UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A10-K
(Amendment No. 1)
(Mark One)
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended June 30, 20122013
OR
¨ | 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: 001-34275
MYREXIS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 26-3996918 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
New York, New York | ||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (801) 214-7800
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
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Securities registered pursuant to Section 12(g) of the Exchange Act: None.
Common Stock, $0.01 Par Value Per Share
Preferred Share Purchase Rights
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by 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 No ¨
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). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’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. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | 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 ¨ No x
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold on December 31, 2011,2012, the last business day of the registrant’s most recently completed second fiscal quarter, was $69,028,808.$74,958,272. As of October 25, 2012July 12, 2013 the registrant had 26,817,29434,479,051 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K: Certain information required in Part III of this Annual Report on Form 10-K which will be incorporated from the registrant’s Proxy Statement for the 2013 Annual Meeting of Stockholders.
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Forward-Looking Statements | 3 | |||||
| BUSINESS | 4 | ||||
Item 1A. | RISK FACTORS | 6 | ||||
Item 1B. | UNRESOLVED STAFF COMMENTS | 9 | ||||
Item 2. | PROPERTIES | 9 | ||||
Item 3. | LEGAL PROCEEDINGS | 9 | ||||
Item 4. | MINE SAFETY DISCLOSURES | 10 | ||||
PART II | ||||||
Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 11 | ||||
Item 6. | SELECTED FINANCIAL DATA | 12 | ||||
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 13 | ||||
Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 19 | ||||
Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 19 | ||||
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 21 | ||||
Item 9A. | CONTROLS AND PROCEDURES | 21 | ||||
Item 9B. | OTHER INFORMATION | 24 | ||||
PART III | ||||||
Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 24 | ||||
Item 11. | EXECUTIVE COMPENSATION | 24 | ||||
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 24 | ||||
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 24 | ||||
Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 24 | ||||
PART IV | ||||||
Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 25 | ||||
Signatures | ||||||
26 |
Forward-looking Statements
Explanatory Note
The purpose of this Amendment No. 1 (the “Amendment”) to theThis Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Myrexis, Inc. (the “Registrant”) forSection 27A of the year ended June 30, 2012 as filed on September 13, 2012 (the “Original Form 10-K”) is to include the disclosure required in Part III, Items 10, 11, 12, 13 and 14. Except for Items 10, 11, 12, 13 and 14Securities Act of Part III and Item 15(a)(3) of Part IV, no other information included in the Original Form 10-K is amended or changed by this Amendment.
PART III
THE BOARD OF DIRECTORS
Our Restated Certificate of Incorporation,1933, as amended, and Restated By-Laws provide that our business is to be managed by or underSection 21E of the directionSecurities and Exchange Act of our Board1934, as amended. All statements other than statements of Directors. Our Board of Directors is divided into three classeshistorical facts are “forward-looking statements” for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our Board of Directors currently consists of eight members, classified into three classes as follows: (1) Jason M. Aryeh, Timothy R. Franson, David W. Gryska and Robert J. Lollini constitute the Class I directors with a term ending at the 2013 annual meeting, however Mr. Lollini will be resigning from the Board of Directors on November 15, 2012; (2) John T. Henderson and Robert Forrester constitute the Class II directors with a term ending at the 2014 annual meeting; and (3) Gerald P. Belle and Dennis H. Langer constitute the Class III directors with a term ending at the 2012 annual meeting.
Effective on October 18, 2011, we entered into agreements with MSMB Healthcare LP and certain of its affiliated funds and entities, referred to hereinafter collectively as MSMB Healthcare, and with Jason M. Aryeh,these provisions, including any statements relating to a notice we received from MSMB Healthcare stating MSMB Healthcare’s intention to nominate two individuals, including Mr. Aryeh, for election as Class II directorsour plans and objectives of the Board of Directors at the 2011 annual meeting, and its intended proxy solicitation in connection therewith. Pursuant to these agreements, on October 19, 2011, the Board of Directors, accepting the recommendation of the Nominating and Governance Committee of the Board, increased the size of the Board of Directors from six to seven members, and appointed Mr. Aryeh to the Board of Directors as a Class I director to serve in accordance withmanagement regarding strategic alternatives, our Bylaws until the 2013 annual meeting and thereafter until his successor is duly elected and qualified. Mr. Aryeh was also appointed as a member of the Strategy Review Committee of the Board. Pursuant to these agreements, MSMB Healthcare agreed to withdraw its nominations for the upcoming annual meeting and terminate any solicitations in connection therewith, and MSMB Healthcare and Mr. Aryeh have agreed to certain standstill and voting covenants until the completion of, and except in connection with, our 2013 annual meeting. MSMB Healthcare and Mr. Aryeh have each agreed during the standstill period not to, among other things, engage in or otherwise facilitate any proxy solicitation with respect to the securities of Myrexis, acquire or announce an intention to acquire any Myrexis voting securities which would result in such person (together with its or his respective affiliates) owning 5%one or more commercial-stage biopharmaceutical assets, the pursuit of Myrexis’ voting securities, seek to placebusiness development activities for our programs, future economic conditions or performance, and any individual onstatement of assumptions underlying any of the Board of Directors other than as recommendedforegoing. In some cases, forward-looking statements can be identified by the Boarduse of Directors,terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential,” or become a participant“continue” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in any election contest involving Myrexis. Martin Shkreli, the Managing Memberforward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the General Partner of MSMB Healthcare LP, has also entered into a letter agreement with us, effective October 18, 2011, pursuant to which he has agreedforward-looking statements will prove to be bound bycorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including but not limited to the risk factors set forth in Item 1A “Risk Factors” below, and for the reasons described elsewhere in this Annual Report. All forward-looking statements and reasons why results may differ included in this Annual Report are made as of the date hereof, and we assume no obligation to update these forward-looking statements or reasons why actual results might differ.
As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” the “Company,” and conditions of“Myrexis” mean Myrexis, Inc. (unless the agreement by and among us and MSMB Healthcare.
On August 9, 2012, we entered intocontext indicates a second letter agreement, dated August 8, 2012, with MSMB Healthcare, referred to hereinafter as the 2012 MSMB Letter Agreement. The 2012 MSMB Letter Agreement requires that, through the completion of the 2013 annual meeting, the shareholdings of MSMB Healthcare, Mr. Shkreli and their affiliates must at all times represent less than 4.99% ownership in Myrexis. Also through the completion of the 2013 annual meeting, MSMB Healthcare, Mr. Shkreli and their affiliates must vote the shares of common stock they own on any matter presented to our stockholders for their vote as the Board recommends. The voting requirement is subjectdifferent meaning). In addition, these terms refer to the conditionformer research and drug development businesses that Mr. Aryeh is included in the Board majority approving the recommendation or, if he abstains or otherwise does not vote as a member of the Board on the matter, that he concurswere integrated with the Board’s recommendation. To the extent that the 2012 MSMB Letter Agreement contains provisionsand operated by Myriad Genetics, Inc., which are in addition to or inconsistent with provisions of the October 18, 2011 letter agreement among the Company and MSMB Healthcare described above, referred to hereinafter as the 2011 MSMB Letter Agreement, the 2012 MSMB Letter Agreement provides that such additional and inconsistent provisions in the 2012 MSMB Letter Agreement are incorporatednow operated by reference into the 2011 MSMB Letter Agreement, superseding provisions in the 2011 MSMB Letter Agreement which are inconsistent with the provisions of the 2012 MSMB Letter Agreement, thereby amending the 2011 MSMB Letter Agreement. Also on August 9, 2012, we entered into a second letter agreement with Mr. Shkreli, which made reference to the 2012 MSMB Letter Agreement. Under this agreement, Mr. Shkreli agrees that he will not, and will not cause or permit any of his affiliates to, take any action or refrain from taking any action which, if done or refrained from being done by MSMB Healthcare, would constitute a breach of the 2011 MSMB Letter Agreement as amended by the 2012 MSMB Letter Agreement.
Set forth below are the names of our directors, their ages, their offices in the Company, if any, their principal occupations or employment for the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years.PART I
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Gerald P. Belle was appointed Chairman of the Myrexis Board of Directors on February 19, 2009. He was previously President and Chief Executive Officer, North American Pharmaceuticals, Aventis, Inc. from 2000 to 2004. Over his 35-year career with Aventis and its predecessor companies, Mr. Belle’s responsibilities included executive commercial and general management positions in the U.S., Asia, Europe/Middle East/Africa and Canada. Following his retirement from Aventis in November 2004, he was appointed Executive Chairman of Merial, Ltd., a global leader in animal health and a joint venture between Merck and sanofi-aventis. He retired from Merial, Ltd. in November 2007. Mr. Belle currently serves as the Chairman of the Board of Directors of PDI, Inc. and previously served as a director of Myriad Genetics, Inc. from November 2007 until November 2009. Mr. Belle received his B.S. in Business from Xavier University, and his M.B.A. from Northwestern University.Overview
Our Board of Directors has concluded that Mr. Belle should serve as a director of Myrexis, Inc. due to his knowledge and experience with respect to the biotechnology and pharmaceutical industries, including his background as a senior level executive of a large, global, publicly held pharmaceutical company, service on various boards and his management experience in global operations, international business, strategic planning and finance.
Jason M. Aryeh was appointed a member of the Myrexis Board of Directors on October 19, 2011. Mr. Aryeh is the founder and managing general partner of JALAA Equities, LP, a private hedge fund focused on the biotechnology and specialty pharmaceutical sector, and has served in such capacity since 1997. On June 4, 2012, Mr. Aryeh was elected to the Board of Directors and appointed to serve as Chairman of the Board of QLT, Inc., a biotechnology company dedicated to the development and commercialization of innovative ocular products. Mr. Aryeh also serves on the Board of Directors of Nabi Biopharmaceuticals and Ligand Pharmaceuticals Incorporated, both of which are public biotechnology companies, as well as CorMatrix Cardiovascular, a private medical device company, and the Cystic Fibrosis Foundation’s Therapeutics Board. Mr. Aryeh earned an A.B. in economics, with honors, from Colgate University, and is a member of the Omnicron Delta Epsilon Honor Society in economics.
Our Board of Directors has concluded that Mr. Aryeh should serve as a director of Myrexis, Inc. due to his capital markets experience, including his service as managing general partner of a hedge fund focused on the biotechnology and specialty pharmaceutical sector, his experience in the biotechnology industry, including his investor-side knowledge of the industry, as well as his experience serving on the boards of directors of publicly traded biotechnology companies.
Robert Forrester, LL.B., joined the Myrexis Board of Directors on June 1, 2009. Mr. Forrester has served as Chief Operating Officer of Verastem, Inc. since March 2011. Prior to joining Verastem, Mr. Forrester served as Chief Operating Officer for Forma Therapeutics, Inc. from April 2010 to January 2011. From February 2004 to January 2010, Mr. Forrester served as Interim President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer of CombinatoRx, Incorporated (now called Zalicus Inc.). Prior to joining CombinatoRx, Mr. Forrester served as Senior Vice President, Finance and Corporate Development at Coley Pharmaceutical Group from 2000 to September 2003. Mr. Forrester2012, Myrexis was a Managing Director of the proprietary investment group at MeesPierson, part of the Fortis Group, from 1994 to 2000. Prior to MeesPierson, Mr. Forrester worked for BZW, UBS and Clifford Chance LLP. Mr. Forrester holds a LL.B. from Bristol University. Mr. Forrester served as a director of CPEX Pharmaceuticals, Inc. from April 2010 until April 2011.
Our Board of Directors has concluded that Mr. Forrester should serve as a director of Myrexis, Inc. due to his executive level management experience resulting from service on various boards of private and public biotechnology companies and as a senior executive officer at private and publicly held companies in the pharmaceutical and biotechnology industries, including experience in the development of corporate strategy, as well as his significant financial and investment banking expertise.
Timothy R. Franson, M.D., joined the Myrexis Board of Directors on September 10, 2009. Dr. Franson has served as Senior Vice President with B&D Consulting since December 2009, and now as Principal at Faegre BD Consulting (a merged firm from Faegre Benson and B&D Consulting) and served as Senior Advisor from August 2008 until December 2009. He also serves as President of the United States Pharmacopeial Convention (2010-2015) and previously served as a Director for Quadraspec, Inc., a small technology firm in West Lafayette, Indiana. Until his retirement in June 2008, Dr. Franson was with Eli Lilly and Company for over 20 years, most recently as Vice President of Global Regulatory Affairs and Drug Safety. Previous positions held at Lilly included Group Medical Director for Europe, Executive Director
for North American Regulatory, Chemistry Manufacturing Control, Planning & Global Operations and Vice President of Clinical Research and Regulatory Affairs-US. Dr. Franson has served as chair of the Clinical Steering Committee and as a member of the Regulatory Affairs Coordinating Committee of the Pharmaceutical Research and Manufacturers’ Association (PhRMA) and until recently, chaired PhRMAs FDA Committee Staff Work Group (2000-2008). He was co-chair of the joint FDA-industry working group addressing clinical aspects of the FDA Modernization Act of 1997, including the Prescription Drug User Fee Act (PDUFA) renewal; and from 2000-2003 he co-chaired the overall industry-FDA committees for PDUFA-3 renewal. Dr. Franson received his undergraduate degree in Pharmacy at Drake University and his M.D. degree at the University of Illinois. He is Board Certified in Internal Medicine and Infectious Diseases and prior to joining Lilly was Assistant Professor of Medicine at the Medical College of Wisconsin where he was a member of the Governor’s Task Force on AIDS. He was also an Assistant Professor of Medicine at Indiana University School of Medicine (1987-2008) and on the Board of Directors of the National Patient Safety Foundation (2001-2006).
Our Board of Directors has concluded that Dr. Franson should serve as a director of Myrexis, Inc. due particularly to his knowledge and experience in policymaking and regulatory and compliance issues in the pharmaceutical industry in both the United States and internationally, as well as his extensive clinical and senior management experience at a large, global, publicly held pharmaceutical company.
David W. Gryska was appointed Chief Operating Officer of Myrexis and a member of our Board of Directors on May 11, 2012. On August 15, 2012, Mr. Gryska was appointed Acting President and Chief Executive Officer upon the death of our Chief Executive Officer, Richard B. Brewer. From December 2006 to October 2010, Mr. Gryska was Senior Vice President and Chief Financial Officer of Celgene Corporation. Previously, from October 2004 to December 2006, he was a principal at Strategic Consulting Group, where he provided strategic consulting to early-stage biotechnology companies. From 1998 to 2004, Mr. Gryska was Senior Vice President and Chief Financial Officer at Scios, Inc., a biopharmaceutical company where he helped lead the transaction effort for the successful salethat generated a pipeline of the company to Johnson & Johnson for $2.5 billiondifferentiated drug candidates in February 2003. Previously, Mr. Gryska served as a partner at Ernst & Young. During his eleven years at Ernst & Young, he focused on technology industries, with an emphasis on biotechnologyoncology and healthcare companies. Mr. Gryska also serves on the Board of Directors of Seattle Genetics, Inc. and Hyperion Therapeutics. He holds a B.A. in accounting and finance from Loyola University and an M.B.A. from Golden Gate University.
Our Board of Directors has concluded that Mr. Gryska should serve as a director of Myrexis, Inc. based on his valuable and relevant experience as a senior financial executive at life science and biotechnology companies dealing with financings, mergers, acquisitions and global expansion and other strategic transactions, his extensive knowledge of accounting principles and financial reporting rules and regulations, tax compliance and oversight of the financial reporting processes of several large, publicly traded corporations.
John T. Henderson, M.D., was appointed a member of the Myrexis Board of Directors on February 19, 2009. Since December 2000, Dr. Henderson has served as a consultant to the pharmaceutical industry as President of FuturePharm LLC. Until his retirement in December 2000, Dr. Henderson was with Pfizer for over 25 years, most recently as a Vice President in the Pfizer Pharmaceuticals Group. Dr. Henderson previously held Vice President level positions with Pfizer in Research and Development in Europe and later in Japan. He was also Vice President, Medical for the Europe, U.S. and International Pharmaceuticals groups at Pfizer. Dr. Henderson earned his bachelor’s and medical degree from the University of Edinburgh and is a Fellow of the Royal College of Physicians (Ed.) and a Fellow of the Faculty of Pharmaceutical Medicine. Dr. Henderson has served as a director of Myriad Genetics, Inc. since May 2004 and Chairman of the Board of Directors since April 2005, and also serves on the Board of Directors of Cytokinetics, Inc.
Our Board of Directors has concluded that Dr. Henderson should serve as a director of Myrexis, Inc. due to his experience and understanding of a broad range of global drug development and pharmaceutical industry issues, his senior management experience at a large, global, publicly held pharmaceutical company, his general knowledge and experience with respect to the biotechnology and pharmaceutical industries as well as his understanding of corporate governance as a Chairman and his service on various boards.
Dennis H. Langer, M.D., J.D., was appointed a member of the Myrexis Board of Directors on February 19, 2009. From August 2005 to May 2010, Dr. Langer served as Managing Partner of Phoenix IP Ventures, LLC. From January 2004 to July 2005, Dr. Langer served as President, North America for Dr. Reddy’s Laboratories, Inc. From September 1994 until January 2004, Dr. Langer held several high-level positions at GlaxoSmithKline, and its predecessor, SmithKline Beecham, including most recently as Senior Vice President, Project, Portfolio and Alliance Management, Senior Vice President, Product Development Strategy, and Senior Vice President, Healthcare Services R&D. From 1991 to 1994, Dr. Langer was President and CEO of Neose Pharmaceuticals, Inc. From 1983 to 1991, Dr. Langer held positions in clinical research and marketing at Eli Lilly, Abbott and Searle. He is also a Clinical Professor at the Department of Psychiatry, Georgetown University School of Medicine. Dr. Langer received a J.D. (cum laude) from Harvard Law School, an M.D. from Georgetown University School of Medicine, and a B.A. in Biology from Columbia University. Dr. Langer has served as a director of Myriad Genetics, Inc. since 2004, and served on the Board of Directors of Auxilium Pharmaceuticals, Inc. from 2007 until 2010, Pharmacopeia, Inc. from 2006 until 2008, and Cytogen Corporation from 2005 until 2008.
Our Board of Directors has concluded that Dr. Langer should serve as a director of Myrexis, Inc. due particularly to his broad leadership experience resulting from service on various boards and as a Chief Executive Officer, his extensive business and scientific expertise due to his background in the development and commercialization of pharmaceutical products in the United States and internationally, and his entrepreneurial experience in the creation and oversight of new life-sciences companies.
Robert J. Lollini was appointed a member of the Myrexis Board of Directors on September 6, 2011, and previously served as the Company’s President and Chief Executive Officer from September 6, 2011 to May 11, 2012 and as the Company’s Interim President and Chief Executive Officer from July 21, 2011 to September 6, 2011. Mr. Lollini joined Myrexis, Inc. in February 2009 and served as Chief Financial Officer from February 17, 2009 to July 21, 2011. In addition, Mr. Lollini served as Treasurer from February 17, 2009 until September 6, 2011, and as Secretary from May 25, 2011 until September 6, 2011. Prior to joining the Company, Mr. Lollini held several executive management positions with Iomed, Inc., an international drug delivery company, serving as President and Chief Executive Officer and a director from November 2002 to August 2007, Chief Operating Officer from October 2001 to November 2002 and as Executive Vice President, Finance, Chief Financial Officer and Secretary from January 1993 to October 2001. Between 1989 and 1992, Mr. Lollini worked for R.P. Scherer Corporation, also an international drug delivery company, as Vice President, Finance, Chief Financial Officer and Secretary, and between 1981 and 1988, as its Corporate Controller and Chief Accounting Officer and in various other management capacities. Between 1978 and 1981, Mr. Lollini was with the accounting firm of Arthur Andersen & Co. Mr. Lollini is a Certified Public Accountant and received a Bachelor of Arts degree in Accounting from Michigan State University and an MBA in Finance/Economics from the University of Detroit.
Our Board of Directors has concluded that Mr. Lollini should serve as a director of Myrexis, Inc. because, having been with Myrexis since its transition to an independent public company, as well as in his previous professional experience, he has demonstrated outstanding management and leadership skills as well as the ability to make decisions effectively and to execute through appropriate action. In addition, Mr. Lollini has an extensive understanding and command of Myrexis’s business, a combination of strategic thinking and operational effectiveness, leadership skills, and a commitment to pursue the best interests of Myrexis’s shareholders as his highest priority.
Pursuant to the terms of our Separation and Consulting Agreement with Mr. Lollini, dated May 11, 2012, Mr. Lollini will resign from the Board of Directors effective on November 15, 2012.
Committees of the Board of Directors
Our Board of Directors has established the following committees:
Audit Committee
Our Audit Committee currently has three members, Robert Forrester (Chairman), John Henderson and Dennis Langer. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include the authority to retain and terminate the services of our independent registered public accounting firm. In addition, the Audit Committee reviews annual financial statements, considers matters relating to accounting policy and internal controls and reviews the scope of annual audits. Our Board of Directors has determined that all members of the Audit Committee satisfy the current independence standards promulgated by the SEC and by The NASDAQ Stock Market LLC, as such standards apply specifically to members of audit committees. The Board has determined that Mr. Forrester is an “audit committee financial expert,” as the Securities and Exchange Commission has defined that term in Item 407 of Regulation S-K.
A copy of the Audit Committee’s written charter is publicly available on the “Investors—Corporate Governance” section of our website atwww.myrexis.com.
Compensation Committee
Our Compensation Committee currently has three members, Dennis Langer (Chairman), Gerald Belle and Robert Forrester. Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and include reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities of the Board of Directors are carried out and that such policies, practices and procedures contribute to our success. The Compensation Committee is responsible for the determination of the compensation of our executive officers, and conducts its decision making process with respect to that issue without such officers present. Our Board of Directors has determined that all members of the Compensation Committee qualify as independent under the definition promulgated by The NASDAQ Stock Market LLC.
A copy of the Compensation Committee’s written charter is publicly available on the “Investors—Corporate Governance” section of our website atwww.myrexis.com.
Nominating and Governance Committee
Our Nominating and Governance Committee currently has three members, John Henderson (Chairman), Dennis Langer and Timothy Franson. Our Nominating and Governance Committee’s role and responsibilities are set forth in the Nominating and Governance Committee’s written charter and include identifying and nominating members of our Board of Directors, developing and recommending to our Board of Directors a set of corporate governance principles applicable to our company and overseeing the evaluation of the performance of our Board of Directors. The committee also oversees our policy on plurality voting for director elections, under which, in non-contested elections, if a director receives a greater number of WITHHOLD votes than FOR votes, the Board will decide, through a process managed by the Nominating and Governance Committee and excluding the nominee in question, whether it should request that the director submit his or her resignation, maintain the director but address what the Nominating and Governance Committee believes is the underlying cause of the WITHHOLD votes, or resolve not to re-nominate the director in the future for election. A copy of this policy is publicly available on the “Investors—Corporate Governance” section of our website atwww.myrexis.com. The Board of Directors has determined that all members of the Nominating and Governance Committee qualify as independent under the definition promulgated by The NASDAQ Stock Market LLC.
Under our current corporate governance policies, the Nominating and Governance Committee may consider candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. For all potential candidates, the Nominating and Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board, and the long-term interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to propose a candidate for consideration as a nominee by the Nominating and Governance Committee under our corporate governance policies, for future annual meetings, the Nominating and Governance Committee will consider only one recommended nominee from any stockholder or group of affiliated stockholders for each annual meeting, and such recommending stockholder or group must have held at least 5% of our common stock for at least one year. All stockholder recommendations for proposed director nominees must be in writing to the Nominating and Governance Committee, care of Myrexis’s Secretary at 305 Chipeta Way, Salt Lake City, Utah 84108, and must be received no later than 120 days prior to the first anniversary of the date of the proxy statement for the previous year’s annual meeting or, in certain circumstances, such as there was no previous annual meeting, a reasonable time in advance of the mailing of our proxy statement for such annual meeting. The recommendation must be accompanied by the following information concerning the recommending stockholder:
the name, address and telephone number of the recommending stockholder;
the number of shares of our common stock owned by the recommending stockholder and the time period for which such shares have been held;
if the recommending stockholder is not a stockholder of record, a statement from the record holder verifying the holdings of the recommending stockholder and a statement from the recommending stockholder of the length of time such shares have been held (alternatively the recommending stockholder may furnish a current Schedule 13D, Schedule 13G, Form 3, Form 4 or Form 5 filed with the SEC, together with a statement of the length of time that the shares have been held); and
a statement from the recommending stockholder as to a good faith intention to continue to hold such shares through the date of the next annual meeting.
The recommendation must also be accompanied by the following information concerning the proposed nominee:
the information required by Items 401, 403 and 404 of Regulation S-K under the Securities Act;
a description of all relationships between the proposed nominee and any stockholder of the Company, including the recommending stockholder, including any agreements or understandings regarding the nomination;
a description of all relationships between the proposed nominee and any of our competitors, customers, suppliers, labor unions or other persons with special interests regarding the Company; and
the contact information of the proposed nominee.
The recommending stockholder must also furnish a statement supporting a view that the proposed nominee possesses the minimum qualifications as set forth below for director nominees and describing the contributions that the proposed nominee would be expected to make to the Board and to the governance of Myrexis and must state whether, in its view, the proposed nominee, if elected, would represent all stockholders and not serve for the purpose of advancing or favoring any particular stockholder or other constituency of Myrexis. The recommendation must also be accompanied by the written consent of the proposed nominee (i) to be considered by the Nominating and Governance Committee and interviewed if the committee chooses to do so in its discretion, and (ii) if nominated and elected, to serve as a director.
