UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 15, 2010
GENESIS BIOPHARMA, INC.
(Exact name of registrant as specified in its chapter)
Nevada 000-53127 75-3254381
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1601 N. Sepulveda Blvd., #632
Manhattan Beach, California 90266
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (866) 963-2220
Freight Management Corp.
Suite 200, 8275 Eastern Ave.
Las Vegas, Nevada 89123
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On March 15, 2010, Freight Management Corp., a Nevada corporation (the
"Company"), and Genesis Biopharma, Inc., a Nevada corporation and a newly formed
merger subsidiary wholly owned by the Company ("Merger Sub"), consummated a
merger transaction (the "Merger") whereby Merger Sub merged into the Company,
with the Company as the surviving corporation. The Company and Merger Sub filed
the Articles of Merger on March 15, 2010 with the Secretary of State of Nevada,
along with the Agreement and Plan of Merger entered into by the two parties
effective as of March 15, 2010 (the "Merger Agreement"). The Merger Agreement
and the Articles of Merger provided for an amendment of the Company's Articles
of Incorporation, which changed the Company's name to "Genesis Biopharma, Inc."
effective as of March 15, 2010. A copy of the Merger Agreement is attached as
Exhibit 10.1 and a copy of the Articles of Merger is attached as Exhibit 3(i).3,
and both are incorporated herein by reference.
As a result of the Merger, the Company acquired all of the assets and
contractual rights, and assumed all of the liabilities, of Merger Sub with
respect to an Asset Purchase Agreement (the "Purchase Agreement"). Effective
March 15, 2010, the Company and Merger Sub entered into the Purchase Agreement
with Hamilton Atlantic, a Cayman Islands company ("Hamilton"), whereby Hamilton
sold, and Merger Sub acquired, all of Hamilton's rights, title and interest to
certain assets related to the development and commercialization of biotechnology
drugs, primarily anti-CD55 antibodies (the "Anti-CD55 Antibody Program"),
including certain patents, patent applications, materials, and know-how. The
Anti-CD55 Antibody Program consists of antibodies that could be developed and
commercialized for the treatment of cancer. As consideration, the Company agreed
to issue to Hamilton 20,960,016 shares of the Company's common stock. The
Purchase Agreement contains customary representations and warranties of the
buyer and the seller typical for transactions of this nature as well as related
indemnification provisions. A copy of the Purchase Agreement is attached as
Exhibit 10.2 and is incorporated herein by reference.
On March 15, 2010, after the effectiveness of the Merger, we entered into a
Patent and Know How Licence (the "License Agreement") with Cancer Research
Technology Limited, a company registered in England and Wales ("CRT"). Pursuant
to the License Agreement, CRT granted to the Company an exclusive, worldwide
right and license in certain intellectual property related to a proprietary,
therapeutic use of anti-CD55 antibodies, including rights to patents and patent
applications related thereto, to research, develop, use, make, distribute, and
sell products utilizing the licensed intellectual property. The license granted
to the Company expires on the later to occur of the expiration of the relevant
licensed patent in the relevant country or 10 years after the date that the
first therapeutic product was placed on the market in such country. In
consideration for the license, the Company agreed to pay to CRT (pound)30,000 in
royalties upon the effective date of the License Agreement. In addition, the
Company agreed to pay CRT additional royalties based on the achievement of
certain milestones, including the consummation of financing by the Company and
other milestones relating to the commencement of Phase III clinical studies, the
filing of new drug applications, and the grant of marketing approval related to
the licensed products. A copy of the License Agreement is attached as Exhibit
10.3 and is incorporated herein by reference.
The disclosure regarding the Private Placement (as that term is defined in Item
3.02) in Item 3.02 with respect to the Private Placement Subscription Agreements
are incorporated herein by reference.
DISCLOSURE PURSUANT TO ITEM 2.01 (F) FOLLOWS:
FORWARD-LOOKING STATEMENTS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE DISCUSSED DUE
TO FACTORS SUCH AS, AMONG OTHERS, LIMITED OPERATING HISTORY, DIFFICULTY IN
DEVELOPING, EXPLOITING AND PROTECTING PROPRIETARY TECHNOLOGIES, INTENSE
COMPETITION AND SUBSTANTIAL REGULATION IN BIOTECH AND PHARMACEUTICAL INDUSTRIES.
ADDITIONAL INFORMATION CONCERNING FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES CAN BE FOUND IN THE FOLLOWING DISCUSSION, INCLUDING THE "RISKS
FACTORS" SECTION BELOW.
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DESCRIPTION OF BUSINESS
OVERVIEW
Freight Management Corp. (now renamed Genesis Biopharma, Inc.) was incorporated
in the State of Nevada on September 17, 2007 to engage in the development of an
internet-based, intelligent online system for business owners, freight
forwarders, and business people in the shipping/freight industry and
export/import industry who require assistance with their freight and shipping
related inquiries. As a result of our recent acquisition of the assets related
to the Anti-CD55 Antibody Program and the License Agreement, we have become a
biopharmaceutical company engaged in the development and commercialization of
drugs and other clinical solutions for underserved diseases, including
metastatic cancers and lethal infectious diseases.
PLAN OF OPERATION
For the coming year we plan to continue to develop and commercialize
proprietary products that provide sustained clinical value. Such products will
likely be directed towards aggressive diseases such as metastatic cancers and
lethal infectious diseases, although other large underserved markets will be
targeted as well. The key elements of our business strategy that we plan on
implementing are as follows:
* Advancing, selectively and cost-effectively, select product candidates
based on proof-of-concept studies and ongoing assessment of their
market potential;
* Developing and deploying our internal know-how related to smart search
methods and drug discovery methods to develop proprietary cocktail
therapies and personalized medicine regimens. If discoveries are made
within this program, they may be commercialized either as a
proprietary combination or cocktail drug therapy, or possibly as a
service that will assist physicians in prescribing combination or
cocktail drug regimens;
* Establishing strategic relationships with marketing and development
partners to maximize sales and development potential for our products
and to obtain access to additional development, commercial, or
financial resources; and
* Licensing or acquiring enabling technologies and complementary drug
candidates, preferably at the clinical stage.
VG102 DEVELOPMENT PLANS
VG102 is a chimeric monoclonal antibody targeting the CD55 antigen that is
over-expressed on approximately 80 percent of solid tumors and has broad
clinical applicability. The parent antibody has previously been used extensively
as an immunodiagnostic agent in humans. There is an urgent need to enhance the
efficacy of the current generation of anti-cancer antibodies. VG102 has
potential for development in a wide range of cancer indications and also as
either a stand-alone monotherapy or in combination with other marketed cancer
immunotherapies. We believe VG102 has potential to be developed as a platform
technology.
The primary strategy for the development of VG102 will be to develop the
antibody as a monotherapy in the first instance, with the expectation that we
will be required by regulatory authorities to evaluate the antibody in
combination with standard treatment (likely chemotherapy) against standard
treatment alone. Furthermore, it may be sensible to select, as the initial
disease target, an indication which would fall within the EU and US Orphan Drug
designation (diseases with relatively few patients), as qualifying for this
designation affords certain benefits to companies developing such drugs, such as
market exclusivity, funding and tax benefits. This route lowers the barriers to
market entry for the new product. The product may then be subsequently developed
for other indications, which may have larger markets. A further possibility is
the development of the product for fast-track status. These programs, typically
of the FDA, are designed to facilitate the development and expedite the review
of new drugs that are intended to treat serious or life-threatening conditions
and that demonstrate the potential to address unmet medical needs. To be
eligible for this program, there must be no effective treatment available for
the disease or the product in question must bring certain benefits over existing
treatments.
We believe the VG102 product may also have utility as a combination therapy, to
be evaluated in combination with other agents, which are already approved for
cancer therapy. It is generally the case that investigational agents entering
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human clinical trials must initially be trialed in combination with agents that
are already approved for the target indication. These are usually
chemotherapeutic regimens, although with the approval of newer, biological
agents such as monoclonal antibodies, there may be the potential for comparison
with these agents in a clinical trial setting.
Colorectal cancer monotherapy is a likely indication for VG102. The market for
similar targeted colorectal cancer therapies was $7 billion in 2006, based on
information obtained from BioPlan Associates. The market success of these drugs
is unusual in that they do not typically replace other drugs. They are often
added to therapy regimes, having the effect of adding to the total colorectal
cancer market. Some regimes are also increasing from two to three drugs,
creating additional market opportunity. In addition to colorectal cancer, CD55
has broad applicability in other cancers given that CD55 is over-expressed on
80% of solid tumors. This includes potential for treating breast and lung
cancers as well. The parent antibody of VG102 has already been used safely in
over 100 human patients in diagnostic cancer imaging studies. Based on this
data, along with computer-generated studies performed on the chimeric version,
we believe that VG102 will be safe and non-immunogenic.
