x |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
36-3898269
(I.R.S.
Employer Identification No.)
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
Non-accelerated
filer
x
|
Page
|
||||
PART
I
|
FINANCIAL
INFORMATION
|
|||
Item
1.
|
Unaudited
Condensed Consolidated Balance Sheets
|
4
|
||
Unaudited
Condensed Consolidated Statements of Operations
|
5
|
|||
Unaudited
Condensed Consolidated Statement of Stockholders’ Equity
(Deficiency)
|
6
|
|||
Unaudited
Condensed Consolidated Statements of Cash Flows
|
7
|
|||
Notes
to Unaudited Condensed Consolidated Financial Statements
|
8
|
|||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
||
Item
3.
|
Quantitative
and Qualitative Disclosure About Market Risk
|
28
|
||
Item
4T.
|
Controls
and Procedures
|
28
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
29
|
||
Item
1A.
|
Risk
Factors
|
29
|
||
Item
6.
|
Exhibits
|
29
|
||
Signatures
|
30
|
· |
the
development of our drug candidates;
|
· |
the
regulatory approval of our drug
candidates;
|
· |
our
use of clinical research centers and other
contractors;
|
· |
our
ability to find collaborative partners for research, development
and
commercialization of potential
products;
|
· |
acceptance
of our products by doctors, patients or
payers;
|
· |
our
history of operating losses;
|
· |
our
ability to compete against other companies and research
institutions;
|
· |
our
ability to secure adequate protection for our intellectual
property;
|
· |
our
ability to attract and retain key
personnel;
|
· |
availability
of reimbursement for our product
candidates;
|
· |
the
effect of potential strategic transactions on
our
business;
|
· |
our
ability to obtain adequate financing;
and
|
· |
the
volatility of our stock
price.
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(Unaudited)
|
(See
Note 1)
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
2,032,655
|
$
|
3,029,118
|
|||
Prepaid
expenses
|
202,161
|
264,586
|
|||||
Total
current assets
|
2,234,816
|
3,293,704
|
|||||
Property
and equipment, net
|
52,472
|
83,743
|
|||||
Other
assets
|
70,506
|
70,506
|
|||||
Total
assets
|
$
|
2,357,794
|
$
|
3,447,953
|
|||
Liabilities
and Stockholders’ Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
852,490
|
$
|
1,393,296
|
|||
Accrued
expenses
|
938,656
|
550,029
|
|||||
Total
current liabilities
|
1,791,146
|
1,943,325
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value. Authorized 1,500,000 shares; no shares issued
and
outstanding at September 30, 2007 and December 31, 2006,
respectively
|
-
|
-
|
|||||
Common
stock, $.001 par value. Authorized 150,000,000 shares; 70,624,232
and
60,120,038 shares issued and outstanding at September 30, 2007 and
December 31, 2006, respectively
|
70,624
|
60,120
|
|||||
Additional
paid-in capital
|
53,590,920
|
44,411,326
|
|||||
Deficit
accumulated during the development stage
|
(53,094,896
|
)
|
(42,966,818
|
)
|
|||
Total
stockholders’ equity
|
566,648
|
1,504,628
|
|||||
Total
liabilities and stockholders' equity
|
$
|
2,357,794
|
$
|
3,447,953
|
Three
Months
ended
September 30,
|
Nine
months
ended
September 30,
|
Cumulative
period from August 6, 2001 (inception) to September
30,
|
||||||||||||||
2007
|
2006
|
2007
|
2006
|
2007
|
||||||||||||
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
—
|
||||||
Costs
and expenses:
|
||||||||||||||||
Research
and development
|
1,808,958
|
1,041,693
|
7,360,040
|
4,299,039
|
25,313,396
|
|||||||||||
General
and administrative
|
898,063
|
923,755
|
2,865,161
|
2,521,091
|
13,109,254
|
|||||||||||
In-process
