* | Less than 1%. (1) | Consists of (i) 176,675 shares held by RTP Venture Fund, (ii) 14,885 shares held by Philip O. Livingston, (iii) 1,721 shares held by the Joan L. Tweedy 2011 Revocable Trust, or the Tweedy Trust, and (iv) 3,005 shares subject to options exercisable within 60 days of February 7,May 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 9,31814,048 shares subject to options exercisable within 60 days of February 7, 2017, and 1,543 shares of restricted stock units vesting within 60 days of February 7, 2016. May 11, 2017. | (3) | Includes 108,967 shares subject to options exercisable within 60 days of February 7,May 11, 2017, and 6,238 common stock warrants purchased in the August 2016 financing transaction, and 40,687 shares of restricted stock units vesting within 60 days of February 7, 2016.transaction. | | | (4) | Includes 9,31814,048 shares subject to options exercisable within 60 days of February 7, 2017, and 1,543 shares of restricted stock units vesting within 60 days of February 7, 2016.May 11, 2017. | | | (5) | Includes 9,31814,048 shares subject to options exercisable within 60 days of January 2,May 11, 2017, and 6,238 common stock warrants purchased in the August 2016 financing transaction, and 1,543 shares of restricted stock units vesting within 60 days of February 7, 2016.transaction. | | | (6) | Includes 9,31814,048 shares subject to options exercisable within 60 days of February 7, 2017, and 1,543 shares of restricted stock units vesting within 60 days of February 7, 2016. | | May 11, 2017. | (7) | Includes 44,99945,054 shares subject to options exercisable within 60 days of February 7,May 11, 2017, and 6,238 common stock warrants purchased in the August 2016 financing transaction, and 21,064 shares of restricted stock units vesting within 60 days of February 7, 2016. | | transaction. | (8) | Includes 33,96734,007 shares subject to options exercisable within 60 days of February 7,May 11, 2017, and 4,158 common stock warrants purchased by the executive in the August 2016 financing transaction, and 15,045 shares of restricted stock units vesting within 60 days of February 7, 2016. | | transaction. | (9) | Includes 7,81612,546 shares subject to options exercisable within 60 days of February 7, 2017 and 1,543 shares of restricted stock units vesting within 60 days of February 7, 2016.May 11, 2017. | (10) | Includes 2,5936,893 shares subject to options exercisable within 60 days of February 7,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 7,3, 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 of 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. |
CERTAIN 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 17,770 shares to Jeffrey Ravetch. 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) 4,6294,628 restricted shares and (ii) options to purchase 4,6294,628 shares of common stock with an exercise price of $17.02 per share, for a total grant of 27,028 restricted shares and options. Livingston Grant On March 23, 2015, the Board of Directors approved a restricted stock award by the Company of 135,135 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. Ravetch Agreement On April 1, 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 term of the agreement is 2 years beginning January 1, 2016, and Dr. 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, 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, 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 February 7,May 11, 2017, there were (i) 6,296,1106,434,348 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 and(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 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 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 Convertible Preferred Stock and Series E Convertible 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 February 7,May 11, 2017, there were 665,281 shares of Series F Convertible 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 warrant 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 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 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 us. As of February 7,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 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 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 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 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 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 an aggregate of 342,906 shares of our common stock, and an aggregate of 238,156 shares of our newly designated Series D Convertible Preferred Stock. As of February 7,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 February 7,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 1,808,4731,705,311 shares are reserved for issuance upon exercise of outstanding options and restricted stock units that have been granted under our equity plans, and 271,836271,036 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 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 yearsyears' 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. Listing Our common stock is listed on The NASDAQ Capital Market under the symbol “MBVX.” On February 9¸May 11¸ 2017, the last reported bid price for our common stock on The NASDAQ Capital Market was $2.79$1.87 per share. As of February 7,May 11, 2017, we had approximately 10489 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. is acting as the sole book-running manager of this offering and as representative of the underwriters, or the Representative. Subject to the terms and conditions set forth inWe have entered into an underwriting agreement among us andwith Laidlaw & Company (UK) Ltd. with respect to the underwriters,shares of common stock and Series G Preferred Stock subject to this offering. Subject to certain conditions, we have agreed to sell to the underwriters,underwriter, and each of the underwritersunderwriter has agreed severally and not jointly, to purchase, from us, at the public offering price per share less the underwriting discount set forth on the cover page of this prospectus, the number of shares of common stock set forthand Series G Preferred Stock provided below opposite its name below.name.
UnderwritersUnderwriter | | Number of Shares of Common Stock(including Series G Preferred Stock)
| | | Laidlaw & Company (UK) Ltd. | | | 2,657,143 | | | Total | | | 2,657,143 | | |
SubjectThe underwriter is offering the shares of common stock and Series G Preferred Stock subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase allits acceptance of the shares of common stock sold under the underwriting agreement if any of these securities are purchased. If an underwriter defaults, theand Series G Preferred Stock from us and subject to prior sale. The underwriting agreement provides that the purchase commitmentsobligation of the non-defaulting underwriters may be increasedunderwriter 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 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 underwriting agreement may be terminated.shares of common stock covered by the underwriter’s over-allotment option described below.
Over-Allotment Option We have agreedgranted the underwriter a 45-day option to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Actpurchase up to an additional 248,571 shares of 1933, as amended, relating to losses or claims resulting from material misstatements in or omissions from this prospectus, the registration statement of which this prospectus forms a part, certain free writing prospectuses and testing-the-waters communications that may be used in this offering and in any marketing materials used in connection with this offering, and to contribute to payments the underwriters may be required to make in respect of those liabilities. The underwriters are offering theour 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 prior sale, when, as and if issuedcertain conditions, to and accepted by them, subject to approval of legal matters by their counsel, includingpurchase the validityadditional 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, and other conditions containedif any, by purchasing shares in the underwriting agreement, such asopen market and will have no obligation to exercise the receipt by the underwriters of officers’ certificatesoverallotment option with respect to our common stock.
Discount, Commissions and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.Expenses Commissions and Discounts
The Representativeunderwriter has advised us that the underwritersthey propose initially to offer the shares of common stock to the publicand 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 $$0.1225 per share. The underwriters alsounderwriter may allow, and certain dealers may reallow,re-allow, a discount from the concession not in excess of $$0.1225 per share to certain brokers and dealers. After the initialthis offering, the combined public offering price, concession or any other termand 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 offering may be changed.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 and proceeds before expenseswith respect to us. 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 informationpresentation in this table assumes either no exercisethe 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 full exercise by the underwriters of their overallotment option.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. | | | | Per Share of Common Stock
| Without Overallotment Exercise
| With Overallotment Exercise
| Public offering price | $
| $
| $
| Underwriting discount paid by us | | | | Proceeds, before expenses, to us | | | |
The expenses of this offering, not including the underwriting discount, are estimated at $ .
In addition, weWe have agreed to reimburse Laidlaw & Company (UK) Ltd., for certain out-of-pocket expenses (including the underwriters at closing for legalreasonable fees and other out-of-pocket accountabledisbursements 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 incurredpayable by themus in connection with this offering, in an amount notincluding reimbursement of Laidlaw & Company (UK) Ltd.’s expenses but excluding the underwriting discount referred to exceed $ in the aggregate.above, will be approximately $490,000.
Overallotment Option
Indemnification We have granted an optionagreed to indemnify the underwritersunderwriter 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 purchase upcontribute to $payments that the underwriter may be required to make in respect of additional securities solelythose liabilities. Lock-up Agreements We, our officers and our directors have agreed, subject to cover overallotments, if any. The underwriters may exercise this optionlimited exceptions, for 45a period of 90 days fromafter the date of the underwriting agreement, solelynot to cover any overallotments. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional securities proportionate to that underwriter's initial amount reflected in the above table. No Sales of Similar Securities
All of our executive officers and directors and certain other existing security holders have agreed that they will not, without the prior written consent of the Representative, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition of (whether by actual disposition or effective economic disposition due to cash settlement or otherwise), by such person or any affiliate of such person or any person in privity with such personor any affiliate of such person, directly or indirectly including the filing (or participation in the filing) of a registration statement with the Securities and Exchange Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder with respect to, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock or publicly announce an intention to effect any such transaction, for a period ending on the date that is days aftereither owned as of the date of the underwriting agreement. The lock-up agreements contain certain exceptions. The lock-up provisions apply to shares of our common stock owned now or acquired later by the person executing the agreement or for whichthereafter acquired without the person executingprior 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 agreement later acquires the powertermination of disposition;provided, however, that if the person is not one of our officers or directors, the lock-up provision will generally not applyperiod, without notice, release all or any portion of the securities subject to shares of our common stock acquired in a directed share program instituted in connection with this offering, if any, or in open market transactions after the completion of this offering.lock-up agreements.
Price Stabilization, Short Positions and Penalty Bids Until the distribution of the securities is completed, Securities and Exchange Commission rules may limit underwriters and selling group members from bidding for and purchasing our securities. However, the Representative may engage in transactions that stabilize the price of our securities, such as bids or purchases to peg, fix or maintain that price.
In connection with thisthe offering the underwritersunderwriter 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 and sell ourthe 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 open market. These transactionsnumber of securities the underwriter is obligated to purchase, which creates a syndicate short position. The short position may includebe either a covered short sales, purchases onposition or a naked short position. In a covered short position, the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the salenumber of securities over-allotted by the underwriters of a greater number of shares than theyunderwriter are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters' overallotment option described above.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 underwritersunderwriter may close out any covered short position by either exercising their overallotmentits over-allotment option and/or purchasing sharessecurities 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 sharessecurities to close out the covered short position, the underwritersunderwriter will consider, among other things, the price of sharessecurities available for purchase in the open market as compared to the price at which theyit may purchase sharessecurities through the overallotmentover-allotment option. “Naked” short sales are sales in excess ofIf the overallotment option. The underwriters must close out anyunderwriter sells more securities than could be covered by the over-allotment option, a naked short position, the position can only be closed out by purchasing sharesbuying securities in the open market. A naked short position is more likely to be created if the underwriters areunderwriter is concerned that there maycould be downward pressure on the price of our common stockthe securities in the open market after pricing that could adversely affect investors who purchase in thisthe offering. Stabilizing transactions consist of various ● Penalty bids for or purchases of our securities madepermit the underwriter to reclaim a selling concession from a syndicate member when the common stock originally sold by the underwriterssyndicate member is purchased in the open market priora stabilizing or syndicate covering transaction to the closing of this offering.cover syndicate short positions. The underwriters may also impose aThese stabilizing transactions, syndicate covering transactions and penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the Representative has repurchased securities sold by or for the account of such underwriter in stabilizing or short covering transactions.
Similar to other purchase transactions, the underwriters' purchases to cover the syndicate short salesbids may have the effect of raising or maintaining the market priceprices of our common stock or preventing or retarding a decline in the market price of ourthe common stock. As a result, the price of our common stock may be higher than the priceprices that might otherwise exist in the open market. The underwriters may conduct these transactions on The NASDAQ Stock Market LLC, in the over-the-counter market or otherwise.
