND becomes effective 30 days after receipt by the FDA unless the FDA objects to it. Typically, clinical evaluation involves a time-consuming and costly three-phase process.
Phase I. RefersI refers typically to closely monitored clinical trials and includes the initial introduction of an investigational new drug into human patients or normal volunteer subjects. Phase I clinical trials are designed to determine the metabolic and pharmacologic actions of a drug in humans, the side effects associated with increasing drug doses and, if possible, to gain early evidence on effectiveness. Phase I trials also include the study of structure-activity relationships and mechanism of action in humans, as well as studies in which investigational drugs are used as research tools to explore biological phenomena or disease processes. During Phase I clinical trials, sufficient information about a drug'sdrug’s pharmacokinetics and pharmacological effects should be obtained to permit the design of well-controlled, scientifically valid, Phase II studies. The total number of subjects and patients included in Phase I clinical trials varies but is generally in the range of 20 to 80 people.
Phase II. RefersII refers to controlled clinical trials conducted to evaluate the effectiveness of a drug for a particular indication or indications in patients with a disease or condition under study and to determine the common short-term side effects and risks associated with the drug. These clinical trials are typically well-controlled, closely monitored and conducted in a relatively small number of patients, usually involving no more than several hundred subjects.
Phase III. RefersIII refers to expanded controlled clinical trials, which many times are designated as "pivotal trials"“pivotal trials” designed to reach end points that the FDA has
8
agreed in advance, if met, would allow approval for marketing. These clinical trials are performed after preliminary evidence suggesting effectiveness of a drug has been obtained. They are intended to gather additional information about the effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling. Phase III clinical trials can include from several hundred to tenthtens of thousands of subjects depending on the specific indication being tested.
The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted in the United States and may, at its discretion, re-evaluate, alter, suspend or terminate the testing based upon the data accumulated to that point and the FDA'sFDA’s assessment of the risk/benefit ratio to the patient. Once Phase III trials are completed, drug developers submit the results of pre-clinical studies and clinical trials to the FDA, in the form of ana new drug application, or NDA, for approval to commence commercial sales. In response, the FDA may grant marketing approval, request additional information or deny the application if the FDA determines that the application does not meet the predetermined study goals and other regulatory approval criteria.
Furthermore, the FDA may prevent a drug developer from marketing a product under a label for its desired indications, which may impair commercialization of the product.
If the FDA approves the new drug application, the drug becomes available for physicians to prescribe in the United States. After approval, the drug developer must submit periodic reports to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional studies, known as Phase IV clinical trials to evaluate long-term effects.
We will be required to comply with similar regulatory procedures in countries other than the United States.
In addition to studies requested by the FDA after approval, a drug developer may conduct other trials and studies to explore use of the approved compound for treatment of new indications. The purpose of these trials and studies and related publications is to broaden the application and use of the drug and its acceptance in the medical community.
10
At this time, neither we nor any of our partners have submitted any of its pre-clinical results to the FDA and it is only recently that the European Approval to begin Phase I human clinical trials for our HIV vaccine was received.
Our future partner(s) will have to complete an approval process, similar to the one required in the United States, in virtually every foreign target market in order to commercialize product candidates based on our technology in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. Approvals (both foreign and in the United States) may not be granted on a timely basis, or at all. In addition, regulatory approval of prices is required in most countries other than the United States. We face the risk that the resulting prices would be insufficient to generate an acceptable return to our partner(s).
EMPLOYEES
Mymetics Corporation has three full-time employees: Mr. Christian J.-F. Rochet,
Jacques-François Martin is now our President and Chief Executive Officer Mr.and there are four full-time employees: Ernst Luebke, our Chief Financial Officer, and Dr. Sylvain Fleury, Ph.D., our Chief Scientific Officer and Ronald Kempers, who has joined us as Chief Operating Officer. In addition,Christian Rochet resigned as our President and CEO effective July 1, 2009, and is currently employed by us as Senior Advisor to the President.
Our Swiss subsidiary, Mymetics Management SarlS.A., has on its payroll two assistants to ourthree employees assisting the CEO, CFO, CSO and CSO respectivelyCOO, as well as one part-time and two full time employeesemployee performing various administrative services on behalf ofour behalf.
Mymetics Corporation as
well as Dream Vaccines Foundation, to whom such services are invoiced on a cost
basis.B.V. has one full time executive officer (CSO) plus one full-time and one part time assistant.
As of December 31, 2008,2009, our Luxembourg affiliate had no employees.
WWW.MYMETICS.COM
News and information about Mymetics Corporation isare available on our web site, www.mymetics.com.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described below together with all of the other information included in this report on Form 10-K. An investment in our common stock is very risky. If any of the following risks materialize, our business,
9
financial condition or results of operations could be adversely affected. In such an event, the trading price of our common stock could decline, and you may lose part or all of your investment. When used in these risk factors, the terms "we"“we” or "our"“our” refer to Mymetics Corporation and its subsidiaries.
We are a company engaged exclusively in research and development activities, focusing primarily on human biology and medicine.vaccine development. Our strategy was crafted in part to minimize the risks usually associated with clinical trials, regulatory approvals and marketing, which we would expect to be borne by our future partner(s).
WE HISTORICALLY HAVE LOST MONEY, EXPECT LOSSES TO CONTINUE FOR THE FORESEEABLE FUTURE AND MAY NEVER ACHIEVE PROFITABILITY.
We historically have lost money. In the yearyears ended December 31, 2009 and December 31, 2008, we sustained net losses of approximately E6,938,000. In the years ended December
31, 2007E10,186,000 and December 31, 2006, we sustained net losses of approximately
E9,294,000 and E1,585,000,E6,938,000, respectively. At December 31, 2008,2009, we had an accumulated deficit of approximately E31,904,000.E42,090,000. Total cash disbursed since 1990 for operating activities, including research and development, is E24,612,000.E35,658,000.
The amount of these losses may vary significantly from year-to-year and quarter-to-quarter and will depend on, among other factors:
- - the timing and cost of product development;
- - the progress and cost of preclinical and clinical development programs;
- - the timing and cost of obtaining necessary regulatory approvals;
- - the timing and cost of sales and marketing activities for future
products; and
- -
| – | | the timing and cost of product development; |
|
| – | | the progress and cost of preclinical and clinical development programs; |
|
| – | | the timing and cost of obtaining necessary regulatory approvals; |
|
| – | | the timing and cost of sales and marketing activities for future products; and |
|
| – | | the costs of pending and any future litigation of which we may be subject. |
We currently are engaged in research and development activities and do not have any commercially marketable products. The product research and development process requires significant capital expenditures, and we do not have any other sources of revenue to off-set such expenditures.
Accordingly, we expect to generate additional operating losses at least until such time as we are able to generate significant revenues.
To become profitable, we will need to generate revenues to offset our operating costs, including our general and administrative expenses. We may not achieve or, if achieved, sustain our revenue or profit objectives, and our losses may increase in the future, and, ultimately, we may have to cease operations.
11
In order to generate new and significant revenues, we must successfully develop and commercialize our proposed products or enter into collaborative agreements with others who can successfully develop and commercialize them. Our business plan is predicated on commercializing our products in collaboration with others. Even if our proposed products are commercially introduced, they may never achieve market acceptance and we may never generate significant revenues or achieve profitability.
WE NEED TO RAISE SUBSTANTIAL ADDITIONAL CAPITAL TO FUND OUR OPERATIONS AND WE MAY BE UNABLE TO RAISE SUCH FUNDS ON A TIMELY BASIS AND ON ACCEPTABLE TERMS.
Although we have restructured our bank debt as disclosed in Note 3 ofaccompanying our Form
10-Kfinancial statements for the year ended December 31, 2008,2009 (see section 15 below), we have not alleviated our working capital needs. We need to address our working capital needs by the end of June 20092010 to allow us to continue devoting our efforts to development of the business instead of raising needed capital. If we must devote a substantial amount of time to raising capital, it will delay our ability to achieve our business plan within the time frames that we now expect, which could increase the amount of capital we need and could threaten the success of our business if competitors are able to produce an effective vaccine to the market ahead of us. In addition,
the amount of time expended by our management on fund raising distracts them
from concentrating on our business affairs.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OR PREDICT OUR FUTURE BUSINESS PROSPECTS.
We have no operating history, and our operating results are impossible to predict because we have not begun selling any products. We are in the development stage, and our proposed operations are subject to all of the risks inherent in establishing a new business enterprise, including:
- - the absence of an operating history;
- - the lack of commercialized products;
- - insufficient capital;
- - expected substantial and continual losses for the foreseeable future;
- - limited experience in dealing with regulatory issues;
- - limited marketing experience;
- - an expected reliance on third parties for the commercialization of our
proposed products;
- - a competitive environment characterized by numerous, well-established
and well-capitalized competitors;
- - uncertain market acceptance of our proposed products; and
- -
| – | | the absence of an operating history; |
|
| – | | the lack of commercialized products; |
|
| – | | insufficient capital; |
10
| – | | expected substantial and continual losses for the foreseeable future; |
|
| – | | limited experience in dealing with regulatory issues; |
|
| – | | limited marketing experience; |
|
| – | | an expected reliance on third parties for the commercialization of our proposed products; |
|
| – | | a competitive environment characterized by numerous, well-established and well-capitalized competitors; |
|
| – | | uncertain market acceptance of our proposed products; and |
|
| – | | reliance on key personnel. |
The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the formation of a new business, the development of new technology, and the competitive and regulatory environment in which we will operate. See "Description“Description of the Business"Business”.
Because we are subject to these risks, you may have a difficult time evaluating our business and your investment in our company.
OUR PROPOSED VACCINES ARE IN THE DEVELOPMENT STAGES AND WILL LIKELY NOT BE COMMERCIALLY INTRODUCED BEFORE 2017,2018, IF AT ALL.
Our proposed key products still are in the development stage and will require further development, preclinical and clinical testing and investment prior to commercialization in the United States and abroad. See
"Description“Description of the
Business"Business”. While we are pleased about the progress made to date on these products, we cannot be sure that these products in development will:
- - be successfully developed;
- - prove to be safe and efficacious in clinical trials;
- - meet applicable regulatory standards or obtain required regulatory
approvals;
- - demonstrate substantial protective or therapeutic benefits in the
prevention or treatment of any disease;
- - be capable of being produced in commercial quantities at reasonable
costs;
12
- - obtain coverage and favorable reimbursement rates from insurers and
other third-party payers; or
- - | – | | be successfully developed; |
|
| – | | prove to be safe and efficacious in clinical trials; |
|
| – | | meet applicable regulatory standards or obtain required regulatory approvals; |
|
| – | | demonstrate substantial protective or therapeutic benefits in the prevention or treatment of any disease; |
|
| – | | be capable of being produced in commercial quantities at reasonable costs; |
|
| – | | obtain coverage and favorable reimbursement rates from insurers and other third-party payers; or |
|
| – | | be successfully marketed or achieve market acceptance by physicians and patients. |
We do not intend to undertake any product development beyond Phase II human clinical trials (i.e., Phase III clinical studies) or be responsible for obtaining regulatory approval or marketing the products. Nevertheless, even if we are successful in selling or licensing our products to another pharmaceutical company, it is likely that any revenues we may receive in connection with those arrangements will depend upon other companies'companies’ sales, which will, in turn, depend upon the factors stated above.
THE LOSS OF OUR PRINCIPAL EXECUTIVE OFFICERS WOULD DIMINISH THE COMPANY'SOUR ABILITY TO ACHIEVE ITSOUR BUSINESS PLAN.
Messrs. RochetMartin, Luebke and Luebke have playedKempers play an important role in financing, achievement of our strategic goals and administration of the Company.administration. In addition, Dr. Fleury has been following, and associated with, our AIDS vaccine project since 1998 and we believe that replacing him as CSO on time for successfully prosecuting our pending patent applications would be extremely difficult. Accordingly, the loss of any of these individuals might prevent the Company from achieving its business plan.
THE LOSS OF KEY SCIENTIFIC OR INDUSTRIAL PARTNERS WOULD DIMINISH THE COMPANY'SOUR ABILITY TO ACHIEVE ITSOUR BUSINESS PLAN.
Certain components or know-how obtained from partners such as Protein eXpert S.A., and PX’Therapeutics, supplier of GMP grade engineered mutated gp41 protein, or Pevion Biotech Ltd., supplier and integrator of virosomes, are key components of our vaccines currently under development. Accordingly, the loss of any of these
11
components or know-how might prevent the Companyus from achieving itsour business plan.
plan, despite the fact that contractual safeguards are in place.
OUR BUSINESS MODEL IS PREDICATED ON OUR BELIEF THAT WE WILL BE ABLE TO ENGAGE LARGE PHARMACEUTICAL COMPANIES TO PARTNER WITH US IN THE DEVELOPMENT OF OUR PRODUCTS AND FAILURE TO DO SO WILL LIKELY MAKE THE COMPANYUS UNATTRACTIVE AS AN ACQUISITION TARGET.
We anticipate that we will need a large pharmaceutical company to assist us with human trials and financing. See "Funding Requirements"“Funding Requirements”. Our failure to succeed in this endeavor will have a dramatic adverse result regarding our financial needs and ability to successfully sell any products that we develop.
IF WE FAIL TO OBTAIN REGULATORY APPROVAL TO COMMERCIALLY MANUFACTURE OR SELL ANY OF OUR FUTURE PRODUCTS, OR IF APPROVAL IS DELAYED OR WITHDRAWN, WE WILL BE UNABLE TO GENERATE REVENUE FROM THE SALE OF OUR PRODUCTS.
We must obtain regulatory approval to sell any of our products in the United States and abroad. In the United States, we must obtain the approval of the FDA for each product or drug that we intend to commercialize. The FDA approval process is typically lengthy and expensive, and approval is never certain. Products to be commercialized abroad are subject to similar foreign government regulation.
Generally, only a very small percentage of newly discovered pharmaceutical products that enter preclinical development are approved for sale. Because of the risks and uncertainties in biopharmaceutical development, our proposed products could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. If regulatory approval is delayed or never obtained, our management'smanagement’s credibility, the value of our company and our operating results and liquidity would be adversely affected. Furthermore, even if a product gains regulatory approval, the product and the manufacturer of the product may be subject to continuing regulatory review. Even after obtaining regulatory approval, we may be restricted or prohibited from marketing or manufacturing a product if previously unknown problems with the product or its manufacture are subsequently discovered. The FDA may also require us to commit to perform lengthy post-approval studies, for which we would have to expend significant additional resources, which could have an adverse effect on our operating results and financial condition.
Although we have conducted pre-clinical studies, costly and lengthy human clinical trials are required to obtain regulatory approval to market our proposed vaccine, and the results of the trials are highly uncertain. In addition, the number of pre-clinical studies and human clinical trials that the FDA requires varies depending on the product, the disease or condition the product is being developed to address and regulations applicable to the particular product. Accordingly, we may need to perform additional pre-clinical studies using various doses and formulations before we can begin human clinical trials, which could result in delays in our ability to market any of our products. Furthermore, even if we obtain favorable results in pre-clinical studies on animals, the results in humans may be different.
13
After we have conducted pre-clinical studies in animals, we must demonstrate that our products are safe and effective for use on the target human patients in order to receive regulatory approval for commercial sale. The data obtained from pre-clinical and human clinical testing are subject to varying interpretations that could delay, limit or prevent regulatory approval. We face the risk that the results of our clinical trials in later phases of clinical trials may be inconsistent with those obtained in earlier phases. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after experiencing promising results in early animal or human testing. Adverse or inconclusive human clinical results would prevent us from filing for regulatory approval of our products. Additional factors that can cause delay or termination of our human clinical trials include:
- - slow patient enrollment;
- - timely completion of clinical site protocol approval and obtaining
informed consent from subjects;
- - longer trial time than foreseen to demonstrate efficacy or safety;
- - adverse medical events or side effects in immunized patients; and
- -
| – | | slow patient enrollment; |
|
| – | | timely completion of clinical site protocol approval and obtaining informed consent from subjects; |
|
| – | | longer trial time than foreseen to demonstrate efficacy or safety; |
|
| – | | adverse medical events or side effects in immunized patients; and |
|
| – | | lack of effectiveness of the vaccines being tested. |
Delays in our clinical trials could allow our competitors additional time to develop or market competing products and thus can be extremely costly in terms of lost sales opportunities and increased clinical trial costs.
EVEN IF OUR PROPOSED PRODUCTS RECEIVE EU AND FDA APPROVAL, THEY MAY NOT ACHIEVE EXPECTED LEVELS OF MARKET ACCEPTANCE, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT
12
ON OUR BUSINESS, FINANCIAL POSITION AND OPERATING RESULTS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.
Even if we are able to obtain required regulatory approvals for our proposed products, the success of those products is dependent upon market acceptance by physicians and patients. Levels of market acceptance for our new products could be impacted by several factors, including:
- - the availability of alternative products from competitors;
- - the price of our products relative to that of our competitors;
- - the timing of our market entry; and
- -
| – | | the availability of alternative products from competitors; |
|
| – | | the price of our products relative to that of our competitors; |
|
| – | | the timing of our market entry; and |
|
| – | | the ability to market our products effectively. |
Some of these factors are not within our control. Our proposed products may not achieve expected levels of market acceptance. Additionally, continuing studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted by the industry, government agencies and others. Such studies, which increasingly employ sophisticated methods and techniques, can call into question the utilization, safety and efficacy of previously marketed products. In some cases, these studies have resulted, and may in the future result, in the discontinuance of product marketing. These situations, should they occur, could have a material adverse effect on our business, financial position and results of operations, and the market value of our common stock could decline.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WE MAY NOT BE ABLE TO COMPETE AS EFFECTIVELY.
The pharmaceutical industry places considerable importance on obtaining patent and trade secret protection for new technologies, products and processes. Our success will depend, in part, upon our ability to obtain, enjoy and enforce protection for any products we develop or acquire under United States and foreign patent laws and other intellectual property laws, preserve the confidentiality of our trade secrets and operate without infringing the proprietary rights of third parties.
Where appropriate, we seek patent protection for certain aspects of our technology. However, our owned and licensed patents and patent applications may not ensure the protection of our intellectual property for a number of other reasons:
- -
– Competitors may interfere with our patents and patent process in a variety of ways. Competitors may claim that they invented the claimed invention before us or may claim that we are infringing on their patents and therefore we cannot use our technology as claimed under our patent. Competitors may also have our patents reexamined by showing the patent examiner that the invention was not original or novel or was obvious.
14
- - – We are in the development stage and are in the process of developing proposed products. Even if we receive a patent, it may not provide much practical protection. If we receive a patent with a narrow scope, then it will be easier for competitors to design products that do not infringe on our patent. Even if the development of our proposed products is successful and approval for sale is obtained, there can be no assurance that applicable patent coverage, if any, will not have expired or will not expire shortly after this approval. Any expiration of the applicable patent could have a material adverse effect on the sales and profitability of our proposed product.
- -
– Enforcing patents is expensive and may require significant time by our management. In litigation, a competitor could claim that our issued patents are not valid for a number of reasons. If the court agrees, we would lose protection on products covered by those patents.
- -
– We also may support and collaborate in research conducted by government organizations or universities. We cannot guarantee that we will be able to acquire any exclusive rights to technology or products derived from these collaborations. If we do not obtain required licenses or rights, we could encounter delays in product development while we attempt to design around other patents or we may be prohibited from developing, manufacturing or selling products requiring these licenses. There is also a risk that disputes may arise as to the rights to technology or products developed in collaboration with other parties.
It also is unclear whether efforts to secure our trade secrets will provide useful protection. While we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our proprietary information to competitors resulting in a loss of protection. Enforcing a claim that someone else illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome
13
is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Finally, our competitors may independently develop equivalent knowledge, methods and know-how.
CLAIMS BY OTHERS THAT OUR PRODUCTS INFRINGE THEIR PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights. Patent applications are maintained in secrecy in the United States and also are maintained in secrecy outside the United States until the application is published. Accordingly, we can conduct only limited searches to determine whether our technology infringes the patents or patent applications of others. Any claims of patent infringement asserted by third parties would be time-consuming and could likely:
- - result in costly litigation;
- - divert the time and attention of our technical personnel and management;
- - cause product development delays;
- - require us to develop non-infringing technology; or
- -
| – | | result in costly litigation; |
|
| – | | divert the time and attention of our technical personnel and management; |
|
| – | | cause product development delays; |
|
| – | | require us to develop non-infringing technology; or |
|
| – | | require us to enter into royalty or licensing agreements. |
Although patent and intellectual property disputes in the pharmaceutical industry often have been settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and often require the payment of ongoing royalties, which could hurt our gross margins. In addition, we cannot be sure that the necessary licenses would be available to us on satisfactory terms, or that we could redesign our products or processes to avoid infringement, if necessary. Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing, manufacturing and selling some of our products, which could harm our business, financial condition and operating results.
WE HAVE ANTI-TAKEOVER PROVISIONS IN OUR BYLAWS THAT MAY DISCOURAGE A CHANGE OF CONTROL.
Our bylaws contain provisions that could discourage, delay or prevent a change in control of our Company or changes in our management that the stockholders of our company may deem advantageous. These provisions
- - limit the ability of our stockholders to call special meetings of
stockholders;
- - provide for a staggered board;
- - provide that our board of directors is expressly authorized to make, alter
or repeal the bylaws; and
- - establish advance notice requirements for nominations for election to our
board or for proposing matters that can be acted upon by stockholders at
stockholder meetings.
15
| – | | limit the ability of our stockholders to call special meetings of stockholders; |
|
| – | | provide for a staggered board; |
|
| – | | provide that our board of directors is expressly authorized to make, alter or repeal the bylaws; and |
|
| – | | establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings. |
ITEM 2. PROPERTIES
We currently occupy approximately 100 square meters of office space that houses
our administrative operations in Nyon, Switzerland (20 miles from Geneva), at
14, rue de la Colombiere.
We also lease approximately 50 square meters of office space in Geneva for
Administrative staff engaged in matters involving Dream Vaccines Foundation a
501(c)(3) charitable organization described below. This lease has been
terminated effective March 31, 2009.
Until February 2009, our CSO and his assistants were using offices which
provided access to scientific databases, leased on short term basis from the
Swiss Institute of Experimental Cancer Research (ISREC) in Lausanne (20 miles
from our Nyon office).
On March 1, 2009, our CSO and his staff took possession
ofwe leased 300 square meters of new office space in a campus recently established near Lausanne (40 miles from Geneva) by the local state government to attract promising biotech companies. This now houses our scientific management and administrative operations. These facilities will be enhanced in late 2010 or early 2011 with about 300 square meters of new laboratory facilities to perform the various testing on pre-clinical and clinical samples under Good Laboratory Practice (GLP) and some product characterization work required by regulatory agencies and which cannot be subcontracted to third parties, or if so, only at prohibitive costs and often not compatible with our timeline. Developing this in-house expertise would favor a better control on the IP and know-how.
We also lease approximately 100 square meters of office space in Nyon, Switzerland (20 miles from Geneva), at 14, rue de la Colombiere, presently used by the Senior Advisor to the CEO and from time to time, by our CFO.
Bestewil Holding B.V. and its subsidiary Mymetics B.V operate from a similar biotechnology campus near Leiden in the Netherlands, where they occupy 100 square meters.
We also conduct our research operations at the properties of various third parties, worldwide.
14
ITEM 3. LEGAL PROCEEDINGS
Neither Mymetics Corporation,we, nor our wholly owned subsidiaries 6543 Luxembourg SAS.A., Mymetics S.A., Bestewil Holding B.V. nor its subsidiary Mymetics Management SarlB.V. are presently involved in any litigation incident to our business.
MYMETICS S.A.
On February 7, 2006, the Tribunal de Commerce in Lyon, France placed Mymetics
S.A., under receivership ("Redressement Judiciaire") as a result of an ongoing
dispute between Mymetics Corporation and a former officer and director, Dr.
Pierre-Francois Serres, who obtained an initial judgment against Mymetics S.A.
in France in the amount of E173,000 for an alleged wrongful termination by the
Company's prior management during 2003, which judgment was reversed on appeal.
Despite this positive outcome, the financial and legal status of Mymetics S.A.
was too impaired to justify the costs and efforts to revitalize it. We therefore
decided to let the matter run its course under French law and to transfer all
operations to Mymetics Corporation.
Under the order of the French court, Mymetics S.A. sold its patents to Lomastar
Technologies Sarl, a Swiss company incorporated in Nyon, for E80,000 in order to
pay its creditors and the administration costs of the case. Upon completion of
this endeavor, the company will be dissolved under the control of the French
court appointed judicial administrator. As a legal consequence of this court
order, Mymetics Corporation has formally lost control over its French
subsidiary. We do not believe that the sale of the patents is significant to us
since they expire in 2017 and 2018, the dates we first expect to be selling the
vaccine. To protect the value of our intellectual property, however, we are
negotiating an exclusive worldwide perpetual license with Lomastar Technologies
with respect to these patents. There can be no assurance, however, that we will
be successful in achieving this result, which could limit the value of our
intellectual property and the potential value of our company to a prospective
purchaser.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
15
PART II
ITEM 5. MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market Information. The Corporation'sCorporation’s common stock is quoted on the OTC Bulletin Board under the trading symbol "MYMX"“MYMX”
The following table sets forth the quarterly high and low sales price per share of the Corporation'sour common stock for the periods indicated. The prices represent inter-dealer quotations, which do not include retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
| | | | | | | | | |
| FISCAL QUARTER ENDED | | HIGH | | LOW |
| 2008 | | | | | | | | |
| | | | | | | | | |
| March 31 | | $ | 0.250 | | | $ | 0.250 | |
| June 30 | | | 0.210 | | | | 0.200 | |
| September 30 | | | 0.340 | | | | 0.320 | |
| December 31 | | | 0.120 | | | | 0.100 | |
| | | | | | | | | |
| 2009 | | | | | | | | |
| March 31 | | $ | 0.190 | | | $ | 0.170 | |
| June 30 | | | 0.189 | | | | 0.160 | |
| September 30 | | | 0.160 | | | | 0.135 | |
| December 31 | | | 0.119 | | | | 0.110 | |
FISCAL QUARTER ENDED HIGH LOW
- -------------------- ------ ------
2007
March 31............ $0.240 $0.180
June 30............. 0.130 0.105
September 30........ 0.115 0.110
December 31......... 0.160 0.130
2008
March 31............ $0.250 $0.250
June 30............. 0.210 0.200
September 30........ 0.340 0.320
December 31......... 0.120 0.100
| (b) | | Stockholders. At April 15, 2010, we had approximately 600 holders of record of our common stock, some of which are securities clearing agencies and intermediaries. |
|
| (c) | | Dividends. We have not paid any dividends on our common stock and do not intend to pay any dividends in the foreseeable future. |
|
| (d) | | Securities Authorized for Issuance under Equity Compensation Plans. |
(b) Stockholders. At March 26, 2009, we had approximately 600 holders
of record of our common stock, some of which are securities clearing agencies
and intermediaries.
(c) Dividends. We have not paid any dividends on common stock and do
not intend to pay any dividends in the foreseeable future.
(d) Securities Authorized for Issuance under Equity Compensation
Plans.
17
16
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of ourthe Company’s existing equity compensation plans as of December 31, 2008.
2009.
| | | | | | | | | | | | | |
| | | | | | | | | | | Number of Securities remaining | |
| | | Number of Securities to be | | | Weighted Average Exercise | | | available for issuance under | |
| | | issued upon exercise of | | | Price of Outstanding | | | equity compensation plans | |
| | | Options, Warrants and | | | Options, Warrants and | | | (excluding securities | |
| | | Rights | | | Rights | | | reflected in column (a)) | |
| Plan Category | | (a) | | | (b) | | | (c) | |
| Equity Compensation Plans Approved by Security Holders (1) | | | 442,500 | (2) | | U.S. $ | 0.97 | | | | 4,557,500 | |
| | | | | | | | | | |
| Total | | | 442,500 | | | U.S. $ | 0.97 | | | | 4,557,500 | |
| | | | | | | | | | |
Number | | |
| (1) | | Equity compensation plans approved by security holders include (i) the Company’s 1994 Amended and Restated Stock Option Plan, (ii) its 1995 Qualified Incentive Stock Option Plan and (iii) our 2001 Stock Option Plan. |
|
| (2) | | Includes (i) 442,500 shares of Securities remaining
Number of Securities to be Weighted Average Exercise available for issuancecommon stock underlying options granted under issued upon exercise of Price of Outstandingthe registrant’s 2001 Stock Option Plan. |
|
| (3) | | We do not have any formal equity compensation plans
Options, Warrants and Options, Warrants and (excluding securities reflected
Rights Rights in column (a))
Plan Category (a) (b) (c)
- ------------- -------------------------- ------------------------- -------------------------------
Equity Compensation Plans
Approvedplan that has not been authorized by Security Holders (1) 442,500 (2) U.S. $0.97 4,557,500
Equity Compensation Plans not
Approved by Security Holders -- (3) N/A
------- ---------- ---------
Total 442,500 U.S. $0.97 4,557,500
======= ========== =========
our stockholders. |
(1) Equity compensation plans approved by our security holders include (i) our
1994 AmendedIn addition, Mymetics granted Norwood Immunology Limited (“NIL”) an option to acquire shares of Mymetics common stock. The conversion price on the option and
Restated Stock Option Plan, (ii) our 1995 Qualified
Incentive Stock Option Plan and (iii) our 2001 Stock Option Plan.
