capacities. Any performance failure on the part of future manufacturers could delay late stage clinical development or regulatory approval of our drug candidates or commercialization of our drugs, producing additional losses and depriving us of potential product revenues.
If the FDA or other regulatory agencies approve any of our drug candidates for commercial sale, or if we significantly expand our clinical trials, we will need to manufacture them in larger quantities. To date, our drug candidates have been manufactured in small quantities for preclinical testing and clinical trials and we may not be able to successfully increase the manufacturing capacity, whether in collaboration with third party manufacturers or on our own, for any of our drug candidates in a timely or economic manner, or at all. For example, the manufacture of our drug candidate sapacitabine and CYC116 require several steps and it is not yet known if scale up to commercial production is feasible. Significant scale-up of manufacturing may require additional validation studies, which the FDA and other regulatory bodies must review and approve. If we are unable to successfully increase the manufacturing capacity for a drug candidate whether for late stage clini cal trials or for commercial sale, the drug development, regulatory approval or commercial launch of any related drugs may be delayed or there may be a shortage in supply. Even if any third party manufacturer makes improvements in the manufacturing process for our drug candidates, we may not own, or may have to share, the intellectual property rights to such innovation.
We currently have no marketing or sales staff. If we are unable to conclude strategic alliances with marketing partners or if we are unable to develop our own sales and marketing capabilities, we may not be successful in commercializing any drugs we may develop.
Our strategy is to develop compounds through the Phase II stage of clinical testing and market or co-promote certain of our drugs on our own. We have no sales, marketing or distribution capabilities. We will depend primarily on strategic alliances with third parties, which have established distribution systems and sales forces, to commercialize our drugs. To the extent that we are unsuccessful in commercializing any drugs ourselves or through a strategic alliance, product revenues will suffer, we will incur significant additional losses and our share price will be negatively affected.
If we evolve from a company primarily involved in discovery and development to one also involved in the commercialization of drugs, we may encounter difficulties in managing our growth and expanding our operations successfully.
If we advance our drug candidates through clinical trials, we will need to expand our development and regulatory capabilities and develop manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for us. If our operations expand, we expect that we will need to manage additional relationships with various collaborative partners, suppliers and other third parties. Our ability to manage our operations and any growth will require us to make appropriate changes and upgrades (as necessary) to our operational, financial and management controls, reporting systems and procedures where we may operate. Any inability to manage growth could delay the execution of our business plan or disrupt our operations.
The failure to attract and retain skilled personnel could impair our drug development and commercialization efforts.
We are highly dependent on our senior management and key scientific and technical personnel. The loss of the services of any member of our senior management, scientific or technical staff may significantly delay or prevent the achievement of drug development and other business objectives and could have a material adverse effect on our business, operating results and financial condition. We also rely on consultants and advisors to assist us in formulating our research and development strategy. All of our consultants and advisors are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to contribute to us.
Table of ContentsWe intend to expand and develop new drug candidates. We will need to hire additional employees in order to continue our clinical trials and market our drug candidates. This strategy will require us to recruit additional executive management and scientific and technical personnel. There is currently intense competition for skilled executives and employees with relevant scientific and technical expertise, and this competition is likely to continue. The inability to attract and retain sufficient scientific, technical and managerial personnel could limit or delay our product development efforts, which would adversely affect the development of our drug candidates and commercialization of our potential drugs and growth of our business.
Our drug candidates are subject to extensive regulation, which can be costly and time-consuming, and we may not obtain approvals for the commercialization of any of our drug candidates.
The clinical development, manufacturing, selling and marketing of drug candidates are subject to extensive regulation by the FDA and other regulatory authorities in the United States, the European Union and elsewhere. These regulations also vary in important, meaningful ways from country to country. We are not permitted to market a potential drug in the United States until we receive approval of a New Drug Application, or NDA, from the FDA. We have not received an NDA approval from the FDA for any of our drug candidates.
