Delaware
|
84-1475642
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(IRS
Employer Identification No.)
|
|
|
1180
Avenue of the Americas, 19th
Floor,
New York, NY
|
10036
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Large accelerated filer
o
|
Accelerated filer
x
|
Non-accelerated
filer o
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
|
|
|
|
Page
|
PART
I
|
FINANCIAL
INFORMATION
|
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
Balance
Sheets as of September 30, 2008 (unaudited) and December 31, 2007
|
|
3
|
|
|
|
|
|
Statement
of Operations for the three and nine months ended September 30, 2008
and
2007 (unaudited) and for the period from inception (September 9,
2003) to
September 30, 2008 (unaudited)
|
|
4
|
|
|
|
|
|
Statement
of Cash Flows for the nine months ended September 30, 2008 and 2007
(unaudited) and for the period from inception (September 9, 2003)
to
September 30, 2008 (unaudited)
|
|
5
|
|
|
|
|
|
Statement
of Changes in Convertible Preferred Stock and Stockholders’
Equity/(Deficit) for the period from inception (September 9, 2003)
to
September 30, 2008 (unaudited)
|
|
6
|
|
|
|
|
|
Notes
to Unaudited Financial Statements
|
|
7
|
|
|
|
|
Management’s
Discussion and Analysis
|
|
12
|
|
|
|
|
|
Quantitative
and Qualitative Disclosure About Market Risk
|
|
19
|
|
|
|
|
|
Controls
and Procedures
|
|
19
|
|
|
|
|
|
PART
II
|
OTHER
INFORMATION
|
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
|
19
|
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
19
|
|
|
|
|
Item
3.
|
Defaults
Under Senior Securities
|
|
19
|
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
20
|
|
|
|
|
Item
5.
|
Other
Information
|
|
20
|
|
|
|
|
Item
6.
|
Exhibits
|
|
21
|
|
Signatures
|
|
22
|
|
Exhibit
Index
|
|
23
|
September 30,
2008
|
December 31,
2007
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
15,191,789
|
$
|
35,028,798
|
|||
Prepaid
expenses and other current assets
|
577,165
|
498,864
|
|||||
Total
current assets
|
15,768,954
|
35,527,662
|
|||||
Property
and equipment, net
|
589,138
|
746,421
|
|||||
|
|
|
|||||
Deposits
|
95,497
|
95,497
|
|||||
Other
non-current assets
|
360,922
|
356,881
|
|||||
Total
assets
|
$
|
16,814,511
|
$
|
36,726,461
|
|||
|
|
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|
|
|||||
Accounts
payable
|
$
|
2,227,537
|
$
|
2,909,170
|
|||
Accrued
expenses
|
3,473,027
|
3,396,480
|
|||||
Total
current liabilities
|
5,700,564
|
6,305,650
|
|||||
|
|||||||
Deferred
rent
|
60,932
|
50,988
|
|||||
Total
liabilities
|
5,761,496
|
6,356,638
|
|||||
|
|||||||
Commitments
and contingencies
|
|||||||
|
|
|
|||||
Stockholders'
equity:
|
|||||||
Common
stock, $.001 par value; 280,000,000 shares authorized; 21,373,964
and
21,298,964 shares issued and outstanding at September 30, 2008
and
December 31, 2007, respectively
|
21,374
|
21,299
|
|||||
Preferred
stock, $0.01 par value; 30,000,000 shares authorized and no shares
issued
and outstanding
|
-
|
-
|
|||||
Additional
paid-in capital
|
71,025,617
|
69,674,151
|
|||||
Warrants
issued
|
20,503,894
|
20,503,894
|
|||||
Deficit
accumulated during the development stage
