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●preclinical laboratory tests and animal tests conducted in compliance with FDA’s good laboratory practice requirements;
| development, manufacture and testing of active pharmaceutical product and dosage forms suitable for human use in compliance with current good manufacturing practices, or GMP; |
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development, manufacture and testing of active pharmaceutical product and dosage forms suitable for human use in compliance with current good manufacturing practices, or GMP;
| the submission to the FDA of an investigational new drug application, or IND, for human clinical testing, which must become effective before human clinical trials may begin; |
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●the submission to the FDA of an investigational new drug application, or IND, for human clinical testing, which must become effective before human clinical trials may begin;
● adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for its specific intended use(s); ● the submission to the FDA of a New Drug Application, or NDA; and ● FDA review and approval of the NDA. | adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for its specific intended use(s); |
| the submission to the FDA of a New Drug Application, or NDA; and |
| FDA review and approval of the NDA. |
Preclinical tests include laboratory evaluation of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate. The conduct of the pre-clinical tests must comply with federal regulations and requirements including good laboratory practices. We must submit the results of the preclinical tests, together with manufacturing information, analytical data and a proposed clinical trial protocol to the FDA as part of an IND, which must become effective before we may commence human clinical trials. The IND will automatically become effective 30 days after its receipt by the FDA, unless the FDA raises concerns or questions before that time about the conduct of the proposed trials. In such a case, we must work with the FDA to resolve any outstanding concerns before clinical trials can proceed. We cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such trials. The study protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board for approval. An institutional review board may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the institutional review board’s requirements or may impose other conditions.
Clinical trials involve the administration of the product candidate to humans under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials are typically conducted in three sequential phases, though the phases may overlap or be combined. In Phase 1, the initial introduction of the drug into healthy human subjects, the drug is usually tested for safety (adverse effects), dosage tolerance and pharmacologic action, as well as to understand how the drug is taken up by and distributed within the body. Phase 2 usually involves studies in a limited patient population (individuals with the disease under study) to:
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evaluate preliminarily the efficacy of the drug for specific, targeted conditions;
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●determine dosage tolerance and appropriate dosage as well as other important information about how to design larger Phase 3 trials; and
| evaluate preliminarily the efficacy of the drug for specific, targeted conditions; |
| determine dosage tolerance and appropriate dosage as well as other important information about how to design larger Phase 3 trials; and |
| identify possible adverse effects and safety risks. |
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identify possible adverse effects and safety risks. Phase 3 trials generally further evaluate clinical efficacy and test for safety within an expanded patient population. The conduct of the clinical trials is subject to extensive regulation, including compliance with good clinical practice regulations and guidance.
The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. We may also suspend clinical trials at any time on various grounds.
The results of the preclinical and clinical studies, together with other detailed information, including the manufacture and composition of the product candidate, are submitted to the FDA in the form of an NDA requesting approval to market the drug.drug as well as a user fee of over $2 million. FDA approval of the NDA is required before marketing of the product may begin in the U.S. If the NDA contains all pertinent information and data, the FDA will “file” the application and begin review. The FDA may “refuse to file” the NDA if it does not contain all pertinent information and data. In that case, the applicant may resubmit the NDA when it contains the missing information and data. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of new drug applications. Most such applications for non-priority drug products are reviewed within 10 months. The review process, however, may be extended by FDA requests for additional information, preclinical or clinical studies, clarification regarding information already provided in the submission, or submission of a risk evaluation and mitigation strategy. The FDA may refer an application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. Before approving an NDA, the FDA will typically inspect the facilities at which the product candidate and/or the active pharmaceutical ingredient is manufactured and will not approve the product candidate unless GMP compliance is satisfactory. FDA also typically inspects facilities responsible for performing animal testing, as well as clinical investigators who participate in clinical trials. The FDA may refuse to approve an NDA if applicable regulatory criteria are not satisfied, or may require additional testing or information. The FDA may also limit the indications for use and/or require post-marketing testing and surveillance to monitor the safety or efficacy of a product. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
The testing and approval process requires substantial time, effort and financial resources, and our product candidates may not be approved on a timely basis, if at all. The time and expense required to perform the clinical testing necessary to obtain FDA approval for regulated products can frequently exceed the time and expense of the research and development initially required to create the product. The results of preclinical studies and initial clinical trials of our product candidates are not necessarily predictive of the results from large-scale clinical trials, and clinical trials may be subject to additional costs, delays or modifications due to a number of factors, including difficulty in obtaining enough patients, investigators or product candidate supply. Failure by us to obtain, or any delay in obtaining, regulatory approvals or in complying with requirements could adversely affect the commercialization of product candidates and our ability to receive product or royalty revenues.
Other Regulatory Requirements
After approval, drug products are subject to extensive continuing regulation by the FDA, which include company obligations to manufacture products in accordance with Good Manufacturing Practice, or GMP, maintain and provide to the FDA updated safety and efficacy information, report adverse experiences with the product, keep certain records and submit periodic reports, obtain FDA approval of certain manufacturing or labeling changes, and comply with FDA promotion and advertising requirements and restrictions. Failure to meet these obligations can result in various adverse consequences, both voluntary and FDA-imposed, including product recalls, withdrawal of approval, restrictions on marketing, and the imposition of civil fines and criminal penalties against the NDA holder. In addition, later discovery of previously unknown safety or efficacy issues may result in restrictions on the product, manufacturer or NDA holder.
We and any manufacturers of our products are required to comply with applicable FDA manufacturing requirements contained in the FDA’s GMP regulations. GMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation. The manufacturing facilities for our products must meet GMP requirements to the satisfaction of the FDA pursuant to a pre-approval inspection before we can use them to manufacture our products. We and any third-party manufacturers are also subject to periodic inspections of facilities by the FDA and other authorities, including procedures and operations used in the testing and manufacture of our products to assess our compliance with applicable regulations.
With respect to post-market product advertising and promotion, the FDA imposes a number of complex regulations on entities that advertise and promote pharmaceuticals, which include, among others, standards for direct-to-consumer advertising, promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet. Failure to comply with FDA requirements can have negative consequences, including adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.
Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.
Adverse event reporting and submission of periodic adverse experience reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, risk evaluation and minimization strategies, action plans and surveillance, as well as annual reports on matters relating to the NDA, to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product.
Outside the United States, our ability to market a product is contingent upon receiving marketing authorization from the appropriate regulatory authorities. The requirements governing marketing authorization, pricing and reimbursement vary widely from jurisdiction to jurisdiction. At present, foreign marketing authorizations are applied for at a national level, although within the European Union registration procedures are available to companies wishing to market a product in more than one European Union member state.
We are also subject to various environmental, health and safety regulations including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials. From time to time, and in the future, our operations may involve the use of hazardous materials.
Orphan Drugs
Under the Orphan Drug Act of 1983, the FDA may grant orphan drug designation to drugs or biologics intended to treat a rare disease or condition, which is generally defined as a disease or condition that affects fewer than 200,000 individuals in the United States. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first applicant to receive FDA approval for a particular active ingredient to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the United States for that product, for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug or biologic for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee.
Non-U.S. Regulation
Before our products can be marketed outside of the United States, they are subject to regulatory approval of the respective authorities in the country in which the product should be marketed. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary widely from country to country. No action can be taken to market any product in a country until an appropriate application has been approved by the regulatory authorities in that country. The current approval process varies from country to country, and the time spent in gaining approval varies from that required for FDA approval. In certain countries, the sales price of a product must also be approved. The pricing review period often begins after market approval is granted. Even if a product is approved by a regulatory authority, satisfactory prices might not be approved for such product.
In Europe, marketing authorizations may be submitted at a centralized, a decentralized or national level; however, the centralized procedure is mandatory for the approval of biotechnology products and provides for the grant of a single marketing authorization that is valid in all European Union member states. There can be no assurance that the chosen regulatory strategy will secure regulatory approval on a timely basis or at all.
While we intend to market our products outside the United States in compliance with our respective license agreements, we have not made any applications with non-U.S. authorities and have no timeline for such applications or marketing.
Properties
We entered into a lease agreement in August 2012 as amended in August 2015 with a lease term that ended on July 31,September 30, 2015, for 5,955 square feet of office space at 11588 Sorrento Valley Road in San Diego, California. FutureUpon expiration of the lease obligations forin September 2015, prior to the monthavailability of August amountour new facility, we continued to $11,017. We currently lease this space on a month-to-month basis.basis from October 2015 through January 2016 at the rate of $11,017 per month.
WeIn September 2015, we entered into a lease agreement with AGP Sorrento Business Complex, L.P. for a lease of approximately 14,971 rentable square feet of office and research facilities located at 11535 Sorrento Valley Road, San Diego, California 92121. We anticipate92121 to serve as our corporate offices and laboratories. Due to the fact that such space shallcertain tenant improvements needed to be made to the premises before we could take occupancy, the facilities were not ready for occupancy in Februaryuntil early 2016. We intend on movingmoved from our existingprevious facility at 11588 Sorrento Valley Road, into thisour new space at such time.in and took occupancy on February 4, 2016. Monthly rent is expected to startcommenced upon occupancy at $2.38 per square foot, totaling $35,631, and will escalate at an annual rate of 3% a year over the six-year term of the lease.lease as set forth in the Lease.
Legal Proceedings
From time to time, we have become involved in various legal proceedings that arise in the ordinary course of business or otherwise. Legal proceedings are subject to inherent uncertainties as to timing, outcomes, costs, expenses and time expenditures by our management and others on our behalf. Although there can be no assurance, based on information currently available, we believe that the outcome of legal proceedings that are pending or threatened against us will not have a material effect on our financial condition. However, the outcome of any of these matters is neither probable nor reasonably estimable.
On May 30, 2014,September 18, 2015, an Order and Final Judgment was entered by the Superior Court of the State of California, approving a settlement of a class action lawsuit was commenced on May 30, 2014, in Santa Clara County Superior Court, State of California, on behalf of Cadillac Partners and others similarly situated, naming as defendants, MabVax Therapeutics, the Companyus and the Company’sour directors, Hudson Bay Capital Management LP, Bio IP Ventures LLC, Hudson Bay Master Fund Ltd., and Hudson Bay IP Opportunities Master Fund LP, together the “Parties”. The suit alleged, alleging the defendants breached certain fiduciary duties, or aided and abetted a breach of fiduciary duties, in connection with the Company’s mergerour Merger with MabVax Therapeutics. In support of their purported claims, the plaintiff alleged, among other things, that the Company’s board has historically failed to fulfill its fiduciary duty to its stockholders, and claiming with respect to the Series B Private Placement and the Merger, that such transactions involved an inadequate sales process and included preclusive deal protection devices, and that the Company’s board of directors would receive personal benefits not available to its public stockholders as a result of the Merger. The plaintiff sought to enjoin the Merger and obtain damages as well as attorneys’ and expert fees and costs.
On June 29, 2014, the parties entered into a Stipulation and Settlement (the “Settlement”), pursuant to which the Company agreed to file with the SEC certain supplemental disclosures No expenses were incurred in 2016 in connection with the merger. The Settlement was subject to certain confirmatory discovery to be undertaken by the plaintiff and to the Parties’ agreement on the payment of the plaintiff’s attorneys’ fees and expenses.
On July 16, 2014, the Company and all other parties to the litigation entered into an agreement which, if consummated, would settle the litigation (the “Proposed Settlement”). Among many other terms, under the Proposed Settlement the Company and all defendants will receive a broad release of any and all claims pertaining to the Series B Private Placement, the Merger, the prior disclosure and a wide variety of other matters. The Proposed Settlement also calls for the parties to ask the court to, among other things, enter orders enjoining other stockholders from bringing similar actions, certifying the putative settlement class, and approving the Proposed Settlement as a fair, final, and binding resolution of the litigation. Under the Proposed Settlement, the Company and the other defendants have expressly denied the allegations of the complaint and denied engaging in any other misconduct, nor will any of them make any paymentthis lawsuit or in any respect amend the negotiated terms of the since-consummated Series B Private Placement and merger. Finally, under the Proposed Settlement, the Company and the other defendants have not agreed to pay any legal fees, or reimburse any expenses, allegedly incurred by the plaintiffs who filed the complaint; instead, the Company expects that counsel for those plaintiffs will present any such disputed claim for legal fees and expenses to the court for resolution.
On April 20, 2015, the Parties made an application for an Order for Notice and Scheduling of Hearing of Settlement in accordance with a Stipulation of Settlement dated as of April 20, 2015 (the “Action”), which sets forth the terms and conditions for settlement and which provides for dismissal of the Action with prejudice. The Order after Hearing on June 12, 2015, provided preliminary approval of the settlement that was agreed to by the Parties, in which the Company provided supplemental disclosures in the definitive proxy filed with the SEC on June 30, 2014. Notice of the action as a class action was sent to class members in July 2015.
On September 18, 2015, an Order and Final Judgment was entered by the Superior Court of the State of California, approving the settlement that was agreed upon by both parties and closing the case. The Company anticipates that there will be no additional future expenses incurred in this action by the Company after the September 30, 2015 balance sheet date which would not be offset by insurance.settlement.
Employees
As of January 25, 2016,May 11, 2017, we had 1725 full time employees including three part timeand two part-time employees. Our employees are not represented by any collective bargaining unit, and we believe our relations with our employees are good.
Name | | Position |
| | |
| J. David Hansen | | Chairman of the Board of Directors, President and Chief Executive Officer |
| | | |
| Kenneth M. Cohen | | Director (1)(2)(3)(4) |
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| Jeffrey F. Eisenberg | | Director (4) |
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| Robert E. Hoffman | | Director (1)(2)(3)(4) |
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| Philip O. Livingston, M.D. | | Director, Chief Science Officer |
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| Paul V. Maier | | Director (1)(3)(4) |
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| Jeffrey V. Ravetch, M.D., Ph.D. | | Director (2)(4) |
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| Thomas C. Varvaro | | Director (1)(2)(3)(4) |
| | |
| (1) | Member of our audit committee |
| (2) | Member of our compensation committee |
| (3) | (3)
(4)
| Member of our nominating and governance committee |
| (4) | Independent member of the board |
The following is a brief summary of the background of each of our directorsdirectors:
J. David Hansen, 64,65, serves as our President, Chief Executive Officer (“CEO”), and as Chairman of our Board of Directors and, prior to the merger with Telik, Inc. on July 8, 2014 (the “Merger”), served as MabVax’s President, Chief Executive Officer,CEO, and Chairman of itsthe Board of Directors of MabVax Therapeutics, Inc. after co-founding MabVaxthe Company in 2006. Mr. Hansen is an experienced biopharmaceutical executive with more than 30 years of industry experience. He has held senior management roles in both private start-up companies as well as small to mid-sized public companies. His senior level experience includes executive management, finance and accounting, corporate development, sales and marketing. During his career, Mr. Hansen has executed a wide variety of in and out licensing agreements, research and development collaborations, joint ventures, divestitures, and acquisitions. Mr. Hansen has developed expertise in the therapeutic areas of immunology, oncology, and infectious disease. From 1998Mr. Hansen gained executive management experience at several life sciences companies prior to 2006, Mr. Hansenco-founding the Company that make him particularly suited for his leadership role in the Company. For example, he was a corporate officer of Avanir Pharmaceuticals. HePharmaceuticals where he held the titles of Vice President of Commercial Development, Senior Vice President of Corporate Development, and President and Chief Operations Officer of the Avanir Subsidiarysubsidiary Xenerex Biosciences. From 1989Prior to 1999Avanir, Mr. Hansen served in multiple roles at Dura Pharmaceuticals including National Sales Director, Director of Marketing, and Director of Business Development. He has additional management experience with Merck & Co. (Schering-Plough), Key Pharmaceuticals, and Bristol Myers Squibb. We believe that Mr. Hansen’s extensive experience in leadership roles with public and private pharmaceutical companies in a leadership role qualifies him to serve as the Chairman of our Board of Directors and as our President and Chief Executive Officer.
Kenneth M. Cohen, 6061,, serves as a member of our Board of Directors and, prior to the merger,Merger, served as a member of MabVax’sthe Board of Directors commencing inof MabVax Therapeutics, Inc. since July of 2014. He is anSince 2007, Mr. Cohen has served either as a board member, executive officer or advisor to various companies, entrepreneurs and investors in the life sciences area. From January 2011 to August 2014, he served as a member of the Board of Directors of Adamis Pharmaceuticals Corporation (Nasdaq: ADMP). He was a co-founder of publicly held Somaxon Pharmaceuticals, and served as its President and Chief Executive OfficerCEO from August 2003 through December 2007 and continued as a director until June 2008. Previously, he was an independent advisorPrior to Somaxon Pharmaceuticals, Mr. Cohen gained executive management and board experience through various biotechnology and pharmaceutical companies, entrepreneurs and investors, including Synbiotics Corporation, Applied NeuroSolutions, Inc. and Highbridge Capital Management. From May 1996 to April 2001,executive positions that make him suitable for membership on the Board of Directors of the Company. For example, he was President and Chief Executive OfficerCEO of Synbiotics Corporation, a veterinary diagnostics company. From March 1995 to February 1996, Mr. Cohen wasCorporation; Executive Vice President and Chief Operating Officer for Canji Incorporated, a human gene-therapy company until its acquisitionthat was acquired by Schering-Plough Corporation in February 1996. Prior to joining Canji, he wasCorporation; Vice President of Business Affairs at Argus Pharmaceuticals, Inc.; and Vice President of Marketing and Business Development for LifeCell Corporation. He served as a member of the Board of Directors of Adamis Pharmaceuticals Corporation (a public pharmaceutical company) from January 2011 until August 2014. Mr. Cohen began his career at Eli Lilly and Company in 1978, where, among many different responsibilities over ten years, he directed business planning for the Medical Instrument Systems Division and managed the launch of Prozac. He received an A.B. in biology and chemistry from Dartmouth College and an M.B.A. from the Wharton School of Thethe University of Pennsylvania. We highly value Mr. Cohen’s significant industry expertise, developed through his career as a senior professional at several leading pharmaceutical companies. We believe that Mr. Cohen’s 20 years of experience serving as an executive officer including chief executive officer of several life sciences companies, and serving as a member of the board of several life sciences companies qualifies him to serve as a member of the Board of Directors.
Jeffrey F. Eisenberg, 51, has served as a member of our Board of Directors since February 2016. Mr. Eisenberg has served in a variety of senior management positions, and has developed significant experience in the areas of corporate transactions, strategic alliances, product development, commercialization, manufacturing and talent management. From July 2016 to the present, Mr. Eisenberg has served as a director of Xenetic Biosciences, Inc., a biotech company based in Lexington, MA, and from December 2016 to the present, Mr. Eisenberg has served as Chief Operating Officer of Xenetic. From November 1998 to December 2015, Mr. Eisenberg held various executive management positions including President, CEO and a board member of Noven Pharmaceuticals, Inc., the U.S. prescription pharmaceutical division of Hisamitsu Pharmaceutical Inc., a Japanese pharmaceutical company and the world's largest manufacturer of transdermal drug patches. Mr. Eisenberg led the post-acquisition integration of JDS Pharmaceuticals, a private specialty pharmaceutical company purchased by Noven in 1997, as well as the integration of Noven and Hisamitsu following the 2009 acquisition. From 2007 to August 2014 Mr. Eisenberg also served as President of Novogyne Pharmaceuticals, a Women's Health commercial joint venture between Noven and Novartis Pharmaceuticals Corporation. Mr. Eisenberg was appointed President and Chief Executive Officer of Noven following Hisamitsu's acquisition of Noven. Prior to Noven Pharmaceuticals, Inc., Mr. Eisenberg gained extensive legal experience serving as Associate General Counsel and then as Acting General Counsel of IVAX Corporation, at the time a publicly-traded pharmaceutical company with global operations. Prior to serving at IVAX, Mr. Eisenberg was a lawyer in the corporate securities department of the Florida law firm of Steel Hector & Davis, where he began his professional career in 1990.
Mr. Eisenberg is an expert in corporate governance, having advised the boards of IVAX, Noven and others through several significant internal and external issues, including mergers and acquisitions, corporate financings, strategic alliances, CEO transitions, securities class action lawsuits, FDA warning letters and consent decrees, and development and implementation of corporate governance policies. Mr. Eisenberg holds a BS, Economics degree from the Wharton School of the University of Pennsylvania, and a JD degree from Columbia University Law School. We believe that Mr. Eisenberg’s extensive experience in corporate transactions, product development, corporate governance and executive leadership, qualifies him to serve as a member of our Board of Directors.
Robert E. Hoffman, 50,51, has served as a member of our Board of Directors since September 2014. Mr. Hoffman is the Executive Vice President and Chief Financial Officer (“CFO”) of AnaptysBio,Innovus Pharmaceuticals, Inc. a position he has held since July 2015. From August 2011 to June 2012, and from September 2014 to June 2015,2016. Mr. Hoffman servedwas CFO of AnaptysBio from July 2015 to September 2016. He was part of the founding management team of Arena Pharmaceuticals, Inc. (Nasdaq: ARNA), a biopharmaceutical company, in 1997, serving as Senior Vice President, Finance and Chief Financial OfficerCFO until July 2015, except for the period of Arena Pharmaceuticals, Inc., a publicly traded biopharmaceutical company, or Arena. From August 1997 to March 2011, Mr. Hoffman served in various other executive and senior management positions, including Vice President, Finance and Chief Accounting Officer. From March 2011 to August 2011, Mr. Hoffmanwhere he served as Chief Financial OfficerCFO for Polaris Group, a biopharmaceutical drug company. Mr. Hoffman is currently a member of the board of directors of CombiMatrix Corporation (Nasdaq: CBMX), a molecular diagnostics company and Kura Oncology, Inc. (Nasdaq: KURA), a biopharmaceuticalbiotechnology company. He also currently serves aswas a member of the Financial Accounting Standards Board’s Small Business Advisory Committee until 2015 and is a member of the steering committee of the Association of Bioscience Financial Officers. In addition, Mr. Hoffman is a member and a former director and President of the San Diego Chapter of Financial Executives International. Mr. Hoffman holds areceived his B.B.A. from St. Bonaventure University, and is licensed as a C.P.A. (inactive) in the State of California. We believe that Mr. Hoffman’s 16 years ofextensive experience in serving as an executive officer of a publicly traded life sciences company and servicefinancial matters as a member ofchief financial officer in the board of directors of two life sciences companiesbiopharmaceutical industry qualifies him to serve as a member of our Board of Directors, and as an Audit Committee financial expert.expert.
Philip O. Livingston, M.D.,73,74, serves as a member of our Board of Directors and our Chief Science Officer and, prior to the merger,Merger, served as a member of MabVax’sthe Board of Directors and its Chief Science Officer of MabVax Therapeutics, Inc. since 2012. He received his MD degree from Harvard Medical School and was Professor of Medicine in the Joan and Sanford Weill Medical College at Cornell University and Attending Physician and Member in Memorial Sloan-Kettering Cancer Center where he treated melanoma patients and ran the Cancer Vaccinology Laboratory research lab for over 30 years until his retirement from MSK October 1, 2011. Dr. Livingston’s research focused on: identification of suitable targets for immunotherapy of a variety of cancers, construction of polyvalent conjugate vaccines specifically designed to augment antibody responses against these targets, and identification of optimal immunological adjuvants to further augment the potency of these vaccines. He has over 150approximately 140 peer-reviewed publications and 47 issued and 3 pending patents concerning cancer vaccines. Recently, Dr. Livingston helped establish MabVax Therapeutics, Inc., and another biotech company, Adjuvance Technologies, Inc. MabVax supports two randomized Phase II trials with these MSK polyvalent vaccines and establishment of human monoclonal antibodies from the blood of immunized patients. We believe that Dr. Livingston’s extensive expertise in immunotherapy qualifies him to serve as a member of our Board of Directors and our Chief Science Officer.
Paul V. Maier, 68,69, serves as a member ofjoined our Board of Directors and served as the Chief Financial Officer of Sequenom, Inc., (a public biotechnology company) from November of 2009 through June ofin July 2014. Prior to joining Sequenom, Mr. Maier served as Senior Vice President and Chief Financial Officer of Ligand Pharmaceuticals, Inc. from 1992 until 2007, where he helped build Ligand from a venture stage company to a commercial, integrated biopharmaceutical organization. Prior to joining Ligand, he spent six years in various management and finance positions at ICN Pharmaceuticals. Since 2007, Mr. Maier has served as a member of the Board of Directors of International Stem Cell Corporation (a public life sciences company)(OTCQB: ISCO) and currently serves as the Chairperson of its Audit Committee and as a member of its Compensation and Governance Committees. Since 2012 Mr. Maier also serveshas served as Chairman of the Audit Committee and a member of the Governance Committee of the Board of Directors of Apricus Biosciences, Inc (a public pharmaceutical company)Inc. (Nasdaq: APRI). Since 2015, Mr. Maier has served as Chairman of the Audit Committee and member of the Compensation Committee of the Board of Directors of Ritter Pharmaceuticals (Nasdaq: RTTR). Mr. Maier also serves as a Director of Biological Dynamics, and Ritter Pharmaceuticals, botha private life science companies.company. From 2009 to June 2014, Mr. Maier served as the CFO of Sequenom, Inc., (acquired by Laboratory Corporation of America Holdings). Prior to Sequenom, Inc., Mr. Maier gained executive management experience through various management positions that make him suitable for membership on the Board of Directors of the Company. For example, Mr. Maier served as Senior Vice President and CFO of Ligand Pharmaceuticals, Inc., where he helped build Ligand from a venture stage company to a commercial, integrated biopharmaceutical organization. Prior to Ligand Pharmaceuticals, Inc., he held various management and finance positions at ICN Pharmaceuticals. Mr. Maier received his M.B.A. from Harvard Business School and a B.S. from Pennsylvania State University. We believe that Mr. Maier’s over 2025 years of experience in life sciences as a chief financial officer and serving on the board of several life sciences public companies qualifies him to serve as a member of the Board of Directors and as chair of the Audit Committee.
Jeffrey V. Ravetch, M.D., Ph.D., 6465, is currentlyserves as a member of our Board of Directors and, prior to the Merger, served as a member of the Board of Directors of MabVax Therapeutics, Inc. since March 2014. Dr. Ravetch has served as the Theresa and Eugene Lang Professor at the Rockefeller University and Head of the Leonard Wagner Laboratory of Molecular Genetics and Immunology since 1997. Prior to the merger, Dr. Ravetch served as a member of the MabVax Board of Directors commencing March 2014.
Dr. Ravetch, a native of New York City, received his undergraduate training in molecular biophysics and biochemistry at Yale University, earning his B.S. degree in 1973, working with Donald M. Crothers on the thermodynamic and kinetic properties of synthetic oligoribonucleotides. Dr. Ravetch continued his training at the Rockefeller University—Cornell Medical School MD/Ph.D. program, earning his doctorate in 1978 in genetics with Norton Zinder and Peter Model, investigating the genetics of viral replication and gene expression for the single stranded DNA bacteriophage f1 and in 1979 he earned his M.D. from Cornell University Medical School. Dr. Ravetch pursued postdoctoral studies at the NIH with Phil Leder where he identified and characterized the genes for human antibodies and the DNA elements involved in switch recombination. From 1982 to 1996 Dr. Ravetch was a member of the faculty of Memorial Sloan-Kettering Cancer Center and Cornell Medical College. His laboratory has focused on the mechanisms by which antibodies mediate their diverse biological activities in vivo, establishing the pre-eminence of FcR pathways in host defense, inflammation and tolerance and describing novel inhibitory signaling pathways to account for the paradoxical roles of antibodies as promoting and suppressing inflammation. His work has been extended into clinical applications for the treatment of neoplastic, inflammatory and infectious diseases.
Dr. Ravetch has received numerous awards including the Burroughs-Wellcome Scholar Award, the Pew Scholar Award, the Boyer Award, the NIH Merit Award, the Lee C. Howley, Sr. Prize (2004), the AAI-Huang Foundation Meritorious Career Award (2005), the William B. Coley Award (2007), the Sanofi-Pasteur Award (2012) and the Gairdner International Prize (2012). He has presented numerous named lectures including the Kunkel Lecture, the Ecker Lecture, the Goidl Lecture, the Grabar Lecture, the Dyer Lecture and the Heidelberger/Kabat Lecture. He has received an honorary doctorate from Freidrich-Alexander University, Nuremberg/Erlangen. He is a member of National Academy of Sciences (2006), the Institute of Medicine (2007), a Fellow of the American Academy of Arts and Sciences (2008) and a Fellow of the American Association for the Advancement of Science (2009).
Dr. Ravetch has contributed extensively to the scientific community by serving as a member of the Scientific Advisory Boards of the Cancer Research Institute, the Irvington Institute for Medical Research and the Damon Runyon Foundation. He has been active in biotechnology for the last two decades, having served as a consultant or member of the Scientific Advisory Boards of Millennium Pharmaceuticals, Exelexis Pharmaceuticals, Regeneron Pharmaceuticals, Medimmune, Genentech, Novartis, Merck, Micromet, Xencor, Suppremol, Igenica, Portola Pharmaceuticals and Momenta Pharmaceuticals, Inc. We believe Dr. Ravetch’s extensive scientific knowledge and training qualify him to serve as a member of our Board of Directors.
Thomas C. Varvaro, 4647, has served as a member of our Board of Directors since April 2015. Mr. Varvaro has served as the Chief Financial OfficerCFO of ChromaDex Corp. (Nasdaq: CDXC) since January 2004 and as its Secretary since March 2006. He also has served as a director of ChromaDex Corporation from March 2006 until May 2010. Mr. Varvaro is responsible for overseeing all aspects of ChromaDex’s accounting, information technology, Intellectual Propertyintellectual property management and human resources management. Mr. Varvaro has extensive process-mapping and business process improvement skills, along with a solid information technology background that includes management and implementation experiences ranging from custom application design to enterprise wide system deployment. Mr. Varvaro also has hands-on experience in integrating acquisitions and in new facility startups. In working with manufacturing organizations, Mr. Varvaro has overseen plant automation, reporting and bar code tracking implementations. Mr. Varvaro also has broad legal experience in intellectual property, contract and employment law. From 1998Prior to 2004,ChromaDex, Mr. Varvaro gained substantial management experience in a number of positions that make him suitable for membership on the Board of Directors of the Company. For example, he was employed by Fast Heat Inc., a Chicago, Illinois based Global supplier to the plastics, HVAC, packaging, and food processing industries, where he began as controller and was promoted to chief information officer and then chief financial officer during his tenure. During his time there Mr. Varvaro was responsible for all financial matters including accounting, risk management and human resources. From 1993 to 1998,Earlier in his career Mr. Varvaro gained additional experience in other areas of information technology and accounting roles. For example, Mr. Varvaro was employed by Maple Leaf Bakery, Inc., Chicago, Illinois, during its rise to becoming a national leader in specialty bakery products. During his tenure, Mr. Varvaro served in information technology and accounting roles, helping to shepherd the company from a single facility to national leader in specialty food products. Mr. Varvaro has a B.S. in Accounting from University of Illinois, Urbana-Champaign and has been certified asis a Certified Public Accountant. We believe Mr. Varvaro’s extensive industry experience as an officer and director, as well as his extensive financial and accounting training and management experience qualify him to serve as a member of our Board of Directors.Directors, and as an Audit Committee financial expert.
Family Relationships
None of our Directors are related by blood, marriage, or adoption to any other Director, executive officer, or other key employees.
Other Directorships
Other than as disclosed above, none of the Directors of the Company are also directors of issuers with a class of securities registered under Section 12 of the Exchange Act (or which otherwise are required to file periodic reports under the Exchange Act).
Legal Proceedings
We are not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses) or being subject to any of the items set forth under Item 401(f) of Regulation S-K.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
BOARD LEADERSHIP STRUCTURE
The Board of Directors is currently chaired by the President and Chief Executive Officer of the Company, Mr. Hansen. The Company believes that combining the positions of Chief Executive Officer and Chairman of the Board of Directors helps to ensure that the Board of Directors and management act with a common purpose. Integrating the positions of Chief Executive Officer and Chairman can provide a clear chain of command to execute the Company’s strategic initiatives. The Company also believes that it is advantageous to have a Chairman with an extensive history with and knowledge of the Company, and extensive technical and industry experience. Notwithstanding the combined role of Chief Executive Officer and Chairman, key strategic initiatives and decisions involving the Company are discussed and approved by the entire Board of Directors. In addition, meetings of the independent directors of the Company are regularly held, which Mr. Hansen does not attend. The Company believes that the current leadership structure and processes maintains an effective oversight of management and independence of the Board of Directors as a whole without separate designation of a lead independent director. However, the Board of Directors will continue to monitor its functioning and will consider appropriate changes to ensure the effective independent function of the Board of Directors in its oversight responsibilities.
ROLE OF THE BOARD IN RISK OVERSIGHT
One of the Board of Director’s key functions is informed oversight of the Company’s risk management process. The Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through various Board of Directors standing committees that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for the Company. The Audit Committee considers and discusses with management the Company’s major financial risk exposures and related monitoring and control of such exposures as well as compliance with legal and regulatory requirements. The Nominating & Governance Committee monitors the effectiveness of our corporate governance guidelines. The Compensation Committee assesses and monitors whether our compensation policies and programs have the potential to encourage excessive risk-taking. Any findings regarding material risk exposure to the Company are reported to and discussed with the Board of Directors.
| INDEPENDENCE OF THE BOARD OF DIRECTORS AND ITS COMMITTEES |
After review of all relevant transactions or relationships between each director and nominee for director, or any of his or her family members, and the Company, its senior management and its Independent Registered Public Accounting Firm, the Board of Directors has determined that all of the Company’s directors and the Company’s nominees for director are independent within the meaning of the applicable NASDAQ listing standards, except Mr. Hansen, the Chairman of the Board of Directors, Chief Executive Officer and President, of the Company, and Dr. Livingston, Chief Science Officer.Officer; and Dr. Ravetch. As required under the NASDAQ listing standards, the Company’s independent directors meet in regularly scheduled executive sessions at which only independent directors are present. The Board of Directors met 116 times and acted by unanimous written consent 911 times during the fiscal year ended December 31, 2015.2016. Each member of the Board of Directors attended 75% or more of the aggregate of the meetings of the Board of Directors held in the last fiscal year during the period for which he was a director and of the meetings of the committees on which he served held in the last fiscal year during the period for which he was a committee member, except Dr.Philip Livingston who was unable to attend certain meetings due to travel and other commitments. Although the Company is not currently NASDAQ-listed we believe it is in the Company’s interests to comply with these standards both as a matter of good governance and to facilitate any future re-listing.
The Board of Directors has three committees: anthe Audit Committee, athe Compensation Committee and athe Nominating & Governance Committee. Below is a description of each committee of the Board of Directors. The Board of Directors has determined that each member of each committee meets the applicable rules and regulations regarding “independence” and that each member is free of any relationship that would interfere with his individual exercise of independent judgment with regard to the Company.
The Audit Committee of the Board of Directors oversees the Company’s corporate accounting and financial reporting process. For this purpose, the Audit Committee performs several functions. The Audit Committee, among other things: evaluates the performance, and assesses the qualifications, of the Independent Registered Public Accounting Firm; determines and pre-approves the engagement of the Independent Registered Public Accounting Firm to perform all proposed audit, review and attest services; reviews and pre-approves the retention of the Independent Registered Public Accounting Firm to perform any proposed, permissible non-audit services; determines whether to retain or terminate the existing Independent Registered Public Accounting Firm or to appoint and engage a new Independent Registered Public Accounting Firm for the ensuing year; confers with management and the Independent Registered Public Accounting Firm regarding the effectiveness of internal controls over financial reporting; establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; reviews the financial statements to be included in the Company’s Annual Report on Form 10-K and recommends whether or not such financial statements should be so included; and discusses with management and the Independent Registered Public Accounting Firm the results of the annual audit and review of the Company’s quarterly financial statements.
The Audit Committee is currently composed of four outside directors: Mr. Maier, Mr. Cohen, Mr. Hoffman and Mr. Varvaro, as of December 31, 2015.2016. The Audit Committee met 65 times and acted two times by written consent during the fiscal year ended December 31, 2015.2016. The Audit Committee Charter was last amended in March 2015 and is available on the Company’s website, www.mabvax.com.
The Board of Directors periodically reviews the NASDAQ listing standards’ definition of independence for Audit Committee members and has determined that all members of the Company’s Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A) of the NASDAQ listing standards and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended). Although the Company is not currently NASDAQ-listed we believe it is in the Company’s interests to comply with these NASDAQ standards both as a matter of good governance and to facilitate any future re-listing. The Board of Directors has determined that Mr. Maier qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. The Board of Directors made a qualitative assessment of Mr. Maier’s level of knowledge and experience based on a number of factors, including his formal education and his service in executive capacities having financial oversight responsibilities. These positions include Chief Financial Officer, Senior Vice President, and member of the boards of directors and audit committees of, a number of biotechnology and genomics companies, pursuant to which he has experience preparing, reviewing and supervising the preparation of financial reports. In addition, Mr. Maier holds an M.B.A from Harvard Business School. For further information on Mr. Maier’s experience, please see his biography above.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors reviews, modifies and approves the overall compensation strategy and policies for the Company. The Compensation Committee, among other things: reviews and approves corporate performance goals and objectives relevant to the compensation of the Company’s officers; determines and approves the compensation and other terms of employment of the Company’s Chief Executive Officer; determines and approves the compensation and other terms of employment of the other officers of the Company; and administers the Company’s stock option and purchase plans, pension and profit sharing plans and other similar programs.
TheAs of December 31, 2016, the Compensation Committee iswas composed of four outside directors: Mr. Cohen, Mr. Eisenberg, Mr. Hoffman, Dr. Ravetch and Mr. Varvaro, as of December 31, 2015. Each ofVarvaro. On May 6, 2016, Mr. Eisenberg was appointed to the Compensation Committee. All members of the Compensation Committee isare independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards). The Compensation Committee met 54 times and acted once3 times by written consent during the fiscal year ended December 31, 2015.2016. The Compensation Committee Charter was last amended in March 2015 and is available on the Company’s website, www.mabvax.com.
Compensation Committee Interlocks and Insider Participation
Each of Jeffrey V. Ravetch, M.D., Ph.D., Robert E. Hoffman, a Kenneth M. Cohen and Thomas Varvaro served on our compensation committee in 2015. No member of our compensation committee has at any time been an employee of ours. None of our executive officers serves as 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.
NOMINATING & GOVERNANCE COMMITTEE
The Nominating & Governance Committee of the Board of Directors is responsible for, among other things: identifying, reviewing and evaluating candidates to serve as directors of the Company; reviewing, evaluating and considering incumbent directors; recommending to the Board of Directors for selection candidates for election to the Board of Directors; making recommendations to the Board of Directors regarding the membership of the committees of the Board of Directors; and assessing the performance of the Board of Directors.
The Nominating & Governance Committee is currently composed of fourfive outside directors: Mr.Messrs. Cohen, Mr.Eisenberg, Hoffman, Mr. Maier and Mr. Varvaro, as of December 31, 2015.2016. On May 6, 2016, Mr. Eisenberg was appointed to the Nominating & Governance Committee. All members of the Nominating & Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards). The Nominating & Governance Committee met once3 times during the fiscal year ended December 31, 2015.2016. The Nominating & Governance Committee Charter was last amended in March 2015 and is available on the Company’s website, www.mabvax.com.
The Nominating & Governance Committee has not established any specific minimum qualifications that must be met for recommendation for a position on the Board of Directors. Instead, in considering candidates for director the Nominating & Governance Committee will generally consider all relevant factors, including among others the candidate’s applicable education, expertise and demonstrated excellence in his or her field, the usefulness of the expertise to the Company, the availability of the candidate to devote sufficient time and attention to the affairs of the Company, the candidate’s reputation for personal integrity and ethics and the candidate’s ability to exercise sound business judgment. Other relevant factors, including diversity, experience and skills, will also be considered. Candidates for director are reviewed in the context of the existing membership of the Board of Directors (including the qualities and skills of the existing directors), the operating requirements of the Company and the long-term interests of its stockholders.
The Nominating & Governance Committee considers each director’s executive experience leading biopharmaceutical companies, his familiarity and experience with the various operational, scientific and/or financial aspects of managing companies in our industry, and his involvement in building collaborative biopharmaceutical development and commercialization relationships.
With respect to diversity, the Nominating & Governance Committee seeks a diverse group of individuals who have executive leadership experience in life sciences companies, and a complementary mix of backgrounds and skills necessary to provide meaningful oversight of the Company’s activities. As a clinical stage drug development company focused on discovering and developing small molecule drugs, we seek directors who have experience in the medical, regulatory and pharmaceutical industries in general, and also look for individuals who have experience with the operational issues that we face in our dealings with clinical and pre-clinical drug development, collaborations with third parties and commercialization and manufacturing issues. Some of our directors have strong financial backgrounds and experience in dealing with public companies, to help us in our evaluation of our operations and our financial model. We also face unique challenges as we implement our strategy to develop, manufacture and commercialize our products by entering into relationships with pharmaceutical companies. The Nominating & Governance Committee annually reviews the Board’s composition in light of the Company’s changing requirements. The Nominating & Governance Committee uses the Board of Director’s network of contacts when compiling a list of potential director candidates and may also engage outside consultants. Pursuant to its charter, the Nominating & Governance Committee will consider, but not necessarily recommend to the Board of Directors, potential director candidates recommended by stockholders. All potential director candidates are evaluated based on the factors set forth above, and the Nominating & Governance Committee has established no special procedure for the consideration of director candidates recommended by stockholders.
There have been no material changes to the procedures by which a stockholder may recommend nominees to the Board of Directors since our last disclosure of these procedures.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Nominating & Governance Committee of the Board of Directors has adopted a process by which stockholders may communicate with the Board of Directors or any of its individual directors. Stockholders who wish to communicate with the Board of Directors may do so by sending a written communication addressed as follows: Board Communication, MabVax Therapeutics Holdings, Inc., 1158811535 Sorrento Valley Rd., Suite 20,400, San Diego, CA 92121. All communications must state the number and class(es) of shares owned by the stockholder making the communication. The Company’s Secretary or other officer will review each communication and forward the communication to the Board of Directors, to any individual director to whom the communication is addressed, and/or to any other officer of the Company considered to be necessary or appropriate.
The following table sets forth information regarding the Company’s executive officers and key personnel.
Name | | Position |
J. David Hansen.Hansen | | Chairman of the Board of Directors, President and Chief Executive Officer |
| | |
| Gregory P. Hanson, CMA, MBA | | Chief Financial Officer |
| |
Wolfgang W. Scholz, Ph.D. | | Vice President of Antibody Discovery |
| | |
| Paul W. Maffuid, Ph.D. | | Executive Vice President of PharmaceuticalResearch and Development |
| |
| Paul Resnick, M.D., MBA | | Vice President and OperationsChief Business Officer |
The following is a brief summary of the background of each of our executive officers.
J. David Hansen. Biographical information regarding Mr. Hansen is provided above under Board of Directors.
Gregory P. Hanson, CMA, MBA, 69,70, hasserves as our CFO, and prior to the Merger served as Chief Financial Officer since the merger of MabVax Therapeutics, Inc. and the Company in July 2015, and as Chief Financial OfficerCFO of MabVax Therapeutics, Inc. since February of 2014. Mr. Hanson has over 30 yearsyears' experience serving as CFO/financial executiveexecutive/board member of both public and private biotechlife sciences and hi tech companies. Since October 2016, Mr. Hanson has served as a member of the board of directors of WCCT, Inc., a private pharmaceutical contract research organization. From January 2008 to February 2014 Mr. Hanson was Managing Director of First Cornerstone, a board and management advisory service to companies and executives in the areas of international corporate development, financing strategies, commercialization of technologies and products, and M&A advisory services. Sinceexecutives. From November 2009 to November 2016, Mr. Hanson has served as Advisory Board Member of Menon International, Inc. involved in commercialization of biosensor devices, and assays, and renewable products. Sincefrom October 2011 Mr. Hanson hasto September 2016, served on the Life Sciences Advisory Board of Brinson Patrick Securities, a boutique investment bank. He also serves as confidential advisor to several other tech and life sciences companies. Mr. Hanson is past-PresidentPast-President and 9-year10-year Member of the Board of Directors of San Diego Financial Executives International (FEI), and a member of the Capital Formation Committee at BIOCOM since 2011.
Earlier in his career, Mr. Hanson gained substantial executive management experience that helped qualify him in his role as CFO. For example, he served as Senior Vice President of Brinson Patrick Securities, from October 2008 to October 2010, where he opened up the San Diego branch and introduced at-the-market financing strategies to public life sciences companies. From January 2006Prior to September 2008Brinson Patrick Securities, Mr. Hanson served as Senior Vice President and Chief Financial OfficerCFO of Mast Therapeutics (MSTX—NYSE MKT). From 1998, and prior to 2006 he served asMast Therapeutics was Vice President and CFO, Chief Accounting Officer, Compliance Officer and Corporate Secretary of Avanir Pharmaceuticals, Inc. (acquired by Otsuka Holdings Co., Ltd.), the developer of the cold sore product Abreva™, and Neudexta™, for the treatment of Pseudobulbar Affect, or PBA, a central nervous system disorder. While at Avanir, Mr. Hanson listed the company on the American Stock Exchange, and later to the NASDAQ.During his career, Mr. Hanson has completed approximately $1 billion in financing, licensing and partnering arrangements. Mr. Hanson was a founding and 6-year member of the Small Business Advisory Committee to the Financial Accounting Standards Board, and has spoken at various national conferences, industry organizations and panels on financing strategy and mergers and acquisitions, and twice spoken to the SEC’s Committee on Improvements to Financial Reporting.
Mr. Hanson has passed the examination for Certified Public Accountants and is a Certified Management Accountant. He has an MBA with distinction from the University of Michigan, and a BS in Mechanical Engineering from Kansas State University. SinceFrom 2008 to September 2016 Mr. Hanson has maintained Series 7 & Series 63 securities licenses.
Wolfgang W. Scholz, Ph.D., 62, serves as Vice President of Antibody Discovery and, prior to the merger, was a co-founder of MabVax and is Vice President of Antibody Discovery since 2008. He has extensive drug discovery experience in multiple therapeutic categories and has collaborated with major pharmaceutical companies on several projects. Dr. Scholz earned his Ph.D. in Microbiology/Immunology from the University of Kiel, Germany in 1985 and completed his postdoctoral training at The Scripps Research Institute, La Jolla. He held positions with increasing responsibilities at Tanabe Research Laboratories from 1990 to 1997 and most recently he was Senior Director at Avanir Pharmaceuticals from 2000 to 2008, where he led research and development efforts for 8 years. He was a co-founder of Xenerex Biosciences, a subsidiary owned by Avanir Pharmaceuticals. Under his leadership, the antibody discovery group developed human monoclonal antibodies to multiple infectious disease targets using in vitro and SCID mouse technologies, and one antibody (AVP-21D9) was successfully out-licensed and recently passed Phase I safety testing. Dr. Scholz's work has been supported by multiple grants from the National Institute for Allergy and Infectious Diseases. Dr. Scholz is the principal investigator on multiple National Cancer Institute grants received by MabVax totaling almost $5 million. Dr. Scholz is an inventor on three pending and three issued antibody patents, three issued small molecule patents, and author on thirty-four peer-reviewed publications. We believe Dr. Scholz's experience in antibody discovery and institutional knowledge of MabVax's vaccine programs qualifies him to serve as Vice President of Antibody Discovery.
Paul W. Maffuid, Ph.D., 6061, serves as Executive Vice President of Pharmaceutical DevelopmentResearch and Operations.Development. Dr. Maffuid joined MabVax Therapeuticsthe Company in July of2014. From 2011 to June 2014, fromhe worked for AAIPHARMA Services Corporation where he washeld various management positions including Executive Vice President, Pharma Operations. His responsibilities included formulation, process development, technology transfer, stability and analytical services for clients developing biologic and small molecule therapeutics. He was a member of the Executive Team that transformed a declining business into one of the world’s leading providers of integrated development services for the biopharmaceutical sector. He joinedDr. Maffuid has been able to gain extensive experience to qualify him in his executive leadership role over research and development at the Company. For example, prior to joining AAIPHARMA in 2011 after founding and managinghe was the founder of Biopharmalogics, Inc. a consulting service providing Chemistry Manufacturing and Controls (CMC) as well as Drug Metabolism-Pharmacokinetics (DMPK) services for the development of pharmaceutical products since 2008. Priorwhich he operated from 2008 to that2011. Earlier in his career Dr. Maffuid was Senior Vice President of Irvine Pharmaceutical Services, Inc. from 2008 to 2009. From 2001 to 2008 he was, and Vice President of Pharmaceutical Development for Arena Pharmaceuticals. AtWhile at Arena Pharmaceuticals Dr. Maffuid was a member of the Executive Management team responsible for all CMC and DMPK in support of discovery, development, and commercial operations. He led the design and construction of a 40,000 sq-ftsq. ft. cGMP compliant pilot manufacturing facility. Dr. Maffuid had management roles at Magellan Laboratories, Cabrillo Laboratories, and Amylin Pharmaceuticals.
Paul F. Resnick, M.D., MBA, 60, serves as Vice President and Chief Business Officer. Dr. Resnick joined the Company in March 2016. From January 2013 to March 2016 Dr. Resnick was Senior Vice President, Business Development for Juventas Therapeutics, where he was responsible for business and commercial strategy and working with executive management overseeing corporate clinical development, and financial and business strategies. From February 2012 to December 2012, Dr. Resnick was an advisor to several companies in the life sciences area. From January 2008 to January 2012 he was Vice President, Business Development for Intellikine, Inc. (acquired by Takeda Pharmaceuticals), responsible for managing alliances and leading the business development strategy that resulted in securing an acquisition by Takeda Pharmaceuticals. During the course of Dr. Resnick’s career, he has been able to gain extensive experience to qualify him in his executive leadership role for business development for the Company. For example, Dr. Resnick held Senior Director positions for Worldwide Business Development, and for Strategic Alliances, at Pfizer Inc., where he was responsible for networking with leaders from biotechnology companies, universities, and research institutions to gain early insights into emerging technologies, and for leading technical and business diligence, negotiations, and alliance management of science and technology initiatives for Pfizer’s Biotechnology and Bio-innovation Center. Prior to Pfizer Dr. Resnick held Director and Senior Director positions at Rinat Neuroscience (acquired by Pfizer), Intermune, Inc. and Roche Pharmaceuticals. Dr. Resnick has an M.D. from The Medical College of Wisconsin and an MBA from The Wharton School of the University of Pennsylvania.
Code of Conduct
The Company hasWe have adopted the MabVax Therapeutic Holdings, Inc. Code of Conduct, a code of ethics with which every person who works for us is expected to comply, including without limitation our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and our other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to us during 2015,2016, SEC filings and certain written representations that no other reports were required during the fiscal year ended December 31, 2015,2016, our officers, directors and greater than ten percent stockholders complied with all applicable Section 16(a) filing requirement.requirement, except for Kenneth M. Cohen, Jeffrey F. Eisenberg, Robert E. Hoffman, Paul V. Maier, Jeffrey V. Ravetch, and Thomas C. Varvarowho were late on a Section 16(a) filing that took place on July 28, 2016.
