Delaware
|
95-3698422
|
|
(State
of incorporation)
|
(I.R.S.
Employer Identification No.)
|
|
14272
Franklin Avenue, Tustin, California
|
92780
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of Class
|
|
Name
of Each Exchange on Which Registered
|
Common
Stock ($0.001 par value)
|
|
The
Nasdaq Stock Market, Inc. under
symbol “PPHM”
|
Large
accelerated filer o
|
|
Accelerated
filer
x
|
|
Non-accelerated
filer o
|
PART
I
|
||
1
|
||
16
|
||
26
|
||
26
|
||
26
|
||
26
|
||
|
||
PART
II
|
||
27
|
||
28
|
||
29
|
||
42
|
||
42
|
||
42
|
||
42
|
||
42
|
||
|
||
PART
III
|
||
45
|
||
45
|
||
45
|
||
45
|
||
45
|
||
|
||
PART
IV
|
||
46
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||
|
53
|
1.
|
Pre-clinical
testing.
This generally includes laboratory testing of our products in animals
to
determine safety, efficacy and potential toxicity. Pre-clinical
studies must be conducted by laboratories that comply with FDA regulations
regarding good laboratory practice.
|
2.
|
Submission
to the FDA of an investigational new drug application
(“IND”). The
results of pre-clinical studies, together with manufacturing information,
analytical data and proposed clinical trial protocols, are submitted
to
the FDA as part of an IND, which must become effective before the
clinical
trials can begin. Once
the IND
is filed, the FDA has 30 days to review it. The IND will automatically
become effective 30 days after the FDA receives it, unless the FDA
indicates prior to the end of the 30-day period that the proposed
protocol
raises concerns that must be resolved to the FDA’s satisfaction before the
trials may proceed. If the FDA raises concerns, we may be unable
to
resolve the proposed protocol to the FDA’s approval in a timely fashion,
if at all.
|
3.
|
Completion
of clinical trials.
Human clinical trials are necessary to seek approval for a new drug
or
biologic and typically involve a three-phase process. In phase I,
small
clinical trials are generally conducted to determine the safety of
the
product. In phase II, clinical trials are generally conducted to
assess
safety, acceptable dose, and gain preliminary evidence of the efficacy
of
the product. In phase III, clinical trials are generally conducted to
provide sufficient data for the statistically valid proof of safety
and
efficacy. Clinical
trials must be conducted according to good clinical practices under
protocols that detail the trial’s objectives, inclusion and exclusion
criteria, the parameters to be used to monitor safety and the efficacy
criteria to be evaluated, and informed consent must be obtained from
all
study subjects. Each protocol must be submitted to the FDA as part
of the
IND. The FDA may impose a clinical hold on an ongoing clinical trial
if,
for example, safety concerns arise, in which case the study cannot
recommence without FDA authorization under terms sanctioned by the
Agency. In addition, before
a clinical trial can be initiated, each
clinical site or hospital administering the product must have the
protocol
reviewed and approved by an institutional review board (“IRB”). The IRB
will consider, among other things, ethical factors and the safety
of human
subjects. The IRB may require changes in a protocol, which may delay
initiation or completion of a study. Phase I, Phase II or
Phase III clinical trials may not be completed successfully within
any specific period of time, if at all, with respect to any of our
potential products. Furthermore, we, the FDA or an IRB may suspend
a
clinical trial at any time for various reasons, including a finding
that
the healthy individuals or the patients are being exposed to an
unacceptable health risk.
|
4.
|
Submission
to the FDA of a Biologics License Application (“BLA”) or New Drug
Application (“NDA”).
After completion of clinical studies for an investigational product,
a
Biologics License Application (“BLA”) or New Drug Application (“NDA”) is
submitted to the FDA for product marketing approval. No action can
be
taken to market any new drug or biologic product in the United States
until the FDA has approved an appropriate marketing application.
|
5.
|
FDA
review and approval of the BLA or NDA before the product is commercially
sold or shipped. The
results of pre-clinical studies and clinical trials and manufacturing
information are submitted to the FDA in the form of a BLA or NDA
for
approval of the manufacture, marketing and commercial shipment of
the
product. The FDA may take a number of actions after the BLA or NDA
is
filed, including but not limited to, denying
the BLA or NDA if applicable regulatory criteria are not satisfied,
requiring additional clinical testing or information; or requiring
post-market testing and surveillance to monitor the safety or efficacy
of
the product. Adverse events that are reported after marketing approval
can
result in additional limitations being placed on the product’s use and,
potentially, withdrawal of the product from the market. Any adverse
event,
either before or after marketing approval, can result in product
liability
claims against us.
|
·
|
delays
in product development, clinical testing or
manufacturing;
|
·
|
unplanned
expenditures in product development, clinical testing or
manufacturing;
|
·
|
failure
in clinical trials or failure to receive regulatory
approvals;
|
·
|
emergence
of superior or equivalent products;
|
·
|
inability
to manufacture on our own, or through others, product candidates
on a
commercial scale;
|
·
|
inability
to market products due to third party proprietary rights;
and
|
·
|
failure
to achieve market acceptance.
|
Net
Loss
|
||||
Fiscal
Year 2006
|
$
|
17,061,000
|
||
Fiscal
Year 2005
|
$
|
15,452,000
|
||
Fiscal
Year 2004
|
$
|
14,345,000
|
· |
slower
than expected rates of patient recruitment due to narrow screening
requirements;
|
· |
the
inability of patients to meet FDA imposed protocol
requirements;
|
· |
the
inability to manufacture sufficient quantities of qualified materials
under current good manufacturing practices, or cGMPs, for use in
clinical
trials;
|
· |
the
need or desire to modify our manufacturing
processes;
|
· |
the
inability to adequately observe patients after
treatment;
|
· |
changes
in regulatory requirements for clinical
trials;
|
· |
the
lack of effectiveness during the clinical
trials;
|
· |
unforeseen
safety issues;
|
· |
delays,
suspension, or termination of the clinical trials due to the institutional
review board responsible for overseeing the study at a particular
study
site; and
|
· |
government
or regulatory delays or “clinical holds” requiring suspension or
termination of the trials.
|
· |
our
ability to provide acceptable evidence of safety and
efficacy;
|
· |
relative
convenience and ease of
administration;
|
· |
the
prevalence and severity of any adverse side
effects;
|
· |
availability
of alternative treatments;
|
· |
pricing
and cost effectiveness;
|
· |
effectiveness
of our or our collaborators’ sales and marketing strategy;
and
|
· |
our
ability to obtain sufficient third-party insurance coverage or
reimbursement.
|
·
|
production
yields;
|
·
|
quality
control and quality assurance;
|
·
|
shortages
of qualified personnel;
|
·
|
compliance
with FDA regulations, including the demonstration of purity and
potency;
|
·
|
changes
in FDA requirements;
|
·
|
production
costs; and/or
|
·
|
development
of advanced manufacturing techniques and process
controls.
|
1.
|
Net
tangible assets of at least $2,500,000 or market capitalization of
at
least $35,000,000 or net income of at least $500,000 in either our
latest
fiscal year or in two of our last three fiscal
years;
|
2.
|
Public
float of at least 500,000 shares;
|
3.
|
Market
value of our public float of at least
$1,000,000;
|
4.
|
A
minimum closing bid price of $1.00 per share of common stock, without
falling below this minimum bid price for a period of thirty consecutive
trading days;
|
5.
|
At
least two market makers; and
|
6.
|
At
least 300 stockholders, each holding at least 100 shares of common
stock.
|
Number
of Shares
of
Common Stock Reserved For Issuance
|
||||
Shares
reserved for under two effective shelf
registration statements
|
15,179,180
|
|||
Common
shares reserved for issuance under stock option plans
|
11,307,279
|
|||
Common
shares available for future grant under option plans
|
5,346,418
|
|||
Common
shares issuable upon exercise of outstanding warrants
|
6,964,653
|
|||
Total
|
38,797,530
|
Common
Stock
Sales
Price
|
Common
Stock Daily
Trading
Volume
(000’s
omitted)
|
||||||||
High
|
Low
|
High
|
Low
|
||||||
Fiscal
Year 2006
|
|||||||||
Quarter
Ended April 30, 2006
|
$1.76
|
$1.20
|
9,922
|
391
|
|||||
Quarter
Ended January 31, 2006
|
$1.40
|
$0.88
|
12,152
|
|
251
|
||||
Quarter
Ended October 31, 2005
|
$1.28
|
$0.91
|
4,619
|
156
|
|||||
Quarter
Ended July 31, 2005
|
$1.31
|
$0.92
|
7,715
|
178
|
|||||
Fiscal
Year 2005
|
|||||||||
Quarter
Ended April 30, 2005
|
$1.64
|
$1.11
|
5,945
|
223
|
|||||
Quarter
Ended January 31, 2005
|
$1.45
|
$0.99
|
6,128
|
160
|
|||||
Quarter
Ended October 31, 2004
|
$1.96
|
$0.95
|
2,141
|
148
|
|||||
Quarter
Ended July 31, 2004
|
$1.92
|
$0.88
|
1,749
|
131
|
|||||
Fiscal
Year 2004
|
|||||||||
Quarter
Ended April 30, 2004
|
$2.85
|
$1.56
|
3,550
|
320
|
|||||
Quarter
Ended January 31, 2004
|
$3.14
|
$2.01
|
6,062
|
201
|
|||||
Quarter
Ended October 31, 2003
|
$2.44
|
$1.25
|
18,060
|
314
|
|||||
Quarter
Ended July 31, 2003
|
$2.19
|
$0.60
|
12,249
|
255
|
·
|
Announcements
of technological innovations or new commercial products by us or
our
competitors;
|
·
|
publicity
regarding actual or potential clinical trial results relating to
products
under development by us or our
competitors;
|
·
|
our
financial results or that of our
competitors;
|
·
|
published
reports by securities analysts;
|
·
|
announcements
of licensing agreements, joint ventures, strategic alliances, and
any
other transaction that involves the sale or use of our technologies
or
competitive technologies;
|
·
|
developments
and/or disputes concerning our patent or proprietary
rights;
|
·
|
regulatory
developments and product safety
concerns;
|
·
|
general
stock trends in the biotechnology and pharmaceutical industry
sectors;
|
·
|
public
concerns as to the safety and effectiveness of our
products;
|
·
|
economic
trends and other external factors, including but not limited to,
interest
rate fluctuations, economic recession, inflation, foreign market
trends,
national crisis, and disasters; and
|
·
|
health
care reimbursement reform and cost-containment measures implemented
by
government agencies.
|
·
|
the
pending patent applications we have filed or to which we have exclusive
rights may not result in issued patents or may take longer than we
expect
to result in issued patents;
|
·
|
the
claims of any patents that issue may not provide meaningful
protection;
|
·
|
we
may be unable to develop additional proprietary technologies that
are
patentable;
|
·
|
the
patents licensed or issued to us may not provide a competitive
advantage;
|
·
|
other
parties may challenge patents licensed or issued to
us;
|
·
|
disputes
may arise regarding the invention and corresponding ownership rights
in
inventions and know-how resulting from the joint creation or use
of
intellectual property by us, our licensors, corporate partners and
other
scientific collaborators; and
|
·
|
other
parties may design around our patented
technologies.
