As filed with the Securities and Exchange Commission on April 26, 2007March 19, 2015
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington,
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BIODEL INC.
(Exact name of registrant as specified in itscharter)charter)
(Exact name of registrant as specified in its
| | Delaware | | | 2834 | | | 90-0136863 | |
| (State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification No.) | |
100 Saw Mill Road
Danbury, Connecticut 06810
Danbury, Connecticut 06810
(203)
796-5000
(Address, including zip code, and telephone number, including area code,
(Address, including zip code, and telephone number, including area code,
of registrant’s principal executive offices)
President and Chief Executive Officer
Biodel Inc.
100 Saw Mill Road
Danbury, Connecticut 06810
(203)
796-5000
(Name, address, including zip code, and telephone number,
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
| | Michael Grundei Wiggin and Dana LLP Two Stamford Plaza 281 Tresser Boulevard Stamford, Connecticut 06901 Telephone: (203) 363-7600 | | |
| Anna T. Pinedo New York, New York Telephone: (212) |
Approximate date of commencement of proposed sale to public: From time to time after the public: As sooneffective date of this registration statement, as practicable after this Registration Statement becomes effective.
determined by the registrant.
If any of the securities being registered on this Formform are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, (the “Securities Act”), pleaseor the Securities Act, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. o☐
If this Formform is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering.o☐_ _
offering.
If this Formform is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering.o☐_ _
offering.
If this Formform is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering.o_ _☐
offering.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| | Large accelerated filer ☐ | | | Accelerated filer ☐ | | | Non-accelerated filer ☐ (Do not check if a smaller reporting company) | | | Smaller reporting company ☒ | |
CALCULATION OF REGISTRATION FEE
| | | |||||||||||||||||||||
| Title of Each Class of Securities to be Registered | | | Amount to be Registered(1) | | | Proposed Maximum Aggregate Offering Price(2) | | | Amount of Registration Fee(2)(3) | | ||||||||||||
| Common Stock, par value $0.01 per share | | | | $ | 30,000,000 | | | | | $ | 30,000,000 | | | | | $ | 3,486.00 | | | |||
| | ||||||||||||||||||||||
(1)
Pursuant to Rule 416(a) under the Securities Act of 1933, the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.
| Proposed Maximum | Proposed Maximum | Amount of | ||||||||||||||||||
| Title of Each Class of | Amount to be | Aggregate Offering | Aggregate Offering | Registration | ||||||||||||||||
| Securities to be Registered | Registered(1) | Price Per Share(2) | Price(2) | Fee(3)(4) | ||||||||||||||||
| Common Stock, $0.01 par value per share | 5,750,000 | $ | 16.00 | $ | 92,000,000 | $ | 9,405.28 | |||||||||||||
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act. Rule 457(o) permits the registration fee to be calculated on the basis of the maximum offering price of all of the securities listed and, therefore, the table does not specify by each class information as to the amount to be registered, the proposed maximum offering price per unit or the proposed maximum aggregate offering price.
(3)
Amount calculated pursuant to Section 6(b) under the Securities Act.
The Registrantregistrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrantregistrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 19, 2015
PROSPECTUS
Shares
![[MISSING IMAGE: lg_biodel.jpg]](https://capedge.com/proxy/S-1/0001571049-15-002083/lg_biodel.jpg)
Biodel Inc. is
Common Stock
We are offering 5,000,000 shares of its common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $14.00 and $16.00 per share.
Our common stock is quoted on theThe Nasdaq GlobalCapital Market (“Nasdaq”) under the symbol “BIOD.” On March 18, 2015, the closing sale price of our common stock, as reported by Nasdaq, was $1.35 per share.
Investing in our common stock involves certain risks. SeeBefore purchasing our common stock, please review the information included in, and incorporated by reference into, the “Risk Factors” caption beginning on page 6.
4 of this prospectus.
| | | | Per Share | | | Total | | |||||||
| Public offering price | | | | $ | | | | | $ | | | |||
| Underwriting discount | | | | $ | | | | | $ | | | |||
| Proceeds, before expenses, to us | | | ||||||||||||
| | $ | | | | | $ | | |||||||
Joint Book-Running Managers
| | William Blair | |
| | ||
| Ladenburg Thalmann | ||
Roth Capital Partners
The date of this prospectus is , 20072015.
TABLE OF CONTENTS
TABLE OF CONTENTS
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You should rely only on the information contained in or incorporated by reference in this prospectus.prospectus, or in any related prospectus supplement, amendment to this prospectus or “free writing prospectus” that we file with the Securities and Exchange Commission. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate as of the date on the front of this prospectus only. Our business, financial condition,conditions, results of operations and prospects may have changed since that date.
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PROSPECTUS SUMMARY
The items in the commencement of this offering, all dealers that buy, sell or trade shares of our common stock, whether or not participatingfollowing summary are described in more detail later in this offering, may be required to deliver a prospectus. This isprospectus or incorporated by reference into this prospectus from our Annual Report on Form 10-K for the year ended September 30, 2014, our Quarterly Report on Form 10-Q for the quarter period ended December 31, 2014 and our other filings with the Securities and Exchange Commission listed in addition to the dealers’ obligation to deliver asection of the prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
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entitled “Incorporation of Certain Documents by Reference.” This summary highlightsprovides an overview of selected information contained elsewhere in this prospectus. This summary mayand does not contain all of the information that is important to you. Before investing inyou should consider before buying our common stock,stock. Therefore, you should read thisthe entire prospectus carefully, in its entirety, especially the risks of investing in our common stock that we discuss in the “Risk Factors” section of this prospectusbeginning on page 4 and our financial statements and the related notes beginning onpage F-1. Inincorporated by reference into this prospectus unless otherwise stated orfrom our Annual Report on Form 10-K for the context otherwise requires, referencesyear ended September 30, 2014, before deciding to invest in our common stock. References in this prospectus to “Biodel,” “we,” “our,” “us” and “our” andother similar references refer toterms mean Biodel Inc., unless we state otherwise or the context indicates otherwise.
Overview
We are a specialty pharmaceuticalbiopharmaceutical company focused on the development and commercialization of innovative treatments for endocrine disorders such as diabetes and osteoporosis, whichthat may be safer, more effective and convenient.more convenient for patients. We develop our product candidates by applying our proprietary formulation technologies to existing drugs in order to improve their therapeutic results.profiles. Our glucagon formulations and presentations are designed to be stable at room temperature and are intended for use by caregivers with little to no medical training as a rescue treatment for diabetes patients experiencing severe hypoglycemia, or very low concentrations of blood glucose. Our proprietary insulin formulations are designed to be more rapid-acting than the formulations currently available to Type 1 and Type 2 diabetes patients. We refer to these as “ultra-rapid-acting” insulin formulations.
Our lead product candidate is a glucagon emergency management, or GEM, device that is intended to treat diabetes patients experiencing severe hypoglycemia. GEM is comprised of lyophilized glucagon and an aqueous diluent in a proprietary injection device from Unilife Medical Solutions, Inc., or Unilife. The GEM device is a dual-chamber design that automatically reconstitutes lyophilized glucagon immediately prior to injection and features automatic needle retraction on full dose delivery. We have two insulin product candidates currentlydesigned the GEM device with the goal of optimizing its ease of use for patient caregivers in clinical trials foran emergency.
In the treatmentthird calendar quarter of diabetes:
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In addition to our RHI-based ultra-rapid-acting insulin formulations, we are using our proprietary excipients to develop analog-based ultra-rapid-acting insulin formulations using either insulin lispro, the active pharmaceutical ingredient in Humalog®, or insulin aspart, the active pharmaceutical ingredient in NovoLog®.
Corporate Information
We were incorporated in the State of Delaware in December 2003. Our principal executive offices are located at 6 Christopher Columbus Avenue,100 Saw Mill Road, Danbury, Connecticut 06810, and our telephone number is(203) 798-3600.796-5000. Our website address is http://www.biodel.com. TheThis reference to our website is intended to be an inactive textual reference and, except for the documents incorporated by reference as described in the section of this prospectus entitled “Incorporation of Certain Documents by Reference,” the information contained on, or that can be accessedaccessible through, our website is not intended to be a part of this prospectus.
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THE OFFERING
The following summary contains basic information about our common stock and the offering and is not intended to be complete. It does not contain all the information that may be important to you. For a more complete understanding of our common stock, you should read the section entitled “Description of Capital Stock” in this prospectus.
Common stock offered by us
shares
Common stock to be outstanding immediately after the offering
shares(1)
Over-allotment option
We have includedgranted the underwriters an option to purchase up to shares of our website addresscommon stock at a price of $ per share solely to cover over-allotments, if any. This option is exercisable, in whole or in part, for a period of 30 days from the date of this prospectus.
Use of proceeds
We intend to use the net proceeds from this offering primarily for working capital and general corporate purposes. See “Use of Proceeds.”
Risk factors
Investing in our common stock involves risks. See “Risk Factors” beginning on page 4 of this prospectus and any related free writing prospectus and under “Risk factors” in our Annual Report on Form 10-K for the year ended September 30, 2014 incorporated by reference into this prospectus for a discussion of risk factors that you should carefully consider before making a decision to buy shares of our common stock in this prospectus solely as an inactive textual reference.offering.
Nasdaq symbol
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BIOD
(1)
The number of shares of our common stock to be outstanding after this offering is based on 8,003,82824,620,322 shares of common stock outstanding as of March 31, 200716, 2015 and an additional 6,407,008excludes shares of common stock issuable upon the exercise of outstanding stock options and warrants and the conversion of all outstanding shares of ourconvertible preferred stock upon the closing of this offering. The number of shares of common stock to be outstanding after this offering excludes:stock.
