x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the Fiscal Year Ended: December 31,
2007
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the transition period from _________ to
_________.
|
Delaware
|
04-3321804
|
(State
or other jurisdiction
of
incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
One
Gateway Center, Suite 504
Newton,
Massachusetts 02458
(Address
of principal executive offices and zip code)
|
Title
of Class
|
Name
of each exchange on which registered
|
|
None
|
Not
Applicable
|
|
|||
Item
1.
|
Description
of Business
|
2
|
|
|
Item
2.
|
Description
of Property
|
9
|
Item
3.
|
Legal
Proceedings
|
9
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
9
|
|
PART
II
|
|||
Item
5.
|
Market
for Common Equity, Related Stockholder Matters and Small Business
Issuer
Purchases of Equity Securities
|
9
|
|
Item
6.
|
Management's
Discussion and Analysis or Plan of Operation
|
10
|
|
Item
7.
|
Financial
Statements
|
25
|
|
Item
8.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
44
|
|
|
Item
8a.
|
Controls
and Procedures
|
44
|
Item
8b.
|
Other
Information
|
45
|
|
PART
III
|
|||
Item
9.
|
Directors,
Executive Officers, Promoters and Control Persons
|
46
|
|
Item
10.
|
Executive
Compensation
|
48
|
|
Item
11.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
53
|
|
Item
12.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
54
|
|
Item
13.
|
55
|
||
Item
14.
|
Principal
Accountant Fees and Services
|
58
|
§
|
Cell
signaling pathways
|
§
|
Cytoskeletal
structure/function
|
§
|
Protein
folding/stability
|
§
|
Calcium
homeostasis
|
§
|
Energy
metabolism
|
§
|
Redox
homeostasis
|
·
|
Group
A: NOV-002, administered intravenously and intramuscularly, in combination
with cytotoxic chemotherapy (carboplatin +
paclitaxel).
|
·
|
Group
B: NOV-002, administered intravenously and subcutaneously, in combination
with cytotoxic chemotherapy.
|
·
|
Group
C: Cytotoxic chemotherapy alone was administered to this control
group.
|
·
|
Pre-clinical
laboratory tests, in
vivo
pre-clinical studies, and formulation
studies;
|
·
|
The
submission to the FDA of an Investigational New Drug Application
for human
clinical testing, which must become effective before human clinical
trials
can commence;
|
·
|
Adequate
and well controlled human clinical trials to establish the safety
and
efficacy of the product;
|
·
|
The
submission of a New Drug Application or Biologic Drug License Application
to the FDA; and
|
·
|
FDA
approval of the New Drug Application or Biologic Drug License Application
prior to any commercial sale or shipment of the
product.
|
Fiscal
Year 2006
|
High
|
Low
|
|||||
First
quarter
|
$
|
2.25
|
$
|
1.60
|
|||
Second
quarter
|
1.95
|
0.85
|
|||||
Third
quarter
|
1.05
|
0.63
|
|||||
Fourth
quarter
|
1.02
|
0.60
|
Fiscal
Year 2007
|
High
|
Low
|
|||||
First
Quarter
|
$
|
1.24
|
$
|
0.85
|
|||
Second
Quarter
|
1.40
|
0.82
|
|||||
Third
Quarter
|
0.90
|
0.45
|
|||||
Fourth
Quarter
|
0.67
|
0.43
|
·
|
the
resources required to successfully complete our clinical trials;
|
·
|
the
time and costs involved in obtaining regulatory approvals;
|
·
|
continued
progress in our research and development programs, as well as the
magnitude of these programs;
|
·
|
the
cost of manufacturing activities;
|
·
|
the
costs involved in preparing, filing, prosecuting, maintaining, and
enforcing patent claims;
|
·
|
the
timing, receipt, and amount of milestone and other payments, if any,
from
collaborators; and
|
·
|
fluctuations
in foreign exchange rates.
|
·
|
the
number of potential products and technologies in
development;
|
·
|
continued
progress and cost of our research and development
programs;
|
·
|
progress
with pre-clinical studies and clinical
trials;
|
·
|
the
time and costs involved in obtaining regulatory
clearance;
|
·
|
costs
involved in preparing, filing, prosecuting, maintaining and enforcing
patent claims;
|
·
|
costs
of developing sales, marketing and distribution channels and our
ability
to sell our drugs;
|
·
|
costs
involved in establishing manufacturing capabilities for clinical
trial and
commercial quantities of our drugs;
|
·
|
competing
technological and market
developments;
|
·
|
market
acceptance of our products;
|
·
|
costs
for recruiting and retaining management, employees and consultants;
|
·
|
costs
for training physicians;
|
·
|
our
status as a Bulletin-Board listed company and the prospects for our
stock
to be listed on a national exchange;
and
|
·
|
uncertainty
and economic instability resulting from terrorist acts and other
acts of
violence or war.
|
·
|
demonstrating
benefit from delivery of each specific drug for specific medical
indications;
|
·
|
demonstrating
through pre-clinical and clinical trials that each drug is safe and
effective; and
|
·
|
demonstrating
that we have established a viable Good Manufacturing Practices capable
of
potential scale-up.