|
·
|
no
stockholder action may be taken without a meeting, without prior
notice
and without a vote; solicitations by consent are thus
prohibited;
|
·
|
special
meetings of stockholders may be called only by our Board of Directors;
and
|
·
|
our
Board of Directors has the authority, without further action by the
stockholders, to fix the rights and preferences, and issue shares,
of
preferred stock. An issuance of preferred stock with dividend and
liquidation rights senior to the common stock and convertible into
a large
number of shares of common stock could prevent a potential acquiror
from
gaining effective economic or voting
control.
|
ITEM 5. |
MARKET
FOR
REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS’ MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
Common
Stock Sales Price
|
||||
High
|
Low
|
|||
Fiscal
Year 2006
|
||||
Quarter
Ended April 30, 2006
|
$1.76
|
$1.20
|
||
Quarter
Ended January 31, 2006
|
$1.40
|
$0.88
|
||
Quarter
Ended October 31, 2005
|
$1.28
|
$0.91
|
||
Quarter
Ended July 31, 2005
|
$1.31
|
$0.92
|
||
Fiscal
Year 2005
|
||||
Quarter
Ended April 30, 2005
|
$1.64
|
$1.11
|
||
Quarter
Ended January 31, 2005
|
$1.45
|
$0.99
|
||
Quarter
Ended October 31, 2004
|
$1.96
|
$0.95
|
||
Quarter
Ended July 31, 2004
|
$1.92
|
$0.88
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||
FIVE
YEARS ENDED APRIL 30,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Revenues
|
$
|
3,193,000
|
$
|
4,959,000
|
$
|
3,314,000
|
$
|
3,921,000
|
$
|
3,766,000
|
||||||
Net
loss
|
$
|
(17,061,000
|
)
|
$
|
(15,452,000
|
)
|
$
|
(14,345,000
|
)
|
$
|
(11,559,000
|
)
|
$
|
(11,718,000
|
)
|
|
Basic
and diluted loss per common share
|
$
|
(0.10
|
)
|
$
|
(0.11
|
)
|
$
|
(0.11
|
)
|
$
|
(0.10
|
)
|
$
|
(0.11
|
)
|
|
Weighted
average common shares outstanding
|
168,294,782
|
144,812,001
|
134,299,407
|
116,468,353
|
104,540,204
|
CONSOLIDATED
BALANCE SHEET DATA
|
||||||||||||||||
AS
OF APRIL 30,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Cash
and cash equivalents
|
$
|
17,182,000
|
$
|
9,816,000
|
$
|
14,884,000
|
$
|
3,137,000
|
$
|
6,072,000
|
||||||
Working
capital
|
$
|
15,628,000
|
$
|
7,975,000
|
$
|
13,631,000
|
$
|
1,949,000
|
$
|
4,007,000
|
||||||
Total
assets
|
$
|
22,676,000
|
$
|
14,245,000
|
$
|
19,137,000
|
$
|
5,399,000
|
$
|
7,866,000
|
||||||
Long-term
debt
|
$
|
545,000
|
$
|
434,000
|
$
|
-
|
$
|
760,000
|
$
|
-
|
||||||
Accumulated
deficit
|
$
|
(186,864,000
|
)
|
$
|
(169,803,000
|
)
|
$
|
(154,351,000
|
)
|
$
|
(140,006,000
|
)
|
$
|
(128,447,000
|
)
|
|
Stockholders’
equity
|
$
|
17,626,000
|
$
|
9,610,000
|
$
|
14,759,000
|
$
|
2,131,000
|
$
|
5,083,000
|
Years
Ended April 30,
|
Years
Ended April 30,
|
||||||||||||||||||
2006
|
2005
|
$
Change
|
2005
|
2004
|
$
Change
|
||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||||||
REVENUES:
|
|||||||||||||||||||
Contract
manufacturing
|
$
|
3,005
|
$
|
4,684
|
$
|
(1,679
|
)
|
$
|
4,684
|
$
|
3,039
|
$
|
1,645
|
||||||
License
revenue
|
188
|
275
|
(87
|
)
|
275
|
275
|
0
|
||||||||||||
Total
revenues
|
3,193
|
4,959
|
(1,766
|
)
|
4,959
|
3,314
|
1,645
|
||||||||||||
COST
AND EXPENSES:
|
|||||||||||||||||||
Cost
of contract manufacturing
|
3,297
|
4,401
|
(1,104
|
)
|
4,401
|
2,212
|
2,189
|
||||||||||||
Research
and development
|
12,415
|
11,164
|
1,251
|
11,164
|
9,673
|
1,491
|
|||||||||||||
Selling,
general and administrative
|
6,564
|
5,098
|
1,466
|
5,098
|
4,225
|
873
|
|||||||||||||
Total
cost and expenses
|
22,276
|
20,663
|
1,613
|
20,663
|
16,110
|
4,553
|
|||||||||||||
LOSS
FROM OPERATIONS
|
(19,083
|
)
|
(15,704
|
)
|
(3,379
|
)
|
(15,704
|
)
|
(12,796
|
)
|
(2,908
|
)
|
|||||||
OTHER
INCOME (EXPENSE):
|
|||||||||||||||||||
Recovery
of note receivable
|
1,229
|
-
|
1,229
|
-
|
-
|
-
|
|||||||||||||
Interest
and other income
|
846
|
265
|
581
|
265
|
291
|
(26
|
)
|
||||||||||||
Interest
and other expense
|
(53
|
)
|
(13
|
)
|
(40
|
)
|
(13
|
)
|
(1,840
|
)
|
1,827
|
||||||||
NET
LOSS
|
$
|
(17,061
|
)
|
$
|
(15,452
|
)
|
$
|
(1,609
|
)
|
$
|
(15,452
|
)
|
$
|
(14,345
|
)
|
$
|
(1,107
|
)
|
o |
Anti-Phosphatidylserine
(“Anti-PS”) Immunotherapeutics (bavituximab)
-
During fiscal year 2006, Anti-PS Immunotherapeutics program expenses
increased $3,202,000 from $5,069,000 in fiscal year 2005 to $8,271,000
in
fiscal year 2006. This current year increase in Anti-PS Immunotherapeutics
program expenses resulted primarily from the advancement of our first
Anti-PS Immunotherapeutic agent, bavituximab (formerly known as Tarvacin).
During the current fiscal year, we increased manufacturing, in-house
antibody development, and clinical trials expenses of bavituximab
as we
supported the manufacturing commercial scale-up efforts and clinical
trial
expenses to support two separate Phase I clinical studies using
bavituximab for the treatment of advanced solid cancers and chronic
hepatitis C virus infection. The foregoing expenses were supplemented
with
an increase in technology access fees associated with clinical trial
milestones achieved during the current fiscal year in accordance
with
third party licensing agreements, an increase in sponsored research
fees,
and an increase in outside animal research studies to support the
possible
expansion of bavituximab clinical trials in other anti-viral indications.
These increases were primarily offset by a decrease in pre-clinical
toxicology study expenses incurred in the prior year to support the
bavituximab Investigational New Drug (“IND”) applications that were filed
in the prior fiscal year combined with a decrease in intellectual
property
access fees and a decrease in outside antibody development fees related
to
our humanized antibody in
development.
|
o |
Tumor
Necrosis Therapy (“TNT”) (Cotara®)
-
During fiscal year 2006, TNT program expenses decreased $811,000
from
$3,183,000 in fiscal year 2005 to $2,372,000 in fiscal year 2006.
The
decrease in TNT program expenses is primarily due to a decrease in
payroll
and related expenses and radiolabeling process development expenses
incurred in the prior year to support the initiation of the Cotara® dose
confirmation and dosimetry clinical trial for the treatment of brain
cancer in collaboration with the New Approaches to Brain Tumor Therapy
consortium, and to support other development programs associated
with our
TNT technology platform. These decreases were further supplemented
by a
decrease in technology access fees incurred in the prior year supporting
the production of monoclonal antibodies for Cotara®.
|
o |
Vascular
Targeting Agents (“VTAs”) and Anti-Angiogenesis -
During fiscal year 2006, VTA and Anti-Angiogenesis pre-clinical program
expenses decreased $922,000 from $2,338,000 in fiscal year 2005 to
$1,416,000 in fiscal year 2006. The decrease in VTA and Anti-Angiogenesis
pre-clinical program expenses is primarily due to a decrease in
intellectual property access fees and sponsored research fees as
our
outside researchers are currently focused on the development of our
Anti-PS Immunotherapeutics technology
platform.
|
o |
Vasopermeation
Enhancements Agents (“VEAs”) - During
fiscal year 2006, VEA program expenses decreased $211,000 from $567,000
in
fiscal year 2005 to $356,000 in fiscal year 2006. The decrease in
VEA
program expenses is primarily due to a decrease in sponsored research
fees
and technology license fees combined with a decrease in antibody
development fees regarding expenses incurred in the prior year. In
January
2005, we entered into an agreement with Merck KGaA of Darmstadt,
Germany,
that gave us access to Merck's technology and expertise in protein
expression to advance the development of our VEA technology and other
platform technologies. We are currently developing a clinical candidate
under our VEA technology utilizing Merck’s expertise in protein
expression.
|
1.
|
Bavituximab
clinical studies for the treatment of solid tumors and chronic hepatitis
C
virus infection and the possible expansion of clinical trials into
other
anti-viral indications;
|
2.
|
Cotara®
clinical study for the treatment of brain cancer in collaboration
with New
Approaches to Brain Tumor Therapy (“NABTT”), a brain tumor treatment
consortium;
|
3.
|
Anti-PS
Immunotherapeutics
research
and development program;
|
4.
|
2C3
(anti-angiogenesis antibody) research and development
program;
|
5.
|
Vascular
Targeting Agent research and development program;
and
|
6.
|
Vasopermeation
Enhancement Agent research and development
program.
|
o
|
Anti-Phosphatidylserine ("Anti-PS")
Immunotherapeutics (bavituximab)
-
During fiscal year 2005, Anti-PS Immunotherapeutics (bavituximab)
program expenses increased $1,992,000 to $5,069,000 compared to $3,077,000
in fiscal year 2004. The increase in Anti-PS
Immunotherapeutics (bavituximab)
program expenses of $1,992,000 was primarily due to increases in
payroll
and related expenses, various clinical trial start-up expenses, and
allocated manufacturing expenses to support two separate Investigational
New Drug (“IND”) applications that were filed with the U.S. Food &
Drug Administration (“FDA”) during fiscal year 2005 using bavituximab, our
lead Anti-PS Immunotherapeutics product,
for the treatment of solid cancer tumors and chronic hepatitis C
virus
infection, in addition to supporting the related bavituximab Phase
I
clinical studies associated with these IND’s. In addition, intellectual
property access fees increased during fiscal year 2005 as we expanded
our
rights under the Anti-PS Immunotherapeutics platform.