ADDITIONAL PLANS FOR DRUG DISCOVERY ACTIVITIES AND CLINICAL APPLICATIONS
We will also focus on developing and utilizing smart search algorithms for use
in drug discovery activities and other clinical applications. These algorithms,
which are based on proven engineering methods, may eventually provide clinical
utility in multiple areas, including but not limited to the discovery of
cocktail therapies, construction of personalized medicine regimens, and for
improved optimization of research or manufacturing methods. Indications of
interest for cocktail therapies include lethal pandemic influenza,
Methicillin-Resistant STAPHYLOCOCCUS AUREUS (an infectious bacterial disease,
"MRSA"), and diseases of normal aging. For construction of personalized medicine
regimens, possible areas of clinical utility include pharmaceutical treatment of
depression, pharmaceutical treatment of late-stage cancer, and optimized use of
nutritional supplements.
We will require additional funds to implement the development programs set forth
above. The company anticipates spending between $500,000 to $1,000,000 in the
coming year to process the VG102 drug development program, cocktail drug
discovery activities, and potential licensing opportunities. These funds may be
raised through equity financing, debt financing, or other sources, which may
result in further dilution in the equity ownership of our shares. There is no
assurance that we will be able to obtain financing on favorable terms, or if at
all. In addition, there is no assurance that we will be able to maintain our
operations at a level sufficient for an investor to obtain a return on his
investment in our common stock. Further, we may continue to be unprofitable.
INTELLECTUAL PROPERTY
The unique binding specificity of the VG102 parent antibody to CD55 underpins
the strength of the intellectual property position, allowing potential
protection for use in cancer as a monotherapy or in combination therapies. It is
the subject of 8 patent applications in major markets, including the United
States, European Union, and Japan. Exclusive and worldwide patent rights are
licensed from Cancer Research Technology. In addition, we have acquired the
rights to 11 patents and patent applications related primarily to the Anti-CD55
Antibody Program through our asset purchase transaction with Hamilton Atlantic.
COMPETITION
The development and commercialization of pharmaceutical products is highly
competitive. We will be competing against a wide range of pharmaceutical and
biotechnology companies that have greater resources than us, including existing
research and development programs in the markets we plan to target. We must
compete with these companies both in regard to the discovery technology we use
to identify potential product candidates and in regard to the development and
commercialization of our product candidates themselves.
Competition in the pharmaceutical and medical products industries is intense and
is characterized by costly and extensive research efforts and rapid
technological progress. We are aware of many pharmaceutical companies also
actively engaged in the development of therapies for the treatment of cancer and
other clinical indications that are of interest to the Company. These companies
have substantially greater research and development capabilities as well as
substantially greater marketing, financial and human resources than we do. In
addition, many of these companies have significantly greater experience than we
have in undertaking pre-clinical testing, human clinical trials and other
regulatory approval procedures. Such companies include, among others, Roche,
Amgen, GlaxoSmithKline, and Novartis. Our competitors may develop technologies
and products that are more effective than those we are currently researching and
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developing. Such developments could render our products less competitive or
possibly obsolete. We are also competing with respect to marketing capabilities
and manufacturing efficiency, areas in which we have limited experience.
Mergers, acquisitions, joint ventures and similar events may also significantly
change the competition.
There are many available drugs for bacterial infections, cancer, and other
clinical indications of interest, as discussed previously in the overview of our
business. All of these available drugs are or will be marketed by pharmaceutical
companies with substantially greater resources than we have. In addition, a
number of generic pharmaceutical products are available. The availability of a
large number of branded prescription products, generic products and
over-the-counter products could limit the demand for, and the price we are able
to charge for a product candidate, if approved. In addition to those drugs
discussed, there may be alternative treatments or preventive measures available
that significantly impact the market potential of our product candidates.
Our ability to commercialize our product candidates will be limited to the
extent that we are able to obtain patent protection for our product candidates
or patent or trade secret protection for our formulations as well as our ability
to protect our trade secrets.
GOVERNMENTAL REGULATIONS
FDA REGULATION OF DRUGS AND BIOLOGICS
Prescription pharmaceutical products are subject to extensive pre- and
post-marketing regulation by the U.S. Food and Drug Administration (FDA),
including regulations that govern the testing, manufacturing, safety, efficacy,
labeling, storage, record-keeping, advertising and promotion of the products
under the Federal Food, Drug and Cosmetic Act, and by comparable agencies in
most foreign countries.
In the United States, at the federal government level, the FDA is principally
responsible for regulating drugs and biologics, including the product candidates
we have under development. Failure to comply with applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions, such as warning letters, product recalls, product seizure,
injunctions, civil penalties, disgorgement of past or future profits, criminal
prosecution, suspension of production, license suspension or revocation,
withdrawal of an approval, or FDA refusal to approve pending marketing
applications.
The steps ordinarily required before a new pharmaceutical product may be
marketed in the United States begin primarily with preclinical testing.
Preclinical tests include laboratory evaluation of product chemistry, toxicology
and other characteristics. Animal studies are used to assess the potential
safety of the product. Many preclinical studies are regulated by the FDA and
must comply with good laboratory practice, or GLP, regulations. Violations of
these regulations can, in some cases, lead to invalidation of the studies,
requiring such studies to be replicated if the data are to be submitted to the
FDA in support of a marketing application for a new drug.
With regards to cocktail therapies or combination drugs, in March 2006, the FDA
released Guidance for Industry: Nonclinical Safety Evaluation of Drug
Combinations. The guidance discusses what preclinical studies are appropriate to
support the clinical study and approval of new combination products and
therapies. In the case of new products composed of previously marketed drugs,
the guidance states that generally the FDA believes sufficient clinical and
preclinical data will exist for each drug component separately. Therefore, in
such a case, the issues to be resolved before the new product is tested in
humans generally relate to possible interactions between the components of the
proposed product. The guidance identifies specific potential interaction issues
to be considered and suggests the type of testing that may be appropriate to
resolve any issues that require such testing.
The results of the preclinical development work, together with other information
as required by the FDA, are summarized in an investigational new drug
application, or IND, which must be submitted to the FDA before the drug may be
provided to clinical investigators for use in humans in clinical trials. An IND
also sets forth the plan for investigating the drug, including the protocols for
each planned study. FDA regulations provide that human clinical trials may begin
30 days following submission of an IND, unless the FDA advises otherwise or
requests additional information, clarification, or additional time to review the
application. Clinical trials cannot begin until any concerns raised by the FDA
have been resolved.
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Each clinical trial must also be approved by an independent institutional review
board, or IRB, which is typically associated with the institution or research
facility at which the investigator will conduct the trial, before the trial may
begin. The IRB must approve the protocol and the procedures for obtaining the
informed consent of the study participants. An IRB will consider, among other
things, ethical factors, the safety of human subjects, and the possible
liability of the institution in which the study will be conducted. The IRB is
required to conduct continuous review of the trials at intervals appropriate to
the degree of risk involved and may suspend or terminate its approval if the
trials are not being conducted in accordance with the IRB's approval or there
has been unexpected serious harm to subjects.
During the conduct of a clinical trial, a company is required to monitor the
investigators' compliance with the clinical study protocol and other FDA
requirements, including the requirements to submit reports to the sponsor, the
IRB, and the FDA, and to keep detailed records regarding study findings and use
and disposition of the study drug. Although monitoring can help reduce the risk
of inadequate compliance by study investigators, it cannot eliminate this risk
entirely. Inadvertent regulatory noncompliance by the investigator, or
intentional investigator misconduct, can jeopardize the usefulness of study
results and, in rare circumstances, require a company to repeat a study. A
company must report to the FDA any adverse event that is both unexpected and
serious and for which there is a reasonable possibility that the event may have
been caused by the investigational drug. In addition, a company must within
seven days report to the FDA any unexpected fatal or life-threatening event that
may have been caused by the drug. The FDA may stop the trials by placing a
"clinical hold" on such trials because of concerns about, for example, the
safety of the product being tested. Such holds can cause substantial delay and
in some cases may require abandonment of a product candidate.