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| December 3, | December 3, | |||||||||||||||||||||||
| 2003 | 2003 | |||||||||||||||||||||||
| (inception) to | Three months ended | (inception) to | ||||||||||||||||||||||
| September 30, | Year ended September 30, | December 31 | December 31, | |||||||||||||||||||||
| 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | |||||||||||||||||||
| (restated) | (restated) | (restated) | (restated) | (restated) | ||||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||
| (in thousands except share and per share data) | ||||||||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development | 580 | 2,666 | 5,987 | 865 | 2,515 | 11,748 | ||||||||||||||||||
| General and administrative | 193 | 724 | 1,548 | 281 | 1,343 | 3,808 | ||||||||||||||||||
| Total operating expenses | 773 | 3,390 | 7,535 | 1,146 | 3,858 | 15,556 | ||||||||||||||||||
| Other (income) and expense: | ||||||||||||||||||||||||
| Interest and other income | — | (9 | ) | (182 | ) | (1 | ) | (190 | ) | (381 | ) | |||||||||||||
| Interest expense | — | — | 78 | 3 | — | 78 | ||||||||||||||||||
| Loss on settlement of debt | — | — | 627 | — | — | 627 | ||||||||||||||||||
| Operating loss before tax provision | (773 | ) | (3,381 | ) | (8,058 | ) | (1,148 | ) | (3,668 | ) | (15,880 | ) | ||||||||||||
| Tax provision | 1 | 2 | 10 | 3 | — | 13 | ||||||||||||||||||
| Net loss | (774 | ) | (3,383 | ) | (8,068 | ) | (1,151 | ) | (3,668 | ) | (15,893 | ) | ||||||||||||
| Charge for accretion of beneficial conversion rights | — | — | (603 | ) | — | — | (603 | ) | ||||||||||||||||
| Net loss applicable to common stockholders | (774 | ) | (3,383 | ) | (8,671 | ) | (1,151 | ) | (3,668 | ) | (16,496 | ) | ||||||||||||
| Net loss per share — basic and diluted | $ | (0.15 | ) | $ | (0.64 | ) | $ | (1.62 | ) | $ | (0.21 | ) | $ | (0.68 | ) | |||||||||
| Weighted average shares outstanding — basic and diluted | 5,313,744 | 5,322,559 | 5,358,223 | 5,356,543 | 5,359,668 | |||||||||||||||||||
| Pro forma net loss per share — basic and diluted (unaudited) | $ | (1.05 | ) | $ | (0.39 | ) | ||||||||||||||||||
| Pro forma weighted average shares outstanding — basic and diluted (unaudited) | 8,252,113 | 9,360,430 | ||||||||||||||||||||||
| As of December 31, | ||||||||
| 2006 | ||||||||
| Pro Forma | ||||||||
| Balance sheet data: | Actual | as Adjusted | ||||||
| (restated) | (restated) | |||||||
| (unaudited) | ||||||||
| (in thousands) | ||||||||
| Cash and cash equivalents | $ | 14,563 | $ | 82,986 | ||||
| Working capital | 11,902 | 80,325 | ||||||
| Total assets | 15,843 | 84,266 | ||||||
| Long-term debt | — | — | ||||||
| Deficit accumulated during the development stage | (16,496 | ) | (20,996 | ) | ||||
| Total stockholders’ equity | 13,160 | 81,583 | ||||||
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RISK FACTORS
Investing in our common stocksecurities involves a high degree of risk. Yousignificant risks. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information includedwe include or incorporate by reference in this prospectus, includingprospectus. In particular, you should consider the financial statements andrisks related notes appearing at the end ofto this prospectus, before deciding to invest in our common stock.offering described below. If any of the followingthese risks actually occur, they may materially harm our business, prospects, financial condition and results of operations. In this event, the market price of our common stocksecurities could decline and you could lose part or all of your investment. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also affect our business operations.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
Since our inception in December 2003, we have incurred significant operating losses. Our net loss applicable to common stockholders was $3.7losses were approximately $14.1 million for the fiscal year ended September 30, 2014 and approximately $4.7 million for the three months ended December 31, 2006 and $8.7 million for the year ended September 30, 2006.2014. As of December 31, 2006,2014, we had a deficit accumulated duringsince inception of approximately $234.2 million. We have invested a significant portion of our efforts and financial resources in the development stage of $16.5 million. To date,our RHI- and insulin analog-based ultra-rapid-acting insulin product candidates, including BIOD-123, BIOD-531, BIOD-238, BIOD-250, and our prior Linjeta™ formulation. More recently, we have financed our operations primarily through private placementsbegun to invest an increasing portion of our preferred stock. We have devoted substantially allefforts and financial resources in the development of our time, money and efforts to the research and development of VIAjecttm, VIAtabtm and our preclinicalGEM product candidates. We have not completed development of any drugs. candidate.
We expect to continue to incur significant and increasing operating losses for at least the next several years. We anticipateyears as we may:
•
conduct the development work necessary to finalize the formulation and design of our GEM product candidate and undertake manufacturing activities in support our earlier stage clinical trials with that product candidate;
•
produce registration batches of our expenses will increase substantially as we:GEM product candidate to support the submission of an NDA with the FDA;
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conduct later stage clinical trials with our GEM product candidate, including at least one pivotal clinical trial required for FDA approval of an NDA, and commence targeted commercialization activities;
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conduct clinical trials with our BIOD-531 product candidate, including a planned Phase 2 parallel group study in patients with Type 2 diabetes over a six-month treatment period;
•
conduct the required stability, preclinical and human factors and user acceptability studies to support the approval of GEM device and one or more insulin injection devices intended for use with BIOD-531; and
•
purchase active pharmaceutical ingredients and other materials in support of our product candidates.
To become and remain profitable, we must succeed in developing and eventually commercializing drugs with significant market potential. This will require us to be successful in a range of challenging activities, including developing proprietary insulin and glucagon product candidates with desirable pharmacokinetic, pharmacodynamic, stability and injection site toleration characteristics and then successfully completing preclinical testing and clinical trials of our product candidates,for these formulations, obtaining regulatory approval for these product candidatesformulations and manufacturing, marketing and selling those products for which we may obtain regulatory approval. We are only in the preliminary stages of these activities. We may never succeed in these activities and may never generate revenues that are significant or large enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable wouldcould depress the market price of our common stock and could impair our ability to raise capital, expand our business or continue our operations. A decline in the market price of our common stock could also cause you to lose all or a part of your investment.
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We will need substantial additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts.
We are a development stage company with no commercial products. All of our product candidates are still being developed, and all but VIAjecttm are in early stages of development. Our product candidates will require significant additional development, clinical development, regulatory approvals and additionalrelated investment before they can be commercialized. We anticipate that VIAjecttm will not be commercially available for several years, if at all.
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materially adversely affected.
Based upon our current plans, we believe that the net proceeds of this offering together with our existing cash and cash equivalents will enable usbe sufficient to fund our anticipated operating expenses and capital expenditures forat least through the next 24 months.third calendar quarter of 2015. However, we cannot assure you that our plans will not change or that changed circumstances will not result in the depletion of our capital resources more rapidly than we currently anticipate. Our future capital requirements will depend on many factors, including:
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the progress, timing or success of our research and development and clinical programs for our product candidates, particularly our GEM product candidate and our BIOD-531 product candidate;
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our ability to conduct the development work necessary to finalize the formulation and presentation of our GEM product candidate, as well as the preclinical studies, clinical trials and manufacturing activities necessary to support the submission of an NDA for that candidate;
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the ability and willingness of our existing strategic partners, service providers and suppliers, upon which we rely in the advancement of our product candidates, to meet the obligations set forth in our agreements with them, including Unilife, which is responsible for designing and manufacturing the device intended for use with our GEM product candidate, as well as delivering three registration lots of the filled and finished GEM device required for submitting an NDA to the FDA;
•
the success of our formulation development work to improve the stability of our newer ultra-and rapid-acting insulin analog-based formulations while maintaining the pharmacokinetic and injection site toleration characteristics associated with earlier formulations;
•
the results of our real-time stability programs for our glucagon-, RHI-, and insulin analog-based product candidates, including the reproducibility of earlier, smaller scale, stability studies and our ability to accurately project long term stability on the basis of accelerated testing;
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our ability to accurately anticipate technical challenges that we may face in the development of our glucagon-, RHI-, and insulin analog-based product candidates;
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our ability to secure approval by the FDA for our product candidates under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, or FFDCA;
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our ability to enter into collaboration arrangements for the commercialization of our product candidates and the success or failure of any such collaborations into which we enter, or our ability to commercialize our product candidates ourselves;
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our ability to enforce our patents for our product candidates and our ability to secure additional patents for our product candidates;
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our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
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the degree of clinical utility of our product candidates, particularly with regard to our ultra-rapid-acting insulin formulations, which have not yet been shown to be clinically superior to existing rapid-acting insulin analogs;
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the emergence of competing technologies and products and other adverse market developments, such as advancements in glucagon stabilization technologies that could enable a room-temperature rescue product in a portable, easy to use presentation;
•
the ability of our contract manufacturing organizations or collaborators to produce our products in our final dosage form and in the quantities we may require;
•
our ability to secure adequate supplies of active pharmaceutical ingredients to support our product development programs and, if successful, the commercialization one or more product candidates;
•
our capabilities and strategies for manufacturing, marketing and commercializing a product candidate; and
•
our ability to accurately estimate anticipated operating losses, future revenues, capital requirements and our needs for additional financing.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through public or private equity offerings and debt financings, strategic collaborations and licensing arrangements. If we raise additional funds by issuing additional equity securities, our stockholders will experience dilution. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences, thatwhich are not favorable to us or our stockholders. If we raise additional funds through collaboration, strategic alliance andor licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies or product candidates, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
Our consolidated financial statements as of September 30, 2014 were prepared under the assumption that we will continue as a going concern for the next twelve months. Our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our recurring and expected continuing future losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. While we have access to certain amounts of financing through our At-the-Market Issuance Sales Agreement, or the sales agreement, with MLV & Co., LLC, or MLV, and our stock purchase agreement with Lincoln Park Capital Fund, LLC, or LPC, there are certain factors, such as volume of trading in our common stock, our stock price and the ability to terminate the agreement with notice, which limit the amount that can be raised in a short period of time through our agreement with LPC. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We commenced active operations in January 2004. Our operations to date have been limited to organizing and staffing our company, developing and securing our technology and undertaking preclinical studies and clinical trials of our most advanced product candidates, VIAjecttmcandidates. We have limited experience completing large-scale, pivotal clinical trials and VIAtabtm.Wewe have not yet demonstrated our ability to successfully complete large-scale, pivotal clinical trials, obtain regulatory approvals,approval to market a product, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.
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In addition, as a relatively new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We willmay need to transition from a company with a research focus to a company capable of supporting commercial activities. We may not be successful in such a transition.
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Risks Related to the Development and Commercialization of Our Product Candidates
We dependhave depended heavily on the success of our most advanced product candidate, VIAjecttm. VIAtabtm is our only other product candidate currently in clinical development. We do not expect to advance any other product candidates into clinical trials until 2008. Clinical trials of our product candidates may not be successful. If we are unable to commercialize VIAjecttm and VIAtabtm, or experience significant delays in doing so, our business will be materially harmed.
ultra-rapid-acting mealtime insulin development program.
We have invested a significant portion of our efforts and financial resources in the development of our most advanced product candidates, VIAjecttm and VIAtabtm. Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, will depend heavily on the successful development and eventual commercialization of theseultra-rapid-acting insulin product candidates. The commercial successFDA concluded that the results from our completed pivotal Phase 3 clinical trials of Linjeta™ were not sufficient to obtain marketing approval for the Linjeta™ formulation. We therefore chose to study newer formulations in earlier stage clinical trials. Clinical trials of our product candidates will depend on several factors, including the following:
first two new RHI-based formulations, BIOD-105 and BIOD-107, did not achieve satisfactory results. If we are not successful in completing the developmentable to develop alternative RHI- or insulin-analog based formulations with desirable pharmacokinetic, pharmacodynamic, stability and commercialization of our product candidates,injection site toleration characteristics, or if we are significantly delayedexperience significant delays in doing so, then our business willmay be materially harmed. For example, while BIOD-531, our lead candidate for a concentrated ultra-rapid-acting RHI-based formulation, demonstrated pharmacokinetic, pharmacodynamic and injection site toleration characteristics consistent with our target product profile in two earlier stage, single-dose, clinical trials, we have not studied BIOD-531 in multi-dose outpatient clinical trials.
The results of earlyour earlier stage clinical trials may not be predictive of results we may generate in later stage clinical trials, which may be more representative of the product candidate’s intended use as a long-term therapy. Additionally, we have manufactured a limited number of larger-scale batches of BIOD-531 from which to generate real-time stability data.