EXECUTIVE COMPENSATION
20152016 Summary Compensation Table
The following table sets forth, for the fiscal years 20152016 and 2014,2015, compensation awarded or paid to, or earned by, our Chief Executive Officers, our Chief Financial Officer and our other two executive officers at December 31, 20152016 (the “Named Executive Officers” or “NEOs”).
| Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | Restricted Stock Unit Awards ($)(5) | | Option Awards ($)(6) | | All Other Compensation ($) | | | Total ($)(1) | |
| | | | | | | | | | | 2,077,475 | | | | | | | | | | |
President, Chief Executive Officer and Chairman(2) | | | | | | | | | | | -0- | | | | | | | | | | |
Michael M. Wick, M.D., Ph.D. | | | | | | | | | | | -0- | | | | | | | | | | |
Former President, Chief Executive Officer and Chairman(2)(3) | | | | | | | | | | | -0- | | | | | | | | | | |
| | | | | | | | | | | 1,075,480 | | | | | | | | | | |
Chief Financial Officer(2) | | | | | | | | | | | -0- | | | | | | | | | | |
Wolfgang W. Scholz, Ph.D. | | | | | | | | | | | 700,925 | | | | | | | | | | |
Vice President, Antibody Discovery | | | | | | | | | | | -0- | | | | | | | | | | |
| | | | | | | | | | | 768,200 | | | | | | | | | | |
Vice President, Pharmaceutical Development and Operations(4) | | | | | | | | | | | -0- | | | | | | | | | | |
Name and Principal Position | Year | | | Restricted Stock Unit Awards ($)(3) | | All Other Compensation ($) | |
| J. David Hansen | 2016 | 404,746 | 141,400 | — | 393,702 | 35,717 | 975,565 |
| President, Chief Executive Officer and Chairman | 2015 | 375,601 | 149,625 | 2,077,475 | 1,493,194 | 87,770 | 4,183,665 |
| Gregory P. Hanson | 2016 | 299,342 | 62,790 | — | 99,743 | 15,055 | 476,930 |
| Chief Financial Officer | 2015 | 271,819 | 77,175 | 1,075,480 | 773,006 | 19,742 | 2,217,222 |
| Wolfgang W. Scholz, Ph.D. | | | | | | | |
Vice President, Antibody Discovery (1) | 2015 | 225,443 | 43,125 | 700,925 | 503,793 | 13,950 | 1,487,236 |
| Paul W. Maffuid | 2016 | 294,519 | 61,950 | — | 91,213 | 34,121 | 481,803 |
| Vice President, Pharmaceutical Development and Operations | 2015 | 268,154 | 53,438 | 768,200 | 552,147 | 33,476 | 1,675,415 |
| Paul F. Resnick | 2016 | 212,000 | 44,094 | — | 323,532 | 20,680 | 600,306 |
Vice President, Chief Business Officer (2) | 2015 | — | — | — | — | — | — |
(1) | This table includes compensation from the Company, and from MabVax Therapeutics, Inc., its predecessor, prior to the July 2014 merger.Effective as of March 8, 2016, Dr. Scholz is no longer considered a NEO. |
| (2) | Mr. Wick resigned his executive positions on July 7, 2014Resnick was appointed as Vice President and Chief Business Officer of the Company in connection with the Merger. Mr. Hansen and Mr. Hanson were appointed to their positions in connection with the Merger on the same date.March 2016. |
| (3) | Dr. Wick was not compensated for his role as a director in 2014. The amount shown reflects salary earned as an employee only. |
(4) | Dr. Maffuid was appointed to his position in July 2014. |
(5) | The amounts in this column represent the aggregate full grant date fair value of restricted stock units (RSUs) granted. Such RSU awards were granted during 2015 with vesting dates after 2015. |
(6)(4) | The amounts in this column represent the aggregate full grant date fair values of stock options granted, computed in accordance with Accounting Standards Codification 718, or ASC 718, “Compensation—Stock Compensation” using the Black-Scholes option valuation model. |
Outstanding Equity Awards at 20152016 Fiscal Year-End
The following table summarizes the number of outstanding equity awards held by each of our Named Executive Officers at December 31, 2015.2016 and after giving effect to the Listing Reverse Split. Each option grant is shown separately for each Named Executive Officer. The vesting schedule for each option grant is shown following this table.
| Name and Principal Position | | Option Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Un-exercisable (#) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price per Share ($) | | 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 ($) | |
| | | | | | | | | | | | | | -0- | | -0- | |
President, Chief Executive Officer and Chairman(1) | | | | | | | | | | | | | | -0- | | -0- | |
| | | | | | | | | | | | | | | 903,250 | | 2,077,475 | |
| | | | | | | | | | | | | | -0- | | -0- | |
Chief Financial Officer(1) | | | | | | | | | | | | | | 467,600 | | 1,075,480 | |
Wolfgang W. Scholz, Ph.D. | | | | | | | | | | | | | | -0- | | -0- | |
Vice President, Antibody Discovery | | | | | | | | | | | | | | -0- | | -0- | |
| | | | | | | | | | | | | | | 304,750 | | 700,925 | |
| | | | | | | | | | | | | | -0- | | -0- | |
Vice President, Pharmaceutical Development and Operations | | | | | | | | | | | | | | 334,000 | | 768,200 | |
| Name and Principal Position | | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Un-exercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price per Share ($) | 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 ($) |
| J. David Hansen | 2/1/2010 | 1,690 | -0- | -0- | 5.33 | 2/1/2020 | -0- | -0- |
President, Chief Executive Officer
| 2/28/2013 | 3,239 | 141 | -0- | 10.66 | 2/28/2023 | -0- | -0- |
and Chairman
| 4/2/2015 | 40,687
| 81,374
| -0-
| 17.02
| 4/2/2025 | 81,374
| 275,044
|
| 2/16/2016 | -0- | 67,569 | -0- | 3.63 | 2/16/2026 | -0- | -0- |
| 8/29/2016 | -0- | 63,400 | -0- | 5.00 | 8/29/2026 | -0- | -0- |
| Gregory P. Hanson | 3/13/2014 | 1,807 | 822 | -0- | 59.94
| 3/13/2024 | -0- | -0- |
| Chief Financial Officer | 4/2/2015 | 21,063 | 42,127 | -0- | 17.02 | 4/2/2025 | 42,127 | 142,389 |
| 2/16/2016 | -0- | 2,703 | -0- | 3.63 | 2/16/2026 | -0- | -0- |
| 8/29/2016 | -0- | 26,400 | -0- | 5.00 | 8/29/2026 | -0- | -0- |
| Wolfgang W. Scholz, Ph.D. (1) | 2/1/2010 | 939 | -0- | -0- | 5.33 | 2/1/2020 | -0- | -0- |
Vice President, Antibody
| 2/28/2013 | 2,160 | 94 | -0- | 10.66 | 2/28/2023 | -0- | -0- |
| Discovery | 4/2/2015 | 13,728 | 27,455 | -0- | 17.02 | 4/2/2025 | 27,455 | 92,798 |
| 2/16/2016 | -0- | 8,109 | -0- | 3.63 | 2/16/2026 | -0- | -0- |
| 8/29/2016 | -0- | 18,800 | -0- | 5.00 | 8/29/2026 | -0- | -0- |
| Paul W. Maffuid | 9/8/2014 | 1,056 | 822 | -0- | 62.75 | 9/8/2024 | -0- | -0- |
| Executive Vice President, | 4/2/2015 | 15,045 | 30,091 | -0- | 17.02 | 4/2/2025 | 30,091 | 101,708 |
Research and Development
| 2/16/2016 | -0- | 8,109 | -0- | 3.63 | 2/16/2026 | -0- | -0- |
| 8/29/2016 | -0- | 20,100 | -0- | 5.00 | 8/29/2026 | -0- | -0- |
| Paul F. Resnick (2) | 3/16/2016 | -0- | 45,406 | -0- | 5.48 | 3/16/2026 | -0- | -0- |
Vice President, Chief
| 3/16/2016 | -0- | 30,271 | -0- | 12.95 | 3/16/2026 | -0- | -0- |
Business Officer
| 8/29/2016 | -0- | 15,200 | -0- | 5.00 | 8/29/2026 | -0- | -0- |
(1) | Effective as of March 8, 2016, Mr. Scholz is no longer considered a NEO. | |
| (2) | Mr. Wick resigned his positions on July 7, 2014Resnick was appointed as Vice President and Chief Business Officer of the Company in connection with the Merger. Mr. Hansen and Mr. Hanson were appointed to their positions in connection with the Merger on the same date.March 2016 |
The Company does not maintain any defined benefit or defined contribution pension or retirement plans, other than a 401(k) Plan that is offered through our payroll provider. The Company made no matching contributions to the 401(k) Plan in 2014.2015 or 2016.
Employment Severance and Change of Control Arrangements
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We entered into an employment agreement with Michael M. Wick, M.D., Ph.D. in August 1999 upon his promotion to the position of Chief Executive Officer. In December 1999, Dr. Wick was elected Chairman of the Board of Directors effective January 2000. On December 17, 2008, we entered into an amended and restated employment agreement, or the Employment Agreement, with Dr. Wick to clarify the manner in which such employment agreement complies with the final regulations under Section 409A of the U.S. Internal Revenue Code. The Employment Agreement superseded and replaced the employment agreement entered into in August 1999. According to the Employment Agreement, either the Company or Dr. Wick may terminate his employment at any time for any reason. Per the agreement if Dr. Wick were to be terminated without cause, he would have been entitled to receive as severance continued payment of his base salary and health care benefits for twelve months. We will also accelerate the vesting of his then unvested stock options as to the number of shares that would have vested in the ordinary course in the first twelve months following his termination date, with such vesting effective as of his termination date. Dr. Wick’s benefits pursuant to the Employment Agreement were subject to his signing of a general waiver or release of the Company. See the section “Effect of the Merger on Executive Compensation Arrangements” regarding Dr. Wick’s release and severance obligations following the merger.
In February 2003, we adopted the Telik, Inc. Change of Control Severance Benefit Plan, or the Severance Plan. On December 17, 2008, the Compensation Committee of the Board of Directors adopted an amendment to the Severance Plan to clarify the manner in which such plan complies with the final regulations under Section 409A. The Severance Plan provided eligible participants with severance benefits in the event that a participant’s employment with the Company were to be terminated, voluntarily or involuntarily, without cause within one year after a change of control, provided that the eligible participant signs a general waiver or release prior to receipt of the benefits. Such benefits included cash severance, payment of premiums under employee benefits plans, COBRA continuation coverage, accelerated vesting of unvested stock options and additional payments if the amounts which a participant would receive in connection with a change in control of the Company would constitute a “parachute payment” or be subject to excise tax.
The Severance Plan provided that, to the extent designated by the Compensation Committee or the Chief Executive Officer, the Chief Operating Officer, Chief Financial Officer, Senior Vice Presidents, Vice Presidents and others would be eligible to participate in the Severance Plan. On February 21, 2003, the Board of Directors designated Dr. Wick as eligible to participate in the Severance Plan. Under the Severance Plan, Dr. Wick, as the Chief Executive Officer, is eligible to receive (1) full accelerated vesting of any unvested stock options then held, (2) a lump sum cash payment equal to two times the greater of: (i) the sum of his base salary and the greater of: (a) the annual cash bonus paid to him in the prior year; or (b) his Annual Target Bonus as in effect on the date of termination; or (ii) the sum of his base salary and the greater of: (a) the annual cash bonus paid to him in the prior year; or (b) his Annual Target Bonus as in effect immediately prior to the Change of Control; and (3) continuation of health benefits for up to 24 months and COBRA continuation coverage. Dr. Wick would also have been entitled to additional payments if the amounts he would receive in connection with a change in control of MabVax Therapeutics Holdings, Inc. would constitute a “parachute payment” or be subject to excise tax. Dr. Wick’s benefits under the Severance Plan, when applicable, would have superseded the severance benefits under his employment contract.
Effect of the Merger on Our Executive and Director Compensation Arrangements
In connection with the Merger, we obtained release agreements from each of Michael M. Wick, M.D., Ph.D., Gail L. Brown, M.D., William P. Kaplan, Esq., Steven R. Schow, Ph.D., and Wendy K. Wee to release any potential claims against MabVax Therapeutics with respect the termination of their employment with or service to the Company, including all claims under the Severance Plan, and provided that each would resign from their respective officer positions upon the consummation of the merger in exchange for cash payments as provided below:
| Participants | | Severance and Release Payment Amount | |
| Michael M. Wick, M.D., Ph.D. | | $ | 172,000 | |
| Gail L. Brown, M.D. | | $ | 136,000 | |
| William P. Kaplan, Esq. | | $ | 118,000 | |
| Steven R. Schow, Ph.D. | | $ | 120,000 | |
| Wendy K. Wee | | $ | 118,000 | |
On July 8, 2014, in connection with the merger, the Company assumed all of the duties, obligations and liabilities of MabVax under (i) the employment agreements with J. David Hansen, dated July 1, 2014, or the Hansen Employment Agreement, (ii) the employment agreement with Gregory P. Hanson dated July 1, 2014, or the Hanson Employment Agreement, and (iii) the employment agreement with Wolfgang W. Scholz, Ph.D., dated July 1, 2014, or the Scholz Employment Agreement.
Hansen Employment Agreement
The employment agreement with Mr. Hansen (the "Hansen Employment AgreementAgreement"), which became effective July 1, 2014, has an initial term of 3 years, with an option to renew or extend the terms if notice is provided by either Mr. Hansen or the Company at least 60 days prior to the end of the term. Under the terms of his agreement, Mr. Hansen received aan initial base salary of $315,660 which may be increased at the discretion of the Board of Directors or the Compensation Committee.$315,660. Mr. Hansen’s base salary may be increased at the discretion of the Board of Directors or the Compensation Committee. Mr. Hansen is also entitled to an annual cash bonus, based on certain performance-based objectives established by the Compensation Committee of the Board.
The Hansen Employment Agreement may be terminated upon death, disability, and with or without Cause (as defined by the Hansen Employment Agreement) by the Company, with Good Reason (as defined in the Hansen Employment Agreement), with or without Cause and upon a Change in Control (as defined in the Employment Agreement), by Mr. Hansen or at either party’s election not to renew the employment agreement. In the event the Hansen Employment Agreement is terminated as a result of Mr. Hansen’s death, Mr. Hansen’s authorized representative shall be entitled to receive all Accrued Obligations (as defined in the employment agreement), full acceleration of vesting of all issued and outstanding stock options, benefits for up to one year, any unpaid annual bonus amounts and a pro rata bonus payment. In the event the Hansen Employment Agreement is terminated by the Company for Disability or without Cause, by Mr. Hansen for Good Reason, non-renewal by the Company or in connection with a Change in Control, Mr. Hansen would be entitled to receive all Accrued Obligations, full acceleration of vesting of all issued and outstanding stock options, unpaid bonus amounts and a pro rata bonus payment, benefits for up to one year or until Mr. Hansen obtains coverage through subsequent employment (whichever is earlier) and severance payments equal to Mr. Hansen’s annual base salary payable in 12 equal monthly installments. In the event the employment agreement is terminated by the Company for Cause, without Good Reason by Mr. Hansen, or the parties elect not to renew the agreement, Mr. Hansen will be entitled to payment of any base salary earned but unpaid through the date of termination and any other payment or benefit to which he is entitled under the applicable terms of any applicable company arrangement during the 30 day30-day period following the termination of the Hansen Employment Agreement.
Hanson Employment Agreement
The employment agreement with Mr. Hanson (the "Hanson Employment AgreementAgreement"), which became effective July 1, 2014, has an initial term of 3 years, with an option to renew or extend the terms if notice is provided by either Mr. Hanson or us at least 60 days prior to the end of the term. Under the terms of his agreement, Mr. Hanson was entitled to receive an initial annual base salary of $215,000, which may be increased at the discretion of the Board of Directors or the Compensation Committee. Mr. Hanson is also entitled to an annual cash bonus, based on certain performance-based objectives established by the Company. In addition, prior to the merger MabVax Therapeutics previouslyhad granted Mr. Hanson options which are currently exercisable to purchase up to 19,4542,629 shares of the Company common stock at an exercise price of $8.096$59.94 under the terms of the Company 2014 Employee, Director and Consultant Equity Incentive Plan as assumed by the Company pursuant to the Merger Agreement.
The Hanson Employment Agreement may be terminated upon death, disability, and with or without Cause (as defined by the Hanson Employment Agreement) by the Company, with Good Reason (as defined in the Hanson Employment Agreement), with or without Cause and upon a Change in Control (as defined in the Employment Agreement), by Mr. Hanson or at either party’s election not to renew the employment agreement. In the event the Hanson Employment Agreement is terminated as a result of Mr. Hanson’s death, Mr. Hanson’s authorized representative shall be entitled to receive all Accrued Obligations (as defined in the employment agreement), full acceleration of vesting of all issued and outstanding stock options, benefits for up to 1 year, any unpaid annual bonus amounts and a pro rata bonus payment. In the event the Hanson Employment Agreement is terminated by the Company for Disability or without Cause, by Mr. Hanson for Good Reason, non-renewal by the Company or in connection with a Change in Control, Mr. Hanson would be entitled to receive all Accrued Obligations, full acceleration of vesting of all issued and outstanding stock options, unpaid bonus amounts and a pro rata bonus payment, benefits for up to one year or until Mr. Hanson obtains coverage through subsequent employment (whichever is earlier) and severance payments equal to Mr. Hanson’s annual base salary payable in 12 equal monthly installments. In the event the employment agreement is terminated by the Company for Cause, without Good Reason by Mr. Hanson, or the parties elect not to renew the agreement, Mr. Hanson will be entitled to payment of any base salary earned but unpaid through the date of termination and any other payment or benefit to which he is entitled under the applicable terms of any applicable company arrangement during the 30 day30-day period following the termination of the Hanson Employment Agreement.
Scholz Employment Agreement
The Scholz Employment Agreement has an initial term of 3 years, with an option to renew or extend the terms if notice is provided by either Dr. Scholz or the Company at least 60 days prior to the end of the term. Under the terms of his agreement, Dr. Scholz was entitled to receive an annual base annual salary of $213,803, which may be increased at the discretion of the Board of Directors or the Compensation Committee. Dr. Scholz is also entitled to an annual cash bonus, based on certain performance-based objectives established by the Company.
The Scholz Employment Agreement may be terminated upon death, disability, and with or without Cause (as defined by the Scholz Employment Agreement) by the Company, with Good Reason (as defined in the Scholz Employment Agreement), with or without Cause and upon a Change in Control (as defined in the Employment Agreement), by Mr. Scholz or at either party’s election not to renew the employment agreement. In the event the Scholz Employment Agreement is terminated as a result of Dr. Scholz’s death, Dr. Scholz’s authorized representative shall be entitled to receive all Accrued Obligations (as defined in the employment agreement), full acceleration of vesting of all issued and outstanding stock options, benefits for up to 1 year, any unpaid annual bonus amounts and a pro rata bonus payment. In the event the Scholz Employment Agreement is terminated by the Company for Disability or without Cause, by Dr. Scholz for Good Reason, non-renewal by the Company or in connection with a Change in Control, Dr. Scholz would be entitled to receive all Accrued Obligations, full acceleration of vesting of all issued and outstanding stock options, unpaid bonus amounts, benefits for up to one year or until Dr. Scholz obtains coverage through subsequent employment (whichever is earlier) and severance payments equal to Dr. Scholz’s annual base salary payable in 12 equal monthly installments. In the event the employment agreement is terminated by the Company, without Good Reason by Dr. Scholz, or the parties elect not to renew the agreement, Dr. Scholz will be entitled to payment of any base salary earned but unpaid through the date of termination and any other payment or benefit to which he is entitled under the applicable terms of any applicable company arrangement during the 30 day period following the termination of the Scholz Employment Agreement.
Maffuid Employment Agreement
On July 21, 2014, we entered into an Employment Agreement with Paul Maffuid, Ph.D., or the Maffuid Employment Agreement. The Maffuid Employment Agreement has an initial term of 3 years, with an option to renew or extend the terms if notice is provided by either Dr. Maffuid or the Company at least 60 days prior to the end of the term. Under the terms of his agreement, Dr. Maffuid was entitled to receive aan initial base salary of $225,000 which may be increased at the discretion of the Board of Directors or the Compensation Committee. Dr. Maffuid is also entitled to an annual bonus, based on certain performance-based objectives established by the Company’s Chief Executive Officer. In addition, the Company previously granted Dr. Maffuid options to purchase up to 13,8951,878 shares of the Company’s common stock at an exercise price of $8.48$62.75 per share under the terms of the Amended and Restated 2014 Employee, Director and Consultant Equity Incentive Plan which was assumed by the Company pursuant to the Merger Agreement.
The Maffuid Employment Agreement may be terminated upon death, disability, and with or without Cause (as defined by the Maffuid Employment Agreement) by the Company, with Good Reason (as defined in the Maffuid Employment Agreement), with or without CauseAgreement and upon a Change in Control (as defined in the Employment Agreement), by Dr. Maffuid or at either party’s election not to renew the employment agreement. In the event the Maffuid Employment Agreement is terminated as a result of Dr. Maffuid’s death, Dr. Maffuid’s authorized representative shall be entitled to receive all Accrued Obligations (as defined in the employment agreement), full acceleration of vesting of all issued and outstanding stock options, benefits for up to 1 year, any unpaid annual bonus amounts and a pro rata bonus payment. In the event the Maffuid Employment Agreement is terminated by the Company for Disability or without Cause, by Dr. Maffuid for Good Reason, non-renewal by the Company or in connection with a Change in Control, Dr. Maffuid would be entitled to receive all Accrued Obligations, full acceleration of vesting of all issued and outstanding stock options, unpaid bonus amounts and a pro rata bonus payment, benefits for up to one year or until Dr. Maffuid obtains coverage through subsequent employment (whichever is earlier) and severance payments equal to Dr. Maffuid’s annual base salary payable in 12 equal monthly installments. In the event the employment agreement is terminated by the Company for Cause, without Good Reason by Dr. Maffuid, or the parties elect not to renew the agreement, Dr. Maffuid will be entitled to payment of any base salary earned but unpaid through the date of termination and any other payment or benefit to which he is entitled under the applicable terms of any applicable company arrangement during the 30 day30-day period following the termination of the Maffuid Employment Agreement.
Resnick Employment Agreement
On March 16, 2016, we entered into an Employment Agreement with Paul F. Resnick, M.D., or the Resnick Employment Agreement. The Resnick Employment Agreement provides that Dr. Resnick’s employment is “at-will” and is not for any specified term or length of time. Under the terms of his agreement, Dr. Resnick was entitled to receive an initial base salary of $265,000 which may be increased at the discretion of the Company. Dr. Resnick is also entitled to an annual bonus of up to 30% of his base salary. In connection with hiring Dr. Resnick, the Company granted Dr. Resnick options to purchase up to 30,271 shares of the Company’s common stock at an exercise price of $12.95 per share and 45,406 shares of the Company’s common stock at an exercise price of $5.48 per share under the terms of the Amended and Restated 2014 Employee, Director and Consultant Equity Incentive Plan.
The Resnick Employment Agreement may be terminated upon death, disability, with or without Cause (as defined by the Resnick Employment Agreement) by the Company, with Good Reason (as defined in the Resnick Employment Agreement), and upon a Change in Control (as defined in the Employment Agreement) or at either party’s election to terminate upon 30 days’ prior written notice. In the event the Resnick Employment Agreement is terminated as a result of Dr. Resnick’s death, Dr. Resnick’s authorized representative shall be entitled to receive all Accrued Obligations (as defined in the employment agreement), full acceleration of vesting of all issued and outstanding stock options, benefits for up to 1 year, any unpaid annual bonus amounts and a pro rata bonus payment. In the event the Resnick Employment Agreement is terminated by the Company for Disability or without Cause, by Dr. Resnick for Good Reason, or in connection with a Change in Control, Dr. Resnick would be entitled to receive all Accrued Obligations, full acceleration of vesting of all issued and outstanding stock options, unpaid bonus amounts and a pro rata bonus payment, benefits for up to one year or until Dr. Resnick obtains coverage through subsequent employment (whichever is earlier) and severance payments equal to Dr. Resnick’s annual base salary payable in 12 equal monthly installments.
2015 Management Bonus Plan
On April 2, 2015, our Compensation Committee approved the 2015 Management Bonus Plan outlining maximum target bonuses of the base salaries of certain of our executive officers. Under the terms of the 2015 Management Bonus Plan, the Company’s Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, the Chief Financial Officer shall receive a maximum target bonus of up to 35% of his annual base salary and the Company’s Vice President shall receive a maximum target bonus of up to 25% of his annual base salary. On February 16, 2016, our Compensation Committee approved a 2016 Management Bonus Plan outlining maximum target bonuses of the base salaries of certain of our executive officers. Under the terms of the 2016 Management Plan, the Company's Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, and the Chief Financial Officer and each of the Company's Vice Presidents of Discovery and Development shall receive a maximum target bonus of up to 30% of his annual base salary.
DIRECTOR COMPENSATION
EmployeeNon-employee directors do not receive any separate compensation for their board of director activities.activities, other than Dr. Ravetch. In April 2015, Dr. Ravetch received 17,770 shares of fully vested restricted common stock valued at $302,450 in exchange for future services of at least one year. On April 1, 2016, we entered into a two-year consulting agreement with Dr. Ravetch, whereby Dr. Ravetch will provide key technology, predevelopment, corporate development, and other consulting services in exchange for $100,000 in cash compensation each year of the agreement. During the year ended December 31, 2015,2016, non-named-executive-officer directors received the compensation described below for their services as director.
20152016 Director Compensation Table
| Name of Director | | Fees Earned or Paid in Cash ($) | | | Option Awards ($) (1) | | | Stock Awards ($) (3) | | | Total ($) | | Fees Earned or Paid in Cash ($) | | | |
Philip O. Livingston, M.D. (2) | | | -- | | | | -- | | | | -- | | | | -- | | — | $— |
| | $ | 20,500 | | | $ | 92,573 | | | $ | 78,775 | | | $ | 191,848 | | $31,500 | $27,778 | $— | $59,278 |
| | $ | 12,000 | | | $ | 92,573 | | | $ | 78,775 | | | $ | 183,348 | | $26,000 | $74,412
| $— | $100,412 |
| | $ | 24,000 | | | $ | 92,573 | | | $ | 78,775 | | | $ | 195,348 | | $38,500 | $27,778 | $— | $66,278 |
| | $ | 22,000 | | | $ | 92,573 | | | $ | 78,775 | | | $ | 193,348 | | $34,500 | $27,778 | $— | $62,278 |
| | $ | 6,000 | | | $ | 92,573 | | | $ | 78,775 | | | $ | 177,348 | | $26,000 | $26,812 | $— | $52,812 |
| Jeffrey F. Eisenberg (6) | | $16,703 | $38,939 | $— | $55,642 |
(1) | The amounts in this column represent the aggregate full grant date fair values of stock options granted to each of the non-employee directors computed in accordance with Accounting Standards Codification 718, or ASC 718, “Compensation—Stock Compensation,” excluding the effect of estimated forfeitures. The amounts reported for these options may not represent the actual economic values that the Company’s non-employee directors will realize from these options, as the actual value realized will depend on the Company’s performance, stock price and their continued services. |
(2) | Dr. Livingston does not receive any cash compensation as a director. Dr. Livingston’s employee compensation in 20152016 consisted of $60,000 in cash compensation. In addition, Dr. Livingston received 700 options on August 29, 2016. Dr. Livingston had 3,705 options outstanding at December 31, 2016. |
(3) | The amounts in this column includeRepresents the aggregate grant date fair value of restricted stock and restricted stock units granted in accordance with Accounting Standards Codification 718, or ASC 718, “Compensation—Stock Compensation.” |
(4) | Non-employee directors serving on the board during 2016 were each granted 4,730 options on June 29, 2016 at an exercise price of $4.07 per share with a grant date fair value of $13,437 vesting over one year. In addition, Mr. Cohen, Mr. Hoffman, Mr. Maier and Dr. Ravetch each were granted 4,100 options, and Mr. Varvaro was granted 3,800 options on August 29, 2016 at an exercise price of $5.00 with grant date fair values of $14,431 and $13,375, respectively, vesting over three years. |
(5) | In addition to the options granted to all non-employee directors, during 2015on November 3, 2016, Dr. Ravetch was granted 17,500 options with an exercise price of $3.75 per share with a grant date fair value of $46,544 vesting dates after 2015.over three years. Dr. Ravetch has 37,192 options and 3,086 restricted stock units outstanding at December 31, 2016. |
(6) | Mr. Eisenberg was appointed to the board of directors in February of 2016. In addition to the options granted to all non-employee directors, he was granted 6,757 options on February 19, 2016 at an exercise price of $3.70 per share with a grant date fair value of $17,407 vesting over three years, 4,730 options on June 29, 2016 at an exercise price of $4.07 per share with a grant date fair value of $13,347 vesting over one year, and 2,300 options on August 29, 2016 at an exercise price of $5.00 with a grant date fair value of $8,095 vesting over three years. Mr. Eisenberg had 13,787 awards outstanding at December 31, 2016. |
(7) | Mr. Hoffman, Mr. Maier and Mr. Cohen each had a total of 19,692 options and 3,086 restricted stock units outstanding at December 31, 2016. |
(8) | Mr. Varvaro had a total of 17,889 options and 3,086 restricted stock units outstanding at December 31, 2016. |
The following table shows for each non-NEO director (a) the grant date of each option granted to the non-employee director in the 2015 fiscal year, (b) the exercise price, (c) the grant date fair value of that option as calculated in accordance with ASC 718 and (d) the aggregate number of shares subject to all outstanding options held by that individual as of December 31, 2015:
| Name of Director | | Option Grant Date | | | Exercise Price Per Share ($) | | | Full Grant Date Fair Value ($) | | | Total Shares Subject to Outstanding Options at 12/31/15 | |
Philip O. Livingston, M.D. | | | | | | | | | | | | | | | | |
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Amended and Restated Director Compensation Policy
In 2015, under our Non-Employee Director Compensation Policy, or the Policy, members of the Board of Directors who are not employees of, or compensated consultants to the Company or any of its affiliates (an “Outside Director”) was, were entitled to receive certain stock option grants.
Under the Policy, each newly appointed or elected Outside Director was granted a non-qualified stock option to purchase up to 11,1161,502 shares of our common stock on the date of his or her initial appointment or election to our Board of Directors. These initial option grants were fully vested on the date of the grant, and had an exercise price equal to the greater of $4.48 per share, or the fair market value of shares of our common stock as determined in the Stock Plan on the date of grant.
Under the Policy in 2015, our Outside Directors were entitled to receive annual cash payments of $12,000 payable on a monthly pro-rata basis and cash payments of $1,250 per meeting attended in person and $750 per meeting attended telephonically. On April 3, 2015, the Board ratified the Compensation Committee’s amendment to the Policy and implementation of the below compensation for all Outside Directors:
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Each Non-employee Board member shall receive a cash retainer of $24,000 per year. Chairmen of each committee shall receive an additional cash retainer as follows: (i) $12,000 for the Chairman of the Audit Committee; (ii) $8,000 for the Chairman of the Compensation Committee; and (iii) $5,000 for the Chairman of the Nominating Committee. All such retainers will be paid on a quarterly basis;
| Each Non-employee Board member shall receive a cash retainer of $24,000 per year. Chairmen of each committee shall receive an additional cash retainer as follows: (i) $12,000 for the Chairman of the Audit Committee; (ii) $8,000 for the Chairman of the Compensation Committee; and (iii) $5,000 for the Chairman of the Nominating Committee. All such retainers will be paid on a quarterly basis; |
| Each current Board member received a one-time grant, and each new member going forward shall receive an initial one time grant of: 68,500 shares of common stock, half of which shall be comprised of restricted stock units and half of which shall be comprised of stock option with three year annual vesting; and |
| Each Non-employee Board member will also receive an automatic annual grant of 35,000 stock options, with one year vesting. |
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Each current Board member received a one-time grant, and each new member going forward shall receive an initial one time grant of: 9,257 shares of common stock, half of which shall be comprised of restricted stock units and half of which shall be comprised of stock option with three-year annual vesting; and
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Each Non-employee Board member will also receive an automatic annual grant of 4,780 stock options, with one year vesting.
On April 3, 2015, the Board approved the following Non-Employee Director Policy with respect to an incumbent non-employee membersmember of the Board in the event that they areis replaced before their term expires:
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A one-time issuance of 2,703 restricted shares of common stock;
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The issuance of all vested options and restricted stock grants held on such date; and
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The payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date.
On February 16, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
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The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 6,757 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal the closing price of the Company's common stock on the effective date of the appointment (or election);
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The annual cash retainer for each non-employee director, paid quarterly, is increased by $1,000 per calendar quarter to a total of $7,000 per quarter, effective April 1, 2016; and
· | A one-time issuance of 20,000 restricted shares of common stock; |
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| The vesting of all options and restricted stock grants held on such date; and |
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The additional annual cash retainer for the chairperson of each of the Audit, Compensation, and Nominating and Governance Committees, paid quarterly, is increased by $1,000 per calendar year, such that each chairperson retainer shall be as follows, effective April 1, 2016: Audit Committee: $13,000; Compensation Committee: $9,000; Nominating and Governance Committee: $6,000
| The payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date. |
On August 25, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
●
The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 25,000 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal the closing price of the Company's common stock on the effective date of the appointment (or election);
●
The additional automatic annual option grant to each non-employee director on the date of the Company's annual meeting shall be a 10-year option to purchase 17,500 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 1-year vesting and a strike price equal the closing price of the Company's common stock on the date of the annual meeting.
On February 6, 2017, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
●
The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 30,000 shares of the Company's Common Stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal the closing price of the Company's common stock on the effective date of the appointment (or election);
●
The additional automatic annual option grant to each non-employee director on the date of the Company's annual meeting shall be a 10-year option to purchase 20,000 shares of the Company's Common Stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 1-year vesting and a strike price equal the closing price of the Company's common stock on the date of the annual meeting.
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to us concerning the beneficial ownership of MabVax Therapeutics Holdings’our common stock asfor:
●
each person known by us to beneficially own more than 5% of January 25, 2016 for:our common stock;
| | each person known by us to beneficially own more than 5% of the Company’s common stock; |
●
each of our executive officers; and
●
all of our directors and executive officers as a group.
| | each of our executive officers; and |
| | all of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In general, a person is deemed to be the beneficial owner of (i) any shares of the Company’s common stock over which such person has sole or shared voting power or investment power, plus (ii) any shares which such person has the right to acquire beneficial ownership of within 60 days of the above date, whether through the exercise of options, warrants or otherwise. Applicable percentagesPercentage ownership calculations for beneficial ownership are based on 29,036,2726,434,348 shares outstanding as of common stock outstanding on the date above,May 11, 2017, adjusted as required by rules promulgated by the SEC.
Certain investors have indicated an interest in purchasing an aggregate of up to approximately $1.75 million of our shares of Series G Preferred Stock and $1.4 million of our common stock in this offering at the offering price. At the assumed public offering price of $1.75 per share, these investors would purchase all shares of Series G Preferred Stock being offered in this offering based on these indications of interest. However, because indications of interest are not binding agreements or commitments to purchase, these investors may determine to purchase fewer shares than they indicate an interest in purchasing or not to purchase any shares in this offering. The following table does not reflect any potential purchases by this investor. Name and Address of Beneficial Owner | | Number of Shares of Common Stock | | | Percentage of Common Stock | |
| 5% Stockholders | | | | | | | | |
| | | | | | | | |
| | | | | | | | | |
Directors and Executive Officers | | | | | | | | |
Philip O. Livingston, M.D. (1) | | | | | | | | |
Jeffrey Ravetch, M.D., Ph.D. (2) | | | | | | | | |
| | | | | | | | |
Wolfgang W. Scholz, Ph.D. (4) | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Paul W. Maffuid, Ph.D. (9) | | | | | | | | |
| | | | | | | | |
| | | | | | | | | |
All executive officers and directors as a group (10 persons) | | | | | | | | |
Name and Address of Beneficial Owner | Number of Shares of Common Stock | Percentage of Common Stock |
| 5% Stockholders | | |
Dr. Phillip Frost, M.D. (12) | 422,334
| 6.56% |
Barry Honig (13) | 391,648
| 6.09%
|
Michael Brauser (14) | 342,614 | 5.32% |
| Directors and Executive Officers | | |
Philip O. Livingston, M.D. (1) | 196,286 | 3.05% |
Jeffrey Ravetch, M.D., Ph.D. (2) | 17,134 | * |
J. David Hansen (3) | 176,678
| 2.70% |
Robert E. Hoffman (4) | 18,486
| * |
Kenneth M. Cohen (5) | 27,843
| * |
Paul V. Maier (6) | 17,810 | * |
Gregory P. Hanson (7) | 80,608
| 1.24% |
Paul W. Maffuid, Ph.D. (8) | 59,469
| * |
Thomas C. Varvaro (9) | 15,632
| * |
Jeffrey F. Eisenberg (10) | 6,983
| * |
Paul Resnick (11) | 25,226 | * |
| All executive officers and directors as a group (11 persons) | 642,155
| 9.51% |
* **
| Less than 1%. Based solely on the holder’s filing with the Securities and Exchange Commission on Schedule 13G.
|
| (1) | Consists of (i) 1,307,396176,675 shares held by RTP Venture Fund, (ii) 110,14714,885 shares held by Philip O. Livingston, (iii) 12,7341,721 shares held by the Joan L. Tweedy 2011 Revocable Trust, or the Tweedy Trust, and (iv) 19,1063,005 shares subject to options exercisable within 60 days of January 25, 2016May 11, 2017 held by Philip O. Livingston. Voting and dispositive decisions of RTP Venture Fund, LLC are made by Philip Livingston, and Philip O. Livingston is a trustee of the Tweedy Trust. The address for RTP Venture Fund, LLC is 156 E. 79th Street, Apt. 6C, New York, NY 10075. |
| (2) | Includes 11,11614,048 shares subject to options exercisable within 60 days of January 25, 2016.May 11, 2017. |
| (3) | Includes 31,265108,967 shares subject to options exercisable within 60 days of January 25, 2016. |
| |
| (4) | Includes 19,45414,048 shares subject to options exercisable within 60 days of January 25, 2016. |
| |
| (5) | Includes 11,11614,048 shares subject to options exercisable within 60 days of January 25, 2016.May 11, 2017, and 6,238 common stock warrants purchased in the August 2016 financing transaction. |
| |
| (6) | Includes 11,11614,048 shares subject to options exercisable within 60 days of January 25, 2016. |
(7)May 11, 2017.
(8)
(9)
|
| (7) | Includes 11,11645,054 shares subject to options exercisable within 60 days of January 25, 2016.May 11, 2017, and 6,238 common stock warrants purchased in the August 2016 financing transaction. |
| (8) | Includes 9,32234,007 shares subject to options exercisable within 60 days of January 25, 2016.May 11, 2017, and 4,158 common stock warrants purchased by the executive in the August 2016 financing transaction. |
(9) | Includes 4,92112,546 shares subject to options exercisable within 60 days of January 25, 2016.May 11, 2017. |
(10) | Includes 6,893 shares subject to options exercisable within 60 days of May 11, 2017. |
| (11) | Includes 25,226 shares subject to options exercisable within 60 days of May 11, 2017. |
| (12) | Based solely upon a Schedule 13G/A filed with the SEC on February 3, 2017. Represents 422,334 shares of common stock held by Frost Gamma Investments Trust (“FGIT”). Excludes (i) 596,000 shares of common stock underlying Series D Convertible Preferred Stock held by FGIT which contains a 4.99% beneficial ownership blocker and (ii) 505,890 shares of common stock underlying warrants held by FGIT which contains a 4.99% beneficial ownership blocker. Dr. Frost is the trustee of FGIT. Frost Gamma L.P. is the sole and exclusive beneficiary of FGIT. Dr. Frost is one of two limited partners of Frost Gamma L.P. The general partner of Frost Gamma L.P. is Frost Gamma, Inc., and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is the sole shareholder of Frost-Nevada Corporation. The reporting person disclaims beneficial ownership of these securities, except to the extent of any pecuniary interest therein and this report shall not be deemed an admission that the reporting person is the beneficial owner of these securities for purposes of Section 16 or for any other purpose. |
(13) | Based solely upon a Schedule 13G filed with the SEC on February 17, 2017. Represents (i) 61,537 shares of common stock held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig (“Roth 401K”), for which Barry Honig is trustee and over which securities he holds voting and dispositive power, (ii) 36,000 shares of common stock held by GRQ Consultants, Inc. 401K (“401K”), for which Barry Honig is trustee and over which securities he holds voting and dispositive power and (iii) 47,074 shares of common stock held by Barry & Renee Honig Charitable Foundation (the “Foundation”), for which Barry Honig is trustee and over which securities he holds voting and dispositive power. Does not include (i) 103,950 shares of common stock issuable upon conversion of the Company’s Series F Convertible Preferred Stock held by Roth 401K or (ii) 145,530 shares of common stock issuable upon conversion of the Company’s Series F Convertible Preferred Stock held by GRQ Consultants, Inc. Roth 401K FBO Renee Honig (“Renee 401K”), for which Barry Honig’s spouse, Renee Honig, is trustee and over which securities she holds voting and dispositive power. The Series F Convertible Preferred Stock contains a 4.99% beneficial ownership blocker. Additionally, does not include (i) 207,900 shares of common stock underlying warrants held by Roth 401K, (ii) 70,166 shares of common stock underlying warrants held by 401K, (iii) 415,800 shares of common stock underlying warrants held by Renee 401K or (iv) 62,370 shares of common stock underlying warrants held by the Foundation. All of these warrants contain a 4.99% beneficial ownership blocker. |
(14) | Based solely upon a Schedule 13G filed with the SEC on February 2, 2017. Includes 5,000 shares of common stock held by Michael & Betsy Brauser Tenants by Entirety (“MBTBE”) and 248,582 shares of common stock held by Grander Holdings, Inc. 401K of which the reporting person is a trustee (“Grander 401K”). Excludes 513,514 shares of common stock underlying Series D Convertible Preferred Stock held by Brauser which contains a 4.99% beneficial ownership blocker; (ii) 207,900 shares of common stock underlying Series F Convertible Preferred Stock held by Grander 401K which contains a 4.99% beneficial ownership blocker and (iii) 415,800 shares of common stock underlying warrants held by Grander 401K which contain a 4.99% beneficial ownership blocker. |
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides certain information with respect to all the Company’s equity compensation plans in effect as of December 31, 2016.
| | | | |
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) | 851,376 | $10.94 | 66,693 |
| Equity compensation plans not approved by security holders | — | N/A | — |
| Total | 851,376 | | 66,693 |
| (1) | The information presented in this table is as of December 31, 2016 and after giving effect to the Listing Reverse Split. |
CERTAINCERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
We entered into Separation and Release Agreements and are and were parties to the employment agreements with each of our officers as set forth in the section entitled “Executive and Director Compensation” above. Pursuant to our Audit Committee Charter, the Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any parties related to us have or will have a direct or indirect material interest.
Ravetch Grant
On April 3, 2015, the Board approved the issuance of an additional restricted stock award of 131,500 shares to Jeffrey Ravetch. This award is for future services covering at least one year period. The award was granted in addition to the prior award to Dr. Ravetch on April 2, 2015 of: (i) 34,250 restricted shares and (ii) options to purchase 34,250 shares of common stock with an exercise price of $2.30 per share, for a total grant of 200,000 restricted shares and options.
Livingston Grant
On March 23, 2015, the Board of Directors approved a restricted stock award by the Company of 1,000,000 shares of common stock, to be negotiated with Phil Livingston, Ph.D. for his continuing service to the Company. On April 4, 2015, the Company awarded and issued the shares to Dr. Livingston by virtue of a common stock purchase agreement, in exchange for Dr. Livingston’s ongoing services as a member of the Company’s Board of Directors. On May 13, 2015, the Compensation Committee of the Board clarified that the award is being granted in consideration for at least one year of Dr. Livingston’s services.
After review of all relevant transactions or relationships between each director and nominee for director, or any of his or her family members, and the Company, its senior management and its Independent Registered Public Accounting Firm, the Board of Directors has determined that all of the Company’s directors are independent within the meaning of the applicable SEC rules and the NASDAQ listing standards, except Mr. Hansen, the Chairman of the Board of Directors and Chief Executive Officer and President of the Company, and Dr. Livingston, Chief Science Officer of the Company. Although the Company is not currently NASDAQ-listed we believe it is in the Company’s interests to comply with these standards both as a matter of good governance and to facilitate any future re-listing.
The following description of our capital stock summarizes the material terms and provisions of our common stock and preferred stock.
Our authorized capital stock consists of 150,000,000 shares of common stock, $0.01 par value, and 15 million shares of preferred stock, $0.01 par value. As of January 25, 2016, there were 29,036,272 shares of common stock outstanding, 185,039 shares of Series D Preferred Stock outstanding, and 33,333 shares of Series E Preferred Stock outstanding.
The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of common stock and preferred stock entitled to vote in any election of directors may elect all of the directors standing for election. Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available therefor. Upon the liquidation, dissolution or winding up of the Company, holders of our common stock are entitled to share ratably together with the holders of our Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to our common stock. All outstanding shares of common stock are fully paid and non-assessable.
Pursuant to our certificate of incorporation, our board of directors has the authority, without further action by the stockholders, to issue up to 15,000,000 shares of preferred stock, in one or more series. Our board shall determine the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series. The issuance of preferred stock could adversely affect the voting power, conversion or other rights of holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change in control of the Company or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock.
0% Series D Convertible Preferred Stock
Pursuant to the Series D Certificate of Designations, we designated 1,000,000 shares of our blank check preferred stock as Series D preferred stock. Each share of Series D preferred stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up of our company, each share of Series D preferred stock will be entitled to a per share preferential payment equal to the stated value. Each share of Series D preferred stock is convertible into 100 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. We are prohibited from effecting the conversion of the Series D preferred stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99% (provided that certain investors elected to block their beneficial ownership initially at 2.49), in the aggregate, of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series D preferred stock. Each share of Series D preferred stock entitles the holder to vote on all matters voted on by holders of common stock. With respect to any such vote, each share of Series D preferred stock entitles the holder to cast such number of votes equal to the number of shares of common stock such shares of Series D preferred stock are convertible into at such time, but not in excess of the beneficial ownership limitation.
On March 25, 2015, we entered into the Exchange Agreements with certain holders of our then outstanding Series A-1 Preferred Stock and A-1 Warrants and holders of our Series B Preferred Stock and Series B Warrants, all previously issued by us. Pursuant to the Exchange Agreements, the holders exchanged such securities and relinquished any and all other rights they may in connection therewith, their respective governing agreements and certificates of designation, including any related registration rights, in exchange for the Exchanged Securities.
As of January 25, 2016, 185,039 shares of our Series D Preferred Stock are outstanding and convertible into 18,503,900 shares of our common stock.
0% Series E Convertible Preferred Stock
On March 30, 2015, we filed a Certificate of Designations, Preferences and Rights of the 0% Series E Convertible Preferred Stock with the Delaware Secretary of State, designating one hundred thousand shares of preferred stock as 0% Series E Convertible Preferred Stock.
The Series E Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of the of such Series E Preferred Share, plus all accrued and unpaid dividends, if any, on such Series E Preferred Share, as of such date of determination, divided by the conversion price. The stated value of each Series E Preferred Share is $75 and the initial conversion price is $0.75 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, during the period proscribed by the Certificate of Designations, subject to certain exceptions, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price. We are prohibited from effecting a conversion of the Series E Preferred Shares to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series E Preferred Shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series E Preferred Shares, but not in excess of the beneficial ownership limitations. The Series E Preferred Shares bear no interest.
As of April 10, 2015, we entered into separate subscription agreements with accredited investors relating to the issuance and sale of an additional $6,718,751 of units at a purchase price of $0.75 per unit, with each unit consisting of one share of common stock (or, at the election of any investor who, as a result of receiving common stock would hold in excess of 4.99% of our issued and outstanding common stock, shares of our newly designated Series E Preferred Shares) and a thirty month warrant to purchase one half of one share of common stock at an initial exercise price of $1.50 per share. In connection with the above described offering we issued $2,500,000 of units consisting of Preferred Shares.
We has also granted each investor, prior to the expiration of 24 months following the final closing date of the offering, a right of participation in our financings. In the event we conduct certain private or public offerings of our securities, each investor has agreed, if requested by the underwriter or placement agent so engaged by us in connection with such offering, to refrain from selling any of our securities for a period of up to 60 days.
We have undertaken, pursuant to the registration rights agreement between the Company and each of the investors to file a registration statement to register 25% of the total number of shares of common stock issued in the offering and 25% of the shares of common stock underlying she Series E Preferred Shares, within sixty days following the final closing date of the April Private Placement, to have such registration statement declared effective by the Securities and Exchange Commission within one hundred and twenty days from such filing date and to maintain the effectiveness of the registration statement until all of the common stock and Series E Conversion Shares, have been sold or are otherwise able to be sold pursuant to Rule 144. In the event the Company fails to file within the sixty day period or have such registration statement declared effective within the one hundred and twenty day period, we are obligated to pay interest charges of 1% per month to the Series E Investors for each month during which such filing is not made and/or effectiveness obtained, such interest charges being subject to certain exceptions. On June 9, 2015, the Company received the requisite approval of the investors to amend the filing deadline to June 9, 2015 and on August 4, 2015, received further approval to extend the filing deadline to October 9, 2015 and for the waiver of any payments for liquidated damages in connection with the extension of the filing deadline. Furthermore, on October 12, 2015, the Company received the required approval to suspend the Company’s registration obligations under the Registration Rights Agreements and the Subscription Agreements during any period when the “Standstill” provision set forth in 5(u) of the Subscription Agreements is in effect.
On April 14, 2015, as a condition to participation by OPKO and FGIT in the offering, we entered into an Escrow Deposit Agreement with Signature Bank N.A. and OPKO, as amended on June 22, 2015, pursuant to which the subscriptions of OPKO and FGIT, totaling, $3.5 million, were to be deposited into and held at Signature Bank as escrowed funds. The escrowed funds were released to the Company on June 30, 2015 as part of a letter agreement giving OPKO the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members of the Company’s Board of Directors, or to approve the person(s) nominated by the Company. The nominees will be subject to satisfaction of standard corporate governance practices and any applicable national securities exchange requirements.
As of January 25, 2016, 33,333 shares of our Series E Preferred Stock are outstanding and convertible into 3,333,300 shares of our common stock.
Stock Options and Restricted Stock Units under Equity Plans
As of January 25, 2016, there were approximately 8,516,682 shares of common stock reserved for issuance under our stock option and equity plans residing in MabVax Therapeutics, Inc. prior to the merger, and after giving effect to the merger and Reverse Split. Of this number, approximately 5,559,593 shares are reserved for issuance upon exercise of outstanding options and restricted stock units that were previously granted under our equity plans, and 2,970,012 shares may be granted in the future under our equity plans.
Warrants
As of January 25, 2016, we had 8,876,336 warrants outstanding, all of which are exercisable, with a weighted average exercise price of $1.33 per share.
Anti-Takeover Effects of Provisions of Delaware Law and Our Charter Documents.
Delaware Takeover Statute. We are subject to the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL. In general, the statute prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an interested stockholder is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation’s voting stock.
Charter Documents. Our certificate of incorporation requires that any action required or permitted to be taken by its stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by a consent in writing. Additionally, our amended and restated certificate of incorporation:
substantially limits the use of cumulative voting in the election of directors;
provides for a board of directors, classified into three classes of directors;
provides that the authorized number of directors may be changed only by resolution of our board of directors;
our board of directors may appoint new directors to fill vacancies or newly created directorships; and
authorizes our board of directors to issue blank check preferred stock to increase the amount of outstanding shares.
Our bylaws provide that candidates for director may be nominated only by our board of directors or by a stockholder who gives written notice to us no later than 90 days prior to nor earlier than 120 days prior to the first anniversary of the last annual meeting of stockholders, provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice should be delivered not earlier than 120 days prior to the annual meeting nor later than the later of 90 days prior to such annual meeting or 10 days after the first public announcement of the date of such annual meeting. Our bylaws also limit who may call a special meeting of stockholders.
Delaware law and these charter provisions may have the effect of deterring hostile takeovers or delaying changes in control of our management, which could depress the market price of our common stock.
Our common stock is traded on the OTCQB marketplace under the symbol “MBVX.” On January 27, 2016, the last reported bid price for our common stock on OTCQB marketplace was $0.62 per share. As of January 27, 2016, we had approximately 159 stockholders of record. Commencing on October 10, 2014, our shares began trading under the new symbol “MBVX.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. Its address is 250 Royall Street, Canton, MA 02021 and its telephone number is (800) 884-4225.
SELLING SHAREHOLDERS
We are registering an aggregate of 3,904,830 Resale Shares for resale by the Selling Shareholders listed in the table below. All expenses incurred with respect to the registration of the Common Stock will be paid by us, but we will not be obligated to pay any underwriting fees, discounts, commissions or other expenses incurred by the Selling Shareholders in connection with the sale of such shares.
The Selling Shareholders may also resell all or a portion of their securities in reliance upon Rule 144 under the Securities Act provided that they meet the criteria and conform to the requirements of that rule or by any other available means.
The Selling Shareholders named below may from time to time offer and sell pursuant to this prospectus up to 3,904,830 Resale Shares. The shares of our Common Stock included in the Resale Shares were issued to the Selling Shareholders in the transaction described in the footnotes to the following table.
The following table sets forth:
| · | the name of the Selling Shareholders; |
| · | the number and percent of shares of our Common Stock that the Selling Shareholders beneficially owned prior to the offering for resale of the shares under this prospectus; |
| · | the number of shares of our Common Stock that may be offered for resale for the account of the Selling Shareholders under this prospectus; and |
| · | the number and percent of shares of our Common Stock to be beneficially owned by the Selling Shareholders after the offering of the Resale Shares (assuming all of the offered Resale Shares are sold by the Selling Shareholders). |
The number of shares in the column “Number of Shares Being Offered” represents all of the shares that each Selling Shareholder may offer under this prospectus. We do not know how long the Selling Shareholders will hold the shares before selling them or how many shares they will sell, and we currently have no agreements, arrangements or understandings with any of the Selling Shareholders regarding the sale of any of the Resale Shares.
This table is prepared solely based on information supplied to us by the Selling Shareholders, any Schedules 13D or 13G and Forms 3 and 4, and other public documents filed with the SEC. The applicable percentages of beneficial ownership are based on an aggregate of 29,036,272 shares of our common stock issued and outstanding on January 25, 2016.