For all potential candidates, the Nominating and Governance Committee may consider all factors it deems relevant, including the following threshold criteria:
candidates should possess the highest personal and professional standards of integrity and ethical values;
candidates must be committed to promoting and enhancing the long-term value of Myrexis for its stockholders;
candidates must be able to represent fairly and equally all stockholders without favoring or advancing any particular stockholder or other constituency of Myrexis;
candidates must have demonstrated achievement in one or more fields of business, professional, governmental, community, scientific or educational endeavor, and possess mature and objective business judgment and expertise;
candidates are expected to have sound judgment, derived from management or policy making experience that demonstrates an ability to function effectively in an oversight role;
candidates must have a general appreciation regarding major issues facing public companies of a size and operational scope similar to Myrexis, including, governance concerns, regulatory obligations, strategic business planning, competition and basic concepts of accounting and finance; and
candidates must have, and be prepared to devote, adequate time to the Board of Directors and its committees.
In addition, the Nominating and Governance Committee will also take into account the extent to which the candidate would fill a present need on the Board, including the extent to which a candidate meets the independence and experience standards promulgated by the SEC and by The NASDAQ Stock Market LLC.
The Board and Nominating and Governance Committee do not have a formal policy with respect to the consideration of diversity in identifying nominees for a director position. However, the Board and Nominating and Governance Committee strive to nominate individuals with a variety of diverse backgrounds, skills, qualifications, attributes and experience such that the Board, as a group, will possess the appropriate expertise, talent and skills to fulfill its oversight responsibilities with respect to the long-term interests of the stockholders.
A copy of the Nominating and Governance Committee’s written charter is publicly available on the “Investors—Corporate Governance” section of our website atwww.myrexis.com.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive officers.
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David W. Gryska—Please see Mr. Gryska’s biography above under “The Board of Directors.”
Andrea Kendell joined Myrexis, Inc. in May 2009 as Corporate Controller and became Vice President, Finance and Human Resources in June 2010. On September 6, 2011, the Board appointed Ms. Kendell as Chief Financial Officer, Treasurer and Secretary. Prior to joining Myrexis, Ms. Kendell held senior management positions with Moog Medical Devices Group, formerly ZEVEX, Inc., a publicly traded international medical device manufacturing company serving as Corporate Controller from January 1997 to March 2007, and Group Financial Manager from March 2007 to May 2009. Ms. Kendell received a B.A. in Accounting and a M.A. in Accounting from Westminster College, Salt Lake City, Utah.
Section 16(a) Beneficial Ownership Reporting Compliance
Our records reflect that all reports which were required to be filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis.
An Annual Statement of Beneficial Ownership on Form 5 is not required to be filed if there are no previously unreported transactions or holdings to report. Nevertheless, we are required to disclose the names of directors, officers and 10% stockholders who did not file a Form 5 unless we have obtained a written statement that no filing is required. We received either a written statement from our directors, officers and 10% stockholders or know from other means that no Forms 5 were required to be filed.
Corporate Code of Conduct and Ethics
We have adopted a Corporate Code of Conduct and Ethics that applies to all of our directors and employees, including our chief executive officer and chief financial and accounting officer. A copy of the Corporate Code of Conduct and Ethics is publicly available on the “Investors—Corporate Governance” section of our website atwww.myrexis.com. To the extent permissible under applicable law, the rules of the SEC or The Nasdaq Stock Market, we also intend to post on our website any amendment to the Corporate Code of Conduct and Ethics, or any grant of a waiver from a provision of the Corporate Code of Conduct and Ethics, that requires disclosure under applicable law, SEC rules or Nasdaq listing standards.
COMPENSATION DISCUSSION AND ANALYSIS
We became an independent, publicly traded biopharmaceutical company on June 30, 2009, the last day of our 2009 fiscal year, as a result of our separation and spin-off from our former parent company Myriad Genetics, Inc. This Compensation Discussion and Analysis discusses the compensation of our named executive officers for fiscal year 2012, our most recently completed fiscal year.
At our 2011 annual meeting, our stockholders cast their votes in support of the Board of Directors’ recommendations on the advisory vote regarding the compensation of our named executive officers. Based on the favorable response we received from our stockholders on this advisory vote, there were no changes made to our compensation policies and decisions as result of this vote.
Fiscal Year 2012 Named Executive Officers
Our named executive officers for the fiscal year ended June 30, 2012 were:
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Although David W. Gryska was appointed our Chief Operating Officer on May 11, 2012, under SEC rules he was not deemed a named executive officer for fiscal year 2012 and as a result does not appear in this Compensation Discussion and Analysis and the executive compensation tables that follow. As he was appointed our acting President and Chief Executive Officer on August 15, 2012, following the death of Richard B. Brewer, he will be a named executive officer for fiscal year 2013.
Executive Summary of Fiscal Year 2012 Company Events and Management Changes
Effective July 21, 2011, Adrian N. Hobden, Ph.D., resigned as our President and Chief Executive Officer and as a member of our Board of Directors, and Robert J. Lollini, our then serving Chief Financial Officer, was appointed our interim President and Chief Executive Officer. On September 6, 2011, the Board of Directors appointed Mr. Lollini permanent President and Chief Executive Officer, and as a Class I member of the Board of Directors, and Andrea Kendell, our then serving Vice President, Finance and Human Resources, as Chief Financial Officer. In connection with these management changes, we entered into a Separation Agreement with Dr. Hobden on July 21, 2011, modified our employment and compensation arrangements with Mr. Lollini, including entering into a new offer letter of employment and an amendment to his Executive Severance and Change in Control Agreement on September 9, 2011, and modified our employment and compensation arrangements with Ms. Kendell, including entering into an offer letter of employment and an Executive Severance and Change in Control Agreement on September 22, 2011, each of which is further described below under the heading “Fiscal Year 2012 Compensation of Named Executive Officers.”
On September 8, 2011, we announced that we had completed an in-depth review of our drug development pipeline, incorporating extensive inputs from both internal and independent external analyses. As a result, we made a strategic business decision to suspend any further development of our lead drug candidate Azixa, which was in Phase 2 development for the treatment of advanced primary and metastatic tumors with brain involvement. Following this decision, in November 2011, we announced a corporate reorganization to realign our resources with our development strategy and clinical initiatives following the suspension of our lead drug candidate. The reorganization included an immediate reduction in our workforce by 15 employees or approximately 20%.
On November 16, 2011, Wayne Laslie, our Chief Operating Officer, resigned, which resignation became effective on February 29, 2012. In connection with Mr. Laslie’s resignation, we entered into a Separation Agreement with Mr. Laslie on December 13, 2011, which is further described below under the heading “Fiscal Year 2012 Compensation of Named Executive Officers.”
autoimmune diseases. In February 2012, we announced that we had suspended development activity on all of our preclinical and clinical programs and retained Stifel Nicolaus Weisel, an investment banking firm, to assist in reviewing and evaluating a full range of strategic alternatives to enhance shareholder value. Thereafter, in March 2012, we initiated an alignment of our resources involving a phased reduction in our workforce from approximately 59 employees to 101 current employees.employee as of June 30, 2013.
Based on ouran evaluation of strategic alternatives, we determined to pursue the acquisition of one or more commercial-stage biopharmaceutical assets, with the goal of building a commercial-stage biopharmaceutical company by optimizing their performance and profitability. Integral to these efforts, on May 11, 2012, we appointedannounced a change in management, including the appointment of Richard B. Brewer as President and Chief Executive Officer and David W. Gryska as Chief Operating Officer and entered into employment agreements and restricted stock unit agreements with them. The terms of Mr. Brewer’s agreements are described below under the heading “Fiscal Year 2012 Compensation of Named Executive Officers.”Officer. In addition, both Mr. Brewer and Mr. Gryska were appointed as members of ourthe Board of Directors.
In connection with the appointment of Mr. Brewer, Robert J. Lollini resigned as President and Chief Executive Officer effective May 11, 2012. In connection with Mr. Lollini’s resignation,
On August 15, 2012, we entered into a Separation and Consulting Agreement with Mr. Lollini on May 11, 2012, which is further described below under the heading “Fiscal Year 2012 Compensation of Named Executive Officers.”
Afterannounced the death of Richard B. Brewer, ourthe Company’s President and Chief Executive Officer, on August 15, 2012, theOfficer. The Board of Directors appointed David W. Gryska as our actingthe Acting President and Chief Executive Officer while considering succession plans.plans and proceeded to further evaluate the Company’s strategic direction in light of this development and our progress to date in identifying attractive biopharmaceutical assets.
Detailed Discussion
On November 9, 2012, the Board of Directors concluded that it appeared unlikely that a strategic transaction at a valuation materially in excess of our estimated liquidation value would be achieved in the near term. Based on these and Analysisother factors, the Board of Directors concluded that a statutory dissolution and liquidation was in the best interests of the Company and its stockholders and therefore unanimously adopted a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”), subject to stockholder approval.
On December 14, 2012, we filed proxy materials with the Securities and Exchange Commission for a Special Meeting of stockholders on January 23, 2013, to consider and vote on the Plan of Dissolution (the “Special Meeting”).
On December 21, 2012, we announced that we entered into a settlement agreement (the “Settlement Agreement”) that settled fully and finally a lawsuit (the “Litigation”) brought by the Alzheimer’s Institute of America, Inc. (“AIA”) against Myriad Genetics, Inc. (“Myriad Genetics” or “MGI”) and its wholly owned subsidiary, Myriad Therapeutics, Inc. (formerly known as Myriad Pharmaceuticals, Inc.) (referred to hereinafter together with Myriad Genetics as “Myriad”), and the Mayo Clinic Jacksonville and Mayo Foundation for Medical Education and Research (referred to hereinafter together as “Mayo”). Specifically, AIA asserted that Myriad and Mayo infringed certain patents allegedly owned by AIA in connection with Myriad’s research and development of its failed Alzheimer’s drug candidate Flurizan (hereinafter referred to as the “Litigation”). Myrexis, Myriad, Mayo and AIA are hereinafter referred to collectively as the “Parties”. As previously disclosed, pursuant to our Separation and Distribution Agreement with Myriad Genetics, dated June 30, 2009, at the time of Myrexis’ separation from Myriad Genetics, Myrexis assumed liability for certain pending or threatened legal matters related to its business, and is obligated to indemnify Myriad Genetics for any liability arising out of such matters, including any costs and expenses of litigating such matters, including payment of attorneys’ fees incurred to defend against claims. Accordingly, pursuant to the terms of the Settlement Agreement, in consideration of AIA’s release of claims against and covenant not to sue the other Parties for matters related to the Litigation, Myrexis agreed to (1) pay AIA approximately $1,525,000, and (2) transfer to AIA all program rights and assets associated with Myrexis’ Hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule anti-interferon (IKK€/TBK1) inhibitor program (the “Program Assets Transfer”). AIA assumed Myrexis’ liabilities under the program contracts being transferred to AIA and all liabilities for the further conduct of the programs, subject, in each case, to certain exclusions, including liabilities accruing or arising from events occurring prior to the Program Assets Transfer. The Settlement Agreement also includes a release of claims against AIA by each of Myrexis, Myriad and Mayo. Simultaneously with the delivery of the settlement payment to AIA by Myrexis on December 21, 2012, the Parties filed a stipulation of dismissal of the Litigation.
On December 21, 2012, David W. Gryska informed Myrexis of his resignation as Acting President and Chief Executive Officer, Chief Operating Officer and member of the Board of Directors, effective December 24, 2012.
On January 22, 2013, the Board unanimously determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration of strategic alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a special cash distribution to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash distribution was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend on Tuesday, February 19, 2013.
On January 22, 2013, the Board of Directors also appointed Jonathan M. Couchman as a Class II director of the Company and as its President and Chief Executive Officer. Subsequent to Mr. Couchman’s appointment to the Board of Directors, the remaining members of the Board of Directors, Gerald P. Belle, Jason M. Aryeh, Robert Forrester, Timothy R. Franson, M.D., John T. Henderson, M.D., and Dennis H. Langer, M.D., J.D., resigned.
On February 13, 2013, Steven Scheiwe and Michael Pearce were appointed to the Board of Directors.
On February 28, 2013, Andrea Kendell’s employment as CFO terminated voluntarily and on March 1, 2013, Mr. Couchman was appointed CFO of Myrexis.
On April 26, 2013, the Company held its 2012 Annual Meeting of shareholders (the “2012 Annual Meeting”). At the 2012 Annual Meeting, stockholders of the Company elected Steven D. Scheiwe as a Class I director for a term ending at the 2013 annual meeting of stockholders, Jonathan M. Couchman as a Class II director for a term ending at the 2014 annual meeting of stockholders and Michael C. Pearce (“Disinterested Director”) as a Class III director for a term ending at the 2015 annual meeting of stockholders.
After giving effect to the payment of the cash distribution on February 15, 2013, as of June 30, 2013, we had approximately $1.1 million in cash and cash equivalents. The Company is in the early stages of reviewing the scope of strategic alternatives that may be available for consideration. Due to limited cash resources available to the Company, the delisting by Nasdaq of the Company’s shares and the potential impact on the Company’s NOLs of any significant share issuance under Section 382 of the Internal Revenue Code, among other things, the Company may conclude to liquidate if available strategic alternatives cannot be identified in a reasonable period of time. To the extent any strategic alternatives or transactions are identified, it will most likely be necessary to raise additional funds to consummate any such alternative or transaction, although there is no assurance we will be able to do so. We do not know if we will be successful in pursuing any strategic alternative or that any transaction will occur; however, we are committed to pursuing a strategic direction that our Board of Directors believes is in the best interests of our shareholders. We currently do not have any drugs that are commercially available.
In light of the Company’s limited activities at the present time, the Company has determined that it is advisable to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. The Company anticipates filing a Form 15 with the Securities and Exchange Commission (the “SEC”) to effect this deregistration in the near future. After careful consideration, the Board of Directors decided to deregister based on its belief that the savings the Company will achieve as a result of deregistration, particularly on costs related to the preparation and filing of SEC reports and compliance with Sarbanes-Oxley obligations, will benefit shareholders, and such benefits will outweigh any advantages of continuing as an SEC reporting company. The obligation of filing SEC reports and complying with Sarbanes-Oxley has become too burdensome and expensive for a company of Myrexis’ size. Upon the filing of the Form 15, the Company’s obligation to file periodic and current reports with the SEC, including Forms 10-K, 10-Q, and 8-K, will be suspended.
Objectives
Oncology Programs
As indicated in our February 2012 announcement, we have suspended development activities for the remaining oncology programs. Despite significant efforts, however, we have been unsuccessful to date in identifying and Elementsattracting third parties to whom we could out-license or sell these assets for further development. Thus, under the Settlement Agreement with AIA, we transferred to AIA all program rights and assets associated with Myrexis’s hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule anti-interferon (IKK€/TBK1) inhibitor program.
Intellectual Property
As a result of the Settlement Agreement, we own or have licensed rights to at least two issued patents and at least one patent application in the United States. Issued patents expire between 2026 and 2027. Any patent applications which we have filed or will file or to which we have licensed or will license rights may not issue, and patents that do issue may not contain commercially valuable claims. In addition, any patents issued to us or our licensors may not afford meaningful protection for our products or technology, or may be subsequently circumvented, invalidated or narrowed, or found unenforceable. Our Compensation Programprocesses and potential products may also conflict with patents which have been or may be granted to competitors, academic institutions or others. As the pharmaceutical industry expands and more patents are issued, the risk increases that our processes and potential products may give rise to claims of patent infringement by other companies, institutions or individuals. These entities or persons could bring legal actions against us claiming damages and seeking to enjoin clinical testing, manufacturing and marketing of the related product or process. If any of these actions are successful, in addition to any potential liability for damages, we could be required to cease the infringing activity or obtain a license in order to continue to manufacture or market the relevant product or process. We may not prevail in any such action and any license required under any such patent may not be made available on acceptable terms, if at all.
FollowingLicense and Collaboration Agreement with EpiCept Corporation
Myriad Genetics had entered into a license agreement (the “License Agreement”) for exclusive rights to utilize certain intellectual property rights related to the drug candidate Azixa with Maxim Pharmaceuticals, Inc. and Cytovia, Inc. All licensed rights of Maxim and Cytovia were subsequently acquired by EpiCept Corporation, and Maxim, Cytovia and EpiCept are collectively referred to herein as EpiCept. Pursuant to the separation agreement with MGI, Myrexis assumed all rights and obligations under the License Agreement.
In September 2011, Myrexis announced that it had suspended any further development of Azixa. On August 28, 2012, Myrexis provided EpiCept notice of termination of the License Agreement following its election to terminate all of its efforts to develop and commercialize Azixa in any major market as such products and markets are defined in the agreement. On January 4, 2013, Myrexis and EpiCept entered into an Asset Purchase Agreement (the “APA”) which expressly terminated the License Agreement and assigned to EpiCept rights in intellectual property, regulatory filings and certain other assets of Myrexis related to its Azixa development program for $1.00. The APA expressly terminates the License Agreement without further liability of either Myrexis or EpiCept. Myrexis has no further obligation for royalty or milestone payments to EpiCept. The APA provides for certain royalty and milestone payments to be made to Myrexis should EpiCept or its licensee develop and commercialize a product using intellectual property rights transferred to EpiCept under the APA.
Employees
As of June 30, 2013, we had one employee, Jonathan M. Couchman, our Chief Executive Officer and Chief Financial Officer.
Corporate History and Available Information
We were incorporated as Myriad Pharmaceuticals, Inc. in Delaware in January 2009 as a new, wholly owned subsidiary of Myriad Genetics, Inc. in order to effect the separation and spin-off of Myriad Genetics’ research and drug development businesses as a stand-alone, independent, publicly traded company. In connection with the formation of this new subsidiary, Myriad Genetics’ existing subsidiary, Myriad Pharmaceuticals, Inc., changed its corporate name to Myriad Therapeutics, Inc. On June 30, 2009, Myriad Genetics contributed substantially all of the assets and certain liabilities of its research and drug development businesses as well as $188 million in cash and marketable securities to us and effected the spin-off of our company through the pro rata dividend distribution to its stockholders of all outstanding shares of our common stock. Effective July 1, 2010, we changed our name from Myriad Genetics,Pharmaceuticals, Inc. to Myrexis, Inc. Our principal executive offices are located c/o Xstelos Holdings, Inc. at 630 Fifth Avenue, Suite 2260, New York, New York 10020. Our telephone number is 801-214-7800 and our Compensation Committee establishedweb site address iswww.myrexis.com. We include our web site address in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our web site. We make available free of charge through the objectives“Investors” section of our compensation programsweb site our Corporate Code of Conduct and implementedEthics, our Audit Committee and other committee charters and our other corporate governance policies, as well as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.
Item 1A. | RISK FACTORS |
The risks and uncertainties described below are those that we currently believe may materially affect our company. If any of the following risks actually occur, they may materially harm our business, our financial condition and our results of operations.
Risks Relating to Our Evaluation of Strategic Alternatives and Our Business
We cannot assure you that the Company’s new management team will identify a strategic alternative or direction that will yield additional value for our shareholders.
As announced in connection with the former Board of Directors’ declaration of the special cash distribution to our shareholders and their resignation and appointment of Jonathan M. Couchman as our initial sole director and chief executive officer, Mr. Couchman will be further evaluating strategic alternatives with a view to generating additional value for our shareholders. However, we cannot assure you that Mr. Couchman and any other members of the management team he appoints will succeed in identifying a strategic direction that will result in additional value for the shareholders at any particular time, or at all. Moreover, even if the new management team identifies and pursues a promising strategic course, there can be no assurance that their efforts to execute such plans policies,will result in any initiatives, agreements, transactions or plans that will enhance shareholder value.
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We anticipate that we will incur losses for the foreseeable future and practiceswe may never achieve or sustain profitability.
We incurred losses of $11.6 million, $31.2 million and $38.7 million for the years ended June 30, 2013, 2012 and 2011, respectively. Although our expenses have been reduced dramatically through multiple reductions in our personnel, and although our research and development efforts no longer continue, we expect to continue to incur operating expenses and anticipate that we will continue to have losses in the foreseeable future as we pursue a new strategic direction. Moreover, even if our Board of Directors determines to pursue a different strategic alternative, we expect that significant expenses will be involved in implementing any such strategic path, which will further reduce our limited existing capital. We may never achieve these objectives, and since that timeor sustain profitability as a business. In addition, after giving effect to the special cash distribution to our shareholders of record on February 4, 2013, we have $1.1 million in cash and cash equivalents remaining in the Company as of June 30, 2013.
We may require additional capital to fund our pursuit and consummation of whatever strategic course our new Board of Directors and management determine.
We have $1.1 million in cash and cash equivalents remaining in the Company as of June 30, 2013. We anticipate this to be sufficient to fund ongoing public company and other related operational costs for at least 12 months. Accordingly, we may require additional capital to pursue whatever strategic direction the new Board of Directors and management determine to undertake. There can be no assurance that such additional funding will be available on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may not be able to effectively implement any new strategic plan and may have to liquidate. We may seek to raise any necessary funds through public or private equity offerings, debt financings or strategic alliances and licensing arrangements. We may elect to raise additional funds even before we need them if the conditions for raising capital are favorable. We may not be able to obtain additional financing on terms favorable to us, if at all. General market conditions may make it very difficult for us to seek financing from the capital markets. We may be required to relinquish rights to our remaining intellectual property assets, or grant licenses on terms that are not favorable to us, and we may be required in connection with entering into new strategic arrangements to accept terms less favorable than would be the case if we had greater financial assets. In addition, our shareholders may suffer substantial dilution of their economic interests in Myrexis as a result of any future financial or other strategic transaction.
Our Chief Executive Officer and Chief Financial Officer serves as the Chief Executive Officer and Chief Financial of another company, and he may not be able to devote the requisite time to evaluate, develop and pursue a strategic plan that will enhance shareholder value. Moreover, he may not be able to attract other executives to the management team on a timely basis.
Jonathan M. Couchman, our new Chief Executive Officer, is employed by us under an agreement that provides him $1.00 per year in salary, and he currently serves as the Chief Executive Officer of Xstelos Holdings, Inc. (“Xstelos”), another public company. Given his other employment commitments, there can be no assurance that Mr. Couchman will be able to devote the time necessary, or at the necessary times, to conduct the planned further evaluation of strategic alternatives, or to pursue and execute whatever strategic path may ultimately be determined. Moreover, Andrea Kendell, our former Chief Financial Officer, ended her full-time employment position with Myrexis on February 28, 2013. Mr. Couchman was retained as Chief Financial Officer on March 1, 2013. During this leadership transition, Mr. Couchman will bear substantial additional leadership responsibilities, which may present challenges in identifying business opportunities and making significant business decisions with a very small executive team. Any failure to manage this leadership transition successfully could have a material adverse effect on the prospects for a successful new strategic course. It is possible in the future that we may determine it to be advisable to enter into a financing or other transaction with Xstelos. In such event we would anticipate that any such transaction would be evaluated and approved by our Disinterested Director.
We may be unable to realize the benefits of our net operating losses (“NOLs”).
NOLs may be carried forward to offset federal and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain limits and adjustments. Based on current income tax rates, if fully utilized, our NOLs and other carry-forwards could provide a benefit to us of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon our ability to comply with the rules relating to the preservation and use of NOLs and the amount of our otherwise taxable income. If we do not have sufficient taxable income in future years to use the tax benefits before they expire, we will lose the benefit of these NOLs permanently. Consequently, our ability to use the tax benefits associated with our NOLs will depend significantly on our success in identifying suitable new business opportunities and acquisition candidates that maximize our NOLs, and once identified, successfully becoming established in this new business line or consummating such an acquisition.
Additionally, if we underwent an ownership change, the NOLs would be subject to an annual limit on the amount of the taxable income that may be offset by our NOLs generated prior to the ownership change and we may be unable to use a significant portion or all of our NOLs to offset taxable income. We have adopted a tax benefits preservation plan and filed an amendment to our Certificate of Incorporation that restricts certain transfers of our common stock with the intention of reducing the likelihood of an ownership change. However, we cannot assure you that these measures will be effective in deterring or preventing all transfers of our common stock that could result in such an ownership change.
The amount of NOLs that we have claimed has not been continuously engagedaudited or otherwise validated by the U.S. Internal Revenue Service (the “IRS”). The IRS could challenge our calculation of the amount of our NOLs and our determinations as to when a prior change in reviewingownership occurred, and revisingother provisions of the Internal Revenue Code may limit our executiveability to carry forward our NOLs to offset taxable income in future years. If the IRS was successful with respect to any such challenge, the potential tax benefit that the NOLs would provide us could be substantially reduced.
Our common stock has been delisted from The NASDAQ Global Market resulting in a more limited market for our common stock.
On January 28, 2013, we received a letter (the “Letter”) from the Listing Qualifications Department of The NASDAQ Stock Market LLC informing us that the NASDAQ Staff had determined to utilize its discretionary authority and initiate proceedings to delist our securities from The NASDAQ Stock Market. The Letter stated that the Staff based their determination on their belief that Myrexis is a “public shell,” and the resignation of all our independent directors. Further, as a result of the resignation of our independent directors, we no longer complied with the following: the majority independent board requirement set forth in Listing Rule 5605(b)(1); the audit committee composition requirement set forth in Listing Rule 5605(c)(2); the compensation policiescommittee requirements set forth in Listing Rule 5605(d); and practicesthe nominating committee requirements set forth in Listing Rule 5605(e). We did not request an appeal of this determination, and trading in our stock on the NASDAQ Global Market was suspended on February 1, 2013. As of February 1, 2013, we began trading in the over-the-counter, or OTC Markets under the symbol MYRX. The delisting by NASDAQ could hurt our investors by reducing the liquidity and market price of our common stock. Additionally, the delisting could negatively affect us by reducing the number of investors willing to hold or acquire our common stock, which could negatively affect our ability to raise capital.