Clinical testing in humans involves the administration of the investigational
drug to healthy volunteers or to patients under the supervision of a qualified
principal investigator, usually a physician, pursuant to an FDA-reviewed
protocol. Human clinical trials typically are conducted in three sequential
phases, but the phases may overlap. Phase 1 clinical trials consist of testing
the product in a small number of patients or healthy volunteers, primarily to
evaluate the drug's safety, at one or more dosage levels, as well as to study
the drug's pharmacokinetic and/or pharmacodynamic profile. In Phase 2 clinical
trials, in addition to safety, the efficacy of multiple dose levels of the
product is evaluated in a patient population. Phase 3 clinical trials typically
involve additional testing for safety and clinical efficacy in an expanded
population at multiple geographically dispersed sites.
Upon completion of clinical trials, a company seeking FDA approval to market a
new drug must file a new drug application, or NDA, with the FDA, or in the case
of a biological product, a biological license application, or BLA. To approve an
NDA, the FDA must determine, based on the information submitted in the
application, that the drug is safe and effective for its intended uses. To
approve a BLA, the FDA must determine that the product is safe, pure, and potent
and that the facilities in which the product is manufactured or otherwise
handled meet the applicable standards. In addition to reports of the preclinical
and clinical trials conducted under IND, the NDA or BLA includes information
pertaining to the product's safety and efficacy, preparation of the drug
substance, analytical methods, drug product formulation, manufacturing details,
and proposed product packaging and labeling. In addition, the manufacturing
facility must also pass an FDA current Good Manufacturing Practices ("cGMP")
inspection before the marketing application can be approved.
Submission of an NDA or BLA does not assure FDA approval for marketing. After
the application is submitted, the FDA initially determines whether all pertinent
data and information have been submitted before accepting the application for
filing. After the application is accepted for filing, the FDA begins its
substantive review. The FDA typically will request a review of the data in the
NDA or BLA and recommendation regarding approval by an advisory committee
consisting of outside experts. The FDA may accept or reject the advisory
committee's recommendations, or accept them with modifications. The application
review process generally takes a year or longer to complete, although reviews of
drugs that meet a medical need for serious or life-threatening diseases may be
accelerated or prioritized for a six-month review. The FDA may deny approval of
an application. Any such denial may require extensive additional testing, which
could take years to complete, in order to make the application approvable, or
the denial may be based on considerations that cannot be favorably resolved
through additional testing. In some circumstances, the FDA may approve an
application even though some unanswered questions remain about the product, if
the applicant agrees to conduct post-marketing studies. The FDA may impose other
conditions of approval as well. Expedited or accelerated approvals may require
additional larger confirmatory clinical studies to be conducted following
approval.
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Product approval may be withdrawn if compliance with regulatory requirements is
not maintained or if post-marketing adverse events associated with the product
are reported that cannot be addressed satisfactorily through changes to the
product's labeling or warnings to healthcare professionals. The FDA requires
reporting of certain safety and other information that becomes known to a
manufacturer of an approved product. A company may become aware of such
information from reports of adverse events suspected to be related to the
product, voluntarily provided to the company and/or to the FDA by physicians and
other healthcare professionals, or from published scientific data. In some
circumstances, the FDA may require the company to make changes to its approved
product labeling or to issue safety warnings to healthcare professionals or the
public, which may have a negative impact on product sales. In addition, the
Amendments Act of 2007 provides the FDA with expanded authority over drug
products after approval, including the authority to require post-approval
studies and clinical trials, labeling changes based on new safety information,
and compliance with risk evaluation and mitigation strategies, or REMS, approved
by the FDA. The FDA's exercise of this authority could result in delays or
increased costs during the period of product candidate development, clinical
trials and regulatory review and approval, increased costs to assure compliance
with new post-approval regulatory requirements, and potential restrictions on
the sale of approved products, which could lead to lower product revenues to us
or our collaborators. Manufacturing and sales may also be disrupted or delayed
in the event of failure to comply with all required cGMP, as determined by FDA
investigators in periodic inspections of manufacturing facilities. Upon
approval, a drug or biological product may only be marketed for the approved
indications, in the approved dosage forms, and at the approved dosage. The
nature of marketing claims that we will be permitted to make in the labeling and
advertising of our products will be limited to those specified in an FDA
approval.
OTHER REGULATIONS
In addition to laws and regulations enforced by the FDA, we are also subject to
regulation under National Institutes of Health guidelines as well as under the
Controlled Substances Act, the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and potential future federal,
state or local laws and regulations, as our research and development may involve
the controlled use of hazardous materials, chemicals, viruses and various
radioactive compounds.
In addition to regulations in the United States, we are subject to a variety of
foreign regulations governing clinical trials and commercial sales and
distribution of our investigational product candidates. Whether or not we obtain
FDA approval for a product, we must obtain approval of a product by the
comparable regulatory authorities of foreign countries before we can commence
clinical trials or marketing of the product in those countries. The approval
process varies from country to country, and the time may be longer or shorter
than that required for FDA approval. The requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary greatly from
country to country.
PROPERTIES
We do not own any real property and do not currently lease office space. Our
employees work out of their homes or out of another employer's offices with the
employer's permission. We intend to outsource substantially all of the clinical
development work by contract research and manufacturing providers.
EMPLOYEES
We have four employees, including three part-time employees. Our Chief Financial
Officer, Richard McKilligan, is a part-time employee and will provide services
as needed. We do not expect any material changes in the number of employees over
the next 12-month period. We do and will continue to outsource contract
employment as needed.
RISK FACTORS
An investment in our common stock involves a number of very significant risks.
You should carefully consider the following risks and uncertainties in addition
to other information in this prospectus in evaluating our company and its
business before purchasing shares of our company's common stock. Our business,
operating results and financial condition could be seriously harmed due to any
of the following risks. The risks described below are all of the material risks
that we are currently aware of that are facing our company. Additional risks not
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presently known to us may also impair our business operations. You could lose
all or part of your investment due to any of these risks.
WE ARE A DEVELOPMENT-STAGE COMPANY AND IF OUR DEVELOPMENT EFFORTS FAIL OUR STOCK
PRICE COULD DECREASE AND YOU COULD LOSE SOME OR ALL OF YOUR INVESTMENT.
We are in the development stage. We have not conducted any significant
operations to date or received any operating revenues. Potential investors
should be aware of the problems, delays, expenses and difficulties encountered
by an enterprise in our stage of development, many of which may be beyond our
control. These include, but are not limited to, problems relating to product
development, testing, regulatory compliance, manufacturing, marketing, costs and
expenses that may exceed current estimates and competition. No assurance can be
given that any future technologies or products will be successfully developed,
commercialized and accepted by the marketplace or that sufficient revenues will
be realized to support operations or future research and development programs
and if our development efforts are unsuccessful the value of the our common
stock could decrease and you could lose your entire investment.
WE CURRENTLY HAVE NO REVENUES AND WILL NEED TO RAISE SUBSTANTIAL ADDITIONAL
CAPITAL TO OPERATE OUR BUSINESS AND YOUR INVESTMENT COULD BE DILUTED.
We do not expect to generate any revenues until, and if, we receive approval
from the FDA and other regulatory authorities for our product candidates, to
sell our drugs. Therefore, for the foreseeable future, we will have to fund all
of our operations and capital expenditures from cash on hand, licensing fees and
grants. Based on our current development plans, we expect that our current cash
levels will be sufficient to fund our operations only until the second quarter
of 2010. We will need to seek additional sources of financing in addition to the
proceeds from the Private Placement, which may not be available on favorable
terms, if at all. If we do not succeed in raising additional funds on acceptable
terms, we may be unable to complete planned pre-clinical testing and clinical
trials or obtain approval of our product candidates from the FDA and other
regulatory authorities. In addition, we could be forced to discontinue product
development, reduce or forego sales and marketing efforts and forego attractive
business opportunities. Any additional sources of financing will likely involve
the issuance of our equity securities, which will have a dilutive effect on our
stockholders.
WE ARE NOT CURRENTLY PROFITABLE AND MAY NEVER BECOME PROFITABLE, WHICH COULD
REDUCE THE VALUE OF YOUR INVESTMENT.
We expect to incur substantial losses and negative operating cash flow for the
foreseeable future, and we may never achieve or maintain profitability. Even if
we succeed in developing and commercializing one or more of our product
candidates, we expect to incur substantial losses for the foreseeable future and
may never become profitable. We also expect to continue to incur significant
operating and capital expenditures and anticipate that our expenses will
increase substantially in the foreseeable future as we:
* continue to undertake pre-clinical development and clinical trials for
our product candidates;
* seek regulatory approvals for our product candidates;
* in-license or otherwise acquire additional products or product
candidates;
* add internal systems and infrastructure; and
* hire additional personnel.