Except as noted in the footnotes to the table below, to our knowledge, none of the Selling Shareholders has held any position or office or had any other material relationship with us or any of our predecessors or affiliates within the past three years other than as a result of the ownership of our securities. None of the Selling Shareholders is a broker-dealer or affiliate of a broker-dealer. See “Plan of Distribution” for additional information about the Selling Shareholders and the manner in which the Selling Shareholders may dispose of their shares. Beneficial ownership has been determined in accordance with the rules of the SEC, and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shares voting or investment power of that security, and includes options that are currently exercisable or exercisable within 60 days. Our registration of these securities does not necessarily mean that the Selling Shareholders will sell any or all of the securities covered by this prospectus.
| Name of Shareholder | | Shares Beneficially OwnedPrior to Offering Number | | Number of Shares Offered(1) | | Number of SharesBeneficially Owned After Offering | | Percent Beneficially Owned After Offering (2) |
| | | | | | | | | |
| Frost Gamma Investments Trust(3) | | 1,418,555(4) | | 333,333 | | 1,479,830(75) | | 4.99% |
| TATS of WA, Inc. Defined Benefit Pension Plan(5) | | 105,000(6) | | 17,500 | | 87,500(6) | | * |
| Brett Nesland | | 150,000(7) | | 25,000 | | 125,000(7) | | * |
| Pinnacle Family Office Investments L.P.(8) | | 1,333,333(9) | | 333,333 | | 1,482,368(76) | | 4.99% |
| Sandor Capital Master Fund(10) | | 1,177,500(11) | | 196,250 | | 981,250(11) | | 3.31% |
| JSL Kids Partners(12) | | 199,999(13) | | 33,333 | | 166,666(13) | | * |
| Ernest W. Kuehne, Jr. | | 412,500(14) | | 68,750 | | 343,750(14) | | 1.17% |
| Shawn Milemore Titcomb and Jennifer Elizabeth Bove-Titcomb Living Trust(15) | | 300,000(16) | | 50,000 | | 250,000(16) | | * |
| David Moss | | 105,000(17) | | 17,500 | | 87,500(17) | | * |
| Sheldon T. Fleck | | 412,500(18) | | 68,750 | | 343,750(18) | | 1.17% |
| Andy Sassine | | 1,333,333(19) | | 333,333 | | 1,482,368(77) | | 4.99% |
| Mark Ravich | | 105,000(20) | | 17,500 | | 87,500(20) | | * |
| Robert S. Colman UDT 3/13/85(21) | | 800,001(22) | | 133,333 | | 666,668(22) | | 2.26% |
| Larry Hopfenspirger Revocable Living Trust(23) | | 412,500(24) | | 68,750 | | 343,750(24) | | 1.17% |
| Roger H. Stetson | | 100,001(25) | | 16,667 | | 83,334(25) | | * |
| Merge Capital, LLC(26) | | 499,999(27) | | 83,333 | | 416,666(27) | | 1.42% |
| Edward Karr | | 600,000(28) | | 100,000 | | 500,000(28) | | 1.70% |
| Airy Properties(29) | | 50,001(30) | | 8,334 | | 41,667(30) | | * |
| 11 East Airy Street Partnership(31) | | 100,001(32) | | 16,667 | | 83,334(32) | | * |
| Corey Patrick O’Rourke | | 100,001(33) | | 16,667 | | 83,334(33) | | * |
| | | | | | | | | | |
| | | | | | | | | | |
American European Insurance Co.(36) | | | | | | | | | | |
| | | | | | | | | | |
MSB FBO Elmer R. Salovich TTEE(39) | | | | | | | | | | |
Brio Capital Master Fund Ltd.(41) | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Horberg Enterprises Limited Partnership(52) | | | | | | | | | | |
Alpha Capital Anstalt(54) | | | | | | | | | | |
Fred Weiss and Nancy Weiss(56) | | | | | | | | | | |
Paradox Capital Partners LLC(58) | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Sargeant Capital Ventures, LLC(63) | | | | | | | | | | |
| | | | | | | | | | |
Lonnie and Dara Ogulnick(66) | | | | | | | | | | |
Stone’s Throw Capital, Inc.(68) | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
*Less than 1%
(1) | Represents 25% of shares purchased in the April Private Placement. |
(2) | Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) that no other shares of our Common Stock beneficially owned by the selling stockholders are acquired or are sold prior to completion of this offering by the selling stockholders. |
(3) | The securities are held by Frost Gamma Investments Trust, of which Phillip Frost M.D., is the trustee. Frost Gamma L.P. is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr. Frost is one of two limited partners of Frost Gamma L.P. The general partner of Frost Gamma L.P. is Frost Gamma, Inc., and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is also the sole shareholder of Frost-Nevada Corporation. |
(4) | Does not include warrants to purchase 629,778 shares of the Company’s common stock and includes 36,888 warrants to purchase shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
(5) | Don Stangle, as Trustee of TATS of WA, Inc. Defined Pension Plan, has voting and dispositive power over shares held by TATS of WA, Inc. Defined Pension Plan. |
(6) | Includes 35,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(7) | Includes 50,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(8) | Barry M. Kitt, as Manager of Pinnacle Family Office Investments L.P., has voting and dispositive power over shares held by Pinnacle Family Office Investments L.P. |
(9) | Does not include warrants to purchase 578,906 shares of the Company’s common stock and includes 87,761 warrants to purchase shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
(10) | John S. Lemak, as Manager of Sandor Capital Master Fund, has voting and dispositive power over shares held by Sandor Capital Master Fund. |
(11) | Includes 392,500 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(12) | John S. Lemak, as Manager of JSL Kids Partners, has voting and dispositive power over shares held by JSL Kids Partners. |
(13) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(14) | Includes 137,500 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(15) | Shawn Titcomb, as Trustee of Shawn Milemore Titcomb and Jennifer Elizabeth Bove-Titcomb Living Trust, has voting and dispositive power over shares held by Shawn Milemore Titcomb and Jennifer Elizabeth Bove-Titcomb Living Trust. |
(16) | Includes 100,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(17) | Includes 35,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(18) | Includes 137,500 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(19) | Does not include warrants to purchase 578,906 shares of the Company’s common stock and includes 87,761 warrants to purchase shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
(20) | Includes 35,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(21) | Robert S. Colman, as Trustee of Robert S. Colman UDT 3/13/85, has voting and dispositive power over shares held by Robert S. Colman UDT 3/13/85. |
(22) | Includes 266,667 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(23) | Larry Hopfenspirger, as Trustee of Larry Hopfenspirger Revocable Living Trust, has voting and dispositive power over shares held by Larry Hopfenspirger Revocable Living Trust. |
(24) | Includes 137,500 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(25) | Includes 33,334 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(26) | Erick Richardson, as Managing Member of Merge Capital, LLC, has voting and dispositive power over shares held by Merge Capital, LLC. |
(27) | Includes 166,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(28) | Includes 200,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(29)
| John O’Rourke has voting and dispositive power over shares held by Airy Properties.
|
(30) | Includes 16,667 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker.
|
(31) | John O’Rourke has voting and dispositive power over shares held by 11 East Airy Street Partnership. |
(32) | Includes 33,334 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(33) | Includes 33,334 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(34) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(35) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(36) | Nachum Stein, as Chairman of American European Insurance Co., has voting and dispositive power over shares held by American European Insurance Co.. |
(37) | Includes 100,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(38) | Includes 100,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(39) | Elmer R. Salovich, as Trustee of MSB FBO Elmer R. Salovich TTEE, has voting and dispositive power over shares held by MSB FBO Elmer R. Salovich TTEE. |
(40) | Includes 35,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(41) | Shaye Hirsch, as Director of Brio Capital Master Fund Ltd., has voting and dispositive power over shares held by Brio Capital Master Fund Ltd. |
(42) | Includes 200,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(43) | Includes 50,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(44) | Includes 66,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(45) | Glenn L. Halpryn, as President of IVC Investors, LLP, has voting and dispositive power over shares held by IVC Investors, LLP. |
(46) | Includes 133,500 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(47) | Richard A. Brand, as Chief Executive Officer of Point Capital, Inc., has voting and dispositive power over shares held by Point Capital, Inc. |
(48) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(49) | Includes 100,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(50) | Includes 100,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(51) | Includes 67,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(52) | Howard Horberg, as President of Horberg Enterprises Limited Partnership, has voting and dispositive power over shares held by Horberg Enterprises Limited Partnership. |
(53) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(54) | Konrad Ackerman, as Director of Alpha Capital Anstalt, has voting and dispositive power over shares held by Alpha Capital Anstalt. |
(55) | Does not include warrants to purchase 411,166 shares of the Company’s common stock and includes 88,834 warrants to purchase shares of the Company’s common stock which contains a 4.99% beneficial ownership blocker.
|
(56) | Fred Weiss and Nancy Weiss own such shares as tenants in common and share voting and dispositive power over such shares. |
(57) | Includes 35,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(58) | Harvey Kesner, as Manager of Paradox Capital Partners LLC, has voting and dispositive power over shares held by Paradox Capital Partners LLC. |
(59) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(60) | Includes 50,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(61) | Erick Richardson, as Managing Member of Bebe LLC, has voting and dispositive power over shares held by Bebe LLC. |
(62) | Includes 26,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(63) | Daniel Nir, as Managing Member of Sargeant Capital Ventures, LLC, has voting and dispositive power over shares held by Sargeant Capital Ventures, LLC. |
(64) | Includes 66,666 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(65) | Includes 35,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(66) | Lonnie Ogulnick and Dara Ogulnick own such shares as tenants in common and share voting and dispositive power over such shares. |
(67) | Includes 40,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(68) | Steven Parker, as Director of Stone’s Throw Capital, Inc., has voting and dispositive power over shares held by Stone’s Throw Capital, Inc. |
(69) | Includes 75,000 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(70) | Includes 33,334 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(71) | Includes 52,500 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(72) | Includes 66,667 warrants to purchase shares of the Company’s common stock which are subject to a 4.99% beneficial ownership blocker. |
(73) | Dr. Phillip Frost, M.D., as Chief Executive Officer and Chairman of OPKO Health, Inc., has voting and dispositive power over shares held by OPKO Health, Inc. Shares being registered for resale hereunder by OPKO Health, Inc. represent shares issuable upon converstion of Series E Convertible Preferred Stock. |
(74) | Does not include warrants to purchase 1,837,121 shares of the Company’s common stock which contains a 4.99% beneficial ownership blocker. |
(75) | Includes warrants to purchase 431,496 shares of the Company’s common stock and excludes warrants to purchase 235,170 shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
(76) | Includes warrants to purchase 482,368 shares of the Company’s common stock and excludes warrants to purchase 184,299 shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
(77) | Includes warrants to purchase 482,368 shares of the Company’s common stock and excludes warrants to purchase 184,299 shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
(78) | Includes warrants to purchase 395,732 shares of the Company’s common stock and excludes warrants to purchase 104,268 shares of the Company’s common stock which contain a 4.99% beneficial ownership blocker.
|
Each selling stockholder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on The OTCQB or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling shares:
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable exchange;
privately negotiated transactions;
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
a combination of any such methods of sale; or
any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933, as amended. Each selling stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock.
We are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933, as amended.
Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, they will be subject to the prospectus delivery requirements of the Securities Act of 1933, as amended, including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act of 1933, as amended may be sold under Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the selling stockholders without registration and without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144 or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act of 1933, as amended).
The validity of the securities being offered by this prospectus been passed upon for us by Sichenzia Ross Friedman Ference LLP, New York, New York.
Our consolidated financial statements as of December 31, 2014 and 2013 and for the years then ended included in this registration statement have been audited by CohnReznick LLP, an independent registered public accounting firm, as stated in their report, which includes an explanatory paragraph about MabVax Therapeutics Holdings, Inc.’s ability to continue as a going concern have been so included in reliance on the report of such firm, given on the authority of said firm as experts in accounting and auditing.
We are a reporting company and file annual, quarterly and special reports, and other information with the SEC. Copies of the reports and other information may be read and copied at the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. You can request copies of such documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.
This prospectus is part of a registration statement on Form S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded from this prospectus. For further information you may:
| ● | read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC’s Public Reference Room; or |
| ● | obtain a copy from the SEC upon payment of the fees prescribed by the SEC. |
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Balance Sheets
| | | September 30, | | | December 31, | |
| | | 2015 | | | 2014 | |
| | | (Unaudited) | | | (Note 1) | |
| Assets | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 4,538,680 | | | $ | 1,477,143 | |
| Grants receivable | | | 133,318 | | | | 84,344 | |
| Prepaid expenses | | | 411,994 | | | | 334,629 | |
| Deferred financing costs | | | 586,608 | | | | — | |
| Other current assets | | | 11,016 | | | | 14,675 | |
| Total current assets | | | 5,681,616 | | | | 1,910,791 | |
| Property and equipment, net | | | 109,920 | | | | 57,053 | |
| Goodwill | | | 6,826,003 | | | | 6,826,003 | |
| Other long-term assets | | | 126,655 | | | | 11,017 | |
| Total assets | | $ | 12,744,194 | | | $ | 8,804,864 | |
| Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 2,331,613 | | | $ | 1,313,247 | |
| Accrued compensation | | | 489,114 | | | | 230,381 | |
| Accrued clinical operations and site costs | | | 373,197 | | | | 494,110 | |
| Accrued lease contingency fee | | | 590,504 | | | | 590,504 | |
| Other accrued expenses | | | 1,199,278 | | | | 245,421 | |
| Warrant liability | | | — | | | | 92,463 | |
| Total current liabilities | | | 4,983,706 | | | | 2,966,126 | |
| Commitments and contingencies: | | | | | | | | |
| Redeemable convertible preferred stock: | | | | | | | | |
| MabVax Therapeutics Holdings Series B redeemable convertible preferred stock, 1,250,000 shares authorized, none and 1,250,000 shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively, with a liquidation preference of $2,627,123 as of December 31, 2014 | | | — | | | | 1,838,025 | |
| Total redeemable convertible preferred stock | | | — | | | | 1,838,025 | |
| Stockholders' equity: | | | | | | | | |
| Series A-1 convertible preferred stock, 2,763,000 shares authorized, none and 1,593,389 shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively, with a liquidation preference of $2,860,233 as of December 31, 2014 | | | — | | | | 4,029,576 | |
| Series C convertible preferred stock, 200,000 shares authorized, none and 96,571 shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively, with no liquidation preference | | | — | | | | 966 | |
| Series D convertible preferred stock, $0.01 par value, 1,000,000 shares authorized, 191,491 and no shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively, with a liquidation preference of $1,915 as of September 30, 2015 | | | 1,915 | | | | — | |
| Series E convertible preferred stock, $0.01 par value, 100,000 shares authorized, 33,333 and no shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively, with a liquidation preference of $333 as of September 30, 2015 | | | 333 | | | | — | |
| Common stock, $0.01 par value; 150,000,000 shares authorized as of September 30, 2015, 25,891,072 and 2,802,867 shares issued and outstanding as of September 30, 2015, and December 31, 2014, respectively | | | 258,911 | | | | 28,029 | |
| Additional paid-in capital | | | 64,118,899 | | | | 24,492,450 | |
| Accumulated deficit | | | (56,619,570 | ) | | | (24,550,308 | ) |
| Total stockholders' equity | | | 7,760,488 | | | | 4,000,713 | |
| Total liabilities, redeemable convertible preferred stock and stockholders' equity | | $ | 12,744,194 | | | $ | 8,804,864 | |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.Condensed Consolidated Statements of Operations
(Unaudited)
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| Revenues: | | | | | | | | | | | | | | | | |
| Grants | | $ | 133,318 | | | $ | 62,492 | | | $ | 509,474 | | | $ | 219,832 | |
| Other | | | — | | | | 10,000 | | | | — | | | | 10,000 | |
| Total revenues | | | 133,318 | | | | 72,492 | | | | 509,474 | | | | 229,832 | |
| | | | | | | | | | | | | | | | | |
| Operating costs and expenses: | | | | | | | | | | | | | | | | |
| Research and development | | | 3,127,173 | | | | 763,674 | | | | 7,178,703 | | | | 2,401,090 | |
| General and administrative | | | 2,286,315 | | | | 1,842,879 | | | | 7,473,416 | | | | 3,769,049 | |
| Total operating costs and expenses | | | 5,413,488 | | | | 2,606,553 | | | | 14,652,119 | | | | 6,170,139 | |
| Loss from operations | | | (5,280,170 | ) | | | (2,534,061 | ) | | | (14,142,645 | ) | | | (5,940,307 | ) |
| Interest and other income (expense) | | | (84 | ) | | | (27 | ) | | | (269 | ) | | | (291 | ) |
| Change in fair value of warrant liability | | | — | | | | 226,584 | | | | 19,807 | | | | 226,584 | |
| Net loss | | | (5,280,254 | ) | | | (2,307,504 | ) | | | (14,123,107 | ) | | | (5,714,014 | ) |
| Deemed dividend on Series A-1 preferred stock | | | — | | | | — | | | | (9,017,512 | ) | | | (2,214,911 | ) |
| Deemed dividend on Series A-1 warrant | | | — | | | | — | | | | (179,411 | ) | | | — | |
| Deemed dividend on Series B preferred stock | | | — | | | | — | | | | (8,655,998 | ) | | — | |
| Accretion of preferred stock dividends | | | — | | | | (213,452 | ) | | | (93,234 | ) | | | (307,216 | ) |
| Net loss allocable to common stockholders | | $ | (5,280,254 | ) | | $ | (2,520,956 | ) | | $ | (32,069,262 | ) | | $ | (8,236,141 | ) |
| Basic and diluted net loss per share | | $ | (0.20 | ) | | $ | (1.54 | ) | | $ | (1.89 | ) | | $ | (11.24 | ) |
| Shares used to calculate basic and diluted net loss per share | | | 25,798,750 | | | | 1,631,932 | | | | 17,001,468 | | | | 732,962 | |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.Condensed Consolidated Statements of Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity
For the Nine Months Ended September 30, 2015
(Unaudited)
| | | Redeemable Convertible Preferred Stock | | | Convertible Preferred Stock | | | | | | | | | | | Additional Paid-in | | | Accumulated | | | Total Stockholders' Equity | |
| | | Series B | | | Series A-1 | | | Series C | | | Series D and E | | | Common Stock | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | |
Balance at December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A-1 into common stock on January 10 and February 25, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C into common stock on January 10, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series B into common stock between March 3 and March 20, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series A-1 from January 1 to March 25, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series B from January 1 to March 25, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to exchange of common stock for Series A-1, Series A-1 Warrants, and Series B on March 25, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exchange of Series A-1 and Series A-1 Warrants into Common and Series D on March 25, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exchange of Series B into Common and Series D on March 25, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Private Placement Issuance of 6,661,000 shares at $0.75 per share, net of issuance costs of $281,023 on March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of additional common stock in March 2015 under common stock Purchase Agreement in relation to Financing on July 7, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Private Placement Issuance of 5,624,998 shares at $0.75 per share, net of issuance costs of $387,127 on April 10, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Private Placement Issuance of 33,333 shares at $75 per share of Series E Preferred Stock on April 10, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of restricted common stock in April 2015 for services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of restricted common stock to former board member on April 3, 2015 upon termination | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series D Preferred Stock to common stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued in connection with exercise of warrants on a cashless basis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Elimination of warrant liability in exchange transaction | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows(Unaudited)
| | | For the Nine Months Ended September 30, | |
| | | 2015 | | | 2014 | |
| | | | | | | |
| Operating activities | | | | | | |
| Net loss | | $ | (14,123,107 | ) | | $ | (5,714,014 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
| Depreciation and amortization | | | 15,412 | | | | 8,521 | |
| Stock-based compensation | | | 2,966,603 | | | | 510,599 | |
| Change in fair value of warrants | | | (19,807 | ) | | | (226,584 | ) |
| Issuance of restricted common stock for services | | | 1,958,450 | | | | — | |
| Increase (decrease) in operating assets and liabilities: | | | | | | | | |
| Grants receivable | | | (48,974 | ) | | | — | |
| Other receivables | | | 2,275 | | | | 3,629 | |
| Prepaid expenses and other | | | (191,619 | ) | | | (200,070 | ) |
| Accounts payable | | | 749,258 | | | | 599,608 | |
| Accrued clinical operations and site costs | | | (120,913 | ) | | | (347,031 | ) |
| Accrued compensation | | | 258,732 | | | | (628,623 | ) |
| Other accrued expenses | | | 636,358 | | | | 293,014 | |
| Net cash used in operating activities | | | (7,917,332 | ) | | | (5,700,951 | ) |
| Investing activities | | | | | | | | |
| Purchases of property and equipment | | | (68,279 | ) | | | (38,744 | ) |
| Proceeds from acquisition of Telik, Inc. | | | — | | | | 1,497,283 | |
| Net cash provided by (used in) investing activities | | | (68,279 | ) | | | 1,458,539 | |
| Financing activities | | | | | | | | |
| Issuances of preferred stock, net of issuance costs | | | 2,500,000 | | | | 2,973,655 | |
| Issuances of common stock, net of issuance costs | | | 8,546,348 | | | | 2,892,615 | |
| Proceeds from exercise of stock options | | | 800 | | | | — | |
| Proceeds from exercise of Series B warrant | | | — | | | | 1,942 | |
| Proceeds from exercise of Series C-1 warrant | | | — | | | | 1,472,502 | |
| Net cash provided by financing activities | | | 11,047,148 | | | | 7,340,714 | |
| Net change in cash and cash equivalents | | | 3,061,537 | | | | 3,098,302 | |
| Cash and cash equivalents at beginning of year | | | 1,477,143 | | | | 354,254 | |
| Cash and cash equivalents at end of period | | $ | 4,538,680 | | | $ | 3,452,556 | |
| | | | | | | | | |
| Supplemental disclosure: | | | | | |
| Cash paid during the period for income taxes | | $ | 1,600 | | | $ | 800 | |
| Supplemental disclosures of non-cash investing and financing information: | | | | | |
| Deemed dividend on beneficial conversion feature for preferred stock | | $ | 17,852,921 | | | $ | 2,214,911 | |
| Goodwill on acquisition of Telik, Inc. | | $ | — | | | $ | 6,157,681 | |
| Accretion of redemption value for Series A-1, B and C-1 convertible preferred stock | | $ | 93,234 | | | $ | 307,216 | |
| Issuance of common stock for accounts payable | | $ | — | | | $ | 240,000 | |
| Conversion of Series A and Series B redeemable preferred stock into common stock | | $ | 160,380 | | | $ | 12,527,124 | |
| Conversion of Series C preferred stock to common stock | | $ | 966 | | | $ | 1,190 | |
| Conversion of Series C-1 redeemable preferred stock into Series A-1 preferred stock | | $ | — | | | $ | 6,807,388 | |
| Conversion of Series D preferred stock to common stock | | $ | 467 | | | $ | — | |
| Conversion of Series A-1 redeemable preferred stock into common stock | | $ | 162,968 | | | $ | — | |
| Exchange of Series A-1 preferred stock and warrants into common stock and Series D convertible preferred stock | | $ | 13,111,280 | | | $ | — | |
| Exchange of Series B preferred stock and warrants into common stock and Series D convertible preferred stock | | $ | 10,451,784 | | | $ | — | |
| Warrants exercised to purchase common stock on a cashless basis | | $ | 12,198 | | | $ | 2,760 | |
| Change in fair value of warrant liability in connection with issuance of warrants with Series B preferred stock | | $ | — | | | $ | 226,584 | |
| Elimination of warrant liability in exchange transaction | | $ | 72,656 | | | $ | — | |
| Financing costs not yet paid | | $ | 586,608 | | | $ | — | |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements1. Basis of Presentation
MabVax Therapeutics Holdings, Inc. (f.k.a. Telik, Inc. and referred to herein as “MabVax Therapeutics Holdings” or the “Company”) (OTCQB: MBVX) was incorporated in the state of Delaware on October 20, 1988. On July 8, 2014, Tacoma Acquisition Corp., a Delaware corporation and wholly owned subsidiary of MabVax Therapeutics Holdings (“Tacoma Corp.”) merged with MabVax Therapeutics, Inc., a Delaware corporation (“MabVax Therapeutics”) pursuant to an Agreement and Plan of Merger, dated May 12, 2014, by and among MabVax Therapeutics Holdings, Tacoma Corp. and MabVax Therapeutics, as amended by that certain Amendment No. 1 to the Merger Agreement, dated June 30, 2014, by and among the parties thereto and by that certain Amendment No. 2 to the Merger Agreement, dated July 7, 2014, by and among the parties thereto (such agreement as amended, the “Merger Agreement”; such merger, the “Merger”). Unless the context otherwise requires, references to “we,” “our,” “us,” or the “Company” in this Quarterly Report mean MabVax Therapeutics Holdings on a condensed consolidated financial statement basis with our wholly-owned subsidiary following the Merger, MabVax Therapeutics, as applicable. On October 9, 2014 FINRA approved our stock symbol change request and the Company began trading under the symbol MBVX (OTCQB: MBVX) on October 10, 2014.
The Company is a clinical stage biopharmaceutical company engaged in the discovery, development and commercialization of proprietary human monoclonal antibody products and vaccines for the treatment of a variety of cancers. The Company has discovered a pipeline of human monoclonal antibody products based on the protective immune responses generated by patients who have been immunized against targeted cancers. Therapeutic vaccines under development were discovered at Memorial Sloan Kettering Cancer Center (“MSKCC”), and are exclusively licensed to MabVax Therapeutics. The Company operates in only one business segment.
The Company plans to continue developing MabVax Therapeutics’ pre-Merger pipeline and continue to evaluate the technology and development programs that were under way at MabVax Therapeutics Holdings prior to the Merger. The Company will terminate unwanted patent applications, and will stop the maintenance fees and patent prosecutions as they come due for the Telintra development program that was in place at MabVax Therapeutics Holdings prior to the Merger.
The Company has incurred net losses since inception and expects to incur substantial losses for the foreseeable future as it continues research and development activities. To date, the Company funded operations primarily through government grants, the sale of preferred stock and equity securities, non-equity payments from collaborators and interest income. The process of developing the Company’s products will require significant additional research and development, preclinical testing and clinical trials, as well as regulatory approval. The Company expects these activities, together with general and administrative expenses, to result in substantial operating losses for the foreseeable future. The Company will not receive substantial revenue unless the Company or its collaborative partners complete clinical trials, obtain regulatory approval and successfully commercialize one or more products or the Company licenses its technology after achieving one or more milestones of interest to a potential partner.
The accompanying unaudited condensed consolidated financial statements were prepared using GAAP for interim financial information and the instructions to Regulation S-X. While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results of the interim period, they do not include all information or notes required by GAAP for annual financial statements and should be read in conjunction with the Audited Financial Statements of MabVax Therapeutics Holdings for the year ended December 31, 2014, included in our Annual Report on Form 10-K filed on March 31, 2015, as amended on April 2, 2015, and April 30, 2015.
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Management believes that these estimates are reasonable; however, actual results may differ from these estimates.
The balance sheet data at December 31, 2014, has been derived from audited financial statements at that date. It does not include, however, all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). ASU No. 2014-09 supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. Additionally, this update supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB affirmed its proposal to defer the effective date of this standard to annual reporting periods (and interim reporting periods within those years) beginning after December 15, 2017. Entities are permitted to apply the new revenue standard early, but not before the original effective date of annual periods beginning after December 15, 2016. Entities may choose from two adoption methods, with certain practical expedients. The Company is currently reviewing this standard to assess the impact on its future financial statements and evaluating the available adoption methods.
In June 2014, the FASB issued ASU No. 2014-12, “Compensation—Stock Compensation” (Topic 718): “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. ASU No. 2014-12 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, although early adoption is permitted. The Company is currently reviewing this standard to assess the impact on its future financial statements.
In August 2014, the FASB issued ASU No. 2014-15, (“ASU 2014-15”), “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. Management is currently evaluating the impact of the adoption of the updated standard on the financial statements and disclosures.
2. Liquidity and Going Concern
The accompanying condensed consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss of $14,123,107, net cash used in operating activities of $7,917,332, net cash used in investing activities of $68,279, and net cash provided by financing activities of $11,047,148 for the nine months ended September 30, 2015. As of September 30, 2015, the Company had $4,538,680 in cash and cash equivalents and an accumulated deficit of $56,619,570.
On March 31, 2015 and April 10, 2015, the Company closed on a financing transaction by entering into separate subscription agreements with accredited investors relating to the issuance and sale of an aggregate of $11,714,498 of units (the “Units”) at a purchase price of $0.75 per Unit, with each Unit consisting of one share of the Company’s common stock, par value $0.01 per share (or, at the election of any Investor who, as a result of receiving common stock would hold in excess of 4.99% of the Company’s issued and outstanding common stock, shares of the Company’s newly designated 0% Series E Convertible Preferred Stock) and a thirty month warrant to purchase one half of one share of common stock at an initial exercise price of $1.50 per share, as further described in the Notes to Financial Statements – Equity, (the “ April 2015 Private Placement”).
The initial closing of the April 2015 Private Placement took place on March 31, 2015, in which the Company sold an aggregate of $4,995,749 of Units. Following the initial closing the Company entered into separate reconfirmation agreements with the investors in order to extend the initial closing date, increase the offering amount, and adopt a lockup agreement, which was entered by all Investors who elected to continue their investment. The second closing was completed on April 10, 2015 for an additional $6,718,751 of Units. The Company issued $2,500,000 of Units consisting of Series E Convertible Preferred Stock on April 10, 2015 and the remainder of Units issued in the April 2015 Private Placement were in the form of common stock Units. Of the total cash received in the second closing on April 10, 2015, $3,500,000 was initially held in escrow under the terms of an escrow agreement with Signature Bank, N.A pending the approval of a representative of one of the lead investors to join the board, or 10 weeks thereafter, unless released sooner or extended. On June 22, 2015, the Company, Signature Bank, N.A. and OPKO Health, Inc. (“OPKO”) extended the term of the escrow to 16 weeks from the closing of the April 2015 Private Placement. As further consideration for the amendment, on June 30, 2015, the Company and OPKO entered into a letter agreement pursuant to which the Company granted OPKO the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members of the Company’s board of directors (the “Board” or the “Board of Directors”), or to approve the person(s) nominated by the Company pursuant to the agreement in consideration for the release of the escrowed funds. The nominees will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange requirements. Upon signing the agreement, the escrowed funds were released to the Company.
On October 5, 2015, subsequent to the end of the quarter, the Company closed a public offering of 2,500,000 shares of common stock and warrants to purchase 1,250,000 shares of common stock, at an offering price of $1.10 per share. For every two shares of common stock sold, the Company issued one warrant to purchase one share of common stock. The Company received $2,750,000 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling approximately $586,608, and without giving effect to the exercise of the underwriters’ over-allotment option. The Company granted the underwriters a 30-day option to purchase up to an additional 375,000 shares of common stock and up to an additional 187,500 warrants at the same price to cover over-allotments, if any. The warrants are immediately exercisable, expire September 30, 2018, and have an exercise price of $1.32 per share.
The Company anticipates that it will continue to incur net losses into the foreseeable future as it: (i) continues to identify and advance a number of potential drug candidates into clinical and preclinical development activities, (ii) initiates manufacturing of its lead antibody candidate 5B1 and continues to fund its operations, and (iii) expands its corporate infrastructure, including the costs associated with being a public company. After giving effect to the net proceeds received from the April 2015 Private Placement and the closing of the public offering, management believes that the Company has sufficient funds to meet its obligations through June 2016.
The Company plans to continue to fund its losses from operations and capital funding needs through equity or debt financings, strategic collaborations, licensing arrangements, asset sales, government grants or other arrangements. However, the Company cannot be sure that such additional funds will be available on reasonable terms, or at all. If the Company is unable to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. In addition, if the Company does not meet its payment obligations to third parties as they come due, it may be subject to litigation claims. Even if the Company is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. Any of these actions could materially harm the Company’s business, results of operations, and future prospects.If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict the Company’s ability to operate its business.
3. Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company limits its exposure to credit loss by holding cash in U.S. Dollars or, from time to time, placing cash and investments in U.S. government, agency and government-sponsored enterprise obligations.
4. Fair value of financial instruments
The Company’s financial instruments consist of cash and cash equivalents, grants receivable, prepaid expenses and other current assets and accounts payable, all of which are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.
5. Convertible Preferred Stock, Common Stock and Warrants
Series A-1 preferred stock and common warrants
As of September 30, 2015, and December 31, 2014, there were no shares and 1,593,389 shares of Series A-1 preferred stock outstanding, respectively, and no Series A-1 warrants and 1,280,047 Series A-1 warrants to purchase common stock at $3.62 per share outstanding, respectively. Both the preferred stock and the warrants had price protection if there were to be a financing at a price lower than their conversion price or exercise price, requiring adjustment as further described in the Company’s Annual Report on Form 10-K. The Series A-1 preferred stock and warrants were initially structured as Series C-1 preferred stock and common warrants of MabVax Therapeutics prior to the Merger, and were converted from Series C-1 to Series A-1 preferred stock and warrants at the time of the Merger.
Series B Preferred Stock
As of September 30, 2015, and December 31, 2014, there were no shares and 1,250,000 shares of Series B preferred stock and no Series B warrants and 78,125 Series B warrants to purchase common stock at $1.57 a share outstanding, respectively. Both the preferred stock and the warrants had price protection if there were to be a financing at a price lower than their conversion price or exercise price, requiring adjustment as further described in the Company’s Annual Report on Form 10-K. As of December 31, 2014, the warrant liability was $92,463.
As a result of the anti-dilution provision contained in the Series B warrants, the Series B warrants were recorded as a current liability in the amount of $92,463 on our consolidated balance sheet as of December 31, 2014. On March 25, 2015, the Series B warrants were re-valued at $72,656 prior to being exchanged into shares of common stock and Series D convertible preferred stock on a one for one basis and the warrant liability was eliminated and the Company recorded a gain of $19,807 for the three months ended March 31, 2015.
Dividends on Preferred Stock
The Company immediately recognizes the changes in the redemption value on preferred stock as they occur and the carrying value of the security is adjusted to equal what the redemption amount would be as if redemption were to occur at the end of the reporting period based on the conditions that exist as of that date. The value adjustment made to the redemption value and preferred stock dividends for the three and nine months ended September 30, 2015, was an increase of none and $93,234, respectively.
Conversion of Preferred Stock into Common Stock
During the three months ended March 31, 2015, holders of Series A-1, Series B, and Series C preferred stock converted 64,019, 106,437, and 96,571 shares into 38,456, 276,883, and 120,714 shares of common stock, respectively; such conversions eliminated all outstanding Series A-1, Series B, and Series C preferred stock outstanding.
Exchange of Series A-1 and Series B Preferred Stock and Warrants into Common Stock and Series D Preferred Stock
On March 25, 2015, the Company entered into separate exchange agreements with certain holders of the Company’s Series A-1 preferred stock and Merger warrants (the “Series A-1 Exchange Securities”) and holders of the Company’s Series B preferred stock and Series B warrants (the “Series B Exchange Securities” and, collectively with the Series A-1 Exchange Securities, the “Exchange Securities”), all previously issued by the Company. Pursuant to the exchange agreements, the holders exchanged the Exchange Securities and relinquished any and all other rights they may have had pursuant to the Exchange Securities, their respective governing agreements and certificates of designation, including any related registration rights, in exchange for an aggregate of 2,537,502 shares of the Company’s common stock and an aggregate of 238,156 shares of the Company’s newly designated Series D Convertible preferred stock (the “Series D preferred stock”), convertible into 23,815,600 shares of common stock. No cash was exchanged in the transaction. The Company recorded deemed dividends of $9,017,512, $8,655,998 and $179,411 representing the excess fair value of the common stock issued over the original conversion terms of the Series A-1 and B preferred stock as part of the consideration for elimination of the Series A-1, Series B convertible preferred stock and Series A-1 warrant, respectively.
Additionally, for as long as a certain principal holder of Exchange Securities holds securities issued pursuant to the exchange agreements, subject to certain exceptions, the Company is restricted from issuing any shares of common stock or securities convertible into common stock, enter into any equity line of credit or issue any floating or variable priced equity linked instrument.
No commission or other payment was received by the Company in connection with the exchange agreements.
Series D Preferred Stock
As of September 30, 2015, there were 191,491 shares of Series D preferred stock issued and outstanding which are convertible into an aggregate of 19,149,100 shares of common stock.
As contemplated by the exchange agreements governing the issuance of the Series D preferred stock and as approved by the Company’s Board of Directors, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Series D Certificate of Designations”), on March 25, 2015. Pursuant to the Series D Certificate of Designations, the Company designated 1,000,000 shares of its blank check preferred stock as Series D preferred stock. Each share of Series D preferred stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up of the Company, each share of Series D preferred stock will be entitled to a per share preferential payment equal to the stated value. Each share of Series D preferred stock is convertible into 100 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company is prohibited from effecting the conversion of the Series D preferred stock to the extent that, as a result of such conversion, the holder beneficially would own more than 4.99% (provided that certain investors elected to block their beneficial ownership initially at 2.49% in the exchange agreements), in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series D preferred stock. Each share of Series D preferred stock entitles the holder to vote on all matters voted on by holders of common stock. With respect to any such vote, each share of Series D preferred stock entitles the holder to cast such number of votes equal to the number of shares of common stock such shares of Series D preferred stock are convertible into at such time, but not in excess of the beneficial ownership limitations.
MabVax Common Stock Financing
On March 31, 2015, the Company consummated the first closing of the April 2015 Private Placement and sold $4,714,726 of Units, net of $281,023 in issuance costs, consisting of 6,661,000 shares of common stock and warrants to purchase 3,330,500 shares of common stock at $1.50 a share. The Units were sold at a price of $0.75 per Unit.
On April 10, 2015, the Company consummated the second and final closing of the April 2015 Private Placement and sold $3,831,622 of Units, net of $387,127 in issuance costs, of which $2,500,000 of the Units consisted of Series E preferred stock and the balance of i consisting of 5,624,998 shares of common stock, together with warrants to all investors to purchase 4,479,167 shares of common stock at $1.50 a share. Each Unit was sold at a purchase price of $0.75 per Unit.
The Company paid commissions to broker-dealers in the aggregate amount of approximately $574,000 in the April 2015 Private Placement.
OPKO was the lead investor in the April 2015 Private Placement, purchasing $2,500,000 of Units consisting of Series E preferred stock.
As a condition to OPKO’s participation in the April 2015 Private Placement, each of the other investors in the April 2015 Private Placement agreed to execute lockup agreements restricting the sale of 50% of the securities underlying the Units purchased by them for a period of 6 months and the remaining 50% prior to the expiration of 1 year following the final closing date of the April 2015 Private Placement.
On April 10, 2015, the Company agreed that $3.5 million of the net proceeds of such closing would be paid into and held under and the terms of an escrow agreement with Signature Bank, N.A pending the approval of a representative of OPKO or 10 weeks thereafter, unless released sooner or extended by the Company and OPKO. On June 22, 2015 the Company and OPKO extended the termination date of the escrow to 16 weeks from the final closing of the April 2015 Private Placement. In connection with the OPKO investment, Steven Rubin, Esq. was appointed advisor to the Company. The escrowed funds were to be returned to the applicable investors and the Company shall have no further obligation to issue Units to such investors in the event certain release conditions are not met. On June 30, 2015 the Company and OPKO entered into a letter agreement pursuant to which the Company granted the representative the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members of the Company’s Board, or to approve the person(s) nominated by the Company pursuant to the agreement in consideration for the release of the escrowed funds. The nominees will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange requirements. Upon signing the agreement, the escrowed funds were released to the Company.
The warrants are exercisable upon issuance and expire 30 months thereafter and may be exercised for cash or on a cashless basis. The warrants have a per share exercise price of $1.50, subject to certain adjustments typical of warrants, namely stock splits, dividends and reverse-splits. The Company is prohibited from effecting the exercise of the warrants to the extent that, as a result of such exercise, the holder beneficially would own more than 4.99% in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the exercise of the warrants.
In connection with the Private Placement, the Company also entered into a Registration Rights Agreement with the investors in the Private Placement Pursuant to which the Company has agreed to file a registration statement with the SEC covering resales of up to 25% of common stock issued under the Subscription Agreements and shares issuable upon conversion of the Series E preferred stock, in the event the investors elect to receive Series E preferred stock instead of common stock (together, the “Registrable Securities”), no later than 60 days following the final closing date of the Private Placement, and to use its commercially reasonable best efforts to have such registration statement declared effective with 120 days after filing. The Company will bear all expenses of such registration of the resale of the Registrable Securities. Investors in the Private Placement also may be required under certain circumstances to agree to refrain from resales of a percentage of their securities upon request of an underwriter or placement agent in a future offering. The liquidated damages for failure to achieve effectiveness of the Registerable Securities is 1% a month 120 days after filing, and provided management has not used commercially reasonable best efforts to have the registration statement declared effective within that timeframe.
In connection with the April 2015 Private Placement, the Company also entered into a registration rights agreements (the “Registration Rights Agreements”) with the investors in the April 2015 Private Placement Pursuant to which the Company has agreed to file a registration statement with the SEC covering resales of up to 25% of common stock issued under the Subscription Agreements and shares issuable upon conversion of the Series E preferred stock, in the event the investors elect to receive Series E preferred stock instead of common stock (together, the “Registrable Securities”), no later than 60 days following the final closing date of the April 2015 Private Placement, and to use its commercially reasonable best efforts to have such registration statement declared effective with 120 days after filing. The Company will bear all expenses of such registration of the resale of the Registrable Securities. Investors in the Private Placement also may be required under certain circumstances to agree to refrain from resales of a percentage of their securities upon request of an underwriter or placement agent in a future offering. The liquidated damages for failure to achieve effectiveness of the Registerable Securities is 1% a month 120 days after filing, and provided management has not used commercially reasonable best efforts to have the registration statement declared effective within that timeframe.
On June 9, 2015 the Company and investors holding over 60% of the outstanding Registrable Securities (as such term is defined in the Registration Rights Agreements) entered into an amendment agreement to the Registration Rights Agreements in order to: (i) amend the definition of “Filing Date” for the initial registration statement such that such term shall be defined as “August 5, 2015” and (ii) waive any payments that may be due to the Investors as a result of the Company not filing a registration statement on or before the Filing Date, as such term was originally defined. On August 4, 2015, the Company and Investors holding over 70% of the outstanding Registrable Securities entered into a second amendment agreement to further extend the Filing Date to October 9, 2015.
On October 12, 2015, the Company and Investors holding over 60% of the outstanding Registerable Securities (as such term is defined in the Registration Rights Agreements) entered into a third amendment agreement to the Registration Rights Agreements to suspend the Company’s registration obligations under the Registration Rights Agreements and related subscription agreements during any period when the “Standstill” provision set forth in 5(u) of the subscription agreements is in effect.
Except for certain issuances, for a period beginning on the closing date of the April 2015 Private Placement and ending on the date that is the earlier of (i) 24 months from the final closing date of the April 2015 Private Placement, (ii) the date the Company consummates a financing (excluding proceeds from the April 2015 Private Placement) in which the Company receives gross proceeds of at least $10,000,000 and (iii) the date the common stock is listed for trading on a national securities exchange (such period until the earlier date, the “Price Protection Period”), in the event that the Company issues any shares of common stock or securities convertible into common stock at a price per share or conversion price or exercise price per share that is less than $0.75, the Company shall issue to the investors in the April 2015 Private Placement such additional number of shares of common stock such that the investor shall own an aggregate total number of shares of common stock as if they had purchased the Units at the price of the lower price issuance. No adjustment in the warrants is required in connection with a lower price issuance.
The Company has also granted each investor prior to the expiration of 24 months following the final closing date of the April 2015 Private Placement, a right of participation in the Company’s financings.
In the event the Company conducts certain private or public offerings of its securities, each investor has agreed, if requested by the underwriter or placement agent so engaged by the Company in connection with such offering, to refrain from selling any securities of the Company for a period of up to 60 days.
Between April 13, 2015, and April 14, 2015, certain holders of warrants issued in the April 2015 Private Placement to purchase an aggregate of 1,849,999 shares of common stock exercised such warrants on a cashless basis for an aggregate issuance of 1,219,780 shares of common stock. As of September 30, 2015, there were 5,959,668 warrants outstanding to purchase common stock at $1.50 a share.
Series E Preferred Stock
As of September 30, 2015, there were 33,333 shares of Series E preferred stock issued and outstanding, convertible into 3,333,300 shares of common stock.
On March 30, 2015, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible preferred stock to designate 100,000 shares of its blank check preferred stock as Series E preferred stock.
The shares of Series E preferred stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such preferred share, plus all accrued and unpaid dividends, if any, on such share of Series E preferred stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series E preferred stock is $75 and the initial conversion price is $0.75 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, during the Price Protection Period, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions. The Company is prohibited from effecting a conversion of the share of Series E preferred stock to the extent that, as a result of such conversion, such holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series E preferred stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s share of Series E preferred stock, but not in excess of beneficial ownership limitations. The shares of Series E preferred stock bear no interest.
Issuance of Common Stock under Common Stock Purchase Agreement
In connection with a financing that took place in July 2014, or the July 2014 Financing Transaction, the Company assumed certain obligations as per the original agreement to issue additional shares to investors in the July 2014 Financing Transaction if a subsequent financing was at a price per share lower than the price per share in the July 2014 Financing Transaction. The Company therefore issued on March 31, 2015, an aggregate of 88,093 shares of common stock that were required to be issued in connection with the July 2014 Financing Transaction, as a result of the lower share price in the April 2015 Private Placement.
Grant of Restricted Shares
Rubin Grant
On April 3, 2015, the Company entered into a consulting agreement with Steve Rubin pursuant to which he agreed to provide advisory services in connection with corporate strategy, licensing and business development estimated to be for a period of 12 months. In exchange for his services, the Company provided him with a one-time grant of 200,000 shares of the Company’s restricted common stock, valued at $2.30 a share. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the current quarter.
Ravetch Grant
On April 4,3, 2015, the Board approved the issuance of an additional restricted stock award of 131,50017,770 shares to Jeffrey Ravetch. This award is for future services covering at least one yeara one-year period. The award was granted in addition to the prior award to Dr. Ravetch on April 2, 2015 of: (i) 34,2504,628 restricted shares and (ii) options to purchase 34,2504,628 shares of common stock with an exercise price of $2.30$17.02 per share, for a total grant of 200,00027,028 restricted shares and options. As the 131,500 shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the current quarter.
Livingston Grant
On April 4,March 23, 2015, the Board of Directors approved a restricted stock award by the Company of 1,000,000135,135 shares of common stock, valued at $2.30 a share, to be issued tonegotiated with Phil Livingston, Ph.D. for his continuing service to the Company. On April 4, 2015, the Company awarded and issued the shares to Dr. Livingston by virtue of a common stock purchase agreement, in exchange for Dr. Livingston’s ongoing services as a member of the Company’s Board of Directors. On May 13, 2015, the Compensation Committee of the Board clarified that the award is being granted in consideration for at least one year of Dr. Livingston’s services. The committee further clarified that the vesting of the common stock shall be on the one-year anniversary of the Board of Directors’ approval of the award, or April 4, 2016. The Company is expensing the grant date fair value of the award over the vesting period of one year.
ConsultingRavetch Agreement
On April 5, 2015, the Company1, 2016, we entered into a consulting agreement with Dr. Ravetch to provide key technology and product development, as well as corporate development and consulting services, in addition to his services as a Board member. The Del Mar Consulting Group, Inc.term of the agreement is 2 years beginning January 1, 2016, and Alex Partners, LLC, together, the “Investor Relations Consultants”, pursuant to which such Investor Relations Consultants shall provide investor relations services toDr. Ravetch will receive $100,000 cash compensation per year.
Director Independence
After review of all relevant transactions or relationships between each director and nominee for director, or any of his or her family members, and the Company, in consideration for an immediate grantits senior management and its Independent Registered Public Accounting Firm, the Board of 300,000 sharesDirectors has determined that all of the Company’s restricteddirectors are independent, as of December 31, 2016 within the meaning of the applicable SEC rules and the NASDAQ listing standards, except Mr. Hansen, the Chairman of the Board of Directors and Chief Executive Officer and President of the Company, Dr. Livingston, Chief Science Officer of the Company; and Dr. Ravetch.
DESCRIPTION OF SECURITIES The following summary description of our capital stock is based on the provisions of our amended and restated certificate of incorporation, or certificate of incorporation, and amended and restated bylaws, or bylaws, and the applicable provisions of the Delaware General Corporation Law. This information is qualified entirely by reference to the applicable provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law. Copies of our certificate of incorporation and our bylaws, copies have been filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”
Authorized Capital Stock
Our authorized capital stock consists of 150 million shares of common stock, $0.01 par value, and 15 million shares of preferred stock, $0.01 par value. As of May 11, 2017, there were (i) 6,434,348 shares of common stock outstanding, (ii) 132,489 shares of Series D Preferred Stock outstanding that are convertible into 1,790,392 shares of common stock, (iii) 33,333 shares of Series E Preferred Stock outstanding that are convertible into 519,751 shares of common stock (iv) 665,281 shares of Series F Preferred Stock outstanding that are convertible into 665,281 shares of common stock and (v) 850 shares of Series H Preferred Stock outstanding that are convertible into 485,715 shares of common stock.
Common Stock
The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a monthly cash retainervote of $12,000the stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of common stock and preferred stock entitled to vote in any election of directors may elect all of the directors standing for election. Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available therefor. Upon the liquidation, dissolution or winding up of the Company, holders of our common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and no right to convert their common stock into any other securities. Our common stock has no redemption or sinking fund provisions. All outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock
Pursuant to our certificate of incorporation, our board of directors has the authority, without further action by the stockholders, to issue up to 15 million shares of preferred stock, in one or more series. Our board shall determine the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series. The issuance of preferred stock could adversely affect the voting power, conversion or other rights of holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of our management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock.
0% Series H Convertible Preferred Stock
Pursuant to a Series H Preferred Stock Certificate of Designations, on May 3, 2017, we designated 2,000 shares of our blank check preferred stock as Series H Preferred Stock. The shares of Series H Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of the Series H Preferred Stock, plus all accrued and unpaid dividends (the “Base Amount”), if any, on such Series H Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series H Preferred Stock is $1,000 and the initial conversion price is $1.75 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events.
In the event of a liquidation, dissolution or winding up of the Company, each share of Series H Preferred Stock will be entitled to a per share preferential payment equal to the Base Amount.All shares of our capital stock will be junior in rank to Series H Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company other than Series A through G Preferred Stock.The holders of Series H Preferred Stock will be entitled to receive dividends if and when declared by our board of directors. The Series H Preferred Stock shall participate on an “as converted” basis, with all dividends declared on our common stock. In addition, if we grant, issue or sell any rights to purchase our securities pro rata to all our record holders of our common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series H Preferred Stock then held.
We are prohibited from effecting a conversion of the Series H Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series H Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series H Preferred Stock, but not in excess of the beneficial ownership limitations.
As of May 11, 2017, there were 850 shares of Series H Preferred Stock outstanding convertible into 485,714 shares of common stock.
0% Series G Convertible Preferred Stock
Pursuant to a Series G Preferred Stock Certificate of Designations, we will designate 5,000,000 shares of our blank check preferred stock as Series G Preferred Stock. The shares of Series G Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of the of such Series G Preferred Stock, plus all accrued and unpaid dividends, if any, on such Series G Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series G Preferred Stock is $1.75 and the initial conversion price is $1.75 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The holder of a majority of the Series G Preferred Stock shall have the right to nominate a candidate for the Board, such right to expire on December 31, 2017.
In the event of a liquidation, dissolution or winding up of the Company, each share of Series G Preferred Stock will be entitled to a per share preferential payment equal to the par value. All shares our capital stock will be junior in rank to Series G Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, except for the Company’s Series D Convertible Preferred Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock. The holders of Series G Preferred Stock will be entitled to receive dividends if and when declared by our board of directors. The Series G Preferred Stock shall participate on an “as converted” basis, with all dividends declared on our common stock. In addition, if we grant, issue or sell any rights to purchase our securities pro rata to all our record holders of our common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series G Preferred Stock then held.
We are prohibited from effecting a conversion of the Series G Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series G Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series G Preferred Stock, but not in excess of the beneficial ownership limitations.
0% Series F Convertible Preferred Stock
Pursuant to a Series F Preferred Stock Certificate of Designations, on August 16, 2016, we designated 1,559,252 shares of our blank check preferred stock as Series F Preferred Stock. The shares of Series F Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of the of such Series F Preferred Stock, plus all accrued and unpaid dividends, if any, on such Series F Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series F Preferred Stock is $4.81 and the initial conversion price is $4.81 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events.
In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the par value.All shares our capital stock will be junior in rank to Series F Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, except for the Company’s Series D Preferred Stock and Series E Preferred Stock.The holders of Series F Preferred Stock will be entitled to receive dividends if and when declared by our board of directors. The Series F Preferred Stock shall participate on an “as converted” basis, with all dividends declared on our common stock. In addition, if we grant, issue or sell any rights to purchase our securities pro rata to all our record holders of our common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series F Preferred Stock then held.
We are prohibited from effecting a conversion of the Series F Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series F Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series F Preferred Stock, but not in excess of the beneficial ownership limitations.
As of May 11, 2017, there were 665,281 shares of Series F Preferred Stock outstanding convertible into 665,281 shares of common stock.
0% Series E Convertible Preferred Stock
On March 30, 2015, we filed a Certificate of Designations, Preferences and Rights of the 0% Series E Convertible Preferred Stock with the Delaware Secretary of State, designating one hundred thousand shares of preferred stock as 0% Series E Convertible Preferred Stock.
The Series E Preferred Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of the of such Series E Preferred Share, plus all accrued and unpaid dividends, if any, on such Series E Preferred Share, as of such date of determination, divided by the conversion price. The stated value of each Series E Preferred Share is $75 and the initial conversion price is $5.55 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, during the period proscribed by the Certificate of Designations, subject to certain exceptions, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price. On August 16, 2016, we revised the conversion price to $4.81 per share as a result of entering into an underwriting agreement at $4.81 per share on the date. As a result of listing on the Nasdaq stock market on August 17, 2016, the provision for price adjustment is no longer in effect. We are prohibited from effecting a conversion of the Series E Preferred Shares to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series E Preferred Shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series E Preferred Shares, but not in excess of the beneficial ownership limitations. The Series E Preferred Shares bear no interest.
As of April 10, 2015, we entered into separate subscription agreements with accredited investors relating to the issuance and sale of $11,714,498 of units at a purchase price of $5.55 per unit, with each unit consisting of one share of common stock (or, at the election of any investor who, as a result of receiving common stock would hold in excess of 4.99% of our issued and outstanding common stock, shares of our newly designated Series E Preferred Shares) and a thirty month for ongoing serviceswarrant to purchase one half of one share of common stock at an initial exercise price of $11.10 per share. In connection with the above described offering we issued $2,500,000 of units consisting of Preferred Shares on April 10, 2015.
We have also granted each investor, prior to the expiration of 24 months following the final closing date of the offering, a right of participation in our financings. In the event we conduct certain private or public offerings of our securities, each investor has agreed, if requested by the underwriter or placement agent so engaged by us in connection with such offering, to refrain from selling any of our securities for a period of one year.up to 60 days.
On April 14, 2015, as a condition to participation by OPKO and Frost Gamma Investments Trust, or FGIT, in the offering, we entered into an Escrow Deposit Agreement with Signature Bank N.A. and OPKO pursuant to which the subscriptions of OPKO and FGIT, totaling, $3.5 million, were deposited into and held at Signature Bank as escrowed funds for a period of 10 weeks, to be released subject to the approval of OPKO. On June 22, 2015, the term of the escrow was extended to 16 weeks. As further consideration for the amendment, on June 30, 2015, we entered into a letter agreement with OPKO pursuant to which we granted OPKO the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members to our Board of Directors, or to approve the person(s) nominated by us pursuant to the agreement in consideration for the release of the escrowed funds. The consultants also received an additional 200,000nominees will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange requirements. Upon signing the agreement, the escrowed funds were released to us.
As of May 11, 2017, 33,333 shares of our Series E Preferred Stock are outstanding and convertible into 519,751 shares of our common stock.
0% Series D Convertible Preferred Stock
Pursuant to the Company’s restrictedSeries D Certificate of Designations, we designated 1,000,000 shares of our blank check preferred stock as Series D preferred stock. Each share of Series D preferred stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up of our company, each share of Series D preferred stock will be entitled to a per share preferential payment equal to the stated value. Each share of Series D preferred stock is convertible into 14 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. We are prohibited from effecting the conversion of the Series D preferred stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99% (provided that certain investors elected to block their beneficial ownership initially at 2.49%, in the aggregate, of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon the Company’s achieving a milestone based on its fully-diluted market capitalization. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair valueconversion of the 300,000Series D preferred stock. Each share of Series D preferred stock entitles the holder to vote on all matters voted on by holders of common stock. With respect to any such vote, each share of Series D preferred stock entitles the holder to cast such number of votes equal to the number of shares of $690,000, as investor relations expense upon grant during the current quarter. The performance condition for the 200,000common stock such shares became probable and the market capitalization metric was met during the second quarter, therefore the Company recognized an additional $460,000 of expense during the quarter ended June 30, 2015.
Consultant Grants
During the quarter ended September 30, 2015, the Board of Directors approved the issuance of restrictedSeries D preferred stock awards to two consultants totaling 120,000 shares with vesting terms ranging from one to three years, valued from $1.77 to $2.13 per share. The Company is expensing eachare convertible into at such time, but not in excess of the grant date fair value of the awards over the performance period for the award, and will be re-measured at the end of each quarter until the performance is complete.
6. Stock-based Activity
Amendment of Equity Incentive Planbeneficial ownership limitation.
On March 31,25, 2015, we entered into separate exchange agreements with certain holders of our then outstanding Series A-1 Preferred Stock and A-1 Warrants and holders of our Series B Preferred Stock and Series B Warrants, all previously issued by us. Pursuant to the Companyexchange agreements, the holders exchanged such securities and relinquished any and all other rights they may in connection therewith, their respective governing agreements and certificates of designation, including any related registration rights, in exchange for an aggregate of 342,906 shares of our common stock, and an aggregate of 238,156 shares of our newly designated Series D Preferred Stock.
As of May 11, 2017, 132,489 shares of our Series D Preferred Stock are outstanding and convertible into 1,790,392 shares of our common stock.
Stock Options and Restricted Stock Units under Equity Plans
As of May 11, 2017, there were approximately 2,147,595 of common stock reserved for issuance under our stock option and equity plans. Of this number, approximately 1,705,311 shares are reserved for issuance upon exercise of outstanding options and restricted stock units that have been granted under our equity plans, and 271,036 shares may be granted in the future under our equity plans.
Anti-Takeover Effects of Provisions of Delaware Law and Our Charter Documents.
Delaware Takeover Statute. We are subject to the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL. In general, the statute prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a Second Amendedprescribed manner. For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and Restated 2014 Employee, Directoran interested stockholder is a person who, together with affiliates and Consultant Equity Incentive Plan (the “Plan”)associates, owns (or within three years' prior, did own) 15% or more of the corporation’s voting stock.
Charter Documents. Our certificate of incorporation requires that any action required or permitted to be taken by its stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by a consent in writing. Additionally, our amended and restated certificate of incorporation:
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substantially limits the use of cumulative voting in the election of directors;
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provides for a board of directors, classified into three classes of directors;
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provides that the authorized number of directors may be changed only by resolution of our board of directors;
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our board of directors may appoint new directors to fill vacancies or newly created directorships; and
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authorizes our board of directors to issue blank check preferred stock to increase the amount of outstanding shares.