Our development of an RHI- or insulin analog-based formulation may not be successful; some formulations may have different regulatory requirements to obtain marketing approval from the FDA.
While we have significant experience with the technology we use to develop ultra-rapid-acting insulin formulations, we cannot assure you that our program to advance RHI- or insulin analog-based formulations will be successful or will offer improvements over the Linjeta™ formulation that we submitted to the FDA in our NDA. Some of our formulations offer advantages in terms of injection site toleration, but may not perform as well as the Linjeta™ formulation in terms of the overall pharmacokinetic and pharmacodynamic profile. Some of our insulin analog-based formulations under development appear to be absorbed as rapidly as Linjeta™, but are less stable in accelerated testing. For example, BIOD-238 and BIOD-250 do not demonstrate stability characteristics consistent with our target product profile. Accordingly, we are continuing our formulation development work to improve the stability characteristics of our ultra-rapid-acting insulin analog-based formulations. We may be unable to develop new RHI- or insulin analog-based formulations with pharmacokinetic, pharmacodynamic, stability and injection site toleration characteristics that are acceptable to us, a potential strategic partner or the FDA.
Furthermore, the regulatory requirements for any alternate formulation may not meet our expectations or may be different from those applicable to the formulation of Linjeta™ submitted in our NDA. For example, advancing any formulation based on an insulin analog may necessitate our conducting additional toxicology work prior to initiation of clinical trials in the United States. While BIOD-238 and BIOD 250, which are formulated by adding our proprietary excipients to the marketed presentation of Humalog®, were the subject of a Phase 1 clinical trial in Australia, we expect that we would need to conduct toxicology studies before advancing our insulin analog-based formulations into a Phase 1 clinical trial in the United States.
Our development of a glucagon rescue product candidate may not be successful; we have limited experience with developing drug-device combination products and rely heavily on the performance of third parties collaborators and consultants.
Our experience with the manufacture, testing and analysis of pharmaceutical preparations of glucagon in preclinical studies is limited, and we have not yet concluded any clinical trials using glucagon as an active pharmaceutical ingredient. Additionally, we have never prepared or submitted an NDA to the FDA for a drug-device combination product, such as our GEM product candidate, and we therefore rely heavily on the expertise of third-party collaborators and consultants, such as Unilife, which is responsible for the design and the development phase manufacturing of the GEM device, as well as for the device-specific portions of any NDA we may submit to the FDA. If we, or our consultants and
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collaborators, do not adequately anticipate or address technical and regulatory challenges that we may face in the development of our GEM product candidate, our business may be significantly harmed. For example, we have recently experienced delays in the development work for our GEM product candidate due to the inability of Unilife to produce registration lots of the final device according to previously projected timelines. As a result, our plans to submit an NDA for our GEM product candidate have been delayed, and we now anticipate filing an NDA for our GEM product candidate in the first half of calendar year 2016.
The results of preclinical testing and clinical trials do not ensure success in later stagefuture clinical trials.trials or commercial success.
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successful completion of preclinical development and clinical trials;
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our ability to identify and enroll patients who meet clinical trial eligibility criteria;
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receipt of marketing approvals from the FDA and similar regulatory authorities outside the United States;
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establishing that, with regard to our ultra-rapid-acting insulin formulations, the formulations are well-tolerated in chronic use;
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establishing that, with regard to our GEM product candidate, the commercial presentation can be administered effectively by patient caregivers with limited or no training;
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establishing commercial manufacturing capabilities through arrangements with third-party manufacturers;
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launching commercial sales of the products, whether alone or in collaboration with others;
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competition from other products; and
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continued acceptable safety profiles of the products following approval.
If our clinical trials are delayed or do not produce positive results, we may incur additional costs and
ultimately be unable to commercialize our product candidates.
ultimately be unable to commercialize our product candidates.
Before obtaining regulatory approval for the sale of our product candidates, we must conduct, at our own expense, extensive preclinical tests to demonstrate the safety of our product candidates in animals and clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more of our clinical trials of VIAjecttm and VIAtabtm canfor ultra rapid acting insulin or GEM product candidates could occur at any stage of testing. We may experience numerous unforeseen events during or as a result of, preclinical testing of VIAmasstm and VIAcaltm andour clinical trials of VIAjecttm and VIAtabtm that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including:
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the number of patients required for our clinical trials may be larger than we anticipate, enrollment | ||
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;
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we might have to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health risks;
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regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;
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the cost of our clinical trials may be delayed.greater than we anticipate;
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the supply, stability or quality of our product candidates or other materials necessary to conduct our clinical trials may be insufficient or inadequate; and
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the effects of our product candidates may not be the desired effects, may include undesirable side effects or the product candidates may have other unexpected characteristics.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete our clinical trials or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:
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be delayed in obtaining or discontinue our efforts to obtain marketing approval; • | ||
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not be able to obtain marketing approval;
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obtain approval for indications that are not as broad as intended; or
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have the product removed from the market after obtaining marketing approval.
Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructuredredesigned or will be completed on schedule, if at all. Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to commercialize our products or product candidates and may harm our business and results of operations.
If our product candidates are found to cause undesirable side effects we may need to delay or abandon our development and commercialization efforts.
Any undesirable side effects that might be caused by our product candidates could interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications. In addition, if any of our product candidates receive marketing approval and we or others later identify undesirable side effects caused by the product, we could face one or more of the following:
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a change in the labeling statements or withdrawal of FDA or other regulatory approval of the product;
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a change in the way the product is administered; or
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the need to conduct additional clinical trials.
Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or could substantially increase the costs and expenses of commercializing the product, which in turn could delay or prevent us from generating significant revenues from its sale.
The commercial success of any product candidates that we may develop including VIAjecttm, VIAtabtm, VIAmasstm and VIAcaltmwill depend upon the degree of market acceptance by physicians, patients,
healthcare payors and others in the medical community.
healthcare payors and others in the medical community.
Any products that we bring to the market including VIAjecttm, VIAtabtm, VIAmasstm and VIAcaltm, if they receive marketing approval, may not gain market acceptance by physicians, patients, healthcare payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. Physicians will not recommend our product candidates until clinical data or other factors demonstrate the safety and efficacy of our product candidates as compared to other treatments. Even if the clinical safety and efficacy of our product candidates isare established, physicians may elect not to recommend these
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product candidates for a variety of factors,reasons including the reimbursement policies of government and third-party payors, and the effectiveness of our competitors in marketing their products and the possibility that patients may experience more injection site discomfort than they experience with competing products.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:
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the willingness and ability of patients and the healthcare community to adopt our products;
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the ability to manufacture our product candidates in sufficient quantities with acceptable quality and to offer our product candidates for sale at competitive prices;
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the perception of patients and the healthcare community, including third-party payors, regarding the safety, efficacy and benefits of our product candidates compared to those of competing products or therapies;
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the convenience and ease of administration of our product candidates relative to existing treatment methods;
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the label and promotional claims allowed by the FDA, such as, in the case of an RHI- or insulin analog-based formulation, claims relating to glycemic control, hypoglycemia, weight gain, injection site discomfort, expiry dating and required handling conditions;
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the pricing and reimbursement of our product candidates relative to existing treatments; and
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marketing and distribution support for our product candidates.
Our ultra-rapid-acting insulin formulations have not yet been shown to be clinically superior to existing rapid-acting insulin analogs or other marketed comparators, such as Humulin® R U-500 and Humalog® Mix 75/25. It may be difficult for us to demonstrate superiority in the future because we anticipate that the primary endpoint of any pivotal clinical trial that we might conduct with an ultra-rapid-acting insulin product candidate would be non-inferiority to the comparator drug product. In addition, we are aware of other companies with expertise in protein stabilization that are developing liquid presentations of stable glucagon. If these formulations are presented in devices that are easier to use than our GEM device, our GEM product candidate, even if approved by the FDA, may not achieve commercial success.
The successful development of our product candidates may depend upon our ability to collaborate with or license technology from third parties.
BIOD-531 is at an early stage of development. In order for us to meet our projected milestones for this program, we must obtain a reliable source of active pharmaceutical ingredient and other related materials and supplies, including insulin injection devices or syringes that may be unique to BIOD-531 and its insulin concentration. In addition, with regard to our GEM product candidate, we are dependent upon proprietary licenses and supply arrangements we have with third parties, such as Unilife, which is responsible for designing and manufacturing the GEM device, as well as delivering three registration lots of the filled and finished GEM device required for submitting an NDA to the FDA. If we are unable to establish or maintain these licenses and supply arrangements, our efforts to commercialize our product candidates may be materially harmed.
If we fail to enter into strategic collaborations for the commercialization of our product candidates or if our collaborations are unsuccessful, we may be delayed in our commercialization efforts; we may be required to establish our own sales, marketing, manufacturing and distribution capabilities which will be expensive, require additional capital we do not currently have, and could delay the commercialization of our product candidates and have a material and adverse affecteffect on our business.business; we cannot commercialize our insulin analog-based formulations until all applicable third-party patents have expired.
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entered into any out-licensing collaborations with pharmaceutical or biotechnology companies. We face significant competition in seeking appropriate collaborators. In addition, collaboration agreements are complex and time-consuming to negotiate, document and implement. For all these reasons, it may be difficult for us to find third parties that are willing to enter into collaborations on economic terms that are favorable to us, or at all. IfEven if we do enter into any such collaboration, the collaboration may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. It is likely that our collaborators will have significant discretion in determining the efforts and resources that they will apply to these collaborations.
If we fail to enter into collaborations, or if our collaborations are unsuccessful, we may be required to establish our own direct sales, marketing, manufacturing and distribution capabilities. Establishing these capabilities can be time-consuming and expensive and we have little experience in doing so. Because of our size, we would be at a disadvantage to our potential competitors to the extent they collaborate with large pharmaceutical companies that have substantially more resources than we do. As a result, we would not initially be able to field a sales force as large as our competitors or provide the same degree of market research or marketing support. In addition, our competitors would have a greater ability to devote research and development resources toward expansion of the indications for their products. We cannot assure prospectiveour investors that we will succeed in entering into acceptable collaborations, that any such collaboration will be successful or, if not, that we will successfully develop our own sales, marketing and distribution capabilities.
If we are unable to obtain adequate reimbursement from governments or third-party payors for any products that we may develop or if we are unable to obtain acceptable prices for those products, they may not be
purchased or used and our revenues and prospects for profitability will suffer.
purchased or used and our revenues and prospects for profitability will suffer.
Our future revenues and profits will depend heavily upon the availability of adequate reimbursement for the use of ourany approved product candidates from governmental and other third-party payors, both in the United States and in other markets. Reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is:
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a covered benefit under its health plan;
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safe, effective and medically necessary;
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appropriate for the specific patient;
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cost-effective; and
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neither experimental nor investigational.
Obtaining reimbursement approval for a product from each government or other third-party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to each payor. We may not be able to provide data sufficient to gain acceptance with respect to reimbursement. Even when a payor determines that a product is eligible for reimbursement, the payor may impose coverage limitations that preclude payment for some uses that are approved by the FDA or comparable authorities. In addition, eligibility for coverage does not imply that any product will be reimbursed in all cases or at a
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rate that allows us to make a profit or even cover our costs.
Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent.
Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.
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Product liability lawsuits against us could cause us to incur substantial liabilities and to limit
commercialization of any products that we may develop.
commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially sell any products that we may develop. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for any product candidates or products that we may develop;
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injury to our reputation;
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withdrawal of clinical trial participants;
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costs to defend the related litigation;
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substantial monetary awards to trial participants or patients;
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loss of revenue; and
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the inability to commercialize any products that we may develop.
We currently carry global liability insurance in the amount of $5 million that we believe is reasonablesufficient to cover us from potential damages arising from proposedpast or future clinical trials of VIAjecttm. We also carry local policies per clinical trial of our ultra-rapid-acting insulin formulations and other product candidates.candidates that we may advance into the clinic. The amount of insurance that we currently hold may not be adequate to cover all liabilities that we may incur. We intend to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for any products. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost. If losses from product liability claims exceed our liability insurance coverage, we may ourselves incur substantial liabilities. If we are required to pay a product liability claim, we may not have sufficient financial resources to complete development or commercialization of any of our product candidates and, if so, our business and results of operations would be harmed.
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We face substantial competition in the development of our product candidates which may result in others developing or commercializing products before or more successfully than we do.
We are engaged in segments of the pharmaceutical industry that are characterized by intense competition and rapidly evolving technology. Many large pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private research organizations are pursuing the development of novel drugs that target endocrine disorders. We face, and expect to continue to face, intense and increasing competition as new products enter the market and advanced technologies become available.
If approved, our GEM product candidate would face significant competition. Eli Lilly and Novo Nordisk currently market injectable glucagon rescue kit products. We are aware of several glucagon rescue product candidates in early stage development, such as a potentially competitive auto-injector device being developed by Enject Corporation that integrates glucagon powder and a diluent into a dual-chamber cartridge within that device. Xeris Corporation, or Xeris, is developing glucagon formulations that are stabilized using non-aqueous solvents to suppress glucagon fibrillation. At the 2014 Annual Meeting of the American Diabetes Association, Xeris presented data from a Phase 2, double-blind, crossover, comparative pharmacology study in healthy non-diabetic volunteers in which the Xeris candidate formulation demonstrated pharmacodynamic bioequivalence to a marketed comparator (although the pharmacokinetic profiles of the 2 glucagon formulations were significantly different). In addition, other companies with expertise in protein stabilization, including Latitude Pharmaceuticals, have announced that they have developed a stable glucagon formulation using FDA-approved injectable ingredients. We believe that an intranasal formulation of glucagon is being studied in one or more clinical trials, as is a glucagon formulation delivered intra-dermally by a micro needle patch. All of these programs utilize the same active pharmaceutical ingredient as the stable glucagon presentations that we are developing and offer, or may offer, presentations allowing for room temperature storage. In addition, Eli Lilly, Novo Nordisk and Zealand Pharma A/S, a pharmaceutical company based in Denmark, may be developing glucagon analogs, which may also offer advantages over our stable glucagon presentations.
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If approved, the primary competition for our BIOD-123 ultra-rapid-acting insulin product candidate will be rapid-acting mealtime injectable insulins. There are several approved injectable rapid-acting meal-timemealtime insulin analogs currently on the market including Humalog®, marketed by Eli Lilly and Company, NovologNovoLog®, marketed by Novo Nordisk, A/S, and Apidra®, marketed by Sanofi-Aventis.Sanofi. These rapid-acting insulin analogs provide improvement over regular forms of short-acting“regular” mealtime insulin, including faster subcutaneous absorption, an earlier and greater insulin peak and more rapid post-peak decrease. Both Humalog® and NovoLog® have limited remaining patent protection in the United States and Europe. The possible introduction of lower priced brands or substitutable generic versions of these products could negatively impact the revenue potential of our ultra-rapid-acting product candidates should any be approved.
In addition, Pfizerother development stage insulin formulations may be approved and compete with BIOD-123. Halozyme Therapeutics, Inc.’s Exubera has conducted a Phase 1 and multiple Phase 2 clinical trials of RHI, lispro (the insulin analog in Humalog®) and aspart (the insulin analog in NovoLog®) in combination with a recombinant human hyaluronidase enzyme and has reported that in each case the combination yielded pharmacokinetics and glucodynamics that better mimicked physiologic mealtime insulin release and activity than RHI, Humalog® or NovoLog® alone. Novo Nordisk has initiated clinical development of an insulin analog intended to provide faster onset of action than the currently available rapid-acting insulin analogs and is studying candidate formulations in Phase 3 clinical trials. A French biotechnology company, Adocia Inc., announced positive preliminary results in September 2014 from a Phase 2a dose response clinical trial evaluating an inhalable“ultra-fast” formulation of insulin deliveredlispro. Furthermore, the company announced plans to develop a concentrated formulation of insulin lispro using its absorption enhancing technologies. In December 2014, Adocia Inc. announced that it had entered into a worldwide licensing partnership with Eli Lilly to develop an ultra-rapid-acting insulin to treat patients with Type 1 and Type 2 diabetes.
Our concentrated ultra-rapid acting insulin product candidate, BIOD-531, if approved, would face significant competition from insulin formulations currently on the market and, potentially, from development stage insulin formulations and other treatment systems. Humulin® R U-500 is commonly used to treat diabetes patients with severe insulin resistance, and pre-mixed insulins, such as Humalog® Mix 75/25, is commonly used to treat diabetes patients and lesser degrees of insulin resistance. Newer combination products may also compete with BIOD-531. For example, a combination of insulin degludec, an ultra-long-acting basal insulin developed by Novo Nordisk, and NovoLog® is approved in Europe and may be approved in the United States within the next few years. Also, combinations of basal insulin and GLP-1 analogs have either been approved or are in later stages of development; these products are believed to offer some measure of postprandial glucose control in addition to the control offered by a device developed by Nektar Therapeutics, was recently approved by the FDA and the European Medicines Agency, or the EMEA. Emisphere Technologies, Inc. is developing oral insulin in pill form. Emisphere is still in early-stage preclinical trials of its oral tablet. Generexbasal insulin. Furthermore, Thermalin Diabetes, LLC, has developed an oral spray that is currently in Phase II development. announced plans to develop a novel concentrated insulin-analog based formulation with fast absorption.
Several companies are also developing or marketing alternative insulin systems for diabetes, including Novo Nordisk, Eli Lilly and Company in collaboration with Alkermes, Inc.,Afrezza® an inhalable mealtime insulin product from MannKind Corporation, Emisphere Technologies, Inc.which was approved by the FDA in July 2014. In September 2014 MannKind Corporation announced the closing of a worldwide exclusive collaboration and Aradigm Corporation. In addition, a number of established pharmaceutical companies, including GlaxoSmithKline plc and Bristol-Myers Squibb Company, are developing proprietary technologies or have entered into arrangementslicensing agreement with or acquired, companies with technologiesSanofi for the treatmentdevelopment and commercialization of Afrezza® for adults with Type 1 and Type 2 diabetes.
An inhaled insulin could reduce the overall market for injectable mealtime insulin.
Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing or that would render our product candidates obsolete or non-competitive. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours.
Many of our potential competitors have:
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significantly greater financial, technical and human resources than we have and may be better equipped to discover, develop, manufacture and commercialize product candidates;
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more extensive experience in preclinical testing and clinical trials, obtaining regulatory approvals and manufacturing and marketing pharmaceutical products;
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product candidates that have been approved or are in late-stage clinical development; or
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collaborative arrangements in our target markets with leading companies and research institutions.
Our product candidates may be rendered obsolete by technological change.
The rapid rate of scientific discoveries and technological changes could result in one or more of our product candidates becoming obsolete or noncompetitive. For several decades, scientists have attempted to improve the bioavailability of injected formulations and to devise alternative non-invasive delivery systems for the delivery of drugs such as insulin. Our product candidates will compete against many products with similar indications. In addition to the currently marketed rapid-acting insulin analogs, our competitors are developing insulin formulations delivered by oral pills, pulmonary devices and oral spray devices. Our future success will depend not only on our ability to develop our product candidates, but also on our ability to maintain market acceptance against emerging industry developments. We cannot assure current or prospective investorsstockholders that we will be able to do so.
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Our business activities involve the storage and use of hazardous materials, which require compliance with environmental and occupational safety laws regulating the use of such materials. If we violate these laws, we could be subject to significant fines, liabilities or other adverse consequences.
Our research and development work and manufacturing processes involve the controlled storage and use of hazardous materials, including chemical and biological materials. Our operations also produce hazardous waste products. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials. Although we believe that our safety procedures for handling and disposing of such materials and waste products comply in all material respects with the standards prescribed by federal, state and local laws and regulations, the risk of accidental contamination or injury from hazardous materials cannot be completely eliminated. In the event of an accident or failure to comply with environmental laws, we could be held liable for any damages that may result, and any such liability could fall outside the coverage or exceed the limits of our insurance. In addition, we could be required to incur significant costs to comply with environmental laws and regulations in the future or pay substantial fines or penalties if we violate any of these laws or regulations. Finally, current or future environmental laws and regulations may impair our research, development or production efforts.
Risks Related to Our Dependence on Third Parties
Use of third parties to manufacture our product candidates may increase the riskrisks that we will not have
sufficient quantities of our product candidates or such quantities at an acceptable cost,andor that our contract manufacturers will not be able to manufacture our products in their final dosage form. In any such case, clinical development and commercialization of our product candidates could be delayed, prevented or impaired.
sufficient quantities of our product candidates or such quantities at an acceptable cost,
We do not currently own or operate manufacturing facilities for commercial production of our product candidates. We have limited experience in drug manufacturing and we lack the resources and the capabilities to manufacture any of our product candidates on a clinical or commercial scale. Our current strategy is to outsource to third parties all of the manufacturing ofrequired for our product candidates, including the component parts of the GEM device and productsactivities associated with assembling, filling, finishing and packaging that device.
Under our customization and commercial supply agreement with Unilife, Unilife will develop and be the sole supplier of the GEM device. Additionally, Unilife is responsible for delivering three registration lots of the filled and finished GEM device required for submitting an NDA to third parties. the FDA. The initial term of our agreement with Unilife will expire in 2028.
We also expecthave entered into a manufacturing agreement with Emergent BioSolutions, or Emergent, under which Emergent will fill and finish the GEM device, using lyophilized glucagon and an aqueous diluent. During the term of our agreement with Emergent following validation of the manufacturing process, we are required to rely uponpurchase, and Emergent is obligated to deliver to us, one manufactured lot of the GEM device every quarter. However, we would likely require additional manufacturing capacity in order for any commercial launch of our GEM product candidate to be successful.
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With regard to our ultra-rapid-acting insulin formulations, including BIOD-531, we have recently relied on the University of Iowa for manufacturing services. We do not have any commercial manufacturing agreements in place with third parties to produce materials required for the commercial production of oursupport these product candidates if we succeed in obtaining necessary regulatory approvals. Although we have contracted with a large commercial manufacturer for VIAjecttm, there can be no assurance that we will be able to do so successfully with our remaining product candidates. The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques, processes and quality controls.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates or products ourselves, including:
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reliance on the third party for regulatory compliance and quality assurance;
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the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and
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the possible refusal by or inability of the third party to support our manufacturing programs in a time frame that we would otherwise prefer.