We also expect to experience negative cash flow for the foreseeable future as we
fund our operating losses and capital expenditures. As a result, we will need to
generate significant revenues in order to achieve and maintain profitability. We
may not be able to generate these revenues or achieve profitability in the
future. Our failure to achieve or maintain profitability could negatively impact
the value of our common stock.
OUR LIMITED OPERATING EXPERIENCE COULD MAKE OUR OPERATIONS INEFFICIENT OR
INEFFECTIVE, CAUSING YOUR INVESTMENT TO DIMINISH IN VALUE.
We are a development-stage company and have not demonstrated our ability to
perform the functions necessary for the successful commercialization of any of
our product candidates. The successful commercialization of our product
candidates will require us to perform a variety of functions, including:
* continuing to undertake pre-clinical development and clinical trials;
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* participating in regulatory approval processes;
* formulating and manufacturing products; and
* conducting sales and marketing activities.
Our management team has limited experience in performing these functions and may
not perform them efficiently or effectively which could create losses that could
reduce the value of our common stock.
TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S "PENNY STOCK" REGULATIONS
WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
The U.S. Securities and Exchange Commission has adopted regulations which
generally define "penny stock" to be any equity security that has a market price
(as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. Our securities are covered by the
penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
"accredited investors." The term "accredited investor" refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of, our common stock.
TRADING IN OUR COMMON SHARES ON THE OTC BULLETIN BOARD IS LIMITED AND SPORADIC
MAKING IT DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES OR LIQUIDATE THEIR
INVESTMENTS.
Our common shares are currently quoted on the OTC Bulletin Board. The trading
price of our common shares has been subject to wide fluctuations. Trading prices
of our common shares may fluctuate in response to a number of factors, many of
which will be beyond our control. The stock market has generally experienced
extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of companies with no current
business operation. There can be no assurance that trading prices and price
earnings ratios previously experienced by our common shares will be matched or
maintained. These broad market and industry factors may adversely affect the
market price of our common shares, regardless of our operating performance.
In the past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management's attention and resources.
WE CURRENTLY HAVE LIMITED FULL TIME MANAGEMENT. IF WE ARE UNABLE TO HIRE
QUALIFIED PERSONNEL, OUR ABILITY TO GROW WE MAY NOT BE ABLE TO IMPLEMENT OUR
BUSINESS PLAN AND IF WE ARE UNABLE TO DO SO, THE VALUE OF OUR COMMON STOCK COULD
BE REDUCED.
We currently have four employees, including three part-time employees.
Attracting and retaining qualified personnel will be critical to our success.
Our success is highly dependent on the hiring and retention of key personnel and
scientific staff. Certain of our current officers, directors, scientific
advisors and/or consultants or certain of the officers, directors, scientific
advisors and/or consultants hereafter appointed may from time to time serve as
officers, directors, scientific advisors and/or consultants of other
biopharmaceutical or biotechnology companies. There can be no assurance that
such other companies will not have interests in conflict with ours. The loss of
9
key personnel or the failure to recruit necessary additional personnel does and
will further impede the achievement of development objectives. We do not have
"key person" life insurance policies for any of our officers. There is intense
competition for qualified personnel in our area of activities, and there can be
no assurance that we will be able to continue to attract and retain the
qualified personnel necessary for the development of its respective business.
We rely, in substantial part, and for the foreseeable future will rely, on
certain independent organizations, advisors and consultants to provide certain
services, including substantially all aspects of regulatory approval, clinical
management, manufacturing, marketing and sales. There can be no assurance that
the services of independent organizations, advisors and consultants will
continue to be available to us on a timely basis when needed, or that we can
find qualified replacements. If we are unable to retain the services of
qualified personnel we may not be able to develop the products we intend to
develop and the value of our common stock could be reduced.
WE MAY NOT OBTAIN THE NECESSARY U.S. OR WORLDWIDE REGULATORY APPROVALS TO
COMMERCIALIZE OUR PRODUCT CANDIDATES, WHICH COULD NEGATIVELY AFFECT OUR ABILITY
TO MARKET OUR PRODUCTS AND COULD REDUCE OUR REVENUES AND THE MARKET PRICE OF OUR
COMMON STOCK.
We will need FDA approval to commercialize our product candidates in the U.S.
and approvals from the FDA equivalent regulatory authorities in foreign
jurisdictions to commercialize our product candidates in those jurisdictions. In
order to obtain FDA approval of any of our product candidates, we must submit to
the FDA a New Drug Application, or NDA, demonstrating that the product candidate
is safe for humans and effective for its intended use. This demonstration
requires significant research and animal tests, which are referred to as
pre-clinical studies, as well as human tests, which are referred to as clinical
trials. Satisfaction of the FDA's regulatory requirements typically takes many
years, depends upon the type, complexity and novelty of the product candidate
and requires substantial resources for research, development and testing. We
cannot predict whether our research and clinical approaches will result in drugs
that the FDA considers safe for humans and effective for indicated uses. The FDA
has substantial discretion in the drug approval process and may require us to
conduct additional preclinical and clinical testing or to perform post-marketing
studies. The approval process may also be delayed by changes in government
regulation, future legislation or administrative action or changes in FDA policy
that occur prior to or during our regulatory review. Delays in obtaining
regulatory approvals may:
* delay commercialization of, and our ability to derive product revenues
from, our product candidates;
* impose costly procedures on us; and
* diminish any competitive advantages that we may otherwise enjoy.
Even if we comply with all FDA requests, the FDA may ultimately reject one or
more of our NDAs. We cannot be sure that we will ever obtain regulatory
clearance for our product candidate. Failure to obtain FDA approval of any of
our product candidates will severely undermine our business by reducing our
number of salable products and, therefore, corresponding product revenues.
In foreign jurisdictions, we must receive approval from the appropriate
regulatory authorities before we can commercialize our drugs. Foreign regulatory
approval processes generally include all of the risks associated with the FDA
approval procedures described above. We cannot assure you that we will receive
the approvals necessary to commercialize our product candidate for sale outside
the United States.
IF WE ARE UNABLE TO DEVELOP OUR PRODUCT CANDIDATES TO THE POINT WHERE AN NDA CAN
BE FILED THE PRICE OF OUR COMMON STOCK COULD DECREASE AND YOU MAY LOSE SOME OR
ALL OF YOUR INVESTMENT.
Our product candidates are in early stages of development and require extensive
pre-clinical testing and clinical development. While we intend to file multiple
Investigational New Drug Applications ("IND") with the FDA, we cannot give any
assurance that we will be able to do so. If we are able to obtain an IND, we
intend to enter human clinical trials. We cannot predict with any certainty if
or when we might commence any such clinical trials or whether such trials will
yield sufficient data to permit us to proceed with additional clinical
development and ultimately submit an NDA for regulatory approval of our product
candidate or whether such an NDA will be accepted.
OUR PRODUCTS USE NOVEL ALTERNATIVE TECHNOLOGIES AND THERAPEUTIC APPROACHES,
WHICH HAVE NOT BEEN WIDELY STUDIED AND IF THESE TECHNOLOGIES ARE INEFFECTIVE WE
MAY NEVER DEVELOP VIABLE PRODUCTS AND THE VALUE OF OUR COMMON STOCK COULD
DECREASE.
10
Our product development efforts focus on novel alternative therapeutic
approaches and new technologies that have not been widely studied. These
approaches and technologies may not be successful. We are applying these
approaches and technologies in our attempt to discover new treatments for
conditions that are also the subject of research and development efforts of many
other companies and if they are found to be ineffective the value of our common
stock may decrease.
IF OUR COMPETITORS, INCLUDING THOSE WHO HAVE GREATER RESOURCES AND EXPERIENCE
THAN WE DO, DEVELOP PRODUCTS OR TECHNOLOGIES THAT MAKE OURS OBSOLETE OR
NONCOMPETITIVE THE VALUE OF OUR COMMON STICK COULD DECREASE.
Many companies are engaged in the pursuit of safe and effective therapeutics for
cancer, infectious diseases, and other clinical indications of interest to the
Company. Our future success will depend on our ability to maintain a competitive
position with respect to technological advances. Technological developments by
others may result in our products becoming obsolete.