Neither we nor any of the underwritersunderwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the priceprices of our common stock. In addition, neither we nor any of the underwritersunderwriter make any representationrepresentations that the Representativeunderwriter will engage in these stabilizing transactions or that these transactions,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 Offer, Sale and Distribution of Securities In connection with this offering, certain of the underwriters or securities dealers
This prospectus in electronic format may distribute prospectuses by electronic means, such as e-mail. In addition, one or more of the underwriters may facilitate Internet distribution for this offering to certain of their Internet subscriptioncustomers. Any such underwriter may allocate a limited number of securities for sale to its online brokerage customers. An electronic prospectus isbe made available on the Internet websites or through other online services maintained by any such underwriter.the underwriter, or by its affiliates. Other than thethis prospectus in electronic format, the information on the websites ofunderwriter’s website and any suchinformation contained in any other website maintained by the underwriter is not part of this prospectus.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 Relationships The underwriters and their respective
From time to time, the underwriter and/or its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their affiliates have engaged in,provided, and may in the future engage in,provide, various investment banking and other commercial dealings in the ordinary course of business withfinancial services for us or our affiliates. Theyfor which services it may have received orand, may in the future receive, customary fees and commissions for these transactions. fees. In the ordinary course of their variousits business, activities, the underwritersunderwriter and their respectiveits affiliates may make or hold a broad array of investments and actively trade debt and equityour securities (or related derivative securities) and financial instruments (including bank loans)or loans for their own account andor for the accounts of their customers, and, such investmentaccordingly, the underwriter and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respectiveits affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold or recommend to clients that they acquire, long and/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 instruments.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; | | (b)
| 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 its last annual or consolidated accounts; | | (c)
| by the underwriter to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or | | (d)
| in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of these securities shall result in a requirement for the publication by the 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. The consolidated financial statements of MabVax Therapeutics Holdings, Inc. as of December 31, 20152016 and 2014,2015, 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 is www.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. MABVAXMABVAX THERAPEUTICS HOLDINGS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PRART 1. FINANCIAL INFORMATIONItem 1. Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Balance Sheets | | | | | | | | | Assets | | | Current assets: | | | Cash and cash equivalents | $6,941,213 | $4,084,085 | Grants receivable | — | 757,562 | Prepaid expenses | 485,785 | 419,751 | Other current assets | 10,000 | 47,586 | Total current assets | 7,436,998 | 5,308,984 | Property and equipment, net | 665,588 | 135,486 | Goodwill | 6,826,003 | 6,826,003 | Other long-term assets | 168,597 | 126,654 | Total assets | $15,097,186 | $12,397,127 | Liabilities and Stockholders' Equity | | | Current liabilities: | | | Accounts payable | $608,374 | $3,002,497 | Accrued compensation | 640,192 | 562,755 | Accrued clinical operations and site costs | 666,146 | 391,041 | Accrued lease contingency fee | 590,504 | 590,504 | License fee payable | — | 225,000 | Other accrued expenses | 488,254 | 186,566 | Interest payable | 49,229 | — | Current portion of notes payable | 1,234,186 | — | Current portion of capital leases payable | 16,654 | — | Total current liabilities | 4,293,539 | 4,958,363 | Long-term liabilities: | | | Long-term portion of notes payable | 3,083,971 | — | Long-term portion of capital leases | 72,498 | — | Other long-term liabilities | 133,057 | — | Total long-term liabilities | 3,289,526 | — | | | | 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, with a liquidation preference of $1,325 and $1,915 as of September 30, 2016, and December 31, 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 with a liquidation preference of $333 | 333 | 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 September 30, 2016 and December 31, 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 September 30, 2016 and December 31, 2015, respectively | 62,961 | 38,366 | Additional paid-in capital | 80,595,120 | 67,999,928 | Accumulated deficit | (73,152,271) | (60,601,778) | Total stockholders' equity | 7,514,121 | 7,438,764 | Total liabilities and stockholders' equity | $15,097,186 | $12,397,127 |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Statements of Operations(Unaudited)
| | | | | | | | | | | Revenues: | | | | | Grants | $— | $133,318 | $148,054 | $509,474 | Total revenues | — | 133,318 | 148,054 | 509,474 | | | | | | Operating costs and expenses: | | | | | Research and development | 1,671,181 | 3,127,173 | 4,967,695 | 7,178,703 | General and administrative | 2,420,516 | 2,286,315 | 7,001,521 | 7,473,416 | Total operating costs and expenses | 4,091,697 | 5,413,488 | 11,969,216 | 14,652,119 | Loss from operations | (4,091,697) | (5,280,170) | (11,821,162) | (14,142,645) | Interest and other expense, net | (266,051) | (84) | (729,331) | (269) | Change in fair value of warrant liability | — | — | — | 19,807 | Net loss | $(4,357,748) | $(5,280,254) | $(12,550,493) | $(14,123,107) | 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 allocable to common stockholders | $(4,357,748) | $(5,280,254) | $(12,550,493) | $(32,069,262) | Basic and diluted net loss per share | $(0.86) | $(1.51) | $(2.87) | $(13.96) | Shares used to calculate basic and diluted net loss per share | 5,041,408 | 3,486,318 | 4,374,801 | 2,297,496 |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ EquityFor the Nine Months Ended September 30, 2016
(Unaudited)
| Series D, E and F Convertible Preferred Stock | | | Accumulated | | | | | | | | Deficit | | | | | | | | | | 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 $866,410 in issuance costs | 665,281 | 6,653 | 1,297,038 | 12,970 | 8,552,720 | — | 8,572,343 | 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 | — | — | — | — | 3,459,992 | — | 3,459,992 | Net loss | — | — | — | — | — | (12,550,493) | (12,550,493) | Balance at September 30, 2016 | 831,103 | $8,311 | 6,296,110 | $62,961 | $80,595,120 | $(73,152,271) | $7,514,121 |
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, | | | | Operating activities | | | Net loss | $(12,550,493) | $(14,123,107) | Adjustments to reconcile net loss to net cash used in operating activities: | | Depreciation and amortization | 60,058 | 15,412 | Stock-based compensation | 3,459,992 | 2,966,603 | 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
| 337,151 | — | Increase (decrease) in operating assets and liabilities: | | | Grants receivable | 757,562 | (48,974) | Other receivables | — | 2,275 | Prepaid expenses and other | 122,522 | (191,619) | Accounts payable | (2,476,130) | 749,258 | Accrued clinical operations and site costs | 275,105 | (120,913) | Accrued compensation | 77,437 | 258,732 | Other accrued expenses | 150,487 | 636,358 | Net cash used in operating activities | (9,622,309) | (7,917,332) | Investing activities | | | Purchases of property and equipment | (412,498) | (68,279) | Net cash used in investing activities | (412,498) | (68,279) | Financing activities | | | Cash receipt from bank loan, net of financing costs | 4,610,324 | — | Issuances of common stock, preferred stock and warrants, net of issuance costs | 8,572,343 | 11,046,348 | Proceeds from exercise of stock options | — | 800 | Principal payments on short-term note | (106,405) | — | Principal payments on capital lease | (6,504) | — | Purchase of vested employee stock in connection with tax withholding obligation | (177,823) | — | Net cash provided by financing activities | 12,891,935 | 11,047,148 | Net change in cash and cash equivalents | 2,857,128 | 3,061,537 | Cash and cash equivalents at beginning of period | 4,084,085 | 1,477,143 | Cash and cash equivalents at end of period | $6,941,213 | $4,538,680 | | | | | | Cash paid during the period 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 | $95,656 | $— | Purchases of property and equipment included in Accounts Payable | $82,006 | $— | Accretion of redemption value for Series A-1 and B convertible preferred stock | — | 93,234 | Conversion of Series A-1 redeemable preferred stock into common stock | $— | $162,968 | Conversion of Series C preferred stock to common stock | $— | $966 | Conversion of Series B preferred stock to common stock | $— | $160,380 | Conversion of Series D preferred stock to common stock | $7,974 | $467 | 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 | Fair value of warrants issued | ��$607,338 | $— | Warrants exercised to purchase common stock on a cashless basis | $— | $12,198 | Elimination of warrant liability in exchange transaction | $— | $72,656 | Financing transaction costs not yet paid | $2,500 | $586,608 |
See Accompanying Notes to Condensed Consolidated Financial Statements
MABVAX THERAPEUTICS HOLDINGS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements1. Basis of Presentation
We are a Delaware corporation, originally incorporated in 1988 under the name Terrapin Diagnostics, Inc. in the State of Delaware, and subsequently renamed “Telik, Inc.” in 1998, and thereafter renamed MabVax Therapeutics Holdings, Inc. (“MabVax Therapeutics Holdings”) in September 2014. Our principal corporate office is located at 11535 Sorrento Valley Road, Suite 400, San Diego, CA 92121 telephone: (858) 259-9405. On July 8, 2014, we consummated a merger (the “Merger”) with MabVax Therapeutics, Inc. (“MabVax Therapeutics”), pursuant to which our subsidiary Tacoma Acquisition Corp. merged with and into MabVax Therapeutics, with MabVax Therapeutics surviving as our wholly owned subsidiary. This transaction is referred to as 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. Beginning October 10, 2014, our common stock was quoted on the OTCQB under the symbol “MBVX.” Since August 17, 2016, our common stock has been trading on The NASDAQ Capital Market under the symbol “MBVX.”
The balance sheet data at December 31, 2015, 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. The consolidated financial statements as presented reflect certain reclassifications from previously issued financial statements to conform to the current year presentation.
On 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 The Financial Industry Regulatory Authority (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 thereto have been retroactively adjusted for all periods presented to give effect to the reverse split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.
The Company is a clinical stage biopharmaceutical company engaged in the discovery, development and commercialization of proprietary human monoclonal antibody products for the diagnosis and 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 vaccinated against targeted cancers. The vaccines were discovered at Memorial Sloan Kettering Cancer Center (“MSK”) and are exclusively licensed to MabVax Therapeutics. The Company operates in only one business segment.
We have incurred net losses since inception and expect to incur substantial losses for the foreseeable future as we continue our research and development activities. To date, we have funded operations primarily through government grants, proceeds from the sale of common and preferred stock, the issuance of debt, the issuance of common stock in lieu of cash for services, payments from collaborators, and interest income. The process of developing products will require significant additional research and development, preclinical testing and clinical trials, as well as regulatory approvals. We expect these activities, together with general and administrative expenses, to result in substantial operating losses for the foreseeable future. We will not receive substantial revenue unless we or our collaborative partners complete clinical trials, obtain regulatory approvals and successfully commercialize one or more products; or we license our 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, 2015 in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2016.
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.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board, or 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 condensed 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. The Company is evaluating the impact of ASU 2016-09 on its consolidated financial 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 condensed consolidated financial statements.
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 $12,550,493, net cash used in operating activities of $9,622,309, net cash used in investing activities of $412,498, and net cash provided by financing activities of $12,891,935 for the nine months ended September 30, 2016. As of September 30, 2016, the Company had $6,941,213 in cash and cash equivalents and an accumulated deficit of $73,152,271.
On January 15, 2016, the Company and Oxford Finance, LLC, as collateral agent and lender, entered into a loan and security agreement (the “Loan Agreement”) providing for senior secured term loans to the Company in an aggregate principal amount of up 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 $390,000.
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, 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 $866,410. The gross proceeds include the underwriters’ over-allotment option, which they exercised on the closing date.
We anticipate that the Company will continue to incur net losses into the foreseeable future as we: (i) continue 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) prepare for filing with the Food and Drug Administration, or FDA, an Investigational New Drug, or IND, application for our HuMab-based radioimmunotherapy product, designated as MVT-1075; (iv) continue preclinical work on several other programs; and (iv) continue operations as a public company. After giving effect to the net proceeds received from the January 2016 Term Loan and the August 2016 Public Offering, management believes that the Company has sufficient funds to meet its obligations through May 2017. These conditions give rise to substantial doubt as to the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We plan to continue to fund the 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, we cannot be sure that such additional funds will be available on reasonable terms, or at all. If we are unable to secure adequate additional funding, we 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 we 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.
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, the carrying amount 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
MabVax Therapeutics Series B Preferred Stock and Warrants (Pre-Merger MabVax Therapeutics Issuances)
Due to the anti-dilution protection in our Series B warrants (described below), the Series B warrants were recorded as a current liability in the amount of $92,463 on the Company’s 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 date based on the conditions that exist as of that date. The value adjustment made to the Series B preferred stock redemption value and preferred stock dividends for the three months ended March 31, 2015, was an increase of $93,234, and was no longer outstanding after March 25, 2015.
Since the Company’s inception, no dividends were ever declared by the Company’s Board of Directors on either of the Company’s Series A redeemable convertible preferred stock or Series B redeemable convertible preferred stock.
Conversion of Preferred Stock into Common Stock
During the nine months ended September 30, 2015, holders of Series A-1, Series B, 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.
Exchange of Series A-1 and Series B Preferred Stock and Warrants into Common Stock and Series D Convertible 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 warrants received in the Merger (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, to eliminate the Exchange Securities. 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 342,906 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 3,218,325 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 Series B preferred stock as part of the consideration for elimination of the Series A-1, Series B preferred stock and Series A-1 warrant, respectively.
As 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 further force or effect.
No commission or other payment was received by the Company in connection with the exchange agreements.