|
(80,497,870
|
)
|
(59,829,521
|
)
|
|||
Total
stockholders' equity
|
11,053,015
|
30,369,823
|
|||||
Total
liabilities and stockholders' equity
|
$
|
16,814,511
|
$
|
36,726,461
|
|
For the three
months
ended
September 30, 2008
|
For the three
months
ended
September 30, 2007
|
For the nine
months
ended
September 30, 2008
|
For the nine
months
ended
September 30, 2007
|
For the Period
from Inception
(September 9, 2003)
through
September 30, 2008
|
|||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||||||
Research
contract revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Operating
expenses and other income:
|
|
|
|
|
|
|||||||||||
Research
and development, including costs of research contracts
|
3,878,987
|
5,568,872
|
14,219,623
|
13,342,389
|
51,324,017
|
|||||||||||
General
and administrative
|
1,740,466
|
2,293,212
|
6,834,696
|
7,131,809
|
33,068,990
|
|||||||||||
Total
operating expenses
|
5,619,453
|
7,862,084
|
21,054,319
|
20,474,198
|
84,393,007
|
|||||||||||
Loss
from operations
|
(5,619,453
|
)
|
(7,862,084
|
)
|
(21,054,319
|
)
|
(20,474,198
|
)
|
(84,393,007
|
)
|
||||||
Interest
income
|
74,972
|
538,718
|
385,970
|
1,564,945
|
3,895,137
|
|||||||||||
Net
loss
|
$
|
(5,544,481
|
)
|
$
|
(7,323,366
|
)
|
$
|
(20,668,349
|
)
|
$
|
(18,909,253
|
)
|
$
|
(80,497,870
|
)
|
|
Basic
and diluted net loss per share
|
$
|
(0.26
|
)
|
$
|
(0.35
|
)
|
$
|
(0.97
|
)
|
$
|
(0.94
|
)
|
|
|||
Weighted
average common shares outstanding used to compute basic and diluted
net
loss per share
|
21,228,964
|
21,196,607
|
21,228,964
|
20,018,480
|
|
For the
nine months
ended
September 30, 2008
|
For the
nine months
ended
September 30, 2007
|
For the period
from inception
(September 9, 2003)
through
September 30, 2008
|
|||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||
Cash
flows from operating activities:
|
|
|
|
|||||||
Net
loss
|
$
|
(20,668,349
|
)
|
$
|
(18,909,253
|
)
|
$
|
(80,497,870
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|||||||
Depreciation
and amortization
|
279,355
|
345,890
|
1,021,813
|
|||||||
Non-cash
stock-based compensation
|
1,351,541
|
1,079,048
|
6,474,658
|
|||||||
Loss
on disposal of fixed assets
|
302
|
4,098
|
8,725
|
|||||||
Change
in operating assets and liabilities:
|
||||||||||
(Increase)
decrease in:
|
|
|
|
|||||||
Prepaid
expenses and other current assets
|
(78,301
|
)
|
(224,226
|
)
|
(577,165
|
)
|
||||
Other
noncurrent assets
|
(4,041
|
)
|
(177,176
|
)
|
(360,922
|
)
|
||||
Deposits
|
-
|
(91,630
|
)
|
(95,497
|
)
|
|||||
Increase
(decrease) in:
|
|
|
|
|||||||
Accounts
payable
|
(681,633
|
)
|
861,709
|
2,227,537
|
||||||
Accrued
expenses
|
76,547
|
1,269,965
|
3,473,027
|
|||||||
Deferred
rent
|
9,944
|
(4,765
|
)
|
60,932
|
||||||
Net
cash used in operating activates
|
(19,714,635
|
)
|
(15,846,340
|
)
|
(68,264,762
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Purchases
of property and equipment
|
(123,074
|
)
|
(617,959
|
)
|
(1,620,376
|
)
|
||||
Proceeds
from sale of property and equipment
|
700
|
-
|
700
|
|||||||
Decrease
in short-term investments
|
-
|
1,555,164
|
-