Our manufacturers may not be able to comply with current good manufacturing practice, or cGMP, regulations or other regulatory requirements or similar regulatory requirements outside the United States. Our manufacturers are subject to unannounced inspections by the FDA, state regulators and similar regulators outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.
Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that are both capable of manufacturing for us and willing to do so. If the third parties that we engage to manufacture product for our clinical trials should cease to continue to do so for any reason, we likely would experience delays in advancing these trials while we identify and qualify replacement suppliers and we may
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be unable to obtain replacement supplies on terms that are favorable to us. In addition, if we are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive regulatory approval on a timely and competitive basis.
We rely on third parties for design and engineering expertise relating to the development of devices we may use to administer the pharmaceutical preparations of our product candidates.
The success of certain of our product candidates is likely to depend heavily on the design of the devices being used for the administration of our pharmaceutical preparations. For example, the GEM device, which is based on an existing technology platform developed by Unilife Corporation, is being customized by Unilife for use in an emergency situation. We do not have internal engineering expertise relating to medical devices, and we therefore rely on Unilife to provide such expertise. If our collaboration with Unilife is not successful in this regard, our program to develop our GEM product candidate will be materially harmed. Additionally, in order to maximize the commercial potential of our ultra-rapid-acting insulin product candidates, we will likely depend on one or more manufacturers of insulin pen injection devices or syringes to supply us with a commercially acceptable device. To date, we have not entered into any agreements for the supply of insulin pen injection devices or syringes, and we cannot assure you that any such devices will be available on terms that will be acceptable to us, if at all.
We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to meet established deadlinestimelines for the completion of such trials.
We do not independently conduct clinical trials forof our product candidates. We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators, to enroll qualified patients and conduct our clinical trials. Our reliance
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on these third parties for clinical development activities reduces our control over these activities. We are responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates.
If our suppliers principally our sole insulin supplier,of active pharmaceutical ingredients and other production materials fail to deliver materials and provide services needed for the production of VIAjecttm and VIAtabtmour product candidates in a timely and sufficient manner, or if they fail to comply with applicable regulations, clinical development or regulatory approval of our product candidates, or
commercialization of our products could be delayed, producing additional losses and depriving us of potential product revenue.
commercialization of our products could be delayed, producing additional losses and depriving us of potential product revenue.
We need access to sufficient, reliable and affordable supplies of recombinant human insulin, glucagon and other materials, such as vials, cartridges, prefilled syringes and, potentially, drug injection devices, for which we rely on various suppliers. We also must rely on those suppliers to comply with relevant regulatory and other legal requirements, including the production of insulin and glucagon in accordance with cGMP. We can make no assurances that our suppliers particularly our insulin supplier, will comply with cGMP.
We currently have anentered into a commercial supply agreement with a single insulin supplier that is responsibleBachem AG for providingthe supply of all of the insulin thatglucagon we usewill need for the testing and manufacturing VIAjecttmof our GEM product candidate. The initial term of our agreement with Bachem AG will expire in July 2017. We believe that the quantities of glucagon that we have rights to acquire under this agreement will be sufficient to allow us to complete our current and VIAtabtm.anticipated future clinical trials of our GEM product candidate and to support any commercial launch of the product candidate.
We have terminated an earlier supply agreement with N.V. Organon (subsequently acquired by Amphastar Pharmaceuticals, Inc., a specialty pharmaceutical development and manufacturing company), under which we have purchased the RHI we have used to formulate all of our RHI-based product candidates. We intend to use existing supplies of RHI to support the further development of BIOD-531, as well as enter into one or more development stage RHI supply agreements, as necessary. We do not have any plans, however, to commit to quantities of RHI that may be required to support the commercial launch of one or more of our RHI-based product candidates.
If we are unable to procure sufficient quantities of glucagon or insulin from our current or any future supplier, if supply of recombinant human insulinRHI, glucagon and other materials otherwise becomes limited, or if our supplier doessuppliers do not meet relevant regulatory requirements, and if we were unable to obtain these materials in sufficient amounts, in a timely manner and at reasonable prices, we could be delayed in the manufacturing and futurepossible commercialization of VIAjecttm and VIAtabtm.our product candidates, which may have a material adverse effect on our business. We would incur substantial costs and manufacturing delays if our suppliers are unable to provide us with products or services approved by the FDA or other regulatory agencies.
Risks Related to Our Intellectual Property
If we are unable to protect our intellectual property rights, our competitors may develop and market similar or identical products that may reduce demand for our products, and we may be prevented from establishing collaborative relationships on favorable terms.
The following factors are important to our success:
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receiving patent protection for our product candidates; • | ||
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maintaining our trade secrets;
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not infringing on the proprietary rights of others; and
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preventing others from infringing on our proprietary rights.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We try to protect our proprietary position by filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business. Because the patent position of pharmaceutical companies involves complex legal and factual questions, the issuance, scope and enforceability of patents cannot be predicted with certainty. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that we own or license from others may not provide any protection against competitors.
Our pending patent applications, those we may file in the future, or those we may license from third parties, may not result in patents being issued. If patents do not issue with claims encompassing our products, our competitors may develop and market similar or identical products that compete with ours. Even if patents are issued, they may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Failure to obtain effective patent protection for our technology and products may reduce demand for our products and prevent us from establishing collaborative relationships on favorable terms.
The individual active and inactive ingredients in our VIAjecttmultra-rapid-acting insulin formulations and VIAtabtm product candidatesour stable glucagon presentations have been known and used for many years and, therefore, are no longer subject to patent protection.protection, except in proprietary combinations. Accordingly, our patent and pending patent applications are directed to the particular formulations of these ingredients in our products, and to their use. Although we believe our formulations and their useuses are patentableor will be patented and provide a competitive advantage, even if issued, our patents may not prevent others from marketing formulations using the same active and inactive ingredients in similar but different formulations.
combinations.
We also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We try to protect this information by entering into confidentiality agreements with parties that have access to it, such as potential corporate partners, collaborators, employees and consultants. Any of these parties may breach the agreements and disclose our confidential information or our competitors may learn of the information in some other way. Furthermore, others may independently develop similar technologies or duplicate any technology that we have developed. If any trade secret, know-how or other technology not protected by a patent were to be disclosed to or independently developed by a competitor, our business and financial condition could be materially adversely affected.
The laws of many foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States.
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Accordingly, the fact that we have obtained certain patent rights in the United States does not guarantee that we will be able to obtain the same or similar rights elsewhere. Even if we are granted patents in foreign countries, we cannot guarantee that we will be able to enforce our rights effectively.
We may become involved in lawsuits and administrative proceedings to protect, defend or enforce our
patents that would be expensive and time-consuming.
patents that would be expensive and time-consuming.
In order to protect or enforce our patent rights, we may initiate patent litigation against third parties in the United States or in foreign countries. In addition, we may be subject to certain opposition proceedings conducted in patent and trademark offices challenging the validity of our patents and may become involved in future opposition proceedings challenging the patents of others. For example, in late July 2013, a third party initiated administrative proceedings to oppose EP2319500 and EP2106790, two of
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our more recent patents that have been granted by the European Patent Office in connection with our ultra-rapid-acting insulin formulations. While we were successful in defending the opposition before the Opposition Division of the European Patent Office in October 2014 through an amendment to the specification, the parties have appealed the European Patent Office’s decisions. The defense of intellectual property rights, including patent rights, through lawsuits, interference or opposition proceedings, and other legal and administrative proceedings can be costly and can divert our technical and management personnel from their normal responsibilities. Such costs increase our operating losses and reduce our resources available for development activities. An adverse determination of any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. For example, during the course of this kind of litigation and despite protective orders entered by the court, confidential information may be inadvertently disclosed in the form of documents or testimony in connection with discovery requests, depositions or trial testimony. This disclosure could materially adversely affect our business and financial results.
Claims by other parties that we infringe or have misappropriated their proprietary technology may result in liability for damages, royalties, or other payments, or stop our development and commercialization efforts.
Competitors and other third parties may initiate patent litigation against us in the United States or in foreign countries based on existing patents or patents that may be granted in the future. Many of our competitors may have obtained patents covering products and processes generally related to our products and processes, and they may assert these patents against us. Moreover, there can be no assurance that these competitors have not sought or will not seek additional patents that may cover aspects of our technology. As a result, there is a greater likelihood of a patent dispute than would be expected if our competitors were pursuing unrelated technologies.
While we conduct patent searches to determine whether the technologies used in our products infringe patents held by third parties, numerous patent applications are currently pending and may be filed in the future for technologies generally related to our technologies, including many patent applications that remain confidential after filing. Due to these factors and the inherent uncertainty in conducting patent searches, there can be no guarantee that we will not violate third-party patent rights that we have not yet identified.
There may be U.S. and foreign patents issued to third parties that relate to aspects of our product candidates. There may also be patent applications filed by these or other parties in the United States and various foreign jurisdictions that relate to some aspects of our product candidates, which, if issued, could subject us to infringement actions. The owners or licensees of these and other patents may file one or more infringement actions against us. In addition, a competitor may claim misappropriation of a trade secret by an employee hired from that competitor. Any such infringement or misappropriation action could cause us to incur substantial costs defending the lawsuit and could distract our management from our business, even if the allegations of infringement or misappropriation are unwarranted. A need to defend multiple actions or claims could have a disproportionately greater impact. In addition, either in response to or in anticipation of any such infringement or misappropriation claim, we may enter into commercial agreements with the owners or licensees of these rights. The terms of these commercial agreements may include substantial payments, including substantial royalty payments on revenues received by us in connection with the commercialization of our products.
Payments under such agreements could increase our operating losses and reduce our resources available for development activities. Furthermore, a party making this type of claim could secure a judgment that requires us to pay substantial damages, which would increase our operating losses and reduce our resources available for development activities. A judgment could also include an injunction or other court order that could prevent us from making, using, selling, offering for sale or importing our products or prevent our customers from using our products. If a court determined or if we independently concluded
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that any of our products or manufacturing processes violated third-party proprietary rights, our clinical trials could be delayed and there can be no assurance
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that we would be able to reengineer the product or processes to avoid those rights, or to obtain a license under those rights on commercially reasonable terms, if at all.
Risks Related to Regulatory Approval of Our Product Candidates
If the FDA does not believe that our product candidates satisfy the requirements for the Section 505(b)(2) approval procedure, or if the requirements for our product candidates under Section 505(b)(2) are not as we expect, the approval pathway will take longer and cost more than anticipated.
anticipated and in either case may not be successful.