|
·
|
uncertainties
arising from the rapidly growing scientific aspects of drug therapies
and
potential treatments;
|
·
|
uncertainties
arising as a result of the broad array of alternative potential treatments
related to cancer, hepatitis and other diseases;
and
|
·
|
anticipated
expense and time believed to be associated with the development and
regulatory approval of treatments for cancer, hepatitis and other
diseases.
|
·
|
the
receipt of regulatory clearance of marketing claims for the uses
that we
are developing;
|
·
|
the
establishment and demonstration of the advantages, safety and efficacy
of
our technologies;
|
·
|
pricing
and reimbursement policies of government and third-party payers such
as
insurance companies, health maintenance organizations and other health
plan administrators;
|
·
|
our
ability to attract corporate partners, including pharmaceutical companies,
to assist in commercializing our intended products;
and
|
·
|
our
ability to market our products.
|
·
|
cease
selling, incorporating or using any of our technologies and/or products
that incorporate the challenged intellectual property, which would
adversely affect our future
revenue;
|
·
|
obtain
a license from the holder of the infringed intellectual property
right,
which license may be costly or may not be available on reasonable
terms,
if at all; or
|
·
|
redesign
our products, which would be costly and
time-consuming.
|
·
|
fail
to satisfy financial or contractual obligations to
us;
|
·
|
fail
to adequately market our products;
|
·
|
cease
operations with little or no notice;
or
|
·
|
offer,
design, manufacture or promote competing
products.
|
·
|
the
election of directors;
|
·
|
the
amendment of charter documents;
|
·
|
issuance
of blank-check preferred or convertible stock, notes or instruments
of
indebtedness which may have conversion, liquidation and similar features,
or completion of other financing arrangements;
or
|
·
|
the
approval of certain mergers and other significant corporate transactions,
including a sale of substantially all of our assets, or merger with
a
publicly-traded shell or other company.
|
Page
|
||||
Report
of Independent Registered Public Accounting Firm
|
26 | |||
Balance
Sheets at December 31, 2007 and 2006
|
27 | |||
Statements
of Operations for the Years Ended December 31, 2007 and
2006
|
28 | |||
Statements
of Redeemable Preferred Stock and Stockholders’ Equity (Deficiency) for
the Years Ended December 31, 2007 and 2006
|
29 | |||
Statements
of Cash Flows for the Years Ended December 31, 2007 and
2006
|
30 | |||
Notes
to Financial Statements
|
31 |
December
31,
2007
|
December
31,
2006
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and equivalents
|
$
|
9,741,518
|
$
|
9,938,428
|
|||
Restricted
cash
|
1,184,702
|
1,655,251
|
|||||
Prepaid
expenses and other current assets
|
133,281
|
294,995
|
|||||
Total
current assets
|
11,059,501
|
11,888,674
|
|||||
FIXED
ASSETS, NET
|
32,809
|
23,810
|
|||||
DEPOSITS
|
15,350
|
10,875
|
|||||
TOTAL
ASSETS
|
$
|
11,107,660
|
$
|
11,923,359
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
(DEFICIENCY) |
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
6,372,478
|
$
|
1,088,041
|
|||
Accrued
compensation
|
349,412
|
225,384
|
|||||
Accrued
dividends
|
337,500
|
—
|
|||||
Total
current liabilities
|
7,059,390
|
1,313,425
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
REDEEMABLE
PREFERRED STOCK:
|
|||||||
Series
B convertible preferred stock, $0.00001 par value; 400 shares designated;
300 shares issued and outstanding at December 31, 2007 (liquidation
preference $15,337,500) (Note 4)
|
9,918,666
|
—
|
|||||
STOCKHOLDERS’
EQUITY (DEFICIENCY):
|
|||||||
Preferred
stock, $0.00001 par value; 7,000 shares authorized: Series A 8% cumulative
convertible preferred stock; no shares outstanding at December 31,
2007,
3,264 shares issued and outstanding at December 31, 2006; Series
C 8%
cumulative convertible preferred stock; 272 shares issued and outstanding
at December 31, 2007 (liquidation preference $3,264,000), no shares
outstanding at December 31, 2006 (Note 4)
|
—
|
—
|
|||||
Common
stock, $0.00001 par value; 150,000,000 shares authorized; 39,260,272