|
|||||||
Net
cash provided by (used in) investing activities
|
(122,374
|
)
|
937,205
|
(1,619,676
|
)
|
|||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from the exercise of stock options
|
-
|
21,394
|
65,596
|
|||||||
Stockholders'
capital contribution
|
-
|
-
|
500,000
|
|||||||
Proceeds
from issuance of common stock and warrants, net
|
-
|
28,970,915
|
67,751,035
|
|||||||
Proceeds
from issuance of preferred stock, net
|
-
|
-
|
16,759,596
|
|||||||
Net
cash provided by financing activities
|
-
|
28,992,309
|
85,076,227
|
|||||||
Net
increase (decrease) in cash and cash equivalents
|
(19,837,009
|
)
|
14,083,174
|
15,191,789
|
||||||
Cash
and cash equivalents, beginning of period
|
35,028,798
|
26,855,450
|
-
|
|||||||
Cash
and cash equivalents, end of period
|
$
|
15,191,789
|
$
|
40,938,624
|
$
|
15,191,789
|
||||
|
|
|
|
|||||||
Supplementary
disclosure of cash flow information:
|
||||||||||
Cash
paid for interest
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
|
|
|
||||||||
Cash
paid for income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
Supplementary
disclosure of noncash investing and financing
activities:
|
||||||||||
|
|
|
|
|||||||
Warrants
issued to placement agents and investors, in connection with
private
placement
|
$
|
-
|
$
|
5,432,793
|
$
|
20,208,217
|
||||
Preferred
stock conversion to common stock
|
$
|
-
|
$
|
-
|
$
|
16,759,596
|
||||
|
|
|
|
|||||||
Warrants
converted to common shares
|
$
|
-
|
$
|
-
|
$
|
17,844
|
Convertible Preferred Stock and Warrants
|
Stockholder's Equity (Deficit)
|
|||||||||||||||||||||||||||
Warrants to Purchase
|
||||||||||||||||||||||||||||
Series A
|
Series A Convertible
|
Deficit Accumulated
|
Total
|
|||||||||||||||||||||||||
Convertible Preferred Stock
|
Preferred Stock
|
Common Stock
|
Additional Paid-
|
During The
|
Stockholders' Equity/
|
|||||||||||||||||||||||
Shares
|
Amount
|
Warrants
|
Shares
|
Amount
|
in Capital
|
Warrants
|
Development Stage
|
(Deficit)
|
||||||||||||||||||||
Stockholders'
contribution,
|
|
|||||||||||||||||||||||||||
September
9, 2003
|
-
|
$
|
-
|
$
|
-
|
250,487
|
$
|
250
|
$
|
499,750
|
$
|
-
|
$
|
-
|
$
|
500,000
|
||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(160,136
|
)
|
(160,136
|
)
|
|||||||||||||||||
Balance
at December 31, 2003
|
-
|
-
|
-
|
250,487
|
250
|
499,750
|
-
|
(160,136
|
)
|
339,864
|
||||||||||||||||||
Issuance
of common stock
|
-
|
-
|
-
|
2,254,389
|
2,254
|
4,497,746
|
-
|
-
|
4,500,000
|
|||||||||||||||||||
Issuance
of common stock for services
|
-
|
-
|
-
|
256,749
|
257
|
438,582
|
-
|
-
|
438,839
|
|||||||||||||||||||
Fair
value of options/warrants
|
||||||||||||||||||||||||||||
issued
for nonemployee services
|
-
|
-
|
-
|
-
|
-
|
13,240
|
251,037
|
-
|
264,277
|
|||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,687,297
|
)
|
(5,687,297
|
)
|
|||||||||||||||||
Balance
at December 31, 2004
|
-
|
-
|
-
|
2,761,625
|
2,761
|
5,449,318
|
251,037
|
(5,847,433
|
)
|
(144,317
|
)
|
|||||||||||||||||
Issuance
of Series A convertible preferred
|
||||||||||||||||||||||||||||
stock
(net of expenses of $1,340,263 and