These increases were offset by a decrease in antibody development
and
access fees associated with the timing of various payments due under
our
licensing agreements to support bavituximab and other related antibodies
under development.
|
o
|
TNT
(Cotara®)
-
During fiscal year 2005, TNT (Cotara®) program expenses increased $833,000
to $3,183,000 compared to $2,350,000 in fiscal year 2004. The increase
in
TNT (Cotara®) program expenses of $833,000 is primarily due to an increase
in manufacturing expenses, payroll and related expenses, and radiolabeling
process expenses to support the planned initiation of the Cotara® dose
confirmation and dosimetry clinical study for the treatment of brain
cancer in collaboration with the New Approaches to Brain Tumor Therapy
consortium, and to support the increase in research and development
programs associated with our TNT technology platform. These increases
were
further supplemented by an increase in technology access fees, which
was
primarily due to an up-front license fee to obtain certain worldwide
non-exclusive rights used in the manufacturing process for the Cotara®
antibody.
|
o
|
VEA
-
During fiscal year 2005, VEA program expenses decreased $624,000
to
$567,000 compared to $1,191,000 in fiscal year 2004. The decrease
in VEA
program expenses of $624,000 is primarily due to a decrease in sponsored
research fees paid to University of Southern California and stock-based
compensation expense associated with the amortization of the fair
value of
options granted to non-employee consultants performing research and
development activities that were fully amortized in fiscal year 2003.
These decreases were further supplemented by a decrease in allocated
manufacturing expenses as we increased our efforts associated with
the
manufacturing of bavituximab and Cotara® during fiscal year 2005 and a
decrease in technology access fees. In January 2005, we entered into
an
agreement with Merck KGaA of Darmstadt, Germany, that will provide
us
access to Merck’s technology and expertise in protein expression to
advance the development of our VEA
technology.
|
o
|
VTA
and Anti-Angiogenesis
-
During fiscal year 2005, VTA and Anti-angiogenesis program expenses
decreased $481,000 to $2,338,000 compared to $2,819,000 in fiscal
year
2004. The decrease in VTA and Anti-Angiogenesis program expenses
of
$481,000 is primarily due to a decrease in intellectual property
access
fees, antibody development fees and manufacturing expenses, offset
with an
increase in payroll and related fees to support our increase in active
VTA
and Anti-Angiogenesis pre-clinical research programs.
|
o
|
Other
research programs
-
During fiscal year 2005, other research program expenses decreased
$229,000 to $7,000 compared to $236,000 in fiscal year 2004. The
decrease
in other research program expenses of $229,000 is primarily due to
allocated expenses incurred in the fiscal year 2003 to manufacture
LYM
materials for research purposes only.
|
Technology
Platform
|
R&D
Expenses-
Year
Ended
April
30, 2004
|
R&D
Expenses-
Year
Ended
April
30, 2005
|
R&D
Expenses-
Year
Ended
April
30, 2006
|
R&D
Expenses-
May
1, 1998 to
April
30, 2006
|
|||||||||
Anti-PS
Immunotherapeutics (bavituximab)
|
$
|
3,077,000
|
$
|
5,069,000
|
$
|
8,271,000
|
$
|
16,417,000
|
|||||
TNT
(Cotara®)
|
2,350,000
|
3,183,000
|
2,372,000
|
31,188,000
|
|||||||||
VTA
and Anti-Angiogenesis
|
2,819,000
|
2,338,000
|
1,416,000
|
11,907,000
|
|||||||||
VEA
|
1,191,000
|
567,000
|
356,000
|
5,724,000
|
|||||||||
Other
research programs
|
236,000
|
7,000
|
-
|
13,441,000
|
|||||||||
Total
R&D Expenses
|
$
|
9,673,000
|
$
|
11,164,000
|
$
|
12,415,000
|
$
|
78,677,000
|
· |
the
uncertainty of our capital resources to fund research, development
and
clinical studies beyond fiscal year 2007;
|
· |
the
uncertainty of future costs associated with our pre-clinical candidates,
including Vascular Targeting Agents, Anti-Angiogenesis Agents, and
Vasopermeation Enhancement Agents, which costs are dependent on the
success of pre-clinical development. We are uncertain whether or
not these
product candidates will be successful and we are uncertain whether
or not
we will incur any additional costs beyond pre-clinical development;
|
· |
the
uncertainty of future clinical trial results;
|
· |
the
uncertainty of the ultimate number of patients to be treated in any
clinical trial;
|
· |
the
uncertainty of the Food and Drug Administration allowing our studies
to
move forward from Phase I clinical studies to Phase II and Phase
III
clinical studies;
|
· |
the
uncertainty of the rate at which patients are enrolled into any current
or
future study. Any delays in clinical trials could significantly increase
the cost of the study and would extend the estimated completion
dates;
|
· |
the
uncertainty of terms related to potential future partnering or licensing
arrangements; and
|
· |
the
uncertainty of protocol changes and modifications in the design of
our
clinical trial studies, which may increase or decrease our future
costs.
|
Year
Ended April 30,
|
|||||||
2006
|
2005
|
||||||
Net
loss, as reported
|
$
|
(17,061,000
|
)
|
$
|
(15,452,000
|
)
|
|
Less
non-cash operating expenses:
Depreciation
Stock-based
compensation expense
Stock
issued for research services
Stock
bonus plan compensation expense
Gain
on sale of property
Recovery
of note receivable
|
415,000
499,000
1,048,000
44,000
(6,000
(1,229,000
|
)
)
|
325,000
231,000
485,000
-
-
-
|
||||
Net
cash used in operating activities before changes in
operating
assets and liabilities
|
$
|
(16,290,000
|
)
|
$
|
(14,411,000
|
)
|
|
Net
change in operating assets and liabilities
|
$
|
(667,000
|
)
|
$
|
1,243,000
|
||
Net
cash used in operating activities
|
$
|
(16,957,000
|
)
|
$
|
(13,168,000
|
)
|
Payments
Due by Period (in thousands)
|
||||||||||||||||
Total
|
<
1 year
|
1-3
years
|
4-5
years
|
After
5 years
|
||||||||||||
Operating
leases, net (1)
|
$
|
9,749
|
$
|
804
|
$
|
2,404
|
$
|
1,627
|
$
|
4,914
|
||||||
Notes
payable (2)
|
996
|
475
|
521
|
-
|
-
|
|||||||||||
Capital
lease obligation (3)
|
70
|
19
|
51
|
-
|
-
|
|||||||||||
Other
long-term liabilities - minimum license obligations (4)
|
100
|
100
|
-
|
-
|
-
|
|||||||||||
Total
contractual obligations
|
$
|
10,915
|
$
|
1,398
|
$
|
2,976
|
$
|
1,627
|
$
|
4,914
|
(1)
|
Represents
our (i) facility operating lease in Tustin, California under a
non-cancelable lease agreement, (ii) facility operating lease in
Houston,
Texas, which has an original three year lease term, and (iii) various
office equipment leases, which generally have a five year lease term.
|
(2)
|
Represents
our note payable agreements entered into with General Electric Capital
Corporation during fiscal years 2006 and 2005 to finance laboratory
equipment.
|
(3)
|
Represents
our capital lease agreement to finance certain office
equipment.
|
(4)
|
We
periodically enter into licensing agreements with third parties to
obtain
exclusive or non-exclusive licenses for certain technologies. The
terms of
certain of these agreements require us to pay future milestone payments
based on product development success. We anticipate we may make milestone
payments in the amount of $100,000 during fiscal year 2007 under
in-licensing agreements pertaining to our bavituximab clinical trials.
Other milestones fees under these and other licensing agreements
cannot be
predicted due to the uncertainty of future clinical trial results
and
development milestones and therefore, cannot be reasonably predicted
or
estimated at the present time.
|
·
|
pertain
to the maintenance of records that, in reasonable detail, accurately
and
fairly reflect the transactions and dispositions of the Company’s
assets;
|
·
|
provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of consolidated financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of the Company’s management and directors;
and
|
·
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/
Steven
W. King
|
|
By:
|
|
/s/
Paul
J. Lytle
|
|
|
|
Steven
W. King,
|
|
|
|
Paul
J. Lytle
|
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
Chief
Financial Officer
|
|
|
ITEM 15. |
EXHIBITS
AND
CONSOLIDATED FINANCIAL STATEMENT
SCHEDULES
|
(a) | (1) |
Consolidated
Financial Statements
|
Page
|
||
F-1
|
||
F-2
|
||
F-4
|
||
F-5
|
||
F-6
|
||
F-8
|
(2) |
Financial
Statement Schedules
|
(3)
|
Exhibits
|
Exhibit
Number
|
Description
|
|
3.1
|
Certificate
of Incorporation of Techniclone Corporation, a Delaware corporation
(Incorporated by reference to Exhibit B to the Company’s 1996 Proxy
Statement as filed with the Commission on or about August 20,
1996).
|
|
3.2
|
Amended
and Restated Bylaws of Peregrine Pharmaceuticals, Inc. (formerly
Techniclone Corporation), a Delaware corporation (Incorporated
by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form
10-Q
for the quarter ended October 31, 2003).
|
|
3.3
|
Certificate
of Designation of 5% Adjustable Convertible Class C Preferred Stock
as
filed with the Delaware Secretary of State on April 23, 1997.
(Incorporated by reference to Exhibit 3.1 contained in Registrant’s
Current Report on Form 8-K as filed with the Commission on or about
May
12, 1997).
|
|
3.4
|
Certificate
of Amendment to Certificate of Incorporation of Techniclone Corporation
to
effect the name change to Peregrine Pharmaceuticals, Inc., a Delaware
corporation. (Incorporated by reference to Exhibit 3.4 contained
in
Registrant’s Annual Report on Form 10-K for the year ended April 30,
2001).
|
|
3.5
|
Certificate
of Amendment to Certificate of Incorporation of Peregrine Pharmaceuticals,
Inc. to increase the number of authorized shares of the Company’s common
stock to two hundred million shares (Incorporated
by reference to Exhibit 3.5 to Registrant's Quarterly Report on Form
10-Q
for the quarter ended October 31, 2003).
|
|
3.6
|
Certificate
of Amendment to Certificate of Incorporation of Peregrine Pharmaceuticals,
Inc. to increase the number of authorized shares of the Company’s common
stock to two hundred fifty million shares (Incorporated by reference
to
Exhibit 3.6 to Registrant’s Quarterly Report on Form 10-Q for the quarter
ended October 31, 2005).
|
|
3.7
|
Certificate
of Designation of Rights, Preferences and Privileges of Series D
Participating Preferred Stock of the Registrant, as filed with the
Secretary of State of the State of Delaware on March 16, 2006.