In light of the changing economic environment, our evolutionCompany’s limited activities at the present time, the Company has determined that it is advisable to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. The Company anticipates filing a Form 15 with the Securities and Exchange Commission (the “SEC”) to effect this deregistration in the near future. After careful consideration, the Board of Directors decided to deregister based on its belief that the savings the Company will achieve as a result of deregistration, particularly on costs related to the preparation and filing of SEC reports and compliance with Sarbanes-Oxley obligations, will benefit shareholders, and such benefits will outweigh any advantages of continuing as an independentSEC reporting company. The obligation of filing SEC reports and complying with Sarbanes-Oxley has become too burdensome and expensive for a company of Myrexis’ size. Upon the filing of the Form 15, the Company’s obligation to file periodic and current reports with the SEC, including Forms 10-K, 10-Q, and 8-K, will be suspended.
Our future success depends on our ability to retain our key executive.
The competition for qualified personnel is intense and we must retain our key executive. There can be no assurance that we will be able to retain Mr. Couchman due in part to the fact that the agreements we have entered into with him provide for $1.00 per year in salary. Although we do not have any reason to believe that we may lose the services of Mr. Couchman in the foreseeable future, the loss of his services may impede our efforts to pursue a new strategic direction.
If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, we could incur substantial liability.
The use of our drug candidates in clinical trials and the sale of any products for which marketing approval has been obtained expose us to the risk of product liability claims. Product liability claims might be brought against us by consumers, health care providers or others selling or otherwise coming into contact with our products. If we cannot successfully defend ourselves against product liability claims, we could incur substantial liabilities.
We have obtained product liability insurance coverage for our previously conducted clinical trials with a $5.0 million annual aggregate coverage limit. However, our insurance coverage may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in particular with respectthe future, we may not be able to fiscal year 2012, corporate developments, while strivingmaintain insurance coverage at a reasonable cost or in sufficient amounts to achieveprotect us against losses due to liability. If and when we acquire any approved drug candidates, we intend to expand our insurance coverage to include the following objectives:sale of commercial products; however, we may be unable to obtain this product liability insurance on commercially reasonable terms. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us could decrease our cash and adversely affect our business.
Provisions of our charter and bylaws and Delaware law and our tax benefits preservation rights plan may make an acquisition of us or a change in our management more difficult.
attractCertain provisions of our restated certificate of incorporation and retainrestated bylaws could discourage, delay, or prevent a merger, acquisition, or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. Stockholders who wish to participate in these transactions may not have the best possible executive talent,opportunity to do so. These provisions also could limit the price that investors might be willing to pay for shares of our common stock, thereby depressing the market price of our common stock. Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions:
• | allow the authorized number of directors to be changed only by resolution of our Board of Directors; | |
• | establish a classified board of directors, providing that not all members of our board be elected at one time; | |
• | authorize our board of directors to issue without stockholder approval blank check preferred stock; | |
• | require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent; | |
• | establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings; | |
• | limit who may call stockholder meetings; | |
• | require the approval of the holders of 80% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our restated certificate of incorporation and restated bylaws. | |
motivate our executive officers,
reward executive officers for their contribution to achieving our objectives through the recognition of individual leadership, initiatives, achievements and other contributions, and
increase long-term shareholder value.
The compensation program for our executive officers has historically consisted principally ofWe have also adopted a combination of base salary, a cash bonus payable under an annual management performance program, and long-term compensationTax Benefits Preservation Rights Plan in the form of stock options and restricted stock unit awardsa rights agreement designed to be competitivehelp protect and preserve our substantial tax attributes primarily associated with our NOLs and research tax credits, under Sections 382 and 383 of the Internal Revenue Code (the NOL Plan). Although this is not the purpose of the NOL Plan, it could have the effect of making it uneconomical for a third party to acquire us on a hostile basis. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of comparable companiesour outstanding voting stock, from merging or combining with us for a prescribed period of time.
We have identified a material weakness in our financial reporting process.
We have identified a material weakness in our financial reporting process as of June 30, 2013 with respect to lack of segregation of duties over a variety of financial and disclosure controls. Our failure to successfully implement our plans to remediate this material weakness could cause us to fail to meet our reporting obligations, to produce timely and reliable financial information, and to align executive performanceeffectively prevent fraud. Additionally, such failure could cause investors to lose confidence in our reported financial information, which could have a negative impact on our financial condition and stock price
In the future, we may identify additional material weaknesses and deficiencies which we may not be able to remediate in a timely manner. If we fail to maintain effective internal control over financial reporting in accordance with Section 404, we will not be able to conclude that we have and maintain effective internal control over financial reporting or our independent registered accounting firm may not be able to issue an unqualified report on the long-term interestseffectiveness of our stockholders. An annual base salary providesinternal control over financial reporting. As a result, our ability to report our financial results on a timely and accurate basis may be adversely affected, we may be subject to sanctions or investigation by regulatory authorities, including the foundation of our compensation programSEC and ensures that the executive officer is being paid ongoing compensation which allows us to attract and retain high-quality talent. An annual incentive bonus forms an important part of our compensation strategy by providing an incentive to reward short-term performance as measured by our performance and accomplishment of individual management business objectives, or MBOs. Stock option awards and restricted stock unit awards reward our executive officers for our long-term performance, and help to ensure that our executive officers have a stakeinvestors may lose confidence in our long-term success by providing an incentive to improve our overall growth and value as measured by our stock price. This alignsfinancial information, which in turn could cause the executive officer’s interests with stockholders’ long-term interests. In addition, to motivate our executive officers to stay with us during periods of uncertainty and to keep them focused on the Company’s interests, in February 2010, we entered into Executive Severance and Change in Control Agreements with our then serving executive officers, and on September 22, 2011, with Andrea Kendell in connection with her appointment as Chief Financial Officer, to provide certain severance benefits upon termination. As further discussed herein, our only Executive Severance and Change in Control Agreement currently in effect with any of our executive officers is our agreement with Ms. Kendell. We also have an Employee Stock Purchase Plan that provides all of our eligible employees, including our executive officers, with an opportunity to purchase our common stock semi-annually at a purchase price equal to 85% of the reported last salemarket price of our common stock on eitherto decrease. We may also be required to restate our financial statements from prior periods. In addition, testing and maintaining internal control in accordance with Section 404 requires increased management time and resources. Any failure to maintain effective internal control over financial reporting could impair the first or last day of each offering period, whichever is less, and we provide various benefit programs to allsuccess of our employees, including healthbusiness and dental insurance, lifeharm our financial results.
Item 1B. | UNRESOLVED STAFF COMMENTS |
Not applicable.
Item 2. | PROPERTIES |
Our headquarters are located in New York, New York. Under our Intercompany Services Agreement entered into on February 27, 2013 between Xstelos and disability insurance,Myrexis, Xstelos agreed to provide Myrexis with certain administrative, management, accounting and information services for one year in exchange for a 401(k) plan wherefee of $25,000. Under this Agreement, we currently share space with Xstelos in a 1,233 square foot office.
Item 3. | LEGAL PROCEEDINGS |
In the Company makes matching contributionsordinary course of 50%business, various legal claims have been asserted, and in the future may be asserted, against Myrexis. In addition, as previously disclosed, under the terms of each employee’s contributionour Separation and Distribution Agreement with our former parent Myriad Genetics, Inc. we had the employer’s contribution notobligation to exceed 4%indemnify Myriad Genetics with respect to certain legal claims against Myriad Genetics which we assumed in connection with our spin-out from Myriad Genetics.That obligation was satisfied in relation to the litigation brought by AIA against Myriad and Mayo, as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” upon the completion of the employee’s compensation.
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While certain
Item 4. | MINE SAFETY DISCLOSURES |
None.
PART II
Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information
Our common stock is currently traded in the over the counter market under the symbol MYRX. Our common stock was traded on The NASDAQ Global Market under the symbol “MYRX” until February 1, 2013 when our stock was delisted. The Board of these elements, including base salaryDirectors declared a special cash distribution to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash distribution was paid on February 15, 2013, and equity awards,the Company’s common stock began trading ex-dividend on Tuesday, February 19, 2013.The following table sets forth the high and low sales prices for our common stock as reported by The NASDAQ Global Market and the OTC Markets for the periods indicated. For an additional information, see “Item 1A: Risk Factors” of this Annual Report on Form 10-K.
High | Low | |||||||
Fiscal Year Ended June 30, 2013: | ||||||||
Fourth Quarter | $ | 0.11 | $ | 0.06 | ||||
Third Quarter | $ | 2.99 | $ | 0.09 | ||||
Second Quarter | $ | 2.83 | $ | 2.34 | ||||
First Quarter | $ | 2.67 | $ | 2.35 |
High | Low | |||||||
Fiscal Year Ended June 30, 2012: | ||||||||
Fourth Quarter | $ | 3.20 | $ | 2.26 | ||||
Third Quarter | $ | 3.32 | $ | 2.58 | ||||
Second Quarter | $ | 2.88 | $ | 2.41 | ||||
First Quarter | $ | 3.70 | $ | 2.64 |
Stockholders
As of July 17, 2013, there were used in fiscal year 2012 to compensate certainapproximately 97 stockholders of record of our named executive officers, duecommon stock and, according to the several management changes that we experienced during the fiscal year resulting in termination-based compensation arrangements for some named executive officers and modified compensation arrangements for other named executive officers, the following discussion analyzes the compensation of each named executive officer individually.
Formulating and Setting Executive Compensation and Role of Management
In accordance with the specific directivesour estimates, approximately 8,435 beneficial owners of our Compensation Committee as set forth in its charter,common stock.
Cash Distribution
On January 22, 2013, the Compensation Committee is responsible for formulating, evaluating, determining,Board unanimously determined to cancel the Special Meeting. The Board of Directors decided, after extensive and at times, recommending thatcareful consideration of strategic alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors approve, appropriate short- and long-term compensation and incentives,declared a special cash distribution to shareholders of record at the close of business on February 4, 2013 in the formamount of $2.86 per share. The cash and equity, that are intended to motivate and reward the accomplishment of individual and corporate objectives and align executive officer compensation with creation of long-term shareholder value. The Compensation Committee also assists the full Board of Directors in establishing and administering appropriate incentive compensation and equity-based plans. Members of management support the Compensation Committee, attend portions of its meetings upon request, and perform various administrative functions at its request. No executive officer is present during Compensation Committee or Board discussions regarding his or her own compensation.
To assist in carrying out its responsibilities, the Compensation Committee utilizes publicly available compensation data and subscription compensation survey data for national and regional companies in the biotechnology and life science industry. Since December 2008, the Compensation Committee has retained Radford, An Aon Hewitt Consulting Company, for the purpose of reviewing the compensation of our executive officers. Radford has provided us with competitive market datadistribution was paid on the compensation of executive officers at comparable companies within our industry and has provided the Compensation Committee analyses of, and recommendations for, cash and equity compensation for our executive officers. We believe that the information provided by Radford aids us in determining the compensation of our executive officers.
In June 2011, Radford reviewed our existing fiscal year 2011 peer group to determine its comparability to Myrexis based on our stage of development, employee headcount, market value, financial profile and business focus. This evaluation resulted in the removal of 11 companies (Alexza Pharmaceuticals, Arena Pharmaceuticals, ARIAD Pharmaceuticals, Inc., Array BioPharma Inc., Dyax Corp., ImmunoGen, Inc., Incyte Corporation, Inspire Pharmaceuticals, Inc., Pain Therapeutics, Inc., VIVUS, Inc. and Vical Incorporated)February 15, 2013, and the addition of 11 companies (Aastrom Biosciences, Athersys, AVI BioPharma, Celldex Therapeutics, Curis, Endocyte, Idera Pharma, Inhibitex, Novavax, Peregrine Pharma and Threshold Pharma) basedCompany’s common stock began trading ex-dividend on employee headcount, development stage and market cap. The peer group approved by the Compensation Committee is comprised of the below listed companies. We refer to this peer group herein as the “2012 peer group” and the data derived from the 2012 peer group as the “Radford Report.”Tuesday, February 19, 2013.
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Fiscal Year 2012 CompensationUnregistered Sales of Named Executive OfficersSecurities
Richard B. Brewer, former President
On February 27, 2013, Xstelos and Chief Executive Officer (May 11, 2012 – August 15, 2012)
Description of Compensation Arrangements
In connection with Mr. Brewer’s appointment as President and Chief Executive Officer, weMyrexis entered into an employmenta stock purchase agreement with Mr. Brewer, effective May 11, 2012, pursuant to which Mr. Brewer was employed on an at-will basis with no specified term of employment.
Pursuant to Mr. Brewer’s employment agreement, his initial base salary was $575,000 per year. As incentive compensation to align his interests with those of our stockholders, on May 11, 2012, Mr. Brewer was granted restricted stock units (“RSUs”) under our 2009 Employee, Director and Consultant Equity Incentive Plan (the “Equity Incentive Plan”), representing a contingent entitlement to receive 1,069,615 shares of our common stock, representing 4% of our outstanding shares of common stock as of May 11, 2012, pursuant to a Restricted Stock Unit Award Agreement (the “RSU“Stock Purchase Agreement”). Pursuant to the terms of the RSUStock Purchase Agreement, provided Myrexis had completed the acquisitionagreed to issue and sell to Xstelos 7,000,000 shares of another company or business whether by merger, reverse merger, combination, acquisitionour common stock, representing approximately 20% of all or substantially alloutstanding common stock after giving effect to such sale. The shares were sold for an aggregate purchase price of a company’s assets, purchaseapproximately $250,000. The consideration paid by Xstelos was based, in part, on the Company’s available cash of securities or similar transaction (an “Acquisition”) on or before May 11,approximately $870,000 after giving effect to liabilities due prior to March 31, 2013, which date could have been extended for upservices to two 90-day extensions inbe provided by Xstelos as well as consent provided by Xstelos to allow Jonathan M. Couchman to serve as the sole discretionCompany’s Chief Financial Officer.
Issuer Purchases of the Board of Directors if it believed significant progress had been made toward achieving an Acquisition, the shares underlying the RSUs would commence vesting as described below after an Acquisition and upon the achievement of the following performance-based criteria:Equity Securities
None.
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If
Stock Performance Graph
The graph set forth below compares the fair market value of Myrexisannual percentage change in our cumulative total stockholder return on our common stock, during any fivea period commencing on June 12, 2009 (the first day of trading days within a 30-trading day period equaled or exceeded twice the average closing price of theour common stock on The NASDAQ Global Market over the 10 trading day periodMarket) and ending on May 10, 2012 (the “First Price Increase”), thenJune 28, 2013 (as measured by dividing (A) the performance milestone with respect to 75%difference between our share price at the end and the beginning of the shares underlyingmeasurement period; by (B) our share price at the RSUs would have been achieved and vesting would have commenced as hereinafter described. On the day following the First Price Increase, halfbeginning of the shares underlyingmeasurement period) with the RSUs that had been earned upon achievementcumulative total return of the First Price Increase would have immediately vestedThe NASDAQ Stock Market, Inc. and the remaining half would have vested quarterly overNASDAQ Biotech Index during such period. We do not include cash dividends in the representation of our performance. The price of a 24-month period thereafter, provided Mr. Brewer was still employed by Myrexis or an affiliate on each applicable vesting date.
If the fair market valueshare of Myrexis common stock during any five trading days within a 30-trading day period equaled or exceeded three timesis based upon the average closing price of the common stockper share as quoted on The NASDAQ Global Market overon the 10last trading day of the year shown. The graph lines merely connect year-end values and do not reflect fluctuations between those dates. The comparison assumes $100 was invested on June 12, 2009 in our common stock and in each of the foregoing indices. The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.
June 12, 2009 | June 30, 2009 | June 30, 2010 | June 30, 2011 | June 29, 2012 | June 28, 2013 | |||||||||||||||||||
Myrexis, Inc. | 100.00 | 66.43 | 53.71 | 51.14 | 37.29 | 42.00 | ||||||||||||||||||
NASDAQ Biotechnology Index | 100.00 | 103.19 | 110.13 | 152.59 | 186.08 | 249.61 | ||||||||||||||||||
NASDAQ Composite Index | 100.00 | 98.72 | 113.47 | 149.21 | 157.90 | 183.09 |
The performance graph shall not be deemed to be incorporated by reference by means of any general statement incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference, and shall not otherwise be deemed filed or soliciting material under such acts.
Item 6. | SELECTED FINANCIAL DATA |
The following table sets forth selected financial information as of and for each of the years in the five-year period ended June 30, 2013, which has been derived from our (1) audited financial statements as of June 30, 2013, and 2012 and for the years ended June 30, 2013, 2012 and 2011, which are included elsewhere in this Form 10-K; and (2) audited financial statements as of June 30, 2010 and 2009 and for the years ended June 30, 2010 and 2009, which are not included elsewhere in this Form 10-K. Because our historical financial information for the period ending June 30, 2009 reflects allocations for services historically provided to us by Myriad Genetics, the selected financial information presented below for such period may not be indicative of our results of operations and financial position as an independent company. The selected financial information presented for the years ended June 30, 2013, 2012, 2011 and 2010, reflects our performance as an independent company.
The selected financial data below should be read in conjunction with our audited financial statements (and notes thereon) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this Form 10-K.
Years ended June 30, | ||||||||||||||||||||
In thousands (except per share data) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Research revenue | $ | — | $ | — | $ | 185 | $ | 90 | $ | 5,456 | ||||||||||
Pharmaceutical revenue | — | — | — | — | — | |||||||||||||||
Other revenue | — | — | — | — | — | |||||||||||||||
Total revenues | — | — | 185 | 90 | 5,456 | |||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Research and development expense | 465 | 14,230 | 22,296 | 28,222 | 54,611 | (2) | ||||||||||||||
General and administrative expense | 11,526 | 17,571 | 18,339 | (3) | 19,984 | 8,981 | ||||||||||||||
Total costs and expenses | 11,991 | 31,801 | 40,635 | 48,206 | 63,592 | |||||||||||||||
Operating loss | (11,991 | ) | (31,801 | ) | (40,450 | ) | (48,116 | ) | (58,136 | ) | ||||||||||
Other income (expense), net | 370 | 592 | 1,742 | 1,165 | — | |||||||||||||||
Net loss | $ | (11,621 | ) | $ | (31,209 | ) | $ | (38,708 | ) | $ | (46,951 | ) | $ | (58,136 | ) | |||||
Net loss per basic and diluted share (1) | $ | (0.39 | ) | $ | (1.18 | ) | $ | (1.52 | ) | $ | (1.91 | ) | $ | (2.43 | ) |
As of June 30, | ||||||||||||||||||||
In thousands | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash, cash equivalents and marketable securities | $ | 1,210 | $ | 89,626 | $ | 115,878 | $ | 147,453 | $ | 188,005 | ||||||||||
Current liabilities | 74 | 2,279 | 3,310 | 4,250 | 4,576 | |||||||||||||||
Total assets | 1,237 | 91,651 | 121,260 | 154,108 | 193,677 | |||||||||||||||
Total stockholders’ equity | 1,163 | 89,372 | 117,950 | 149,858 | 189,101 |
(1) | For year ended June 30, 2009, pro forma net loss per share calculated based on the 23,974,211 shares issued in connection with the spin-off. |
(2) | Amount includes a $9.0 million credit recorded in fiscal 2009, resulting from the difference in an estimated sub-license fee accrual recorded in fiscal 2008 and amounts actually paid in 2009. |
(3) | Includes a $1.1 million impairment loss on certain fixed assets. For the year ended June 30, 2011, the Company reclassified the $1.1 million in impairment charges from other income (expense) to general and administrative expense. |
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis should be read together with “Selected Financial Data,” and the financial statements and the related notes appearing elsewhere in this Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Information regarding these forward-looking statements can be found in the preface to Part I, Item 1 “Business” of this Form 10-K. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Form 10-K.
Overview
Prior to February 2012, Myrexis was a biopharmaceutical company that generated a pipeline of differentiated drug candidates in oncology and autoimmune diseases. In February 2012, we announced that we had suspended development activity on all of our preclinical and clinical programs and retained Stifel Nicolaus Weisel, an investment banking firm, to assist in reviewing and evaluating a full range of strategic alternatives to enhance shareholder value. Thereafter, in March 2012, we initiated an alignment of our resources involving a phased reduction in our workforce from approximately 59 employees to 1 current employee as of June 30, 2013.
Based on an evaluation of strategic alternatives, we determined to pursue the acquisition of one or more commercial-stage biopharmaceutical assets, with the goal of building a commercial-stage biopharmaceutical company by optimizing their performance and profitability. Integral to these efforts, on May 10,11, 2012, (the “Second Price Increase”), thenwe announced a change in management, including the performance milestone with respect to 25%appointment of the shares underlying the RSUs would have been achieved and vesting would have commenced as hereinafter described. On the day following the Second Price Increase, half of the shares underlying the RSUs that had been earned upon achievement of the Second Price Increase would have immediately vested and the remaining half would have vested quarterly over a 24-month period thereafter, provided Mr.Richard B. Brewer was still employed by Myrexis or an affiliate on each applicable vesting date. In addition, in the event of a sale of Myrexis prior to the Second Price Increase, the Board had the sole discretion to waive the requirement to achieve the Second Price Increase and deem the shares underlying the RSUs to be earned and commence time-based vesting as of the date of the closing of a sale of Myrexis.
As no Acquisition occurred prior to Mr. Brewer’s death on August 15, 2012, the RSU Agreement was terminated with no shares of common stock issued.
In addition, the Board agreed to increase Mr. Brewer’s salary, subject to and following achievement of the First Price Increase, if necessary, to such amount that equaled the 75th percentile of the base salaries paid to the highest level executive officer in Myrexis’ then applicable peer group, and to establish an annual performance-based bonus plan that would have allowed for Mr. Brewer to earn a bonus with a target payment to be calculated based on a percentage of salary that was considered to be appropriate for his position in relation to companies in Myrexis’ then applicable peer group. Following the establishment of such bonus plan, payments pursuant thereto would have been made based on achievement of performance objectives as determined by the Board of Directors. As no Acquisition, and therefore no First Price Increase, occurred prior to Mr. Brewer’s death, there was no salary adjustment or bonus plan established during fiscal year 2012 or thereafter for Mr. Brewer.
Mr. Brewer’s employment agreement also contained confidentiality, non-competition, and non-solicitation provisions effective during the term of employment and for certain specified periods thereafter.
Upon Mr. Brewer’s death on August 15, 2012, his employment agreement was terminated with no amounts payable thereunder.
Determination of Mr. Brewer’s Compensation Arrangements
The terms of Mr. Brewer’s compensation were negotiated between Mr. Brewer and the Compensation Committee. To assist it in the negotiations, the Compensation Committee obtained an analysis of, and a recommendation for, cash and equity compensation for Mr. Brewer from Radford. In addition, the Compensation Committee used data from Radford’s 2011 Global Life Sciences Survey focusing on public biotechnology and pharmaceutical companies with employee size between 75 and 300 employees and revenues between $50 and $150 million for purposes of determining Mr. Brewer’s compensation. Mr. Brewer’s compensation package was a combination of base salary and equity incentives that were dependent upon both a strategic acquisition and share price performance designed to tie a substantial portion of his compensation to successful execution of the Company’s business strategy and the creation of shareholder value. Specifically, Mr. Brewer’s RSUs would vest only upon the consummation of a strategic acquisition and achievement of established share price performance thresholds within a certain period of time.
Robert J. Lollini, former President and Chief Executive Officer (July 21, 2011 – May 11, 2012) and former Chief Financial Officer (February 17, 2009 – September 6, 2011)
Fiscal Year 2012 Compensation of Mr. Lollini as Chief Financial Officer and Interim President and Chief Executive Officer
In June 2011, the Compensation Committee reevaluated the base salaries of our then serving executive officers and recommended, and the Board of Directors approved, that there be no increases to the base salaries of our executive officers for fiscal year 2012, with the exception of a 5% increase of the base salary of Mr. Lollini, who was serving as our Chief Financial Officer at that time, from $285,000 to $300,000. In addition, the Compensation Committee also recommended, and the Board of Directors approved, increasing Mr. Lollini’s target bonus award opportunity for fiscal year 2012 performance from 35% to 40% of his base salary. The Compensation Committee determined to increase Mr. Lollini’s base salary and his target bonus award opportunity based on the Radford Report, targeting a range between the 50th and 75th percentile for base salary and target bonus.
Following the resignation of Adrian N. Hobden, Ph.D., as our President and Chief Executive Officer in July 2011, Mr. Lollini was appointed interim President and Chief Executive Officer while retaining his position as Chief Financial Officer. At the time of this appointment, there were no changes made to Mr. Lollini’s compensation.
Fiscal Year 2012 Compensation of Mr. Lollini as President and Chief Executive Officer
In September 2011, Mr. Lollini was appointed permanent President and Chief Executive Officer and resigned as Chief Financial Officer. In connection with his appointment, we entered into a new offer letter with Mr. Lollini that provided for the following compensation arrangements for Mr. Lollini’s service as President and Chief Executive Officer and replaced the offer letter that we had entered into with Mr. Lollini upon his appointmentDavid W. Gryska as Chief Financial Officer on February 4, 2009:
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The Compensation Committee determined Mr. Lollini’s base salary and target bonus amount based on the Radford Report, targeting a range between the 25th and 50th percentile for base salary and target bonus.