shares issued and outstanding at December 31, 2007; 39,235,272 shares
issued and outstanding at December 31, 2006
|
392
|
392
|
|||||
Additional
paid-in capital
|
37,370,959
|
34,294,154
|
|||||
Accumulated
deficit
|
(43,241,747
|
) |
(23,684,612
|
)
|
|||
Total
stockholders’ equity (deficiency)
|
(5,870,396
|
) |
10,609,934
|
||||
TOTAL
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(DEFICIENCY)
|
$
|
11,107,660
|
$
|
11,923,359
|
Year
Ended December 31,
|
|||||||
|
2007
|
2006
|
|||||
COSTS
AND EXPENSES:
|
|||||||
Research
and development
|
$
|
17,427,804
|
$
|
6,441,394
|
|||
General
and administrative
|
2,866,383
|
2,488,414
|
|||||
Total
costs and expenses
|
20,294,187
|
8,929,808
|
|||||
OTHER
INCOME:
|
|||||||
Interest
income
|
729,922
|
637,752
|
|||||
Miscellaneous
|
7,130
|
6,000
|
|||||
Total
other income
|
737,052
|
643,752
|
|||||
NET
LOSS
|
(19,557,135
|
)
|
(8,286,056
|
)
|
|||
PREFERRED
STOCK DIVIDEND
|
(1,161,120
|
)
|
(261,120
|
)
|
|||
PREFERRED
STOCK DEEMED DIVIDEND
|
(9,003,083
|
)
|
—
|
||||
NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(29,721,338
|
)
|
$
|
(8,547,176
|
)
|
|
BASIC
AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON
SHARE
|
$
|
(0.76
|
)
|
$
|
(0.23
|
)
|
|
SHARES
USED IN COMPUTING BASIC AND DILUTED
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS PER COMMON SHARE
|
39,247,532
|
37,179,878
|
|
|
REDEEMABLE
PREFERRED STOCK
|
|||||||||||||||||||||||||||||||||
Series B Convertible
Preferred Stock
|
Common Stock
|
Series A Cumulative
Convertible
Preferred Stock
|
Series C Cumulative
Convertible
Preferred
|
Additional
|
Total
Stockholders’
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Paid-in
Capital
|
Accumulated
Deficit
|
Equity
(Deficiency)
|
|||||||||||||||||||||||||
BALANCE
AT JANUARY 1, 2006
|
—
|
$
|
—
|
27,921,199
|
$
|
279
|
3,264
|
$
|
—
|
—
|
$
|
—
|
$
|
20,119,820
|
$
|
(15,398,556
|
)
|
$
|
4,721,543
|
||||||||||||||||
Exercise
of stock options
|
—
|
—
|
75,000
|
1
|
—
|
—
|
—
|
—
|
749
|
—
|
750
|
||||||||||||||||||||||||
Issuance
of common stock for services
|
—
|
—
|
85,000
|
1
|
—
|
—
|
—
|
—
|
144,049
|
—
|
144,050
|
||||||||||||||||||||||||
Issuance
of common stock and warrants in private placement, net of issuance
costs
of $1,211,232
|
—
|
—
|
11,154,073
|
111
|
—
|
—
|
—
|
—
|
13,846,663
|
—
|
13,846,774
|
||||||||||||||||||||||||
Compensation
expense associated with options issued to employees
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
268,281
|
—
|
268,281
|
||||||||||||||||||||||||
Compensation
expense associated with options issued to non-employees
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
175,712
|
—
|
175,712
|
||||||||||||||||||||||||
Dividends
paid on preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(261,120
|
)
|
—
|
(261,120
|
)
|
||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(8,286,056
|
)
|
(8,286,056
|
)
|
||||||||||||||||||||||
BALANCE
AT DECEMBER 31, 2006
|
—
|
—
|
39,235,272
|
392
|
3,264
|
—
|
—
|
—
|
34,294,154
|
(23,684,612
|
)
|
10,609,934
|
|||||||||||||||||||||||
Exercise
of stock options
|
—
|
—
|
25,000
|
—
|
—
|
—
|
—
|
—
|
250
|
—
|
250
|
||||||||||||||||||||||||
Compensation
expense associated with options issued to employees
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
343,233
|
—
|
343,233
|
||||||||||||||||||||||||
Compensation
expense associated with options issued to non-employees
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
160,057
|
—
|
160,057
|
||||||||||||||||||||||||
Issuance
of Series B redeemable convertible preferred stock and warrants,
net of
issuance costs of $1,306,949
|
300
|
17,743,051
|
—
|
—
|
—
|
—
|
—
|
—
|
3,774,385
|
—
|
3,774,385
|
||||||||||||||||||||||||
Beneficial
conversion feature on Series B redeemable convertible preferred stock
|
—
|
(7,824,385
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
7,824,385
|
—
|
7,824,385
|
|||||||||||||||||||||||
Deemed
dividend related to the accretion of beneficial conversion feature
on
Series B redeemable convertible preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,824,385
|
)
|
—
|
(7,824,385
|
)
|
||||||||||||||||||||||
Retirement
of Series A preferred stock and issuance of Series C preferred stock
|
—
|
—