We are subject to significant competition from pharmaceutical and biotechnology
companies, academic and research institutions, and government or other
publicly-funded agencies that are pursuing the development of therapeutic
products and technologies that are substantially similar to our proposed
therapeutic products and technologies, or that otherwise address the indications
we are pursuing. Our most significant competitors include major biotechnology
companies such as Genentech, Amgen, Genzyme, Gilead Sciences, and Biogen Idec,
and major pharmaceutical companies such as Merck, Pfizer, Sanofi-Aventis,
Novartis, Johnson & Johnson, and Eli Lilly. Most of our current and potential
competitors have substantially greater research and development capabilities and
financial, scientific, regulatory, manufacturing, marketing, sales, human
resources, and experience than we do. Many of our competitors have several
therapeutic products that have already been developed, approved and successfully
commercialized, or are in the process of obtaining regulatory approval for their
therapeutic products in the United States and internationally.
Many of these companies have substantially greater capital resources, research
and development resources and experience, manufacturing capabilities, regulatory
expertise, sales and marketing resources, established relationships with
consumer products companies and production facilities.
Universities and public and private research institutions are also potential
competitors. While these organizations primarily have educational objectives,
they may develop proprietary technologies or secure patent protection that we
may need for the development of our technologies and products. We may attempt to
license these proprietary technologies, but these licenses may not be available
to us on acceptable terms, if at all.
Our competitors, either alone or with their collaborative partners, may succeed
in developing technologies or products that are more effective, safer, more
affordable or more easily commercialized than ours, and our competitors may
obtain intellectual property protection or commercialize products sooner than we
do. Developments by others may render our product candidates or our technologies
obsolete making it difficult for us to generate revenues and the value of our
common stock could decrease.
IF WE ARE UNABLE TO FINANCE CLINICAL TRIALS, OR SUPPORT THEM IN ANY WAY, OUR
CLINICAL TRIALS MAY NOT BE COMPLETED AND THE PRICE OF OUR COMMON STOCK COULD
DECREASE.
Human clinical trials are very expensive and difficult to design and implement,
in part because they are subject to rigorous regulatory requirements. The
clinical trial process is also time-consuming. We estimate that clinical trials
of our product candidates will take at least several years to complete.
Furthermore, failure can occur at any stage of the trials, and we could
encounter problems that cause us to abandon or repeat clinical trials. The
commencement and completion of clinical trials may be delayed by several
factors, including:
* unforeseen safety issues;
* determination of dosing issues;
* lack of effectiveness during clinical trials;
* slower than expected rates of patient recruitment;
* inability to monitor patients adequately during or after treatment;
and
* inability or unwillingness of medical investigators to follow our
clinical protocols.
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In addition, we or the FDA may suspend our clinical trials at any time if it
appears that we are exposing participants to unacceptable health risks or if the
FDA finds deficiencies in the conduct of these trials.
IF THE RESULTS OF OUR CLINICAL TRIALS DO NOT SUPPORT OUR PRODUCT CANDIDATE
CLAIMS THE VALUE OF OUR COMMON STOCK MAY DECREASE.
Even if our clinical trials are completed as planned, we cannot be certain that
their results will support our product candidate claims. Success in pre-clinical
testing and early clinical trials does not ensure that later clinical trials
will be successful, and we cannot be sure that the results of later clinical
trials will replicate the results of prior clinical trials and pre-clinical
testing. The clinical trial process may fail to demonstrate that our product
candidates are safe for humans and effective for indicated uses. This failure
would cause us to abandon a product candidate and may delay development of other
product candidates.
In addition, our clinical trials involve a small patient population. Because of
the small sample size, the results of these clinical trials may not be
indicative of future results. Any delay in, or termination of, our clinical
trials will delay the filing of our NDAs with the FDA and, ultimately, our
ability to commercialize our product candidates and could result in decrease in
the value of our common stock.
IF PHYSICIANS AND PATIENTS DO NOT ACCEPT AND USE OUR DRUGS, WE MAY BE UNABLE TO
GENERATE REVENUE FROM OUR PRODUCTS AND IT COULD RESULT IN A DECREASE IN THE
VALUE OF OUR COMMON STOCK.
Even if the FDA approves our product candidates, physicians and patients may not
accept and use them. Acceptance and use of our product will depend upon a number
of factors including:
* perceptions by members of the health care community, including
physicians, about the safety and effectiveness of our drugs;
* cost-effectiveness of our product relative to competing products;
* availability of reimbursement for our products from government or
other healthcare payers; and
* effectiveness of marketing and distribution efforts by us and our
licensees and distributors, if any.
Because we expect sales of our current product candidates, if approved, to
generate substantially all of our revenues for the foreseeable future, the
failure of any of these drugs to find market acceptance would harm our business
and could require us to seek additional financing.
WE HAVE NO COMMERCIAL MANUFACTURING CAPABILITY AND IF WE CANNOT FIND THIRD
PARTIES TO MANUFACTURE OUR PRODUCT CANDIDATES AND THE MATERIALS USED TO MAKE
THEM WE MAY BE UNABLE TO GENERATE REVENUE.
Completion of any clinical trials and commercialization of our product
candidates require access to, or the development of, facilities to manufacture a
sufficient supply of our proteins, enzymes, and other reagents needed to produce
and commercialize our technology. Since we currently have no manufacturing
capability of our own, we are highly dependent on CMOs to produce these
materials for us or our collaborators for non-clinical, clinical and/or
commercial purposes. Our success depends on our ability to have these compounds
manufactured on a commercial scale or to obtain commercial quantities, in either
case, at reasonable cost. We may not be able to procure sufficient quantities of
the products we develop, or the materials used to make them, to meet our or our
collaborators' needs for non-clinical or clinical development or
commercialization. We may compete with other parties for access to manufacturing
facilities and suitable alternatives may be unavailable to us. As a result, our
product candidates may suffer delays in manufacture if our CMOs give other
products greater priority than our product candidates or the materials needed to
make them. It is time-consuming and expensive to change contract manufacturers
for pharmaceutical products, particularly when the products are under regulatory
review in a New Drug Application process. If we fail to maintain essential
manufacturing and service relationships, we may not be able to replace an
important CMO or to develop our own manufacturing capabilities, either of which
could impede our ability to obtain regulatory approval for our product
candidates and delay or prevent our or our collaborators' product development
and commercialization. If we do find replacement CMOs, we may not be able to
enter into agreements with them on terms and conditions favorable to us and,
there could be a considerable delay before a new facility could be qualified and
registered with the appropriate authorities. If we encounter delays or
difficulties in connection with manufacturing, commercialization of our products
and technology could be delayed, we could have difficulty generating revenue.
12
THE MANUFACTURE OF OUR PRODUCT CANDIDATES IS A COMPLEX AND HIGHLY-REGULATED
PROCESS. IF ANY OF OUR CMOS ENCOUNTER PROBLEMS MANUFACTURING MATERIALS FOR US,
WE MAY NOT GENERATE REVENUE AND THE PRICE OF OUR COMMON STOCK COULD DECREASE.
The FDA and foreign regulators require manufacturers to register manufacturing
facilities. The FDA and foreign regulators also inspect these facilities to
confirm compliance with cGMP or similar requirements that the FDA or foreign
regulators establish. The manufacture of product candidates and key reagents at
any facility will be subject to strict quality control, testing, and record
keeping requirements, and continuing obligations regarding the submission of
safety reports and other post-market information. Ultimately, we, our CMOs, or
other suppliers may not meet these requirements. Our CMOs may face manufacturing
or quality control problems causing product production and shipment delays or a
situation where we or they may not be able to maintain compliance with the FDA's
cGMP requirements, or those of foreign regulators, necessary to continue
manufacturing our product candidates and materials. Any failure to comply with
cGMP requirements or other FDA or foreign regulatory requirements could
adversely affect our clinical research activities and our ability to market and
develop our products candidates.
Additionally, we and the third parties with whom we contract to manufacture our
proteins face the significant, normal scale-up risks associated with protein
manufacturing: proteins are difficult to produce; it is difficult to scale up
protein manufacturing processes; and it is expensive to produce proteins. These
process manufacturing and/or regulatory problems could increase the cost, delay
the timeline, or render unfeasible the commercial launch of our product
candidates, reducing our ability to generate revenue and possibly causing the
price of our common stock to decrease .