Mr. Lollini’s equity compensation was determined with reference to the Radford Report, targeting a range between the 50th and 75th percentile, as well as Radford’s 2011 Global Life Sciences Survey focusing on public biotechnology and pharmaceutical companies with employee size between 50 and 200 employees. Radford determined a “Market Composite” of equity compensation at the 25th, 50th and 75th percentiles for Mr. Lollini. The Market Composite was determined by weighting the compensation data from the 2012 peer group proxy statements by 50%, to the extent proxy data was available, and Radford’s 2011 Global Life Sciences Survey by 50%. Utilizing the data provided to us in the Radford Report, we analyzed, amongst other criteria, the Market Composite equity compensation (using the Black Scholes value of options, the number of option equivalents, and grant as a percent of company), for Mr. Lollini at the 25th, 50th and 75th percentile range. We also analyzed our expected gross equity burn rate, issued equity overhang and total equity overhang at the 50th and 75th percentile range as compared to the 22 companies reported in our peer group of companies from equity compensation information for this peer group from publicly available regulatory filings, including proxy statements. Mr. Lollini’s stock option award was set at approximately the 50th percentile range of aggregate value of awards for chief executive officers represented in the Radford Report.
Operating Officer. In addition, both Mr. Lollini’s Executive SeveranceBrewer and Change in Control Agreement, dated February 1, 2010, was amended on September 9, 2011, pursuant to which the benefits Mr. Lollini was eligible to receive upon a termination by us that was not in connection with a Change in Control (other than for Cause, Disability or death) or by Mr. Lollini for Good Reason (as such capitalized terms are defined in the agreement),Gryska were amended,appointed as follows:
Payment in a lump sum amount equal to one times his then current annual base salary (increased from six monthsmembers of base salary);
payment in a lump sum amount equal to one times his then current fiscal year target bonus amount (increased from 50%); and
continuation of health benefits for up to 12 months (increased from six months).
In the event of the above-described termination, Mr. Lollini was also entitled to payment in a lump sum amount of his base salary through the date of termination, a pro rata portion of his then current fiscal year target bonus amount, and any accrued vacation pay to the extent not previously paid, in accordance with the original terms of his agreement. The amendment to Mr. Lollini’s Executive Severance and Change in Control Agreement was recommended by the Compensation Committee, and approved by the Board of Directors.
On August 15, 2012, we announced the death of Richard B. Brewer, the Company’s President and Chief Executive Officer. The Board of Directors in order to provide Mr. Lollini withappointed David W. Gryska as the same severance and change in control benefits that Dr. Hobden, our previousActing President and Chief Executive Officer had been eligiblewhile considering succession plans and proceeded to receive under his Executive Severancefurther evaluate the Company’s strategic direction in light of this development and Changeour progress to date in Control Agreement.identifying attractive biopharmaceutical assets.
May 11,
On November 9, 2012, the Board of Directors concluded that it appeared unlikely that a strategic transaction at a valuation materially in excess of our estimated liquidation value would be achieved in the near term. Based on these and other factors, the Board of Directors concluded that a statutory dissolution and liquidation was in the best interests of the Company and its stockholders and therefore unanimously adopted a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”), subject to stockholder approval.
On December 14, 2012, we filed proxy materials with the Securities and Exchange Commission for a Special Meeting of stockholders on January 23, 2013, to consider and vote on the Plan of Dissolution (the “Special Meeting”).
On December 21, 2012, we announced that we entered into a settlement agreement (the “Settlement Agreement”) that settled fully and finally a lawsuit (the “Litigation”) brought by the Alzheimer’s Institute of America, Inc. (“AIA”) against Myriad Genetics, Inc. (“Myriad Genetics”) and its wholly owned subsidiary, Myriad Therapeutics, Inc. (formerly known as Myriad Pharmaceuticals, Inc.) (referred to hereinafter together with Myriad Genetics as “Myriad”), and the Mayo Clinic Jacksonville and Mayo Foundation for Medical Education and Research (referred to hereinafter together as “Mayo”). Specifically, AIA asserted that Myriad and Mayo infringed certain patents allegedly owned by AIA in connection with Myriad’s research and development of its failed Alzheimer’s drug candidate Flurizan (hereinafter referred to as the “Litigation”). Myrexis, Myriad, Mayo and AIA are hereinafter referred to collectively as the “Parties”. As previously disclosed, pursuant to our Separation and ConsultingDistribution Agreement with Mr. LolliniMyriad Genetics, dated June 30, 2009, at the time of Myrexis’ separation from Myriad Genetics, Myrexis assumed liability for certain pending or threatened legal matters related to its business, and is obligated to indemnify Myriad Genetics for any liability arising out of such matters, including any costs and expenses of litigating such matters, including payment of attorneys’ fees incurred to defend against claims. Accordingly, pursuant to the terms of the Settlement Agreement, in consideration of AIA’s release of claims against and covenant not to sue the other Parties for matters related to the Litigation, Myrexis agreed to (1) pay AIA approximately $1,525,000, and (2) transfer to AIA all program rights and assets associated with Myrexis’ Hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule anti-interferon (IKK€/TBK1) inhibitor program (the “Program Assets Transfer”). AIA assumed Myrexis’ liabilities under the program contracts being transferred to AIA and all liabilities for the further conduct of the programs, subject, in each case, to certain exclusions, including liabilities accruing or arising from events occurring prior to the Program Assets Transfer. The Settlement Agreement also includes a release of claims against AIA by each of Myrexis, Myriad and Mayo. Simultaneously with the delivery of the settlement payment to AIA by Myrexis on December 21, 2012, the Parties filed a stipulation of dismissal of the Litigation.
Mr. Lollini resigned
On December 21, 2012, David W. Gryska informed Myrexis of his resignation as Acting President and Chief Executive Officer, Chief Operating Officer and member of the Board of Directors, effective May 11,December 24, 2012. In connection with Mr. Lollini’s resignation, we entered into
On January 22, 2013, the Board unanimously determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration of strategic alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a Separation and Consulting Agreement with Mr. Lollini, dated May 11, 2012 (the “Separation Agreement”). Mr. Lollini receivedspecial cash distribution to shareholders of record at the payments and benefits to which he was entitled under his Executive Severance and Change in Control Agreement, datedclose of business on February 1, 2010, as amended on September 9, 2011, in connection with a termination without Cause (as defined4, 2013 in the agreement). In addition, underamount of $2.86 per share. The cash distribution was paid on February 15, 2013, and the Separation Agreement, Mr. Lollini agreed to resignCompany’s common stock began trading ex-dividend on Tuesday, February 19, 2013.
On January 22, 2013, The Board of Directors also appointed Jonathan M. Couchman as a Class II director of Myrexisthe Company and as of November 15, 2012, and to provide consulting services to Myrexis through November 15, 2012 in exchange for (i) continued vesting of his outstanding stock options and restricted stock units until November 15, 2012, (ii) the vesting on November 15, 2012 of options to purchase 75,000 shares of Myrexis common stock that would not otherwise have vested by their terms as of that date, and (iii) the extension of the expiration date of all his vested stock options until November 15, 2013. Further details regarding Mr. Lollini’s Separation Agreement are discussed below under the heading “Payments Upon Termination or Change in Control.”
Adrian N. Hobden, Ph.D., formerits President and Chief Executive Officer (February 19, 2009 – July 21, 2011)
Effective July 21, 2011, Adrian N. Hobden, Ph.D., resigned as our President and Chief Executive Officer and as a member of our Board of Directors. Prior to his resignation, there were no adjustments made during the 2012 fiscal year to Dr. Hobden’s compensation nor was he awarded any equity grants in the 2012 fiscal year. In connection with Dr. Hobden’s resignation, we negotiated and entered into a Separation Agreement with Dr. Hobden, dated July 21, 2011. In consideration for the payments and benefits under the Separation Agreement, Dr. Hobden agreed to assist us with an orderly transition for a three month period following July 21, 2011, during which he agreed to be available to provide consulting services to us for up to 10 hours per week. Pursuant to the terms and conditions of the Separation Agreement, Dr. Hobden received (i) a lump sum payment equal to six months of his gross monthly base salary, (ii) a lump sum payment equal to 50% of his target bonus for the 2012 fiscal year, (iii) COBRA benefits, and (iv) accelerated vesting of stock options and restricted stock units that would have vested through July 21, 2012. Further details regarding Dr. Hobden’s Separation Agreement are discussed below under the heading “Payments Upon Termination or Change in Control.”
Andrea Kendell, Chief Financial Officer (September 6, 2011 – present)
Fiscal Year 2012 Compensation of Ms. Kendell as Chief Financial Officer
Prior to Ms. Kendell’s appointment as our Chief Financial Officer on September 6, 2011, Ms. Kendell served as our Vice President, Finance and Human Resources. In connection with Ms. Kendell’s appointment as Chief Financial Officer, we entered into an offer letter with Ms. Kendell, dated September 22, 2011, which provided for the following compensation arrangements for Ms. Kendell’s service as Chief Financial Officer:
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In addition, on September 22, 2011, we entered into an Executive Severance and Change in Control Agreement with Ms. Kendell, the terms of which are described below under the heading “Payments Upon Termination or Change in Control.”
We also have a standard form of employment agreement with Ms. Kendell, dated June 29, 2009. Pursuant to our employment agreement with Ms. Kendell, either party may terminate employment at any time for any reason, with or without notice or cause. The employment agreement also provides that Ms. Kendell will not disclose confidential information of Myrexis during and after employment and will not compete with Myrexis nor solicit customers or employees during the term of employment and for one year thereafter.
The Compensation Committee determined Ms. Kendell’s base salary and target bonus amount based on the Radford Report, targeting a range between the 25th and 50th percentile for base salary and target bonus. Ms. Kendell’s equity compensation was determined with reference to the Radford Report, as well as Radford’s 2011 Global Life Sciences Survey, in the same manner that Mr. Lollini’s equity compensation was determined as described above. Ms. Kendell’s stock option award was set at approximately the 75th percentile range of aggregate value of awards for chief financial officers represented in the Radford Report.
Ms. Kendell’s Fiscal Year 2012 Bonus and Post-2012 Fiscal Year End Compensation Adjustments
At the end of our 2012 fiscal year, the Compensation Committee determined, in an exercise of its sole discretion, to award Ms. Kendell a $75,000 bonus for fiscal year 2012 performance, representing approximately 84% of her target bonus for the year. The Compensation Committee determined to award this bonus in consideration of Ms. Kendell’s management and oversight of several reductions in force and corporate reorganizations throughout the fiscal year, implementation of strong documentation processes in connection therewith, supporting the Board of Directors through multiple management changes, ensuring internal control over financial reporting activities and supporting the Company and the Board of Directors in its pursuit of other strategic alternatives.
In addition, effective July 2, 2012, the Compensation Committee approved the following adjustments to Ms. Kendell’s compensation:
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The equity grants and the retention bonus described above were approved by the Compensation Committee in order to provide an incentive for Ms. Kendell to continue her employment with the Company in its pursuit of strategic alternatives.
Wayne Laslie, former Chief Operating Officer (February 19, 2009 – February 29, 2012)
December 13, 2011 Separation Agreement with Wayne Laslie
On November 16, 2011, Wayne Laslie, our then serving Chief Operating Officer, notified the Company of his intention to resign effective on February 29, 2012. Prior to his resignation, there were no adjustments made during the 2012 fiscal yearOfficer. Subsequent to Mr. Laslie’s compensation nor was he awarded any equity grants in the 2012 fiscal year. In connection with Mr. Laslie’s resignation, we entered into a Separation Agreement with Mr. Laslie on December 13, 2011. Pursuant to the terms and conditions of the Separation Agreement, Mr. Laslie received the payments and benefits to which he was entitled under his Executive Severance and Change in Control Agreement, dated February 1, 2010, in connection with a termination without Cause (as defined in the agreement). In addition, Mr. Laslie received accelerated vesting of stock options and restricted stock units through February 28, 2013. Further details regarding Mr. Laslie’s Separation Agreement are discussed below under the heading “Payments Upon Termination or Change in Control.”
COMPENSATION COMMITTEE REPORT
The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears above in this Form 10-K, with our management. Based on this review and discussion, the Compensation Committee has recommendedCouchman’s appointment to the Board of Directors, the remaining members of the Board of Directors, Gerald P. Belle, Jason M. Aryeh, Robert Forrester, Timothy R. Franson, M.D., John T. Henderson, M.D., and Dennis H. Langer, M.D., J.D., resigned.
On February 13, 2013, Steven Scheiwe and Michael Pearce were appointed to the Board of Directors.
On February 28, 2013, Andrea Kendell’s employment as CFO terminated voluntarily and on March 1, 2013, Mr. Couchman was appointed CFO of Myrexis.
On April 26, 2013, the Company held its 2012 Annual Meeting of shareholders (the “2012 Annual Meeting”). At the 2012 Annual Meeting, stockholders of the Company elected Steven D. Scheiwe as a Class I director for a term ending at the 2013 annual meeting of stockholders, Jonathan M. Couchman as a Class II director for a term ending at the 2014 annual meeting of stockholders and Michael C. Pearce (“Disinterested Director”) as a Class III director for a term ending at the 2015 annual meeting of stockholders.
After giving effect to the payment of the cash distribution on February 15, 2013, as of June 30, 2013, we had approximately $1.1 million in cash and cash equivalents. The Company is in the early stages of reviewing the scope of strategic alternatives that may be available for consideration. Due to limited cash resources available to the Company, the delisting by Nasdaq of the Company’s shares and the potential impact on the Company’s NOLs of any significant share issuance under Section 382 of the Internal Revenue Code, among other things, the Company may conclude to liquidate if available strategic alternatives cannot be identified in a reasonable period of time. To the extent any strategic alternatives or transactions are identified, it will most likely be necessary to raise additional funds to consummate any such alternative or transaction, although there is no assurance we will be able to do so. We do not know if we will be successful in pursuing any strategic alternative or that any transaction will occur; however, we are committed to pursuing a strategic direction that our Board of Directors believes is in the best interests of our shareholders. We currently do not have any drugs that are commercially available.
In light of the Company’s limited activities at the present time, the Company has determined that it is advisable to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. The Company anticipates filing a Form 15 with the Securities and Exchange Commission (the “SEC”) to effect this deregistration in the near future. After careful consideration, the Board of Directors decided to deregister based on its belief that the Compensation Discussionsavings the Company will achieve as a result of deregistration, particularly on costs related to the preparation and Analysisfiling of SEC reports and compliance with Sarbanes-Oxley obligations, will benefit shareholders, and such benefits will outweigh any advantages of continuing as an SEC reporting company. The obligation of filing SEC reports and complying with Sarbanes-Oxley has become too burdensome and expensive for a company of Myrexis’ size. Upon the filing of the Form 15, the Company’s obligation to file periodic and current reports with the SEC, including Forms 10-K, 10-Q, and 8-K, will be included in this Form 10-K.suspended.
During the years ended June 30, 2013, 2012 and 2011, we reported $0, $0 and $185,000, respectively in revenues associated with research services related to short-term research agreements and a net loss of $11.6 million, $31.2 million and $38.7 million, respectively.
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Summary Compensation TableWe expect to incur net losses for the foreseeable future and that such losses will fluctuate from quarter to quarter.
Our drug research and development expenses include costs incurred for our drug candidates. The following table showsonly costs we track by each drug candidate are external costs such as services provided to us by clinical research organizations, manufacturing of drug supply, and other outsourced research. We do not assign or allocate internal costs such as salaries and benefits, facilities costs, lab supplies and the total compensation paid or accruedcosts of preclinical research and studies to individual development programs. We also incurred costs related to external research collaborations from our research services business. We track all underlying principal costs associated with our research collaborations. All development costs for our drug candidates and external research collaborations are expensed as incurred. Our research and development expense for Azixa (for which development was suspended in September 2011), our clinical-stage drug candidate, MPC-3100, our preclinical-stage drug candidates, MPC-9528, MPC-8640, IKKe and MPC-0767 (for which development was suspended in February 2012), and our discontinued drug candidate MPC-4326 during the fiscal years ended June 30, 2013, 2012 and 2011 and 2010 to (1) our former President and Chief Executive Officer, Richard B. Brewer, who died on August 15, 2012, (2) our former President and Chief Executive Officer and former Chief Financial Officer, Robert J. Lollini, who resigned on May 11, 2012, (3) our former President and Chief Executive Officer, Adrian N. Hobden, Ph.D., who resigned on July 21, 2011, (4) our Chief Financial Officer, Andrea Kendell, and (5) our former Chief Operating Officer, Wayne Laslie, who resigned effective February 29, 2012.are as follows:
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Richard B. Brewer(3) | ||||||||||||||||||||||||||||
Former President and Chief Executive Officer | 2012 | 54,597 | 0 | (4 | ) | 0 | 0 | 54,597 | ||||||||||||||||||||
Robert J. Lollini(5) | 2012 | 339,387 | (6) | 25,507 | 0 | 550,650 | 810,579 | (7) | 1,726,123 | |||||||||||||||||||
Former President and Chief Executive Officer and Former Chief Financial Officer |
| 2011 2010 |
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| 285,552 285,552 |
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| 50,382 507 |
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| 85,565 84,630 |
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| 169,096 411,119 |
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| 9,875 9,018 |
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| 600,470 790,820 |
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Adrian N. Hobden, Ph.D.(8) | 2012 | 44,629 | 0 | 0 | 0 | 489,050 | (9) | 533,679 | ||||||||||||||||||||
Former President and Chief Executive Officer |
| 2011 2010 |
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| 535,552 535,552 |
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| 507 507 |
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| 160,835 201,500 |
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| 317,850 433,816 |
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| 9,875 9,875 |
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| 1,024,619 1,181,250 |
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Andrea Kendell(10) | ||||||||||||||||||||||||||||
Chief Financial Officer | 2012 | 244,999 | (11) | 75,540 | 0 | 293,680 | 9,623 | (12) | 623,842 | |||||||||||||||||||
Wayne Laslie(13) | 2012 | 269,535 | 547 | 0 | 0 | 424,087 | (14) | 694,169 | ||||||||||||||||||||
Former Chief Operating Officer |
| 2011 2010 |
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| 380,552 380,552 |
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| 524 524 |
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| 96,500 68,510 |
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| 190,710 146,413 |
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| 9,875 9,875 |
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| 678,161 605,874 |
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Years Ended June 30, | ||||||||||||
(In thousands) | 2013 | 2012 | 2011 | |||||||||
External costs, drug candidates: | ||||||||||||
Azixa | $ | 25 | $ | 1,367 | $ | 1,388 | ||||||
MPC-4326 | 3 | 40 | (144 | )(1) | ||||||||
MPC-3100 | 14 | 214 | 1,202 | |||||||||
MPC-0767 | 7 | 980 | 278 | |||||||||
MPC-9528 | — | — | 264 | |||||||||
MPC-8640 | 146 | 1,124 | 121 | |||||||||
IKKe | 68 | 269 | — | |||||||||
Sub-total direct costs | 263 | 3,994 | 3,109 | |||||||||
Internal costs, drug candidates | 65 | 4,645 | 5,318 | |||||||||
Preclinical development costs | 137 | 5,591 | 13,157 | |||||||||
External research collaborations | — | — | 712 | |||||||||
Total research and development | $ | 465 | $ | 14,230 | $ | 22,296 |
(1) |
2012 Fiscal Year Grants of Plan-Based Awards
The following table shows information regarding grants of equity awards that we made during the fiscal year ended June 30, 2012 to the executive officers named in the Summary Compensation Table.
Name | Grant Date | Approval Date | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($)(1) | ||||||||||||||||||||||||||
Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||
Richard B. Brewer | 5/11/12 | 5/9/12 | 802,211 | (2) | 1,069,615 | (2) | 1,069,615 | (2) | — | — | 0 | (2) | ||||||||||||||||||||
Robert J. Lollini | 9/22/11 | 9/22/11 | — | — | — | 300,000 | 2.75 | 550,650 | ||||||||||||||||||||||||
Adrian N. Hobden, Ph.D. | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Andrea Kendell | 9/22/11 | 9/22/11 | — | — | — | 160,000 | 2.75 | 293,680 | ||||||||||||||||||||||||
Wayne Laslie | — | — | — | — | — | — | — | — |
Narrative Disclosure to Summary Compensation TableWe do not expect any future research and 2012 Fiscal Year Grants of Plan-Based Awards Table
Employment Agreements
The terms of our employment agreement, offer letter, and/or separation agreement, as applicable, with each of our named executive officers are described in the Compensation Discussion and Analysis and below under the heading “Payments Upon Termination or Change in Control.”
2012 Equity Awards
As discussed in the Compensation Discussion and Analysis, on May 11, 2012, Richard B. Brewer was awarded a grant of 1,069,615 restricted stock units under our Equity Incentive Plan, representing 4% of our outstanding shares of common stock as of May 11, 2012, in connection with his appointment as our President and Chief Executive Officer, which were subject to the vesting and other conditions set forth in the restricted stock unit agreement that we entered into with Mr. Brewer on May 11, 2012 and described in the Compensation Discussion and Analysis. Upon Mr. Brewer’s death on August 15, 2012, the restricted stock unit agreement with Mr. Brewer terminated and no shares of common stock were issued thereunder.
As discussed in the Compensation Discussion and Analysis, in connection with their respective appointments as President and Chief Executive Officer and Chief Financial Officer effective September 6, 2011 and as set forth in their respective offer letters, Robert J. Lollini and Andrea Kendell were granted options to purchase 300,000 and 160,000 shares of common stock, respectively, on September 22, 2011, under our Equity Incentive Plan. These options were granted with an exercise price equal to the fair market value of our common stock on the date of grant as reported by The NASDAQ Global Market, and a four-year vesting schedule with 25% of the shares vesting on each anniversary of the date of grant. In accordance with the terms of our Separation Agreement with Mr. Lollini, 75,000 shares underlying his option will vest on November 15, 2012, the date of his resignation from the Board of Directors, and the option will cease vesting on such date.
Fiscal Year 2012 Performance Bonus Awards
In the first quarter of fiscal year 2012, the Compensation Committee established target bonus award opportunities for each then serving executive officer and certain employees, based on a percentage of base salary. These percentages were set at the market 50th percentile. In connection with Mr. Lollini’s appointment as President and Chief Executive Officer on September 6, 2011, his target bonus percentage was increased from 40% to 50%. In connection with Ms. Kendell’s appointment as Chief Financial Officer on September 6, 2011, her target bonus percentage was increased from 30% to 35%. Dr. Hobden’s and Mr. Laslie’s target percentages remained at 50% and 40%, respectively, for fiscal year 2012. Mr. Brewer was not entitled to any bonus compensation under his compensation arrangements with us. Although target bonus award opportunities were established for fiscal year 2012 performance,development costs as a result of the changing strategydecision to suspend further development activities for all preclinical and directionclinical programs and as a result of the Company duringtransfer of all preclinical and clinical programs to third parties.
Critical Accounting Policies and Use of Estimates
Critical accounting policies are those policies which are both important to the portrayal of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are as follows:
• | income taxes; | |
• | clinical trial expenses; | |
• | share-based payment expense; and | |
Income Taxes
Our income tax provision is based on income before taxes and is computed using the liability method in accordance with Accounting Standards Codification, or ASC, 740—Income Taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates projected to be in effect for the year formal objectivesin which the differences are expected to reverse. Significant estimates are required in determining our provision for income taxes. Some of these estimates are based on interpretations of existing tax laws or regulations, or the expected results from any future tax examinations. Various internal and external factors may have favorable or unfavorable effects on our future provision for income taxes. Those factors include, but are not limited to, changes in tax laws, regulations and/or rates, the results of any future tax examinations, changing interpretations of existing tax laws or regulations, changes in estimates of prior years’ items, past levels of R&D spending, acquisitions, changes in our corporate structure, and changes in overall levels of income before taxes all of which may result in periodic revisions to our provision for income taxes.
Developing our provision for income taxes, including our effective tax rate and analysis of potential uncertain tax positions, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and any estimated valuation allowance we deem necessary to offset deferred tax assets. We have established a valuation allowance to fully offset our deferred tax assets. We have also established a liability for unrecognized tax benefits from uncertain tax positions. Due to the fact that we currently have net operating loss and research credit carryforwards, the liability for unrecognized tax benefits is presented as a reduction of the deferred tax asset (prior to any consideration of the need for a valuation allowance) which has been established for the net operating loss and research credit carryforwards.Our judgment and tax strategies are subject to audit by various taxing authorities. While we believe we have provided adequately for our uncertain income tax positions in our consolidated financial statements, an adverse determination by these taxing authorities could have a material adverse effect on our consolidated financial condition, results of operations or cash flows. Interest and penalties on income tax items are included as a component of overall income tax expense.
Clinical Trial Expenses
Prior to our suspension of drug development activities, the cost of our clinical trials was based, in part, on estimates of the services received and efforts expended pursuant to contracts with numerous clinical trial centers and clinical research organizations, or the CROs. We contracted with third parties to perform various clinical trial activities in the development of our drug candidates. The financial terms of the agreements varied from contract to contract, were ultimately never establishedsubject to negotiation and approved byresulted in uneven payment flows. Payments under the Compensation Committeecontracts depended on factors such as the achievement of certain events, the successful enrollment of patients or the completion of portions of the clinical trial or similar conditions. The objective of our accrual policy was to match the recording of expenses in our financial statements to the actual services received and efforts expended. As such, we recognized direct expenses related to each patient enrolled in a clinical trial on an estimated cost-per-patient basis as services were performed. In addition, we considered information from our clinical operations group regarding the status of our clinical trials, we relied on information from CROs, such as estimated costs per patient, to calculate our accrual for purposes of evaluating performance and awarding bonuses followingdirect clinical expenses at the end of each reporting period. For indirect expenses, which related to site and other administrative costs to manage our clinical trials, we relied on information provided by the fiscal year,CRO, including costs incurred by the CRO as had been doneof a particular reporting date, to calculate our indirect clinical expenses. In connection with the early termination of a clinical trial, we recognized expenses in prior years.