|
—
|
—
|
(3,264
|
)
|
—
|
272
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
Issuance
of common stock purchase warrants in connection with exchange of
preferred
stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,138,698
|
—
|
1,138,698
|
||||||||||||||||||||||||
Deemed
dividend recorded in connection with exchange of Series A for Series
C
convertible preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,178,698
|
)
|
—
|
(1,178,698
|
)
|
||||||||||||||||||||||
Dividends
paid on preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(823,620
|
)
|
—
|
(823,620
|
)
|
||||||||||||||||||||||
Dividends
accrued on preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(337,500
|
)
|
—
|
(337,500
|
)
|
||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(19,557,135
|
)
|
(19,557,135
|
)
|
||||||||||||||||||||||
BALANCE
AT DECEMBER 31, 2007
|
300
|
$
|
9,918,666
|
39,260,272
|
$
|
392
|
—
|
$
|
—
|
272
|
$
|
—
|
$
|
37,370,959
|
$
|
(43,241,747
|
)
|
$
|
(5,870,396
|
)
|
Year
Ended December 31,
|
|||||||
2007
|
2006
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(19,557,135
|
)
|
$
|
(8,286,056
|
)
|
|
Adjustments
to reconcile net loss to cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
15,367
|
9,516
|
|||||
Stock-based
compensation
|
503,290
|
588,043
|
|||||
Change
in:
|
|||||||
Prepaid
expenses and other current assets
|
161,714
|
122,803
|
|||||
Accounts
payable and accrued liabilities
|
5,284,437
|
870,885
|
|||||
Accrued
compensation
|
124,028
|
225,384
|
|||||
Cash
used in operating activities
|
(13,468,299
|
)
|
(6,469,425
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of fixed assets
|
(24,366
|
)
|
(10,716
|
)
|
|||
Change
in restricted cash
|
470,549
|
(1,458,343
|
)
|
||||
Deferred
financing costs
|
—
|
24,612
|
|||||
Deposits
|
(4,475
|
)
|
(1,219
|
)
|
|||
Cash
provided by (used in) investing activities
|
441,708
|
(1,445,666
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuance of common stock, net
|
—
|
13,846,774
|
|||||
Proceeds
from issuance of Series B convertible preferred stock, net
|
13,693,051
|
—
|
|||||
Dividends
paid to preferred stockholders
|
(823,620
|
)
|
(261,120
|
)
|
|||
Payment
to preferred stockholders in connection with exchange of shares
(1)
|
(40,000
|
)
|
—
|
||||
Proceeds
from exercise of stock option
|
250
|
750
|
|||||
Cash
provided by financing activities
|
12,829,681
|
13,586,404
|
|||||
INCREASE
(DECREASE) IN CASH AND EQUIVALENTS
|
(196,910
|
)
|
5,671,313
|
||||
CASH
AND EQUIVALENTS AT BEGINNING OF YEAR
|
9,938,428
|
4,267,115
|
|||||
CASH
AND EQUIVALENTS AT END OF YEAR
|
$
|
9,741,518
|
$
|
9,938,428
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW
INFORMATION
|
|||||||
SUPPLEMENTAL
DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|||||||
Deemed
dividends on preferred stock
|
$
|
8,963,083
|
$
|
—
|
|||
Dividends
declared but not paid to preferred stockholders
|
$
|
337,500
|
$
|
—
|
|||
Issuance
of warrants to Series B preferred stockholders
|
$
|
3,774,385
|
$
|
—
|
|||
Issuance
of warrants to placement agents
|
$
|
768,621
|
$
|
—
|
|||
Common
stock issued for services
|
$
|
—
|
$
|
144,050
|
2007
|
2006
|
||||||
Office
and computer equipment
|
$
|
51,652
|
$
|
52,537
|
|||
Computer
software
|
7,896
|
7,896
|
|||||
Leasehold
improvements
|
4,095
|
2,500
|
|||||
Total
fixed assets
|
63,643
|
62,933
|
|||||
Less
accumulated depreciation and
amortization
|
(30,834
|
)
|
(39,123
|
)
|
|||
Fixed
assets, net
|
$
|
32,809
|
$
|
23,810
|
Offering
|
Outstanding
(as adjusted)
|
Exercise
Price
(as adjusted)
|
Expiration Date
|
|||||||
2005
Bridge Loans
|
720,000
|
$
|
0.625
|
April
1, 2010
|
||||||
2005
PIPE:
|
||||||||||
Investors
|
4,500,000
|
$
|
1.00
|
August 9, 2008
|
||||||
Placement
agents and finders
|
680,000
|
$
|
1.00
|
August 9, 2010
|
||||||
Series
A Preferred (1):
|
||||||||||
Investors –
September 30, 2005 closing
|
909,090
|
$
|
1.00
|
September 30, 2010
|
||||||
Investors
– October 3, 2005 closing
|
60,606
|
$
|
1.00
|
October 3, 2010
|
||||||
2006
PIPE:
|
||||||||||
Investors
|
9,509,275
|
$
|
2.20
|
March
7, 2011
|
||||||
Placement
agents
|
760,743
|
$
|
2.20
|
March
7, 2011
|
||||||
Series
B Preferred:
|
||||||||||
Investors
|