IF THE EFFICACY OF OUR PRODUCTS IS DIMINISHED AS A RESULT OF THEIR PROTEIN
CONTENT, WE MAY HAVE DIFFICULTY GENERATING REVENUE.
Proteins that are foreign to a living body often provoke an immune response.
Protein drugs produced by recombinant technology, even though they have the same
primary amino acid sequence as a native human protein, sometimes provoke
formation of antibodies that bind to the protein drug. Some such antibodies bind
so as to prevent the protein drug from engaging its receptor, and thus
neutralize the drug activity of the protein. Furthermore, neutralizing
antibodies provoked by administration of a protein drug may react with
endogenous proteins whose natural activity the drug was intended to supplement,
thereby inducing a total lack of both therapeutic and natural activities in the
patient. Such a condition can prove fatal. We will not know if the proteins we
develop as product candidates will provoke neutralizing antibody responses in
humans until they are evaluated in clinical trials. It is possible that our
product candidates may be rendered ineffective for the therapeutic purpose for
which they are intended or could induce harm to patients because of the
neutralizing effect of antibodies to endogenous proteins in humans in response
to our proteins.
Additionally, all protein drugs, or reagents used in the manufacture of the
protein drugs, that are expressed by recombinant technology retain some trace of
contaminating proteins from the host cells used to express the protein drug.
These host cell proteins may increase the chances of an immunogenic response
that could diminish the therapeutic efficacy of the protein and decrease our
ability to generate revenue.
IF WE ARE UNABLE TO EFFECTIVELY MARKET AND DISTRIBUTE OUR PRODUCTS WE MAY BE
UNABLE TO GENERATE SIGNIFICANT REVENUE.
We currently have no sales, marketing or distribution capabilities. We do not
anticipate having the resources in the foreseeable future to allocate to the
sales and marketing of its proposed products. Our future success depends, in
part, on our ability to enter into and maintain such collaborative
relationships, the collaborator's strategic interest in the products under
development and such collaborator's ability to successfully market and sell any
such products. We intend to pursue collaborative arrangements regarding the
sales and marketing of our products, however, there can be no assurance that we
will be able to establish or maintain such collaborative arrangements, or if
able to do so, that they will have effective sales forces. To the extent that we
decide not to, or are unable to, enter into collaborative arrangements with
respect to the sales and marketing of its proposed products, significant capital
expenditures, management resources and time will be required to establish and
develop an in-house marketing and sales force with technical expertise. There
can also be no assurance that we will be able to establish or maintain
relationships with third party collaborators or develop in-house sales and
distribution capabilities. To the extent that we depend on third parties for
marketing and distribution, any revenues we receive will depend upon the efforts
of such third parties, and there can be no assurance that such efforts will be
successful. In addition, there can also be no assurance that we will be able to
market and sell our product in the United States or overseas.
13
IF WE FAIL TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS OR
SECURE RIGHTS TO PATENTS OF OTHERS, THE VALUE OF OUR INTELLECTUAL PROPERTY
RIGHTS WOULD DIMINISH.
Our success, competitive position and future revenues will depend in part on our
ability and the abilities of our licensors to obtain and maintain patent
protection for our products, methods, processes and other technologies, to
preserve our trade secrets, to prevent third parties from infringing on our
proprietary rights and to operate without infringing the proprietary rights of
third parties.
To date, we hold certain exclusive rights under U.S. patent applications as well
as rights under foreign patent applications. We anticipate filing additional
patent applications both in the U.S. and in other countries, as appropriate.
However, we cannot predict:
* the degree and range of protection any patents will afford us against
competitors including whether third parties will find ways to
invalidate or otherwise circumvent our patents;
* if and when patents will issue;
* whether or not others will obtain patents claiming aspects similar to
those covered by our patents and patent applications; or
* whether we will need to initiate litigation or administrative
proceedings which may be costly whether we win or lose.
Our success also depends upon the skills, knowledge and experience of our
scientific and technical personnel, our consultants and advisors as well as our
licensors and contractors. To help protect our proprietary know-how and our
inventions for which patents may be unobtainable or difficult to obtain, we rely
on trade secret protection and confidentiality agreements. To this end, we often
require our employees, consultants, advisors and contractors to enter into
agreements which prohibit the disclosure of confidential information and, where
applicable, require disclosure and assignment to us of the ideas, developments,
discoveries and inventions important to our business. These agreements may not
provide adequate protection for our trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure or the lawful
development by others of such information. If any of our trade secrets, know-how
or other proprietary information is disclosed, the value of our trade secrets,
know-how and other proprietary rights would be significantly impaired and our
business and competitive position would suffer.
IF WE INFRINGE THE RIGHTS OF THIRD PARTIES WE COULD BE PREVENTED FROM SELLING
PRODUCTS, FORCED TO PAY DAMAGES, AND TO DEFEND AGAINST LITIGATION.
If our products, methods, processes and other technologies infringe the
proprietary rights of other parties, we could incur substantial costs and we may
have to:
* obtain licenses, which may not be available on commercially reasonable
terms, if at all;
* redesign our products or processes to avoid infringement;
* stop using the subject matter claimed in the patents held by others;
* pay damages; or
* defend litigation or administrative proceedings which may be costly
whether we win or lose, and which could result in a substantial
diversion of our valuable management resources.
OUR ABILITY TO GENERATE PRODUCT REVENUES WILL BE DIMINISHED IF OUR DRUGS SELL
FOR INADEQUATE PRICES OR PATIENTS ARE UNABLE TO OBTAIN ADEQUATE LEVELS OF
REIMBURSEMENT.
Our ability to commercialize our drugs, alone or with collaborators, will depend
in part on the extent to which reimbursement will be available from:
* government and health administration authorities;
* private health maintenance organizations and health insurers; and
* other healthcare payers.
14
Significant uncertainty exists as to the reimbursement status of newly approved
healthcare products. Healthcare payers, including Medicare, are challenging the
prices charged for medical products and services. Government and other
healthcare payers increasingly attempt to contain healthcare costs by limiting
both coverage and the level of reimbursement for drugs. Even if our product
candidates are approved by the FDA, insurance coverage may not be available, and
reimbursement levels may be inadequate, to cover our drugs. If government and
other healthcare payers do not provide adequate coverage and reimbursement
levels for any of our products, once approved, market acceptance of our products
could be reduced.
WE MAY NOT SUCCESSFULLY MANAGE OUR GROWTH, WHICH COULD REDUCE THE PRICE OF OUR
COMMON STOCK.
Our success will depend upon the expansion of our operations and the effective
management of our growth, which will place a significant strain on our
management and on our administrative, operational and financial resources. To
manage this growth, we must expand our facilities, augment our operational,
financial and management systems and hire and train qualified personnel. If we
are unable to manage our growth effectively, the price of our common stock could
be reduced.
WE WILL USE HAZARDOUS AND BIOLOGICAL MATERIALS IN OUR BUSINESS. ANY CLAIMS
RELATING TO IMPROPER HANDLING, STORAGE OR DISPOSAL OF THESE MATERIALS COULD BE
TIME CONSUMING AND COSTLY.
Our products and processes will involve the controlled storage, use and disposal
of certain hazardous and biological materials and waste products. We and our
suppliers and other collaborators are subject to federal, state and local
regulations governing the use, manufacture, storage, handling and disposal of
materials and waste products. Even if we and these suppliers and collaborators
comply with the standards prescribed by law and regulation, the risk of
accidental contamination or injury from hazardous materials cannot be completely
eliminated. In the event of an accident, we could be held liable for any damages
that result, and any liability could exceed the limits or fall outside the
coverage of any insurance we may obtain and exceed our financial resources. We
may not be able to maintain insurance on acceptable terms, or at all. We may
incur significant costs to comply with current or future environmental laws and
regulations.
WE MAY INCUR SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT
COMMERCIALIZATION OF OUR PRODUCTS IN RESPONSE TO PRODUCT LIABILITY LAWSUITS.
The testing and marketing of medical products entail an inherent risk of product
liability. If we cannot successfully defend ourselves against product liability
claims, we may incur substantial liabilities or be required to limit
commercialization of our products. Our inability to obtain sufficient product
liability insurance at an acceptable cost to protect against potential product
liability claims could prevent or inhibit the commercialization of
pharmaceutical products we develop, alone or with corporate collaborators. We
currently do not carry clinical trial insurance or product liability insurance.
Although we intend to obtain clinical trial insurance prior to the commencement
of any clinical trials, we, or any corporate collaborators, may not be able to
obtain insurance at a reasonable cost, if at all. Even if our agreements with
any future corporate collaborators entitle us to indemnification against losses,
such indemnification may not be available or adequate should any claim arise.