We believe that VIAjecttmour ultra-rapid-acting insulin formulations and VIAtabtmour stable glucagon presentation for use as a rescue product qualify for approval under Section 505(b)(2) of the FFDCA. Because we are developing improvednew formulations of previously approved chemical entities, such as insulin this may enable us to avoid having to submit certain types of data and studies that are required in full NDAs and instead submit a Section 505(b)(2) NDA. The FDA may not agree that our products are approvable under Section 505(b)(2). Insulin is a unique and complex drug in that it is a complex hormone molecule that is more difficult to replicate than many small molecule drugs. The availability of the Section 505(b)(2) pathway for insulin is even more controversial than for small molecule drugs, and the FDA may not accept this pathway for our insulin product candidates. The FDA has not published any guidance that specifically addresses insulin Section 505(b)(2) NDAs. No other insulin product has yet been approved under a Section 505(b)(2) NDA. If the FDA determines that Section 505(b)(2) NDAs are not appropriate and that full NDAs are required for our product candidates, the time and financial resources required to obtain FDA approval for our product candidates could substantially and materially increase. This would require us to obtain substantially more funding than previously anticipated which could significantly dilute the ownership interests of our stockholders. Even with this investment, the prospect for FDA approval may be significantly lower. If the FDA requires full NDAs for our product candidates or requires more extensive testing and development for some other reason, our ability to compete with alternative products that arrive on the market more quickly than our product candidates would be adversely impacted.
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| As of December 31, 2006 | ||||||||||||
| Pro Forma | ||||||||||||
| Actual | Pro Forma | as Adjusted | ||||||||||
| (restated) | (restated) | |||||||||||
| (unaudited) | (restated) | |||||||||||
| (in thousands, except share data) | ||||||||||||
| Cash and cash equivalents(1) | $ | 14,563 | $ | 14,986 | $ | 82,986 | ||||||
| Long-term liabilities | — | — | — | |||||||||
| Stockholders’ equity: | ||||||||||||
| Series A convertible preferred stock, par value $0.01 per share, 1,050,000 shares authorized and 569,000 shares issued and outstanding, with a liquidation preference of $2,845 and an 8% non-cumulative dividend, actual; no shares authorized, issued or outstanding, pro forma or pro forma as adjusted | 6 | — | ||||||||||
| Series B convertible preferred stock, par value $0.01 per share, 6,500,000 shares authorized, 6,198,179 shares issued and outstanding, with a liquidation preference of $24,421, actual; no shares authorized, issued or outstanding, pro forma or pro forma as adjusted | 62 | — | ||||||||||
| Preferred stock, par value $0.01 per share, no shares authorized, issued or outstanding, actual and pro forma; 50,000,000 shares authorized and no shares issued or outstanding, pro forma as adjusted | — | |||||||||||
| Common stock, par value $0.01 per share; 50,000,000 shares authorized, actual and pro forma; and 5,366,921 shares issued and outstanding, actual; 14,410,836 shares issued and outstanding, pro forma; 100,000,000 million shares authorized and 19,410,836 shares issued and outstanding, pro forma as adjusted | 54 | 144 | 194 | |||||||||
| Additional paid-in capital(1) | 29,534 | 34,435 | 102,385 | |||||||||
| Deficit accumulated during the development stage | (16,496 | ) | (20,996 | ) | (20,996 | ) | ||||||
| Total capitalization(1) | $ | 13,160 | $ | 13,583 | $ | 81,583 | ||||||
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| Assumed initial public offering price per share | $ | 15.00 | ||||||
| Historical net tangible book value per share as of December 31, 2006 | $ | 2.37 | ||||||
| Decrease attributable to the exercise of warrants on March 30, 2007 and the conversion of outstanding preferred stock | $ | (1.46 | ) | |||||
| Pro forma net tangible book value as of December 31, 2006 | $ | 0.91 | ||||||
| Increase per share attributable to new investors | $ | 3.27 | ||||||
| Pro forma net tangible book value per share after this offering | $ | 4.18 | ||||||
| Dilution per share to new investors | $ | 10.82 | ||||||
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| Shares Purchased | Total Consideration | Average Price | ||||||||||||||||||
| Number | Percent | Amount | Percent | Per Share | ||||||||||||||||
| Existing stockholders | 14,410,836 | 74.2 | % | $ | 28,703,000 | 27.7 | % | $ | 1.99 | |||||||||||
| New investors | 5,000,000 | 25.8 | % | $ | 75,000,000 | 72.3 | % | $ | 15.00 | |||||||||||
| Total | 19,410,836 | 100.0 | % | $ | 103,703,000 | 100.0 | % | |||||||||||||
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| December 3, | December 3, | |||||||||||||||||||||||
| 2003 | 2003 | |||||||||||||||||||||||
| (inception) to | (inception) to | |||||||||||||||||||||||
| September 30, | Year ended September 30, | Three months ended December 31 | December 31, | |||||||||||||||||||||
| Statement of operations data: | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | ||||||||||||||||||
| (restated) | (restated) | (restated) | (restated) | (restated) | ||||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development | 580 | 2,666 | 5,987 | 865 | 2,515 | 11,748 | ||||||||||||||||||
| General and administrative | 193 | 724 | 1,548 | 281 | 1,343 | 3,808 | ||||||||||||||||||
| Total operating expenses | 773 | 3,390 | 7,535 | 1,146 | 3,858 | 15,556 | ||||||||||||||||||
| Other (income) and expense: | ||||||||||||||||||||||||
| Interest and other income | — | (9 | ) | (182 | ) | (1 | ) | (190 | ) | (381 | ) | |||||||||||||
| Interest expense | — | — | 78 | 3 | — | 78 | ||||||||||||||||||
| Loss on settlement of debt | — | — | 627 | — | — | 627 | ||||||||||||||||||
| Operating loss before tax provision | (773 | ) | (3,381 | ) | (8,058 | ) | (1,148 | ) | (3,668 | ) | (15,880 | ) | ||||||||||||
| Tax provision | 1 | 2 | 10 | 3 | — | 13 | ||||||||||||||||||
| Net loss | (774 | ) | (3,383 | ) | (8,068 | ) | (1,151 | ) | (3,668 | ) | (15,893 | ) | ||||||||||||
| Charge for accretion of beneficial conversion rights | — | — | (603 | ) | — | — | (603 | ) | ||||||||||||||||
| Net loss applicable to common stockholders | (774 | ) | (3,383 | ) | (8,671 | ) | (1,151 | ) | (3,668 | ) | (16,496 | ) | ||||||||||||
| Net loss per share — basic and diluted | $ | (0.15 | ) | $ | (0.64 | ) | $ | (1.62 | ) | $ | (0.21 | ) | $ | (0.68 | ) | |||||||||
| Weighted average shares outstanding — basic and diluted | 5,313,744 | 5,322,559 | 5,358,223 | 5,356,543 | 5,359,668 | |||||||||||||||||||
| Pro forma net loss per share — basic and diluted (unaudited) | $ | (1.05 | ) | $ | (0.39 | ) | ||||||||||||||||||
| Pro forma weighted average shares outstanding — basic and diluted (unaudited) | 8,252,113 | 9,360,430 | ||||||||||||||||||||||
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| As of | ||||||||||||||||
| As of September 30, | December 31, | |||||||||||||||
| 2004 | 2005 | 2006 | 2006 | |||||||||||||
| (restated) | (restated) | (restated) | ||||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
Balance sheet data: | ||||||||||||||||
| Cash and cash equivalents | $ | 221 | $ | 368 | $ | 17,539 | $ | 14,563 | ||||||||
| Working capital (deficit) | 194 | (98 | ) | 15,307 | 11,902 | |||||||||||
| Total assets | 611 | 1,195 | 18,659 | 15,843 | ||||||||||||
| Long-term debt | — | — | — | — | ||||||||||||
| Deficit accumulated during the development stage | (774 | ) | (4,157 | ) | (12,828 | ) | (16,496 | ) | ||||||||
| Total stockholders’ equity | 581 | 654 | 16,348 | 13,160 | ||||||||||||
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| December 3, | December 3, | |||||||||||||||||||||||
| 2003 | 2003 | |||||||||||||||||||||||
| (inception) to | Year ended | Three months ended | (inception) to | |||||||||||||||||||||
| September 30, | September 30, | December 31 | December 31, | |||||||||||||||||||||
| 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | |||||||||||||||||||
| (restated) | (restated) | (restated) | (restated) | (restated) | ||||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Research and development expenses: | ||||||||||||||||||||||||
| Preclinical expenses | $ | 495 | $ | 1,261 | $ | 1,575 | $ | 286 | $ | 313 | $ | 3,644 | ||||||||||||
| Manufacturing expenses | 13 | 241 | 1,264 | 53 | 598 | 2,116 | ||||||||||||||||||
| Clinical/regulatory expenses | 72 | 1,164 | 3,148 | 526 | 1,604 | 5,988 | ||||||||||||||||||
| Total | $ | 580 | $ | 2,666 | $ | 5,987 | $ | 865 | $ | 2,515 | $ | 11,748 | ||||||||||||
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| Liquidity Event | ||||||||||||||||
| Sale/ | ||||||||||||||||
Valuation Date | Private Company | IPO | Merger | Dissolution | ||||||||||||
| July 14, 2005 | 35 | % | 0 | % | 0 | % | 65 | % | ||||||||
| July 19, 2006 | 55 | % | 10 | % | 5 | % | 30 | % | ||||||||
| December 19, 2006 | 45 | % | 35 | % | 15 | % | 5 | % | ||||||||
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| Less than | More than | |||||||||||||||||||
| Total | 1 Year | 1-3 Years | 4-5 Years | 5 Years | ||||||||||||||||
| Operating lease obligations | $ | 266 | $ | 76 | $ | 190 | $ | — | $ | — | ||||||||||
| Total fixed contractual obligations | $ | 266 | $ | 76 | $ | 190 | $ | — | $ | — | ||||||||||
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| Pharmacokinetic and | ||||||||||||
Pharmacodynamic Measures | VIAjectTM | Humulin® R | p-Value | |||||||||
| Minutes to maximum GIR | 99 | 154 | <0.0015 | |||||||||
| Minutes to maximum serum insulin concentration | 33 | 97 | <0.0001 | |||||||||
| Minutes to 50% of maximum serum insulin concentration | 8 | 32 | <0.0001 | |||||||||
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| Hypoglycemic Events per Treatment | ||||||||||||
Hours Past Dose | Humulin® R | Humalog® | VIAjecttm | |||||||||
| 0-3 hours | 0 | 7 | 4 | |||||||||
| 3-8 hours | 13 | 11 | 4 | |||||||||
| 0-8 hours | 13 | 18 | 8 | |||||||||
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Notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), over the last few years certain brand-name pharmaceutical companies and others have objected to the FDA’s interpretation of Section 505(b)(2). If the FDA’s interpretation of Section 505(b)(2) is successfully challenged in court, the FDA may be required to change its interpretation of Section 505(b)(2) which could delay or even prevent the FDA from approving any Section 505(b)(2) NDA that we submit. The pharmaceutical industry is highly competitive, and it is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions can significantly delay, or even prevent, the approval of the new product. Moreover, even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition.
Any product for the same drug for the same orphan indication regardless of whether the application is a full NDAwhich we obtain marketing approval could be subject to restrictions or a Section 505(b)(2) NDA. Pediatric exclusivity, if granted, provides an additional six months to an existing exclusivity or statutory delay in approval resulting from a patent certification. This six-month exclusivity, which runswithdrawal from the end of other exclusivity protection or patent delay,market and we may be granted based onsubject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
Any product for which we obtain marketing approval, along with the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request”manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such a study. The current pediatric exclusivity provision is scheduledproduct, will be subject to end on October 1, 2007, but it may be reauthorized.