|
||||||||||||||||||||||||||||
warrant
cost of $1,682,863)
|
4,197,946
|
15,076,733
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Fair
value of warrants to purchase Series
|
||||||||||||||||||||||||||||
A
convertible preferred stock
|
-
|
-
|
1,682,863
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Issuance
of Common stock to EasyWeb
|
||||||||||||||||||||||||||||
Shareholders
|
-
|
-
|
-
|
189,922
|
190
|
(190
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Conversion
of Series A convertible
|
||||||||||||||||||||||||||||
preferred
stock @ $0.001 into $0.001
|
||||||||||||||||||||||||||||
common
stock on September 13, 2005
|
||||||||||||||||||||||||||||
at
an exchange ratio of .500974
|
(4,197,946
|
)
|
(15,076,733
|
)
|
(1,682,863
|
)
|
4,197,823
|
4,198
|
15,072,535
|
1,682,863
|
-
|
16,759,596
|
||||||||||||||||
Issuance
of common stock for options
|
-
|
-
|
-
|
98,622
|
99
|
4,716
|
-
|
4,815
|
||||||||||||||||||||
Fair
value of options/warrants issued for
|
||||||||||||||||||||||||||||
nonemployee
services
|
-
|
-
|
-
|
-
|
-
|
54,115
|
44,640
|
-
|
98,755
|
|||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(9,516,923
|
)
|
(9,516,923
|
)
|
|||||||||||||||||
Balance
at December 31, 2005
|
-
|
-
|
-
|
7,247,992
|
7,248
|
20,580,494
|
1,978,540
|
(15,364,356
|
)
|
7,201,926
|
||||||||||||||||||
Issuance
of common stock in private
|
||||||||||||||||||||||||||||
placement,
net of expenses $2,719,395
|
-
|
-
|
-
|
7,991,256
|
7,991
|
21,179,568
|
-
|
-
|
21,187,559
|
|||||||||||||||||||
Issuance
of warrants
|
-
|
-
|
-
|
-
|
-
|
-
|
13,092,561
|
-
|
13,092,561
|
|||||||||||||||||||
Issuance
of common stock for
|
||||||||||||||||||||||||||||
services
rendered
|
-
|
-
|
-
|
25,000
|
25
|
106,225
|
-
|
-
|
106,250
|
|||||||||||||||||||
Stock
based compensation for
|
||||||||||||||||||||||||||||
employees
|
-
|
-
|
-
|
-
|
-
|
2,776,408
|
-
|
-
|
2,776,408
|
|||||||||||||||||||
Issuance
of common stock due to
|
||||||||||||||||||||||||||||
exercise
of stock options
|
-
|
-
|
-
|
5,845
|
6
|
25,186
|
-
|
-
|
25,192
|
|||||||||||||||||||
Issuance
of common stock due to
|
||||||||||||||||||||||||||||
exercise
of stock warrants
|
-
|
-
|
-
|
2,806
|
3
|
(3
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(17,856,919
|
)
|
(17,856,919
|
)
|
|||||||||||||||||
Balance
at December 31, 2006
|
-
|
-
|
-
|
15,272,899
|
15,273
|
44,667,878
|
15,071,101
|
(33,221,275
|
)
|
26,532,977
|
||||||||||||||||||
Issuance
of common stock in private
|
||||||||||||||||||||||||||||
placement,
net of expenses $1,909,090
|
-
|
-
|
-
|
5,910,049
|
5,910
|
23,532,212
|
-
|
-
|
23,538,122
|
|||||||||||||||||||
Issuance
of warrants
|
-
|
-
|
-
|
-
|
-
|
-
|
5,432,793
|
-
|
5,432,793
|
|||||||||||||||||||
Stock-based
compensation for employees
|
-
|
-
|
-
|
-
|
-
|
1,318,096
|
-
|
-
|
1,318,096
|
|||||||||||||||||||
Stock-based
compensation for non-employee
|
-
|
-
|
-
|
-
|
-
|
120,492
|
-
|
-
|
120,492
|
|||||||||||||||||||
Issuance
of common stock due to
|
||||||||||||||||||||||||||||
exercise
of stock options
|
-
|
-
|
-
|
46,016
|
46
|
35,543
|
-
|
-
|
35,589
