Delaware | 2834 | 46-4993860 | ||
(State or | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Large | Accelerated | ||
Non-accelerated | Smaller | ||
Emerging |
Title of each class of securities to be registered | Amount to be registered | Proposed maximum offering price per share (1) | Proposed maximum aggregate offering price | Amount of registration fee |
Common stock, par value $0.0001 per share | 8,880,760 | $1.07 | $9,502,414 | $1,233.41 |
Title of Each Class of Securities to be Registered | Amount to be Registered (1) | Proposed Maximum Offering Price per Share (2) | Proposed Maximum Aggregate Offering Price (2) | Amount of Registration Fee |
Common stock, $0.0001 par value per share | 16,000,002(3) | $0.8175 | $13,080,001 | $1,427.02 |
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37 | |
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50 | |
74 | |
77 | |
80 | |
91 | |
93 | |
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105 | |
107 | |
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107 | |
F-1 | |
II-1 | |
II-6 | |
II-9 |
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our securities. You should read this entire prospectus carefully, including the “Risk Factors” section in this prospectus and under similar captions in the documents incorporated by reference into this prospectus. In this prospectus, unless otherwise stated or the context otherwise requires, references to “AzurRx”, “Company”, “we”, “us”, “our” or similar references mean AzurRx BioPharma, Inc. and its subsidiaries on a consolidated basis. References to “AzurRx BioPharma” refer to AzurRx BioPharma, Inc. on an unconsolidated basis. References to “AzurRx SAS” refer to AzurRx SAS, AzurRx BioPharma’s wholly-owned subsidiary through which we conduct our European operations. Overview We are engaged in the research and development of targeted, non-systemic MS1819 MS1819 – Phase 2b OPTION 2 Cystic Fibrosis Monotherapy Studies On October 17, 2019, we announced that the Cystic Fibrosis Foundation Data Safety Monitoring Board (the “CFF DSMB”) completed its review of our final results of the | ||
The OPTION 2 Trial is designed to investigate the safety, tolerability and efficacy of MS1819 (2.2 gram and 4.4 gram doses in enteric capsules) in a head-to-head manner versus the current standard of care, porcine pancreatic enzyme replacement therapy (“PERT”) pills. The OPTION 2 Trial will be an open-label, crossover study, conducted in 15 sites in the U.S. and Europe. A total of 30 CF patients 18 years or older will be enrolled. MS1819 will be administered in enteric capsules to provide gastric protection and allow optimal delivery of enzyme to the duodenum. Patients will first be randomized into two cohorts: to either the MS1819 arm, where they receive a 2.2 gram daily oral dose of MS1819 for three weeks; or to the PERT arm, where they receive their pre-study dose of PERT pills for three weeks. After three weeks, stools will be collected for analysis of coefficient of fat absorption (“CFA”). Patients will then be crossed over for another three weeks of the alternative treatment. After three weeks of cross-over therapy, stools will again be collected for analysis of CFA. A parallel group of patients will be randomized and studied in the same fashion, using a 4.4 gram daily dose of MS1819. All patients will be followed for an additional two weeks after completing both crossover treatments for post study safety observation. Patients will be assessed using descriptive methods for efficacy, comparing CFA between MS1819 and PERT arms, and for safety. We initiated the OPTION 2 Trial in July 2020 with the first patient screened and three clinical trial sites activated in the U.S. In August 2020, the Company dosed the first patients and initiated the European arm of the OPTION 2 Trial. Topline data is anticipated in the first quarter of 2021; however, this timeline may be further delayed due to the COVID-19 pandemic. In November 2020, we submitted a protocol amendment for the OPTION 2 Trial to add a study arm that uses an immediate release MS1819 capsule to compare data from the existing arm, that uses delayed-release enteric capsules with data from the new arm, that uses immediate release capsules, in order to determine the optimal dose and delivery method. We plan to initiate the OPTION 2 study extension in early first quarter 2021. MS1819 – Phase 2 Combination Therapy Study In addition to the We dosed the first patients in its Combination Trial in Hungary in October 2019. Planned enrollment is expected to include approximately 24 CF patients with severe EPI, We opened a total of five clinical sites for the Combination Trial in Turkey in October | ||
We do not expect to generate revenue from drug candidates that we develop until we obtain approval for one or more of such drug candidates and commercialize our product or enter into a collaborative agreement with a third party. We do not have any products approved for sale at the present and have never generated revenue from product sale. Recent Developments License Agreement with First Wave Bio, Inc. On December 31, 2020, we entered into a License Agreement (the “First Wave License Agreement”) with First Wave Bio, Inc. (“First Wave”). Pursuant to the First Wave License Agreement, First Wave granted us a worldwide, exclusive right to develop, manufacture, and commercialize First Wave’s proprietary immediate release and enema formulations of niclosamide for the fields of treating ICI-AC and COVID in humans (the “Product”). The Product uses First Wave’s proprietary formulations of niclosamide, a pro-inflammatory pathway inhibitor. We plan to commence in 2021 both a Phase 2 trial of the Product for COVID in GI and a Phase 1b/2a trial for ICI-AC. In consideration of the license and other rights granted by First Wave, we paid First Wave a $9.0 million upfront cash payment and are obligated to make an additional payment of $1.25 million due on June 30, 2021. In addition, we are obligated to pay potential milestone payments to First Wave totaling up to $37.0 million for each indication, based upon the achievement of specified development and regulatory milestones. Under the First Wave License Agreement we are obligated to pay First Wave royalties as a mid-single digit percentage of net sales of the Product, subject to specified reductions. Pursuant to the First Wave Purchase Agreement, the shares of Series C Preferred Stock issued to First Wave are not convertible prior to the Stockholder Approval. | ||
Registered Direct Offering and Private Placement On December 31, 2020, we entered into a securities purchase agreement (the “Series C Purchase Agreement”) with the selling stockholder named herein, pursuant to which we agreed to sell in the Registered Direct Offering 5,333.333 shares of Series C Preferred Stock, at a price of $750 per share, initially convertible into an aggregate of 5,333,334 shares of Common Stock, which is equivalent to the Issuable Maximum, at an initial stated value of $750.00 per share and a conversion price of $0.75 per share. The Registered Direct Offering closed on January 6, 2020. Upon the closing of the Registered Direct Offering, the selling stockholder converted all of its Series C Preferred Stock issued in the Registered Direct Offering, effective immediately upon the closing. Upon such conversion, in lieu of the issuance of shares of Common Stock, the Series C Certificate of Designation provides for the issuance of Pre-funded Warrants to purchase shares of Common Stock, with an exercise price of $0.001 per share and no expiration term, if necessary to comply with the Beneficial Ownership Limitation contained therein. Accordingly, the investor received upon the closing of the Registered Direct Offering, an aggregate of 3,400,000 shares of Common stock and Pre-funded Warrants to purchase up to 1,933,334 shares of Common stock. Concurrently with the Registered Direct Offering, in the Private Placement pursuant to the Series C Purchase Agreement, we also sold to the selling stockholder named herein, an additional 5,333.333 shares of Series C Preferred Stock at the same price as the Series C Preferred Stock offered in the Registered Direct Offering, which shares are convertible into an aggregate of 5,333,334 shares of our Common stock, together with Investor Warrants to purchase up to an aggregate of 10,666,668 shares of Common Stock, with an exercise price of $0.80 per share and an expiration term of five and a half years from the date of issuance. The Private Placement closed on January 6, 2020. The aggregate gross proceeds from the Offerings, excluding the net proceeds, if any, from the exercise of the Investor Warrants, were $8.0 million and we estimate that the net proceeds will be approximately $6.8 million. We intend to use the net proceeds from the Offerings to fund the payment of the cash consideration payable to First Wave under the First Wave License Agreement, and for other general corporate purposes. Until we have obtained the Stockholder Approval, we may not issue, upon conversion of the Series C Preferred Stock and certain related transactions, a number of shares of Common Stock which would exceed 6,186,966 shares of Common Stock in the aggregate, which amount is equal to the Issuable Maximum. The Issuable Maximum shall be applied collectively, when any conversions of Series C Preferred Stock are aggregated together with all shares of Common Stock issuable upon conversion or exchange of any securities issued in certain transactions related to the Offerings, including (i) any shares of Series C Preferred Stock issued to First Wave as consideration for the First Wave License Agreement, (ii) any warrants issued as compensation to the placement agent in the Offerings and (iii) any securities issuable to holders of the Exchange Rights (as defined and further described below) as a result of the Offerings. Any conversions of Series C Preferred Stock will be processed in the order in which we receive such conversion request from the holders of Series C Preferred Stock, and not on a pro rata basis. As a result of the conversion, immediately upon consummation of the Registered Direct Offering, of 5,333.3333 shares of Series C Preferred Stock into Common Stock and Pre-funded Warrants, 853,632 shares of Common Stock remained available for issuance below the Issuable Maximum as of January 11, 2021. Upon receipt of the Stockholder Approval, we anticipate to convert immediately all shares of Series C Preferred Stock into shares of Common Stock (or Pre-Funded Warrants, as applicable). | ||
In connection with the Offerings, we issued to H.C. Wainwright & Co. LLC (“Wainwright”) and its designees certain warrants (the “Placement Agent Warrants”) exercisable for up to 746,667 shares of Common Stock, which is equal to 7.0% of the amount determined by dividing the gross proceeds of the Offerings by the offering price per share of Common Stock, or $0.75. The Placement Agent Warrants have substantially the same terms as the Investor Warrants, except an exercise price of $0.9375, or 125% of the per share price of the Series C Preferred Stock issued in the Offerings. The Placement Agent Warrants are not exercisable until the Stockholder Approval is obtained. Pursuant to the Series C Purchase Agreement, we must hold a meeting of our stockholders not later than March 31, 2021 to seek such approval as may be required from our stockholders, in accordance with applicable law, the applicable rules and regulations of the Nasdaq Stock Market, our certificate of incorporation and bylaws and the General Corporate Law of the State of Delaware with respect to the issuance of shares of Common Stock upon conversion or exercise of the Series C Preferred Stock and the Warrants sold in the Private Placement and the related transactions described herein, including (x) an increase in the number of authorized shares of Common Stock above 150,000,000 and (y) the potential issuance of shares of Common Stock in excess of the Issuable Maximum. We have scheduled a special meeting (the “Special Meeting”) of our stockholders to be held on February 24, 2021 at 9:00 A.M., Eastern Time in order to obtain the Stockholder Approval. Only holders of record of our Common Stock as of the close of business on January 4, 2021 are entitled to notice of and to vote at the Special Meeting. The terms of the Offerings were previously reported in our Current Reports on Form 8-K filed on January 4, 2021 and January 8, 2021. Registration Rights Agreement In connection with the Offerings, we entered into a registration rights agreement, dated as of December 31, 2020 (the “Registration Rights Agreement”), with the selling stockholder, pursuant to which we undertook to file, within 30 days following the closing of the Offerings, this registration statement to register the shares of Common Stock issuable upon (i) the conversion of the Series C Preferred Stock sold in the Private Placement, (ii) the exercise of the Investor Warrants sold in the Private Placement and (iii) the exercise of any Pre-funded Warrants issued or issuable upon the conversion of the Series C Preferred Stock sold in the Private Placement (collectively, the “Registrable Securities”). We are filing this registration statement, of which this prospectus forms a part, to register the resale of the Registerable Securities by the selling stockholder named herein in compliance with our obligations under the Registration Rights Agreement. Corporate Information We were incorporated on January 30, 2014 in the State of Delaware. In June 2014, we acquired 100% of the issued and outstanding capital stock of AzurRx SAS. Our principal executive offices are located at 1615 South Congress Avenue, Suite 103, Delray Beach, Florida 33445. Our telephone number is (646) 699-7855. We maintain a website at www.azurrx.com. The information contained on our website is not, and should not be interpreted to be, a part of this prospectus. | ||
THE OFFERING | |||
Securities to be Offered by the Selling Stockholder | Up to 16,000,002 shares of Common Stock issuable upon conversion of the Series C Preferred Stock (or Pre-funded Warrants, as applicable) and exercise of the Investor Warrants. | ||
Use of Proceeds | The Common Stock to be offered and sold using this prospectus will be offered and sold by the selling stockholder named in this prospectus. Accordingly, we will not receive any proceeds from any sale of shares of our Common Stock in this offering. A portion of the shares covered by this prospectus may be issued upon exercise of the Warrants. Upon any cash exercise of the Warrants, the selling stockholder will pay us the applicable exercise price. We anticipate that proceeds that we receive from the cash exercise of such warrants, if any, will be used for working capital and general corporate purposes, including, without limitation, development of our product candidates, and general and administrative expenses. It is possible that, pending their use, we may invest the net proceeds in a way that does not yield a favorable, or any, return for us. See the section entitled “Use of Proceeds” in this prospectus. | ||
Risk Factors | You should read the section entitled “Risk Factors” in this prospectus for a discussion of the factors to consider carefully before deciding to invest in shares of our Common Stock. | ||
Nasdaq Capital Market Symbol | Our Common Stock is listed on the Nasdaq Capital Market under the symbol “AZRX.” | ||
(iii) (iv) (v) The Closing Payment Shares and the Escrow Shares were all issued upon execution of the Mayoly APA;provided, however, per the terms of the Mayoly APA, the Escrow Shares will be held in escrow until the applicable Milestone Payment date, at which time the respective Escrow Shares will be vested and released to INRA Agreement In The agreement provided Mayoly with the world-wide use in human therapy, nutraceuticals, and cosmetology and provides INRA with world-wide (i) use of lipase as an enzymatic catalyst throughout this field, including the production of pharmaceuticals, and (ii) treatment of the environment, food production processes, cleaning processes and other fields, excluding human therapies, nutraceuticals and cosmetology. The agreement provides for shared use in the production of lipase in the veterinary field (livestock and pets). As consideration for the agreement, Mayoly agreed to pay INRA an annual lump sum of €5,000 until marketing. Upon marketing, Mayoly agreed to pay INRA a lump sum of €100,000 and royalties on net sales of the product. Unless earlier terminated in accordance with its terms, the agreement with INRA expires upon the expiration of the patents in each country in which the license has been granted. The parties may terminate the agreement in the event the other party breaches its obligations therein, which termination shall become effective three months following written notice thereof to the breaching party. The breaching party shall have the right to cure such breach or default during such three-month period. Upon execution of the Mayoly APA in March 2019, TransChem Sublicense On August 7, 2017, we entered into | ||
We also depend upon the skills, knowledge, experience and know-how of our management and research and development personnel, as well as that of our advisors, consultants and other contractors. To help protect our proprietary know-how, which is not patentable, and for inventions for which patents may be difficult to enforce, we currently rely and will in the future rely on trade secret protection and confidentiality agreements to protect our interests. To this end, we require all of our employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business. MS1819 ● ● PCT/FR2000/001148 patent family (including the patent EP1276874 B1) “Cloning and expressing an acid-resistant extracellular lipase of Yarrowia lipolytica” describes the coding sequences of acid-resistant extracellular lipases, in particular Candida ernobii or Yarrowia lipolytica yeasts and the production of said lipases in their recombinant form. This patent has been validated in several European countries, including Italy, France and Great Britain. This patent expires April 28, 2020; and ● PCT/FR2006/001352 patent family (including the patent EP2035556 and patent US8,334,130 and US8,834,867) “Method for producing lipase, transformed Yarrowia lipolytica cell capable of producing said lipase and their uses” describes a method for producing Yarrowia lipolytica acid-resistant recombinant lipase utilizing a culture medium without any products of animal origin or non-characterized mixtures such as tryptone, peptone or lactoserum, in addition to its uses. The European patents expire June 15, 2026, U.S. patent 8,334,130 expires September 11, 2028, and U.S. patent 8,834,867 expires September 15, 2026. In addition, a provisional application was filed in 2020 directed to our proprietary formulation of MS1819. Any patent application claiming priority to this provisional application upon issuance will have an expected expiration in 2041. Niclosamide Our FW-420 and FW-1022 niclosamide programs are protected by patent filings licensed under the First Wave License Agreement that include the following:
Manufacturing MS1819 API is obtained by fermentation in bioreactors using our engineered and proprietary Yarrowia lipolytica strain. The proprietary yeast cell line from which the API is derived is kept at a storage facility maintained by Charles River. MS1819 Drug Substance is currently manufactured at a contract facility located in Capua, Italy owned by Olon. MS1819 Drug Product is currently manufactured at a contract facilities located in Reims, France and Craigavon, United Kingdom owned by Delpharm and Almac Pharma Services. We believe there are multiple alternative contract manufacturers capable of producing the product we need for clinical trials. We are in the process of establishing alternative manufacturers and manufacturing sites for the product; however, there is no guarantee that the processes are easily reproducible and transferrable. In December 2020, we entered into a Competition The pharmaceutical and biotechnology industries are characterized by rapidly evolving technology and intense competition. Many companies of all sizes, including major pharmaceutical companies and specialized biotechnology companies, are engaged in the | ||||||
MS1819 Niclosamide With respect to FW-1022, micronized niclosamide for COVID-19 infections, if approved, we will compete with currently approved antivirals, including VEKLURY® (remdesivir) marketed by Gilead Sciences, Inc. and vaccines, including those marketed by Pfizer Inc. and BioNTech SE, Moderna, Inc. and AstraZeneca plc. There are also several therapeutic and vaccine candidates in various stages of development that may With respect to FW-420, micronized niclosamide for ICI-AC, we will compete with both oral and intravenous (“IV”) administered steroids as well as hospital-based infusions of biologics, including infliximab and vedolizumab. We believe our ability to compete in this market, if we are successful in developing and obtaining regulatory approval to market FW-420, will depend on Government Regulation and Product Approval Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such as those we are developing. To date, our internal research and development efforts have been U.S. Government Regulation In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations, and biologics under the FDCA and the Public Health Service Act, or PHSA, and its implementing regulations. FDA approval is required before any new unapproved drug or dosage form, including a new use of a previously approved drug, can be The process required by the FDA before drug candidates may be marketed in the United States generally involves the following: ● completion of extensive preclinical laboratory tests, preclinical animal studies, and toxicity data, all performed in accordance with the ● submission to the ● approval by an independent IRB or ethics committee representing each clinical site before each clinical study may be initiated; ● performance of adequate and well-controlled human clinical studies to establish the ● preparation of ● review of the ● a ● satisfactory completion of an FDA pre-approval inspection of the ● FDA review and approval of an NDA or BLA prior to any commercial marketing or sale of the drug or biologic in the United States. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. The central focus of an IND submission is on the Clinical Studies Clinical studies involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the The clinical investigation of a drug or biologic is generally divided into three or four phases. Although the phases are usually conducted sequentially, they may overlap or be combined. ● Phase 1. The drug or biologic is initially introduced into healthy human subjects or patients with the target disease or condition. These studies are designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the investigational new drug in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness. ● Phase 2. The drug or biologic is administered to a limited patient population to evaluate dosage tolerance and optimal dosage, identify possible adverse side effects and safety risks and preliminarily evaluate efficacy. ● Phase 3. The drug or biologic is administered to an expanded patient population, generally at geographically dispersed clinical study sites to generate enough data to statistically evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the investigational product and to provide an adequate basis for product approval. ● Phase 4. In some cases, the FDA may condition approval of an NDA or BLA for a drug candidate on the Phase 4 clinical studies. | ||