research and development charge
|
-
|
-
|
-
|
-
|
11,887,807
|
|||||||||||
Impairment
of intangible assets
|
-
|
-
|
-
|
-
|
1,248,230
|
|||||||||||
Loss
on disposition of intangible assets
|
-
|
-
|
-
|
-
|
1,213,878
|
|||||||||||
Total
operating expenses
|
2,707,021
|
1,965,448
|
10,225,201
|
6,820,130
|
52,772,565
|
|||||||||||
Operating
loss
|
(2,707,021
|
)
|
(1,965,448
|
)
|
(10,225,201
|
)
|
(6,820,130
|
)
|
(52,772,565
|
)
|
||||||
Other
(income) expense:
|
||||||||||||||||
Interest
and other income
|
(37,600
|
)
|
(68,740
|
)
|
(97,598
|
)
|
(253,929
|
)
|
(807,314
|
)
|
||||||
Interest
expense
|
-
|
714
|
475
|
952
|
26,033
|
|||||||||||
Realized
gain on sale of marketable equity securities
|
-
|
-
|
-
|
(490
|
)
|
(76,032
|
)
|
|||||||||
Total
other income
|
(37,600
|
)
|
(68,026
|
)
|
(97,123
|
)
|
(253,467
|
)
|
(857,313
|
)
|
||||||
Net
loss
|
(2,669,421
|
)
|
(1,897,422
|
)
|
(10,128,078
|
)
|
(6,566,663
|
)
|
(51,915,252
|
)
|
||||||
Preferred
stock dividends (including imputed amounts)
|
-
|
-
|
-
|
-
|
(1,179,644
|
)
|
||||||||||
Net
loss applicable to common shares
|
$
|
(2,669,421
|
)
|
$
|
(1,897,422
|
)
|
$
|
(10,128,078
|
)
|
$
|
(6,566,663
|
)
|
$
|
(53,094,896
|
)
|
|
Net
loss per common share:
|
||||||||||||||||
Basic
and diluted
|
$
|
(0.04
|
)
|
$
|
(0.03
|
)
|
$
|
(0.15
|
)
|
$
|
(0.11
|
)
|
||||
Weighted
average shares of common stock outstanding:
|
||||||||||||||||
Basic
and diluted
|
70,591,623
|
60,120,038
|
67,134,882
|
60,109,737
|
|
|
Series
A
convertible preferred stock |
|
Common
stock
|
|
Additional
paid-in capital
|
|
Subscription
receivable
|
|
Deficit
accumulated during development
stage
|
|
payable
in Series A preferred
shares
|
|
Accumulated
other comprehensive
income
(loss)
|
|
Unearned
consulting
services
|
|
Total
stock- holders'equity
(deficiency)
|
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|||||||||||||||||||
Stock
issued at $0.0004 per share for subscription
receivable
|
—
|
$
|
—
|
10,167,741
|
$
|
10,168
|
$
|
(6,168
|
)
|
$
|
(4,000
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(56,796
|
)
|
—
|
—
|
—
|
(56,796
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2001
|
—
|
—
|
10,167,741
|
10,168
|
(6,168
|
)
|
(4,000
|
)
|
(56,796
|
)
|
—
|
—
|
—
|
(56,796
|
)
|
|||||||||||||||||||
Proceeds
from subscription receivable
|
—
|
—
|
—
|
—
|
—
|
4,000
|
—
|
—
|
—
|
—
|
4,000
|
|||||||||||||||||||||||
Stock
issued at $0.0004 per share for license rights
|
—
|
—
|
2,541,935
|
2,542
|
(1,542
|
)
|
—
|
—
|
—
|
—
|
—
|
1,000
|
||||||||||||||||||||||
Stock
options issued for consulting services
|
—
|
—
|
—
|
—
|
60,589
|
—
|
—
|
—
|
—
|
(60,589
|
)
|
—
|
||||||||||||||||||||||
Amortization
of unearned consulting services
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
22,721
|
22,721
|
|||||||||||||||||||||||
Common
stock issued at $0.63 per share, net of expenses
|
—
|
—
|
3,043,332
|
3,043
|
1,701,275
|
—
|
—
|
—
|
—
|
—
|
1,704,318
|
|||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(1,037,320
|
)
|
—
|
—
|
—
|
(1,037,320
|
)
|
||||||||||||||||||||||
Balance
at December 31, 2002
|
—
|
—
|
15,753,008
|
15,753
|
1,754,154
|
—
|
(1,094,116
|
)
|
—
|
—
|
(37,868
|
)
|
637,923
|
|||||||||||||||||||||
Common
stock issued at $0.63 per share, net of expenses
|
—
|
—
|
1,321,806
|
1,322
|
742,369
|
—
|
—
|
—
|
—
|
—
|
743,691
|
|||||||||||||||||||||||
Effect
of reverse acquisition
|
—
|
—
|
6,287,582
|
6,287
|
2,329,954
|
—
|
—
|
—
|
—
|
—
|
2,336,241
|
|||||||||||||||||||||||
Amortization
of unearned consulting costs
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