Series D Preferred Stock
As of September 30, 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 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. 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 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 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.
Series E Preferred Stock
As of September 30, 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 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 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 converted into. 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.
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 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 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 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 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 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 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.
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.
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.
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 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 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 September 30, 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 September 30, 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 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. 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 $866,410. The gross proceeds include the underwriter’s over-allotment option, which they exercised on the closing date.
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 convertible 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.
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 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.
Consulting Agreements
On April 5, 2015, the Company entered into a 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 quarter ended June 30, 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 September 30, 2016, the Company expensed $33,124 related to these grants. As of September 30, 2016, the expected future compensation expense related to these grants is $35,636 based upon the Company’s stock price on September 30, 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.
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 another investor relations consulting firm. In exchange for the shares granted and a monthly retainer, the consulting firm will perform investor relation 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.
6. Notes Payable
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 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 Stock 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 the index rate plus 11.29%, where the index rate is the greater of the 30-day LIBOR rate or 0.21%. 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 earned 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. 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 condensed consolidated balance sheet. The Company's transaction costs of approximately $390,000 are presented in the condensed 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.
The Loan Agreement also contains customary indemnification obligations and customary events of default, including, among other things, our failure to fulfill certain of the Company's obligations under the 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.
The Company was in compliance with all applicable covenants set forth in the Loan Agreement as of September 30, 2016.
The Company recorded interest expense related to the term loan of $266,057 and $729,350 for the three and nine months ended September 30, 2016, respectively. The annual effective interest rate on the note payable, including the amortization of the debt discounts and accretion of the final payment, but excluding the warrant amortization, is approximately 13.8%.
As of September 30, 2016, the Company has one insurance premium note outstanding with a balance totaling $123,075, which matures in April 2017. This note bears interest at a rate of 4.5% per annum, and the monthly payments are $20,783.
Future principal payments under the Loan Agreement and insurance premium note as of September 30, 2016 are as follows:
Years ending December 31: | | 2016 | $61,192 | 2017 | 1,589,660 | 2018 | 1,666,667 | 2019 | 1,666,667 | 2020 | 138,889 | Notes payable, balance as of September 30, 2016 | 5,123,075 | Unamortized discount on notes payable | (804,918) | Notes payable, net, balance as of September 30, 2016 | 4,318,157 | Current portion of notes payable | (1,234,186) | Non-current portion of notes payable | $3,083,971 |
7. Related Party Transactions
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 member of the Board of Directors, for his continuing services to the Company, and the value of this award has been amortized over a period of one year.
8. Stock-based Activity
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”) to increase the number of shares reserved for issuance under the Plan from 21,362 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) 1,081,081 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.
●
Provisions that no more than 405,406 shares may be granted to any participant in any fiscal year.
●
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.
●
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
We measure stock-based compensation expense for equity-classified awards, principally related to stock options and restricted stock units, or RSUs, based on the estimated fair values of the awards on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our condensed consolidated statements of operations. Due to limited activity in 2016 and 2015, we assumed a forfeiture rate of zero.
We use the Black-Scholes-Merton model to estimate the fair value of stock options granted. The expected term of stock options granted represents the period of time that we expect them to be outstanding. For the three and nine months ended September 30, 2016 we used volatility of 70.98% to 85.91%, dividend rate of 0%, expected term of 2.9 to 6 years, and risk-free interest rate of 0.87% to 1.43% in our Black-Scholes-Merton calculations. For the three and nine months ended September 30, 2015, we used volatility of 81.03% to 86.62%, dividend rate of 0%, expected term of 5.5 to 6 years, and risk-free interest rate of 0.87% to 1.05% in our Black-Scholes-Merton calculations.
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” comprised the following:
| | | | | | | | | | | | | | | Research and development | $301,985 | $307,892 | $889,666 | $633,593 | General and administrative | 666,556 | 1,186,931 | 2,570,326 | 2,333,010 | Total stock-based compensation expense | $968,541 | $1,494,823 | $3,459,992 | $2,966,603 |
Stock-based Award Activity
The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2016:
| | Weighted-Average Exercise Price | Outstanding at December 31, 2015 | 438,249 | $17.46 | Granted | 413,578 | 5.21 | Exercised | — | — | Forfeited/cancelled/expired | (36,415) | 15.28 | Outstanding and expected to vest at September 30, 2016 | 815,412 | 11.32 | Vested and exercisable at September 30, 2016 | 164,588 | $17.58 |
The total unrecognized compensation cost related to nonvested stock option grants as of September 30, 2016, was $3,496,364, and the weighted average period over which these grants are expected to vest is 2.18 years. The Company has assumed a forfeiture rate of zero. The weighted average remaining contractual life of stock options outstanding at September 30, 2016, is 9.0 years.
During the first nine months of 2016, the Company granted 413,578 options to officers and employees with a weighted average exercise price of $5.21 and vesting over a three-year period with vesting starting at the one-year anniversary of the grant date. During the first nine months of 2015, there were 407,547 options and 310,926 shares of restricted stock granted to directors, officers, employees and consultants.
Because the Company had a net operating loss carryforward as of September 30, 2016, 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 no stock options exercised in the three and nine months ended September 30, 2016 and there were 376 stock options exercised during the three and nine months ended September 30, 2015.
A summary of activity related to restricted stock grants under the Plan for the nine months ended September 30, 2016 is presented below:
| | Weighted-Average Grant-Date Fair Value | Nonvested at December 31, 2015 | 310,926 | $16.84 | Granted | — | — | Vested | (105,448) | 18.82 | Forfeited | — | — | Nonvested at September 30, 2015 | 205,478 | $16.85 |
As of September 30, 2016, unamortized compensation expense related to restricted stock grants amounted to $2,553,920, which is expected to be recognized over a weighted average period of 1.5 years.
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.
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 2,703 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 of Directors, 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.
Stock Issued Upon Vesting of Restricted Stock Grants
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 33,845 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 September 30, 2016, there were 205,478 nonvested restricted stock units remaining outstanding.
Common Stock Reserved for Future Issuance
Common stock reserved for future issuance consists of the following at September 30, 2016:
Common stock reserved for conversion of preferred stock | 2,975,424
| Common stock reserved for exercise of warrants | 5,124,144
| Common stock options outstanding | 815,412
| Authorized for future grant or issuance under the Stock Plan | 22,443
| Nonvested restricted stock | 205,478
| Total | 9,142,901
|
9. 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 | 815,412 | 438,249 | Restricted stock awards | 205,478 | 610,926 | Preferred stock | 2,975,424 | 3,038,162 | Common stock warrants | 5,124,144 | 805,361 | Total | 9,120,458 | 4,892,698 |
10. 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 89% complete as of September 30, 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, a subsidiary of ThermoFisher Scientific. Under the agreement the Company agreed to license certain cell lines from Life Technologies Corporation 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 2015. The Company paid $225,000 during 2015 related to this contract, and the remaining amount of $225,000 was paid during the quarter ended September 30, 2016.
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 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 three and nine months ended September 30, 2016, no revenues had been earned under the Option Agreement.
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 three and nine months ended September 30, 2016, the Company had no additional expenses associated with the agreement. The company recorded no expenses related to this Services Agreement in 2016. For the three and nine months ended September 30, 2015, the Company recorded $751,931 and $1,987,006 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 National Cancer Institute (“NCI”) awarded the Company a Small Business Innovation Research, or SBIR, Program Contract to support the Company’s program to develop a Positron Emission Tomography (“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 was 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 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 contract has been successfully completed at the end of 2015. No additional activities are required or planned under the contract and all monies available under the contract have been requested and received.
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, 2016 and 2015, the Company recorded none, $148,054, $133,318 and $509,474 of revenue associated with the NCI PET Imaging Agent Grant, respectively.
11. 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.
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 our facility located at 3165 Porter Drive in Palo Alto, California (the “Porter Drive Facility”), which is payable to ARE-San Francisco No. 24 (“ARE”) following the Company’s receipt of $15 million or more in additional financing, in the aggregate, which was achieved on August 22 ,2016.
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, which was 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 is $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. The lease contained 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 was included in other long-term assets in the accompanying condensed consolidated financial statements. We recognize rent expense on a straight-line basis over the term the lease.
During the three and nine months ended September 30, 2016, the Company recorded rent expense of $115,238 and $318,159, respectively, and during the three and nine months ended September 30, 2015, the Company recorded rent expense of $31,627 and $89,156, respectively.
Minimum future annual operating lease obligations are as follows as of September 30, 2016:
2016 (remaining) | $106,893 | 2017 | 439,330 | 2018 | 452,510 | 2019 | 466,085 | 2020 | 480,068 | Thereafter | 535,776 | Total | $2,480,662 |
Capitalized 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.
As of September 30, 2016, future minimum lease payments due in fiscal years under capitalized leases are as follows:
2016 (remainder of) | $5,826 | 2017 | 23,306 | 2018 | 23,306 | 2019 | 23,306 | 2020 | 23,306 | 2021 and thereafter | 7,904 | Less interest | (17,802) | Principal | 89,152 | Less current portion | (16,654) | Noncurrent portion | $72,498 |
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, 20152016 and 2014,2015, 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, 20152016 and 2014,2015, 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 14, 2016 (except for the effects of the matter discussed in the first paragraph of Note 14 to the consolidated financial statements, as to which the date is August 16, 2016)1, 2017 MABVAX THERAPEUTICS HOLDINGS, INC.
Consolidated Balance Sheets | | | | | Assets | | | Current assets: | | | Cash and cash equivalents | $4,084,085 | $1,477,143 | Grants receivable | 757,562 | 84,344 | Prepaid expenses | 419,751 | 334,629 | Other current assets | 47,586 | 14,675 | Total current assets | 5,308,984 | 1,910,791 | Property and equipment, net | 135,486 | 57,053 | Goodwill | 6,826,003 | 6,826,003 | Other long-term assets | 126,654 | 11,017 | Total assets | $12,397,127 | $8,804,864 | Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity | | | Current liabilities: | | | Accounts payable | $3,002,497 | $1,313,247 | Accrued compensation | 562,755 | 230,381 | Accrued clinical operations and site costs | 391,041 | 494,110 | Accrued lease contingency fee | 590,504 | 590,504 | Other accrued expenses | 411,566 | 245,421 | Warrant liability | — | 92,463 | Total current liabilities | 4,958,363 | 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 issued and outstanding as of December 31, 2015 and 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 (deficit): | | | Series A-1 convertible preferred stock, 2,763,000 shares authorized, none and 1,593,389 shares issued and outstanding as of December 31, 2015 and 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 December 31, 2015 and 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 December 31, 2015 and 2014, respectively, with a liquidation preference of $1,915 as of December 31, 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 December 31, 2015 and 2014, respectively, with a liquidation preference of $333 as of December 31, 2015 | 333 | — | Common stock, $0.01 par value; 150,000,000 shares authorized as of December 31, 2015, 3,836,632 and 378,766 shares issued and outstanding as of December 31, 2015 and 2014, respectively | 38,366 | 3,787 | Additional paid-in capital | 67,999,928 | 24,516,692 | Accumulated deficit | (60,601,778) | (24,550,308) | Total stockholders’ equity | 7,438,764 | 4,000,713 | Total liabilities, redeemable convertible preferred stock and stockholders’ equity | $12,397,127 | $8,804,864 |
See Accompanying Notes to Consolidated Financial Statements.
