UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2013
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________________ to ________________.
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Commission file number 000-27239
TAPIMMUNE INC.
(Exact name of registrant as specified in its charter)
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Nevada
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88-0277072
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(State or other jurisdiction of incorporation of organization)
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(I.R.S. Employer Identification No.)
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1551 Eastlake Avenue East, Suite 100
Seattle, Washington
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98102
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(Address of Principal Executive Offices)
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(Zip Code)
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(206) 504-7278
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer o Accelerated filer o
Non-accelerated filer o (do not check if a smaller reporting company) Smaller reporting company T
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the registrant’s common equity was last sold, as of June 28, 2013 (the last day of the registrant’s most recently completed second fiscal quarter) was approximately $3,423,048.
The registrant had 16,058,815 shares of common stock outstanding as of April 10, 2014.
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties outlined in this annual report. Any of these items may cause our actual results to differ materially from any forward-looking statement made in this annual report. Forward-looking statements in this annual report include, among others, statements regarding our capital needs, business plans and expectations.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Some of the risks and assumptions include:
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our need for additional financing;
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our limited operating history;
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our history of operating losses;
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our lack of insurance coverage;
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the competitive environment in which we operate;
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changes in governmental regulation and administrative practices;
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our dependence on key personnel;
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conflicts of interest of our directors and officers;
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our ability to fully implement our business plan;
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our ability to effectively manage our growth; and
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other regulatory, legislative and judicial developments.
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We advise the reader that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. The forward-looking statements in this annual report are made as of the date of this annual report and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.
AVAILABLE INFORMATION
TapImmune Inc. files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the SEC at the SEC’s Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.
REFERENCES
As used in this annual report: (i) the terms “we”, “us”, “our”, “TapImmune” and the “Company” mean TapImmune Inc.; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the United States Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the United States Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.
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TABLE OF CONTENTS
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PART I
ITEM 1.BUSINESS
Company Overview
Our Cancer Vaccines
TapImmune is a clinical-stage immunotherapy company specializing in the development of innovative peptide and gene-based immunotherapeutics and vaccines for the treatment of cancer and infectious disease. The Company combines a set of proprietary technologies to improve the ability of the cellular immune system to destroy diseased cells. These are peptide antigen technologies and DNA expression technologies, Polystart™ and TAP. To enhance shareholder value and taking into account development timelines, the Company plans to focus on advancing its clinical programs including our HER2/neu peptide antigen program and our Folate Alpha breast and ovarian trials into Phase II. In parallel, we plan to complete the preclinical development of our Polystart™ technology and to continue to develop the TAP-based franchise as an integral component of our prime-and-boost vaccine methodology.
Unlike other vaccine technologies that narrowly address the initiation of an immune response, TapImmune's ("Prime" and "Boost") approach broadly stimulates the cellular immune system by enhancing the function of killer T-cells and helper T-cells. Our peptide vaccine technology may be coupled with our recently developed in-house Polystart™ nucleic acid-based technology designed to enhance T-cell antigen presentation on the surface of appropriate populations of presenting cells. Our Polystart™ technology directs the translation and subsequent endogenous natural processing of antigenic T-cell epitopes contained within a poly-antigen array(s) at four times the level of conventional comparator systems, thereby providing a greater signal/propensity to attract and directly interact with a patient’s T-cells. Accordingly, elevated levels of target specific cell surface presented T-cell antigen(s) are correspondingly expected to more effectively engage, activate and expand antigen specific killer T-cell population(s) that can then seek out and destroy target cells (e.g., cancer cells). Moreover, our versatile Polystart™ technology is designed to express either Class I killer or Class II helper T-cell antigenic epitopes. Our nucleic acid-based systems can also incorporate “TAP” which stands for Transporter associated with Antigen Presentation.
We are currently focusing on the clinical development and testing of our product candidates. In this regard, we have two Phase I studies being conducted at the Mayo Clinic (Rochester, MN) which are designed to evaluate the safety and immune response(s) of a set of proprietary Her2/neu antigens for a Her2/neu breast cancer vaccine and Folate Receptor Alpha for breast and ovarian cancer respectively. TapImmune has the exclusive option to license each of these technologies upon the completion of each Phase I. In addition, we plan to initiate two Phase II studies in Q4 of 2014. The first of which will include a novel Class I antigen in a Phase Ib/II study, providing a vaccine for Her2/neu breast cancer that can stimulate both killer T-cells and helper T-cells. The second Phase II trial is expected to include our folate alpha receptor epitopes and will likely focus on ovarian cancer, which we believe will allow us to proceed with an orphan drug application pending discussion with the FDA.
The Company plans to incorporate the pre-clinical development of Polystart™ as a boost strategy for Her2/neu breast cancer, colorectal cancer, ovarian cancer and triple negative breast cancer.