37,868
|
37,868
|
|||||||||||||||||||||||
Unrealized
loss on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,760
|
)
|
—
|
(7,760
|
)
|
|||||||||||||||||||||
Payment
for fractional shares for stock combination
|
—
|
—
|
—
|
—
|
(300
|
)
|
—
|
—
|
—
|
—
|
—
|
(300
|
)
|
|||||||||||||||||||||
Preferred
stock issued at $10 per share, net of expenses
|
1,000,000
|
1,000
|
—
|
—
|
9,045,176
|
—
|
—
|
—
|
—
|
—
|
9,046,176
|
|||||||||||||||||||||||
Imputed
preferred stock dividend
|
418,182
|
—
|
(418,182
|
)
|
—
|
—
|
||||||||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,960,907
|
)
|
—
|
—
|
—
|
(5,960,907
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2003
|
1,000,000
|
1,000
|
23,362,396
|
23,362
|
14,289,535
|
—
|
(7,473,205
|
)
|
—
|
(7,760
|
)
|
—
|
6,832,932
|
|||||||||||||||||||||
Exercise
of stock options
|
—
|
—
|
27,600
|
27
|
30,073
|
—
|
—
|
—
|
—
|
—
|
30,100
|
|||||||||||||||||||||||
Common
stock issued at $1.10, net of expenses
|
—
|
—
|
3,368,952
|
3,369
|
3,358,349
|
—
|
—
|
—
|
—
|
—
|
3,361,718
|
|||||||||||||||||||||||
Preferred
stock dividend accrued
|
—
|
—
|
—
|
—
|
—
|
—
|
(585,799
|
)
|
585,799
|
—
|
—
|
—
|
||||||||||||||||||||||
Preferred
stock dividends paid by issuance of shares
|
24,901
|
25
|
—
|
—
|
281,073
|
—
|
—
|
(282,388
|
)
|
—
|
—
|
(1,290
|
)
|
|||||||||||||||||||||
Conversion
of preferred stock to common stock at $1.10 per share
|
(170,528
|
)
|
(171
|
)
|
1,550,239
|
1,551
|
(1,380
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Warrants
issued for consulting services
|
—
|
—
|
—
|
—
|
125,558
|
—
|
—
|
—
|
—
|
(120,968
|
)
|
4,590
|
||||||||||||||||||||||
Amortization
of unearned consulting costs
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
100,800
|
100,800
|
|||||||||||||||||||||||
Unrealized
gain on short-term investments and reversal of unrealized loss
on
short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
20,997
|
—
|
20,997
|
|||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,896,031
|
)
|
—
|
—
|
—
|
(5,896,031
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2004
|
854,373
|
854
|
28,309,187
|
28,309
|
18,083,208
|
—
|
(13,955,035
|
)
|
303,411
|
13,237
|
(20,168
|
)
|
4,453,816
|
|||||||||||||||||||||
Common
stock issued at $1.11 and $1.15, net of expenses
|
—
|
—
|
11,917,680
|
11,918
|
12,238,291
|
—
|
—
|
—
|
—
|
—
|
12,250,209
|
|||||||||||||||||||||||
Common
stock issued to vendor at $1.11 per share in satisfaction
of accounts
payable
|
—
|
—
|
675,675
|
676
|
749,324
|
—
|
—
|
—
|
—
|
—
|
750,000
|
|||||||||||||||||||||||
Exercise
of stock options
|
—
|
—
|
32,400
|
33
|
32,367
|
—
|
—
|
—
|
—
|
—
|
32,400
|
|||||||||||||||||||||||
Exercise
of warrants
|
—
|
—
|
279,845
|
279
|
68,212
|
—
|
—
|
—
|
—
|
—
|
68,491
|
|||||||||||||||||||||||
Preferred
stock dividend accrued
|
—
|
—
|
—
|
—
|
—
|
—
|
(175,663
|
)
|
175,663
|
—
|
—
|
—
|
||||||||||||||||||||||
Preferred
stock dividends paid by issuance of shares
|
41,781
|
42
|
—
|
—
|
477,736
|
—
|
—
|
(479,074
|
)
|
—
|
—
|
(1,296
|
)
|
|||||||||||||||||||||
Conversion
of preferred stock to common stock at $1.10 per share
|
(896,154
|
)
|
(896
|
)
|
8,146,858
|
8,147
|
(7,251
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Share-based
compensation
|
—
|
—
|
—
|
—
|
66,971
|
—
|
—
|
—
|
—
|
20,168
|
87,139
|
|||||||||||||||||||||||
Reversal
of unrealized gain on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(12,250
|
)
|
—
|
(12,250
|
)
|
|||||||||||||||||||||
Stock
issued in connection with acquisition of Tarpan Therapeutics,
Inc.