Obtaining an NDA approval is expensive and is a complex, lengthy and uncertain process. The FDA approval process for a new drug involves completion of preclinical studies and the submission of the results of these studies to the FDA, together with proposed clinical protocols, manufacturing information, analytical data and other information in an Investigational New Drug application, or IND, which must become effective before human clinical trials may begin. Clinical development typically involves three phases of study: Phase I, II and III. The most significant costs associated with clinical development are the Phase III clinical trials as they tend to be the longest and largest studies conducted during the drug development process. After completion of clinical trials, an NDA may be submitted to the FDA. In responding to an NDA, the FDA may refuse to file the application, or if accepted for filing, the FDA may grant marketing approval, request additional informat ion or deny the application if it determines that the application does not provide an adequate basis for approval. In addition, failure to comply with FDA and other applicable foreign and U.S. regulatory requirements may subject it to administrative or judicially imposed sanctions. These include warning letters, civil and criminal penalties, injunctions, product seizure or detention, product recalls, total or partial suspension of production and refusal to approve either pending NDAs, or supplements to approved NDAs.
Despite the substantial time and expense invested in preparation and submission of an NDA or equivalents in other jurisdictions, regulatory approval is never guaranteed. The FDA and other regulatory authorities in the United States, the European Union and elsewhere exercise substantial discretion in the drug approval process. The number, size and design of preclinical studies and clinical trials that will be required for FDA or other regulatory approval will vary depending on the drug candidate, the disease or condition for which the drug candidate is intended to be used and the regulations and guidance documents applicable to any particular drug candidate. The FDA or other regulators can delay, limit or deny approval of a drug candidate for many reasons, including, but not limited to:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | those discussed in the risk factor which immediately follows; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | the fact that FDA or other regulatory officials may not approve our or our third party manufacturer’s processes or facilities; or |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | the fact that new regulations may be enacted by the FDA or other regulators may change their approval policies or adopt new regulations requiring new or different evidence of safety and efficacy for the intended use of a drug candidate. |
Following regulatory approval of any drug candidate, we would be subject to ongoing regulatory obligations and restrictions, which may result in significant expense and limit our ability to commercialize our potential drugs.
If one of our drug candidates is approved by the FDA or by another regulatory authority, we would be held to extensive regulatory requirements over product manufacturing, labeling, packaging, adverse
32
Table of Contentsevent reporting, storage, advertising, promotion and record keeping. Regulatory approvals may also be subject to significant limitations on the indicated uses or marketing of the drug candidates. Potentially costly follow-up or post-marketing clinical studies may be required as a condition of approval to further substantiate safety or efficacy, or to investigate specific issues of interest to the regulatory authority. Previously unknown problems with the drug candidate, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of the drug, and could include withdrawal of the drug from the market.
In addition, the law or regulatory policies governing pharmaceuticals may change. New statutory requirements may be enacted or additional regulations may be enacted that could prevent or delay regulatory approval of our drug candidates. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the United States or elsewhere. If we are not able to maintain regulatory compliance, we might not be permitted to market our drugs and our business could suffer.
Our applications for regulatory approval could be delayed or denied due to problems with studies conducted before we in-licensed some of our product candidates.
We currently license some of the compounds and drug candidates used in its research programs from third parties. These include sapacitabine, licensed from Sankyo Co., Ltd and CYC381 and related intellectual property, licensed from Lorus Therapeutics, Inc. Our present research involving these compounds relies upon previous research conducted by third parties over which we had no control and before we in-licensed the drug candidates. In order to receive regulatory approval of a drug candidate, we must present all relevant data and information obtained during our research and development, including research conducted prior to our licensure of the drug candidate. Although we are not currently aware of any such problems, any problems that emerge with preclinical research and testing conducted prior to our in-licensing may affect future results or our ability to document prior research and to conduct clinical trials, which could delay, limit or prevent regulatory appr oval for our drug candidates.
We face intense competition and our competitors may develop drugs that are less expensive, safer, or more effective than our drug candidates.
