UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2010
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11550
Pharmos Corporation
(Exact name of registrant as specified in its charter)
| | Nevada | | 36-3207413 | |
| | (State or other jurisdiction of incorporation or organization) | | (IRS Employer Id. No.) | |
99 Wood Avenue South, Suite 311
Iselin, NJ 08830
(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 452-9556
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Non-accelerated filer o | | Accelerated filer o Smaller reporting company x | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x .
As of May 5, 2010, the Registrant had outstanding 59,438,214 shares of its $.03 par value Common Stock.
INDEX
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| PART I – FINANCIAL INFORMATION | |
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| PART II – OTHER INFORMATION | |
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| Part I. | Financial Information |
| PHARMOS CORPORATION | | | | | | |
| | | | | | |
| | | March 31, 2010 | | | December 31, 2009 | |
| Assets | | (Unaudited) | | | | |
| Cash and cash equivalents | | $ | 3,884,487 | | | $ | 4,629,486 | |
| Prepaid expenses and other current assets | | | 108,189 | | | | 25,678 | |
| Total current assets | | | 3,992,676 | | | | 4,655,164 | |
| | | | | | | | | |
| Fixed assets, net | | | 914 | | | | 1,379 | |
| Other assets | | | 29,105 | | | | 32,479 | |
| | | | | | | | | |
| Total assets | | $ | 4,022,695 | | | $ | 4,689,022 | |
| | | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | |
| Accounts payable | | $ | 76,989 | | | $ | 73,717 | |
| Accrued expenses | | | 68,704 | | | | 148,414 | |
| Accrued wages and other compensation | | | - | | | | 195,000 | |
| Total current liabilities | | | 145,693 | | | | 417,131 | |
| | | | | | | | | |
| Convertible debentures | | | 1,000,000 | | | | 1,000,000 | |
| Total liabilities | | | 1,145,693 | | | | 1,417,131 | |
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| Shareholders’ Equity | | | | | | | | |
| Preferred stock, $.03 par value, 1,250,000 shares authorized, none issued and outstanding | | | - | | | | - | |
| Common stock, $.03 par value; 120,000,000 shares | | | | | | | | |
| authorized, 59,438,214 and 59,291,154 issued and outstanding as of | | | | | | | | |
| March 31, 2010 and December 31, 2009, respectively | | | 1,783,147 | | | | 1,778,735 | |
| Paid-in capital in excess of par | | | 211,393,751 | | | | 211,301,675 | |
| Accumulated deficit | | | (210,299,470 | ) | | | (209,808,093 | ) |
| Treasury stock, at cost, 2,838 shares | | | (426 | ) | | | (426 | ) |
| Total shareholders' equity | | | 2,877,002 | | | | 3,271,891 | |
| | | | | | | | | |
| Total liabilities and shareholders' equity | | $ | 4,022,695 | | | $ | 4,689,022 | |
| The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. |
PHARMOS CORPORATION (Unaudited) Condensed Consolidated Statements of Operations |
| | | Three months ended March 31, | |
| | | | |
| | | 2010 | | | 2009 | |
| Expenses | | | | | | |
| Research and development | | $ | 122,995 | | | $ | 2,014,420 | |
| In–process research and development milestone | | | - | | | | 1,180,000 | |
| General and administrative | | | 339,314 | | | | 334,749 | |
| Depreciation and amortization | | | 465 | | | | 2,126 | |
| Total operating expenses | | | 462,774 | | | | 3,531,295 | |
| | | | | | | | | |
| Loss from operations | | | (462,774 | ) | | | (3,531,295 | ) |
| | | | | | | | | |
| Other (expense) income | | | | | | | | |
| Interest income | | | 287 | | | | 5,286 | |
| Interest expense | | | (28,374 | ) | | | (119,838 | ) |
| Other income (expense) | | | (516 | ) | | | (32,605 | ) |
| Other expense | | | (28,603 | ) | | | (147,157 | ) |
| | | | | | | | | |
| Net loss | | $ | (491,377 | ) | | $ | (3,678,452 | ) |
| | | | | | | | | |
| Net loss per share | | | | | | | | |
| - basic and diluted | | $ | (0.01 | ) | | $ | (0.14 | ) |
| | | | | | | | | |
| Weighted average shares outstanding | | | | | | | | |
| - basic and diluted | | | 58,210,866 | | | | 26,697,649 | |
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
Pharmos Corporation
(Unaudited)
Condensed Consolidated Statements of Cash Flows
| | | Three months ended March 31, | |
| | | 2010 | | | 2009 | |
| Cash flows from operating activities | | | | | | |
| Net loss | | $ | (491,377 | ) | | $ | (3,678,452 | ) |
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| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Depreciation and amortization | | | 465 | | | | 2,126 | |
| Stock based compensation | | | 46,487 | | | | 26,977 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Prepaid expenses and other current assets | | | (82,511 | ) | | | 13,973 | |
| Other assets | | | 3,374 | | | | 12,825 | |
| Accounts payable | | | 3,273 | | | | 250,981 | |
| Accrued expenses | | | (29,710 | ) | | | 290,390 | |
| Accrued wages and other compensation | | | (195,000 | ) | | | (69,000 | ) |
| Milestone payable | | | - | | | | 1,000,000 | |
| Other liabilities | | | - | | | | (11,071 | ) |
| | | | | | | | | |
| Net cash used in operating activities | | | (744,999 | ) | | | (2,161,251 | ) |
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| Cash flows from investing activities | | | | | | | | |
| Proceeds from disposition of fixed assets | | | - | | | | 367,994 | |
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| Net cash provided by investing activities | | | - | | | | 367,994 | |
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| Net decrease in cash and cash equivalents | | | (744,999 | ) | | | (1,793,257 | ) |
| | | | | | | | | |
| Cash and cash equivalents at beginning of year | | | 4,629,486 | | | | 4,730,282 | |
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| Cash and cash equivalents at end of period | | $ | 3,884,487 | | | $ | 2,937,025 | |
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| Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | |
| Common shares issued for accrued interest | | $ | 50,000 | | | $ | 201,667 | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements (unaudited)
Basis of Presentation
The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accrual adjustments, considered necessary for a fair statement have been included. Operating results and cash flows for the three month period ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. The December 31, 2009 consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America and included in the Form 10-K filing.