The current standard therapies for our initial targets in cancer include surgery, radiation therapy and chemotherapy. However, we believe that these treatments are not precise in targeting only cancerous cells and often fail to remove or destroy all of the cancer. The remaining cancer cells may then grow into new tumors, which can be resistant to further chemotherapy or radiation, which may result in death. In the United States, deaths from cancer are second only to cardiovascular deaths. Our candidate breast cancer, colorectal cancer and ovarian cancer immunotherapeutic vaccines are being developed for use in this setting as an adjuvant treatment to prevent recurrent disease.
Management strongly believes that the comprehensive scientific underpinnings of our overall approach, to elicit the production of both helper T-cells and killer T-Cells, will provide the Company with highly competitive product candidates for the treatment of Her2/neu positive breast cancer, colorectal cancer, ovarian cancer and triple negative breast cancer.
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Our Infectious Disease Program
Regarding our programs for the development of vaccines aimed at viral pandemics/biodefense, we believe that our ongoing collaborations with the Mayo Clinic have progressed well and studies on the immunogenicity of novel smallpox antigens in mice treated with both antigens and TAP expression vectors are ongoing. We plan to complete animal efficacy and human safety studies through non-dilutive grant funding in collaboration with Dr. Greg Poland and colleagues at the Mayo Clinic and anticipate that further development will be completed through strategic corporate partnerships. The use of non-dilutive grant funding to progress this area allows the Company to focus the majority of its internal resources on Her2/neu breast, ovarian and triple negative cancers.
General
The facilities at 1551 Eastlake Avenue, Seattle have exceeded our expectations and allowed us to continue to recruit top-class scientific staff while at the same time effectively leverage world-class resources made available to us and manage our cash flow. Our technical staff has proven experience and relevant expertise in the areas of molecular biology, cellular biology and immunology/oncology. Our small core team has allowed us to establish in-house technical expertise in molecular biology (expression vector development) and immunology to underpin our current and future development projects, and to optimally work with external collaborators/oncologists. It has also allowed us to make significant progress in the refinement and focus of clinical programs to take advantage of new antigens, the emerging field of vaccinomics and vaccine development strategies. In addition, it has allowed us to start generating new intellectual property (IP), adding to our core TAP IP and antigen specific IP from the Mayo Clinic for which we have either licensed outright or have exclusive options to license.
Over the past two quarters, we have, in a challenging financing climate, raised sufficient working capital to fund and progress our operations and significantly restructured our balance sheet and capital structure. We believe that we continue to make good progress with the resources available to us. With the start of clinical programs and our focus on securing non-dilutive financing from a number of sources, management is confident that our current pathway will secure longer term capital to finance and accelerate our activities. The strength of our science and development approaches is becoming more widely appreciated, particularly as our clinical program generates data and as we embrace additional collaborations with leading institutions and corporations.
While the pathway to successful product development takes time and significant resources, we believe that we have put in place the technical and corporate fundamentals for success. The strength of our product pipeline gives us a unique opportunity to make a major contribution to global health care.
Company History
We currently trade on the OTC Bulletin Board under the symbol “TPIV”.
We were incorporated under the laws of the State of Nevada in 1991 under the name “Ward’s Futura Automotive Ltd”. We changed our name a number of times since 1991 and, in July 2002, we completed the acquisition of GeneMax Pharmaceuticals Inc. (“GeneMax Pharmaceuticals”), a Delaware corporation, in a reverse merger and changed our name to “GeneMax Corp”. As a result of this transaction, the former stockholders of GeneMax Pharmaceuticals then owned 75% of the total issued and outstanding shares of GeneMax Corp. GeneMax Pharmaceuticals is now a wholly owned subsidiary of TapImmune, and GeneMax Pharmaceuticals Canada Inc. (“GP Canada”), a British Columbia corporation, is a wholly owned subsidiary of GeneMax Pharmaceuticals. On June 28, 2007, we approved a name change to TapImmune Inc.
The Immunotherapy Industry for Cancer
Management believes that there is a critical need for more effective cancer therapies. Given the massive unmet need in the treatment of metastatic cancer combined with our process for harnessing the body’s own immune system to treat certain cancers, we believe that we are positioned to be a leading contributor to solving this problem.
The human immune system appears to have the potential to clear cancers from the body, based on clinical observations that some tumors spontaneously regress when the immune system is activated. Most cancers are not very “immunogenic”, however, meaning that the cancers are not able to induce an immune response because they no longer express sufficient levels of key proteins on their cell surface, known as Major Histocompatability Class I or MHC Class I proteins. In healthy cells, these proteins provide the information to the immune system that defines whether the cell is healthy or, in the case of cancer or viral infection, abnormal. If the MHC Class I proteins signal that the cells are abnormal, then the immune system’s T-cells are activated to attack and kill the infected or malignant cell.
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In many solid cancer tumors, the TAP protein system does not function and, therefore, the immune system is not stimulated to attack the cancer. Management believes that although a number of cancer therapies have been developed that stimulate the immune system, these approaches have often proven ineffective because the cancers remain invisible to the immune system due to this apparent lack of or low expression of the TAP protein.