(Incorporated by reference to Exhibit 3.7 to Registrant’s Current Report
on Form 8-K as filed with the Commission on March 17,
2006).
|
|
4.1
|
Form
of Certificate for Common Stock (Incorporated by reference to the
exhibit
of the same number contained in Registrant’s Annual Report on Form 10-K
for the year end April 30, 1988).
|
4.13
|
Form
of Stock Purchase Warrant to be issued to the Equity Line Subscribers
pursuant to the Regulation D Common Stock Equity Subscription Agreement
(Incorporated by reference to Exhibit 4.7 contained in Registrant’s
Current Report on Form 8-K as filed with the Commission on or about
June
29, 1998).
|
Exhibit
Number
|
Description
|
|
4.16
|
Form
of Non-qualified Stock Option Agreement by and between Registrant,
Director and certain consultants dated December 22, 1999 (Incorporated
by
reference to the exhibit contained in Registrant’s Registration Statement
on Form S-3 (File No. 333-40716)).*
|
|
4.17
|
Peregrine
Pharmaceuticals, Inc. 2002 Non-Qualified Stock Option Plan (Incorporated
by reference to the exhibit contained in Registrant’s Registration
Statement in Form S-8 (File No. 333-106385)).*
|
|
4.18
|
Form
of 2002 Non-Qualified Stock Option Agreement (Incorporated by reference
to
the exhibit contained in Registrant’s Registration Statement in Form S-8
(File No. 333-106385)).*
|
|
4.19
|
Preferred
Stock Rights Agreement, dated as of March 16, 2006, between the Company
and Integrity Stock Transfer, Inc., including the Certificate of
Designation, the form of Rights Certificate and the Summary of Rights
attached thereto as Exhibits A, B and C, respectively (Incorporated
by
reference to Exhibit 4.19 to Registrant’s Current Report on Form 8-K as
filed with the Commission on March 17,
2006).
|
10.40
|
1996
Stock Incentive Plan (Incorporated by reference to the exhibit contained
in Registrant's Registration Statement in form S-8 (File No.
333-17513)).*
|
|
10.41
|
Stock
Exchange Agreement dated as of January 15, 1997 among the stockholders
of
Peregrine Pharmaceuticals, Inc. and Registrant (Incorporated by reference
to Exhibit 2.1 to Registrant's Quarterly Report on Form 10-Q for
the
quarter ended January 31, 1997).
|
|
10.42
|
First
Amendment to Stock Exchange Agreement among the Stockholders of Peregrine
Pharmaceuticals, Inc. and Registrant (Incorporated by reference to
Exhibit
2.1 contained in Registrant’s Current Report on Form 8-K as filed with the
Commission on or about May 12, 1997).
|
|
10.43
|
Termination
and Transfer Agreement dated as of November 14, 1997 by and between
Registrant and Alpha Therapeutic Corporation (Incorporated by reference
to
Exhibit 10.1 contained in Registrant’s Current Report on Form 8-K as filed
with the commission on or about November 24, 1997).
|
|
10.47
|
Real
Estate Purchase Agreement by and between Techniclone Corporation
and 14282
Franklin Avenue Associates, LLC dated December 24, 1998 (Incorporated
by
reference to Exhibit 10.47 to Registrant's Quarterly Report on Form
10-Q
for the quarter ended January 31, 1999).
|
|
10.48
|
Lease
and Agreement of Lease between TNCA, LLC, as Landlord, and Techniclone
Corporation, as Tenant, dated as of December 24, 1998 (Incorporated
by
reference to Exhibit 10.48 to Registrant's Quarterly Report on Form
10-Q
for the quarter ended January 31, 1999).
|
|
10.49
|
Promissory
Note dated as of December 24, 1998 between Techniclone Corporation
(Payee)
and TNCA Holding, LLC (Maker) for $1,925,000 (Incorporated by reference
to
Exhibit 10.49 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended January 31, 1999).
|
Exhibit
Number
|
Description
|
|
10.50
|
Pledge
and Security Agreement dated as of December 24, 1998 for $1,925,000
Promissory Note between Grantors and Techniclone Corporation (Secured
Party) (Incorporated by reference to Exhibit 10.50 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended January 31,
1999).
|
|
10.56
|
License
Agreement dated as of March 8, 1999 by and between Registrant and
Schering
A.G. (Incorporated
by reference to Exhibit 10.56 to Registrant's Annual Report on Form
10-K
for the year ended April 30, 1999).**
|
|
10.57
|
Patent
License Agreement dated October 8, 1998 between Registrant and the
Board
of Regents of the University of Texas System for patents related
to
Targeting the Vasculature of Solid Tumors (Vascular Targeting Agent
patents) (Incorporated
by reference to Exhibit 10.57 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended July 31, 1999).
|
|
10.58
|
Patent
License Agreement dated October 8, 1998 between Registrant and the
Board
of Regents of the University of Texas System for patents related
to the
Coagulation of the Tumor Vasculature (Vascular Targeting Agent patents)
(Incorporated
by reference to Exhibit 10.58 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended July 31, 1999).
|
|
10.59
|
License
Agreement between Northwestern University and Registrant dated August
4,
1999 covering the LYM-1 and LYM-2 antibodies (Oncolym) (Incorporated
by reference to Exhibit 10.59 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended July 31, 1999).
|
|
10.67
|
Warrant
to purchase 750,000 shares of Common Stock of Registrant issued to
Swartz
Private Equity, LLC dated November 19, 1999 (Incorporated
by reference to Exhibit 10.67 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended January 31, 2000).
|
10.73
|
Common
Stock Purchase Agreement to purchase up to 6,000,000 shares of
Common
Stock of Registrant issued to ZLP Master Fund, LTD, ZLP Master
Technology
Fund, LTD, Eric Swartz, Michael C. Kendrick, Vertical Ventures
LLC and
Triton West Group, Inc. dated November 16, 2001 (Incorporated by
reference
to Exhibit 10.73 to Registrant’s Current Report on Form 8-K dated November
19, 2001, as filed with the Commission on November 19,
2001).
|
|
10.74
|
Form
of Warrant to be issued to Investors pursuant to the Common Stock
Purchase
Agreement dated November 16, 2001 (Incorporated by reference to
Exhibit
10.74 to Registrant’s Current Report on Form 8-K dated November 19, 2001,
as filed with the Commission on November 19, 2001).
|
|
10.75
|
Common
Stock Purchase Agreement to purchase 1,100,000 shares of Common
Stock of
Registrant issued to ZLP Master Fund, LTD and Vertical Capital
Holdings,
Ltd. dated January 28, 2002 (Incorporated by reference to Exhibit
10.75 to
Registrant’s Current Report on Form 8-K dated January 31, 2002, as filed
with the Commission on February 5, 2002).
|
|
10.76
|
Form
of Warrant to be issued to Investors pursuant to the Common Stock
Purchase
Agreement dated January 28, 2002 (Incorporated by reference to
Exhibit
10.76 to Registrant’s Current Report on Form 8-K dated January 31, 2002,
as filed with the Commission on February 5, 2002).
|
|
10.77
|
Securities
Purchase Agreement dated as of August 9, 2002 between Registrant
and
Purchasers (Incorporated by reference to Exhibit 10.77 to Registrant’s
Registration Statement on Form S-3 (File No. 333-99157), as filed
with the
Commission on September 4, 2002).
|
Exhibit
Number
|
Description
|
|
10.78
|
Form
of Convertible Debentures issued to Purchasers pursuant to Securities
Purchase Agreement dated August 9, 2002 (Incorporated by reference
to
Exhibit 10.78 to Registrant’s Registration Statement on Form S-3 (File No.
333-99157), as filed with the Commission on September 4,
2002).
|
|
10.79
|
Registration
Rights Agreement dated August 9, 2002 between Registrant and Purchasers
of
Securities Purchase Agreements dated August 9, 2002 (Incorporated
by
reference to Exhibit 10.79 to Registrant’s Registration Statement on Form
S-3 (File No. 333-99157), as filed with the Commission on September
4,
2002).
|
|
10.80
|
Form
of Warrant to be issued to Purchasers pursuant to Securities Purchase
Agreement dated August 9, 2002 (Incorporated by reference to Exhibit
10.80
to Registrant’s Registration Statement on Form S-3 (File No. 333-99157),
as filed with the Commission on September 4,
2002).
|
10.81
|
Form
of Warrant issued to Debenture holders pursuant to Securities Purchase
Agreement dated August 9, 2002 (Incorporated by reference to Exhibit
10.81
to Registrant’s Registration Statement on Form S-3 (File No. 333-99157),
as filed with the Commission on September 4, 2002).
|
|
10.82
|
Form
of Adjustment Warrant issued to Investors pursuant to Securities
Purchase
Agreement dated August 9, 2002 (Incorporated by reference to Exhibit
10.82
to Registrant’s Registration Statement on Form S-3 (File No. 333-99157),
as filed with the Commission on September 4, 2002).
|
|
10.83
|
Securities
Purchase Agreement dated as of August 9, 2002 between Registrant
and ZLP
Master Fund, Ltd. (Incorporated by reference to Exhibit 10.83 to
Registrant’s Registration Statement on Form S-3 (File No. 333-99157), as
filed with the Commission on September 4, 2002).
|
|
10.84
|
Registration
Rights Agreement dated August 9, 2002 between Registrant and ZLP
Master
Fund, Ltd. (Incorporated by reference to Exhibit 10.84 to Registrant’s
Registration Statement on Form S-3 (File No. 333-99157), as filed
with the
Commission on September 4, 2002).
|
|
10.85
|
Form
of Warrant to be issued to ZLP Master Fund, Ltd. pursuant to Securities
Purchase Agreement dated August 9, 2002 (Incorporated by reference
to
Exhibit 10.85 to Registrant’s Registration Statement on Form S-3 (File No.
333-99157), as filed with the Commission on September 4,
2002).
|
|
10.86
|
Form
of Adjustment Warrant issued to ZLP Master Fund, Ltd. pursuant
to
Securities Purchase Agreement dated August 9, 2002 (Incorporated
by
reference to Exhibit 10.86 to Registrant’s Registration Statement on Form
S-3 (File No. 333-99157), as filed with the Commission on September
4,
2002).
|
|
10.87
|
Common
Stock Purchase Agreement dated June 6, 2003 between Registrant
and eight
institutional investors (Incorporated
by reference to Exhibit 10.87 to Registrant's Quarterly Report
on Form
10-Q for the quarter ended July 31, 2003).
|
10.88
|
Common
Stock Purchase Agreement dated June 6, 2003 between Registrant
and one
institutional investor (Incorporated
by reference to Exhibit 10.88 to Registrant's Quarterly Report
on Form
10-Q for the quarter ended July 31, 2003).
|
Exhibit
Number
|
Description
|
|
10.89
|
Common
Stock Purchase Agreement dated June 26, 2003 between Registrant and
seven
institutional investors (Incorporated
by reference to Exhibit 10.89 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended July 31, 2003).
|
|
10.90
|
Common
Stock Purchase Agreement dated July 24, 2003 between Registrant and
one
institutional investor (Incorporated
by reference to Exhibit 10.90 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended July 31, 2003).
|
|
10.91
|
Common
Stock Purchase Agreement dated September 18, 2003 between Registrant
and
one institutional investor (Incorporated
by reference to Exhibit 10.91 to Registrant's Quarterly Report on
Form
10-Q for the quarter ended October 31, 2003).
|
10.92
|
Common
Stock Purchase Agreement dated January 22, 2004 between Registrant
and one
institutional investor (Incorporated
by reference to Exhibit 10.92 to Registrant's Quarterly Report
on Form
10-Q for the quarter ended January 31, 2004).