OUR BYLAWS CONTAIN PROVISIONS INDEMNIFYING OUR OFFICERS AND DIRECTORS AGAINST
ALL COSTS, CHARGES AND EXPENSES INCURRED BY THEM.
Our Bylaws contain provisions with respect to the indemnification of our
officers and directors against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, actually and reasonably
incurred by him, including an amount paid to settle an action or satisfy a
judgment in a civil, criminal or administrative action or proceeding to which he
is made a party by reason of his being or having been one of our directors or
officers.
INVESTORS' INTERESTS IN OUR COMPANY WILL BE DILUTED AND INVESTORS MAY SUFFER
DILUTION IN THEIR NET BOOK VALUE PER SHARE IF WE ISSUE ADDITIONAL SHARES OR
RAISE FUNDS THROUGH THE SALE OF EQUITY SECURITIES.
In the event that we are required to issue any additional shares or enter into
private placements to raise financing through the sale of equity securities,
investors' interests in our company will be diluted and investors may suffer
dilution in their net book value per share depending on the price at which such
15
securities are sold. If we issue any such additional shares, such issuances also
will cause a reduction in the proportionate ownership and voting power of all
other shareholders. Further, any such issuance may result in a change in our
control.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning our current executive
officers and directors:
Name Age Position
---- --- --------
Robert Brooke 29 President, Chief Executive Officer, and Director
Richard McKilligan 46 Secretary, Treasurer, Chief Financial Officer,
and Director
Ibrahim Abotaleb 34 Director
Gerald Lewis 60 Director
ROBERT BROOKE was appointed as our President, Chief Executive Officer, and also
as a Director, on March 15, 2010. Mr. Brooke is the founder and President of
Percipio Biosciences, Inc., a research diagnostics company that manufactures and
distributes world-wide products related to oxidative stress research. From 2004
to 2008, he was an analyst with Bristol Capital Advisors, LLC, investment
manager to Bristol Investment Fund, Ltd. During this period, Bristol financed
over 60 public healthcare and life science companies and was listed by The PIPEs
Report as the most active investor in private placements by public biotechnology
companies. He currently is a member of the Los Angeles Gerontology Research
Group. Mr. Brooke earned a B.S. in Electrical Engineering from Georgia Tech in
2003 and a M.S. in Biomedical Engineering from UCLA in 2005.
RICHARD MCKILLIGAN was appointed as our Secretary, Treasurer, Chief Financial
Officer, and also as a Director, on March 15, 2010. Mr. McKilligan is a director
of Bristol Investment Fund, Ltd., which holds a significant equity stake in the
Company. He is also Chief Financial Officer and General Counsel of Derycz
Scientific, Inc., a publicly traded company engaged in providing published
content to its customers for marketing, regulatory or research purposes. Mr.
Brooke was an associate with Morgan, Lewis & Bockius, LLP in their New York and
London offices from 2000 until January 2006. He is a member of the State Bar of
California, the New York State Bar Association and The Florida Bar. Mr.
McKilligan earned his law degree from Cornell Law School, his MBA from the
University of Chicago and his undergraduate degree in Accountancy from the
University of Illinois at Urbana-Champaign.
IBRAHIM ABOTALEB has been a Director of the Company since inception. He was our
President and Chief Executive Officer since the Company's inception until his
resignation on March 15, 2010. From September 2006 to the present, Mr. Abotaleb
has been employed as the Commercial and Marketing Manager for Medlevant Shipping
Co. in Alexandria. Medlevant is the exclusive representative for Hapag-Lloyd AG
in Egypt. From January 2006 to August 2006 he was employed as the Sales &
Marketing Manager for the Arabian Gulf Marine Trading Co., which was the
representative for Hatsu Marine Limited. From July 2001 to December 2005 he was
employed with the Arabian Gulf Marine Co. where he first served as the Marketing
and Business Deputy manager and was promoted to Business Export Manager in
January 2003. From October 1998 to June 2001 he was employed with Finmar
Shipping Co., an agency representative of the Yang Ming Line. He started as a
Sales Executive and was promoted to Sales Supervisor in January 2000. Mr.
Abotaleb received a Master's degree in Shipping and International Transport from
the Arab Academy of Science and Technology, in Alexandria, Egypt in 2004. He
also received a Bachelor's degree in Accounting from the University of
Alexandria, Egypt in 1997.
GERALD LEWIS has been a Director of the Company since inception, and was the
Secretary, Treasurer and Chief Financial Officer from inception until his
resignation on March 15, 2010. Prior to his retirement in 2005, Mr. Lewis was
self employed in the apartment rental business, which he started in 1979. He
owned various buildings, and up to 135 rental suites, in Edmonton, Alberta
Canada, which he managed and operated himself. He received a degree in
mechanical engineering from the University of Alberta in 1972 and his P.Eng
(professional engineering certification) in 1975.
There are no family relationships among any of our directors, executive officers
or key employees.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS; AGREEMENTS
Our Articles of Incorporation provide that no director or officer of the Company
will be personally liable to the Company or any of its stockholders for damages
for breach of fiduciary duty as a director or officer or for any act or omission
of any such director or officer, except for (i) acts or omissions involving
intentional misconduct, fraud or a knowing violation of law or (ii) the payment
of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Our
Bylaws provide indemnification by the Company of any individual made a party to
proceeding because he is or was an officer, director, employee or agent of the
Company against liability incurred in the proceeding, to the fullest extent
permissible under the laws of Nevada. The Bylaws provide that the Company
advance the expenses of officers and directors incurred in defending any such
proceeding, provided that the Company received an undertaking from such person
to repay the expenses advanced if it is ultimately determined that he is not
entitled to be indemnified.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's acquisition of the assets pursuant to the
Purchase Agreement from Hamilton, and after the related 24-for-1 forward stock
split and the related merger of our wholly owned subsidiary, Mr. Brooke acquired
beneficial ownership of 9,940,008 shares (post-split) of our common stock held
by Mr. Abotaleb and Mr. McKilligan acquired beneficial ownership of 2,720,016
shares (post-split) of our common stock held by Mr. Abotaleb. The balance of the
shares held by Mr. Abotaleb and all of the shares held by Mr. Lewis, totaling an
aggregate of 83,339,976 (post-split), were then returned to the Company for
cancellation and are no longer outstanding.
Richard McKilligan is a director of Bristol Investment Fund, Ltd., which is one
of the investors in our recently completed private placement and a current
stockholder of the Company.
VOTING SECURITIES
Our authorized capital stock consists of 1,800,000,000 shares of common stock,
$0.001 par value per share. Our common stock is the only class of voting
securities issued and outstanding. Each share of common stock is entitled to one
vote. As of the date of this report (after adjustment for the split and the
return to our treasury for cancellation of 83,339,976 shares of our common
stock), there were 71,860,008 shares of our common stock issued and outstanding.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Our common stock, par value $.001, is currently quoted on the OTC Bulletin Board
under the symbol "FGGT"; however, no active trading market in our securities has
yet commenced. We have requested for a new trading symbol from FINRA, and we
expect to be assigned the new symbol shortly after the filing of this report. As
of the date of this report, there were 71,860,008 shares (after taking into
effect our recently completed 24-for-1 forward stock split and our recent
private placement) of our common stock outstanding and approximately 46 holders
of record. A total of 9,940,008 shares (post-split) are beneficially held by Mr.
Brooke, a total of 2,720,016 shares (post-split) are beneficially held by Mr.
McKilligan, an additional 12,799,968 shares (post-split) are held by investors
in our recently completed private placement, and an additional 20,960,016 shares
(post-split) are held by Hamilton Atlantic pursuant to the Purchase Agreement,
all of which shares are restricted securities, as that term is defined in Rule
144 of the Rules and Regulations of the Securities and Exchange Commission,
promulgated under the Act. Under Rule 144, such shares can only be publicly
sold, subject to volume restrictions and certain restrictions on the manner of
sale, commencing one year after their acquisition.
We have not paid any cash dividends since inception to the holders of our common
stock. We currently intend to retain any earnings for internal cash flow use.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
We do not currently compensate our directors in cash for their service as
members of our board of directors. We do reimburse our directors for reasonable
expenses in connection with attendance at board meetings. From inception to
date, we have not paid compensation to our executive officers. The Company
intends to enter into definitive employment agreements with Mr. Brooke and Mr.