MABVAX THERAPEUTICS HOLDINGS, INC. Consolidated Consolidated Statements of OperationsBalance Sheets | For the Years Ended December 31, | | | | Revenues: | | | Grants | $1,267,036 | $304,175 | Other | — | 10,000 | Total revenues | 1,267,036 | 314,175 | | | | Operating costs and expenses: | | | Research and development | 9,596,768 | 3,502,730 | General and administrative | 9,795,163 | 5,204,341 | Total operating costs and expenses | 19,391,931 | 8,707,071 | Loss from operations | (18,124,895) | (8,392,896) | Interest and other income (expense) | (227) | (379) | Change in fair value of warrant liability | 19,807 | 475,422 | Net loss | (18,105,315) | (7,917,853) | 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 | (93,234) | (444,992) | Net loss allocable to common stockholders | $(36,051,470) | $(10,577,756) | Basic and diluted net loss per share | $(13.44) | $(70.36) | Shares used to calculate basic and diluted net loss per share | 2,681,740 | 150,336 |
| | | | | Assets | | | Current assets: | | | Cash and cash equivalents | $3,979,290 | $4,084,085 | Grants receivable | — | 757,562 | Prepaid expenses | 281,858 | 419,751 | Other current assets | 32,830 | 47,586 | Total current assets | 4,293,978 | 5,308,984 | Property and equipment, net | 731,712 | 135,486 | Goodwill | 6,826,003 | 6,826,003 | Other long-term assets | 168,597 | 126,654 | Total assets | $12,020,290 | $12,397,127 | Liabilities and Stockholders’ Equity | | | Current liabilities: | | | Accounts payable | $1,137,903 | $3,002,497 | Accrued compensation | 770,592 | 562,755 | Accrued clinical operations and site costs | 1,218,641 | 391,041 | Accrued lease contingency fee | 590,504 | 590,504 | Other accrued expenses | 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 | | | | 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 | 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 | Accumulated deficit | (78,262,261) | (60,601,778) | 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.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 at December 31, 2013 | | | 956,240 | | | $ | 5,787,906 | | | | 891,485 | | | $ | 6,737,276 | | | | — | | | $ | — | | | | — | | | $ | — | | | $ | 12,525,182 | | Exercise of Series B warrant in January at $0.01 per share | | | — | | | | — | | | | 194,281 | | | | 1,942 | | | | — | | | | — | | | | — | | | | — | | | | 1,942 | | Conversion of $240,000 in accounts payable into 6,009 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 | | | — | | | | — | | | | — | | | | — | | | | 3,697,702 | | | | 2,973,655 | | | | — | | | | — | | | | 2,973,655 | | Deemed dividend related to beneficial conversion feature of MabVax Series C-1 preferred | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,214,911 | | | | — | | | | — | | | | 2,214,911 | | Issuance of common stock at $68.97 per share, net of issuance costs of $156,303 in June and July | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Reclassification of Series A and Series B to equity in June | | | (956,240 | ) | | | (5,787,906 | ) | | | (1,085,766 | ) | | | (6,739,218 | ) | | | — | | | | — | | | | — | | | | — | | | | (12,527,124 | ) | 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 99,200 | | | | — | | | | — | | | | 99,200 | | Exercise of Series C-1 warrant on July 7, 2014 | | | — | | | | — | | | | — | | | | — | | | | 1,827,979 | | | | 1,472,502 | | | | — | | | | — | | | | 1,472,502 | | Accretion of redemption value for Series C-1 warrant to July 8, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 47,120 | | | | — | | | | — | | | | 47,120 | | Conversion of Series C-1 into Series A-1 on July 8, 2014 | | | — | | | | — | | | | — | | | | — | | | | (5,525,681 | ) | | | (6,807,388 | ) | | | — | | | | — | | | | (6,807,388 | ) | Accretion of redemption value for Series A-1 from July 8 to December 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 568,299 common and 1,250,000 Series B preferred stock outstanding in July | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,250,000 | | | | 1,710,902 | | | | 1,710,902 | | Accretion of redemption value for Series B from May 12, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 127,123 | | | | 127,123 | | 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 December 31, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Conversion of Series C into common stock from October to December 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Balance at December 31, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,250,000 | | | | 1,838,025 | | | | 1,838,025 | | 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (106,437 | ) | | | (160,380 | ) | | | (160,380) | | 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 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 | |
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 | | | — |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,143,563 | )
| | | (10,379,128 | )
| | | (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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Balance at December 31, 2015 | | | — | | | $ | — | | | | — | | | $ | — | | | | — | | | $ | — | | | | — | | | $ | — | | | $ | — | |
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)Operations | Convertible Preferred Stock | | | MabVax Series A | | MabVax Series B | | | Series A-1 | | Series C | | Shares | | Amount | | Shares | | Amount | | | Shares | | | Amount | | Shares | | Amount | 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 6,009 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 $68.97 per share, net of issuance costs of $156,303 in June and July | — | | | — | | — | | | — | | | | — | | | | — | | — | | | — | Reclassification of Series A and Series B to equity in June | 956,240 | | | 5,787,906 | | 1,085,766 | | | 6,739,218 | | | | — | | | | — | | — | | | — | Conversion of Series A to common stock on July 8, 2014 | (956,240 | ) | | (5,787,906 | ) | — | | | — | | | | — | | | | — | | — | | | — | Conversion of Series B to common stock on July 8, 2014 | — | | | — | | (1,085,766 | ) | | (6,739,218 | ) | | | — | | | | — | | — | | | — | 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 | — | | | — | | — | | | — | | | | 2,762,841 | | | | 6,807,388 | | — | | | — | Accretion of redemption value for Series A-1 from July 8 to December 31, 2014 | — | | | — | | — | | | — | | | | — | | | | 171,549 | | — | | | — | | 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 568,299 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 | — | | | — | | — | | | — | | | | — | | | | — | | 118,970 | | | 1,190 | | 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 December 31, 2014 | — | | | — | | — | | | — | | | | (1,169,452 | ) | | | (2,949,361 | ) | | — | | | — | | Conversion of Series C into common stock from October to December 2014 | — | | | — | | — | | | — | | | | — | | | | — | | | (22,399 | ) | | (224) | | Stock-based compensation | — | | | — | | — | | | — | | | | — | | | | — | | | — | | | — | | Net loss | — | | | — | | — | | | — | | | | — | | | | — | | | — | | | — | | Balance at December 31, 2014 | — | | | — | | — | | | — | | | | 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 | — | | | — | | — | | | — | | | | — | | | | — | | | — | | | — | | 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 | — | | | — | | — | | | — | | | | — | | | | — | | | — | | | — | | Deemed dividend related to exchange of common stock for Series A-1, Series A-1 Warrants, and Series B on March 25, 2015 | — | | | — | | — | | | — | | | | — | | | | 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 | — | | | — | | — | | | — | | | | — | | | | — | | | — | | | — | | Private Placement Issuance of 900,135 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Balance at December 31, 2015 | | | — | | | $ | — | | | | — | | | $ | — | | | | — | | | $ | — | | | | — | | | $ | — | |
| For the Years Ended December 31, | | | | Revenues: | | | Grants | $148,054 | $1,267,036 | Total revenues | 148,054 | 1,267,036 | | | | Operating costs and expenses: | | | Research and development | 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 | Loss from operations | (16,663,119) | (18,124,895) | Interest and other expenses, net of income
| (997,364) | (227) | Change in fair value of warrant liability | — | 19,807 | Net loss | (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 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 StatementsStatements of Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity (Deficit)Stockholders’ Equity | | Series D & E Convertible Preferred Stock | | | Common Stock
| | | Additional Paid-in
| | | Accumulated
| | | Total Stockholders' Equity
| | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital
| | | Deficit
| | | (Deficit)
| | Balance at December 31, 2013 | | | — | | | $ | — | | | | 31,149 | | | $ | 311 | | | $ | 609,907 | | | $ | (13,972,552 | ) | | $ | (13,362,334 | ) | Exercise of Series B warrant in January at $0.01 per share | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Conversion of $240,000 in accounts payable into 6,009 shares of common stock on February 12, 2014 | | | — | | | | — | | | | 6,009 | | | | 60 | | | | 239,940 | | | | — | | | | 240,000 | | 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,214,911 | ) | | | (2,214,911 | ) | Issuance of common stock at $68.97 per share, net of issuance costs of $156,303 in June and July | | | — | | | | — | | | | 44,090 | | | | 441 | | | | 2,883,892 | | | | — | | | | 2,884,333 | | Reclassification of Series A and Series B to equity in June | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,527,124 | | Conversion of Series A to common stock on July 8, 2014 | | | — | | | | — | | | | 35,912 | | | | 359 | | | | 5,787,547 | | | | — | | | | — | | Conversion of Series B to common stock on July 8, 2014 | | | — | | | | — | | | | 40,776 | | | | 408 | | | | 6,738,810 | | | | — | | | | — | | Accretion of redemption value for Series C-1 to July 8, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | (99,200 | ) | | | (99,200 | ) | Exercise of Series C-1 warrant on July 7, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Accretion of redemption value for Series C-1 warrant to July 8, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | (47,120 | ) | | | (47,120 | ) | Conversion of Series C-1 into Series A-1 on July 8, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,807,388 | | Accretion of redemption value for Series A-1 from July 8 to December 31, 2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | (171,549 | ) | | | — | |
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 568,299 common and 1,250,000 Series B preferred stock outstanding in July | | — | | | — | | | 77,413 | | | 774 | | | 4,704,952 | | | — | | | | 4,705,726 | | Accretion of redemption value for Series B from May 12, 2014 | | — | | | — | | | — | | | — | | | — | | | (127,123 | ) | | | (127,123 | ) | Exchange of common stock for Series C on September 3, 2014 | | — | | | — | | | (20,096 | ) | | (201 | ) | | (989 | ) | | — | | | | — | | Elimination of fractional shares resulting from Reverse Split on September 8, 2014 | | — | | | — | | | — | | | — | | | (293 | ) | | — | | | | (293 | ) | Shares issued in connection with exercise of warrants on a cashless basis in September and October | | — | | | — | | | 66,035 | | | 660 | | | (660 | ) | | — | | | | — | | Conversion of Series A-1 into common stock from November 13 to December 31, 2014 | | — | | | — | | | 93,694 | | | 937 | | | 2,948,424 | | | — | | | | — | | Conversion of Series C into common stock from October to December 2014 | | — | | | — | | | 3,784 | | | 38 | | | 186 | | | — | | | | — | | Stock-based compensation | | | | | | | | — | | | — | | | 604,976 | | | — | | | | 604,976 | | Net loss | | — | | | — | | | — | | | — | | | — | | | (7,917,853 | ) | | | (7,917,853 | ) | 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 | ) |
| | Redeemable Convertible Preferred Stock | Convertible Preferred Stock | | | | | | | | | | | | | | | | Balance at December 31, 2014 | | 1,250,000 | $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) | — | | — | 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 | — | | — | 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 | ) | — | 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 | | 117,583 | | 1,176 | | 299,109 | | | 2,991 | | | 13,107,113 | | — | | | — | | — | (1,529,370) | (13,111,280) | | — | 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 | | | Exchange of Series B into Common and Series D on March 25, 2015 | | (1,143,563) | (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 | | — | | — | | 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 | ) | — | | — | Balance at December 31, 2015 | | 224,824 | | $ | 2,248 | | | 3,836,632 | | | $ | 38,366 | | | $ | 67,999,928 | | | $ | (60,601,778 | ) | | $ | 7,438,764 | | |
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, 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. Consolidated Statements of Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity 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) |