|
|
10.93
|
Common
Stock Purchase Agreement dated March 31, 2004 between Registrant
and one
institutional investor (Incorporated by reference to Exhibit 10.93
to
Registrant’s Annual Report on Form 10-K for the year ended April 30,
2005).
|
|
10.95
|
2003
Stock Incentive Plan Non-qualified Stock Option Agreement (Incorporated
by
reference to the exhibit contained in Registrant’s Registration Statement
in form S-8 (File No. 333-121334).*
|
|
10.96
|
2003
Stock Incentive Plan Incentive Stock Option Agreement (Incorporated
by
reference to the exhibit contained in Registrant’s Registration Statement
in form S-8 (File No. 333-121334)).*
|
|
10.97
|
Common
Stock Purchase Agreement dated January 31, 2005 between Registrant
and one
institutional investor (Incorporated by reference to Exhibit 10.97
to
Registrant’s Quarterly Report on Form 10-Q for the quarter ended January
31, 2005).
|
|
10.98
|
Form
of Incentive Stock Option Agreement for 2005 Stock Incentive Plan
(Incorporated by reference to Exhibit 10.98 to Registrant’s Current Report
on Form 8-K as filed with the Commission on October 28,
2005).*
|
|
10.99
|
Form
of Non-Qualified Stock Option Agreement for 2005 Stock Incentive
Plan
(Incorporated by reference to Exhibit 10.99 to Registrant’s Current Report
on Form 8-K as filed with the Commission on October 28,
2005).*
|
|
10.100
|
Peregrine
Pharmaceuticals, Inc. 2005 Stock Incentive Plan (Incorporated by
reference
to Exhibit B to Registrant’s Definitive Proxy Statement filed with the
Commission on August 29, 2005).*
|
|
10.101
|
First
Amendment to Lease and Agreement of Lease between TNCA, LLC, as
Landlord,
and Peregrine Pharmaceuticals, Inc., as Tenant, dated December
22, 2005
(Incorporated by reference to Exhibit 99.1 and 99.2 to Registrant’s
Current Report on Form 8-K as filed with the Commission on December 23,
2005).
|
Exhibit
Number
|
Description
|
|
10.102
|
Common
Stock Purchase Agreement dated May 11, 2005 between Registrant and
one
institutional investor (Incorporated by reference to Registrant’s Current
Report on Form 8-K as filed with the Commission on May 11,
2005).
|
|
10.103
|
Common
Stock Purchase Agreement dated June 22, 2005 between Registrant and
one
institutional investor (Incorporated by reference to Exhibit 99.1
to
Registrant’s Current Report on Form 8-K as filed with the Commission on
June 24, 2005).
|
|
10.104
|
Common
Stock Purchase Agreement dated November 23, 2005 between Registrant
and
one institutional investor (Incorporated by reference to Registrant’s
Current Report on Form 8-K as filed with the Commission on November
23,
2005).
|
|
10.105
|
Common
Stock Purchase Agreement dated April 5, 2006 between Registrant and
one
institutional investor (Incorporated by reference to Exhibit 99.2
to
Registrant’s Current Report on Form 8-K as filed with the Commission on
April 6, 2006).
|
10.106
|
Form
of Incentive Stock Bonus Plan dated February 13, 2006 between
Registrant and key employees and consultants. **, ***
|
|
21
|
Subsidiaries
of Registrant ***
|
|
23.1
|
Consent
of Independent Registered Public Accounting Firm ***
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.***
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.***
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant
to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.***
|
|
_______________________________
|
||
*
**
***
|
This
Exhibit is a management contract or a compensation plan or
arrangement.
Portions
omitted pursuant to a request of confidentiality filed separately
with the
Commission.
Filed
herewith.
|
PEREGRINE PHARMACEUTICALS, INC. | ||
|
|
|
Dated: July 7, 2006 | By: | /s/ Steven W. King |
|
||
Steven W. King, President and Chief Executive Officer |
Signature
|
Capacity
|
Date
|
||
/s/
Steven W. King
|
President
& Chief Executive
|
July
7, 2006
|
||
Steven
W. King
|
Officer
(Principal Executive
|
|||
Officer)
|
||||
/s/
Paul J. Lytle
|
Chief
Financial Officer
|
July
7, 2006
|
||
Paul
J. Lytle
|
(Principal
Financial and
|
|||
Principal
Accounting Officer)
|
||||
/s/
Carlton M. Johnson
|
Director
|
July
7, 2006
|
||
Carlton
M. Johnson
|
||||
/s/
David H. Pohl
|
Director
|
July
7, 2006
|
||
David
H. Pohl
|
||||
/s/
Eric S. Swartz
|
Director
|
July
7, 2006
|
||
Eric
S. Swartz
|
||||
/s/
Dr. Thomas A. Waltz
|
Director
|
July
7, 2006
|
||
Thomas A. Waltz, M.D. |
2006
|
2005
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
17,182,000
|
$
|
9,816,000
|
|||
Trade
and other receivables, net of allowance for doubtful accounts of
nil and
$69,000, respectively
|
579,000
|
486,000
|
|||||
Inventories
|
885,000
|
627,000
|
|||||
Prepaid
expenses and other current assets
|
1,466,000
|
1,197,000
|
|||||
Total
current assets
|
20,112,000
|
12,126,000
|
|||||
PROPERTY:
|
|||||||
Leasehold
improvements
|
618,000
|
494,000
|
|||||
Laboratory
equipment
|
3,444,000
|
3,029,000
|
|||||
Furniture,
fixtures and computer equipment
|
666,000
|
647,000
|
|||||
4,728,000
|
4,170,000
|
||||||
Less
accumulated depreciation and amortization
|
(2,822,000
|
)
|
(2,532,000
|
)
|
|||
Property,
net
|
1,906,000
|
1,638,000
|
|||||
OTHER
ASSETS:
|
|||||||
Note
receivable, net of allowance of nil
and $1,512,000, respectively
|
-
|
-
|
|||||
Other
|
658,000
|
481,000
|
|||||
Total
other assets
|
658,000
|
481,000
|
|||||
TOTAL
ASSETS
|
$
|
22,676,000
|
$
|
14,245,000
|
LIABILITIES AND STOCKHOLDER'S EQUITY |
2006
|
2005
|
|||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
1,233,000
|
$
|
1,325,000
|
|||
Accrued
clinical trial site fees
|
170,000
|
8,000
|
|||||
Accrued
legal and accounting fees
|
250,000
|
549,000
|
|||||
Accrued
royalties and license fees
|
138,000
|
149,000
|
|||||
Accrued
payroll and related costs
|
850,000
|
806,000
|
|||||
Notes
payable, current portion
|
429,000
|
234,000
|
|||||
Capital
lease obligation, current portion
|
15,000
|
-
|
|||||
Deferred
revenue
|
563,000
|
517,000
|
|||||
Other
current liabilities
|
836,000
|
563,000
|
|||||
Total
current liabilities
|
4,484,000
|
4,151,000
|
|||||
Notes
payable, less current portion
|
498,000
|
434,000
|
|||||
Capital
lease obligation, less current portion
|
47,000
|
-
|
|||||
Deferred
license revenue
|
21,000
|
50,000
|
|||||
Commitments
and contingencies
|
|||||||
STOCKHOLDERS’
EQUITY:
|
|||||||
Preferred
stock - $.001 par value; authorized 5,000,000
shares;
non-voting; nil shares outstanding
|
-
|
-
|
|||||
Common
stock-$.001 par value; authorized 250,000,000 shares;
outstanding
– 179,382,191 and 152,983,460, respectively
|
179,000
|
153,000
|
|||||
Additional
paid-in-capital
|
204,546,000
|
180,011,000
|
|||||
Deferred
stock compensation
|
(235,000
|
)
|
(751,000
|
)
|
|||
Accumulated
deficit
|
(186,864,000
|
)
|
(169,803,000
|
)
|
|||
Total
stockholders’ equity
|
17,626,000
|
9,610,000
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
22,676,000
|
$
|
14,245,000
|
2006
|
2005
|
2004
|
||||||||
REVENUES:
|
||||||||||
Contract
manufacturing revenue
|
$
|
3,005,000
|
$
|
4,684,000
|
$
|
3,039,000
|
||||
License
revenue
|
188,000
|
275,000
|
275,000
|
|||||||
Total
revenues
|
3,193,000
|
4,959,000
|
3,314,000
|
|||||||
COSTS
AND EXPENSES:
|
||||||||||
Cost
of contract manufacturing
|
3,297,000
|
4,401,000
|
2,212,000
|
|||||||
Research
and development
|
12,415,000
|
11,164,000
|
9,673,000
|
|||||||
Selling,
general and administrative
|
6,564,000
|
5,098,000
|
4,225,000
|
|||||||
Total
costs and expenses
|
22,276,000
|
20,663,000
|
16,110,000
|
|||||||
LOSS
FROM OPERATIONS
|
(19,083,000
|
)
|
(15,704,000
|
)
|
(12,796,000
|
)
|
||||
OTHER
INCOME (EXPENSE):
|
||||||||||
Recovery
of note receivable
|
1,229,000
|
-
|
-
|
|||||||
Interest
and other income
|
846,000
|
265,000
|
291,000
|
|||||||
Interest
and other expense
|
(53,000
|
)
|
(13,000
|
)
|
(1,840,000
|
)
|
||||
NET
LOSS
|
$
|
(17,061,000
|
)
|
$
|
(15,452,000
|
)
|
$
|
(14,345,000
|
)
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
|
168,294,782
|
144,812,001
|
134,299,407
|
|||||||
BASIC
AND DILUTED LOSS PER COMMON SHARE
|
$
|
(0.10
|
)
|
$
|
(0.11
|
)
|
$
|
(0.11
|
)
|
Additional
|
Deferred
|
Total
|
|||||||||||||||||
Common