7,500,000
|
$
|
1.25
|
May
2, 2012
|
||||||
Placement
agents
|
900,000
|
$
|
1.25
|
May
2, 2012
|
||||||
Series
C Exchange
|
1,333,333
|
$
|
1.25
|
May
2, 2012
|
||||||
Total
|
26,873,047
|
December
31,
|
|||||||
2007
|
2006
|
||||||
2000
Stock Option Plan
|
73,873
|
73,873
|
|||||
2006
Stock Incentive Plan
|
2,220,000
|
5,000,000
|
|||||
Options
issued outside of formalized plans
|
2,553,778
|
2,578,778
|
|||||
Warrants
|
28,973,047
|
(1)
|
16,820,135
|
||||
Preferred
stock
|
22,014,000
|
(1)
|
2,696,283
|
||||
Total
shares reserved for future issuance
|
55,834,698
|
27,169,069
|
Year Ended
December 31,
|
|||||||
2007
|
2006
|
||||||
Employee
and director stock option grants:
|
|||||||
Research
and development
|
$
|
163,558
|
$
|
77,333
|
|||
General
and administrative
|
179,675
|
190,948
|
|||||
343,233
|
268,281
|
||||||
Non-employee
consultants stock option grants and restricted stock
awards:
|
|||||||
Research
and development
|
17,233
|
11,435
|
|||||
General
and administrative
|
142,824
|
308,327
|
|||||
|
160,057
|
319,762
|
|||||
Total
stock-based compensation
|
$
|
503,290
|
$
|
588,043
|
|
Year Ended
December 31,
|
||||||
|
2007
|
2006
|
|||||
Volatility
|
80
|
%
|
80
|
%
|
|||
Weighted-average
volatility
|
80
|
%
|
80
|
%
|
|||
Risk-free
interest rate
|
3.57%-4.66
|
%
|
4.50%-5.05
|
%
|
|||
Expected
life (years)
|
5
|
5
|
|||||
Dividend
|
0
|
0
|
|||||
Weighted-average
exercise price
|
$
|
0.57
|
$
|
0.99
|
|||
Weighted-average
grant-date fair value
|
$
|
0.38
|
$
|
0.62
|
|
Options
Outstanding
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contracted
Term in
Years
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding
at January 1, 2006
|
2,727,651
|
$
|
0.60
|
8.9
|
$
|
4,294,257
|
|||||||
Options
granted
|
840,000
|
$
|
0.99
|
||||||||||
Options
exercised
|
(75,000
|
)
|
$
|
0.01
|
|||||||||
Outstanding
at December 31, 2006
|
3,492,651
|
$
|
0.70
|
8.4
|
$
|
1,773,777
|
|||||||
Options
granted
|
1,380,000
|
$
|
0.57
|
||||||||||
Options
exercised
|
(25,000
|
)
|
$
|
0.01
|
|||||||||
Outstanding
at December 31, 2007
|
4,847,651
|
$
|
0.67
|
8.1
|
$
|
1,308,961
|
|||||||
Exercisable
at December 31, 2007
|
3,125,978
|
$
|
0.68
|
7.3
|
$
|
1,177,066
|
2007
|
2006
|
||||||
Net
operating loss carryforwards
|
$
|
4,547,000
|
$
|
3,700,000
|
|||
Research
and development
expenses
|
9,718,000
|
3,581,000
|
|||||
Tax
credits
|
1,880,000
|
550,000
|
|||||
Capital
loss carryforward
|
403,000
|
403,000
|
|||||
Stock-based
compensation
|
375,000
|
||||||
Gross
deferred tax asset
|
16,923,000
|
8,234,000
|
|||||
Valuation
allowance
|
(16,923,000
|
)
|
(8,234,000
|
)
|
|||
Net
deferred tax asset
|
$
|
—
|
$
|
—
|
|
Year Ended
December 31,
|
||||||
|
2007
|
2006
|
|||||
Stock
options
|
4,847,651
|
3,492,651
|
|||||
Warrants
|
26,873,047
|
14,561,449
|
|||||
Conversion
of preferred stock
|
18,264,000
|
2,417,774
|
Name
|
Age
|
Position
|
||
Stephen
A. Hill,
B.M. B.Ch., M.A., F.R.C.S.
|
49
|
Chairman
of the Board
|
||
Harry
S. Palmin
|
38
|
President,
Chief Executive Officer, Director
|
||
M.
Taylor Burtis
|
56
|
Vice
President of Regulatory, Quality and Compliance
|
||
Christopher
J. Pazoles, Ph.D.
|
57
|
Vice
President of Research and Development
|
||
Joanne
M. Protano
|
39
|
Vice
President, Chief Financial Officer and Treasurer
|
||
Kristin
C. Schuhwerk
|
37
|
Vice
President of Clinical Development and Operations
|
||
Michael
J. Doyle (1) (2) (3)
|
49
|
Director
|
||
Sim
Fass, Ph.D. (1) (2) (3)
|
66
|
Director
|
||
James
S. Manuso, Ph.D.
|
59
|
Director
|
||
David
B. McWilliams (2) (3)
|
64
|
Director
|
||
Simyon
Palmin
|
63
|
Director
|
||
Howard
M. Schneider (1) (3)
|
63
|
Director
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
(4)
|
Option
Awards
($) (5)
|
All
other compensation
($)
|
Total
($)
|
|||||||||||||
Harry
S. Palmin (1)
|
2007
|
$
|
245,000
|
$
|
37,500
|
$
|
59,660
|
$
|
0
|
$
|
342,160
|
||||||||
President,
Chief Executive Officer
|
2006
|
225,000
|
50,000
|
91,410
|
0
|
366,410
|
|||||||||||||
Christopher
J. Pazoles (2)
|
2007
|
$
|
216,720
|
$
|
30,000
|
$
|
37,288
|
$
|
0
|
$
|
284,008
|
||||||||
Vice
President of Research and
Development
|
2006
|
199,200
|
40,320
|
60,940
|
0
|
300,460
|
|||||||||||||
M.