Although the Company received $3.9 million in December 2009 from the sale of their state NOL’s and has approximately $3.9 million of cash at March 31, 2010, the Company’s ultimate ability to continue operating in the long term is largely dependent upon achieving a collaboration with a pharmaceutical partner or raising additional capital to advance its lead compound.
1. The Company
Pharmos Corporation (the Company or Pharmos) is a biopharmaceutical company engaged in the discovery and development of novel therapeutics to treat a wide range of diseases of the nervous system.
The Company is not currently pursuing any clinical development activities. With limited cash resources, the strategy is to seek a pharmaceutical partner with the appropriate GI clinical, scientific and financial resources for further development of Dextofisopam.
Dextofisopam
Dextofisopam is Pharmos’ lead product for diarrhea predominant irritable bowel syndrome (IBS-d). Data from both a Phase 2a Proof-of-Concept study and a Phase 2b Dose-Ranging study strongly support the efficacy of the molecule at the 200 mg BID dosage level. Importantly, in both of these studies, dextofisopam was very well-tolerated.
While IBS is not a life threatening disease, it can be debilitating and represents a large unmet medical need. Previously approved treatments for IBS include Lotronex from GSK and Zelnorm from Novartis, both of which were both withdrawn after highly successful market launches because of unexpected serious side effects. Lotronex was subsequently relaunched, but with a black box warning label. Dextofisopam is an enantiomer of racemic tofisopam, a drug that has been used safely for over 30 years, and has exhibited an excellent safety profile in clinical trials to date.
Pharmos, together with Vela Pharmaceuticals (Vela) which merged with Pharmos in 2006, has advanced the compound through Phase 2b. The placebo-controlled Phase 2a trial (N=141) studied a 200mg dose of Dextofisopam and produced statistically significant results that formed the basis for a Phase 2b clinical trial.
The Phase 2b trial (N=324) studied 100 mg, 200 mg and 300 mg doses of Dextofisopam. While the Phase 2b trial did not meet its primary endpoint (percent of weeks with overall adequate relief) with statistical significance, the trial clearly showed drug activity, especially at the 200 mg dose level, confirming the efficacy in the Phase 2a trial. Statistical significance was achieved in multiple variables in month 3, including overall relief. Statistical significance for the primary endpoint was not achieved because of a much higher than expected placebo response rate in the 2b trial, compared with the 2a trial. This higher-than-expected placebo-response may have been largely due to the inclusion of multiple active treatment arms in the study. The addition of sites and change in CRO during the course of the Phase 2b tr ial may also have been a factor in the higher placebo response.
Taken together, the results of the Phase 2a and Phase 2b trials make a compelling argument for further development of Dextofisopam for the treatment of IBS-d. The drug shows strong signals for activity, and appears to be very well-tolerated. Pharmos considers that the next development step will be to conduct a Phase 2c clinical trial.
Cannabinoid
Pharmos’ cannabinoid research was geared toward development of selective and specific CB2 receptor agonists. By activating CB2 receptors, CB2 agonists inhibit autoimmune and inflammatory processes, and are likely to be useful for treating pain, autoimmune, inflammatory and degenerative disorders. Although progress has been made, the early stage of this work and resource limitations have resulted in termination of these programs. Pharmos’ strategy is to sell or out license the technology developed around the cannabinoid research. Pharmos had developed these compounds in preclinical testing for neuropathic pain.
In November 2009 the Company entered into a Material Transfer Agreement whereby a European company will perform certain experiments with samples of our synthetic selective cannabinoid receptor CB2 agonist.
Tianeptine
Tianeptine, a potential follow-on product to Dextofisopam, has completed late-preclinical development for the treatment of irritable bowel syndrome (IBS). Tianeptine, a racemic molecule, has been marketed outside the United States since 1988 for the treatment of depression. Preclinical studies support the potential utility of Tianeptine for the treatment of functional gastrointestinal disorders and, in particular, IBS. Pharmos has established patent rights for the use of Tianeptine and its enantiomers for the treatment of IBS and functional dyspepsia. Tianeptine is available for out-licensing.
Tofisopam
The Company owns the rights to both R and S Tofisopam. Dextofisopam is the R enantiomer of racemic tofisopam and is being developed for IBS as described above. In December 2009 the Company entered into a Material Transfer Agreement with a US based company to perform certain experiments with S-Tofisopam.
The Company has corporate offices in Iselin, New Jersey.