Our only executive officer eligible to receive a bonus for fiscal year 2012 performance and employed with usan amount based on the last dayour estimate of the 2012 fiscal yearremaining non-cancelable obligations associated with the winding down of the clinical trial, which we confirmed directly with the CRO.
If our CROs were to have either under or over reported the costs that they had incurred or if there was Andrea Kendell,a change in the estimated per patient costs, it could have had an impact on our Chief Financial Officer. Although no formal objectives were establishedclinical trial expenses during fiscal year 2012the period in which they reported a change in estimated costs to us. Adjustments to our clinical trial accruals primarily relate to indirect costs, for purposeswhich we placed significant reliance on our CROs for accurate information at the end of evaluating Ms. Kendell’s performance,each reporting period.
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Share-Based Payment Expense
Share-based compensation expense standards set accounting requirements for “share-based” compensation to employees, including employee stock purchase plans, and require us to recognize, as expense, in our statements of operations, the Compensation Committee exercised its discretiongrant date fair value of our stock options and awarded Ms. Kendell a $75,000 bonus, representing 84%other equity-based compensation. The determination of her target bonus. This bonus was awarded bygrant date fair value is estimated using an option-pricing model, which includes variables such as the Compensation Committeeterms of each grant, the expected volatility of our share price, the exercise behavior of our employees, interest rates, and dividend yields. These variables are projected based on our historical data, experience, and other factors. Changes in recognitionany of Ms. Kendell’s management and oversight of several reductionsthese variables could result in force and corporate reorganizations, implementation of strong documentation processes inmaterial adjustments to the expense recognized for share-based payments.
In connection therewith, supportingwith the Board through multiple management changes, ensuring internal control over financial reporting activities and supporting the Company and the Board in its pursuit of other strategic alternatives.
Outstanding Equity Awards at 2012 Fiscal Year-End
Our separation and spin-off from Myriad Genetics on June 30, 2009 was effectuated by way of a pro rata dividend to Myriad Genetics stockholders of one share of our common stock for every four shares of Myriad Genetics common stock. In connection with the spin-off and pursuant to the terms of Myriad Genetics’ stock option plans,related transactions, each outstanding Myriad Genetics stock option on the date of the separation was adjusted. Eachconverted into an adjusted Myriad Genetics common stock option, remains exercisable for the same number of shares of Myriad Genetics common stock as the original Myriad Genetics option, and for each Myriad Genetics option outstanding, a new Myrexis common stock option, exercisable for one-fourth of the number of shares of our common stock as the original Myriad Genetics option was issued. Theoption. An adjusted exercise price of each adjusted Myriad Genetics option and each new Myrexis stockconverted option was determined in accordance with Section 409A and Section 422 of the Internal Revenue Code and preserved the intrinsic valueof 1986, as amended. All other terms of the pre-separation Myriad Genetics option.
The following table shows grants of stockconverted options and grants of unvested stock awards outstanding on June 30, 2012, the last day of our fiscal year, held by each of the executive officers named in the Summary Compensation Table. All options with grant dates noted in the “Date of Grant” column prior to July 1, 2009 represent the Myrexis stock options that were granted on June 30, 2009 in connection with the separation as described above and the “Date of Grant” cited in the below table represents the date that the original Myriad Genetics options were granted as that is the date based on which the associated Myrexis stock options vest and terminate. All of these options were issued under our 2009 Equity Plan withremain the same terms ashowever; the original Myriad Genetics option, except that the vesting if any, and expiration of both the Myriad Genetics and the new Myrexisconverted options arewill be based on the optionholder’s continuing employment with usMyriad Genetics or Myrexis, as applicable, following the separation.
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | Date of Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | |||||||||||||||||||||
Richard B. Brewer | 05/11/2012 | — | — | — | — | 1,069,615 | (2) | 2,791,695 | ||||||||||||||||||||
Robert J. Lollini(3) | 07/01/2009 | 50,000 | 50,000 | (4) | 4.03 | 11/15/2013 | — | — | ||||||||||||||||||||
09/10/2009 | 16,500 | 16,500 | (4) | 4.63 | 11/15/2013 | — | — | |||||||||||||||||||||
02/18/2010 | 16,500 | 16,500 | (4) | 4.83 | 11/15/2013 | — | — | |||||||||||||||||||||
09/24/2010 | — | — | — | — | 16,625 | (5) | 43,391 | |||||||||||||||||||||
09/24/2010 | 16,625 | 49,875 | (4) | 3.86 | 11/15/2013 | — | — | |||||||||||||||||||||
9/22/2011 | 0 | 150,000 | (6) | 2.75 | 11/15/2013 | — | — | |||||||||||||||||||||
Adrian N. Hobden, Ph.D. | 02/19/2004 | 2,946 | 0 | 0.93 | 02/19/2014 | — | — | |||||||||||||||||||||
02/17/2005 | 2,260 | 0 | 1.22 | 02/17/2015 | — | — | ||||||||||||||||||||||
02/16/2006 | 13,951 | 0 | 1.34 | 02/16/2016 | — | — | ||||||||||||||||||||||
09/06/2006 | 16,000 | 0 | 1.40 | 09/06/2016 | — | — | ||||||||||||||||||||||
02/21/2007 | 15,548 | 0 | 1.89 | 02/21/2017 | — | — | ||||||||||||||||||||||
09/26/2007 | 22,500 | 0 | 2.80 | 09/26/2017 | — | — | ||||||||||||||||||||||
02/28/2008 | 26,169 | 0 | 2.06 | 02/28/2018 | — | — | ||||||||||||||||||||||
09/10/2008 | 16,875 | 0 | 3.56 | 09/10/2018 | — | — | ||||||||||||||||||||||
Andrea Kendell | 07/01/2009 | 2,500 | 2,500 | (8) | 4.03 | 07/01/2019 | — | — | ||||||||||||||||||||
09/10/2009 | 5,310 | 5,310 | (8) | 4.63 | 09/10/2019 | — | — | |||||||||||||||||||||
02/18/2010 | 5,538 | 5,536 | (8) | 4.83 | 02/18/2020 | — | — | |||||||||||||||||||||
09/24/2010 | — | — | — | — | 6,465 | (9) | 16,874 | |||||||||||||||||||||
09/24/2010 | 4,315 | 12,945 | (8) | 3.86 | 09/24/2020 | — | — | |||||||||||||||||||||
09/22/2011 | 0 | 160,000 | (8) | 2.75 | 09/22/2021 | — | — | |||||||||||||||||||||
Wayne Laslie | 11/11/2004 | 4,244 | 0 | 1.07 | 11/11/2014 | — | — | |||||||||||||||||||||
09/14/2005 | 2,774 | 0 | 1.13 | 09/14/2015 | — | — | ||||||||||||||||||||||
02/16/2006 | 7,951 | 0 | 1.34 | 02/16/2016 | — | — | ||||||||||||||||||||||
09/06/2006 | 10,000 | 0 | 1.40 | 09/06/2016 | — | — | ||||||||||||||||||||||
02/21/2007 | 9,548 | 0 | 1.89 | 02/21/2017 | — | — | ||||||||||||||||||||||
09/26/2007 | 6,500 | 0 | 2.80 | 09/26/2017 | — | — | ||||||||||||||||||||||
02/28/2008 | 16,169 | 0 | 2.06 | 02/28/2018 | — | — | ||||||||||||||||||||||
09/10/2008 | 14,000 | 0 | 3.56 | 09/10/2018 | — | — |
2012 Fiscal Year Option ExercisesAs a result of the option modifications that occurred in connection with the separation from Myriad Genetics, Myriad Genetics measured the potential accounting impact of these option modifications. Based upon the analysis, which included a comparison of the fair value of the modified options granted to our employees and Stock Vested
The following table shows information regardingdirectors immediately after the exercisemodification with the fair value of stockthe original option immediately prior to the modification, it was determined that there was no incremental compensation expense. All unrecognized compensation expense at June 30, 2009 that is related to Myriad Genetics options and the vesting of stock awardsMyrexis options that are held by each executive officer namedcurrent Myrexis employees and directors was recognized by us over the remaining vesting term of the option. All such expense relating to Myrexis options held by current and former Myriad Genetics employees, directors or consultants will not be recognized by us.
Impairment of Long-Lived Assets
We assess the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Factors that we consider in deciding when to perform an impairment review include significant negative industry or economic trends, and significant changes or planned changes in our use of the assets. We measure the recoverability of assets that will continue to be used in our operations by comparing the carrying value of the asset grouping to our estimate of the related total future undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related undiscounted cash flows, the asset grouping is considered to be impaired. The impairment is measured by comparing the difference between the asset grouping’s carrying value and its fair value. Fair value is the price that would be received from selling an asset in an orderly transaction between market participants at the measurement date. Long-lived assets such as intangible assets and property, plant and equipment are considered non-financial assets, and are recorded at fair value only when an impairment charge is recognized. We recorded impairment charges for the years ended June 30, 2013, 2012 and 2011 of $20,000, $0.3 million and $1.1 million, respectively. These charges are reflected in the Summary Compensation Tablestatement of operations and comprehensive loss in general and administrative expenses.
We evaluated our equipment as of June 30, 2012 and management had committed to a plan to sell our laboratory equipment. Equipment categorized as equipment held for sale on the balance sheet at June 30, 2012 totaled $1.0 million. Equipment held for sale is no longer subject to depreciation, and is recorded at the lower of depreciated carrying value or fair market value less costs to sell. All such equipment had been sold as of June 30, 2013.
Results of Operations
Years ended June 30, 2013 and 2012
Research and development expenses are comprised primarily of salaries and related personnel costs, laboratory supplies, equipment costs, and costs associated with our clinical trials. Research and development expenses for the fiscal year ended June 30, 2013 were $0.5 million compared to $14.2 million in 2012. This 97% decrease was primarily due to:
We do not expect any future research and development costs as a result of the decision to suspend further development activities for all preclinical and clinical programs and as a result of the transfer of all preclinical and clinical programs to third parties.
General and administrative expenses consist primarily of salaries and related personnel costs for business development, executive, legal, finance and accounting, information technology, human resources, and allocated facilities expenses. General and administrative expenses for the fiscal year ended June 30, 2013 were $11.5 million, compared to $17.6 million in 2012. The decrease in general and administrative expenses of 35% was due primarily to a decrease in the lease expense, share-based compensation, depreciation expense and reduced severance costs during the year ended June 30, 2013 in comparison for the year ended June 30, 2012. We recognized $2.2 million in lease expense for the year ended June 30, 2013. We recognized $3.8 million in lease expense for the year ended June 30, 2012. We expect to see reduced general and administrative expenses in future years as a result of the decision to suspend further development activities for all preclinical and clinical programs and other related wind down activities.
Other income (expense) for the fiscal year ended June 30, 2013 was $0.4 million compared to $0.6 million for the fiscal year ended June 30, 2012. Other income for the year ended June 30, 2013, reflects interest income and gains on sale of assets of $0.3 million. Other income for the year ended June 30, 2012, reflects interest income and realized gains on our marketable securities and a gain on sale of assets of $0.3 million.
Years ended June 30, 2012 and 2011
Research revenue is comprised of research services related to short-term research agreements. Research revenue for the fiscal year ended June 30, 2012 was $0 compared to $185,000 in the prior year. The decrease in research revenue was primarily attributable to stopping all contract research services activity in March 2011 as a result of a corporate reorganization.
Research and development expenses are comprised primarily of salaries and related personnel costs, laboratory supplies, equipment costs, and costs associated with our clinical trials. Research and development expenses for the fiscal year ended June 30, 2012 were $14.2 million compared to $22.3 million in 2011. This 36% decrease was primarily due to:
General and administrative expenses consist primarily of salaries and related personnel costs for business development, executive, legal, finance and accounting, information technology, human resources, and allocated facilities expenses. General and administrative expenses for the fiscal year ended June 30, 2012 were $17.6 million, compared to $18.3 million in 2011. The decrease in general and administrative expenses of 4% was due primarily to a decrease in the loss on impairment of assets from $1.1 million to $0.3 million, share-based compensation and depreciation expense, partially offset by increased severance and professional fees during the year ended June 30, 2012. We recognized $2.5 million in severance expenses recorded in general and administrative for the year ended June 30, 2012 in connection with executive management changes, the November 2011 corporate reorganization and the March 2012 resource alignment. We recognized $0.5 million in severance expenses recorded in general and administrative for the year ended June 30, 2011.
Other income (expense) for the fiscal year ended June 30, 2012 was $0.6 million compared to $1.7 million for the fiscal year ended June 30, 2011. Other income for the year ended June 30, 2012, reflects interest income and realized gains on our marketable securities and a gain on sale of assets of $0.3 million. Other income for the year ended June 30, 2011 reflects interest income and realized gains on our marketable securities. Other income for the year ended June 30, 2011, includes a $1.2 million one-time grant received in November 2010 as a part of the qualifying therapeutic discovery project under section 48D of the Internal Revenue Code.
Liquidity and Capital Resources
Net cash used in operating activities was $13.0 million during the fiscal year ended June 30, 2013 compared to $27.8 million used by operating activities during the prior fiscal year. The change in cash flow from operating activity can be attributed primarily to the higher net loss in fiscal 2012.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Richard B. Brewer | — | — | — | — | ||||||||||||
Robert J. Lollini | — | — | 12,542 | 31,621 | ||||||||||||
Adrian N. Hobden, Ph.D. | 120,914 | 243,576 | 27,083 | 94,249 | ||||||||||||
Andrea Kendell | — | — | 3,655 | 9,436 | ||||||||||||
Wayne Laslie | 14,955 | 5,420 | 18,166 | 55,062 |
Pension Benefits
Our investing activities provided $71.4 million in cash during the fiscal year ended June 30, 2013 compared to $27.1 million during the prior fiscal year. The change is primarily due to the maturities and sales of our marketable investment securities. In addition, we received $1.5 million in proceeds from the sale of assets during the year ended June 30, 2013. We do not have any qualified or non-qualified defined benefit plans.anticipate investments in additional equipment and leasehold improvements in the future.
Nonqualified Deferred Compensation
We do not have any nonqualified defined contribution plans or other deferred compensation plan.
Payments Upon Termination or ChangeApproximately $76.9 million in Control
Richard B. Brewer, former Presidentcash was used in financing activities during the year ended June 30, 2013, as a result the payment of the special cash distribution made February 15, 2013, partially offset by proceeds from stock options exercised and Chief Executive Officerproceeds from the issuance of common stock during the period, compared to $1.2 million provided by financing activities compared to 2012.
As of June 30, 2012, there were no severance2013, we had $1.1 million in cash and cash equivalents a decrease of $18.6 million from $19.7 million as of June 30, 2012.
As discussed above, on January 22, 2013, our Board of Directors unanimously determined to cancel the special meeting of our shareholders scheduled for January 23, 2013, and instead, the Board of Directors declared a special cash distribution to shareholders of record as of the close of business on February 4, 2013 in the amount of $2.86 per share. The $1.1 million remaining cash and cash equivalents in the Company is anticipated to be sufficient to fund ongoing public company and other related operational costs for at least 12 months. Our future capital requirements, cash flows, and results of operations will be affected by and depend on many factors that are currently unknown to us, including:
• | the outcome of our new management’s further review and evaluation of strategic alternatives; | |
• | changes in our business strategy; | |
• | regulatory developments or enforcement in the United States and foreign countries; | |
• | the ability to partner, sell or out-license rights to our remaining intellectual property assets on favorable terms; | |
• | failure to secure adequate capital to fund our operations if and when needed; | |
• | litigation; | |
• | future sales of our common stock; | |
• | general market conditions; | |
• | economic and other external factors or other disasters or crises; | |
• | period-to-period fluctuations in our financial results; and | |
To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or change in control arrangements in place with Richard B. Brewer, our former President and Chief Executive Officer, other than acceleration of his RSUs had milestones been achieved under the RSU Agreement.
May 11, 2012 Separation and Consulting Agreement with Robert J. Lollini, former President and Chief Executive Officer
Robert J. Lollini resigned as President and Chief Executive Officer effective May 11, 2012.private equity offerings, collaboration agreements, debt financings or licensing arrangements. Additional funding may not be available to us on acceptable terms or at all. In connection with Mr. Lollini’s resignation, we entered into a Separation and Consulting Agreement with Mr. Lollini, dated May 11, 2012 (the “Separation Agreement”). Pursuant toaddition, the terms of any financing may adversely affect the Separation Agreement, Mr. Lollini receivedholdings or the following amounts and benefitsrights of our stockholders. For example, if we raise additional funds by issuing equity securities or by selling convertible debt securities, further dilution to which he was entitled pursuantour existing stockholders may result. If we raise funds through licensing arrangements, we may be required to relinquish rights to our technologies, or grant licenses on terms that are not favorable to us.
Off-Balance Sheet Arrangements
None.
Contractual Obligations
None.
Effects of Inflation
We do not believe that inflation has had a material impact on our business, revenues, or operating results during the terms of his Executive Severance and Change in Control Agreement, dated February 1, 2010, as amended September 9, 2011, in connection with a termination without Cause (as defined in the agreement):periods presented.
In addition, Mr. Lollini agreed to resign as a director of Myrexis as of November 15, 2012, and to provide consulting services to Myrexis through November 15, 2012. In consideration of Mr. Lollini’s agreement to provide consulting services to Myrexis, Mr. Lollini received:
continued vesting of his outstanding stock options and restricted stock units until November 15, 2012;
the vesting on November 15, 2012 of options to purchase 75,000 shares of Myrexis common stock that would not otherwise have vested by their terms, which options have an exercise price of $2.75 per share, which exceeds the closing price of our common stock on June 29, 2012, the last business day of our fiscal year; and
the extension of the expiration date of all his vested stock options until November 15, 2013.
In addition, the Separation Agreement contains Mr. Lollini’s general release of any claims against us, and Mr. Lollini’s agreement that the non-disclosure, intellectual property assignment, non-competition (as modified by the Separation Agreement) and non-solicitation provisions set forth in his employment agreement with us, dated July 1, 2009, will continue to apply in accordance with their terms.
July 21, 2011 Separation Agreement with Adrian N. Hobden, Ph.D., former President and Chief Executive Officer
Effective July 21, 2011, Adrian N. Hobden, Ph.D., resigned as our President and Chief Executive Officer and as a member of our Board of Directors. In connection with Dr. Hobden’s resignation, we negotiated a Separation Agreement with Dr. Hobden. Pursuant to the terms and conditions of the Separation Agreement, Dr. Hobden received:
In exchange for the foregoing, Dr. Hobden agreed to assist us with an orderly transition for a three month period following July 21, 2011, during which he agreed to be available to provide consulting services to us for up to 10 hours per week. In addition, the Separation Agreement contains Dr. Hobden’s release of claims against us, and Dr. Hobden’s agreement that the non-disclosure, intellectual property assignment, non-competition and non-solicitation provisions set forth in his employment agreement with us, dated July 1, 2009, will continue to apply in accordance with their terms.
September 22, 2011 Executive Severance and Change in Control Agreement with Andrea Kendell, Chief Financial Officer
As of June 30, 2012, our only severance and change in control arrangement in effect with2013, we hold a named executive officer is our Executive Severance and Change in Control Agreement (the “Severance and Change in Control Agreement”) with Andrea Kendell, our Chief Financial Officer, dated September 22, 2011.
Termination Payments and Benefits
Under the termsCertificate of the Severance and Change in Control Agreement with Ms. Kendell, if (1) a Change in Control (as definedDeposit in the agreement) occursamount of $75,000 which matured on July 10, 2013 and within 12 monthswas not renewed. The balance of the Change in Control the employmentour portfolio consists of Ms. Kendell is terminated by the Company (other than for Cause, Disability or death) or by Ms. Kendell for Good Reason (as such capitalized terms are defined in the agreement), or (2) Ms. Kendell’s employment is terminated by the Company (other than for Cause, Disability or death) or by Ms. Kendell for Good Reason not in connection with a Change in Control, then Ms. Kendell shall be entitled to the following:only cash and cash equivalents.
payment in a lump sum amount of her base salary through the date of termination, and any accrued vacation pay to the extent not previously paid;
Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
payment in a lump sum amount equal to one times her then current annual base salary;
payment in a lump sum amount equal to one times her then current fiscal year target bonus amount; and
continuation of health benefits for up to 12 months.
Receipt of severance payments under the agreement is conditioned on Ms. Kendell executing and delivering a written general release of claims against the Company and its affiliates within 30 days of termination, and which includes Ms. Kendell’s reaffirmation of her continuing obligations under the assignment of inventions, non-disclosure, non-competition and non-solicitation provisions contained in her employment agreement, dated June 29, 2009, with the Company.
Term
The Severance and Change in Control Agreement with Ms. Kendell has a term (the “Term”) that continues in effect until December 31, 2015 and thereafter for one year terms unless the Company provides notice of non-renewalinformation required by this Item 8 is included at least 90 days prior to the end of the expirationthis Annual Report on Form 10-K beginning on page F-1.
19 |
MYREXIS, INC.
Index to Financial Statements | Number | |
Reports of Independent Registered Public Accounting Firms | F-2 – F-3 | |
Balance Sheets as of June 30, 2013 and 2012 | F-4 | |
Statements of Operations and Comprehensive Loss for the Years Ended June 30, 2013, 2012 and 2011 | F-5 | |
Statements of Stockholders’ Equity for the Years Ended June 30, 2013, 2012 and 2011 | F-6 | |
Statements of Cash Flows for the Years Ended June 30, 2013, 2012 and 2011 | F-7 | |
Notes to Financial Statements | F-8 |
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
On February 4, 2013, we were notified by our independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”), that upon completion of Ernst & Young’s review of the term then in effect. Company’s unaudited interim condensed consolidated financial statements as of December 31, 2012 and for the three and six month periods ended December 31, 2012 and 2011, Ernst & Young would resign as the Company’s independent registered public accounting firm. Such review was completed on February 8, 2013.
The rights and obligations under the Severance and Change in Control Agreement will expirereports of Ernst & Young on the earlierCompany’s consolidated financial statements for the past two fiscal years ended June 30, 2012 and 2011 did not contain an adverse opinion or disclaimer of (i)opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the expirationaudits of the Term, (ii)Company’s consolidated financial statements for each of the datetwo fiscal years ended June 30, 2012 and 2011, and in the subsequent interim period through February 8, 2013, there were no disagreements with Ernst & Young on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Ernst & Young would have caused Ernst & Young to make reference to the matter in their report.
There were no “reportable events” as that term is 12 months after a Changedescribed in Control, if Ms. Kendell is still employedItem 304(a)(1)(v) of Regulation S-K that occurred during the Company's fiscal years ended June 30, 2012 and 2011 or during the subsequent interim period through February 8, 2013.
On February 8, 2013, the Company engaged EisnerAmper LLP (“EisnerAmper”) as the Company’s new independent registered public accounting firm to audit the Company’s consolidated financial statements for the fiscal year ending June 30, 2013. The appointment of EisnerAmper was approved by the Company as of such later date, or (iii) the fulfillment by the Company of all of its obligations under the Severance and Change in Control Agreement.
Defined Terms
As defined in the Severance and Change in Control Agreement:
“Cause”means the executive’s willful and continued failure to substantially perform her reasonable assigned duties (other than any such failure resulting from incapacity due to physical or mental illness or any failure after the executive gives notice of termination for Good Reason), which failure is not cured within 30 days after a written demand for substantial performance is received by the executive from the Board of Directorssole director of the Company which specifically identifiesCompany.
Item 9A. | CONTROLS AND PROCEDURES |
1. Disclosure Controls and Procedures
We maintain disclosure controls and procedures (Disclosure Controls) within the manner in which the Boardmeaning of Directors believes the executive has not substantially performed the executive’s duties; or the executive’s willful engagement in illegal conduct or gross misconduct which is materiallyRules 13a-15(e) and demonstrably injurious to the Company.
A “Change in Control” means the occurrence of any of the following events: (1) Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d)15d-15(e) of the Securities Exchange Act of 1934, as amended) becomesamended, or the “Beneficial Owner” (asExchange Act. Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Chief Executive Officer, who is also the Chief Financial Officer, after evaluating the effectiveness of our Disclosure Controls as of the end of the period covered by this Annual Report on Form 10-K, has concluded that, based on such evaluation, our Disclosure Controls were not effective based on the material weakness noted below to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
2. Internal Control Over Financial Reporting
(a) Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13d-3Rules 13a-15(f) and 15d-15(f) promulgated under said Act), directlythe Exchange Act as a process designed by, or indirectly,under the supervision of, securitiesa company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that:
Because of those inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2013. In making their assessment, management used the criteria set forth by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its affiliates or by any employee benefit planCommittee of Sponsoring Organizations of the Company) pursuant to a transaction or a seriesTreadway Commission (COSO) inInternal Control—Integrated Framework.Based on our assessment, management believes that, as of related transactionsJune 30, 2013, our internal control over financial reporting was not effective based on those criteria, as the following material weakness in internal control was identified:
· | the Company, given its relatively small size, did not have sufficient segregation of duties over a variety of financial and disclosure controls. |
Our independent registered public accounting firm has issued its report on the effectiveness of our internal control over financial reporting, which is included below.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Myrexis, Inc.