Taylor Burtis (3)
|
2007
|
$
|
203,175
|
$
|
20,000
|
$
|
29,830
|
$
|
0
|
$
|
253,005
|
||||||||
Vice
President of Quality,
Regulatory
and Compliance
|
2006
|
186,750
|
37,800
|
60,940
|
0
|
285,490
|
Individual
Grants
|
||||||||||||||||
Name
|
Year
of
Grant
|
Number
of securities underlying unexercised
options
(#)
exercisable
|
Number
of securities underlying unexercised
options
(#)
unexercisable
|
Exercise or
base price
($/share)
|
Expiration
date
|
|||||||||||
Harry
S. Palmin
|
2007
|
(1)
|
—
|
200,000
|
$
|
0.45
|
12/17/2017
|
|||||||||
2006
|
(1)
|
50,000
|
100,000
|
0.91
|
12/11/2016
|
|||||||||||
2005
|
(2)
|
250,000
|
—
|
0.01
|
1/31/2015
|
|||||||||||
2005
|
(2)
|
150,000
|
—
|
0.01
|
3/31/2015
|
|||||||||||
2004
|
(3)
|
330,000
|
—
|
0.01
|
4/1/2014
|
|||||||||||
2003
|
(4)
|
7,130
|
—
|
0.70
|
8/1/2013
|
|||||||||||
Christopher
J. Pazoles
|
2007
|
(1)
|
—
|
125,000
|
$
|
0.45
|
12/17/2017
|
|||||||||
2006
|
(1)
|
33,333
|
66,667
|
0.91
|
12/11/2016
|
|||||||||||
2005
|
(5)
|
200,000
|
—
|
0.01
|
4/8/2015
|
|||||||||||
2004
|
(6)
|
16,667
|
—
|
0.01
|
4/1/2014
|
|||||||||||
M.
Taylor Burtis
|
2007
|
(1)
|
—
|
100,000
|
$
|
0.45
|
12/17/2017
|
|||||||||
2006
|
(1)
|
33,333
|
66,667
|
0.91
|
12/11/2016
|
|||||||||||
2005
|
(7)
|
150,000
|
—
|
2.20
|
7/1/2015
|
(1)
|
These
shares vest annually in increments of one-third over three years
from the
date of grant. The exercise price equals the closing price on the
date of
grant.
|
(2)
|
These
shares initially vested over a two-year period. Pursuant to their
terms,
the shares fully vested upon the completion of a non-bridge loan
financing, which occurred in the second quarter of 2005. The exercise
price equals the fair market value of our common stock on the date
of
grant as determined by our board of directors.
|
(3)
|
These
shares initially vested one-third upon grant and one third annually
over
the following two years. Pursuant to their terms, one additional
year of
vesting occurred upon the completion of a non-bridge loan financing,
which
occurred in the second quarter of 2005. The exercise price equals
the fair
market value of our common stock on the date of grant as determined
by our
board of directors.
|
(4)
|
These
shares vest annually in increments of one-third over three years
from the
date of grant. The exercise price equals the fair market value of
our
common stock on the date of grant as determined by our board of directors.
|
(5)
|
These
shares vest in increments of one-fourth every six months over two
years
from the date of grant. The exercise price equals the fair market
value of
our common stock on the date of grant as determined by our board
of
directors.
|
(6)
|
These
shares represent the fully vested portion of an option grant made
to Mr.
Pazoles in consideration of consulting services delivered during
2004.
Pursuant to their terms, the shares vested at the completion of the
consulting engagement expire ten years from the date of grant.
|
(7)
|
These
shares vest in increments of one-fourth every six months over two
years
from the date of grant. The exercise price equals the closing price
on the
date of grant.
|
Name
and Principal Position
|
Year
|
Director
Fees
($)
(2)
|
Option
Awards
($)
(3)
|
All
other compensation
($)
|
Total
($)
|
|||||||||||
Stephen
A. Hill, Chairman
|
2007
|
$
|
10,542
|
$
|
70,020
|
$
|
—
|
$
|
80,562
|
|||||||
Michael
J. Doyle, Director
|
2007
|
31,500
|
17,919
|
—
|
49,419
|
|||||||||||
Sim
Fass, Director
|
2007
|
30,750
|
17,919
|
—
|
48,669
|
|||||||||||
James
S. Manuso, Director
|
2007
|
8,250
|
37,510
|
45,760
|
||||||||||||
David
B. McWilliams, Director
|
2007
|
25,000
|
17,919
|
—
|
42,919
|
|||||||||||
Simyon
Palmin, Director and director of
Russian relations (1)
|
2007
|
—
|
—
|
81,880
|
81,880
|
|||||||||||
Howard
M. Schneider, Director
|
2007
|
38,000
|
17,919
|
—
|
55,919
|
(1)
|
Other
compensation for Simyon Palmin represents salary and bonus he received
in
his capacity as director of Russian relations for the
Company.
|
(2)
|
Director
fees include all fees earned for director services including quarterly
fees, meeting fees and committee chairman fees.
|
(3)
|
The
fair value of each stock award was estimated on the grant date using
the
Black-Scholes option-pricing model. See Note 6 to the financial statements
for a description of the assumptions used in estimating the fair
value of
stock options.
|
Plan
category
|
Number of shares to
be issued upon
exercise of
outstanding options,
warrants and rights
(#)
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
($)
|
Number of shares
remaining available for
future issuance under
equity compensation plans
(excluding shares reflected
in column (a)) (#)
|
|||||||
(a)
|
(b)
|
(c)
|
||||||||
Equity compensation
plans approved by stockholders
|
2,293,873
|
$
|
0.81
|
2,780,000
|
||||||
Equity
compensation plans not approved by stockholders
|
2,553,778
|
$
|
0.55
|
0
|
||||||
Total
|
4,847,651
|
$
|
0.67
|
2,780,000
|
·
|
Each
person known by us to be the beneficial owner of more than five percent
of
our common stock;
|
·
|
Each
of our directors;
|
·
|
Each
executive officer named in the summary compensation table; and
|
·
|
All
of our current directors and executive officers as a
group.
|
Shares
Beneficially Owned (3)
|
|||||||||||||
Name
and Address of Beneficial Owner
|
Outstanding
|
Right to Acquire
|
Total
|
Percentage
|
|||||||||
Harry
S. Palmin (1)
|
582,118
|
787,130
|
1,369,248
|
3.4
|
%
|
||||||||
M.