|
—
|
—
|
10,731,052
|
10,731
|
11,042,253
|
—
|
—
|
—
|
—
|
—
|
11,052,984
|
|||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(19,140,997
|
)
|
—
|
—
|
—
|
(19,140,997
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2005
|
—
|
—
|
60,092,697
|
60,093
|
42,751,111
|
—
|
(33,271,695
|
)
|
—
|
987
|
—
|
9,540,496
|
||||||||||||||||||||||
Cashless
exercise of warrants
|
—
|
—
|
27,341
|
27
|
(27
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||
Share-based
compensation
|
—
|
—
|
—
|
—
|
1,675,499
|
—
|
—
|
—
|
—
|
—
|
1,675,499
|
|||||||||||||||||||||||
Unrealized
loss on short-term investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(987
|
)
|
—
|
(987
|
)
|
|||||||||||||||||||||
Costs
associated with private placement
|
—
|
—
|
—
|
—
|
(15,257
|
)
|
—
|
—
|
—
|
—
|
—
|
(15,257
|
)
|
|||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(9,695,123
|
)
|
—
|
—
|
—
|
(9,695,123
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2006
|
—
|
—
|
60,120,038
|
60,120
|
44,411,326
|
—
|
(42,966,818
|
)
|
—
|
—
|
—
|
1,504,628
|
||||||||||||||||||||||
Common
stock issued at $0.84 and $0.90, net of expenses
|
—
|
—
|
10,185,502
|
10,186
|
7,841,999
|
—
|
—
|
—
|
—
|
—
|
7,852,185
|
|||||||||||||||||||||||
Common
stock issued to directors at $0.72 per share in satisfaction
of accounts
payable
|
—
|
—
|
27,776
|
28
|
19,972
|
—
|
—
|
—
|
—
|
20,000
|
||||||||||||||||||||||||
Common
stock issued in connection with in-licensing agreement at $0.90
per
share
|
—
|
—
|
125,000
|
125
|
112,375
|
—
|
—
|
—
|
—
|
—
|
112,500
|
|||||||||||||||||||||||
Common
stock issued in connection with in-licensing agreement at
$0.80 per
share
|
—
|
—
|
150,000
|
150
|
119,850
|
—
|
—
|
—
|
—
|
—
|
120,000
|
|||||||||||||||||||||||
Share-based
compensation
|
—
|
—
|
—
|
—
|
1,078,185
|
—
|
—
|
—
|
—
|
—
|
1,078,185
|
|||||||||||||||||||||||
Exercise
of warrants
|
—
|
—
|
10,327
|
15
|
7,219
|
—
|
—
|
—
|
—
|
—
|
7,234
|
|||||||||||||||||||||||
Cashless
exercise of warrants
|
—
|
—
|
5,589
|
—
|
(6
|
)
|
—
|
—
|
—
|
—
|
—
|
(6
|
)
|
|||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
-
|
—
|
(10,128,078
|
)
|
—
|
—
|
—
|
(10,128,078
|
)
|
|||||||||||||||||||||
Balance
at September 30, 2007
|
—
|
$
|
—
|
70,624,232
|
$
|
70,624
|
$
|
53,590,920
|
$
|
—
|
$
|
(53,094,896
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
566,648
|
Cumulative
|
||||||||||
period
from
|
||||||||||
August
6, 2001
|
||||||||||
Nine
months
ended
|
(inception)
to
|
|||||||||
September
30,
|
September
30,
|
|||||||||
2007
|
2006
|
2007
|
||||||||
|
||||||||||
Cash
flows from operating activities:
|
||||||||||
Net
loss
|
$
|
(10,128,078
|
)
|
$
|
(6,566,663
|
)
|
$
|
(51,915,252
|
)
|
|
Adjustments
to reconcile net loss to
|
||||||||||
net
cash used in operating activities:
|
||||||||||
Share-based
compensation
|
1,078,185
|
945,858
|
3,002,212
|
|||||||
Shares