2. Liquidity and Business Risks
Except for 2001, the Company has experienced operating losses every year since inception in funding the research, development and clinical testing of our drug candidates. The Company had an accumulated deficit of $210.3 million as of March 31, 2010 and expects to continue to incur losses going forward. Such losses have resulted principally from costs incurred in research and development and from general and administrative expenses. Previously the Company had financed its operations with public and private offerings of securities, advances and other funding pursuant to an earlier marketing agreement with Bausch & Lomb, grants from the Office of the Chief Scientist of Israel, research contracts, the sale of a portion of its New Jersey net operating loss carryforwards (NOL’s), and interest income. Although the Company r eceived $3.9 million in December 2009 from the sale of their NOL’s and had approximately $3.9 million of cash and cash equivalents at March 31, 2010, the Company’s ultimate ability to continue in the long term is largely dependent upon achieving a collaboration with a pharmaceutical partner or raising additional capital to either advance its lead compound, Dextofisopam, for the treatment of IBS or to advance other earlier stage intellectual property assets. The Company has engaged an investment advisor to assist with these strategies but has not been successful to date. The Company has in the past pursued various funding and financing options; however management believes that future funding or financing options may be challenging because of the current environment.
Also, the Company does not currently have the finances and resources to complete full clinical trials for its lead compound, Dextofisopam. Nevertheless the Company is exploring the feasibility of smaller trials using Dextofisopam in other therapeutic indications or commencing pre-clinical development on its other intellectual property assets which could further reduce the Company’s current resources.
3. Significant Accounting Policies
Basis of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Pharmos Ltd and Vela Acquisition Corp. All significant intercompany balances and transactions are eliminated in consolidation.
Cash and Cash Equivalents
Cash and Cash Equivalents as of March 31, 2010 consist primarily of a money market fund invested in short term government obligations.
Concentration of Credit Risk
Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents. The Company maintains its cash and cash equivalent balances with a high quality financial institution who invests the Company’s funds in Government short-term instruments. Consequently the Company believes that such funds are subject to minimal credit risk.
Income Taxes
The Company accounts for income taxes in accordance with the provisions of FASB ASC Topic 740. “Accounting for Income Taxes” (“ASC – Topic 740”). Under the asset and liability method of Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities, if any, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recogni zed in income in the period that includes the enactment date.
In the normal course of business the Company is subject to examination by taxing authorities. At present, there are no ongoing audits or unresolved disputes with the various tax authorities that the Company files with. There were no uncertain tax positions at March 31, 2010 or December 31, 2009, as the Company’s tax positions for the open years meet the recognition thresholds of more likely than not to be sustained upon examination.
Foreign exchange
The Company's foreign operations were principally conducted in U.S. dollars. Any transactions or balances in currencies other than U.S. dollars are remeasured and any resultant gains and losses are included in other income (expense). To date, such gains and losses have been insignificant.
Fair value of financial instruments
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, investments, other receivables, other assets, accounts payable and accrued liabilities approximate fair value due to their short term maturities.
The Company has estimated the fair value of the $1,000,000 outstanding convertible debenture due November 1, 2012 to be approximately $400,000 at March 31, 2010. In determining the fair value the Company used a level 3 inputs (unobservable) rate of 35%. Management used a discount rate they believe was most relevant given the business risks described in Note 2 of the financial statements and because they have been unable to raise third party financing during the past several years.
Equity based compensation
During the three months ended March 31, 2010 and 2009, the Company recognized equity based compensation expense of $46,487 and $26,977, respectively, for restricted stock and stock options which was recognized in the Consolidated Statement of Operations. As of March 31, 2010, the total compensation costs related to non-vested stock options not yet recognized is $190,454 and the Executive Chairman of the Board Robert Johnston’s restricted stock charges are $203,500 which will be recognized over the remaining requisite service period.
During the three months ended March 31, 2010 and 2009, executive and outside directors of the Company were granted stock options under the Pharmos 2000 Stock Option Plan per the table below:
| Period Ended | | Grants Issued | | | Weighted Average Exercise Price | | | Weighted Average Fair Value | |
| | | | | | | | | | |
| March 31, 2010 | | | | 70,000 | | | $ | 0.08 | | | $ | 0.07 | |
| March 31, 2009 | | | | 65,000 | | | $ | 0.14 | | | $ | 0.10 | |
Reclassification
Certain amounts in prior periods have been reclassified to conform to the 2010 financial statement presentation.
Recent Accounting Pronouncements
In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements ("ASU 2009-13"). ASU 2009-13, amends existing revenue recognition accounting pronouncements that are currently within the scope of Codification Subtopic 605-25 (previously included within EITF 00-21, Revenue Arrangements with Multiple Deliverables ("EITF 00-21"). The consensus to ASU 2009-13 provides accounting principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. This guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition ba sed upon management's estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. EITF 00-21 previously required that the fair value of the undelivered item be the price of the item either sold in a separate transaction between unrelated third parties or the price charged for each item when the item is sold separately by the vendor. Under EITF 00-21, if the fair value of all of the elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and allows for retroactive application. The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.
Subsequent Events
In May 2009, the FASB established general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued (ASC Topic 855). It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. The Company's adoption of these standards had no material impact on its financial position, results of operations and cash flows.
4. Convertible Debentures
On January 3, 2008, Pharmos Corporation completed a private placement of its 10% Convertible Debentures due November 2012. At the closing the Company issued $4,000,000 principal amount of the Debentures, at par, and received gross proceeds in the same amount.
The purchasers consisted of certain existing investors in the Company, namely Venrock Associates (which is affiliated with Anthony B. Evnin), New Enterprise Associates (which is affiliated with Charles W. Newhall, III), Lloyd I. Miller, III and Robert F. Johnston.