|
|||||||||||||||||||
Issuance
of restricted stock
|
-
|
-
|
-
|
70,000
|
70
|
(70
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(26,608,246
|
)
|
(26,608,246
|
)
|
|||||||||||||||||
Balance
at December 31, 2007
|
-
|
-
|
-
|
21,298,964
|
21,299
|
69,674,151
|
20,503,894
|
(59,829,521
|
)
|
30,369,823
|
||||||||||||||||||
Stock-based
compensation for employees
|
-
|
-
|
-
|
-
|
-
|
1,351,541
|
-
|
-
|
1,351,541
|
|||||||||||||||||||
Issuance
of restricted stock
|
-
|
-
|
-
|
100,000
|
100
|
(100
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Cancellation
of restricted stock
|
(25,000
|
)
|
(25
|
)
|
25
|
-
|
-
|
-
|
||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(20,668,349
|
)
|
(20,668,349
|
)
|
|||||||||||||||||
Balance
at September 30, 2008 (unaudited)
|
-
|
$
|
-
|
$
|
-
|
21,373,964
|
$
|
21,374
|
$
|
71,025,617
|
$
|
20,503,894
|
$
|
(80,497,870
|
)
|
$
|
11,053,015
|
1.
|
BASIS
OF PRESENTATION AND
OPERATIONS
|
2.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
2.
|
RECENT
ACCOUNTING
PRONOUNCEMENTS…CONTINUED
|
3.
|
STOCK-BASED
COMPENSATION AND STOCK OPTION
PLAN
|
|
Three months
|
Three months
|
Nine months
|
Nine months
|
|||||||||
|
ended September 30, 2008
|
ended September 30, 2007
|
ended September 30, 2008
|
ended September 30, 2007
|
|||||||||
|
|
|
|
|
|||||||||
Research
and development, including costs of research contracts
|
$
|
115,472
|
$
|
139,696
|
$
|
500,440
|
$
|
511,954
|
|||||
General
and administrative
|
265,488
|
203,601
|
851,101
|
567,094
|
|||||||||
Share
based compensation expense before tax
|
380,960
|
343,297
|
1,351,541
|
1,079,048
|
|||||||||
Income
tax benefit
|
-
|
-
|
-
|
-
|
|||||||||
Net
compensation expense
|
$
|
380,960
|
$
|
343,297
|
$
|
1,351,541
|
$
|
1,079,048
|
3.
|
STOCK-BASED
COMPENSATION AND STOCK OPTION
PLAN…CONTINUED
|
|
Number
of
Shares
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding,
January 1, 2008
|
2,797,000
|
$
|
3.81
|
||||||||||
Granted
|
172,000
|
2.63
|
|||||||||||
Exercised
|
—
|
—
|
|||||||||||
Cancelled
|
217,330
|
4.37
|
|
|
|||||||||
Outstanding,
September 30, 2008
|
2,751,670
|
$
|
3.69
|
7.79
|
$
|
436,531
|
|||||||
Options
exercisable, September 30, 2008
|
1,553,279
|
$
|
3.70
|
6.92
|
$
|
432,531
|
3.
|
STOCK-BASED
COMPENSATION AND STOCK OPTION
PLAN…CONTINUED
|
|
Restricted
Stock
|
Weighted-
Average Grant
Date Fair Value
|
|||||
Non-vested
at January 1, 2008
|
70,000
|
$
|
2.73
|
||||
Granted
|
100,000
|
3.25
|
|||||
Vested
|
—
|
—
|
|||||
Canceled
|
25,000
|
2.73
|
|||||
Non-vested
at September 30, 2008
|
145,000
|
$
|
3.09
|
4.
|
INCOME
TAXES
|
|
·
|
Darinaparsin
is an organic arsenic compound covered by issued patents and pending
patent applications in the U.S. and in foreign countries. A form
of
commercially available inorganic arsenic (arsenic trioxide [Trisenox
®];
“ATO”) has been approved in the United States and the European Union for
the treatment of acute promyelocytic leukemia (“APL”), a precancerous
condition. ATO is on the compendia listing for the therapy of multiple
myeloma, and has been studied for the treatment of various other
cancers.