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candidates are approved, products that have been commercialized. Any drug products manufactured or distributed by us pursuant to FDA approvals areour product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulationregulatory review. The FDA strictly regulates the promotional claims that may be made about prescription drug products. In particular, a drug may not be promoted in a misleading manner or for uses that are not approved by the FDA including:
Discovery after approval of previously unknown problems with the provisions of the approved label.
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restrictions on such products’ manufacturers or judicial sanctions being imposed on us ormanufacturing processes;
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restrictions on the manufacturers and distributors of our approved products, including warning letters, refusals of government contracts, clinical holds, civil penalties, injunctions, restitution, and disgorgement or profits, recall or seizure of products, total or partial suspension of productionmarketing or distribution of a product;
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requirements that we conduct new studies, make labeling changes, and implement Risk Evaluation and Mitigation Strategies;
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warning letters;
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withdrawal of approvals, the products from the market;
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refusal to approve pending applications or supplements to approved applications that we submit;
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recall of products;
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fines, restitution or disgorgement of profits or revenue;
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suspension or withdrawal of regulatory approvals;
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refusal to permit the import or export of our products;
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product embargo and/or seizure;
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injunctions; or
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imposition of civil or criminal penalties.
Changes in law, regulations, and criminal prosecution resultingpolicies may preclude approval of our product under a 505(b)(2) or make it more difficult and costly for us to obtain regulatory approval of our product candidates and to produce, market and distribute our existing products.
In March 2010, the President signed into law legislation creating an abbreviated pathway for approval under the Public Health Service Act, or PHS Act, of biological products that are similar to other biological products that are approved under the PHS Act. This legislation also expanded the definition of biological product to include proteins such as insulin. The new law contains transitional provisions governing protein products such as insulin that, under certain circumstances, might permit companies to seek approval for their insulin products as biologics under the PHS Act and might require that Biodel’s product be approved under the PHS Act rather than in fines and incarceration. a 505(b)(2) NDA. We would be unlikely to pursue approval of our product candidates if we were required to seek approval under the PHS Act rather than in a 505(b)(2) NDA.
In addition, even afterthe federal and state laws, regulations, policies or guidance may change in a manner that could prevent or delay regulatory approval is obtained, later discovery of previously unknown problems with aour product may result in restrictions on the productcandidates or even complete withdrawal of the product from the market.
Failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our products abroad.
States. In additionorder to regulationsmarket our products in the United States, we will be subject to a variety of regulations inEuropean Union and many other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements of other countries regarding
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safety and efficacy and governing, among other things, clinical trials and commercial sales and distribution of our products. Whether or not weThe approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ from that required to obtain FDA approval. The regulatory approval for a product, we must obtainprocesses outside the United States may include all of the risks associated with obtaining FDA approval, of a product by the comparable regulatory authorities ofas well as additional risks. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market.
Reports of side effects or safety concerns in related technology fields or in other companies’ clinical trials could delay or prevent us from obtaining regulatory approval or negatively impact public perception of our product candidates.
At present, there are a number of clinical trials being conducted by us and by other pharmaceutical companies involving insulin or insulin delivery systems. The major safety concern with patients taking insulin is the occurrence of hypoglycemic events. If we can commencediscover that our product is associated with a significantly increased frequency of hypoglycemic or other adverse events, or if other pharmaceutical companies announce that they observed frequent or significant adverse events in their trials involving insulin or insulin delivery systems, we could encounter delays in the commencement or completion of our clinical trials or marketingdifficulties in obtaining the approval of our product candidates. In addition, the public perception of our products might be adversely affected, which could harm our business and results of operations, even if the concern relates to another company’s product.
Risks Related to Employee Matters and Managing Growth
Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.
We are highly dependent on Errol De Souza, our President and Chief Executive Officer, Gary Gemignani, our Chief Financial Officer and Dr. Alan Krasner, our Chief Medical Officer. The loss of the product in those countries. The approval process varies from country to country,services of any of these persons might impede the achievement of our research, development and the timecommercialization objectives. Replacing key employees may be longer or shorter than thatdifficult and time-consuming because of the limited number of individuals in our industry with the skills and experiences required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement also vary between jurisdictions.
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Recruiting and retaining qualified scientific personnel, clinical personnel and sales and marketing personnel will compete against many products withalso be critical to our success. We may not be able to attract and retain these personnel on acceptable terms, if at all, given the competition among numerous pharmaceutical and biotechnology companies for similar indications.
clinical personnel from other companies, universities and research institutions. In addition, VIAjecttmwe rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may face competition from products employing non-invasive methods of insulin delivery, such as oral insulin pills, which are currently inbe employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.
We may expand our development, or inhalable insulins, such as Exubera®, which has been recently approved, or others which are in clinical development. Emisphere Technologies, Inc. is developing oral insulin in pill form. Emisphere is still in early-stage preclinical trials of its oral tablet. Generex has developed an oral spray that is currently in Phase II development. The development of insulin formulations that are taken orally, or swallowed, face problems because insulin is largely broken down in the digestive systemregulatory and sales and marketing capabilities, and as a result, muchwe may encounter difficulties in managing our growth, which could disrupt our operations.
If our development and commercialization plans for any of our product candidates are successful, we may experience significant growth in the insulin delivered orally does not enter the bloodnumber of our employees and the timing and amountscope of dosage that does is variable and unpredictable.
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Risks Related to Our Common Stock
Provisions in Type 1our corporate charter documents and Type 2 diabetic patients. Eli Lilly, in collaboration with Alkermes, is currently in Phase III clinical trials for pulmonary insulin delivery systems. The Eli Lilly/Alkermes product, AIR®, is currently being tested in Type 1 diabetic patients. Novo Nordisk and Aradigm Corporation also have AERx®, a pulmonary insulin product under development. Phase III clinical trials for AERx® were halted due to poor results, but the re-initiationDelaware law could make an acquisition of the drug’s Phase III program was announced on March 7, 2006. In addition, Kos Pharmaceuticals, Inc., recently acquired by Abbott, is also developing an inhaled formulation of insulin, but the product appears to be several years behind the competition.
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Among others, these provisions:
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establish a classified board of directors such that not all members of the board are elected at one time;
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allow the authorized number of our directors to be changed only by resolution of our board of directors;
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limit the manner in which stockholders can remove directors from the board;
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establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;
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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;
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limit who may call stockholder meetings;
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authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a stockholder rights plan or “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and
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require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Because our stock price is volatile, purchasers of our common stock could incur substantial losses.
Our stock price has been and may continue to be volatile. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our common stock may be influenced by many factors, including:
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results of clinical trials of our product candidates or those weof our competitors;
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regulatory or legal developments in the United States and other countries;
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variations in our financial results or those of companies that are perceived to be similar to us;
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developments or disputes concerning patents or other proprietary rights;
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the recruitment or departure of key personnel;
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changes in the structure of healthcare payment systems;
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market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;
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general economic, industry and market conditions; and
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the other factors described in this “Risk Factors” section.
Our outstanding warrants may license from third parties,be exercised, and our outstanding shares of preferred stock may notbe converted, in the future, which would increase the number of shares in the public market and result in patents being issued.dilution to our stockholders.
As a result of our May 2011 registered direct offering and June 2012 private placement, we have outstanding warrants to purchase 2,256,929 shares of our common stock at $9.92 per share and 2,749,469 shares of our common stock at $2.66 per share. The $9.92 per share warrants expire in May 2016 and the $2.66 per share warrants expire in June 2017. We also have outstanding shares of Series B preferred stock that are convertible into 1,950,000 shares of common stock. In June and September 2013 an aggregate of 1,655,607 shares of Series B preferred stock were converted into an equal number of shares of common stock. The exercise of these warrants for, or the conversion of shares of Series B preferred stock into, shares of common stock would be substantially dilutive to the outstanding shares of common stock. Any dilution or potential dilution may cause our stockholders to sell their shares, which would contribute to a downward movement in the stock price of our common stock.
We have never paid any cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future.
We have paid no cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a policyresult, we do not expect to pay any cash dividends in the foreseeable future, and payment of filingcash dividends, if any, will depend on our financial condition, results of operations, capital requirements and other factors and will be at the discretion of our board of directors. Furthermore, we may in the future become subject to contractual restrictions on, or prohibitions against, the payment of dividends. Capital appreciation, if any, of our common stock will be investors’ sole source of gain for patent protection on allthe foreseeable future.
We incur substantial costs as a result of operating as a public company, and our product candidates. Our currently pending patent applications consistmanagement is required to devote substantial time to comply with public company regulations.
We are subject to the reporting requirements of the following:
Risks Related to manufacturethis Offering
Investors in this offering will suffer immediate and substantial dilution.
Because the price per share of our product candidates by contracting with third parties which operate manufacturing facilitiescommon stock being offered is substantially higher than the book value per share of our common stock, you will suffer substantial dilution in accordance with cGMP.the net tangible book value of the common stock you purchase in this offering. If you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of $ per share in the net tangible book value of the common stock. See the section entitled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
We will have considerable discretion over the use of the proceeds of this offering and may not realize an adequate return.
We will have considerable discretion in the application of the net proceeds of this offering. We have contracted with Cardinal Health — PTS, LLC,not determined the amount of net proceeds that we will apply to various corporate purposes. We may use the proceeds for purposes that do not yield a large commercial manufacturer,significant return, if any, for our stockholders.
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Future sales or issuances of our common stock may cause the market price of our common stock to manufacturedecline.
The sale of substantial amounts of our VIAjecttm product candidate to supplycommon stock, whether directly by us or in the secondary market by existing securityholders (including holders of our Phase III clinical trialsoutstanding warrants and convertible preferred stock), the perception that such sales could occur or the availability for future sale of shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock could materially and adversely affect the market price of our common stock and our initial commercial requirements. This agreement has no specified termination date, but generallyability to raise capital through future offerings of equity or equity related securities. Any such sales may be terminated upon sixty days advance notice by either party.result in significant dilution to our existing shareholders, including you. We believecannot assure you that the manufacturer complies with the relevant regulatory requirements. Working with our commercial manufacturer, we have manufactured all three commercial size batches necessary for regulatory approval. We believe that if this manufacturer becomes unable or unwilling to supply VIAjecttm we will be able to promptly findsell shares or other securities in any other offering at a replacement manufacturerprice per share that is equal to facilitateor greater than the manufacturing of VIAjecttm.price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders, which will result in additional dilution to you.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference in this prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included or incorporated by reference in this prospectus and the documents we incorporate by reference in this prospectus regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Our forward-looking statements in this prospectus and the documents we incorporate by reference in this prospectus are subject to a number of known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from those described or implied in the forward-looking statements, including:
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the progress, timing or success of our research and development and clinical programs for our product candidates, particularly our GEM, product candidate, which comprises lyophilized glucagon and an aqueous diluent in an automatic reconstitution device, and our concentrated ultra-rapid-acting insulin that we will need forproduct candidate, BIOD-531, which uses RHI, as the testingactive pharmaceutical ingredient in a concentration of 400 units per milliliter;
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our ability to conduct the development work necessary to finalize the formulation and presentation of our GEM product candidate, as well as the preclinical studies, clinical trials and manufacturing activities necessary to support the submission of an NDA, to the FDA, for that product candidate;
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the ability and willingness of our existing strategic partners, service providers and suppliers, upon which we rely in the advancement of our product candidates. This agreement has no specified termination date, but generally may be terminated upon two-years’ advance notice by either party. We believecandidates, to meet the obligations set forth in our insulin supplier has sufficient capacityagreements with them, including Unilife, which is responsible for designing and manufacturing the device intended for use with our GEM product candidate, as well as delivering three registration lots of the filled and finished GEM device required for submitting an NDA to provide us with sufficient quantities of insulin to support our need through commercializationthe FDA;
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the success of our formulation development work to improve the stability of our newer ultra-rapid-acting insulin analog-based formulations while maintaining the pharmacokinetic and injection site toleration characteristics associated with earlier formulations;
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the results of our real-time stability programs for our glucagon-, RHI-, and insulin analog-based product candidates.candidates, including the reproducibility of earlier, smaller scale, stability studies and our ability to accurately project long term stability on the basis of accelerated testing;
our ability to accurately anticipate technical challenges that we may face in the development of our glucagon-, RHI-, and Marketinginsulin analog-based product candidates;
our ability to selectivelysecure approval by the FDA for our product candidates under Section 505(b)(2) of the FFDCA;
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our ability to enter into collaboration agreements with leading pharmaceutical or biotechnology companiesarrangements for the commercialization of our product candidates late inand the success or upon completionfailure of clinical development. In enteringany such collaborations into these collaboration agreements,which we enter, or our goal will beability to maintain co-promotion or co-commercialization rights in the United States and potentially other markets. In ordercommercialize our product candidates ourselves;
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our ability to implementenforce our strategy successfully, we must develop a specialized sales and marketing organization with sufficient technical expertise.