A confirmatory or pivotal study is a clinical study that adequately meets regulatory agency requirements for the evaluation of a drug candidate's efficacy and safety such that it can be used to justify the approval of the product. Generally, pivotal studies are Phase 3 studies, but the FDA may accept results from Phase 2 studies if the study design provides a well-controlled and reliable assessment of clinical benefit, particularly in situations where there is an unmet medical need and the results are sufficiently robust. In such cases, FDA may require post-market studies for safety and efficacy to be conducted for the drug candidate. The | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The FDA, the IRB or the clinical study sponsor may suspend or terminate a clinical study at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Additionally, some clinical studies are overseen by an independent group of | clinical study sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study. We may also suspend or terminate a clinical study based on evolving business objectives and/or competitive climate. Submission of an NDA or BLA to the FDA Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational new drug product information is submitted to the FDA in the form of an NDA or BLA requesting approval to market the product for one or more indications. Under federal law, the submission of most NDAs and BLAs is subject to a substantial application user fee. Applications for orphan drug products are exempted from the NDA and BLA application user fees. An NDA or BLA must include all relevant data available from pertinent preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product's chemistry, manufacturing, controls and proposed labeling, among other things. Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational product to the satisfaction of the FDA. Once an NDA or BLA has been submitted, the FDA's goal is to review the application within ten months after it accepts the application for filing, or, if the application relates to an unmet medical need in a serious or life-threatening indication, six months after the FDA accepts the application for filing. The review process is often significantly extended by FDA requests for additional information or clarification. Before approving an NDA or BLA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. The FDA is required to refer an application for an investigational drug or biologic to an advisory committee or explain why such referral was not made. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the investigational product application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions and typically follows such recommendations. The FDA's Decision on an NDA or BLA After the FDA evaluates the NDA or BLA and conducts inspections of manufacturing facilities, it may issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug or biologic with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete, and the application is not ready for approval. A Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical study(ies), and/or other significant, expensive and time-consuming requirements related to clinical studies, preclinical studies or manufacturing. Even if such additional information is submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for approval. The FDA could also approve the NDA or BLA with a REMS to mitigate risks, which could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications or a commitment to conduct one or more post-market studies or clinical studies. Such post-market testing may include Phase 4 clinical studies and surveillance to further assess and monitor the product's safety and effectiveness after commercialization. The FDA may have the authority to withdraw its approval if post-market testing fails to verify the approved drug's clinical benefit, if the applicant does not perform the required testing with due diligence, or if the any other evidence demonstrates the approved drug is not safe or effective, among other reasons. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA's policies may change, which could delay or prevent regulatory approval of our products under development. Expedited Review and Accelerated Approval Programs The FDA has various programs, including fast track designation, breakthrough therapy designation, accelerated approval, regenerative medicine advanced therapy and priority review, that are intended to expedite the development and approval of new drugs and biologics that address unmet medical needs in the treatment of serious or life-threatening diseases and conditions. To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need. The FDA may review sections of the NDA for a fast-track product on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA. The FDA may give a priority review designation to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists. A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under current. These six and ten-month review periods are measured from the "filing" date rather than the receipt date for NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of submission. Most products that are eligible for fast-track designation are also likely to be considered appropriate to receive a priority review. In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be approved on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug may be subject to accelerated withdrawal procedures. Moreover, under the provisions of the FDA Safety and Innovation Act passed in July 2012, a sponsor can request designation of a drug candidate as a "breakthrough therapy." A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drugs designated as breakthrough therapies are also eligible for the other expedited review and approval programs, including accelerated approval, priority review, regenerative medicine advanced therapy, and fast-track designation. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy. In addition, the 21st Century Cures Act in 2016 made the Regenerative Medicine Advanced Therapy, or RMAT, designation available for investigational drugs that are intended to treat, modify, reverse, or cure a serious condition, with preliminary clinical evidence indicating that the drug has the potential for addressing unmet medical needs for such condition. The RMAT designation is available for cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products that use such therapies or products. The advantages of RMAT designation include those of breakthrough and fast track designations, such as early interactions with FDA and rolling review of applications, and the drug candidate with the RMAT designation may be eligible for accelerated approval. Requests for RMAT designations should be made with the IND application (if preliminary clinical evidence is available), but no later than the end-of-phase-2 meeting. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Post-Approval Requirements Drugs and biologics marketed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing, annual user fee requirements. Manufacturers are subject to periodic unannounced inspections by the FDA and state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. Discovery of previously unknown problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved NDA or BLA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA's policies may change, which could delay or prevent regulatory approval of our products under development. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things. ● product; ● ● fines, warning letters or holds on post-approval clinical studies; ● refusal of the FDA to approve pending NDAs or BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product licenses or approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties. The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may Orphan Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested before submitting a BLA or NDA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product marketing exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same use or indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA or NDA application user fee. A designated orphan drug many not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if the second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Biosimilars and Exclusivity The Affordable Care Act, signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. To date, only a handful of biosimilars have been licensed under the Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity and potency, can be shown through analytical studies, human PK and PD studies, clinical immunogenicity assessments, animal studies and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. However, complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant's own preclinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed "interchangeable" by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued "Written Request" for such a study. The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, recent government proposals have sought to reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate impact, implementation, and impact of the BPCIA is subject to significant uncertainty. Hatch-Waxman Amendments and Exclusivity Section 505 of the FDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug. A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy. A 505(b)(2) NDA is an application that contains full reports of investigations of safety and efficacy but where at least some of the information required for approval comes from investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. This regulatory pathway enables the applicant to rely, in part, on the FDA's prior findings of safety and efficacy for an existing product, or published literature, in support of its application. Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an ANDA. An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product. ANDAs are termed "abbreviated" because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and efficacy. Instead, generic applicants must scientifically demonstrate that their product is bioequivalent to, or performs in the same manner as, the innovator drug through in vitro, in vivo or other testing. The generic version must deliver the same amount of active ingredients into a subject's bloodstream in the same amount of time as the innovator drug and can often be substituted by pharmacists under prescriptions written for the reference listed drug. In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant's drug or a method of using the drug. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential competitors in support of approval of an ANDA or 505(b)(2) NDA. Upon submission of an ANDA or a 505(b)(2) NDA, an applicant must certify to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. Generally, the ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through the last type of certification, also known as a paragraph IV certification. If the applicant does not challenge the listed patents, or indicates that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired. If the ANDA or 505(b)(2) NDA applicant has provided a Paragraph IV certification to the FDA, the applicant must send notice of the Paragraph IV certification to the NDA and patent holders once the application has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the paragraph IV certification. If the paragraph IV certification is challenged by an NDA holder or the patent owner(s) asserts a patent challenge to the paragraph IV certification, the FDA may not approve that application until the earlier of 30 months from the receipt of the notice of the paragraph IV certification, the expiration of the patent, when the infringement case concerning each such patent was favorably decided in the applicant's favor or settled, or such shorter or longer period as may be ordered by a court. This prohibition is generally referred to as the 30-month stay. In instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owner(s) regularly take action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve. The FDA also cannot approve an ANDA or 505(b)(2) application until all applicable non-patent exclusivities listed in the Orange Book for the branded reference drug have expired. For example, a pharmaceutical manufacturer may obtain five years of non-patent exclusivity upon NDA approval of a new chemical entity, or NCE, which is a drug containing an active moiety that has not been approved by FDA in any other NDA. An "active moiety" is defined as the molecule responsible for the drug substance's physiological or pharmacologic action. During that five-year exclusivity period, the FDA cannot accept for filing (and therefore cannot approve) any ANDA seeking approval of a generic version of that drug or any 505(b)(2) NDA that relies on the FDA's approval of the drug, provided that that the FDA may accept an ANDA four years into the NCE exclusivity period if the ANDA applicant also files a Paragraph IV certification. A drug, including one approved under Section 505(b)(2), may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant. Should this occur, the FDA would be precluded from approving any ANDA or 505(b)(2) application for the protected modification until after that three-year exclusivity period has run. However, unlike NCE exclusivity, the FDA can accept an application and begin the review process during the exclusivity period. Other Healthcare Laws and Compliance Requirements Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security and physician sunshine laws and regulations. If their operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to penalties, including, without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of operations, exclusion from participation in federal and state healthcare programs and individual imprisonment. Coverage and Reimbursement Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state and foreign government healthcare programs, commercial insurance and managed healthcare organizations and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. These third-party payors are increasingly reducing reimbursements for medical products, drugs and services. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product. Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales. Even after FDA approves a product, failure to have the product covered by third-party payors may have material adverse effect on sales. Federal and state governments continue to promulgate new policies and regulations; such policies and regulations may have material adverse effect on sales. These laws and regulations may restrict, prohibit, or preventing us from implementing a wide range of pricing, discounting, marketing, promotion, sales commission, incentive programs, and other business activities. No uniform policy of coverage and reimbursement among third-party payors exists in the United States. Such payors often rely upon Medicare coverage policy establishing their coverage and reimbursement policies. However, each payor makes independent and separate decisions regarding the extent of coverage and amount of reimbursement to be provided. Healthcare Reform In March 2010, former President Obama signed the Affordable Care Act, which substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical industry. The Affordable Care Act contains a number of provisions, including those governing enrollments in federal healthcare programs, reimbursement adjustments and fraud and abuse changes. Additionally, the Affordable Care Act increases the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1%; requires collection of rebates for drugs paid by Medicaid managed care organizations; requires manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D; and imposes a non-deductible annual fee on pharmaceutical manufacturers or importers who sell "branded prescription drugs" to specified federal government programs. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, and we expect there will be additional challenges and amendments to the Affordable Care Act in the future. Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year and reduced payments to several types of Medicare providers. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, proposing to encourage importation from other countries and bulk purchasing. Foreign Corrupt Practices Act Our business activities may be subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. The FCPA generally prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action, or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation under the FCPA. There is no certainty that all of our employees, agents, suppliers, manufacturers, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, the closing down of facilities, including those of our suppliers and manufacturers, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries as well as difficulties in manufacturing or continuing to develop our products, and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results, and financial condition. European Union Drug Development In the European Union, our drug candidates may also be subject to extensive regulatory requirements. As in the United States, medicinal products can only be marketed if a marketing authorization from the competent regulatory agencies has been obtained. Similar to the United States, the various phases of preclinical and clinical research in the European Union are subject to significant regulatory controls. Clinical trials of medicinal products in the European Union must be conducted in accordance with European Union, national regulations and international standards for good clinical practice, or GCP. Clinical trials are currently governed by EU Clinical Trials Directive 2001/20/EC that set out common rules for the control and authorization of clinical trials in the European Union. To improve the current system, Regulation (EU) No 536/2014 on clinical trials on medicinal products for human use was adopted in 2014. The Regulation aims at harmonizing and streamlining the clinical trials authorization process, simplifying adverse event reporting procedures, improving the supervision of clinical trials, and increasing their transparency, notably via a clinical trial information system set up by the EMA. The new Regulation expressly provides that it will not be applied before six months after the publication of a notice delivered by the European Commission on the European Union clinical trial portal and database. As such notice requires a successful (partial) audit of the database and as that database is still under development, there is no scheduled application date yet. Pursuant to the transitory provisions of the new regulation, the Clinical Trials Directive 2001/20/EC will still apply for three years after the implementation of the European Union clinical trial portal and database. Thus, the sponsor has the possibility to choose between the requirements of the directive and the regulation for a period of three years from the entry into force of the regulation. European Union Drug Review and Approval In the EEA (which is comprised of the 28 Member States of the European Union plus Norway, Iceland and Liechtenstein), medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. MAs may be granted either centrally (Community MA) or nationally (National MA). The Community MA is issued centrally by the European Commission through the Centralized Procedure, based on the opinion of the CHMP of the EMA and is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products such as orphan medicinal products and medicinal products containing a new active substance indicated for the treatment of neurodegenerative disorders. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the European Union. National MAs are issued nationally by the competent authorities of the Member States of the EEA and only cover their respective territory. National MAs are available for products not falling within the mandatory scope of the Centralized Procedure. We do not foresee that any of our current drug candidates will be suitable for a National MA as they fall within the mandatory criteria for the Centralized Procedure. Therefore, our drug candidates will be approved through Community MAs. Under the above-described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy. The paediatric use marketing authorisation, or PUMA, is a dedicated marketing authorization for medicinal products indicated exclusively for use in the pediatric population, with, if necessary, an age-appropriate formulation. Pursuant to Regulation (EC) No. 1901/2006 (The “Paediatric Regulation”), all PUMA applications for marketing authorization for new medicines must include to be valid, in addition to the particulars and documents referred to in Directive 2001/83/EC, the results of all studies performed and details of all information collected in compliance with a pediatric investigation plan agreed between regulatory authorities and the applicant, unless the medicine is exempt because of a deferral or waiver of the EMA. Before the EMA is able to begin its assessment of a Community MA application, it will validate that the applicant has complied with the agreed pediatric investigation plan. The applicant and the EMA may, where such a step is adequately justified, agree to modify a pediatric investigation plan to assist validation. Modifications are not always possible; may take longer to agree than the period of validation permits; and may still require the applicant to withdraw its marketing authorization application and to conduct additional non-clinical and clinical studies. Products that are granted a MA on the basis of the pediatric clinical trials conducted in accordance with the Pediatric Investigation Plan, or PIP, are eligible for a six-month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two-year extension of the orphan market exclusivity. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted. Orphan Drugs In the European Union, Regulation (EC) No 141/2000 of the European Parliament and of the Council of December 16, 1999 on orphan medicinal products, as amended, states that a drug shall be designated as an orphan drug if its sponsor can establish that the three following cumulative conditions are met: ● the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; ● the prevalence of the conditions is not more than five in ten thousand persons in the European Union when the application is made, or that it is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the European Union and that without incentives it is unlikely that the marketing of the drug in the European Union would generate sufficient return to justify the necessary investment; and ● that there is no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the European Union or, if such method exists, that the drug will be of significant benefit to those affected by that condition. Pursuant to Regulation (EC) No. 847/2000 of April 27, 2000 laying down the provisions for implementation of the criteria for designation of a medicinal product as an orphan medicinal product and definitions of the concepts "similar medicinal product" and "clinical superiority", an application for the designation of a drug as an orphan drug must be submitted at any stage of development of the drug before filing of a MA application. The European Union offers incentives to encourage the development of designated orphan medicines (protocol assistance, fee reductions, etc.) and provides opportunities for market exclusivity. Pursuant to abovementioned Regulation (EC) No. 141/2000, products receiving orphan designation in the European Union can obtain market exclusivity for a certain number of years in the European Union following the marketing approval. If a Community MA in respect of an orphan drug is granted, regulatory authorities will not, for a period of usually ten years, accept another application for a MA, or grant a MA or accept an application to extend an existing MA, for the same therapeutic indication, in respect of a similar drug. This period may however be reduced to six years if, at the end of the fifth year, it is established, in respect of the drug concerned, that the above-mentioned criteria for orphan drug designation are no longer met, in other words, when it is shown on the basis of available evidence that the product is sufficiently profitable not to justify maintenance of market exclusivity. Pursuant to Regulation No. 1901/2006, for orphan medicinal products, instead of an extension of the supplementary protection certificate, the ten-year period of orphan market exclusivity should be extended to 12 years if the requirement for data on use in the pediatric population is fully met (i.e. when the request contains the results of all studies carried out under the approved PIP and when the declaration attesting the conformity of the request to this PIP is included in the MA). Notwithstanding the foregoing, a MA may be granted, for the same therapeutic indication, to a similar drug if: ● the holder of the MA for the original orphan drug has given its consent to the second applicant; ● the holder of the MA for the original orphan drug is unable to supply sufficient quantities of the drug; or ● the second applicant can establish in the application that the second drug, although similar to the orphan drug already authorized, is safer, more effective or otherwise clinically superior. The abovementioned Regulation (EC) No. 141/2000 provides for other incentives regarding orphan medicinal products. Post-Approval Controls The holder of a MA must comply with EU requirements applicable to manufacturing, marketing, promotion and sale of medicinal products. In particular, the holder of the MA must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, or QPPV, who is responsible for oversight of that system and who will reside and operate in the EU. Key obligations include safety expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports, or PSURs. All new MAs must include a risk management plan, or RMP, to submit to the EMA, describing the risk management system that we will put in place and documenting measures to prevent or minimize the risks associated with the product. The regulatory authorities may also impose specific obligations as a condition of the MA. Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-authorization safety studies. RMPs and PSURs are routinely available to third parties requesting access, subject to limited redactions. All advertising and promotional activities for the product must be consistent with the approved summary of product characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription medicines is also prohibited in the European Union. Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each EU Member State and can differ from one country to another. Reimbursement The European Union provides options for its Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A Member State may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. For example, in France, effective market access will be supported by agreements with hospitals and products may be reimbursed by the Social Security Fund. The price of medicines covered by national health insurance is negotiated with the Economic Committee for Health Products, or CEPS. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our drug candidates. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower. Other European Regulatory Matters French Regulatory Framework for Clinical Development In France, Directive No. 2001/20/EC has been implemented in French national law, establishing a system of prior authorization and requiring a prior favorable opinion from an ethics committee. Parties to a clinical trial agreement, or CTA, must use a CTA template (“unique agreement” or convention unique) to organize the conduct of interventional clinical trials with commercial purpose, as well as specific template exhibits to this agreement. Once concluded, the CTA is communicated for information by the sponsor to the French national board of physicians (Ordre national des médecins) without delay. The processing of personal data collected during clinical trials has to comply with the Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 and Law No 2018-493 of June 20, 2018 on the protection of personal data, implementing the Regulation (EU) 2016/679 requirements. Regarding automatic processing operations for the purpose of research or clinical studies, formalities have to be completed before the French data protection authority, the Commission Nationale de l'Informatique et des Libertés, or CNIL, so as to obtain the authorization to process personal data. However, there are simplified standards. Law No. 2011-2012 of December 29, 2011, or Loi Bertrand, aimed at strengthening the health safety of medicinal and health products, as amended (and its implementing decrees), introduced into French law provisions regarding transparency of fees received by some healthcare professionals from health product industries, i.e. companies manufacturing or marketing health products (Article L.1453-1 of the French Public Health Code). These provisions have been recently extended and redefined by Decree No. 2016-1939 of December 28, 2016, which clarified French "Sunshine" regulations. The decree notably provides that companies manufacturing or marketing health care products (medicinal products, medical devices, etc.) in France shall publicly disclose (mainly on a specific public website available at: https://www.entreprises-transparence.sante.gouv.fr) the advantages and fees paid to healthcare professionals amounting to €10 or above, as well as the agreements concluded with the latter, along with detailed information about each agreement (the precise subject matter of the agreement, the date of signature of the agreement, its end date, the total amount paid to the healthcare professional, etc.). Another declaration must also be filed to the competent healthcare professional body. Law No. 2011-2012 also reinforced the French anti-gift rules and Order No. 2017-49 of January 19, 2017 amended the law and expanded the scope of the general prohibition of payments from pharmaceutical and device manufacturers to healthcare professionals to broadly cover any company manufacturing or marketing health products, regardless of whether or not payment for the products is reimbursed under the French social security system (new Articles L. 1453-3 et seq. of the French Public Health Code). It also changed the procedure related to the prior submission to the national or departmental board of the relevant healthcare professional body. Moreover, the penalties incurred for non-compliance with the requirements of the Anti-Gift Law will be doubled to a fine of up to €750,000. The changes of the anti-gift rules will only enter into force after the publication of implementing measures. As of January 11, 2021, we had ten full-time employees, of whom four were employed by AzurRx SAS and located in France and six were employed by us and located in our offices in the United States. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following section sets forth certain information regarding our directors. There are no family relationships between any of the directors and our Named Executive Officers.
Edward J. Borkowskiwas appointed to the Board in May 2015, and currently serves as our Chair. Mr. Borkowski is a healthcare executive who currently serves as Executive Vice President for Therapeutics MD. He served as Executive Vice President of MiMedx Group, Inc. (Nasdaq: MDGX) from April 2018 until December 2019. Mr. Borkowski also served as a director for Co-Diagnostics, Inc. (Nasdaq: CODX), from May 2017 until June 2019. Previously, he served as the Chief Financial Officer of Aceto Corporation (Nasdaq: ACET) from February 2018 to April 2018, and has held several executive positions with Concordia International, an international specialty pharmaceutical company, between May 2015 to February 2018. Mr. Borkowski has also served as Chief Financial Officer of Amerigen Pharmaceuticals, a generic pharmaceutical company with a focus on oral, controlled release products and as the Chief Financial Officer and Executive Vice President of Mylan N.V. In addition, Mr. Borkowski previously held the position of Chief Financial Officer with Convatec, a global medical device company focused on wound care and ostomy, and Carefusion, a global medical device company for which he helped lead its spin-out from Cardinal Health into an independent public company. Mr. Borkowski has also served in senior financial positions at Pharmacia and American Home Products (Wyeth). He started his career with Arthur Andersen & Co. after receiving his MBA in accounting from Rutgers University subsequent to having earned his degree in Economics and Political Science from Allegheny College. Mr. Borkowski is currently a Trustee and a member of the Executive Committee of Allegheny College. Mr. Borkowski’s extensive healthcare and financial expertise, together with his public company experience provides the Board and management with valuable insight in the growth of our business plan. Charles J. Casamentowas appointed to the Board in March 2017. Since 2007, Mr. Casamento has been executive director and principal of The Sage Group, a health care advisory group. Prior to that, Mr. Casamento was president and Chief Executive Officer of Osteologix, a startup company which he oversaw going public, from October 2004 until April 2007. Mr. Casamento was the founder of Questcor Pharmaceuticals where he was President, Chief Executive Officer and Chair from 1999 through 2004. During his time at Questcor, the company acquired Acthar, a product with sales that would eventually exceed $1.0 billion. Mr. Casamento also served as President, Chief Executive Officer and Chair of RiboGene Inc. until 1999 when RiboGene was merged another company to form Questcor. He was also the Co-Founder, President and Chief Executive Officer of Indevus (formerly Interneuron Pharmaceuticals) and has held senior management positions at Genzyme Corporation, where he was Senior Vice President, American Hospital Supply, where he was Vice President of Business Development for the Critical Care division, Johnson & Johnson, Hoffmann-LaRoche and Sandoz. He currently serves as Chairman of the Board of Directors of Relmada Therapeutics (OTCQB: RLMD) and also serves on the Board of Directors of Eton Pharmaceuticals (Nasdaq: ETON), and was previously a Director and Vice Chair of the Catholic Medical Missions Board, a large not for profit international organization. Mr. Casamento holds a bachelor's degree in Pharmacy from Fordham University and an MBA from Iona College. Mr. Casamento’s expertise and knowledge of the financial community combined with his experience in the healthcare sector makes him a valued member of the Board Dr. Alastair Riddell was appointed to the Board in September 2015. Since June 2016, Dr. Riddell has served as Chair of Nemesis Biosciences Ltd and Chair of Feedback plc (LON: FDBK). He has also served as Chair of the South West Academic Health Science network in the UK since January 2016. Since his appointment in December 2015, Dr. Riddell has served as Non-Executive Director of Cristal Therapeutics in The Netherlands. From September 2012 to February 2016, he served as Chair of Definigen Ltd., and from November 2013 to September 2015 as Chair of Silence Therapeutics Ltd., and from October 2009 to November 2012 as Chair of Procure Therapeutics. Between 2007 to 2009, Dr. Riddell served as the Chief Executive Officer of Stem Cell Sciences plc. and between 2005 to 2007, served at Paradigm Therapeutics Ltd. as the Chief Executive Officer. Between 1998 to 2005, Dr. Riddell also served as the Chief Executive Officer of Pharmagene plc. Dr. Riddell began his career as a doctor in general practice in a variety of hospital specialties and holds a Master of Science and a Bachelor of Medicine and Surgery degrees. He was recently awarded a Doctorate of Science, Honoris Causa by Aston University. Dr. Riddell’s medical background coupled with his expertise in the life sciences industry, directing all phases of clinical trials, before moving to sales, marketing and general management, makes him a well-qualified member of the Board. Dr. Vern L. Schramm was appointed to the Board in October 2017. Dr. Schramm has served as Professor of the Albert Einstein College of Medicine since 1987 and Chair of the Department of Biochemistry from 1987 to 2015, and was awarded the Ruth Merns Endowed Chair in Biochemistry. His fields of interest include enzymatic transition state analysis, transition state inhibitor design, biological targets for inhibitor design, and mechanisms of N-ribosyltransferases. Dr. Schramm was elected to the National Academy of Sciences in 2007, and served as the Associate Editor for the Journal of the American Chemical Society between 2003 to 2012. A frequent lecturer and presenter in topics related to chemical biology, Dr. Schramm has been a consultant and advisor to Pico Pharmaceuticals, Metabolon Inc., Sirtris Pharmaceuticals, and BioCryst Pharmaceuticals. Dr. Schramm obtained his BS in Bacteriology with an emphasis in chemistry from South Dakota State College and holds a Master’s Degree in Nutrition with an emphasis in biochemistry from Harvard University, a Ph.D. in Mechanism of Enzyme Action from the Australian National University and completed his postdoctoral training at NASA Ames Research Center, Biological Sciences, with an NSF-NRC fellowship. Dr. Schramm’s substantial experience in biochemistry and expertise in the chemistry related to non-systemic biologics makes him a respected member of the Board and an asset to us specifically in the development of our product candidates. James Sapirstein was appointed to the Board on October 8, 2019 and as our President and Chief Executive Officer effective that same day. Prior to joining us, Mr. Sapirstein served as Chief Executive Officer and as a director of ContraVir Pharmaceuticals, Inc. (now known as Hepion Pharmaceuticals, Inc.) from March 2014 to October 2018. Previously, Mr. Sapirstein was the Chief Executive Officer of Alliqua Therapeutics from October 2012 to February 2014. He founded and served as Chief Executive Officer of Tobira Therapeutics from October 2006 to April 2011 and served as Executive Vice President, Metabolic and Endocrinology for Serono Laboratories from June 2002 to May 2005. Mr. Sapirstein’s earlier career included a number of senior level positions in the area of marketing and commercialization, including as Global Marketing Lead for Viread (tenofovir) while at Gilead Sciences and as Director of International Marketing of the Infectious Disease Division at Bristol Myers Squibb. Mr. Sapirstein is currently the Chair Emeritus of BioNJ, the New Jersey affiliate of the Biotechnology Innovation Organization, and also serves on the Emerging Companies and Health Section Boards of the Biotechnology Innovation Organization. Mr. Sapirstein received his bachelor’s degree in pharmacy from Rutgers University and holds an MBA degree in management from Fairleigh Dickinson University. Mr. Sapirstein’s nearly 36 years of pharmaceutical industry experience which spans areas such as drug development and commercialization, including participation in 23 product launches, six of which were global launches led by him makes him a valuable asset to the Board and in his oversight and execution of our business plan. Gregory Oakeswas appointed to the Board on April 13, 2020. Mr. Oakes brings over 25 years of pharmaceutical industry and leadership experience and currently serves asPresident, North America, Relypsa, Inc, Executive Vice President, Vifor Pharma. Mr. Oakes previously served asCorporate Vice President, Global Integration Lead for Otezla® (apremilast) at Amgen, Inc. where he was responsible for the integration and continued success of the brand with $2 billion in assets. Prior to Amgen from 2017 - 2019, Mr. Oakes served as Corporate Vice President and U.S. General Manager at Celgene Corp., a global biopharmaceutical company which develops and commercializes medicines for cancer and inflammatory disorders. Mr. Oakes also served as the Global Commercial Integration Lead at Celgene where he helped steer the $74 billion acquisition by Bristol-Myers Squibb and the $13.4 billion divestiture of Otezla®. From 2010 to 2017, Mr. Oakes held several positions at Novartis AG, the most recent as Head of Sandoz Biopharmaceuticals, North America. He began his career at Schering-Plough (Merck) where he held executive roles in both the U.S. and Europe. Mr. Oakes holds a bachelor's degree in Marketing and Business Administration from Edinboro University and a M.B.A. from Clemson University. He currently sits on the Board of BioNJ and previously served on various Executive Committees at Celgene, Novartis, and Schering- Plough (Merck). Mr. Oakes’ background of over 25 years of pharmaceutical industry and leadership experience combined with broad experience in pharmaceutical commercialization and acquisitions makes him a qualified member of the Board. Non-Executive Director Compensation On October 1, 2020, our Board adopted a Non-Executive Director Compensation Policy under which each of our non-executive directors is entitled to receive the following cash compensation for their service on the Board (paid quarterly): (i) an annual retainer of $35,000; (ii) the chairman of the Board is entitled to receive an annual retainer in the amount of $20,000, (iii) the chair of the Audit Committee is entitled to receive an annual retainer in the amount of $10,000, (iv) each non-chairperson member of the Audit Committee is entitled to receive an annual retainer in the amount of $5,000, (v) the chair of the Compensation Committee is entitled to receive an annual retainer in the amount of $7,500, (vi) each non-chairperson member of the Compensation Committee is entitled to receive an annual retainer in the amount of $3,500, (vii) the chair of the Corporate Governance and Nominating Committee is entitled to receive an annual retainer in the amount of $5,000, and (viii) each non-chairperson member of the Corporate Governance and Nominating Committee is entitled to receive an annual retainer in the amount of $2,500. Additionally, under this policy, each of our non-executive directors is entitled to receive an annual grant of 80,000 stock options for their service on the Board which will vest in equal quarterly installments. The following table provides information regarding compensation paid to non-employee directors for the year ended December 31, 2020. Mr. Sapirstein did not receive compensation for his service on the Board as employee director for the year ended December 31, 2020. Information regarding executive compensation paid to Messrs. Sapirstein during 2020 is reflected in the Summary Compensation table under “Executive Compensation.”