Stock
|
Paid-In
|
Stock
|
Accumulated
|
Stockholders’
|
|||||||||||||||
Shares
|
Amount
|
Captital
|
Compensation
|
Deficit
|
Equity
|
||||||||||||||
BALANCES,
April 30, 2003
|
119,600,501
|
$
|
120,000
|
$
|
142,274,000
|
$
|
(257,000
|
)
|
$
|
(140,006,000
|
)
|
$
|
2,131,000
|
||||||
Common
stock issued for cash under June 6, 2003 Financing, net of issuance
costs
of $104,000
|
2,412,448
|
2,000
|
1,969,000
|
-
|
-
|
1,971,000
|
|||||||||||||
Common
stock issued for cash under June 26, 2003 Financing, net of issuance
costs
of $101,000
|
1,599,997
|
2,000
|
1,737,000
|
-
|
-
|
1,739,000
|
|||||||||||||
Common
stock issued for cash under option granted under June 26, 2003
Financing,
net of issuance costs of $54,000
|
1,599,997
|
2,000
|
1,784,000
|
-
|
-
|
1,786,000
|
|||||||||||||
Common
stock issued for cash under July 24, 2003 Financing, net of issuance
costs
of $13,000
|
2,000,000
|
2,000
|
2,885,000
|
-
|
-
|
2,887,000
|
|||||||||||||
Common
stock issued for cash under September 18, 2003 Financing, net of
issuance
costs of $19,000
|
2,800,000
|
2,000
|
5,271,000
|
-
|
-
|
5,273,000
|
|||||||||||||
Common
stock issued for cash under November 17, 2003 Financing, net of
issuance
costs of $1,000
|
2,000,000
|
2,000
|
4,254,000
|
-
|
-
|
4,256,000
|
|||||||||||||
Common
stock issued for cash under January 22, 2004 Financing, net of
issuance
costs of $1,000
|
1,000,000
|
1,000
|
2,274,000
|
-
|
-
|
2,275,000
|
|||||||||||||
Common
stock issued to an unrelated entity for research services under
a research
collaboration agreement, net of issuance costs of under
$1,000
|
243,101
|
-
|
648,000
|
-
|
-
|
648,000
|
|||||||||||||
Common
stock issued upon conversion of convertible debt
|
2,817,645
|
3,000
|
2,392,000
|
-
|
-
|
2,395,000
|
|||||||||||||
Common
stock issued upon exercise of options and warrants, net of issuance
costs
of $134,000
|
5,194,493
|
5,000
|
3,467,000
|
-
|
-
|
3,472,000
|
|||||||||||||
Reversal
of deferred stock compensation associated with the cancellation
of
unvested options
|
-
|
-
|
(52,000
|
)
|
28,000
|
-
|
(24,000
|
)
|
|||||||||||
Deferred
stock compensation
|
-
|
-
|
66,000
|
(66,000
|
)
|
-
|
-
|
||||||||||||
Stock-based
compensation
|
-
|
-
|
-
|
295,000
|
-
|
295,000
|
|||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(14,345,000
|
)
|
(14,345,000
|
)
|
|||||||||||
BALANCES,
April 30, 2004
|
141,268,182
|
141,000
|
168,969,000
|
-
|
(154,351,000
|
)
|
14,759,000
|
||||||||||||
Common
stock issued for cash under March 31, 2004 Financing, net of issuance
costs of $43,000
|
3,000,000
|
3,000
|
3,204,000
|
-
|
-
|
3,207,000
|
|||||||||||||
Common
stock issued for cash under January 31, 2005 Financing, net of
issuance
costs of $1,000
|
3,000,000
|
3,000
|
3,276,000
|
-
|
-
|
3,279,000
|
|||||||||||||
Common
stock issued to various unrelated entities for research
services
|
1,174,682
|
1,000
|
1,448,000
|
-
|
-
|
1,449,000
|
|||||||||||||
Common
stock issued upon exercise of options and warrants, net of issuance
costs
of $5,000
|
4,540,596
|
5,000
|
2,132,000
|
-
|
-
|
2,137,000
|
|||||||||||||
Deferred
stock compensation
|
-
|
-
|
982,000
|
(982,000
|
)
|
-
|
-
|
||||||||||||
Stock-based
compensation
|
-
|
-
|
-
|
231,000
|
-
|
231,000
|
|||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(15,452,000
|
)
|
(15,452,000
|
)
|
|||||||||||
BALANCES,
April 30, 2005
|
152,983,460
|
153,000
|
180,011,000
|
(751,000
|
)
|
(169,803,000
|
)
|
9,610,000
|
|||||||||||
Common
stock issued for cash under January 31, 2005 Financing, net of
issuance
costs of $6,000
|
1,582,217
|
1,000
|
1,575,000
|
-
|
-
|
1,576,000
|
|||||||||||||
Common
stock issued for cash under May 11, 2005 Financing, net of issuance
costs
of $11,000
|
3,125,000
|
3,000
|
2,986,000
|
-
|
-
|
2,989,000
|
|||||||||||||
Common
stock issued for cash under June 22, 2005 Financing, net of issuance
costs
of $29,000
|
8,000,000
|
8,000
|
6,683,000
|
-
|
-
|
6,691,000
|
|||||||||||||
Common
stock issued for cash under November 23, 2005 Financing, net of
issuance
costs of $1,000
|
8,000,000
|
8,000
|
6,711,000
|
-
|
-
|
6,719,000
|
|||||||||||||
Common
stock issued for cash under April 5, 2006 Financing, net of issuance
costs
of $1,000
|
4,000,000
|
4,000
|
4,915,000
|
-
|
-
|
4,919,000
|
|||||||||||||
Common
stock issued to various unrelated entities for research
services
|
695,820
|
1,000
|
906,000
|
-
|
-
|
907,000
|
|||||||||||||
Common
stock issued upon exercise of options and warrants
|
966,742
|
1,000
|
732,000
|
-
|
-
|
733,000
|
|||||||||||||
Common
stock issued under the Company's stock bonus plan
|
28,952
|
-
|
44,000
|
-
|
-
|
44,000
|
|||||||||||||
Deferred
stock compensation
|
-
|
-
|
(17,000
|
)
|
17,000
|
-
|
-
|
||||||||||||
Stock-based
compensation
|
-
|
-
|
-
|
499,000
|
-
|
499,000
|
|||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(17,061,000
|
)
|
(17,061,000
|
)
|
|||||||||||
BALANCES,
April 30, 2006
|
179,382,191
|
$
|
179,000
|
$
|
204,546,000
|
$
|
(235,000
|
)
|
$
|
(186,864,000
|
)
|
$
|
17,626,000
|
2006
|
2005
|
2004
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
Net
loss
|
$
|
(17,061,000
|
)
|
$
|
(15,452,000
|
)
|
$
|
(14,345,000
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||
Depreciation
|
415,000
|
325,000
|
374,000
|
|||||||
Stock-based
compensation expense
|
499,000
|
231,000
|
271,000
|
|||||||
Amortization
of discount on convertible debt and debt issuance costs
|
-
|
-
|
1,811,000
|
|||||||
Stock
issued for research services
|
1,048,000
|
485,000
|
616,000
|
|||||||
Stock
bonus plan compensation expense
|
44,000
|
-
|
-
|
|||||||
Gain
on sale of property
|
(6,000
|
)
|
-
|
-
|
||||||
Recovery
of note receivable
|
(1,229,000
|
)
|
-
|
-
|
||||||
Changes
in operating assets and liabilities:
|
||||||||||
Trade
and other receivables
|
(93,000
|
)
|
1,034,000
|
(1,275,000
|
)
|
|||||
Short-term
investments
|
-
|
-
|
242,000
|
|||||||
Inventories
|
(258,000
|
)
|
613,000
|
(864,000
|
)
|
|||||
Prepaid
expenses and other current assets
|
(410,000
|
)
|
7,000
|
49,000
|
||||||
Accounts
payable
|
(92,000
|
)
|
(6,000
|
)
|
771,000
|
|||||
Accrued
clinical trial site fees
|
162,000
|
(46,000
|
)
|
(206,000
|
)
|
|||||
Deferred
revenue
|
17,000
|
(1,082,000
|
)
|
918,000
|
||||||
Accrued
payroll and related expenses
|
44,000
|
303,000
|
189,000
|
|||||||
Other
accrued expenses and current liabilities
|
(37,000
|
)
|
420,000
|
198,000
|
||||||
Net
cash used in operating activities
|
(16,957,000
|
)
|
(13,168,000
|
)
|
(11,251,000
|
)
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Property
acquisitions
|
(618,000
|
)
|
(1,090,000
|
)
|
(411,000
|
)
|
||||
Increase
in other assets, net
|
(171,000
|
)
|
(101,000
|
)
|
(250,000
|
)
|
||||
Recovery
of note receivable
|
1,229,000
|
-
|
-
|
|||||||
Net
cash provided by (used in) investing activities
|
440,000
|
(1,191,000
|
)
|
(661,000
|
)
|
|||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Proceeds
from issuance of common stock, net of issuance costs of
$48,000,
$49,000, and $428,000, respectively
|
23,627,000
|
8,623,000
|
23,659,000
|
|||||||
Proceeds
from issuance of notes payable
|
566,000
|
733,000
|
-
|
|||||||
Principal
payments on notes payable and capital lease
|
(310,000
|
)
|
(65,000
|
)
|
-
|
|||||
Net
cash provided by financing activities
|
23,883,000
|
9,291,000
|
23,659,000
|
2006
|
2005
|
2004
|
||||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
$
|
7,366,000
|
$
|
(5,068,000
|
)
|
$
|
11,747,000
|
|||
CASH
AND CASH EQUIVALENTS, Beginning of year
|
9,816,000
|
14,884,000
|
3,137,000
|
|||||||
CASH
AND CASH EQUIVALENTS, End of year
|
$
|
17,182,000
|
$
|
9,816,000
|
$
|
14,884,000
|
||||
SUPPLEMENTAL
INFORMATION:
|
||||||||||
Interest
paid
|
$
|
49,000
|
$
|
13,000
|
$
|
78,000
|
||||
SCHEDULE
OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||
Property
acquired under capital lease
|
$
|
65,000
|
$
|
-
|
$
|
-
|
||||
Conversion
of convertible debt into common stock
|
$
|
-
|
$
|
-
|
$
|
2,395,000
|
||||
Common
stock issued for research fees and prepayments for future research
services
|
$
|
907,000
|
$
|
1,449,000
|
$
|
648,000
|
1.