Nevertheless, ATO has been shown to be toxic to the heart, liver,
and
brain, which limits its use as an anti-cancer agent. ATO carries
a “black
box” warning for ECG abnormalities since arsenic trioxide has been shown
to cause QT interval prolongation and complete atrioventricular block.
QT
prolongation can lead to a torsade de pointes-type ventricular arrhythmia,
which can be fatal. Inorganic arsenic has also been shown to cause
cancer
of the skin and lung in humans. The toxicity of arsenic is generally
correlated to its accumulation in organs and tissues. Our preclinical
and
clinical studies to date have demonstrated that darinaparsin is
considerably less toxic than inorganic arsenic, particularly with
regard
to cardiac toxicity. In
vitro
testing of darinaparsin using the National Cancer Institute’s human cancer
cell panel detected activity against lung, colon, brain, melanoma,
ovarian, and kidney cancer. Moderate activity was detected against
breast
and prostate cancer. In addition to solid tumors, in
vitro
testing in both the National Cancer Institute’s cancer cell panel and
in
vivo
testing in a leukemia animal model demonstrated substantial activity
against hematological cancers (cancers of the blood and blood-forming
tissues) such as leukemia, lymphoma, myelodysplastic syndromes, and
multiple myeloma. In ongoing in
vitro
studies, the activity of darinaparsin against B-cell, T-cell, and
NK-cell
Non-Hodgkin’s Lymphoma cell lines is being investigated. Preliminary
results indicate significant activity against the HuT 78 cutaneous
T-cell
lymphoma, the NK-G2MI natural killer-cell NHL, KARPAS-299 T-cell
NHL,
SU-DHL-8 B-cell NHL, SU-DHL-10 B-cell NHL and SU-DHL-16 B-cell NHL
cell
lines. Preclinical studies have also established anti-angiogenic
properties of darinaparsin, provided support for the development
of an
oral form of the drug, and established synergy of darinaparsin in
combination with other approved anti-cancer
agents.
|
|
|
Phase
I testing of the intravenous form of darinaparsin in solid tumors
and
hematological cancers has been completed. The Company has reported
clinical activity and, importantly, a safety profile from these studies
as
predicted by preclinical results. The Company is nearing completion
of
Phase II studies in advanced myeloma, in certain other hematological
cancers, and primary liver cancer. In addition, the Company has recently
initiated two Phase I studies with an oral form of darinaparsin.
Preliminary favorable results from the trial with IV-administered
darinaparsin in hematologic cancers have been reported. Initial study
results indicate efficacy and a favorable safety profile in various
types
of blood cancers. In the ongoing Phase I trials, preliminary reported
data
in solid tumors indicate the oral form is active and well tolerated.
The
Company is actively seeking a partner or partners, or other sources
of
funding, to progress both the IV and oral programs into phase II
study in
particular sub-types of non-Hodgkin’s lymphoma. If we cannot find a
partner to fund the development of either one or both forms of
darinaparsin, we would intend to complete the ongoing studies which
are
included in the Company’s current estimate of expenses and then
discontinue the development program for darinaparsin.
|
|
|
|
|
·
|
Palifosfamide,
or isophosphoramide mustard (“IPM”), is the active metabolite of
ifosfamide, a compound chemically related to cyclophosphamide. Patent
applications covering proprietary forms of palifosfamide for
pharmaceutical composition and method of use have been filed in the
U.S.