By restoring TAP expression to TAP-deficient cells, the MHC Class I protein peptide complexes could signal the immune system to attack the cancer. A strategic vision of TapImmune is to restore the TAP function within cancerous cells, thus making them immunogenic, or more “visible” to cancer fighting immune cells. Management believes that this cancer vaccine strategy will provide a commercially viable therapeutic approach that addresses this problem of “non-immunogenicity” of cancer.
In addition to our focus on the cancer vaccines, with adequate funding, we will also pursue the development of prophylactic vaccines against infectious microbes by partnering with other vaccine developers in the infectious disease market.
TapImmune’s Target Market and Strategy
We will focus our product development in oncology, both, alone and with corporate partners and/or collaborators including the Mayo Clinic for Her2/neu positive Breast Cancer, Folate Alpha Ovarian and Breast Cancer and smallpox. The diversity of cancer types and their overall prevalence create a large need for new and improved treatments. Management believes that there is a significant market opportunity for a cancer treatment that utilizes the highly specific defense mechanisms of the immune system to attack cancers. The goal of TapImmune management is to have the FDA approve our cancer vaccines within the next few years so that we can secure a portion of this market.
With the required funding in place, we will support our infectious disease partnership, with the Mayo Clinic and will look to non-dilutive financing to fund infectious disease projects.
Management also believes that our Polystart™ expression vector approach will provide a flexible and unique platform for the creation of new vaccines that can rapidly respond to emerging viral threats/bioterrorism in addition to enhancing the efficacy of current vaccines in the treatment of infectious disease. If successful, this platform technology would be a significant advance in vaccine development and it will be a key business development strategy to pursue additional partnerships and joint research and/or development ventures with vaccine manufacturers and pharmaceutical companies to bring new and improved vaccines to market. In addition to a broad range of oncological treatments, this strategy includes the development of vaccines for pandemic diseases and for bioterrorism threats. Management believes that our adjuvant will increase the potency of many of the currently available vaccines and lead to the creation of better, more effective new vaccines, thereby allowing us to participate in this large market through novel new products and in combination with existing vaccines.
Our business strategy in cancer is to take products through Phase II clinical trials and then partner with pharmaceutical marketing organizations ahead of Phase III trials. In the infectious disease/biodefense area our business strategy is to seek joint research and development partnerships on our infectious disease platform with companies seeking to expand their product portfolios.
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The global market for infectious disease based vaccines is dominated by five companies—Merck, GlaxoSmithKline, Sanofi Pasteur (the vaccines division of Sanofi SA), Pfizer Inc. and Novartis—with Pfizer, GlaxoSmithKline, Sanofi, and Novartis collectively accounting for approximately 74% of the market (Source: Transparency Market Research’s Global Vaccine Market Analysis and Forecast 2011-2016). This market is estimated at roughly $30 billion worldwide, with the U.S. contributing approximately $20 billion. Importantly, there still exist significant development opportunities in the global vaccine market, as there are more than 300 infectious diseases yet effective prophylactic therapies for only approximately 15% of these (Source: The Life Sciences Report’s “Vaccine Therapies Hold Promise for Investors: Stephen Dunn,” April 12, 2012). Management believes that ultimately our combined technology Platform(s) will have the potential to increase the potency of many of the currently available vaccines and lead to the creation of better, more effective new vaccines, thereby allowing us to participate in this large market through novel new products and in combination with existing vaccines.
Research and Development Efforts
We direct our research and development efforts towards the advancement of immunotherapeutic and prophylactic vaccine products for the treatment of cancer and protection against pathogenic microbes respectively, using our combined proprietary technologies, (1) relevant killer plus helper T-cell peptide antigens, (2) Polystart™ nucleic acid-based expression system(s), and (3) TAP. We have focused our efforts initially on the development of a therapeutic vaccine for applications in cancer treatment, while concomitantly demonstrating the breadth of our combined technology platform for the development of prophylactic vaccines. Our product development efforts are opportunistically designed to consider combinations with approved and emerging products in both cancer therapeutics and prophylactic vaccines against microbes. This approach allows us to pursue our own internal product development while positioning us to enter into multiple partnerships and licensing agreements. We have made significant progress in the development of a nucleic acid-based (Co-linear Polystart™) technology which directs the enhanced synthesis of a linear peptide antigen array comprising multiple proprietary T-cell epitopes (CD4 and CD8). In addition, the technology also directs the synthesis of the protein TAP1 associated with the transport of MHC Class I epitopes to the surface of cells. The expression or functioning of this protein is often lowered in tumor cells or virally infected cells and its replacement can enhance antigen presentation. Recent work on this novel expression vector platform has demonstrated that T-cells recognize cell surface presented T-cell peptide epitopes confirming that multiple individual peptides are effectively and functional processed from a linear peptide antigen array and that this leads to peptide specific T-cell killing.