The Debentures mature the earlier of November 1, 2012 or the sale of the Company. The Debentures, together with all accrued and unpaid interest thereon, may be repaid, without premium or penalty, commencing on November 1, 2011. Starting on November 1, 2009, any outstanding Debenture may be converted into common shares at the option of the holder. The conversion price is fixed equal to $0.70 per share. The Debentures bear interest at the rate of 10% per annum, payable semi-annually either in cash or common stock of the Company at the option of the Company, provided that an effective registration statement is in effect.
A registration statement covering the resale of the shares underlying the debenture held by one of the four debenture holders, Lloyd I. Miller, III, was declared effective in December 2008.
On April 21, 2009, Venrock Associates (which is affiliated with Anthony B. Evnin, a Director of the Company), New Enterprise Associates (which is affiliated with Charles W. Newhall, III, a Director of the Company) and Robert F. Johnston, the Company’s Executive Chairman of the Board of Directors, agreed to convert as of such date the Company’s 10% Convertible Debentures due November 1, 2012 held by them, comprising an aggregate of $3,000,000 in principal amount, at a conversion price of $0.275 per share. Accrued but unpaid interest on their debentures, aggregating $80,403, was also converted on such date, at a conversion price of $0.34 per share. An aggregate of 11,145,570 shares was issued upon conversion of the principal and accrued but unpaid interest on the debentures.
In the first quarter of 2010, the Company elected to pay the interest on its 10% Convertible Debentures due November 2012 incurred through the fourth interest payment date, January 15, 2010, in common stock to the remaining debenture holder. The dollar amount of interest incurred from July 15, 2009 to January 15, 2010 to be paid in stock amounted to $50,000 which, converted at $0.34 per share, resulted in an aggregate of 147,059 shares issued to the debenture holder.
5. Milestone Commitments
In 2006, the Company acquired Vela, which had a Phase II product candidate, Dextofisopam, in development to treat IBS. The Company has dedicated substantial resources to advance clinical development of this product candidate. The Vela acquisition also includes additional compounds in preclinical and/or clinical development for neuropathic pain, inflammation and sexual dysfunction.
The Company issued 6.5 million shares of common stock and paid $6 million to Vela shareholders at closing. The amended Merger Agreement also includes additional performance-based milestone payments to the Vela stockholders related to the development of Dextofisopam, aggregating up to an additional $8 million in cash and the issuance of up to an additional 13,500,000 shares of Pharmos common stock. None of the conditions requiring issuance of these contingent shares or funding these payments were met at December 31, 2009 and March 31, 2010 except for a $1.0 million milestone payment made by Pharmos due upon the study’s commencement which was paid in 2008.
The remaining milestones are as follows:
· $1 million cash + 2 million shares of Pharmos common stock: Final patient enrolled in Phase 2b trial (1)
· $2 million cash + 2.25 million shares: Successful completion of Phase 2b (milestone not met)
· $2 million + 2 million shares: NDA submission
· $2 million cash +2.25 million shares: FDA approval
· 1 million shares: Approval to market in Europe or Japan
· 4 million shares: $100 million sales of Dextofisopam, when and if approved, in any 12-month period
(1) The milestone was reached when the final patient was enrolled in the Dextofisopam Phase 2b trial and was recognized in the first quarter of 2009 as all probability criteria were met. The milestone had two components, a cash portion of $1,000,000 and a share portion of 2,000,000 shares valued at $180,000. The total charge in the first quarter 2009 was $1,180,000. The shares were issued in November 2009 under the terms of the Amendment #3 to the agreement and plan of merger. Under that amendment the payment of the cash portion was deferred until such time as 1) the Company successfully entered into a strategic collaboration or licensing agreement with a third party for the development of Dextofisopam resulting in an upfront cash fee of at least $10 million, and 2) payment of the cash milestone would still leave the Company with one year’s operating cash.
The results of the Phase 2b trial were announced in September 2009 and reported that while there was clearly drug activity, the trial did not achieve its primary endpoints. Cowen and Company were subsequently engaged to help the Company achieve a pharmaceutical partnership. Under the terms of the Vela acquisition agreement as amended, the 2 million shares were issued on November 2, 2009. The cash portion that was expensed in Q1 2009 was reversed in Q4 2009 since it is not deemed probable that the amended terms would be achieved. Since the trial results were not successful, no other milestones have been achieved.
6. Net Loss Per Common Share
Basic and diluted net loss per common share was computed by dividing the net loss for the period by the weighted average number of shares of common stock issued and outstanding. For the periods ending March 31, 2010 and 2009, other potential common stock has been excluded from the calculation of diluted net loss per common share, as their inclusion would be anti-dilutive.
The following table sets forth the number of potential shares of common stock that have been excluded from diluted loss per share since inclusion would have been anti-dilutive.
| | | March 31, |
| | | 2010 | | 2009 |
| | | | | |
| Stock options | | | 3,579,155 | | 2,678,555 |
| Convertible debentures | | | 1,428,571 | | 5,714,286 |
| Restricted stock | | | 1,200,000 | | - |
| Warrants | | | 18,000,000 | | - |
| | | | | | |
| Total potential dilutive securities not included in loss per share | | | 24,207,726 | | 8,392,841 |
7. Common Stock Transactions
In the first quarter of 2010, the Company elected to pay the interest on its 10% Convertible Debentures due November 2012 incurred through the fourth interest payment date, January 15, 2010, in common stock to the remaining debenture holder. The dollar amount of interest incurred from July 15, 2009 to January 15, 2010 to be paid in stock amounted to $50,000 which, converted at $0.34 per share, resulted in an aggregate of 147,059 shares issued to the debenture holder.