Taylor Burtis
|
0
|
183,333
|
183,333
|
*
|
|||||||||
Christopher
J. Pazoles
|
0
|
250,000
|
250,000
|
*
|
|||||||||
Stephen
A. Hill
|
0
|
61,250
|
61,250
|
*
|
|||||||||
Michael
J. Doyle
|
0
|
140,625
|
140,625
|
*
|
Shares
Beneficially Owned (3)
|
|||||||||||||
Name
and Address of Beneficial Owner
|
Outstanding
|
Right to Acquire
|
Total
|
Percentage
|
|||||||||
Sim Fass
|
0
|
140,625
|
140,625
|
*
|
|||||||||
James
S. Manuso
|
0
|
30,000
|
30,000
|
*
|
|||||||||
David
McWilliams
|
0
|
193,403
|
193,403
|
*
|
|||||||||
Simyon
Palmin (2)
|
1,947,481
|
487,826
|
2,435,307
|
6.1
|
%
|
||||||||
Howard
Schneider
|
100,000
|
40,625
|
140,625
|
*
|
|||||||||
All
directors and officers as a group (12 persons)
|
2,629,599
|
2,473,150
|
5,102,749
|
12.2
|
%
|
Filed
|
Incorporated
by Reference
|
|||||||||
with this
|
||||||||||
Exhibit
|
Form
|
Exhibit
|
||||||||
No.
|
Description
|
10-KSB
|
Form
|
Filing
Date
|
No.
|
|||||
2.1
|
Agreement
and plan of merger among Common Horizons, Inc., Nove Acquisition,
Inc. and
Novelos Therapeutics, Inc. dated May 26, 2005
|
8-K
|
June
2, 2005
|
99.2
|
||||||
2.2
|
Agreement
and plan of merger between Common Horizons and Novelos Therapeutics,
Inc.
dated June 7, 2005
|
10-QSB
|
August
15, 2005
|
2.2
|
||||||
3.1
|
Amended
and Restated Certificate of Incorporation filed as Exhibit A
to the
Certificate of Merger merging Nove Acquisition, Inc. with and
into Novelos
Therapeutics, Inc. dated May 26, 2005
|
10-QSB
|
August
10, 2007
|
3.1
|
||||||
3.2
|
Certificate
of Merger merging Common Horizons, Inc. with and into Novelos
Therapeutics, Inc. dated June 13, 2005
|
10-QSB
|
August
10, 2007
|
3.2
|
||||||
3.3
|
Certificate
of Correction dated March 3, 2006
|
10-QSB
|
August
10, 2007
|
3.3
|
||||||
3.4
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
dated
July 16, 2007
|
10-QSB
|
August
10, 2007
|
3.4
|
||||||
3.5
|
Certificate
of Designations of Series B convertible preferred stock
|
10-QSB
|
August
10, 2007
|
3.5
|
||||||
3.6
|
Certificate
of Designations of Series C cumulative convertible preferred
stock
|
10-QSB
|
August
10, 2007
|
3.6
|
||||||
3.7
|
By-laws
|
8-K
|
June
17, 2005
|
2
|
||||||
10.1
**
|
Employment
agreement with Christopher J. Pazoles dated July 15, 2005
|
10-QSB
|
August
15, 2005
|
10.4
|
||||||
10.2
**
|
Employment
Agreement with Harry S. Palmin dated January 31, 2006
|
8-K
|
February
6, 2006
|
99.1
|
||||||
10.3
**
|
Compensation
for independent directors
|
8-K
|
December 22, 2006
|
99.1
|
||||||
10.4**
|
2000
Stock Option and Incentive Plan
|
SB-2
|
November 16, 2005
|
10.2
|
||||||
10.5
**
|
Form
of 2004 non-plan non-qualified stock option
|
SB-2
|
November 16, 2005
|
10.3
|
||||||
10.6
**
|
Form
of non-plan non-qualified stock option used from February to
May
2005
|
SB-2
|
November 16, 2005
|
10.4
|
||||||
10.7
**
|
Form
of non-plan non-qualified stock option used after May 2005
|
SB-2
|
November
16, 2005
|
10.5
|
||||||
10.8
|
Form
of common stock purchase warrant issued in March 2005
|
SB-2
|
November
16, 2005
|
10.6
|
||||||
10.9
|
Form
of securities purchase agreement dated May 2005
|
8-K
|
June
2, 2005
|
99.1
|
||||||
10.10
|
Form
of subscription agreement dated September 30, 2005
|
8-K
|
October
3, 2005
|
99.1
|
||||||
10.11
|
Form
of Class A common stock purchase warrant dated September 30,
2005
|
8-K
|
October
3, 2005
|
99.3
|
Filed
|
Incorporated
by Reference
|
|||||||||
with this
|
||||||||||
Exhibit
|
Form
|
Exhibit
|
||||||||
No.