See Accompanying Notes to Consolidated Financial Statements. MABVAX THERAPEUTICS HOLDINGS, INC. Consolidated Statements of Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity | 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. ConsolidatedConsolidated Statements of Cash FlowsCash Flows | | For the Years Ended December 31, | | For the Years Ended December 31, | | | 2015 | | 2014 | | | | Operating activities | | | | | | | | Net loss | | $ | (18,105,315 | ) | | $ | (7,917,853 | ) | $(17,660,483) | $(18,105,315) | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | Depreciation and amortization | | | 21,360 | | | 12,241 | | 96,553 | 21,360 | Stock-based compensation | | | 4,463,695 | | | 604,976 | | 4,403,278 | 4,463,695 | Change in fair value of warrants | | | (19,807 | ) | | (475,422 | ) | — | (19,807) | Issuance of restricted common stock for services | | | 1,958,450 | | — | | 164,000 | 1,958,450 | Increase (decrease) in operating assets and liabilities excluding effects of the Merger: | | | | | | | | Amortization and accretion related to notes payable | | 413,676 | — | Increase (decrease) in operating assets and liabilities: | | | Grants receivable | | | (673,218 | ) | | (84,344 | ) | 757,562 | (673,218) | Other receivables | | | 2,275 | | | 28,316 | | — | 2,275 | Prepaid expenses and other | | | (199,377 | ) | | (117,004 | ) | 340,187 | (199,377) | Accounts payable | | | 1,631,305 | | | 1,246,270 | | (1,898,520) | 1,631,305 | Accrued clinical operations and site costs | | | (103,069) | | (279,413 | ) | 827,600 | (103,069) | Accrued compensation | | | 332,374 | | (789,014 | ) | 207,837 | 332,374 | Other accrued expenses | | | 166,145 | | | | 109,228 | | (15,101) | 166,145 | Net cash used in operating activities | | | (10,525,182 | ) | | | (7,662,019 | ) | (12,363,411) | (10,525,182) | Investing activities | | | | | | | Purchases of property and equipment | | (78,416 | ) | | (44,807 | ) | (563,196) | (78,416) | Proceeds from acquisition of Telik, Inc. | | | — | | | | 1,497,283 | | | Net cash provided by (used in) investing activities | | | (78,416 | ) | | | 1,452,476 | | | Net cash used in investing activities | | (563,196) | (78,416) | Financing activities | | | | | | | Issuances of preferred stock, net of issuance costs | | 2,500,000 | | | 2,973,655 | | — | 2,500,000 | Proceeds from exercise of MabVax Series B warrant | | — | | | 1,942 | | | Proceeds from exercise of MabVax Series C-1 warrants | | — | | | 1,472,502 | | | Proceeds from exercise of stock options | | 800 | | — | | — | 800 | Proceeds from issuance of common stock, net of issuance costs | | | 10,709,740 | | | | 2,884,333 | | | 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 | | | 13,210,540 | | | | 7,332,432 | | 12,821,812 | 13,210,540 | Net change in cash and cash equivalents | | 2,606,942 | | | 1,122,889 | | (104,795) | 2,606,942 | Cash and cash equivalents at beginning of year | | | 1,477,143 | | | | 354,254 | | 4,084,085 | 1,477,143 | Cash and cash equivalents at end of year | | $ | 4,084,085 | | | $ | 1,477,143 | | $3,979,290 | $4,084,085 | Supplemental disclosures of cash flow information: | | | | | | | Cash paid during the year for income taxes | | $ | 1,600 | | | $ | 800 | | $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 | | | $ | 2,214,911 | | $— | $17,852,921 | Goodwill on acquisition of Telik, Inc. | | $ | — | | | $ | 6,826,003 | | | Warrant liability upon acquisition of Telik, Inc. | | $ | — | | | $ | 567,885 | | | Accretion of redemption value for Series A-1, B and C-1 preferred stock | | $ | 93,234 | | | $ | 444,992 | | | 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-1 redeemable preferred stock into Series A-1 preferred stock | | $ | — | | | $ | 6,807,388 | | | 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 | | $ | 467 | | | $ | — | | $7,974 | $6,306 | Conversion of Series A-1 preferred stock and warrants into common stock and Series D preferred stock | | $ | 162,968 | | | $ | — | | | Acquisition of MabVax Therapeutics Holdings in relation to the merger | | $ | — | | | $ | 4,705,726 | | | 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 | | | $ | 2,949,361 | | $— | $13,111,280 | Exchange of Series B preferred stock and warrants to common stock and Series D convertible preferred stock | | $ | 10,451,784 | | | $ | — | | $— | $10,451,784 | | | | | | | | Warrants exercised to purchase common stock on a cashless basis to purchase 66,035 shares of common stock. | | $ | 12,198 | | | $ | 4,887 | | | Conversion of common stock to Series C preferred stock | | $ | — | | | $ | 1,190 | | | Warrants exercised to purchase common stock on a cashless basis | | $— | $12,198 | Elimination of warrant liability in exchange transaction | | $ | 72,656 | | | $ | — | | $— | $72,656 | Financing transaction not yet paid | | $ | 36,570 | | | $ | — | | $— | $36,570 | Conversion of Series C preferred stock to common stock | | $ | 966 | | $ | 224 | | $— | $966 | Property and equipment accrued in accounts payable | | $ | 21,376 | | $ | — | | $33,934 | $21,376 |
See Accompanying Notes to Consolidated Financial Statements. MABVAX THERAPEUTICS HOLDINGS, INC. NotesNotes 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 owned subsidiary following the Merger, MabVax Therapeutics, as applicable. On October 9, 2014, FINRA the Financial Industry Regulatory Authority (FINRA) approved Thethe Company’s stock symbol change request and the Company began trading on the OTCQB under the symbol MBVX (OTCQB: MBVX) on October 10, 2014. On August 17, 2016, our common stock began trading on The NASDAQ Capital Market under the symbol “MBVX.” On 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 of common stock to additional paid-in capital. 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 (“MSK”) and are exclusively licensed to MabVax Therapeutics. The Company operates in only one business segment. The Company has incurred net losses since inception and expects to incur substantial losses for the foreseeable future as it continues its research and development activities. To date, the 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 products will require significant additional research and development, preclinical testing and clinical trials, as well as regulatory approvals. 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'partners complete clinical trials, obtain regulatory approvals 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 $18,105,315,$17,660,483, net cash used in operating activities of $10,525,182$12,363,411 and net cash used byin investing activities of $78,416,$563,196 for the year ended December 31, 2015.2016. As of December 31, 2015,2016, the Company had $4,084,085$3,979,290 in cash and cash equivalents and an accumulated deficit of $60,601,778. On March 31, 2015 and April 10, 2015, we 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 $5.55 per Unit, with each Unit consisting of one share of 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 $11.10 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$78,262,261.
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 for a period of 10 weeks pending the approval of a representative of one of the lead investors to release the funds. 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, we 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 the exercise of the underwriters’ over-allotment option. 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 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 will not be listed on any securities exchange or other trading market. The underwriters did not exercise 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.
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. On January 28, 2016, we filed a registration statement with the SEC; and we gave notification of effectiveness of the registration statement on February 10, 2016.
On January 15, 2016, the Company and Oxford Finance LLC, as collateral agent and lender, entered into a Loanloan and Security Agreementsecurity agreement (the “Loan Agreement”) providing for senior secured term loans to the Company in an aggregate principal amount of up 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 $381,000.$390,000. 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, 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. We anticipate that the Company will continue to incur net losses into the foreseeable future as we: (i) initiatecontinue our Phase I clinical trial for our standalone therapeutic HuMab 5b-1, designated as MVT-5873 that was initiated in the first quarter 2016 Phase I clinical trials planned forof 2016; (ii) continue our stand-alone therapeutic HuMab 5b-1 and early in 2016 our PETPositron Emission Tomography (“PET”) imaging agent 89Zr-HuMab-5B1, (ii)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 to conduct preclinical effortswork on several other programs,programs; and (iii)(iv) continue operations as a public company. After giving effect to the net proceeds received from the January 2016 Term Loan, managementManagement believes that the Company has sufficient funds to meet its obligations through September 2016.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. We plan to continue to fund the 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, we cannot be sure that such additional funds will be available on reasonable terms, or at all. If we are unable to secure adequate additional funding, we 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 we 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 we raisethe Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would result. If we raisethe 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 We 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 federally 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, 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. Grants Receivable Grants receivable at December 31, 2015 representrepresented 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 We evaluate the Company’s long-lived assets with definite lives, such as property and equipment, for impairment. We 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, 20152016 and 2014.2015. Impairment of Goodwill We apply Generally Accepted Accounting Principles (“GAAP”)The Company applies the GAAP principles related to Intangibles – Goodwill and Other related to performing a test for goodwill impairment annually. For the years ended December 31, 2016 and 2015, the Company performed a step 1 analysis and assessed the market value of the Company to determine whether an impairment had taken place. Based upon the analysis performed no impairment was noted, therefore performing step 2 was not required. The Company has conducted the annual impairment test and evaluated goodwill as of December 31, 2015, and concluded that no impairment of goodwillGoodwill has taken place for the yearyears ended December 31, 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 is 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-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, 20152016 and 2014,2015, 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 In May 2014,November 2015, 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 thatUpdate No. 2015-17, Income Taxes. Current GAAP requires an entity should recognize revenue to depictseparate deferred income tax liabilities and assets into current and noncurrent amounts in a classified balance sheet. The new standard simplifies the transferpresentation of promised goods or services to customersdeferred tax assets and liabilities and requires that deferred tax assets and liabilities be classified as noncurrent in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Ita classified balance sheet. This ASU 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 periodsfiscal years 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 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 theThis 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 of the adoption of the updated standard on the financial statements and disclosures.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. 2016-15 (“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 the settlement 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 securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 with early adoption permitted. The adoption of this new standard did not have a material impact on our consolidated 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.” 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 and to provide related footnote disclosures. ASU No. 2014-15 is effective for fiscal years ending after December 15, 2016 and for interim and annual periods therein with early adoption permitted. The adoption of this new standard did not have a material impact on our consolidated financial 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, 20152016 and 2014:2015: | | December 31, | | | | | 2015 | | | 2014 | | | | Furniture and fixtures | | $ | 8,979 | | $ | 8,979 | | $51,909 | $8,979 | Office equipment | | | 52,547 | | | 31,170 | | 52,547 | Lab equipment | | | 400,301 | | | 321,884 | | 894,942 | 400,301 | Capital lease equipment | | 95,657 | — | Leasehold improvement | | 59,555 | — | | | 461,827 | | | 362,033 | | 1,154,610 | 461,827 | Less accumulated depreciation and amortization | | | (326,341 | ) | | | (304,980 | ) | (422,898) | (326,341) | Totals | | $ | 135,486 | | | $ | 57,053 | | $731,712 | $135,486 |
Depreciation expense for the years ended December 31, 2016 and 2015 was $96,553 and 2014 was $21,360, and $12,241, 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 stockholderseffective with FINRA and the Company’s common stock began trading on The NASDAQ Capital Market at the special stockholder meeting heldopen 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 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 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 8, 201430, 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 Board of Directors atCompany on January 15, 2016. The Company is obligated to pay a meeting$150,000 final payment upon completion of the Board heldterm 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 September 8, 2014.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. On the Effective Date, immediatelyThe Loan Agreement also contains customary indemnification obligations and without further action bycustomary events of default, including, among other things, our stockholders, every 8 shares of our common stock, issued and outstanding immediately priorfailure to the Effective Time, were automatically converted into 1 share of our common stock. As a resultfulfill certain of the Reverse Split and calculatedCompany's obligations under the 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 Record Date, the numberprospect of outstanding sharesrepayment 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 resultany portion of the Reverse Split and,loan, or a material impairment in lieuthe perfection or priority of these fractional shares, any holderthe Lenders’ lien in the collateral or in the value of less than 1 sharesuch collateral. In the event of our common stock wasdefault by the Company under the Loan Agreement, the Lenders would be entitled to receive cash for such holder’s fractional share equalexercise their remedies thereunder, including the right to the product of such fraction multiplied by the averageaccelerate payment 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 thatdebt, upon which we may be obtained upon exercise or conversion of these securities, and changesrequired to repay all amounts then outstanding under the applicable exercise or purchase price of such securities.Loan Agreement, which could harm the Company's financial condition.
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 its common stock began trading on the OTCQB marketplace under the trading symbol MBVX on October 10, 2014.
All prior periodsThe Company was in these consolidated financial statements have been adjusted to reflect the effects of the Merger and the Reverse Split, unless otherwise indicated.
6. Mergercompliance 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 as of December 31, 2016.
The Company recorded interest expense related to the term loan of $997,389 for the year ended December 31, 2016. The annual effective interest rate on the note payable, including the amortization of the debt discounts and accretion of the final payment, but excluding the warrant amortization, is approximately 12.4%. As of December 31, 2016, the Company has one insurance premium note outstanding with a balance totaling $61,883, which resultedmatures 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 stockApril 2017. This note bears interest at a rate of two shares of MabVax Therapeutics Series C-14.5% per each share of MabVax Therapeutics Holdings Series A-1 preferred stock, (d) each outstanding MabVax Therapeutics optionannum, 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.monthly payments are $20,783. As a result ofFuture principal payments under the consummation of the Merger,Loan Agreement and insurance premium note 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.