(1) Mr. Oakes was appointed to the board effective April 13, 2020. (2) Represents amounts of accrued and unpaid cash compensation for board services through December 31, 2020. (3) Represents the aggregate grant date fair value of 80,000 stock options issued to each of Messrs. Borkowski, Casamento, Riddell and Schramm on April 6, 2020, and 60,000 stock options issued to Mr. Oakes on April 13, 2020, our non-employee directors, calculated in accordance with ASC Topic 718. Compensation Committee Interlocks and Insider Participation None of our executive officers currently serves, or has served during the last three years, on the Compensation Committee of any other entity that has one or more officers serving as a member of our Board. Board Leadership Structure Currently, Mr. James Sapirstein serves as our President and Chief Executive Officer and Mr. Edward J. Borkowski serves as Chair of our Board. Our Board of Directors has determined that it is in the best interests of the Board and us to maintain separate the roles for the Chief Executive Officer and Chair of the Board. The Board believes this structure increases the Board’s independence from management and, in turn, leads to better monitoring and oversight of management. Although the Board believes we are currently best served by separating the role of Board Chairman and Chief Executive Officer, the Board of Directors will review and consider the continued appropriateness of this structure on an annual basis. Director Independence The Board has determined that all of its members, other than Mr. Sapirstein, our President and Chief Executive Officer are “independent” within the meaning of Nasdaq Listing Rule 5605(a)(2) under the rules of the Nasdaq Stock Market (“Nasdaq”), and the Securities and Exchange Commission (“SEC”) rules regarding independence. Director Nomination Process The Corporate Governance and Nominating Committee identifies director nominees by first considering those current members of the Board who are willing to continue service. Current members of the Board with skills and experience that are relevant to our business and are willing to continue their service as a director are considered for re-election, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. Nominees for director are selected by a majority of the members of the Board. Although we do not have a formal diversity policy, in considering the suitability of director nominees, the Corporate Governance and Nominating Committee considers such factors as it deems appropriate to develop a Board and its committees that are diverse in nature and comprised of experienced and seasoned advisors. Factors considered by the Corporate Governance and Nominating Committee include sound judgment, knowledge, skill, diversity, integrity, experience with businesses and other organizations of comparable size, including experience in the biopharma industry, clinical studies, U.S. Food and Drug Administration (“FDA”) compliance, intellectual property, business, finance, administration or public service, the relevance of a candidate’s experience to our needs and experience of other Board members, experience with accounting rules and practices, the desire to balance the considerable benefit of continuity with the periodic injection of the fresh perspective provided by new members, and the extent to which a director candidate would be a desirable addition to the Board and its committees. The Board may consider suggestions for persons to be nominated for director that are submitted by stockholders. The Corporate Governance and Nominating Committee will evaluate stockholder suggestions for director nominees in the same manner as it evaluates suggestions for director nominees made by management, then-current directors or other appropriate sources. The Role of the Board in Risk Oversight Our Board oversees a company-wide approach to risk management, determines our appropriate risk level in general, assesses the specific risks faced by us and reviews steps taken by management to manage those risks. Although our Board has ultimate oversight responsibility for the risk management process, specific areas of risk are overseen by designation of such duties and responsibilities to certain committees of the Board. Specifically, the Board has designated certain fiduciary duties to its Compensation Committee, which is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements, and the incentives created by the compensation awards it administers. The Board has also designated specific fiduciary duties to its Audit Committee, which is responsible for overseeing the management of enterprise risks and financial risks, as well as potential conflicts of interests. The Board is responsible for overseeing the management of risks associated with the independence of the Board. Code of Business Conduct and Ethics The Board adopted a code of business conduct and ethics (the “Code”) that applies to our directors, officers and employees. A copy of this Code is available on our website at www.azurrx.com/investors. We intend to disclose on our website any amendments to and waivers of the Code that apply to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions. Stockholder Communications If you wish to communicate with the Board, you may send your communication in writing to AzurRx BioPharma, Inc., Attention: Chief Financial Officer – 1615 South Congress Avenue, Suite 103, Delray Beach, Florida 33445. You must include your name and address in the written communication and indicate whether you are a stockholder of the Company. The Chief Financial Officer will review any communication received from a stockholder, and all material and appropriate communications from stockholders will be forwarded to the appropriate director or directors or committee of the Board based on the subject matter. Meetings of the Board Each of our directors who served during the year ended December 31, 2020 attended or participated in no less than 75% or more of the aggregate of (i) the total number of meetings of the Board; and (ii) the total number of meetings held by all committees of the Board on which such director served as a member during such year. Although directors are not required to attend our annual meeting of stockholders, they are encouraged to attend. The following table represents the composition of each committee of the Board and meetings held as well as actions taken by unanimous written consent (“UWC”) in lieu of holding a meeting, during the fiscal year ended December 31, 2020:
Board Committees The standing committees of the Board consist of the Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee. Our Board has adopted written charters for each of these committees, copies of which are available on our website at www.azurrx.com/investors. Our Board may establish other committees as it deems necessary or appropriate from time to time. Audit Committee The duties and responsibilities of the Audit Committee include but are not limited to: ● appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm; ● discussing with our independent registered public accounting firm the independence of its members from its management; ● reviewing with our independent registered public accounting firm the scope and results of their audit; ● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; ● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that are filed with the SEC; ● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements; ● coordinating oversight of the Code and our disclosure controls and procedures on behalf of the Board; ● establishing procedures for the confidential and/or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and ● reviewing and approving related-person transactions. The rules of Nasdaq require our Audit Committee to consist of at least three directors, all of whom must be deemed to be independent directors under Nasdaq rules. The Board has affirmatively determined that Messrs. Borkowski and Casamento, and Dr. Riddell, each meet the definition of “independent director” for purposes of serving on an Audit Committee under Nasdaq rules. Additionally, the Board has determined that Messrs. Borkowski and Casamento each qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. Compensation Committee The duties and responsibilities of the Compensation Committee include but are not limited to: ● reviewing key employee compensation goals, policies, plans and programs; ● reviewing and approving the compensation of our directors and executive officers; ● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and ● appointing and overseeing any compensation consultants or advisors to the Company. The rules of Nasdaq require our Compensation Committee to consist entirely of independent directors. The Board has affirmatively determined that Mr. Borkowski and Dr. Riddell meet the definition of “independent director” for purposes of serving on the Compensation Committee under Nasdaq rules. Corporate Governance and Nominating Committee The duties and responsibilities of the Corporate Governance and Nominating Committee include but are not limited to: ● assisting the Board in identifying qualified individuals to become members of the Board; ● determining the composition of the Board and monitoring the activities of the Board to assess overall effectiveness; and ● developing and recommending to our Board corporate governance guidelines applicable to the Company and advising our Board on corporate governance matters. The following table sets forth information regarding our current executive officers as appointed by the Board, each to serve in such position until their respective successors have been duly appointed and qualified or until their earlier death, resignation or removal from office.
Our executive officers are appointed by and serve at the discretion of the Board, subject to the terms of any employment agreements they may have with us. The following is a brief description of the qualifications and business experience of each of our current executive officers. James Sapirstein. Please see Mr. Sapirstein’s biography under the “Directors” section of this proxy statement. Daniel Schneiderman was appointed as our Chief Financial Officer on January 2, 2020. Prior to joining us, from November 2018 through December 2019 Mr. Schneiderman served as Chief Financial Officer of Biophytis SA, (ENXTPA: ALBPS) and its U.S. subsidiary, Biophytis, Inc., a European-based, clinical-stage biotechnology company focused on the development of drug candidates for age-related diseases, with a primary focus on neuromuscular diseases. From February 2012 through August 2018, Mr. Schneiderman served as Vice President of Finance, Controller and Secretary of MetaStat, Inc. (OTCQB: MTST), a publicly traded biotechnology company with a focus on Rx/Dx precision medicine solutions to treat patients with aggressive (metastatic) cancer. From 2008 through February 2012, Mr. Schneiderman was Vice President of Investment Banking at Burnham Hill Partners LLC, a boutique investment bank providing capital raising, advisory and merchant banking services. From 2004 through 2008, Mr. Schneiderman served in various roles and increasing responsibilities, including as Vice President of Investment Banking at Burnham Hill Partners, a division of Pali Capital, Inc. Previously, Mr. Schneiderman worked at H.C. Wainwright & Co., Inc. in 2004 as an investment banking analyst. Mr. Schneiderman holds a bachelor’s degree in economics from Tulane University. Dr. James E. Pennington was appointed as our Chief Medical Officer in May 2018. Prior to joining us, Dr. Pennington served as Senior Clinical Fellow from 2010 to 2018 and as Executive Vice President and Chief Medical Officer from 2007 to 2010 at Anthera Pharmaceuticals, Inc. (Nasdaq: ANTH). From 2004 to 2007, Dr. Pennington served as Executive Vice President and Chief Medical Officer at CoTherix, Inc., and has held various executive positions at a number of pharmaceutical companies, including InterMune Inc., Shaman Pharmaceuticals and Bayer Corporation. He has served on several editorial boards, and has authored numerous original research publications and reviews. Dr. Pennington is currently a Clinical Professor of Medicine with the University of California San Francisco, where he has taught since 1986. Prior to that, he was a professor at Harvard Medical School. Dr. Pennington received a Bachelor of Arts from the University of Oregon and a Doctor of Medicine from the University of Oregon School of Medicine, and is Board Certified in internal medicine and infectious diseases. Summary Compensation The table set forth below reflects certain information regarding the compensation paid or accrued during the years ended December 31, 2020 and 2019 to our Chief Executive Officer and our executive officers, other than our Chief Executive Officer, who were serving as an executive officer as of December 31, 2020, and whose annual compensation exceeded $100,000 during such year (collectively the “Named Executive Officers”). As previously reported on our Current Report on Form 8-K filed on March 28, 2019, Dr. Dupret retired and resigned from his position as President of AzurRx SAS, a wholly owned French subsidiary of the Company effective July 1, 2019. Due to the resignation of Mr. Spoor as President and Chief Executive Officer effective October 8, 2019, Mr. Sapirstein was appointed as our President and Chief Executive Officer effective that same day. Compensation paid to Dr. Dupret and Mr. Spoor during the year ended December 31, 2019 is reflected in the table below.
Employment Arrangements and Potential Payments upon Termination or Change of Control Sapirstein Employment Agreement. Effective October 8, 2019, we entered into an employment agreement with Mr. Sapirstein to serve as our President and Chief Executive Officer for a term of three years, subject to further renewal upon agreement of the parties. The employment agreement with Mr. Sapirstein provides for a base salary of $450,000 per year. In addition to the base salary, Mr. Sapirstein is eligible to receive (i) a bonus of up to 40% of his base salary on an annual basis, based on certain milestones that are yet to be determined; (ii) 1% of net fees received by us upon entering into license agreements with any third-party with respect to any product current in development or upon the sale of all or substantially all of our assets; (iii) a grant of 200,000 restricted shares of our Common Stock which are subject to vest as follows (a) 100,000 upon the first commercial sale of MS1819 in the United States, and (b) 100,000 upon our total market capitalization exceeding $1.0 billion for 20 consecutive trading days; (iv) a grant of 300,000 10-year stock options to purchase shares of our Common Stock which are subject to vest as follows (a) 50,000 upon us initiating our next Phase 2 clinical trial in the United States for MS1819, (b) 50,000 upon us completing our next or subsequent Phase 2 clinical trial in the United States for MS1819, (c) 100,000 upon us initiating a Phase 2I clinical trial in the United States for MS1819, and (d) 100,000 upon us initiating a Phase I clinical trial in the United States for any product other than MS1819. Mr. Sapirstein is entitled to receive 20 days of paid vacation, participate in full employee health benefits and receive reimbursement for all reasonable expenses incurred in connection with his services to us. In the event that Mr. Sapirstein’s employment is terminated by us for Cause, as defined in his employment agreement, or by Mr. Sapirstein voluntarily, then will not be entitled to receive any payments beyond amounts already earned, and any unvested equity awards will terminate. In the event that Mr. Sapirstein’s employment is terminated as a result of an Involuntary Termination Other than for Cause, as defined in the Agreement, Mr. Sapirstein will be entitled to receive the following compensation: (i) severance in the form of continuation of his salary (at the Base Salary rate in effect at the time Schneiderman Employment Agreement.Effective January 2, 2020, we entered into an employment agreement with Mr. Schneiderman to serve as our Chief Financial Officer for a term of three years, subject to further renewal upon agreement of the parties. The employment agreement with Mr. Schneiderman provides for a base salary of $285,000 per year. In addition to the base salary, Mr. Schneiderman is eligible to receive (a) an annual milestone cash bonus based on certain milestones that will be established by our Board or the Compensation Committee, (b) grants of stock options to purchase such number of shares equal to one and a quarter percent (1.25%) of the issued and outstanding Common Stock on January 2, 2020, or 335,006 shares of Common Stock with an exercise price of $1.03 per share, which shall vest in over a term of three years. Mr. Schneiderman is entitled to receive 20 days of paid vacation, participate in full employee health benefits and receive reimbursement for all reasonable expenses incurred in connection with his service to us. We may terminate Mr. Schneiderman’s employment agreement at any time, with or without Cause, as such term is defined in his employment agreement. Effective July 16, 2020, our Board approved an amended and restated option grant to Mr. Schneiderman, amending and restating the grant previously made on January 2, 2020, to reduce the amount of shares issuable upon exercise of such option to be the maximum number of shares Mr. Schneiderman was eligible to receive under the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) on the original grant date (or 300,000 shares), due to the 2014 Plan provisions relating to Section 162(m) limitations. In the event that Mr. Schneiderman’s employment is terminated by us for Cause, as defined in Mr. Schneiderman’s employment agreement, or by Mr. Schneiderman voluntarily, then he will not be entitled to receive any payments beyond amounts already earned, and any unvested equity awards will terminate. If we terminate his employment agreement without Cause, not in connection with a Change of Control, as such term is defined in Mr. Schneiderman’s