We are engaged in a rapidly changing and highly competitive field. We are seeking to develop and market products that will compete with other products and drugs that currently exist or are being developed. We compete with companies that are developing small molecule drugs, as well as companies that have developed drugs or are developing alternative drug candidates for cancer or other serious disorders where there is abnormal cell proliferation. We believe that other companies are currently developing drugs targeting cancer that may compete with our drug candidates, including Astex, AstraZeneca, Eisai, Kyowa Hakko, Onconova, Pfizer, Schering AG, and Sunesis. Although Aventis, a predecessor of Sanofi-Aventis, had previously announced that it has ceased Phase II development of alvocidib or flavopiridol, a CDK inhibitor, we believe that the National Cancer Institute’s Cancer Therapy Evaluation Program is continuing to enroll patients in a Phase II trial a nd that Sanofi-Aventis has reinitiated development of alvocidib in Phase III clinical trials in patients with chronic leukemia. Several pharmaceutical and biotechnology companies have nucleoside analogs on the market or in clinical trials for oncology indications, Clavis Pharmaceuticals, Eli Lilly, Genzyme, GlaxoSmithKline and Supergen. A number of companies are pursuing discovery and research activities in each of the other areas that are the subject of our research and drug development programs. We believe that Astex, AstraZeneca, Merck, jointly with Vertex, Millennium, Nerviano Medical Sciences and Serono have commenced Phase II or Phase I clinical trials of Aurora kinase inhibitors in patients with advanced cancers. Several companies have reported selection of Aurora kinase inhibitor candidates for development, including Entremed and Sunesis, and may have started or are expected to start clinical trials within the next twelve months. We believe that Boehringer Ingelheim and Onconova have entered cli nical development with Plk inhibitor candidates for oncology indications.
33
Table of ContentsOur competitors, either alone or together with collaborators, may have substantially greater financial resources and research and development staff. Our competitors may also have more experience:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | developing drug candidates; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | conducting preclinical and clinical trials; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | obtaining regulatory approvals; and |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | commercializing drug candidates. |
Our competitors may succeed in obtaining patent protection and regulatory approval and may market drugs before we do. If our competitors market drugs that are less expensive, safer, more effective or more convenient to administer than our potential drugs, or that reach the market sooner than our potential drugs, we may not achieve commercial success. Scientific, clinical or technical developments by our competitors may render our drug candidates obsolete or noncompetitive. We anticipate that we will face increased competition in the future as new companies enter the markets and as scientific developments progress. If our drug candidates obtain regulatory approvals, but do not compete effectively in the marketplace, our business will suffer.
The commercial success of our drug candidates depends upon their market acceptance among physicians, patients, healthcare providers and payors and the medical community.
If our drug candidates are approved by the FDA or by another regulatory authority, the resulting drugs, if any, may not gain market acceptance among physicians, healthcare providers and payors, patients and the medical community. The degree of market acceptance of any of our approved drugs will depend on a variety of factors, including:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | timing of market introduction, number and clinical profile of competitive drugs; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | our ability to provide acceptable evidence of safety and efficacy; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | relative convenience and ease of administration; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | availability of coverage, reimbursement and adequate payment from health maintenance organizations and other third party payors; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | prevalence and severity of adverse side effects; and |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | other potential advantages over alternative treatment methods. |
If our drugs fail to achieve market acceptance, we may not be able to generate significant revenue and our business would suffer.
There is uncertainty related to coverage, reimbursement and payment by healthcare providers and payors for newly approved drugs. The inability or failure to obtain coverage could affect its ability to market our future drugs and decrease our ability to generate revenue.
The availability and levels of coverage and reimbursement of newly approved drugs by healthcare providers and payors is subject to significant uncertainty. The commercial success of our drug candidates in both the U.S. and international markets is substantially dependent on whether third party coverage and reimbursement is available. The U.S. Centers for Medicare and Medicaid Services, health maintenance organizations and other third party payors in the United States, the European Union and other jurisdictions are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs and, as a result, they may not cover or provide adequate payment for its potential drugs. Our drug candidates may not be considered cost-effective and reimbursement may not be available to consumers or may not be sufficient to allow our drug candidates to be marketed on a competitive basis.