The purchase price is based upon the fair value of MabVax Therapeutics Holdings (f.k.a. Telik, Inc.) common stock outstanding of 77,418 shares as of July 8, 2014, multiplied by the stock closing price at July 8, 2014 of $82.88, 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 isDecember 31, 2016 are as follows:
Purchase Consideration:
(In thousands) | | | | | | Purchase Consideration | | | | | $ | 6,416 | | Telik Assets: | | | | | | | | Cash and Cash Equivalents | | $ | 1,497 | | | | | Accounts Receivable | | | 31 | | | | | Prepaids and Other Current Assets | | | 182 | | | | | | | | | | | (1,710 | ) | Telik Liabilities: | | | | | | | | Accrued Compensation | | | 850 | | | | | Accrued Liabilities | | | 111 | | | | | Accrued Contingent Termination Fee | | | 591 | | | | | Warrant Liability | | | 568 | | | | | | | | | | | 2,120 | | Goodwill | | | | | $ | 6,826 | |
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 TherapeuticsHoldings Series B preferred stockRedeemable Convertible Preferred Stock and Warrants (Pre-Merger MabVax Therapeutics Issuances) 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
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.
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”) 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 $111.59 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 $111.59 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 $111.59 to $73.48 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) $111.59 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.
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 218,253 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 93,694 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
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 10,557 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 $197.14. 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 $11.62 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 are recorded as a current liability on our consolidated balance sheet. The outstanding warrant was valued at $92,463 and $567,885 as of December 31, 2014, and July 8, 2014 or the acquisition date, respectively. Our outstanding warrants are revalued on each balance sheet date, with changes in the fair value between reporting periods recorded in the consolidated statements of operations. Warrants were valued using the Black-Scholes-Merton model. The warrant had 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 for the valuation as of 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 | | | | | Risk-free interest rate | | | 1.75 | % | | | 1.60 | % | Dividend yield | | | — | % | | | — | % | Expected volatility | | | 86.67 | % | | | 101.60 | % | Expected life of options, in years | | | 4.36 | | | | 4.90 | | Market price for common stock | | $ | 13.47
| | | $ | 85.84 | | Warrant exercise price, adjusted | | $ | 13.32 | | | $ | 197.14 | |
At December 31, 2015 and 2014, financial instruments requiring fair value measurement totaled zero and $92,463, respectively.
As a result of the Series B warrants’ anti-dilution provision, 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 warrantsCommon 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 basisPreferred Stock and the warrant liability was eliminated and the Company recorded a gain of $19,807 for the year ended December 31, 2015.
The following table presents information about our financial instruments that are measured at fair value on a recurring basis as | | 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) | | Financial liabilities: | | | | | | | | | | | | | | | | | Warrants | | $ | 92,463 | | | $ | — | | | $ | — | | | $ | 92,463 | | Total financial liabilities | | $ | 92,463 | | | $ | — | | | $ | — | | | $ | 92,463 | |
The changes in the value of the warrant liability during the year ended December 31, 2015 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 | | $ | — | |
Fair value – beginning of year | $92,463 | Change in fair value | (19,807) | Cancellation of warrants | (72,656) | Fair value – end of year | $— |
The changes in the value of the warrant liability during the year endedAt December 31, 20142016 and 2015, there were as follows:no financial instruments requiring fair value measurement.
Fair value - beginning of year | | $ | — | | Fair value on acquisition | | | 567,885 | | Change in fair value | | | (475,422 | ) | Fair value - end of year | | $ | 92,463 | |
There were no transfers between Level 1 and Level 2 measurements for the years ended December 31, 2015 and 2014.
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, 20152016 and 2014,2015, was an increase of none and $93,234, and $444,992, 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 stockPreferred 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 stockPreferred Stock outstanding. Exchange of Series A-1Preferred Stock 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 stockPreferred Stock and Merger warrants (the “Series A-1 Exchange Securities”) and holders of the Company’s Series B preferred stockPreferred 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 342,906 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”)Preferred Stock , convertible into 3,218,325 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 Preferred Stock and B preferred stockPreferred Stock as part of the consideration for elimination of the Series A-1 Preferred Stock, Series B convertible preferred stockPreferred Stock and Series A-1 warrant, respectively. Additionally, for as long as a certain principal holderAs of Exchange Securities holds securities issuedMarch 25, 2015, pursuant to the terms of the exchange agreements, subject to certain exceptions, the Company is restricted from issuing any sharesSeries 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 common stockwhich 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 further force or securities convertible into common stock, enter into any equity line of credit or issue any floating or variable priced equity linked instrument.effect.
No commission or other payment was received by the Company in connection with the exchange agreements. Series D Preferred Stock Financing 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 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. 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 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. Series 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 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 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 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. 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 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 March 31, 2015, the Company consummated the first closing of the Aprila private offering (the “April 2015 Private PlacementPlacement”) and sold $4,714,726 worth of Units,units (the “Unit(s)”), net of $281,023 in issuance costs, consistingcosts. The Units consisted of 900,135900,136 shares of common stock and warrants to purchase 450,068 shares of common stock atwith an exercise price of $11.10 aper 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 stockPreferred Stock and the balance consistedof 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 aper 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.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.AN.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 and expire 30 months thereafterOctober 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 typical of warrants, namelyincluding 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 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 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 preferred stock,Preferred Stock, in the event the investors elect to receive Series E preferred stockPreferred 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 withwithin 120 days after filing. The Company will bear all expenses of such registration of the resale of the Registrable Securities. Investors in the April 2015 Private Placement also may be required under certain circumstances to agree to refrain from resales of a percentage of theirselling securities upon request of an underwriter or placement agent in a future offering.underlying the purchased Units. The liquidated damages for failure to achieve effectiveness of the Registerable Securities is 1% aper 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 (as such term is defined in the Registration Rights Agreements) entered into an amendment agreement to the Registration Rights Agreements in order to: (i) amendto extend the definitionfiling date of “Filing Date” for the initial registration statement such that such term shall be defined as “August 5, 2015” and (ii)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 Filing Date, as such term was originally defined.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 Datefiling 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”“standstill” provision set forth in 5(u) of 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, representing 25% of shares issued in the April 2015 Private Placement, 415,068 shares of common stock andincluding 112,613 shares of common stock, which are issuable upon conversion of the Company’s Series E Convertible Preferred Stock. 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 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 Companyfinancings for a period of up to 60 days.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, 2015,2016, there were 805,361 warrants outstanding from the April 2015 Private Placement to purchase common stock at $11.10 aper 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 theany exercise of the underwriters’ over-allotment option. The Company intends to useused the net proceeds from this offering to fund the HuMab-5B1 human antibody program through Phase I clinicalpreclinical 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 willare not be listed on any securities exchange or other trading market. As of December 31, 2015,2016, 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, iswas 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 October 12, 2015, the Company and investors holding over 60%August 22, 2016, we closed a public offering 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. Series D Preferred Stock
As of December 31, 2015, there were 191,491 shares of Series D preferred stock issued and outstanding which are convertible into an aggregate of 2,587,717 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 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. 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 of1,297,038 shares of common stock upon the conversion of the Series D preferred stock. Each shareand 665,281 shares 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 ofF Preferred Stock convertible into 665,281 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.
Series E Preferred Stock
As of December 31, 2015, there were 33,333 shares of Series E preferred stock issued and outstanding, convertible into 450,446 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 stockwarrants 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 Price Protection Period, in the event the Company issues or sells, or is deemed to issue or sell,purchase 1,962,319 shares of common stock at a$5.55 per share price that is less than the conversion price then in effect, the conversion price shall be reducedand warrants 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 ofpurchase 1,962,319 shares of common stock outstanding immediately after giving effect to the issuanceat $6.29 per share, at an offering price of shares$4.81 per share. For every one share of common stock upon conversion of theor Series E preferred stock, which beneficial ownership limitation may be increased by the holder upF Preferred Stock sold, we issued one warrant 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 sharespurchase one share of common stock issuable upon conversion of such holder’sat $5.55 per share and one warrant to purchase one share of Series E preferredcommon stock but notat $6.29 per share. We received $9,438,753 in excess of beneficial ownership limitations.gross proceeds, before underwriting discounts and commissions and offering expenses totaling $871,305. The shares of Series E preferred stock bear no interest.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 that took placeby the Company in July 2014 or the July(the “July 2014 Financing Transaction,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 therefore 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 April 2015 Private Placement.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 aper 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.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:of (i) 4,6294,628 restricted shares and (ii) options to purchase 4,6294,628 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: ● 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. ● Provision that no more than 405,406 shares may be granted to any participant in any fiscal year. ● 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. ● 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: | | | | | 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. | | | | |
| | | 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: ● A one-time issuance of 2,703 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 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 | 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. | | | | | 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 Laidlaw & Company (UK) Ltd. |
, 2017 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 underwriter fees and 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 | $ 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 |
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 MabVax 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. In addition, our amended and restated bylaws provide that: ● 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. 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 225,226 shares of the Company’s common stock at $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 13,514 shares of common stock in connection with the foregoing. 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. Exercise of Warrants into common stock Between April 13, 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 164,835 shares of common stock by exercising an aggregate of 250,000 warrants to purchase shares of common stock in accordance with the terms of the warrant agreement. 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 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 Issuance of common stock under common stock Purchase Agreement We 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 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 $4,995,750 of units at a purchase price of $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 Series E Preferred Stock) and a thirty month warrant to purchase one half of one share of common stock at an initial exercise price of $11.10 per share. A second closing was held on April 3, 2015 in which we entered into separate subscription agreements for an additional $6,718,751 of units. Of the subscription agreements accepted, investors elected, and we issued, $2,500,000 of units consisting of Series E Preferred Stock 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. Rubin Grant 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 27,027 shares of our restricted common stock. Ravetch Grant On April 4, 2015, the Board approved the issuance of an additional restricted stock award of 17,770 shares of common stock 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) 4,628 restricted shares of common stock 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. Livingston Grant On April 4, 2015, the Board of Directors approved a restricted stock award by the Company of 135,135 shares of common stock valued at $17.02 a share, to be issued to Phil Livingston, Ph.D. for his continuing service to the Company. 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 Table of the award over the vesting period of one year.Contents
ConsultingNCI 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 OnApril 5, 2015, August 29, 2014, the Company entered into an option agreement (the “Option Agreement”) with Juno Therapeutics, Inc. (“Juno”) in exchange for a consulting agreement with The Del Mar Consulting Group, Inc. and Alex Partners, LLC, together,one-time up-front option fee in the “Investor Relations Consultants”, pursuant to which such Investor Relations Consultants shall provide investor relations serviceslow five figures. Pursuant 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 andOption 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 no legal recourse to recover the sharesa contractual right for use of Company binding domains for use in the eventconstruction of nonperformance, the Company recognized the grant date fair value of the 40,451 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 quarter ended June 30, 2015.
Consultant GrantsCAR T-cells.
During 2015, the Board of Directors approved the issuance of restricted stock awards to two 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. For the year 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 expensed $11,809 related to these grants. As of December 31, 2015, the expected future compensation expense related to these grants is $70,991 based uponand the Company’s stock price on December 31, 2015.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. 8. Related Party Transactions
Capital Leases In April 2015,On March 21, 2016, the Company has grantedentered into a restricted stock awardlease agreement with ThermoFisher Scientific (“Lessor”). Under the terms of 135,135 sharesthe agreement, the Company agreed to Phil Livingston, Ph.D.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), an employee and Board member, for his continuing services to the Company.monthly lease payment is $1,942. In addition, in April 2015,there is a $1.00 buyout option at the Company has granted a restricted stock awardend of 17,770 shares for Jeffrey Ravetch, a Board member, for future consulting services.the lease term.
In February 2014, MabVax Therapeutics issued approximately 5,946 sharesMinimum future annual capital lease obligations are as follows as of common stock to related parties in settlement of $240,000 in related party liabilities for consulting services.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.) signed separation agreements, which is payable to ARE-San Francisco No. 24 (“ARE”) if the Company receives $15 million or more in May 2014additional 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 nine employeesAGP Sorrento Business Complex, L.P., for certain premises of office and agreedlaboratory space in buildings located at 11535 Sorrento Valley Rd., San Diego, California, to pay severancesserve as the Company’s corporate offices and health benefits upon closinglaboratories (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 Merger subject to certain provisions inLease did not commence until the agreement.New Premises were ready for occupancy, on February 4, 2016. The total in severance and benefits costs paid subsequent to the Merger is approximately $748,000. At December 31, 2015 and 2014, the accrued severance and benefits costs are approximately none and $6,000, respectively. 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 maximumLease terminates six years after such 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 vestingcommencement date, unless otherwise accelerated underearlier terminated in accordance with the Lease. Pursuant to the terms of the applicable stock plan agreement.Lease, the monthly base rent will be $35,631, subject to annual increases as set forth in the Lease.