(2) Includes (i) 442,500convertible debt is set at $0.80 since the Company did not issue stock subsequently at a lower price. The result is that the option allows NIL to acquire 12,011,531 shares of common
stock underlying options granted
under our 2001 Stock Option Plan.
(3) We do not have any formal equity compensation plan that has not been
authorized by our stockholders.
18
stock. 17
ISSUANCES OF UNREGISTERED SECURITIES
Set forth below is information regarding our sales of unregistered securities during the period commencing on January 1, 20082009 and ending on March
26, 2009.April 15, 2010. These issuances were made pursuant to individual contracts that are discrete from one another and in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, and/or Regulation D promulgated under the Securities Act, as transactions by an issuer not involving any public offering to persons who are sophisticated in such transactions and who had knowledge of and access to sufficient information about Mymeticsus to make an informed investment decision. Among this information was the fact that the securities were restricted securities.
- - On January 8, 2008, we issued a new investor 800,000 common shares of
Mymetics Corporation at $.155 per share, as fee for services rendered.
- - On January 8, 2008, we issued a new investor 200,000 common shares of
Mymetics Corporation at $.155 per share, as fee for services rendered.
- - On February 28, 2008, we issued a previous investor 1,000,000 common shares
of Mymetics Corporation for $500,000 or $.50 per share.
- - On March 17, 2008, we issued a previous investor and non-executive director
500,000 common shares of Mymetics Corporation at $.24 per share, as fee for
services rendered.
- - On March 17, 2008, we issued a previous investor and non-executive director
500,000 common shares of Mymetics Corporation at $.24 per share, as fee for
services rendered.
- - On June 23, 2008, we issued a previous investor 300,000 common shares of
Mymetics Corporation for $150,000 or $.50 per share.
- - On June 23, 2008, we issued a previous investor 1,300,000 common shares of
Mymetics Corporation for $780,000 or $.60 per share.
- - On July 17, 2008, we issued a new investor 2,000,000 common shares of
Mymetics Corporation at $.20 per share, as fee for services rendered.
- - On August 2, 2008, we issued a new investor 250,000 common shares of
Mymetics Corporation at $.20 per share, as fee for services rendered.
- - On December 23, 2008, we granted a previous investor 1,000,000 common
shares of Mymetics Corporation for $455,000 or $.46 per share. These shares
were issued to the investor in January 2009.
| – | | On March 13, 2009, a new investor was issued 250,000 common shares of Mymetics Corporation at $.200 per share, as fee for services rendered. |
|
| – | | On May 27, 2009, a previous investor was issued 250,000 common shares of Mymetics Corporation at $.160 per share, as fee for services rendered. |
|
| – | | On September 30, 2009, a previous investor was issued 250,000 common shares of Mymetics Corporation at $.135 per share, as fee for services rendered. |
|
| – | | On February 15, 2010, a new investor was issued 150,000 common shares of Mymetics Corporation at $.132 per share, as fee for services rendered. |
|
| – | | On February 15, 2010, a new investor was issued 50,000 common shares of Mymetics Corporation at $.132 per share, as fee for services rendered. |
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable
ITEM 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis of the results of operations and financial condition of
Mymetics Corporationus for the years ended December 31,
20082009 and
20072008 should be read in conjunction with
the Corporation'sour audited consolidated financial statements and related notes and the description of
the Company'sour business and properties included elsewhere herein.
19
RESULTS OF OPERATIONS -— YEAR ENDED DECEMBER 31, 20082009 COMPARED TO YEAR ENDED DECEMBER 31, 20072008
We received grant income of E13,000 and E65,000 for the years ended December 31, 2009 and 2008, respectively. We also received E136,000 related to license agreement fees for the year ended December 31, 2008, and
recorded a gain on extinguishment of debt of E774,000 in 2007. Our2009. The lack of product revenue is directly attributable to our focus on research and development. The Company predictsWe believe that this focus will continue for the foreseeable future, but we are unable to predict future economic conditions at
the time that our products are ready to be commercialized by our future
partners(s), as described elsewhere in this document.future. Future revenues could be affected by local and other economic conditions, technology, competitive forces, and/or challenges to the Company'sour intellectual property.
Costs and expenses decreasedincreased to E10,346,000 for the year ended December 31, 2009 from E6,985,000 for the year ended December 31, 2008, from E10,064,000 for the year ended December 31, 2007, a decreasean increase of 30.6%48,1%, due to no additional license costs, the purchase butof Bestewil BV and increased activity in anticipation of our planned human clinical trials.trials, offset by a credit for the change in fair value of acquisition-related contingent consideration.
Research and development expenses decreasedincreased to E2,692,000E6,364,000 in the current period from E5,981,000E2,692,000 in the comparative period of 2007, a decrease of 55.0%.When
excluding E4,760,000 for various HIV and malaria acquisitions in 2007, research
and development expenses for that year amounted to E1,221,000, against which the
2008, expenses represent an increase of 120.5%136.4%. This is mostly attributable to licensing costs and the increased activity required to achieve acceptance to begin phasePhase I clinical trials withof our HIV vaccine.
18
General & administrative expenses decreased by 12.2% to E3,693,000E3,244,000 in the year ended December 31, 20082009 from E3,945,000E3,693,000 in the comparable period of 2007, or 6.4%2008, , primarily as a result of improved efficiency inreduced costs for our continuing investor relations efforts, whichefforts. Interest expense has outweighed increased interest expense charges on
our unsecureddue to increased secured convertible loans.
loans outstanding.
CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Certain of the estimates and assumptions required to be made relate to matters that are inherently uncertain as they pertain to future events. While management believes that the estimates and assumptions used were the most appropriate, actual results could differ significantly from those estimates under different assumptions and conditions. The following is a description of those accounting policies believed by management to require subjective and complex judgments which could potentially affect reported results.
REVENUE RECOGNITION AND RECEIVABLES
As we are a development stage company, we have not generated any material revenues since we commenced our current line of business in 2001, and we domanagement does not anticipate generating any material revenues on a sustained basis unless and until a substantial licensing agreement or other commercial arrangement is entered into with respect to our technology.
However, should we engage in any form of commercial activity, a revenue recognition and receivables policy according to the following principles would be implemented:
Revenue related to the sale of products is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and
collectibilitycollectability is reasonably assured. Receivables are stated at their outstanding principal balances. Management reviews the
collectibilitycollectability of receivables on a periodic basis and determines the appropriate amount of any allowance. Based on this review procedure, management has determined that the allowances at December 31,
20082009 and
20072008 are sufficient.
The Company chargesWe charge off receivables to the allowance when management determines that a receivable is not collectible.
The CompanyWe may retain a security interest in the products sold.
20
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
CURRENCY TRANSLATION
The Company translates non-Euro
Our reporting currency is the Euro because substantially all of our activities are conducted in Europe. Non-Euro assets and liabilities of itsour subsidiaries are translated at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the averageclosing rate of exchange throughoutof the year.day of transaction. Unrealized gains or losses from these translations are reported as a separate component of comprehensive income. Transaction gains or losses are included in general and administrative expenses in the consolidated statements of operations. The translation adjustments do not recognize the effect of income tax because the
Company expectswe expect to reinvest the amounts indefinitely in operations.
IN-PROCESS RESEARCH AND DEVELOPMENT
In-Process research and development (referred to as IPR&D) represents the estimated fair value assigned to research and development projects acquired in a purchased business combination that have not been completed at the date of acquisition and which have no alternative future use. IPR&D assets acquired in a business
19
combination after January 1, 2009, are capitalized as indefinite-lived intangible assets. These assets remain indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period prior to completion or abandonment, those acquired indefinite-lived assets are not amortized but are tested for impairment annually, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, which include property and equipment, and the license contract, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The Company'simpairment testing involves comparing the carrying amount to the forecasted undiscounted future cash flows generated by that asset. In the event the carrying value of the assets exceeds the undiscounted future cash flows generated by that asset and the carrying value is not considered recoverable, impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. An impairment loss would be recognized in net income in the period that the impairment occurs.
GOODWILL
Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. Goodwill is assessed for impairment on an annual basis as of April 1st of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment model prescribes a two-step method for determining goodwill impairment. In the first step, we determine the fair value of our reporting currency isunit using an enterprise value analysis. If the Euro because substantiallynet book value of our reporting unit exceeds the fair value, we would then perform the second step of the impairment test which requires allocation of our reporting unit’s fair value to all of its assets and liabilities using the Company's activitiesacquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge will be recognized only when the implied fair value of our reporting unit’s goodwill is less than its carrying amount.
CONTINGENT CONSIDERATION
We account for contingent consideration in a purchase business combination in accordance with applicable guidance provided within the business combination rules. As part of our consideration for the Bestewil acquisition, we are conducted in Europe.
contractually obligated to pay additional purchase price consideration upon achievement of certain commercial milestones. Therefore, we are required to update our assumptions each reporting period, based on new developments, and record such amounts at fair value until such consideration is satisfied.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 of Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective dates of adoption and effects on results of operations and financial condition.
BUSINESS PLAN
We subcontract our research project modules to best of class research teams. We pay for and coordinate the work, consolidate the results, and retain all associated intellectual property. On rare occasions, we execute partnership agreements with companies offering technologies that can enhance our products. As we have initiated human clinical trials have been initiated, access to our ownowned laboratory facilities becomes necessary. We have therefore signedan option on a pre-lease agreement for such facilities in the new Biopole campus established by the local state government near Lausanne. We expect theseThese facilities are expected to become available by the end of 2010.2010 or early 2011.
20
We will continue in the foreseeable future to outsource to specialized third parties all human clinical trials of our vaccines, such process being complex and highly regulated.
Our business plan is predicated by the size and available resources of our company,resources, which preclude us from pursuing our human clinical trials beyond phase II, which normally involves no more than 250-300 volunteers and a cost in the range of $5-10 million per phase I and II trial cycle. In contrast, phase III trialstrial for a prophylactic vaccine involves up to 30,000 patients and several testing centers spread over two or more continents. The high number of volunteers, as well as the logistical complexity of such an undertaking, implyimplies a cost-per-volunteer in the $10,000 to $12,000 range, or up to $360 million per phase III trial. Similarly, the cost and complexity of the vaccine registration procedure with the relevant European agencies can be very expensive. The cost of registration with the U.S. Food and Drug Administration (FDA) is generally significantly higher due to a variety of factors, including, potential product liability claims.
In light of the significant phase III costs, Mymetics expectswe expect to sign a partnership agreement with one or more of the major pharmaceutical companies active in the preventive vaccine market as soon as their human clinical phase II trials are completed. Such partnership agreements typically involve an initial cash payment with covers the initial costs of R&D up to that time plus aan adequate margin of profit, followed by a series of payments associated with specific milestones and finally, royalties on any sales of end products, assuming these have been approved by the various regulatory authorities involved, such as the FDA.
We are trying to achieve this for
our malariathe HIV-1 vaccine by
2012,2011, which has successfully completed
athe first round of
phasesvaccination of the Phase I
in Belgium. Malaria is the other vaccine that already completed successfully a Phase Ia (adults in Switzerland) and
more recently a Phase Ib (children in Tanzania) with the final report expected in April 2010. Partnership for HIV-1 and malaria phase II
human trials in
Switzerland and
III might also involve non-profit entities like the
UK respectivelyBill and
is presently undergoing a new phase 1b
in Tanzania under endemic conditions on children and teenagers , followed at a
later date, probably in 2013Melinda Gates Foundation or
2014, by our HIV-AIDS vaccine, which began phase
I human trials in December 2008.governmental agencies like the NIH. These dates are based on our results, which have been encouraging so far.
21
We will enter into negotiations with potential pharmaceutical partners as soon as positive intermediary results will be observed in view of a partnership agreement as described above.
In this regard, we offer a brief summary of our achievements so far:
HIV-AIDS Vaccine
Considering that 85% of HIV transmission is due
Dream Vaccines Foundation
We attempted to
sexual contact, we strongly
believe that it is crucial to protect the genital and intestinal mucosa, which
represent the main entry door for HIV during the very first minutes or hours of
transmission. We therefore believe that an HIV vaccine that could successfully
achieve specific mucosal antibodies production in both the genital and
intestinal tracts might allow a new prophylactic vaccine approach, efficient at
preventing or slowing down HIV infection.
It is worth noting that such mucosal protection is naturally present in large
groups of people, for example in East African sex workers. It has further been
demonstrated by other scientists that a high correlation exists between such
natural protection and the presence of so-called IgA antibodies in the mucosa of
naturally protected people. Our goal was therefore to imitate Mother Nature by
trying to induce the production of such mucosal antibodies in vaccinated
subjects. Mymetics is one of the very few companies worldwide that is developing
a vaccine candidate that focuses on the induction of protective mucosal
antibodies, in addition to developing HIV antigens with minimal sequence
homologies with human proteins for preventing potential cross-reactivity. The
majority of the scientific and industrial community decided to take various
other routes, without equivalence in nature, for this reason, we believe that
the failure of other vaccine producers' apparently promising vaccines are not
relevant to us.
Our principal milestones since 2004 have been:
- - Our agreement with Pevion Biotech Ltd. (Bern, Switzerland) under which Pevion
granted us an option (later confirmed) to acquire an exclusive world-wide
license to use its unique virosome technology in the field of HIV-AIDS as a form
of "packaging" to protect the trimeric protein against degradation after the
vaccine has been injected into animals or human patients. The virosome
technology has been used since 1994 without problems in 43 countries with over
40 million doses of vaccines produced by other vaccines producers such as Berna
Biotech (Bern, Switzerland). Virosomes boost the effect of antigens,
particularly the production of mucosal antibodies, without the use of an
adjuvant. We believe that this feature gives us a significant strategic
advantage over our competitors as no mucosal adjuvant has been developed so far,
let alone approved, and the development and approval of such an adjuvant being
expected to take several years.
- - The completion of our preliminary pre-clinical study on rabbits in 2005 with
the objective to elicit neutralizing antibodies following injections of the
second generation of our proprietary recombinant trimeric (i.e. closely
mimicking the complex natural protein to ensure efficacy), mutated (to boost
efficacy and avoid unwanted side-effects), low cost (for distribution to
underserved and impoverished populations) and stable (to ensure easy and safe
distribution even in hard-to-access regions) rgp41 protein. This work was
conducted in cooperation with four French laboratories. Despite the low
induction of neutralizing antibodies at this time, these results were extremely
important and crucial for a better understanding of our HIV vaccine candidate
and paved the way for our second round of animal studies, conducted at the
Chinese Academy of Medical Sciences in Beijing.
- - In March 2006, non-human primates were immunized over six months with HIV gp41
peptides in view of reproducing and above all, improving on the earlier results
obtained in rabbits.
- - Our vaccine based on virosomes-gp41 peptides has elicited mucosal IgA and
blood IgG antibodies in more than 90% of vaccinated non-human primates. These
antibodies were found to be present in both the genital and intestinal
compartments, even in animals vaccinated by intra-muscular injection in the
absence of mucosal adjuvant. The mucosal IgA antibodies were harvested and
tested in vitro for their capacity to neutralize native (i.e. not laboratories
attenuated strains) HIV. They were found to
22
be more neutralizing than the best monoclonal antibodies known to date, even at
very low concentration. Vaccinated animals have recently been challenged with
SHIV (a
strain of HIV specific to the animals being tested) for evaluating the level of
protection against the virus.
- - In 2007, we were able to complete the production of our fourth generation
rgp41 for HIV clades (strains) B and C, respectively prevalent in developed and
developing countries. In October 2007 we launched a second non-human primate
study at the Institute of Laboratory Animal Science & Chinese Academy of Medical
Science (ILAS) in China, using macaques for evaluating the full vaccine. Animal
vaccinations were scheduled over a six month period. We reproduced the results
from the first macaque study done in 2006-2007 with macaques either protected
against the SHIV162p3 or having a viremia between 1-2 log lower than the control
group.
During 2008, we performed a viral challenge (vaginal route) on those animals
having received our second generation (two component) AIDS vaccine. The results
were better than expected and have been announced in detail at the 16th
Conference on Retroviruses and Opportunistic Infections held in Montreal
(Canada) in February 2009. We expect to make other presentations at appropriate
scientific conferences later in 2009.
- - In parallel to these animal studies, we initiated the lengthy and more costly
phase I clinical trial process of our latest generation candidate vaccine. We
received approval in sixteen days from the European Medicines Agency (EMEA) for,
and launched in Belgium, a clinical trial phase I in Q4 2008 for testing our
second generation vaccine formulated with virosomes. As with every phase I
study, its objective will be to evaluate the human tolerance and immunogenicity
of our HIV-AIDS vaccine. This phase I is expected to last 18 months. Considering
the safety record of the virosome technology since 1994, we are very confident
that this phase I trial will show positive results. We have therefore already
initiated the early regulatory procedure required for phase Ib of a new vaccine
formulation enhanced with a third vaccine component recently identified. We
expect to start this phase before the end of 2011, ending in or about mid 2013.
Along with our research on a gp41-based HIV preventive vaccine, we conduct
complementary studies to further and buttress the development of an effective
HIV-1 preventive vaccine.
With regards to financing, we are hopeful that we can obtain significant grants
since many of our competitors' projects have been cancelled or placed on
indefinite hold as a result of recent, widely publicized failures of certain
vaccines in human clinical trials.
Malaria Vaccine
We acquired this promising vaccine project, also based on the virosome platform,
in October 2007 from a business partner, Pevion Biotech Ltd.
This project is more advanced than our initial HIV-AIDS project as it has
already completed a first cycle of human trials phase I and II in 2007 with two
antigens only (five are planned for the complete product). These trials took
place in Switzerland and England with non infected adult European volunteers.
They were very encouraging in terms of level and duration of protection when
compared to the best known competing vaccine. In addition, our vaccine possesses
a unique feature which is the capacity to significantly boost the immune
response of patients having previously been infected by the malaria parasite. In
other words, our vaccine prototype has the potential to act as a therapeutic as
well as a preventive vaccine against malaria, which considerably extends the
size of its potential market.
A second human trial phase I with the same two antigens has recently begun in
Tanzania on young children and teenagers under actual, native conditions, as
African countries now demand that any vaccine tested on their populations be
first tested in developed countries. This was successfully completed in December
2008.
A new round of clinical trials phase I and II are scheduled for testing an
improved vaccine formulation containing 5 antigens.
23
Although we have acquired the full rights to this vaccine project, Pevion will
remain significantly involved in its future development, in accordance with the
terms of our agreement with them.
Dream vaccines Foundation
We believe that our vaccines may have a significant impact on marginalized poor
populations, especially in third world countries currently devastated by these
diseases.
Because this market segment is considered to be unprofitable, there is low
economic interest to research and produce vaccines for diseases specific to
these populations due to high research cost and low commercial return, creating,
we believe, a substantial health and economic disparity between groups of people
who have access to vaccines and those who do not. Sometimes this disparity is
geographical but mostly it is economic. For definition purposes we call these
groups of people underserved and impoverished populations.
We believe that access to vaccines for all populations is a human right. We are,
therefore, establishingestablish Dream Vaccines Foundation as a 501(c)(3)3) public charity in the United States. Dream Vaccines Foundation will have a majority of its
board of directors independent of Mymetics. We will have at least one memberDue to the cost and complexity of the board of directors of Dream Vaccines Foundation be a current officer of
Mymetics,registration process as well as to resource limitations, this endeavor has been terminated and any transaction between the two entitiesentity will be at arms' length
and fair to both parties.
We expect Dream Vaccines Foundation to play a significant role in the fight
against HIV/AIDS and malaria by financing and leading unbiased vaccine research
and development, which includes unconventional yet promising approaches, using
the latest biotechnology knowledge and methods. We further expect its research
funding to focus on neglected infectious diseases, including specific strains
and clades of these diseases that are prevalent among underserved and
impoverished populations. Finally, we anticipate that the Foundation will ensure
that vaccines reach underserved and impoverished populations at an affordable
price regardless of location, market limitations, or ability to pay.
Visit www.dreamvaccinesfoundation.com to learn more about Dream Vaccines
Foundation.
liquidated. LIQUIDITY AND CAPITAL RESOURCES
The Company
We had E509,000E2,959,000 cash at December 31, 2008,2009, compared to E159,000E509,000 at December 31, 2007.2008.
As we are a development stage company, we have not generated anysignificant material revenues since we commenced ourthe current line of business was commenced in 2001, and we do not anticipate generating anysignificant material revenues on a sustained basis unless and until a major licensing agreement or other commercial arrangement is entered into with respect to ourits technology.
As of December 31, 2008,2009, we had an accumulated deficit of approximately E32.0E42.0 million and we incurred losses of E6,938,000E10,186,000 in the twelve-month period ending December 31, 2008,2009, this compares with losses of E9,294,000E6,938,000 in the twelve month period ending December 31 2007.2008. These losses are principally associated with the research and development of our HIV vaccine technologies, the acquisition of its malaria project
21
from Pevion Biotech Ltd. and the acquisition of our new malaria project from Pevion Biotech Ltd.Bestewil and Mymetics B.V. We expect to continue to incur expenses in the future for research, development and activities related to the future licensing of our technologies.
Accounts payable of E1,540,000 at December 31, 2009, increased from E991,000 at December 31, 2008 decreased from E2,307,000 at
December 31, 2007 which included E2,000,000E400,000 milestone due to Pevion Biotech Ltd. on account of our acquisition of their malaria vaccine project, less E774,000 of
various debt amounts forgiven by creditors.starting phase I and E200,000 milestone due to PX Therapeutics related to Gp41 manufacturing technology.
Net cash used by operating activities was
E11,046,000 for the year ended December 31, 2009, compared to E7,718,000 for the year ended December 31,
2008, compared to E6,634,000 for the year ended December 31, 2007.2008. The major factor
24
in 20082009 was costs incurred in connection with our first AIDS vaccine human clinical trial phase I, which began in December 2008.
INVESTING ACTIVITIES USED CASH OF E23,000 FOR THE YEAR ENDED DECEMBER 31, 2008,
DUE to purchase of property and equipment less sale of short term investments.2009. Investing activities providedused cash of E240,000E18,582,000 for the year ended December 31, 2007.
Financing2009, for the acquisition of Bestewil BV. Investing activities providedused cash of E8,078,000E23,000 for the year ended December 31, 20082008.
Financing activities provided cash of E16,968,000 for the year ended December 31, 2009 compared to E6,599,000E8,078,000 in the same period last year.
Proceeds from issuance of common stock provided cash of E1,255,000NIL for the year ended December 31, 20082009 compared to E5,360,000E1,255,000 in the same period in 2007.2008. As has been the case since 2003, all private investors having subscribed and acquired shares of our common restricted stock of the Company have done so at a premium of 100% to 300% over the prevailing market price at the time of issuance. The latest subscriptions have been at USD 0.60 and USD 0.45 per share when the market was USD 0.13 per share.
Our major shareholder, and a member of our Board of Directors and another previous investor have also made available an aggregate E8,390,000E24,832,563 in the form of convertible, unsecuredsecured notes, the details of which are described in Note 3 of our financial statements.
Our
The Company’s budgeted cash outflow, or cash burn rate, for 20092010 is approximately E12,700,000E10,500,000 for research and fixed and normal recurring expenses, assuming weit will be able to obtain the necessary financing and without taking into account any grants weit may obtain.
Monthly
Our monthly burn rate is only relevant as regards administration expenses and amounts to E305,000.E250,000. Other expenditures related to vaccine research and development have either already been spent during the first quarter of 20092010 or will be very spent in the very near future as the service companies we contract to perform our clinical trials always require advance, generally non refundable, payments.
| | | | |
| 2010 budget | | 12 Months
-----------
2009 budget
| |
GMP lots production & Human Clinical Trials Phase Ib (AIDS) (HIV) | | E 7,500,000
Phases I | 4,500,000 | |
RSV and II (Malaria) 1,500,000
HSV | | | 2,200,000 | |
| Further Virosome R&D | | | 800,000 | |
Administration 3,700,000
-----------
| | | 3,000,000 | |
| | | |
Total E12,700,000
===========
| | E | 10,500,000 | |
| | | |
We expect Management expects that the cash outflow mayon R&D to increase but this should be compensated by administrative savings to give an overall decrease in 2010 over 2009 over 2008 as the Company
increases its
22
we increase our research and development activities, and proceedsproceed with its current, or preparesprepare for new, human clinical trials and compliance duties associated with the signing of a partnership agreement with a major pharmaceutical company.
Administration costs include E696,000E1,100,000 in gross salaries and related payroll costs for three of ourthe Company’s executive officers, and payments under various consulting contracts.
We did not pay our non-employee directors in 2007, but in 2008 they
were entitled to receive E10,000 each per year of service on the board.
As of March 20, 2009, our Luxembourg affiliate had no employees.
Mymetics Corporation has threehave four full-time employees: Mr. Christian J.-F. Rochet,
our Chief Executive Officer, Mr. Ernst Luebke, our Chief Financial Officer, and Dr. Sylvain Fleury, Ph.D., our Chief Scientific Officer and Mr. Ronald Kempers, Chief Operating Officer. Mr. Christian Rochet resigned as President and CEO of Mymetics effective July 1, 2009, and is currently employed by the Company as Senior Advisor to the President.
In addition, our Swiss subsidiary Mymetics
Management SarlS.A. has on its payroll
twothree assistants to
ourits CEO,
CFO, CSO and
CSO respectivelyCOO, as well as one part-time
and two full time employeesemployee performing various administrative services on
behalf ofour behalf. Mymetics
Corporation as
well as Dream Vaccines Foundation, to whom such services are invoiced on a cost
basis.
25
BV has one full time executive officer (CSO) plus one full-time and one part time assistant. Included in administration costs are E99,000 estimatedE500,000 legal fees paid to outside corporate counsel, E62,000E347,000 audit and review fees paid to ourthe Company’s independent accountants, and E407,000E361,000 in investor relationsfinance and acquisition expenses.
We intend to continue to incur additional expenditures during the next 12 months for additional research and development of our HIV, RSV and malariaHSV vaccines. These expenditures will relate to the continued testing of ourits prototype vaccines and are included in the monthly cash outflow described above. Additional funding requirements during the next 12 months are needed to continue the phasePhase I clinical trial that started in December 2008.2009.
In the past, we have financed our research and development activities primarily through debt and equity financings from various parties.
We anticipate that our normal operations will require approximately E12,700,000E10,500,000 in the year ending December 31, 2009.2010. We will seek to raise the required capital from equity or debt financings, donors and/or potential partnerships with major international pharmaceutical and biotechnology firms. However, there can be no assurance that weit will be able to raise additional capital on satisfactory terms, or at all, to finance ourits operations. In the event that we are not able to obtain such additional capital, we wouldwill be required to further restrict or even cease our operations.
RECENT FINANCING ACTIVITIES
During 2008,2009, our principal source of funds was not, as before, the sale of common restricted shares to non-US investors under Regulation S of the Securities Act of 1933. All1933, such sales werehaving been made at two to three timessignificant premiums over the current share market price. We alsoIn 2009, we received funds in the form of convertible unsecuredsecured loans from certain major shareholders. TheseSome of these loans were originally bridge financing but have now been converted to carry a 10% or lower interest rate. As disclosed in our filing 8-KThe loans, which had been bridge finance now mature June 30, 2010; others, if not converted, are only reimbursable upon the date that the Company has sufficient revenues to the Securities and Exchange Commission dated
February 14, 2008, Mymetics entered into the Next Generation Immunogen Inducing
Broadly Reactive Neutralizing Antibodies HIV-1 Consortium Agreement (the "NGIN
Agreement"), effective February 11, 2008, among fifteen European charitable
organizations, governmental entities, academic institutions and biotech
companies, including Mymetics. Under the NGIN Agreement the consortium will
receive a grant of E7.50 million ($11 million) from the European Commission to
investigate new human immunodeficiency virus ("HIV") antigen formulations for
triggering broadly neutralizing antibodies in the blood and mucosal
compartments, using various adjuvants and platform technologies based on
virus-like particles. Mymetics will support this European consortium through its
expertise with vaccination and HIV mucosal immune response and will provide
access to the HIV virosomes technology for which Mymetics has received an
exclusive license from Pevion Biotech Ltd.repay.