On May 11, 2009, Robert Johnston, the Executive Chairman, was awarded 1,200,000 shares of restricted stock. 300,000 of such shares become vested and free from a risk of forfeiture on the first anniversary of the date hereof, and the remaining 900,000 shares shall become vested and free from a risk of forfeiture in quarterly increments over a three-year period commencing on the first anniversary of the grant date. Over the four year period, a total of $264,000 will be recorded as compensation expense. In the first quarter of 2010, the Company expensed $16,500 for Mr. Johnston’s restricted stock.
As of March 31, 2010, the Company had reserved 3,579,155 common stock shares for outstanding stock options. There were 18,000,000 outstanding warrants as of March 31, 2010.
8. Segment and Geographic Information
The Company is active in one business segment: designing, developing, selling and marketing pharmaceutical products. On August 29, 2008 the Company announced that effective October 31, 2008 it would cease operations in Rehovot, Israel, and manage those activities out of the Company’s US headquarters in Iselin, New Jersey. The Company’s subsidiary in Israel, Pharmos Ltd. is being voluntarily liquidated.
Geographic information for the three months ending March 31, 2010 and 2009 are as follows:
| | | Three months ended March 31, | |
| | | 2010 | | | 2009 | |
| Net (loss) income | | | | | | |
| United States | | $ | (490,861 | ) | | $ | (3,612,693 | ) |
| Israel | | | (516 | ) | | | (65,759 | ) |
| | | $ | (491,377 | ) | | $ | (3,678,452 | ) |
| | | | | | | | | |
| Capital Expenditures | | | | | | | | |
| United States | | $ | - | | | $ | - | |
| Israel | | | - | | | | - | |
| | | $ | - | | | $ | - | |
Geographic information as of March 31, 2010 and December 31, 2009 are as follows:
| Total Assets | | March 31, 2010 | | | December 31, 2009 | |
| United States | | $ | 4,003,870 | | | $ | 4,669,681 | |
| Israel | | | 18,825 | | | | 19,341 | |
| | | $ | 4,022,695 | | | $ | 4,689,022 | |
| | | | | | | | | |
| Long Lived Assets, net | | | | | | | | |
| United States | | $ | 914 | | | $ | 1,379 | |
| Israel | | | - | | | | - | |
| | | $ | 914 | | | $ | 1,379 | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
This report on Form 10-Q contains information that may constitute "forward-looking statements." The use of words such as "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. As and when made, we believe that these forward-looking statements are reasonable. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forw ard-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I, "Item 1A. Risk Factors" of our Form 10-K for the year ended December 31, 2009 and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission.
We do not undertake to discuss matters relating to our ongoing clinical trials or our regulatory strategies beyond those which have already been made public or discussed herein.
Executive Summary of 2010 Strategy and Operating Plan
The Company is not currently pursuing any clinical development activities. With limited cash resources, the strategy is to seek a pharmaceutical partner with the appropriate GI clinical, scientific and financial resources for further development of Dextofisopam.
The focus of the Company during the quarter has been to present the Dextofisopam for IBS opportunity to potential pharmaceutical company partners with the assistance of our investment bank. We believe that the next development step is to conduct a Phase 2c clinical trial. As this may cost as much as $ 8 million we need a partner. Concurrently with seeking a pharmaceutical partner, we continue to seek venture capital firms.
Dextofisopam is Pharmos’ lead product for diarrhea predominant irritable bowel syndrome (IBS-d). Data from both a Phase 2a Proof-of-Concept study and a Phase 2b Dose-Ranging study strongly support the efficacy of the molecule at the 200 mg BID dosage level. Importantly, in both of these studies, dextofisopam was very well-tolerated.
While IBS is not a life threatening disease, it can be debilitating and represents a large unmet medical need. Previously approved treatments for IBS include Lotronex from GSK and Zelnorm from Novartis, both of which were both withdrawn after highly successful market launches because of unexpected serious side effects. Lotronex was subsequently relaunched, but with a black box warning label. Dextofisopam is an enantiomer of racemic tofisopam, a drug that has been used safely for over 30 years, and has exhibited an excellent safety profile in clinical trials to date. Unlike Lotronex and Zelnorm, which are serotonergic (5-HT) drugs, Dextofisopam structurally is a homophthalazine, Dextofisopam binds with high specificity to a unique class of receptors in the brain, namely 2,3-benzodiazepine receptors. These receptors are found principally i n the hypothalamus, an area of the brain controlling autonomic function. Importantly, when Dextofisopam binds to these receptors, it decreases stimulated autonomic activity without affected basal autonomic activity. In this manner, Dextofisopam “normalizes” aberrant GI function typical of IBS-d, without causing constipation. While Dextofisopam does have a benzodiazepine-like structure, its ring-structure is unique and atypical, making Dextofisopam non-sedating and non-addicting.
Pharmos, together with Vela Pharmaceuticals which merged with Pharmos in 2006, has advanced the compound through Phase 2b. The placebo-controlled Phase 2a trial (N=141) studied a 200mg dose of Dextofisopam and produced statistically significant results that formed the basis for a Phase 2b clinical trial.
The Phase 2b trial (N=324) studied 100 mg, 200 mg and 300 mg doses of Dextofisopam. While the Phase 2b trial did not meet its primary endpoint (percent of weeks with overall adequate relief) with statistical significance, the trial clearly showed drug activity, especially at the 200 mg dose level, confirming the efficacy seen in the Phase 2a trial. Statistical significance was achieved in multiple variables in month 3, including overall relief. The Phase 2b trial had a higher placebo response rate than the Phase 2a trial which may be one of the reasons the Phase 2b trial did not achieve statistical significance for the primary endpoint of overall adequate relief. This higher-than-expected placebo-response may have been largely due to the inc lusion of multiple active treatment arms in the study. The addition of sites and change in CRO during the course of the Phase 2b trial may also have been a factor in the higher placebo response.