AmendmentThe 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 Equity Incentive Planthe taxes and utility, maintenance and other operating costs paid or accrued in connection with the ownership and operation of the property.
On MarchThe 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, the Company approved a Second Amended and Restated 2014 Employee, Director and Consultant Equity Incentive Plan (the “Plan”), effectiverespectively. Minimum future annual operating lease obligations are as follows as of and contingent upon the consummation of the initial closing of the sale of Units pursuant to the Subscription Agreement, 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:December 31, 2016: ●
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.
●
Provision that no more than 405,406 shares may be granted to any participant in any fiscal year.
●
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.
2017 | $439,330 | 2018 | 452,510 | 2019 | 466,085 | 2020 | 480,068 | 2021 | 494,469 | Thereafter | 41,306 | Total | $2,373,768 | | |
Stock-based Compensation13. Income Taxes
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:
| | | | | | | | | | | Years Ended December 31, | | | | 2015 | | | 2014 | | Research and development | | $ | 929,633 | | | $ | 163,019 | | General and administrative | | | 3,534,062 | | | | 441,957 | | Total share-based compensation expense | | $ | 4,463,695 | | | $ | 604,976 | |
Stock-based Award Activity
The following table summarizes the Company’s stock option activity forDuring the years ended December 31, 2016 and 2015, and 2014 giving effectthe Company did not record a provision or benefit for current or deferred income taxes in the consolidated statement of operations due to the reverse stock split:its cumulative net losses.
| | Options Outstanding | | | Weighted Average Exercise Price | | Outstanding at December 31, 2013 | | | 20,543 | | | $ | 8.81 | | Granted | | | 12,280 | | | | 62.68 | | Exercised | | | — | | | | — | | Forfeited/cancelled/expired | | | — | | | | — | | Outstanding and expected to vest 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 | | Vested and exercisable at December 31, 2015 | | | 24,054 | | | $ | 26.57 | |
The total unrecognized compensation cost related to unvested stock option grantsDeferred 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, 2015 was $3,964,3202016 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 weighted average period over which these grants are expected to vestavailable 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 2.12 years.more likely than not that the deferred tax assets will not be realized. Due to limited activity in 2015,such uncertainties surrounding the realization of the Company’s deferred tax assets, the Company has assumedmaintains a forfeiture ratevaluation allowance of zero. The weighted average remaining contractual life$27,901,900 against its deferred tax assets as of stock options outstanding at December 31, 2015 and 2014 is 9.13 years and 7.9 years, respectively.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. Stock options granted to employees generally vest over a four-year period and vesting does not start until the one-year anniversary of the grant date. During the year ended December 31, 2014, MabVax Therapeutics, Inc. merged with Telik, Inc. in a tax-free reorganization. As a result of the Company granted five new Board members appointedmerger, 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 connection withtotal equaling $6,045,000. The current year change in these assets has been reflected in the Merger an aggregate of 7,511 in stock options, which were immediately vested on the grant date. There were no grants of stock options during the year ended December 31, 2015 with immediate vesting.provision for income taxes.
During 2015,As of December 31, 2016, the Company granted 407,548 optionshad net operating loss carryforwards of approximately $50,576,000 and 310,926 shares$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 restricted stockapproximately $525,500 and $6,878,000 for federal and state income tax purposes, respectively. The federal credits may be used to its directors, officers, employeesoffset future taxable income and consultants fromwill 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 2014 Plan. In addition,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 Company granted 250,203 sharesU.S. and state taxing authorities due to the carryforward of restricted stock outsideunutilized net operating losses and research and development credits. Utilization of the plan for consultingCompany’s net operating loss carryforwards and investor relation services duringresearch 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 second quarterfuture, as defined and required by Section 382 of 2015.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. A summary of activity relatedThe provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate (34% in 2016 and 2015) to restricted stock grants under the Plan for the year December 31, 2015 is presented below:income taxes as follows:
| | Shares | | | Weighted Average Grant-Date Fair Value | | Non-vested at December 31, 2014 | | | — | | | $ | — | | Granted | | | 310,926 | | | | 16.87 | | Vested | | | — | | | | — | | Forfeited | | | — | | | | — | | Non-vested at December 31, 2015 | | | 310,926 | | | $ | 16.87 | |
| | | 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) | $— | $— |
AsThe 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 December 31, 2015, unamortized compensation expense related to restricted stock grants amounted to $3,843,264, whichthe benefit for a tax position is expecteddependent upon the benefit being more likely than not to be recognized over a weighted average period of 2.27 years.
Valuation Assumptions
The Company usedsustainable upon audit by the Black-Scholes-Merton option valuation model, orapplicable taxing authority. If this threshold is met, the Black-Scholes model, to determine the stock-based compensation expensetax benefit is then measured and recognized under ASC 718. 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 timelargest amount that is greater than 50 percent likely of the grant.
| | Years Ended December 31, | | | | 2015 | | | 2014 | | Risk-free interest rate | | 0.9 to 1.8 | % | | 0.1 to 2 % | | Dividend yield | | | 0 | % | | | 0 | % | Expected volatility | | 81 to 87 | % | | 84 to 100 | % | Expected life of options, in years | | 5.5 and 6.0 | | | 5 and 6.25 | | Weighted average grant date fair value | | $ | 1.56 | | | $ | 4.73 | |
Because the Company had a net operating loss carryforward as of December 31, 2015, 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 2014.
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, 2015, the Company accrued and expensed $323,363 related to the Management Plan.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 Laidlaw & Company (UK) Ltd. |
, 2017 On April 4, 2015,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 Board approvedRegistrant, other than estimated underwriter fees and commissions, in connection with our public offering. All amounts shown are estimates except for the following Non-Employee Director Policy (the “Incumbent Director Policy”SEC registration fee and the Financial Industry Regulatory Authority, Inc. (“FINRA”) fee: 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 |
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 incumbent non-employee membersany criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Subsection (b) of Section 145 of the BoardDGCL 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 eventright of the corporation to procure a judgment in its favor by reason of the fact that they are replaced before their term expires: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 MabVax Holdings and its stockholders. However, our directors may be personally liable for liability: ● A one-time issuancefor any breach of 2,703 restricted sharesduty of common stock;loyalty to us or to our stockholders; ● The vestingfor acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of all options and restricted stock grants held on such date; andlaw; ● Thefor unlawful payment of all earned but unpaid cash compensation for their services on the Board and its committees, as of such date.dividends or unlawful stock repurchases or redemptions; or On April 4, 2015, in connection with his resignation● for any transaction from which the Board, Michael Wick received a one-time restricted stock grant of 2,703 shares under the Incumbent Director Policy.director derived an improper personal benefit. Common Stock Reserved for Future Issuance
Common stock reserved for future issuance consists of the following at December 31, 2015:
Common stock reserved for conversion of preferred stock and warrants | | | 4,012,442 | | Common stock options outstanding | | | 438,249 | | Authorized for future grant or issuance under the Stock Plan | | | 401,353 | | Unvested restricted stock | | | 310,926 | | Total | | | 5,162,970 | |
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.
| | Years Ended December 31, | | | | 2015 | | | 2014 | | Stock options | | | 438,248 | | | | 6,030 | | MabVax Series A redeemable convertible preferred stock | | | — | | | | 18,596 | | MabVax Series B redeemable convertible preferred stock | | | — | | | | 21,114 | | MabVax Series C-1 redeemable convertible preferred stock | | | — | | | | 55,736 | | Series B redeemable convertible preferred stock | | | — | | | | 13,905 | | Series A-1 preferred stock | | | — | | | | 100,359 | | Series C preferred stock | | | — | | | | 6,355 | | Series D preferred stock | | | 2,587,717 | | | | — | | Series E preferred stock | | | 450,446 | | | | — | | Unvested restricted stock | | | 310,926 | | | | — | | Warrants to purchase common stock | | | 974,280 | | | | — | | Total | | | 4,761,617 | | | | 222,095 | |
11. Contracts In addition, our amended and Agreementsrestated bylaws provide that:
Life Technologies Licensing Agreement● 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. 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 24,1, 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 licensing agreementLoan and Security Agreement (the “Loan Agreement”) with Life Technologies Corporation (“Life Technologies”), a subsidiary of Thermo Fisher Scientific. UnderOxford Finance LLC providing for senior secured term loans to the agreement, MabVax agreed to license certain cell lines from Life Technologies to be usedCompany in the productionaggregate principal amount of recombinant proteins forup 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 225,226 shares of the Company’s clinical trials. The amountcommon stock at $5.55 per share. In connection with the execution of the contract is for $450,000 and was fully expensed during the year ended December 31, 2015. The Company paid $225,000 during the year ended December 31, 2015, related to this contract. Rockefeller University Collaboration
In July 2015,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 research collaboration agreementcertain 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 Rockefeller University's Laboratorycorporate partners pursuant to which the Company is entitled to receive in total a minimum of Molecular Genetics$10,000,000 in initial licensing or equity investments under such agreements; and Immunology.(d) the date on which shares of the Company's common stock are listed on a national securities exchange. The Company provided antibody material to Rockefeller University, which is exploringissued 13,514 shares of common stock in connection with the mechanismforegoing.
The securities referenced above were issued in reliance on the exemption from registration afford by Rule 506 of action of constant region (Fc) variantsRegulation D and/or Section 4(a)(2) of the HuMab-5B1Securities Act as a transaction by an issuer not involving a public offering. Exercise of Warrants into common stock Between April 13, 2015 and April 14, 2015, several holders of warrants issued in the roleApril Private Placement exercised their warrants on a cashless basis to purchase an aggregate of tumor clearance. The Company will supply additional research materials as requested164,835 shares of common stock by exercising an aggregate of 250,000 warrants to purchase shares of common stock in accordance with the university, which is evaluating ways to optimizeterms of the function.warrant agreement. NCI Neuroblastoma VaccineThe 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 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 Issuance of common stock under common stock Purchase Agreement We 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 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 $4,995,750 of units at a purchase price of $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 Series E Preferred Stock) and a thirty month warrant to purchase one half of one share of common stock at an initial exercise price of $11.10 per share. A second closing was held on April 3, 2015 in which we entered into separate subscription agreements for an additional $6,718,751 of units. Of the subscription agreements accepted, investors elected, and we issued, $2,500,000 of units consisting of Series E Preferred Stock 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. Rubin Grant 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 July 2012,exchange for his services, we provided him with a one-time grant of 27,027 shares of our restricted common stock. Ravetch Grant On April 4, 2015, the NCI awardedBoard approved the issuance of an additional restricted stock award of 17,770 shares of common stock 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) 4,628 restricted shares of common stock 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. Livingston Grant On April 4, 2015, the Board of Directors approved a restricted stock award by the Company a SBIR Program grantof 135,135 shares of common stock to supportbe issued to Phil Livingston, Ph.D. for his continuing service to the Company’s program to manufactureCompany. On May 13, 2015, the clinical material and develop an Investigational New Drug Application for a vaccine to prevent the recurrence of Neuroblastoma (the “NCI Neuroblastoma Vaccine Grant”). The project period for Phase ICompensation Committee of the grant endedBoard clarified that the award is being granted in December 2012 andconsideration for at least one year of Dr. Livingston’s services. The committee further clarified that the Company received a one-year extensionvesting of the common stock shall be on the project. The Company records revenue associated withone-year anniversary of the NIH Grants asBoard of Directors’ approval of the related costs and expenses are incurred. For the year ended December 31, 2014, the Company recorded $32,355award, or April 4, 2016. Table of revenue associated with the NCI Neuroblastoma Vaccine Grant.Contents
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 ofwas approximately $1,749,000 supports research work through June 2016. $1,749,000. The Company recordsrecorded revenue associated with the NCI PET Imaging Agent Grant as the related costs and expenses arewere incurred. For the years ended December 31, 20152016 and 2014,2015, the Company recorded $1,141,451$148,054 and $271,820$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, MabVax Therapeuticsthe Company entered into an Option Agreementoption 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, MabVax Therapeuticsthe Company 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 Therapeuticsthe Company developed with respect to fully human antibodies with binding specificity against human GD2 or sialyl Lewissialyl-Lewis A antigens (the “Patents”) and certain MabVax TherapeuticsCompany controlled biologic materials. Juno may exercise its option to purchase the License until the earlierAs of June 30, 2016, or 90 days from the date MSK completes its research with respect toOption Agreement expired and Juno no longer has a contractual right for use of Company binding domains for use in the Patents in accordance with the termsconstruction of agreements by and between MSK and MabVax Therapeutics.CAR T-cells. During the years ended December 31, 20152016 and 2014,2015, 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 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.Agreement.