34
Table of ContentsIn some countries, pricing of prescription drugs is subject to government control. In such countries, pricing negotiations with governmental authorities can take three to 12 months or longer following application to the competent authorities. To obtain reimbursement or pricing approval in such countries may require conducting an additional clinical trial comparing the cost-effectiveness of the drug to other alternatives. In the United States, the Medicare Part D drug benefit implemented in 2006 will limit drug coverage through formularies and other cost and utilization management programs, while Medicare Part B limits drug payments to a certain percentage of average price or through restrictive payment policies of ‘‘least costly alternatives’’ and ‘‘inherent reasonableness.’’ Our business could be materially harmed if coverage, reimbursement or pricing is unavailable or set at unsatisfactory levels.
We may be exposed to product liability claims that may damage our reputation and we may not be able to obtain adequate insurance.
Because we conduct clinical trials in humans, we face the risk that the use of our drug candidates will result in adverse effects. We believe that we have obtained reasonably adequate product liability insurance coverage for our trials. We cannot predict, however, the possible harm or side effects that may result from our clinical trials. Such claims may damage our reputation and we may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limit of, our insurance coverage.
Once we have commercially available drugs based on our drug candidates, we will be exposed to the risk of product liability claims. This risk exists even with respect to those drugs that are approved for commercial sale by the FDA or other regulatory authorities in the United States, the European Union or elsewhere and manufactured in facilities licensed and regulated by the FDA or other such regulatory authorities. We intend to secure limited product liability insurance coverage, but may not be able to obtain such insurance on acceptable terms with adequate coverage, or at a reasonable cost. There is also a risk that third parties that we have agreed to indemnify could incur liability. Even if we were ultimately successful in product liability litigation, the litigation would consume substantial amounts of our financial and managerial resources and may create adverse publicity, all of which would impair our ability to generate sales of the litigated product as well as our other potential drugs.
We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain potential drugs, which could severely harm its business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
Defending against claims relating to improper handling, storage or disposal of hazardous chemical, radioactive or biological materials could be time consuming and expensive.
Our research and development involves the controlled use of hazardous materials, including chemicals, radioactive and biological materials such as chemical solvents, phosphorus and bacteria. Our operations produce hazardous waste products. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from those materials. Various laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development and production efforts.
35
Table of ContentsIf we fail to enforce adequately or defend our intellectual property rights our business may be harmed.
Our commercial success depends in large part on obtaining and maintaining patent and trade secret protection for our drug candidates, the methods used to manufacture those drug candidates and the methods for treating patients using those drug candidates. Specifically our two lead drug candidates have composition of matter patents that expire at the earliest case at 2016 and 2014 respectively. Failure to obtain, maintain or extend the patents could adversely affect our business. We will only be able to protect our drug candidates and our technologies from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.
Our ability to obtain patents is uncertain because legal means afford only limited protections and may not adequately protect our rights or permit it to gain or keep any competitive advantage. Some legal principles remain unresolved and the breadth or interpretation of claims allowed in patents in the United States, the European Union or elsewhere can still be difficult to ascertain or predict. In addition, the specific content of patents and patent applications that are necessary to support and interpret patent claims is highly uncertain due to the complex nature of the relevant legal, scientific and factual issues. Changes in either patent laws or in interpretations of patent laws in the United States, the European Union or elsewhere may diminish the value of our intellectual property or narrow the scope of our patent protection. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologi es or from developing competing products and technologies. In addition, we generally do not control the patent prosecution of subject matter that we license from others and have not controlled the earlier stages of the patent prosecution. Accordingly, we are unable to exercise the same degree of control over this intellectual property as we would over our own.