employment agreement, he will be entitled to (i) all salary owed through the date of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pennington Employment Agreement. Effective May 28, 2018, we entered into an employment agreement with Mr. Pennington to serve as our Chief Medical Officer. The employment agreement with Dr. Pennington provides for a base annual salary of Spoor Employment Agreement. On January 3, 2016, we entered into an employment agreement with our former President and Chief Executive Officer, Johan Spoor. The employment agreement provided for a term expiring January 2, 2019. Although Mr. Spoor’s employment agreement expired, he remained employed as our President and Chief Executive Officer under the terms of his prior employment agreement through his resignation as President and Chief Executive Officer on October 8, 2019. In addition, Mr. Spoor resigned as a member of the Board on April 29, 2020. The employment agreement with Mr. Spoor provided for a base salary of $425,000 per year. At the sole discretion of the Board or the Compensation Committee of the Board, following each calendar year of employment, Mr. Spoor was eligible to receive an additional cash bonus based on his attainment of certain financial, clinical development, and/or business milestones to be established annually by the Board or the Compensation Committee. Mr. Spoor’s employment agreement was terminable by either party at any time. In the event of termination by us without Cause or by Mr. Spoor for Good Reason not in connection with a Change of Control, as those terms are defined in Mr. Spoor’s employment agreement, he was entitled to twelve months’ severance payable over such period. In the event of termination by us without Cause or by Mr. Spoor for Good Reason in connection with a Change of Control, as those terms are defined in Mr. Spoor’s employment agreement, he was eligible to receive eighteen months’ worth of his base salary in a lump sum as severance. Mr. Spoor was originally entitled to 10-year stock | options to purchase 100,000 shares of Common Stock with an exercise price of $4.48 per share with a grant date fair value of $386,900 were granted and vested. On September 29, 2017, Mr. Spoor was granted 100,000 shares of restricted Common Stock subject to milestone-based vesting, in satisfaction of our obligation to issue an additional 280,000 options to Mr. Spoor, with an estimated grant date fair value of $425,000. During the year ended December 31, 2018, all 100,000 shares of restricted Common Stock vested, but the separate stock options covering 100,000 shares of Common Stock were cancelled as a result of Mr. Spoor’s resignation as our President and Chief Executive Officer. Mr. Spoor resigned from his position as our President and Chief Executive Office effective October 8, 2019. Mr. Spoor received no additional or severance compensation and all unvested stock options and shares of restricted Common Stock granted to Mr. Spoor were cancelled as a result of Mr. Spoor’s resignation. Mr. Spoor has a period of twelve months following his resignation to exercise all vested stock options. On June 29, 2019, we accrued an incentive bonus in the amount of $255,000. Subsequent to Mr. Spoor’s resignation, the Compensation Committee reviewed the accrued bonus and determined that such amount was not owed and we reversed the accrual in the quarter ended December 31, 2019, which determination was challenged by Mr. Spoor. As part of a settlement and general release effective July 9, 2020, Mr. Spoor waived all claims to the incentive bonus in the amount of $255,000 and also waived all claims to an amount of $348,000 due to JIST Consulting, a company controlled by Mr. Spoor. Also, in connection with the settlement and general release, Mr. Spoor received warrants to purchase an aggregate of 150,000 shares of Common Stock with an exercise price of $1.00 per share and an expiration term of five years and we agreed to pay Mr. Spoor’s legal expenses in the amount of $51,200. Mr. Spoor received no additional or severance compensation and all unvested stock options and shares of restricted Common Stock granted to Mr. Spoor were cancelled as a result of Mr. Spoor’s resignation. As of December 31, 2019, there were 241,667 earned but unissued shares of restricted Common Stock due to Mr. Spoor. However, Mr. Spoor forfeited the right to receive these shares on April 29, 2020 in connection with his resignation from the Board. Shenouda Employment Agreement. On September 26, 2017, we entered into an employment agreement with Mr. Shenouda to serve as our Executive Vice-President of Corporate Development and Chief Financial Officer for a term of three years, during which time he received a base salary of $275,000. In addition to the base salary, Mr. Shenouda was eligible to receive an annual milestone cash bonus based on the achievement of certain financial, clinical development, and/or business milestones, which milestones were established annually at the sole discretion of our Board or the Compensation Committee. Mr. Shenouda’s employment agreement provided for the issuance of stock options to purchase 100,000 shares of Common Stock, pursuant to the 2014 Plan, with an exercise price of $4.39 per share and a term of ten years. These stock options vested upon the achievement of certain strategic milestones during the year ended December 31, 2018. Mr. Shenouda’s employment agreement was terminable by us any time, with or without Cause, as such term is defined in the agreement. If we terminated the agreement without Cause, or if the agreement was terminated due to a Change of Control, as such term is defined in the agreement, Mr. Shenouda was entitled to (i) all salary owed through the date of termination; (ii) any unpaid annual milestone bonus; (iii) severance in the form of continuation of his salary for the greater of a period of 12 months following the termination date or the remaining term of his employment agreement; (iv) payment of premiums to cover COBRA for a period of 12 months following the termination date; (v) a prorated annual bonus equal to the target annual milestone bonus, if any, for the year of termination multiplied by the formula set forth in the agreement; and (vi) immediate accelerated vesting of any unvested options or other unvested awards. Mr. Shenouda resigned from his position as our Chief Financial Officer effective November 30, 2019. Mr. Shenouda received no additional or severance compensation and all unvested stock options and shares of restricted Common Stock granted to Mr. Shenouda were cancelled as a result of Mr. Shenouda’s resignation. Mr. Shenouda has a period of twelve months following his resignation to exercise all vested stock options. On June 28, 2019, the Compensation Committee had approved the accrual of an incentive bonus in the amount of $100,000. Subsequent to Mr. Shenouda’s resignation, the Compensation Committee reviewed the accrued bonus and determined that such amount was not owed, and we reversed the accrual in the quarter ended December 31, 2019. As part of a settlement and general release entered into on July 2, 2020, Mr. Shenouda waived all claims to the incentive bonus in the amount of $100,000 and we agreed to pay Mr. Shenouda a settlement sum of $15,000, which includes $10,000 due to Mr. Shenouda reflected in our accounts payable as of June 30, 2020. Outstanding Equity Incentive Awards at Fiscal Year-End The following table sets forth information regarding unexercised options, stock that has not vested and equity incentive awards held by each of the Named Executive Officers outstanding as of December 31, 2020 and 2019:
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2020 regarding equity compensation plans approved by our security holders and equity compensation plans that have not been approved by our security holders:
(1) Excludes 387,000 shares of Common Stock reserved under the 2014 Plan as of December 31, 2020, subject to the issuance of (2) Represents outstanding stock options granted to our current or former employees, directors and consultants pursuant to the 2014 Omnibus Equity Incentive Plan (the “2014 Plan” and 2020 Omnibus Equity Incentive Plan (the “2020 Plan”). Summary of Amended and Restated 2014 Omnibus Equity Incentive Plan The Board and stockholders adopted and approved the 2014 Plan, which took effect on May 12, 2014, and the 2020 Plan, which took effect on September 11, 2020. From the effective date of the 2020 Plan, no new awards have been or will be made under the | Stock Options. The 2014 Plan permitted the grant of “incentive stock options” (“ISOs”), which are intended to meet the requirements for special federal income tax treatment under the Code, and “nonqualified stock options” (“NQSOs”) that do not meet the requirements of Section 422 of the Code. No stock option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime a stock option may be exercised only by the recipient. However, the Compensation Committee may permit the holder of a stock option, SAR or other award to transfer the stock option, right or other award to immediate family members or a family trust for estate planning purposes. The Compensation Committee will determine the extent to which a holder of a stock option may exercise the option following termination of service with us. Restricted Stock Awards and Restricted Stock Unit Awards. A restricted stock award is a grant or sale of Common Stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrestricted Stock Awards. An unrestricted stock award is a grant or sale of shares of Change-in-Control Provisions. In connection with the grant of an award, the Compensation Committee may provide that, in the event of a change in control, such award will become fully vested and immediately exercisable. Potential Limitation on Company Deductions Section 162(m) of the Code generally disallows a tax deduction for compensation in excess of $1 million paid in a taxable year by a publicly held corporation to its chief executive officer and certain other “covered employees.” Effective for taxable years beginning prior to January 1, 2018, an exception to this deduction limit applied to “performance-based compensation” that satisfied certain criteria. Under regulations issued by the Internal Revenue Service under Section 162(m), stock Summary of the 2020 Omnibus Equity Incentive Plan The Board and stockholders have adopted and approved the 2020 Plan, which is a comprehensive incentive compensation plan under which we can grant equity-based and other incentive awards to our officers, employees, directors, consultants and advisers. The purpose of the 2020 Plan is to help us attract, motivate and retain such persons with awards under the Administration. The 2020 Plan is administered by the Compensation Committee of the Board (the “Compensation Committee”), which consists of three members of the Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee may grant stock options, stock appreciation rights (“SARs”), performance stock awards, performance unit awards, dividend equivalent right awards, restricted stock awards, restricted stock unit awards, unrestricted stock awards, incentive bonus awards and other cash-based awards and other stock-based awards to Eligibility. Employees, directors and individual consultants of the Company or an affiliate as well as prospective employees, directors and individual consultants of the Company or an affiliate are eligible to participate in the 2020 Plan. The 2020 Plan allows for grants to employees, directors and individual consultants of the Company or an affiliate who are non-US persons. Currently, we have nine employees (including one executive director), five non-executive directors and approximately ten non-employee consultants. Shares Subject to the 2020 Plan. The maximum aggregate number of shares of Common Stock that may be issued under the 2020 Plan shall be 10,000,000 shares. The 2020 Plan allows for 100,000,000 shares to be issued as “incentive stock options” (“ISOs”). In addition, the 2020 Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our Common Stock available for issuance under the 2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030, in an amount equal to the lesser of (i) ten percent of the total number of shares of Common Stock outstanding on December 31st of the preceding calendar year or (ii) such number of shares determined by the Board. If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2020 Plan. The maximum number of shares of Common Stock that may be subject to awards to outside directors, in the aggregate, during any calendar year is 250,000. The number of shares authorized for issuance under the 2020 Plan and each of the preceding share limitations are subject to customary adjustments for stock splits, stock dividends, recapitalization, reorganization, merger, combination, exchange or similar transactions. Stock Options. The 2020 Plan provides for either ISOs, which are intended to meet the requirements for special federal income tax treatment under the United States of America Internal Revenue Code of 1986, as amended (the “Code”), or “nonqualified stock options” (“NQSOs”) that do not meet the requirements of Section 422 of the Code. Stock options may be granted on such terms and conditions as the Compensation Committee may determine; provided, however, that the per share exercise price under a stock option may not be less than the fair market value of a share of Common Stock on the date of Performance Shares and Dividend Equivalent Right Awards. A dividend equivalent right award entitles the participant to receive bookkeeping credits, cash payments and/or Common Stock distributions equal in amount to the distributions that would have been made to the participant had the participant held a specified number of shares of Common Stock during the period the participant held the dividend equivalent right. A dividend equivalent right may be awarded as a component of another award under the 2020 Plan, where, if so awarded, such dividend equivalent right will expire or be forfeited by the participant under the same conditions as under such other award. Restricted Stock Awards and Restricted Stock Unit Awards. A restricted stock award is a grant or sale of Common Stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of such shares if issued to the participant at no cost) in the event that conditions specified by the Compensation Committee in the award are not satisfied prior to the end of the time period during which the shares subject to the award may be repurchased by or forfeited to us. Restricted stock units entitle the participant to receive a cash payment equal to the fair market value of a share of Common Stock for each restricted stock unit subject to such restricted stock unit award, if the participant satisfies the applicable vesting requirement. The Compensation Committee will determine the restrictions and conditions applicable to each award of restricted stock award or restricted stock unit award, which may include performance-based conditions. Unrestricted Stock Awards. An unrestricted stock award is a grant or sale of shares of our Common Stock to the participant that is not subject to transfer, forfeiture or other restrictions, in consideration for past services rendered to us or an affiliate or for other valid consideration. Other Cash-Based Awards and Other Stock-Based Awards. The Compensation Committee may award other types of cash-based or equity-based awards under the 2020 Plan, including the grant or offer for sale of shares of unrestricted shares and the right to receive one or more cash payments subject to satisfaction of such conditions as the Compensation Committee may impose. Incentive Bonus Awards. Incentive bonus awards may be awarded to the participant based upon the attainment of specified levels of our performance as measured by pre-established, objective performance criteria determined at the discretion of the Compensation Committee. Change-of-Control Provisions. The Compensation Committee may, at the time of the grant of an award, provide for the effect of a change of control (as defined in the 2020 Plan) on | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