and internationally. Like cyclophosphamide and ifosfamide, palifosfamide
is an alkylating agent. The Company believes that cyclophosphamide
is the
most widely used alkylating agent in cancer therapy, with significant
use
in the treatment of breast cancer and non-Hodgkin’s lymphoma. Ifosfamide
has been shown to be effective at high doses in the treatment of
sarcoma
and lymphoma, either by itself or in combination with other anticancer
agents. Ifosfamide is approved by the U.S. Food and Drug
Administration ("FDA") as a treatment for testicular cancer while
ifosfamide-based treatment is a standard of care for sarcoma, although
it
is not licensed for this indication by the U.S. FDA. Preclinical
studies
have shown that palifosfamide has activity against leukemia and solid
tumors. These studies also indicate that palifosfamide may have a
better
safety profile than ifosfamide or cyclophosphamide because it does
not
appear to produce known toxic metabolites, such as acrolein and
chloroacetaldehyde. Acrolein, which is toxic to the kidneys and bladder,
can mandate the administration of a protective agent called mesna,
which
is inconvenient and expensive. Chloroacetaldehyde is toxic to the
central
nervous system, causing “fuzzy brain” syndrome for which there is
currently no protective measure. Similar toxicity concerns pertain
to
high-dose cyclophosphamide, which is widely used in bone marrow and
blood
cell transplantation. Palifosfamide has evidenced activity against
ifosfamide- and/or cyclophosphamide-resistant cancer cell lines.
Also in
preclinical cancer models, encouraging results have been obtained
with
palifosfamide in combination with doxorubicin, an agent approved
to
treat sarcoma.
|
|
|
|
|
|
Following
Phase I study, Phase II testing of the intravenous form of palifosfamide
as a single agent to treat advanced sarcoma has been completed. In
both
Phase I and Phase II testing, palifosfamide has been administered
without
the “uroprotectant” mesna, and the toxicities associated with acrolein and
chloroacetaldehyde have not been observed. With an earlier form of
palifosfamide that has been recently substituted with a new form,
kidney
toxicity (Fanconi’s Syndrome) and acute renal failure were reported
primarily at doses significantly higher than the dose currently used
in
clinical trials. In clinical study to date with the new form, there
have
been no reports of kidney toxicity and palifosfamide has been otherwise
well tolerated. The Company reported clinical activity of palifosfamide
when used alone in the Phase II study addressing advanced sarcoma.
Following review of the preclinical combination studies, clinical
data,
and discussion with sarcoma experts, the Company initiated a Phase
I study
of palifosfamide in combination with doxorubicin in patients with
soft
tissue sarcoma. In light of the reported favorable phase II clinical
activity data and with the combination of palifosfamide with doxorubicin
well tolerated in the phase I trial (enrollment completed, study
ongoing),
the Company has initiated a Phase II randomized controlled trial
to
compare doxorubicin plus palifosfamide to doxorubicin alone in patients
with front and second-line soft tissue sarcoma. Data from this
trial are expected to shape a Phase III trial in the same setting.
The
Company is also developing an oral form of palifosfamide to be studied
clinically following completion of additional preclinical studies
and with
further data from the IV trials. Importantly, Orphan Drug Designation
for
palifosfamide has been obtained in both the United States and the
European
Union for the treatment of soft tissue sarcomas.
|
|
·
|
Indibulin
is a novel, orally available small molecular-weight inhibitor of
tubulin polymerization that was acquired from Baxter Healthcare and
is the
subject of numerous patents worldwide, including the United States,
the
European Union and Japan. The microtubule component, tubulin, is
one of
the more well established drug targets in cancer. Microtubule inhibitors
interfere with the dynamics of tubulin polymerization, resulting
in
inhibition of chromosome segregation during mitosis and consequently
inhibition of cell division. A number of marketed IV anticancer drugs
target tubulin, such as the taxane family members, paclitaxel (Taxol
®,
Abraxane ®),
docetaxel (Taxotere ®)
,
and the Vinca
alkaloid family members, vincristine and vinorelbine. This class
of agents
is typically the mainstay of therapy in a wide variety of indications.
In
spite of their effectiveness, the use of these drugs is associated
with
significant toxicities, notably peripheral neurotoxicity.