|
Description
|
10-KSB
|
Form
|
Filing
Date
|
No.
|
|||||
10.12
|
Form
of share escrow agreement
|
8-K
|
November
3, 2005
|
10.3
|
||||||
10.13
|
Consideration
and new technology agreement dated April 1, 2005 with ZAO BAM
|
10-QSB
|
August
15, 2005
|
10.2
|
||||||
10.14
|
Letter
agreement dated March 31, 2005 with The Oxford Group, Ltd.
|
10-QSB
|
August
15, 2005
|
10.3
|
||||||
10.15
|
Form
of securities purchase agreement dated March 2, 2006
|
8-K
|
March
3, 2006
|
99.2
|
||||||
10.16
|
Form
of common stock purchase warrant dated March 2006
|
8-K
|
March
3, 2006
|
99.3
|
||||||
10.17
|
Placement
Agent Agreement with Oppenheimer & Co. Inc. dated December 19,
2005
|
8-K
|
March
3, 2006
|
99.4
|
||||||
10.18**
|
2006
Stock Incentive Plan
|
10-QSB
|
November 6, 2006
|
10.1
|
||||||
10.19
|
Form
of Incentive Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock
Incentive Plan
|
8-K
|
December 15, 2006
|
10.1
|
||||||
10.20
|
Form
of Non-Statutory Stock Option under Novelos Therapeutics, Inc.’s 2006
Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.2
|
||||||
10.21
|
Form
of Non-Statutory Director Stock Option under Novelos Therapeutics,
Inc.’s
2006 Stock Incentive Plan
|
8-K
|
December 15, 2006
|
10.3
|
||||||
10.22
|
Securities
Purchase Agreement dated April 12, 2007
|
10-QSB
|
May
8, 2007
|
10.1
|
||||||
10.23
|
Letter
Amendment dated May 2, 2007 to the Securities Purchase Agreement
|
10-QSB
|
May
8, 2007
|
10.2
|
||||||
10.24
|
Registration
Rights Agreement dated May 2, 2007
|
10-QSB
|
May
8, 2007
|
10.3
|
||||||
10.25
|
Placement
Agent Agreement with Rodman & Renshaw, LLC dated February 12,
2007
|
10-QSB
|
May
8, 2007
|
10.4
|
||||||
10.26
|
Agreement
to Exchange and Consent dated May 1, 2007
|
10-QSB
|
May
8, 2007
|
10.5
|
||||||
10.27
|
Form
of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant
to the
Securities Purchase Agreement dated April 12, 2007
|
10-QSB
|
May
8, 2007
|
4.1
|
||||||
10.28
|
Form
of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant
to the
Agreement to Exchange and Consent dated May 2, 2007
|
10-QSB
|
May
8, 2007
|
4.2
|
Filed
|
Incorporated
by Reference
|
|||||||||
with this
|
||||||||||
Exhibit
|
Form
|
Exhibit
|
||||||||
No.
|
Description
|
10-KSB
|
Form
|
Filing
Date
|
No.
|
|||||
31.1
|
Certification
of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||
31.2
|
Certification
of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||
32.1
|
Certification
of chief executive officer and chief financial officer pursuant
to Section
906 of the Sarbanes-Oxley Act of 2002
|
X
|
2007
|
2006
|
||||||
Audit
|
$
|
81,500
|
$
|
79,500
|
|||
Audit
Related
|
14,125
|
—
|
|||||
Tax
|
—
|
—
|
|||||
All
Other
|
—
|
—
|
|||||
Total
|
$
|
95,625
|
$
|
79,500
|
NOVELOS
THERAPEUTICS, INC.
|
||
By:
|
/s/
Harry S. Palmin
|
|
Harry
S. Palmin
|
||
Title:
President, Chief Executive Officer
|
||
Date:
March
24, 2008
|
/s/
Harry S. Palmin
|
||
Harry S. Palmin | ||
Title: Chief Executive Officer and Director (Principal Executive Officer) | ||
Date:
March 24, 2008
|
||
By:
|
/s/
Joanne M. Protano
|
|
Joanne M. Protano | ||
Title: Chief Financial Officer (Principal Accounting Officer) | ||
Date:
March 24, 2008
|
||
By:
|
/s/
Stephen A. Hill
|
|
Stephen A. Hill | ||
Title: Chairman of the Board of Directors | ||
Date:
March 24, 2008
|
||
By:
|
/s/
Michael J. Doyle
|
|
Michael J. Doyle | ||
Title: Director | ||
Date:
March 24, 2008
|
||
By:
|
/s/
Sim Fass
|
|
Sim Fass | ||
Title: Director | ||
Date:
March 24, 2008
|
By:
|
/s/
James S. Manuso
|
|
James
S. Manuso
|
||
Title:
Director
|
||
Date:
March 24, 2008
|
||
By:
|
/s/
David B. McWilliams
|
|
David
B. McWilliams
|
||
Title:
Director
|
||
Date:
March 24, 2008
|
||
By:
|
/s/
Simyon Palmin
|
|
Simyon
Palmin
|
||
Title:
Director
|
||
Date:
March 24, 2008
|
||
By:
|
/s/
Howard M. Schneider
|
|
Howard
M. Schneider
|
||
Title:
Director
|
||
Date:
March 24, 2008
|