Products and Technology in Development
Clinical
For perspective, the Company notes that clinical trials to support new drug applications are typically conducted in three sequential phases, although the phases may overlap. During Phase I there is an initial introduction of the therapeutic candidate into healthy human subjects or patients. For an immunotherapeutic/vaccine in particular, Phase I studies are generally conducted in cancer patients that have previously received one or another current standard of care and include the measurement of cellular immune responses. Phase II usually involves studies in a more focused patient population in order to carefully assess clinical activity of the drug in specific targeted indications, dosage tolerance (i.e., dose escalation) and optimal dosage, while continuing to identify possible adverse effects and safety risks. If the therapeutic candidate is found to be potentially effective and to have an acceptable safety profile in Phase II evaluations, Phase III trials are undertaken to further demonstrate clinical efficacy and to further test for safety within an expanded patient population at geographically dispersed clinical trial sites
Phase I Human Clinical Trials – Her2/neu+ Breast Cancer – Mayo Clinic
On June 1, 2010, we signed an exclusive licensing option agreement with the Mayo Clinic, Rochester MN for clinical development of a new Her2/neu breast cancer vaccine technology. An IND for Phase I human clinical trial on the Her2/neu cancer vaccine in collaboration with the Mayo Clinic was allowed by the FDA in July, 2011, and the Mayo IRB approved the trial on May 4, 2012. This trial is fully enrolled and closed, and patient dosing has been completed. All patients have received the Company’s vaccine composition, and interim safety analysis on the first six patients is complete and shown to be safe. In addition, each of the first six patients treated, developed specific T-cell immune responses to the antigens in the vaccine composition proving a solid case for advancement to Phase II in 2014. An additional secondary endpoint incorporated into this Phase I Trial will be a two year follow on recording time to disease recurrence in the participating breast cancer patients. The assessment of vaccine safety (primary endpoint) and evaluation of immunogenicity (secondary endpoint) for this trial are currently scheduled for completion at the end of 2014.
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As this Phase I Trial progresses, we plan to add a Class I peptide, licensed from the Mayo Clinic (April 16, 2012), to the four Class II peptides in the context of a Phase I(b)/II clinical trial. Management believes that the combination of Class I and Class II Her2/neu antigens, gives us the leading Her2/neu vaccine platform. Therefore a key goal in 2014 is to progress the Her2/neu vaccine into the above mentioned Phase 1(b)/II Clinical Trial. The cost of funding our current Phase I clinical program in Her2/neu breast cancer at the Mayo Clinic is approximately $850,000 and is mostly paid off as of this report.
Phase I Human Clinical Trials – Folate Alpha Breast and Ovarian Cancer – Mayo Clinic
On March 19, 2014, the Company announced the signing of an exclusive option agreement for a set of unique peptide epitopes targeting Folate Receptor Alpha in both breast cancer and ovarian cancer.
Folate receptor alpha is expressed in nearly 50% of breast cancers and in addition, over 95% of ovarian cancers, for which the only treatment options are surgery and chemotherapy, leaving a very important and urgent clinical need for a new therapeutic. Time to recurrence is relatively short for this type of cancer and survival prognosis is extremely poor after recurrence. In the United States alone, there are approximately 30,000 ovarian cancer patients newly diagnosed every year.
A 24 patient Phase I clinical trial is currently underway. The trial is fully enrolled and closed, and Phase II advancement is expected and will be assessed in late 2014.
No serious adverse events have occurred to date and more information and immune response data will be made available over the course the trial. More information can be seen at:
http://clinicaltrials.gov/ct2/show/NCT01606241?term=folate+receptor+alpha&rank=1
Preclinical
Polystart™
TapImmune is initiating the development of a nucleic acid-based expression system that can be aligned as a prime and boost strategy with our peptide-based vaccine compositions. The nucleic acid-based platform may also represent a second stand-alone vaccine technology. The nucleic acid–based technology is termed “Polystart™. The Company’s Polystart™ technology was invented in-house and is therefore not subject to any licensing fees or downstream royalty payments. The Polystart™ technology composition can be administered in the form of a plasmid DNA or incorporated into a viral delivery system (RNA or DNA). The Polystart™ technology comprises two portions, one supporting high level of expression and the other a T-cell peptide antigen array (“PAA”). The antigens making up the PAA are naturally processed inside a patient’s own cells where they are then presented on the cell surface visible for T-cell recognition, activation and expansion. We have confirmed that the Polystart™/PAA technology works in preclinical studies in context with our smallpox vaccine candidate. However, it is important to understand that this is a platform technology which can be adapted to essentially any T-cell peptide antigen targeted indication, including Her2/neu. The Polystart™ technology combined with our peptide-based technology is an ideal opportunity for developing an effective prime plus boost vaccination methodology. The Company has filed a U.S. Provisional Patent Application around the Polystart™ technology.