an award for an equivalent cash value, as determined by the Compensation Committee. The Amendment and Termination. The Compensation Committee may adopt, amend and rescind rules relating to the administration of the 2020 Plan, and amend, suspend or terminate the 2020 Plan, provided, that (a) to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, we shall obtain stockholder approval of any 2020 Plan amendment in such a manner and to such a degree as required, and (b) stockholder approval is required for any amendment to the 2020 Plan that (i) increases the number of shares available for issuance under the 2020 Plan, or (ii) changes the persons or class of persons eligible to receive awards. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Johan (Thijs) Spoor During the year ended December 31, 2015, we employed the services of JIST Consulting (“JIST”), a company controlled by Johan (Thijs) Spoor, our former Chief Executive Officer and President, as a consultant for business strategy, financial modeling, and fundraising. Included in accounts payable at December 31, 2019 and 2018, is $348,400 and $478,400, respectively, for JIST relating to Mr. Spoor’s services. The $348,400 included in the accounts payable at December 31, 2019 has since been waived by Mr. Spoor, pursuant to a settlement and general release, effective July 9, 2020. Mr. Spoor received no other compensation from us other than as specified in his employment agreement. On October 8, 2019, Mr. Spoor resigned as our Chief Executive Officer and President, and on April 29, 2020, Mr. Spoor resigned as a member of the Board. On June 28, 2019, we accrued an incentive bonus in the amount of $255,000 payable to Mr. Spoor. Subsequent to Mr. Spoor’s resignation, the Compensation Committee reviewed the accrued bonus and determined that such amount was not owed, which determination is being challenged by Mr. Spoor. As a result of management’s determination, we reversed the accrual in the quarter ended December 31, 2019. As part of a settlement and general release effective July 9, 2020, Mr. Spoor waived all claims to the incentive bonus in the amount of $255,000 and also waived all claims to the amount of $348,000 due to JIST Consulting, a company controlled by Mr. Spoor. Also in connection with the settlement and general release, Mr. Spoor received warrants to purchase an aggregate of 150,000 shares of Common Stock and we agreed to pay Mr. Spoor’s legal expenses in the amount of $51,200. As of December 31, 2019, Mr. Spoor was entitled to an aggregate of 241,667 shares of restricted Common Stock with an aggregate grant date fair value of $855,668 that have vested but not been issued. Mr. Spoor forfeited the right to receive these shares on April 29, 2020 in connection with his resignation from the Board. Mr. Spoor received no additional or severance compensation and all unvested stock options and shares of restricted Common Stock granted to Mr. Spoor were cancelled as a result of Mr. Spoor’s resignation. Maged Shenouda From October 1, 2016 until his appointment as our Chief Financial Officer on September 25, 2017, we employed the services of Maged Shenouda as a financial consultant. Included in accounts payable at December 31, 2019 and 2018 is $10,000 and $50,000, respectively, for Mr. Shenouda’s services. On November 1, 2019, Mr. Shenouda submitted his resignation as our Chief Financial Officer, effective November 30, 2019. On June 28, 2019, we accrued an incentive bonus in the amount of $100,000 payable to Mr. Shenouda. Subsequent to Mr. Shenouda’s resignation, the Compensation Committee reviewed the accrued bonus and determined that such amount was not owed, and we reversed the accrual in the quarter ended December 31, 2019. As part of a settlement and general release entered into on July 2, 2020, Mr. Shenouda waived all claims to the incentive bonus in the amount of $100,000 and we agreed to pay Mr. Shenouda a settlement sum of $15,000, which includes $10,000 due to Mr. Shenouda reflected in our accounts payable as of June 30, 2020. Mr. Shenouda resigned from his position as our Chief Financial Officer effective November 30, 2019. Mr. Shenouda received no additional or severance compensation and all unvested stock options and shares of restricted Common Stock granted to Mr. Shenouda were cancelled as a result of Mr. Shenouda’s resignation. Mr. Shenouda has a period of twelve months following his resignation to exercise all vested stock options. Promissory Notes, Series B Private Placement and Series B Exchange On December 20, 2019, Edward J. Borkowski, Chairman of the Board, purchased a Promissory Note (the “Borkowski Promissory Note”) for an original principal amount of $100,000, together with related warrants exercisable for 51,547 shares of Common Stock at an exercise price of $1.07, pursuant to a Note Purchase Agreement by and between us and certain accredited investors. The Borkowski Promissory Note accrued interest at a rate of 9% per annum and was convertible at the option of the holder into shares of Common Stock at a price of $0.97 per share. On July 16, 2020, in connection with the Series B Private Placement and the Series B Exchange, Mr. Borkowski purchased $250,000 worth of Series B Preferred Stock and related Series B Warrants for cash, and Mr. Borkowski also exchanged the balance of his outstanding Borkowski Promissory Note of $105,128 (including outstanding principal amount and accrued and unpaid interest thereon) for 13.653087 shares of Series B Preferred Stock convertible into 136,531 shares of Common Stock, Series B Warrants for 68,266 shares of Common Stock and Exchange Warrants for 25,774 shares of Common Stock. On January 3, 2020, Edmund Burke Ross, Jr., a stockholder that beneficially owns greater than 5% of our outstanding shares, purchased a Promissory Note for an original amount of $750,000, together with related warrants exercisable for 375,000 shares of Common Stock at an exercise price of $1.07, pursuant to a Note Purchase Agreement by and between us and certain accredited investors. The Promissory Note accrued interest at a rate of 9% per annum and was convertible at the option of the holder into shares of Common Stock at a price of $0.97 per share. On July 16, 2020, in connection with the Private Placement and the Exchange, Mr. Ross exchanged the balance of his outstanding Promissory Note of $785,877 (including outstanding principal amount and accrued and unpaid interest thereon) for 102.06191 shares of Series B Preferred Stock convertible into 1,020,620 shares of Common Stock, Series B Warrants for 510,310 shares of Common Stock and Exchange Warrants for 193,299 shares of Common Stock. On July 16, 2020, in connection with the Series B Private Placement and the Exchange, James Sapirstein, President, Chief Executive Officer and Director purchased $100,000 worth of Series B Preferred Stock and related Series B Warrants for cash. Mr. Sapirstein received 12.987013 shares of Series B Preferred Stock convertible into 129,871 shares of Common Stock and Series B Warrants for 64,936 shares of Common Stock. Policy and Procedures Governing Related Party Transactions The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. The SEC rules define a related party transaction to include any transaction, arrangement or relationship which: (i) we are a participant; (ii) the amount involved exceeds $120,000; and (iii) executive officer, director or director nominee, or any person who is known to be the beneficial owner of more than 5% of our Common Stock, or any person who is an immediate family member of an executive officer, director or director nominee or beneficial owner of more than 5% of our Common Stock had or will have a direct or indirect material interest. Although we do not maintain a formal written procedure for the review and approval of transactions with such related persons, it is our policy for the disinterested members of our Board to review all related party transactions on a case-by-case basis. To receive approval, a related-party transaction must have a legitimate business purpose for us and be on terms that are fair and reasonable to us and our stockholders and as favorable to us and our stockholders as would be available from non-related entities in comparable transactions. All related party transactions must be disclosed in our applicable filings with the SEC as required under SEC rules. PRINCIPAL STOCKHOLDERS The following table sets forth information regarding shares of our Common Stock beneficially owned as of January 11, 2021 by: ● each of our officers and directors; ● all officers and directors as a group; and ● each person known by us to beneficially own five percent or more of the outstanding shares of our Common Stock. Percentage of ownership is calculated based on 38,849,938 shares of Common Stock outstanding as of January 1, 2021. Beneficial Ownership of Common Stock
(1) Unless otherwise indicated, the address of such individual is c/o AzurRx BioPharma, Inc., 1615 South Congress Avenue, Suite 103, Delray Beach, FL 33445. (2) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. All entries exclude beneficial ownership of shares issuable pursuant to warrants, options or other derivative securities that have not vested or that are not otherwise exercisable as of the date hereof or which will not become vested or exercisable within 60 days. (3) Percentages are rounded to nearest tenth of a percent. Percentages are based on 38,849,938 shares of Common Stock outstanding. Warrants, options or other derivative securities that are presently exercisable or exercisable within 60 days are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage ownership of that person, but are not treated as outstanding for the purpose of computing the percentage of any other person. (4) Includes (i) 141,667 shares of Common Stock issuable upon exercise of vested options, (ii) 135,281 shares of Common Stock issuable upon conversion of 13.528196 shares of Series B Preferred Stock, which includes issued PIK dividends through December 31, 2020, and (iii) 64,935 shares of Common Stock issuable upon exercise of warrants. Excludes (i) 1,358,333 shares of Common Stock issuable upon exercise of unvested options, and (ii) 200,000 shares of Common Stock issuable upon unvested Restricted Stock Units (RSUs).Pursuant to the Exchange Right, Mr. Sapirstein has the right to exchange the stated value, plus accrued and unpaid dividends, of the shares of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-93- (5) Includes (i) 1,000 shares of Common Stock and (ii) 149,862 shares of Common Stock issuable upon exercise of vested options. Excludes 435,144 shares of Common Stock issuable upon exercise of unvested options. (6) Includes 120,833 shares of Common Stock issuable upon exercise of vested options. Excludes 364,167 shares of Common Stock issuable upon exercise of unvested options. (7) Includes (i) 409,773 shares of Common Stock; (ii) 336,397 shares of Common Stock issuable upon the exercise of warrants; (iii) 140,000 shares of Common Stock issuable upon exercise of vested options; (iv) 480,423 shares of Common Stock issuable upon conversion of 48.042522 shares of Series B Preferred Stock, which includes issued PIK dividends through December 31, 2020, and (v) 13,680 shares of Common Stock held by Mr. Borkowski’s spouse. Excludes (i) 45,000 unvested and unissued restricted shares of Common Stock; and (ii) 41,237 shares of Common Stock issuable upon exercise of unvested options. Pursuant to the Exchange Right, Mr. Borkowski has the right to exchange the stated value, plus accrued and unpaid dividends, of the shares of Series B Preferred Stock beneficially owned by (8) Includes (i) 107,998 shares of Common Stock; (ii) 110,000 shares of Common Stock issuable upon exercise of vested options; and (iii) 9,000 shares of Common Stock held by La Jolla Lenox Trust, a family trust of which the Trustee is someone other than Mr. Casamento. Mr. Casamento and members of his immediate family are the sole beneficiaries of the trust. Excludes 75,000 shares of Common Stock issuable upon exercise of unvested options. Excludes 41,237 shares of Common Stock issuable upon exercise of unvested options. (9) Includes (i) 132,049 shares of Common Stock and (ii) 140,000 shares of Common Stock issuable upon exercise of vested options. Excludes (i) 30,000 unvested restricted shares of Common Stock; and (ii) 41,237 shares of Common Stock issuable upon exercise of unvested options. (10) Includes (i) 90,498 shares of Common Stock and (ii) 110,000 shares of Common Stock issuable upon exercise of vested options. Excludes 41,237 shares of Common Stock issuable upon exercise of unvested options. (11) Includes 60,000 shares of Common Stock issuable upon exercise of vested options. Excludes 41,237 shares of Common Stock issuable upon exercise of unvested options. (12) Based upon information contained in a Schedule 13D filed by Edmund Burke Ross, Jr. on August 11, 2020 and records maintained by us.Includes warrants to purchase 1,970,297 shares of Common Stock beneficially owned by Mr. Ross, of which (i) 100,000 warrants to purchase 75,000 shares of Common Stock, warrants to purchase 386,598 shares of Common Stock, 510,309 Series B Warrants and 193,299 Exchange Warrants are owned by EBR Ventures, LLC and (ii) warrants to purchase 805,991 shares of Common Stock are owned by ADEC Private Equity Investments, LLC. The Series B Preferred Stock and the warrants include a beneficial ownership blocker that limits the conversion and/or exercise of the Series B Preferred Stock and the warrants at 9.99% of the outstanding Common Stock. Mr. Ross is the manager of EBR Ventures, LLC and ADEC Private Equity Investments, LLC and, accordingly, may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the DESCRIPTION OF CAPITAL STOCK The following summary of the rights of our capital stock is not complete and is subject to and qualified in its entirety by reference to our certificate of incorporation and bylaws, copies of which are filed as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC | |
General Our certificate of incorporation, as amended and | |
Assumed Average Purchase Price Per Share | Number of Registered Shares to be Issued if Full Purchase (1) | Percentage of Outstanding Shares After Giving Effect to the Issuance to Lincoln Park (2) | Proceeds from the Sale of Shares to Lincoln Park Under the $15M Purchase Agreement |
$0.50 | 4,743,854 | 15.11% | $2,371,927 |
$1.00 | 8,393,592 | 24.0% | $8,393,592 |
$1.11(3) | 8,393,592 | 24.0% | $9,316,887 |
$1.50 | 8,393,592 | 24.0% | $12,590,388 |
Number of Shares of Common Stock Owned Prior to Offering | Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus | Number of Shares of Common Stock Owned After Offering | |
Name of Selling Stockholder | Number | Offered(1) | Number |
Armistice Capital Master Fund Ltd. (1) | 16,000,002 | 16,000,002 | 0 |
Page | |
Unaudited Consolidated Financial Statements – September 30, 2020: | |
Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 | F-2 |
Consolidated Statements of Loss and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 | F-3 |
Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2020 and 2019 | F-4 |
Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 | F-5 |
Notes to Consolidated Financial Statements | F-6 |
Consolidated Financial Statements – December 31, 2019 and 2018: |
Report of Independent Registered Public Accounting Firm | F-32 |
Consolidated Balance Sheets as of December 31, 2019 and 2018 | F-33 |
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2019 and 2018 | F-34 |
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2019 and 2018 | F-35 |
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018 | F-36 |
Notes to the Consolidated Financial Statements | F-37 |
September 30, | December 31, | |
2020 | 2019 | |
ASSETS | ||
Current Assets: | ||
Cash | $11,368,680 | $175,796 |
Other receivables | 20,688 | 2,637,303 |
Prepaid expenses | 148,604 | 595,187 |
Total Current Assets | 11,537,972 | 3,408,286 |
Property, equipment, and leasehold improvements, net | 54,070 | 77,391 |
Other Assets: | ||
Patents, net | 3,011,423 | 3,407,084 |
Goodwill | 1,968,519 | 1,886,686 |
Operating lease right-of-use assets | 104,196 | 82,386 |
Deposits | 45,841 | 41,047 |
Total Other Assets | 5,129,979 | 5,417,203 |
Total Assets | $16,722,021 | $8,902,880 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current Liabilities: | ||
Accounts payable and accrued expenses | $1,686,003 | $1,754,682 |
Accounts payable and accrued expenses - related party | 38,453 | 533,428 |
Note payable | - | 444,364 |
Accrued Dividends Payable | 408,043 | - |
Convertible debt | - | 1,076,938 |
Other current liabilities | 492,815 | 476,224 |
Total Current Liabilities | 2,625,314 | 4,285,636 |
Other liabilities | 31,469 | - |
Total Liabilities | 2,656,783 | 4,285,636 |
Stockholders' Equity: | ||
Common stock - Par value $0.0001 per share; 150,000,000 shares authorized; 28,881,984 and 26,800,519 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | 2,888 | 2,680 |
Series B preferred stock- Par value $0.0001 per share; 5,194.805195 shares authorized; 2,878.455557 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | - | - |
Additional paid-in capital | 93,239,704 | 68,575,851 |
Accumulated deficit | (77,965,806) | (62,694,732) |
Accumulated other comprehensive loss | (1,211,548) | (1,266,555) |
Total Stockholders' Equity | 14,065,238 | 4,617,244 |
Total Liabilities and Stockholders' Equity | $16,722,021 | $8,902,880 |
Three Months | Three Months | Nine Months | Nine Months | |
Ended | Ended | Ended | Ended | |
09/30/20 | 09/30/19 | 09/30/20 | 09/30/19 | |
Research and development expenses | $1,795,684 | $2,221,933 | $4,438,229 | $7,927,907 |
General and administrative expenses | 1,916,250 | 1,860,141 | 4,595,860 | 5,690,001 |
Loss from operations | (3,711,934) | (4,082,074) | (9,034,089) | (13,617,908) |
Other: | ||||
Interest expense | (1,203,404) | (110,398) | (5,838,417) | (278,155) |
Gain (Loss) on Settlement | 211,430 | 211,430 | ||
Gain (Loss) on Debt Extinguishment | (609,998) | (609,998) | ||
Total other | (1,601,972) | (110,398) | (6,236,985) | (278,155) |
Loss before income taxes | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
Income taxes | - | - | - | - |
Net loss | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
Other comprehensive loss: | ||||
Foreign currency translation adjustment | 108,712 | (138,241) | (55,007) | (207,034) |
Total comprehensive loss | $(5,205,194) | $(4,330,713) | $(15,326,081) | $(14,103,097) |
Net loss | $(5,313,906) | $(4,192,472) | $(15,271,074) | $(13,896,063) |
Deemed dividend of preferred stock | (8,155,212) | - | (8,155,212) | - |
Net loss applicable to common stockholders | (13,469,118) | (4,192,472) | (23,426,286) | (13,896,063) |
Basic and diluted weighted average shares outstanding | 28,518,835 | 24,962,691 | 27,828,235 | 21,080,701 |
Net loss per share - basic and diluted | $(0.47) | $(0.17) | $(0.84) | $(0.66) |
Convertible | Additional | Other | ||||||
Preferred Stock | Common Stock | Paid In | Accumulated | Comprehensive | ||||
Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Total | |
Balance, January 1, 2019 | - | $- | 17,704,925 | $1,771 | $53,139,259 | $(47,517,046) | $(1,150,112) | $4,473,872 |
Common stock issued from public offerings | 7,522,097 | 752 | 9,491,265 | 9,492,017 | ||||
Common stock issued to consultants | 62,158 | 6 | 112,494 | 112,500 | ||||
Common stock issued to Mayoly for patents | 775,931 | 77 | 1,740,882 | 1,740,959 | ||||
Stock-based compensation | 541,725 | 541,725 | ||||||
Restricted stock granted to employees/directors | 90,000 | 9 | 556,879 | 556,888 | ||||
Warrant modification | 325,320 | 325,320 | ||||||
Received from stockholder in relation to warrant modification | 61,590 | 61,590 | ||||||
Foreign currency translation adjustment | (207,034) | (207,034) | ||||||
Net loss | (13,896,063) | (13,896,063) | ||||||
Balance, September 30, 2019 | - | $- | 26,155,111 | $2,615 | $65,969,414 | $(61,413,109) | $(1,357,146) | $3,201,774 |