Taken together, the results of the Phase 2a and Phase 2b trials make a compelling argument for further development of Dextofisopam for the treatment of IBS-d. The drug shows strong signals for activity, and appears to be very well-tolerated. Pharmos considers that the next development step will be to conduct a Phase 2c clinical trial.
In addition to seeking to achieve a partnership with a pharmaceutical firm and /or raise additional capital, the Company is exploring the feasibility of smaller trials using Dextofisopam in other therapeutic indications or commencing pre-clinical development on its other intellectual property assets which could further reduce the Company’s current resources.
The Company continues to seek, sell or license other CB2 assets, including Cannabinor which was the only CB2 asset to enter human clinical trials.
The Company also maintains a commitment to out-license proprietary technologies and products not consistent with our primary corporate focus. Assets involved are Tianeptine to treat IBS or functional dyspepsia and S-Tofisopam.
The Company owns the rights to both R and S Tofisopam. Dextofisopam is the R enantiomer of racemic tofisopam and is being developed for IBS as described above. In December 2009 the Company entered into a Material Transfer Agreement with a US based company to perform certain experiments with S-Tofisopam.
The results for the three months ended March 31, 2010 and 2009 were a net loss of $0.5 million and $3.7 million. On a loss per share basis, this equates to $(0.01) and $(0.14) for the quarters ended March 31, 2010 and 2009, respectively.
Except for 2001, the Company has experienced operating losses every year since inception in funding the research, development and clinical testing of our drug candidates. The Company had an accumulated deficit of $210.3 million as of March 31, 2010 and expects to continue to incur losses going forward. Such losses have resulted principally from costs incurred in research and development and from general and administrative expenses. Previously the Company had financed its operations with public and private offerings of securities, advances and other funding pursuant to an earlier marketing agreement with Bausch & Lomb, grants from the Office of the Chief Scientist of Israel, research contracts, the sale of a portion of its New Jersey net operating loss carryforwards (NOL’s), and interest income.
Results of Operations
Three Months ended March 31, 2010 and 2009
Total operating expenses for the first quarter of 2010 decreased by $3,068,521 or 87%, from $3,531,295 in 2009 to $462,774 in 2010.
Research & development expenses decreased by $1,891,425 or 94% from $2,014,420 in 2009 to $122,995 in 2010, related to the Company’s completion of the Dextofisopam Phase 2b trial and the downsizing and curtailment of general research and development programs. The decline reflects decreases in virtually every research and development expense category. The primary reductions include a $1,752,000 reduction in clinical studies, a $57,000 reduction in consultant and professional fees, a $43,000 reduction in various other areas and a $39,000 reduction in payroll. The decrease in these costs, reflect the fact that the Dextofisopam trial is complete.
In 2009, the Company completed a Phase 2b trial of its lead compound, Dextofisopam. The Phase 2b trial was fully enrolled on April 9, 2009 at 324 patients. All patients in the trial completed treatment in July of 2009 and top line clinical data was released in September 2009. The results of the Dextofisopam Phase 2b clinical trial were announced on September 14, 2009. The trial did not meet the primary endpoints for any of the three drug dose arms and therefore the trial did not meet the definition of a successful trial. On October 21, 2009 the Company announced that it had engaged Cowen and Company as advisors to assist with accelerating a partnership arrangement for Dextofisopam. In the first quarter of 2010 costs of $30,000 were incurred during the quarter in connection with the Dextofisopam trial, consisting of certain consulting and professional fees.
In process research and development costs which were related to the Vela milestone decreased by $1,180,000 from $1,180,000 in 2009 to $0 in 2010. On April 9, 2009 the last patients were enrolled in the Phase 2b trial thus triggering the following milestone: $1 million cash + 2 million shares of Pharmos common stock: Final patient enrolled in Phase 2b trial. The expense of the milestone of $1,180,000 was reflected in the 1Q 2009 results. The payment of the cash portion of the milestone was deferred under an amendment to the acquisition agreement. Under the terms of the Vela acquisition agreement as amended, the 2 million shares were issued on November 2, 2009. As noted in Commitments and Contingencies below, the $1 million cash expense was reversed in 4Q 2009.
General and administrative expenses for the first quarter of 2010 increased by $4,565, or 1%, from $334,749 in 2009 to $339,314 in 2010. The primary reductions are a $59,000 reduction in consultant and professional fees and an $11,000 reduction in various facility related expenses. This is offset by an increase of $74,000 in salaries and benefits, the majority of which results from higher stock compensation in 2010 and a non cash bonus reversal in 2009. Professional and accounting fees have decreased as a result of reduced accounting fees. The decrease in the facility related expenses were a combination of all expense items and overall was not a significant reduction. The increase in payroll costs in 2010 reflects higher stock compensation co sts and a reversal of the 2008 bonus accrual in the first quarter of 2009, as it was not paid.
Depreciation and amortization expenses decreased by $1,661, or 78%, from $2,126 in 2009 to $465 in 2010. The decrease is due to fixed assets which have become fully depreciated and the disposition of various depreciable assets in conjunction with the Company’s 2008 restructuring plans.