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our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
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the degree of clinical utility of our product candidates, particularly with regard to our ultra-rapid-acting insulin formulations, which have not yet been shown to be clinically superior to existing rapid-acting insulin analogs;
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the emergence of competing technologies and products and other adverse market developments, such as advancements in glucagon stabilization technologies that could enable a room-temperature rescue product in a portable, easy to use presentation;
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the ability of our contract manufacturing organizations or collaborators to properly produce our products in our final dosage form and in the quantities we may require;
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our ability to secure adequate supplies of active pharmaceutical ingredients to support our product development programs and, if successful, the commercialization one or more product candidates;
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our capabilities and strategies for manufacturing, marketing and commercializing a product candidate; and
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our ability to accurately estimate anticipated operating losses, future revenues, capital requirements and our needs for additional financing.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included or incorporated by reference important factors in the cautionary statements included in this prospectus, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make.
You should read this prospectus, the documents incorporated by reference in this prospectus and the documents that have been filed as exhibits to the registration statement of which this prospectus forms a part or to any document incorporated by reference herein completely and with the understanding that our actual future results may be materially different from what we expect. It is routine for internal projections and expectations to change as the year, or each quarter in the year, progresses, and, therefore, it should be clearly understood that the internal projections and beliefs upon which we receive marketing approvalsbase our expectations are made as of the date of this prospectus and may change prior to the end of each quarter or the year. While we may elect to update forward-looking statements at some point in situationsthe future, we do not assume any obligation to update any forward-looking statements contained or incorporated by reference in whichthis prospectus.
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USE OF PROCEEDS
We estimate that the net proceeds to us from this offering, after deduction of the underwriting discount and payment of estimated offering expenses, will be approximately $ (or approximately $ if the underwriters’ over-allotment option is exercised in full).
We intend to use the net proceeds from this offering for operating costs, capital expenditures and for general corporate purposes, including working capital. We may also use a portion of the net proceeds to invest in or acquire businesses or technologies that we believe it is possibleare complementary to accessour own, although we have no current plans, commitments or agreements with respect to any acquisitions as of the market through a focused, specialized sales force. In particular, we plandate of this prospectus.
We expect to focus onutilize the pediatric market because we believe VIAjecttm is particularly suitedproceeds of this offering in part to:
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conduct the clinical development work required for the treatmentsubmission of children with diabetes,an NDA for our GEM product candidate to the numberFDA;
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complete the technology transfer and related chemistry, manufacturing and controls development work necessary for the manufacture of pediatric endocrinologists is relatively few and we believe this patient population is underserved.
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submit an NDA for our employee relationsGEM product candidate to be good.the FDA; and
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64
TABLE OF CONTENTSMANAGEMENTExecutive Officers and Directors
(1) Member2014 on an actual basis and on an as adjusted basis to reflect our receipt of the Compensation Committee.(2) Memberestimated net proceeds of the Nominating and Corporate Governance Committee.(3) Member of the Audit Committee.Dr. Solomon S. Steiner co-founded our company and has served as our Chairman, President and Chief Executive Officer since our inception in December 2003. In 1991, Dr. Steiner founded Pharmaceutical Discovery Corporation, or PDC, a biopharmaceutical corporation. Dr. Steiner served as PDC’s Chief Executive Officer and Chairman of the Board of Directors from its inception until December 2001, when PDC was merged with two other companies to form MannKind Corporation. From December 2001 to February 2003, Dr. Steiner served on MannKind’s board of directors and as a Corporate Vice President and Chief Scientific Officer. In 1985, Dr. Steiner founded and was the Chairman of the Board of Directors and President of Clinical Technologies Associates, Inc., or CTAI, now known as Emisphere Technologies, Inc. Under his leadership CTAI went public in February of 1989. Dr. Steiner is an inventor of Emisphere’s oral delivery system for peptides and mucopolysaccharides. Dr. Steiner is currently an adjunct full professor at New York Medical College and research full professor of psychiatry and neurology at New York University School of Medicine. Dr. Steiner received a Ph.D. from New York University. Dr. Steiner is Erik Steiner’s father.Mr. F. Scott Reding joined our company in, and has served as our Vice President, Chief Financial Officer and Treasurer since, November 2006. From November 2000 to January 2004, Mr. Reding served as Senior Vice President, Chief Financial Officer, Treasurer and Secretary of Molecular Staging, Inc., a biotechnology company. From February 1999 to November 2000, Mr. Reding served as Senior Vice President, Chief Financial Officer and Secretary of Repros Therapeutics, Inc., formerly Zonagen, Inc., a biopharmaceutical company. From 1996 to 1998, Mr. Reding served as Vice President, Chief Financial Officer and Treasurer of ImmunoTherapy, Inc. Due to a medical condition from which he has recovered, Mr. Reding was unable to work from April 2004 to November 2006. Mr. Reding received an MBA from Columbia University Graduate School of Business.Dr. Roderike Pohl joined our company and has served as our Vice President, Research since our inception in December 2003. From August 2003 to November 2003, Dr. Pohl served as a scientific consultant with Steiner Ventures, LLC, or SV. From December 1998 to July 2003, Dr. Pohl served as Vice President of Preclinical Research
CAPITALIZATION
The following table sets forth our executive officerscash, cash equivalents and directors and their respective ages and positionscapitalization as of MarchDecember 31, 2007:
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| Long-Term | ||||||||||||||||||||
| Compensation | ||||||||||||||||||||
| Annual Compensation(1) | Securities | All Other | ||||||||||||||||||
Name and Principal Position(s) | Year | Salary | Bonus | Underlying Options | Compensation | |||||||||||||||
| Dr. Solomon S. Steiner | 2006 | $ | 250,000 | (2) | $ | 400,000 | (3) | 53,138 | — | |||||||||||
| Chief Executive Officer, Chairman of the Board of Directors and President | ||||||||||||||||||||
| Dr. Roderike Pohl | 2006 | 150,000 | 11,250 | 10,628 | — | |||||||||||||||
| Vice President, Research | ||||||||||||||||||||
| Erik Steiner | 2006 | 100,000 | 18,750 | 14,170 | — | |||||||||||||||
| Vice President, Operations | ||||||||||||||||||||
| Potential Realizable | ||||||||||||||||||||||||
| Value at | ||||||||||||||||||||||||
| Assumed Annual | ||||||||||||||||||||||||
| Percentage of | Rates of | |||||||||||||||||||||||
| Number of | Total Options | Stock Price | ||||||||||||||||||||||
| Securities | Granted to | Exercise | Appreciation for | |||||||||||||||||||||
| Underlying Options | Employees in | Price Per | Expiration | Option Term(1) | ||||||||||||||||||||
Name | Granted | Fiscal Year | Share | Date | 5% | 10% | ||||||||||||||||||
| Dr. Solomon S. Steiner | 53,138 | 11.5 | % | $ | 5.65 | 12/15/2013 | $ | 877,406 | $ | 1,408,361 | ||||||||||||||
| Dr. Roderike Pohl | 10,628 | 2.3 | % | $ | 5.65 | 12/15/2013 | $ | 175,488 | $ | 281,683 | ||||||||||||||
| Erik Steiner | 14,170 | 3.1 | % | $ | 5.65 | 12/15/2013 | $ | 233,973 | $ | 375,559 | ||||||||||||||
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| Number of Securities | Value of Unexercised | |||||||||||||||||||||||
| Underlying Unexercised | In-the-Money | |||||||||||||||||||||||
| Shares | Options at | Options at | ||||||||||||||||||||||
| Acquired | September 30, | September 30, | ||||||||||||||||||||||
| on | Value | 2006 | 2006 | |||||||||||||||||||||
Name | Exercise (#) | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
| Dr. Solomon S. Steiner | — | $ | — | 13,284 | 92,991 | $ | 180,530 | $ | 1,038,456 | |||||||||||||||
| Dr. Roderike Pohl | — | — | — | 10,628 | — | $ | 99,372 | |||||||||||||||||
| Erik Steiner | — | — | — | 14,170 | — | $ | 132,490 | |||||||||||||||||
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The historical data in the 2004table is derived from, and should be read in conjunction with, our historical financial statements, including accompanying notes, incorporated by reference in the registration statement of which this prospectus is a part. You should also read this table in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto from our Annual Report on Form 10-K for the year ended September 30, 2014 and Quarterly Report on Form 10-Q for the quarter ended December 31, 2014.
| December 31, 2014 (unaudited) (in thousands, except share and per share amounts) | | | Actual | | | As adjusted | | ||||||||
| Cash and cash equivalents | | | | $ | 19,726 | | | | | $ | | | |||
| Stockholders’ equity | | | | ||||||||||||
| Series B convertible preferred stock, $0.01 par value per share, 1,950,000 shares issued and outstanding | | | | | 19 | | | | | | | | | ||
| Common stock, $0.01 par value per share, 23,453,075 shares issued and outstanding | | | | | 235 | | | | | | | | | ||
| Additional paid-in capital | | | | | 252,874 | | | | | | | | | ||
| Accumulated deficit | | | | | (234,246) | | | | | | | | | ||
| Total capitalization | | | | $ | 18,882 | | | | | $ | | | | ||
| | |||||||||||||||
Common stock outstanding listed in the table above as of December 31, 2014 does not include:
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5,006,398 shares underlying outstanding warrants,
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1,950,000 shares underlying outstanding Series B Preferred Stock, Incentive Plan as amended and restated.
•
3,462,516 shares underlying outstanding stock options, or
•
131,128 outstanding RSUs.
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