Even if patents are issued regarding our drug candidates or methods of using them, those patents can be challenged by our competitors who may argue such patents are invalid and/or unenforceable. Patents also will not protect our drug candidates if competitors devise ways of making or using these product candidates without legally infringing our patents. The U.S. Federal Food, Drug and Cosmetic, or FD&C, Act and FDA regulations and policies and equivalents in other jurisdictions provide incentives to manufacturers to challenge patent validity or create modified, noninfringing versions of a drug in order to facilitate the approval of abbreviated new drug applications for generic substitutes. These same types of incentives encourage manufacturers to submit new drug applications that rely on literature and clinical data not prepared for or by the drug sponsor.
Proprietary trade secrets and unpatented know-how are also very important to our business. We rely on trade secrets to protect our technology, especially where we do not believe that patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Enforcing a claim that a third party obtained illegally and is using trade secrets is expensive and time consuming, and the outcome is unpredictable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
If we infringe intellectual property rights of third parties, we may increase our costs or be prevented from being able to commercialize our drug candidates.
There is a risk that we are infringing or will infringe the proprietary rights of third parties because patents and pending applications belonging to third parties exist in the United States, the European Union and elsewhere in the world in the areas our research explores. Others might have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents and might have been the first to file patent applications for these inventions. In addition, because the patent application process can take several years to complete, there may be currently pending applications, unknown to us, which may later result in issued patents that cover the production, manufacture, commercialization or use of our drug candidates. In addition, the production, manufacture, commercialization or use of our product candidates may infringe existing
36
Table of Contentspatents of which we are not aware. Numerous third-party United States and foreign issued patents and pending applications exist in the area of kinases, including CDK, Aurora and Plk for which we have research programs. Because patent applications can take several years to issue, there may be pending applications that may result in issued patents that cover our technologies or product candidates. For example, some pending patent applications contain broad claims that could represent freedom to operate limitations for some of our kinase programs should they be issued unchanged. If we wish to use the technology or compound claimed in issued and unexpired patents owned by others, we will need to obtain a license from the owner, enter into litigation to challenge the validity of the patents or incur the risk of litigation in the event that the owner asserts that we infringe its patents. In one case we have opposed a European patent relating to human aurora kinase. We are also aware of a corresponding U.S. patent containing method of treatment claims for specific cancers using aurora kinase modulators which, if held valid, could potentially restrict the use of our aurora kinase inhibitors once clinical trials are completed.
There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. Defending against third party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our development or commercialization efforts. If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business. As a result of intellectual property infringement claims, or to avoid potential claims, we might:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | be prohibited from selling or licensing any product that we may develop unless the patent holder licenses the patent to us, which it is not required to do; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | be required to pay substantial royalties or grant a cross license to our patents to another patent holder; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | decide to move some of our screening work outside Europe; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | be required to pay substantial damages for past infringement, which we may have to pay if a court determines that our product candidates or technologies infringe a competitor’s patent or other proprietary rights; or |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | be required to redesign the formulation of a drug candidate so it does not infringe, which may not be possible or could require substantial funds and time. |
The development programs for our two lead drug candidates are based in part on intellectual property rights we licensed from others, and any termination of those licenses could seriously harm our business.
We have in-licensed certain patent rights in connection with the development programs for each of our two lead drug candidates. With respect to seliciclib, we hold a license from Centre National de Recherche Scientifique, or CNRS, and Institut Curie. With respect to sapacitabine, we hold a license from Sankyo Co., Ltd. of Japan. Both of these license agreements impose payment and other material obligations on us. Under the CNRS/Institut Curie license, we are obligated to pay license fees, milestone payments and royalties. We are also obligated to use reasonable efforts to develop and commercialize products based on the licensed patents. Under the Sankyo license we are obligated to pay license fees, milestone payments and royalties. We are also obligated to use commercially reasonable efforts to commercialize products based on the licensed rights and to use reasonable efforts to obtain regulatory approval to sell the products in at least one country by September& nbsp;2011. Although we are currently in compliance with all of our material obligations under these licenses, if we were to breach any such obligations our counterparties would be permitted to terminate the licenses. This would restrict or delay or eliminate our ability to develop and commercialize these drug candidates, which could seriously harm our business.