We plan to develop or out-license our technologies for the creation of enhanced anti-viral vaccines, such as for smallpox and other viral diseases. In our smallpox collaboration, scientists at the Mayo Clinic will complete small animal studies in respect of a novel set of vaccinia virus peptide antigens within the next few months. The subsequent regulatory pathway for this product is to use the FDA’s “Animal Efficacy Rule” for completion of efficacy studies in primates followed by Phase I clinical studies on vaccine safety. We anticipate that we will complete these studies with a strategic partner involved in the Biodefense space.
We intend to progress our infectious disease programs with non-dilutive grant funding as well. In collaboration with the Vaccine Group at the Mayo Clinic we will continue development of our smallpox vaccine and to expand the use of our TAP platform to emerging pathogens that could be either pandemic or bioterrorist threats.
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Strategic Relationships
Mayo Foundation for Medical Education and Research
On May 26, 2010 we signed a Technology Option Agreement with the Mayo Foundation for Medical Education and Research, Rochester, MN, for the evaluation of Her2/neu peptide epitopes as antigens for a breast cancer vaccine. The agreement grants TapImmune an exclusive worldwide option to become the exclusive licensee of the technology after completion of Phase I clinical trials.
Following approval of the IND by the FDA in July, 2011, TapImmune and the Mayo Foundation executed a Sponsored Research Agreement for the clinical trial.
On May 4, 2012, Mayo IRB approval was confirmed and patient dosing started in August 2012. Interim safety analysis on the first five patients was completed successfully allowing continuation of the trial.
On July 24, 2010, we signed a Research and Technology License Option Agreement with the Mayo Foundation for Medical Education and Research, Rochester, MN, to evaluate novel smallpox peptide antigens. The Agreement grants TapImmune an exclusive worldwide option to become the exclusive licensee of the smallpox vaccine technology after research studies have been completed under the terms of the agreement. This project is progressing well with identification of several peptide antigens which could form the basis of a new vaccine for potential stockpiling. Its completion in Q4, 2014 will trigger the decision whether to proceed into primate studies.
On April 16, 2012, we announced an Exclusive Agreement with the Mayo Foundation for Education & Research, Rochester, MN, to License a proprietary MHC Class I Her2/neu antigen technology. This antigen was discovered in the laboratory of Dr. Keith Knutson at the Mayo Clinic. In contrast to Class I antigens in clinical testing this novel antigen is naturally produced in the intracellular proteasome and presented to T-cells as the MHC Class I peptide complex. Scientific details of this new work was presented by Andrea Henle of Dr. Knutson’s lab at the Annual Meeting of The American Association of Immunologists held in Boston, MA, May 2012 and by Mark Reddish, Head of Development at TapImmune at the Third Annual Cancer Vaccines and Active Immunity Summit, Boston, June 26, 2012. A peer-reviewed manuscript from the Knutson lab, which describes the science in detail, has been accepted for publication in Journal of Immunology.
Intellectual Property, Patents and Trademarks
Patents and other proprietary rights are vital to our business operations. We protect our technology through various United States and foreign patent filings, and maintain trade secrets that we own. Our policy is to seek appropriate patent protection both in the United States and abroad for its proprietary technologies and products. We require each of our employees, consultants and advisors to execute a confidentiality agreement upon the commencement of any employment, consulting or advisory relationship with us. Each agreement provides that all confidential information developed or made known to the individual during the course of the relationship will be kept confidential and not be disclosed to third parties except in specified circumstances. In the case of employees, the agreements provide that all inventions conceived of by an employee shall be our exclusive property.
Patent applications in the United States are maintained in secrecy until patents are issued. There can be no assurance that our patents, and any patents that may be issued to us in the future, will afford protection against competitors with similar technology. In addition, no assurances can be given that the patents issued to us will not be infringed upon or designed around by others or that others will not obtain patents that we would need to license or design around. If the courts uphold existing or future patents containing broad claims over technology used by us, the holders of such patents could require us to obtain licenses to use such technology.
Method of Enhancing Expression of MHC Class I Molecules Bearing Endogenous Peptides
On March 26, 2002, the United States Patent and Trademark Office issued US Patent No. 6,361,770 to the University of British Colombia for the use of TAP-1 as an immunotherapy against all cancers.
Method of Enhancing an Immune Response
U.S. patent No. 7,378,087, issued May 27 2008. The patent claims relate to methods for enhancing the immune response to tumor cells by introducing the TAP molecule into the infected cells. Patent applications are pending on other aspects of the Company’s technology
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Method of Identifying MHC Class I Restricted Antigens Endogenously Processed by a Secretory Pathway
On August 11, 1998, the U.S. Patent and Trademark Office issued US Patent No. 5,792,604 to UBC, being a patent for the use of bioengineered cell lines to measure the output of the MHC Class I restricted antigen presentation pathway as a way to screen for immunomodulating drugs.
Method of Enhancing an Immune Response
On October 27, 2011 The US Patent and Trademark Office issued Patent 7,994,146 entitled “Method of Enhancing an Immune Response”. The invention relates to a method of enhancing an immune response to an antigen by augmenting the level of TAP (Transporters Associated with Antigen Processing) molecule in a target cell bearing the antigen.