Preclinical
studies with indibulin demonstrate significant and broad antitumor
activity, including activity against taxane-refractory cell lines.
The
cytotoxic activity of indibulin was demonstrated in several rodent
and
human tumor cell lines derived from prostate, brain, breast, pancreas,
lung, ovary, and cervical tumor tissues and in rodent tumor and human
tumor xenograft models. In addition, indibulin was effective against
multidrug resistant tumor cell lines (breast, lung, and leukemia)
both
in
vitro
and in
vivo.
Indibulin is potentially safer than other tubulin inhibitors. No
neurotoxicity has been observed at therapeutic doses in rodents and
in the
ongoing Phase I trials. Indibulin has also demonstrated synergy with
approved anti-cancer agents in preclinical studies. The availability
of an
oral formulation of indibulin creates significant commercial opportunity
because no oral formulations of paclitaxel or related compounds are
currently on the market in the United States.
Indibulin
has completed a Phase I trial in Europe and two additional Phase
I trials
are nearing completion in the U.S. in patients with advanced solid
tumors.
The Company has reported signs of clinical activity at well-tolerated
doses using a continuous dosing scheme without the development of
clinically relevant peripheral neuropathy. Following encouraging
results
obtained with indibulin in combination with erlotinib, and 5-FU in
preclinical models, two Phase I/II combination studies have been
initiated with Tarceva® and Xeloda®. Preclinical work to explore dose
dense and metronomic dosing in the clinical setting are progressing.
|
·
|
Clinical
trial expenses, including the costs incurred with respect to the
conduct
of clinical trials for palifosfamide and
indibulin;
|
·
|
Fees
and milestone payments required under the license agreements relating
to
our existing product candidates;
|
·
|
Costs
related to the scale-up and the manufacture of palifosfamide and
indibulin;
|
·
|
Rent
for our facilities; and
|
·
|
General
corporate and working capital, including general and administrative
expenses.
|
|
·
|
Changes
in the focus and direction of our development
programs;
|
|
·
|
Competitive
and technical advances;
|
|
·
|
Costs
associated the development of palifosfamide and indibulin and the
further
financing of darinaparsin development by a partner;
and
|
|
·
|
Costs
of filing, prosecuting, defending and enforcing any patent claims
and any
other intellectual property rights, or other
developments.
|
Payments due by Period
|
|||||||||||||||||||
|
Total
|
2009
|
2010
|
2011
|
2012
|
2013 and
thereafter
|
|||||||||||||
Operating
leases
|
$
|
1,184,362
|
$
|
471,026
|
$
|
350,804
|
$
|
186,188
|
$
|
176,344
|
—
|
Exhibit
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Securities Exchange Act Rule
13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Securities Exchange Act Rule
13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
ZIOPHARM
ONCOLOGY, INC.
|
|
|
|
|
Date: October
30, 2008
|
By:
|
/s/ Jonathan
Lewis
|
|
|
Jonathan
Lewis, M.D., Ph.D.
Chief
Executive Officer
(Principal
Executive Officer)
|
Date:
October 30, 2008
|
By:
|
/s/ Richard
Bagley
|
|
|
Richard
Bagley
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
Exhibit
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Securities Exchange Act Rule
13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Securities Exchange Act Rule
13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of ZIOPHARM Oncology,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
October 30, 2008
|
|
/s/
Jonathan
Lewis
|
Jonathan
Lewis, M.D., Ph.D.
Principal
Executive Officer
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of ZIOPHARM Oncology,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
October 30, 2008
|
|
/s/
Richard
E. Bagley
|
Richard
E. Bagley
Principal
Financial Officer
|
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
/s/
Jonathan
Lewis
|
Jonathan
Lewis, M.D., Ph.D.
Principal
Executive Officer
October
30, 2008
|
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
/s/
Richard
E. Bagley
|
Richard
E. Bagley
Principal
Financial Officer
October
30, 2008
|