We have audited Myrexis Inc.’s (the “Company”) internal control over financial reporting as of June 30, 2013, based on criteria established inInternal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting 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 the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment: The Company did not have sufficient segregation of duties over its financial process or disclosures. This material weakness was considered in determining the nature, timing, and extent of audit test applied in our audit of the 2013 financial statements, and this report does not approve; or (2) Merger/Sale of Assets. (A) A merger or consolidationaffect our report dated July 16, 2013 on those financial statements.
In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, Myrexis, Inc. has not maintained effective internal control over financial reporting as of June 30, 2013, based on criteria established inInternal Control - Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company whetherAccounting Oversight Board (United States), the balance sheet of Myrexis, Inc. as of June 30, 2013, and the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended June 30, 2013, and our report dated July 16, 2013 expressed an unqualified opinion thereon.
/s/ EisnerAmper LLP
Iselin, New Jersey
July 16, 2013
(b) Change in Internal Control over Financial Reporting
The following change in our internal control over financial reporting was identified in connection with the evaluation of such internal control that occurred during the fourth quarter of our last fiscal year that have materially affected, or not approvedare reasonably likely to materially affect, our internal control over financial reporting: due to the reduction in employees from five to one during the fourth quarter, there no longer exists adequate segregation of duties at Myrexis.
Item 9B. | OTHER INFORMATION |
Not applicable.
PART III
Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Management and Corporate Governance,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Code of Conduct and Ethics” in our Proxy Statement for the 2013 Annual Meeting of Stockholders.
Item 11. | EXECUTIVE COMPENSATION |
The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Compensation Discussion and Analysis,” “Executive Officer and Director Compensation,” “Management and Corporate Governance-Committees of the Board of Directors other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval.
“Disabilityand Meetings,” means the executive’s absence from the full-time performance of the executive’s duties with the Company for 180 consecutive calendar days as a result of incapacity due to mental or physical illness which is determined to be total“Management and permanent by a physician selected by the Company or its insurersCorporate Governance-Compensation Committee Interlocks and acceptable to the executive or the executive’s legal representative.
“Good ReasonInsider Participation,” means the occurrence, without the executive’s written consent, of any of the following events or circumstances: (a) a material“Compensation Committee Report” and continuing diminution of the executive’s position, duties, authority or responsibilities in the operation and management of the Company as compared to such position, duties, authority or responsibilities on the effective date of the Severance and Change in Control Agreement; (b) a material reduction in the executive’s then current annual base salary; (c) a change by the Company in the location at which the executive performs her principal duties for the Company to a new location that is more than 50 miles from the location at which the executive performs her principal duties for the Company on the effective date of the Severance and Change in Control Agreement; (d) the failure of the Company to obtain the agreement from any successor to the Company to assume and agree to perform the Severance and Change in Control Agreement; or (e) any failure of the Company to pay or provide to the executive any portion of the executive’s compensation or any Company-paid health, disability, accident and/or life insurance plans or programs due within seven days of the date such compensation or benefits are due, or any material breach by the Company of the Severance and Change in Control Agreement or any employment agreement with the executive.
The defined terms set forth above are the same defined terms that were contained in our now terminated Executive Severance and Change in Control Agreements with each of Dr. Hobden, Mr. Lollini, and Mr. Laslie.
Potential Payments to Ms. Kendell Upon a June 30, 2012 Termination
If Ms. Kendell had been terminated as of June 29, 2012, the last business day of our most recently completed fiscal year, under one of the circumstances described in her Severance and Change in Control Agreement, she would have received the following:
December 13, 2011 Separation Agreement with Wayne Laslie, former Chief Operating Officer
On November 16, 2011, Wayne Laslie, our then serving Chief Operating Officer, notified the Company of his intention to resign effective on February 29, 2012. In connection with Mr. Laslie’s resignation, we entered into a Separation Agreement with Mr. Laslie on December 13, 2011. Pursuant to the terms and conditions of the Separation Agreement, Mr. Laslie received the following:
Mr. Laslie’s right to receive the foregoing was subject to his execution of a release of claims against the Company, and his agreement that the non-disclosure, intellectual property assignment, non-competition and non-solicitation provisions set forth in his employment agreement with Myrexis, dated July 1, 2009, will continue to apply in accordance with their terms.
Director Compensation
The following table shows the total compensation paid or accrued during the fiscal year ended June 30, 2012 to each of our non-employee directors. In accordance with the terms of his Separation and Consulting Agreement with us, Mr. Lollini does not receive any compensation for his service as a director.
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | Total ($) | |||||||||
Gerald P. Belle | 157,000 | (2) | 29,949 | 186,949 | ||||||||
Jason M. Aryeh | 39,250 | 44,898 | 84,148 | |||||||||
Robert Forrester | 100,000 | 29,949 | 129,949 | |||||||||
John T. Henderson, M.D. | 71,000 | 29,949 | 100,949 | |||||||||
Dennis H. Langer, M.D., J.D. | 103,000 | 29,949 | 132,949 | |||||||||
Timothy R. Franson, M.D. | 59,000 | 29,949 | 88,949 |
Name | Options Outstanding (#) | Vested Options (#) | ||||||
Gerald P. Belle | 72,500 | 56,250 | ||||||
Jason M. Aryeh | 25,000 | — | ||||||
Robert Forrester | 57,500 | 41,250 | ||||||
John T. Henderson, M.D. | 97,500 | 81,250 | ||||||
Dennis H. Langer, M.D., J.D. | 75,000 | 58,750 | ||||||
Timothy R. Franson, M.D. | 57,500 | 41,250 |
Director Compensation Policy
Our non-employee directors are compensated as follows.
Annual Retainer
Our non-employee directors are compensated on a role-based model and are paid cash fees based on the following annual retainers (25% paid following each quarter of service):
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Attendance
In addition to the annual retainer amounts, we pay each non-employee director a per meeting cash fee of $2,000 for in-person attendance and $1,000 for telephonic attendance at any Board meetings in excess of five meetings per fiscal year. We also pay each non-employee director a per meeting cash fee of $2,000 for in-person attendance and $1,000 for telephonic attendance at committee meetings in excess of five Audit Committee meetings, four Compensation Committee meetings, and three Nominating and Governance Committee meetings, per fiscal year. All directors are also reimbursed for their out-of pocket expenses incurred in attending meetings.
In addition to the compensation described above, members of the Board’s Strategy Review Committee, comprised of Gerald P. Belle, Dennis Langer, Robert Forrester, and Jason M. Aryeh, are paid a per meeting cash fee of $1,000 for in-person or telephonic attendance or participation in committee meetings.
Stock Option Awards
Our non-employee directors are entitled to receive options to purchase our common stock under Equity Incentive Plan. Each year on the date of our annual meeting of stockholders, each non-employee director, other than new non-employee directors appointed within six months of the annual meeting, will automatically be granted a non-qualified option to purchase 16,250 shares of common stock at an exercise price equal to the closing price of our common stock on the date of grant. In addition, upon initial election to the Board each new non-employee director is granted a non-qualified option to purchase 25,000 shares of common stock at an exercise price equal to the closing price of our common stock on the date of grant. Options granted to our non-employee directors will vest in full on the first anniversary of the date of grant, assuming continued membership on the Board. Options granted to our non-employee directors will be exercisable after the termination of the director’s service on the Board to the extent exercisable on the date of such termination for the remainder of the life of the option. All options granted to our non-employee directors will become fully exercisable upon a change in control or upon the death of the director.
Risks“Risks Related to Compensation Practices and Policies
The Compensation Committee maintains a pay-for-performance compensation philosophy, but also recognizes that providing certain typesPolicies” in our Proxy Statement for the 2013 Annual Meeting of compensation incentives may inadvertently motivate individuals to act in ways that could be detrimental to the organization as a whole in order to maximize personal compensation. To minimize such risk, the Compensation Committee reviews at least annually the overall structure and individual components of our compensation program. The Compensation Committee also performs an annual evaluation to ensure that salary levels, equity awards and other elements of compensation are benchmarked against appropriate standards and that incentives provided for achievement of target goals are balanced between short-term rewards and longer-term enhancement of shareholder value. Based on its review, the Compensation Committee has concluded that any risks created by our compensation policies and procedures are not reasonably likely to have a material adverse effect on our Company or business.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee has three members, Dennis Langer (Chairman), Gerald Belle and Robert Forrester. No member of our Compensation Committee has at any time been an employee of ours. None of our executive officers is a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.Stockholders.
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Security
The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the beneficial ownership ofManagement” and “Equity Compensation Plan Information” in our common stock as of September 30, 2012 (except as otherwise indicated) for (a) each stockholder known by us to own beneficially more than 5% of our common stock, (b) the executive officers named in the Summary Compensation Table of this Form 10-K, (c) each of our directors, and (d) all of our current directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of September 30, 2012 pursuant to the exercise of options or the vesting of restricted stock units to be outstandingProxy Statement for the purpose2013 Annual Meeting of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 26,811,906 shares of common stock outstanding on September 30, 2012. Attached to each share of common stock is a Preferred Share Purchase Right to acquire one one-thousandth of a share of our Series A Junior Participating Preferred Stock, par value $.01 per share, which Preferred Share Purchase Rights are not presently exercisable.Stockholders.
Except as indicated in the footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them. Unless otherwise indicated, the address for each director and executive officer listed is c/o Myrexis, Inc., 305 Chipeta Way, Salt Lake City, UT 84108.
Shares of Common Stock Beneficially Owned | ||||||||
Beneficial Owner | Number | Percentage | ||||||
Principal Stockholders: | ||||||||
Biotechnology Value Fund, L.P. (1) 900 North Michigan Avenue, Suite 1100 Chicago, IL 60611 | 1,344,900 | 5.02 | % | |||||
Bulldog Investors (2) Park 80 West, 250 Pehle Avenue, Suite 708 Saddle Brook, NJ 07663 | 1,936,564 | 7.22 | % | |||||
First Eagle Investment Management, LLC (3) 1345 Avenue of the Americas New York, New York 10105 | 2,741,604 | 10.23 | % | |||||
ICS Opportunities, Ltd. (4) c/o Millennium International Management LP 666 Fifth Avenue New York, New York 10103 | 1,413,300 | 5.27 | % | |||||
Executive Officers and Directors: | ||||||||
Andrea Kendell (5) | 75,360 | * | ||||||
Robert J. Lollini (6) | 268,683 | 1.00 | % | |||||
Adrian N. Hobden, Ph.D. (7) | 208,014 | * | ||||||
Wayne Laslie (8) | 120,722 | * | ||||||
Gerald P. Belle (9) | 133,480 | * | ||||||
Jason M. Aryeh (10) | 580,145 | 2.16 | % | |||||
Robert Forrester (11) | 41,250 | * | ||||||
Timothy R. Franson, M.D. (11) | 41,250 | * | ||||||
David W. Gryska | 0 | 0 | ||||||
John T. Henderson, M.D. (12) | 82,325 | * | ||||||
Dennis H. Langer, M.D., J.D. (11) | 58,750 | * | ||||||
All current executive officers and directors as a group (9 persons) (13) | 1,281,243 | 4.68 | % |
Equity Compensation Plan Information
The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of June 30, 2012.
(a) | (b) | (c) | ||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders (1) | 4,806,563 | (2) | $ | 3.30 | (3) | 2,437,149 | (4) | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 4,806,563 | (2) | $ | 3.30 | (3) | 2,437,149 | (4) |
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Certain
The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Certain Relationships and Related Transactions
We were not a party to any transactions with related persons since July 1, 2011 that would be required to be disclosed pursuant to Item 404(a)Person Transactions” and “Management and Corporate Governance-Director Independence” in our Proxy Statement for the 2013 Annual Meeting of Regulation S-K.
Policy for Approval of Related Person Transactions
We have adopted a Policy on Related Person Transactions (the “Policy”) under which the Audit Committee reviews, approves or ratifies all related person transactions. Under our Policy, a related person transaction is one in which Myrexis is a participant, and the amount involved exceeds $120,000, and in which any of the following persons has or will have a direct or indirect material interest:
executive officers of the Company;
members of our Board of Directors;
beneficial holders of more than 5% of our securities;
immediate family members, as defined by Item 404 of Regulation S-K promulgated under the Securities Act, of any of the foregoing persons;
any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest; and
any other persons whom the Board determines may be considered to be related persons as defined by Item 404 of Regulation S-K promulgated under the Securities Act.
Under the Policy, the Audit Committee shall approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of Myrexis and its stockholders, taking into account all available facts and circumstances as the Audit Committee determines in good faith to be necessary. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to Myrexis; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee shall participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members is the related person.
In reviewing and approving such transactions, the Audit Committee shall obtain, or shall direct management to obtain on its behalf, all information that the Audit Committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the Audit Committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the Audit Committee. This approval authority may also be delegated to the Chairperson of the Audit Committee in some circumstances. It is contemplated that no related person transaction shall be entered into prior to the completion of these procedures; however, where permitted, a related person transaction may be ratified upon completion of these procedures.
The Audit Committee may adopt any further policies and procedures relating to the approval of related person transactions that it deems necessary or advisable from time to time. A copy of our Policy on Related Person Transactions is publicly available on the “Investors—Corporate Governance” section of our website atwww.myrexis.com.
Director Independence
Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with Myrexis, either directly or indirectly. Based upon this review, our Board has determined that the following members of the Board are “independent directors” as defined by The NASDAQ Stock Market: Mr. Belle, Mr. Aryeh, Mr. Forrester, Dr. Franson, Dr. Henderson and Dr. Langer.Stockholders.
Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The Audit Committee has appointed Ernst & Young LLP, independent registered public accounting firm,response to auditthis item is incorporated by reference to the discussion responsive thereto in the proposal entitled “Independent Registered Public Accounting Firm” in our financial statementsProxy Statement for the fiscal year ending June 30, 2013. Ernst & Young LLP audited our financial statements for the fiscal year ended June 30, 2012.2013 Annual Meeting of Stockholders.
Accounting Fees and Services
The following table presents fees for professional audit services rendered by Ernst & Young LLP for the audit of the Company’s annual financial statements for the years ended June 30, 2012, and June 30, 2011, and fees billed for other services rendered by Ernst & Young LLP during those periods.
2012 | 2011 | |||||||
Audit fees: (1) | $ | 232,096 | $ | 249,949 | ||||
Audit related fees: (2) | — | — | ||||||
Tax fees: (3) | 22,900 | 85,829 | ||||||
All other fees: (4) | 1,995 | 1,995 | ||||||
|
|
|
| |||||
Total | $ | 256,991 | $ | 337,773 |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.PART IV
Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
PART IV
Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a)The following documents are filed as part of this Annual Report on Form 10-K:
1. Financial Statements
See “Index to Financial Statements” at Item 8 of this Annual Report on Form 10-K.
2. Financial Statement SchedulesExhibits
The financial statements beginning on page F-1 are filed as part of this Annual Report on Form 10-K. Other financial statement schedules have not been included because they are not applicable or the information is included in the financial statements or notes thereto.
3. Exhibits
The exhibits which are filed with or incorporated by reference into this Annual Report on Form 10-K are set forth in the Exhibit Index to this Annual Report on Form 10-K, which is incorporated herein by reference.
SIGNATURES
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, on October 29, 2012.July 17, 2013.
MYREXIS, INC. | ||
By: | /S/ Jonathan M. Couchman | |
Jonathan M. Couchman | ||
President and Chief Executive Officer |
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 indicated below and on the dates indicated.
| |||||
Title |
| ||||
By: | /s/ Jonathan M. Couchman | President and Chief Executive Officer, Chief | |||
Jonathan M. Couchman | Officer, | ||||
Chairman of the Board | July 17, 2013 | ||||
(principal executive officer, principal financial and | |||||
accounting officer) | |||||
By: | /s/ Michael C. Pearce | Director | July 17, 2013 | ||
Michael C. Pearce | |||||
By: | /s/ Steven D. Scheiwe | Director | July 17, 2013 | ||
Steven D. Scheiwe |
26 |
INDEX TO FINANCIAL STATEMENTS
EXHIBIT INDEX
Myrexis, Inc.
Years Ended June 30, 2013, 2012 and 2011
Page | ||
Reports of Independent Registered Public Accounting Firms | F-2 – F-3 | |
Financial Statements: | ||
Balance Sheets as of June 30, 2013 and 2012 | F-4 | |
Statements of Operations and Comprehensive Loss for the Years Ended June 30, 2013, 2012 and 2011 | F-5 | |
Statements of Stockholders’ Equity for the Years Ended June 30, 2013, 2012 and 2011 | F-6 | |
Statements of Cash Flows for the Years Ended June 30, 2013, 2012 and 2011 | F-7 | |
Notes to Financial Statements | F-8 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Myrexis, Inc.
We have audited the accompanying balance sheet of Myrexis, Inc. (the “Company”) as of June 30, 2013, and the related statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit 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. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Myrexis, Inc. as of June 30, 2013, and the results of its operations and its cash flows for the year ended June 30, 2013 in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Myrexis Inc.’s internal control over financial reporting as of June 30, 2013, based on criteria established inInternal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated July 16, 2013 expressed an adverse opinion thereon.
/s/ EisnerAmper LLP
Iselin, New Jersey
July 16, 2013
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Myrexis, Inc.
We have audited the accompanying balance sheet of Myrexis, Inc. as of June 30, 2012 and the statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years ended June 30, 2012 and 2011. These financial statements are the responsibility of the Company’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. 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 financial statements referred to above present fairly, in all material respects, the financial position of Myrexis, Inc. at June 30, 2012, and the results of its operations and its cash flows for each of the years ended June 30, 2012 and 2011, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Salt Lake City, Utah
September 13, 2012
MYREXIS, INC.
Balance Sheets
June 30, 2013 and 2012
(In thousands, except per share amounts)
2013 | 2012 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,135 | $ | 19,707 | ||||
Marketable investment securities | 75 | 68,671 | ||||||
Equipment held for sale | — | 974 | ||||||
Prepaid expenses and other assets | 27 | 192 | ||||||
Total current assets | 1,237 | 89,544 | ||||||
Equipment and leasehold improvements: | ||||||||
Equipment | — | 1,298 | ||||||
Leasehold improvements | — | 1,197 | ||||||
— | 2,495 | |||||||
Less accumulated depreciation | — | 1,846 | ||||||
Net equipment and leasehold improvements | — | 649 | ||||||
Long-term marketable investment securities | — | 1,248 | ||||||
Other assets | — | 210 | ||||||
Total assets | $ | 1,237 | $ | 91,651 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | — | $ | 197 | ||||
Accrued liabilities | 74 | 2,082 | ||||||
Total current liabilities | 74 | 2,279 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value, authorized 5,000 shares; no shares issued and outstanding | — | — | ||||||
Common stock, $0.01 par value, authorized 60,000 shares; issued and outstanding 34,479 shares at June 30, 2013; issued and outstanding 26,794 shares at June 30, 2012 | 345 | 268 | ||||||
Additional paid-in capital | 129,307 | 205,968 | ||||||
Accumulated other comprehensive income | — | 4 | ||||||
Accumulated deficit | (128,489 | ) | (116,868 | ) | ||||
Total stockholders’ equity | 1,163 | 89,372 | ||||||
Total liabilities and stockholders’ equity | $ | 1,237 | $ | 91,651 |
See accompanying notes to financial statements.
MYREXIS, INC.
Statements of Operations and Comprehensive Loss
Years ended June 30, 2013, 2012 and 2011
(In thousands, except per share amounts)
2013 | 2012 | 2011 | ||||||||||
Research revenue | $ | — | $ | — | $ | 185 | ||||||
Total revenue | — | — | 185 | |||||||||
Costs and expenses: | ||||||||||||
Research and development expense | 465 | 14,230 | 22,296 | |||||||||
General and administrative expense | 11,526 | 17,571 | 18,339 | |||||||||
Total costs and expenses | 11,991 | 31,801 | 40,635 | |||||||||
Operating loss | (11,991 | ) | (31,801 | ) | (40,450 | ) | ||||||
Other income, net | 370 | 592 | 1,742 | |||||||||
Net loss | (11,621 | ) | (31,209 | ) | (38,708 | ) | ||||||
Other comprehensive loss: | ||||||||||||
Change in unrealized gains (losses) on marketable investment securities | (4 | ) | (43 | ) | 22 | |||||||
Comprehensive loss | $ | (11,625 | ) | $ | (31,252 | ) | $ | (38,686 | ) | |||
Loss per basic and diluted share | $ | (0.39 | ) | $ | (1.18 | ) | $ | (1.52 | ) | |||
Weighted-average shares used to compute net loss per basic and diluted share | 29,508 | 26,387 | 25,513 |
See accompanying notes to financial statements.
MYREXIS, INC.
Statements of Stockholders’ Equity
Years ended June 30, 2013, 2012 and 2011
(In thousands)
Common Stock | Additional Paid-In | Accumulated | Unrealized Gain on Available-for- sale | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | securities | Equity | |||||||||||||||||||
Balance at June 30, 2010 | 25,214 | $ | 252 | $ | 196,532 | $ | (46,951 | ) | $ | 25 | $ | 149,858 | ||||||||||||
Net loss | — | — | — | (38,708 | ) | — | (38,708 | ) | ||||||||||||||||
Change in unrealized gains on marketable investment securities | — | — | — | — | 22 | 22 | ||||||||||||||||||
Issuance of common stock for cash upon exercise of options and employee stock purchase plan | 839 | 9 | 1,937 | — | — | 1,946 | ||||||||||||||||||
Share-based payment expense | — | — | 4,832 | — | — | 4,832 | ||||||||||||||||||
Balance at June 30, 2011 | 26,053 | 261 | 203,301 | (85,659 | ) | 47 | 117,950 | |||||||||||||||||
Net loss | — | — | — | (31,209 | ) | — | (31,209 | ) | ||||||||||||||||
Change in unrealized gains on marketable investment securities | — | — | — | — | (43 | ) | (43 | ) | ||||||||||||||||
Issuance of common stock for cash upon exercise of options and employee stock purchase plan | 741 | 7 | 1,160 | — | — | 1,167 | ||||||||||||||||||
Share-based payment expense | — | — | 1,507 | — | — | 1,507 | ||||||||||||||||||
Balance at June 30, 2012 | 26,794 | 268 | 205,968 | (116,868 | ) | 4 | 89,372 | |||||||||||||||||
Net loss | — | — | — | (11,621 | ) | — | (11,621 | ) | ||||||||||||||||
Change in unrealized gains on marketable investment securities | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||
Issuance of common stock for cash | 7,000 | 70 | 180 | — | — | 250 | ||||||||||||||||||
Issuance of common stock for cash upon exercise of options and employee stock purchase plan | 685 | 7 | 1,375 | — | — | 1,382 | ||||||||||||||||||
Special cash distribution | — | — | (78,581 | ) | — | — | (78,581 | ) | ||||||||||||||||
Share-based payment expense | — | — | 365 | — | — | 365 | ||||||||||||||||||
Balance at June 30, 2013 | 34,479 | $ | 345 | $ | 129,307 | $ | (128,489 | ) | $ | — | $ | 1,163 |
See accompanying notes to financial statements.
MYREXIS, INC.
Statements of Cash Flows
Years ended June 30, 2013, 2012 and 2011
(In thousands)
2013 | 2012 | 2011 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (11,621 | ) | $ | (31,209 | ) | $ | (38,708 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Depreciation and amortization | 387 | 1,282 | 1,661 | |||||||||
Loss on impairment of assets | 20 | 281 | 1,112 | |||||||||
Share-based compensation expense | 365 | 1,507 | 4,832 | |||||||||
Gain on sale of marketable investment securities | (1 | ) | (3 | ) | (5 | ) | ||||||
Gain on sale of assets | (292 | ) | (266 | ) | — | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Prepaid expenses | 67 | 1,669 | (1,414 | ) | ||||||||
Other assets | �� | 308 | (4 | ) | — | |||||||
Accounts payable | (197 | ) | (1,013 | ) | (711 | ) | ||||||
Accrued liabilities | (2,008 | ) | (18 | ) | (222 | ) | ||||||
Net cash used in operating activities | (12,972 | ) | (27,774 | ) | (33,455 | ) | ||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures for equipment and leasehold improvements | — | (55 | ) | (93 | ) | |||||||
Proceeds from sale of assets | 1,509 | 450 | — | |||||||||
Purchase of marketable investment securities | (181,368 | ) | (232,439 | ) | (142,428 | ) | ||||||
Proceeds from sale of marketable investment securities | 8,433 | 82,500 | 29,099 | |||||||||
Proceeds from maturity of marketable investment securities | 242,775 | 176,669 | 128,209 | |||||||||
Net cash provided by investing activities | 71,349 | 27,125 | 14,787 | |||||||||
Cash flows from financing activities: | ||||||||||||
Net proceeds from issuance of common stock | 250 | — | — | |||||||||
Net proceeds from common stock issued under share-based compensation plans | 1,382 | 1,167 | 1,946 | |||||||||
Net payment of special cash distribution | (78,581 | ) | — | — | ||||||||
Net cash (used in) provided by financing activities | (76,949 | ) | 1,167 | 1,946 | ||||||||
Net (decrease) increase in cash and cash equivalents | (18,572 | ) | 518 | (16,722 | ) | |||||||
Cash and cash equivalents at beginning of year | 19,707 | 19,189 | 35,911 | |||||||||
Cash and cash equivalents at end of year | $ | 1,135 | $ | 19,707 | $ | 19,189 | ||||||
Supplemental cash flow information: | ||||||||||||
Fair value adjustment on marketable investment securities recorded to stockholders’ equity | 4 | 43 | 22 |
See accompanying notes to financial statements.
MYREXIS, INC.