37
Table of ContentsIntellectual property rights of third parties could adversely affect our ability to commercialize our drug candidates.
If patents issued to third parties contain valid claims that cover our compounds or their manufacture or uses relevant to our development plans, we may be required to obtain licenses to these patents or to develop or obtain alternative technology. We are aware of several published patent applications, and understand that others may exist, that could support claims that, if granted, could cover various aspects of our developmental programs, including in some cases particular uses of our lead drug candidate, seliciclib, sapacitabine or other therapeutic candidates, or gene sequences and techniques that we use in the course of our research and development. In addition, we understand that other applications exist relating to potential uses of seliciclib and sapacitabine that are not part of our current clinical programs for these compounds. Although we intend to continue to monitor these applications, we cannot predict what claims will ultimately be allowed and if a llowed what their scope would be. If a patent is issued that covers our compounds or their manufacture or uses or screening assays related to our development plans then we may not be in a position to commercialize the related drug candidate unless we successfully pursue litigation to have that patent invalidated or enter into a licensing arrangement with the patent holder. Any such litigation would be time consuming and costly, and its outcome would not be guaranteed, and we cannot be certain that we would be able to enter into a licensing arrangement with the patent holder on commercially reasonable terms. In either case, our business prospects could be materially adversely affected. In one case we have opposed a granted European patent related to human aurora kinase. We are also aware of a corresponding US patent containing method of treatment claims for specific cancers using aurora kinase modulators, which if held valid, could potentially restrict the use of certain of our aurora kinase inhibitors.
We have limited experience attempting to comply with public company obligations. Attempting to comply with these requirements will increase our costs and require additional management resources, and we still may fail to comply.
As a newly public company, we face and will continue to face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company. Compliance with the Sarbanes Oxley Act of 2002, as well as other rules of the SEC, the Public Company Accounting Oversight Board and The Nasdaq Global Market has resulted in a significant initial cost to us as well as an ongoing increase in our legal, audit and financial compliance costs. As a public company, we are subject to Section 404 of the Sarbanes Oxley Act relating to internal control over financial reporting and although we have developed processes to evaluate our internal controls for purposes of Section 404, we cannot assure that our internal control over financial reporting will prove to be effective.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed. However, guidance from regulatory authorities in the area of internal controls continues to evolve and substantial uncertainty exists regarding our on-going ability to comply by applicable deadlines. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
Our common stock may have a volatile public trading price.
An active public market for our common stock has not developed. Our stock can trade in small volumes which may make the price of our stock highly volatile. The last reported price of our stock may not represent the price at which you would be able to buy or sell the stock. The market prices for securities of companies comparable to us have been highly volatile. Often, these stocks have
38
Table of Contentsexperienced significant price and volume fluctuations for reasons unrelated to the operating performance of the individual companies. Factors giving rise to this volatility may include:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | disclosure of actual or potential clinical results with respect to product candidates we are developing; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | regulatory developments in both the United States and abroad; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | developments concerning proprietary rights, including patents and litigation matters; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | public concern about the safety or efficacy of our product candidates or technology, or related technology, or new technologies generally; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | concern about the safety or efficacy of our product candidates or technology,or related technology, or new technologies generally; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | public announcements by our competitors or others; and |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | general market conditions and comments by securities analysts and investors. |
Fluctuations in our operating losses could adversely affect the price of our common stock.
Our operating losses may fluctuate significantly on a quarterly basis. Some of the factors that may cause our operating losses to fluctuate on a period-to-period basis include the status of our preclinical and clinical development programs, level of expenses incurred in connection with our preclinical and clinical development programs, implementation or termination of collaboration, licensing, manufacturing or other material agreements with third parties, non-recurring revenue or expenses under any such agreement, and compliance with regulatory requirements. Period-to-period comparisons of our historical and future financial results may not be meaningful, and investors should not rely on them as an indication of future performance. Our fluctuating losses may fail to meet the expectations of securities analysts or investors. Our failure to meet these expectations may cause the price of our common stock to decline.