We have filed or are in the process of filing several othernew grant applications with European as well as U.S. institutions which are presently being prosecuted.in relation to our HIV-1 and malaria vaccines.
We anticipate using our current funds and those we receive in the future both to meet our working capital needs and for funding the ongoing vaccines pre-clinical research costs for our HIV-AIDS vaccine phaseand Phase I clinical trial,trials, which effectively began in Belgium during the last quarter of 2008.
We do2009.
23
Management does not anticipate that our existing capital resources will be sufficient to fund our cash requirements through the next six months. We do not have enough cash presently on hand, based upon our current levels of expenditures and anticipated needs during this period, and
we will need additional funding through future collaborative arrangements, licensing arrangements, and debt and equity financings under Regulation D and Regulation S under the Securities Act of 1933. We do not know whether additional financing will be available on commercially acceptable terms when needed.
26
If wemanagement cannot raise funds on acceptable terms when needed, we may not be able to successfully commercialize our technologies, take advantage of future opportunities, or respond to unanticipated requirements. If we are unable to secure such additional financing when needed, we will have to curtail or suspend all or a portion of our business activities and we could be required to cease operations entirely. Further, if we issuenew equity securities are issued, our shareholders may experience severe dilution of their ownership percentage.
The extent and timing of our future capital requirements will depend primarily upon the rate of our progress in the research and development of our technologies, our ability to enter into a partnership agreement with a major pharmaceutical company, and the results of our present and future clinical trials.
To date, we have generated no material revenues from our business operations. Weoperations and are unable to predict when or if we will be able to generate revenues from licensing our technology or the amounts expected from such activities. These revenue streams may be generated by us or in conjunction with collaborative partners or third party licensing arrangements, and may include provisions for one-time, lump sum payments in addition to ongoing royalty payments or other revenue sharing arrangements. However, we presently have no commitments for any
such payments.
OFF-BALANCE SHEET ARRANGMENTS
None
ITEM 7 A.7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required with respect to this Item 7,8, and as identified in Item 14 of this annual report, are included in this annual report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. (T) CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
SEC'sSEC’s rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation and supervision of
ourits Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of
ourits disclosure controls and procedures as of the end of the period covered by this report and determined that our disclosure controls and procedures were
effective.
This annual report does not
include an attestation reporteffective due to existence of
the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this annual report.
Attacheda material weakness as
exhibits to this Form 10-K are certifications of Mymetics' Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"), which are
required in
27
accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). This "Controls and Procedures" section includes
information concerning the controls and controls evaluation referred to in the
certifications.
Changes in internaldescribed below.24
Management’s Annual Report on Internal Control over Financial Reporting
As disclosed in our 2007 Annual Report on Form 10-K, we reported material
weaknesses in our internal controls over financial reporting as discussed in
more detail below.
As of December 31, 2008, we have remediated the previously reported material
weaknesses in internal controls over financial reporting. The reported material
weaknesses
Management is responsible for establishing and remediation results are as follows:
Material Weaknesses in Internal Controls
During the conduct of our assessment ofmaintaining internal control over financial reporting, we identified three material weaknessesas such term is defined in Exchange Act Rule 13a-15(f). The Company’s management evaluated, under the supervision and have advisedwith the audit
committee thatparticipation of our Chief Executive Officer and Chief Financial Officer, the following material weaknesses existed ateffectiveness of the Company’s internal control over financial reporting as of December 31, 2007.
As defined2009.
Based on its evaluation under the framework in Internal Control — Integrated Framework issued by the Public Company Accounting Oversight Board Auditing Standard
No. 5,Committee of Sponsoring Organizations of the Treadway Commission, the Company’s management concluded that its internal control over financial reporting was not effective as of December 31, 2009, due to existence of a "material weakness"material weakness, as described below. A material weakness is a control deficiency, or a combination of control deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses existed in (i) the lack of independent oversight by
This annual report does not include an audit committee of independent membersattestation report of the BoardCompany’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of Directors, (ii) the lackSecurities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Attached as exhibits to this Form 10-K are certifications of controls over cash receipts and related equity issuances and (iii) the lack
of controls over the period end closing process.
While these material weaknesses did not have an effect on our reported results
or result in the restatement of any previously issued financial statements or
any other related disclosure, they nevertheless constituted deficiencies in our
controls. In light of these material weaknesses and the requirements enacted by
the Sarbanes-Oxley act of 2002, and the related rules and regulations adopted by
the SEC, ourMymetics’ Chief Executive Officer (“CEO”) and Chief Financial Officer concluded that,(“CFO”), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as of December 31, 2007, ouramended (the “Exchange Act”). This “Controls and Procedures” section includes information concerning the controls and procedures needed improvementcontrols evaluation referred to in the certifications.
Material Weakness Identified
A material error was noted during the determination of the fair value calculations of acquisition-related contingent consideration and acquired intangible assets related to the Company’s acquisition of Bestewil B.V. and its fully owned subsidiary Virosomes Biologicals B.V. (now Mymetics B.V.) in compliance with US GAAP Subtopic 820-10 (formerly FAS 157).
The Company didn’t engage a qualified consultant to review and disclose this kind of complex transaction; formula errors and inconsistencies in inputs were noted by our independent auditors and have been since corrected. In addition, several required disclosures related to the acquisition were not effective at a reasonable assurance level. Despite those deficienciesinitially presented by management.
Changes in our
internal controls, management believes that thereControl over Financial Reporting
No changes of internal control over financial reporting were
no material inaccuracies
or omissions of material factmade in
the annual report for the year ended December 31,
2007.
Remediation
Since the discovery of the material weaknesses described above, management
believes that it has corrected the first and third weaknesses by establishing an
audit committee of nonexecutive directors, one of whom is Dr. Thomas Staehelin,
an independent member of our Board of Directors and our audit committee
financial expert. The second weakness was addressed by having the assistant to
the CFO, who is not a direct employee but an independent sub-contracted party;
perform a reconciliation of stock issuances to the detail accounting and stock
records on a quarterly basis.
Management Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting to provide reasonable assurance regarding the
reliability of our financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. generally accepted
accounting principles. Internal control over financial reposting includes those
policies and procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of Mymetics; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with authorizations of management and directors of
Mymetics; and (iii) provide reasonable assurance regarding prevention and timely
detection of unauthorized acquisition, use, or disposition of Mymetics' assets
that could have a material effect on the financial statements.
28
Management assessed our internal control over financial reporting as of December
31, 2008 and considers that the material weaknesses identified previously have
been resolved with respect to the accounts for the period to December 31, 2008.
This has been possible due to the deployment of increased staff numbers in the
accounting department, which has allowed for improved separation of function.
Management now considers that internal control over financial reporting is
effective when reviewed according to the COSO Integrated Framework. We cannot,
however, provide assurance that neither we nor our independent auditors will in
the future identify further material weaknesses or significant deficiencies in
our internal control over financial reporting that we have not discovered to
date.
2009. Inherent Limitations on Effectiveness of Controls
The Company's
Our management, including the CEO and CFO, does not expect that ourthe Disclosure Controls or our internal control over financial reporting will prevent or detect all errorerrors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system'ssystem’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within theour company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion
25
of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions of deterioration in the degree of compliance with policies or procedures.
ITEM 9B. OTHER INFORMATION
26
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
Our number of directors of the Company is established at six.
Our six, person board is divided into three classes, designated as Class I, Class II and Class III. The term of the Class I directors will expire at ourthe Company’s 2010 annual meeting of stockholders, the term of the Class II directors will expire at our 2008the 2011 annual meeting of stockholders, and the term of the Class III directors will expire at our 2009the 2012 annual meeting of stockholders. A plurality of the votes of the shares of ourthe registrant’s common stock present in person or represented by proxy at the annual meeting and entitled to vote on the election of directors are required to elect the directors. On July 2, 2007, Dr. Thomas Staehelin was elected to fillThe Board members have three year terms and in the vacancy caused by
the resignation of Dr. Zimmer who resigned on June 7, 2005.
On January 1, 2008, Mr. Ernest M. Stern, our outside U.S. counsel, was elected
to fill the vacancy caused by the resignation of Mr. Michael Allio, who resigned
on July 30, 2003.
The position left vacant by the resignation of Mr. Peter McCann, who resigned on
February 14, 2002, will be reserved for a potential investor and/or candidate
related to the securingabsence of a strategic partner.vote at an annual meeting of stockholders, they continue for successive three year terms until they are replaced or resign.
The following table sets forth information regarding each of our current directors and executive
officers.
EXPIRATION
OF TERM
AS A
NAME CURRENT POSITION WITH THE COMPANY AGE DIRECTOR
- -------------- -------------------------------------- --- ----------
Christian Rochet Chief Executive Officer, President 59 2008 (1)
(Class II) And Director (appointed July 31, 2003)
Ernst Luebke Chief Financial Officer, Treasurer, 63 2007 (1)
(Class I) Secretary and Director (appointed
July 31, 2003)
Sylvain Fleury, Ph.D. Chief Scientific Officer (appointed 45 2006 (1)
(Class III) November 3, 2003) and Director
(appointed January 11, 2006)
Thomas Staehelin Director 61 2012
(Class II)
Ernest M. Stern Director 58 2010
(Class I)
Marc Girard, DVM, D.Sc. Head of vaccine development 73 n/a
(appointed January 15, 2004, resigned
March 9, 2009, to continue as a
consultant to the Company)
(1) Under the Company's Bylaws that are subject to the Delaware General
Corporation Law, directors are elected either (i) until the expiration
of the term for which they are selected and until a successor has been
selected and qualified or (ii) until their earlier death, resignation
or removal. Accordingly, since we have not wanted to incur the cost of
a shareholders meeting and, therefore, have not formally reelected the
current directors for another term, the current directors will continue
in their Board positions until their death, resignation or removal
unless we decide to hold a shareholders meeting and extend their terms
or select and qualify successors.
30
CHRISTIAN ROCHETofficers:| | | | | | | | | | | |
| | | | | | | | | EXPIRATION |
| | | | | | | | | OF TERM AS |
| NAME | | CURRENT POSITION WITH THE COMPANY | | AGE | | A DIRECTOR |
Jacques-François Martin
(Class II) | | Chief Executive Officer, President and Director (appointed July 1, 2009) | | | 65 | | | | 2012 | |
Ernst Luebke
(Class I) | | Chief Financial Officer, Treasurer, Secretary and Director (appointed July 31, 2003) | | | 64 | | | | 2010 | |
Sylvain Fleury, Ph.D.
(Class III) | | Chief Scientific Officer (appointed November 3, 2003) and Director (appointed January 11, 2006) | | | 46 | | | | 2012 | |
Christian Rochet
(Class II) | | Senior Advisor to the President | | | 60 | | | | 2011 | |
Thomas Staehelin
(Class II) | | Director | | | 62 | | | | 2012 | |
Ernest M. Stern
(Class I) | | Director | | | 59 | | | | 2010 | |
| Marc Girard, DVM, D.Sc. | | Consultant to the President | | | 74 | | | | n/a | |
| Ronald Kempers | | Chief Operating Officer (appointed July 1st 2009) | | | 42 | | | | n/a | |
JACQUES-FRANCOIS MARTIN
Mr. RochetMartin is the Chief Executive Officer, President and a Director of Mymetics. Mr. Martin is also chairman and CEO of Parteurop, a biotech consulting company, and has a long history in biotechnology and public health. Prior to joining Mymetics in July 2009, he had been president of The OECD Vaccine Fund he was CEO of Rhone-Poulenc Pharma in Hamburg, Germany before joining Institut Mérieux as vice-president of sales and marketing in 1976. He became CEO of Pasteur-Mérieux in 1998, where he was instrumental in the merger with Connaught Laboratories Ltd in Toronto. From 1996 to 1999, Mr.
27
Martin was a member of the board of the French Institut National de la Santé et de la Recherche Médicale (INSERM). He is a past member of the GAVI Working Group and the Strategic Advisory Council of the Bill & Melinda Gates Children’s Vaccine Programme and was a board member of the International AIDS Vaccine Initiative (IAVI). Mr. Martin holds an MBA from the Ecole des Hautes Etudes Commerciales, is a member of the French Academy of Technologies and an officer in the French Order of Merit.
Key Director Qualifications
Mr. Martin has extensive vaccine industry experience to assist raising the Company’s credibility in the scientific community and to assist with introductions to strategic partners, including large pharmaceutical companies.
ERNST LUEBKE
Mr. Luebke was appointed as Chief Financial Officer and a Director on July 31, 2003. Prior to joining Mymetics, Mr. Luebke spent over 21 years as an independent international business consultant and was the founder of several companies active in the medical and biotech sectors. Together with Mr. Rochet, he became a major shareholder of Mymetics’ former French subsidiary Mymetics S.A. (f.k.a. Hippocampe S.A.) in 1997, and was a director of that company between 1999 and 2001. On July 31, 2003, Mr. Luebke was elected as Director and appointed as Chief Financial Officer and Treasurer of Mymetics. Mr. Luebke was further appointed Secretary of Mymetics on August 29, 2003.
Key Director Qualifications
Mr. Luebke has extensive international finance and biotech industry experience to assist the Company with its financing efforts and collaborations with commercial and public institutions in the vaccine field.
SYLVAIN FLEURY, Ph.D.
Dr. Fleury was appointed as our Chief Scientific Officer in November 2003 and as a Director on January 11, 2006. Following a scientific audit in 1997, Dr. Fleury was the first consultant recommending to the Swiss investors the development of the parental biotech company that became later Mymetics Corporation. Dr. Fleury has a broad knowledge in molecular and cellular Immunology and antigen design, with over 20 years of expertise in infectious diseases and HIV-1/AIDS field. Researcher at the Centre Hospitalier Universitaire Vaudois (CHUV) in Lausanne from 1997 to 2003, working on the immune regeneration in HIV-1 infected subjects and gene therapy. Dr. Fleury obtained his B.Sc. in Microbiology in 1985 from the University of Montreal (Canada), his M.Sc. in Virology in 1988 from the Institut Armand-Frappier (Laval, Canada) and his Ph.D. in Immunology in 1992 from the Clinical Research Institute of Montreal, Canada. Dr. Fleury also worked at the Columbia Hospital in New-York before doing his post-doc training from 1993 to 1996 at the National Institutes of Allergy and Infectious Diseases (NIAID/NIH) in Bethesda (Maryland, USA). Consultant for several biotechs, Dr. Fleury is a recipient of numerous awards; published in leading scientific journals with a high impact such as Science, Cell, Nature, Nature Medicine and Circulation.
Key Director Qualifications
Dr. Fleury has extensive scientific experience in the vaccines that the Company is developing and in the delivery system of these vaccines to maximize the effectiveness of the vaccines.
RONALD KEMPERS
Chief Operating Officer (since July 1, 2009). Senior business leader and entrepreneur, over 15 years of international business management, business development
28
and finance experience with leading global corporations (Hewlett Packard, Oracle) and medical and IT start-ups. Mr. Kempers has a M.Sc. in Business Administration from the Erasmus University, Rotterdam School of Management and has continued further education with various executive courses, among which at IMD, Lausanne.
CHRISTIAN ROCHET
Mr. Rochet is a Director of Mymetics and was its former Chief Executive Officer. Prior to joining Mymetics in July 2003, he had been an independent business consultant on development and diversification strategies for over 21 years. He became a major shareholder of ourMymetics’ former French subsidiary Mymetics S.A. (f.k.a. Hippocampe S.A.) in 1997, on the scientific advice of Dr. Sylvain Fleury, Ph. D., and was a director of that company between 1999 and 2001. On July 31, 2003, Mr. Rochet was elected as President and Director and appointed as Chief Executive Officer of the Company. ERNST LUEBKE
Mr. Luebke was appointedRochet resigned as our Chief Financial OfficerPresident and CEO of Mymetics effective July 1, 2009, and is currently employed by the Company as aSenior Advisor to the President.
Key Director on
July 31, 2003. Prior to joining Mymetics,Qualifications
Mr. Luebke spent over 21 years as an
independentRochet has international business consultant and was the founder of several
companies active in the medicalfinance and biotech sectors. Together with Mr. Rochet,
he became a major shareholder of our former French subsidiary Mymetics S.A.
(f.k.a. Hippocampe S.A.) in 1997, and was a director of that company between
1999 and 2001. On July 31, 2003, Mr. Luebke was elected as Director and
appointed as Chief Financial Officer and Treasurer of the Company. Mr. Luebke
was further appointed Secretary ofindustry experience to assist the Company on August 29, 2003.
SYLVAIN FLEURY, Ph.D.
Dr. Fleury was appointed as our Chief Scientific Officerwith its financing efforts in November 2003Europe and as
a Director on January 11, 2006. In addition to serving as our Chief Scientific
Officer, Dr. Fleury has maintained until June 2006 his academic research
activity on in heart transplantation at the Department of Experimental Surgery
from the Centre Hospitalier Universitaire Vaudois (CHUV) in Lausanne,
Switzerland. Dr. Fleury moved to the CHUV in January 1997 where he initially
worked as Assistant to Professor Giuseppe Pantaleo until June 2000, a leading
expert in AIDS. During that time, he studied the immune regeneration of HIV
infected subjects under highly active anti-retroviral therapy. He then moved to
the Division of Cardiology (CHUV) as Project leader for developing new research
activities in gene therapy applied to heart transplantation, in collaborationUnited States and strategic alliances with Novartis,vaccine companies and genetic studies involving chemokinesFrench and chemokine receptors
in heart rejection. In January 2004, Dr. Fleury moved to the Department of
Experimental Surgery directed by Professor Yann Barrandon, a world leader on
stem cells , for completing its research on lentiviral gene therapy . Dr. Fleury
obtained his B.Sc. in Microbiology in 1985 from the University of Montreal
(Canada), his M.Sc. in Virology in 1988 from the Institut Armand-Frappier
(Laval, Canada)Swiss educational and his Ph.D. in 1992 from the Clinical Research Institute of
Montreal in Canada with Rafick Sekaly. During his Ph.D., Dr. Fleury worked on
the CD4 molecule, which is the primary HIV cellular receptor. From 1993-1996,
Dr. Fleury completed his postgraduate studies in Bethesda (USA) at the NIAID,
National Institutes of Health (NIH), with Dr. Ronald N. Germain, a world
renowned Immunologist. Dr. Fleury is the recipient of several awards and prizes
and has published articles in his field of study in scientific journals with a
high impact such as Science, Cell, Nature, Nature Medicine, Circulation.
institutions.
DR. THOMAS STAEHELIN
Dr. Staehelin is Senior Managing Partner of Fromer, Schultheiss and Staehelin, a law firm located in Basel, Switzerland. Dr. Staehelin focuses primarily on corporate and tax law. Dr. Staehelin has served as a member of this law firm since 1975. Dr. Staehelin also serves on the boards of various Swiss companies and is Chairman of the Chamber of Commerce of the Basel region. In addition, Dr. Staehelin is Managing Director of the
"Swiss“Swiss Association of privately held Swiss
Companies"Companies” and is a member of the Board of
"economiesuisse,"“economiesuisse,” The Swiss Business Federation. Dr. Staehelin received his Ph.D. degree in Law from the University of Basel. He formerly served as a member of the cantonal parliament of Basel.
31
Key Director Qualifications
Dr. Staehelin has significant international business experience, financial expertise through his role as a lawyer and board member of many companies conducting business on a global basis and knowledge of the Swiss legal system to assist the Company with its Swiss subsidiaries.
ERNEST M. STERN
Ernest M. Stern was appointed as a Director in January 2008. Mr. Stern is a partner in the law firm of Seyfarth ShawAkerman Senterfitt LLP, which serves as outside U.S. counsel of Mymetics, where he specializes in securities and corporate law, representing public companies, investment banks and venture funds, and is the engagement partner for Mymetics. Mr. Stern received his undergraduate degree from Bowdoin College (Phi Beta Kappa, , summa cum laude)laude), and his J.D and LL.M (Taxation) degrees from Georgetown University Law Center (Case and Note Editor,Law and Policy in International Business)Business).
Key Director Qualifications
Mr. Stern has extensive international business experience and contacts through his representation as a U.S. lawyer of many companies engaged in international business, knowledge of state and federal laws applicable to the Company and finance knowledge.
29
MARC GIRARD, DVM, D. SC.
Professor Girard has been a Consultant to Mymetics since January 2004. Prior to joining Mymetics, Professor Girard served as Director General, Fondation Merieux, in Lyon, France between 2001 and 2003. Between 1999 and 2001, Professor Girard served as Director, European Research Center for Virology and Immunology (CERVI), Lyon, France. Professor Girard has also taught as a professor since 1966, most recently between 1984 and 1999 at the Institut Pasteur, Paris, France where he also served as the Head of Laboratory of Molecular Virology, Department of Virology, Institut Pasteur, Paris between 1980 and 1999. During his career, Professor Girard has served the medical community in a variety of capacities, including as Head, HIV Vaccine Task Force, French National Agency for AIDS Research (ANRS), Paris between 1988 and 1998, the Chairman, Department of Virology, Institut Pasteur, Paris between 1997 and 1999 and the Chairman, European Consortium for an HIV Vaccine (EuroVac), Brussels between 1999 and 2002. Professor Girard received his D.V.M. (Alfort Veterinary College) in 1960, his D. Sc. (University of Paris) in 1967 and completed a post doctoral fellow in 1966 through studies with Prof. James Darnell, MIT, then Albert Einstein College of Medicine and Prof. David Baltimore and Renato Dulbecco of the Salk Institute. Professor Girard is also the published author of several articles in his field of study.
SCIENTIFIC ADVISORY BOARD
During the period to September 30, 2009 a ten member Scientific Advisory Board (SAB) was created, made up of eminent intellectuals from around the world with expertise related to the Company’s products as follows:
| • | | Chairman of the Scientific Advisory Board — Dr. Stanley Plotkin, Emeritus Professor Wistar Institute, University of Pennsylvania, consultant to Sanofi Pasteur, developed the rubella vaccine in 1960s; worked extensively on the development and application of other vaccines including polio, rabies, varicella, rotavirus and cytomegalovirus as well as senior roles at the Epidemic Intelligence Service, U.S. Public Health Service; Aventis Pasteur (medical and scientific director); and Sanofi Pasteur (executive advisor). |
|
| • | | Vice Chairman of the Scientific Advisory Board — Dr. Marc Girard, has over 20 years of experience in the HIV-1 research field, past Director of the Mérieux Foundation and a consultant to the WHO and former Chairman of EuroVac (European Consortium for HIV vaccine). |
|
| • | | Dr. Morgane Bomsel, Cochin Institute, France |
|
| • | | Dr. Ruth Ruprecht, Harvard University, Dana Farber Cancer Institute, Boston USA |
|
| • | | Dr. Ronald H. Gray, Johns Hopkins University, Baltimore, USA |
|
| • | | Dr. Malegapuru William Makgoba, University of KwaZulu-Natal, Durban, South Africa |
|
| • | | Dr. Souleymane Mboup, Cheikh Anta DIOP University, Dakar, Sénégal |
|
| • | | Dr. Juliana McElrath, University of Washington, Seattle, USA |
|
| • | | Dr. Odile Puijalon, Pasteur Institute, Paris, France |
|
| • | | Dr. Caetano Reis e Sousa, Cancer Research UK, London, UK |
AUDIT COMMITTEE
Our
The Company’s board of directors has appointed Ernest M. Stern and Dr. Thomas Staehelin to serve as members of ourits Audit Committee. OurThe board of directors has determined that Dr. Staehelin qualifies as our "audit“audit committee financial expert"expert” and is independent as that term is defined under NASDAQ Rule 4200(a)(15).
30
CODE OF ETHICS
We have
The registrant has adopted a Code of Ethics that applies to ourits executive officers, including ourits chief executive officer, as well as to the entire staff of the Company. A copy of the Code of Ethics is filed as an exhibit to this Form 10-K annual report.
report for the year ended December 31, 2009, hereby incorporated by reference.
MEETINGS OF THE BOARD OF DIRECTORS
In 2008, the2009, our Board of Directors held ninefourteen meetings, fourtwo of which were conducted by telephone conference call, and acted by unanimous written consent four times. All directors attended at least 75% of the total number of Board meetings. The Board of Directors has determined that Mr. StaehelinStern is independent within the meaning of Section 10A and Rule 10A-3 of the Exchange Act. The Company does not have a formal policy regarding attendance by members of the board of directors at theour annual meetings of stockholders since itwe did not hold an annual meeting in 2008.2009.
Shareholders may contact
theour Board of Directors by mail addressed to the entire board of directors, or to one or more individual directors, at
14, ruec/o Mymetics S.A., Biopole, Route de la
Colombiere, CH-1260 Nyon,Corniche 4, CH-1066 Epalinges, Switzerland, Attn: Secretary. All communications directed to
theour board of directors or individual directors in this manner will be relayed to the intended recipients.
32
We do not have a separate nominating committee and do not believe that such a committee is required at this time given our emphasis on research and development rather than an active revenue generating business and our limited shareholder base.
DIRECTORS'
DIRECTORS’ FEES
Our non-Executive Directorsnon-executive directors became eligible for compensation of E10,000 each for their services as directors in 2008.
2009.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires ourthat executive officers, directors and persons who own more than 10% of a registered class of ourthe Company’s equity securities to file reports of ownership and changes of ownership with the SEC within specified due dates. These persons are required by SEC regulations to furnish usthe Company with copies of all such reports they file. Based solely on the review of the copies of such reports furnished, to us,
we believe that, with respect to our fiscal year ended December 31, 2008,2009, all of our executive officers, directors and 10% stockholders filed all required reports under Section 16(a) in a timely manner, except as follows: Dr Fleury, Dr Staehelin and Professor Girard, in bothall cases due to incompatibility between the respectively Swiss and French legal procedures with the electronic filing procedure of the SEC, and Thomas Staehelin.
SEC.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee of the Board of Directors (the "Committee"“Committee”)is composed of one employee Director, Mr. Jacques-François Martin, our President and CEO, and two non-Executive directors, Mr. Ernst M. Stern and Mr. Thomas Staehelin. The Compensation Committee does not have a charter.
The Committee met with management to review and discuss the Compensation Discussion and Analysis disclosures that follow. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K, and the Board has approved that recommendation.
The Compensation Committee is composed of two employee Directors, Mr. Christian
J.F. Rochet, our President and CEO, and Mr. Ernst Luebke, our CFO. The
Compensation Committee does not have a charter.
31
Compensation Discussion and Analysis
The Committee is responsible for reviewing and approving the compensation paid to executive officers of the Company, including salaries, bonuses, stock grants and stock options. Following review and approval by the Committee, action pertaining to executive compensation for the three named executive officers, our
President and CEO, Christian J.F. Rochet, our CFO, Ernst Luebke, and our CSO,CFO, Sylvain Fleury, CSO, and Ronald Kempers, COO, for 20082009 is reported to the full Board of Directors for further consideration.
Compensation Philosophy
The
Company'sCompany’s compensation of executive officers and its philosophy regarding executive compensation is comprised of the following characteristics:
(i) Competitive base salary;
(ii) Granting stock awards as a portion of the total compensation,
which vest over a certain number of years; and
(iii) Granting performance-based bonuses either in cash or common
stock.
33
The Company believes its | (i) | | Competitive base salary; |
|
| (ii) | | Granting stock awards as a portion of the total compensation, which vest over a certain number of years; and |
|
| (iii) | | Granting performance-based bonuses either in cash or common stock. |
We believe our executive compensation should be designed to allow the
Companyus to attract, motivate and retain executives of a high caliber to permit the Companyus to remain competitive in itsour industry. The Company desiresWe desire to maintain for now a uniformity of base salary compensation in light of the contributions each of the three principal executives has either made, or is expected to the Company'smake, to our ability to remain in business and achieve the level of success that it haswe have reached in meeting scientific results, primarily to date with the HIV-AIDS vaccine. The Company takesWe take into account the compensation paid at similarly situated companies, both within and outside of itsour industry, when determining executive compensation. The Company believesWe believe that by granting shares of the
Company'sour Common Stock to itsour executives which vest over a certain number of years, itwe will be able to encourage executives to remain with the Company.us.