|
ORGANIZATION
AND BUSINESS DESCRIPTION
|
2. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
2006
|
2005
|
||||||
Raw
materials
|
$
|
565,000
|
$
|
445,000
|
|||
Work-in-process
|
320,000
|
182,000
|
|||||
Total
inventories
|
$
|
885,000
|
$
|
627,000
|
2006
|
2005
|
2004
|
||||||||
Common
stock equivalent shares assuming issuance of shares represented by
outstanding stock options and warrants utilizing the treasury stock
method
|
3,433,414
|
6,485,168
|
11,462,682
|
|||||||
Common
stock equivalent shares assuming issuance of shares upon conversion
of
convertible debt utilizing the if-converted method
|
-
|
-
|
563,054
|
|||||||
Total
|
3,433,414
|
6,485,168
|
12,025,736
|
2006
|
2005
|
2004
|
||||||||
Net
loss, as reported
|
$
|
(17,061,000
|
)
|
$
|
(15,452,000
|
)
|
$
|
(14,345,000
|
)
|
|
Stock-based
employee compensation cost that would have been included in the
determination of net loss if the fair value based method had been
applied
to all awards
|
(1,755,000
|
)
|
(2,828,000
|
)
|
(2,541,000
|
)
|
||||
Pro
forma net loss as if the fair value based method had been applied
to all
awards
|
$
|
(18,816,000
|
)
|
$
|
(18,280,000
|
)
|
$
|
(16,886,000
|
)
|
|
Basic
and diluted loss per common share, as reported
|
$
|
(0.10
|
)
|
$
|
(0.11
|
)
|
$
|
(0.11
|
)
|
|
Basic
and diluted loss per common share, pro forma
|
$
|
(0.11
|
)
|
$
|
(0.13
|
)
|
$
|
(0.13
|
)
|
2006
|
2005
|
2004
|
||||||||
Weighted
average fair value of stock options granted
|
$
|
0.91
|
$
|
0.80
|
$
|
1.59
|
||||
Risk-free
interest rate
|
3.88%
|
|
3.38%
|
|
2.31%
|
|
||||
Expected
life (in years)
|
5.49
|
4.00
|
4.00
|
|||||||
Expected
volatility factor
|
103%
|
|
115%
|
|
124%
|
|
||||
Expected
dividend yield
|
-
|
-
|
-
|
3. |
NOTE
RECEIVABLE
|
2006
|
2005
|
||||||
Allowance
balance, beginning
|
$
|
1,581,000
|
$
|
1,645,000
|
|||
Principal
payments received
|
(1,274,000
|
)
|
(64,000
|
)
|
|||
Note
receivable payoff reduction
|
(307,000
|
)
|
-
|
||||
Allowance
balance, ending
|
$
|
-
|
$
|
1,581,000
|
4. |
NOTES
PAYABLE AND CAPITAL LEASE
OBLIGATION
|
April
30,
2006
|
April
30,
2005
|
||||||
Note
payable dated November 2004; 5.78% per annum;
monthly
payments of $11,000 due through December 2007
|
$
|
202,000
|
$
|
314,000
|
|||
Note
payable dated December 2004; 5.85% per annum;
monthly
payments of $12,000 due through January 2008
|
232,000
|
354,000
|
|||||
Note
payable dated June 2005; 6.39% per annum; monthly
payments
of $8,000 due through July 2008
|
205,000
|
-
|
|||||
Note
payable dated November 2005; 6.63% per annum;
monthly
payments of $3,000 due through December 2008
|
92,000
|
-
|
|||||
Note
payable dated March 2006; 6.87% per annum;
monthly
payments of $6,000 due through April 2009
|
196,000
|
-
|
|||||
927,000
|
668,000
|
||||||
Less
current portion
|
(429,000
|
)
|
(234,000
|
)
|
|||
Notes
payable, less current portion
|
$
|
498,000
|
$
|
434,000
|
Year
ending April 30:
|
||||
2007
|
429,000
|
|||
2008
|
379,000
|
|||
2009
|
119,000
|
|||
Total
|
$
|
927,000
|
Furniture,
fixtures and office equipment
|
$
|
68,000
|
||
Less
accumulated depreciation
|
(5,000
|
)
|
||
Net
book value
|
$
|
63,000
|
Year
ending April 30:
|
||||
2007
|
$
|
19,000
|
||
2008
|
19,000
|
|||
2009
|
19,000
|
|||
2010
|
13,000
|
|||
Total
minimum lease payments
|
70,000
|
|||
Amount
representing interest
|
(8,000
|
)
|
||
Net
present value minimum lease payments
|
62,000
|
|||
Less
current portion
|
15,000
|
|||
$
|
47,000
|
5.
|
COMMITMENTS
AND CONTINGENCIES
|
Year
ending
April
30:
|
Minimum
Lease Payments
|
Sublease
Income
|
Net
Lease
Payments
|
|||||||
2007
|
$
|
804,000
|
$
|
(40,000
|
)
|
$
|
764,000
|
|||
2008
|
815,000
|
-
|
815,000
|
|||||||
2009
|
793,000
|
-
|
793,000
|
|||||||
2010
|
796,000
|
-
|
796,000
|
|||||||
2011
|
805,000
|
-
|
805,000
|
|||||||
Thereafter
|
5,736,000
|
-
|
5,736,000
|
|||||||
|
$
|
9,749,000
|
$
|
(40,000
|
)
|
$
|
9,709,000
|
6. |
CONVERTIBLE
DEBT
|
7. |
LICENSE,
RESEARCH AND DEVELOPMENT AGREEMENTS
|
8. |
STOCKHOLDERS'
EQUITY
|
Registration
Statement
No.
|
Shelf
Effective Date
|
Number
of Shares of
Common
Stock Registered
|
Number
of Warrants
Registered
|
333-71086
|
November
2001
|
10,000,000
|
2,000,000
|
333-103965
|
March
2003
|
10,000,000
|
-
|
333-109982
|
October
2003
|
12,000,000
|
-
|
333-121450
|
December
2004
|
12,000,000
|
-
|
333-128322
|
September
2005
|
12,000,000
|
-
|
333-132872
|
March
2006
|
15,000,000
|
-
|
FISCAL
YEAR 2004
|
||||||||||
Description
of Financing Transaction
|
Number
of Common Stock Shares Issued
|
Number
of
Warrants
Issued
|
Net
Issuance
Value
|
|||||||
Common
stock purchase agreement dated June 6, 2003
|
2,412,448
|
150,000
|
$
|
1,971,000
|
||||||
Common
stock purchase agreement dated June 26, 2003
|
1,599,997
|
-
|
$
|
1,739,000
|
||||||
Option
granted under the common stock purchase agreement dated June 26,
2003
|
1,599,997
|
-
|
$
|
1,786,000
|
||||||
Common
stock purchase agreement dated July 24, 2003
|
2,000,000
|
-
|
$
|
2,887,000
|
||||||
Common
stock purchase agreement dated September 18, 2003
|
2,800,000
|
-
|
$
|
5,273,000
|
||||||
Common
stock purchase agreement dated November 17, 2003
|
2,000,000
|
-
|
$
|
4,256,000
|
||||||
Common
stock purchase agreement dated January 22, 2004
|
1,000,000
|
-
|
$
|
2,275,000
|
||||||
Common
stock issued to unrelated entities for research services
|
243,101
|
-
|
$
|
648,000
|
||||||
13,655,543
|
150,000
|
$
|
20,835,000
|
FISCAL
YEAR 2005
|
Description
of Financing Transaction
|
Number
of Common Stock Shares Issued
|
Number
of
Warrants
Issued
|
Net
Issuance
Value
|
|||||||
Common
stock purchase agreement dated March 31, 2004
|
3,000,000
|
-
|
$
|
3,207,000
|
||||||
Common
stock purchase agreement dated January 31, 2005
|
3,000,000
|
-
|
$
|
3,279,000
|
||||||
Common
stock issued to unrelated entities for research services
|
1,174,682
|
-
|
$
|
1,449,000
|
||||||
7,174,682
|
-
|
$
|
7,935,000
|
FISCAL
YEAR 2006
|
Description
of Financing Transaction
|
Number
of Common Stock Shares Issued
|
Number
of
Warrants
Issued
|
Net
Issuance
Value
|
|||||||
Common
stock purchase agreement dated January 31, 2005
|
1,582,217
|
-
|
$
|
1,576,000
|
||||||
Common
stock purchase agreement dated May 11, 2005
|
3,125,000
|
-
|
$
|
2,989,000
|
||||||
Common
stock purchase agreement dated June 22, 2005
|
8,000,000
|
-
|
$
|
6,691,000
|
||||||
Common
stock purchase agreement dated November 23, 2005
|
8,000,000
|
-
|
$
|
6,719,000
|
||||||
Common
stock purchase agreement dated April 5, 2006
|
4,000,000
|
-
|
$
|
4,919,000
|
||||||
Common
stock issued to unrelated entities for research services
|
695,820
|
-
|
$
|
907,000
|
||||||
25,403,037
|
-
|
$
|
23,801,000
|
Number
of
shares
reserved
|
||||
Shares
reserved under two effective shelf registration statements
|
15,179,180
|
|||
Options
issued and outstanding
|
11,307,279
|
|||
Options
available for future grant
|
5,346,418
|
|||
Warrants
issued and outstanding
|
6,964,653
|
|||
Total
shares reserved
|
38,797,530
|
9.
|
STOCK
OPTIONS
|
2006
|
2005
|
2004
|
|||||||||||||||||
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
||||||||||||||
BALANCE,
|
|||||||||||||||||||
Beginning
of year
|
11,182,640
|
$1.61
|
11,704,205
|
$1.48
|
9,580,458
|
$1.16
|
|||||||||||||
Granted
|
1,128,481
|
$1.14
|
3,149,829
|
$1.52
|
4,187,947
|
$2.09
|
|||||||||||||
Exercised
|
(154,230
|
)
|
$0.79
|
(2,120,806
|
)
|
$0.66
|
(1,131,242
|
)
|
$0.61
|
||||||||||
Forfeited
or Expired
|
(849,612
|
)
|
$1.80
|
(1,550,588
|
)
|
$1.77
|
(932,958
|
)
|
$1.99
|
||||||||||
BALANCE,
|
|||||||||||||||||||
End
of year
|
11,307,279
|
$1.
56
|
11,182,640
|
$1.61
|
11,704,205
|
$1.48
|
Options
Outstanding
|
Options
Exercisable
|
||||
Range
of Per
Share
Exercise
Prices
|
Number
of Shares
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
Weighted
Average
Per
Share
Exercise
Price
|
Number
of Shares Exercisable
|
Weighted
Average
Per
Share
Exercise
Price
|
$
0.34 - $ 1.05
|
2,470,284
|
5.64
|
$
0.63
|
1,765,078
|
$
0.50
|
$
1.06 - $ 1.31
|
2,264,616
|
6.23
|
$
1.20
|
1,766,182
|
$
1.21
|
$
1.32 - $ 1.62
|
2,412,351
|
7.34
|
$
1.49
|
1,172,135
|
$
1.51
|
$
1.63 - $ 2.19
|
558,900
|
6.76
|
$
1.92
|
359,575
|
$
1.95
|
$
2.20 - $ 5.28
|
3,601,128
|
7.15
|
$
2.41
|
3,416,562
|
$
2.42
|
$
0.34 - $ 5.28
|
11,307,279
|
6.66
|
$
1.56
|
8,479,532
|
$
1.62
|
10.
|
WARRANTS
|
Range
of Per Share
Exercise
Prices
|
Number
of Warrants
Outstanding
|
Weighted
Average
Per
Share
Exercise
Price
|
Expiration
Date
or
Date Range
|
|||
$0.71
- $0.75
|
4,916,788
|
$0.71
|
8/8/06
|
|||
$0.86
|
62,865
|
$0.86
|
6/8/07
|
|||
$1.00
|
1,350,000
|
$1.00
|
11/16/06
|
|||
$1.47
- $2.50
|
635,000
|
$1.72
|
1/31/07
- 3/31/08
|
|||
$0.71
- $2.50
|
6,964,653
|
$0.86
|
8/6/06
- 3/31/08
|
11.