Other expense net, decreased by $118,554 from $147,157 in other expense in 2009 to $28,603 in other expense in 2010. The decrease is related to a $91,464 reduction in interest expense attributable to reduced debenture interest and a $32,089 decrease in translation gains and losses that were recorded at our Rehovot location in 2009. This was offset by the decreased interest income of $4,999 from a decline in cash and cash equivalents. In the first quarter of 2010 the Company recorded $28,374 in interest expense related to the remaining of $1,000,000 in convertible debentures issued on January 3, 2008.
No tax provision is required at this time since the Company expects to be in a tax loss position at year-end December 31, 2010 and has net operating losses from previous years. The Company has established a 100% valuation allowance against the deferred tax asset.
Liquidity and Capital Resources
The Company incurred cumulative operating losses since 2002 and had an accumulated deficit of $210.3 million at March 31, 2010. The Company has financed its operations with public and private offerings of securities, advances and other funding pursuant to an earlier marketing and asset agreement with Bausch & Lomb, grants from the Office of the Chief Scientist of Israel, research contracts, the sale of a portion of its New Jersey State Net Operating Loss carryforwards, and interest income. Should the Company be unable to raise adequate financing or generate revenue in the future, operations will need to be scaled back or discontinued.
The following table describes the Company's working capital, cash and cash equivalents and convertible debentures on March 31, 2010, and on December 31, 2009:
| | | March 31, 2010 | | | December 31, 2009 | |
| | | | | | | |
| Working capital | | $ | 3,846,983 | | | $ | 4,238,033 | |
| | | | | | | | | |
| Cash and cash equivalents | | $ | 3,884,487 | | | $ | 4,629,486 | |
| | | | | | | | | |
| Convertible Debenture – due 2012 | | $ | 1,000,000 | | | $ | 1,000,000 | |
| | | | | | | | | |
Current working capital position
As of March 31, 2010, the Company had working capital of $3.8 million consisting of current assets of $4.0 million and current liabilities of $0.2 million. This represents a decrease of $0.4 million from its working capital of $4.2 million on current assets of $4.6 million and current liabilities of $0.4 million as of December 31, 2009. This decrease in working capital of $0.4 million was principally associated with the funding of research and development and general and administrative activities.
Current and future liquidity position
At March 31, 2010 the Company had approximately $3.9 million of cash and cash equivalents, which at current operating levels should be sufficient to continue operations at least through December 31, 2011. However, the Company’s ability to operate in the long term is largely dependent upon achieving a pharmaceutical partnership for the advancement of its lead compound, Dextofisopam for the treatment of IBS. Further, the Company may embark on smaller clinical trials, the expense of which would reduce cash resources available.
The Company has in the past pursued various funding options, including additional equity offerings, strategic corporate alliances, and business combinations, as well as grants and the sale of some of its New Jersey net operating loss carry forwards. Future equity financings will be challenging because of the low market capitalization of the Company and the move from the Nasdaq market to trading on the over the counter Pink Sheets in March 2009.
Cash
At March 31, 2010, cash and cash equivalents totaled $3.9 million. At December 31, 2009 cash and cash equivalents totaled $4.6 million. This net decrease in cash of $0.7 million was due primarily to spending for normal operating requirements. The cash and cash equivalents will be used to fund Research & Development activities and general and administrative costs.
Operating activities
Net cash used in operating activities for the first three months of 2010 was $0.7 million compared to net cash used of $2.2 million for the first three months of 2009. The decrease reflects the decline in operating expenses. In addition, a greater portion of the cash was utilized for G&A spending rather than on R&D spending in 2010 as compared to 2009 which reflects the focus of expenditures on the G&A as we look for a partnership or licensing deal for a future Dextofisopam clinical trial.
Investing activities
Net cash provided by investing activities were zero in 2010 while in 2009, the Company had proceeds from the disposition of fixed assets in its Israel operations of $368,000.
Commitment and Contingencies
As of March 31, 2010, the Company had the following contractual commitments and long-term obligations:
| | | Total | | | Less than 1 Year | | | 1 - 3 Years | | | 3 - 5 Years | | | Undetermined | |
| Operating leases | | $ | 21,600 | | | $ | 21,600 | | | $ | - | | | $ | - | | | $ | - | |
| Convertible debenture | | | 1,000,000 | | | | - | | | | 1,000,000 | | | | - | | | | - | |
| Convertible debenture interest | | | 258,333 | | | | 100,000 | | | | 158,333 | | | | - | | | | - | |
| Total | | $ | 1,279,933 | | | $ | 121,600 | | | $ | 1,158,333 | | | $ | - | | | $ | - | |
In connection with the acquisition of Vela Pharmaceuticals which closed on October 25, 2006 the Company is obligated to pay certain performance based milestones connected to the development of Dextofisopam.
The remaining milestones are as follows:
· $1 million cash + 2 million shares of Pharmos common stock: Final patient enrolled in Phase 2b trial (1)
· $2 million cash + 2.25 million shares: Successful completion of Phase 2b (milestone not met)
· $2 million + 2 million shares: NDA submission
· $2 million cash +2.25 million shares: FDA approval
· 1 million shares: Approval to market in Europe or Japan
· 4 million shares: $100 million sales of Dextofisopam, when and if approved, in any 12-month period
(1) The milestone was reached when the final patient was enrolled in the Dextofisopam Phase 2b trial and was recognized in the first quarter of 2009 as all probability criteria were met. The milestone had two components, a cash portion of $1,000,000 and a share portion of 2,000,000 shares valued at $180,000. The total charge in the first quarter 2009 was $1,180,000. The shares were issued in November 2009 under the terms of the Amendment #3 to the agreement and plan of merger. Under that amendment the payment of the cash portion was deferred until such time as 1) the Company successfully entered into a strategic collaboration or licensing agreement with a third party for the development of Dextofisopam resulting in an upfront cash fee of at least $10 million, and 2) payment of the cash milestone would still leave the Company with one year’s operating cash.