Additionally, individual performance of the executive is considered as a factor in determining executive compensation, as well as the overall performance of the Company, which, since the Company iswe are pre-revenue and primarily involved in research and development, includes, but is not limited to, fund raising and meeting the Company'sour business plan milestones on time and within budget, including successful conclusion of strategic partner agreements and achieving the regulatory approvals to commercialize the HIV-AIDS and malaria vaccines, rather than earnings, revenue growth, cash flow and earnings per share which would be more typical for a company generating revenues and earnings. The Committee also uses subjective criteria it deems relevant in its reasonable discretion.
Compensation of Chief Executive Officer
Mr. Rochet joined usthe Company on July 31, 2003 as its Chief Executive Officer. Mr. Rochet was paid a base salary of E96,000 in calendar year 2004, the first full year of his employment by the Company. The Company had very little cash and Mr. Rochet deferred a significant portion of his salary in 2004, 2005, and 2006. As a result of Mr. Rochet'sRochet’s efforts, the Company waswe were able to stay in business and achieve important scientific goals for itsour HIV-AIDS vaccine that encouraged investment in the Company.us. Mr. Rochet'sRochet’s salary was first increased to E120,000 in 2005, then E180,000 in 2006 and E216,000 in 2007 based upon his success in fund raising for the Company and negotiating an agreement with Pevion Biotech Ltd. to acquire the malaria vaccine. Mr. Rochet resigned as our President and CEO effective July 1, 2009 to become the Senior Advisor to the new President on a part-time basis (to be reviewed May, 2010) with an annual salary of E108,000. Mr. Rochet is further entitled to finder’s fees of 3% on all funding amounts raised through his efforts.
Mr. Jacques-François Martin joined us on July 1, 2009 as our President and Chief Executive Officer for an annual compensation of E240,000.
32
Compensation of Chief Financial Officer
Mr. Luebke joined us on July 31, 2003 as our Chief Financial Officer. Mr. Luebke was paid a base salary of E96,000 in calendar year 2004, the first full year of his employment by the Company.us. The Company had very little cash and Mr. Luebke deferred a significant portion of his salary in 2004, 2005, and 2006. As a result of Mr. Luebke'sLuebke’s efforts, the Company was able to stay in business and achieve important scientific goals for its HIV-AIDS vaccine that encouraged investment in the Company. Mr. Luebke'sLuebke’s salary was first increased to E120,000 in 2005, then E180,000 in 2006 and E216,000 in 2007 based upon his role in assisting with the Company'sCompany’s fund raising activities and negotiations in concluding an agreement with Pevion Biotech Ltd. to acquire the malaria vaccine. As of January 1, 2010, Mr. Luebke’s salary has been converted into CHF300,000, which is approximately equal to his previous salary of E216,000, which included also the employer’s share of social contributions. A contractual clause allowing for a 3% success fee upon sale of the Company to, or licensing of technology to, a major partner is to be deleted in favor of stock options.
Compensation of Chief Scientific Officer
Dr. Fleury was
ourthe Company’s Scientific Consultant from July 31, 2003 until November 3, 2003 when he was appointed Chief Scientific Officer. Dr. Fleury was paid a base salary of E96,000 in calendar year 2004, the first full year of his employment by the Company. The Company had very little cash and Mr. Fleury deferred a significant portion of his salary in 2004, 2005, and 2006. As a result of Mr.
Fleury'sFleury’s efforts, the Company achieved important scientific goals for its HIV-AIDS vaccine that encouraged investment in the Company. Dr.
Fleury'sFleury’s salary was first increased to E120,000 in 2005, then E180,000 in 2006 and E216,000 in 2007 based upon his success in the animal studies leading to the
Company'sCompany’s ability to commence Phase I clinical trials for its HIV-AIDS vaccine in addition to his role in the negotiations in concluding an agreement with Pevion Biotech Ltd. to acquire the malaria vaccine.
34
As of January 1, 2010, Dr Fleury’s salary has been converted into CHF300,000, which is approximately equal to his previous salary of E216,000, which included also the employer’s share of social contributions. A contractual clause allowing for a 3% success fee upon sale of the Company to, or licensing of technology to, a major partner is to be deleted in favor of stock options.Compensation of Chief Operating Officer
Mr. Kempers joined us on July 1, 2009 as Chief Operating Officer. Mr. Kempers was paid a proportion of a base salary of E216,000 in calendar year 2009.
33
SUMMARY COMPENSATION TABLE
The following table sets forth for the last three fiscal years information on the annual compensation earned by our directors and officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Changes in | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Value and | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nonqualified | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Equity | | Deferred | | |
| | | | | | | | | | | | | | | | | | | | | | | Stock | | Option | | Incentive | | Compensation | | |
| | | | | | | | | Salary | | Bonus | | Awards | | Awards | | Plan | | Earnings | | Compensation | | All Other |
| Name and Principal Position | | | | | | Year | | (E) | | (E) | | E) | | E) | | (E) | | E) | | (E) | | Total |
| Christian J.-F. Rochet (PEO) | | | (1a | ) | | | 2009 | | | E | 180,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 180,000 | (5) |
| | | | | | | | 2008 | | | E | 216,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 216,000 | (5) |
| | | | | | | | 2007 | | | E | 216,000 | (5) | | | — | | | E | 807,000 | | | | — | | | | — | | | | — | | | | — | | | E | 1,023,000 | (5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Jacques-François Martin (PEO) | | | (1b | ) | | | 2009 | | | E | 120,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 120,000 | (5) |
| | | | | | | | 2008 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | 2007 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ernst Luebke (PFO) | | | (2 | ) | | | 2009 | | | E | 216,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 216,000 | (5) |
| | | | | | | | 2008 | | | E | 216,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 216,000 | (5) |
| | | | | | | | 2007 | | | E | 216,000 | (5) | | | — | | | E | 672,000 | | | | — | | | | — | | | | — | | | | — | | | E | 888,000 | (5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sylvain Fleury, Ph. D. | | | (3 | ) | | | 2009 | | | E | 216,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 216,000 | (5) |
| | | | | | | | 2008 | | | E | 216,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 216,000 | (5) |
| | | | | | | | 2007 | | | E | 216,000 | (5) | | | — | | | E | 672,000 | | | | — | | | | — | | | | — | | | | — | | | E | 888,000 | (5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Marc Girard, DVM, D.Sc. | | | (4 | ) | | | 2009 | | | E | 48,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 48,000 | (5) |
| | | | | | | | 2008 | | | E | 48,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 48,000 | (5) |
| | | | | | | | 2007 | | | E | 48,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 48,000 | (5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ronald Kempers | | | (6 | ) | | | 2009 | | | E | 108,000 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | E | 108,000 | (5) |
| | | | | | | | 2008 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | 2007 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Change | | |
| (1a) | | Mr. Rochet has been Mymetics’ President and Chief Executive Officer from July 31, 2003 to July 1, 2009. |
|
| (1b) | | Mr. Martin has been Mymetics’ President and Chief Executive Officer from July 1, 2009. |
|
| (2) | | Mr. Luebke has been Mymetics’ Chief Financial Officer and Treasurer since July 31, 2003 and our Secretary since August 29, 2003. |
|
| (3) | | Dr. Fleury has been appointed as Mymetics’ Chief Scientific Officer on November 3, 2003. |
|
| (4) | | Professor Girard has acted as Head of Vaccine Development since January 15, 2004, a position from which he has resigned for health reasons, as noted above, but he continues to act in Pension
Value and
Nonqualified
Non-Equity Deferred
Stock Option Incentive Compensation All Other
Bonus Awards Awards Plan Earnings Compensation Total
Name and Principal Position Year Salary (E) (E) (E) (E) (E) (E) (E) (E)
- ---------------------------- ---- ------------ ----- -------- ------ ------------ ------------ ------------ --------------
Christian J.-F. Rochet (PEO) (1) 2008 E216,000 an advisory capacity under a consulting agreement. |
|
(5) - - - - - - E 216,000 (5)
2007 E216,000 (5) - E807,000 - - - - E1,023,000 (5)
2006 E180,000 (5) - - - - - - E 180,000 (5)
Ernst Luebke (PFO) (2) 2008 E216,000 (5) - - - - - - E 216,000 (5)
2007 E216,000 (5) - E672,000 - - - - E 888,000 (5)
2006 E180,000 (5) - - - - - - E 180,000 (5)
Sylvain Fleury, Ph. D. (3) 2008 E216,000 (5) - - - - - - E 216,000 (5)
2007 E216,000 (5) - E672,000 - - - - E 888,000 (5)
2006 E180,000 (5) - - - - - - E 180,000 (5)
Marc Girard, DVM, D.Sc. (4) 2008 E 48,000 - - - - - - E 48,000 (5)
2007 E 48,000 - - - - - - E 48,000 (5)
2006 E 48,000 - - - - - - E 48,000 (5)
| | See below “Employment Agreements”. |
|
| (6) | | Mr. Kempers has been Mymetics’ Chief Operating Officer since July 1, 2009. |
(1) Mr. Rochet has been our President and Chief Executive Officer since July
31, 2003.
(2) Mr. Luebke has been our Chief Financial Officer and Treasurer since July
31, 2003 and our Secretary since August 29, 2003.
(3) Dr. Fleury has been appointed as our Chief Scientific Officer on November
3, 2003.
(4) Professor Girard has acted as Head of Vaccine Development since January 15,
2004, a position from which he has resigned for health reasons, as noted
above, but he continues to act in an advisory capacity under a consulting
agreement.
(5) See below "Employment Agreements".
35
34
The tables entitled "GRANTS“GRANTS OF PLAN-BASED AWARDS," "OUTSTANDING” “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END," "OPTION” “OPTION EXERCISES AND STOCK VESTED," "PENSION” “PENSION BENEFITS,"
"NONQUALIFIED” “NONQUALIFIED DEFERRED COMPENSATION"COMPENSATION” and "DIRECTOR COMPENSATION"“DIRECTOR COMPENSATION” and the respective discussions related to those tables have been omitted because no compensation required to be reported in those tables was awarded to, earned by or paid to any of the named executive officers or directors in any of the covered fiscal years.
Employment Agreements
Under the Executive Employment Agreement for Christian Rochet, he iswas employed as CEO for five years commencing July 1, 2006. Mr. Rochet receivesreceived an annual salary of E216,000 and iswas entitled to cash bonuses of 3% of all payments to be received from industry partners of the Company. If Mr. Rochet iswere terminated without cause or he terminatesterminated for good reason, he iswas entitled to a lump-sum payment equal to the greater of 24 months of his salary or the remaining term of his employment agreement. Mr. Rochet resigned as President and CEO of Mymetics effective July 1, 2009, Mr. Rochet is currently employed by us under a Consulting Agreement as Senior Advisor to the President (to be reviewed May, 2010). Under this Consulting Agreement, Mr. Rochet receives an annual salary of CHF 150,000, which is approximately equal to E108,000. Mr. Rochet is further entitled to finder’s fees of 3% on all funding amounts raised through his efforts.
Under the Executive Employment Agreement for Ernst Luebke, he is employed as CFO for five years commencing July 1, 2006. Mr. Luebke receives an annual salary of E216,000E216,000. During the employment period, at the discretion of the Board and is entitled to cash bonuses of 3% of all paymentsthe Compensation Committee and based on the company’s performance and individual achievements, The executive shall be eligible for an annual bonus to be received
from industry partners of the Company.paid in cash, stock or stock options. If Mr. Luebke is terminated without cause or he terminates for good reason, he is entitled to a lump-sum payment equal to the greater of 24 months of his salary or the remaining term of his employment agreement. Retroactive to January 1, 2010, Mr. Luebke’s salary has been converted into CHF300,000, which is approximately equal to his previous salary of E216,000, which included also the employer’s share of social contributions.
Under the Executive Employment Agreement for Sylvain Fleury Ph.D., he is employed as CSO for five years commencing July 1, 2006. Dr. Fleury receives an annual salary of E216,000E216,000. During the employment period, at the discretion of the Board and is entitled to cash bonuses of 3% of all paymentsthe Compensation Committee and based on the company’s performance and individual achievements, The executive shall be eligible for an annual bonus to be received from industry partners of the Company.paid in cash, stock or stock options. If Dr. Fleury is terminated without cause or he terminates for good reason, he is entitled to a lump-sum payment equal to the greater of 24 months of his salary or the remaining term of his employment agreement. Retroactive to January 1, 2010, Dr. Fleury’s salary has been converted into CHF300,000, which is approximately equal to his previous salary of E216,000, which included also the employer’s share of social contributions.
Under the Executive Employment Agreement for Ronald Kempers, he is employed as COO for five years commencing July 1, 2009. Mr. Kempers receives an annual salary of CHF300,000, which is approximately equal to E216,000 and is entitled to participate in the stock incentive plan. If Mr. Kempers is terminated without cause or he terminates for good reason, he is entitled to a lump-sum payment equal to the greater of 12 months of his salary or the remaining term of his employment agreement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information about the beneficial ownership of our common stock as of March 26, 2009,April 15, 2010, by: (a) each of our named executive officers; (b) each of our directors; (c) each person known to usthe management to be the beneficial owner of more than 5% of our outstanding voting securities; and (d) all of our current executive officers
35
and directors as a group. The following is based solely on statements and reports filed with the Securities and Exchange Commission or other information we believe to be reliable.
There were 195,313,630196,263,630 shares of our common stock outstanding on March 26, 2009.
We haveApril 15, 2010. Beneficial ownership has been determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Except as indicated by the footnotes below, we believe, based on the information furnished, to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 26, 2009,April 15, 2010, are deemed outstanding. These shares of common stock, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.
| | | | | | | | | | | | | |
| NAME AND ADDRESS OF | | TITLE | | AMOUNT AND NATURE OF | | |
| BENEFICIAL OWNER | | OF CLASS | | BENEFICIAL OWNERSHIP | | PERCENT OF CLASS |
| Round Enterprises Ltd. St. Peter Port, Guernsey | | Common | | | 44,914,000 | | | | 22.88 | % |
| | | | | | | | | | | | | |
| Dr. Thomas Staehelin (1) Director | | Common | | | 8,500,000 | | | | 4.33 | % |
| | | | | | | | | | | | | |
| Ernst Luebke (1) | | Common | | | 8,829,546 | (2) | | | 4.50 | % |
| Chief Financial Officer, Secretary and Director | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Christian Rochet (1) | | Common | | | 6,709,733 | (3) | | | 3.42 | % |
| Former Chief Executive Officer, and Director | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Dr. Sylvain Fleury (1) | | Common | | | 6,500,000 | (4) | | | 3.31 | % |
| Chief Scientific Officer, and Director | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Jacques-François Martin (1) | | Common | | | 1,430,307 | | | | 0.73 | % |
| Chief Executive Officer, President and Director | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Mr. Ernest M. Stern (1) Director and outside Counsel | | Common | | | 1,500,000 | | | | 0.76 | % |
| | | | | | | | | | | | | |
| Prof. Marc Girard (1)Consultant and member of the SAB | | Common | | | 500,000 | (5) | | | 0.25 | % |
| | | | | | | | | | | | | |
| Prof. Morgane Bomsel (1)Consultant and member of the SAB | | Common | | | 500,000 | (6) | | | 0.25 | % |
| | | | | | | | | | | | | |
| All current executive officers and directors as a group (6 persons) | | Common | | | 33,269,586 | | | | 16.95 | % |
36
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER TITLE OF CLASS BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------- -------------- -------------------- ----------------
Round Enterprises Ltd. Common 44,814,000 22.94%
St. Peter Port, Guernsey
Ernst Luebke | | |
(1) Common 10,079,418 | | Address is Mymetics Corporation, c/o Mymetics S.A., Biopole, Route de la Corniche 4, CH-1066 Epalinges (Switzerland). |
|
(2) 5.16%
Chief Financial Officer, Secretary | | Of which 2,829,546 acquired prior to being elected as director and Director
Christian Rochet (1) Common 7,377,138 (3) 3.78%
Chief Executive Officer, Presidentappointed as officer, 1,000,000 acquired through conversion of unpaid salary and Director
Dr. Sylvain Fleury (1) Common 6,500,000 (4) 3.33%
Chief Scientific Officer,expenses and Director
Dr. Thomas Staehelin (1) Common 8,300,000 4.25%
Director
Prof. Marc Girard (1) Common5,000,000 acquired as bonus. |
|
| (3) | | Of which 1’627’009 acquired prior to being elected as director and appointed as officer, 1,000,000 (5) 0.51%
Consultantacquired through conversion of unpaid salary and memberexpenses and 6,000,000 acquired as bonus. |
|
| (4) | | Of which 500,000 issued for services, 1,000,000 acquired through conversion of the SAB
Mr. Ernest M. Stern (1) Common 1,500,000 0.77%
Directorunpaid salary and outside Counsel
All current executive officersexpenses and Common 34,756,556 17.80%
directors5,000,000 acquired as a group (6 persons)
|
37
- ----------
(1) Address is Mymetics Corporation, European Executive Office, 14, rue de la
Colombiere, CH-1260 Nyon (Switzerland).
(2) Of which 4,079,418 acquired prior to being elected as director and
appointed as officer, 1,000,000 acquired through conversion of unpaid
salary and expenses and 5,000,000 acquired as bonus.
(3) Of which 377,138 acquired prior to being elected as director and appointed
as officer, 1,000,000 acquired through conversion of unpaid salary and
expenses and 6,000,000 acquired as bonus.
(4) Of which 500,000 issued for services, 1,000,000 acquired through conversion
of unpaid salary and expenses and 5,000,000 acquired as bonus.
(5) bonus. |
| (5) | | Of which 500,000 issued for services and 500,000 acquired through conversion of unpaid fees and expenses. 500,000 have been sold in 2006. |
|
| (6) | | 500,000 issued for services rendered. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During 2008,2009, there were no transactions, and there are currently no proposed transactions, to which we were, are or will be a party in which the amount involved exceeds $120,000 and in which any of our directors, executive officers or holders of more than 5% of our common stock, or an immediate family member of any of the foregoing, had or will have a direct or indirect interest.
Furthermore, it is our intention to ensure that all future transactions, including loans, between us and our officers, directors and principal stockholders and their affiliates are on terms no less favorable to us than those that we could obtainbe obtained from unaffiliated third parties.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table provides information about the fees billed to
the registrantus for professional services rendered by Peterson Sullivan LLP during fiscal years
20082009 and
2007:
2008 2007
------- -------
Audit Fees $57,000 $57,000
Audit-Related Fees - -
Tax Fees 8,000 41,000
All Other Fees - -
------- -------
Total $65,000 $98,000
======= =======
2008:| | | | | | | | | |
| | | 2009 | | | 2008 | |
| Audit Fees | | $ | 72,000 | | | $ | 57,000 | |
| Audit-Related Fees | | | — | | | | — | |
| Tax Fees | | | 9,500 | | | | 41,000 | |
| All Other Fees | | | — | | | | — | |
| | | | | | | |
| Total | | $ | 81,500 | | | $ | 98,000 | |
| | | | | | | |
Audit Fees. Audit fees consist of fees for the audit of the registrant'sour annual financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of
the registrant'sour financial statements and are not reported as Audit Fees. During fiscal
2009 and 2008,
and 2007, theno services
were provided in this
category included due
diligence reviews, audits of employee benefit funds, and consulting on
accounting standards and transactions.
38
category.37
Tax Fees. Tax fees consist of fees for tax compliance services, tax advice and tax planning. During fiscal 20082009 and 2007,2008, the services provided in this category included assistance and advice in relation to the preparation of corporate income tax returns.
All Other Fees. Any other fees not included in Audit Fees, Audit-Related Fees or Tax Fees.
Pre-Approval Policies and Procedures.
Our
Board of Directorsaudit Committee pre-approved all services to be provided by Peterson Sullivan LLP.
39
38
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Index to Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a)(2) ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT
APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE
FINANCIAL STATEMENTS OR NOTES THERETO.
(3) List of Exhibits
2.1 Share Exchange Agreement dated December 13, 2001 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page thereto (1)
2.2 Share Exchange Agreement dated December 13, 2001 between the
Company and the stockholders of Mymetics S.A. listed on the
signature page thereto (1)
2.3 Purchase Agreement dated October 17, 1998 between the
Company and the majority stockholders of Nazca Holdings
Ltd. (2)
2.4 Amendment to the Purchase Agreement dated October 17, 1998
between the Company and the majority stockholders of Nazca
Holdings Ltd. (3)
2.5 Revised Purchase Agreement dated July 28, 1999 between the
Company and the majority stockholders of Nazca Holdings
Ltd. (4)
2.6 Share Exchange Agreement dated July 30, 2002 between the
Company and the stockholders of Mymetics S.A. listed on the
signature page thereto (5)
3(i) Articles of Incorporation of the Company (as amended through
May 10, 2002) (6)
3(ii) Bylaws (7)
4.1 Form of Specimen Stock Certificate (8)
4.2 Form of letter regarding Warrant (8)
4.3 Form of Share Exchange Agreement (8)
9.1 Voting and Exchange Trust Agreement dated March 19, 2001, among
the Company, 6543 Luxembourg S.A. and MFC Merchant Bank
S.A. (8)
| (a)(1) | | Index to Financial Statements |
|
| | | Report of Independent Registered Public Accounting Firm |
|
| | | Consolidated Balance Sheets |
|
| | | Consolidated Statements of Operations and Comprehensive Loss |
|
| | | Consolidated Statements of Changes in Shareholders’ Equity (Deficit) |
|
| | | Consolidated Statements of Cash Flows |
|
| | | Notes to Consolidated Financial Statements |
|
| (a)(2) | | ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR NOTES THERETO. |
|
| (3) | | List of Exhibits |
|
| 2.1 | | Share Exchange Agreement dated December 13, 2001 between the Corporation and the stockholders of Mymetics S.A. listed on the signature page thereto (1) |
|
| 2.2 | | Share Exchange Agreement dated December 13, 2001 between the Company and the stockholders of Mymetics S.A. listed on the signature page thereto (1) |
|
| 2.3 | | Purchase Agreement dated October 17, 1998 between the Company and the majority stockholders of Nazca Holdings Ltd. (2) |
|
| 2.4 | | Amendment to the Purchase Agreement dated October 17, 1998 between the Company and the majority stockholders of Nazca Holdings Ltd. (3) |
|
| 2.5 | | Revised Purchase Agreement dated July 28, 1999 between the Company and the majority stockholders of Nazca Holdings Ltd. (4) |
|
| 2.6 | | Share Exchange Agreement dated July 30, 2002 between the Company and the stockholders of Mymetics S.A. listed on the signature page thereto (5) |
|
| 3(i) | | Articles of Incorporation of the Company (as amended through May 10, 2002) (6) |
|
| 3(ii) | | Bylaws (7) |
|
| 4.1 | | Form of Specimen Stock Certificate (8) |
|
| 4.2 | | Form of letter regarding Warrant (8) |
|
| 4.3 | | Form of Share Exchange Agreement (8) |
|
| 9.1 | | Voting and Exchange Trust Agreement dated March 19, 2001, among the Company, 6543 Luxembourg S.A. and MFC Merchant Bank S.A. (8) |
|
| 10.1 | | Services Agreement dated May 31, 2001, between the Company and MFC Merchant Bank, S.A.(7) |
39
| 10.2 | | Employment Agreement dated May 3, 2001, between Pierre-Francois Serres and the Company (7) |
|
| 10.3 | | Indemnification Agreement dated March 19, 2001, between the Company and MFC Bancorp Ltd. (7) |
|
| 10.4 | | Agreement dated for reference May 15, 2000, between the Company and Maarten Reidel (7) |
|
| 10.5 | | Preferred Stock Redemption and Conversion Agreement dated for reference December 21, 2000, between the Company and Sutton Park International Ltd. (10) |
|
| 10.6 | | Preferred Stock Conversion Agreement dated for reference December 21, 2000, between the Company and Med Net International Ltd. (11) |
|
| 10.7 | | Preferred Stock Conversion Agreement dated December 21, 2000, between the Company and Dresden Papier GmbH (11) |
|
| 10.8 | | Assignment Agreement dated December 29, 2000, among the Company, Mymetics S.A. and MFC Merchant Bank S.A. (1) |
|
| 10.9 | | Credit Facility Agreement dated July 27, 2000, between MFC Merchant Bank, S.A. and the Company (1) |
|
| 10.10 | | Amended Credit Facility Agreement dated for reference August 13, 2001, between MFC Merchant Bank, S.A. and the Company (16) |
|
| 10.11 | | Second Amended Credit Facility Agreement dated for reference February 27, 2002, between MFC Merchant Bank, S.A. and the Company (16) |
|
| 10.12 | | Amended and Restated Credit Facility Agreement dated for reference February 28, 2003, among MFC Merchant Bank, S.A., MFC Bancorp Ltd., and the Company (16) |
|
| 10.13 | | Guarantee dated for reference February 28, 2003, by MFC Bancorp Ltd. to MFC Merchant Bank S.A. (16) |
|
| 10.14 | | Shareholder Agreement dated March 19, 2001, among the Company, the Holders of Class B Exchangeable Preferential Non-Voting Shares of 6543 Luxembourg S.A. signatory thereto and 6543 Luxembourg S.A.(8) |
|
| 10.15 | | Support Agreement dated March 19, 2001, between the Company and 6543 Luxembourg S.A. (8) |
|
| 10.16 | | 1995 Qualified Incentive Stock Option Plan (12) |
|
| 10.17 | | Amended 1994 Stock Option Plan (13) |
|
| 10.18 | | 2001 ICHOR Company Stock Option Plan (7) |
|
| 10.19 | | Employment Agreement dated March 18, 2002, between the Company and Peter P. McCann (14) |
|
| 10.20 | | Consulting Agreement dated August 31, 2001, between the Company and Michael K. Allio (8) |
|
| 10.21 | | Amendment to Consulting Agreement dated August 21, 2002, between the Company and Michael K. Allio (16) |
|
| 10.22 | | Employment Agreement dated March 18, 2002, between the |
40
10.1 Services Agreement dated May 31, 2001, between the Company
and MFC Merchant Bank, S.A.(7)
10.2 Employment Agreement dated May 3, 2001, between Pierre-Francois
Serres and the Company (7)
10.3 Indemnification Agreement dated March 19, 2001, between the
Company and MFC Bancorp Ltd. (7)
10.4 Agreement dated for reference May 15, 2000, between the
Company and Maarten Reidel (7)
10.5 Preferred Stock Redemption and Conversion Agreement dated for
reference December 21, 2000, between the Company and Sutton
Park International Ltd. (10)
10.6 Preferred Stock Conversion Agreement dated for reference
December 21, 2000, between the Company and Med Net
International Ltd. (11)
10.7 Preferred Stock Conversion Agreement dated December 21, 2000,
between the Company and Dresden Papier GmbH (11)
10.8 Assignment Agreement dated December 29, 2000, among the
Company, Mymetics S.A. and MFC Merchant Bank S.A. (1)
10.9 Credit Facility Agreement dated July 27, 2000, between MFC
Merchant Bank, S.A. and the Company (1)
10.10 Amended Credit Facility Agreement dated for reference August
13, 2001, between MFC Merchant Bank, S.A. and the Company
(16)
10.11 Second Amended Credit Facility Agreement dated for reference
February 27, 2002, between MFC Merchant Bank, S.A. and the
Company (16)
10.12 Amended and Restated Credit Facility Agreement dated for
reference February 28, 2003, among MFC Merchant Bank, S.A., MFC
Bancorp Ltd., and the Company (16)
10.13 Guarantee dated for reference February 28, 2003, by MFC Bancorp
Ltd. to MFC Merchant Bank S.A. (16)
10.14 Shareholder Agreement dated March 19, 2001, among the
Company, the Holders of Class B Exchangeable Preferential
Non-Voting Shares of 6543 Luxembourg S.A. signatory thereto and
6543 Luxembourg S.A.(8)
10.15 Support Agreement dated March 19, 2001, between the Company
and 6543 Luxembourg S.A. (8)
10.16 1995 Qualified Incentive Stock Option Plan (12)
10.17 Amended 1994 Stock Option Plan (13)
10.18 2001 ICHOR Company Stock Option Plan (7)
10.19 Employment Agreement dated March 18, 2002, between the
Company and Peter P. McCann (14)
10.20 Consulting Agreement dated August 31, 2001, between the
Company and Michael K. Allio (8)
| | | Company and Dr. Joseph D. Mosca (15) |
|
| 10.23 | | Separation Agreement and Release dated January 31, 2003, between the Company and Peter P. McCann (16) |
|
| 10.24 | | Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Robert Demers (8) |
|
| 10.25 | | Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Michael K. Allio (8) |
|
| 10.26 | | Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and John M. Musacchio (8) |
|
| 10.27 | | Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Patrice Pactol (8) |
|
| 10.28 | | Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Pierre-Francois Serres (8) |
|
| 10.29 | | Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Pierre-Francois Serres (16) |
|
| 10.30 | | Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Patrice Pactol (16) |
|
| 10.31 | | Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Robert Demers (16) |
|
| 10.32 | | Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and John M. Musacchio (16) |
|
| 10.33 | | Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Michael K. Allio (16) |
|
| 10.34 | | Director and Non-Employee Stock Option Agreement dated August 21, 2002, between the Company and Michael K. Allio (16) |
|
| 10.35 | | Director and Non-Employee Stock Option Agreement dated June 20, 2002, between the Company and Peter P. McCann (16) |
|
| 10.36 | | Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Peter P. McCann (16) |
|
| 10.37 | | Director and Non-Employee Stock Option Agreement dated February 6, 2003, between the Company and Peter P. McCann (16) |
|
| 10.38 | | Patent Pledge Agreement dated November __, 2002 among Mymetics S.A., Mymetics Deutschland GmbH, the Company and MFC Merchant Bank S.A. (16) |
|
| 10.39 | | Third Amendment to the Credit Facility Agreement dated for Reference December 31, 2006, between MFC Merchant Bank, S.A. and the Company (17) |
|
| 10.40 | | Fourth Amendment to the Credit Facility Agreement dated for Reference February 16, 2005, between MFC Merchant Bank, S.A. and the Company (17) |
|
| 10.41 | | Consulting Agreement dated for reference January 1, 2004, between the Centre Hospitalier Universitaire Vaudois (CHUV), the Company and Dr. Sylvain Fleury, Ph.D. (18) |
41
10.21 Amendment to Consulting Agreement dated August 21, 2002,
between the Company and Michael K. Allio (16)
10.22 Employment Agreement dated March 18, 2002, between the
Company and Dr. Joseph D. Mosca (15)
10.23 Separation Agreement and Release dated January 31, 2003,
between the Company and Peter P. McCann (16)
10.24 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Company and Robert Demers (8)
10.25 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Company and Michael K. Allio (8)
10.26 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Company and John M. Musacchio (8)
10.27 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Company and Patrice Pactol (8)
10.28 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Company and Pierre-Francois Serres (8)
10.29 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Company and Pierre-Francois Serres (16)
10.30 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Company and Patrice Pactol (16)
10.31 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Company and Robert Demers (16)
10.32 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Company and John M. Musacchio (16)
10.33 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Company and Michael K. Allio (16)
10.34 Director and Non-Employee Stock Option Agreement dated August
21, 2002, between the Company and Michael K. Allio (16)
10.35 Director and Non-Employee Stock Option Agreement dated June 20,
2002, between the Company and Peter P. McCann (16)
10.36 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Company and Peter P. McCann (16)
10.37 Director and Non-Employee Stock Option Agreement dated February
6, 2003, between the Company and Peter P. McCann (16)
10.38 Patent Pledge Agreement dated November __, 2002 among Mymetics
S.A., Mymetics Deutschland GmbH, the Company and MFC
Merchant Bank S.A. (16)
10.39 Third Amendment to the Credit Facility Agreement dated for
Reference December 31, 2006, between MFC Merchant Bank, S.A.