Our bylaws provide that candidates for director may be nominated only by our board of directors or by a stockholder who gives written notice to us no later than 90 days prior to nor earlier than 120 days prior to the first anniversary of the last annual meeting of stockholders, provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice should be delivered not earlier than 120 days prior to the annual meeting nor later than the later of 90 days prior to such annual meeting or 10 days after the first public announcement of the date of such annual meeting. Our bylaws also limit who may call a special meeting of stockholders.
Delaware law and these charter provisions may have the effect of deterring hostile takeovers or delaying changes in control of our management, which could depress the market price of our common stock.
Listing
Our common stock is listed on The NASDAQ Capital Market under the symbol “MBVX.” On May 11¸ 2017, the last reported bid price for our common stock on The NASDAQ Capital Market was $1.87 per share. As of May 11, 2017, we had approximately 89 stockholders of record.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. Its address is 250 Royall Street, Canton, MA 02021 and its telephone number is (800) 884-4225.
We have entered into an underwriting agreement with Laidlaw & Company (UK) Ltd. with respect to the shares of common stock and Series G Preferred Stock subject to this offering. Subject to certain conditions, we have agreed to sell to the underwriter, and the underwriter has agreed to purchase, the number of shares reserved for issuance underof common stock and Series G Preferred Stock provided below opposite its name.
| Underwriter | | Number of Shares (including Series G Preferred Stock)
| | |
| Laidlaw & Company (UK) Ltd. | | 2,657,143 | | |
| Total | | 2,657,143 | | |
The underwriter is offering the Plan from 158,073 to 8,360,789 shares of common stock. Additional changesstock and Series G Preferred Stock subject to its acceptance of the shares of common stock and Series G Preferred Stock from us and subject to prior sale. The underwriting agreement provides that the obligation of the underwriter to pay for and accept delivery of the shares of common stock and Series G Preferred Stock offered by this prospectus is subject to the Plan include:approval of certain legal matters by its counsel and to certain other conditions. The underwriter is obligated to take and pay for all of the shares of common stock and Series G Preferred Stock if any such shares are taken. However, the underwriter is not required to take or pay for the shares of common stock covered by the underwriter’s over-allotment option described below.
Over-Allotment Option
We have granted the underwriter a 45-day option to purchase up to an additional 248,571 shares of our common stock at a price of $1.75 per share, to cover over-allotments, if any, of the shares of our common stock offered by this prospectus. If the underwriter exercises this option, the underwriter will be obligated, subject to certain conditions, to purchase the additional shares for which the option has been exercised. However, because our common stock is publicly traded, the underwriter may satisfy some or all of the overallotment of shares of our common stock, if any, by purchasing shares in the open market and will have no obligation to exercise the overallotment option with respect to our common stock.
Discount, Commissions and Expenses
The underwriter has advised us that they propose to offer the shares of common stock and Series G Preferred Stock at the public offering price set forth on the cover page of this prospectus and, in the case of common stock and Series G Preferred Stock sold to investors introduced to us by the underwriter, to certain dealers at that price less a concession not in excess of $0.1225 per share. The underwriter may allow, and certain dealers may re-allow, a discount from the concession not in excess of $0.1225 per share to certain brokers and dealers. After this offering, the combined public offering price, concession and reallowance to dealers may be changed by the underwriter. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The shares of common stock and Series G Preferred Stock are offered by the underwriter as stated herein, subject to receipt and acceptance by it and subject to its right to reject any order in whole or in part. The underwriter has informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.
The following table shows the underwriting discount payable to the underwriter by us in connection with this offering. Such amounts are shown assuming both no exercise and full exercise of the underwriter’s over-allotment option to purchase additional shares.
| | Per Share (including Series G Preferred Stock) | Total Without Exercise of Over-Allotment Option | Total With Exercise of Over-Allotment Option |
| Public offering price | $1.7500 | $4,650,000 | $ 5,085,000 |
Underwriting discount (1)(2)(3)
| $0.1225 | $205,000 | $ 235,450
|
__________________________
1.
The underwriter will receive a discount of 7% of the public offering price on sales to investors introduced by the underwriter.
2.
The underwriter will receive no fee or underwriting discount with respect to sales to certain existing investors unless such existing investors participate in the offering in the aggregate minimum amount of $2,000,000, in which case the underwriter will receive a flat fee of $100,000 in lieu of any underwriting discount for sales made to such existing investors.
3.
The presentation in this table assumes the purchase of securities by certain existing investors who have indicated an interest in purchasing an aggregate of up to approximately $3.15 million in securities in this offering at the offering price. However, because indications of interest are not binding agreements or commitments to purchase, this investor may determine to purchase fewer securities than they had indicated an interest in purchasing or not to purchase any securities in this offering.
We have agreed to reimburse Laidlaw & Company (UK) Ltd., for certain out-of-pocket expenses (including the reasonable fees and disbursements of counsel to the underwriter) not to exceed $80,000, upon the successful completion of this offering, without our prior written consent, such consent not to be unreasonably withheld. We estimate that expenses payable by us in connection with this offering, including reimbursement of Laidlaw & Company (UK) Ltd.’s expenses but excluding the underwriting discount referred to above, will be approximately $490,000.
Indemnification
We have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriter may be required to make in respect of those liabilities.
Lock-up Agreements
We, our officers and our directors have agreed, subject to limited exceptions, for a period of 90 days after the date of the underwriting agreement, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of common stock or any securities convertible into or exchangeable for our common stock either owned as of the date of the underwriting agreement or thereafter acquired without the prior written consent of Laidlaw & Company (UK) Ltd. Laidlaw & Company (UK) Ltd. may, in its sole discretion and at any time or from time to time before the termination of the lock-up period, without notice, release all or any portion of the securities subject to lock-up agreements.
Price Stabilization, Short Positions and Penalty Bids
In connection with the offering the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:
●
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.
●
Over-allotment involves sales by the underwriter of securities in excess of the number of securities the underwriter is obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of securities over-allotted by the underwriter are not greater than the number of securities that they may purchase in the over-allotment option. In a naked short position, the number of securities involved is greater than the number of securities in the over-allotment option. The underwriter may close out any covered short position by either exercising its over-allotment option and/or purchasing securities in the open market.
●
Syndicate covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of securities to close out the short position, the underwriter will consider, among other things, the price of securities available for purchase in the open market as compared to the price at which it may purchase securities through the over-allotment option. If the underwriter sells more securities than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying securities in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in the offering.
●
Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market prices of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the prices that might otherwise exist in the open market. Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the prices of our common stock. In addition, neither we nor the underwriter make any representations that the underwriter will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.
Listing and Transfer Agent
Our common stock is quoted on The NASDAQ Capital Market under the symbol “MBVX.” The transfer agent of our common stock is Computershare Trust Company, N.A.
Electronic Distribution
This prospectus in electronic format may be made available on websites or through other online services maintained by the underwriter, or by its affiliates. Other than this prospectus in electronic format, the information on the underwriter’s website and any information contained in any other website maintained by the underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriter in its capacity as underwriter, and should not be relied upon by investors.
Other
From time to time, the underwriter and/or its affiliates may have provided, and may in the future provide, various investment banking and other financial services for us for which services it may have received and, may in the future receive, customary fees. In the course of its business, the underwriter and its affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriter and its affiliates may at any time hold long or short positions in such securities or loans. Except for services provided in connection with this offering, the underwriter has not provided any investment banking or other financial services to us during the 180-day period preceding the date of this prospectus and we do not expect to retain the underwriter to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.
NOTICE TO INVESTORS
Notice to Investors in the United Kingdom
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
| | ●(a) | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
| | An “evergreen” provision (b)
| to reserve additional shares for issuance underany legal entity which has two or more of (1) an average of at least 250 employees during the Plan onlast financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual basis commencing on the first daynet turnover of fiscal 2016 and ending on the second day of fiscal 2024, such that the number of shares that may be issued under the Plan shall be increased by an amount equal to the lesser of: (i) 8,000,000 or the equivalent of such number of shares after the administrator,more than €50,000,000, as shown in its sole discretion, has interpretedlast annual or consolidated accounts; |
| (c)
| by the effect of any stock split, stock dividend, combination, recapitalizationunderwriter to fewer than 100 natural or similar transaction in accordance with the Plan; (ii) the number of shares necessary such that the total shares reserved under the Plan equals (x) 15% of the number of outstanding shares of common stock on such date (assuming the conversion of all outstanding shares of Preferred Stock (aslegal persons (other than qualified investors as defined in the Plan) andProspectus Directive); or |
| (d)
| in any other outstanding convertiblecircumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of these securities and exercise of all outstanding warrants to purchase common stock) plus (y) 229,000; and (iii) an amount determinedshall result in a requirement for the publication by the Board;issuer or the underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. |
For the purposes of this provision, the expression an “offer to the public” in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any such securities to be offered so as to enable an investor to decide to purchase any such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
The underwriter has represented, warranted and agreed that:
| (a) | it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of any of the securities in circumstances in which section 21(1) of the FSMA does not apply to the issuer; and |
| (b)
| it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the securities in, from or otherwise involving the United Kingdom. |
European Economic Area
In particular, this document does not constitute an approved prospectus in accordance with European Commission’s Regulation on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of securities to the public in that Relevant Member State at any time:
| ● | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
| ● | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in the last annual or consolidated accounts; or |
| ● | in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
For the purposes of this provision, the expression an “offer of securities to the public” in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes the securities offered hereby are “securities.”
The validity of the securities being offered by this prospectus has been passed upon for us by Sichenzia Ross Ference Kesner LLP, New York, New York. Sheppard Mullin Richter & Hampton LLP, New York, New York, is acting as counsel to the Laidlaw & Company (UK) Ltd. in this offering.
EXPERTS
The consolidated financial statements of MabVax Therapeutics Holdings, Inc. as of December 31, 2016 and 2015, and for the years then ended included in this registration statement have been so included in reliance on the report of CohnReznick LLP, an independent registered public accounting firm, which included an explanatory paragraph about MabVax Therapeutics Holdings, Inc.’s ability to continue as a going concern, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed with the registration statement. For further information about us and the securities offered hereby, we refer you to the registration statement and the exhibits filed with the registration statement. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the filed exhibits may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, NE, Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from that office at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website iswww.sec.gov.
We are subject to the information and reporting requirements of the Exchange Act and, in accordance with this law, are required to file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referenced above. We make available free of charge, on or through the investor relations section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information found on our website is not part of this prospectus.
MABVAX THERAPEUTICS HOLDINGS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | |
| ● | | Provide that no more than 3,000,000 shares may be granted to any participant in any fiscal year. |
| | F-1 | |
| ● | | Provisions to allow for performance based equity awards to be issued by the Company in accordance with Section 162(m) of the Internal Revenue Code. |
Stock-based Compensation
Total estimated stock-based compensation expense, related to all of the Company’s stock-based payment awards recognized under ASC 718, “Compensation—Stock Compensation” was comprised of the following:
| | | Three Months Ended | | | Three Months Ended | | | Nine Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | | | September 30, | | | September 30, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| Research and development | | $ | 307,892 | | | $ | 32,082 | | | $ | 633,593 | | | $ | 109,509 | |
| General and administrative | | | 1,186,931 | | | | 111,650 | | | | 2,333,010 | | | | 401,090 | |
| Total share-based compensation expense | | $ | 1,494,823 | | | $ | 143,732 | | | $ | 2,966,603 | | | $ | 510,599 | |
Stock-based Award Activity
The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2015:
| | | Options Outstanding | | | Weighted-Average Exercise Price | |
| Outstanding at December 31, 2014 | | | 242,893 | | | $ | 3.92 | |
| Granted | | | 3,015,850 | | | | 2.23 | |
| Exercised | | | (2,779 | ) | | | 0.29 | |
| Forfeited/cancelled/expired | | | (12,923 | ) | | | 7.42 | |
| Outstanding and expected to vest at September 30, 2015 | | | 3,243,041 | | | $ | 2.36 | |
| Vested and exercisable at September 30, 2015 | | | 170,063 | | | $ | 3.60 | |
The total unrecognized compensation cost related to unvested stock option grants as of September 30, 2015, was $4,549,452 and the weighted average period over which these grants are expected to vest is 2.36 years. The Company has assumed a forfeiture rate of zero. The weighted average remaining contractual life of stock options outstanding at September 30, 2015, is 9.39 years.
During the first nine months of 2015, the Company granted 3,015,850 options and 2,300,850 shares of restricted stock to its directors, officers, employees and consultants from the 2014 Plan. In addition, the Company granted 1,851,500 shares of restricted stock outside of the plan for consulting and investor relation services during the second quarter of 2015.
A summary of activity related to restricted stock grants under the Plan for the nine months ended September 30, 2015 is presented below:
| | | Shares | | | Weighted-Average Grant-Date Fair Value | |
| Nonvested at December 31, 2014 | | | — | | | $ | — | |
| Granted | | | 2,300,850 | | | | 2.28 | |
| Vested | | | — | | | | — | |
| Forfeited | | | — | | | | — | |
| Nonvested at September 30, 2015 | | | 2,300,850 | | | $ | 2.28 | |
As of September 30, 2015, unamortized compensation expense related to restricted stock grants amounted to $4,392,890, which is expected to be recognized over a weighted average period of 2.53 years.
Because the Company had a net operating loss carryforward as of September 30, 2015, no tax benefits for the tax deductions related to stock-based compensation expense were recognized in the Company’s Condensed Consolidated Statements of Operations. Additionally, there were 2,779 stock options exercised in the three and nine months ended September 30, 2015, and there were no stock option exercises in the corresponding periods of 2014.
Management Bonus Plan
On April 2, 2015, the Compensation Committee of the Board of the Directors approved the 2015 Management Bonus Plan (the “Management Plan”) outlining maximum target bonuses of the base salaries of certain of the Company’s executive officers. Under the terms of the Management Plan, the Company’s Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, the Chief Financial Officer shall receive a maximum target bonus of up to 35% of his annual base salary and the Company’s Vice President shall receive a maximum target bonus of up to 25% of his annual base salary.
On April 4, 2015, the Board approved the following Non-Employee Director Policy (the “Incumbent Director Policy”) with respect to incumbent non-employee members of the Board in the event that they are replaced before their term expires:
● | | A one-time issuance of 20,000 restricted shares of common stock; |
● | | The vesting of all options and restricted stock grants held on such date; and |
● | | The payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date. |
On April 4, 2015, in connection with his resignation from the Board, Michael Wick received a one-time restricted stock grant of 20,000 shares under the Incumbent Director Policy.
Common stock reserved for future issuance
Common stock reserved for future issuance consists of the following at September 30, 2015:
Common stock reserved for conversion of preferred stock | | | 22,482,400F-2 | |
Common stock reserved for exercise | | | 5,959,668F-3 | |
Common stock options outstanding | | | 3,243,041F-4 | |
Unvested restricted stock awards | | | 2,300,850F-8 | |
Authorized for future grant or issuance under the Stock Plan | | | 2,970,012 | |
Total | | | 36,955,971F-9 | |
7. Net Loss per Share
The Company calculates basic and diluted net loss per share using the weighted-average number of shares of common stock outstanding during the period.
When the Company is in a net loss position, it excludes from the calculation of diluted net loss per share all potentially dilutive stock options, preferred stock and warrants, and the diluted net loss per share is the same as the basic net loss per share for such periods.
The table below presents the potentially dilutive securities that would have been included in the calculation of diluted net loss per share if they were not antidilutive for the periods presented.
| | | As of September 30, | |
| | | 2015 | | | 2014 | |
| Stock options | | | 3,243,041 | | | | 242,893 | |
| Restricted stock awards | | | 2,300,850 | | | | — | |
| Redeemable convertible preferred stock | | | — | | | | 1,250,000 | |
| Preferred stock | | | 22,482,400 | | | | 2,881,811 | |
| Common stock warrants | | | 5,959,668 | | | | 2,133,386 | |
| Total | | | 33,985,959 | | | | 6,508,090 | |
8. Contracts and Agreements
Life Technologies Licensing Agreement
On September 24, 2015, the Company entered into a licensing agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific. Under the agreement MabVax agreed to license certain cell lines from Life Technologies to be used in the production of recombinant proteins for the Company’s clinical trials. The amount of the contract is for $450,000 and was fully expensed for the three and nine months ended September 30, 2015.
Rockefeller University Collaboration
In July 2015, the Company entered into a research collaboration agreement with Rockefeller University's Laboratory of Molecular Genetics and Immunology. The Company provided antibody material to Rockefeller University, which is exploring the mechanism of action of constant region (Fc) variants of the HuMab 5B1 in the role of tumor clearance. The Company will supply additional research materials as requested by the university, which is evaluating ways to optimize the function.
Juno Therapeutics Option Agreement
On August 29, 2014, MabVax Therapeutics entered into an Option Agreement (the “Option Agreement”) with Juno Therapeutics, Inc. (“Juno”). Pursuant to the Option Agreement, MabVax Therapeutics granted Juno the option to obtain an exclusive, world-wide, royalty-bearing license authorizing Juno to develop, make, have made, use, import, have imported, sell, have sold, offer for sale and otherwise exploit certain patents MabVax Therapeutics developed with respect to fully human antibodies with binding specificity against human GD2 or sialyl-Lewis A antigens and certain MabVax Therapeutics controlled biologic materials. Juno may exercise its option to purchase the license until the earlier of June 30, 2016 or 90 days from the date MSKCC completes its research with respect to the patents in accordance with the terms of agreements by and between MSKCC and MabVax Therapeutics.
During the three and nine months ended September 30, 2015, no revenues had been earned under the Option Agreement, however the Option Agreement remains valid and active.
The Option Agreement may be terminated by either party (i) upon material breach of the other party if the breach is not cured within 30 days, or (ii) with 60 days’ prior written notice in the event the other party becomes the subject of a voluntary or involuntary petition in bankruptcy. Juno may terminate the Option Agreement at any time upon 30 days’ prior written notice. MabVax Therapeutics may terminate the Option Agreement if Juno, or any Juno employee or affiliate, is a party to any action or proceeding in which Juno, or any Juno employee or affiliate, opposes the patents or otherwise seeks a determination that any of the patents are invalid or unenforceable if Juno, or as applicable, its employee and/or affiliate, fails to discontinue its involvement in such an action within 10 days of receiving notice from MabVax Therapeutics.
As consideration for the grant of the exclusive option to purchase the license, Juno paid MabVax Therapeutics a one-time up-front option fee in the low five figures. Should the option be exercised, MabVax Therapeutics would expect to negotiate with Juno to pay amounts that include MabVax Therapeutics license fees, milestone payments, and royalty-based compensation in connection with entering into a License. The terms of the license including the financial terms are expected to be agreed upon at a future date.
Patheon Biologics LLC Agreement
On April 14, 2014, the Company entered into a development and manufacturing services agreement with Patheon (f.k.a. Gallus Biopharmaceuticals) to provide a full range of manufacturing and bioprocessing services, including cell line development, process development, protein production, cell culture, protein purification, bio-analytical chemistry and QC testing. Total amount of the contract is estimated at approximately $3.0 million. For the three and nine months ended September 30, 2015, the Company recorded approximately $751,931 and $1,987,006 of expense associated with the agreement, respectively.
NCI PET Imaging Agent Grant
In September 2013, the NCI awarded the Company a SBIR Program Contract to support the Company’s program to develop a PET imaging agent for pancreatic cancer using a fragment of the Company’s 5B1 antibody (the “NCI PET Imaging Agent Grant”). The project period for Phase I of the grant award of approximately $250,000 covered a nine-month period which commenced in September 2013 and ended in June 2014.
On August 25, 2014, the Company was awarded a $1.5 million contract for the Phase II portion of the NCI PET Imaging Agent Grant. The contract is intended to support a major portion of the preclinical work being conducted by the Company, together with its collaboration partner, MSKCC, to develop a novel Positron Emission Tomography (“PET”) imaging agent for detection and assessment of pancreatic cancer. The total contract amount for Phase I and Phase II of approximately $1,749,000 supports research work through June 2016.
The Company records revenue associated with the NCI PET Imaging Agent Grant as the related costs and expenses are incurred. For the three and nine months ended September 30, 2015, and 2014 the Company recorded $133,318, $509,474, $62,492 and $219,832 of revenue associated with the NCI PET Imaging Agent Grant, respectively.
9. Commitments and contingencies
Litigation
On May 30, 2014, a class action lawsuit was commenced in Santa Clara County Superior Court, State of California, on behalf of Cadillac Partners and others similarly situated, naming as defendants, MabVax Therapeutics, the Company and the Company’s directors, Hudson Bay Capital Management LP, Bio IP Ventures LLC, Hudson Bay Master Fund Ltd., and Hudson Bay IP Opportunities Master Fund LP, together the “Parties”. The suit alleged the defendants breached certain fiduciary duties, or aided and abetted a breach of fiduciary duties, in connection with the Company’s Merger with MabVax Therapeutics. In support of their purported claims, the plaintiff alleged, among other things, that the Company’s board has historically failed to fulfill its fiduciary duty to its stockholders, and claiming with respect to the Series B Private Placement and the Merger, that such transactions involved an inadequate sales process and included preclusive deal protection devices, and that the Company’s board of directors would receive personal benefits not available to its public stockholders as a result of the Merger. The plaintiff sought to enjoin the Merger and obtain damages as well as attorneys’ and expert fees and costs.
On June 29, 2014, the parties entered into a Stipulation and Settlement (the “Settlement”), pursuant to which the Company agreed to file with the SEC certain supplemental disclosures in connection with the Merger. The Settlement was subject to certain confirmatory discovery to be undertaken by the plaintiff and to the Parties’ agreement on the payment of the plaintiff’s attorneys’ fees and expenses.
On July 16, 2014, the Company and all other parties to the litigation entered into an agreement which, if consummated, would settle the litigation (the “Proposed Settlement”). Among many other terms, under the Proposed Settlement the Company and all defendants will receive a broad release of any and all claims pertaining to the Series B Private Placement, the Merger, the prior disclosure and a wide variety of other matters. The Proposed Settlement also calls for the parties to ask the court to, among other things, enter orders enjoining other stockholders from bringing similar actions, certifying the putative settlement class, and approving the Proposed Settlement as a fair, final, and binding resolution of the litigation. Under the Proposed Settlement, the Company and the other defendants have expressly denied the allegations of the complaint and denied engaging in any other misconduct, nor will any of them make any payment or in any respect amend the negotiated terms of the since-consummated Series B Private Placement and Merger. Finally, under the Proposed Settlement, the Company and the other defendants have not agreed to pay any legal fees, or reimburse any expenses, allegedly incurred by the plaintiffs who filed the complaint; instead, the Company expects that counsel for those plaintiffs will present any such disputed claim for legal fees and expenses to the court for resolution.
On April 20, 2015, the Parties made an application for an Order for Notice and Scheduling of Hearing of Settlement in accordance with a Stipulation of Settlement dated as of April 20, 2015 (the “Action”), which sets forth the terms and conditions for settlement and which provides for dismissal of the Action with prejudice. The Order after Hearing on June 12, 2015, provided preliminary approval of the settlement that was agreed to by the Parties, in which the Company provided supplemental disclosures in the definitive proxy filed with the SEC on June 30, 2014. Notice of the action as a class action was sent to class members in July 2015.
On September 18, 2015, an Order and Final Judgement was entered by the Superior Court of the State of California, approving the settlement that was agreed upon by both parties and closing the case. The Company anticipates that there will be no additional future expenses incurred in this action by the Company after the September 30, 2015 balance sheet date which would not be offset by insurance.
Operating Leases
In connection with the Merger, the Company recorded a $590,504 contingent lease termination fee, in connection with the termination by MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) of the master lease and sublease of the Porter Drive Facility, which is payable to ARE-San Francisco No. 24 (“ARE”), if the Company receives $15 million or more in additional financing in the aggregate, but otherwise forgiven.
On September 2, 2015, the Company entered into a lease (the “Lease”) with AGP Sorrento Business Complex, L.P., for certain premises consisting of a total of approximately 14,971 square feet of office and laboratory space in buildings located at 11535-11585 Sorrento Valley Rd., San Diego, California, to serve as the Company’s corporate offices and laboratories (the “New Premises”). Due to the fact that certain tenant improvements need to be made to the New Premises before the Company can occupy the New Premises, the term of the Lease will commence when the New Premises are ready for occupancy, currently estimated to be approximately November 1, 2015. The Lease terminates six years after such term commencement date, unless earlier terminated in accordance with the Lease. Pursuant to the terms of the Lease, the monthly base rent will be $35,631, subject to annual increases as set forth in the Lease.
The Company has an option to extend the Lease term for a single, five-year period. If the Lease term is extended for the optional five-year period, the monthly base rent will be adjusted based on fair market rental value. In addition to rent, the Company agreed to pay a portion of the taxes and utility, maintenance and other operating costs paid or accrued in connection with the ownership and operation of the property.
10. Subsequent Events
On October 5, 2015, the Company closed a public offering of 2,500,000 shares of common stock and warrants to purchase 1,250,000 shares of common stock, at an offering price of $1.10 per share. For every two shares of common stock sold, the Company issued one warrant to purchase one share of common stock. The Company received $2,750,000 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling approximately $586,608, and without giving effect to the exercise of the underwriters’ over-allotment option. Such costs were recorded as deferred costs on the Company’s balance sheet as of September 30, 2015, and were deducted or paid from the gross proceeds from the transaction. The Company intends to use the net proceeds from this offering to fund the HuMab 5B1 human antibody program through Phase I clinical development and for working capital and general corporate purposes.
The Company granted the underwriters a 30-day option to purchase up to an additional 375,000 shares of common stock and up to an additional 187,500 warrants at the same price to cover over-allotments, if any. The shares and warrants were separately issued and sold in equal proportions. The warrants are immediately exercisable, expire September 30, 2018, and have an exercise price of $1.32 per share. The warrants will not be listed on any securities exchange or other trading market.
Under the terms of the underwriting agreement entered into between the Company and the underwriter in the public offering, the Company, without the prior written consent of the underwriter, is prohibited, for a period of 90 days after execution of the underwriting agreement, from issuing any equity securities, subject to certain exceptions.
On October 12, 2015, the Company and investors holding over 60% of the outstanding Registerable Securities (as such term is defined in the Registration Rights Agreements) issued in the April 2015 Private Placement entered into a third amendment agreement to the Registration Rights Agreements to suspend the Company’s registration obligations under the Registration Rights Agreements and related subscription agreements during any period when the “Standstill” provision set forth in 5(u) of the related subscription agreements is in effect.
To the Board of Directors and Stockholders
MabVax Therapeutics Holdings, Inc.
We have audited the accompanying consolidated balance sheets of MabVax Therapeutics Holdings, Inc. (the “Company”) as of December 31, 20142016 and 2013,2015, and the related consolidated statements of operations, redeemable convertible preferred stock, convertible preferred stock and stockholders’ equity, (deficit), and cash flows for the years then ended. MabVax Therapeutics Holdings, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MabVax Therapeutics Holdings, Inc. as of December 31, 20142016 and 2013,2015, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring operating losses and is dependent on additional financing to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ CohnReznick LLP
San Diego, California
March 31, 2015
1, 2017
MABVAX THERAPEUTICS HOLDINGS, INC.
| | | December 31, | | |
| | | 2014 | | 2013 | | | |
| Assets | | | | | | | |
| | | | | | | |
Cash and cash equivalents | | | | | | | | | $3,979,290 | $4,084,085 |
| | | | | | | | — | 757,562 |
Prepaid expenses - clinical operations | | | | | | | | |
| | | | | | | | 281,858 | 419,751 |
| | | | | | | | | 32,830 | 47,586 |
| | | | | | | 4,293,978 | 5,308,984 |
Property and equipment, net | | | | | | | 731,712 | 135,486 |
| | | | | | | 6,826,003 |
| | | | | | | | | |
| Other long-term assets | | 168,597 | 126,654 |
| | | | | | | | | $12,020,290 | $12,397,127 |
| | | | | | | | | |
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) | | | | | | |
| Liabilities and Stockholders’ Equity | | |
| | | | | | |
| | | | | | | | | $1,137,903 | $3,002,497 |
| | | | | | | 770,592 | 562,755 |
Accrued clinical operations and site costs | | | | | | | 1,218,641 | 391,041 |
Related party liabilities | | | | | | | |
Accrued lease contingency fee | | | | | | | 590,504 |
| | | | | | | 315,034 | 411,566 |
| | | | | | | | | |
| Interest payable | | 51,295 | — |
| Current portion of notes payable | | 1,589,661 | — |
| Current portion of capital lease payable | | 17,004 | — |
Total current liabilities | | | | | | | | | 5,690,634 | 4,958,363 |
Commitments and contingencies: | | | | | | |
Redeemable convertible preferred stock: | | | | | | |
MabVax Series A redeemable convertible preferred stock, 956,240 shares authorized, 956,240 shares issued and outstanding as of December 31, 2013 with a liquidation preference of $8,013,996 as of December 31, 2013 | | | | | | | |
MabVax Series B redeemable convertible preferred stock, 2,000,000 shares authorized, 891,485 shares issued and outstanding as of December 31, 2013 with a liquidation preference of $6,509,866 as of December 31, 2013 | | | | | | | |
MabVax Therapeutics Holdings Series B redeemable convertible preferred stock, 1,250,000 shares authorized, issued and outstanding as of December 31, 2014 with a liquidation preference of $2,627,123 as of December 31, 2014 | | | | | | | | | |
Total redeemable convertible preferred stock | | | | | | | | | |
Stockholders’ equity (deficit): | | | | | | |
Series A-1 convertible preferred stock, 2,763,000 shares authorized, 1,593,389 shares issued and outstanding as of December 31, 2014, with a liquidation preference of $2,860,233 as of December 31, 2014 | | | | | | | |
Series C convertible preferred stock, 200,000 shares authorized, 96,571 shares issued and outstanding as of December 31, 2014 with no liquidation preference | | | | | | | |
Common stock, $0.01 par value; 150,000,000 shares authorized as of December 31, 2014, 2,802,867 and 230,503 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively | | | | | | | |
| | | |
| Long-term liabilities: | | |
| Long-term portion of notes payable, net | | 2,774,627 | — |
| Long-term portion of capital lease payable | | 68,113 | — |
| Other long-term liabilities | | 144,394 | — |
| Total long-term liabilities | | 2,987,134 | — |
| Total liabilities | | 8,677,768 | 4,958,363 |
| | | |
| Commitments and contingencies | | |
| | | |
| Stockholders’ equity: | | |
| Series D convertible preferred stock, $0.01 par value, 1,000,000 shares authorized, 132,489 and 191,490 shares issued and outstanding as of December 31, 2016 and 2015, respectively, with liquidation preference of $1,325 and $1,915 as of December 31, 2016 and 2015, respectively | | 1,325 | 1,915 |
| Series E convertible preferred stock, $0.01 par value, 100,000 shares authorized, 33,333 shares issued and outstanding as of December 31, 2016 and 2015, with a liquidation preference of $333 as of December 31, 2016 and 2015 | | 333 |
| Series F convertible preferred stock, $0.01 par value, 1,559,252 shares authorized, 665,281 shares and none issued and outstanding, with a liquidation preference of $6,653 and none as of December 31, 2016 and 2015, respectively | | 6,653 | — |
| Common stock, $0.01 par value; 150,000,000 shares authorized, 6,296,110 and 3,836,631 shares issued and outstanding as of December 31, 2016 and 2015, respectively | | 62,961 | 38,366 |
Additional paid-in capital | | | | | | | 81,533,511 | 67,999,928 |
| | | | | | | | | (78,262,261) | (60,601,778) |
Total stockholders’ equity (deficit) | | | | | | | | | |
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | | | | | | | | | |
| Total stockholders’ equity | | 3,342,522 | 7,438,764 |
| Total liabilities and stockholders’ equity | | $12,020,290 | $12,397,127 |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
| | | For the Years Ended December 31, | | For the Years Ended December 31, |
| | | 2014 | | 2013 | | | |
| | | | | | | |
| | | | | | | | | $148,054 | $1,267,036 |
| | | | | | | | | |
| | | | | | | | | 148,054 | 1,267,036 |
| | | |
Operating costs and expenses: | | | | | | |
| | | | | | | 7,800,723 | 9,596,768 |
General and administrative | | | | | | | | | 9,010,450 | 9,795,163 |
Total operating costs and expenses | | | | | | | | | 16,811,173 | 19,391,931 |
| | | | | | | (16,663,119) | (18,124,895) |
Interest and other income (expense) | | | | | | | |
Interest and other expenses, net of income
| | (997,364) | (227) |
Change in fair value of warrant liability | | | | | | | | | — | 19,807 |
| | | | | | | (17,660,483) | (18,105,315) |
Deemed dividend on Series A-1 preferred stock | | | | | | | — | (9,017,512) |
| Deemed dividend on Series A-1 warrant | | — | (179,411) |
| Deemed dividend on Series B preferred stock | | — | (8,655,998) |
Accretion of preferred stock dividends | | | | | | | | | — | (93,234) |
Net loss available to common stockholders | | | | | | | | | |
| Net loss allocable to common stockholders | | $(17,660,483) | $(36,051,470) |
Basic and diluted net loss per share | | | | | | | | | $(3.64) | $(13.44) |
Shares used to calculate basic and diluted net loss per share | | | | | | | | | 4,857,753 | 2,681,740 |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity | | Redeemable Convertible Preferred Stock | Convertible Preferred Stock |
| | | | | |
| | | | | | | | |
| Balance at December 31, 2014 | 1,250,000 | $1,838,025 | $1,838,025 | 1,593,389 | $4,029,576 | 96,571 | $966 |
| Conversion of Series A-1 into common stock on January 10 and February 25, 2015 | — | — | — | (64,019) | (162,968) | — | — |
| Conversion of Series C into common stock on January 10, 2015 | — | — | — | — | — | (96,571) | (966) |
| Conversion of Series B into common stock between March 3 and March 20, 2015 | (106,437) | (160,380) | (160,380) | — | — | | — |
| Accretion of redemption value for Series A-1 from January 1 to March 25, 2015 | — | — | — | — | 47,749 | | — |
| Accretion of redemption value for Series B from January 1 to March 25, 2015 | — | 45,485 | 45,485 | — | — | | — |
| Deemed dividend related to exchange of common stock for Series A-1, Series A-1 Warrants, and Series B on March 25, 2015 | — | 8,655,998 | 8,655,998 | — | 9,196,923 | | — |
| Exchange of Series A-1 and Series A-1 Warrants into common and Series D on March 25, 2015 | — | — | — | (1,529,370) | (13,111,280) | | — |
| Exchange of Series B into Common and Series D on March 25, 2015 | (1,143,563) | (10,379,128) | (10,379,128) | — | — | | — |
| Private Placement Issuance of 900,136 shares at $5.55 per share, net of issuance costs of $281,023 on March 31, 2015 | — | — | — | — | — | | — |
| Issuance of additional common stock in March 2015 under common stock Purchase Agreement in relation to financing on July 7, 2014 | — | — | — | — | — | | — |
| Private Placement Issuance of 760,135 shares at $5.55 per share, net of issuance costs of $387,127 on April 10, 2015 | — | — | — | — | — | | — |
| Private Placement Issuance of 33,333 shares at $75 per share of Series E Preferred Stock on April 10, 2015 | — | — | — | — | — | | — |
| Issuance of restricted common stock in April 2015 for services | — | — | — | — | — | | — |
| Issuance of restricted common stock to former board member on April 3, 2015 upon termination | — | — | — | — | — | | — |
| Conversion of Series D Preferred Stock to common stock | — | — | — | — | — | | — |
| Stock option exercise | — | — | — | — | — | | — |
| Shares issued in connection with exercise of warrants on a cashless basis | — | — | — | — | — | | — |
| Elimination of warrant liability in exchange transaction | — | — | — | — | — | | — |
| Stock-based compensation | — | — | — | — | — | | — |
| Net loss | — | — | — | — | — | | — |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
| | | Redeemable Convertible Preferred Stock | |
| | | MabVax Series A | | | MabVax Series B | | | MabVax Series C-1 | | | Series B | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Total | |
Balance, December 31, 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of Series B preferred stock from February 1 to December 18 at $6.82 per share, net of issuance costs of $7,007 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to beneficial conversion feature of series B preferred | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exercise of Series B warrant in January at $0.01 per share | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of $240,000 in accounts payable into 44,466 shares of common stock on February 12, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of MabVax Series C-1 preferred stock in February at $0.84 per share, net of issuance costs of $126,345 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to beneficial conversion feature of MabVax Series C-1 preferred | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of common stock at $9.32 per share, net of issuance costs of $156,303 in June and July | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassification of Series A and Series B to equity in June | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A to common stock on July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series B to common stock on July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series C-1 to July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exercise of Series C-1 warrant on July 7, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series C-1 warrant to July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C-1 into Series A-1 on July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series A-1 from July 8 to Dec 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) at exchange ratio of 2.223284 shares of MabVax Therapeutics Holdings for every share of MabVax, including 4,205,411 common and 1,250,000 Series B preferred stock outstanding in July | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series B from May 12, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exchange of common stock for Series C on September 3, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Elimination of fractional shares resulting from Reverse Split on September 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued in connection with exercise of warrants on a cashless basis in September and October | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A-1 into Common stock from November 13 to Dec 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C into Common stock from October to December, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redeemable Convertible Preferred Stock | Convertible Preferred Stock |
| | | | |
| | | | | | | |
| Balance at December 31, 2015 | — | $— | $— | — | $— | — | $— |
| Issuance of warrants in connection with note payable transaction on January 15, 2016 | — | — | — | — | — | | — |
| Issuance of whole in lieu of fractional shares resulting from reverse split in August 2016 | — | — | — | — | — | | — |
| Issuance of Series F convertible preferred stock, warrants and common stock in August public offering, net of $871,305 in issuance costs | — | — | — | — | — | | — |
| Issuance of additional common stock related to April 2015 financing | — | — | — | — | — | | — |
| Stock issued for services | — | — | — | — | — | | — |
| Conversion of Series D Preferred Stock to common stock | — | — | — | — | — | | — |
| Stock issued upon vesting of restricted stock units in April, July and August of 2016, net of payroll taxes | — | — | — | — | — | | — |
| Stock-based compensation | — | — | — | — | — | | — |
| Net loss | — | — | — | — | — | | — |
| Balance at December 31, 2016 | — | $— | $— | — | $— | | $— |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Total Stockholders’ Equity
| | Series D, E & F Convertible Preferred Stock
| | | | Total Stockholders'
|
| | | | | | | | |
| Balance at December 31, 2014 | — | $ — | 378,766 | $ 3,787 | $ 24,516,692 | $ (24,550,308)
| $ 4,000,713 |
| Conversion of Series A-1 into common stock on January 10 and February 25, 2015 | — | — | 5,197 | 52 | 162,916 | — | — |
| Conversion of Series C into common stock on January 10, 2015 | — | — | 16,313 | 163 | 803 | — | — |
| Conversion of Series B into common stock between March 3 and March 20, 2015 | — | — | 37,416 | 374 | 160,006 | — | 160,380 |
| Accretion of redemption value for Series A-1 from January 1 to March 25, 2015 | — | — | — | — | — | (47,749)
| — |
| Accretion of redemption value for Series B from January 1 to March 25, 2015 | — | — | — | — | — | (45,485)
| (45,485) |
| Deemed dividend related to exchange of common stock for Series A-1, Series A-1 Warrants, and Series B on March 25, 2015 | — | — | — | — | — | (17,852,921) | (8,655,998) |
| Exchange of Series A-1 and Series A-1 Warrants into common and Series D on March 25, 2015 | 117,582 | 1,176 | 299,108 | 2,991 | 13,107,113 | — | — |
| Exchange of Series B into common and Series D on March 25, 2015 | 120,573 | 1,206 | 43,797 | 438 | 10,377,484 | — | 10,379,128 |
| Private Placement Issuance of 900,135 shares at $5.55 per share, net of issuance costs of $281,023 on March 31, 2015 | — | — | 900,135 | 9,001 | 4,705,725
| — | 4,714,726 |
| Issuance of additional common stock in March 2015 under common stock Purchase Agreement in relation to financing on July 7, 2014 | — | — | 11,904 | 119 | (119)
| — | — |
| Private Placement Issuance of 760,135 shares at $5.55 per share, net of issuance costs of $387,127 on April 10, 2015 | — | — | 760,135 | 7,601 | 3,824,021 | — | 3,831,622 |
| Private Placement Issuance of 33,333 shares at $75 per share of Series E Preferred Stock on April 10, 2015 | 33,333 | 333 | — | — | 2,499,667 | — | 2,500,000 |
| Issuance of restricted common stock in April 2015 for services | — | — | 247,500 | 2,476 | 1,909,974 | — | 1,912,450 |
| Issuance of restricted common stock to former board member on April 3, 2015 upon termination | — | — | 2,703 | 27 | 45,973 | — | 46,000 |
| Conversion of Series D Preferred Stock to common stock | (46,665) | (467) | 630,608 | 6,306 | (5,839)
| — | — |
| Stock option exercise | — | — | 376 | 4 | 796 | — | 800 |
| Shares issued in connection with exercise of warrants on a cashless basis | — | — | 164,835 | 1,648 | (1,648)
| — | — |
| Elimination of warrant liability in exchange transaction | — | — | — | — | 72,656 | — | 72,656 |
| Issuance of shares in registered offering in October 2015, net of issuance costs | — | — | 337,838 | 3,379 | 2,160,013 | — | 2,163,392 |
| Stock-based compensation | — | — | — | — | 4,463,695 | — | 4,463,695 |
| Net loss | — | — | — | — | — | (18,105,315) | (18,105,315) |
| | | Convertible Preferred Stock | |
| | | MabVax Series A | | | MabVax Series B | | | Series A-1 | | | Series C | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | |
Balance, December 31, 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of Series B preferred stock from February 1 to December 18 at $6.82 per share, net of issuance costs of $7,007 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to beneficial conversion feature of series B preferred | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exercise of Series B warrant in January at $0.01 per share | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of $240,000 in accounts payable into 44,466 shares of common stock on February 12, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of MabVax Series C-1 preferred stock in February at $0.84 per share, net of issuance costs of $126,345 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to beneficial conversion feature of MabVax Series C-1 preferred | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of common stock at $9.32 per share, net of issuance costs of $156,303 in June and July | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassification of Series A and Series B to equity in June | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A to common stock on July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series B to common stock on July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series C-1 to July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exercise of Series C-1 warrant on July 7, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series C-1 warrant to July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C-1 into Series A-1 on July 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series A-1 from July 8 to Dec 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) at exchange ratio of 2.223284 shares of MabVax Therapeutics Holdings for every share of MabVax, including 4,205,411 common and 1,250,000 Series B preferred stock outstanding in July | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series B from May 12, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exchange of common stock for Series C on September 3, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Elimination of fractional shares resulting from Reverse Split on September 8, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued in connection with exercise of warrants on a cashless basis in September and October | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A-1 into Common stock from November 13 to Dec 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C into Common stock from October to December, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
| | | | | | Additional Paid-in Capital | | | | | | Total Stockholders’ Equity (Deficit) | |
| | | Common Stock | | | | Accumulated Deficit | | |
| | | Shares | | | Amount | | | | |
Balance, December 31, 2012 | | | | | | | | | | | | | | | | | | | | |
Issuance of Series B preferred stock from February 1 to December 18 at $6.82 per share, net of issuance costs of $7,007 | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to beneficial conversion feature of series B preferred | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | | | | | | | | | | | | | | | | | | | | |
Exercise of Series B warrant in January at $0.01 per share | | | | | | | | | | | | | | | | | | | | |
Conversion of $240,000 in accounts payable into 44,466 shares of common stock on February 12, 2014 | | | | | | | | | | | | | | | | | | | | |
Issuance of MabVax Series C-1 preferred stock in February at $0.84 per share, net of issuance costs of $126,345 | | | | | | | | | | | | | | | | | | | | |
Deemed dividend related to beneficial conversion feature of MabVax Series C-1 preferred | | | | | | | | | | | | | | | | | | | | |
Issuance of common stock at $9.32 per share, net of issuance costs of $156,303 in June and July | | | | | | | | | | | | | | | | | | | | |
Reclassification of Series A and Series B to equity in June | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A to common stock on July 8, 2014 | | | | | | | | | | | | | | | | | | | | |
Conversion of Series B to common stock on July 8, 2014 | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series C-1 to July 8, 2014 | | | | | | | | | | | | | | | | | | | | |
Exercise of Series C-1 warrant on July 7, 2014 | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series C-1 warrant to July 8, 2014 | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C-1 into Series A-1 on July 8, 2014 | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series A-1 from July 8 to Dec 31, 2014 | | | | | | | | | | | | | | | | | | | | |
Acquisition of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) at exchange ratio of 2.223284 shares of MabVax Therapeutics Holdings for every share of MabVax, including 4,205,411 common and 1,250,000 Series B preferred stock outstanding in July | | | | | | | | | | | | | | | | | | | | |
Accretion of redemption value for Series B from May 12, 2014 | | | | | | | | | | | | | | | | | | | | |
Exchange of common stock for Series C on September 3, 2014 | | | | | | | | | | | | | | | | | | | | |
Elimination of fractional shares resulting from Reverse Split on September 8, 2014 | | | | | | | | | | | | | | | | | | | | |
Shares issued in connection with exercise of warrants on a cashless basis in September and October | | | | | | | | | | | | | | | | | | | | |
Conversion of Series A-1 into Common stock from November 13 to Dec 31, 2014 | | | | | | | | | | | | | | | | | | | | |
Conversion of Series C into Common stock from October to December, 2014 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2014 | | | | | | | | | | | | | | | | | | | | |
| | Series D, E & F Convertible Preferred Stock
| | | | |
| | | | | | | | Equity |
| Balance at December 31, 2015 | 224,823 | $ 2,248 | 3,836,631 | $ 38,366 | $ 67,999,928 | $ (60,601,778) | $ 7,438,764 |
| Issuance of warrants in connection with note payable transaction on January 15, 2016 | — | — | — | — | 607,338 | — | 607,338 |
| Issuance of whole in lieu of fractional shares resulting from reverse split in August 2016 | — | — | 2,426 | 24 | (24) | — | — |
| Issuance of Series F convertible preferred stock, warrants and common stock in August public offering, net of $871,305 in issuance costs | 665,281 | 6,653 | 1,297,038 | 12,970 | 8,547,825 | — | 8,567,448 |
| Issuance of additional common stock related to April 2015 financing | — | — | 255,459 | 2,555 | (2,555) | — | — |
| Stock issued for services | — | — | 35,644 | 356 | 163,644 | — | 164,000 |
| Conversion of Series D Preferred Stock to common stock | (59,001)
| (590) | 797,312 | 7,974 | (7,384) | — | — |
| Stock issued upon vesting of restricted stock units in April, July and August of 2016, net of payroll taxes | — | — | 71,600 | 716 | (178,539) | — | (177,823) |
| Stock-based compensation | — | — | — | — | 4,403,278 | — | 4,403,278 |
| Net loss | — | — | — | — | — | (17,660,483) | (17,660,483) |
| Balance at December 31, 2016 | 831,103 | $8,311 | 6,296,110 | $62,961 | $81,533,511 | $(78,262,261) | $3,342,522 |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Statements of Cash Flows | | For the Years Ended December 31, |
| | | |
| Operating activities | | |
| Net loss | $(17,660,483) | $(18,105,315) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | |
| Depreciation and amortization | 96,553 | 21,360 |
| Stock-based compensation | 4,403,278 | 4,463,695 |
| Change in fair value of warrants | — | (19,807) |
| Issuance of restricted common stock for services | 164,000 | 1,958,450 |
| Amortization and accretion related to notes payable | 413,676 | — |
| Increase (decrease) in operating assets and liabilities: | | |
| Grants receivable | 757,562 | (673,218) |
| Other receivables | — | 2,275 |
| Prepaid expenses and other | 340,187 | (199,377) |
| Accounts payable | (1,898,520) | 1,631,305 |
| Accrued clinical operations and site costs | 827,600 | (103,069) |
| Accrued compensation | 207,837 | 332,374 |
| Other accrued expenses | (15,101) | 166,145 |
| Net cash used in operating activities | (12,363,411) | (10,525,182) |
| Investing activities | | |
| Purchases of property and equipment | (563,196) | (78,416) |
| Net cash used in investing activities | (563,196) | (78,416) |
| Financing activities | | |
| Issuances of preferred stock, net of issuance costs | — | 2,500,000 |
| Proceeds from exercise of stock options | — | 800 |
| Principal payments on financed insurance policies | (167,597) | — |
| Principal payments on capital lease | (10,540) | — |
| Purchase of vested employee stock in connection with tax withholding obligation | (177,823) | — |
| Cash receipts from bank loan, net of financing costs | 4,610,324 | — |
| Proceeds from issuance of preferred stock, common stock and warrants, net of issuance costs | 8,567,448 | 10,709,740 |
| Net cash provided by financing activities | 12,821,812 | 13,210,540 |
| Net change in cash and cash equivalents | (104,795) | 2,606,942 |
| Cash and cash equivalents at beginning of year | 4,084,085 | 1,477,143 |
| Cash and cash equivalents at end of year | $3,979,290 | $4,084,085 |
| Supplemental disclosures of cash flow information: | | |
| Cash paid during the year for income taxes | $24,626 | $1,600 |
| Supplemental disclosures of non-cash investing and financing information: | | |
| Deemed dividend on beneficial conversion feature for preferred stock | $— | $17,852,921 |
| Capital lease in connection with purchase of equipment | $95,657 | $— |
| Fair value of warrants issued | $607,338 | $— |
| Accretion of redemption value for Series A-1 and B preferred stock | $— | $93,234 |
| Conversion of Series B redeemable preferred stock into common stock | $— | $160,380 |
| Conversion of Series D preferred stock into common stock | $7,974 | $6,306 |
| Conversion of Series A-1 preferred stock into common stock | $— | $162,968 |
| Exchange of Series A-1 preferred stock and warrants to common stock and Series D convertible preferred stock | $— | $13,111,280 |
| Exchange of Series B preferred stock and warrants to common stock and Series D convertible preferred stock | $— | $10,451,784 |
| Warrants exercised to purchase common stock on a cashless basis | $— | $12,198 |
| Elimination of warrant liability in exchange transaction | $— | $72,656 |
| Financing transaction not yet paid | $— | $36,570 |
| Conversion of Series C preferred stock to common stock | $— | $966 |
| Property and equipment accrued in accounts payable | $33,934 | $21,376 |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC.
| | | For the Years Ended December 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | | |
| | | | | | | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Depreciation and amortization | | | | | | | | |
| | | | | | | | |
Change in fair value of warrants | | | | | | | | |
Increase (decrease) in operating assets and liabilities excluding effects of the Merger: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Prepaid expenses - clinical operations | | | | | | | | |
Prepaid expenses and other | | | | | | | | |
| | | | | | | | |
Accrued clinical operations and site costs | | | | | | | | |
| | | | | | | | |
Related party liabilities | | | | | | | | |
| | | | | | | | |
Net cash used in operating activities | | | | | | | | |
| | | | | | | | |
Purchases of property and equipment | | | | | | | | |
Proceeds from acquisition of Telik, Inc. | | | | | | | | |
Net cash provided by (used in) investing activities | | | | | | | | |
| | | | | | | | |
Issuances of preferred stock, net of issuance costs | | | | | | | | |
Proceeds from exercise of MabVax Series B warrant | | | | | | | | |
Proceeds from exercise of MabVax Series C-1 warrants | | | | | | | | |
Proceeds from issuance of common stock, net of issuance costs | | | | | | | | |
Net cash provided by financing activities | | | | | | | | |
Net change in cash and cash equivalents | | | | | | | | |
Cash and cash equivalents at beginning of year | | | | | | | | |
Cash and cash equivalents at end of year | | | | | | | | |
| | | | | | | | | |
Supplemental disclosures of cash flow information: | | | | | | | | |
Cash paid during the period for income taxes | | | | | | | | |
Supplemental disclosures of non-cash investing and financing information: | | | | | | | | |
Deemed dividend on beneficial conversion feature for preferred stock | | | | | | | | |
Goodwill on acquisition of Telik, Inc. | | | | | | | | |
Warrant liability upon acquisition of Telik, Inc. | | | | | | | | |
Accretion of redemption value for Series A-1 and B preferred stock | | | | | | | | |
Issuance of common stock for accounts payable | | | | | | | | |
Conversion of Series A and Series B redeemable preferred stock into common stock | | | | | | | | |
Conversion of Series C-1 redeemable preferred stock into Series A-1 preferred stock | | | | | | | | |
Acquisition of MabVax Therapeutics Holdings in relation to the merger | | | | | | | | |
Conversion of Series A-1 preferred stock to common stock | | | | | | | | |
Warrants exercised to purchase common stock on a cashless basis to purchase 488,659 shares of common stock. See Note 7. | | | | | | | | |
Conversion of common stock to Series C preferred stock | | | | | | | | |
Conversion of Series C preferred stock to common stock | | | | | | | | |
See Accompanying NotesNotes to Consolidated Financial Statements.StatementsNotes to Consolidated Financial Statements
1. Nature of Operations and Basis of Presentation
MabVax Therapeutics Holdings, Inc. (f.k.a. Telik, Inc. and referred to herein as “MabVax Therapeutics Holdings” or the “Company”) (OTCQB:(NASDAQ: MBVX) was incorporated in the state of Delaware on October 20, 1988. On July 8, 2014, Tacoma Acquisition Corp., a Delaware corporation and wholly owned subsidiary of MabVax Therapeutics Holdings (“Tacoma Corp.”) merged with MabVax Therapeutics, Inc., a Delaware corporation (“MabVax Therapeutics”) pursuant to an Agreement and Plan of Merger, dated May 12, 2014, by and among MabVax Therapeutics Holdings, Tacoma Corp. and MabVax Therapeutics, as amended by that certain Amendment No. 1 to the Merger Agreement, dated June 30, 2014, by and among the parties thereto and by that certain Amendment No. 2 to the Merger Agreement, dated July 7, 2014, by and among the parties thereto (such agreement as amended, the “Merger Agreement”; such Merger, the “Merger”). Unless the context otherwise requires, references to “we,” “our,” “us,” or the “Company” in this Annual Report mean MabVax Therapeutics Holdings, Inc. on a consolidated financial statement basis with our wholly-ownedwholly owned subsidiary following the Merger, MabVax Therapeutics, as applicable. On October 9, 2014, the Financial Industry Regulatory Authority (FINRA) approved the Company’s stock symbol change request and the Company began trading on the OTCQB under the symbol MBVX on October 10, 2014. On August 17, 2016, our common stock began trading on The NASDAQ Capital Market under the symbol “MBVX.”
ParOn August 16, 2016, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware in order to effectuate a reverse stock split of our issued and outstanding common stock on a 1 for 7.4 basis, effective on August 16, 2016 (the “Reverse Stock Split”). The Reverse Stock Split was effective with FINRA and the Company’s common stock began trading on The NASDAQ Capital Market at the open of business on August 17, 2016. All share and per share amounts, and number of shares of common stock into which each share of preferred stock will convert, in the financial statements and notes hereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value andof common stock to additional paid-in capital for December 31, 2013 has been restated to reflect the par value for shares post-merger and the September 8, 2014, 8-for-1 Reverse Split (as defined in note 5).capital.
