| Corporate overview | 1. Corporate overview:
Overview
The accompanying unaudited condensed financial statements of
HedgePath Pharmaceuticals, Inc., a Delaware corporation (the
“Company”, “HPPI”, “we”,
“us” or similar terminology), have been prepared by the
Company without audit. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary
to present fairly the financial position, results of operations and
cash flows as of June 30, 2016, and for all periods presented,
have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”) have been condensed or omitted pursuant to the
Securities and Exchange Commission (“SEC”) rules and
regulations. These unaudited condensed financial statements should
be read in conjunction with the audited financial statements and
notes thereto for the year ended December 31, 2015, which are
included in the Company’s 2015 Annual Report on Form 10-K,
filed with the SEC on February 1, 2016 (the “2015 Annual
Report”). The accompanying condensed balance sheet as of
December 31, 2015 has been derived from the audited financial
statements at that date, but does not include all information and
footnotes required by GAAP for complete financial statements.
As used herein, the term “Common Stock” means the
Company’s common stock, $0.0001 par value per share.
The results of operations for the three and six month periods ended
June 30, 2016 are not necessarily indicative of results that
may be expected for any other interim period or for the full fiscal
year. Readers of this Quarterly Report are strongly encouraged to
review the risk factors relating to the Company which are set forth
in the 2015 Annual Report and our other filings with the SEC.
The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and
satisfaction of liabilities of the Company in the normal course of
business. If the Company is unable to raise required funding to
continue to pursue its business plan, it may have to cease
operations. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a
going concern.
Nature of the Business
The Company is a clinical stage biopharmaceutical company that is
seeking to discover, develop and commercialize innovative
therapeutics for patients with certain cancers. The Company may
also explore acquiring or licensing other innovative therapeutics
addressing unmet needs and orphan indications beyond cancer. The
Company’s preliminary focus is on the development of
therapies for skin, lung and prostate cancers in the United States
of America (“U.S.”) market, with the first indication
targeting basal cell carcinoma in patients with Basal Cell
Carcinoma Nevus Syndrome (also known as Gorlin Syndrome) for which
the Company is presently conducting an open label Phase II(b)
clinical trial.
The Company’s proposed therapy is based upon the use of
SUBA™-Itraconazole, which is a patented, oral formulation of
the currently marketed anti-fungal drug Itraconazole to which the
Company holds an exclusive U.S. license. The Company believes that
the dosing of oral capsules of this formulation can affect the
Hedgehog signaling pathway, a major regulator of many fundamental
cellular processes, which, in turn, can impact the development and
growth of cancers such as basal cell carcinoma. Itraconazole has
been approved by the U.S. Food and Drug Administration (the
“FDA”) for, and has been extensively used to treat,
fungal infections and has an extensive history of safe and
effective use in humans. The Company has developed, optioned and
licensed intellectual property and know-how related to the
treatment of cancer patients using itraconazole.
Relationship with Mayne Pharma Ventures Pty Ltd.
The Company has exclusive rights in the U.S. to develop and to
commercialize SUBA-Itraconazole capsules for the treatment of human
cancer via oral administration. SUBA-Itraconazole was developed and
is licensed to us by the Company’s
manufacturing partner and significant shareholder Mayne Pharma
Ventures Pty Ltd. and its affiliates (“Mayne Pharma”)
under a supply and license agreement, originally dated
September 3, 2013 and most recently amended and restated on
May 15, 2015 (the “SLA”). Mayne Pharma is an
Australian specialty pharmaceutical company that develops and
manufactures branded and generic products, which it distributes
directly or through distribution partners and also provides
contract development and manufacturing services. In addition to
being the Company’s licensor and supply partner, under the
SLA and related agreements, Mayne Pharma holds a significant
minority equity stake in the Company and holds important rights
with respect to the Company, such as the right to appoint a member
to the Company’s Board of Directors.
Recent financing
On May 25, 2016, the Company conducted the final closing (the
“Final Closing”) of its previously announced
“best efforts/no minimum” private placement offering to
accredited investors (the “Offering”) of the
Company’s units (each a “Unit”) at a price of
$0.10 per Unit, with each Unit consisting of: (i) one
(1) share of the Company’s common stock, par value
$0.0001 per share (“Common Stock”), and (ii) a
five-year warrant to purchase one (1) share of Common Stock at
an exercise price of $0.12 per share (each a
“Warrant”). No actual Units were issued, and each
investor received shares of Common Stock and Warrants only. During
the course of the Offering, which began on March 30, 2016, the
Company sold all 55,000,000 Units reserved for the Offering for
aggregate gross proceeds of $5,500,000 including the units sold to
Mayne Pharma as described below.
The Company has granted the investors certain registration rights
requiring the Company, following the Final Closing, to file a
registration statement with the Securities and Exchange Commission
covering the resale by the investors of the shares of Common Stock
issued in the Offering and the shares of Common Stock underlying
the Warrants issued in the Offering. The Company is required to use
its commercially best efforts to cause the registration statement
to be declared effective. The Company filed the registration
statement with the Securities and Exchange Commission in June 2016,
and it was declared effective on July 22, 2016.
In connection with the Final Closing, and pursuant to an existing
right of the Company’s license and manufacturing partner and
significant stockholder Mayne Pharma to purchase its pro rata
share, on a fully-diluted basis, of new securities issuances of the
Company (the “Mayne Right of First Refusal”), the
Company entered into a definitive Securities Purchase Agreement
(“SPA”) (in substantially the same form as the SPA
executed by other investors in the Offering) with Mayne Pharma, and
in connection therewith issued an aggregate of 27,885,000 Units to
Mayne Pharma, consisting of an aggregate of 27,885,000 shares of
Common Stock and a Warrant to purchase up to an aggregate of
27,885,000 shares of Common Stock, for aggregate gross proceeds to
the Company of $2,788,500.
In connection with the Offering, the Company engaged certain
FINRA-member agents to help it secure investors for the Offering
(the “Finders Arrangements”). Such agents secured
investors for an aggregate of $582,500 for the Offering and
received commissions equal to an aggregate of $46,600 in cash and
warrants (in substantially the form of the Warrants) to purchase
466,000 shares of Common Stock. Pursuant to the Mayne Right of
First Refusal, the Company issued and sold to Mayne a warrant to
purchase 479,236 shares of Common Stock for a purchase price of
$47,924 (the “Mayne Finders Warrant”), which
constituted Mayne’s pro rata share, on a fully-diluted basis,
of all warrants issued in connection with the Finders Arrangements,
inclusive of the Mayne Finders Warrant. For ease of administration,
the 479,236 shares of Common Stock underlying the Mayne Finders
Warrant were added to the Mayne Offering Warrant, resulting in the
issuance to Mayne of a single Warrant to purchase 28,364,236 shares
of Common Stock. |