and the Company (17)
10.40 Fourth Amendment to the Credit Facility Agreement dated for
Reference February 16, 2005, between MFC Merchant Bank, S.A.
and the Company (17)
10.41 Consulting Agreement dated for reference January 1, 2004,
between the Centre Hospitalier Universitaire Vaudois (CHUV),
the Company and Dr. Sylvain Fleury, Ph.D. (18)
| 10.42 | | Consulting Agreement dated for reference January 1, 2004, between the Company and Professor Marc Girard, DVM, D.Sc. (18) |
|
| 10.43 | | Cooperation and Option Agreement dated March 10, 2005, between the Company and Pevion A.G. (18) |
|
| 10.44 | | Consulting Agreement dated March 23, 2005, between the Company and Northern Light International. (18) |
|
| 10.45 | | Sixth Amended Credit Facility Agreement dated for reference December 31, 2005, between MFC Merchant Bank, S.A. and the Company (19) |
|
| 10.46 | | Employment Agreement dated July 1, 2006, between the Company and Dr. Sylvain Fleury (20) |
|
| 10.47 | | Employment Agreement dated July 1, 2006, between the Company and Christian Rochet (20) |
|
| 10.48 | | Employment Agreement dated July 1, 2006, between the Company and Ernst Luebke (20) |
|
| 10.49 | | License Agreement dated March 1, 2007, between the Company and Pevion Biotech Ltd. (21) |
|
| 10.50 | | Settlement Agreement dated March 19, 2007 between Mymetics and MFC Merchant Bank S.A. (22) |
|
| 10.51 | | Co-ownership Agreement dated January 8, 2008 between the Company, INSERM and Pevion Biotech Ltd. (23) |
|
| 10.52 | | Co-ownership Agreement dated January 8, 2008 between the Company and INSERM (23) |
|
| 10.53 | | Exploitation Agreement dated January 8, 2008 between the Company and INSERM (23) |
|
| 10.54 | | Non-Executive Director Agreement dated 21 January between the Company and Mr Ernest M Stern.(24) |
|
| 10.55 | | NGIN Material Transfer Agreement dated 11 February 2008 between the Company, Institute Cochin, Université Paris Descartes and Pevion Biotech.(25) |
|
| 10.56 | | Acquisition & License Agreement dated 19 May 2008 between the Company and Pevion Biotech Ltd. (26) |
|
| 10.57 | | Extension of Convertible Note Maturity Date Agreement dated 22 August 2008 between the Company, Anglo Irish Bank and Round Enterprises Ltd. (27) |
|
| 10.58 | | Gp41 Manufacturing Technology Agreement dated 26 January 2009 between the Company and PX Therapeutics (28) |
|
| 10.59 | | Share Purchase Agreement pursuant to which Mymetics purchased all issued and outstanding shares of capital stock of Bestewil Holding B.V. (“Bestewil”) from its parent, Norwood Immunology Limited (“NIL”), and all issued and outstanding shares of capital stock of Virosome Biologicals B.V. now held by Bestewil. (29) |
|
| 10.60 | | Resignation of Prof Marc Girard as Head of vaccine development for reasons of personal health. (30) |
42
10.42 Consulting Agreement dated for reference January 1, 2004,
between the Company and Professor Marc Girard, DVM, D.Sc. (18)
10.43 Cooperation and Option Agreement dated March 10, 2005, between
the Company and Pevion A.G. (18)
10.44 Consulting Agreement dated March 23, 2005, between the
Company and Northern Light International. (18)
10.45 Sixth Amended Credit Facility Agreement dated for reference
December 31, 2005, between MFC Merchant Bank, S.A. and the
Company (19)
10.46 Employment Agreement dated July 1, 2006, between the
Company and Dr. Sylvain Fleury (20)
10.47 Employment Agreement dated July 1, 2006, between the
Company and Christian Rochet (20)
10.48 Employment Agreement dated July 1, 2006, between the
Company and Ernst Luebke (20)
10.49 License Agreement dated March 1, 2007, between the Company
and Pevion Biotech Ltd. (21)
10.50 Settlement Agreement dated March 19, 2007 between Mymetics
and MFC Merchant Bank S.A. (22)
10.51 Co-ownership Agreement dated January 8, 2008 between the Company,
INSERM and Pevion Biotech Ltd. (23)
10.52 Co-ownership Agreement dated January 8, 2008 between the Company
and INSERM (23)
10.53 Exploitation Agreement dated January 8, 2008 between the Company
and INSERM (23)
10.54 Non-Executive Director Agreement dated 21 January, 2008 between the
Company and Mr Ernest M Stern.(24)
10.55 NGIN Material Transfer Agreement dated 11 February 2008 between the
Company, Institute Cochin, Universite Paris Descartes and
Pevion Biotech.(25)
10.56 Acquisition & License Agreement dated 19 May 2008 between the
Company and Pevion Biotech Ltd. (26)
10.57 Extension of Convertible Note Maturity Date Agreement dated 22
August 2008 between the Company, Anglo Irish Bank and Round
Enterprises Ltd. (27)
10.58 Gp41 Manufacturing Technology Agreement dated 26 January 2009
between the Company and PX Therapeutics (28)
10.59 Share Purchase Agreement pursuant to which Mymetics purchased all
issued and outstanding shares of capital stock of Bestewil Holding
B.V. ("Bestewil") from its parent, Norwood Immunology Limited
("NIL"), and all issued and outstanding shares of capital stock of
Virosome Biologicals B.V. now held by Bestewil. (29)
10.60 Resignation of Prof Marc Girard as Head of vaccine development for
reasons of personal health. (30)
43
11.1 Statement Regarding Calculation of Per Share Earnings.
14.1 Code of Ethics.
21.1 List of Subsidiaries
24.1 Powers of Attorney (included on the signature page hereto)
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or 15d-14 of the
| 10.61 | | Completion of Share Purchase Agreement pursuant to which Mymetics purchased all issued and outstanding shares of capital stock of Bestewil Holding B.V. and Virosome Biologicals B.V. including Unregistered Sales of Equity Securities, Exchange Act of 1934
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
32.1 Section 1350 Certification of Chief Executive Officer and Chief
Financial Officer
- ----------
(1) Incorporated by reference to the Company's Schedule 14C filed with the
Securities and Exchange Commission on April 26, 2001.
(2) Incorporated by reference to the Company's report on Form 8-K filed with
the Securities and Exchange Commission on October 22, 1998.
(3) Incorporated by reference to the Company's report on Form 8-K/A filed with
the Securities and Exchange Commission on April 15, 1999.
(4) Incorporated by reference to the Company's report on Form 8-K/A filed with
the Securities and Exchange Commission on August 13, 1999.
(5) Incorporated by reference to the Company's Amendment No. 1 to Form S-1
filed with the Securities and Exchange Commission on August 8, 2002.
(6) Incorporated by reference to the Company's report on Form 10-Q for the
quarter ended March 31, 2002, filed with the Securities and Exchange
Commission on May 15, 2002.
(7) Incorporated by reference to the Company's report on Form 10-Q for the
quarter ended June 30, 2001, filed with the Securities and Exchange
Commission on August 14, 2001.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-1, File No. 333-88782, filed with the Securities and Exchange Commission
on May 22, 2002.
(9) Incorporated by reference to the Company's report on Form 8-K/A filed with
the Securities and Exchange Commission on August 9, 2000.
(10) Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd. with
the Securities and Exchange Commission on dated January 2, 2001.
(11) Incorporated by reference to the Company's report on Form 10-K for the
fiscal year ended December 31, 2000, filed with the Securities and Exchange
Commission on March 14, 2001.
(12) Incorporate by reference to the Company's Registration Statement on Form
S-8, File No. 333-15831, filed with the Securities and Exchange Commission
on November 8, 1996.
(13) Incorporated by reference to the Company's Registration Statement on Form
S-8, File No. 333-15829, filed with the Securities and Exchange Commission
on November 8, 1996.
44
(14) Incorporated by reference to the Company's report on Form 10-K for the
fiscal year ended December 31, 2004, and filed with the Securities and
Exchange Commission on March 29, 2002.
(15) Incorporated by reference to the Company's report on Form 10-Q for the
quarter ended March 31, 2002, filed with the Securities and Exchange
Commission on May 15, 2002.
(16) Incorporated by reference to the Company's report on Form 10-K for the
fiscal year ended December 31, 2005, and filed with the Securities and
Exchange Commission on March 27, 2003.
(17) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on February 18, 2005.
(18) Incorporated by reference to the Company's report on Form 10-K for the
fiscal year ended December 31, 2004, filed with the Securities and Exchange
Commission on March 30, 2005.
(19) Incorporated by reference to the Company's report on Form 10-K for the
fiscal year ended December 31, 2005, filed with the Securities and Exchange
Commission on April 17, 2006.
(20) Incorporated by reference to the Company's report on Form 10-Q for the
period ended June 30, 2006, and filed with the Securities and Exchange
Commission on August 21, 2006.
(21) Incorporated by reference to the Company's report on Form 10-K for the
fiscal year ended December 31, 2006, filed with the Securities and Exchange
Commission on April 17, 2007.
(22) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on March 21, 2007.
(23) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on January 14, 2008.
(24) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on January 25, 2008.
(25) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on February 19, 2008.
(26) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on May 19, 2008.
(27) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on June 30, 2008.
(28) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on January 30, 2009.
(29) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on March 5, 2009.
(30) Incorporated by reference to the Company's report on Form 8-K filed With
the Securities and Exchange Commission on March 9, 2009.
45
(c) Financial Statements and Exhibits. (31) |
|
| 10.62 | | Completion of Share Purchase Agreement pursuant to which Mymetics purchased all issued and outstanding shares of capital stock of Bestewil Holding B.V. and Virosome Biologicals B.V. including Unregistered Sales of equity Securities, further Financial Statements and Exhibits. (32) |
|
| 10.63 | | Election of Jacques-François Martin as a member of the Board of Directors and Chairman of the Board, resignation of Christian Rochet as President and CEO and agreement of Jacques-François Martin to serve as President and CEO. (33) |
|
| 10.64 | | Consulting Agreement dated September 1 2009, between the Company and Mr. Christian Rochet |
|
| 14.1 | | Code of Ethics. |
|
| 21.1 | | List of Subsidiaries |
|
| 24.1 | | Powers of Attorney (included on the signature page hereto) |
|
| 31.1 | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14 of the Securities Exchange Act of 1934 |
|
| 31.2 | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14 of the Securities Exchange Act of 1934 |
|
| 32.1 | | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer |
| | |
| (1) | | Incorporated by reference to the Company’s Schedule 14C filed with the Securities and Exchange Commission on April 26, 2001. |
|
| (2) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on October 22, 1998. |
|
| (3) | | Incorporated by reference to the Company’s report on Form 8-K/A filed with the Securities and Exchange Commission on April 15, 1999. |
|
| (4) | | Incorporated by reference to the Company’s report on Form 8-K/A filed with the Securities and Exchange Commission on August 13, 1999. |
|
| (5) | | Incorporated by reference to the Company’s Amendment No. 1 to Form S-1 filed with the Securities and Exchange Commission on August 8, 2002. |
|
| (6) | | Incorporated by reference to the Company’s report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002. |
|
| (7) | | Incorporated by reference to the Company’s report on Form 10-Q for the quarter ended June 30, 2001, filed with the Securities and Exchange Commission on August 14, 2001. |
43
| | |
| (8) | | Incorporated by reference to the Company’s Registration Statement on Form S-1, File No. 333-88782, filed with the Securities and Exchange Commission on May 22, 2002. |
|
| (9) | | Incorporated by reference to the Company’s report on Form 8-K/A filed with the Securities and Exchange Commission on August 9, 2000. |
|
| (10) | | Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd. with the Securities and Exchange Commission on dated January 2, 2001. |
|
| (11) | | Incorporated by reference to the Company’s report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on March 14, 2001. |
|
| (12) | | Incorporate by reference to the Company’s Registration Statement on Form S-8, File No. 333-15831, filed with the Securities and Exchange Commission on November 8, 1996. |
|
| (13) | | Incorporated by reference to the Company’s Registration Statement on Form S-8, File No. 333-15829, filed with the Securities and Exchange Commission on November 8, 1996. |
|
| (14) | | Incorporated by reference to the Company’s report on Form 10-K for the fiscal year ended December 31, 2004, and filed with the Securities and Exchange Commission on March 29, 2002. |
|
| (15) | | Incorporated by reference to the Company’s report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002. |
|
| (16) | | Incorporated by reference to the Company’s report on Form 10-K for the fiscal year ended December 31, 2005, and filed with the Securities and Exchange Commission on March 27, 2003. |
|
| (17) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2005. |
|
| (18) | | Incorporated by reference to the Company’s report on Form 10-K for the fiscal year ended December 31, 2004, filed with the Securities and Exchange Commission on March 30, 2005. |
|
| (19) | | Incorporated by reference to the Company’s report on Form 10-K for the fiscal year ended December 31, 2005, filed with the Securities and Exchange Commission on April 17, 2006. |
|
| (20) | | Incorporated by reference to the Company’s report on Form 10-Q for the period ended June 30, 2006, and filed with the Securities and Exchange Commission on August 21, 2006. |
|
| (21) | | Incorporated by reference to the Company’s report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Securities and Exchange Commission on April 17, 2007. |
|
| (22) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2007. |
|
| (23) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2008. |
|
| (24) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2008. |
|
| (25) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on February 19, 2008. |
44
| | |
| (26) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2008. |
|
| (27) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2008. |
|
| (28) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on January 30, 2009. |
|
| (29) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2009. |
|
| (30) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2009. |
|
| (31) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2009. |
|
| (32) | | Incorporated by reference to the Company’s report on Form 8-K/A filed with the Securities and Exchange Commission on June 22, 2009. |
|
| (33) | | Incorporated by reference to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on June 23, 2009. |
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders
Mymetics Corporation and Subsidiaries
Nyon,
Epalinges, Switzerland
We have audited the accompanying consolidated balance sheets of Mymetics Corporation (a development stage company) and Subsidiaries as of December 31, 20082009 and 2007,2008, and the related consolidated statements of operations and comprehensive loss, changes in shareholders'shareholders’ equity (deficit), and cash flows for the years ended December 31, 20082009 and 2007,2008, and for the period from May 2, 1990 (inception) to December 31, 2008.2009. These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mymetics Corporation (a development stage company) and Subsidiaries as of December 31, 20082009 and 2007,2008, and the results of their operations and their cash flows for the years ended December 31, 20082009 and 2007,2008, and for the period from May 2, 1990 (inception) to December 31, 2008,2009, in conformity with accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has not developed a commercially viable product and, therefore, has not been able to generate revenue, which has resulted in significant losses. These conditions raise substantial doubt about the Company'sCompany’s ability to continue as a going concern. Management'sManagement’s plans regarding these matters are also described in Note 1. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/S/
/S/ PETERSON SULLIVAN LLP
Seattle, Washington
March 20, 2009
April 15, 2010
46
MYMETICS CORPORATION AND SUBSIDIARIES
(A(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31,
20082009 and
2007
(In2008(In Thousands of Euros)
2008 2007
-------- --------
ASSETS
Current Assets
Cash E 509 E 159
Short-term investments -- 60
Receivables officer 8 71
Receivables other 6 --
Prepaid expenses 75 17
-------- --------
Total current assets 598 317
Property and equipment, net of accumulated
depreciation of E18 and E2 at December 31,
2008 and 2007, respectively 76 10
-------- --------
E 674 E 317
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable E 991 E 2,307
Taxes and social costs payable 25 4
Current portion of convertible notes payable
to related parties -- 2,000
Other -- 52
-------- --------
Total current liabilities 1,016 4,363
Convertible notes payable to related parties,
less current portion 8,973 150
-------- --------
Total liabilities 9,989 4,513
Shareholders' Equity (Deficit)
Common stock, U.S. $.01 par value;
495,000,000 shares authorized; issued 194,313,630
at December 31, 2008 and 186,963,630 at December 31, 2007 1,742 1,694
Common stock issuable, 1,000,000 at December 31, 2008 and
500,000 at December 31, 2007 7 3
Preferred stock, U.S. $.01 par value;
5,000,000 shares authorized; none issued or outstanding -- --
Additional paid-in capital 20,155 18,401
Deficit accumulated during the development stage (31,904) (24,966)
Accumulated other comprehensive income 685 672
-------- --------
(9,315) (4,196)
-------- --------
E 674 E 317
======== ========
| | | | | | | | | |
| | | 2009 | | | 2008 | |
| ASSETS | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash | | E | 2,959 | | | E | 509 | |
| Receivables officer | | | 6 | | | | 8 | |
| Receivables other | | | 39 | | | | 6 | |
| Prepaid expenses | | | 34 | | | | 75 | |
| | | | | | | |
| Total current assets | | | 3,038 | | | | 598 | |
| Property and equipment, net of accumulated depreciation of E100 and E18 at December 31, 2009 and 2008, respectively | | | 232 | | | | 76 | |
| License contract, net of accumulated amortization of E144 at December 31, 2009 and Nil at December 31, 2008 | | | 2,550 | | | | — | |
| In-process research and development | | | 2,266 | | | | — | |
| Goodwill | | | 6,671 | | | | — | |
| | | | | | | |
| | | E | 14,757 | | | E | 674 | |
| | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | E | 1,540 | | | E | 991 | |
| Taxes and social costs payable | | | 41 | | | | 25 | |
| Current portion of convertible notes payable to related parties | | | 5,740 | | | | — | |
| | | | | | | |
| Total current liabilities | | | 7,321 | | | | 1,016 | |
| Convertible notes payable to related parties, less current portion | | | 21,722 | | | | 8,973 | |
| Convertible notes payable, other | | | 2,593 | | | | — | |
| Acquisition-related contingent consideration | | | 1,936 | | | | — | |
| | | | | | | |
| Total liabilities | | | 33,572 | | | | 9,989 | |
| Shareholders’ Equity (Deficit) | | | | | | | | |
| Common stock, U.S. $.01 par value; 495,000,000 shares authorized; issued 196,063,630 at December 31, 2009 and 194,313,630 at December 31, 2008 | | | 1,754 | | | | 1,742 | |
| Common stock issuable, nil at December 31, 2009 and 1,000,000 at December 31, 2008 | | | — | | | | 7 | |
| Preferred stock, U.S. $.01 par value; 5,000,000 shares authorized; none issued or outstanding | | | — | | | | — | |
| Additional paid-in capital | | | 20,840 | | | | 20.155 | |
| Deficit accumulated during the development stage | | | (42,090 | ) | | | (31,904 | ) |
| Accumulated other comprehensive income | | | 681 | | | | 685 | |
| | | | | | | |
| | | | (18,815 | ) | | | (9,315 | ) |
| | | | | | | |
| | | E | 14,757 | | | E | 674 | |
| | | | | | | |
The accompanying notes are an integral part of these financial statements.