Balance, January 1, 2020 | - | $- | 26,800,519 | $2,680 | $68,575,851 | $(62,694,732) | $(1,266,555) | $4,617,244 |
Issuance of Series B preferred stock and warrants for cash, conversion of promissory notes, net of offering costs | 2,912 | - | 14,460,155 | 14,460,155 | ||||
Warrants issued in connection with Series B convertible preferred stock private placement | 5,952,516 | 5,952,516 | ||||||
Warrants issued as inducement to exchange promissory notes into Series B convertible preferred stock private placement | 986,526 | 986,526 | ||||||
Beneficial conversion feature of Series B preferred stock | 8,155,212 | 8,155,212 | ||||||
Deemed dividend of preferred stock | (8,155,212) | (8,155,212) | ||||||
Accrued dividends on Series B preferred stock | (412,829) | (412,829) | ||||||
Deemed dividend related to exchange of promissory notes into Series B preferred stock | (1,129,742) | (1,129,742) | ||||||
Conversion of Series B preferred shares into common stock | (34) | - | 341,274 | 34 | (34) | - | ||
Issuance of common stock for accrued dividends upon conversion of Series B preferred stock | 6,214 | 1 | 4,785 | 4,786 | ||||
Common stock issued to settle accounts payable | 105,937 | 11 | 131,126 | 131,137 | ||||
Common stock issued to Lincoln Park for Equity Purchase agreement | 1,495,199 | 149 | 988,199 | 988,348 | ||||
Warrants issued in association with convertible debt issuance | 1,252,558 | 1,252,558 | ||||||
Beneficial conversion feature on convertible debt issuances | 1,838,422 | 1,838,422 | ||||||
Common stock issued to consultants | 132,841 | 13 | 109,592 | 109,605 | ||||
Settlement with former chief executive officer | 85,770 | 85,770 | ||||||
Stock-based compensation | 396,809 | 396,809 | ||||||
Foreign currency translation adjustment | - | 55,007 | 55,007 | |||||
Net loss | (15,271,074) | (15,271,074) | ||||||
Balance, September 30, 2020 | 2,878 | $- | 28,881,984 | $2,888 | $93,239,704 | $(77,965,806) | $(1,211,548) | $14,065,238 |
Nine Months | Nine Months | |
Ended | Ended | |
09/30/20 | 09/30/19 | |
Cash flows from operating activities: | ||
Net loss | $(15,271,074) | $(13,896,063) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 26,556 | 51,261 |
Amortization | 395,661 | 825,063 |
Non-cash lease expense | (4,855) | (3,218) |
Common stock issued to settle accounts payable for board fees | 131,137 | - |
Stock-based compensation | 369,517 | 541,725 |
Restricted stock granted to employees/directors | 27,292 | 556,888 |
Common stock granted to consultants | 109,605 | 112,500 |
Accreted interest on convertible debt | 234,334 | 124,932 |
Accretion of debt discount | 4,580,167 | 147,461 |
Loss on debt extinguishment | 609,998 | - |
Gain on settlement | (211,430) | - |
Beneficial conversion feature related to promissory note exchange | 798,413 | - |
Changes in assets and liabilities: | ||
Accounts receivables | (220,094) | - |
Other receivables | 2,121,336 | (261,981) |
Prepaid expenses | 446,766 | 420,218 |
Deposits | (4,180) | (4,125) |
Accounts payable and accrued expenses | 90,147 | 601,096 |
Accrued dividends payable | 408,043 | - |
Other liabilities | 31,104 | (23,274) |
Net cash used in operating activities | (5,331,557) | (10,807,517) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (2,808) | (17,243) |
Net cash used in investing activities | (2,808) | (17,243) |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable, net | 179,408 | - |
Proceeds from issuance of common stock, net | 988,348 | 9,492,016 |
Proceeds from issuance of convertible debt, net | 3,227,002 | 2,000,000 |
Proceeds from issuance of preferred stock, net | 13,197,740 | - |
Received from stockholder in relation to warrant modification | - | 61,590 |
Repayments of convertible debt | (475,000) | - |
Repayments of note payable | (623,772) | (255,032) |
Net cash provided by financing activities | 16,493,726 | 11,298,574 |
Increase in cash | 11,159,361 | 473,814 |
Effect of exchange rate changes on cash | 33,523 | (38,332) |
Cash, beginning balance | 175,796 | 1,114,343 |
Cash, ending balance | $11,368,680 | $1,549,825 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | $105,460 | $5,762 |
Non-cash investing and financing activities: | ||
Common stock issued for patents purchased from Mayoly | $- | $1,740,959 |
Warrant modification related to convertible debt issuance | $- | $325,320 |
Deemed dividend on preferred stock | $8,155,212 | $- |
Accrued dividends on preferred stock | $408,043 | $- |
Exchange of promissory notes into preferred stock and warrants | $609,998 | $- |
Fair Value Measured at Reporting Date Using | |||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Fair Value | |
At September 30, 2020: | |||||
Cash | $11,368,680 | $ | $11,368,680 | $ | $11,368,680 |
Other receivables | $20,688 | $ | $20,688 | $20,688 | |
At December 31, 2019: | |||||
Cash | $175,796 | $- | $175,796 | $- | $175,796 |
Other receivables | $2,637,303 | $- | $- | $2,637,303 | $2,637,303 |
Note payable | $444,364 | $- | $- | $444,364 | $444,364 |
Convertible debt | $1,076,938 | $- | $- | $1,076,938 | $1,076,938 |
September 30, | December 31, | |
2020 | 2019 | |
R&D tax credits | $- | $2,566,281 |
Other | 20,688 | 71,022 |
Total other receivables | $20,688 | $2,637,303 |
September 30, | December 31, | |
2020 | 2019 | |
Laboratory equipment | $193,661 | $193,661 |
Computer equipment | 77,850 | 74,836 |
Office equipment | 36,703 | 36,703 |
Leasehold improvements | 29,162 | 35,711 |
Total property, plant and equipment | 337,376 | 340,911 |
Less accumulated depreciation | (283,306) | (263,520) |
Property, plant and equipment, net | $54,070 | $77,391 |
Common stock issued at signing to Mayoly | $1,740,959 |
Due to Mayoly at 12/31/19 - €400,000 | 449,280 |
Due to Mayoly at 12/31/20 - €350,000 | 393,120 |
Assumed Mayoly liabilities and forgiveness of Mayoly debt | 1,219,386 |
$3,802,745 |
September 30, | December 31, | |
2020 | 2019 | |
Patents | $3,802,745 | $3,802,745 |
Less accumulated amortization | (791,322) | (395,661) |
Patents, net | $3,011,423 | $3,407,084 |
2020 (balance of year) | $395,661 |
2021 | 527,548 |
2022 | 527,548 |
2023 | 527,548 |
2024 | 527,548 |
2025 | 527,548 |
Goodwill | |
Balance at January 1, 2019 | $1,924,830 |
Foreign currency translation | (38,144) |
Balance at December 31, 2019 | 1,886,686 |
Foreign currency translation | 81,833 |
Balance at September 30, 2020 | $1,968,519 |
September 30, | December 31, | |
2020 | 2019 | |
Trade payables | $1,422,066 | $1,683,505 |
Accrued expenses | 263,937 | 71,177 |
Total accounts payable and accrued expenses | $1,686,003 | $1,754,682 |
Total | Promissory Notes | ADEC Notes | Total | |
September 30, | September 30, | September 30, | December 31, | |
2020 | 2020 | 2020 | 2019 | |
Convertible debt | $- | $- | $- | $3,836,300 |
Unamortized debt discount - revalued warrants | - | - | - | (118,356) |
Unamortized debt discount - warrants | - | - | - | (878,979) |
Unamortized debt discount - BCF | - | - | - | (1,307,755) |
Unamortized debt discount - debt issuance costs | - | - | - | (566,815) |
Accrued interest | - | - | - | 112,543 |
Total convertible debt | $- | $- | $- | $1,076,938 |
September 30, | December 31, | |
Current | 2020 | 2019 |
Due to Mayoly | $410,026 | $392,989 |
Lease liabilities | 74,156 | 83,235 |
Other liabilities | 8,633 | - |
$492,815 | $476,224 | |
September 30, | December 31, | |
Long-term | 2020 | 2019 |
Lease liabilities | 31,469 | - |
$31,469 | $- |
● | the lowest sale price of Common Stock on the purchase date; and; |
● | the average of the three lowest closing sale prices for the Common Stock during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares; |
● | 97% of the volume weighted average price of the Company’s common stock during the applicable Accelerated Purchase Measurement Period on the applicable Accelerated Purchase date; and |
● | the closing sale price of Common Stock on the applicable Accelerated Purchase Date. |
● | 97% of the volume weighted average price of the Company’s common stock during the applicable Additional Accelerated Purchase Measurement Period on the applicable Additional Accelerated Purchase date; and |
● | the closing sale price of Common Stock on the applicable Additional Accelerated Purchase. |
Exercise | Weighted | ||
Price Per | Average | ||
Warrants | Share | Exercise Price | |
Warrants outstanding and exercisable at January 1, 2019 | 3,112,715 | $2.55 - 7.37 | $4.83 |
Granted during the period | 275,663 | $2.55 – 2.82 | $2.68 |
Expired during the period | - | - | - |
Exercised during the period | - | - | - |
Warrants outstanding and exercisable at September 30, 2019 | 3,388,378 | $1.50 - 7.37 | $3.51 |
Warrants outstanding and exercisable at January 1, 2020 | 5,378,288 | $1.07 - 7.37 | $2.53 |
Granted during the period | 19,881,654 | $0.85 - 1.42 | $0.88 |
Expired during the period | (59,774) | $3.25 - 7.37 | $5.15 |
Exercised during the period | - | - | - |
Warrants outstanding and exercisable at September 30, 2020 | 25,200,168 | $0.85 - 7.37 | $1.22 |
Number of | Weighted Average | Weighted | ||
Shares Under | Remaining Contract | Average | ||
Exercise Price | Warrants | Life in Years | Exercise Price | |
$0.00 - 0.99 | 17,718,665 | 4.79 | ||
$1.00 - 1.99 | 5,362,464 | 3.65 | ||
$2.00 - 2.99 | 320,063 | 2.82 | ||
$3.00 - 3.99 | 635,019 | 1.57 | ||
$4.00 - 4.99 | 164,256 | 1.53 | ||
$5.00 - 5.99 | 783,132 | 1.42 | ||
$6.00 - 6.99 | 187,750 | 1.01 | ||
$7.00 - 7.37 | 28,819 | 0.28 | ||
Totals | 25,200,168 | 4.28 | $1.22 |
September 30, | |
2020 | |
Expected life (in years) | 5 |
Volatility | 84.7% |
Risk-free interest rate | 0.28-1.67% |
Dividend yield | -% |
September 30, | |
2020 | |
Expected life (in years) | 10 |
Volatility | 84.0% |
Risk-free interest rate | 0.62- 1.88% |
Dividend yield | -% |
Number | Average | Remaining Contract | Intrinsic | |
of Shares | Exercise Price | Life in Years | Value | |
Stock options outstanding at January 1, 2019 | 994,000 | $3.58 | 5.42 | $- |
Granted during the period | 893,500 | $1.70 | 4.96 | - |
Expired during the period | - | - | - | - |
Canceled during the period | - | - | - | - |
Exercised during the period | - | - | - | - |
Stock options outstanding at September 30, 2019 | 1,887,500 | $2.58 | 4.69 | $- |
Exercisable at September 30, 2019 | 994,000 | $3.58 | 5.17 | $- |
Non-vested stock options outstanding at January 1, 2019 | 244,500 | $3.05 | 4.53 | $- |
Granted during the period | 893,500 | $1.70 | 4.96 | - |
Vested during the period | (274,500) | $2.91 | 3.88 | - |
Expired during the period | - | - | - | - |
Canceled during the period | - | - | - | - |
Exercised during the period | - | - | - | - |
Non-vested stock options outstanding at September 30, 2019 | 863,500 | $1.70 | 4.77 | $- |
Stock options outstanding at January 1, 2020 | 1,677,5000 | $2.17 | 5.37 | $- |
Granted during the period | 2,870,012 | $0.89 | 9.79 | $- |
Expired during the period | - | - | ||
Canceled during the period | (235,006) | $1.94 | 3.28 | $- |
Exercised during the period | - | - | ||
Stock options outstanding at September 30, 2020 | 4,312,506 | $1.38 | 7.94 | $- |
Exercisable at September 30, 2020 | 1,084,834 | $2.59 | 5.60 | $- |
Non-vested stock options outstanding at January 1, 2020 | 883,500 | $1.33 | 6.26 | $- |
Granted during the period | 2,870,012 | $0.98 | 10.00 | $- |
Vested during the period | (593,750) | $2.59 | 6.88 | $- |
Expired during the period | - | - | - | |
Canceled during the period | (160,006) | $1.30 | 7.10 | $- |
Exercised during the period | - | - | - | |
Non-vested stock options outstanding at September 30, 2020 | 2,999,756 | $0.98 | 8.75 | $- |
September 30, | |
2020 | |
Lease term and discount rate | |
Weighted-average remaining lease term | 1.16 years |
Weighted-average discount rate | 6.0% |
2020 | $30,565 |
2021 | 55,420 |
2022 | 23,375 |
Total lease payments | 109,360 |
Less imputed interest | (3,736) |
Present value of lease liabilities | $105,624 |
December 31, 2019 | December 31, 2018 | |
ASSETS | ||
Current Assets: | ||
Cash and cash equivalents | $175,796 | $1,114,343 |
Other receivables | 2,637,303 | 3,172,676 |
Prepaid expense | 595,187 | 512,982 |
Total Current Assets | 3,408,286 | 4,800,001 |
Property, equipment, and leasehold improvements, net | 77,391 | 128,854 |
Other Assets: | ||
In process research & development, net | - | 258,929 |
License agreements, net | - | 311,548 |
Patents, net | 3,407,084 | - |
Goodwill | 1,886,686 | 1,924,830 |
Operating lease right-of-use assets | 82,386 | - |
Deposits | 41,047 | 45,233 |
Total Other Assets | 5,417,203 | 2,540,540 |
TOTAL ASSETS | $8,902,880 | $7,469,395 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
LIABILITIES | ||
Current Liabilities: | ||
Accounts payable and accrued expense | $1,754,682 | $2,070,396 |
Accounts payable and accrued expense - related party | 533,428 | 670,095 |
Note payable | 444,364 | 255,032 |
Convertible debt | 1,076,938 | - |
Other current liabilities | 476,224 | - |
Total Current Liabilities | 4,285,636 | 2,995,523 |
STOCKHOLDERS' DEFICIT | ||
Convertible preferred stock - Par value $0.0001 per share; 10,000,000 shares authorized, and 0 shares issued and outstanding at December 31, 2019 and 2018, respectively; liquidation preference approximates par value | - | - |
Common stock - Par value $0.0001 per share; 150,000,000 and 100,000,000 shares authorized at December 31, 2019 and 2018, respectively; 26,800,519 and 17,704,925 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively. | 2,680 | 1,771 |
Additional paid-in-capital | 68,575,851 | 53,139,259 |
Accumulated deficit | (62,694,732) | (47,517,046) |
Accumulated other comprehensive loss | (1,266,555) | (1,150,112) |
Total stockholders' deficit | 4,617,244 | 4,473,872 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $8,902,880 | $7,469,395 |
DRAFT |
Year ended | ||
December 31, 2019 | December 31, 2018 | |
Revenue | $- | $- |
Total Revenue | - | - |
Operating Expense | ||
Research & development | 8,680,669 | 5,771,405 |
General & administrative | 6,063,078 | 7,450,366 |
Fair value adjustment, contingent consideration | - | 210,000 |
Total Operating Expense | 14,743,747 | 13,431,771 |
Other Expenses (income) | ||
Interest expense | 433,939 | 101,846 |
Total Other Expense (Income) | 433,939 | 101,846 |
Net Loss | $(15,177,686) | $(13,533,617) |
Other comprehensive (loss): | ||
Foreign currency translation adjustment | (116,443) | (194,397) |
Total comprehensive loss | $(15,294,129) | $(13,728,014) |
Net loss per share, basic and diluted | $(0.68) | $(0.88) |
Weighted average of shares outstanding, basic and diluted | 22,425,564 | 15,439,310 |
DRAFT |
Convertible Preferred Stock | Common Stock | Paid-in | Subscription | Accumulated | Accumulated Other Comprehensive | Total | |||
Shares | Amount | Shares | Amount | Capital | Receivable | Deficit | Loss | Deficit | |
Balance at January 1, 2018 | - | $- | 12,042,574 | $1,205 | $37,669,601 | $(1,071,070) | $(33,983,429) | $(955,715) | $1,660,592 |
Common stock issued from public offering | - | - | 4,160,000 | 416 | 9,577,647 | - | - | - | 9,578,063 |
Common stock issued to consultants | - | - | 118,818 | 12 | 360,759 | - | - | - | 360,771 |
Common stock issued for warrant exercises | - | - | 503,070 | 50 | 1,253,623 | 1,071,070 | - | - | 2,324,743 |
Common stock issued for purchase of Protea assets from bankruptcy | - | - | 734,463 | 73 | 1,299,926 | - | - | - | 1,299,999 |
Stock-based compensation | - | - | - | - | 1,441,475 | - | - | - | 1,441,475 |
Restricted common stock granted to employees and directors | - | - | 120,000 | 12 | 1,038,810 | - | - | - | 1,038,822 |
Convertible debt converted into common stock | - | - | 26,000 | 3 | 68,670 | - | - | - | 68,673 |
Warrant modification | - | - | - | - | 428,748 | - | - | - | 428,748 |
Foreign currency translation adjustment | - | - | - | - | - | - | - | (194,397) | (194,397) |
Net loss | - | - | - | - | - | (13,533,617) | - | (13,533,617) | |
Balance at December 31, 2018 | - | $- | 17,704,925 | $1,771 | $53,139,259 | $- | $(47,517,046) | $(1,150,112) | $4,473,872 |
Common stock issued from public offerings | - | - | 7,522,097 | 752 | 9,475,997 | - | - | - | 9,476,749 |
Common stock issued to consultants | - | - | 190,398 | 19 | 209,981 | - | - | - | 210,000 |
Common stock issued to Mayoly for patents | - | - | 775,931 | 77 | 1,740,882 | - | - | - | 1,740,959 |
Common stock issued to Lincoln Park for Equity Purchase agreement | - | - | 487,168 | 49 | (49) | - | - | - | - |
Warrants issued in association with convertible debt issuances | - | - | - | - | 1,081,673 | - | - | - | 1,081,673 |
Beneficial conversion feature on convertible debt issuances | - | - | - | - | 1,359,284 | - | - | - | 1,359,284 |
Stock-based compensation | - | - | - | - | 574,335 | - | - | - | 574,335 |
Restricted common stock granted to employees and directors | - | - | 120,000 | 12 | 607,579 | - | - | - | 607,591 |
Warrant modification | - | - | - | - | 325,320 | - | - | - | 325,320 |
Received from stockholder in relation to warrant modification | - | - | - | - | 61,590 | - | - | - | 61,590 |
Foreign currency translation adjustment | - | - | - | - | - | - | - | (116,443) | (116,443) |
Net loss | - | - | - | - | - | - | (15,177,686) | - | (15,177,686) |
Balance at December 31, 2019 | - | $- | 26,800,519 | $2,680 | $68,575,851 | $- | $(62,694,732) | $(1,266,555) | $4,617,244 |
DRAFT |
Year ended | ||
December 31, 2019 | December 31, 2018 | |
Cash Flows from Operating Activities: | ||
Net loss | $(15,177,686) | $(13,533,617) |
Adjustments to reconcile net loss to net | ||
cash used in operating activities: | ||
Depreciation | 63,096 | 61,909 |
Amortization | 956,950 | 736,537 |
Fixed assets written off | 7,296 | - |
Fair value adjustment, contingent consideration | - | 210,000 |
Stock-based compensation | 574,335 | 1,441,475 |
Restricted common stock granted to employees and directors | 607,591 | 1,038,822 |
Common stock granted to consultants | 210,000 | 360,771 |
Accreted interest on convertible debt | 112,543 | - |
Accreted interest on debt discount - warrants | 313,364 | 97,837 |
Warrant modification | - | 428,748 |
Net changes in assets and liabilities: | ||
Other receivables | (749,859) | (2,187,903) |
Prepaid expense | (85,681) | (243,330) |
Right of use assets | (82,234) | - |
Deposits | 3,900 | (15,001) |