McKilligan, which agreements will provide for compensation commensurate for
their responsibilities as executive officers of the Company.
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the shares of
common stock beneficially owned or deemed to be beneficially owned as of March
19, 2010 by: (i) each person whom we know beneficially owns more than 5% of our
common stock, (ii) each of our directors, (iii) the executive officers named in
the summary compensation table, and (iv) all such directors and executive
officers as a group.
Except as indicated by the footnotes below, we believe, based on the information
furnished to us, that the persons and entities named in the table below have
sole voting and investment power with respect to all shares of our common stock
that they beneficially own, subject to applicable community property laws.
In computing the number of shares of common stock beneficially owned by a person
and the percentage ownership of that person, pursuant to the rules prescribed by
the SEC we deem outstanding shares of common stock subject to options or
warrants held by that person that are currently exercisable or exercisable
within 60 days of March 19, 2010 and we do not deem these shares outstanding for
the purpose of computing the percentage ownership of any other person. As of the
date of this report, we do not have any options, warrants, or other convertible
securities outstanding.
Shares of Common Stock Percent of Common Stock
Name Beneficially Owned (1) Beneficially Owned (1)
---- ---------------------- ----------------------
5% OR GREATER OWNERS:
Hamilton Atlantic (2) 20,960,016 29.2%
Theorem Group, LLC (3) 6,400,008 8.9%
DIRECTORS AND EXECUTIVE OFFICERS:
Robert Brooke 9,940,008 13.8%
Richard McKilligan 2,720,016 3.8%
Ibrahim Abotaleb 0 0
Gerald Lewis 0 0
All directors and executive officers
as a group (4 persons): 12,660,024 17.6%
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(1) Applicable percentage ownership is based on 71,860,008 shares (post-split)
of common stock outstanding at March 19, 2010. The number of shares of
common stock owned are those "beneficially owned" as determined under the
rules of the Securities and Exchange Commission, including any shares of
common stock as to which a person has sole or shared voting or investment
power and any shares of common stock which the person has the right to
acquire within sixty (60) days through the exercise of any option, warrant
or right.
(2) Amy Wang and Graham May exercise dispositive and voting control with
respect to the shares held by Hamilton Atlantic.
(3) Anshuman Dube exercises dispositive and voting control with respect to the
shares held by Theorem Group.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not have standing audit, nominating or compensation committees of the
board of directors, or committees performing similar functions, and therefore
our entire board of directors performs such functions. We are not currently
listed on any national exchange and are not required to maintain such committees
18
by any self-regulatory agency. We do not believe it is necessary for our board
of directors to appoint such committees because the volume of matters that come
before our board of directors for consideration permits each director to give
sufficient time and attention to such matters to be involved in all decision
making. Messrs. Abotaleb and Lewis are independent directors. All directors
participate in the consideration of director nominees. We do not have a policy
with regard to attendance at board meetings.
We do not have a policy with regard to consideration of nominations of
directors. We accept nominations for directors from our security holders. There
is no minimum qualification for a nominee to be considered by our directors. All
of our directors will consider any nomination and will consider such nomination
in accordance with his or her fiduciary responsibility to the Company and its
stockholders.
Security holders may send communications to our board of directors by writing to
Genesis Biopharma, Inc., 1601 N. Sepulveda Blvd., #632, Manhattan Beach,
California 90266, attention Board of Directors or any specified director. Any
correspondence received at the foregoing address to the attention of one or more
directors is promptly forwarded to such director or directors.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
Effective March 15, 2010, the Company sold to accredited investors pursuant to
subscription agreements, in a private placement offering (the "Private
Placement"), an aggregate of 12,799,968 shares (post-split) of its common stock
(the "Shares"), for an aggregate purchase price of $400,000. The Common Stock
Subscription Agreements granted the investors "piggy-back" registration rights
with respect to the Shares, pursuant to which the Company agreed, in the event
the Company determines to register its common stock with the Securities and
Exchange Commission, that it would include as part of the registration statement
registering its common stock the Shares.
The securities sold by the Company in the Private Placement were exempt from
registration under the Securities Act of 1933, as amended, pursuant to
Regulation S promulgated thereunder and pursuant to Section 4(2) thereof.
A copy of the form of Private Placement Subscription Agreement is attached as
Exhibit 10.4 to this report and is incorporated herein by reference.
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS.
On March 15, 2010, Ibrahim Abotaleb resigned as the Company's President and
Chief Executive Officer, and Gerald Lewis resigned as the Secretary, Treasurer,
and Chief Financial Officer. Effective ten days from the filing of an
information statement pursuant to Rule 14f-1 and its distribution to the
Company's stockholders, Mr. Abotaleb and Mr. Lewis resigned from the Company's
board of directors.
On March 15, 2010, the Company appointed Robert Brooke as its President and
Chief Executive Officer, and the Company appointed Richard McKilligan as its
Secretary, Treasurer, and Chief Financial Officer. In addition, Mr. Brooke and
Mr. McKilligan were appointed to the Company's board of directors.
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
On March 15, 2010, the Company also effected a 24-for-1 forward stock split,
with a record date of March 15, 2010, and correspondingly increased the number
of its authorized shares to 1,800,000,000. The Certificate of Change attached as
Exhibit 3(i).2 is incorporated herein by reference.
The disclosure regarding the Articles of Merger in Item 2.01 and Exhibit 3(i).3
hereto are incorporated herein by reference. Effective on March 15, 2010, 2005,
the Articles of Merger amended the Company's Articles of Incorporation and
changed its name to "Genesis Biopharma, Inc."
19
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit Description of Exhibit
- ------- ----------------------
3(i).1* Articles of Incorporation filed with the Nevada Secretary of
State on September 7, 2007.
3(i).2 Certificate of Change filed with the Nevada Secretary of State on
March 15, 2010.
3(i).3 Articles of Merger filed with the Nevada Secretary of State on
March 15, 2010.
10.1 Agreement and Plan of Merger between Freight Management Corp.
(renamed Genesis Biopharma, Inc.) and and Genesis Biopharma,
Inc., filed with the Nevada Secretary of State on March 15, 2010.
10.2 Asset Purchase Agreement among Freight Management Corp. (renamed
Genesis Biopharma, Inc.), Genesis Biopharma, Inc., and Hamilton
Atlantic, filed with the Nevada Secretary of State on March 15,
2010.
10.3 Patent and Know How Licence between Cancer Research Technology
Limited and Genesis Biopharma, Inc. (formerly Freight Management
Corp.) dated March 15, 2010. (1)
10.4 Form of Private Placement Subscription Agreement.
- ----------
* Incorporated by reference from the Company's Registration Statement on Form
SB-2 filed on January 29, 2008.
(1) Certain portions of the exhibit have been omitted pursuant to Registrant's
confidential treatment request filed with the Commission pursuant to Rule
246-2 under the Securities Exchange Act of 1934. The omitted text has been
filed separately with the Commission.
20
SIGNATURE
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 hereunto duly authorized.
Date: March 19, 2010 GENESIS BIOPHARMA, INC.
By: /s/ Robert Brooke
-------------------------------------
Robert Brooke
President and Chief Executive Officer
21
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
3(i).1* Articles of Incorporation filed with the Nevada Secretary of
State on September 7, 2007.
3(i).2 Certificate of Change filed with the Nevada Secretary of State on
March 15, 2010.
3(i).3 Articles of Merger filed with the Nevada Secretary of State on
March 15, 2010.
10.1 Agreement and Plan of Merger between Freight Management Corp.
(renamed Genesis Biopharma, Inc.) and and Genesis Biopharma,
Inc., filed with the Nevada Secretary of State on March 15, 2010.
10.2 Asset Purchase Agreement among Freight Management Corp. (renamed
Genesis Biopharma, Inc.), Genesis Biopharma, Inc., and Hamilton
Atlantic, filed with the Nevada Secretary of State on March 15,
2010.
10.3 Patent and Know How Licence between Cancer Research Technology
Limited and Genesis Biopharma, Inc. (formerly Freight Management
Corp.) dated March 15, 2010. (1)
10.4 Form of Private Placement Subscription Agreement.
- ----------
* Incorporated by reference from the Company's Registration Statement on Form
SB-2 filed on January 29, 2008.
(1) Certain portions of the exhibit have been omitted pursuant to Registrant's
confidential treatment request filed with the Commission pursuant to Rule
246-2 under the Securities Exchange Act of 1934. The omitted text has been
filed separately with the Commission.