47
MYMETICS CORPORATION AND SUBSIDIARIES
(A(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Years Ended December 31,
2009 and 2008 and
2007 and
the Period from May 2, 1990 (Inception) to December 31,
2008
(In2009(In Thousands of Euros, Except Per Share Data)
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
2008 2007 2008)
------- ------- ---------------
Revenues
Sales E -- E -- E 224
Interest -- -- 34
Gain on extinguishment of debt -- 774 774
Government grants 65 -- 65
------- ------- --------
65 774 1,097
Expenses
Research and development 2,692 5,981 14,302
General and administrative 3,693 3,945 14,761
Bank fee -- -- 935
Interest 583 138 1,952
Goodwill impairment -- -- 209
Depreciation and amortization 17 -- 530
Directors' fees -- -- 274
Other -- -- 10
------- ------- --------
6,985 10,064 32,973
------- ------- --------
Loss before income tax provision (6,920) (9,290) (31,876)
Income tax provision (18) (4) (28)
------- ------- --------
Net loss (6,938) (9,294) (31,904)
Other comprehensive income
Foreign currency translation
adjustment 13 (75) 685
------- ------- --------
Comprehensive loss E(6,925) E(9,369) E(31,219)
======= ======= ========
Basic and diluted loss per share E (0.04) E (0.06)
======= =======
| | | | | | | | | | | | | |
| | | | | | | | | | | Accumulated | |
| | | | | | | | | | | During | |
| | | | | | | | | | | Development | |
| | | | | | | | | | | Stage | |
| | | | | | | | | | | (May 2, 1990 to | |
| | | | | | | | | | | December 31, | |
| | | 2009 | | | 2008 | | | 2009) | |
| Revenues | | | | | | | | | | | | |
| Sales | | E | 136 | | | E | — | | | E | 360 | |
| Interest | | | 1 | | | | — | | | | 35 | |
| Gain on extinguishment of debt | | | — | | | | — | | | | 774 | |
| Government grants | | | 13 | | | | 65 | | | | 78 | |
| | | | | | | | | | |
| | | | 150 | | | | 65 | | | | 1,247 | |
| Expenses | | | | | | | | | | | | |
| Research and development | | | 6,364 | | | | 2,692 | | | | 20,666 | |
| General and administrative | | | 3,244 | | | | 3,693 | | | | 18,005 | |
| Bank fee | | | 2 | | | | — | | | | 937 | |
| Interest | | | 2,082 | | | | 583 | | | | 4,034 | |
| Change in the fair value of acquisition-related contingent consideration | | | (1,614 | ) | | | — | | | | (1,614 | ) |
| Goodwill impairment | | | — | | | | — | | | | 209 | |
| Depreciation and amortization | | | 226 | | | | 17 | | | | 756 | |
| Directors’ fees | | | 42 | | | | — | | | | 316 | |
| Other | | | — | | | | — | | | | 10 | |
| | | | | | | | | | |
| | | | 10,346 | | | | 6,985 | | | | 43,319 | |
| | | | | | | | | | |
| Loss before income taxes | | | (10,196 | ) | | | (6,920 | ) | | | (42,072 | ) |
| Income tax (provision) benefit | | | 10 | | | | (18 | ) | | | (18 | ) |
| | | | | | | | | | |
| Net loss | | | (10,186 | ) | | | (6,938 | ) | | | (42,090 | ) |
| Other comprehensive income (loss) | | | | | | | | | | | | |
| Foreign currency translation adjustment | | | (4 | ) | | | 13 | | | | 681 | |
| | | | | | | | | | |
| Comprehensive loss | | E | (10,190 | ) | | E | (6,925 | ) | | E | (41,409 | ) |
| | | | | | | | | | |
| Basic and diluted loss per share | | E | (0.05 | ) | | E | (0.04 | ) | | | | |
| | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
48
MYMETICS CORPORATION AND SUBSIDIARIES
(A(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS'SHAREHOLDERS’ EQUITY (DEFICIT)
For the Period from May 2, 1990 (Inception) to December 31,
2008
(In2009(In Thousands of Euros)
Accumulated
Other
Comprehensive
Deficit Income -
Accumulated Foreign
Additional During the Currency
Date of Number of Par Paid-in Development Translation
Transaction Shares Value Capital Stage Adjustment Total
-------------- ---------- ----- ---------- ----------- ------------ --------
Balance at May 2, 1990
Shares issued for cash June 1990 33,311,361 E119 E -- E -- E -- E 119
Net losses to December 31, 1999 -- -- -- (376) -- (376)
Balance at December 31, 1999 33,311,361 119 -- (376) -- (257)
---------- ---- ------ -------- ------- -------
Bank fee -- -- 806 -- -- 806
Net loss for the year -- -- -- (1,314) -- (1,314)
---------- ---- ------ -------- ------ -------
Balance at December 31, 2000 33,311,361 119 806 (1,690) -- (765)
Effect on capital structure resulting
from a business combination March 2001 8,165,830 354 (354) -- -- --
Issuance of stock purchase warrants in
connection with credit facility
(restated) March 2001 -- -- 210 -- -- 210
Issuance of shares for bank fee March 2001 1,800,000 21 (21) -- -- --
Issuance of shares for bank fee June 2001 225,144 3 (3) -- -- --
Issuance of shares for cash June 2001 1,333,333 15 2,109 -- -- 2,124
Exercise of stock purchase warrants in
repayment of debt June 2001 1,176,294 13 259 -- -- 272
Exercise of stock purchase warrants for
cash December 2001 3,250,000 37 563 -- -- 600
Net loss for the year (restated) -- -- -- (1,848) -- (1,848)
Translation adjustment -- -- -- -- 100 100
---------- ---- ------ -------- ------- -------
Balance at December 31, 2001 49,261,962 562 3,569 (3,538) 100 693
Exercise of stock options March 2002 10,000 -- 8 -- -- 8
Issuance of stock purchase warrants for
bank fee June 2002 -- -- 63 -- -- 63
Exercise of stock purchase warrants in
repayment of debt July 2002 1,625,567 16 396 -- -- 412
Issuance of remaining shares from 2001
business combination August 2002 46,976 1 (1) -- -- --
Net loss for the year -- -- -- (3,622) -- (3,622)
Translation adjustment -- -- -- -- 97 97
---------- ---- ------ -------- ------- -------
Balance at December 31, 2002 50,944,505 579 4,035 (7,160) 197 (2,349)
========== ==== ====== ======== ======= =======
Issuance of shares for services September 2003 400,000 4 29 -- -- 33
Shares retired October 2003 (51) - - -- -- --
Issuance of shares for services November 2003 1,500,000 12 100 -- -- 112
Issuance of shares for cash December 2003 1,500,000 12 113 -- -- 125
Issuance of stock purchase warrants for
financing fee December 2003 -- -- 12 -- -- 12
Net loss for the year -- -- -- (2,786) -- (2,786)
Translation adjustment -- -- -- -- 453 453
---------- ---- ------ -------- ------- -------
Balance at December 31, 2003 54,344,454 607 4,289 (9,946) 650 (4,400)
========== ==== ====== ======== ======= =======
Issuance of shares for services January 2004 550,000 5 27 -- -- 32
Issuance of shares for cash January 2004 2,000,000 17 150 -- -- 167
Issuance of stock purchase warrants for
financing fee January 2004 -- -- 40 -- -- 40
Issuance of shares for cash February 2004 2,500,000 21 187 -- -- 208
Issuance of stock purchase warrants for
financing fee February 2004 -- -- 62 -- -- 62
Issuance of shares for services April 2004 120,000 1 11 -- -- 12
Issuance of shares for bank fee May 2004 500,000 4 62 -- -- 66
Issuance of shares for cash May 2004 2,000,000 16 148 -- -- 164
Issuance of shares for services August 2004 250,000 2 26 -- -- 28
Issuance of shares for cash August 2004 1,466,667 12 128 -- -- 140
Issuance of stock purchase warrants for
financing fee August 2004 -- -- 46 -- -- 46
Issuance of shares for services September 2004 520,000 4 29 -- -- 33
Issuance of shares for cash September 2004 50,000 -- 4 -- -- 4
Issuance of shares for services October 2004 2,106,743 16 132 -- -- 148
Issuance of shares for services November 2004 2,000,000 15 177 -- -- 192
Issuance of shares for cash November 2004 40,000 -- 4 -- -- 4
Net loss for the year -- -- -- (2,202) -- (2,202)
Translation adjustment -- -- -- -- 191 191
---------- ---- ------ -------- ------- -------
Balance at December 31, 2004 68,447,864 E720 E5,522 E(12,148) E 841 E(5,065)
========== ==== ====== ======== ======= =======
Issuance of shares for services January 2005 500,000 4 83 -- -- 87
Issuance of shares for services March 2005 200,000 2 33 -- -- 35
Issuance of shares for services March 2005 1,500,000 11 247 -- -- 258
Issuance of shares for services April 2005 60,000 1 10 -- -- 11
Issuance of shares for cash May 2005 52,000 -- 5 -- -- 5
Issuance of shares for cash June 2005 50,000 -- 3 -- -- 3
Issuance of shares for cash June 2005 50,000 -- 3 -- -- 3
Issuance of shares for cash June 2005 343,500 3 14 -- -- 17
Issuance of shares for cash June 2005 83,300 1 3 -- -- 4
Issuance of shares for cash June 2005 100,000 1 4 -- -- 5
Issuance of shares for cash July 2005 144,516 1 6 -- -- 7
Issuance of shares for cash July 2005 144,516 1 6 -- -- 7
Issuance of shares for cash July 2005 144,516 1 6 -- -- 7
Issuance of shares for cash August 2005 206,452 2 8 -- -- 10
Issuance of shares for cash August 2005 50,000 -- 2 -- -- 2
Issuance of shares for services September 2005 500,000 4 8 -- -- 12
Issuance of shares for services September 2005 500,000 4 8 -- -- 12
Issuance of shares for services September 2005 500,000 4 8 -- -- 12
Issuance of shares for services September 2005 300,000 3 5 -- -- 8
Issuance of shares for services September 2005 68,000 1 1 -- -- 2
Issuance of shares for services September 2005 173,200 1 3 -- -- 4
Issuance of shares for cash October 2005 87,459 1 2 -- -- 3
Issuance of shares for services October 2005 185,000 2 6 -- -- 8
Issuance of shares for cash October 2005 174,918 1 5 -- -- 6
Issuance of shares for cash October 2005 116,612 1 3 -- -- 4
Issuance of shares for cash November 2005 116,611 1 3 -- -- 4
Issuance of shares for cash November 2005 390,667 3 3 -- -- 6
Issuance of shares for services November 2005 20,000 -- -- -- -- --
Issuance of shares for services November 2005 20,000 -- -- -- -- --
Issuance of shares for services November 2005 20,000 -- -- -- -- --
Issuance of shares for services November 2005 500,000 5 9 -- -- 14
Issuance of shares for services December 2005 140,000 2 2 -- -- 4
Issuance of shares for cash December 2005 390,667 3 3 -- -- 6
Issuance of shares for cash December 2005 390,666 3 3 -- -- 6
Issuance of shares for cash December 2005 6,000,000 50 200 -- -- 250
Net loss for the year -- -- -- (1,939) -- (1,939)
Translation adjustment -- -- -- -- (98) (98)
---------- ---- ------ -------- ------- -------
Balance at December 31, 2005 82,670,464 837 6,227 (14,087) 743 (6,280)
========== ==== ====== ======== ======= =======
Issuance of shares for services January 2006 2,500,000 21 31 -- -- 52
Issuance of shares for cash January 2006 4,000,000 33 132 -- -- 165
Issuance of shares for services January 2006 100,000 1 2 -- -- 3
Issuance of shares for cash March 2006 1,500,000 12 38 -- -- 50
Issuance of shares for cash March 2006 2,500,000 21 62 -- -- 83
Issuance of shares for cash March 2006 250,000 2 6 -- -- 8
Issuance of shares for cash March 2006 1,500,000 12 38 -- -- 50
Issuance of shares for services April 2006 100,000 1 4 -- -- 5
Issuance of shares for cash May 2006 300,000 2 3 -- -- 5
Issuance of shares for cash May 2006 300,000 3 7 -- -- 10
Issuance of shares for cash May 2006 2,350,000 18 82 -- -- 100
Debt Conversion - non cash May 2006 1,000,000 8 31 -- -- 39
Issuance of shares for cash June 2006 2,600,000 20 80 -- -- 100
Debt Conversion - non cash July 2006 1,000,000 8 72 -- -- 80
Debt Conversion - non cash July 2006 1,000,000 8 72 -- -- 80
Debt Conversion - non cash July 2006 1,000,000 8 72 -- -- 80
Debt Conversion - non cash July 2006 500,000 4 36 -- -- 40
Issuance of shares for services November 2006 300,000 2 4 -- -- 6
Issuance of shares for cash November 2006 1,300,000 10 90 -- -- 100
Issuance of shares for cash November 2006 1,280,000 10 90 -- -- 100
Issuance of shares for cash December 2006 1,320,000 10 90 -- -- 100
Issuance of shares for cash December 2006 1,320,000 10 90 -- -- 100
Issuance of shares for cash December 2006 330,000 3 22 -- -- 25
Net loss for the year -- -- -- (1,585) -- (1,585)
Translation adjustment -- -- -- -- 4 4
----------- ----- ------ -------- ------- -------
Balance at December 31, 2006 111,020,464 1,064 7,381 (15,672) 747 (6,480)
=========== ===== ====== ======== ======= =======
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Other | | | | |
| | | | | | | | | | | | | | | | | | | Deficit | | | Comprehensive | | | | |
| | | | | | | | | | | | | | | | | | | Accumulated | | | Income — Foreign | | | | |
| | | | | | | | | | | | | | | Additional | | | During the | | | Currency | | | | |
| | | Date of | | | Number of | | | Par | | | Paid-in | | | Development | | | Translation | | | | |
| | | Transaction | | | Shares | | | Value | | | Capital | | | Stage | | | Adjustment | | | Total | |
| Balance at May 2, 1990 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares issued for cash | | June 1990 | | | | 33,311,361 | | | E | 119 | | | E | — | | | E | — | | | E | — | | | E | 119 | |
| Net losses to December 31, 1999 | | | | | | | — | | | | — | | | | — | | | | (376 | ) | | | — | | | | (376 | ) |
| Balance at December 31, 1999 | | | | | | | 33,311,361 | | | | 119 | | | | — | | | | (376 | ) | | | — | | | | (257 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Bank fee | | | | | | | — | | | | — | | | | 806 | | | | — | | | | — | | | | 806 | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (1,314 | ) | | | — | | | | (1,314 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2000 | | | | | | | 33,311,361 | | | | 119 | | | | 806 | | | | (1,690 | ) | | | — | | | | (765 | ) |
| Effect on capital structure resulting from a business combination | | March 2001 | | | | 8,165,830 | | | | 354 | | | | (354 | ) | | | — | | | | — | | | | — | |
| Issuance of stock purchase warrants in connection with credit facility (restated) | | March 2001 | | | | — | | | | — | | | | 210 | | | | — | | | | — | | | | 210 | |
| Issuance of shares for bank fee | | March 2001 | | | | 1,800,000 | | | | 21 | | | | (21 | ) | | | — | | | | — | | | | — | |
| Issuance of shares for bank fee | | June 2001 | | | | 225,144 | | | | 3 | | | | (3 | ) | | | — | | | | — | | | | — | |
| Issuance of shares for cash | | June 2001 | | | | 1,333,333 | | | | 15 | | | | 2,109 | | | | — | | | | — | | | | 2,124 | |
| Exercise of stock purchase warrants in repayment of debt | | June 2001 | | | | 1,176,294 | | | | 13 | | | | 259 | | | | — | | | | — | | | | 272 | |
| Exercise of stock purchase warrants for cash | | December 2001 | | | | 3,250,000 | | | | 37 | | | | 563 | | | | — | | | | — | | | | 600 | |
| Net loss for the year (restated) | | | | | | | — | | | | — | | | | — | | | | (1,848 | ) | | | — | | | | (1,848 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | 100 | | | | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2001 | | | | | | | 49,261,962 | | | | 562 | | | | 3,569 | | | | (3,538 | ) | | | 100 | | | | 693 | |
| Exercise of stock options | | March 2002 | | | | 10,000 | | | | — | | | | 8 | | | | — | | | | — | | | | 8 | |
| Issuance of stock purchase warrants for bank fee | | June 2002 | | | | — | | | | — | | | | 63 | | | | — | | | | — | | | | 63 | |
| Exercise of stock purchase warrants in repayment of debt | | July 2002 | | | | 1,625,567 | | | | 16 | | | | 396 | | | | — | | | | — | | | | 412 | |
49
Issuance of shares for cash January 2007 650,000 5 45 -- -- 50
Issuance of shares for services January 2007 300,000 2 6 -- -- 8
Issuance of shares for services January 2007 200,000 2 4 -- -- 6
Issuance of shares for services January 2007 250,000 2 5 -- -- 7
Issuance of shares for services February 2007 250,000 2 5 -- -- 7
Issuance of shares for cash February 2007 1,420,000 11 99 -- -- 110
Issuance of shares for cash February 2007 325,000 2 22 -- -- 24
Issuance of shares for cash March 2007 650,000 5 45 -- -- 50
Issuance of shares for cash March 2007 8,712,000 115 875 -- -- 990
Debt Conversion - non cash March 2007 12,500,000 94 2,505 -- -- 2,599
Issuance of shares for services April 2007 100,000 1 13 -- -- 14
Issuance of shares for services April 2007 200,000 1 25 -- -- 26
Issuance of shares for services April 2007 1,000,000 7 67 -- -- 74
Issuance of shares for cash May 2007 1,000,000 7 140 -- -- 147
Issuance of shares for cash May 2007 750,000 6 105 -- -- 111
Debt Cancellation - non cash May 2007 -- -- 242 -- -- 242
Debt Conversion - non cash June 2007 9,469,000 70 891 -- -- 961
Issuance of shares for cash June 2007 5,393,000 40 760 -- -- 800
Issuance of shares for services June 2007 261,250 2 25 -- -- 27
Issuance of shares for services June 2007 261,250 2 25 -- -- 27
Issuance of shares for officer
compensation June 2007 2,500,000 19 318 -- -- 337
Issuance of shares for officer
compensation June 2007 2,500,000 19 318 -- -- 337
Issuance of shares for officer
compensation June 2007 4,000,000 30 508 -- -- 538
Issuance of shares for officer
compensation June 2007 1,000,000 7 127 -- -- 134
Issuance of shares for officer
compensation June 2007 6,000,000 45 762 -- -- 807
Issuance of shares for services June 2007 135,000 1 12 -- -- 13
Issuance of shares for cash June 2007 2,250,000 17 12 -- -- 29
Issuance of shares for cash July 2007 5,550,000 42 1,208 -- -- 1,250
Issuance of shares for cash August 2007 933,333 7 193 -- -- 200
Issuance of shares for services August 2007 1,000,000 7 66 -- -- 73
Issuance of shares for services August 2007 1,000,000 7 66 -- -- 73
Issuance of shares for services August 2007 100,000 1 7 -- -- 8
Issuance of shares for services September 2007 300,000 2 21 -- -- 23
Issuance of shares for cash September 2007 1,666,667 12 344 -- -- 356
Cancellation of shares for collateral September 2007 -2,000,000 -- -- -- -- --
Issuance of shares for cash October 2007 2,350,000 17 483 -- -- 500
Issuance of shares for cash November 2007 2,966,666 21 623 -- -- 644
Issuance of shares for services December 2007 500,000 3 48 -- -- 51
Net loss for the year -- -- -- (9,294) -- (9,294)
Translation adjustment -- -- -- -- (75) (75)
----------- ----- ------ -------- ------- -------
Balance at December 31, 2007 187,463,630 1,697 18,401 (24,966) 672 (4,196)
=========== ===== ====== ======== ======= =======
Issuance of shares for services January 2008 800,000 6 79 -- -- 85
Issuance of shares for services January 2008 200,000 1 20 -- -- 21
Issuance of shares for cash February 2008 1,000,000 7 326 -- -- 333
Issuance of shares for services March 2008 500,000 3 73 -- -- 76
Issuance of shares for services March 2008 500,000 3 73 -- -- 76
Issuance of shares for cash June 2008 300,000 2 94 -- -- 96
Issuance of shares for cash June 2008 1,300,000 8 492 -- -- 500
Issuance of shares for services July 2008 2,000,000 13 239 -- -- 252
Issuance of shares for services August 2008 250,000 2 39 -- -- 41
Issuance of shares for cash December 2008 1,000,000 7 319 -- -- 326
Net loss for the period -- -- -- (6,938) -- (6,938)
Translation adjustment -- -- -- -- 13 13
----------- ----- ------ -------- ------- -------
Balance at December 31, 2008 195,313,630 1,749 20,155 (31,904) 685 (9,315)
=========== ===== ====== ======== ======= =======
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Other | | | | |
| | | | | | | | | | | | | | | | | | | Deficit | | | Comprehensive | | | | |
| | | | | | | | | | | | | | | | | | | Accumulated | | | Income — Foreign | | | | |
| | | | | | | | | | | | | | | Additional | | | During the | | | Currency | | | | |
| | | Date of | | | Number of | | | Par | | | Paid-in | | | Development | | | Translation | | | | |
| | | Transaction | | | Shares | | | Value | | | Capital | | | Stage | | | Adjustment | | | Total | |
| Issuance of remaining shares from 2001 business combination | | August 2002 | | | | 46,976 | | | | 1 | | | | (1 | ) | | | — | | | | — | | | | — | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (3,622 | ) | | | — | | | | (3,622 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | 97 | | | | 97 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2002 | | | | | | | 50,944,505 | | | | 579 | | | | 4,035 | | | | (7,160 | ) | | | 197 | | | | (2,349 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for services | | September 2003 | | | | 400,000 | | | | 4 | | | | 29 | | | | — | | | | — | | | | 33 | |
| Shares retired | | October 2003 | | | | (51 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| Issuance of shares for services | | November 2003 | | | | 1,500,000 | | | | 12 | | | | 100 | | | | — | | | | — | | | | 112 | |
| Issuance of shares for cash | | December 2003 | | | | 1,500,000 | | | | 12 | | | | 113 | | | | — | | | | — | | | | 125 | |
| Issuance of stock purchase warrants for financing fee | | December 2003 | | | | — | | | | — | | | | 12 | | | | — | | | | — | | | | 12 | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (2,786 | ) | | | — | | | | (2,786 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | 453 | | | | 453 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2003 | | | | | | | 54,344,454 | | | | 607 | | | | 4,289 | | | | (9,946 | ) | | | 650 | | | | (4,400 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for services | | January 2004 | | | | 550,000 | | | | 5 | | | | 27 | | | | — | | | | — | | | | 32 | |
| Issuance of shares for cash | | January 2004 | | | | 2,000,000 | | | | 17 | | | | 150 | | | | — | | | | — | | | | 167 | |
| Issuance of stock purchase warrants for financing fee | | January 2004 | | | | — | | | | — | | | | 40 | | | | — | | | | — | | | | 40 | |
| Issuance of shares for cash | | February 2004 | | | | 2,500,000 | | | | 21 | | | | 187 | | | | — | | | | — | | | | 208 | |
| Issuance of stock purchase warrants for financing fee | | February 2004 | | | | — | | | | — | | | | 62 | | | | — | | | | — | | | | 62 | |
| Issuance of shares for services | | April 2004 | | | | 120,000 | | | | 1 | | | | 11 | | | | — | | | | — | | | | 12 | |
| Issuance of shares for bank fee | | May 2004 | | | | 500,000 | | | | 4 | | | | 62 | | | | — | | | | — | | | | 66 | |
| Issuance of shares for cash | | May 2004 | | | | 2,000,000 | | | | 16 | | | | 148 | | | | — | | | | — | | | | 164 | |
| Issuance of shares for services | | August 2004 | | | | 250,000 | | | | 2 | | | | 26 | | | | — | | | | — | | | | 28 | |
| Issuance of shares for cash | | August 2004 | | | | 1,466,667 | | | | 12 | | | | 128 | | | | — | | | | — | | | | 140 | |
| Issuance of stock purchase warrants for financing fee | | August 2004 | | | | — | | | | — | | | | 46 | | | | — | | | | — | | | | 46 | |
| Issuance of shares for services | | September 2004 | | | | 520,000 | | | | 4 | | | | 29 | | | | — | | | | — | | | | 33 | |
| Issuance of shares for cash | | September 2004 | | | | 50,000 | | | | — | | | | 4 | | | | — | | | | — | | | | 4 | |
| Issuance of shares for services | | October 2004 | | | | 2,106,743 | | | | 16 | | | | 132 | | | | — | | | | — | | | | 148 | |
| Issuance of shares for services | | November 2004 | | | | 2,000,000 | | | | 15 | | | | 177 | | | | — | | | | — | | | | 192 | |
| Issuance of shares for cash | | November 2004 | | | | 40,000 | | | | — | | | | 4 | | | | — | | | | — | | | | 4 | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (2,202 | ) | | | — | | | | (2,202 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | 191 | | | | 191 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2004 | | | | | | | 68,447,864 | | | E | 720 | | | E | 5,522 | | | E | (12,148 | ) | | E | 841 | | | E | (5,065 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for services | | January 2005 | | | | 500,000 | | | | 4 | | | | 83 | | | | — | | | | — | | | | 87 | |
| Issuance of shares for services | | March 2005 | | | | 200,000 | | | | 2 | | | | 33 | | | | — | | | | — | | | | 35 | |
| Issuance of shares for services | | March 2005 | | | | 1,500,000 | | | | 11 | | | | 247 | | | | — | | | | — | | | | 258 | |
| Issuance of shares for services | | April 2005 | | | | 60,000 | | | | 1 | | | | 10 | | | | — | | | | — | | | | 11 | |
| Issuance of shares for cash | | May 2005 | | | | 52,000 | | | | — | | | | 5 | | | | — | | | | — | | | | 5 | |
| Issuance of shares for cash | | June 2005 | | | | 50,000 | | | | — | | | | 3 | | | | — | | | | — | | | | 3 | |
| Issuance of shares for cash | | June 2005 | | | | 50,000 | | | | — | | | | 3 | | | | — | | | | — | | | | 3 | |
| Issuance of shares for cash | | June 2005 | | | | 343,500 | | | | 3 | | | | 14 | | | | — | | | | — | | | | 17 | |
50
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Other | | | | |
| | | | | | | | | | | | | | | | | | | Deficit | | | Comprehensive | | | | |
| | | | | | | | | | | | | | | | | | | Accumulated | | | Income — Foreign | | | | |
| | | | | | | | | | | | | | | Additional | | | During the | | | Currency | | | | |
| | | Date of | | Number of | | | Par | | | Paid-in | | | Development | | | Translation | | | | |
| | | Transaction | | Shares | | | Value | | | Capital | | | Stage | | | Adjustment | | | Total | |
| Issuance of shares for cash | | June 2005 | | | 83,300 | | | | 1 | | | | 3 | | | | — | | | | — | | | | 4 | |
| Issuance of shares for cash | | June 2005 | | | 100,000 | | | | 1 | | | | 4 | | | | — | | | | — | | | | 5 | |
| Issuance of shares for cash | | July 2005 | | | 144,516 | | | | 1 | | | | 6 | | | | — | | | | — | | | | 7 | |
| Issuance of shares for cash | | July 2005 | | | 144,516 | | | | 1 | | | | 6 | | | | — | | | | — | | | | 7 | |
| Issuance of shares for cash | | July 2005 | | | 144,516 | | | | 1 | | | | 6 | | | | — | | | | — | | | | 7 | |
| Issuance of shares for cash | | August 2005 | | | 206,452 | | | | 2 | | | | 8 | | | | — | | | | — | | | | 10 | |
| Issuance of shares for cash | | August 2005 | | | 50,000 | | | | — | | | | 2 | | | | — | | | | — | | | | 2 | |
| Issuance of shares for services | | September 2005 | | | 500,000 | | | | 4 | | | | 8 | | | | — | | | | — | | | | 12 | |
| Issuance of shares for services | | September 2005 | | | 500,000 | | | | 4 | | | | 8 | | | | — | | | | — | | | | 12 | |
| Issuance of shares for services | | September 2005 | | | 500,000 | | | | 4 | | | | 8 | | | | — | | | | — | | | | 12 | |
| Issuance of shares for services | | September 2005 | | | 300,000 | | | | 3 | | | | 5 | | | | — | | | | — | | | | 8 | |
| Issuance of shares for services | | September 2005 | | | 68,000 | | | | 1 | | | | 1 | | | | — | | | | — | | | | 2 | |
| Issuance of shares for services | | September 2005 | | | 173,200 | | | | 1 | | | | 3 | | | | — | | | | — | | | | 4 | |
| Issuance of shares for cash | | October 2005 | | | 87,459 | | | | 1 | | | | 2 | | | | — | | | | — | | | | 3 | |
| Issuance of shares for services | | October 2005 | | | 185,000 | | | | 2 | | | | 6 | | | | — | | | | — | | | | 8 | |
| Issuance of shares for cash | | October 2005 | | | 174,918 | | | | 1 | | | | 5 | | | | — | | | | — | | | | 6 | |
| Issuance of shares for cash | | October 2005 | | | 116,612 | | | | 1 | | | | 3 | | | | — | | | | — | | | | 4 | |
| Issuance of shares for cash | | November 2005 | | | 116,611 | | | | 1 | | | | 3 | | | | — | | | | — | | | | 4 | |
| Issuance of shares for cash | | November 2005 | | | 390,667 | | | | 3 | | | | 3 | | | | — | | | | — | | | | 6 | |
| Issuance of shares for services | | November 2005 | | | 20,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Issuance of shares for services | | November 2005 | | | 20,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Issuance of shares for services | | November 2005 | | | 20,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Issuance of shares for services | | November 2005 | | | 500,000 | | | | 5 | | | | 9 | | | | — | | | | — | | | | 14 | |
| Issuance of shares for services | | December 2005 | | | 140,000 | | | | 2 | | | | 2 | | | | — | | | | — | | | | 4 | |
| Issuance of shares for cash | | December 2005 | | | 390,667 | | | | 3 | | | | 3 | | | | — | | | | — | | | | 6 | |
| Issuance of shares for cash | | December 2005 | | | 390,666 | | | | 3 | | | | 3 | | | | — | | | | — | | | | 6 | |
| Issuance of shares for cash | | December 2005 | | | 6,000,000 | | | | 50 | | | | 200 | | | | — | | | | — | | | | 250 | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (1,939 | ) | | | — | | | | (1,939 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | (98 | ) | | | (98 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2005 | | | | | | | 82,670,464 | | | | 837 | | | | 6,227 | | | | (14,087 | ) | | | 743 | | | | (6,280 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for services | | January 2006 | | | 2,500,000 | | | | 21 | | | | 31 | | | | — | | | | — | | | | 52 | |
| Issuance of shares for cash | | January 2006 | | | 4,000,000 | | | | 33 | | | | 132 | | | | — | | | | — | | | | 165 | |
| Issuance of shares for services | | January 2006 | | | 100,000 | | | | 1 | | | | 2 | | | | — | | | | — | | | | 3 | |
| Issuance of shares for cash | | March 2006 | | | 1,500,000 | | | | 12 | | | | 38 | | | | — | | | | — | | | | 50 | |
| Issuance of shares for cash | | March 2006 | | | 2,500,000 | | | | 21 | | | | 62 | | | | — | | | | — | | | | 83 | |
| Issuance of shares for cash | | March 2006 | | | 250,000 | | | | 2 | | | | 6 | | | | — | | | | — | | | | 8 | |
| Issuance of shares for cash | | March 2006 | | | 1,500,000 | | | | 12 | | | | 38 | | | | — | | | | — | | | | 50 | |
| Issuance of shares for services | | April 2006 | | | 100,000 | | | | 1 | | | | 4 | | | | — | | | | — | | | | 5 | |
| Issuance of shares for cash | | May 2006 | | | 300,000 | | | | 2 | | | | 3 | | | | — | | | | — | | | | 5 | |
| Issuance of shares for cash | | May 2006 | | | 300,000 | | | | 3 | | | | 7 | | | | — | | | | — | | | | 10 | |
| Issuance of shares for cash | | May 2006 | | | 2,350,000 | | | | 18 | | | | 82 | | | | — | | | | — | | | | 100 | |
| Debt Conversion — non cash | | May 2006 | | | 1,000,000 | | | | 8 | | | | 31 | | | | — | | | | — | | | | 39 | |
| Issuance of shares for cash | | June 2006 | | | 2,600,000 | | | | 20 | | | | 80 | | | | — | | | | — | | | | 100 | |
| Debt Conversion — non cash | | July 2006 | | | 1,000,000 | | | | 8 | | | | 72 | | | | — | | | | — | | | | 80 | |
| Debt Conversion — non cash | | July 2006 | | | 1,000,000 | | | | 8 | | | | 72 | | | | — | | | | — | | | | 80 | |
| Debt Conversion — non cash | | July 2006 | | | 1,000,000 | | | | 8 | | | | 72 | | | | — | | | | — | | | | 80 | |
| Debt Conversion — non cash | | July 2006 | | | 500,000 | | | | 4 | | | | 36 | | | | — | | | | — | | | | 40 | |
51
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Other | | | | |
| | | | | | | | | | | | | | | | | | | Deficit | | | Comprehensive | | | | |
| | | | | | | | | | | | | | | | | | | Accumulated | | | Income — Foreign | | | | |
| | | | | | | | | | | | | | | Additional | | | During the | | | Currency | | | | |
| | | Date of | | Number of | | | Par | | | Paid-in | | | Development | | | Translation | | | | |
| | | Transaction | | Shares | | | Value | | | Capital | | | Stage | | | Adjustment | | | Total | |
| Issuance of shares for services | | November 2006 | | | 300,000 | | | | 2 | | | | 4 | | | | — | | | | — | | | | 6 | |
| Issuance of shares for cash | | November 2006 | | | 1,300,000 | | | | 10 | | | | 90 | | | | — | | | | — | | | | 100 | |
| Issuance of shares for cash | | November 2006 | | | 1,280,000 | | | | 10 | | | | 90 | | | | — | | | | — | | | | 100 | |
| Issuance of shares for cash | | December 2006 | | | 1,320,000 | | | | 10 | | | | 90 | | | | — | | | | — | | | | 100 | |
| Issuance of shares for cash | | December 2006 | | | 1,320,000 | | | | 10 | | | | 90 | | | | — | | | | — | | | | 100 | |
| Issuance of shares for cash | | December 2006 | | | 330,000 | | | | 3 | | | | 22 | | | | — | | | | — | | | | 25 | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (1,585 | ) | | | — | | | | (1,585 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | 4 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2006 | | | | | | | 111,020,464 | | | | 1,064 | | | | 7,381 | | | | (15,672 | ) | | | 747 | | | | (6,480 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| Issuance of shares for cash | | January 2007 | | | 650,000 | | | | 5 | | | | 45 | | | | — | | | | — | | | | 50 | |
| Issuance of shares for services | | January 2007 | | | 300,000 | | | | 2 | | | | 6 | | | | — | | | | — | | | | 8 | |
| Issuance of shares for services | | January 2007 | | | 200,000 | | | | 2 | | | | 4 | | | | — | | | | — | | | | 6 | |
| Issuance of shares for services | | January 2007 | | | 250,000 | | | | 2 | | | | 5 | | | | — | | | | — | | | | 7 | |
| Issuance of shares for services | | February 2007 | | | 250,000 | | | | 2 | | | | 5 | | | | — | | | | — | | | | 7 | |
| Issuance of shares for cash | | February 2007 | | | 1,420,000 | | | | 11 | | | | 99 | | | | — | | | | — | | | | 110 | |