12. Commitments and contingencies Litigation 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 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“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. 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 We expect to which the Company agreed to file with the SEC certain supplemental disclosuresincur no expenses in 2016 or thereafter 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.settlement.
Capital Leases On September 18, 2015, an Order and Final Judgment wasMarch 21, 2016, the Company entered byinto a lease agreement with ThermoFisher Scientific (“Lessor”). Under the Superior Courtterms 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 byagreement, the Company afteragreed 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, 2015 balance sheet date which would not be offset by insurance.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, but otherwise forgiven.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 Company entered 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. The lease contained 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 was 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 $122,236$433,397 and $115,118$122,236 was recognized in the years ended December 31, 20152016 and 2014,2015, respectively. Minimum future annual operating lease obligations are as follows as of December 31, 2015:2016: 2016 | | $ | 391,941 | | | 2017 | | 439,330 | | $439,330 | 2018 | | 452,510 | | 452,510 | 2019 | | 466,085 | | 466,085 | 2020 | | 480,068 | | 480,068 | 2021 | | 494,469 | Thereafter | | | 535,776 | | 41,306 | Total | | $ | 2,765,710 | | $2,373,768 | | | | | | |
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. As of December 31, 2015 and 2014, zero and approximately $6,000 in severance and benefits costs remained.
13. Income Taxes During the years ended December 31, 20152016 and 2014,2015, 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, 20152016 and 2014:2015: | | 2015 | | | 2014 | | | | Deferred tax assets: | | | | | | | | | | Net operating loss carryforwards | | $ | 14,502,000 | | $ | 9,478,000 | | $20,169,000 | $14,502,000 | Tax credits | | | 4,803,000 | | | 4,128,000 | | 5,065,000 | 4,803,000 | Accrued expenses and other | | | 1,861,300 | | | 225,000 | | 2,667,900 | 1,861,300 | Total deferred tax assets | | 21,166,300 | | | 13,831,000 | | 27,901,900 | 21,166,300 | Less valuation allowance | | | (21,166,300 | ) | | | (13,831,000 | ) | (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 $21,166,300$27,901,900 against its deferred tax assets as of December 31, 2015.2016. 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, 2015,2016, the Company had net operating loss carryforwards of approximately $36,375,000$50,576,000 and $36,616,000$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 $297,000$525,500 and $6,827,000$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, 20152016 and 20142015 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 20152016 and 2014)2015) to income taxes as follows: | | 2015 | | | 2014 | | | | Tax benefit computed at 34% | | $ | (6,155,300 | ) | | $ | (2,692,100 | ) | $(6,004,000) | $(6,155,300) | State tax provision, net of federal tax benefit | | | (1,551,444 | ) | | | (462,800 | ) | (989,344) | (1,551,444) | Change in valuation allowance | | | 7,335,300 | | | | 3,146,000 | | 6,735,600 | 7,335,300 | Other | | | 371,444 | | | 8,900 | | 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”,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 August 16, 2016, the Company effected a 1-for-7.4 reverse stock split of its common stock. All share and per share amounts, and number of shares of common stock into which each share of preferred stock will convert, in the consolidated financial statements and notes thereto 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.
On January 15, 2016, the Company and Oxford Finance LLC, as collateral agent and lender (the “Lender” or “Collateral Agent”) entered into a Loan and Security Agreement (the “Loan Agreement”) providing for senior secured term loans to the Company in an aggregate principal amount of up to $10,000,000, subject to the terms and conditions set forth in the Loan Agreement. On January 15, 2016, the Company received an initial loan of $5,000,000 (“Term A Loan”) under the Loan Agreement, before fees and issuance costs of approximately $381,000.
Under the Loan Agreement, if the Company achieves (a) positive interim data on the Phase 1a HuMab-5B1 antibody trial in pancreatic cancer and (b) uplisting of its common stock onto the NASDAQ Stock Market or New York Stock Exchange (the “Term B Event”) then until the earliest to occur of 60 days from the Term B Event or September 30, 2016, and provided there has been no event of default, the Company may request a second tranche in the amount of $5,000,000 under the Loan Agreement (“Term B Loan” and together with Term Loan A the “Term Loans”).
Interest on the Term Loans accrues at a rate equal to the greater1,657,143 Shares of (i) 11.50% and (ii) the sumCommon Stock
1,000,000 Shares of (a) the thirty (30) day U.S. LIBOR rate reported inSeries G Convertible Preferred Stock The Wall Street Journalon the last Business DayConvertible into 1,000,000 Shares of the month that immediately precedes the month in which the interest will accrue, plus (b) 11.29%. Interest is payable monthly in arrears. The Term Loans mature on February 1, 2020. Upon the occurrence of an Event of Default, the interest rate under the Term Loans shall be equal to 5% plus the Interest Rate then in effect.Common Stock
The Term Loans are secured by a security interest in all of the assets of the Company and its current and future subsidiaries, excluding intellectual property but including proceeds of intellectual property.
The Company may prepay all but not less than all of the Term loans advanced under the Loan Agreement, provided that the Company provides written notice to the Collateral Agent at least 30 days prior to such prepayment, and pays the lender an amount equal to the outstanding principal of the Term Loans, plus accrued and unpaid interest through the prepayment date, the Final Payment and the prepayment fee equal to (i) 3% of the outstanding balance, if the loan is prepaid within 18 months of the funding date, (ii) 2% of the outstanding balance, if the loan is prepaid 18 months after through and including the second anniversary of the funding date and (iii) 1% of the outstanding balance if the loan is prepaid after the second anniversary of the funding date and prior to the maturity date of the loan (the “Prepayment Fee”) and all other obligations that are due and payable under the Loan Agreement including any applicable expenses of the lender. The Final Payment is an amount equal to the original principal of the Term Loan multiplied by 3%.
The Loan Agreement contains customary representations and covenants that, subject to exceptions, restrict the Company’s ability to: pay dividends (other than dividends payable solely in capital stock) or redeem or repurchase any capital stock, make investments, incur additional liens, engage in mergers, acquisitions, and transact with affiliates, undergo a change in control, add or change business locations and engage in businesses that are not related to existing businesses.
The Company also issued the Lender five-year warrants to purchase an aggregate of 225,226 shares of the Company’s common stock at $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 13,514 shares of common stock to the Holder in connection with the Amendment.
PROSPECTUS Laidlaw & Company (UK) Ltd. |
, 2017 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 underwriter fees and 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 | | $ | 1,159 | | FINRA filing fee | | $ | * | | 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 MabVax 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. In addition, our amended and restated bylaws provide that: ● 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. 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 797,314797,312 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 225,226 shares of the Company’s common stock at $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 13,514 shares of common stock in connection with the foregoing. 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. Exercise of Warrants into common stock Between April 13, 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 164,835 shares of common stock by exercising an aggregate of 250,000 warrants to purchase shares of common stock in accordance with the terms of the warrant agreement. 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 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 preferred stockConvertible 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 Issuance of common stock under common stock Purchase Agreement We 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 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 $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 $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, $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. Rubin Grant 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 27,027 shares of our restricted common stock. Ravetch Grant On April 4, 2015, the Board approved the issuance of an additional restricted stock award of 17,770 shares of common stock 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) 4,6294,628 restricted shares of common stock and (ii) options to purchase 4,6294,628 shares of common stock with an exercise price of $17.02 per share, for a total grant of 27,028 restricted shares and options. Livingston Grant On April 4, 2015, the Board of Directors approved a restricted stock award by the Company of 135,135 shares of common stock to be issued to Phil Livingston, Ph.D. for his continuing service to the Company. 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. Consulting Agreement On April 5, 2015, we entered into a consulting agreement with The Del Mar Consulting Group, Inc. and Alex Partners, LLC in consideration for 40,541 shares of our restricted common stock. The consultants also received an additional 27,027 shares of our restricted common stock upon the Company’s achieving a milestone based on its fully-diluted market capitalization. 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 342,906 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 157,936 shares of our common stock, 2,762,841 shares of Series A-1 preferred stock, warrants to purchase up to an aggregate of 277,738 shares of our common stock, and options exercisable into 26,228 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 10,557 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(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.
Series C Preferred Exchanges
On September 3, 2014, we exchanged approximately 20,096 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(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 (a) Exhibits. Exhibit No. | | Description | | Form | | Filing Date/Period End | | Exhibit Number | | 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 | | 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 | | 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 | | 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 | | | | | | | ** | Amended and Restated Certificate of Incorporation | | | | | | | | | | | | | | | | | | | | | | | | 3.2 | | Amended and Restated Bylaws | | 8-K | | 12/14/2007 | | 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 | | 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 | | 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 | | 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 Amendment to Amended and Restated Certificate of Incorporation | | 8-K | | 8/17/2016 | | 3.1 | ** | 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 | | 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 | | 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 | | Form of Exchange Agreement | | 8-K | | 9/3/2014 | | 10.1 | | | | | | | | | | | | | | | | | | 4.4 | | Form of Waiver Letter | | 8-K | | 9/3/2014 | | 10.2 | | 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 | | | | | | | | | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | 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 | | Subsidiaries of the Registrant | | S-1 | | 9/29/2014 | | 21.1 | | | | | | | | | | | | | | | | | | 23.1 | * | Consent of Independent Registered Public Accounting Firm | | | | | | | * | Consent of Independent Registered Public Accounting Firm | | | | | | | | | | | | | | | | | | | | | | | | 23.2 | ** | Consent of Sichenzia Ross Ference Kesner LLP. (included as part of Exhibit 5.1) | | | | | | | ** | Consent of Sichenzia Ross Ference Kesner LLP (included as part of Exhibit 5.1) | | | | | | | | | | | | | | | | | | | | | | | | 24.1 | * | Power of Attorney (included on signature page) | | | | | | | ** | Power of Attorney
| | | | | | |
* **
| Filed herewith To bePreviously filed by amendment
|
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. |
| (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 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: |
| (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) 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:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (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 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 10th12th day of February,May, 2017. | MABVAX THERAPEUTICS HOLDINGS, INC. | | | | | By | /s/ J. David Hansen | | | J. David Hansen | | President and Chief Executive Officer (Principal executive officer) | | | | /s/ Gregory P. Hanson |
| | Gregory P. Hanson | | | | (Principal financial and accounting officer) |
POWER OF ATTORNEY 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 inand 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.
Pursuant 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 | | Title | | Date | | | | | | /s/ J. David Hansen J. David Hansen | | Chairman of the Board, President and Chief Executive Officer (Principal executive officer) | | February 10, |
| | | | | | /s/ Gregory P. Hanson Gregory P. Hanson | | Chief Financial Officer (Principal financial and accounting officer) | | | | | | | | /s/ J. Kenneth M. Cohen*
Kenneth M. Cohen | | Director | | | | | | | | /s/ J. Robert E. Hoffman*
Robert E. Hoffman | | Director | | | | | | | | /s/ Philip O. Livingston* Philip O. Livingston, M.D. | | Director | | | | | | | | /s/ Paul V. Maier* Paul V. Maier | | Director | | | | | | | | /s/ J. Jeffrey V. Ravetch* Jeffrey V. Ravetch, M.D., Ph.D. | | Director | | | | | | | | /s/ Thomas Varvaro* Thomas Varvaro | | Director | | |
/s/ Jeffrey Eisenberg* Jeffrey Eisenberg | | Director | | |
* By: /s/ Gregory P. Hanson
Gregory P. Hanson
II-10
|