Notes to Financial Statements
June 30, 2013, 2012, and 2011
(1) | Organization and Summary of Significant Accounting Policies |
(a) | Organization and Business Description |
Prior to February 2012, Myrexis, Inc. (“Myrexis” or the “Company”) was a biopharmaceutical company that generated a pipeline of differentiated drug candidates in oncology and autoimmune diseases. In February 2012, the Company announced that it had suspended development activity on all of its preclinical and clinical programs and retained Stifel Nicolaus Weisel, an investment banking firm, to assist in reviewing and evaluating a full range of strategic alternatives to enhance shareholder value. Thereafter, in March 2012, the Company initiated an alignment of its resources involving a phased reduction in its workforce from approximately 59 employees to 1 employee as of June 30, 2013.
Based on the Company’s evaluation of strategic alternatives, it determined to pursue the acquisition of one or more commercial-stage biopharmaceutical assets, with the goal of building a commercial-stage biopharmaceutical company by optimizing their performance and profitability. Integral to these efforts, on May 11, 2012, the Company announced a change in management, including the appointment of Richard B. Brewer as President and Chief Executive Officer and David W. Gryska as Chief Operating Officer. In addition, both Mr. Brewer and Mr. Gryska were appointed as members of the Board of Directors.
On August 15, 2012, the Company announced the death of Richard B. Brewer, its President and Chief Executive Officer. The Board of Directors appointed David W. Gryska as the Acting President and Chief Executive Officer while considering succession plans and proceeded to further evaluate the Company’s strategic direction in light of this development and the Company’s progress to date in identifying attractive biopharmaceutical assets.
On November 9, 2012, the Board of Directors concluded that it appeared unlikely that a strategic transaction at a valuation materially in excess of the Company’s estimated liquidation value would be achieved in the near term. Based on these and other factors, the Board of Directors concluded that a statutory dissolution and liquidation was in the best interests of the Company and its stockholders and therefore unanimously adopted a Plan of Complete Liquidation and Dissolution (the “Plan of Dissolution”), subject to stockholder approval.
On December 14, 2012, the Company filed proxy materials with the Securities and Exchange Commission (“SEC”) for a special meeting of stockholders on January 23, 2013, to consider and vote upon the Plan of Dissolution (the “Special Meeting”).
On December 21, 2012, we announced that we entered into a settlement agreement (the “Settlement Agreement”) that settled fully and finally a lawsuit (the “Litigation”) brought by the Alzheimer’s Institute of America, Inc. (“AIA”) against Myriad Genetics, Inc. (“Myriad Genetics” or “MGI”) and its wholly owned subsidiary, Myriad Therapeutics, Inc. (formerly known as Myriad Pharmaceuticals, Inc.) (referred to hereinafter together with Myriad Genetics as “Myriad”), and the Mayo Clinic Jacksonville and Mayo Foundation for Medical Education and Research (referred to hereinafter together as “Mayo”). Specifically, AIA asserted that Myriad and Mayo infringed certain patents allegedly owned by AIA in connection with Myriad’s research and development of its failed Alzheimer’s drug candidate Flurizan (hereinafter referred to as the “Litigation”). Myrexis, Myriad, Mayo and AIA are hereinafter referred to collectively as the “Parties”. As previously disclosed, pursuant to our Separation and Distribution Agreement with Myriad Genetics, dated June 30, 2009, at the time of Myrexis’ separation from Myriad Genetics, Myrexis assumed liability for certain pending or threatened legal matters related to its business, and is obligated to indemnify Myriad Genetics for any liability arising out of such matters, including any costs and expenses of litigating such matters, including payment of attorneys’ fees incurred to defend against claims. Accordingly, pursuant to the terms of the Settlement Agreement, in consideration of AIA’s release of claims against and covenant not to sue the other Parties for matters related to the Litigation, Myrexis agreed to (1) pay AIA approximately $1,525,000, and (2) transfer to AIA all program rights and assets associated with Myrexis’ Hsp90 inhibitor program, cancer metabolism inhibitor program, and small molecule anti-interferon (IKK€/TBK1) inhibitor program (the “Program Assets Transfer”). AIA assumed Myrexis’ liabilities under the program contracts being transferred to AIA and all liabilities for the further conduct of the programs, subject, in each case, to certain exclusions, including liabilities accruing or arising from events occurring prior to the Program Assets Transfer. The Settlement Agreement also includes a release of claims against AIA by each of Myrexis, Myriad and Mayo. Simultaneously with the delivery of the settlement payment to AIA by Myrexis on December 21, 2012, the Parties filed a stipulation of dismissal of the Litigation.
On December 21, 2012, David W. Gryska informed Myrexis of his resignation as Acting President and Chief Executive Officer, Chief Operating Officer and member of the Board of Directors, effective December 24, 2012.
On January 22, 2013, the Board unanimously determined to cancel the Special Meeting. The Board of Directors decided, after extensive and careful consideration of strategic alternatives, to abandon the proposed Plan of Dissolution and instead, the Board of Directors declared a special cash distribution to shareholders of record at the close of business on February 4, 2013 in the amount of $2.86 per share. The cash distribution of $78.6 million was paid on February 15, 2013, and the Company’s common stock began trading ex-dividend on Tuesday, February 19, 2013.
On January 22, 2013, The Board of Directors also appointed Jonathan M. Couchman as a Class II director of the Company and as its President and Chief Executive Officer. Mr. Couchman is also Chairman of the Board, Chief Executive Officer and Chief Financial Officer of Xstelos Holdings, Inc. (see Note 12 – Related Parties). Subsequent to Mr. Couchman’s appointment to the Board of Directors, the remaining members of the Board of Directors, Gerald P. Belle, Jason M. Aryeh, Robert Forrester, Timothy R. Franson, M.D., John T. Henderson, M.D., and Dennis H. Langer, M.D., J.D., resigned.
On February 13, 2013, Steven Scheiwe and Michael Pearce were appointed to the Board of Directors.
On February 28, 2013, Andrea Kendell’s employment as CFO terminated voluntarily and on March 1, 2013, Mr. Couchman was appointed CFO of Myrexis.
(b) | Use of Estimates |
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires Myrexis management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include or have included assessment of impairment of long-lived assets, deferred tax valuation allowances, the carrying amount of certain accrued liabilities and share-based compensation. Actual results could differ from those estimates presented herein.
(c) | Cash and Cash Equivalents |
The Company considers all cash on deposit, money market accounts, and highly liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents. The Company maintains cash and cash equivalents in bank deposit and other investment accounts which, at times, may exceed federally insured limits.
(d) | Loss Per Share |
The loss per basic and diluted share is calculated by dividing net loss by the weighted-average number of shares outstanding during the reported period.
As of June 30, 2013, there were outstanding potential common equivalent shares of 2,200,589 compared to 2,648,774 and 2,613,945, as of the same periods in 2012 and 2011 which were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. These potential dilutive common equivalent shares may be dilutive to basic earnings per share in future periods.
The calculation of diluted loss per share is the same as the basic loss per share in all years since the inclusion of any potentially dilutive securities would be anti-dilutive.
(e) | Fair Value Disclosure |
At June 30, 2013 and 2012, the carrying value of the Company’s accounts payable and accrued liabilities approximates fair value, principally because of the short term nature of these liabilities.
(f) | Revenue Recognition |
Research revenue is comprised of research services related to short-term research agreements. Research revenue reflects revenues earned utilizing the Company’s prior expertise to identify and characterize protein-protein interactions. In connection with the Company’s March 2011 corporate reorganization, it stopped all contract research services activity.
(g) | Research and Development Expenses |
Research and development expenses consist primarily of costs associated with the clinical trials of the Company’s product candidates, development materials, compensation and related benefits for research and development personnel, costs for consultants, and various overhead costs. Research and development costs are expensed as incurred. In February 2012, the Company suspended activity on all of its preclinical and clinical programs.
F-9 |
(h) | Equipment Held for Sale |
In conjunction with the suspension of all development activities in 2012, the Company evaluated its equipment and management committed to a plan to sell the Company’s laboratory equipment. Equipment categorized as equipment held for sale on the balance sheet at June 30, 2012 totaled $1.0 million. Equipment held for sale is no longer subject to depreciation, and is recorded at the lower of depreciated carrying value or fair market value less costs to sell. All such equipment had been sold as of June 30, 2013.
(i) | Equipment and Leasehold Improvements |
Equipment and leasehold improvements are stated at cost. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated useful lives of the related assets or lease terms. Equipment items had depreciable lives of five years. Leasehold improvements were being depreciated over the shorter of the estimated useful lives or the associated lease terms, which ranged from three to fifteen years. For the years ended June 30, 2013, 2012, and 2011, the Company recorded depreciation expense of $0.4 million, $1.3 million, and $1.7 million, respectively. As of June 30, 2013, the Company had sold all its equipment and the leasehold improvements had been completely amortized as a result of the termination of the related lease.
(j) Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. For the years ended June 30, 2013, 2012 and 2011, $20,000, $0.3 million and $1.1 million, respectively, was recorded for impairment of assets, and is included in general and administrative expenses in the statements of operations.
(k) | Income Taxes |
The Company recognizes income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
The provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and any estimated valuation allowances deemed necessary to recognize deferred tax assets at an amount that is more likely than not to be realized. The Company has provided full valuation allowances against its deferred tax assets. The Company’s filings, including the positions taken therein, are subject to audit by various taxing authorities. While the Company believes it has provided adequately for its income tax liabilities, adverse determinations by these taxing authorities could have a material adverse effect on the consolidated financial condition, results of operations or cash flows.
(l) | Share-based Compensation |
The Company recognizes compensation expense using a fair-value based method for costs related to stock options and other equity-based compensation. The expense is measured based on the grant date fair value of the awards that are expected to vest, and the expense is recorded over the applicable requisite service period. For time-based stock options and restricted stock, compensation expense is recognized over the vesting period from the vesting commencement date using the straight-line method. In the absence of an observable market price for a share-based award, the fair value is based upon a valuation methodology that takes into consideration various factors, including the exercise price of the award, the expected term of the award, the current price of the underlying shares, the expected volatility of the underlying share price based on peer companies, the expected dividends on the underlying shares and the risk-free interest rate.
(m) | Marketable Investment Securities |
The Company has classified its marketable investment securities as available-for-sale. These securities are carried at estimated fair value with unrealized holding gains and losses, net of any related tax effect, included in accumulated other comprehensive income in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned.
A decline in the market value of any available-for-sale security below cost that is deemed other than temporary results in a charge to earnings and establishes a new cost basis for the security. Losses are charged against “Other income (expense)” when a decline in fair value is determined to be other than temporary. The Company reviews several factors to determine whether a loss is other than temporary. These factors include but are not limited to: (i) the extent to which the fair value is less than cost and the cause for the fair value decline, (ii) the financial condition and near term prospects of the issuer or declines in credit risk, (iii) the length of time a security is in an unrealized loss position and (iv) the Company more likely than not, holding securities for a period of time sufficient to allow for any anticipated recovery in fair value. The Company recognized no impairments on available-for-sale securities for the years ended June 30, 2013, 2012 and 2011.
(n) | Segment and Related Information |
The Company operates in one reportable business segment, pharmaceutical development and related research activities.
The Company’s revenues were derived from research performed in the United States. Additionally, all of the Company’s long-lived assets are located in the United States.
(2) | Marketable Investment Securities |
The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of available-for-sale securities by major security type and class of security at June 30, 2013 and 2012 were as follows (in thousands):
Amortized cost | Gross unrealized holding gains | Gross unrealized holding losses | Estimated fair value | |||||||||||||
June 30, 2013: | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 844 | $ | — | $ | — | $ | 844 | ||||||||
Certificate of deposit | 75 | — | — | 75 | ||||||||||||
Total | $ | 919 | $ | — | $ | — | $ | 919 |
Amortized cost | Gross unrealized holding gains | Gross unrealized holding losses | Estimated fair value | |||||||||||||
June 30, 2012: | ||||||||||||||||
Available-for-sale: | ||||||||||||||||
Money market funds | $ | 19,707 | $ | — | $ | — | $ | 19,707 | ||||||||
Corporate bonds and notes | 53,989 | 2 | — | 53,991 | ||||||||||||
Federal agency issues | 15,679 | 2 | — | 15,681 | ||||||||||||
Total | $ | 89,375 | $ | 4 | $ | — | $ | 89,379 |
Cash and cash equivalents of $1.1 million at June 30, 2013 consist of cash of $0.3 million and money market funds of $0.8 million. In addition, the Company holds $75,000 restricted cash at June 30, 2013 in an 18-month certificate of deposit as collateral for a corporate purchasing card program that matures in July 2013.This amount is included in short-term marketable investment securities on the balance sheet as of June 30, 2013.Cash and cash equivalents of $19.7 million at June 30, 2012 consist of cash and money market funds. In addition, the Company held $200,000 restricted cash in an 18-month certificate of deposit as collateral for a corporate purchasing card program and $48,000 in a restricted cash account as collateral for office equipment. These amounts were included in long-term marketable investment securities on the balance sheet as of June 30, 2012.
(3) | Fair Value Measurements |
The fair value of the Company’s financial instruments reflects the amounts that the Company estimates to receive in connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:
Level 1—quoted prices in active markets for identical assets and liabilities.
Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities.
Level 3—unobservable inputs.
The majority of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. The following table sets forth the fair value of the Company’s financial assets that the Company re-measured:
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
June 30, 2013 | ||||||||||||||||
Money market funds | $ | 844 | $ | — | $ | — | $ | 844 | ||||||||
Certificate of deposit | — | 75 | — | 75 | ||||||||||||
Total | $ | 844 | $ | 75 | $ | — | $ | 919 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
June 30, 2012 | ||||||||||||||||
Money market funds | $ | 19,707 | $ | — | $ | — | $ | 19,707 | ||||||||
Corporate bonds and notes | — | 53,991 | — | 53,991 | ||||||||||||
Federal agency issues | — | 15,681 | — | 15,681 | ||||||||||||
Total | $ | 19,707 | $ | 69,671 | $ | — | $ | 89,379 |
As of June 30, 2013 and 2012, the Company has no investments which were measured using unobservable (Level 3) inputs.
In conjunction with the suspension of all development activities in 2012, the Company has evaluated its equipment and management committed to a plan to sell the Company’s laboratory equipment. Equipment categorized as equipment held for sale on the balance sheet at June 30, 2012 totaled $1.0 million. Equipment held for sale is no longer subject to depreciation, and is recorded at the lower of depreciated carrying value or fair market value less costs to sell. The fair value of the equipment was determined by using broker quotes for similar assets. The Company has classified the inputs used for determining the fair value of these assets as Level 2 in the fair value hierarchy. As of June 30, 2013, all such equipment had been sold.
(4) Leases
The Company entered into a sublease agreement with Myriad Genetics (“MGI”) effective July 1, 2009, as amended on November 11, 2009, and February 19, 2010, that provided for the sublease of certain office and laboratory space. The sublease for the Company’s facility took effect January 4, 2010 for a period of three years from the commencement date with the option to extend for an additional four three-year periods. In addition, the Company entered into a sublease agreement on June 1, 2012 that provided for the sublease of certain office space in Monterey, CA. The sublease for this office space took effect July 1, 2012 for a period of one year from the commencement date with the option to extend for an additional two one year periods. Rental expense for the years ended June 30, 2013, 2012 and 2011 was $2.2 million, $3.8 million and $3.8 million, respectively. As of June 30, 2013, the Company had no future minimum lease payments under the aforementioned sublease agreements.
F-12 |
(5) | Share-Based Compensation |
Myrexis Share-Based Compensation Plans
The Company adopted two equity incentive plans, the Myrexis, Inc. 2009 Employee, Director and Consultant Equity Incentive Plan (the “Equity Incentive Plan”) and the Myrexis, Inc. 2009 Employee Stock Purchase Plan (the “ESPP”). At June 30, 2013, the Company was authorized to issue a total of 8.6 million shares under the plans. The number of shares of common stock reserved for issuance under the Equity Incentive Plan is subject to increase pursuant to an “evergreen” provision, which provides for an annual increase equal to the lesser of 2,400,000 shares, 5% of the Company’s then outstanding shares of common stock, or such other amount as the Board of Directors may determine. The Board of Directors determined not to increase the number of shares reserved under the Equity Incentive Plan as of July 1, 2012. The number of shares of common stock reserved for issuance under the ESPP is subject to increase pursuant to an “evergreen” provision, which provides for an annual increase equal to the lesser of 500,000 shares, 2% of the Company’s then outstanding shares of common stock, or such other amount as the Board of Directors may determine. The Board of Directors determined not to increase the number of shares reserved under the ESPP as of July 1, 2012.
The Equity Incentive Plan provides for the issuance of common stock based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights and other equity based awards to the Company’s directors, officers, employees and consultants.
The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended. Full-time employees of Myrexis who will own less than five percent of Myrexis, Inc’s outstanding shares of common stock will be eligible to contribute a percentage of their base salary, subject to certain limitations, over the course of six-month offering periods for the purchase of shares of common stock. The purchase price for shares of common stock purchased under the ESPP will equal 85 percent of the fair market value of a share of common stock at the beginning or end of the relevant six-month offering period, whichever is lower.
In connection with the separation from MGI and related transactions, each outstanding MGI stock option was converted into an adjusted MGI common stock option, exercisable for the same number of shares of common stock as the original MGI option, and a new Myrexis common stock option, exercisable for one-fourth of the number of shares of common stock as the original MGI option. All other terms of the converted options remained the same. However, the vesting and expiration of the converted options is based on the optionholder’s continuing employment with either MGI or Myrexis, as applicable, following the separation. The adjusted exercise price of each converted option was determined in accordance with Section 409A and Section 422 of the Code, as follows:
• | The per share exercise price of each such MGI converted option is equal to the product of (i) the per share exercise price of the original MGI option multiplied by (ii) a fraction, the numerator of which is the closing MGI’s stock price on the day after the distribution, and the denominator of which is the ex-dividend closing stock price of MGI on the day of the distribution plus one-quarter of the “when-issued” Myrexis stock price on the day of the distribution. | |
Accordingly, in connection with the separation and related transactions, the Company issued stock options to current and former directors, officers, employees and consultants of MGI and Myrexis.
The exercise price of options granted during the period ended June 30, 2013, 2012 and 2011 was equivalent to the fair value of the stock on the date of grant. The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an option-by-option basis. Options generally vest ratably over service periods of four years and expire ten years from the date of grant. As of June 30, 2013, 7,713,640 shares were available for future grant under the Equity Incentive Plan and 936,765 shares were available for purchase under the Myrexis ESPP.
The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants for the fiscal years ended June 30:
2013 | 2012 | 2011 | ||||||||||
Risk-free interest rate | 0.67 | % | 0.9 | % | 1.4 | % | ||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||
Expected lives (in years) | 6.0 -7.0 | 6.0 -7.0 | 6.0 -7.0 | |||||||||
Expected volatility | 73 | % | 77.5 | % | 75.4 | % |
Expected option lives and volatilities are based on historical data and other factors.
A summary of option activity is as follows:
2013 | 2012 | 2011 | ||||||||||||||||||||||
Number of shares | Weighted average exercise price | Number of shares | Weighted average exercise price | Number of shares | Weighted average exercise price | |||||||||||||||||||
Options outstanding at beginning of year | 2,628,009 | $ | 3.30 | 3,248,984 | $ | 3.42 | 3,592,227 | $ | 3.28 | |||||||||||||||
Options granted | 60,000 | 2.65 | 1,097,400 | 2.79 | 844,060 | 3.84 | ||||||||||||||||||
Less: | ||||||||||||||||||||||||
Options exercised | (598,755 | ) | 2.33 | (536,985 | ) | 1.63 | (562,562 | ) | 2.22 | |||||||||||||||
Options canceled or expired | (1,202,894 | ) | 3.43 | (1,181,390 | ) | 3.92 | (624,741 | ) | 4.26 | |||||||||||||||
Options outstanding at end of year | 886,360 | 3.73 | 2,628,009 | 3.30 | 3,248,984 | 3.42 | ||||||||||||||||||
Options exercisable at end of year | 886,360 | 3.73 | 1,409,760 | 3.38 | 1,542,307 | 2.76 | ||||||||||||||||||
Options vested and expected to vest | 886,360 | 3.73 | 2,450,823 | 3.33 | 3,086,509 | 3.38 | ||||||||||||||||||
Weighted average fair value of options granted during the year | 1.64 | 1.84 | 2.53 |
The following table summarizes information about the stock options outstanding under the Equity Incentive Plan for both Myrexis and MGI employees at June 30, 2013:
Options outstanding | Options exercisable | |||||||||||||||||||||
Range of exercise prices | Number | Weighted | Weighted | Number | Weighted | |||||||||||||||||
$ | 0.62 - 3.39 | 178,378 | 3.57 | $ | 2.09 | 178,378 | $ | 2.09 | ||||||||||||||
3.56 - 3.56 | 232,144 | 5.19 | 3.56 | 232,144 | 3.56 | |||||||||||||||||
3.65 - 4.63 | 185,863 | 1.81 | 4.02 | 185,863 | 4.02 | |||||||||||||||||
4.67 - 4.83 | 289,975 | 5.32 | 4.68 | 289,975 | 4.68 | |||||||||||||||||
886,360 | 4.20 | 3.73 | 886,360 | 3.73 |
The fair-value of each Myrexis stock option issued pursuant to the separation was based on an allocation of the unamortized fair-value of the original MGI stock option from which it was derived. Myrexis recognizes share-based compensation expense relating to both Myrexis and MGI options held by current directors, officers, employees and consultants of Myrexis. Share-based compensation expense relating to Myrexis options held by current and former directors, officers, employees and consultants of MGI will be recognized by MGI.
As of June 30, 2013, unrecognized compensation expense related to the unvested portion of MGI’s stock options granted to Myrexis employees and the unvested portion of Myrexis stock options granted was $0.
The total intrinsic value of options exercised during the fiscal year ended June 30, 2013, 2012 and 2011 was $10,000, $0.7 million and $1.0 million, respectively. The aggregate intrinsic value of options outstanding was $0 and the aggregate intrinsic value for options fully vested was $0 as of June 30, 2013.
During the year ended June 30, 2013, the Company issued 64,078 restricted stock units under the Equity Incentive Plan at a weighted average fair value of $2.69 per share based on the fair market stock price on date of grant. As of June 30, 2013, the unrecognized compensation expense related to unvested restricted stock units was $0 as all outstanding restricted stock units not vested were terminated.
On May 11, 2012, the Company issued 2,139,230 restricted stock units (1,069,615 units to each of the Company’s then serving President and Chief Executive Officer and its Chief Operating Officer) under the Equity Incentive Plan at a fair value of $2.75. The restricted stock units issued on May 11, 2012 include certain performance conditions as well as market conditions. As of June 30, 2012, the performance criteria were not probable of being achieved; therefore, no stock-based compensation expense recorded during the year ended June 30, 2012. The units that were issued to the Company’s then serving President and Chief Executive Officer, Richard B. Brewer, expired by their terms upon his death on August 15, 2012. If specific performance conditions are met with respect to the restricted stock units issued to the Company’s Chief Operating Officer, a substantial expense could be incurred. These shares were not vested and cancelled by their terms upon his resignation on December 24, 2012.