| Issuance of shares for cash | | February 2007 | | | 325,000 | | | | 2 | | | | 22 | | | | — | | | | — | | | | 24 | |
| Issuance of shares for cash | | March 2007 | | | 650,000 | | | | 5 | | | | 45 | | | | — | | | | — | | | | 50 | |
| Issuance of shares for cash | | March 2007 | | | 8,712,000 | | | | 115 | | | | 875 | | | | — | | | | — | | | | 990 | |
| Debt Conversion — non cash | | March 2007 | | | 12,500,000 | | | | 94 | | | | 2,505 | | | | — | | | | — | | | | 2,599 | |
| Issuance of shares for services | | April 2007 | | | 100,000 | | | | 1 | | | | 13 | | | | — | | | | — | | | | 14 | |
| Issuance of shares for services | | April 2007 | | | 200,000 | | | | 1 | | | | 25 | | | | — | | | | — | | | | 26 | |
| Issuance of shares for services | | April 2007 | | | 1,000,000 | | | | 7 | | | | 67 | | | | — | | | | — | | | | 74 | |
| Issuance of shares for cash | | May 2007 | | | 1,000,000 | | | | 7 | | | | 140 | | | | — | | | | — | | | | 147 | |
| Issuance of shares for cash | | May 2007 | | | 750,000 | | | | 6 | | | | 105 | | | | — | | | | — | | | | 111 | |
| Debt Cancellation — non cash | | May 2007 | | | — | | | | — | | | | 242 | | | | — | | | | — | | | | 242 | |
| Debt Conversion — non cash | | June 2007 | | | 9,469,000 | | | | 70 | | | | 891 | | | | — | | | | — | | | | 961 | |
| Issuance of shares for cash | | June 2007 | | | 5,393,000 | | | | 40 | | | | 760 | | | | — | | | | — | | | | 800 | |
| Issuance of shares for services | | June 2007 | | | 261,250 | | | | 2 | | | | 25 | | | | — | | | | — | | | | 27 | |
| Issuance of shares for services | | June 2007 | | | 261,250 | | | | 2 | | | | 25 | | | | — | | | | — | | | | 27 | |
| Issuance of shares for officer compensation | | June 2007 | | | 2,500,000 | | | | 19 | | | | 318 | | | | — | | | | — | | | | 337 | |
| Issuance of shares for officer compensation | | June 2007 | | | 2,500,000 | | | | 19 | | | | 318 | | | | — | | | | — | | | | 337 | |
| Issuance of shares for officer compensation | | June 2007 | | | 4,000,000 | | | | 30 | | | | 508 | | | | — | | | | — | | | | 538 | |
| Issuance of shares for officer compensation | | June 2007 | | | 1,000,000 | | | | 7 | | | | 127 | | | | — | | | | — | | | | 134 | |
| Issuance of shares for officer compensation | | June 2007 | | | 6,000,000 | | | | 45 | | | | 762 | | | | — | | | | — | | | | 807 | |
| Issuance of shares for services | | June 2007 | | | 135,000 | | | | 1 | | | | 12 | | | | — | | | | — | | | | 13 | |
| Issuance of shares for cash | | June 2007 | | | 2,250,000 | | | | 17 | | | | 12 | | | | — | | | | — | | | | 29 | |
| Issuance of shares for cash | | July 2007 | | | 5,550,000 | | | | 42 | | | | 1,208 | | | | — | | | | — | | | | 1,250 | |
| Issuance of shares for cash | | August 2007 | | | 933,333 | | | | 7 | | | | 193 | | | | — | | | | — | | | | 200 | |
| Issuance of shares for services | | August 2007 | | | 1,000,000 | | | | 7 | | | | 66 | | | | — | | | | — | | | | 73 | |
| Issuance of shares for services | | August 2007 | | | 1,000,000 | | | | 7 | | | | 66 | | | | — | | | | — | | | | 73 | |
| Issuance of shares for services | | August 2007 | | | 100,000 | | | | 1 | | | | 7 | | | | — | | | | — | | | | 8 | |
| Issuance of shares for services | | September 2007 | | | 300,000 | | | | 2 | | | | 21 | | | | — | | | | — | | | | 23 | |
| Issuance of shares for cash | | September 2007 | | | 1,666,667 | | | | 12 | | | | 344 | | | | — | | | | — | | | | 356 | |
| Cancellation of shares for collateral | | September 2007 | | | -2,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Issuance of shares for cash | | October 2007 | | | 2,350,000 | | | | 17 | | | | 483 | | | | — | | | | — | | | | 500 | |
| Issuance of shares for cash | | November 2007 | | | 2,966,666 | | | | 21 | | | | 623 | | | | — | | | | — | | | | 644 | |
52
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Other | | | | |
| | | | | | | | | | | | | | | | | | | Deficit | | | Comprehensive | | | | |
| | | | | | | | | | | | | | | | | | | Accumulated | | | Income — Foreign | | | | |
| | | | | | | | | | | | | | | Additional | | | During the | | | Currency | | | | |
| | | Date of | | Number of | | | Par | | | Paid-in | | | Development | | | Translation | | | | |
| | | Transaction | | Shares | | | Value | | | Capital | | | Stage | | | Adjustment | | | Total | |
| Issuance of shares for services | | December 2007 | | | 500,000 | | | | 3 | | | | 48 | | | | — | | | | — | | | | 51 | |
| Net loss for the year | | | | | | | — | | | | — | | | | — | | | | (9,294 | ) | | | — | | | | (9,294 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | (75 | ) | | | (75 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2007 | | | | | | | 187,463,630 | | | | 1,697 | | | | 18,401 | | | | (24,966 | ) | | | 672 | | | | (4,196 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| Issuance of shares for services | | January 2008 | | | 800,000 | | | | 6 | | | | 79 | | | | — | | | | — | | | | 85 | |
| Issuance of shares for services | | January 2008 | | | 200,000 | | | | 1 | | | | 20 | | | | — | | | | — | | | | 21 | |
| Issuance of shares for cash | | February 2008 | | | 1,000,000 | | | | 7 | | | | 326 | | | | — | | | | — | | | | 333 | |
| Issuance of shares for services | | March 2008 | | | 500,000 | | | | 3 | | | | 73 | | | | — | | | | — | | | | 76 | |
| Issuance of shares for services | | March 2008 | | | 500,000 | | | | 3 | | | | 73 | | | | — | | | | — | | | | 76 | |
| Issuance of shares for cash | | June 2008 | | | 300,000 | | | | 2 | | | | 94 | | | | — | | | | — | | | | 96 | |
| Issuance of shares for cash | | June 2008 | | | 1,300,000 | | | | 8 | | | | 492 | | | | — | | | | — | | | | 500 | |
| Issuance of shares for services | | July 2008 | | | 2,000,000 | | | | 13 | | | | 239 | | | | — | | | | — | | | | 252 | |
| Issuance of shares for services | | August 2008 | | | 250,000 | | | | 2 | | | | 39 | | | | — | | | | — | | | | 41 | |
| Issuance of shares for cash | | December 2008 | | | 1,000,000 | | | | 7 | | | | 319 | | | | — | | | | — | | | | 326 | |
| Net loss for the period | | | | | | | — | | | | — | | | | — | | | | (6,938 | ) | | | — | | | | (6,938 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | 13 | | | | 13 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2008 | | | | | | | 195,313,630 | | | | 1,749 | | | | 20,155 | | | | (31,904 | ) | | | 685 | | | | (9,315 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| Issuance of shares for services | | March 2009 | | | 250,000 | | | | 2 | | | | 36 | | | | — | | | | — | | | | 38 | |
| Issuance of stock options for acquisition | | April 2009 | | | — | | | | — | | | | 601 | | | | — | | | | — | | | | 601 | |
| Issuance of shares for services | | May 2009 | | | 250,000 | | | | 1 | | | | 27 | | | | — | | | | — | | | | 28 | |
| Issuance of shares for services | | September 2009 | | | 250,000 | | | | 2 | | | | 21 | | | | — | | | | — | | | | 23 | |
| Net loss for the period | | | | | | | — | | | | — | | | | — | | | | (10,186 | ) | | | — | | | | (10,186 | ) |
| Translation adjustment | | | | | | | — | | | | — | | | | — | | | | — | | | | (4 | ) | | | (4 | ) |
| | | | | | | �� | | | | | | | | | | | | | | | | |
| Balance at December 31, 2009 | | | | | | | 196,063,630 | | | E | 1,754 | | | E | 20,840 | | | E | (42,090 | ) | | E | 681 | | | E | (18,815 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
50
53
MYMETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2009 and 2008 and
2007 and
the Period from May 2, 1990 (Inception) to December 31,
2008
(In2009(In Thousands of Euros)
Total
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
2008 2007 2008)
------- ------- ---------------
Cash Flows from Operating Activities
Net loss E(6,938) E(9,294) E(31,904)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 17 -- 530
Goodwill impairment -- -- 209
Fees paid in warrants -- -- 223
Gain on extinguishment of debt -- (774) (774)
Services and fees paid in common stock 551 2,590 5,135
Amortization of debt discount -- -- 210
Changes in operating assets and liabilities,
net of effects from reverse purchase
Receivables 57 (56) 24
Accounts payable (1,316) 1,148 1,747
Taxes and social costs payable 21 (1) 25
Other (110) (247) (37)
------- ------- --------
Net cash used in operating activities (7,718) (6,634) (24,612)
Cash Flows from Investing Activities
Patents and other -- 300 (393)
Purchase of property and equipment (83) -- (83)
Short-term investments 60 (60) --
Cash acquired in reverse purchase -- -- 13
------- ------- --------
Net cash provided by (used in)
investing activities (23) 240 (463)
Cash Flows from Financing Activities
Proceeds from the issuance of
common stock and warrants 1,255 5,360 11,630
Borrowings from shareholders -- 730 972
Increase in notes payable and other
short-term advances 6,823 1,999 13,917
Decrease in notes payable and other
short-term advances -- (1,490) (1,490)
Loan fees -- -- (130)
------- ------- --------
Net cash provided by financing activities 8,078 6,599 24,899
Effect of exchange rate changes on cash 13 (75) 685
------- ------- --------
Net increase in cash 350 130 509
Cash, beginning of period 159 29 --
------- ------- --------
Cash, end of period E 509 E 159 E 509
======= ======= ========
| | | | | | | | | | | | | |
| | | | | | | | | | | Total | |
| | | | | | | | | | | Accumulated | |
| | | | | | | | | | | During | |
| | | | | | | | | | | Development | |
| | | | | | | | | | | Stage | |
| | | | | | | | | | | (May 2, 1990 to | |
| | | | | | | | | | | December 31, | |
| | | 2009 | | | 2008 | | | 2009) | |
| Cash Flows from Operating Activities | | | | | | | | | | | | |
| Net loss | | E | (10,186 | ) | | E | (6,938 | ) | | E | (42,090 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | | | |
| Change in the fair value of acquisition-related contingent consideration | | | (1,614 | ) | | | — | | | | (1,614 | ) |
| Depreciation and amortization | | | 226 | | | | 17 | | | | 756 | |
| Goodwill impairment | | | — | | | | — | | | | 209 | |
| Fees paid in warrants | | | — | | | | — | | | | 223 | |
| Gain on extinguishment of debt | | | — | | | | — | | | | (774 | ) |
| Services and fees paid in common stock | | | 89 | | | | 551 | | | | 5,224 | |
| Amortization of debt discount | | | — | | | | — | | | | 210 | |
| Changes in operating assets and liabilities, net of effects from reverse purchase | | | | | | | | | | | | |
| Receivables | | | 1 | | | | 57 | | | | 25 | |
| Accounts payable | | | 374 | | | | (1,316 | ) | | | 2,121 | |
| Taxes and social costs payable | | | 16 | | | | 21 | | | | 41 | |
| Other | | | 48 | | | | (110 | ) | | | 11 | |
| | | | | | | | | | |
| Net cash used in operating activities | | | (11,046 | ) | | | (7,718 | ) | | | (35,658 | ) |
| | | | | | | | | | | | | |
| Cash Flows from Investing Activities | | | | | | | | | | | | |
| Patents and other | | | — | | | | — | | | | (393 | ) |
| Purchase of property and equipment | | | (140 | ) | | | (83 | ) | | | (223 | ) |
| Acquisition of subsidiary, net of cash acquired of E58 | | | (4,942 | ) | | | — | | | | (4,942 | ) |
| Short-term investments | | | — | | | | 60 | | | | — | |
| Cash acquired in reverse purchase | | | — | | | | — | | | | 13 | |
| | | | | | | | | | |
| Net cash used in investing activities | | | (5,082 | ) | | | (23 | ) | | | (5,545 | ) |
| Cash Flows from Financing Activities | | | | | | | | | | | | |
| Proceeds from the issuance of common stock and warrants | | | — | | | | 1,255 | | | | 11,630 | |
| Borrowings from shareholders | | | — | | | | — | | | | 972 | |
| Increase in notes payable and other short-term advances | | | 18,582 | | | | 6,823 | | | | 32,499 | |
| Decrease in notes payable and other short-term advances | | | — | | | | — | | | | (1,490 | ) |
| Loan fees | | | — | | | | — | | | | (130 | ) |
| | | | | | | | | | |
| Net cash provided by financing activities | | | 18,582 | | | | 8,078 | | | | 43,481 | |
| Effect of exchange rate changes on cash | | | (4 | ) | | | 13 | | | | 681 | |
| | | | | | | | | | |
| Net increase in cash | | | 2,450 | | | | 350 | | | | 2,959 | |
| Cash, beginning of period | | | 509 | | | | 159 | | | | — | |
| | | | | | | | | | |
| Cash, end of period | | E | 2,959 | | | E | 509 | | | E | 2,959 | |
| | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
51
54
MYMETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
Basis of Presentation
The amounts in the notes are rounded to the nearest thousand except for share and per share amounts.
Mymetics Corporation (the "Company"“Company”) was created for the purpose of engaging in research and development of human health products. Its main research efforts have been concentrated in the prevention and treatment of the AIDS virus. The Company has established a network which enables it to work with education centers, research centers, pharmaceutical laboratories and biotechnology companies. Mymetics intends to expand its range of candidate vaccines and
network of collaborators by thehas also acquired from a close scientific partner an advanced malaria vaccine project currently in clinical trial. The acquisition of Bestewil Holdingand Mymetics B.V. from its
parent, NORWOOD IMMUNOLOGY LIMITED ("NIL") during 2009, brought fundamental virosome technology and know-how plus ongoing programs designed to combat: Respiratory Syncytial Virus (RSV), Influenza and all issued and outstanding
sharesHerpes Simplex Viruses (HSV), to the portfolio. The detailed financial implications of capital stockthe acquisition are presented in Note 7. Acquisition of Virosome Biologicals B.V. See Note 7 Subsequent
Events.
Bestewil.
These financial statements have been prepared treating the Company as a development stage company. As of December 31, 2008,2009, the Company had not performed any stage III clinical testing and a commercially viable product is not expected for several more years. As such, the Company has not generated significant revenue. Revenue reported by the Company for 2008 consist2009 consists of incidental grant revenue.revenue and early stage licensing income from Solvay Pharmaceutical for use of the Company’s patents. For the purpose of these financial statements, the development stage started May 2, 1990.
These financial statements have also been prepared assuming the Company will continue as a going concern. The Company has experienced significant losses since inception resulting in a deficit accumulated during the development stage of E31,904E42,090 at December 31, 2008.2009. Deficits in operating cash flows since inception have been financed through debt and equity funding sources. In order to remain a going concern and continue the Company'sCompany’s research and development activities, management intends to seek additional funding. Further, the Company'sCompany’s current liabilities exceed its current assets by E418E4,283 as of December 31, 2008,2009, and there is no assurance that cash will become available to pay current liabilities in the near term. Management is seeking additional financing but there can be no assurance that management will be successful in any of those efforts.
The Company is focusing its efforts on funding its on-going expenses through high net worth individuals located in Switzerland. To date, these individuals have purchasedgranted the Company secured convertible loans in addition to purchasing restricted common shares at prices at a premium to the market price of Mymetics shares and have introduced management to other high net worth individuals who have a similar interest in the Company'sCompany’s science and mission. The Company expectsCollaboration is ongoing with reputable private financial organizations in order to continue to rely on its existing high net worth
shareholders and new individuals who they knowcreate further equity investment by private placements to meet itsthe Company’s expenses during the next 12 months.
months and beyond.
55
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated.
Foreign Currency Translation
The Company translates non-Euro assets and liabilities of its subsidiaries at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the year. Unrealized gains or losses from these translations are reported as a separate component of comprehensive income. Transaction gains or losses are included in general and administrative expenses in the consolidated statements of operations. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. The
Company'sCompany’s reporting currency is the Euro because substantially all of the
Company'sCompany’s activities are conducted in Europe.
52
Cash and Cash Flow Disclosure
Cash deposits are occasionally in excess of insured amounts.not insured. Interest paid was zeronil in 20082009 and E138 in 2007. The Company has paid no income tax since its
inception.
Short Term Investments
Short term investments consisted of time deposits with initial three-month
maturities. Short term investments were reported at market value which
approximates cost and there were no gains or losses in 2008.
Revenue Recognition
Revenue related to the sale of products is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured.
Grant revenue is recognized when the associated costs are incurred.
Receivables
Receivables are stated at their outstanding principal balances. Management reviews the collectability of receivables on a periodic basis and determines the appropriate amount of any allowance. Based on this review procedure, management has determined that the allowances at December 31, 20082009 and 20072008 are sufficient. The Company charges off receivables to the allowance when management determines that a receivable is not collectible. The Company may retain a security interest in the products sold.
Property and Equipment
Property and equipment is recorded at cost and is depreciated over its estimated useful life on straight linestraight-line basis from the date placed in service. Estimated useful lives are usually taken as 3 years.
Current liabilities
Current liabilities
License Contract
The license contract was acquired as part of the acquisition of Bestewil. It is amortized over 14 years on a straight-line basis.
56
In-Process Research and Development
In-Process research and development (referred to as IPR&D) represents the estimated fair value assigned to research and development projects acquired in a purchased business combination that have not been completed at December 31,2008the date of acquisition and which have no alternative future use. IPR&D assets acquired in a business combination after January 1, 2009, are capitalized as indefinite-lived intangible assets. These assets remain indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period prior to completion or abandonment, those acquired indefinite-lived assets are not amortized but are tested for impairment annually, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.
Impairment of Long-Lived Assets
Long-lived assets, which include E25 due for taxesproperty and social
costs payableequipment, and the balancelicense contract, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of E991the asset may not be recoverable. The impairment testing involves comparing the carrying amount to various suppliersthe forecasted undiscounted future cash flows generated by that asset. In the event the carrying value of the assets exceeds the undiscounted future cash flows generated by that asset and the carrying value is not considered recoverable, impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. An impairment loss would be recognized in net income in the period that the impairment occurs.
Goodwill
Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. Goodwill is assessed for impairment on an annual basis as of April 1st of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment model prescribes a two-step method for determining goodwill impairment. In the first step, the Company determines the fair value of its reporting unit using an enterprise value analysis. If the net book value of its reporting unit exceeds the fair value, then the second step of the impairment test is performed which requires allocation of the Company’s reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge will be recognized only when the implied fair value of the reporting unit’s goodwill is less than its carrying amount.
Contingent Consideration
The Company accounts payablefor contingent consideration in a purchase business combination in accordance with applicable guidance provided within the business combination rules. As part of the consideration for the Bestewil acquisition, the Company is contractually obligated to pay additional purchase price consideration upon achievement of certain commercial milestones. Therefore, the Company is required to update the assumptions at each reporting period, based on new developments, and accrued trade creditors.
record such amounts at fair value until such consideration is satisfied.
57
Research and Development
Research and development costs are expensed as incurred.
Taxes on Income
The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Company'sCompany’s financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax laws or rates.
The Company adopted the Financial Accounting Standards Board ("FASB")
interpretation No. 48 ("FIN No. 48"). This interpretation clarifies the
accountingreports a liability, if any, for uncertainty inunrecognized tax benefits resulting from uncertain income taxes recognized in a company's financial
statements in accordance with Statement of Financial Accounting Standard
("SFAS") No. 109. This interpretation prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax positionpositions taken or expected to be taken in aan income tax return. It also provides guidance on
derecognition, classification,Estimated interest and penalties, accounting in interim
periods, disclosureif any, are recorded as a component of interest expense and transition. other expense, respectively.
The
adoption of this interpretation did not
have a material impact on the Company's results of operations or financial
position.
53
As such, the Company has not recorded any liabilities for uncertain tax positions or any related interest and penalties.penalties at December 31, 2009 or 2008. The Company'sCompany’s United States tax returns are open to audit for the years ended December 31, 20052006 to 2008.2009. The accountsreturns for ourthe Luxembourg subsidiary LUXEMBOURG 6543 S.A., are open to audit for the yearsyear ended December 31, 2005 to 2008 and2009. The returns for the accounts for our Swiss subsidiary, Mymetics Management SarlS.A., are open to audit for the years ended December 31, 2007 to 2008.
2009. The returns for the Netherlands subsidiaries, Bestewil B.V. and Mymetics B.V., are open to audit for the year ended December 31, 2009.Earnings per Share
Basic earnings per share is computed by dividing income availablenet loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. The weighted average number of shares (including shares issuable) was 195,728,698 for the year ended December 31, 2009 and 191,949,969 for the year ended December 31, 2008 and 156,418,377 for the year
ended December 31, 2007.2008. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities. OptionsNotes payable convertible into 75,356,078 shares of common stock and options exercisable into 12,454,031 shares of common stock and were not included in the computation of diluted earnings per share because their effect would be anti-dilutive due to net losses incurred.
Preferred Stock
The Company has authorized 5,000,000 shares of preferred stock. No shares are issued or outstanding at December 31, 2009 or 2008. The preferred stock is issuable in several series with varying dividend, conversion and voting rights. The specific series and rights will be determined upon any issuance of preferred stock.
Stock-Based Compensation
The Company accounts for stock-based compensation according to the fair value
recognition provisions of FAS No. 123(R), Share-Based Payment, ("FAS 123R").
Compensation cost for all share-based payments is based on the estimated grant-date fair value estimated in accordance with the provisions of FAS 123R.value. The Company amortizes stock compensation cost ratably over the requisite service period.
There were no options issued in 2008 and 2007, and there were no stock options
that vested in any of these years.
58
The issuance of common shares for services is recorded at the quoted price of the shares on the date the services are rendered.
Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Standards
In September 2006, the FASB issued SFAS No. 157, "Fair
Fair Value Measurements" (SFAS
157), which definesMeasurements
Fair value guidance establishes a three-tier fair value
establishes a framework for measuring fair
value, and expands disclosures about fair-value measurements required under
other accounting pronouncements. It does not change existing guidance as to
whether or not an instrument is carried at fair value. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. In February 2008,hierarchy, which prioritizes the
FASB issued
FASB Staff Position No. FAS 157-1 (FSP 157-1), which excludes SFAS No. 13,
"Accounting for Leases" and certain other accounting pronouncements that address
fair value measurements under SFAS 13, from the scope of SFAS 157. In February
2008, the FASB issued FASB Staff Position No. 157-2 (FSP 157-2), which provides
a one-year delayed application of SFAS 157 for nonfinancial assets and
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually).
54
The Company is required to adopt SFAS 157 as amended by FSP 157-1 and FSP 157-2
on January 1, 2009, the beginning of its fiscal year 2009 (as related to
nonfinancial assets and liabilities). The Company does not expect the
application of SFAS No. 157 (as related to nonfinancial assets and liabilities)
to have a material effect on the Company's consolidated financial statements.
In October 2008, the FASB issued FASB Staff Position No. FAS 157-3, "Determining
the Fair Value of a Financial Asset in a Market That Is Not Active" (FSP 157-3),
which clarifies the application of SFAS 157 when the market for a financial
asset is inactive. Specifically, FSP 157-3 clarifies how (1) management's
internal assumptions should be consideredinputs used in measuring fair value whenvalue. These tiers include: Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs other than Level 1 that are observable, dataeither directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not present, (2)active; or other inputs that are observable or can be corroborated by observable market information from an
inactivedata for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market should be taken into account,activity and (3) the use of broker quotes
or pricing services should be considered in assessing the relevance of
observable and unobservable data to measure fair value. The guidance in FSP
157-3 is effective immediately and did not have a material effect on the
Company's consolidated financial statements.
In June 2008, the FASB issued Staff Position EITF 03-06-1, "Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities" (FSP EITF 03-06-1). FSP EITF 03-06-1 provides that unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings per share pursuantsignificant to the two-class method in SFAS No. 128, "Earnings per Share." FSP EITF 03-06-1 did not
have any impact on the Company's consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of Accounting Research Bulletin
No 51" (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent's ownership of a noncontrolling interest, calculation and
disclosurefair value of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent's ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited. The
Company must adopt SFAS 160 on January 1, 2009, the beginning of its fiscal year
2009. The Company does not expect the application of SFAS 160 to have a material
effect on its consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141R, "Business Combinations" (SFAS
141R), which establishes principles and requirements for the reporting entity in
a business combination, including recognition and measurement in the financial
statements of the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period on or after December 15, 2008,
and interim periods within those fiscal years. The Company must adopt SFAS 141R
on January 1, 2009, the beginning of its fiscal year 2009. The Company does not
expect the application of SFAS 141R to have a material effect on its
consolidated financial statements for the period up to December 31, 2008. It is
anticipated that the subsequent acquisition of Bestewil Holding B.V and Virosome
Biologicals B.V. will require consideration of SFAS No. 141R for the period
ending December 31, 2009.
liabilities.
Fair Values of Financial Instruments
The Company generally has the following financial instruments: cash,
short-term
investments, receivables, accounts payable,
taxes and social costs payable, acquisition-related contingent consideration, and convertible notes payable. The carrying value of cash, accounts receivable,
accounts payable, and
accountstaxes and social costs payable approximate their fair value based on the short-term nature of these financial instruments. The
Company adjusts the carrying value of
its short-term investmentsacquisition-related contingent consideration is equal to fair value
with any unrecognized gains or losses recorded as a component of
"Accumulated Other Comprehensive Income" and thus the carrying value equalssince this liability is required to be reported at fair value. Management estimates that it is not practicable to estimate the fair value of the convertible notes payable due to the unique nature of the instruments.
55
ConcentrationsRecently Issued Accounting Standards
In June 2009, Financial Accounting Standards Board (“FASB”) issued authoritative guidance on accounting for variable interest entities, which is effective for reporting periods beginning after November 15, 2009. The amendments change the process for how an enterprise determines which party consolidates a variable interest entity (referred to as a VIE) to a primarily qualitative analysis. The party that consolidates the VIE (the primary beneficiary) is defined as the party with (1) the power to direct activities of the VIE that most significantly affect the VIE’s economic performance and (2) the obligation to absorb losses of the VIE or the right to receive
59
benefits from the VIE. Upon adoption, reporting enterprises must consider their conclusions on whether an entity should be consolidated and should a change result the effect on net assets will be recorded as a cumulative effect adjustment to retained earnings. The Company enters into scientific collaboration agreementsdoes not believe the adoption of this standard will have a material impact on its financial statements.
In September 2009, the FASB ratified authoritative guidance relating to revenue recognition in multiple element arrangements, which is effective for fiscal years beginning after June 15, 2010 and may be applied retrospectively or prospectively for new or materially modified arrangements with selected
partners such as Pevion Biotech Ltd.,early adoption permitted. The guidance provides greater ability to separate and allocate arrangement consideration in a Swiss company that granted Mymetics
exclusive licensesmultiple element revenue arrangement. In addition, it will require the use of estimated selling price to allocate arrangement considerations, therefore eliminating the use their virosome vaccine delivery technology in
conjunction withof the Company's AIDS and malaria preventive vaccines under
development. Underresidual method of accounting. The Company does not believe the adoption of this agreement, Pevion Biotech is committed to supply the
actual virosomes and perform their integration with the Company's antigens,
which requires proprietary know-how, at Pevion's premises. The agreement
includes specific mechanisms to mitigate the risk of losingstandard will have a key component of
Mymetics' vaccines should Pevion become unable to live up tomaterial impact on its commitment.