The results of the Phase 2b trial were announced in September 2009 and reported that while there was clearly drug activity, the trial did not achieve its primary endpoints. Cowen and Company were subsequently engaged to help the Company achieve a pharmaceutical partnership. Under the terms of the Vela acquisition agreement as amended, the 2 million shares were issued on November 2, 2009. The cash portion was also expensed in Q1 2009 but was reversed in Q4 2009 since it is not deemed probable that the amended terms would be achieved. Since the trial results were not successful, no other milestones have been achieved.
New accounting pronouncements
In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements ("ASU 2009-13"). ASU 2009-13, amends existing revenue recognition accounting pronouncements that are currently within the scope of Codification Subtopic 605-25 (previously included within EITF 00-21, Revenue Arrangements with Multiple Deliverables ("EITF 00-21"). The consensus to ASU 2009-13 provides accounting principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. This guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition ba sed upon management's estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. EITF 00-21 previously required that the fair value of the undelivered item be the price of the item either sold in a separate transaction between unrelated third parties or the price charged for each item when the item is sold separately by the vendor. Under EITF 00-21, if the fair value of all of the elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and allows for retroactive application. The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We assessed our vulnerability to certain market risks, including interest rate risk associated with financial instruments included in cash and cash equivalents. Due to the relatively short-term nature of these investments the Company has determined that the risks associated with interest rate fluctuations related to these financial instruments do not pose a material risk to us.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures: An evaluation of Pharmos' disclosure controls and procedures (as defined in Section13a-15(e) of the Securities Exchange Act of 1934 (the “Act”)) was carried out under the supervision and with the participation of Pharmos' principal executive officer and principal financial officer and several other members of Pharmos' senior management at March 31, 2010. Based on this evaluation, Pharmos' principal executive officer and principal financial officer concluded that as of March 31, 2010, Pharmos' disclosure controls and procedures were effective, at a reasonable level of assurance, in ensuring that the information required to be disclosed by Pharmos in the reports it files or submits under the Act is (i) accumulated and communicated to Pharmos' management (including th e principal executive officer and principal financial officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
(b) Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II Other Information
Nasdaq Listing
On March 13, 2009 the company was officially delisted from the Nasdaq Capital Market, and is currently trading on the OTCBB pink sheets. The company was not in compliance with the minimum $2,500,000 stockholders’ requirement for continued listing and was unable to comply during the grace period extended by Nasdaq. As a result of trading on the OTCBB pink sheets, liquidity for our common stock may be significantly decreased which could reduce trading price and increase the transaction costs of trading shares of the company’s common stock.
Need For Additional Capital
Our ability to operate as a going concern is dependent upon raising adequate financing. Management believes that the current cash and cash equivalents, totaling $3.9 million as of March 31, 2010, will be sufficient to support our currently planned continuing operations through at least December 31, 2011. Without additional financing, there is substantial doubt about our ability to continue as a going concern. The Company is actively seeking to sell non-core assets. Should we be unable to raise adequate financing or generate revenue in the future, our operations will need to be scaled back or discontinued.
| Unregistered Sales of Equity Securities and Use of Proceeds | NONE |
| Defaults upon Senior Securities | NONE |
| Submission of Matters to Vote of Security Holders | NONE |
| Number | | Exhibit |
| 3.1 | | Restated Articles of Incorporation (Incorporated by reference to Appendix E to the Joint Proxy Statement/Prospectus included in the Form S-4 Registration Statement of the Company dated September 28, 1992 (No. 33-52398) |
| | | |
| 3.2 | | Certificate of Amendment of Restated Articles of Incorporation dated January 30, 1995 (Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 1994). |
| | | |
| 3.3 | | Certificate of Amendment of Restated Articles of Incorporation dated January 16, 1998 (Incorporated by reference to the Company’s Current Report on Form 8-K, dated February 6, 1998). |
| | | |
| 3.4 | | Certificate of Amendment of Restated Articles of Incorporation dated October 21, 1999 (Incorporated by reference to exhibit 4(e) to the Form S-3 Registration Statement of the Company filed September 28, 2000 (No. 333-46818)). |
| | | |
| 3.5 | | Certificate of Amendment of Restated Articles of Incorporation dated July 19, 2002 (Incorporated by reference to Exhibit 3 to the Company’s Report on Form 10-Q for the quarter ended June 30, 2002). |
| | | |
| 3.6 | | Certificate of Amendment of Restated Articles of Incorporation dated July 7, 2004 (Incorporated by reference to Exhibit 3.1 to the Company’s Report on Form 10-Q for the quarter ended June 30, 2004). |
| | | |
| 3.7 | | Certificate of Amendment to Articles of Incorporation dated September 23, 2005 (Incorporated by reference to exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005). |
| | | |
| 3.8 | | Certificate of Amendment to Articles of Incorporation dated August 5, 2009 (Incorporated by reference to exhibit 3.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009). |
| | | |
| 3.9 | | Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007). |
| | | |
| 31.1 | | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 31.2 | | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 32.1 | | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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.
| | | PHARMOS CORPORATION | |
| | | | | |
| | | | | |
| Date: May 12, 2010 | | | | |
| | | by: | /s/ S. Colin Neill | |
| | | | | |
| | | S. Colin Neill | |
| | | President, Chief Financial Officer, Secretary & Treasurer | |
| | | (Principal Accounting and Financial Officer) | |
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