Anti-takeover provisions in our charter documents and provisions of Delaware law may make an acquisition more difficult and could result in the entrenchment of management.
We are incorporated in Delaware. Anti-takeover provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may make a change in control or efforts to remove management more difficult. Also, under Delaware, our board of directors may adopt additional anti-takeover measures.
We have the authority to issue up to 5,000,000 shares of preferred stock and to determine the terms of those shares of stock without any further action by our stockholders. If the board of directors exercises this power to issue preferred stock, it could be more difficult for a third party to acquire a majority of our outstanding voting stock and vote the stock they acquire to remove management or directors.
Our amended and restated certificate of incorporation and amended and restated bylaws also provides staggered terms for the members of our board of directors. Under Section 141 of the Delaware General Corporation Law, our directors may be removed by stockholders only for cause and only by vote of the holders of a majority of voting shares then outstanding. These provisions may prevent stockholders from replacing the entire board in a single proxy contest, making it more difficult for a third party to acquire control of us without the consent of our board of directors. These provisions could also delay the removal of management by the board of directors with or without cause. In addition, our directors may only be removed for cause and amended and restated bylaws limit the ability of our stockholders to call special meetings of stockholders.
Under Section 203 of the Delaware General Corporation Law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. Our board of directors could use this provision to prevent changes in management. The existence of the foregoing provisions could limit the price investors might be willing to pay in the future for shares of our common stock.
39
Table of ContentsOur certificate of incorporation and bylaws and certain provisions of Delaware law may delay or prevent a change in our management and make it more difficult for a third party to acquire us.
Our certificate of incorporation and bylaws contain provisions that could delay or prevent a change in our board of directors and management teams. Some of these provisions:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | authorize the issuance of preferred stock that can be created and issued by the board of directors without prior stockholder approval, commonly referred to as ‘‘blank check’’ preferred stock, with rights senior to those of our common stock; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | provide for the board of directors to be divided into three classes; and |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent. |
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of large stockholders to complete a business combination with, or acquisition of, us. These provisions may prevent a business combination or acquisition that would be attractive to stockholders and could limit the price that investors would be willing to pay in the future for our stock.
These provisions also make it more difficult for our stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt to replace our current management team. Additionally, these provisions may prevent an acquisition that would be attractive to stockholders and could limit the price that investors would be willing to pay in the future for our common stock.
We may have limited ability to pay cash dividends on the convertible preferred stock.
Delaware law may limit our ability to pay cash dividends on the convertible preferred stock. Under Delaware law, cash dividends on our capital stock may only be paid from ‘‘surplus’’ or, if there is no ‘‘surplus,’’ from the corporation’s net profits for the current or preceding fiscal year. Delaware law defines ‘‘surplus’’ as the amount by which the total assets of a corporation, after subtracting its total liabilities, exceed the corporation’s capital, as determined by its board of directors. Since we are not profitable, our ability to pay cash dividends will require the availability of adequate surplus. Even if adequate surplus is available to pay cash dividends on the convertible preferred stock, we may not have sufficient cash to pay dividends on the convertible preferred stock. If that was to happen, holders of preferred stock would be granted certain additional rights until such dividends were repaid.
Our common and convertible preferred stock may experience extreme price and volume fluctuations, which could lead to costly litigation for the Company and make an investment in the Company less appealing.