We areThe Company is a clinical stage biopharmaceutical company engaged in the discovery, development and commercialization of proprietary human monoclonal antibody products and vaccines for the treatment of a variety of cancers. We haveThe Company has discovered a pipeline of human monoclonal antibody products based on the protective immune responses generated by patients who have been immunized against targeted cancers. Therapeutic vaccines under development were discovered at Memorial Sloan Kettering Cancer Center (“MSK”), and are exclusively licensed to MabVax Therapeutics. We operateThe Company operates in only one business segment.
We are continuing to evaluate the technology and development programs that were under way at theThe Company prior to the Merger and plan to continue developing MabVax Therapeutics’ pre-Merger pipeline.
We havehas incurred net losses since inception and expectexpects to incur substantial losses for the foreseeable future as the Companyit continues its research and development activities. To date, we havethe Company has funded operations primarily through government grants, the sale of preferred stock and equity securities, debt financing, non-equity payments from collaborators and interest income. The process of developing the Company’s products will require significant additional research and development, preclinical testing and clinical trials, as well as regulatory approval. We expectapprovals. The Company expects these activities, together with general and administrative expenses, to result in substantial operating losses for the foreseeable future. WeThe Company will not receive substantial revenue unless the Company or its collaborative partners complete clinical trials, obtain regulatory approvalapprovals and successfully commercialize one or more products; or the Company licenses its technology after achieving one or more milestones of interest to a potential partner.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Management believes that these estimates are reasonable; however, actual results may differ from these estimates.
Liquidity and Going Concern
The accompanying consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company had a net loss of $7,917,853,$17,660,483, net cash used in operating activities of $7,662,019$12,363,411 and net cash provided byused in investing activities of $1,452,476,$563,196 for the year ended December 31, 2014.2016. As of December 31, 2014,2016, the Company had $1,477,143$3,979,290 in cash and cash equivalents and an accumulated deficit of $24,550,308.$78,262,261.
From February 13, 2014 through July 7, 2014, MabVax Therapeutics Holdings completedOn January 15, 2016, the Company and Oxford Finance LLC, as collateral agent and lender, entered into a seriesloan and security agreement (the “Loan Agreement”) providing for senior secured term loans to the Company in an aggregate principal amount of financing transactions totaling approximately $7.3 million netup to $10,000,000, subject to the terms and conditions set forth in the Loan Agreement (the “January 2016 Term Loan”). On January 15, 2016, the Company received an initial loan of $5,000,000 under the Loan Agreement, before fees and issuance costs of approximately $300,000 in issuance costs, through the sale$390,000.
On August 22, 2016, we closed a public offering of MabVax Therapeutics Holdings preferred stock, MabVax Therapeutics Holdings1,297,038 shares of common stock and exercise665,281 shares of MabVax Therapeutics Holdings warrants.Series F Preferred Stock, and warrants to purchase 1,962,319 shares of common stock at $5.55 per share and warrants to purchase 1,962,319 shares of common stock at $6.29 per share, at an offering price of $4.81 per share (the “August 2016 Public Offering”). For every one share of common stock or Series F Preferred Stock sold, we issued one warrant to purchase one share of common stock at $5.55 per share and one warrant to purchase one share of common stock at $6.29 per share. We received $9,438,753 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling $871,305. The gross proceeds include the underwriters’ over-allotment option, which they exercised on the closing date.
TheWe anticipate that the Company anticipates that it will continue to incur net losses into the foreseeable future as it:we: (i) continues to identifycontinue our Phase I clinical trial for our standalone therapeutic HuMab 5b-1, designated as MVT-5873 that was initiated in the first quarter of 2016; (ii) continue our Positron Emission Tomography (“PET”) imaging agent 89Zr-HuMab-5B1, designated as MVT-2163 that was initiated in July 2016; (iii) initiate our clinical trial for the development of our HuMab-based radioimmunotherapy product, designated as MVT-1075; (iv) continue preclinical work on several other programs; and advance a number of potential drug candidates into clinical and preclinical development activities, (ii) initiates manufacturing of its lead antibody candidate 5B1 and continues to fund its(iv) continue operations and (iii) expands its corporate infrastructure, including the costs associated with beingas a public company. Without additional funding, managementManagement believes that the Company will not havehas sufficient funds to meet its obligations beyond October 2015, unless the Company is able to raise additional capital.through April 2017. These conditions give rise to substantial doubt as to the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company plansWe plan to continue to fund itsthe Company’s losses from operations and capital funding needs through equity or debt financings, strategic collaborations, licensing arrangements, asset sales, government grants or other arrangements. However, the Companywe cannot be sure that such additional funds will be available on reasonable terms, or at all. If the Company iswe are unable to secure adequate additional funding, the Companywe may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. In addition, if the Company does not meet its payment obligations to third parties as they come due, it may be subject to litigation claims. Even if the Company iswe are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. Any of these actions could materially harm the Company’s business, results of operations, and future prospects.
If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict the Company’s ability to operate its business.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements reflect all of our activities, including those of our wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Management believes that these estimates are reasonable; however, actual results may differ from these estimates.
Cash and Cash Equivalents
The Company considersWe consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company minimizes its credit risk associated with cash and cash equivalents by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed Federallyfederally insured limits. As of December 31, 2016, cash and cash equivalents exceeded federally insured limits by approximately $3.7 million. The Company has not experienced any losses on such accounts.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, grants receivable, other receivable, prepaid expenses and other assets, accounts payable, related party payables and warrant liabilities, all of which are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.
Grants Receivable
Grants receivable at December 31, 2014 represent2015 represented amounts due under the NIH Imaging Contract Phase II with the National Cancer Institute (the “NCI”), a division of the National Institutes of Health, or NIH (collectively, the “NIH Grants”). The Company considers the grants receivable to be fully collectible; accordingly, no allowance for doubtful accounts has been established. Grants receivable balances may include unbilled amounts for which work was completed by the Company as of the balance sheet date. If amounts become uncollectible, they are charged to operations. There were no grant receivable amounts outstanding as of December 31, 2016.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which are generally three to fiveseven years. Leasehold improvements are amortized over the lesser of the life of the lease or the life of the asset.
Impairment of Long-lived Assets
The Company evaluates itsWe evaluate the Company’s long-lived assets with definite lives, such as property and equipment, for impairment. The Company recordsWe record impairment losses on long-lived assets used for operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying value of the assets. There have not been any impairment losses of long-lived assets for the years ended December 31, 20142016 and 2013.2015.
Impairment of Goodwill
The Company applies the GAAP principles related to Intangibles – Goodwill and Other related to performing a test for goodwill impairment annually. DuringFor the fourth quarter, there was a triggering event that occurred as a result of the decline in the Company’s market capitalization. As a result,years ended December 31, 2016 and 2015, the Company went toperformed a step 1 analysis utilizingand assessed the market value of the Company to determine whether an external valuation firm to value the Company.impairment had taken place. Based upon the analysis performed no impairment was noted, therefore performing step 2 was not required. The Company has concluded that no impairment of Goodwill has taken place for the yearyears ended December 31, 2014.2016 and 2015. Further, in performing a qualitative assessment, the Company concluded no events and circumstances have taken place that would have indicated that an impairment had taken place.
Revenue Recognition
Revenue from grants areis based upon internal and subcontractor costs incurred that are specifically covered by the grant, including a facilities and administrative rate that provides funding for overhead expenses. NIH Grants are recognized when the Company incurs internal expenses that are specifically related to each grant, in clinical trials at the clinical trial sites, by subcontractors who manage the clinical trials, and provided the grant has been approved for payment. U.S. Treasury grant awards are based upon internal research and development costs incurred that are specifically covered by the grant, and revenues are recognized when the Company incurs internal expenses that are related to the approved grant. The Company records revenue associated with the NIH Grants as the related costs and expenses are incurred. Any amounts received by the Company pursuant to the NIH Grants prior to satisfying the Company’s revenue recognition criteria are recorded as deferred revenue.
Research and Development Costs
Research and development expenses, which consist primarily of salaries and other personnel costs, clinical trial costs and preclinical study fees, manufacturing costs for non-commercial products, and the development of earlier-stage programs and technologies, are expensed as incurred when these expenditures have no alternative future uses. A significant portion of the development activities are outsourced to third parties, including contract research organizations. In such cases, the Company may be required to estimate related service fees incurred.
Stock-based Compensation
The Company’s stock-based compensation programs include grants of common stock and stock options to employees, non-employee directors and non-employee consultants. Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense, under the straight-line method, over the employee’s requisite service period (generally the vesting period of the equity grant).
The Company accounts for equity instruments, including common stock and stock options, issued to non-employees in accordance with authoritative guidance for equity based payments to non-employees. Stock options issued to non-employees are accounted for at their estimated fair value determined using the Black ScholesBlack-Scholes-Merton option-pricing model. The fair value of options granted to non-employees is re-measured as they vest, and the resulting increase in value, if any, is recognized as expense during the period the related services are rendered.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to basis differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 20142016 and 2013,2015, all deferred tax assets were fully offset by a valuation allowance.
The Company accrues interest and penalties, if any, on underpayment of income taxes related to unrecognized tax benefits as a component of income tax expense in its consolidated statements of operations.
Fair Value Measurements
Level 1 fair value inputs are quoted prices for identical items in active, liquid and visible markets such as stock exchanges. Level 2 fair value inputs are observable information for similar items in active or inactive markets, and appropriately consider counterparty creditworthiness in the valuations. Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate.
3. Recent Accounting Pronouncements
The Company has historically reported as a development stage company. In the period ended June 30, 2014, the Company elected to early adopt FASB Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements.” The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage.
In May 2014,November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes. Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified balance sheet. The new standard simplifies the presentation of deferred tax assets and liabilities and requires that deferred tax assets and liabilities be classified as noncurrent in a classified balance sheet. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, with early adoption permitted. This ASU affected our disclosures relating to deferred tax assets and liabilities. The Company has applied this guidance prospectively and it did not have a material impact on the consolidated balance sheets.
In February 2016, the FASB issued ASU 2016-2,"Leases (Topic 842)." This update will increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged, and it simplified the accounting for sale and leaseback transactions. Lessees will no longer be provided with a source of off-balance sheet financing. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently in the process of assessing what impact this new standard may have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This update includes multiple provisions intended to simplify various aspects of the accounting for share-based payment transactions including accounting for excess tax benefits and tax deficiencies, classification of excess tax benefits in the statement of cash flows and accounting for award forfeitures. This update is effective for annual and interim reporting periods of public entities beginning after December 15, 2016, with early adoption permitted. We do not expect the adoption of this new standard to have a material impact on our consolidated financial statements.
In August 2016, the FASB issued ASU No. 2014-09, “Revenue2016-15 (“ASU 2016-15”), “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance on eight (8) cash flow issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon bonds; (3) contingent consideration payments after a business combination; (4) proceeds from Contracts with Customers” (Topic 606). ASU No. 2014-09 supersedes the revenue recognition requirementssettlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in Topic 605, “Revenue Recognition,”securitization transactions; and most industry-specific revenue recognition guidance throughout the Industry Topics(8) separately identifiable cash flows and application of the Accounting Standards Codification. Additionally, this update supersedes some cost guidance includedpredominance principle. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The core principlethe statement of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Itcash flows. ASU 2016-15 is effective for the firstfiscal years, and interim periodperiods within annual reporting periodsthose years, beginning after December 15, 2016, and2017 with early adoption ispermitted. The adoption of this new standard did not permitted. Entities may choose from two adoption methods, with certain practical expedients. We are currently reviewing this standard to assess thehave a material impact on the Company’s future financial statements and evaluating the available adoption methods.
In June 2014, the FASB issued ASU No. 2014-12, “Compensation—Stock Compensation” (Topic 718): “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. ASU No. 2014-12 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, although early adoption is permitted. We are currently reviewing this standard to assess the impact on the Company’s futureour consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15 (“("ASU 2014-15”2014-15"), “Disclosure of Uncertainties Aboutabout an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 requires management to perform interim and annual assessments of an entity’sConcern.” This standard provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern.provide related footnote disclosures. ASU No. 2014-15 applies to all entities and is effective for annual and interim reporting periodsfiscal years ending after December 15, 2016 and for interim and annual periods therein with early adoption permitted. Management is currently evaluating the impact of the The adoption of the updatedthis new standard did not have a material impact on theour consolidated financial statements and disclosures.statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
4. Property and Equipment, Net
Property and equipment consisted of the following as of December 31, 20142016 and 2013:2015:
| | | December 31, | | |
| | | 2014 | | | 2013 | | | |
| | | | | | | | $51,909 | $8,979 |
| | | | | | | | 52,547 |
| | | | | | | | 894,942 | 400,301 |
| Capital lease equipment | | 95,657 | — |
| Leasehold improvement | | 59,555 | — |
| | | | | | | | 1,154,610 | 461,827 |
Less accumulated depreciation and amortization | | | | | | | | | (422,898) | (326,341) |
| | | | | | | | | $731,712 | $135,486 |
Depreciation expense for the years ended December 31, 20142016 and 20132015 was $12,241$96,553 and $35,366,$21,360, respectively.
5. Reverse Stock Split Name Change and Increase in Authorized Shares
On September 8, 2014, MabVax Therapeutics Holdings filed an amended and restated certificate of incorporation to increase the authorized number of shares of our common stock to a new total of 150,000,000 shares, increase the number of shares of our preferred stock to a new total of 15,000,000 shares, and change the name of the Company from “Telik, Inc.” to “MabVax Therapeutics Holdings, Inc.” The amendment and restatement of the certificate of incorporation effectuating the name change and above authorized share increases were approved by our stockholders at the special stockholder meeting on September 8, 2014 and by our Board of Directors at a meeting of the Board held on September 8, 2014.
On September 8, 2014, following the filing of the amended and restated certificate disclosed above, MabVax Therapeutics HoldingsAugust 16, 2016, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation with the amended and restated certificateSecretary of incorporationState of the State of Delaware in order to effect an 8-for-1effectuate a reverse stock split onof our issued and outstanding common stock on a 1 for 7.4 basis, effective on August 16, 2016 (the “Reverse Stock Split”), effective as of 4:01 p.m. Eastern Time (the “Effective Time”) on September 8, 2014 (the “Effective Date”). The Reverse Stock Split was approved by our stockholders ateffective with FINRA and the special stockholder meeting held on September 8, 2014 and by the Board of Directors at a meeting of the Board held on September 8, 2014.
On the Effective Date, immediately and without further action by our stockholders, every 8 shares of our common stock, issued and outstanding immediately prior to the Effective Time, were automatically converted into 1 share of our common stock. As a result of the Reverse Split and calculated as of the Record Date, the number of outstanding shares of our common stock was reduced from 13,932,937 to 1,741,617, excluding outstanding and unexercised share options and warrants and subject to adjustment for fractional shares. No fractional shares were issued as a result of the Reverse Split and, in lieu of these fractional shares, any holder of less than 1 share of our common stock was entitled to receive cash for such holder’s fractional share equal to the product of such fraction multiplied by the average of the last reported bid and ask prices of our common stock at 4:00 p.m., Eastern time, end of regular trading hours on OTCQB marketplace, during the 10 consecutive trading days ending on the last trading day prior to the Effective Date. Further, any options, warrants and contractual rights outstanding as of the Effective Date that were subject to adjustment were adjusted in accordance with their terms. These adjustments included, without limitation, changes to the number of shares of our common stock that may be obtained upon exercise or conversion of these securities, and changes to the applicable exercise or purchase price of such securities.
Shares of our common stock began to trade on the OTCQB marketplace on a post-split basis under the name MabVax Therapeutics Holdings, Inc. on September 10, 2014 under the new CUSIP number 55414P108. MabVax Therapeutics Holdings retained the same CUSIP number when itsCompany’s common stock began trading on The NASDAQ Capital Market at the OTCQB marketplace underopen of business on August 17, 2016. All share and per share amounts, and number of shares of common stock into which each share of preferred stock will convert, in the trading symbol MBVXfinancial statements and notes hereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.
6. Notes Payable, Net
On January 15, 2016, we entered into a loan and security agreement with Oxford Finance LLC pursuant to which we had the option to borrow $10,000,000 in two equal tranches of $5,000,000 each (the “Loan Agreement”). The first tranche of $5,000,000 was funded at close on October 10, 2014.January 15, 2016 (the “Term A Loan”). The option to fund the second tranche of $5,000,000 (the “Term B Loan”) was upon the Company achieving positive interim data on the Phase 1 HuMab-5B1 antibody trial in pancreatic cancer and successfully uplisting to either the NASDAQ Capital Market or NYSE MKT on or before September 30, 2016. The option for the Term B Loan expired on September 30, 2016. The Company is not pursuing completion of any additional debt financing with Oxford Finance LLC at the present time. The interest rate for the Term A Loan is set on a monthly basis at a rate equal to the greater of: the index rate plus 11.29%, where the index rate is the 30-day LIBOR rate; or 11.5%. Interest is due on the first day of each month, in arrears, calculated based on a 360-day year. The loan is interest only for the first year after funding, and the principal amount of the loan is amortized in equal principal payments, plus period interest, over the next 36 months. A facility fee of 1.0% or $100,000 was due at closing of the transaction, and was incurred and paid by the Company on January 15, 2016. The Company is obligated to pay a $150,000 final payment upon completion of the term of the loan, and this amount is being accreted using the effective interest rate method over the term of the loan. The amount being accreted is included in the long-term portion of notes payable, net, on the balance sheet Each of the term loans can be prepaid subject to a graduated prepayment fee, depending on the timing of the prepayment.
Concurrent with the closing of the transaction, the Company issued 225,226 common stock purchase warrants to Oxford Finance LLC with an exercise price of $5.55 per share. The warrants are exercisable for five years and may be exercised on a cashless basis, and expire on January 15, 2021. The Company recorded $607,338 for the fair value of the warrants as a debt discount within notes payable and an increase to additional paid-in capital on the Company’s balance sheet. We used the Black-Scholes-Merton valuation method to calculate the value of the warrants. The debt discount is being amortized as interest expense over the term of the loan using the effective interest method.
We granted Oxford Finance LLC a perfected first priority lien on all of the Company’s assets with a negative pledge on intellectual property. The Company paid Oxford Finance LLC a good faith deposit of $50,000, which was applied towards the facility fee at closing. The Company agreed to pay all costs, fees and expenses incurred by Oxford Finance LLC in the initiation and administration of the facilities including the cost of loan documentation.
At the initial funding, the Company received net proceeds of approximately $4,610,000 after fees and expenses. These fees and expenses are being accounted for as a debt discount and classified within notes payable on the Company’s consolidated balance sheet as a direct deduction from the carrying amount of the notes payable, consistent with debt discounts. Debt discounts, issuance costs and the final payment are being amortized or accreted as interest expense over the term of the loan using the effective interest method.
All prior periods in these consolidated financial statements have been adjustedThe Loan Agreement also contains customary indemnification obligations and customary events of default, including, among other things, our failure to reflect the effectsfulfill certain of the Merger andCompany's obligations under the Reverse Split, unless otherwise indicated.Loan Agreement, the occurrence of a material adverse change, which is defined as a material adverse change in the Company's business, operations, or condition (financial or otherwise), a material impairment of the prospect of repayment of any portion of the loan, or a material impairment in the perfection or priority of the Lenders’ lien in the collateral or in the value of such collateral. In the event of default by the Company under the Loan Agreement, the Lenders would be entitled to exercise their remedies thereunder, including the right to accelerate payment of the debt, upon which we may be required to repay all amounts then outstanding under the Loan Agreement, which could harm the Company's financial condition.
6. MergerThe Company was in compliance with MabVax Therapeutics, Inc.
On May 12, 2014, the Company entered into a Merger Agreement. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Tacoma Corp. was merged with and into private company MabVax Therapeutics on July 8, 2014, with MabVax Therapeutics surviving the Merger as a wholly-owned subsidiary of MabVax Therapeutics Holdings. The Merger is intended to qualify as a tax-free reorganization for U.S. Federal income tax purposes.
On July 7, 2014, the stockholders of MabVax Therapeutics Holdings approved the Merger, and the Merger closed and became effective on July 8, 2014. At the effective date of the Merger: (a) all shares of MabVax Therapeutics Series A preferred stock and all shares of MabVax Therapeutics Series B preferred stock were automatically converted into shares of MabVax Therapeutics Holdings common stock, (b) all outstanding shares of MabVax Therapeutics common stock were converted into and exchanged for shares of MabVax Therapeutics Holdings common stock at an exchange rate calculated in accordance with the methodologyapplicable covenants set forth in the MergerLoan Agreement which resulted in 2.223284 shares of MabVax Therapeutics Holdings common stock for every share of MabVax Therapeutics common stock, (c) all outstanding shares of MabVax Therapeutics Series C-1 preferred stock were converted into and exchanged for shares of MabVax Therapeutics Holdings Series A-1 preferred stock at a rate of two shares of MabVax Therapeutics Series C-1 per each share of MabVax Therapeutics Holdings Series A-1 preferred stock, (d) each outstanding MabVax Therapeutics option and warrant to purchase MabVax Therapeutics common stock became options and warrants to purchase shares of MabVax Therapeutics Holdings common stock (and the number of such shares and exercise price was adjusted as calculated in accordance with the methodology set forth in the Merger Agreement), and (e) each outstanding MabVax Therapeutics warrant to purchase MabVax Therapeutics preferred stock was cancelled for no consideration.
As a result of the consummation of the Merger, as of the closing date, the former stockholders, option holders and warrant holders of MabVax Therapeutics were issued, based on the methodology set forth in the Merger Agreement (which excluded certain out of the money convertible securities and calculated others on a net-exercise or cashless basis under the terms of the convertible securities), approximately 85% of the outstanding shares of MabVax Therapeutics Holdings common stock on a fully diluted basis and the stockholders, option holders and warrant holders of MabVax Therapeutics Holdings prior to the Merger owned approximately 15% of the outstanding shares of MabVax Therapeutics Holdings common stock on a fully diluted basis (such percentages calculated based on the methodology set forth in the Merger Agreement). As a result of the Merger, a change of control of MabVax Therapeutics Holdings occurred.
For accounting purposes, the Merger is treated as a “reverse acquisition”. The private company MabVax Therapeutics is considered the accounting acquirer, and the public company MabVax Therapeutics Holdings is considered the legal acquirer and accounting acquiree. The private company MabVax Therapeutics is the accounting acquirer because it owns a majority of the merged company (approximately 85%). As a result, the historical financial statements of the private company MabVax Therapeutics constitute the historical financial statements of the merged companies. The transaction is considered a business combination as MabVax Therapeutics Holdings is considered an operating entity. For accounting purposes, MabVax Therapeutics is treated as the continuing reporting entity.
The issuance of shares of our common stock and preferred stock in the Merger was approved by our stockholders in the annual stockholder meeting held on July 7, 2014. Amendments to our amended and restated certificate of incorporation related to an increase in the authorized number of shares of our common stock and preferred stock and a proposed reverse stock split to maintain NASDAQ listing maintenance standards and other transactions contemplated by the Merger Agreement were not approved at this meeting. As a result of our not getting stockholder approval of a proposed reverse stock split at the July 7, 2014 annual stockholders’ meeting, we were unable to meet all of the listing requirements for the NASDAQ Exchange and our common stock began trading on the OTCQB market under the stock symbol MBVX. There is no impact on accounting for the Merger on July 8, 2014, as a result of not getting stockholder approval on all matters presented at the July 7, 2014 annual meeting.December 31, 2016.
The purchase price is based upon the fair value of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) common stock outstanding of 572,887 shares as of July 8, 2014, multiplied by the stock closing price at July 8, 2014 of $11.20, or approximately $6,416,000. The consideration transferred is based on the market price of MabVax Therapeutics Holdings since management has determined that this was the most reliable measure of fair value, taking into consideration a third party valuation we received for financial reporting purposes as outlined under the Financial Accounting Standards Board Accounting Standards Codification Topic 805: Business Combination in connection with the Merger.
The total estimated purchase price of the acquisition as of July 8, 2014 is as follows:
Purchase Consideration:
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The Company noted a triggering event relating to its goodwill duerecorded interest expense related to the decrease in public market cap duringterm loan of $997,389 for the year ended December 31, 2014. Factors contributing to a low implied value2016. The annual effective interest rate on the note payable, including the amortization of the Company ondebt discounts and accretion of the stock exchange included thinly traded stock and significant stock sales from a significant investor, as well as lackfinal payment, but excluding the warrant amortization, is approximately 12.4%.
As of visibility on public exchanges of potentially dilutive securities that are disclosed in the Company’s public filings, that if converted would show substantially more shares outstanding than reported on public stock exchanges. Therefore,December 31, 2016, the Company performedhas one insurance premium note outstanding with a step 1 analysis using an independent valuation firm to determine if there wasbalance totaling $61,883, which matures in fact an impairmentApril 2017. This note bears interest at a rate of goodwill that needed to be recorded. The valuation took into consideration a recent re-capitalization and financing for the Company as a basis for determining the valuation of the Company4.5% per annum, and the Company concluded that no impairment had taken place. Goodwill is not deductible for tax purposes.monthly payments are $20,783.
Future principal payments under the Loan Agreement and insurance premium note as of December 31, 2016 are as follows:
| Years ending December 31: | |
| 2017 | $1,589,661 |
| 2018 | 1,666,667 |
| 2019 | 1,666,667 |
| 2020 | 138,889 |
| Notes payable, balance as of December 31, 2016 | 5,061,884 |
| Unamortized discount on notes payable | (697,596) |
| Notes payable, net, balance as of December 31, 2016 | 4,364,288 |
| Current portion of notes payable, net | (1,589,661) |
| Long-term portion of notes payable, net | $2,774,627 |
7. Redeemable Convertible Preferred Stock, Convertible Preferred Stock, Common Stock and Warrants
MabVax Therapeutics Series A and MabVax Therapeutics Series B preferred stock (Pre-Merger MabVax Therapeutics Issuances)
During February 2013 through December 2013, the Company sold an additional 410,557 shares of MabVax Therapeutics Series B redeemable convertible preferred stock in exchange for $2,792,993 in funds, net of issuance costs of $7,007. The Company also issued warrants to purchase an additional 194,281 shares of MabVax Therapeutics Series B redeemable convertible preferred stock at an exercise price of $0.01 per share (the “Series B Warrant”). The Series B Warrant is exercisable immediately and has a term of five years. Because the Series B Warrant is immediately convertible at the option of the holder, the Company recorded a deemed dividend of $691,812 from the beneficial conversion feature associated with the issuance of the MabVax Therapeutics Series B redeemable convertible preferred stock and the Series B Warrant.
The Company valued the warrants at fair value at the date the warrants were issued, using the Black Scholes valuation model with the following assumptions; contractual term of five years, volatility of 86%, no dividend yield and a risk-free interest rate of 0.28%.
As of December 31, 2013, the holders of shares of MabVax Therapeutics Series A redeemable convertible preferred stock and MabVax Therapeutics Series B redeemable convertible preferred stock were entitled to cumulative cash dividends of 8% per annum, when and if declared by the MabVax Therapeutics Board of Directors. Such dividends would have been in preference to and prior to any payment of any dividend on shares of MabVax Therapeutics common stock. Cumulative preferred stock dividends, when and if declared, for the MabVax Therapeutics Series A redeemable convertible preferred stock totaled $2,114,818 and the MabVax Therapeutics Series B redeemable convertible preferred stock totaled $430,944, as of December 31, 2013, and were reduced to zero in February 2014 as a result of the MabVax Therapeutics Series C-1 Preferred Stock Financing.
In January 2014, holders of warrants to purchase shares of MabVax Therapeutics Series B redeemable convertible preferred stock exercised their rights to purchase 194,281 shares of MabVax Therapeutics Series B redeemable convertible preferred stock for proceeds of $1,942.
In February 2014, the holders of MabVax Therapeutics Series A redeemable convertible preferred stock and MabVax Therapeutics Series B redeemable convertible preferred stock waived any rights to all prior accrued dividends they may have had a right to receive and amended the MabVax Therapeutics certificate of incorporation to eliminate their right to accrue dividends in the future as an inducement to buyers in the MabVax Therapeutics Series C-1 Preferred Stock Financing. The effect of this change reduced the liquidation preference for the MabVax Therapeutics Series A redeemable convertible preferred stock by $2,187,762 and the MabVax Therapeutics Series B redeemable convertible preferred stock by $486,938 as of February 12, 2014.
No dividends were ever declared by the MabVax Therapeutics Board of Directors since MabVax Therapeutics’ inception on either of the MabVax Therapeutics Series A redeemable convertible preferred stock or the MabVax Therapeutics Series B redeemable convertible preferred stock.
Removal of Redemption Rights – As of December 31, 2013, the holders of a majority interest of the MabVax Therapeutics Series A redeemable convertible preferred stock and MabVax Therapeutics Series B redeemable convertible preferred stock held a right to redeem (the “MabVax Therapeutics Redemption Right”), at any time on or after the fifth anniversary of the issuance date, upon request of at least 60% of the holders thereof, all of their preferred stock at a redemption price of $6.17 and $6.82 per share of MabVax Therapeutics Series A redeemable convertible preferred stock and MabVax Therapeutics Series B redeemable convertible preferred stock, respectively, exclusive of dividends. Due to these terms, MabVax Therapeutics classified all of the MabVax Therapeutics preferred stock as mezzanine equity (outside of permanent equity) as of December 31, 2013. In March 2014, the majority of holders, or more than 60%, of the MabVax Therapeutics Series A redeemable convertible preferred stock and MabVax Therapeutics Series B redeemable convertible preferred stock agreed by letter commitment to MabVax Therapeutics to relinquish the MabVax Therapeutics Redemption Right, and MabVax Therapeutics reclassified the presentation on the consolidated balance sheets as permanent equity following the agreement.
Liquidation preference – As of December 31, 2013, in the event of any voluntary or involuntary liquidation, dissolution or winding up of MabVax Therapeutics, the MabVax Therapeutics Series A redeemable convertible preferred stockholders and MabVax Therapeutics Series B redeemable convertible preferred stockholders were entitled to be paid an amount equal to $6.17 and $6.82 per share, respectively, plus all declared and unpaid dividends, as adjusted to reflect any stock splits, stock dividends or other recapitalization. In addition, after setting apart or paying in full the MabVax Therapeutics Series A redeemable convertible preferred stock and MabVax Therapeutics Series B redeemable convertible preferred stock liquidation preference, any remaining assets of MabVax Therapeutics available for distribution to its stockholders would have been distributed to all stockholders of MabVax Therapeutics with holders of MabVax Therapeutics preferred stock participating on an as converted basis without actually converting their MabVax Therapeutics preferred stock into shares of MabVax Therapeutics common stock. In the event that upon liquidation or dissolution, the assets and funds of MabVax Therapeutics would have been insufficient to permit the payment to MabVax Therapeutics preferred stockholders of the full preferential amounts, then the entire assets and funds of MabVax Therapeutics legally available for distribution were to be distributed ratably first to the holders of MabVax Therapeutics Series B preferred stock, second to the holders of MabVax Therapeutics Series A preferred stock and third on a pro rata basis to all stockholders of MabVax Therapeutics on an as-converted basis.
Series C-1 preferred stock purchase agreement
On February 12, 2014, MabVax Therapeutics entered into a Securities Purchase Agreement (the “MabVax Therapeutics Securities Purchase Agreement”) and issued 3,697,702 shares of MabVax Therapeutics Series C-1 preferred stock, warrants to purchase 2,055,260 shares of MabVax Therapeutics common stock at $3.62 a share (the “MabVax Therapeutics Series C Common Warrants”) and warrants to purchase 1,848,851 shares of MabVax Therapeutics Series C-1 preferred stock at $0.84 a share (the “MabVax Therapeutics Series C Preferred Warrants”), respectively, for aggregate gross proceeds of $3,100,000, less issuance costs of $126,345 (the “MabVax Therapeutics Series C-1 Financing”). The MabVax Therapeutics Series C Common Warrants and Preferred Warrants were exercisable immediately. The MabVax Series C Common Warrants would have expired on February 13, 2022, and the MabVax Therapeutics Series C Preferred Warrants would have expired upon registration of the shares of MabVax Therapeutics common stock (or a successor entity) under the Securities Act. Because the warrants are immediately convertible at the option of the holder, MabVax Therapeutics recorded a deemed dividend of $2,214,911 from the beneficial conversion feature associated with the issuance of the MabVax Series C-1 preferred stock and the MabVax Therapeutics Series C Common Stock Warrants and the MabVax Therapeutics Series C Preferred Stock Warrants.
In connection with the MabVax Therapeutics Series C-1 Financing, MabVax Therapeutics agreed to use its reasonable best efforts to raise at least an additional $3,000,000 through the sale and issuance of shares of MabVax Therapeutics common stock initially intended to be at $15.08 per share (the “Subsequent Capital Raise”). Substantially all of the investors in the MabVax Therapeutics Series C-1 Financing executed a financing commitment letter (such letters, the “Financing Commitment Letters”) to purchase a pro rata number of shares of MabVax Therapeutics common stock at the purchase price of $15.08 per share, representing in the aggregate at least $750,000, subject to certain terms and conditions, including a condition that MabVax Therapeutics raise at least $3,000,000 from new investors in the Subsequent Capital Raise. In addition, each such commitment letter provided that, in the event that less than $3,000,000 was raised from new investors in the Subsequent Capital Raise and subject to certain terms and conditions, each investor party to such letter was required to purchase shares of MabVax Therapeutics preferred stock to be designated as MabVax Therapeutics Series C-2 convertible preferred stock at $15.08 per share and in the aggregate amount of up to $3,000,000 (the “Backstop Capital Raise”).
On May 12, 2014, MabVax Therapeutics and certain investors amended the MabVax Therapeutics Securities Purchase Agreement to, among other things, (i) lower the price per share of the Subsequent Capital Raise from $15.08 to $9.93 per share, and (ii) provide that the price per share payable by investors as set forth in the Financing Commitment Letters would henceforth be the lower of (A) $15.08 a share and (B) the lowest price paid in the Subsequent Capital Raise. The price per share of the Backstop Capital Raise was not changed as a result of the amendment. On July 7, 2014, prior to the Merger, MabVax Therapeutics raised over $3.0 million from the sale of common stock and the Backstop Capital Raise was no longer in effect.
The MabVax Therapeutics Series C-1 preferred stock allowed the holders to require that MabVax Therapeutics redeem their shares of MabVax Therapeutics Series C-1 preferred stock, including any accrued but unpaid dividends, upon the occurrence of any of the following events (each, a “Triggering Event”): (i) the suspension of trading of common stock following registration of such shares, (ii) the failure to issue shares of MabVax Therapeutics common stock upon conversion of any MabVax Therapeutics Series C-1 preferred stock, (iii) the failure to authorize sufficient shares of MabVax Therapeutics common stock to permit the conversion of all outstanding shares of MabVax Therapeutics Series C-1 preferred stock and exercise of all MabVax Therapeutics Series C Common Warrants and MabVax Therapeutics Series C Warrants, (iv) failure to make certain required payments to the holders in excess of $25,000, (v) a default on indebtedness in the aggregate amount of $100,000, (vi) bankruptcy events, (vii) judgments requiring payments in excess of $100,000, (viii) consummation of a change of control with an entity which did not have a class of securities registered for trading, (ix) failure of MabVax Therapeutics to initiate the process of becoming publicly traded (either through a merger into a public company or the filing of a registration statement) within 4 months of the closing of the MabVax Therapeutics Series C-1 Financing, (x) failure to complete such Merger within one year or such registration within 4 months of the closing of the MabVax Therapeutics Series C-1 Financing, (xi) issuance of common stock in violation of certain restrictions relating to employee equity, (xii) issuance of debt in violation of any agreement relating to the MabVax Therapeutics Series C-1 Financing, (xiii) failure to convert MabVax Therapeutics Series A preferred stock or MabVax Therapeutics Series B preferred stock on or prior to the date shares of MabVax Therapeutics common stock became publicly tradable, (xiv) any deviation of 20% or more from the annual budget approved by such holders, (xv) any deviation of 5% or more with respect to auditing and investors’ relations expenses, (xvi) failure to deliver the 2013 audited financials within 45 days of the closing of the MabVax Therapeutics Series C-1 Financing, (xvii) any deviation of any line item of the 2013 audited financials from those set forth in the 2013 unaudited financials delivered in connection with the MabVax Therapeutics Series C-1 Financing or (xviii) a breach of any representation, warranty, covenant or other term or condition of any agreement relating to the MabVax Therapeutics Series C-1 Financing. Certain Triggering Events had occurred as of May 9, 2014, but were subsequently waived by the holders of the MabVax Therapeutics Series C-1 preferred stock.
On July 8, 2014, the date of the Merger, all MabVax Therapeutics Series C-1 preferred stock was converted into shares of MabVax Therapeutics Holdings Series A-1 preferred stock, and the Triggering Events were removed. Because of the removal of the Triggering Events as of the Merger date, the MabVax Therapeutics Holdings Series A-1 convertible preferred stock is presented on the consolidated balance sheet as permanent equity as of December 31, 2014.
Conversion
After giving effect to the Merger and Reverse Split, the holders of our Series A-1 preferred stock may at any time voluntarily convert each share into a number of fully paid shares of our common stock determined by dividing the liquidation preference (described below) by the initial conversion price of $1.6767 per share. Conversion is subject to (a) proportional adjustment for certain dilutive issuances, splits, combinations and other recapitalizations or reorganizations and (b) a full ratchet anti-dilution adjustment upon issuance of shares of common stock (or securities convertible into shares of common stock) at a price per share (or with a conversion or exercise price per share) less than the applicable conversion price, and subject to customary carve outs and exclusions.
Under the terms described for a mandatory conversion, all outstanding shares of our Series A-1 preferred stock shall be automatically converted into shares of our common stock upon the affirmative election of the holders of a majority of the issued and outstanding shares of our Series A-1 preferred stock. In the event that the Company does not issue the shares of its common stock upon conversion of any shares of its Series A-1 preferred stock, certain penalties, which may be paid in the form of cash or additional shares of its common stock, will accrue. The number of shares of our common stock issuable upon conversion of our Series A-1 preferred stock held by any particular holder, together with all affiliates of such holder, is capped at 4.99% of the issued and outstanding shares of common stock of the Company. Any shares in excess of such amount will be held in abeyance until such time as the issuance of such shares of common stock would not put such holder, together will all affiliates of such holder, above 4.99%. An individual holder may elect to increase this limit to up to 9.99% effective 61 days after providing notice to the Company.
Dividends
The Company’s Series A-1 stockholders are entitled to cumulative dividends on each share held at a rate of 8% per annum on the Stated Value (as defined in the Series A-1 certificate of designations) from and after the first date of issuance of any Series A-1 whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends. Such dividends are in preference to and prior to any payment of any dividend on shares of our Series B preferred stock, our Series C preferred stock or our common stock. If any dividend is declared and paid on any shares of our common stock, Series B preferred stock or Series C preferred stock, a dividend shall be declared and paid on shares of our Series A-1 preferred stock on an “as converted” basis. The Company is accreting the dividends in accordance with the agreement.
Liquidation preference
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, our Series A-1 preferred stockholders shall be paid an amount equal to $1.6767 per share, plus all accrued dividends, as adjusted to reflect any stock splits, stock dividends or other recapitalization. In addition, after setting apart or paying in full the Series A-1 preferred stock, and Series B preferred stock liquidation preference, any remaining assets of the Company available for distribution to stockholders, if any, shall be distributed to all stockholders of the Company with holders of our preferred stock participating on an as converted basis without actually converting their preferred stock into common stock.
In the event that upon liquidation or dissolution, the assets and funds of the Company are insufficient to permit the payment to its preferred stockholders of the full preferential amounts, then the entire assets and funds of the Company legally available for distribution are to be distributed ratably first to the holders of shares of our Series A-1 preferred stock, second to holders of our Series B preferred stock and third on a pro rata basis to all stockholders of the Company on an as-converted basis.
Voting rights
Each holder of our Series A-1 preferred stock is entitled to the number of votes equal to the number of shares of our common stock into which such holder’s shares are convertible. In addition, the consent of the Required Holders (as defined in the Series A-1 preferred stock certificate of designations) is required in certain circumstances.
Registration of Common Stock Issuable upon Conversion of Series A-1 Preferred Stock, and Conversions
On October 14, 2014, the Company filed an Amendment No. 1 to a Registration Statement on Form S-1 (the “Form S-1”) that was initially filed on September 29, 2014, for the purpose of registering additional shares of MabVax Therapeutics Holdings common stock issuable upon conversion of outstanding shares of MabVax Therapeutics Holdings Series A-1 preferred stock. The Form S-1, as amended, to register 1,615,070 shares of common stock, was declared effective by the SEC at 4:00 p.m. Eastern Standard Time on November 12, 2014.
From November 13, 2014, to December 31, 2014, holders of Series A-1 preferred stock converted 1,169,452 shares into 693,335 shares of common stock.
Exercise of MabVax Therapeutics Series C Preferred Warrants
On July 7, 2014, MabVax Therapeutics received $1.5 million in exchange for the exercise by holders of the MabVax Therapeutics Series C Preferred warrants to purchase 1,827,979 shares of MabVax Therapeutics Series C-1 preferred stock.
MabVax Therapeutics Holdings Series B Redeemable Convertible Preferred Stock and Warrants (Pre-Merger MabVax Therapeutics Issuances)
On May 12, 2014, (the “Closing Date”), MabVax Therapeutics Holdings entered into a securities purchase agreement (the “Series B Purchase Agreement”) with certain purchasers the “Purchasers” pursuant to which MabVax Therapeutics Holdings agreed to issue and sell, to the Purchasers, subject to customary closing conditions, an aggregate of 1,250,000 shares of MabVax Therapeutics Series B redeemable convertible preferred stockPreferred Stock and warrants (the “Series B Common Warrants”) to purchase up to an additional 78,12510,557 shares of MabVax Therapeutics Holdings common stock, with an aggregate purchase price of $2,500,000, or $2.00 for each share of our Series B redeemable convertible preferred stockPreferred Stock and related Series B Common Warrant (such transaction collectively, the “Series B Private Placement”). The closing of the Series B Private Placement took place on the Closing Date.
On May 8, 2014, MabVax Therapeutics Holdings filed a certificate of designation for the MabVax Therapeutics Holdings Series B preferred stock with the Secretary of State of the State of Delaware. The certificate of designations authorized 1,250,000 shares of Series B preferred stock. Holders of MabVax Therapeutics Series B redeemable convertible preferred stock (the “Holders”) are entitled to cumulative dividends on each share held at a rate of 8% per annum on the Stated Value (as defined in the certificate of designations). Upon a liquidation event, the Holders are entitled to a liquidation preference per share, prior to any distribution of the Company’s assets to the holders of its common stock, in an amount equal to the Stated Value plus accrued and unpaid dividends. After payment to the Holders of the full preferential amount, the Holders will, on a pari passu basis with the holders of the Company’s common stock, participate in the distribution of any remaining assets of the Company, subject to certain limitations. Each Holder may elect to convert their Series B preferred stock into shares of the Company’s common stock at the applicable conversion rate in effect at the time of such conversion. However, the Company shall not effect conversion of the Series B redeemable convertible preferred stock to the extent such conversion would result in the beneficial owner acquiring beneficial ownership of more than 4.99% of the Company’s outstanding common stock post-conversion, including any shares of its common stock issuable upon exercise or conversion of other convertible securities held by such beneficial owner. The Company obtained stockholder approval for the securities being issued in the Series B Private Placement at the annual stockholder meeting held on July 7, 2014. The conversion rate is subject to full ratchet anti-dilution protection upon certain dilutive issuances of our common stock or convertible securities of the Company. Such conversion price will be subject to adjustment from and after the earlier of: (i) the date that some or all of the Registerable Securities (as defined below) have become registered pursuant to an effective registration statement and (ii) six months after the Closing Date at which time the conversion price of the Series B preferred stock shall equal the lower of (a) the initial conversion price and (b) 90% of the average of the 10 lowest weighted average prices of the Company’s common stock during the 20 trading days immediately preceding applicable date of the conversion, of which the latter condition was reached on November 14, 2014. The Holders may also require the Company to redeem their shares of Series B redeemable convertible preferred stock prior to a change of control, as set forth in the certificate of designations. The certificate of designations further provides that the Holders are entitled to certain participation rights on issuances by the Company to holders of common stock in order to maintain their proportionate ownership, subject to certain customary exclusions, such as issuances pursuant to Company option plans, and in connection with the Merger.
The Series B Common Warrants became exercisable six months from the Closing Date, or November 12, 2014, expire five years from the Closing Date and may be exercised for cash or otherwise may be net-exercised. The Series B Common Warrants initially had a per share exercise price of $26.64. On the 60th day following the earlier of (i) the date all of the shares underlying the Warrants become registered pursuant to an effective registration statement and (ii) six months following the Closing Date (in each case, the “Reset Date”), the exercise price shall be reset to equal the lower of (i) the current exercise price and (ii) 90% of the average of the 10 lowest weighted average prices of Common Stock during the 20 trading days immediately preceding the Reset Date. The price was reset to $1.57 on January 11, 2015. The exercise price is subject to full ratchet anti-dilution adjustment for any issuances of common stock and convertible securities for common stock below the current conversion price, consistent with the terms of the Series B preferred stock.
In connection with the Series B Private Placement, the Company also entered into a Registration Rights Agreement with the Purchasers (the “Series B Registration Rights Agreement”). Pursuant to the Series B Registration Rights Agreement, the Company agreed to file a registration statement with the SEC covering resales of the Warrant Shares and the shares issuable upon conversion of the Series B preferred stock (together, the “Series B Registerable Securities”) by the Purchasers no later than 60 days following the Closing Date, and to use its commercially reasonable best efforts to have such registration statement declared effective as soon as practicable. The Company bears all expenses of such registration of the resale of the Registerable Securities. On September 3, 2014, the Required Holders (as defined in the Series B preferred stock certificate of designations) temporarily waived the 60 day registration deadline for a five day period.Warrants.
As a result of the Series B Common Warrants’ anti-dilution provision, the Series B Common Warrants arewere recorded as a current liability in the amount of $92,463 on our consolidated balance sheet. The outstanding warrant was valued at $92,463 and $567,885sheet as of December 31, 2014,2014. On March 25, 2015, the Series B Common Warrants were re-valued at $72,656 prior to being exchanged into shares of common stock and July 8, 2014 orSeries D Preferred Stock and the acquisition date, respectively. Our outstanding warrants are revalued on each balance sheet date, with changes inwarrant liability was eliminated and the fair value between reporting periodsCompany recorded in the consolidated statementsa gain of operations.
Warrants are valued using the Black-Scholes-Merton model. The warrant has only partial down round protection, as it has a price reset only on a down round financing, and not an increase in number of shares convertible with the warrant. The Company concluded that using the Black-Scholes-Merton model$19,807 for the valuation as ofyear ended December 31, 2014, is fairly accurate compared to a recent buyout offer. The fair value of warrants is estimated using the following assumptions, which, except for risk-free interest rate, are Level 3 inputs:
Warrant liability valuation assumptions
| | | As of December 31, 2014 | | | As of July 8, 2014 | |
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Expected life of options, in years | | | | | | | | |
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The following table presents information about our financial instruments that are measured at fair value on a recurring basis as of December 31, 2014 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value:
| | | Basis of Fair Value Measurement at December 31, 2014 | |
| | | December 31, 2014 | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | |
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Total financial liabilities | | | | | | | | | | | | | | | | |
The changes in the value of the warrant liability during the year ended December 31, 20142015 were as follows:
| Fair value – beginning of year | $92,463 |
| Change in fair value | (19,807) |
| Cancellation of warrants | (72,656) |
| Fair value – end of year | $— |
At December 31, 2016 and 2015, there were no financial instruments requiring fair value measurement.
Dividends on Preferred Stock
The Company immediately recognizes the changes in the redemption value on preferred stock as they occur and the carrying value of the security is adjusted to equal what the redemption amount would be as if redemption were to occur at the end of the reporting period based on the conditions that exist as of that date. The value adjustment made to the redemption value and preferred stock dividends on the Series A-1 Preferred Stock and Series B Preferred Stock for the year ended December 31, 2016 and 2015, was an increase of none and $93,234, respectively.
Since the Company’s inception, no dividends were ever declared or paid by the Company’s Board of Directors on either of the Company’s Series A Preferred Stock or Series B Preferred Stock.
Conversion of Preferred Stock into Common Stock
During quarter ended March 31, 2015, holders of Series A-1 Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock converted 64,019, 106,437, and 96,571 shares into 5,197, 37,417, and 16,313 shares of common stock, respectively; such conversions eliminated all outstanding Series A-1 Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock outstanding.
Exchange of Series A-1Preferred Stock and Series B Preferred Stock and Warrants into Common Stock and Series D Preferred Stock
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ThereAs of March 25, 2015, pursuant to the terms of the exchange agreements, the Series A-1 Purchase Agreement, dated February 12, 2014; the Series A-1 Registration Rights Agreement, dated February 12, 2014; the Series B Purchase Agreement, dated May 12, 2014; and the Series B Registration Rights Agreement, dated May 12, 2014; all of which have been described as part of the Company’s annual report on Form 10-K, were terminated, and all rights covenants, agreements and obligations contained therein, are of no transfers between Level 1 and Level 2 measurements forfurther force or effect.
No commission or other payment was received by the years endedCompany in connection with the exchange agreements.
Series D Preferred Stock
As of December 31, 20142016, there were 132,489 shares of Series D Preferred Stock issued and no required disclosureoutstanding that are convertible into an aggregate of 1,790,392 shares of common stock, as compared to 191,490 that were convertible into 2,587,703 shares of common stock as of December 31, 2013.2015.
Exchange Agreement and Series C Preferred Stock
On September 3, 2014, MabVax Therapeutics Holdings and certain holders of its issued and outstanding common stock entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which such holders agreed to exchange 148,713 shares of MabVax Therapeutics Holdings common stock for an aggregate of 118,970 shares of newly designated MabVax Therapeutics Holdings Series C preferred stock. From October to December 2014, holders converted 22,399 shares of Series C preferred stock into 28,000 shares of common stock.
As contemplated by the Exchange Agreementexchange agreements and as approved by the Company’s Board of Directors, the Company filed with the Secretary of State of the State of Delaware a certificateCertificate of designations forDesignation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Series D Certificate of Designations”), on March 25, 2015. Pursuant to the Series CD Certificate of Designations, the Company designated 1,000,000 shares of its blank check preferred stock on September 3, 2014. Holdersas Series D Preferred Stock. Each share of Series D Preferred Stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up of the Company, each share of Series D Preferred Stock will be entitled to a per share preferential payment equal to the par value. Each share of Series D Preferred Stock is convertible into 13.5135 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company is prohibited from effecting the conversion of the Series C preferred stock are entitled to vote on an as converted basis on matters presentedD Preferred Stock to the Company’s stockholdersextent that, as a result of such conversion, the holder beneficially would own more than 4.99% (provided that certain investors elected to block their beneficial ownership initially at 2.49% in the exchange agreements), in the aggregate, of the issued and upon liquidation, share in distributions on a pari passu basis with the holdersoutstanding shares of the Company’s common stock in amounts available for distribution following payments required to be madecalculated immediately after giving effect to the holdersissuance of shares of common stock upon the conversion of the Series A-1 preferred stock and Series B preferred stock.D Preferred Stock. Each share of Series C preferred stock is convertible into 1.25 shares of our common stock subjectD Preferred Stock entitles the holder to adjustment and the conversion limitations set forth in the Series C certificate of designations. When and as declaredvote on all matters voted on by the Board of Directors, the holders of the Series C preferred stock shall be entitled to receive dividends on an as converted basis (without regardcommon stock. With respect to any limitations on conversion) withsuch vote, each share of Series D Preferred Stock entitles the holdersholder to cast such number of votes equal to the Company’s common stock.
The termsnumber of the Exchange Agreement and Series C Certificate of Designations were determined by arms-length negotiation between the parties. The shares of common stock issuable pursuant to the Exchange Agreement have been, or will be, upon settlement, issuedsuch shares of Series D Preferred Stock are convertible into at such time, but not in reliance on the exemption from registration contained in Section 3(a)(9)excess of the Securities Act for securities exchanged by an issuer and an existing security holder where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange.beneficial ownership limitations.
MabVax CommonSeries E Preferred Stock Financing
From June 27 to July 7, 2014, MabVax Therapeutics HoldingsAs of December 31, 2016 and December 31, 2015, there were 33,333 shares of Series E Preferred Stock issued approximately 326,000and outstanding, convertible into 519,751 and 450,446 shares of common stock, for aggregate proceedsrespectively.
On March 30, 2015, the Company filed with the Secretary of approximately $2,884,000, netState of issuance coststhe State of approximately $156,000, inDelaware a private placement transactionCertificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the “MabVax Common“Series E Certificate of Designations”) to designate 100,000 shares of its blank check preferred stock as Series E Preferred Stock.
The shares of Series E Preferred Stock Private Placement”), pursuant to Common Stock Purchase Agreements by and among MabVax Therapeutics and certain institutional investors party thereto (the “MabVax Purchase Agreements”). Pursuantare convertible into shares of common stock based on a conversion calculation equal to the MabVax Purchase Agreements, MabVax Therapeutics agreedstated value of such preferred share, plus all accrued and unpaid dividends, if any, on such share of Series E Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series E Preferred Stock is $75 and the initial conversion price is $5.55 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, during the period proscribed for in the Series E Certificate of Designations, in the event the Company issues or sells, or is deemed to issue the purchasers participating in closings held under the MabVax Common Stock Private Placement prior to the closing of the Merger additional “anti-dilution” shares of MabVax Therapeutics common stock, for no additional consideration should MabVax Therapeuticsor sell, shares of its common stock at a per share price that is less than the conversion price then in effect, the future (subjectconversion price shall be reduced to such lower price, subject to certain customary exceptions, such as uponexceptions. The Company is prohibited from effecting a conversion of the conversion or exerciseshare of then outstanding convertible securities, the securities issued in the Merger and issuances under the MabVax Therapeutics option plan) at a price lower than $9.14 per share priorSeries E Preferred Stock to the first to occurextent that, as a result of (x) December 31, 2015 and (y) the date on which MabVax Therapeutics raises an aggregate of $10,000,000. The number of additional sharessuch conversion, such holder would be calculated on a weighted average based on the price per share of equity securities sold by MabVax Therapeutics following the initial closing of the MabVax Common Stock Private Placement and in no event would a purchaser be issued a number of additional shares of MabVax Therapeutics common stock in excess of 33%beneficially own more than 4.99% of the number of shares initially purchased by such purchaser and held as of the date of any anti-dilution adjustment. These shares of MabVax Therapeutics common stock issued in the MabVax Common Stock Private Placement were converted into shares of MabVax Therapeutics Holdings common stock in connection with the Merger. MabVax Therapeutics’ obligations with respect to the anti-dilution provisions in the Merger were assumed by MabVax Therapeutics Holdings, and these provisions now apply to sales of MabVax Therapeutics Holdings common stock. As of December 31, 2014, no sales of common stock had taken place since the MabVax Common Stock Private Placement that would have causedoutstanding immediately after giving effect to the issuance of anti-dilution shares.