issued in connection with in-licensing agreements
|
232,500
|
-
|
232,500
|
|||||||
Amortization
of intangible assets
|
-
|
-
|
145,162
|
|||||||
Gain
on sale of marketable equity securities
|
-
|
(490
|
)
|
(76,032
|
)
|
|||||
Depreciation
|
40,406
|
44,581
|
187,886
|
|||||||
Non
cash portion of in-process research and development charge
|
-
|
-
|
11,721,623
|
|||||||
Loss
on impairment and disposition of intangible assets
|
-
|
-
|
2,462,108
|
|||||||
Other
|
-
|
-
|
5,590
|
|||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||||
(Increase)/decrease
in prepaid expenses and other current assets
|
62,425
|
(554,274
|
)
|
(143,916
|
)
|
|||||
Increase
in other assets
|
-
|
-
|
(70,506
|
)
|
||||||
Increase/(decrease)
in accounts payable
|
(520,806
|
)
|
(531,941
|
)
|
1,272,704
|
|||||
Increase
in accrued expenses
|
388,627
|
280,405
|
398,335
|
|||||||
Net
cash used in operating activities
|
(8,846,741
|
)
|
(6,382,524
|
)
|
(32,777,586
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Purchase
of property and equipment
|
(9,135
|
)
|
(15,872
|
)
|
(230,636
|
)
|
||||
Cash
paid in connection with acquisitions, net
|
-
|
-
|
(26,031
|
)
|
||||||
Proceeds
from sale of short-term investments, net
|
-
|
500,000
|
435,938
|
|||||||
Proceeds
from sale of license
|
-
|
-
|
200,001
|
|||||||
Net
cash (used in) provided by investing activities
|
(9,135
|
)
|
484,128
|
379,272
|
||||||
Cash
flows from financing activities:
|
||||||||||
Repayments
of notes payable to stockholders
|
-
|
-
|
(884,902
|
)
|
||||||
Payment
for fractional shares for preferred stock dividends
|
-
|
-
|
(2,286
|
)
|
||||||
Proceeds
related to sale of common stock, net
|
7,852,185
|
(15,256
|
)
|
25,896,262
|
||||||
Proceeds
from sale of preferred stock, net
|
-
|
-
|
9,046,176
|
|||||||
Proceeds
from exercise of warrants and stock options
|
7,228
|
-
|
138,219
|
|||||||
Other,
net
|
-
|
-
|
237,500
|
|||||||
Net
cash provided by (used in) financing activities
|
7,859,413
|
(15,256
|
)
|
34,430,969
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
(996,463
|
)
|
(5,913,652
|
)
|
2,032,655
|
|||||
Cash
and cash equivalents at beginning of period
|
3,029,118
|
9,826,336
|
—
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
2,032,655
|
$
|
3,912,684
|
$
|
2,032,655
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Interest
paid
|
$
|
475
|
$
|
952
|
$
|
26,033
|
||||
Supplemental
disclosure of noncash investing and financing activities:
|
||||||||||
Common
stock issued in satisfaction of accounts payable
|
$
|
20,000
|
$
|
-
|
$
|
770,000
|
||||
Imputed
preferred stock dividend
|
-
|
-
|
418,182
|
|||||||
Preferred
stock dividends accrued
|
-
|
-
|
761,462
|
|||||||
Conversion
of preferred stock to common stock
|
-
|
-
|
9,046,176
|
|||||||
Preferred
stock dividends paid by issuance of shares
|
-
|
-
|
759,134
|
|||||||
Issuance
of common stock for acquisitions
|
-
|
-
|
13,389,226
|