Infectious Disease (Mayo Collaboration, Poland/Kennedy)
U.S. Patent 7,622,120, entitled “Peptide Originating from Vaccinia Virus, issued Nov 24, 2009.
U.S. Patent Application 13/222,862 entitled “Vaccinia Virus Polypeptides” converted August 31, 2011.
Oncology (Mayo Collaboration, Knutson)
U.S. Patent Application 12/740562, entitled “HLA-DR Binding Peptides and Their Uses”; 371 date August 24, 2010 derived from International Application PCT/US2008/081799 filed October 30, 2008.
International Application PCT/US2013/026484 filed February 15, 2013, entitled “Methods and Materials for Generating CD8+ T Cells having the Ability to Recognize Cancer Cells Expressing a Her2/Neu Polypeptide”.
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PolyStart Technology (TapImmune Inc.)
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U.S. Provisional Application 61/954,588, entitled “Nucleic Acid Molecules Vaccine Compositions and Uses Thereof”, filed March 17, 2014
The Company has multiple patents and patent applications in association with its exclusive licenses and option agreements with Mayo Clinic providing many years of patent protection for its proprietary product candidates.
Management expects technology developments in the oncology industry to continue to occur at a rapid pace. Commercial developments by any competitors may render some or all of our potential products obsolete or non-competitive, which could materially harm the Company’s business and financial condition.
Competition
Management believes that a number of companies, which are developing various types of similar immunotherapies and therapeutic cancer vaccines to treat cancer, could be our major competitors including: Lion Biotechnology, Advaxis, Dendreon Corp., Genzyme Molecular Oncology, Immune Design, Oncothyreon, Celldex, BN Immunotherapeutics, Immunocellular, Galena, Antigen Express, Transgene S.A., and Bavarian Nordic.
Government Regulation
United States
The design, research, development, testing, manufacturing, labeling, promotion, marketing, advertising and distribution of drug products are extensively regulated by the FDA in the United States and similar regulatory bodies in other countries. The regulatory process is similar for a new drug application, or IND. The steps ordinarily required before a new drug may be marketed in the United States, which are similar to steps required in most other countries, include: (i) pre-clinical laboratory tests, pre-clinical studies in animals, formulation studies and the submission to the FDA of an initial IND; (ii) adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication; (iii) the submission of the IND to the FDA; and (iv) review by an FDA advisory committee and approval by the FDA.
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Pre-clinical tests include laboratory evaluation of product chemistry, preparation of consistent test batches of product to what is known as GLP, toxicology studies, animal pre-clinical efficacy studies and manufacturing pursuant to what is known as GMP. The results of pre-clinical testing are submitted to the FDA as part of an initial IND. After the filing of each initial IND, and assuming all pre-clinical results have been approved, a thirty-day waiting period is required prior to the commencement of clinical testing in humans. At any time during this thirty-day period or at any time thereafter, the FDA may halt proposed or ongoing clinical trials until the FDA authorizes trials under specified terms. The initial IND process may be extremely costly and substantially delay development of products. Moreover, positive results of pre-clinical tests will not necessarily indicate positive results in subsequent clinical trials.
After successful completion of the required clinical trials, a IND is generally submitted. The IND is usually reviewed by an outside committee consisting of physicians, scientists, and at least one consumer representative. The advisory committee reviews, evaluates and recommends whether the application should be approved, but the FDA is not bound by the recommendation of an advisory committee. The FDA may request additional information before accepting a IND for filing, in which case the application must be resubmitted with the additional information. Once the submission has been accepted for filing, the FDA or the advisory committee reviews the application and responds to the applicant. The review process is often extended by FDA requests for additional information or clarification. The FDA cites 24 months as the median time for IND review.
If the FDA evaluations of the IND and the manufacturing facilities are favorable, the FDA may issue an approval letter. An approval letter will usually contain a number of conditions that must be met in order to secure final approval of the IND and authorization of commercial marketing of the drug for certain indications. The FDA may also refuse to approve the IND or issue a not approval letter, outlining the deficiencies in the submission and often requiring either additional testing or information or withdrawal of the submission.
The manufacturers of approved products and their manufacturing facilities are subject to continual review and periodic inspections.
Approved drugs are subject to ongoing compliance requirements and identification of certain side effects after any of the drug products are on the market. This could result in issuance of warning letters, subsequent withdrawal of approval, reformulation of the drug product, and additional pre-clinical studies or clinical trials.