Temporary Waivershares of Warrant Exercise Period
On the effective datecommon stock upon conversion of the Merger and pursuant toSeries E Preferred Stock, which beneficial ownership limitation may be increased by the Merger Agreement, MabVax Therapeutics Holdings issued as part of its securities to the holders of MabVax Therapeutics in exchange for securities owned by MabVax Therapeutics’ security holders, warrants to purchaseholder up to, an aggregate of 2,055,268 shares of MabVax Therapeutics Holdings common stock, with an exercise price of $3.62 per share and expiringbut not exceeding, 9.99%. Each holder is entitled to vote on July 10, 2023 (the “Merger Warrants”).
The preambleall matters submitted to stockholders of the Merger Warrants contains limitations prohibitingCompany, and shall have the Merger Warrant holders from exercising the Merger Warrants priornumber of votes equal to the one year anniversary of the effective date of the Merger, or July 8, 2015.
On September 3, 2014, the Company sent a letter to the holders of the issued and outstanding Merger Warrants (the “Waiver Letter”), waiving, on a limited basis from September 3 through September 12, 2014, the requirement set forth in the preamble of the Merger Warrants that the Merger Warrants may not be exercised until July 8, 2015, and permitting the Merger Warrants to be exercised, either through payment of the exercise price or on a net “cashless” basis, at any time during the period commencing on the date of the letter and ending on and including September 12, 2014 (the “Waiver Period”). The Waiver Letter also provides that, with respect to exercises pursuant to the Waiver Letter during the Waiver Period, the number of shares of common stock issuable upon cashless exercise shallconversion of such holder’s share of Series E Preferred Stock, but not in excess of beneficial ownership limitations. The shares of Series E Preferred Stock bear no interest.
On August 22, 2016, when the Company closed on the August 2016 Public Offering, the current Series E Preferred Stock conversion price of $5.55 per share was reduced to $4.81 per share under the terms of the Series E Certificate of Designations, resulting in an increase in the number of shares of common stock to 519,751 that the Series E Preferred Stock may be determinedconverted into. In the event of a liquidation, dissolution or winding up of the Company, each share of Series E preferred stock will be entitled to a per share preferential payment equal to the stated value. There is no further adjustment required by the Series E Certificate of Designations in accordancethe event of an offering of shares below $4.81 per share by the Company.
Series F Preferred Stock
As of December 31, 2016 and December 31, 2015, there were 665,281 and 0 shares of Series F Preferred Stock issued and outstanding, convertible into 665,281 and 0 shares of common stock, respectively. In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the par value.
On August 16, 2016, we filed a Certificate of Designations, Preferences and Rights of the 0% Series F Convertible Preferred Stock with the formula set forth in the Waiver Letter rather than the formula set forth in Section 1(d)Delaware Secretary of the Merger Warrant.State, designating 1,559,252 shares of preferred stock as 0% Series F Preferred Stock.
The shares of Series F Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series F Preferred Stock, plus all accrued and unpaid dividends, if any, on such Series F Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series F Preferred Stock is $4.81 and the initial conversion price is $4.81 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the par value. All shares of the Company’s capital stock will be junior in rank to Series F Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, except for the Company’s Series D Preferred Stock and Series E Preferred Stock.
The holders of Series F Preferred Stock will be entitled to receive dividends if and when declared by our board of directors. The Series F Preferred Stock shall participate on an “as converted” basis, with all dividends declared on the Company’s common stock. In addition, if we grant, issue or sell any rights to purchase our securities pro rata to all our record holders of our common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series F Preferred Stock then held.
We are prohibited from effecting a conversion of the Series F Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series F Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series F Preferred Stock, but not in excess of the beneficial ownership limitations.
April 2015 Private Placement
On October 3, 2014,March 31, 2015, the Company consummated the first closing of a private offering (the “April 2015 Private Placement”) and sold $4,714,726 worth of units (the “Unit(s)”), net of $281,023 in issuance costs. The Units consisted of 900,136 shares of common stock and warrants to purchase 450,068 shares of common stock with an exercise price of $11.10 per share. The Units were sold at a price of $5.55 per Unit.
On April 10, 2015, the Company consummated the second and final closing of the April 2015 Private Placement and sold $3,831,622 worth of Units, net of $387,127 in issuance costs, of which $2,500,000 of the Units consisted of Series E Preferred Stock and the balance of it consisting of 760,135 shares of common stock, together with warrants to all investors to purchase 605,293 shares of common stock at $11.10 per share. Each Unit was sold at a purchase price of $5.55 per Unit.
The Company paid commissions to broker-dealers in the aggregate amount of approximately $574,000 in the April 2015 Private Placement.
OPKO Health, Inc., or OPKO, was the lead investor in the April 2015 Private Placement, purchasing $2,500,000 worth of Units consisting of Series E Preferred Stock.
As a condition to OPKO’s and Frost Gama Investment Trust’s, or FGIT’s, participation in the April 2015 Private Placement, each of the other investors in the April 2015 Private Placement agreed to execute lockup agreements restricting the sale of 50% of the securities underlying the Units purchased by them for a period of six months and the remaining 50% prior to the expiration of one year following the Company’s delivery on September 30, 2014,final closing date of the April 2015 Private Placement.
On April 10, 2015, the Company agreed that $3.5 million of the net proceeds of such closing would be paid into and held under the terms of an escrow agreement with Signature Bank, N.A. pending the approval of a second letterrepresentative of OPKO or 10 weeks thereafter, unless released sooner or extended by the Company and OPKO. On June 22, 2015, the Company and OPKO extended the termination date of the escrow to 16 weeks from the final closing of the April 2015 Private Placement. In connection with the OPKO investment, Steven Rubin, Esq. was appointed advisor to the holdersCompany. The escrowed funds were to be returned to the applicable investors and the Company shall have no further obligation to issue Units to such investors in the event certain release conditions are not met. On June 30, 2015, the Company and OPKO entered into a letter agreement pursuant to which the Company granted the representative the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members of the Company’s Board of Directors, or to approve the person(s) nominated by the Company pursuant to the agreement in consideration for the release of the escrowed funds. The nominees will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange requirements. Upon signing the agreement, the escrowed funds were released to the Company.
The warrants are exercisable upon issuance and expire October 10, 2017, and may be exercised for cash or on a cashless basis. The warrants have a per share exercise price of $11.10, subject to certain adjustments including stock splits, dividends and reverse-splits. The Company is prohibited from effecting the exercise of the warrants to the extent that, as a result of such exercise, the holder beneficially would own more than 4.99% in the aggregate, of the issued and outstanding Merger Warrants (the “Waiver Extension Letter”), waiving, on a limited basis for a four day period, the requirement set forth in the preamble of the Merger Warrants that the Merger Warrants may not be exercised until July 8, 2015, and permitting the Merger Warrants to be exercised, either through payment of the exercise price or on a net “cashless” basis, at any time during the period commencing on the date of the letter and ending on and including October 3, 2014 (the “Waiver Extension Period”). The Waiver Extension Letter also provides that, with respect to exercises pursuant to the Waiver Extension Letter during the Waiver Extension Period, the number of shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the exercise of the warrants.
In connection with the April 2015 Private Placement, the Company also entered into registration rights agreements (the “Registration Rights Agreements”) with the investors in the April 2015 Private Placement pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of 25% of common stock issued pursuant to the subscription agreements including 25% of the common stock issuable upon cashless exercise shallconversion of the Series E Preferred Stock, in the event the investors elect to receive Series E Preferred Stock instead of common stock (together, the “Registrable Securities”), no later than 60 days following the final closing date of the April 2015 Private Placement, and to use its commercially reasonable best efforts to have such registration statement declared effective within 120 days after filing. Investors in the April 2015 Private Placement also may be determinedrequired under certain circumstances to agree to refrain from selling securities underlying the purchased Units. The liquidated damages for failure to achieve effectiveness of the Registerable Securities is 1% per month beginning 120 days after filing, and provided management has not used commercially reasonable best efforts to have the registration statement declared effective within that time frame.
On June 9, 2015, the Company and investors holding over 60% of the outstanding Registrable Securities entered into an amendment agreement to the Registration Rights Agreements in accordance withorder to extend the formulafiling date of the registration statement to waive any payments that may be due to the investors as a result of the Company not filing a registration statement on or before the original filing date. On August 4, 2015, the Company and investors holding over 70% of the outstanding Registrable Securities entered into a second amendment agreement to further extend the filing date to October 9, 2015.
On October 12, 2015, the Company and investors holding over 60% of the outstanding Registerable Securities entered into a third amendment agreement to the Registration Rights Agreements to suspend the Company’s registration obligations under the Registration Rights Agreements and related subscription agreements during any period when the “standstill” provision set forth in the Waiver Extension Letter rather thansubscription agreements is in effect.
On January 28, 2016, the formula set forth in Section 1(d)Company filed a Registration Statement on Form S-1, registering 527,680 shares of common stock for resale, including 112,613 shares of common stock, which are issuable upon conversion of the Merger Warrant.Company’s Series E Preferred Stock issued in the April 2015 Private Placement.
Except for certain issuances, for a period beginning on the closing date of the April 2015 Private Placement and ending on the date that is the earlier of (i) 24 months from the final closing date of the April 2015 Private Placement, (ii) the date the Company consummates a financing (excluding proceeds from the April 2015 Private Placement) in which the Company receives gross proceeds of at least $10,000,000 and (iii) the date the common stock is listed for trading on a national securities exchange (such period until the earlier date, the “Price Protection Period”), in the event that the Company issues any shares of common stock or securities convertible into common stock at a price per share or conversion price or exercise price per share that is less than $5.55, the Company shall issue to the investors in the April 2015 Private Placement such additional number of shares of common stock such that the investor shall own an aggregate total number of shares of common stock as if they had purchased the Units at the price of the lower price issuance. No adjustment in the warrants is required in connection with a lower price issuance.
Effective with the Company’s entry into an agreement with the underwriter for the Company’s August 2016 Public Offering, which closed on August 22, 2016, the Company issued 255,459 shares of common stock to the holders of record of the shares purchased in the Company’s April 2015 Private Placement under the Price Protection Period, representing the shares the investors would have received had they purchased their shares at $4.81 per share, instead of $5.55 per share. Effective August 17, 2016, the date of listing of the Company’s stock on the Nasdaq Capital Market, the Price Protection Period came to an end.
The Company’s management issued the temporary waiverCompany has also granted each investor a right of the warrant exercise period with the intention of gradually increasing the number of its publicly held sharesparticipation in furtherance of the Company’s continued effortsfinancings for a period of 24 months.
Between April 13, 2015, and April 14, 2015, certain holders of warrants issued in the April 2015 Private Placement to satisfy NASDAQ’s Initial Listing Standards and regain trading eligibility forpurchase an aggregate of 250,000 shares of its common stock exercised such warrants on a cashless basis for an aggregate issuance of 164,835 shares of common stock. As of December 31, 2016, there were 805,361 warrants outstanding from the NASDAQ Capital Market. Shares of the Company’sApril 2015 Private Placement to purchase common stock at $11.10 per share.
October 2015 Public Offering
On October 5, 2015, the Company closed a public offering of 337,838 shares of common stock and warrants to purchase 168,919 shares of common stock, at an offering price of $8.14 per share. For every two shares of common stock sold, the Company issued uponone warrant to purchase one share of common stock. The Company received $2,750,000 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling approximately $586,608, and without giving effect to any exercise of the Merger Warrants willunderwriters’ over-allotment option. The Company used the net proceeds from this offering to fund the HuMab-5B1 human antibody program preclinical development and for working capital and general corporate purposes.
The shares and warrants were separately issued and sold in equal proportions. The warrants are immediately exercisable, expire September 30, 2018, and have an exercise price of $9.77 per share. The warrants are not be registeredlisted on any securities exchange or other trading market. As of December 31, 2016, there were warrants to purchase 168,919 shares of common stock outstanding. The Company granted the underwriters a 30-day option to purchase up to an additional 50,676 shares of common stock and up to an additional 25,338 warrants at the same price to cover over-allotments, if any.
Under the terms of the underwriting agreement entered into between the Company and the underwriter in the public offering, the Company, without the prior written consent of the underwriter, was prohibited, for resale duringa period of 90 days after execution of the Waiver Extension Period and will beunderwriting agreement, from issuing any equity securities, subject to resale restrictionscertain exceptions.
August 2016 Public Offering
On August 22, 2016, we closed a public offering of 1,297,038 shares of common stock and 665,281 shares of Series F Preferred Stock convertible into 665,281 shares of common stock, and warrants to purchase 1,962,319 shares of common stock at $5.55 per Rule 144 as promulgatedshare and warrants to purchase 1,962,319 shares of common stock at $6.29 per share, at an offering price of $4.81 per share. For every one share of common stock or Series F Preferred Stock sold, we issued one warrant to purchase one share of common stock at $5.55 per share and one warrant to purchase one share of common stock at $6.29 per share. We received $9,438,753 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling $871,305. The gross proceeds include the underwriter’s over-allotment option, which they exercised on the closing date.
Issuance of Common Stock under a 2014 Common Stock Purchase Agreement
In connection with a financing by the Securities Act.Company in July 2014 (the “July 2014 Financing Transaction”), the Company assumed certain obligations as per the original agreement to issue additional shares to investors in the July 2014 Financing Transaction if a subsequent financing or issuance of shares was at a price per share lower than the price per share in the July 2014 Financing Transaction. The Company issued on March 31, 2015, an aggregate of 11,904 shares of common stock that were required to be issued in connection with the July 2014 Financing Transaction as a result of the issuance of shares at a lower share price than in the July 2014 Financing Transaction.
ForGrant of Restricted Shares
Rubin Grant
On April 3, 2015, the year ended December 31, 2014, 488,659 additionalCompany entered into a consulting agreement with Steve Rubin pursuant to which he agreed to provide advisory services in connection with corporate strategy, licensing and business development estimated to be for a period of 12 months. In exchange for his services, the Company provided him with a one-time grant of 27,027 shares of the Company’s restricted common stock, had been issued pursuantvalued at $17.02 per share. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the second quarter of 2015.
Ravetch Grant
On April 4, 2015, the Board of Directors approved the issuance of an additional restricted stock award of 17,770 shares to Jeffrey Ravetch, M.D., Ph. D, who is one of the Company’s board members. This award is for future services covering at least a one-year period. The award was granted in addition to the prior award to Dr. Ravetch on April 2, 2015 of (i) 4,628 restricted shares and (ii) options to purchase 4,628 shares of common stock with an exercise price of $17.02 per share, for a total grant of 27,028 restricted shares and deliveryoptions. As the 17,770 shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of 775,219 Merger Warrants in accordance withnonperformance, the termsCompany recognized the grant date fair value of the Waiver Lettershares as consulting expense upon grant during the second quarter of 2015.
Livingston Grant
On April 4, 2015, the Board of Directors approved the issuance of a restricted stock award by the Company of 135,135 shares of common stock, valued at $17.02 per share, to Philip Livingston, Ph.D. for his continuing service to the Company. On May 13, 2015, the Compensation Committee of the Board of Directors clarified that the award was being granted in consideration for at least one year of Dr. Livingston’s services. The committee further clarified that the vesting of the common stock shall be on the one-year anniversary of the Board of Directors’ approval of the award, or April 4, 2016. The Company expensed the grant date fair value of the award over the vesting period of one year.
Consultant Grants
On April 5, 2015, the Company entered into consulting agreements with two investor relations consultants to provide relations services to the Company in consideration for an immediate grant of 40,541 shares of the Company’s restricted common stock and a monthly cash retainer of $12,000 a month for ongoing services for a period of one year. The consultants also received an additional 27,027 shares of the Company’s restricted common stock upon the Company’s achieving a milestone based on its fully-diluted market capitalization. As the shares granted were fully vested upon grant and the Waiver Extension Letter.Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the 40,541 shares or $690,000, as investor relations expense upon grant during the second quarter of 2015. The performance condition for the 27,027 shares became probable and the market capitalization metric was met during the second quarter; therefore, the Company recognized an additional $460,000 of expense during the second quarter of 2015.
Also during 2015, the Board of Directors approved the issuance of restricted stock awards to two other consultants totaling 16,217 shares with vesting terms ranging from one to three years, valued from $13.10 to $15.76 per share. The Company is expensing each of the grant date fair value of the awards over the performance period for the award, which will be re-measured at the end of each quarter until the performance is complete. As of December 31, 2014,2016, the numberCompany expensed $32,569 related to these grants. As of warrants outstanding was 1,280,049 shares and 78,125December 31, 2016, the expected future compensation expense related to these grants is $24,571 based upon the Company’s stock price on December 31, 2016.
On January 13, 2016, the Board of Directors approved the issuance of 13,514 shares of restricted stock valued at $64,000 to a consultant for advisory services to the Merger Warrants exercisable intoCompany that was fully recognized upon issuance.
On September 1, 2016, the Board of Directors approved the issuance of 22,130 shares of common stock with a date of issuance fair value of $100,000 to an investor relations consulting firm. In exchange for the shares granted and a monthly retainer, the consulting firm will perform investor relations services on behalf of the Company. As the shares granted were fully vested upon grant and the Series B Common Warrants, respectively.Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the 22,130 shares of $100,000 as investor relations expense upon grant during the third quarter of 2016.
8. Related Party Transactions
The Company incurred consulting fees of $240,000 with a former board member and another founder ofOn November 3, 2016, the Company duringgranted 17,500 stock options to Jeffrey Ravetch, M.D., Ph.D., a Board member, for his ongoing consulting services to the year endedCompany. The option award vests over a three-year period.
On April 1, 2016, the Company entered into a two-year consulting agreement with Jeffrey Ravetch, M.D., Ph.D., a Board member, for work beginning January 1, 2016 through December 31, 2013. The2017, at a rate of $100,000 a year, in support of scientific and technical advice on the discovery and development of technology and products for the Company recorded a $240,000primarily related party liability as of December 31, 2013.to monoclonal antibodies, corporate development, and corporate partnering efforts. In April 2016, the Company paid Dr. Ravetch $100,000 for services to be performed in 2016, and will pay quarterly thereafter beginning January 1, 2017.
In February 2014, MabVax Therapeutics issued approximately 44,000April 2015, the Company granted a restricted stock award of 135,135 shares to Phil Livingston, Ph.D., an employee and Board member, for his continuing services to the Company. In addition, in April 2015, the Company has granted a restricted stock award of common stock to related parties in settlement of $240,000 in related party liabilities17,770 shares for Jeffrey Ravetch, M.D., Ph.D., a Board member, for consulting services.
In connection with the Merger, MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) signed separation agreements in May 2014 with nine employees and agreed to pay severances and health benefits upon closing of the Merger subject to certain provisions in the agreement. The total in severance and benefits costs to be paid out subsequent to the Merger is approximately $748,000. At December 31, 2014, the accrued severance and benefits costs are approximately $6,000.
9. Stock-based ActivityCompensation
Stock Incentive Plan
In September 2008, the Company’s stockholders approved the 2008 Stock Incentive Plan (the “2008 Plan”) which became effective in September 2008 and under which 65,5078,853 shares of the Company’s common stock were initially reserved for issuance to employees, non-employee directors and consultants of the Company. In November 2012, the Company increased the authorized shares under the plan to 155,893.21,067. On February 14, 2013, the 2008 Plan terminated and no further grants of equity may be made thereunder.
In June 2014, MabVax Therapeutics Inc.’s stockholders approved the amended 2014 Stock Incentive Plan (the “2014 Plan”) which became effective and was adopted by the Company in the Merger in July 2014. The 2014 Plan authorized the issuance of up to 351,44347,493 shares, 152,01720,543 of which are contingent upon the forfeiture, expiration or cancellation of the 2008 Reserved Shares.
The 2014 Plan providesprovided for the grant of incentive stock options, non-incentive stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards to eligible recipients. The maximum term of options granted under the Stock Plan is ten years.
Employee option grants will generally vest 25% on the first anniversary of the original vesting date, and the balance vests monthly over the nextfollowing three years. The vesting schedules for grants to non-employee directors and consultants will beis determined by the Company’s Compensation Committee. Stock options are generally not exercisable prior to the applicable vesting date, unless otherwise accelerated under the terms of the applicable stock plan agreement.
Amendment of Equity Incentive Plan
On March 31, 2015, the Company approved a Second Amended and Restated 2014 Employee, Director and Consultant Equity Incentive Plan (the “Plan”), effective as of and contingent upon the consummation of the initial closing of the April Private Placement, to increase the number of shares reserved for issuance under the Plan from 21,361 to 1,129,837 shares of common stock. Additional changes to the Plan include:
●
An “evergreen” provision to reserve additional shares for issuance under the Plan on an annual basis commencing on the first day of fiscal 2016 and ending on the second day of fiscal 2024, such that the number of shares that may be issued under the Plan shall be increased by an amount equal to the lesser of: (i) 1,081,082 or the equivalent of such number of shares after the administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the Plan; (ii) the number of shares necessary such that the total shares reserved under the Plan equals (x) 15% of the number of outstanding shares of common stock on such date (assuming the conversion of all outstanding shares of Preferred Stock (as defined in the Plan) and other outstanding convertible securities and exercise of all outstanding warrants to purchase common stock) plus (y) 30,946; and (iii) an amount determined by the Board.
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Provision that no more than 405,406 shares may be granted to any participant in any fiscal year.
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Provisions to allow for performance based equity awards to be issued by the Company in accordance with Section 162(m) of the Internal Revenue Code.
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On September 22, 2016, the Board of Directors ratified an automatic increase in the number of shares reserved for issuance under the Plan, increasing the total shares reserved from 1,129,837 to 1,208,307 shares of common stock, under the annual evergreen provision for the Plan.
Stock-based Compensation
Total estimated stock-based compensation expense, related to all of the Company’s stock-based payment awards recognized under ASC 718, “Compensation—“Compensation—Stock Compensation” and ASC 505, “Equity”was comprised of the following:
| | | Years Ended December 31, | | |
| | | 2014 | | | 2013 | | | |
| | | | | | | | $1,192,126 | $929,633 |
General and administrative | | | | | | | | 3,211,152 | 3,534,062 |
Total share-based compensation expense | | | | | | | | | |
| Total stock-based compensation expense | | $4,403,278 | $4,463,695 |
Stock-based Award Activity
The following table summarizes the Company’s stock option activity for the years ended December 31, 20142016 and 2013:2015:
| | | Options Outstanding | | | Weighted- Average Exercise Price | | | Weighted Average Exercise Price |
Outstanding at December 31, 2012 | | | | | | | | |
| Outstanding at December 31, 2014 | | 32,823 | $29.00 |
| | | | | | | | 407,547 | 16.50 |
| | | | | | | | (376) | 2.15 |
Forfeited/cancelled/expired | | | | | | | | (1,746) | 54.91 |
Outstanding at December 31, 2013 | | | | | | | | |
| Outstanding and expected to vest at December 31, 2015 | | 438,248 | 17.46 |
| | | | | | | 449,542 | 5.13 |
| | | | | | | — |
Forfeited/cancelled/expired | | | | | | | | | (36,415) | 15.28 |
Outstanding and expected to vest at December 31, 2014 | | | | | | | | | |
Vested and exercisable at December 31, 2014 | | | | | | | | | |
| Outstanding and expected to vest at December 31, 2016 | | 851,375 | $10.94 |
| Vested and exercisable at December 31, 2016 | | 167,291 | $17.29 |
The total unrecognized compensation cost related to unvested stock option grants as of December 31, 20142016 was $750,405$3,007,785 and the weighted average period over which these grants are expected to vest is 2.51.96 years. TheDue to limited activity in 2016, the Company has assumed a forfeiture rate of zero. The weighted average remaining contractual life of stock options outstanding at December 31, 20142016 and 2015 is 7.9 years.8.82 years and 9.13 years, respectively.
None of the stockStock options granted to employees during the year ended December 31, 2014 were vested at December 31, 2014, as they generally vest over a four yearthree-year period with one third of the grants vesting at each one-year anniversary of the grant date.
During 2016, the Company granted 449,542 options to its directors, officers, employees with a weighted average exercise price of $5.13 and vesting does not start untilover a three-year period with vesting starting at the one-year anniversary of the grant date. During 2015, there were 407,547 options and 310,926 shares of restricted stock granted to directors, officers, employees and consultants from the 2014 Plan. During the year ended December 31, 2014,2016, 105,448 shares of restricted stock units have vested and the balance will vest in two equal installments on the anniversary of the grant date over the next two years. During the year ended December 31, 2016, the Company has recognized $1,628,405 in stock based compensation expense related to restricted stock units. In addition, the Company granted five new board members appointed in connection with250,203 shares of restricted stock outside of the Merger an aggregateplan for consulting and investor relation services during the second quarter of 55,580 in stock options, which were immediately vested on the grant date.2015.
A summary of activity related to restricted stock grants under the Plan for the years December 31, 2016 and 2015 is presented below:
| | | Weighted Average Grant-Date Fair Value |
| Non-vested at December 31, 2014 | — | $— |
| Granted | 310,926 | 16.84 |
| Vested | — | — |
| Forfeited | — | — |
| Non-vested at December 31, 2015 | 310,926 | 16.84 |
| Granted | — | — |
| Vested | (105,448) | 16.84 |
| Forfeited | — | — |
| Non-vested at December 31, 2016 | 205,478 | $16.84
|
On April 2 and April 3, 2016, 98,237 shares of restricted stock units vested upon the one-year anniversary of restricted stock units granted. Accordingly, 64,392 shares were issued to the Company’s directors and officers, and the Company withheld 33,848 shares for the employee portion of taxes and remitted $177,823 to the tax authorities in order to satisfy tax liabilities related to this issuance on behalf of the officers. In addition, in July and August of 2016, 7,208 shares were issued to outside consultants upon vesting of previously issued restricted stock units. As of December 31, 2016, there were 205,478 nonvested restricted stock units remaining outstanding.
As of December 31, 2016 and 2015, unamortized compensation expense related to restricted stock grants amounted to $2,214,859 and $3,843,264, which is expected to be recognized over a weighted average period of 1.27 and 2.27 years, respectively.
Valuation Assumptions
The Company used the Black-Scholes-Merton option valuation model, or the Black ScholesBlack-Scholes model, to determine the stock-based compensation expense for stock options recognized under ASC 718.718 and ASC 505. The Company’s expected stock-price volatility assumption was based solely on the weighted average of the historical and implied volatility of comparable companies whose share prices are publicly available. The expected term of stock options granted was based on the simplified method in accordance with Staff Accounting Bulletin No. 110, or SAB 110, as the Company’s historical share option exercise experience did not provide a reasonable basis for estimation. The risk-free interest rate was based on the U.S. Treasury yield for a period consistent with the expected term of the stock award in effect at the time of the grant.
| | | |
| | | Years Ended December 31, | | | |
| | | 2014 | | 2013 | | |
|
| | | | | | | | 0.9 to 1.4 % | 0.9 to 1.8 % |
| | | | | | | | 0% | 0% |
| | | | | | | | 71 to 86% | 81 to 87%
|
Expected life of options, in years | | | | | | | | 1.61 to 6.0 | 5.5 and 6.0
|
Weighted-average grant date fair value | | | | | | | | | |
| Weighted average grant date fair value | | $3.16 | $1.56 |
Because the Company had a net operating loss carryforward as of December 31, 2014,2015 and 2016, no tax benefits for the tax deductions related to stock-based compensation expense were recognized in the Company’s Consolidated Statementsconsolidated statements of Operations.operations. Additionally, nothere were 376 stock options were exercised induring the yearsyear ended December 31, 2015, and there were no stock option exercises in the corresponding period of 2016.
Management Bonus Plan
On April 2, 2015, the Compensation Committee of the Board of Directors approved the 2015 Management Bonus Plan (the “Management Plan”) outlining maximum target bonuses of the base salaries of certain of the Company’s executive officers. Under the terms of the Management Plan, the Company’s Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, the Chief Financial Officer shall receive a maximum target bonus of up to 35% of his annual base salary and the Company’s Vice President shall receive a maximum target bonus of up to 25% of his annual base salary. During the year ended December 31, 2016 and 2015, the Company accrued and expensed $458,586 and $323,363, respectively related to the Management Plan.
On April 4, 2015, the Board approved the following Non-Employee Director Policy (the “Incumbent Director Policy”) with respect to incumbent non-employee members of the Board in the event that they are replaced before their term expires:
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A one-time issuance of 2,703 restricted shares of common stock;
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The vesting of all options and restricted stock grants held on such date; and
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The payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date.
On April 4, 2015, in connection with his resignation from the Board, Michael Wick received a one-time restricted stock grant of 2,703 shares under the Incumbent Director Policy.
On February 16, 2016, our Compensation Committee approved a 2016 Management Bonus Plan (the “2016 Management Plan”) outlining maximum target bonuses of the base salaries of certain of our executive officers. Under the terms of the 2016 Management Plan, the Company's Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, and the Chief Financial Officer and each of the Company's Vice Presidents shall receive a maximum target bonus of up to 30% of their annual base salary.
On February 16, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
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The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 6,757 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and 2013.a strike price equal the closing price of the Company's common stock on the effective date of the appointment (or election);
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The annual cash retainer for each non-employee director, paid quarterly, is increased by $1,000 per calendar quarter to a total of $7,000 per quarter, effective April 1, 2016; and
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The additional annual cash retainer for the chairperson of each of the Audit, Compensation, and Nominating and Governance Committees, paid quarterly, is increased by $1,000 per calendar year, such that each chairperson retainer shall be as follows, effective April 1, 2016: Audit Committee: $13,000; Compensation Committee: $9,000; Nominating and Governance Committee: $6,000.
On August 25, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
●
The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 25,000 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal to the closing price of the Company's common stock on the effective date of the appointment (or election); and
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The additional automatic annual option grant to each non-employee director on the date of the Company's annual meeting shall be a 10-year option to purchase 17,500 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 1-year vesting and a strike price equal to the closing price of the Company's common stock on the date of the annual meeting.
Common stock reservedStock Reserved for future issuanceFuture Issuance
Common stock reserved for future issuance consists of the following at December 31, 2014:2016:
Common stock reserved for conversion of preferred stock and warrants | | | | |
Common stock options outstanding | | | | |
Authorized for future grant or issuance under the Stock Plan | | | | |
| | Unvested restricted stock | |
| Total | |
10. Net Loss per Share
The Company calculates basic and diluted net loss per share using the weighted-averageweighted average number of shares of common stock outstanding during the period.
When the Company is in a net loss position, it excludes from the calculation of diluted net loss per share all potentially dilutive stock options, preferred stock and warrants, and the diluted net loss per share is the same as the basic net loss per share for such periods. If the Company was to be in a net income position, the weighted-averageweighted average number of shares used to calculate the diluted net income per share would include the potential dilutive effect of in-the-money securities, as determined using the treasury stock method.
The table below presents the potentially dilutive securities that would have been included in the calculation of diluted net loss per share if they were not antidilutive for the periods presented.
| | | Years Ended December 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | | |
MabVax Series A redeemable convertible preferred stock | | | | | | | | |
MabVax Series B redeemable convertible preferred stock | | | | | | | | |
MabVax Series C-1 redeemable convertible preferred stock | | | | | | | | |
Series B redeemable convertible preferred stock | | | | | | | | |
Series A-1 preferred stock | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | |
| | | |
| Stock options | 851,375 | 438,248 |
| Preferred stock | 2,975,424 | 3,038,163 |
| Unvested restricted stock | 205,478 | 310,926 |
| Warrants to purchase common stock | 5,124,144 | 974,280 |
| Total | 9,156,421 | 4,761,617 |
11. Contracts and Agreements
NCI Sarcoma Vaccine GrantMemorial Sloan Kettering Cancer Center, or MSK
In July 2010, the National Cancer Institute (“NCI”) awardedSince 2008 the Company a Small Business Innovation Research (“SBIR”) Program granthas engaged in various research agreements and collaborations with MSK including licensed rights to supportcancer vaccines and the Company’s program to conduct a Phase II clinical trial for a vaccine intended to prevent the recurrence of sarcoma (the “NCI Sarcoma Vaccine Grant”). The Company received the Phase II portion of the grant, which amountedblood samples from patients who have been vaccinated with MSK’s cancer vaccines. Total sponsored research contracts outstanding in 2016 amounting to approximately $1,829,000 and covered the period from April 2011 to January 2013. The Company records revenue associated with the NIH Grants$800,000 in 2016 were approximately 100% complete as the related costs and expenses are incurred. Forof the year ended December 31, 2013,2016. Such sponsored research agreements provide support for preclinical work on the Company recorded $201,355Company’s product development programs. The work includes preparing radioimmunoconjugates of revenue associated with the NCI Sarcoma Vaccine Grant.
NCI Neuroblastoma Vaccine GrantCompany’s antibodies and performingin vitroandin vivopharmacology studies for our therapeutic antibody product, imaging agent product and radioimmunotherapy product programs.
Life Technologies Licensing Agreement
On September 24, 2015, the Company entered into a licensing agreement with Life Technologies Corporation (“Life Technologies”), a subsidiary of ThermoFisher Scientific. Under the agreement, MabVax agreed to license certain cell lines from Life Technologies to be used in the production of recombinant proteins for the Company’s clinical trials. The amount of the contract is for $450,000 and was fully expensed during the year ended December 31, 2015. In each of the years ended December 31, 2015 and 2016, the Company paid $225,000 and $225,000, respectively, related to this contract.
Rockefeller University Collaboration
In July 2012, the NCI awarded2015, the Company entered into a SBIR Program grantresearch collaboration agreement with Rockefeller University's Laboratory of Molecular Genetics and Immunology. The Company provided antibody material to supportRockefeller University, which is exploring the Company’s program to manufacture the clinical material and develop an Investigational New Drug Application for a vaccine to prevent the recurrencemechanism of Neuroblastoma (the “NCI Neuroblastoma Vaccine Grant”). The project period for Phase Iaction of constant region (Fc) variants of the grant endedHuMab-5B1 in December 2012 andthe role of tumor clearance. The Company will supply additional research materials as requested by the university, which is evaluating ways to optimize the function.
Patheon Biologics LLC Agreement
On April 14, 2014, the Company receivedentered into a one-year extension ondevelopment and manufacturing services agreement (the “Services Agreement”) with Patheon (f.k.a. Gallus Biopharmaceuticals) to provide a full range of manufacturing and bioprocessing services, including cell line development, process development, protein production, cell culture, protein purification, bio-analytical chemistry and quality control, or QC, testing. Total amount of the project. The Company records revenue associated with the NIH Grants as the related costs and expenses are incurred.contract is estimated at approximately $3.0 million. For the years ended December 31, 20142016 and 2013,2015, the Company recorded $32,355$0 and $102,521$2,556,278 of revenueexpense, respectively, associated with the NCI Neuroblastoma Vaccine Grant, respectively.Services Agreement. During the third quarter of 2016, the Company negotiated a reduction in the amount previously recorded and owed to Patheon related to manufacturing batches that have failed, resulting in the reduction in R&D expenses of approximately $363,000 during the quarter.
NCI PET Imaging Agent GrantSeries D Preferred Stock
In September 2013,As of December 31, 2016, there were 132,489 shares of Series D Preferred Stock issued and outstanding that are convertible into an aggregate of 1,790,392 shares of common stock, as compared to 191,490 that were convertible into 2,587,703 shares of common stock as of December 31, 2015.
As contemplated by the NCI awardedexchange agreements and as approved by the Company’s Board of Directors, the Company filed with the Secretary of State of the State of Delaware a SBIR Program ContractCertificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Series D Certificate of Designations”), on March 25, 2015. Pursuant to support the Company’s programSeries D Certificate of Designations, the Company designated 1,000,000 shares of its blank check preferred stock as Series D Preferred Stock. Each share of Series D Preferred Stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up of the Company, each share of Series D Preferred Stock will be entitled to develop a PET imaging agent for pancreatic cancer usingper share preferential payment equal to the par value. Each share of Series D Preferred Stock is convertible into 13.5135 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company is prohibited from effecting the conversion of the Series D Preferred Stock to the extent that, as a fragmentresult of such conversion, the holder beneficially would own more than 4.99% (provided that certain investors elected to block their beneficial ownership initially at 2.49% in the exchange agreements), in the aggregate, of the issued and outstanding shares of the Company’s 5B1 antibody (the “NCI PET Imaging Agent Grant”). The project period for Phase Icommon stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the grant awardSeries D Preferred Stock. Each share of approximately $250,000 covered a nine-month period which commencedSeries D Preferred Stock entitles the holder to vote on all matters voted on by holders of common stock. With respect to any such vote, each share of Series D Preferred Stock entitles the holder to cast such number of votes equal to the number of shares of common stock such shares of Series D Preferred Stock are convertible into at such time, but not in September 2013excess of the beneficial ownership limitations.
Series E Preferred Stock
As of December 31, 2016 and ended in June 2014.December 31, 2015, there were 33,333 shares of Series E Preferred Stock issued and outstanding, convertible into 519,751 and 450,446 shares of common stock, respectively.
On August 25, 2014,March 30, 2015, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the “Series E Certificate of Designations”) to designate 100,000 shares of its blank check preferred stock as Series E Preferred Stock.
The shares of Series E Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such preferred share, plus all accrued and unpaid dividends, if any, on such share of Series E Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series E Preferred Stock is $75 and the initial conversion price is $5.55 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, during the period proscribed for in the Series E Certificate of Designations, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions. The Company is prohibited from effecting a conversion of the share of Series E Preferred Stock to the extent that, as a result of such conversion, such holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series E Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s share of Series E Preferred Stock, but not in excess of beneficial ownership limitations. The shares of Series E Preferred Stock bear no interest.
On August 22, 2016, when the Company closed on the August 2016 Public Offering, the current Series E Preferred Stock conversion price of $5.55 per share was awardedreduced to $4.81 per share under the terms of the Series E Certificate of Designations, resulting in an increase in the number of shares of common stock to 519,751 that the Series E Preferred Stock may be converted into. In the event of a $1.5 million contractliquidation, dissolution or winding up of the Company, each share of Series E preferred stock will be entitled to a per share preferential payment equal to the stated value. There is no further adjustment required by the Series E Certificate of Designations in the event of an offering of shares below $4.81 per share by the Company.
Series F Preferred Stock
As of December 31, 2016 and December 31, 2015, there were 665,281 and 0 shares of Series F Preferred Stock issued and outstanding, convertible into 665,281 and 0 shares of common stock, respectively. In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the par value.
On August 16, 2016, we filed a Certificate of Designations, Preferences and Rights of the 0% Series F Convertible Preferred Stock with the Delaware Secretary of State, designating 1,559,252 shares of preferred stock as 0% Series F Preferred Stock.
The shares of Series F Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series F Preferred Stock, plus all accrued and unpaid dividends, if any, on such Series F Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series F Preferred Stock is $4.81 and the initial conversion price is $4.81 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the par value. All shares of the Company’s capital stock will be junior in rank to Series F Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, except for the Phase II portionCompany’s Series D Preferred Stock and Series E Preferred Stock.
The holders of Series F Preferred Stock will be entitled to receive dividends if and when declared by our board of directors. The Series F Preferred Stock shall participate on an “as converted” basis, with all dividends declared on the Company’s common stock. In addition, if we grant, issue or sell any rights to purchase our securities pro rata to all our record holders of our common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series F Preferred Stock then held.
We are prohibited from effecting a conversion of the NCI PET Imaging Agent Grant. The contract is intendedSeries F Preferred Stock to supportthe extent that, as a major portionresult of such conversion, the holder would beneficially own more than 4.99% of the preclinical work being conductednumber of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series F Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series F Preferred Stock, but not in excess of the beneficial ownership limitations.
April 2015 Private Placement
On March 31, 2015, the Company consummated the first closing of a private offering (the “April 2015 Private Placement”) and sold $4,714,726 worth of units (the “Unit(s)”), net of $281,023 in issuance costs. The Units consisted of 900,136 shares of common stock and warrants to purchase 450,068 shares of common stock with an exercise price of $11.10 per share. The Units were sold at a price of $5.55 per Unit.
On April 10, 2015, the Company consummated the second and final closing of the April 2015 Private Placement and sold $3,831,622 worth of Units, net of $387,127 in issuance costs, of which $2,500,000 of the Units consisted of Series E Preferred Stock and the balance of it consisting of 760,135 shares of common stock, together with its collaboration partner, MSK,warrants to developall investors to purchase 605,293 shares of common stock at $11.10 per share. Each Unit was sold at a novel Positron Emission Tomography (“PET”) imaging agent for detection and assessmentpurchase price of pancreatic cancer. The total contract amount for Phase I and Phase II of approximately $1,749,000 supports research work through June 2016.$5.55 per Unit.
The Company records revenue associatedpaid commissions to broker-dealers in the aggregate amount of approximately $574,000 in the April 2015 Private Placement.
OPKO Health, Inc., or OPKO, was the lead investor in the April 2015 Private Placement, purchasing $2,500,000 worth of Units consisting of Series E Preferred Stock.
As a condition to OPKO’s and Frost Gama Investment Trust’s, or FGIT’s, participation in the April 2015 Private Placement, each of the other investors in the April 2015 Private Placement agreed to execute lockup agreements restricting the sale of 50% of the securities underlying the Units purchased by them for a period of six months and the remaining 50% prior to the expiration of one year following the final closing date of the April 2015 Private Placement.
On April 10, 2015, the Company agreed that $3.5 million of the net proceeds of such closing would be paid into and held under the terms of an escrow agreement with Signature Bank, N.A. pending the approval of a representative of OPKO or 10 weeks thereafter, unless released sooner or extended by the Company and OPKO. On June 22, 2015, the Company and OPKO extended the termination date of the escrow to 16 weeks from the final closing of the April 2015 Private Placement. In connection with the NCI PET Imaging Agent Grant asOPKO investment, Steven Rubin, Esq. was appointed advisor to the related costsCompany. The escrowed funds were to be returned to the applicable investors and expenses are incurred. For the years ended December 31, 2014 and 2013, the Company recorded $271,820shall have no further obligation to issue Units to such investors in the event certain release conditions are not met. On June 30, 2015, the Company and $62,492OPKO entered into a letter agreement pursuant to which the Company granted the representative the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members of revenue associated with the NCI PET Imaging Agent Grant, respectively.Company’s Board of Directors, or to approve the person(s) nominated by the Company pursuant to the agreement in consideration for the release of the escrowed funds. The nominees will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange requirements. Upon signing the agreement, the escrowed funds were released to the Company.
Juno Therapeutics Option Agreement
On August 29, 2014, MabVax Therapeutics entered into an Option Agreement (the “Option Agreement”) with Juno Therapeutics, Inc. (“Juno”). PursuantThe warrants are exercisable upon issuance and expire October 10, 2017, and may be exercised for cash or on a cashless basis. The warrants have a per share exercise price of $11.10, subject to certain adjustments including stock splits, dividends and reverse-splits. The Company is prohibited from effecting the exercise of the warrants to the Option Agreement, MabVax Therapeutics granted Juno the option to obtain an exclusive, world-wide, royalty-bearing license (the “License”) authorizing Juno to develop, make, have made, use, import, have imported, sell, have sold, offer for sale and otherwise exploit certain patents MabVax Therapeutics developed with respect to fully human antibodies with binding specificity against human GD2 or sialyl Lewis A antigens (the “Patents”) and certain MabVax Therapeutics controlled biologic materials. Juno may exercise its option to purchase the License until the earlier of June 30, 2016 or 90 days from the date MSK completes its research with respect to the Patents in accordance with the terms of agreements by and between MSK and MabVax Therapeutics.
The Option Agreement may be terminated by either party (i) upon material breach of the other party if the breach is not cured within 30 days, or (ii) with 60 days’ prior written notice in the event the other party becomes the subject of a voluntary or involuntary petition in bankruptcy. Juno may terminate the Option Agreement at any time upon 30 days’ prior written notice. MabVax Therapeutics may terminate the Option Agreement if Juno, or any Juno employee or affiliate, is a party to any action or proceeding in which Juno, or any Juno employee or affiliate, opposes the Patents or otherwise seeks a determinationextent that, any of the Patents are invalid or unenforceable if Juno, or as applicable, its employee and/or affiliate, fails to discontinue its involvement in such an action within 10 days of receiving notice from MabVax Therapeutics.
As consideration for the grant of the exclusive option to purchase the License, Juno has agreed to pay MabVax Therapeutics a one-time up-front option fee in the low five figures. Should the option be exercised, MabVax Therapeutics would expect to negotiate with Juno to pay amounts that include MabVax Therapeutics license fees, milestone payments, and royalty-based compensation in connection with entering into a License. The terms of the License including the financial terms are expected to be agreed upon at a future date.
12. Commitments and contingencies
Litigation
On May 30, 2014, a class action lawsuit was commenced in Santa Clara County Superior Court, State of California, on behalf of Cadillac Partners and others similarly situated, naming as defendants, MabVax Therapeutics, the Company and the Company’s directors, Hudson Bay Capital Management LP, Bio IP Ventures LLC, Hudson Bay Master Fund Ltd., and Hudson Bay IP Opportunities Master Fund LP. The suit alleged the defendants breached certain fiduciary duties, or aided and abetted a breach of fiduciary duties, in connection with the Company’s Merger with MabVax Therapeutics. In support of their purported claims, the plaintiff alleged, among other things, that the Company’s board has historically failed to fulfill its fiduciary duty to its stockholders, and claiming with respect to the Series B Private Placement and the Merger, the such transactions involved an inadequate sales process and included preclusive deal protection devices, and that the Company’s board of directors would receive personal benefits not available to its public stockholders as a result of such exercise, the Merger. The plaintiff soughtholder beneficially would own more than 4.99% in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to enjoin the Merger and obtain damages as well as attorneys’ and expert fees and costs.issuance of shares of common stock upon the exercise of the warrants.
On June 29, 2014,In connection with the partiesApril 2015 Private Placement, the Company also entered into a Stipulation and Settlementregistration rights agreements (the “Settlement”“Registration Rights Agreements”), with the investors in the April 2015 Private Placement pursuant to which the Company agreed to file a registration statement with the SEC certain supplemental disclosures in connection withcovering the Merger. The Settlement is subject to certain confirmatory discovery to be undertaken by the plaintiff and to the parties’ agreement on the paymentresale of the plaintiff’s attorneys’ fees and expenses.
On July 16, 2014, the Company and all other parties to the litigation entered into an agreement which, if consummated, will settle the litigation (the “Proposed Settlement”). Among many other terms, under the Proposed Settlement the Company and all defendants will receive a broad release of any and all claims pertaining to the Series B Private Placement, the Merger, the prior disclosure and a wide variety of other matters. The Proposed Settlement also calls for the parties to ask the court to, among other things, enter orders enjoining other stockholders from bringing similar actions, certifying the putative settlement class, and approving the Proposed Settlement as a fair, final, and binding resolution of the litigation. Under the Proposed Settlement, the Company and the other defendants have expressly denied the allegations of the complaint and denied engaging in any other misconduct, nor will any of them make any payment or in any respect amend the negotiated terms of the since-consummated Series B Private Placement and Merger. Finally, under the Proposed Settlement, the Company and the other defendants have not agreed to pay any legal fees, or reimburse any expenses, allegedly incurred by the plaintiffs who filed the complaint; instead, the Company expects that counsel for those plaintiffs will present any such disputed claim for legal fees and expenses to the court for resolution.
Operating Leases
In connection with the Merger, the Company recorded a $590,504 contingent lease termination fee, related to the termination of the master lease and sublease of the Porter Drive Facility by MabVax Therapeutics Holdings (f.k.a. Telik, Inc.), which is payable to ARE-San Francisco No. 24 (“ARE”) if the Company receives $15 million or more in additional financing in the aggregate, but otherwise forgiven.
The Company leases its corporate office and laboratory space under an operating lease that, as amended on August 1, 2010, expires on July 31, 2015. The lease contains an option to cancel at various dates prior to the termination date by paying a cancellation penalty. The Company has provided a refundable security deposit of $11,017 to secure its obligations under the lease, which has been included in other long-term assets in the accompanying consolidated financial statements. We recognize rent expense on a straight-line basis over the term the lease. Rent expense of $115,118 and $138,783 was recognized in the years ended December 31, 2014 and 2013, respectively.
Minimum future annual operating lease obligations are as follows as of December 31, 2014:
Restructuring Plan upon Closing of the Merger
In connection with the Merger, the Company signed separation agreements in May 2014 with nine employees and agreed to pay severances and health benefits upon closing of the Merger subject to certain provisions in the agreements. Approximately $6,000 in severance and benefits costs remain as of December 31, 2014.
13. Income taxes
The components of the provision for income taxes for the years ended December 31, 2014 and 2013 is as follows:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets are as follows as of December 31, 2014 and 2013:
| | | 2014 | | | 2013 | |
| | | | | | | | |
Net operating loss carryforwards | | | | | | | | |
| | | | | | | | |
Accrued expenses and other | | | | | | | | |
Total deferred tax assets | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that the deferred tax assets will not be realized. Due to such uncertainties surrounding the realization of the Company’s deferred tax assets, the Company maintains a valuation allowance of $13,831,000 against its deferred tax assets as of December 31, 2014. Realization of the deferred tax assets will be primarily dependent upon the Company’s ability to generate sufficient taxable income prior to the expiration of its net operating losses.
During the year, MabVax Therapeutics, Inc. merged with Telik, Inc. in a tax-free reorganization. As a result of the merger, all components of Telik’s deferred tax assets are now included as deferred tax assets of MabVax Therapeutics, Inc. These pre-merger deferred tax assets are net operating loss carryforwards of $1,672,000, research and development credit carryforwards of $3,903,000, as well as other deferred tax asset items of $53,000, in total equaling $5,628,000. The current year change in these assets has been reflected in the provision for income taxes.
As of December 31, 2014, the Company had net operating loss carryforwards of approximately $23,909,000 and $23,773,000 for federal and state income tax purposes, respectively. These may be used to offset future taxable income and will begin to expire in varying amounts in 2028 to 2034. The Company also has research and development credits of approximately $194,000 and $5,960,000 for federal and state income tax purposes, respectively. The federal credits may be used to offset future taxable income and will begin to expire at various dates beginning in 2030 through 2034. The state credits may be used to offset future taxable income, and such credits carryforward indefinitely.
The Company is subject to taxation in the U.S. and California jurisdictions. Currently, no historical years are under examination. The Company’s tax years ending December 31, 2014 and 2013 are subject to examination by the U.S. and state taxing authorities due to the carryforward of unutilized net operating losses and research and development credits.
Utilization of the Company’s net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to an “ownership change” that may have occurred, or that could occur in the future, as defined and required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state provisions. These ownership changes may limit the amount of net operating loss carryforwards and research and development credit carryforwards, and other tax attributes that can be utilized annually to offset future taxable income and tax, respectively. Any limitation may result in the expiration of a portion of the net operating loss carryforwards or research and development credit carryforwards before utilization. The net operating loss carryforwards and research and development credit carryforwards inherited as a result of the merger with Telik, Inc. have been severely limited under these rules and will likely not be realized.
In general, an “ownership change” results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders or public groups. The Company intends to complete a study in the future to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation, and will complete such study before the use of any of the aforementioned attributes.
The provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate (34% in 2014 and 2013) to income taxes as follows:
| | | 2014 | | | 2013 | |
Tax benefit computed at 34% | | | | | | | | |
State tax provision, net of federal tax benefit | | | | | | | | |
Change in valuation allowance | | | | | | | | |
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The Company has adopted ASC 740-10-25. This interpretation clarifies the criteria for recognizing income tax benefits under ASC 740, “Accounting for Income Taxes”, and requires additional disclosures about uncertain tax positions. Under ASC 740-10-25 the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement.
14. Subsequent Events
On January 11, 2015, the Series B Common Warrants reached the Reset Date, in accordance with the original terms of the agreement, and the warrant exercise price was reset to $1.57.
On January 14, 2015, holders of the Series C preferred stock converted 96,571 shares into 120,714 shares25% of common stock.
Between January 10, 2015 and February 25, 2015, holders of the Series A-1 preferred stock converted 64,019 shares into 38,456 shares of common stock.
Between March 3, 2015 and March 20, 2015, holders of the Company’s Series B Preferred Stock converted a total of 106,437 of those shares into 276,883 shares of common stock.
Exchange of Preferred Stock and Warrants
On March 25, 2015, the Company entered into separate exchange agreements (the “Exchange Agreements”) with certain holders (each an “Exchange Holder”; collectively the “Exchange Holders”) of the Company’s Series A-1 preferred stock and Merger Warrants (the “Series A-1 Exchange Securities”) and holders of the Company’s Series B preferred stock and Series B Warrants (the “Series B Exchange Securities” and, collectively with the Series A-1 Exchange Securities, the “Exchange Securities”), all previously issued by the Company. Pursuant to the Exchange Agreements, the Exchange Holders exchanged the Exchange Securities and relinquished any and all other rights they may have had pursuant to the Exchange Securities, their respective governingsubscription agreements and certificatesincluding 25% of designation, including any related registration rights, in exchange for an aggregate of 2,588,407 shares of the Company’s common stock and an aggregate of 237,647 shares of the Company’s newly designated Series D Convertible preferred stock (the “Series D preferred stock” and together with the common stock issuable pursuant to the Exchange Agreements and the common stock issuable upon conversion of the Series D preferredE Preferred Stock, in the event the investors elect to receive Series E Preferred Stock instead of common stock (together, the “Securities”“Registrable Securities”)., no later than 60 days following the final closing date of the April 2015 Private Placement, and to use its commercially reasonable best efforts to have such registration statement declared effective within 120 days after filing. Investors in the April 2015 Private Placement also may be required under certain circumstances to agree to refrain from selling securities underlying the purchased Units. The liquidated damages for failure to achieve effectiveness of the Registerable Securities is 1% per month beginning 120 days after filing, and provided management has not used commercially reasonable best efforts to have the registration statement declared effective within that time frame.
Additionally, for as longOn June 9, 2015, the Company and investors holding over 60% of the outstanding Registrable Securities entered into an amendment agreement to the Registration Rights Agreements in order to extend the filing date of the registration statement to waive any payments that may be due to the investors as a certain principal holderresult of Exchangethe Company not filing a registration statement on or before the original filing date. On August 4, 2015, the Company and investors holding over 70% of the outstanding Registrable Securities holdsentered into a second amendment agreement to further extend the filing date to October 9, 2015.
On October 12, 2015, the Company and investors holding over 60% of the outstanding Registerable Securities issued pursuantentered into a third amendment agreement to the ExchangeRegistration Rights Agreements subject to certain exceptions,suspend the Company’s registration obligations under the Registration Rights Agreements and related subscription agreements during any period when the “standstill” provision set forth in the subscription agreements is in effect.
On January 28, 2016, the Company filed a Registration Statement on Form S-1, registering 527,680 shares of common stock for resale, including 112,613 shares of common stock, which are issuable upon conversion of the Company’s Series E Preferred Stock issued in the April 2015 Private Placement.
Except for certain issuances, for a period beginning on the closing date of the April 2015 Private Placement and ending on the date that is restrictedthe earlier of (i) 24 months from issuingthe final closing date of the April 2015 Private Placement, (ii) the date the Company consummates a financing (excluding proceeds from the April 2015 Private Placement) in which the Company receives gross proceeds of at least $10,000,000 and (iii) the date the common stock is listed for trading on a national securities exchange (such period until the earlier date, the “Price Protection Period”), in the event that the Company issues any shares of common stock or securities convertible into common stock enterat a price per share or conversion price or exercise price per share that is less than $5.55, the Company shall issue to the investors in the April 2015 Private Placement such additional number of shares of common stock such that the investor shall own an aggregate total number of shares of common stock as if they had purchased the Units at the price of the lower price issuance. No adjustment in the warrants is required in connection with a lower price issuance.