Activity with respect to outstanding restricted stock units for the fiscal years ended June 30, 2012, 2011 and 2010 is as follows:
Number of shares | Weighted average grant date fair value | |||||||
Balance at June 30, 2010 | 144,466 | $ | 4.03 | |||||
Granted | 141,094 | 3.86 | ||||||
Cancelled | (54,657 | ) | 3.97 | |||||
Vested | (55,302 | ) | 4.03 | |||||
Balance at June 30, 2011 | 175,601 | 3.91 |
Number of shares | Weighted average grant date fair value | |||||||
Balance at June 30, 2011 | 175,601 | $ | 3.91 | |||||
Granted | 2,192,630 | 2.75 | ||||||
Cancelled | (114,277 | ) | 3.47 | |||||
Vested | (72,302 | ) | 3.94 | |||||
Balance at June 30, 2012 | 2,181,652 | 2.77 |
Number of shares | Weighted average grant date fair value | |||||||
Balance at June 30, 2012 | 2,181,652 | $ | 2.77 | |||||
Granted | 64,078 | 2.69 | ||||||
Cancelled | (2,159,508 | ) | 2.76 | |||||
Vested | (86,222 | ) | 2.93 | |||||
Balance at June 30, 2013 | 0 | 0 |
For the years ended June 30, 2013, 2012 and 2011, Myrexis employees purchased 13,085, 131,617 and 221,191 shares, respectively, under the Myrexis ESPP. Compensation expenses associated with Myrexis employees participating in the Myrexis ESPP for the years ended June 30, 2013, 2012 and 2011 were approximately $9,000, $206,000, and $360,000, respectively. The fair value of shares issued under the Myrexis ESPP was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions for the fiscal years ended June 30:
2013 | 2012 | 2011 | ||||||||||
Risk-free interest rate | 0.12 | % | 0.05 | % | 0.2 | % | ||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||
Expected lives (in years) | 0.5 | 0.5 | 0.5 | |||||||||
Expected volatility | 79 | % | 77 | % | 75 | % |
Share-based compensation expense recognized for Myrexis employees included in the statement of operations and comprehensive loss for the fiscal years ended June 30, 2013, 2012 and 2011 is as follows (in thousands):
2013 | 2012 | 2011 | ||||||||||
Research and development | $ | (37 | ) | $ | 595 | $ | 2,086 | |||||
General and administrative | 402 | 912 | 2,746 | |||||||||
Total employee stock-based compensation expense | $ | 365 | $ | 1,507 | $ | 4,832 |
(6) | Income Taxes |
Income tax expense (benefit) consists of the following:
(In thousands) | Year ended June 30, | |||||||||||
2013 | 2012 | 2011 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | — | — | — | |||||||||
Total Current | — | — | — | |||||||||
Deferred: | ||||||||||||
Federal | (4,056 | ) | (9,991 | ) | (13,032 | ) | ||||||
State | (459 | ) | (1,606 | ) | (2,380 | ) | ||||||
Change in valuation allowance | 4,515 | 11,597 | 15,412 | |||||||||
Total Deferred | — | — | — | |||||||||
Total income tax expense (benefit) | $ | — | $ | — | $ | — |
The differences between income taxes at the statutory federal income tax rate and income taxes reported in the consolidated statements of operations were as follows:
Year ended June 30, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Federal income tax expense at the statutory rate | (34.0 | )% | (34.0 | )% | (34.0 | )% | ||||||
State income taxes, net of federal benefit | (3.3 | ) | (3.3 | ) | (3.3 | ) | ||||||
Research and development credits, net of the federal tax on state credits | (3.0 | ) | (0.9 | ) | (5.9 | ) | ||||||
Incentive stock option and employee stock purchase plan expense | 0.4 | 0.8 | 2.3 | |||||||||
Uncertain tax positions, net of federal benefit on state positions | 0.5 | 0.3 | 1.1 | |||||||||
Other | 0.6 | — | — | |||||||||
Change in valuation allowance | 38.8 | 37.1 | 39.8 | |||||||||
— | % | — | % | — | % |
The significant components of the Company’s deferred tax assets and liabilities were comprised of the following at June 30, 2013 and 2012:
(In thousands) | Year ended June 30, | |||||||
2013 | 2012 | |||||||
Net operating loss carry-forwards | $ | 48,373 | $ | 40,026 | ||||
Intangible asset basis difference | — | 1,216 | ||||||
Accrued vacation | — | 44 | ||||||
Stock compensation expense | 990 | 3,057 | ||||||
Research and development credits | 3,710 | 3,364 | ||||||
Property, plant and equipment | — | 794 | ||||||
Other, net | 84 | 82 | ||||||
Liability for unrecognized tax benefits | (726 | ) | (666 | ) | ||||
Total net deferred tax assets before valuation allowance | 52,431 | 47,917 | ||||||
Less valuation allowance | (52,431 | ) | (47,917 | ) | ||||
Net deferred tax assets | $ | — | $ | — |
Due to losses incurred, the Company has determined that it is not more likely than not that the Company’s deferred tax assets will be realized. Accordingly, a valuation allowance has been established for the full amount of the Company’s deferred tax assets. The valuation allowance increased $4,515,000, $11,597,000 and $15,412,000 for the years ended June 30, 2013, 2012 and 2011, respectively.
At June 30, 2013 the Company had total federal and state tax net operating loss (“NOL”) carry-forwards of approximately $147,177,000, of which $17,491,000 is attributable to excess tax benefits for which no deferred tax asset has been established. If not utilized, the federal NOL carry-forwards will expire beginning in 2030 through 2033, and the state NOL carry-forwards will expire beginning in 2025 through 2028. The Company had approximately $3,006,000 of federal research tax credit carry-forwards, which can be carried forward to reduce federal income taxes. If not utilized, the federal research credits will expire beginning in 2030 through 2033. Additionally, the Company had approximately $1,066,000 of Utah research tax credit carry-forwards, which can be carried forward to reduce Utah income taxes. If not utilized, the Utah research tax credit carry-forwards will expire beginning in 2024 through 2027. Pursuant to Sections 382 and 383 of the Internal Revenue Code, with which Utah complies, the Company’s use of the carry-forward tax benefits may be limited in any given year as a result of certain changes in the Company’s ownership, including significant increases in ownership by the Company’s 5-percent shareholders. While the Company believes that its carry-forward tax benefits as of June 30, 2013 are not limited under Sections 382 and 383, significant changes in ownership in the future may limit such usage. In March, 2012, in an effort to protect the use of its carry-forward tax benefits, the Company adopted aTax Benefits Preservation Rights Plan that discourages significant changes in ownership of the Company’s stock that might limit the use of our carry-forward tax benefits.
In order to preserve the tax treatment of the Company’s NOLs and other tax benefits, on April 26, 2013, at the Company’s 2012 Annual Meeting of shareholders, the shareholders approved an amendment to the Company’sCertificate of Incorporation (the “Protective Amendment”) designed to prevent certain transfers of the Company’s Common Stock that could result in an ownership change under Section 382 and, therefore, materially inhibit the Company’s ability to use its NOLs and other tax attributes to reduce its future income tax liability. The Protective Amendment’s transfer restrictions generally restrict any direct or indirect transfer of the Company’s common stock if the effect would be to increase the direct or indirect ownership of any Person (as defined in the Certificate of Amendment) from less than 4.75% to 4.75% or more of the Company’s common stock, or increase the ownership percentage of a Person owning or deemed to own 4.75% or more of the Company’s common stock. Any direct or indirect transfer attempted in violation of this restriction would be void as of the date of the prohibited transfer as to the purported transferee. The Protective Amendment permits the Company’s Board of Directors to approve transfers of the Company’s common stock that would otherwise violate the transfer restrictions in the Protective Amendment if it determines that the approval is in the best interests of the Company.
On January 22, 2013, the Board of Directors of the Company declared a special cash distribution to shareholders in the amount of $2.86 per share. The special cash distribution was paid to shareholders of record at the close of business on Monday, February 4, 2013. The cash distribution, totaling $78.6 million, was paid on February 15, 2013. Due to the fact that the Company has no current or accumulated earnings and profits, the cash distribution represents a return of capital to the shareholders.
The Company has adopted the provisions of ASC Topic 740 Subtopic 10 Section 05, which addresses the accounting for uncertainty in tax positions. The guidance requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year ended June 30, | ||||||||||||
(In thousands) | 2013 | 2012 | 2011 | |||||||||
Unrecognized tax benefits at beginning of year | $ | 666 | $ | 541 | $ | 90 | ||||||
Gross increases—current year tax positions | 60 | 125 | 451 | |||||||||
Unrecognized tax benefits at end of year | $ | 726 | $ | 666 | $ | 541 |
Approximately $726,000 of the total unrecognized tax benefits as of June 30, 2013, if recognized, would affect the effective tax rate. The Company does not anticipate that unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Interest and penalties related to uncertain tax positions are included as a component of income tax expense.
The Company files U.S. and various state income tax returns. The 2009, 2010, and 2011 tax years remain subject to examination by the respective tax authorities. The Company’s federal tax return and state tax returns are not currently under examination. Annual tax provisions include amounts considered necessary to pay assessments that may result from examination of the Company’s tax returns. However, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued.
(7) | Employee Deferred Savings Plan |
During fiscal years 2013, 2012 and 2011, Myrexis employees participated in a deferred savings plan which qualifies under Section 401(k) of the Internal Revenue Code. Substantially all of the Myrexis employees were covered by the plan. Myrexis made matching contributions of 50% of each employee’s contribution with the employer’s contribution not to exceed 4% of the employee’s compensation. Myrexis contributions to the plan were $4,000, $166,000, and $368,000, which are included in research and development expenses and $19,000, $70,000 and $94,000, which are included in general and administrative expenses for the three years ended June 30, 2013, 2012 and 2011, respectively, in the accompanying statements of operations and comprehensive loss..
(8) | NOL Rights Agreement |
In March 2012, the Company adopted a Tax Benefits Preservation Rights Plan in the form of a Rights Agreement designed to help protect and preserve its substantial tax attributes primarily associated with net operating loss carryforwards (NOLs) and research tax credits, under Sections 382 and 383 of the Internal Revenue Code. The Tax Benefits Preservation Rights Plan is similar to plans adopted by numerous other public companies with significant NOLs. The Tax Benefits Preservation Rights Plan replaces the Shareholder Rights Plan that Myrexis adopted in 2009, which the Myrexis Board of Directors terminated immediately prior to the adoption of the Rights Agreement.
Myrexis’ ability to generate a tax benefit through the use of its tax attributes would be substantially limited in the event of an “ownership change” under Sections 382 and 383 of the Internal Revenue Code, including if shareholders who own (or are deemed to own) 5% or more of Myrexis’ stock increase their collective ownership in Myrexis by more than 50 percentage points over a rolling three-year period. The Tax Benefits Preservation Rights Plan is intended to reduce the likelihood of an unintended 50% “ownership change” occurring through the buying and selling of Myrexis common stock. The Board of Directors believes that the plan serves the interests of all shareholders as it is designed to protect the use of its tax attributes.
As part of the plan, on March 29, 2012, Myrexis’ Board of Directors declared a dividend of one preferred share purchase right for each share of Myrexis common stock outstanding as of April 9, 2012. Any shares of Myrexis common stock issued after the record date will be issued together with the rights. The rights are not currently exercisable and initially will trade only with shares of Myrexis common stock. However, effective upon the initial public announcement of the Rights Agreement, if any person or group acquires 4.99% or more of the outstanding shares of Myrexis common stock, or if a person or group that already owned 4.99% or more of Myrexis common stock at such time acquires additional shares representing 0.1% or more of the outstanding shares of Myrexis common stock, then, subject to certain exceptions, there would be a triggering event under the plan and the rights would separate from the common stock and become exercisable for shares of Myrexis common stock having a market value equal to twice the exercise price, resulting in significant dilution in the ownership interest of the acquiring person or group. Myrexis’ Board of Directors has the discretion to exempt in advance any acquisition of common stock from the provisions of the plan if it determines that doing so would not limit or impair the availability of the NOLs. Myrexis’ Board of Directors also has the ability to terminate the plan at any time, including but not limited to in connection with a transaction, if it determines that doing so would be in the best interests of the shareholders.
The rights issued under the plan will expire on March 29, 2015. The rights may also expire on an earlier date upon the occurrence of certain events, including a determination by Myrexis’ Board that the Tax Benefits Preservation Rights Plan is no longer necessary for the preservation of tax attributes, or the beginning of a taxable year of Myrexis to which the Board determines that no tax attributes may be carried forward. The rights may also be redeemed, exchanged or terminated prior to their expiration.
(9) | Commitments and Contingencies |
Our former parent Myriad Genetics had entered into a license agreement (the “License Agreement”) for exclusive rights to utilize certain intellectual property rights related to the drug candidate Azixa with Maxim Pharmaceuticals, Inc. and Cytovia, Inc. All licensed rights of Maxim and Cytovia were subsequently acquired by EpiCept Corporation, and Maxim, Cytovia and EpiCept are collectively referred to herein as EpiCept. Pursuant to the separation agreement with MGI, Myrexis assumed all rights and obligations under the License Agreement.
In September 2011, Myrexis announced that it had suspended any further development of Azixa. On August 28, 2012, Myrexis provided EpiCept notice of termination of the License Agreement following its election to terminate all of its efforts to develop and commercialize Azixa in any major market as such products and markets are defined in the agreement. On January 4, 2013, Myrexis and EpiCept entered into an Asset Purchase Agreement (the “APA”) which expressly terminated the License Agreement and assigned to EpiCept rights in intellectual property, regulatory filings and certain other assets of Myrexis related to its Azixa development program for $1.00. The APA expressly terminates the License Agreement without further liability of either Myrexis or EpiCept. Myrexis has no further obligation for royalty or milestone payments to EpiCept. The APA provides for certain royalty and milestone payments to be made to Myrexis should EpiCept or its licensee develop and commercialize a product using intellectual property rights transferred to EpiCept under the APA.
(10) | Other Income |
Other income was $0.4 million, $0.6 million and $1.7 million for the years ended June 30, 2013, 2012 and 2011, respectively. Other income in the year ended June 30, 2013 includes $78,000 interest income and $292,000 in gains on the sale of equipment. Other income in the year ended June 30, 2012 includes interest income, realized gains on Myrexis’ marketable securities and $0.3 million in gains on the sale of equipment. Other income in the year ended June 30, 2011 includes a one-time $1.2 million grant received in November 2010 as a part of the qualifying therapeutic discovery project under section 48D of the Internal Revenue Code, interest income and realized gains on Myrexis’s marketable securities.
(11) | Reorganization |
On November 18, 2011, Myrexis announced a corporate reorganization reducing the Company’s workforce by 20%. In connection with this announcement, the Company recorded severance costs of approximately $0.6 million. These expenses are reflected in the statement of operations and comprehensive loss, including $50,000 in general and administrative and $550,000 in research and development for the year ended June 30, 2012.
On March 1, 2012, Myrexis announced an alignment of the Company’s resources following the February 2012 announcement to suspend development activities of all its preclinical and clinical programs. The alignment included a phased reduction in the Company’s workforce. In connection with the resource alignment, the Company recorded severance costs of approximately $3.6 million in the year ended June 30, 2012. Of this amount, $2.5 million was paid during the year ended June 30, 2012, and $1.1 million was accrued and paid in 2013. These expenses are reflected in the statement of operations and comprehensive loss, including $1.0 million in general and administrative and $2.6 million in research and development for the year ended June 30, 2012.
In addition in 2012, Myrexis recorded severance expenses of $0.7 million related to the departure of certain executives. These expenses are reflected in the statement of operations and comprehensive loss in general and administrative for the year ended June 30, 2012.
On May 11, 2012, Myrexis announced its Board of Directors had appointed Richard B. Brewer as President and Chief Executive Officer, and David W. Gryska as Chief Operating Officer. In addition, both Mr. Brewer and Mr. Gryska were appointed to Myrexis’ Board of Directors. In connection with these management changes, Robert J. Lollini stepped down as President and Chief Executive Officer and will continue on Myrexis’ Board for a transition period through November 15, 2012. The Company recorded severance expense of $0.8 million for Mr. Lollini in addition to severance costs previously mentioned during the year ended June 30, 2012. This severance was paid during the year ended June 30, 2012.
In conjunction with the March 2012 reorganization, the Company determined that there were indicators of impairment of certain fixed assets, based on quoted market prices, and evaluated whether the carrying value of assets with impairment indicators is recoverable. Impairment charges of $281,000 were recorded in the year ended June 30, 2012, in conjunction with the March 2012 reorganization. During the year ended June 30, 2013, management reviewed the carrying value of certain fixed assets and recorded an additional $20,000 of impairment loss. These impairment charges are reflected in general and administrative expenses in the statement of operations and comprehensive loss.
In 2012, the Company’s management committed to a plan to sell the Company’s laboratory equipment. Equipment categorized as equipment held for sale on the balance sheet at June 30, 2012 totaled $974,000. Equipment held for sale is no longer subject to depreciation, and is recorded at the lower of depreciated carrying value or fair market value less costs to sell. For the year ended June 30, 2013, the Company sold assets with a net book value of $1.2 million, recognizing a net gain of $292,000. This gain is in other income in the statements of operation and comprehensive loss.
In connection with the wind down of the Company’s operations, and the pursuit of other strategic alternatives, the Company recorded and paid $0.8 million in severance costs for the year ended June 30, 2013. These expenses, which are reflected in the statements of operations and comprehensive loss, include $763,000 in general and administrative and $16,000 in research and development for the year ended June 30, 2013. For the year ended June 30, 2012, the Company recorded severance costs of approximately $3.6 million. These expenses are reflected in the statements of operations and comprehensive loss, include $1.0 million in general and administrative and $2.6 million in research and development.
(12) | Related Party Transaction |
On February 27, 2013, Xstelos Corp., a wholly owned subsidiary of Xstelos Holdings, Inc. (“Xstelos Corp.”) and Myrexis entered into a stock purchase agreement (the “Stock Purchase Agreement”). Pursuant to terms of such stock purchase agreement, Myrexis agreed to issue and sell to Xstelos Corp. 7,000,000 shares of Myrexis’s common stock, representing approximately 20% of all outstanding Myrexis common stock after giving effect to such sale (the “Sale”). The shares were sold for an aggregate purchase price of approximately $250,000. Xstelos Corp. also agreed to provide to Myrexis services pursuant to the terms of an Intercompany Services Agreement (described below) as well as consent to Mr. Couchman serving as Myrexis’s Chief Financial Officer. Steven D. Scheiwe, a member of the Xstelos Board of Directors, serves on the Board of Directors of Myrexis.
In connection with the Sale, Myrexis entered into a letter agreement (the “Letter Agreement”) dated February 27, 2013 with Xstelos Corp. pursuant to which Myrexis granted to Xstelos Corp. an exemption under Section 29 of Myrexis’s Tax Benefits Shareholder Rights Agreement, embodying a shareholder rights plan adopted on March 29, 2012 to protect the use of Myrexis’s net operating losses and certain other tax attributes. Under the exemption, Xstelos Corp. must not at any time represent more than the lesser of (i) 30% of Myrexis‘s outstanding common stock and (ii) the maximum percentage ownership of Myrexis’s outstanding common stock from time to time such that an ownership change would not have occurred for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.
On February 27, 2013, Xstelos Corp. and Myrexis entered into an Intercompany Services Agreement. Pursuant to the Intercompany Services Agreement, Xstelos Corp. agreed to provide Myrexis with certain administrative, management, accounting and information services for one year in exchange for a fee of $25,000. The Intercompany Services Agreement will terminate upon 30 days written notice given to the other party. $6,250 in fees were accrued or paid for the year ended June 30, 2013.
(13) Quarterly Financial Data (Unaudited)
Quarter Ended | ||||||||||||||||
In thousands | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | ||||||||||||
Research revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
Total revenue | — | — | — | — | ||||||||||||
Costs and expenses: | ||||||||||||||||
Research and development expense | (4 | ) | 61 | 117 | 291 | |||||||||||
General and administrative expense | 157 | 3,150 | 4,734 | 3,485 | ||||||||||||
Total costs and expenses | 153 | 3,211 | 4,851 | 3,776 | ||||||||||||
Operating loss | (153 | ) | (3,211 | ) | (4,851 | ) | (3,776 | ) | ||||||||
Other income (expense), net | 1 | (27 | ) | 41 | 355 | |||||||||||
Net loss | $ | (152 | ) | $ | (3,238 | ) | $ | (4,810 | ) | $ | (3,421 | ) |
Quarter Ended | ||||||||||||||||
June 30, 2012 | March 31, 2012(1) | December 31, 2011 | September 30, 2011 | |||||||||||||
Research revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
Total revenue | — | — | — | — | ||||||||||||
Costs and expenses: | ||||||||||||||||
Research and development expense | 558 | 5,603 | 3,769 | 4,300 | ||||||||||||
General and administrative expense | 4,129 | 5,216 | 3,841 | 4,385 | ||||||||||||
Total costs and expenses | 4,687 | 10,819 | 7,610 | 8,685 | ||||||||||||
Operating loss | (4,687 | ) | (10,819 | ) | (7,610 | ) | (8,685 | ) | ||||||||
Other income, net | 266 | 127 | 100 | 99 | ||||||||||||
Net loss | $ | (4,421 | ) | $ | (10,692 | ) | $ | (7,510 | ) | $ | (8,586 | ) |
(1) | Includes one-time severance costs related to corporate reorganizations of $3.6 million for the period ending March 31, 2012. |
F-21 |
EXHIBIT INDEX
Exhibit
| Exhibit Description |
| with this Report | Incorporated by | Filing | SEC File / | |||||||
2.1 | Separation and Distribution Agreement, dated June 30, 2009, by and between the Registrant and Myriad Genetics, Inc. | 8-K (Exhibit 2.1) | 7/7/09 | 001-34275 | |||||||||
3.1 | Amended and Restated Certificate of Incorporation of the Registrant | 10-K (Exhibit 3.1) | 9/13/10 | 001-34275 | |||||||||
3.1.1 | Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock | 10-K (Exhibit 3.1.1) | 9/13/10 | 001-34275 | |||||||||
3.1.2 | Certificate of Amendment to Restated Certificate of Incorporation of the Registrant | 10-K (Exhibit 3.1.2) | 9/13/10 | 001-34275 | |||||||||
3.1.3 | Amended Certificate of Designation, Rights and Preferences of Series A Junior Participating Preferred Stock | 8-K (Exhibit 3.1) | 3/30/12 | 001-34275 | |||||||||
3.1.4 | Certificate of Amendment to Restated Certificate of Incorporation of the Registrant | 8-K (Exhibit 3.1) | 9/13/10 | 001-34275 | |||||||||
3.2 | Amended and Restated Bylaws of the Registrant | 10-K (Exhibit 3.2) | 9/13/10 | 001-34275 | |||||||||
4.1 | Form of Common Stock Certificate of the Registrant | 10-K (Exhibit 4.1) | 9/13/12 | 001-34275 | |||||||||
4.2 | Shareholder Rights Agreement between the Registrant and American Stock Transfer & Trust Company, LLC, dated June 30, 2009, which includes as Exhibit B the form of Right Certificate | 8-A (Exhibit 4.1) | 6/30/09 | 001-34275 | |||||||||
4.2.1 | First Amendment, dated March 29, 2012, to Shareholder Rights Agreement by and between the Registrant and American Stock Transfer & Trust Company, LLC, dated June 30, 2009 | 8-K (Exhibit 4.1) | 3/30/12 | 001-34275 | |||||||||
4.3 | Tax Benefits Preservation Rights Agreement by and between the Registrant and American Stock Transfer & Trust Company, LLC, dated March 29, 2012, which includes as Exhibit B the Form of Right Certificate | 8-K (Exhibit 4.2) | 3/30/12 | 001-34275 | |||||||||
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*10.9 | Separation Agreement by and between the Registrant and Adrian N. Hobden, dated July 21, 2011 | 8-K (Exhibit 10.1) | 7/22/11 | 001-34275 | ||||||||
*10.10 | Offer Letter by and between the Registrant and Robert J. Lollini, dated September 9, 2011 | 8-K (Exhibit 10.1) | 9/12/11 | 001-34275 | ||||||||
*10.11 | First Amendment, dated September 9, 2011, to Executive Severance and Change in Control Agreement by and between the Registrant and Robert J. Lollini, dated February 1, 2010 | 8-K (Exhibit 10.2) | 9/12/11 | 001-34275 | ||||||||
*10.12 | Offer Letter by and between the Registrant and Andrea Kendell, dated September 22, 2011 | 8-K/A (Exhibit 10.1) | 9/28/11 | 001-34275 | ||||||||
*10.13 | Executive Severance and Change in Control Agreement by and between the Registrant and Andrea Kendell, dated September 22, 2011 | 8-K/A (Exhibit 10.2) | 9/28/11 | 001-34275 |
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10.14 | Agreement by and between the Registrant and Jason M. Aryeh, dated October 18, 2011 | 8-K (Exhibit 10.2) | 10/21/11 | 001-34275 | ||||||||
*10.15 | Separation Agreement by and between the Registrant and Wayne Laslie, dated December 13, 2011 | 8-K (Exhibit 10.1) | 12/14/11 | 001-34275 | ||||||||
*10.16 | Separation and Consulting Agreement by and between the Registrant and Robert J. Lollini, dated May 11, 2012 | 8-K (Exhibit 10.1) | 5/11/12 | 001-34275 | ||||||||
*10.17 | Employment Agreement by and between the Registrant and Richard B. Brewer, dated May 9, 2012 | 8-K (Exhibit 10.2) | 5/11/12 | 001-34275 | ||||||||
*10.18 | Employment Agreement by and between the Registrant and David W. Gryska, dated May 9, 2012 | 8-K (Exhibit 10.3) | 5/11/12 | 001-34275 | ||||||||
Other Material Agreements | ||||||||||||
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10.21 | Agreement by and among the Registrant and MSMB Healthcare LP, MSMB Healthcare Investors LLC, MSMB Healthcare Management LLC, and MSMB Capital Management LLC, dated October 18, 2011 | 8-K (Exhibit 10.1) | 10/21/11 | 001-34275 | ||||||||
Letter Agreement by and between the Registrant and Martin Shkreli, dated October 18, 2011 | 8-K (Exhibit 10.3) | 10/21/11 | 001-34275 | |||||||||
Letter Agreement by and among the Registrant, Bulldog Investors, and Brooklyn Capital Management LLC, dated August 6, 2012 | 8-K (Exhibit 10.1) | 8/10/12 | 001-34275 | |||||||||
Letter Agreement by and among the Registrant, MSMB Healthcare LP, MSMB Healthcare Investors LLC, MSMB Healthcare Management LLC and MSMB Capital Management LLC, dated August 8, 2012 | 8-K (Exhibit 10.2) | 8/10/12 | 001-34275 | |||||||||
Letter Agreement by and between the Registrant and Martin Shkreli, dated August 8, 2012 | 8-K (Exhibit 10.3) | 8/10/12 | 001-34275 | |||||||||
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10.26 | Settlement Agreement, dated December 20, 2012, between and among Alzheimer’s Institute of America, Inc., and the Registrant, Myriad Genetics, Inc., Myriad Therapeutics, Inc., Mayo Clinic Jacksonville and Mayo Foundation for Medical Education and Research. | 10-Q (Exhibit 10.2) | 2/08/13 | 001-34275 | ||||||||
10.27 | Stock Purchase Agreement by and between the Registrant and Xstelos Corp., dated February 27, 2013 | 10-Q (Exhibit 10.1) | 5/10/13 | 001-34275 | ||||||||
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31.1 | Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||
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Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 | X | |||||||||||
32.1 | Certification of the Chief Executive Officer and the Chief Financial Officer under Section 906 of the Sarbanes- Oxley Act of 2002 |
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101** | The following materials from Myrexis, Inc.’s Annual Report on Form 10-K for the fiscal year ended June 30, |
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* | Management contract, compensatory plan or arrangement. |
† | Confidential portions of these documents have been filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. |
** | Users of the XBRL data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
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