Canada
In Canada, the Therapeutic Products Directorate and the Biologics and Genetic Therapies Directorate of Health Canada ensure that clinical trials are properly designed and undertaken and that subjects are not exposed to undue risk. Regulations define specific Investigational New Drug Submission (or IND) application requirements, which must be complied with before a new drug can be distributed for trial purposes. The Directorates currently review the safety, efficacy and quality data submitted by the sponsor and approve the distribution of the drug to the investigator. The sponsor of the trial is required to maintain accurate records, report adverse drug reactions, and ensure that the investigator adheres to the approved protocol. Trials in humans should be conducted according to generally accepted principles of good clinical practice. Management believes that these standards provide assurance that the data and reported results are credible and accurate, and that the rights, integrity, and privacy of clinical trial subjects are protected.
Sponsors wishing to conduct clinical trials in Phases I to III of development must apply under a 30-day default system. Applications must contain the information described in the regulations, including: a clinical trial attestation; a protocol; statements to be contained in each informed consent form, that set out the risks posed to the health of clinical trial subjects as a result of their participation in the clinical trial; an investigator’s brochure; applicable information on excipients (delivery vehicles); and chemistry and manufacturing information.
The sponsor can proceed with the clinical trial if the Directorates have not objected to the sale or importation of the drug within 30 days after the date of receipt of the clinical trial application and Research Ethics Board approval for the conduct of the trial at the site has been obtained. Additional information is available on Health Canada’s website - www.hc-sc.gc.ca.
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Other Jurisdictions
Outside the United States and Canada, the Company’s ability to market drug products is contingent upon receiving marketing authorization from the appropriate regulatory authorities. Management believes that the foreign regulatory approval process includes all of the complexities associated with FDA approval described above. The requirements governing the conduct of clinical trials and marketing authorization vary widely from country to country. At present, foreign marketing authorizations are applied for at a national level, although within the European Union procedures are available to companies wishing to market a product in more than one member country.
Product Liability and Insurance
Once we are able to commence the sale of our products into the market, we will face the risk of product liability claims. Because we are not yet selling our products, we have not experienced any product liability claims to date and we do not yet maintain product liability insurance. Management intends to maintain product liability insurance consistent with industry standards upon commencement of the marketing and distribution. There can be no assurance that product liability claims will not exceed such insurance coverage limits, which could have a materially adverse effect on our business, financial condition or results of operations, or that such insurance will continue to be available on commercially reasonable terms, if at all.
Employees
TapImmune currently has two full-time employees. The management team is comprised of Dr. Glynn Wilson (Chief Executive Officer and Principal Executive Officer and Acting Principal Accounting Officer), and Dr. Robert Florkiewicz (Head of Research) together with a number of consultants, corporate advisors and scientific collaborators. Since May 7, 2012, TapImmune has not had Officers resident in British Columbia.
ITEM 1A.RISK FACTORS
We are not required to provide the information required by this item because we are a smaller reporting company.
ITEM 1B.UNRESOLVED STAFF COMMENTS
None.
ITEM 2.PROPERTIES
We do not own any real estate or other properties. Our registered office is located at 1551 Eastlake Ave East, Seattle, WA 98102. Our lease expired in January and we continue to rent laboratory and office space at this address on a month to month basis.
ITEM 3.LEGAL PROCEEDINGS
In May 2012, we issued what is now equal to 112,000 shares of our common stock to two consultants. We contested the validity of the issuances of this common stock based on our belief that the consultants did not perform the services agreed to under their respective consulting agreements. While we initially were able to delay the sale of the contested shares, we were not successful in clawing back the contested shares. A claim for perceived damages from Michael Gardner (one of the consultants) suffered as a result of our contesting the issuance under the consulting agreements has been filed in the Supreme Court of New York. He has based his claim for damages on the difference between market price at the time we were able to delay the sale of his shares and the market price at the time of the sale of all of his shares. As the result of a judicial decision in New York he received a bond payment of ($100,000) that the Company had used to secure a temporary restraining order against the issuance of stock to him. The company is pursuing litigation against Gardner through the American Arbitration Association (“Gardner Action”).
The law firm that we used to pursue the Gardner Action was awarded a judgment against us for $210,255 of unpaid legal fees (“G&S Judgment”). Shareholders of the Company acquired the G&S Judgment in full, converted that Judgment into shares of Company common stock and subsequently released the Company from any liability related thereto.
One of our suppliers, Fischer Scientific was awarded a judgment against us for $51,000 which is equal to the amount owed to them. We intend to settle that matter in Q2 of 2014.
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Management is not aware of any legal proceedings contemplated by any government authority or any other party involving the Company. As of the date of this Annual Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceeding. Management is not aware of any other legal proceedings pending or threatened against the Company.
ITEM 4.MINE SAFETY DISCLOSURE
Not Applicable
PART II
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ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Market Information
Our common stock is traded on the Over the Counter Bulletin Board (“OTCBB”) under the symbol “TPIV.OB” and on the Frankfurt and Berlin Stock Exchanges under the symbol “GX1A.” The listing on the Berlin Stock Exchange was done without the Company’s knowledge and consent.