|
SEGMENT
REPORTING
|
2006
|
2005
|
2004
|
||||||||
Net
Revenues:
|
||||||||||
Contract
manufacturing and development of biologics
|
$
|
3,005,000
|
$
|
4,684,000
|
$
|
3,039,000
|
||||
Research
and development of biotherapeutics
|
188,000
|
275,000
|
275,000
|
|||||||
Total
net revenues
|
$
|
3,193,000
|
$
|
4,959,000
|
$
|
3,314,000
|
||||
Gross
Profit (Loss):
|
||||||||||
Contract
manufacturing and development of biologics
|
$
|
(292,000
|
)
|
$
|
283,000
|
$
|
827,000
|
|||
Research
and development of biotherapeutics
|
188,000
|
275,000
|
275,000
|
|||||||
Total
gross profit (loss)
|
$
|
(104,000
|
)
|
$
|
558,000
|
$
|
1,102,000
|
|||
Research
and development expense of biotherapeutics
|
(12,415,000
|
)
|
(11,164,000
|
)
|
(9,673,000
|
)
|
||||
Selling,
general and administrative expense
|
(6,564,000
|
)
|
(5,098,000
|
)
|
(4,225,000
|
)
|
||||
Net
other income (expense)
|
2,022,000
|
252,000
|
(1,549,000
|
)
|
||||||
Net
loss
|
$
|
(17,061,000
|
)
|
$
|
(15,452,000
|
)
|
$
|
(14,345,000
|
)
|
2006
|
2005
|
2004
|
|||
Customer
revenues as a % of net revenues:
|
|||||
United
States (customer A)
|
73%
|
51%
|
4%
|
||
United
States (customer B)
|
2%
|
15%
|
24%
|
||
Germany
(one customer)
|
10%
|
0%
|
3%
|
||
Israel
(one customer)
|
1%
|
32%
|
67%
|
||
Other
customers
|
14%
|
2%
|
2%
|
||
Total
customer revenues as a % of net revenues
|
100%
|
100%
|
100%
|
2006
|
2005
|
||||||
Long-lived
Assets, net:
|
|||||||
Contract
manufacturing and development of biologics
|
$
|
1,516,000
|
$
|
1,291,000
|
|||
Research
and development of biotherapeutics
|
390,000
|
347,000
|
|||||
Total
long-lived assets, net
|
$
|
1,906,000
|
$
|
1,638,000
|
12. |
INCOME
TAXES
|
2006
|
2005
|
2004
|
||||||||
Provision
for federal income taxes at statutory rate
|
$
|
(5,801,000
|
)
|
$
|
(5,254,000
|
)
|
$
|
(4,877,000
|
)
|
|
State
income taxes, net of federal benefit
|
(995,000
|
)
|
(902,000
|
)
|
(837,000
|
)
|
||||
Expiration
and adjustment of loss carryforwards
|
719,000
|
4,513,000
|
891,000
|
|||||||
Change
in valuation allowance
|
6,048,000
|
1,628,000
|
6,746,000
|
|||||||
Increase
of effective tax rate for net state deferred tax asset
|
-
|
-
|
(1,941,000
|
)
|
||||||
Other,
net
|
29,000
|
15,000
|
18,000
|
|||||||
Income
tax (expense) benefit
|
$
|
-
|
$
|
-
|
$
|
-
|
2006
|
2005
|
||||||
Net
operating loss carryforwards
|
$
|
48,147,000
|
$
|
41,628,000
|
|||
Stock-based
compensation
|
1,676,000
|
1,495,000
|
|||||
General
business and research and development credits
|
118,000
|
118,000
|
|||||
Deferred
revenue
|
233,000
|
226,000
|
|||||
Accrued
liabilities
|
1,126,000
|
1,785,000
|
|||||
Total
deferred tax assets
|
51,300,000
|
45,252,000
|
|||||
Less
valuation allowance
|
(51,300,000
|
)
|
(45,252,000
|
)
|
|||
Net
deferred tax assets
|
$
|
-
|
$
|
-
|
13. |
RELATED
PARTY TRANSACTION
|
14. |
BENEFIT
PLAN
|
15. |
SUBSEQUENT
EVENTS
|
16.
|
SELECTED
QUARTERLY FINANCIAL DATA
(UNAUDITED)
|
Quarter
Ended
|
||||||||||||||||||||||||||||
April
30,
|
January
31,
|
October
31,
|
July
31,
|
April
30,
|
January
31,
|
October
31,
|
July
31,
|
|||||||||||||||||||||
2006
|
2006
|
2005
|
2005
|
2005
|
2005
|
2004
|
2004
|
|||||||||||||||||||||
Net
revenues
|
$
|
901,000
|
$
|
1,528,000
|
$
|
556,000
|
$
|
208,000
|
$
|
919,000
|
$
|
1,353,000
|
$
|
2,183,000
|
$
|
504,000
|
||||||||||||
Cost
of sales
|
$
|
1,477,000
|
(a) |
$
|
1,088,000
|
$
|
428,000
|
$
|
304,000
|
(b) |
$
|
1,136,000
|
(c) |
$
|
1,273,000
|
$
|
1,544,000
|
$
|
448,000
|
|||||||||
Gross
profit (loss)
|
$
|
(576,000
|
)
|
$
|
440,000
|
$
|
128,000
|
$
|
(96,000
|
)
|
$
|
(217,000
|
)
|
$
|
80,000
|
$
|
639,000
|
$
|
56,000
|
|||||||||
Operating
expenses
|
$
|
4,934,000
|
$
|
4,922,000
|
$
|
4,814,000
|
$
|
4,309,000
|
$
|
4,498,000
|
$
|
3,886,000
|
$
|
4,341,000
|
$
|
3,537,000
|
||||||||||||
Net
loss
|
$
|
(5,038,000
|
)
|
$
|
(3,113,000
|
)
|
$
|
(4,571,000
|
)
|
$
|
(4,339,000
|
)
|
$
|
(4,657,000
|
)
|
$
|
(3,744,000
|
)
|
$
|
(3,638,000
|
)
|
$
|
(3,413,000
|
)
|
||||
Basic
and diluted loss
per
common
share
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
(a) |
Cost
of sales for the quarter ended April 30, 2006 includes the write-off
of
unusable work-in-process inventory generated during the quarter ended
April 30, 2006 in the amount of $698,000 combined with a contract
loss
provision associated with one customer in the amount of
$184,000.
|
(b) |
Cost
of sales for the quarter ended July 31, 2005 includes additional
costs
incurred during the quarter ended July 31, 2005 to provide additional
data
to support required studies for current
customers.
|
(c) |
Cost
of sales for the quarter ended April 30, 2005 includes the write-off
of
unusable work-in-process inventory generated during the quarter ended
April 30, 2005 in the amount of
$605,000.
|
Balance
at
|
Charged
|
Balance
|
|||||||||||
Beginning
|
to
costs and
|
at
end
|
|||||||||||
Description
|
of
period
|
expenses
|
Deductions
|
of
period
|
|||||||||
Valuation
reserve for note and other receivables for
the
year ended April 30, 2004
|
$
|
1,704,000
|
$
|
-
|
$
|
(59,000
|
)
|
$
|
1,645,000
|
||||
Valuation
reserve for note and other receivables for
the
year ended April 30, 2005
|
$
|
1,645,000
|
$
|
-
|
$
|
(64,000
|
)
|
$
|
1,581,000
|
||||
Valuation
reserve for note and other receivables for
the
year ended April 30, 2006
|
$
|
1,581,000
|
$
|
-
|
$
|
(1,581,000
|
)
|
$
|
-
|
1. |
Approval
Date. This Stock Bonus Plan (the “Plan”) has been approved by
the Company’s Compensation Committee of the Board on February 13 ,
2006.
|
2.
|
Max.
No. of Shares.
Up
to 1,737,166
shares of Peregrine’s common stock may be earned by all Grantees upon the
attainment of milestones set forth in the below Milestone
Table.
|
3.
|
Plan.
The shares shall be reserved for issuance under the Company’s 2005 Stock
Incentive Plan.
|
4.
|
Date
of Stock Issuance For Milestones Achieved.
|
Milestone
Timeframe
|
Shares
Issuance Period
|
|
For
all milestones achieved and bonuses “earned” before March 31,
2006
|
During
April 2006
|
|
For
all milestones achieved and bonuses “earned” between April 1, 2006
and
June 30, 2006
|
During
July 2006
|
|
For
all milestones achieved and bonuses “earned” between July 1, 2006
and
September 30, 2006
|
During
October 2006
|
|
For
all milestones achieved and bonuses “earned” between October 1, 2006
and
December 31, 2006
|
During
January 2007
|
|
For
all milestones achieved and bonuses “earned” between January 1, 2007
and
April 1, 2007
|
During
April 2007
|
For
purposes of financial statement purposes, a bonus will be deemed
“earned”,
and the recipient’s right to receive the bonus shall accrue, as
follows:
|
If
the milestone is achieved by the Bonus Target Date, and the milestone
triggers a press release, then the bonus shall be earned on the date
the
press release is publicly
disseminated.
|
If
the milestone is achieved by the Bonus Target Date, and the milestone
has
not triggered the dissemination of a press release within ten (10)
trading
days following the date the milestone is achieved, then the bonus
shall be
earned on the date that is the tenth trading day following the date
the
milestone is achieved.
|
5.
|
Black-Out
Periods.
In
the event the planned date of issuance of shares occurs on a black-out
day
in which no shares could be sold in the open market to cover the
estimated
income taxes, the Company will then postpone the issuance of shares
until
3 trading days following the date of the material non-public information
is disclosed in a press release or Form 8-K. The Company shall not
be
liable for any decrease the trading price of its Stock during a black-out
period that postpones the issuance of any
shares.
|
6.
|
Form
4 Reporting.
Steve King, Paul Lytle and David King will report the receipt of
the
shares within two (2) days of the date that they are earned pursuant
to
paragraph 4 above.
|
7.
|
Plan
Provisions to Prevail.
In
the event that there is any inconsistency between the provisions
of this
Stock Bonus Plan and of the 2005 Stock Incentive Plan, the provisions
of
the 2005 Stock Incentive Plan shall
govern.
|
8.
|
Tax
Withholding Obligation and Tax Advice Allowance.
Because the receipt of shares of Stock is taxable to the recipient
as
ordinary income (i.e., compensation) on the date of receipt, the
Company
has an obligation to withhold all payroll taxes due with respect
to the
receipt of the shares of Stock and to remit such taxes at the end
of the
applicable pay period. In order to facilitate the collection of
withholding taxes, each participant must have established a brokerage
account with RBC Dain Rauscher (“RBC”). Further, by your participation in
the Plan (and by your execution of the Performance Share Award Agreement
(the “Award Agreement”), you agree and consent to the Company’s standing
instruction to RBC to immediately sell, following receipt thereof,
enough
shares of Stock to cover the required statutory bonus withholdings
which
are at the following rates:
|
a.
|
Federal
- 25%
|
b.
|
California
- 9.3%
|
c.
|
Social
Security (FICA) - 6.2%
|
d.
|
Medicare
- 1.45%
|
9.
|
Fair
Market Value of Income.
Participants shall be taxed at the fair market value of the stock
on the
date the shares are physically received by the employee or consultant.
Fair market value shall be determined to be the closing stock price
of the
Company’s common stock on the date of receipt by RBC.
|
|
|
|
Dated: July 7, 2006 | By: | /s/ Steven W. King |
|
||
Steven
W. King
President
and Chief Executive Officer
|
|
|
|
Dated: July 7, 2006 | By: | /s/ Paul J. Lytle |
|
||
Paul
J. Lytle
Chief
Financial
Officer
|
By:
|
/s/
STEVEN W. KING
|
||
Name:
|
Steven
W. King
|
||
Title:
|
President
and Chief Executive Officer
|
||
Date:
|
July
7, 2006
|
By:
|
/s/
PAUL J. LYTLE
|
||
Name:
|
Paul
J. Lytle
|
||
Title:
|
Chief
Financial Officer
|
||
Date:
|
July
7, 2006
|