Accounts payable and accrued expense | (420,788) | 741,624 |
Interest payable | - | (7,192) |
Other liabilities | (366,329) | - |
Net Cash used in Operating Activities | (14,033,502) | (10,869,320) |
Cash Flows from Investing Activities: | ||
Purchase of property and equipment | (24,098) | (55,473) |
Purchase of Protea assets from bankruptcy | - | (250,000) |
Net Cash used in Investing Activities | (24,098) | (305,473) |
Cash Flows from Financing Activities: | ||
Proceeds from issuances of common stock, net | 9,476,749 | 11,902,805 |
Proceeds from issuances of convertible debt, net | 4,967,308 | - |
Repayments of convertible debt | (1,550,000) | (286,529) |
Received from stockholder in relation to warrant modification | 61,590 | - |
Proceeds of note payable | 498,783 | 286,203 |
Repayments of note payable | (309,451) | (190,351) |
Net Cash provided by Financing Activities | 13,144,979 | 11,712,128 |
Net (decrease) increase in cash and cash equivalents | (921,621) | 537,335 |
Effect of exchange rate changes on cash | (25,926) | 3,537 |
Cash and cash equivalents: | ||
Cash at the beginning of the year | 1,114,343 | 573,471 |
Cash at the end of the year | $175,796 | $1,114,343 |
Supplemental Disclosure of Cash Flow Activities: | ||
Cash paid for interest | $8,032 | $4,010 |
Supplemental Disclosure of Non-cash Financing Activities: | ||
Common stock issued for purchase of Protea assets from bankruptcy that extinguished contingent consideration | $- | $1,300,000 |
Common stock issued for patents purchased from Mayoly | $1,740,959 | $- |
Warrant modification related to convertible debt issuance | $325,320 | $- |
DRAFT |
DRAFT |
DRAFT |
DRAFT |
DRAFT |
DRAFT |
Fair Value Measured at Reporting Date Using | |||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Fair Value | |
At December 31, 2019: | |||||
Cash | $175,796 | $- | $175,796 | $- | $175,796 |
Other receivables | $2,637,303 | $- | $- | $2,637,303 | $2,637,303 |
Note payable | $444,364 | $- | $- | $444,364 | $444,364 |
Convertible debt | $1,076,938 | $- | $- | $1,076,938 | $1,076,938 |
At December 31, 2018: | |||||
Cash | $1,114,343 | $- | $1,114,343 | $- | $1,114,343 |
Other receivables | $3,172,676 | $- | $- | $3,172,676 | $3,172,676 |
Note payable | $255,032 | $- | $- | $255,032 | $255,032 |
DRAFT |
December 31, | December 31, | |
2019 | 2018 | |
R&D tax credits | $2,566,281 | $2,162,373 |
Other | 71,022 | 1,010,303 |
Total other receivables | $2,637,303 | $3,172,676 |
December 31, | December 31, | |
2019 | 2018 | |
Laboratory equipment | $193,661 | $190,406 |
Computer equipment | 74,836 | 75,417 |
Office equipment | 36,703 | 37,262 |
Leasehold improvements | 35,711 | 29,163 |
Total property, plant and equipment | 340,911 | 332,248 |
Less accumulated depreciation | (263,520) | (203,394) |
Property, plant and equipment, net | $77,391 | $128,854 |
DRAFT |
Common stock issued at signing to Mayoly, subject to vesting | $1,740,959 |
Due to Mayoly at 12/31/19 - €400,000 | 449,280 |
Due to Mayoly at 12/31/20 - €350,000 | 393,120 |
Assumed Mayoly liabilities and forgiveness of Mayoly debt | 1,219,386 |
$3,802,745 |
December 31, | December 31, | |
2019 | 2018 | |
In process research and development | $- | $416,600 |
Less accumulated amortization | - | (157,671) |
In process research and development, net | $- | $258,929 |
License agreements | $- | $3,398,702 |
Less accumulated amortization | - | (3,087,154) |
License agreements, net | $- | $311,548 |
Patents | $3,802,745 | $- |
Less accumulated amortization | (395,661) | - |
Patents, net | $3,407,084 | $- |
DRAFT |
Goodwill | |
Balance at January 1, 2018 | $2,016,240 |
Foreign currency translation | (91,410) |
Balance at December 31, 2018 | 1,924,830 |
Foreign currency translation | (38,144) |
Balance at December 31, 2019 | $1,886,686 |
December 31, | December 31, | |
2019 | 2018 | |
Trade payables | $1,683,505 | $1,532,110 |
Accrued expense | 71,177 | 285,061 |
Accrued payroll | - | 253,225 |
Total accounts payable and accrued expense | $1,754,682 | $2,070,396 |
DRAFT |
DRAFT |
Total | Promissory Notes | ADEC Notes | Total | |
December 31, | December 31, | December 31, | December 31, | |
2019 | 2019 | 2019 | 2018 | |
Convertible debt | $3,836,300 | $3,386,300 | $450,000 | $- |
Unamortized debt discount - revalued warrants | (118,356) | - | (118,356) | - |
Unamortized debt discount - warrants | (878,979) | (878,979) | - | - |
Unamortized debt discount - BCF | (1,307,755) | (1,307,755) | - | - |
Unamortized debt discount - debt issuance costs | (566,815) | (566,815) | - | - |
Accrued interest | 112,543 | 8,390 | 104,153 | - |
Total convertible debt | $1,076,938 | $641,141 | $435,797 | $- |
DRAFT |
December 31, | December 31, | |
2019 | 2018 | |
Due to Mayoly | $392,989 | $- |
Lease liabilities | 83,235 | - |
$476,224 | $- |
DRAFT |
● | the lowest sale price of Common Stock on the purchase date; and; |
● | the average of the three lowest closing sale prices for the Common Stock during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares; |
DRAFT |
● | 97% of the volume weighted average price of the Company’s common stock during the applicable Accelerated Purchase Measurement Period on the applicable Accelerated Purchase date; and |
● | the closing sale price of Common Stock on the applicable Accelerated Purchase Date. |
● | 97% of the volume weighted average price of the Company’s common stock during the applicable Additional Accelerated Purchase Measurement Period on the applicable Additional Accelerated Purchase date; and |
● | the closing sale price of Common Stock on the applicable Additional Accelerated Purchase. |
DRAFT |
DRAFT |
DRAFT |
Exercise | Weighted | ||
Price Per | Average | ||
Warrants | Share | Exercise Price | |
Warrants outstanding and exercisable at January 1, 2018 | 3,371,385 | $3.17 - $7.37 | $5.28 |
Granted during the period | 244,400 | $2.55 - $2.75 | $2.58 |
Expired during the period | - | - | - |
Exercised during the period | (503,070) | $2.50 | $2.50 |
Warrants outstanding and exercisable at December 31, 2018 | 3,112,715 | $2.55 - $7.37 | $4.83 |
Warrants outstanding and exercisable at January 1, 2019 | 3,112,715 | $2.55 - $7.37 | $4.83 |
Granted during the period | 2,265,573 | $1.07 - $2.82 | $1.15 |
Expired during the period | - | - | - |
Exercised during the period | - | - | - |
Warrants outstanding and exercisable at December 31, 2019 | 5,378,288 | $1.25 - $7.37 | $2.53 |
Number of | Weighted Average | Weighted | |
Shares Under | Remaining Contract | Average | |
Exercise Price | Warrants | Life in Years | Exercise Price |
$1.07 - $1.99 | 3,199,475 | 3.95 | |
$2.00 - $2.99 | 320,063 | 3.57 | |
$3.00 - $3.99 | 636,972 | 2.31 | |
$4.00 - $4.99 | 196,632 | 2.01 | |
$5.00 - $5.99 | 805,476 | 2.13 | |
$6.00 - $6.99 | 187,750 | 1.76 | |
$7.00 - $7.37 | 31,920 | 0.96 | |
Total | 5,378,288 | 3.30 | $2.53 |
December 31, | December 31, | |
2019 | 2018 | |
Expected life (in years) | 5 | 5 |
Volatility | 71 - 80% | 84% |
Risk-free interest rate | 1.64 - 2.37% | 2.70% |
Dividend yield | -% | -% |
DRAFT |
DRAFT |
December 31, | December 31, | |
2019 | 2018 | |
Contractual term (in years) | 5 - 10 | 5 |
Volatility | 72% - 75% | 85% |
Risk-free interest rate | 1.54% - 1.84% | 2.82% |
Dividend yield | -% | -% |
Number | Average | Remaining Contract | Intrinsic | |
of Shares | Exercise Price | Life in Years | Value | |
Stock options outstanding at January 1, 2018 | 545,000 | $4.05 | 7.13 | $- |
Granted during the period | 539,000 | $3.04 | 5.00 | $- |
Expired during the period | - | - | ||
Canceled during the period | (90,000) | $3.26 | 4.41 | $- |
Exercised during the period | - | - | ||
Stock options outstanding at December 31, 2018 | 994,000 | $3.58 | 5.42 | $- |
Exercisable at December 31, 2018 | 749,500 | $3.74 | 5.71 | $- |
Non-vested stock options outstanding at January 1, 2018 | 387,500 | $3.89 | 6.39 | $- |
Granted during the period | 539,000 | $3.04 | 5.00 | $- |
Vested during the period | (600,750) | $3.50 | 5.00 | $- |
Expired during the period | - | - | ||
Canceled during the period | (81,250) | $3.26 | 4.41 | $- |
Exercised during the period | - | - | ||
Non-vested stock options outstanding at December 31, 2018 | 244,500 | $3.05 | 4.53 | $- |
DRAFT |
Stock options outstanding at January 1, 2019 | 994,000 | $3.58 | 5.42 | $- |
Granted during the period | 1,193,500 | $1.44 | 5.79 | $- |
Expired during the period | - | - | ||
Canceled during the period | (510,000) | $2.80 | 4.50 | $- |
Exercised during the period | - | - | ||
Stock options outstanding at December 31, 2019 | 1,677,500 | $2.17 | 5.37 | $- |
Exercisable at December 31, 2019 | 794,000 | $3.36 | 4.04 | $- |
Non-vested stock options outstanding at January 1, 2019 | 244,500 | $3.05 | 4.53 | $- |
Granted during the period | 1,193,500 | $1.44 | 5.79 | $- |
Vested during the period | (304,500) | $2.79 | 3.72 | $- |
Expired during the period | - | - | ||
Canceled during the period | (250,000) | $1.75 | 4.45 | $- |
Exercised during the period | - | - | ||
Non-vested stock options outstanding at December 31, 2019 | 883,500 | $1.33 | 6.26 | $- |
DRAFT |
DRAFT |
DRAFT |
DRAFT |
DRAFT |
December 31, | |
2019 | |
Lease term and discount rate | |
Weighted-average remaining lease term | 0.85 years |
Weighted-average discount rate | 6.0% |
2020 | 87,008 |
Total lease payments | 87,008 |
Less imputed interest | (3,773) |
Present value of lease liabilities | $83,235 |
December 31, | December 31, | |
2019 | 2018 | |
Gross deferred tax assets: | ||
Net operating loss carry-forwards | $16,197,000 | $12,019,000 |
Temporary differences: | ||
Stock compensation | 199,000 | 303,000 |
Accruals | 136,000 | 124,000 |
Other | 131,000 | 44,000 |
Amortization | (291,000) | - |
Deferred tax asset valuation allowance | (16,372,000) | (12,490,000) |
Net deferred tax asset | $- | $- |
DRAFT |
December 31, | December 31, | |
2019 | 2018 | |
Income taxes benefit (expense) at statutory rate | 21% | 21% |
State income tax | 14% | 14% |
Non-deductible expense | (5%) | (6%) |
Change in valuation allowance | (30%) | (29%) |
0% | 0% |
DRAFT |
DRAFT |
Item | Amount |
SEC registration fee | $1,427.02 |
Legal fees and expenses | 274,000 |
Accounting fees and expenses | 15,000 |
Printing and engraving expenses | 2,000 |
Transfer agent and registrar fees and expenses | 2,000 |
Miscellaneous fees and expenses | 3,572.98 |
Total | $298,000 |
Amount | ||||
SEC Registration Fee | $ | 1,233.41 | ||
Legal Fees and Expenses | * | |||
Accounting Fees and Expenses | * | |||
Transfer Agent and Registrar fees and expenses | * | |||
Miscellaneous Expenses | * | |||
Total expenses | $ | * |
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this 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. |
Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 of the Company's Registration Statement on Form S-1, filed July 13, 2016). | ||
Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 of the Company's Registration Statement on Form S-1, filed with the SEC July 13, 2016). | ||
Certificate of Amendment to Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K, filed with the SEC December 30, 2019). | ||
Certificate of the Designations, Powers, Preferences and Rights of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed with the SEC on July 20, 2020.) | ||
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed with the SEC on August 5, 2020.) | ||
Certificate of the Designations, Powers, Preferences and Rights of Series C 9.00% Convertible Junior Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2021). | ||
Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-1, filed with the SEC on July 29, 2016). | ||
Form of Investor Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1 filed with the SEC on July 13, 2016). | ||
Form of Underwriter Warrant (Incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-1, filed with the SEC on July 29, 2016). | ||
Form of Series A Warrant, dated April 11, 2017 between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.3 filed with the Company’s Current Report on Form 8-K filed with the SEC on April 12, 2017). | ||
Form of Series A Warrant, dated June 5, 2017 (incorporated by reference to Exhibit 10.3 filed with the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2017). | ||
Form of Series A-1 Warrant, dated June 5, 2017 (incorporated by reference to Exhibit 10.4 filed with the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2017). | ||
Form of Underwriter Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2018). | ||
Form of Selling Agent Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2019). | ||
Form of Selling Agent Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 14, 2019). | ||
Form of Wainwright Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 22, 2019). | ||
Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 20, 2020). | ||
Form of Warrant for Convertible Notes Offering (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-3 filed with the SEC on July 27, 2020). | ||
Form of Pre-funded Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021). | ||
Form of Private Placement Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021). | ||
Form of Wainwright Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2021). | ||
Opinion of Lowenstein Sandler LLP. | ||
Stock Purchase Agreement dated May 21, 2014 between the Registrant, Protea Biosciences Group, Inc. and its wholly-owned subsidiary, Protea Biosciences, Inc (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-1 filed with the SEC on July 13, 2016). | ||
Amended and Restated AzurRx BioPharma, Inc. 2014 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 filed with the SEC on July 13, 2016). |
Securities Purchase Agreement dated April 11, 2017 between the Registrant and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 12, 2017). | ||
Registration Rights Agreement dated April 11, 2017 between the Registrant and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on April 12, 2017). | ||
Form of Securities Purchase Agreement dated June 5, 2017 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2017). | ||
Form of Registration Rights Agreement dated June 5, 2017 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on April 12, 2017). | ||
Sublicense Agreement dated August 7, 2017 by and between the Registrant and TransChem, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017). | ||
Asset Sale and Purchase Agreement, dated December 7, 2018, by and between Protea Biosciences Group, Inc., Protea Biosciences, Inc. and AzurRx Biopharma, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2018). | ||
Registration Rights Agreement, dated February 14, 2019 (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2019). | ||
Asset Purchase Agreement, by and between AzurRx BioPharma, Inc., AzurRx BioPharma SAS and Laboratoires Mayoly Spindler SAS, dated March 27, 2019 (incorporated by reference to Exhibit 10.25 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2019). | ||
Patent License Agreement, by and between AzurRx BioPharma, Inc. and Laboratoires Mayoly Spindler SAS, dated March 27, 2019 (incorporated by reference to Exhibit 10.26 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2019). |
Employment Agreement by and between AzurRx BioPharma, Inc. and James Sapirstein, dated October 8, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 11, 2019). | ||
Securities Purchase Agreement, dated November 13, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 14, 2019). | ||
Registration Rights Agreement, dated November 13, 2019 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on November 14, 2019). | ||
10.15 | Form of Note Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 30, 2019). | |
Form of Warrant (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on December 30, 2019). | ||
Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on December 30, 2019). | ||
Employment Agreement by and between AzurRx BioPharma, Inc. and Daniel Schneiderman, dated January 1, 2020 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2020). |
Form of Purchase Agreement, by and among the Company and the investors set forth on the signature pages thereto, including the form of Exchange Addendum (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 20, 2020). | ||
Form of Registration Rights Agreement, by and among the Company and the investors set forth on the signature page thereto (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 20, 2020). | ||
First Amendment to 2014 Omnibus Equity Incentive Plan (incorporated by reference as Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on July 20, 2020). | ||
2020 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 16, 2020). | ||
Form of Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021). | ||
Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2021). | ||
First Wave Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2021). | ||
10.26# | First Wave License Agreement (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed with the SEC on January 13, 2021). | |
Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 filed with the Company’s Registration Statement on Form S-1 filed with the SEC on July 13, 2016). | ||
Consent of Mazars USA LLP. | ||
Consent of Lowenstein Sandler LLP (included in Exhibit 5.1). | ||
Power of Attorney (included on the signature page of this registration statement). | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase |
AZURRX BIOPHARMA, INC. | |
By: /s/ James Sapirstein Name: James Sapirstein Title: President and Chief Executive Officer Officer) |
Signature | Title | Date | ||
/s/ James Sapirstein | President, Chief Executive Officer and Director | |||
James Sapirstein | (Principal Executive Officer) | |||
/s/ Daniel Schneiderman | Chief Financial Officer | January 13, 2021 | ||
Daniel Schneiderman | (Principal Financial Officer and Principal Accounting Officer) | |||
/s/ Edward J. Borkowski | Chair of the Board of Directors | |||
Edward J. Borkowski | ||||
/s/ Charles Casamento | Director | |||
Charles Casamento | ||||
/s/ Alastair Riddell | Director | |||
Alastair Riddell | ||||
/s/ Gregory Oaks | Director | January 13, 2021 | ||
Gregory Oaks | ||||
/s/ Vern Lee Schramm | Director | |||
Vern Lee Schramm | ||||