Reclassifications
Certain reclassifications have been made to the December 31, 2007, financial statements in order for them to conform to the current year presentation.
statements.
Note 2. Receivables
2008 2007
---- ----
Receivable officer 8 71
Receivable other 144 --
--- ---
152 71
Allowance for doubtful accounts (138) --
--- ---
E14 E71
=== ===
| | | | | | | | | |
| | | 2009 | | | 2008 | |
| Receivable officer | | | 6 | | | | 8 | |
| Receivable other | | | 200 | | | | 144 | |
| | | | | | | |
| | | | 206 | | | | 152 | |
| Allowance for doubtful accounts | | | (161 | ) | | | (138 | ) |
| | | | | | | |
| | | E | 45 | | | E | 14 | |
| | | | | | | |
Note 3. Transactions with Affiliates
On March 19, 2007 the Company entered into a Settlement Agreement with MFC
Merchant Bank S.A. to dismiss with prejudice the lawsuits in Delaware and New
York that Mymetics brought against MFC, KHD Humboldt Wedag International, Ltd.
(f/k/a MFCBancorp., Ltd.), the parent company of MFC, and certain of MFC's prior
and present officers and directors in which Mymetics challenged the validity of
the credit facility agreement. Under the terms of the Settlement Agreement,
Mymetics agreed to pay E1.49 million in cash and to issue 12.5 million
restricted shares of its common stock to convert the remaining debt to equity.
MFC agreed to terminate the E4.02 million credit facility agreement, ending any
further payments or obligations of Mymetics under the credit facility agreement
and releasing from its blanket security interest all assets of Mymetics,
including Mymetics' intellectual property.
Mr. Ernest M. Stern, the Company'sCompany’s outside U.S. counsel is both a director of the Company and a partner in Seyfarth Shaw LLP.LLP, the firm retained as legal counsel by the Company. Fees paid to Seyfarth Shaw in the yearyears ended December 31, 2009 and 2008, amounted to E105 and E95, for Mymetics.
Tworespectively.
Three of the Company'sCompany’s major shareholders have made available an aggregate E8,350E24,833 in the form of convertible, unsecuredsecured notes representing approximately
25,300,000 potentially dilutive common shares atas described below.
The Company has renegotiated all of its financial arrangements with its major shareholders during the Euro/$ exchange rateyear ended December 31, 2009. The principals of 0.7095agreement between the parties are that all of the related party notes
60
outstanding at December 31,
2008.
56
2009, are now secured against a proportion of the Company’s intellectual property. Maturity for the current (short term) shareholder loans is now set at June 30, 2010 with the other outstanding shareholder loans and notes set to be open ended according to the Company having sufficient revenue to repay. Conversion prices on Euro-denominated debt have been fixed to a fixed Euro/US dollar exchange rate. The details of thetheses convertible notes are:
and other loans and contingent liabilities are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Fixed | |
| | | | | | | | | | | | | | | | | | | | | | | EUR/USD | |
| | | | | | | | | | | | | | | | | Conversion | | | Rate for | |
| | | Principal | | | 1st-Issue | | | Duration | | | Interest | | | Price | | | Conversion | |
| Lender | | Amount | | | Date | | | (Note) | | | Rate | | | (stated) | | | Price | |
| Eardley Holding A.G. (1) | | E | 133 | | | | 06/23/2006 | | | | (2 | ) | | 10% pa | | US$ | 0.10 | | | | N/A | |
| Anglo Irish Bank S.A. (3) | | E | 500 | | | | 10/21/2007 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.4090 | |
| Round Enterprises Ltd. | | E | 1,500 | | | | 12/10/2007 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.4429 | |
| Round Enterprises Ltd. | | E | 1,500 | | | | 01/22/2008 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.4629 | |
| Round Enterprises Ltd. | | E | 2,000 | | | | 04/25/2008 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.5889 | |
| Round Enterprises Ltd. | | E | 1,500 | | | | 06/30/2008 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.5380 | |
| Round Enterprises Ltd. | | E | 1,200 | | | | 11/18/2008 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.2650 | |
| Round Enterprises Ltd. | | E | 1,500 | | | | 02/09/2009 | | | | (2 | ) | | 10% pa | | US$ | 0.50 | | | | 1.2940 | |
| Round Enterprises Ltd. | | E | 5,500 | | | | 06/15/2009 | | | | (2 | ) | | 10% pa | | US$ | 0.80 | | | | 1.4045 | |
| Eardley Holding A.G. | | E | 100 | | | | 06/15/2009 | | | | (2 | ) | | 10% pa | | US$ | 0.80 | | | | 1.4300 | |
| Von Meyenburg | | E | 200 | | | | 08/03/2009 | | | | (2 | ) | | 10% pa | | US$ | 0.80 | | | | 1.4400 | |
| Round Enterprises Ltd. | | E | 2,000 | | | | 10/13/2009 | | | | (2 | ) | | 5% pa | | US$ | 0.25 | | | | 1.4854 | |
| Round Enterprises Ltd. | | E | 2,200 | | | | 12/18/2009 | | | | (2 | ) | | 5% pa | | US$ | 0.25 | | | | 1.4338 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
61
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Fixed | |
| | | | | | | | | | | | | | | | | | | | | | | EUR/USD | |
| | | | | | | | | | | | | | | | | Conversion | | | Rate for | |
| | | Principal | | | 1st-Issue | | | Duration | | | Interest | | | Price | | | Conversion | |
| Lender | | Amount | | | Date | | | (Note) | | | Rate | | | (stated) | | | Price | |
| Total long term | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal Amounts | | E | 19,833 | | | | | | | | | | | | | | | | | | | | | |
| Accrued Interest | | E | 1,889 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total long term | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible Notes to Related Parties | | E | 21,722 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Round Enterprises Ltd. | | E | 4,000 | | | | 04/03/2009 | | | | (4 | ) | | 10% pa | | US$ | 0.80 | | | | 1.3486 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Eardley Holding A.G. | | E | 1,000 | | | | 04/03/2009 | | | | (4 | ) | | 10% pa | | None | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total short term | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal Amounts | | E | 5,000 | | | | | | | | | | | | | | | | | | | | | |
| Accrued Interest | | E | 740 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total short term | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible Notes to Related Parties | | E | 5,740 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total Convertible Notes to Related Parties | | E | 27,462 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Norwood Secured Loan | | E | 2,500 | | | | 04/03/2009 | | | | (5 | ) | | 5% pa | | US$ | 0.80 | | | | 1.2812 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total Principal Amount | | E | 2,500 | | | | | | | | | | | | | | | | | | | | | |
| Accrued Interest | | E | 93 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total Convertible Note Payable — other | | E | 2,593 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Norwood contingent liability | | E | 1,936 | | | | (6 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL NOTES,LOANS AND CONTINGENT LIABILITY | | E | 31,991 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
62
Principal Issue Duration Interest Conversion
Lender Amount Date (Note) Rate Price
- ------ ----------- ---------- -------- -------- ----------
Eardley Holding A.G. | | |
(1) E 150 06/23/2006 | | Private investment company of Dr. Thomas Staehelin, member of the Board of Directors and of the Audit Committee of the Company. Face value is stated in U.S. dollars at $190,000. |
|
| (2) | | The earlier of: (i) The date that the Company has sufficient revenues to repay, or (ii) upon an event of default. The loan is secured against IP assets of Mymetics Corporation. |
|
(3) 10% pa US$ 0.50
Anglo Irish | | Renamed Hyposwiss Private Bank (Suisse)Genève S.A. (2) E 500 10/21/2007 (4) 10% pa US$ 0.50and acting on behalf of Round Enterprises Ltd. E 1,500 12/10/2007 which is a major shareholder. |
|
(4) 10% pa US$ 0.50
Round Enterprises Ltd. E 1,500 01/22/2008 (4) 10% pa US$ 0.50
Round Enterprises Ltd. E 2,000 04/25/2007 (4) 10% pa US$ 0.50
Round Enterprises Ltd. E 1,500 06/30/2007 (4) 10% pa US$ 0.50
Round Enterprises Ltd. E 1,200 11/18/2007 (4) 10% pa US$ 0.50
-----------
Total Principal Amounts E 8,350
-----------
Accrued Interest E 623
-----------
Total E 8,973
===========
| | The earlier of (i) June 30, 2010 or (ii) upon an event of default. The loan is secured against two third of the IP assets of Bestewil Holding BV and convertible for shares. |
|
| (5) | | Under the terms of the acquisition of Bestewil B.V., as part of the consideration, the Company issued to Norwood Immunology Limited (“NIL”) a convertible redeemable note (the “Note”) in the principal amount of E2,500 with maturity 36 months after the closing date and bearing interest at 5% per annum. The note is secured against one third of Bestewil shares. |
|
| (6) | | Under the terms of the acquisition of Bestewil BV, as part of the consideration, the Company is committed to make further payments to NIL in the event that certain stated milestones for the development of vaccines are achieved. These have been considered on a risk probability basis. |
(1) Private investment company of Dr. Thomas Staehelin, member of the Board of
Directors and of the Audit Committee of Mymetics Corporation. Face value is
stated in U.S. dollars at $ 190,000
(2) Acting on behalf of Round Enterprises Ltd. which is controlled by a major
shareholder.
(3) The earlier of (i) 90 days after the Company receives its first cash
payment from a major pharmaceutical strategic partner or (ii) upon an event
of default
(4) The earlier of (i) July 31, 2010 or (ii) upon an event of default
57
Note 4. Income Taxes
The reconciliation of income tax on income computed at the federal statutory rates to income tax expense is as follows:
2008 2007
------- -------
U.S. Federal statutory rates on loss from
operations E(2,353) E(3,160)
Effect of exchange rate changes on
U.S. net operating loss carryforward (454) 639
Increase in valuation allowance 2,925 3,546
Prior year losses not previously recognized
and other (100) (1,021)
------- -------
Income tax provision E 18 E 4
======= =======
| | | | | | | | | |
| | | 2009 | | | 2008 | |
| U.S. Federal statutory rates on loss from operations | | E | (3,466 | ) | | E | (2,353 | ) |
| Effect of foreign statutory rate differences | | | 185 | | | | — | |
| Effect of exchange rate changes | | | 36 | | | | (454 | ) |
| Permanent differences | | | (549 | ) | | | — | |
| Increase in valuation allowance | | | 3,781 | | | | 2,925 | |
| Other | | | 3 | | | | (100 | ) |
| | | | | | | |
| Income tax provision (benefit) | | E | (10 | ) | | E | 18 | |
| | | | | | | |
63
Deferred tax asset is composed of the following:
2008 2007
------- -------
Licenses capitalized for United States tax purposes E 1,385 E 1,598
Net operating loss carryforwards
United States 8,722 5,586
Luxembourg 173 171
------- -------
10,280 7,355
Less valuation allowance for deferred tax asset (10,280) (7,355)
------- -------
Net deferred tax asset E -- E --
======= =======
58
| | | | | | | | | |
| | | 2009 | | | 2008 | |
| Licenses capitalized for United States tax purposes | | E | 1,279 | | | E | 1,385 | |
| License contract basis difference | | | (867 | ) | | | — | |
| IPR&D basis difference | | | (770 | ) | | | — | |
| Other | | | 54 | | | | — | |
| Net operating loss carry forwards | | | | | | | | |
| United States | | | 11,818 | | | | 8,722 | |
| Switzerland | | | 459 | | | | — | |
| The Netherlands | | | 228 | | | | — | |
| Luxembourg | | | 174 | | | | 173 | |
| | | | | | | |
| | | | 12,375 | | | | 10,280 | |
| Less valuation allowance for deferred tax asset | | | (12,375 | ) | | | (10,280 | ) |
| | | | | | | |
| Net deferred tax asset | | E | — | | | E | — | |
| | | | | | | |
The
Company'sCompany’s provision for income taxes was derived from U.S., Swiss,
Netherlands and Luxembourg operations. At December 31,
2008,2009, the Company had estimated net operating loss
carryforwardscarry forwards which expire as follows (the Luxembourg losses do not expire):
United
States Luxembourg
-------- ----------
2009 E --
2010 --
2011 561
2012 1,028
2013 --
2014-2028 24,065
-------- ----
E 25,654 E786
======== ====
The Swiss affiliate made a taxable (intercompany) profit.
| | | | | | | | | | | | | | | | | |
| | | United States | | | Luxembourg | | | Switzerland | | | The Netherlands | |
| 2010 | | E | — | | | E | — | | | E | — | | | E | — | |
| 2011 | | | 552 | | | | — | | | | — | | | | — | |
| 2012 | | | 1,011 | | | | — | | | | — | | | | — | |
| 2013 | | | — | | | | — | | | | — | | | | — | |
| 2014 | | | — | | | | — | | | | — | | | | — | |
| 2015-2028 | | | 33,196 | | | | — | | | | 1,834 | | | | 911 | |
| Perpetual | | | — | | | | 793 | | | | — | | | | — | |
| | | | | | | | | | | | | |
| | | E | 34,759 | | | E | 793 | | | E | 1,834 | | | E | 911 | |
| | | | | | | | | | | | | |
64
Note 5. Stock Option Plan
Options
2001 Qualified Incentive Stock Option Plan
The
Company'sCompany’s board of directors approved a stock option plan on June 15, 2001, which provides for the issuance of up to 5,000,000 shares of the
Company'sCompany’s common stock to employees and non-employee directors. No options were issued
under this plan in
20072008 or
2008.2009. The following table summarizes information with respect to
thisall options outstanding under the stock option plan:
Weighted
Number Average
of Exercise
Shares Price
--------- ---------
Outstanding and exercisable
at December 31, 2007 and 2008 442,500 U.S. $ .97
========= ==========
Reserved for future grants
at December 31, 2008 4,557,500
=========
The weighted average contractual life is 4.1 years.
| | | | | | | | | | | | | |
| | | | | | | Weighted | | | Weighted Average | |
| | | Number | | | Average | | | Remaining | |
| | | of | | | Exercise | | | Contractual | |
| | | Options | | | Price | | | Term (Years) | |
| Outstanding and exercisable at December 31, 2007, 2008 and 2009 | | | 442,500 | | | | U.S. $.97 | | | | 3.1 | |
| | | | | | | | | | |
| Reserved for future grants at December 31, 2009 | | | 4,557,500 | | | | | | | | | |
| | | | | | | | | | |
At December 31, 2008,2009, exercise prices range from $0.12 to $3.50. There was no material intrinsic value on outstanding options at December 31, 2008.
2009.
Not included in the above table are the 12,011,531 options issued as part of the acquisition of Bestewil described in Note 7.
The Company will issue new shares upon
the exercise of any
options exercise.
59
options.Note 6. Commitments and Contingencies
Total rent expense per year was E20E179 for 20082009 and E20 for 2007.2008. The lease of the Company'sCompany’s Nyon, administrative officesSwitzerland facility expires in 2012; the lease of the Company's scientific staff's offices nearCompany’s Lausanne, expiredSwitzerland facilities expires in February 2009,
when the Company moved into new scientific facilities at the same location, the
lease of which will expire in 2018.
65
Future lease payments expected on the above office leases are as follows for the years ending December 31,
Office Rent Expected 2009 2010 2011 2012 2013 2014-18
----- ----- ----- ----- ----- -------
NYON ............... E 20 E 20 E 20 E 20 E -- E --
LAUSANNE ........... E 117 E 117 E 117 E 117 E 117 E 585
GENEVA ............. E 2 -- -- -- -- --
===== ===== ===== ===== ===== =======
TOTAL .............. E 139 E 137 E 137 E 137 E 117 E 585
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Office Rent Expected | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015-18 | |
| NYON | | E | 18 | | | E | 18 | | | E | 4 | | | E | — | | | E | — | | | E | — | |
| LAUSANNE | | E | 120 | | | E | 120 | | | E | 120 | | | E | 120 | | | E | 120 | | | E | 480 | |
| LEIDEN | | E | 48 | | | E | — | | | E | — | | | E | — | | | E | — | | | E | — | |
| | | | | | | | | | | | | | | | | | | |
| TOTAL | | E | 186 | | | E | 138 | | | E | 124 | | | E | 120 | | | E | 120 | | | E | 480 | |
Note 7. Subsequent Events
- - Acquisition of Bestewil
On
February 6, 2009, the company issued to Round Enterprise ltd. a
convertible note for E1,500 carrying an interest rate of 10% p.a., with a
maturity date of March 27, 2009, convertible at $0.50 per share. The
Company is in the process of negotiating an extension to the maturity date
for this note.
- - On March 5,April 1, 2009 Mymetics and NIL
entered intoclosed the acquisition of Bestewil Holding B.V. (“Bestewil”) from its parent, NIL, under a Share Purchase Agreement pursuant to which Mymetics
purchasedagreed to purchase all issued and outstanding shares of capital stock (the
"Bestewil Shares"“Bestewil Shares”) of Bestewil
Holding B.V. ("Bestewil") from its parent, NIL, and all issued and outstanding shares of capital stock of Virosome Biologicals B.V. which were held by Bestewil. Mymetics
has agreed to
paypaid NIL E5,000
(the “Cash Consideration”) raised from bridge financing (the
"Cash Consideration"“Bridge Loan”)
and issued to NIL
at the
closing date that is anticipated to be April 1, 2009 and to issue a convertible redeemable note (the
"Note"“Note”) in the principal amount of E2,500 due 36 months after the closing date, bearing interest at 5% per annum, convertible into shares of the
Company'sCompany’s common stock at a conversion rate of the lower of (i) $0.80 or (ii) the issue price of the shares of common stock that the Company intends to issue after the closing date for the purpose of raising the necessary funds to repay the bridge loan that the Company expects to issue to pay the Cash Consideration (the
"Conversion Price"“Conversion Price”) and secured by the
Company'sCompany’s pledge of 1/3rd of the Bestewil Shares. In addition, Mymetics
has granted NIL an option to acquire shares of Mymetics common stock equal to the result obtained by dividing $9,609 by the Conversion
Price, subjectPrice. If Mymetics had issued shares of capital stock in connection with a financing to
adjustment. Each of such share option
shall give NILrepay the
right to subscribe, for cash consideration equal to the
Conversion Price, one common share of Mymetics. If shares are issued in the
share capital of Mymetics withBridge Loan that had more favorable financial rights
orand preferences
attachedthan its shares of common stock, NIL had the right, at its election, to
thempurchase those shares in
place of shares of Mymetics common stock. However, the
contextconversion price on the option and convertible debt is set at $0.80 since the Company did not issue stock subsequently at a lower price. The result is that the option allows NIL to acquire 12,011,531 shares of
the fundraising required for the transaction
contemplated in this agreement ("Preferred Shares"), at the election of NIL, one
Preferred Share (the "Share Option"). Each Share Option shall be exercisable for
a period of three years from the closing date.
60
common stock.Further contingent consideration to be paid after completion ofunder the Share Purchase Agreement includes:
-
A payment of up to E 2,800E2,800 in cash in the event of a license agreement being signed by April 1, 2011 with a third party to access Bestewil intellectual property and know howknow-how in the field of Respiratory Syncytial Virus ("(“RSV Licence"License”),
- ;
66
A payment of up to E 3,000E3,000 in cash should a third party commence a Phase III clinical trial by April 1,20131, 2013 for its intranasal influenza
vaccineMymetics’ Intranasal Influenza Vaccine licensed from Bestewil,
- A payment of 50% of Mymetics' net royalties received from a RSV
License, payable in cash,
- A payment of 25% of any net amounts received by Mymetics from a third
party Herpes Simplex Virus License based upon Bestewil intellectual
property payable in cash.
Bestewil;
| • | | A payment of 50% of Mymetics’ net royalties received from a Respiratory Syncytial Virus license (RSV license), payable in cash, maximum amount unlimited; and |
|
| • | | A payment in cash, maximum amount unlimited, of 25% of any net amounts received by Mymetics from a third party Herpes Simplex Virus license (HSV license) based upon Bestewil intellectual property. |
Under the terms of the Share Purchase Agreement, Mymetics also intends to enterhas entered into an employment agreement at the closing date with Antonius Stegmann, CSO of Virosome Biologicals B.V. (renamed Mymetics B.V.).
The acquisition of Virosome Biologicals will expand Mymetics'Bestewil has expanded Mymetics’ current portfolio of vaccines and vaccine candidates.
The acquisition of Bestewil has been recorded as a business acquisition. In a business acquisition, the purchase price of an acquired entity is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.
The Company has concluded the measurement period for estimating the fair value of the purchase consideration. The fair value of the purchase consideration given to NIL, includingfor the Bestewil acquisition on April 1, 2009 was as follows:
| | | | | | | | | | | | | |
| | | As | | | Measurement | | | | |
| | | Initially | | | Period | | | As | |
| | | Recorded | | | Adjustments | | | Adjusted | |
| Cash paid to Norwood | | E | 5,000 | | | E | — | | | E | 5,000 | |
| Convertible note payable issued | | | 2,500 | | | | — | | | | 2,500 | |
| Equity options issued | | | 601 | | | | — | | | | 601 | |
| Contingent consideration: | | | | | | | | | | | | |
| Royalties for Influenza Vaccine | | | — | | | | 1,800 | | | | 1,800 | |
| Royalties for RSV | | | 700 | | | | 729 | | | | 1,429 | |
| Royalties for HSV | | | 750 | | | | (429 | ) | | | 321 | |
| | | | | | | | | | |
| Total purchase consideration | | E | 9,551 | | | E | 2,100 | | | E | 11,651 | |
| | | | | | | | | | |
The range of the undiscounted amounts the Company could pay in contingent consideration is not determinable since it is based on sales of vaccines that are yet to be developed. The fair value of the contractual obligations to pay the contingent consideration recognized on the acquisition date was determined based on a risk-adjusted, discounted cash flow approach. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The resultant cash flows were discounted
67
using a discount rate of 25%, which the Company believes is appropriate and is representative of a market participant assumption.
The options to acquire 12,011,531 shares of common stock had a grant date fair value of E0.05 using the following assumptions:
| | | | |
|
| Expected volatility | | | 157.60 | % |
| Risk-free interest rate | | | 0.65 | % |
| Expected term in years | | | 1.5 | |
| Dividend yield | | | 0.00 | % |
The Company’s fair value estimates of the purchase price consideration are assigned to the assets acquired and liabilities assumed based on their estimated fair values as of April 1, 2009:
| | | | |
| | Purchase Price Allocation | |
| Assets: | | | | |
| Current assets | | E | 90 | |
| License contract (Intranasal Influenza Vaccine) | | | 2,694 | |
| In-process research and development (HSV and RSV) | | | 2,266 | |
| Goodwill | | | 6,671 | |
| Property and equipment | | | 98 | |
| Other non-current assets | | | 7 | |
| | | |
| Total assets | | | 11,826 | |
| Liabilities: | | | | |
| Current liabilities | | | 175 | |
| | | |
| Total liabilities | | E | 175 | |
| | | |
| Total purchase consideration | | E | 11,651 | |
| | | |
The above allocation is final. The license contract will be determined afteramortized over 14 years.
The fair value of the closingin-process research and development assets and license contract were estimated using an income approach and Level 3 inputs. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions. Cash flows were generally assumed to extend either through the patent life underlying each product.
68
We derived the estimated cash flows from the existing license in the case of the Solvay contract and the projected revenues of drugs developed with in-process research and development. The fair value of in-process research and development also includes an existing royalty payable by the Company to Norwood based on the net sales derived from drugs that use the IPR&D technology. The discount rate applied to the estimated cash flows for all intangible assets acquired was 25%. We believe the discount rate used is consistent with what a market participant would use.
The E6,671 of goodwill was assigned to our vaccine development segment, which is our only reportable segment as of December 31, 2009. The goodwill recognized is attributable primarily to the potential additional applications for the acquired patents, expected corporate synergies, the assembled workforce of Bestewil and other factors. None of the goodwill is expected to be deductible for income tax purposes.
The amounts of revenue and net loss of Bestewil since the acquisition date included in the consolidated income statement for the year ended December 31, 2009 are E149 and E243, respectively. The amounts of revenue and net loss for the Company for the year ended December 31, 2009 as though the acquisition took place as of January 1, 2008 are as follows:
| | | | |
| | YEAR ENDED | |
| | DECEMBER 31, 2009 | |
| Revenue | | E | 233 | |
| Net loss | | E | (10,199 | ) |
The results above would not change had the acquisition taken place as of January 1, 2009. The amounts of revenue and net loss for the Company for the year ended December 31, 2008 as though the acquisition took place as of January 1, 2008 are not practicable to determine due to lack of data for these periods.
69
Note 8. Fair Value Measurements
As of December 31, 2009, the Company held a liability for acquisition-related contingent consideration that is required to be measured at fair value on a recurring basis.
The Company’s acquisition-related contingent consideration is measured at fair value on a recurring basis using Level 3 inputs.
The following table presents changes to the Company’s acquisition-related contingent consideration for the year ended December 31, 2009:
| | | | |
| | Fair Value Measurements | |
| | Using Significant | |
| | Unobservable Inputs | |
| | (Level 3) | |
| | Acquisition-related | |
| | Contingent Consideration | |
| Liabilities: | | | | |
| Balance at January 1, 2009 | | E | — | |
| Amounts acquired or issued | | | 3,550 | |
| Transfers in and/or (out) of Level 3 | | | — | |
| Change in fair value recorded in earnings | | | (1,614 | ) |
| | | | |
| | | |
| Balance at December 31, 2009 | | E | 1,936 | |
| | | |
As of December 31, 2009, the fair value of the acquisition-related contingent consideration decreased from the acquisition date primarily reflecting management’s current assessment of the decreased probability that the Company will be allocatedobligated to make contingent consideration payments, as well as the acquiredreduction in the amount of expected royalties to be paid.
Note 9. Intangible Assets
Intangible assets consisted of the following at December 31, 2009:
| | | | |
| | December 31, 2009 | |
| Indefinite-lived intangibles: | | | | |
| In process research and development | | E | 2,266 | |
| | | | |
| Definite-lived intangibles: | | | | |
| License contract | | E | 2,694 | |
| Less accumulated amortization | | | (144 | ) |
| | | |
| | | 2,550 | |
| | | |
| Other intangibles, net | | E | 4,816 | |
| | | |
70
Amortization expense was E144 for the year ended December 31, 2009. As of December 31, 2009, estimated amortization of intangibles for each of the next five years subsequent to December 31, 2009 is E192.
Note 10. Subsequent Events
On February 4, 2010, Mymetics engaged a US based investment bank to lead the effort of raising approximately €35 million in a private placement to meet Mymetics’ capital requirements for continued development of its vaccine pipeline.
On February 4, 2010, the Board of Directors of Mymetics approved a stock incentive plan for its officers, directors, employees and
liabilities at that time.
61
consultants subject to approval of its stockholders. 71
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Mymetics Corporation
By: /s/ Christian J.F. Rochet
------------------------------------
Name: Christian J.F. Rochet
Title: Chief Executive Officer
----------------------------------------
(Date)
62
| | | | |
| Mymetics Corporation
| |
| By: | /s/ Jacques-François Martin | |
| Name: | Jacques-François Martin | |
| Title: | Chief Executive Officer | |
|
| | January 7, 2011 | |
72
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints Ernst Luebke as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on From 10-K,Form 10-K/A, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| Signature | | Title
- --------- -------------------------------------------
/s/ Christian J.F. Rochet |
| | |
/s/ Jacques-François MartinJacques-François Martin | | Chief Executive Officer and Director
- ---------------------------------- (Principal
(Principal Executive Officer) Christian J.F. Rochet
- ----------------------------------
March 26, 2009
/s/ |
|
| January 5, 2011 | | |
| | |
/s/ Ernst Luebke Ernst Luebke | | Chief Financial Officer and Director
- ---------------------------------- (Principal
(Principal Financial and Accounting Officer) Ernst Luebke
- ----------------------------------
March 26, 2009
/s/ |
|
| January 5, 2011 | | |
| | |
/s/ Sylvain Fleury Sylvain Fleury, Ph.D. | | Chief Scientific Officer and - ---------------------------------- Director Sylvain Fleury, Ph. D.
- ----------------------------------
March 26, 2009
|
|
| January 5, 2011 | | |
| | |
| /s/ Ernest Stern | | Director |
| | |
| Ernest Stern | | |
|
| January 5, 2011 | | |
| | |
| /s/ Dr. Thomas Staehelin | | Director |
| | |
| Thomas Staehelin | | |
|
| January 5, 2011 | | |
6373