|||||||
Issuance
of common stock in connection with in-licensing agreements
|
232,500
|
-
|
232,500
|
|||||||
Marketable
equity securities received in connection with
|
||||||||||
sale
of license
|
-
|
-
|
359,907
|
|||||||
Net
liabilities assumed over assets acquired in business
combination
|
-
|
-
|
(675,416
|
)
|
||||||
Cashless
exercise of warrants
|
6
|
27
|
33
|
Three
months ended September 30,
|
Nine
months ended
September 30, |
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
General
and administrative expense:
|
|||||||||||||
Share-based
employee compensation costs
|
$
|
254,870
|
$
|
225,394
|
$
|
726,414
|
$
|
670,371
|
|||||
Share-based
consultant and non-employee (credits) costs
|
—
|
(2,962
|
)
|
10,550
|
(25,823
|
)
|
|||||||
Total
general and administrative expense
|
$
|
254,870
|
$
|
222,432
|
$
|
736,964
|
$
|
644,548
|
|||||
Research
and development expense:
|
|||||||||||||
Share-based
employee compensation costs
|
$
|
125,533
|
$
|
108,111
|
$
|
356,983
|
$
|
308,583
|
|||||
Share-based
consultant and non-employee (credits) costs
|
(8,767
|
)
|
(3,813
|
)
|
(15,762
|
)
|
(7,273
|
)
|
|||||
Total
research and development expense
|
$
|
116,766
|
$
|
104,298
|
$
|
341,221
|
$
|
301,310
|
|||||
Total
share-based costs
|
$
|
371,636
|
$
|
326,730
|
$
|
1,078,185
|
$
|
945,858
|
Three
months ended September 30,
|
Nine
months ended September 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Expected
Volatility
|
93
|
%
|
55
|
%
|
80%
- 93
|
%
|
55
|
%
|
|||||
Dividend
yield
|
—
|
—
|
—
|
—
|
|||||||||
Expected
term (in years)
|
6
- 8
|
6
|
6
- 8
|
6
|
|||||||||
Risk-free
interest rate
|
4.38%
- 4.96
|
%
|
4.88
|
%
|
4.38%
- 4.96
|
%
|
4.88
|
%
|
Weighted
|
|||||||||||||
Weighted
|
Average
|
||||||||||||
average
|
Remaining
|
Aggregate
|
|||||||||||
exercise
|
Contractual
|
Intrinsic
|
|||||||||||
Shares
|
price
|
Term
(years)
|
Value
|
||||||||||
Outstanding
at
|
|||||||||||||
December
31, 2006
|
7,000,504
|
$
|
1.31
|
||||||||||
Granted
|
|||||||||||||
Officers
|
870,000
|
||||||||||||
Directors
|
300,000
|
||||||||||||
Employees
|
172,500
|
||||||||||||
Total
Granted
|
1,342,500
|
0.88
|
|||||||||||
Exercised
|
-
|
-
|
|||||||||||
Cancelled
|
(109,166
|
)
|
0.95
|
||||||||||
Outstanding
at
|
|||||||||||||
September
30, 2007
|
8,233,838
|
$
|
1.25
|
7.19
|
$
|
-
|
|||||||
Options
exercisable at
|
|||||||||||||
September
30, 2007
|
5,247,546
|
$
|
1.29
|
6.74
|
$
|
-
|
|||||||
Weighted-average
fair value of options granted during the nine months ended
September 30,
2007
|
$
|
0.63
|
·
|
Topical
PTH (1-34) for the treatment of
psoriasis;
|
·
|
Altoderm,
a proprietary formulation of topical cromolyn sodium for the treatment
of
atopic dermatitis;
|
·
|
Hedrin,
a novel, non-insecticide treatment for head
lice;
|
·
|
and
Altolyn, a proprietary site specific tablet formulation of oral cromolyn
sodium for the treatment of
mastocytosis.