Effective with the Company’s entry into an agreement with the underwriter for the Company’s August 2016 Public Offering, which closed on August 22, 2016, the Company issued 255,459 shares of common stock to the holders of record of the shares purchased in the Company’s April 2015 Private Placement under the Price Protection Period, representing the shares the investors would have received had they purchased their shares at $4.81 per share, instead of $5.55 per share. Effective August 17, 2016, the date of listing of the Company’s stock on the Nasdaq Capital Market, the Price Protection Period came to an end.
The Company has also granted each investor a right of participation in the Company’s financings for a period of 24 months.
Between April 13, 2015, and April 14, 2015, certain holders of warrants issued in the April 2015 Private Placement to purchase an aggregate of 250,000 shares of common stock exercised such warrants on a cashless basis for an aggregate issuance of 164,835 shares of common stock. As of December 31, 2016, there were 805,361 warrants outstanding from the April 2015 Private Placement to purchase common stock at $11.10 per share.
October 2015 Public Offering
On October 5, 2015, the Company closed a public offering of 337,838 shares of common stock and warrants to purchase 168,919 shares of common stock, at an offering price of $8.14 per share. For every two shares of common stock sold, the Company issued one warrant to purchase one share of common stock. The Company received $2,750,000 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling approximately $586,608, and without giving effect to any exercise of the underwriters’ over-allotment option. The Company used the net proceeds from this offering to fund the HuMab-5B1 human antibody program preclinical development and for working capital and general corporate purposes.
The shares and warrants were separately issued and sold in equal proportions. The warrants are immediately exercisable, expire September 30, 2018, and have an exercise price of $9.77 per share. The warrants are not listed on any securities exchange or other trading market. As of December 31, 2016, there were warrants to purchase 168,919 shares of common stock outstanding. The Company granted the underwriters a 30-day option to purchase up to an additional 50,676 shares of common stock and up to an additional 25,338 warrants at the same price to cover over-allotments, if any.
Under the terms of the underwriting agreement entered into between the Company and the underwriter in the public offering, the Company, without the prior written consent of the underwriter, was prohibited, for a period of 90 days after execution of the underwriting agreement, from issuing any equity line of credit or issue any floating or variable priced equity linked instrument.securities, subject to certain exceptions.
No commissionAugust 2016 Public Offering
On August 22, 2016, we closed a public offering of 1,297,038 shares of common stock and 665,281 shares of Series F Preferred Stock convertible into 665,281 shares of common stock, and warrants to purchase 1,962,319 shares of common stock at $5.55 per share and warrants to purchase 1,962,319 shares of common stock at $6.29 per share, at an offering price of $4.81 per share. For every one share of common stock or other payment wasSeries F Preferred Stock sold, we issued one warrant to purchase one share of common stock at $5.55 per share and one warrant to purchase one share of common stock at $6.29 per share. We received $9,438,753 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling $871,305. The gross proceeds include the underwriter’s over-allotment option, which they exercised on the closing date.
Issuance of Common Stock under a 2014 Common Stock Purchase Agreement
In connection with a financing by the Company in July 2014 (the “July 2014 Financing Transaction”), the Company assumed certain obligations as per the original agreement to issue additional shares to investors in the July 2014 Financing Transaction if a subsequent financing or issuance of shares was at a price per share lower than the price per share in the July 2014 Financing Transaction. The Company issued on March 31, 2015, an aggregate of 11,904 shares of common stock that were required to be issued in connection with the Exchange Agreements.July 2014 Financing Transaction as a result of the issuance of shares at a lower share price than in the July 2014 Financing Transaction.
Grant of Restricted Shares
Rubin Grant
On April 3, 2015, the Company entered into a consulting agreement with Steve Rubin pursuant to which he agreed to provide advisory services in connection with corporate strategy, licensing and business development estimated to be for a period of 12 months. In exchange for his services, the Company provided him with a one-time grant of 27,027 shares of the Company’s restricted common stock, valued at $17.02 per share. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the second quarter of 2015.
Ravetch Grant
On April 4, 2015, the Board of Directors approved the issuance of an additional restricted stock award of 17,770 shares to Jeffrey Ravetch, M.D., Ph. D, who is one of the Company’s board members. This award is for future services covering at least a one-year period. The award was granted in addition to the prior award to Dr. Ravetch on April 2, 2015 of (i) 4,628 restricted shares and (ii) options to purchase 4,628 shares of common stock with an exercise price of $17.02 per share, for a total grant of 27,028 restricted shares and options. As the 17,770 shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the second quarter of 2015.
Livingston Grant
On April 4, 2015, the Board of Directors approved the issuance of a restricted stock award by the Company of 135,135 shares of common stock, valued at $17.02 per share, to Philip Livingston, Ph.D. for his continuing service to the Company. On May 13, 2015, the Compensation Committee of the Board of Directors clarified that the award was being granted in consideration for at least one year of Dr. Livingston’s services. The committee further clarified that the vesting of the common stock shall be on the one-year anniversary of the Board of Directors’ approval of the award, or April 4, 2016. The Company expensed the grant date fair value of the award over the vesting period of one year.
Consultant Grants
On April 5, 2015, the Company entered into consulting agreements with two investor relations consultants to provide relations services to the Company in consideration for an immediate grant of 40,541 shares of the Company’s restricted common stock and a monthly cash retainer of $12,000 a month for ongoing services for a period of one year. The consultants also received an additional 27,027 shares of the Company’s restricted common stock upon the Company’s achieving a milestone based on its fully-diluted market capitalization. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the 40,541 shares or $690,000, as investor relations expense upon grant during the second quarter of 2015. The performance condition for the 27,027 shares became probable and the market capitalization metric was met during the second quarter; therefore, the Company recognized an additional $460,000 of expense during the second quarter of 2015.
Also during 2015, the Board of Directors approved the issuance of restricted stock awards to two other consultants totaling 16,217 shares with vesting terms ranging from one to three years, valued from $13.10 to $15.76 per share. The Company is expensing each of the grant date fair value of the awards over the performance period for the award, which will be re-measured at the end of each quarter until the performance is complete. As of December 31, 2016, the Company expensed $32,569 related to these grants. As of December 31, 2016, the expected future compensation expense related to these grants is $24,571 based upon the Company’s stock price on December 31, 2016.
On January 13, 2016, the Board of Directors approved the issuance of 13,514 shares of restricted stock valued at $64,000 to a consultant for advisory services to the Company that was fully recognized upon issuance.
On September 1, 2016, the Board of Directors approved the issuance of 22,130 shares of common stock with a date of issuance fair value of $100,000 to an investor relations consulting firm. In exchange for the shares granted and a monthly retainer, the consulting firm will perform investor relations services on behalf of the Company. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the 22,130 shares of $100,000 as investor relations expense upon grant during the third quarter of 2016.
8. Related Party Transactions
On November 3, 2016, the Company granted 17,500 stock options to Jeffrey Ravetch, M.D., Ph.D., a Board member, for his ongoing consulting services to the Company. The option award vests over a three-year period.
On April 1, 2016, the Company entered into a two-year consulting agreement with Jeffrey Ravetch, M.D., Ph.D., a Board member, for work beginning January 1, 2016 through December 31, 2017, at a rate of $100,000 a year, in support of scientific and technical advice on the discovery and development of technology and products for the Company primarily related to monoclonal antibodies, corporate development, and corporate partnering efforts. In April 2016, the Company paid Dr. Ravetch $100,000 for services to be performed in 2016, and will pay quarterly thereafter beginning January 1, 2017.
In April 2015, the Company granted a restricted stock award of 135,135 shares to Phil Livingston, Ph.D., an employee and Board member, for his continuing services to the Company. In addition, in April 2015, the Company has granted a restricted stock award of 17,770 shares for Jeffrey Ravetch, M.D., Ph.D., a Board member, for consulting services.
9. Stock-based Compensation
Stock Incentive Plan
In September 2008, the Company’s stockholders approved the 2008 Stock Incentive Plan (the “2008 Plan”) which became effective in September 2008 and under which 8,853 shares of the Company’s common stock were initially reserved for issuance to employees, non-employee directors and consultants of the Company. In November 2012, the Company increased the authorized shares under the plan to 21,067. On February 14, 2013, the 2008 Plan terminated and no further grants of equity may be made thereunder.
In June 2014, MabVax Therapeutics Inc.’s stockholders approved the amended 2014 Stock Incentive Plan (the “2014 Plan”) which became effective and was adopted by the Company in the Merger in July 2014. The 2014 Plan authorized the issuance of up to 47,493 shares, 20,543 of which are contingent upon the forfeiture, expiration or cancellation of the 2008 Reserved Shares.
The 2014 Plan provided for the grant of incentive stock options, non-incentive stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards to eligible recipients. The maximum term of options granted under the Stock Plan is ten years.
Employee option grants generally vest 25% on the first anniversary of the original vesting date, and the balance vests monthly over the following three years. The vesting schedules for grants to non-employee directors and consultants is determined by the Company’s Compensation Committee. Stock options are generally not exercisable prior to the applicable vesting date, unless otherwise accelerated under the terms of the applicable stock plan agreement.
Amendment of Equity Incentive Plan
On March 31, 2015, the Company approved a Second Amended and Restated 2014 Employee, Director and Consultant Equity Incentive Plan (the “Plan”), effective as of and contingent upon the consummation of the initial closing of the April Private Placement, to increase the number of shares reserved for issuance under the Plan from 21,361 to 1,129,837 shares of common stock. Additional changes to the Plan include:
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An “evergreen” provision to reserve additional shares for issuance under the Plan on an annual basis commencing on the first day of fiscal 2016 and ending on the second day of fiscal 2024, such that the number of shares that may be issued under the Plan shall be increased by an amount equal to the lesser of: (i) 1,081,082 or the equivalent of such number of shares after the administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the Plan; (ii) the number of shares necessary such that the total shares reserved under the Plan equals (x) 15% of the number of outstanding shares of common stock on such date (assuming the conversion of all outstanding shares of Preferred Stock (as defined in the Plan) and other outstanding convertible securities and exercise of all outstanding warrants to purchase common stock) plus (y) 30,946; and (iii) an amount determined by the Board.
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Provision that no more than 405,406 shares may be granted to any participant in any fiscal year.
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Provisions to allow for performance based equity awards to be issued by the Company in accordance with Section 162(m) of the Internal Revenue Code.
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On September 22, 2016, the Board of Directors ratified an automatic increase in the number of shares reserved for issuance under the Plan, increasing the total shares reserved from 1,129,837 to 1,208,307 shares of common stock, under the annual evergreen provision for the Plan.
Stock-based Compensation
Total estimated stock-based compensation expense, related to all of the Company’s stock-based payment awards recognized under ASC 718, “Compensation—Stock Compensation” and ASC 505, “Equity”was comprised of the following:
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| | | |
| Research and development | $1,192,126 | $929,633 |
| General and administrative | 3,211,152 | 3,534,062 |
| Total stock-based compensation expense | $4,403,278 | $4,463,695 |
Stock-based Award Activity
The following table summarizes the Company’s stock option activity for the years ended December 31, 2016 and 2015:
| | | Weighted Average Exercise Price |
| Outstanding at December 31, 2014 | 32,823 | $29.00 |
| Granted | 407,547 | 16.50 |
| Exercised | (376) | 2.15 |
| Forfeited/cancelled/expired | (1,746) | 54.91 |
| Outstanding and expected to vest at December 31, 2015 | 438,248 | 17.46 |
| Granted | 449,542 | 5.13 |
| Exercised | — | — |
| Forfeited/cancelled/expired | (36,415) | 15.28 |
| Outstanding and expected to vest at December 31, 2016 | 851,375 | $10.94 |
| Vested and exercisable at December 31, 2016 | 167,291 | $17.29 |
The total unrecognized compensation cost related to unvested stock option grants as of December 31, 2016 was $3,007,785 and the weighted average period over which these grants are expected to vest is 1.96 years. Due to limited activity in 2016, the Company has assumed a forfeiture rate of zero. The weighted average remaining contractual life of stock options outstanding at December 31, 2016 and 2015 is 8.82 years and 9.13 years, respectively.
Stock options granted to employees generally vest over a three-year period with one third of the grants vesting at each one-year anniversary of the grant date.
During 2016, the Company granted 449,542 options to its directors, officers, employees with a weighted average exercise price of $5.13 and vesting over a three-year period with vesting starting at the one-year anniversary of the grant date. During 2015, there were 407,547 options and 310,926 shares of restricted stock granted to directors, officers, employees and consultants from the 2014 Plan. During the year ended December 31, 2016, 105,448 shares of restricted stock units have vested and the balance will vest in two equal installments on the anniversary of the grant date over the next two years. During the year ended December 31, 2016, the Company has recognized $1,628,405 in stock based compensation expense related to restricted stock units. In addition, the Company granted 250,203 shares of restricted stock outside of the plan for consulting and investor relation services during the second quarter of 2015.
A summary of activity related to restricted stock grants under the Plan for the years December 31, 2016 and 2015 is presented below:
| | | Weighted Average Grant-Date Fair Value |
| Non-vested at December 31, 2014 | — | $— |
| Granted | 310,926 | 16.84 |
| Vested | — | — |
| Forfeited | — | — |
| Non-vested at December 31, 2015 | 310,926 | 16.84 |
| Granted | — | — |
| Vested | (105,448) | 16.84 |
| Forfeited | — | — |
| Non-vested at December 31, 2016 | 205,478 | $16.84
|
On April 2 and April 3, 2016, 98,237 shares of restricted stock units vested upon the one-year anniversary of restricted stock units granted. Accordingly, 64,392 shares were issued to the Company’s directors and officers, and the Company withheld 33,848 shares for the employee portion of taxes and remitted $177,823 to the tax authorities in order to satisfy tax liabilities related to this issuance on behalf of the officers. In addition, in July and August of 2016, 7,208 shares were issued to outside consultants upon vesting of previously issued restricted stock units. As of December 31, 2016, there were 205,478 nonvested restricted stock units remaining outstanding.
As of December 31, 2016 and 2015, unamortized compensation expense related to restricted stock grants amounted to $2,214,859 and $3,843,264, which is expected to be recognized over a weighted average period of 1.27 and 2.27 years, respectively.
Valuation Assumptions
The Company used the Black-Scholes-Merton option valuation model, or the Black-Scholes model, to determine the stock-based compensation expense for stock options recognized under ASC 718 and ASC 505. The Company’s expected stock-price volatility assumption was based solely on the weighted average of the historical and implied volatility of comparable companies whose share prices are publicly available. The expected term of stock options granted was based on the simplified method in accordance with Staff Accounting Bulletin No. 110, or SAB 110, as the Company’s historical share option exercise experience did not provide a reasonable basis for estimation. The risk-free interest rate was based on the U.S. Treasury yield for a period consistent with the expected term of the stock award in effect at the time of the grant.
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| | | |
| |
|
| Risk-free interest rate | 0.9 to 1.4 % | 0.9 to 1.8 % |
| Dividend yield | 0% | 0% |
| Expected volatility | 71 to 86% | 81 to 87%
|
| Expected life of options, in years | 1.61 to 6.0 | 5.5 and 6.0
|
| Weighted average grant date fair value | $3.16 | $1.56 |
Because the Company had a net operating loss carryforward as of December 31, 2015 and 2016, no tax benefits for the tax deductions related to stock-based compensation expense were recognized in the Company’s consolidated statements of operations. Additionally, there were 376 stock options exercised during the year ended December 31, 2015, and there were no stock option exercises in the corresponding period of 2016.
Management Bonus Plan
On April 2, 2015, the Compensation Committee of the Board of Directors approved the 2015 Management Bonus Plan (the “Management Plan”) outlining maximum target bonuses of the base salaries of certain of the Company’s executive officers. Under the terms of the Management Plan, the Company’s Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, the Chief Financial Officer shall receive a maximum target bonus of up to 35% of his annual base salary and the Company’s Vice President shall receive a maximum target bonus of up to 25% of his annual base salary. During the year ended December 31, 2016 and 2015, the Company accrued and expensed $458,586 and $323,363, respectively related to the Management Plan.
On April 4, 2015, the Board approved the following Non-Employee Director Policy (the “Incumbent Director Policy”) with respect to incumbent non-employee members of the Board in the event that they are replaced before their term expires:
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A one-time issuance of 2,703 restricted shares of common stock;
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The vesting of all options and restricted stock grants held on such date; and
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The payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date.
On April 4, 2015, in connection with his resignation from the Board, Michael Wick received a one-time restricted stock grant of 2,703 shares under the Incumbent Director Policy.
On February 16, 2016, our Compensation Committee approved a 2016 Management Bonus Plan (the “2016 Management Plan”) outlining maximum target bonuses of the base salaries of certain of our executive officers. Under the terms of the 2016 Management Plan, the Company's Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, and the Chief Financial Officer and each of the Company's Vice Presidents shall receive a maximum target bonus of up to 30% of their annual base salary.
On February 16, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
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The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 6,757 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal the closing price of the Company's common stock on the effective date of the appointment (or election);
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The annual cash retainer for each non-employee director, paid quarterly, is increased by $1,000 per calendar quarter to a total of $7,000 per quarter, effective April 1, 2016; and
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The additional annual cash retainer for the chairperson of each of the Audit, Compensation, and Nominating and Governance Committees, paid quarterly, is increased by $1,000 per calendar year, such that each chairperson retainer shall be as follows, effective April 1, 2016: Audit Committee: $13,000; Compensation Committee: $9,000; Nominating and Governance Committee: $6,000.
On August 25, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
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The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 25,000 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal to the closing price of the Company's common stock on the effective date of the appointment (or election); and
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The additional automatic annual option grant to each non-employee director on the date of the Company's annual meeting shall be a 10-year option to purchase 17,500 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 1-year vesting and a strike price equal to the closing price of the Company's common stock on the date of the annual meeting.
Common Stock Reserved for Future Issuance
Common stock reserved for future issuance consists of the following at December 31, 2016:
| Common stock reserved for conversion of preferred stock and warrants | 8,099,568 |
| Common stock options outstanding | 851,375 |
| Authorized for future grant or issuance under the Stock Plan | 66,693 |
| Unvested restricted stock | 205,478 |
| Total | 9,223,114 |
10. Net Loss per Share
The Company calculates basic and diluted net loss per share using the weighted average number of shares of common stock outstanding during the period.
When the Company is in a net loss position, it excludes from the calculation of diluted net loss per share all potentially dilutive stock options, preferred stock and warrants, and the diluted net loss per share is the same as the basic net loss per share for such periods. If the Company was to be in a net income position, the weighted average number of shares used to calculate the diluted net income per share would include the potential dilutive effect of in-the-money securities, as determined using the treasury stock method.
The table below presents the potentially dilutive securities that would have been included in the calculation of diluted net loss per share if they were not antidilutive for the periods presented.
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| | | |
| Stock options | 851,375 | 438,248 |
| Preferred stock | 2,975,424 | 3,038,163 |
| Unvested restricted stock | 205,478 | 310,926 |
| Warrants to purchase common stock | 5,124,144 | 974,280 |
| Total | 9,156,421 | 4,761,617 |
11. Contracts and Agreements
Memorial Sloan Kettering Cancer Center, or MSK
Since 2008 the Company has engaged in various research agreements and collaborations with MSK including licensed rights to cancer vaccines and the blood samples from patients who have been vaccinated with MSK’s cancer vaccines. Total sponsored research contracts outstanding in 2016 amounting to approximately $800,000 in 2016 were approximately 100% complete as of the year ended December 31, 2016. Such sponsored research agreements provide support for preclinical work on the Company’s product development programs. The work includes preparing radioimmunoconjugates of the Company’s antibodies and performingin vitroandin vivopharmacology studies for our therapeutic antibody product, imaging agent product and radioimmunotherapy product programs.
Life Technologies Licensing Agreement
On September 24, 2015, the Company entered into a licensing agreement with Life Technologies Corporation (“Life Technologies”), a subsidiary of ThermoFisher Scientific. Under the agreement, MabVax agreed to license certain cell lines from Life Technologies to be used in the production of recombinant proteins for the Company’s clinical trials. The amount of the contract is for $450,000 and was fully expensed during the year ended December 31, 2015. In each of the years ended December 31, 2015 and 2016, the Company paid $225,000 and $225,000, respectively, related to this contract.
Rockefeller University Collaboration
In July 2015, the Company entered into a research collaboration agreement with Rockefeller University's Laboratory of Molecular Genetics and Immunology. The Company provided antibody material to Rockefeller University, which is exploring the mechanism of action of constant region (Fc) variants of the HuMab-5B1 in the role of tumor clearance. The Company will supply additional research materials as requested by the university, which is evaluating ways to optimize the function.
Patheon Biologics LLC Agreement
On April 14, 2014, the Company entered into a development and manufacturing services agreement (the “Services Agreement”) with Patheon (f.k.a. Gallus Biopharmaceuticals) to provide a full range of manufacturing and bioprocessing services, including cell line development, process development, protein production, cell culture, protein purification, bio-analytical chemistry and quality control, or QC, testing. Total amount of the contract is estimated at approximately $3.0 million. For the years ended December 31, 2016 and 2015, the Company recorded $0 and $2,556,278 of expense, respectively, associated with the Services Agreement. During the third quarter of 2016, the Company negotiated a reduction in the amount previously recorded and owed to Patheon related to manufacturing batches that have failed, resulting in the reduction in R&D expenses of approximately $363,000 during the quarter.
Series D Preferred Stock
As of December 31, 2016, there were 132,489 shares of Series D Preferred Stock issued and outstanding that are convertible into an aggregate of 1,790,392 shares of common stock, as compared to 191,490 that were convertible into 2,587,703 shares of common stock as of December 31, 2015.
As contemplated by the Exchange Agreementsexchange agreements and as approved by the Company’s Board of Directors, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Series D Certificate of Designations”), on March 25, 2015. Pursuant to the Series D Certificate of Designations, the Company designated 1,000,000 shares of its blank check preferred stock as Series D preferred stock.Preferred Stock. Each share of Series D preferred stockPreferred Stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up of the Company, each share of Series D preferred stockPreferred Stock will be entitled to a per share preferential payment equal to the statedpar value. Each share of Series D preferred stockPreferred Stock is convertible into 10013.5135 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company is prohibited from effecting the conversion of the Series D preferred stockPreferred Stock to the extent that, as a result of such conversion, the holder beneficially ownswould own more than 4.99% (provided that certain investors elected to block their beneficial ownership initially at 2.49% in the Exchange Agreements)exchange agreements), in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series D preferred stock (the “Beneficial Ownership Limitation”).Preferred Stock. Each share of Series D preferred stockPreferred Stock entitles the holder to vote on all matters voted on by holders of common stock. With respect to any such vote, each share of Series D preferred stockPreferred Stock entitles the holder to cast such number of votes equal to the number of shares of common stock such shares of Series D preferred stockPreferred Stock are convertible into at such time, but not in excess of the Beneficial Ownership Limitation.beneficial ownership limitations.
AfterSeries E Preferred Stock
As of December 31, 2016 and December 31, 2015, there were 33,333 shares of Series E Preferred Stock issued and outstanding, convertible into 519,751 and 450,446 shares of common stock, respectively.
On March 30, 2015, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (the “Series E Certificate of Designations”) to designate 100,000 shares of its blank check preferred stock as Series E Preferred Stock.
The shares of Series E Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such preferred share, plus all accrued and unpaid dividends, if any, on such share of Series E Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series E Preferred Stock is $75 and the initial conversion price is $5.55 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In addition, during the period proscribed for in the Series E Certificate of Designations, in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions. The Company is prohibited from effecting a conversion of the share of Series E Preferred Stock to the extent that, as a result of such conversion, such holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the transactions contemplated by the Exchange Agreements, and prior to Private Placement Financing noted in our Subsequent Events the Company had 5,827,327issuance of shares of common stock issuedupon conversion of the Series E Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and outstanding and 237,647 sharesshall have the number of Series D preferred stock outstanding convertible into an aggregatevotes equal to the number of 23,764,700 shares of common stock without giving effectissuable upon conversion of such holder’s share of Series E Preferred Stock, but not in excess of beneficial ownership limitations. The shares of Series E Preferred Stock bear no interest.
On August 22, 2016, when the Company closed on the August 2016 Public Offering, the current Series E Preferred Stock conversion price of $5.55 per share was reduced to any Beneficial Ownership Limitation.$4.81 per share under the terms of the Series E Certificate of Designations, resulting in an increase in the number of shares of common stock to 519,751 that the Series E Preferred Stock may be converted into. In the event of a liquidation, dissolution or winding up of the Company, each share of Series E preferred stock will be entitled to a per share preferential payment equal to the stated value. There is no further adjustment required by the Series E Certificate of Designations in the event of an offering of shares below $4.81 per share by the Company.
As of March 25,December 31, 2016 and December 31, 2015, pursuantthere were 665,281 and 0 shares of Series F Preferred Stock issued and outstanding, convertible into 665,281 and 0 shares of common stock, respectively. In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the termspar value.
On August 16, 2016, we filed a Certificate of Designations, Preferences and Rights of the Exchange Agreements,0% Series F Convertible Preferred Stock with the MabVax Therapeutics Securities Purchase Agreement,Delaware Secretary of State, designating 1,559,252 shares of preferred stock as 0% Series A-1 Registration Rights Agreement,F Preferred Stock.
The shares of Series F Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Series F Preferred Stock, plus all accrued and unpaid dividends, if any, on such Series F Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series F Preferred Stock is $4.81 and the initial conversion price is $4.81 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. In the event of a liquidation, dissolution or winding up of the Company, each share of Series F Preferred Stock will be entitled to a per share preferential payment equal to the par value. All shares of the Company’s capital stock will be junior in rank to Series F Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company, except for the Company’s Series D Preferred Stock and Series E Preferred Stock.
The holders of Series F Preferred Stock will be entitled to receive dividends if and when declared by our board of directors. The Series F Preferred Stock shall participate on an “as converted” basis, with all dividends declared on the Company’s common stock. In addition, if we grant, issue or sell any rights to purchase our securities pro rata to all our record holders of our common stock, each holder will be entitled to acquire such securities applicable to the granted purchase rights as if the holder had held the number of shares of common stock acquirable upon complete conversion of all Series F Preferred Stock then held.
We are prohibited from effecting a conversion of the Series B Purchase Agreement andF Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series B Registration Rights Agreement were terminated,F Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and all rights covenants, agreements and obligations contained therein, areshall have the number of no further force or effect.votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series F Preferred Stock, but not in excess of the beneficial ownership limitations.
April 2015 Private Placement Transaction
On March 31, 2015, the Company accepted subscription agreements (the “Subscription Agreements”) inconsummated the first closing of a private placement issuanceoffering (the “April 2015 Private Placement”) and sold $4,714,726 worth of 6,661,000 Units, as described below, and received proceeds of $4,662,957,units (the “Unit(s)”), net of $332,793$281,023 in issuance costs. The Company also agreed to issue and sell, subject to customary closing conditions, additional Units for an aggregate private placementconsisted of up to 21,333,333 shares of the Company’s common stock (or, for purchasers who would hold 5% or more of the Company’s common stock, shares of the Company’s Series E Convertible preferred stock, par value $0.01 per share (the “Series E preferred stock”) convertible into an equivalent number of shares of such common stock) (such900,136 shares of common stock and Series E preferred stock, the “PIPE Shares”) and, for each sharewarrants to purchase 450,068 shares of common stock so purchased (or issuable upon conversionwith an exercise price of each share$11.10 per share. The Units were sold at a price of $5.55 per Unit.
On April 10, 2015, the Company consummated the second and final closing of the April 2015 Private Placement and sold $3,831,622 worth of Units, net of $387,127 in issuance costs, of which $2,500,000 of the Units consisted of Series E preferred stock so purchased) warrants to purchase one-halfPreferred Stock and the balance of one shareit consisting of 760,135 shares of common stock, (collectively, the “Private Placement” and the “PIPE Warrants” and, together with the PIPE Shares, the “Units”). Upon closing, the Company will sell Units with an aggregatewarrants to all investors to purchase 605,293 shares of common stock at $11.10 per share. Each Unit was sold at a purchase price of up to $16,000,000 (or $0.75 for each Unit). The Series E preferred stock is described below.$5.55 per Unit.
The PIPE WarrantsCompany paid commissions to broker-dealers in the aggregate amount of approximately $574,000 in the April 2015 Private Placement.
OPKO Health, Inc., or OPKO, was the lead investor in the April 2015 Private Placement, purchasing $2,500,000 worth of Units consisting of Series E Preferred Stock.
As a condition to OPKO’s and Frost Gama Investment Trust’s, or FGIT’s, participation in the April 2015 Private Placement, each of the other investors in the April 2015 Private Placement agreed to execute lockup agreements restricting the sale of 50% of the securities underlying the Units purchased by them for a period of six months and the remaining 50% prior to the expiration of one year following the final closing date of the April 2015 Private Placement.
On April 10, 2015, the Company agreed that $3.5 million of the net proceeds of such closing would be paid into and held under the terms of an escrow agreement with Signature Bank, N.A. pending the approval of a representative of OPKO or 10 weeks thereafter, unless released sooner or extended by the Company and OPKO. On June 22, 2015, the Company and OPKO extended the termination date of the escrow to 16 weeks from the final closing of the April 2015 Private Placement. In connection with the OPKO investment, Steven Rubin, Esq. was appointed advisor to the Company. The escrowed funds were to be returned to the applicable investors and the Company shall have no further obligation to issue Units to such investors in the event certain release conditions are not met. On June 30, 2015, the Company and OPKO entered into a letter agreement pursuant to which the Company granted the representative the right, but not the obligation, until June 30, 2016, to nominate and appoint up to two additional members of the Company’s Board of Directors, or to approve the person(s) nominated by the Company pursuant to the agreement in consideration for the release of the escrowed funds. The nominees will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange requirements. Upon signing the agreement, the escrowed funds were released to the Company.
The warrants are exercisable upon issuance at the Closing Date (as defined in the Subscription Agreement),and expire 30 months from the Closing DateOctober 10, 2017, and may be exercised for cash or on a cashless basis. The PIPE Warrants will initiallywarrants have a per share exercise price of $1.50,$11.10, subject to certain adjustments.adjustments including stock splits, dividends and reverse-splits. The Company is prohibited from effecting the exercise of the PIPE Warrantswarrants to the extent that, as a result of such exercise, the holder beneficially ownswould own more than 4.99% in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the exercise of the PIPE Warrants.warrants.
In connection with the April 2015 Private Placement, the Company also entered into a Registrationregistration rights agreements (the “Registration Rights AgreementAgreements”) with the PIPE Purchasers (the “PIPE Registration Rights Agreement”). Pursuantinvestors in the April 2015 Private Placement pursuant to the PIPE Registration Rights Agreement,which the Company has agreed to file a registration statement with the SEC covering resalesthe resale of up to 25% of common stock issued underpursuant to the Subscription Agreements and sharessubscription agreements including 25% of the common stock issuable upon conversion of the Series E preferredPreferred Stock, in the event the investors elect to receive Series E Preferred Stock instead of common stock (together, the “Registrable Securities”) by the PIPE Purchasers, no later than 60 days following the Closing Date,final closing date of the April 2015 Private Placement, and to use its commercially reasonable best efforts to have such registration statement declared effective withwithin 120 days after filing. The Company will bear all expenses of such registration ofInvestors in the resale of the Registrable Securities. PIPE PurchasersApril 2015 Private Placement also may be required under certain circumstances to agree to refrain from resalesselling securities underlying the purchased Units. The liquidated damages for failure to achieve effectiveness of a percentage of their securities upon request of an underwriter or placement agent in a future offering.the Registerable Securities is 1% per month beginning 120 days after filing, and provided management has not used commercially reasonable best efforts to have the registration statement declared effective within that time frame.
On June 9, 2015, the Company and investors holding over 60% of the outstanding Registrable Securities entered into an amendment agreement to the Registration Rights Agreements in order to extend the filing date of the registration statement to waive any payments that may be due to the investors as a result of the Company not filing a registration statement on or before the original filing date. On August 4, 2015, the Company and investors holding over 70% of the outstanding Registrable Securities entered into a second amendment agreement to further extend the filing date to October 9, 2015.
F-50
On October 12, 2015, the Company and investors holding over 60% of the outstanding Registerable Securities entered into a third amendment agreement to the Registration Rights Agreements to suspend the Company’s registration obligations under the Registration Rights Agreements and related subscription agreements during any period when the “standstill” provision set forth in the subscription agreements is in effect.
common stock for resale, including 112,613 shares of common stock, which are issuable upon conversion of the Company’s Series E Preferred Stock issued in the April 2015 Private Placement.
As approved byExcept for certain issuances, for a period beginning on the Company’ Board of Directors, the Company filed with the Secretary of Stateclosing date of the State of Delaware a Certificate of Designation of Preferences, RightsApril 2015 Private Placement and Limitations of Series E Convertible preferred stock (the “Series E Certificate of Designations”),ending on March 31, 2015. Pursuant to the Series E Certificate of Designations, the Company designated 100,000 shares of its blank check preferred stock as Series E preferred stock. Each share of Series E preferred stock has a stated value of $75.00 per share. In the event of a liquidation, dissolution or winding up of the Company, each share of Series E preferred stock will be entitled to a per share preferential payment equal to $0.01 per share. Each share of Series E preferred stockdate that is convertible into 100 shares of common stock. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. In addition, until the earlier of (i) twenty-four (24)24 months from the Final Closing Date (as defined infinal closing date of the Subscription Agreement),April 2015 Private Placement, (ii) the date the Company consummates a financing (excluding proceeds from the sale of the Series E preferred stock)April 2015 Private Placement) in which the Company receives gross proceeds of at least Ten Million Dollars ($10,000,000)$10,000,000 and (iii) the date the Company’s common stock is listed for trading on a national securities exchange if(such period until the earlier date, the “Price Protection Period”), in the event that the Company issues or sells any shares of common stock or securities convertible into common stock at a price per share or conversion price or exercise price per share that is less than $0.75 (a “New Issuance”),$5.55, the Conversion Price of the Series E preferred stock is automatically adjustedCompany shall issue to the New Issuance price. The Company is prohibited from effecting the conversion of the Series E preferred stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99%,investors in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series E preferred stock (the “Series E Beneficial Ownership Limitation”). Each share of Series E preferred stock entitles the holder to vote on all matters voted on by holders of common stock. With respect to anyApril 2015 Private Placement such vote, each share of Series E preferred stock entitles the holder to cast such number of votes equal to theadditional number of shares of common stock such that the investor shall own an aggregate total number of shares of common stock as if they had purchased the Units at the price of the lower price issuance. No adjustment in the warrants is required in connection with a lower price issuance.
Effective with the Company’s entry into an agreement with the underwriter for the Company’s August 2016 Public Offering, which closed on August 22, 2016, the Company issued 255,459 shares of common stock to the holders of record of the shares purchased in the Company’s April 2015 Private Placement under the Price Protection Period, representing the shares the investors would have received had they purchased their shares at $4.81 per share, instead of $5.55 per share. Effective August 17, 2016, the date of listing of the Company’s stock on the Nasdaq Capital Market, the Price Protection Period came to an end.
The Company has also granted each investor a right of participation in the Company’s financings for a period of 24 months.
Between April 13, 2015, and April 14, 2015, certain holders of warrants issued in the April 2015 Private Placement to purchase an aggregate of 250,000 shares of common stock exercised such warrants on a cashless basis for an aggregate issuance of 164,835 shares of common stock. As of December 31, 2016, there were 805,361 warrants outstanding from the April 2015 Private Placement to purchase common stock at $11.10 per share.
October 2015 Public Offering
On October 5, 2015, the Company closed a public offering of 337,838 shares of common stock and warrants to purchase 168,919 shares of common stock, at an offering price of $8.14 per share. For every two shares of common stock sold, the Company issued one warrant to purchase one share of common stock. The Company received $2,750,000 in gross proceeds, before underwriting discounts and commissions and offering expenses totaling approximately $586,608, and without giving effect to any exercise of the underwriters’ over-allotment option. The Company used the net proceeds from this offering to fund the HuMab-5B1 human antibody program preclinical development and for working capital and general corporate purposes.
The shares and warrants were separately issued and sold in equal proportions. The warrants are immediately exercisable, expire September 30, 2018, and have an exercise price of $9.77 per share. The warrants are not listed on any securities exchange or other trading market. As of December 31, 2016, there were warrants to purchase 168,919 shares of common stock outstanding. The Company granted the underwriters a 30-day option to purchase up to an additional 50,676 shares of common stock and up to an additional 25,338 warrants at the same price to cover over-allotments, if any.
Under the terms of the underwriting agreement entered into between the Company and the underwriter in the public offering, the Company, without the prior written consent of the underwriter, was prohibited, for a period of 90 days after execution of the underwriting agreement, from issuing any equity securities, subject to certain exceptions.
August 2016 Public Offering
On August 22, 2016, we closed a public offering of 1,297,038 shares of common stock and 665,281 shares of Series E preferred stock areF Preferred Stock convertible into 665,281 shares of common stock, and warrants to purchase 1,962,319 shares of common stock at such time, but not$5.55 per share and warrants to purchase 1,962,319 shares of common stock at $6.29 per share, at an offering price of $4.81 per share. For every one share of common stock or Series F Preferred Stock sold, we issued one warrant to purchase one share of common stock at $5.55 per share and one warrant to purchase one share of common stock at $6.29 per share. We received $9,438,753 in excess ofgross proceeds, before underwriting discounts and commissions and offering expenses totaling $871,305. The gross proceeds include the Series E Beneficial Ownership Limitation. All, none or a portion ofunderwriter’s over-allotment option, which they exercised on the Series E preferred stock may be issued in connection with the Subscription Agreements including with respect to any subscriptions that may be accepted in the discretion of the Company in connection with any closings which the Company may elect to accept following the date of this report.closing date.
Issuance of Common Stock under a 2014 Common Stock Purchase Agreement
In connection with a financing by the Company in July 2014 Private Placement Transaction, or July(the “July 2014 Financing Transaction”), the Company assumed certain obligations as per the original agreement to issue additional shares to investors in the July 2014 Financing Transaction if a subsequent financing or issuance of shares was at a price per share lower than the price per share in the July 2014 Financing.Financing Transaction. The Company therefore issued on March 31, 2015, an aggregate of 88,09311,904 shares of common stock that were required to be issued in connection with the Private Placement.July 2014 Financing Transaction as a result of the issuance of shares at a lower share price than in the July 2014 Financing Transaction.
Grant of Restricted Shares
Rubin Grant
On April 3, 2015, the Company entered into a consulting agreement with Steve Rubin pursuant to which he agreed to provide advisory services in connection with corporate strategy, licensing and business development estimated to be for a period of 12 months. In exchange for his services, the Company provided him with a one-time grant of 27,027 shares of the Company’s restricted common stock, valued at $17.02 per share. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the second quarter of 2015.
Ravetch Grant
On April 4, 2015, the Board of Directors approved the issuance of an additional restricted stock award of 17,770 shares to Jeffrey Ravetch, M.D., Ph. D, who is one of the Company’s board members. This award is for future services covering at least a one-year period. The award was granted in addition to the prior award to Dr. Ravetch on April 2, 2015 of (i) 4,628 restricted shares and (ii) options to purchase 4,628 shares of common stock with an exercise price of $17.02 per share, for a total grant of 27,028 restricted shares and options. As the 17,770 shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting expense upon grant during the second quarter of 2015.
Livingston Grant
On April 4, 2015, the Board of Directors approved the issuance of a restricted stock award by the Company of 135,135 shares of common stock, valued at $17.02 per share, to Philip Livingston, Ph.D. for his continuing service to the Company. On May 13, 2015, the Compensation Committee of the Board of Directors clarified that the award was being granted in consideration for at least one year of Dr. Livingston’s services. The committee further clarified that the vesting of the common stock shall be on the one-year anniversary of the Board of Directors’ approval of the award, or April 4, 2016. The Company expensed the grant date fair value of the award over the vesting period of one year.
Consultant Grants
On April 5, 2015, the Company entered into consulting agreements with two investor relations consultants to provide relations services to the Company in consideration for an immediate grant of 40,541 shares of the Company’s restricted common stock and a monthly cash retainer of $12,000 a month for ongoing services for a period of one year. The consultants also received an additional 27,027 shares of the Company’s restricted common stock upon the Company’s achieving a milestone based on its fully-diluted market capitalization. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the 40,541 shares or $690,000, as investor relations expense upon grant during the second quarter of 2015. The performance condition for the 27,027 shares became probable and the market capitalization metric was met during the second quarter; therefore, the Company recognized an additional $460,000 of expense during the second quarter of 2015.
Also during 2015, the Board of Directors approved the issuance of restricted stock awards to two other consultants totaling 16,217 shares with vesting terms ranging from one to three years, valued from $13.10 to $15.76 per share. The Company is expensing each of the grant date fair value of the awards over the performance period for the award, which will be re-measured at the end of each quarter until the performance is complete. As of December 31, 2016, the Company expensed $32,569 related to these grants. As of December 31, 2016, the expected future compensation expense related to these grants is $24,571 based upon the Company’s stock price on December 31, 2016.
On January 13, 2016, the Board of Directors approved the issuance of 13,514 shares of restricted stock valued at $64,000 to a consultant for advisory services to the Company that was fully recognized upon issuance.
On September 1, 2016, the Board of Directors approved the issuance of 22,130 shares of common stock with a date of issuance fair value of $100,000 to an investor relations consulting firm. In exchange for the shares granted and a monthly retainer, the consulting firm will perform investor relations services on behalf of the Company. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the 22,130 shares of $100,000 as investor relations expense upon grant during the third quarter of 2016.
8. Related Party Transactions
On November 3, 2016, the Company granted 17,500 stock options to Jeffrey Ravetch, M.D., Ph.D., a Board member, for his ongoing consulting services to the Company. The option award vests over a three-year period.
On April 1, 2016, the Company entered into a two-year consulting agreement with Jeffrey Ravetch, M.D., Ph.D., a Board member, for work beginning January 1, 2016 through December 31, 2017, at a rate of $100,000 a year, in support of scientific and technical advice on the discovery and development of technology and products for the Company primarily related to monoclonal antibodies, corporate development, and corporate partnering efforts. In April 2016, the Company paid Dr. Ravetch $100,000 for services to be performed in 2016, and will pay quarterly thereafter beginning January 1, 2017.
In April 2015, the Company granted a restricted stock award of 135,135 shares to Phil Livingston, Ph.D., an employee and Board member, for his continuing services to the Company. In addition, in April 2015, the Company has granted a restricted stock award of 17,770 shares for Jeffrey Ravetch, M.D., Ph.D., a Board member, for consulting services.
9. Stock-based Compensation
Stock Incentive Plan
In September 2008, the Company’s stockholders approved the 2008 Stock Incentive Plan (the “2008 Plan”) which became effective in September 2008 and under which 8,853 shares of the Company’s common stock were initially reserved for issuance to employees, non-employee directors and consultants of the Company. In November 2012, the Company increased the authorized shares under the plan to 21,067. On February 14, 2013, the 2008 Plan terminated and no further grants of equity may be made thereunder.
In June 2014, MabVax Therapeutics Inc.’s stockholders approved the amended 2014 Stock Incentive Plan (the “2014 Plan”) which became effective and was adopted by the Company in the Merger in July 2014. The 2014 Plan authorized the issuance of up to 47,493 shares, 20,543 of which are contingent upon the forfeiture, expiration or cancellation of the 2008 Reserved Shares.
The 2014 Plan provided for the grant of incentive stock options, non-incentive stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards to eligible recipients. The maximum term of options granted under the Stock Plan is ten years.
Employee option grants generally vest 25% on the first anniversary of the original vesting date, and the balance vests monthly over the following three years. The vesting schedules for grants to non-employee directors and consultants is determined by the Company’s Compensation Committee. Stock options are generally not exercisable prior to the applicable vesting date, unless otherwise accelerated under the terms of the applicable stock plan agreement.
Amendment of Equity Incentive Plan
On March 31, 2015, the Company approved a Second Amended and Restated 2014 Employee, Director and Consultant Equity Incentive Plan (the “Plan”), effective as of and contingent upon the consummation of the initial closing of the sale of Units pursuant to the Subscription Agreement,April Private Placement, to increase the number of shares reserved for issuance under the Plan from 158,07321,361 to 8,360,7891,129,837 shares of common stock. Additional changes to the Plan include:
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An “evergreen” provision to reserve additional shares for issuance under the Plan on an annual basis commencing on the first day of fiscal 2016 and ending on the second day of fiscal 2024, such that the number of shares that may be issued under the Plan shall be increased by an amount equal to the lesser of: (i) 1,081,082 or the equivalent of such number of shares after the administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the Plan; (ii) the number of shares necessary such that the total shares reserved under the Plan equals (x) 15% of the number of outstanding shares of common stock on such date (assuming the conversion of all outstanding shares of Preferred Stock (as defined in the Plan) and other outstanding convertible securities and exercise of all outstanding warrants to purchase common stock) plus (y) 30,946; and (iii) an amount determined by the Board.
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Provision that no more than 405,406 shares may be granted to any participant in any fiscal year.
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Provisions to allow for performance based equity awards to be issued by the Company in accordance with Section 162(m) of the Internal Revenue Code.
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On September 22, 2016, the Board of Directors ratified an automatic increase in the number of shares reserved for issuance under the Plan, increasing the total shares reserved from 1,129,837 to 1,208,307 shares of common stock, under the annual evergreen provision for the Plan.
Stock-based Compensation
Total estimated stock-based compensation expense, related to all of the Company’s stock-based payment awards recognized under ASC 718, “Compensation—Stock Compensation” and ASC 505, “Equity”was comprised of the following:
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| | | |
| Research and development | $1,192,126 | $929,633 |
| General and administrative | 3,211,152 | 3,534,062 |
| Total stock-based compensation expense | $4,403,278 | $4,463,695 |
Stock-based Award Activity
The following table summarizes the Company’s stock option activity for the years ended December 31, 2016 and 2015:
| | | Weighted Average Exercise Price |
| Outstanding at December 31, 2014 | 32,823 | $29.00 |
| Granted | 407,547 | 16.50 |
| Exercised | (376) | 2.15 |
| Forfeited/cancelled/expired | (1,746) | 54.91 |
| Outstanding and expected to vest at December 31, 2015 | 438,248 | 17.46 |
| Granted | 449,542 | 5.13 |
| Exercised | — | — |
| Forfeited/cancelled/expired | (36,415) | 15.28 |
| Outstanding and expected to vest at December 31, 2016 | 851,375 | $10.94 |
| Vested and exercisable at December 31, 2016 | 167,291 | $17.29 |
The total unrecognized compensation cost related to unvested stock option grants as of December 31, 2016 was $3,007,785 and the weighted average period over which these grants are expected to vest is 1.96 years. Due to limited activity in 2016, the Company has assumed a forfeiture rate of zero. The weighted average remaining contractual life of stock options outstanding at December 31, 2016 and 2015 is 8.82 years and 9.13 years, respectively.
Stock options granted to employees generally vest over a three-year period with one third of the grants vesting at each one-year anniversary of the grant date.
During 2016, the Company granted 449,542 options to its directors, officers, employees with a weighted average exercise price of $5.13 and vesting over a three-year period with vesting starting at the one-year anniversary of the grant date. During 2015, there were 407,547 options and 310,926 shares of restricted stock granted to directors, officers, employees and consultants from the 2014 Plan. During the year ended December 31, 2016, 105,448 shares of restricted stock units have vested and the balance will vest in two equal installments on the anniversary of the grant date over the next two years. During the year ended December 31, 2016, the Company has recognized $1,628,405 in stock based compensation expense related to restricted stock units. In addition, the Company granted 250,203 shares of restricted stock outside of the plan for consulting and investor relation services during the second quarter of 2015.
A summary of activity related to restricted stock grants under the Plan for the years December 31, 2016 and 2015 is presented below:
| | | Weighted Average Grant-Date Fair Value |
| Non-vested at December 31, 2014 | — | $— |
| Granted | 310,926 | 16.84 |
| Vested | — | — |
| Forfeited | — | — |
| Non-vested at December 31, 2015 | 310,926 | 16.84 |
| Granted | — | — |
| Vested | (105,448) | 16.84 |
| Forfeited | — | — |
| Non-vested at December 31, 2016 | 205,478 | $16.84
|
On April 2 and April 3, 2016, 98,237 shares of restricted stock units vested upon the one-year anniversary of restricted stock units granted. Accordingly, 64,392 shares were issued to the Company’s directors and officers, and the Company withheld 33,848 shares for the employee portion of taxes and remitted $177,823 to the tax authorities in order to satisfy tax liabilities related to this issuance on behalf of the officers. In addition, in July and August of 2016, 7,208 shares were issued to outside consultants upon vesting of previously issued restricted stock units. As of December 31, 2016, there were 205,478 nonvested restricted stock units remaining outstanding.
As of December 31, 2016 and 2015, unamortized compensation expense related to restricted stock grants amounted to $2,214,859 and $3,843,264, which is expected to be recognized over a weighted average period of 1.27 and 2.27 years, respectively.
Valuation Assumptions
The Company used the Black-Scholes-Merton option valuation model, or the Black-Scholes model, to determine the stock-based compensation expense for stock options recognized under ASC 718 and ASC 505. The Company’s expected stock-price volatility assumption was based solely on the weighted average of the historical and implied volatility of comparable companies whose share prices are publicly available. The expected term of stock options granted was based on the simplified method in accordance with Staff Accounting Bulletin No. 110, or SAB 110, as the Company’s historical share option exercise experience did not provide a reasonable basis for estimation. The risk-free interest rate was based on the U.S. Treasury yield for a period consistent with the expected term of the stock award in effect at the time of the grant.
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| | | |
| |
|
| Risk-free interest rate | 0.9 to 1.4 % | 0.9 to 1.8 % |
| Dividend yield | 0% | 0% |
| Expected volatility | 71 to 86% | 81 to 87%
|
| Expected life of options, in years | 1.61 to 6.0 | 5.5 and 6.0
|
| Weighted average grant date fair value | $3.16 | $1.56 |
Because the Company had a net operating loss carryforward as of December 31, 2015 and 2016, no tax benefits for the tax deductions related to stock-based compensation expense were recognized in the Company’s consolidated statements of operations. Additionally, there were 376 stock options exercised during the year ended December 31, 2015, and there were no stock option exercises in the corresponding period of 2016.
Management Bonus Plan
On April 2, 2015, the Compensation Committee of the Board of Directors approved the 2015 Management Bonus Plan (the “Management Plan”) outlining maximum target bonuses of the base salaries of certain of the Company’s executive officers. Under the terms of the Management Plan, the Company’s Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, the Chief Financial Officer shall receive a maximum target bonus of up to 35% of his annual base salary and the Company’s Vice President shall receive a maximum target bonus of up to 25% of his annual base salary. During the year ended December 31, 2016 and 2015, the Company accrued and expensed $458,586 and $323,363, respectively related to the Management Plan.
On April 4, 2015, the Board approved the following Non-Employee Director Policy (the “Incumbent Director Policy”) with respect to incumbent non-employee members of the Board in the event that they are replaced before their term expires:
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A one-time issuance of 2,703 restricted shares of common stock;
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The vesting of all options and restricted stock grants held on such date; and
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The payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date.
On April 4, 2015, in connection with his resignation from the Board, Michael Wick received a one-time restricted stock grant of 2,703 shares under the Incumbent Director Policy.
On February 16, 2016, our Compensation Committee approved a 2016 Management Bonus Plan (the “2016 Management Plan”) outlining maximum target bonuses of the base salaries of certain of our executive officers. Under the terms of the 2016 Management Plan, the Company's Chief Executive Officer shall receive a maximum target bonus of up to 50% of his annual base salary, and the Chief Financial Officer and each of the Company's Vice Presidents shall receive a maximum target bonus of up to 30% of their annual base salary.
On February 16, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
●
The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 6,757 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal the closing price of the Company's common stock on the effective date of the appointment (or election);
●
The annual cash retainer for each non-employee director, paid quarterly, is increased by $1,000 per calendar quarter to a total of $7,000 per quarter, effective April 1, 2016; and
●
The additional annual cash retainer for the chairperson of each of the Audit, Compensation, and Nominating and Governance Committees, paid quarterly, is increased by $1,000 per calendar year, such that each chairperson retainer shall be as follows, effective April 1, 2016: Audit Committee: $13,000; Compensation Committee: $9,000; Nominating and Governance Committee: $6,000.
On August 25, 2016, the Compensation Committee of the Board of Directors of the Company approved the following amendments to Company's policy for compensating non-employee members of the Board:
●
The initial equity grant upon first appointment (or election) of future non-employee directors to the Board shall be a 10-year option to purchase 25,000 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 3-year annual vesting and a strike price equal to the closing price of the Company's common stock on the effective date of the appointment (or election); and
●
The additional automatic annual option grant to each non-employee director on the date of the Company's annual meeting shall be a 10-year option to purchase 17,500 shares of the Company's common stock, under the Company's Second Amended and Restated 2014 Equity Incentive Plan with 1-year vesting and a strike price equal to the closing price of the Company's common stock on the date of the annual meeting.
Common Stock Reserved for Future Issuance
Common stock reserved for future issuance consists of the following at December 31, 2016:
| Common stock reserved for conversion of preferred stock and warrants | ●8,099,568 |
| Common stock options outstanding | 851,375 |
An “evergreen” provision to reserve additional sharesAuthorized for future grant or issuance under the Plan on an annual basis commencing on the first day of fiscal 2016 and ending on the second day of fiscal 2024, such that the number of shares that may be issued under the Plan shall be increased by an amount equal to the lesser of: (i) 8,000,000 or the equivalent of such number of shares after the administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the Plan; (ii) the number of shares necessary such that the total shares reserved under the Plan equals (x)&nnbsp;15% of the number of outstanding shares of common stock on such date (assuming the conversion of all outstanding shares of Preferred Stock (as defined in the Plan) and other outstanding convertible securities and exercise of all outstanding warrants to purchase common stock) plus (y) 229,000; and (iii) an amount determined by the Board;Plan | 66,693 |
| Unvested restricted stock | 205,478 |
| Total | 9,223,114 |
| ● | | Provide that no more than 3,000,000 shares may be granted to any participant in any fiscal year. |
10. Net Loss per Share
The Company calculates basic and diluted net loss per share using the weighted average number of shares of common stock outstanding during the period.
When the Company is in a net loss position, it excludes from the calculation of diluted net loss per share all potentially dilutive stock options, preferred stock and warrants, and the diluted net loss per share is the same as the basic net loss per share for such periods. If the Company was to be in a net income position, the weighted average number of shares used to calculate the diluted net income per share would include the potential dilutive effect of in-the-money securities, as determined using the treasury stock method.