The market price of our common and convertible preferred stock may fluctuate substantially due to a variety of factors, including:
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | additions to or departures of our key personnel; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | announcements of technological innovations or new products or services by us or our competitors; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | announcements concerning our competitors or the biotechnology industry in general; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | new regulatory pronouncements and changes in regulatory guidelines; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | general and industry-specific economic conditions; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | changes in financial estimates or recommendations by securities analysts; |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | variations in our quarterly results; |
40
Table of Contents![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | announcements about our collaborators or licensors; and |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| • | changes in accounting principles. |
The market prices of the securities of biotechnology companies, particularly companies like us without product revenues and earnings, have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the performance of particular companies. In the past, companies that experience volatility in the market price of their securities have often faced securities class action litigation. Moreover, market prices for stocks of biotechnology-related and technology companies frequently reach levels that bear no relationship to the performance of these companies. These market prices generally are not sustainable and are highly volatile. Whether or not meritorious, litigation brought against us could result in substantial costs, divert our management’s attention and resources and harm our financial condition and results of operations.
The future sale of our common and convertible preferred stock, and future issuances of our common stock upon conversion of our convertible preferred stock and upon the payment of make-whole dividends, if any, could negatively affect our stock price.
If our common or convertible preferred stockholders sell substantial amounts of its stock in the public market, or the market perceives that such sales may occur, the market price of our common and convertible preferred stock could fall.
In addition, if we exercise our rights to pay make-whole dividends in common stock rather than in cash upon conversion of our convertible preferred stock to common stock, then the sale of such shares of common stock or the perception that such sales may occur could cause the market price of our stock to fall. Additionally, after our convertible preferred stock offering, the holders of our convertible preferred stock had the right to convert each share of convertible preferred stock into approximately 0.42553 shares of our common stock. Such conversion rate is subject to certain antidilution adjustments that, upon the occurrence of certain events, will increase the number of shares of common stock that each holder of convertible preferred stock will receive upon conversion into common stock. Such antidilution price adjustments may apply in the case of any strategic alternative that we pursue which may result in further dilution to the holders of outstanding commo n stock. The conversion of our convertible preferred stock into common stock and the payment of any make-whole dividends in shares of common stock in lieu of cash, may result in substantial dilution to the interests of our holders of common stock.
If we exchange the convertible preferred stock for debentures, the exchange will be taxable but we will not provide any cash to pay any tax liability that any convertible preferred stockholder may incur.
An exchange of convertible preferred stock for debentures, as well as any dividend make-whole or interest make-whole payments paid in our common stock, will be taxable events for U.S. federal income tax purposes, which may result in tax liability for the holder of convertible preferred stock without any corresponding receipt of cash by the holder. In addition, the debentures may be treated as having original issue discount, a portion of which would generally be required to be included in the holder’s gross income even though the cash to which such income is attributable would not be received until maturity or redemption of the debenture. We will not distribute any cash to you to pay these potential tax liabilities.
If we automatically convert the convertible preferred stock, there is a substantial risk of fluctuation in the price of our common stock from the date we elect to automatically convert to the conversion date.
We may elect to automatically convert the convertible preferred stock on or prior to maturity if our common stock price has exceeded 150% of the conversion price for at least 20 trading days during a 30-day trading period ending within five trading days prior to the notice of automatic conversion. You should be aware that there is a risk of fluctuation in the price of our common stock between the time when we may first elect to automatically convert the preferred and the automatic conversion date.
We do not intend to pay cash dividends on our common stock in the foreseeable future.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. Any payment of cash dividends will depend on our financial condition, results of operations, capital
41
Table of Contentsrequirements, the outcome of the review of our strategic alternatives and other factors and will be at the discretion of our board of directors. Accordingly, investors will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock. Furthermore, we may in the future become subject to contractual restrictions on, or prohibitions against, the payment of dividends.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif)
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | 31 | .1 | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14 (a) As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | 31 | .2 | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a) As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | 32 | .1 | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | 32 | .2 | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
42
Table of ContentsSIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, in Berkeley Heights, New Jersey, on May 9, 2007.
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif)
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
| ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | CYCLACEL PHARMACEUTICALS, INC. |
Dated: May 9, 2007 | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | By: | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | /s/ Paul McBarron |
| ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | Paul McBarron |
| ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | ![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) | Chief Operating Officer and Executive Vice President, Finance |
![](https://capedge.com/proxy/10-Q/0000950136-07-003281/spacer.gif) |
43