|
Nine
months ended September
30,
|
Increase
|
%
Increase
|
|||||||||||
2007
|
2006
|
(decrease)
|
(decrease)
|
||||||||||
Costs
and expenses
|
|||||||||||||
Research
and development
|
|||||||||||||
Stock
based compensation
|
$
|
341,000
|
$
|
301,000
|
$
|
40,000
|
13.3
|
%
|
|||||
In-license
and related fees
|
$
|
1,804,000
|
$
|
250,000
|
$
|
1,554,000
|
621.6
|
%
|
|||||
Consulting
costs related to in-license activities
|
$
|
134,000
|
$
|
-
|
$
|
134,000
|
N/A
|
||||||
Other
research and development expense
|
$
|
5,081,000
|
$
|
3,748,000
|
$
|
1,333,000
|
35.6
|
%
|
|||||
Total
research and development expense
|
$
|
7,360,000
|
$
|
4,299,000
|
$
|
3,061,000
|
71.2
|
%
|
|||||
General
and administrative
|
|||||||||||||
Stock
based compensation
|
$
|
737,000
|
$
|
645,000
|
$
|
92,000
|
14.3
|
%
|
|||||
Other
general and administrative expense
|
$
|
2,128,000
|
$
|
1,876,000
|
$
|
252,000
|
13.4
|
%
|
|||||
Total
general and administrative expense
|
$
|
2,865,000
|
$
|
2,521,000
|
$
|
344,000
|
13.6
|
%
|
|||||
Other
income
|
$
|
97,000
|
$
|
253,000
|
$
|
(156,000
|
)
|
-61.7
|
%
|
||||
Net
loss
|
$
|
(10,128,000
|
)
|
$
|
(6,567,000
|
)
|
$
|
3,561,000
|
54.2
|
%
|
Quarter
ended September 30,
|
|
Increase
|
|
%
Increase
|
|
||||||||
|
|
2007
|
|
2006
|
|
(decrease)
|
|
(decrease)
|
|||||
Costs
and expenses
|
|||||||||||||
Research
and development
|
|||||||||||||
Stock
based compensation
|
$
|
117,000
|
$
|
104,000
|
$
|
13,000
|
12.5
|
%
|
|||||
Other
research and development expense
|
$
|
1,692,000
|
$
|
938,000
|
$
|
754,000
|
80.4
|
%
|
|||||
Total
research and development expense
|
$
|
1,809,000
|
$
|
1,042,000
|
$
|
767,000
|
73.6
|
%
|
|||||
General
and administrative
|
|||||||||||||
Stock
based compensation
|
$
|
255,000
|
$
|
222,000
|
$
|
33,000
|
14.9
|
%
|
|||||
Other
general and administrative expense
|
$
|
643,000
|
$
|
702,000
|
$
|
(59,000
|
)
|
-8.4
|
%
|
||||
Total
general and administrative expense
|
$
|
898,000
|
$
|
924,000
|
$
|
(26,000
|
)
|
-2.8
|
%
|
||||
Other
income
|
$
|
37,000
|
$
|
68,000
|
$
|
(31,000
|
)
|
-45.6
|
%
|
||||
Net
loss
|
$
|
(2,670,000
|
)
|
$
|
(1,898,000
|
)
|
$
|
772,000
|
40.7
|
%
|
Exhibit
No.
|
Description
|
|
31.1
|
Certification
of Chief Executive Officer
|
|
Certification
of Chief Financial Officer
|
||
32.1
|
Certifications
of Chief Executive Officer and Chief Financial Officer pursuant
to Section
906 of the Sarbanes-Oxley Act of
2002.
|
MANHATTAN
PHARMACEUTICALS, INC.
|
||
|
|
|
Date: November 13, 2007 | By: | /s/ Douglas Abel |
Douglas
Abel
President
and Chief Executive Officer
|
Date: November 13, 2007 | By: | /s/ Michael G. McGuinness |
Michael
G. McGuinness
Chief
Financial Officer
|
Exhibit
No.
|
Description
|
|
31.1
|
Certification
of Chief Executive Officer
|
|
Certification
of Chief Financial Officer
|
||
32.1
|
Certifications
of Chief Executive Officer and Chief Financial Officer pursuant
to Section
906 of the Sarbanes-Oxley Act of
2002.
|
1. |
I
have reviewed this Quarterly Report on Form 10-Q of Manhattan
Pharmaceuticals, Inc. (the “Registrant”);
|
2. |
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3. |
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this report;
|
4. |
The
Registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant
and have:
|
5. |
The
Registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the Registrant’s auditors and the audit committee of the Registrant’s
board of directors (or persons performing the equivalent functions):
|
Date: November 13, 2007 | /s/ Douglas Abel | |
Douglas
Abel
President
and Chief Executive Officer
|
1. |
I
have reviewed this Quarterly Report on Form 10-Q of Manhattan
Pharmaceuticals, Inc. (the “Registrant”);
|
2. |
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3. |
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this report;
|
4. |
The
Registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) for the Registrant and have:
|
5. |
The
Registrant's other certifying officer(s) and I have disclosed, based
on
our most recent evaluation of internal control over financial reporting,
to the Registrant’s auditors and the audit committee of the Registrant’s
board of directors (or persons performing the equivalent functions):
|
Date: November 13, 2007 | /s/ Michael G. McGuinness | |
Michael
G. McGuinness
Chief
Financial Officer
|
Dated: November 13, 2007 | /s/ Douglas Abel | |
Douglas
Abel
President
and Chief Executive Officer
|
Dated: November 13, 2007 | /s/ Michael G. McGuinness | |
Michael
G. McGuinness
Chief
Financial Officer
|