The table below presents the potentially dilutive securities that would have been included in the calculation of diluted net loss per share if they were not antidilutive for the periods presented.
| | |
| | | |
| Stock options | 851,375 | 438,248 |
| Preferred stock | 2,975,424 | 3,038,163 |
| Unvested restricted stock | 205,478 | 310,926 |
| Warrants to purchase common stock | 5,124,144 | 974,280 |
| Total | 9,156,421 | 4,761,617 |
11. Contracts and Agreements
Memorial Sloan Kettering Cancer Center, or MSK
Since 2008 the Company has engaged in various research agreements and collaborations with MSK including licensed rights to cancer vaccines and the blood samples from patients who have been vaccinated with MSK’s cancer vaccines. Total sponsored research contracts outstanding in 2016 amounting to approximately $800,000 in 2016 were approximately 100% complete as of the year ended December 31, 2016. Such sponsored research agreements provide support for preclinical work on the Company’s product development programs. The work includes preparing radioimmunoconjugates of the Company’s antibodies and performingin vitroandin vivopharmacology studies for our therapeutic antibody product, imaging agent product and radioimmunotherapy product programs.
Life Technologies Licensing Agreement
On September 24, 2015, the Company entered into a licensing agreement with Life Technologies Corporation (“Life Technologies”), a subsidiary of ThermoFisher Scientific. Under the agreement, MabVax agreed to license certain cell lines from Life Technologies to be used in the production of recombinant proteins for the Company’s clinical trials. The amount of the contract is for $450,000 and was fully expensed during the year ended December 31, 2015. In each of the years ended December 31, 2015 and 2016, the Company paid $225,000 and $225,000, respectively, related to this contract.
Rockefeller University Collaboration
In July 2015, the Company entered into a research collaboration agreement with Rockefeller University's Laboratory of Molecular Genetics and Immunology. The Company provided antibody material to Rockefeller University, which is exploring the mechanism of action of constant region (Fc) variants of the HuMab-5B1 in the role of tumor clearance. The Company will supply additional research materials as requested by the university, which is evaluating ways to optimize the function.
Patheon Biologics LLC Agreement
On April 14, 2014, the Company entered into a development and manufacturing services agreement (the “Services Agreement”) with Patheon (f.k.a. Gallus Biopharmaceuticals) to provide a full range of manufacturing and bioprocessing services, including cell line development, process development, protein production, cell culture, protein purification, bio-analytical chemistry and quality control, or QC, testing. Total amount of the contract is estimated at approximately $3.0 million. For the years ended December 31, 2016 and 2015, the Company recorded $0 and $2,556,278 of expense, respectively, associated with the Services Agreement. During the third quarter of 2016, the Company negotiated a reduction in the amount previously recorded and owed to Patheon related to manufacturing batches that have failed, resulting in the reduction in R&D expenses of approximately $363,000 during the quarter.
NCI PET Imaging Agent Grant
In September 2013, the NCI awarded the Company a SBIR Program Contract to support the Company’s program to develop a PET imaging agent for pancreatic cancer using a fragment of the Company’s HuMab-5B1 antibody (the “NCI PET Imaging Agent Grant”). The project period for Phase I of the grant award of approximately $250,000 covered a nine-month period which commenced in September 2013 and ended in June 2014.
On August 25, 2014, the Company was awarded a $1.5 million contract for the Phase II portion of the NCI PET Imaging Agent Grant. The contract is intended to support a major portion of the preclinical work being conducted by the Company, together with its collaboration partner, MSK, to develop a novel Positron Emission Tomography (“PET”) imaging agent for detection and assessment of pancreatic cancer. The total contract amount for Phase I and Phase II was approximately $1,749,000. The Company recorded revenue associated with the NCI PET Imaging Agent Grant as the related costs and expenses were incurred. For the years ended December 31, 2016 and 2015, the Company recorded $148,054 and $1,141,451 of revenue associated with the NCI PET Imaging Agent Grant, respectively. No additional activities are required or planned under the contract and all monies available under the contract have been requested and received.
Juno Therapeutics Option Agreement
On August 29, 2014, the Company entered into an option agreement (the “Option Agreement”) with Juno Therapeutics, Inc. (“Juno”) in exchange for a one-time up-front option fee in the low five figures. Pursuant to the Option Agreement, the Company granted Juno the option to obtain an exclusive, world-wide, royalty-bearing license authorizing Juno to develop, make, have made, use, import, have imported, sell, have sold, offer for sale and otherwise exploit certain patents the Company developed with respect to fully human antibodies with binding specificity against human GD2 or sialyl-Lewis A antigens and certain Company controlled biologic materials. As of June 30, 2016, the Option Agreement expired and Juno no longer has a contractual right for use of Company binding domains for use in the construction of CAR T-cells.
During the years ended December 31, 2016 and 2015, no revenues had been earned under the Option Agreement.
12. Commitments and contingencies
Litigation
On September 18, 2015, an Order and Final Judgment was entered by the Superior Court of the State of California, approving a settlement of a class action lawsuit commenced on May 30, 2014, in Santa Clara County Superior Court, State of California, on behalf of Cadillac Partners and others similarly situated, naming as defendants, MabVax Therapeutics, the Company and the Company’s directors, Hudson Bay Capital Management LP, Bio IP Ventures LLC, Hudson Bay Master Fund Ltd., and Hudson Bay IP Opportunities Master Fund LP, together the “Parties,” alleging the defendants breached certain fiduciary duties, or aided and abetted a breach of fiduciary duties, in connection with the Company’s Merger with MabVax Therapeutics. The plaintiff sought to enjoin the Merger and obtain damages as well as attorneys’ and expert fees and costs. We expect to incur no expenses in 2016 or thereafter in connection with this lawsuit or settlement.
Capital Leases
On March 21, 2016, the Company entered into a lease agreement with ThermoFisher Scientific (“Lessor”). Under the terms of the agreement, the Company agreed to lease two pieces of equipment from the Lessor, a liquid chromatography system and an incubator, totaling in cost of $95,656. The term of the lease is five years (60 months), and the monthly lease payment is $1,942. In addition, there is a $1.00 buyout option at the end of the lease term.
Minimum future annual capital lease obligations are as follows as of December 31, 2016:
| 2017 | $23,306 |
| 2018 | 23,306 |
| 2019 | 23,306 |
| 2020 | 23,306 |
| 2021 | 7,769 |
| (15,876)
|
| Principal | 85,117
|
Less current portion
| (17,004)
|
| $68,113
|
Operating Leases
In connection with the Merger, the Company recorded a $590,504 contingent lease termination fee, related to the termination of the master lease and sublease of the Porter Drive Facility by MabVax Therapeutics Holdings (f.k.a. Telik, Inc.), which is payable to ARE-San Francisco No. 24 (“ARE”) if the Company receives $15 million or more in additional financing in the aggregate. The additional financing was achieved in 2015 and the termination fee is reflected on the balance sheet as an accrued lease contingency fee.
On September 2, 2015,the Companyentered into a lease (the “Lease”) with AGP Sorrento Business Complex, L.P., for certain premises of office and laboratory space in buildings located at 11535 Sorrento Valley Rd., San Diego, California, to serve as the Company’s corporate offices and laboratories (the “New Premises”). Due to the fact that certain tenant improvements needed to be made to the New Premises before the Company could take occupancy, the term of the Lease did not commence until the New Premises were ready for occupancy, on February 4, 2016. The Lease terminates six years after such term commencement date, unless earlier terminated in accordance with the Lease. Pursuant to the terms of the Lease, the monthly base rent will be $35,631, subject to annual increases as set forth in the Lease.
The Company has an option to extend the Lease term for a single, five-year period. If the Lease term is extended for the optional five-year period, the monthly base rent will be adjusted based on fair market rental value. In addition to rent, the Company agreed to pay a portion of the taxes and utility, maintenance and other operating costs paid or accrued in connection with the ownership and operation of the property.
The Company previously leased its corporate office and laboratory space under an operating lease that, as amended on August 1, 2010, expired on July 31, 2015.
We recognize rent expense on a straight-line basis over the term the lease. Rent expense of $433,397 and $122,236 was recognized in the years ended December 31, 2016 and 2015, respectively.
Minimum future annual operating lease obligations are as follows as of December 31, 2016:
| 2017 | $439,330 |
| 2018 | 452,510 |
| 2019 | 466,085 |
| 2020 | 480,068 |
| 2021 | 494,469 |
| Thereafter | 41,306 |
| Total | $2,373,768 |
| | |
13. Income Taxes
During the years ended December 31, 2016 and 2015, the Company did not record a provision or benefit for current or deferred income taxes in the consolidated statement of operations due to its cumulative net losses.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets are as follows as of December 31, 2016 and 2015:
| | | |
| Deferred tax assets: | | |
| Net operating loss carryforwards | $20,169,000 | $14,502,000 |
| Tax credits | 5,065,000 | 4,803,000 |
| Accrued expenses and other | 2,667,900 | 1,861,300 |
| Total deferred tax assets | 27,901,900 | 21,166,300 |
| Less valuation allowance | (27,901,900) | (21,166,300) |
| Net deferred tax assets | $— | $— |
The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that the deferred tax assets will not be realized. Due to such uncertainties surrounding the realization of the Company’s deferred tax assets, the Company maintains a valuation allowance of $27,901,900 against its deferred tax assets as of December 31, 2016. Realization of the deferred tax assets will be primarily dependent upon the Company’s ability to generate sufficient taxable income prior to the expiration of its net operating losses.
During the year ended December 31, 2014, MabVax Therapeutics, Inc. merged with Telik, Inc. in a tax-free reorganization. As a result of the merger, all components of Telik’s deferred tax assets are now included as deferred tax assets of MabVax Therapeutics, Inc. These pre-merger deferred tax assets are net operating loss carryforwards of $1,588,000, research and development credit carryforwards of $4,457,000, in total equaling $6,045,000. The current year change in these assets has been reflected in the provision for income taxes.
As of December 31, 2016, the Company had net operating loss carryforwards of approximately $50,576,000 and $50,994,000 for federal and state income tax purposes, respectively. These may be used to offset future taxable income and will begin to expire in varying amounts in 2028 to 2035. The Company also has research and development credits of approximately $525,500 and $6,878,000 for federal and state income tax purposes, respectively. The federal credits may be used to offset future taxable income and will begin to expire at various dates beginning in 2030 through 2035. The state credits may be used to offset future taxable income, and such credits carry forward indefinitely.
The Company is subject to taxation in the U.S. and California jurisdictions. Currently, no historical years are under examination. The Company’s tax years ending December 31, 2016 and 2015 are subject to examination by the U.S. and state taxing authorities due to the carryforward of unutilized net operating losses and research and development credits.
Utilization of the Company’s net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to an “ownership change” that may have occurred, or that could occur in the future, as defined and required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. These ownership changes may limit the amount of net operating loss carryforwards and research and development credit carryforwards, and other tax attributes that can be utilized annually to offset future taxable income and tax, respectively. Any limitation may result in the expiration of a portion of the net operating loss carryforwards or research and development credit carryforwards before utilization. The net operating loss carryforwards and research and development credit carryforwards inherited as a result of the merger with Telik, Inc. have been severely limited under these rules and will likely not be realized.
In general, an “ownership change” results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders or public groups. The Company intends to complete a study in the future to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation, and will complete such study before the use of any of the aforementioned attributes.
The provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate (34% in 2016 and 2015) to income taxes as follows:
| | | |
| Tax benefit computed at 34% | $(6,004,000) | $(6,155,300) |
| State tax provision, net of federal tax benefit | (989,344) | (1,551,444) |
| Change in valuation allowance | 6,735,600
| 7,335,300 |
| Other | 257,744
| 371,444 |
| Tax provision (benefit) | $— | $— |
The Company has adopted ASC 740-10-25. This interpretation clarifies the criteria for recognizing income tax benefits under ASC 740,“Accounting for Income Taxes,”and requires additional disclosures about uncertain tax positions. Under ASC 740-10-25 the financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement.
1,657,143 Shares of Common Stock
1,000,000 Shares of Series G Convertible Preferred Stock
Convertible into 1,000,000 Shares of Common Stock
PROSPECTUS
| ● | | Provisions to allow for performance based equity awards to be issued by theLaidlaw & Company in accordance with Section 162(m) of the Internal Revenue Code.(UK) Ltd. |
, 2017
3,904,830 Shares of Common Stock
PROSPECTUS
, 2016
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth all expenses to be paid by the Registrant, other than estimated underwriting discountsunderwriter fees and commissions.commissions, in connection with our public offering. All amounts shown are estimates except for the SEC registration fee and the Financial Industry Regulatory Authority, Inc. (“FINRA”) fee:
| SEC registration fee | | $ | 240.58 | |
| Legal fees and expenses | | | * | |
| Accounting fees and expenses | | | * | |
| Transfer agent and registrar fees | | | * | |
| Printing and engraving expenses | | | * | |
| Miscellaneous fees and expenses | | | * | |
| Total | | | * | |
| SEC registration fee | $ 590 |
| FINRA filing fee | 6,142 |
| Legal fees and expenses | 230,000 |
| Accounting fees and expenses | 50,000 |
| Transfer agent and registrar fees | 10,000 |
| Printing and engraving expenses | 30,000 |
Miscellaneous fees and expenses | 163,268 |
| Total | $ 490,000 |
* To be filed by amendment.
Item 14. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the General Corporation Law of Delaware, or the DGCL, empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith; that indemnification or advancement of expenses provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145.
Reference is also made to Section 102(b)(7) of the DGCL, which enables a corporation in its certificate of incorporation to eliminate or limit the personal liability of a director for monetary damages for violations of a director’s fiduciary duty, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which the director derived an improper personal benefit. Our amended and restated certificate of incorporation provides that we must indemnify our directors to the fullest extent under applicable law. Pursuant to Delaware law, this includes elimination of liability for monetary damages for breach of the directors’ fiduciary duty of care to the CompanyMabVax Holdings and its stockholders. However, our directors may be personally liable for liability:
●
for any breach of duty of loyalty to us or to our stockholders;
●
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
●
for unlawful payment of dividends or unlawful stock repurchases or redemptions; or
●
for any transaction from which the director derived an improper personal benefit.
· | for any breach of duty of loyalty to us or to our stockholders; |
II-1
· | for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; |
In addition, our amended and restated bylaws provide that:
· | for unlawful payment of dividends or unlawful stock repurchases or redemptions; or |
●
we are required to indemnify our directors and executive officers to the fullest extent not prohibited by Delaware law or any other applicable law, subject to limited exceptions;
· | for any transaction from which the director derived an improper personal benefit. |
●
we may indemnify our other officers, employees and other agents as set forth in Delaware law or any other applicable law;
· | In addition, our amended and restated bylaws provide that: |
●
we are required to advance expenses to our directors and executive officers as incurred in connection with legal proceedings against them for which they may be indemnified; and
· | we are required to indemnify our directors and executive officers to the fullest extent not prohibited by Delaware law or any other applicable law, subject to limited exceptions; |
· | we may indemnify our other officers, employees and other agents as set forth in Delaware law or any other applicable law; |
· | we are required to advance expenses to our directors and executive officers as incurred in connection with legal proceedings against them for which they may be indemnified; and |
●
the rights conferred in the amended and restated bylaws are not exclusive.
· | the rights conferred in the amended and restated bylaws are not exclusive. |
Item 15. Recent Sales of Unregistered Securities
May 2017 Private Placement
On May 3, 2017, we entered into separate subscription agreements with accredited investors pursuant to which we agreed to sell an aggregate of $850,000 of 0% Series H Convertible Preferred Stock.The shares of Series H Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of the Series H Preferred Stock, plus all accrued and unpaid dividends (the “Base Amount”), if any, on such Series H Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series H Preferred Stock is $1,000 and the initial conversion price is $1.75 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events.
On the closing date, we entered into separate registration rights agreements (the “Registration Rights Agreements”) with each of the investors, pursuant to which we agreed to undertake to file a registration statement to register the resale of the shares within thirty (30) days following the closing date, to cause such registration statement to be declared effective by the Securities and Exchange Commission within sixty (60) days of the closing date and to maintain the effectiveness of the registration statement until all of such shares of Common Stock have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any restrictions.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Consulting Shares
On January 13, 2016, we issued 13,514 shares of common stock as payment for consulting services received.
On September 1, 2016, we issued 22,130 shares of common stock as partial payment for consulting services performed in 2016.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Series D Conversions
During the year ended December 31, 2016, holders of Series D preferred stock converted an aggregate of 59,001 shares of Series D preferred stock into an aggregate of 797,312 shares of common stock. During the year ended 2015, holders of Series D preferred stock converted an aggregate of 46,665 shares of Series D preferred stock into an aggregate of 630,608 shares of common stock.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Oxford Loan
On January 15, 2016, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Oxford Finance LLC providing for senior secured term loans to the Company in the aggregate principal amount of up to $10,000,000. In connection with the foregoing loan agreement, the Company issued Oxford Finance LLC five year warrants to purchase an aggregate of 1,666,668225,226 shares of the Company’s common stock at $0.75$5.55 per share.
In connection with the execution of the Loan Agreement, the Company entered into an amendment of Sections 8(a) and 8(b) of certain Exchange Agreements with the Company dated March 25, 2015 held by a certain holder of the Company’s Series D Preferred Stock. The amendment requires the Company to obtain consent of the holder for certain future equity or debt issuances, and modifies the termination date for this requirement to be the earlier to occur of: (a) April 1, 2017; (b) the date on which the Company has raised $10 million in equity financing; (c) the date on which the Company has closed one or more licensing agreements with corporate partners pursuant to which the Company is entitled to receive in total a minimum of $10,000,000 in initial licensing or equity investments under such agreements; and (d) the date on which shares of the Company's common stock are listed on a national securities exchange. The Company issued 100,00013,514 shares of common stock to the holder in connection with the amendmentforegoing.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
IssuancesExercise of Options
Warrants into common stock In August
Between April 13, 2015 weand April 14, 2015, several holders of warrants issued optionsin the April Private Placement exercised their warrants on a cashless basis to purchase an aggregate of 175,000164,835 shares of common stock to our Board members which vest one year from the date of issuance.
In August 2015, we issued options to purchaseby exercising an aggregate of 100,000250,000 warrants to purchase shares of common stock to a consultant which vests in three equal annual installments beginningaccordance with the terms of the warrant agreement.
The securities referenced above were issued in reliance on the dateexemption from registration afford by Rule 506 of issuance.Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Conversion of Series A-1 Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock into common stock
For the three months ended March 31, 2015, holders of Series A-1 Preferred Stock, Series B Preferred Stock, and Series C Convertible Preferred Stock (“Series C Preferred Stock”) converted 64,019, 106,437, and 96,571 shares into 5,197, 37,417, and 16,313 shares of common stock, respectively.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.offering
ExerciseIssuance of Warrants into common stock under common stock Purchase Agreement
Between April 13,We issued, on March 31, 2015, and April 14, 2015, several holders of warrants issued in the April Private Placement exercised their warrants on a cashless basis to purchase an aggregate of 1,219,78011,904 shares of common stock by exercising an aggregate of 1,849,999 warrantsthat were required to purchase shares of common stockbe issued in accordanceconnection with the termsJuly 2014 financing transaction, as a result of the warrant agreement.lower share price in an offering.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Conversion of Preferred Stock into common stock
Between April 6, 2015, and October 12, 2015, holders of Series D preferred stock converted an aggregate of 46,665 shares of Series D preferred stock into an aggregate of 4,666,500 shares of common stock.
For the three months ended March 31, 2015, holders of Series A-1, Series B, and Series C preferred stock converted 64,019, 106,437, and 96,571 shares into 38,456, 276,883, and 120,714 shares of common stock, respectively.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Issuance of common stock under common stock Purchase Agreement
We issued, on March 31, 2015, an aggregate of 88,093 shares of common stock that were required to be issued in connection with the July 2014 financing transaction, as a result of the lower share price in an offering.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Private Placement
On March 31, 2015,, the Company sold an aggregate of $4,995,749$4,995,750 of units at a purchase price of $0.75$5.55 per unit, with each unit consisting of one share of our common stock (or, at the election of any investor who, as a result of receiving common stock would hold in excess of 4.99% of our issued and outstanding common stock, shares of our newly designated 0% Series E Convertible Preferred Stock) and a thirty month warrant to purchase one half of one share of common stock at an initial exercise price of $1.50$11.10 per share. A second closing was held on April 3, 2015 in which we entered into separate Subscription Agreementssubscription agreements for an additional $6,718,751 of units. Of the Subscription Agreementssubscription agreements accepted, investors elected, and we issued, $3,500,000$2,500,000 of units consisting of Series E Preferred SharesStock on April 3, 2015.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
On April 3, 2015, we entered into a consulting agreement with Steve Rubin pursuant to which he agreed to provide advisory services in connection with corporate strategy, licensing and business development estimated to be for a period of 12 months. In exchange for his services, we provided him with a one-time grant of 200,00027,027 shares of our restricted common stock.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Ravetch Grant
On April 3,4, 2015, the Board approved the issuance of an additional restricted stock award of 131,50017,770 shares of common stock to Jeffrey Ravetch. This award is for future services covering at least one yearone-year period. The award was granted in addition to the prior award to Dr. Ravetch on April 2, 2015 of: (i) 34,2504,628 restricted shares of common stock and (ii) options to purchase 34,2504,628 shares of common stock with an exercise price of $2.30$17.02 per share, for a total grant of 200,00027,028 restricted shares and options.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Livingston Grant
On March 23,April 4, 2015, the Board of Directors approved a restricted stock award by the Company of 1,000,000135,135 shares of common stock to be negotiated withissued to Phil Livingston, Ph.D. for his continuing service to the Company. On April 4, 2015, the Company awarded and issued the shares to Dr. Livingston by virtue of a common stock purchase agreement, in exchange for Dr. Livingston’s ongoing services as a member of the Company’s Board of Directors. On May 13, 2015, the Compensation Committee of the Board clarified that the award is being granted in consideration for at least one year of Dr. Livingston’s services. The committee further clarified that the vesting of the common stock shall be on the one-year anniversary of the Board of Directors’ approval of the award, or April 4, 2016.
Table of Contents
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Consulting Agreement
On April 5, 2015, we entered into a consulting agreementsagreement with The Del Mar Consulting Group, Inc. (“Del Mar”) and Alex Partners, LLC (“Alex Partners”), our investor relations consultants, in consideration for which we issued to Del Mar40,541 shares of our restricted common stock. The consultants also received an aggregate of 300,000additional 27,027 shares of our restricted common stock and Alex Partners 200,000 shares ofupon the Company’s restricted common stock (the “Alex Shares”). Sixty percent (60%) of the Alex Shares were immediately sent to Del Mar and Alex Partners onachieving a prorated basis and forty percent (40%) of the Alex Shares are held by the Company and will be released and sent to Del Mar and Alex Partners on a prorated basis upon the earlier of: (i) the Company’s common stock becoming listed on a national exchange (NASDAQ; NYSE), (ii) the Company reaches a market valuation at or above $200 millionmilestone based on the Company’s shares outstanding on a fully diluted basis and the closing price of the Company’s common stock in theits fully-diluted market it trades; and (iii) a change of control. Additionally, the Company agreed to pay Del Mar a cash payment of $7,200 per month and Alex Partners $4,800 per month for a period of 12 months.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
Preferred and Warrant Exchanges
On March 25, 2015, we exchanged certain of our issued and outstanding Series A-1 Preferred Stock, A-1 Warrants, Series B Preferred Stock, and Series B warrant in exchange for an aggregate of 2,537,502342,906 shares of our common stock, and an aggregate of 238,156 shares of our newly designated Series D Convertible Preferred Stock.
The issuance of the securities set forth above was deemed to be exempt from registration pursuant to Section 3(a)(9) of the Securities Act.
Preferred Stock Issuances
On July 8, 2014, we issued to MabVax Therapeutics’ stockholders, and assumed existing MabVax Therapeutics options and warrants that represented, an aggregate of approximately 9,349,841 (1,168,730 post reverse split) shares of our common stock, 2,762,841 shares of Series A-1 preferred stock, warrants to purchase up to an aggregate of 16,442,080 (2,055,260 post reverse split) shares of our common stock, and options exercisable into 1,552,964 (194,120 post reverse split) shares of our common stock.
On May 12, 2014, we issued an aggregate of 1,250,000 shares of Series B Preferred Stock and warrants to purchase up to an additional 625,000 (78,125 post reverse split) shares of our common stock, with an aggregate purchase price of $2,500,000, or $2.00 for each share of Series B Preferred Stock and related warrant.
The sales of the securities set forth above were deemed to be exempt from registration under the Securities Act by virtue of Section 4(a)(2) or Rule 506 promulgated under Regulation D promulgated thereunder. Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about us. No underwriters were involved in these transactions.II-4
Series C Preferred Exchanges
On September 3, 2014, we exchanged approximately 1,189,700 (148,713 post reverse split) shares of our common stock for an aggregate of approximately 118,970 shares of newly designated Series C convertible preferred stock.
The issuance of the securities set forth below was deemed to be exempt from registration pursuant to Section 3(a)(9) of the Securities Act.
Series C-1 Preferred Stock Purchase Agreement
On February 12, 2014, we issued 3,697,702 shares of MabVax Therapeutics Series C-1 preferred stock, warrants to purchase 2,055,260 shares of MabVax Therapeutics common stock at $3.62 a share and warrants to purchase 1,848,851 shares of MabVax Therapeutics Series C-1 preferred stock at $0.84 a share, respectively, for aggregate gross proceeds of $3,100,000, less issuance costs of $126,345.
The sales of the securities set forth above were deemed to be exempt from registration under the Securities Act by virtue of Section 4(a)(2) or Rule 506 promulgated under Regulation D promulgated thereunder. Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access, through employment, business or other relationships, to information about us. No underwriters were involved in these transactions.
Item 16. Exhibits and Financial Statement Schedules
Exhibit No. | | Description | | Form | | Filing Date/Period End | | Exhibit Number |
| | | | | |
| 2.1 | | Agreement and Plan of Merger and Reorganization, dated May 12, 2014, between the Company, Tacoma Acquisition Corp., Inc. and MabVax Therapeutics, Inc. | | 8-K | | 5/12/2014 | | 2.1 |
| | | | | |
| 2.2 | | Amendment No.1, dated as of June 30, 2014, by and between the Company and MabVax Therapeutics, Inc. | | 8-K | | 7/1/2014 | | 2.1 |
| | | | | |
| 2.3 | | Amendment No.2 to the Agreement and Plan of Merger, dated July 7, 2014, by and among the Company, Tacoma Acquisition Corp. and MabVax Therapeutics, Inc. | | 8-K | | 7/9/2014 | | 2.1 |
| | | | | |
| 3.1 | | Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock | | 8-K | | 9/3/2014 | | 3.1 |
| | | | | |
| 3.2 | | Amended and Restated Certificate of Incorporation | | 8-K | | 9/9/2014 | | 3.1 |
| | | | | |
| 3.3 | | Certificate of Amendment of Amended and Restated Certificate of Incorporation | | 8-K | | 9/9/2014 | | 3.2 |
| | | | | |
| 3.4 | | Amended and Restated Bylaws | | 8-K | | 12/14/2007 | | 3.2 |
| | | | | |
| 3.5 | | Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock | | 8-K | | 3/26/2015 | | 3.1 |
| | | | | |
| 3.6 | | Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock | | 10-K | | 3/31/2015 | | 3.8 |
| | | | | | | | | |
| 4.1 | | Securities Purchase Agreement, dated as of February 12, 2014, between MabVax Therapeutics, Inc. and the purchasers set forth on the signature pages thereto including that certain Amendment No. 1 to Securities Purchase Agreement, dated as of May 12, 2014, between MabVax Therapeutics, Inc. and the persons and entities identified on the signature pages thereto | | 8-K | | 5/12/2014 | | 10.3 |
| | | | | | | | | |
| 4.2 | | Registration Rights Agreement, dated as of February 12, 2014, between MabVax Therapeutics, Inc. and the persons and entities identified on the signature pages thereto | | 8-K | | 5/12/2014 | | 10.2 |
| | | | | | | | | |
| 4.3 | | Form of Exchange Agreement | | 8-K | | 9/3/2014 | | 10.1 |
| | | | | | | | | |
| 4.4 | | Form of Waiver Letter | | 8-K | | 9/3/2014 | | 10.2 |
| 4.5 | | Form of Common Stock Certificate | | S-1 | | 9/29/2014 | | 4.1 |
| | | | | | | | | |
| 4.6 | | Form of Waiver Extension Letter | | 8-K | | 9/30/2014 | | 10.1 |
| | | | | | | | | |
| 4.7 | | Form of Subscription Agreement, dated March 31, 2015, between the Company and the subscribers set forth on the signature pages thereto | | 10-K | | 3/31/2015 | | 4.11 |
| | | | | | | | | |
4.8 | | Form of Common Stock Purchase Warrant | | 10-K | | 3/31/2015 | | 4.12 |
| | | | | |
| 4.9 | | Form of Registration Rights Agreement, dated March 31, 2015, between the Company and the persons and entities identified on the signature pages thereto | | 10-K | | 3/31/2015 | | 4.13 |
| | | | | | | | | |
| 4.10 | | Form of Secured Promissory Note | | 8-K | | 1/19/2016 | | 4.1 |
| | | | | | | | | |
| 4.11 | | Form of Warrant | | 8-K | | 1/19/2016 | | 4.2 |
| | | | | | | | | |
| 5.1** | | Opinion of Sichenzia Ross Friedman Ference LLP, as to the legality of the securities being registered | | | | | | |
| | | | | |
| 10.1 | | Separation Agreement and Release, dated May 12, 2014, between Michael M. Wick and the Company | | 8-K | | 5/12/2014 | | 10.4 |
| | | | | |
| 10.2 | | Separation Agreement and Release, dated May 12, 2014, between William P. Kaplan and the Company | | 8-K | | 5/12/2014 | | 10.5 |
| | | | | |
| 10.3 | | Separation Agreement and Release, dated May 12, 2014, between Steven R. Schow and the Company | | 8-K | | 5/12/2014 | | 10.6 |
| | | | | |
| 10.4 | | Separation Agreement and Release, dated May 12, 2014, between Wendy K. Wee and the Company | | 8-K | | 5/12/2014 | | 10.7 |
| | | | | |
| 10.5 | | Michael Wick Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.1 |
| | | | | |
| 10.6 | | Edward W. Cantrall Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.2 |
| | | | | |
| 10.7 | | Steven R. Goldring Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.3 |
| | | | | |
| 10.9 | | Richard B. Newman Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.4 |
| | | | | |
| 10.10 | | Employment Agreement, dated July 1, 2014, by and between MabVax Therapeutics, Inc. and J. David Hansen | | 10-Q | | 8/8/2014 | | 10.9 |
| | | | | |
| 10.11 | | Employment Agreement, dated July 1, 2014, by and between MabVax Therapeutics, Inc. and Gregory P. Hanson | | 10-Q | | 8/8/2014 | | 10.10 |
| | | | | |
| 10.12 | | Employment Agreement, dated July 1, 2014, by and between MabVax Therapeutics, Inc. and Wolfgang W. Scholz, Ph.D. | | 10-Q | | 8/8/2014 | | 10.11 |
| | | | | |
| 10.13 | | Securities Purchase Agreement, dated July 8, 2014, by and between MabVax Therapeutics, Inc. and certain institutional investors set forth therein | | 10-Q | | 8/8/2014 | | 10.12 |
| | | | | |
| 10.14 | | Form of Indemnification Agreement | | 8-K | | 9/9/2014 | | 10.1 |
| | | | | |
| 10.15 | | Second Amended and Restated MabVax Therapeutics Holdings, Inc. 2014 Employee, Director and Consultant Equity Incentive Plan | | 10-K | | 3/31/2015 | | 10.15 |
Exhibit No. | | Description | | Form | | Filing Date/Period End | | Exhibit Number |
| | | | | | | |
| 1.1 | ** | Underwriting Agreement | | | | | | |
| | | | | | | | | |
| 2.1 | | Agreement and Plan of Merger and Reorganization, dated May 12, 2014, between the Company, Tacoma Acquisition Corp., Inc. and MabVax Therapeutics, Inc. | | 8-K | | 5/12/2014 | | 2.1 |
| | | | | | | | | |
| 2.2 | | Amendment No.1, dated as of June 30, 2014, by and between the Company and MabVax Therapeutics, Inc. | | 8-K | | 7/1/2014 | | 2.1 |
| | | | | | | | | |
| 2.3 | | Amendment No.2 to the Agreement and Plan of Merger, dated July 7, 2014, by and among the Company, Tacoma Acquisition Corp. and MabVax Therapeutics, Inc. | | 8-K | | 7/9/2014 | | 2.1 |
| | | | | | | | | |
| 3.1 | ** | Amended and Restated Certificate of Incorporation | | | | | | |
| | | | | | | | | |
| 3.2 | | Amended and Restated Bylaws | | 8-K | | 12/14/2007 | | 3.2 |
| | | | | | | | | |
| 3.3 | | Form of Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock | | 8-K | | 3/26/2015 | | 3.1 |
| | | | | | | | | |
| 3.4 | | Form of Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock | | 8-K | | 4/6/2015 | | 4.2 |
| | | | | | | | | |
| 3.5 | | Form of Certificate of Designations, Preferences and Rights of Series F Convertible Preferred Stock | | 8-K | | 8/17/2016 | | 3.2 |
| | | | | | | | | |
| 3.6 | ** | Form of Certificate of Designations, Preferences and Rights of Series G Convertible Preferred Stock | | | | | | |
| | |
| | | | | | |
| 3.7 |
| Form of Certificate of Designations, Preferences and Rights of Series H Convertible Preferred Stock | | 8-K
| | 5/3/2017
| | 3.1
|
| | | | | | | | | |
| 3.8 | | Form of Certificate of Amendment to Amended and Restated Certificate of Incorporation | | 8-K | | 8/17/2016 | | 3.1 |
| | | | | | | | | |
| 4.1 | | Securities Purchase Agreement, dated as of February 12, 2014, between MabVax Therapeutics, Inc. and the purchasers set forth on the signature pages thereto including that certain Amendment No. 1 to Securities Purchase Agreement, dated as of May 12, 2014, between MabVax Therapeutics, Inc. and the persons and entities identified on the signature pages thereto | | 8-K | | 5/12/2014 | | 10.3 |
| | | | | | | | | |
| 4.2 | | Registration Rights Agreement, dated as of February 12, 2014, between MabVax Therapeutics, Inc. and the persons and entities identified on the signature pages thereto | | 8-K | | 5/12/2014 | | 10.2 |
| | | | | | | | | |
| 4.3 | | Form of Exchange Agreement | | 8-K | | 9/3/2014 | | 10.1 |
| | | | | | | | | |
| 4.4 | | Form of Waiver Letter | | 8-K | | 9/3/2014 | | 10.2 |
| 10.16 | | Non-Employee Director Compensation Policy | | 10-Q/A | | 8/12/2015 | | 10.1 |
| | | | | |
| 10.17 | | Standard Industrial Net Lease, dated as of May 23, 2008, by and between MabVax Therapeutics, Inc. and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.2 |
| | | | | |
| 10.18 | | First Amendment to that Standard Industrial Net Lease, dated May 6, 2010, by and between MabVax Therapeutics, Inc. and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.3 |
| | | | | |
| 10.19 | | Second Amendment to that Standard Industrial Net Lease, dated August 1, 2012, by and between the Company and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.4 |
| | | | | |
| 10.20 | | Employment Agreement, dated July 21, 2014, 2014, by and between MabVax Therapeutics, Inc. and Paul Maffuid, Ph.D. | | 10-Q/A | | 8/12/2015 | | 10.5 |
| | | | | |
| 10.21 | | Development and Manufacturing Services Agreement, dated April 15, 2014, by and between MabVax Therapeutics, Inc. and Gallus BioPharmaceuticals NJ, LLC | | 10-Q/A | | 8/12/2015 | | 10.6 |
| | | | | | | | | |
| 10.22 | | Exclusive License Agreement for “Polyvalent Conjugate Vaccines for Cancer” (SK#14491), dated as of June 30, 2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.7 |
| | | | | | | | | |
| 10.23 | | Research and License Agreement, dated as of April 7, 2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.8 |
| | | | | | | | | |
| 10.24 | | Exclusive License to Unimolecular Antibodies, dated October 13, 2011, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.9 |
| | | | | | | | | |
| 10.25 | | Option Agreement, dated August 29, 2014, by and between MabVax Therapeutics, Inc. and Juno Therapeutics, Inc. | | 10-Q/A | | 8/12/2015 | | 10.10 |
| 4.5 | | Form of Common Stock Certificate | | S-1 | | 9/29/2014 | | 4.1 |
| | | | | | | | | |
| 4.6 | | Form of Waiver Extension Letter | | 8-K | | 9/30/2014 | | 10.1 |
| | | | | | | | | |
| 4.7 | | Form of Subscription Agreement, dated March 31, 2015, between the Company and the subscribers set forth on the signature pages thereto | | 10-K | | 3/31/2015 | | 4.11 |
| | | | | | | | | |
| 4.8 | | Form of Common Stock Purchase Warrant | | 10-K | | 3/31/2015 | | 4.12 |
| | | | | | | | | |
| 4.9 | | Form of Registration Rights Agreement, dated March 31, 2015, between the Company and the persons and entities identified on the signature pages thereto | | 10-K | | 3/31/2015 | | 4.13 |
| 10.26 | | SBIR Contract from National Cancer Institute | | 10-Q/A | | 8/12/2015 | | 10. |
| | | | | |
| 10.27 | | Form of Exchange Agreement (Series A-1 Preferred Stock and Series A-1 Warrants). | | 8-K | | 3/26/2015 | | 10.1 |
| | | | | |
| 10.28 | | Form of Exchange Agreement (Series B Preferred Stock and Series B Warrants). | | 8-K | | 3/26/2015 | | 10.2 |
| | | | | |
| 10.29 | | 2008 Equity Incentive Plan | | 10-K | | 3/31/2015 | | 10.29 |
| | | | | |
| 10.30 | | Form of Option Agreement, 2008 Equity Incentive Plan | | 10-K | | 3/31/2015 | | 10.30 |
| | | | | |
| 10.31 | | Form of Lockup Agreement dated as of April 3, 2015 | | 8-K | | 4/6/2015 | | 10.3 |
| | | | | | | | | |
| 10.32 | | Consulting Agreement with The Del Mar Consulting Group, Inc. and Alex Partners, LLC dated as of April 5, 2015 | | 8-K | | 4/6/2015 | | 10.4 |
| 10.33 | | Form of Escrow Deposit Agreement dated as of April 14, 2015 | | 8-K | | 4/15/2015 | | 10.1 |
| | | | | | | | | |
| 10.34 | | Form of Amendment Agreement to Registration Rights Agreement | | 8-K | | 6/10/2015 | | 10.1 |
| | | | | | | | | |
| 10.35 | | Amendment to Escrow Deposit Agreement dated June 22, 2015 | | 8-K | | 6/24/2015 | | 10.1 |
| | | | | | | | | |
| 10.36 | | Letter Agreement dated June 30, 2015 between MabVax Therapeutics, Inc. and OPKO Health, Inc. | | 8-K | | 7/1/205 | | 10.1 |
| | | | | | | | | |
| 10.37 | | Form of Proposed Lease Agreement with AGP Sorrento Business Complex, L.P | | S-1 | | 8/25/2015 | | 10.37 |
| | | | | | | | | |
| 10.38 | | Form of Amendment Agreement No. 2 to Registration Right s Agreement | | 8-K | | 8/4/2015 | | 10.1 |
| | | | | | | | | |
| 10.39 | | Non-Employee Director Compensation Policy | | 10-Q/A | | 8/12/2015 | | 10.1 |
| | | | | | | | | |
| 10.41 | | Standard Industrial Net Lease, dated as of May 23, 2008, by and between MabVax Therapeutics, Inc. and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.2 |
| | | | | | | | | |
| 10.42 | | First Amendment to that Standard Industrial Net Lease, dated May 6, 2010, by and between MabVax Therapeutics, Inc. and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.3 |
| | | | | | | | | |
| 10.43 | | Second Amendment to that Standard Industrial Net Lease, dated August 1, 2012, by and between the Company and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.4 |
| | | | | | | | | |
| 10.44 | | Employment Agreement, dated July 21, 2014, by and between MabVax Therapeutics, Inc. and Paul Maffuid, Ph.D. | | 10-Q/A | | 8/12/2015 | | 10.5 |
| | | | | | | | | |
| 10.45 | | Development and Manufacturing Services Agreement, dated April 15, 2014, by and between MabVax Therapeutics, Inc. and Gallus BioPharmaceuticals NJ, LLC | | 10-Q/A | | 8/12/2015 | | 10.6 |
| | | | | | | | | |
| 10.46 | | Exclusive License Agreement for “Polyvalent Conjugate Vaccines for Cancer” (SK#14491), dated as of June 30, 2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.7 |
| | | | | | | | | |
| 10.47 | | Research and License Agreement, dated as of April 7, 2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.8 |
| | | | | | | | | |
| 10.48 | | Exclusive License to Unimolecular Antibodies, dated October 13, 2011, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.9 |
| | | | | | | | | |
| 10.49 | | Option Agreement, dated August 29, 2014, by and between MabVax Therapeutics, Inc. and Juno Therapeutics, Inc. | | 10-Q/A | | 8/12/2015 | | 10.10 |
| | | | | | | | | |
| 10.50 | | SBIR Contract from National Cancer Institute | | 10-Q/A | | 8/12/2015 | | 10.11 |
| | | | | | | | | |
| 10.51 | | Lease by and between AGP Sorrento Business Complex, L.P., and MabVax Therapeutics Holdings, Inc., dated as of September 2, 2015 | | 8-K | | 9/3/2015 | | 10.1 |
| | | | | | | | | |
| 10.52 | | Form of Amendment Agreement No.3 to Registration Rights Agreement | | 8-K | | 10/13/2015 | | 10.1 |
| | | | | | | | | |
| 10.53 | | Loan and Security Agreement dated as of January 15, 2016 | | 8-K | | 1/19/2016 | | 10.1 |
| | | | | | | | | |
| 11.1 | | Statement of per share earnings | | S-1 | | 9/29/2014 | | 11.1 |
| | | | | |
| 21.1 | | Subsidiaries of the Registrant | | S-1 | | 9/29/2014 | | 21.1 |
| | | | | | | | | |
| 23.1* | | Consent of Independent Registered Public Accounting Firm | | | | | | |
| | | | | | | | | |
23.2** | | Consent of Sichenzia Ross Friedman Ference LLP. (included as part of Exhibit 5.1) | | | | | | |
| | | | | | | | | |
| 24.1* | | Power of Attorney (included on signature page of this Form S-1) | | | | | | |
| | | | | | | | | |
* | Filed herewith. |
** | To be filed by amendment. |
| |
Unless otherwise indicated, the above referenced exhibits are all incorporated by referenced herein from the original form on which such exhibit was originally filed.
Item 17. Undertakings| 4.10 | | Form of Secured Promissory Note | | 8-K | | 1/19/2016 | | 4.1 |
| | | | | | | | | |
| 4.11 | | Form of Warrant | | 8-K | | 1/19/2016 | | 4.2 |
| | | | | | | | | |
| 4.12 | | Form of Warrant Agency Agreement between MabVax Therapeutics Holdings, Inc. and Equity Stock Transfer LLC and the Form of Warrant Certificate | | S-1 | | 8/25/2015 | | 4.10 |
| | | | | | | | | |
| 5.1 | ** | Opinion of Sichenzia Ross Ference Kesner LLP, as to the legality of the securities being registered | | | | | | |
| 10.1 | | Separation Agreement and Release, dated May 12, 2014, between Michael M. Wick and the Company | | 8-K | | 5/12/2014 | | 10.4 |
| | | | | | | | | |
| 10.2 | | Separation Agreement and Release, dated May 12, 2014, between William P. Kaplan and the Company | | 8-K | | 5/12/2014 | | 10.5 |
| | | | | | | | | |
| 10.3 | | Separation Agreement and Release, dated May 12, 2014, between Steven R. Schow and the Company | | 8-K | | 5/12/2014 | | 10.6 |
| | | | | | | | | |
| 10.4 | | Separation Agreement and Release, dated May 12, 2014, between Wendy K. Wee and the Company | | 8-K | | 5/12/2014 | | 10.7 |
| | | | | | | | | |
| 10.5 | | Michael Wick Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.1 |
| | | | | | | | | |
| 10.6 | | Edward W. Cantrall Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.2 |
| | | | | | | | | |
| 10.7 | | Steven R. Goldring Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.3 |
| 10.9 | | Richard B. Newman Resignation Letter, dated July 7, 2014 | | 8-K | | 7/9/2014 | | 99.4 |
| | | | | | | | | |
| 10.10 | | Employment Agreement, dated July 1, 2014, by and between MabVax Therapeutics, Inc. and J. David Hansen | | 10-Q | | 8/8/2014 | | 10.9 |
| | | | | | | | | |
| 10.11 | | Employment Agreement, dated July 1, 2014, by and between MabVax Therapeutics, Inc. and Gregory P. Hanson | | 10-Q | | 8/8/2014 | | 10.10 |
| | | | | | | | | |
| 10.12 | | Employment Agreement, dated July 1, 2014, by and between MabVax Therapeutics, Inc. and Wolfgang W. Scholz, Ph.D. | | 10-Q | | 8/8/2014 | | 10.11 |
| | | | | | | | | |
| 10.13 | | Securities Purchase Agreement, dated July 8, 2014, by and between MabVax Therapeutics, Inc. and certain institutional investors set forth therein | | 10-Q | | 8/8/2014 | | 10.12 |
| | | | | | | | | |
| 10.14 | | Form of Indemnification Agreement | | 8-K | | 9/9/2014 | | 10.1 |
| | | | | | | | | |
| 10.15 | | Second Amended and Restated MabVax Therapeutics Holdings, Inc. 2014 Employee, Director and Consultant Equity Incentive Plan | | 10-K | | 3/31/2015 | | 10.15 |
| 10.16 | | Form of Exchange Agreement (Series A-1 Preferred Stock and Series A-1 Warrants). | | 8-K | | 3/26/2015 | | 10.1 |
| | | | | | | | | |
| 10.17 | | Form of Exchange Agreement (Series B Preferred Stock and Series B Warrants). | | 8-K | | 3/26/2015 | | 10.2 |
| 10.18 | | 2008 Equity Incentive Plan | | 10-K | | 3/31/2015 | | 10.29 |
| | | | | | | | | |
| 10.19 | | Form of Option Agreement, 2008 Equity Incentive Plan | | 10-K | | 3/31/2015 | | 10.30 |
| | | | | | | | | |
| 10.20 | | Form of Lockup Agreement dated as of April 3, 2015 | | 8-K | | 4/6/2015 | | 10.3 |
| | | | | | | | | |
| 10.21 | | Consulting Agreement with The Del Mar Consulting Group, Inc. and Alex Partners, LLC dated as of April 5, 2015 | | 8-K | | 4/6/2015 | | 10.4 |
| 10.22 | | Form of Escrow Deposit Agreement dated as of April 14, 2015 | | 8-K | | 4/15/2015 | | 10.1 |
| | | | | | | | | |
| 10.23 | | Form of Amendment Agreement to Registration Rights Agreement | | 8-K | | 6/10/2015 | | 10.1 |
| 10.24 | | Amendment to Escrow Deposit Agreement dated June 22, 2015 | | 8-K | | 6/24/2015 | | 10.1 |
| | | | | | | | | |
| 10.25 | | Letter Agreement dated June 30, 2015 between MabVax Therapeutics, Inc. and OPKO Health, Inc. | | 8-K | | 7/1/205 | | 10.1 |
| | | | | | | | | |
| 10.26 | | Form of Proposed Lease Agreement with AGP Sorrento Business Complex, L.P. | | S-1 | | 8/25/2015 | | 10.37 |
| | | | | | | | | |
| 10.27 | | Form of Amendment Agreement No. 2 to Registration Right s Agreement | | 8-K | | 8/4/2015 | | 10.1 |
| | | | | | | | | |
| 10.28 | | Non-Employee Director Compensation Policy | | 10-Q/A | | 8/12/2015 | | 10.1 |
| | | | | | | | | |
| 10.29 | | Standard Industrial Net Lease, dated as of May 23, 2008, by and between MabVax Therapeutics, Inc. and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.2 |
| 10.30 | | First Amendment to that Standard Industrial Net Lease, dated May 6, 2010, by and between MabVax Therapeutics, Inc. and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.3 |
| | | | | | | | | |
| 10.31 | | Second Amendment to that Standard Industrial Net Lease, dated August 1, 2012, by and between the Company and Sorrento Square | | 10-Q/A | | 8/12/2015 | | 10.4 |
| | | | | | | | | |
| 10.32 | | Employment Agreement, dated July 21, 2014, by and between MabVax Therapeutics, Inc. and Paul Maffuid, Ph.D. | | 10-Q/A | | 8/12/2015 | | 10.5 |
| | | | | | | | | |
| 10.33 | | Development and Manufacturing Services Agreement, dated April 15, 2014, by and between MabVax Therapeutics, Inc. and Gallus BioPharmaceuticals NJ, LLC | | 10-Q/A | | 8/12/2015 | | 10.6 |
| | | | | | | | | |
| 10.34 | | Exclusive License Agreement for “Polyvalent Conjugate Vaccines for Cancer” (SK#14491), dated as of June 30, 2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.7 |
| | | | | | | | | |
| 10.35 | | Research and License Agreement, dated as of April 7, 2008, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.8 |
| | | | | | | | | |
| 10.36 | | Exclusive License to Unimolecular Antibodies, dated October 13, 2011, by and between MabVax Therapeutics, Inc. and Sloan-Kettering Institute for Cancer Research | | 10-Q/A | | 8/12/2015 | | 10.9 |
| 10.37 | | Option Agreement, dated August 29, 2014, by and between MabVax Therapeutics, Inc. and Juno Therapeutics, Inc. | | 10-Q/A | | 8/12/2015 | | 10.10 |
| | | | | | | | | |
| 10.38 | | SBIR Contract from National Cancer Institute | | 10-Q/A | | 8/12/2015 | | 10.11 |
| 10.39 | | Lease by and between AGP Sorrento Business Complex, L.P., and MabVax Therapeutics Holdings, Inc., dated as of September 2, 2015 | | 8-K | | 9/3/2015 | | 10.1 |
| | | | | | | | | |
| 10.40 | | Form of Amendment Agreement No.3 to Registration Rights Agreement | | 8-K | | 10/13/2015 | | 10.1 |
| | | | | | | | | |
| 10.41 | | Loan and Security Agreement dated as of January 15, 2016 | | 8-K | | 1/19/2016 | | 10.1 |
| 10.42 | | Form of Amendment Agreement | | 10-K | | 3/14/2016 | | 10.54 |
| | | | | | | | | |
| 10.43 | | Consulting Agreement, dated April 1, 2016, by and between MabVax Therapeutics Holdings, Inc. and Jeffrey Ravetch, M.D., Ph.D. | | 8-K | | 4/7/2016 | | 10.1 |
| | | | | | | | | |
| 10.44 | | Employment Agreement, dated March 16, 2016, by and between MabVax Therapeutics Holdings, Inc. and Paul Resnick, M.D. | | 10-K/A | | 4/19/2016 | | 10.56 |
| | | | | | | | | |
| 10.45 | | Non-Employee Director Compensation Policy, as amended through August 25, 2016 | | 8-K | | 8/31/2016 | | 10.1 |
| | | | | | | | | |
| 10.46 |
| Form of Subscription Agreement between the Company and the subscribers set forth on the signature pages thereto | | 8-K
| | 5/3/2017 | | 10.1 |
| | | | | | | | | |
| 10.47 |
| Form of Registration Rights Agreement between the Company and the subscribers set forth on the signature pages thereto | | 8-K | | 5/3/2017 | | 10.2
|
| | | | | | | | | |
| 11.1 | | Statement of per share earnings | | S-1 | | 9/29/2014 | | 11.1 |
| | | | | | | | | |
| 21.1 | | Subsidiaries of the Registrant | | S-1 | | 9/29/2014 | | 21.1 |
| | | | | | | | | |
| 23.1 | * | Consent of Independent Registered Public Accounting Firm | | | | | | |
| | | | | | | | | |
| 23.2 | ** | Consent of Sichenzia Ross Ference Kesner LLP (included as part of Exhibit 5.1) | | | | | | |
| | | | | | | | | |
| 24.1 | ** | Power of Attorney
| | | | | | |
* **
| Filed herewith Previously filed
|
Item 17.Undertakings
(a)
The undersigned registrant hereby undertakes:
| | (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
| | (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| | (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| | (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S–3 (§239.13 of this chapter) or Form F–3 (§239.33 of this chapter) and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) (§230.424(b) of this chapter) that is part of the registration statement.
| | (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| | (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| | (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| (i) | If the registrant is relying on Rule 430B (§230.430B of this chapter): |
| (A) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this chapter) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
| (B) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the |
| initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or |
| (ii) | If the registrant is subject to Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| | (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter); |
| | (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| | (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| | (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(c)
The undersigned registrant hereby undertakes that:
SIGNATURES
(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on this Form S-1 and has duly caused this Amendment No. 6 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California on the 28th12th day of January 2016.
May, 2017.| | MABVAX THERAPEUTICS HOLDINGS, INC. |
| |
| | |
By: | By | /s/ J. David Hansen |
| |
| | J. David Hansen |
| | President and Chief Executive Officer (Principal executive officer) |
By: | |
| | /s/ Gregory P. Hanson |
|
| | Gregory P. Hanson |
| | | |
| (Principal financial and accounting officer)officer) |
We, the undersigned officers and directors of MabVax Therapeutics Holdings, Inc. hereby severally constitute and appoint J. David Hansen and Gregory P. Hanson, our true and lawful attorney-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, and in any and all capacities, to sign for us and in our names in the capacities indicated below any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
POWER OF ATTORNEYPursuant to the requirements of the Securities Act of 1933, this Amendment No. 6 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature | | Signature
Title | | | | |
| | | | | |
/s/ J. David Hansen J. David Hansen | | Chairman of the Board, President and Chief Executive Officer (Principal executive officer) | | January 28, 2016 |
|
J. David Hansen | | |
| | | |
/s/ Gregory P. Hanson Gregory P. Hanson | | Chief Financial Officer (Principal financial and accounting officer) | | January 28, 2016May 12, 2017
|
Gregory P. Hanson | | |
| | | |
/s/ J. *
Kenneth M. Cohen | | Director | | January 28, 2016May 12, 2017
|
Kenneth M. Cohen | | |
| | | |
/s/ J. *
Robert E. Hoffman | | Director | | January 28, 2016May 12, 2017
|
Robert E. Hoffman | | |
| | | |
/s/ Phillip* Philip O. Livingston, M.D. | | Director | | January 28, 2016May 12, 2017
|
Philip O. Livingston, M.D. | | |
| | | |
| | Director | | January 28, 2016May 12, 2017
|
Paul V. Maier | | |
| | | |
/s/ J. * Jeffrey V. Ravetch, M.D., Ph.D. | | Director | | January 28, 2016May 12, 2017
|
Jeffrey V. Ravetch, M.D., Ph.D. | | |
| | | |
| | Director | | January 28, 2016May 12, 2017
|
Thomas Varvaro/s/ * Jeffrey Eisenberg | | Director | | |
II-13* By: /s/ Gregory P. Hanson
Gregory P. Hanson
II-10