The market for our common stock is limited, volatile and sporadic. The following table sets forth, for the periods indicated, the high and low bid prices of our common stock as reported on the OTCBB. The following quotations reflect inter-dealer prices, without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
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High Bid
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Low Bid
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Fiscal Year 2014
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March 31, 2014
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$ | 5.00 | $ | 1.50 | ||||
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Fiscal Year 2013
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December 31, 2013
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$ | 4.00 | $ | 1.00 | ||||
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September 30, 2013
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$ | 3.20 | $ | 11.00 | ||||
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June 30, 2013
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$ | 11.00 | $ | 3.00 | ||||
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March 31, 2013
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$ | 16.00 | $ | 10.00 | ||||
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Fiscal Year 2012
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December 31, 2012
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$ | 13.00 | $ | 8.00 | ||||
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September 30, 2012
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$ | 16.00 | $ | 8.00 | ||||
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June 30, 2012
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$ | 27.00 | $ | 11.00 | ||||
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March 31, 2012
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$ | 18.00 | $ | 15.00 | ||||
The last reported sales price for our shares on the OTCBB as of April 10, 2014, was $3.26 per share. As of April 10, 2014, we had 492 shareholders of record.
Dividend Policy
No dividends have been declared or paid on our common stock. We have incurred recurring losses and do not currently intend to pay any cash dividends in the foreseeable future.
Securities Authorized For Issuance under Compensation Plans
The following table sets forth information as of December 31, 2013:
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Equity Compensation Plan Information
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Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
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Weighted average exercise price of outstanding options, warrants and rights
(b)
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Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
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(a)Equity compensation plans approved by security holders
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Nil
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Nil
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Nil
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(b)Equity compensation plans not approved by security holders
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65,430 | (1) | $ | 18.00 | 34,570 | |||||||
| 65,430 | (1) | $ | 18.00 | 34,570 | ||||||||
(1) The plan under which these shares were issued was approved by the Board of Directors and the shareholders in 2009 but did not come into effect until February 22, 2010.
Stock Incentive Plan
On October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan”). The 2009 Plan allows for the issuance of up to 100,000 common shares. Options granted under the Plan shall be at prices and for terms as determined by our Board of Directors, and may have vesting requirements as determined by our Board of Directors. To date, 65,430 options have been issued under the 2009 Plan.
The foregoing summary of the 2009 Stock Incentive Plan is not complete and is qualified in its entirety by reference to the 2009 Stock Incentive Plan, a copy of which has been filed with the SEC.
On March 19, 2014, we adopted the 2014 Omnibus Stock Option Plan (“2014 Plan”). The 2014 Plan allows for the issuance of 2,500,000 options to acquire common shares.
Warrants
As of April 10, 2014, there are an aggregate of 254,212 common stock purchase warrants issued and outstanding.
Recent Sales of Unregistered Securities
The Company has previously reported all issuances of unregistered equity during the year ended December 31, 2013 and in 2014 through to the date of March 24, 2014.
On March 24, 2014, we issued 145,000 shares of our common stock to one person for the settlement of approximately $127,040 worth of debt, and on April 4, 2014, we issued 244,764 shares of common stock to the same person for the settlement of approximately $214,446 worth of debt. We made both of these issuances of unregistered equity securities in reliance on the registration exemption provided by Section 3(a)(10) of the Securities Act of 1933.
On April 1, 2014, the Company granted five-year warrants to purchase 100,000 shares of common stock to a consultant. Each of those warrants is exercisable at $3.65. We made this issuance in reliance on the registration exemption provided by Section 4(2) of the Securities Act of 1933.
ITEM 6.SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act are not required to provide the information required under this item.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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The following discussion of our financial condition, changes in financial condition, plan of operations and results of operations should be read in conjunction with (i) our audited consolidated financial statements as at December 31, 2013 and for the period from inception (July 27, 1999) to December 31, 2013 and (ii) the section entitled “Business”, included in this annual report. The discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Plan of Operations
Management believes that our platform technologies combine to make the most comprehensive vaccines in development today. The comprehensive approach of stimulating both the helper and killer T-cell response to cancer antigens is essential in having an effective and long lasting killing effect on tumor and infected cells.
On Jan 10, 2014 the shareholders and the Board of Directors approved a reverse stock split whereby every one hundred (100) shares of common stock held by a Tapimmune stockholder was exchanged for one share of Tapimmune common stock (the “Reverse Stock Split”). The Board of Directors set the close of business on the twentieth day following the mailing of an Information Statement to the shareholders as the date on which to file a “Certificate Pursuant to NRS 78.209” with the Nevada Secretary of State to make the Reverse Stock Split effective. Every one hundred (100) shares of common stock issued and outstanding immediately prior to that effective date was reclassified as and changed into one share of common stock.
The principal effect of the Reverse Stock Split decreased the number of outstanding shares of common stock. At the time of the approval of the Reverse Stock Split by the shareholders on January 10, 2014, we had approximately 145,000,000 common shares outstanding, which number was reduced to approximately 1,450,000 shares as a result of the Reverse Stock Split. The respective relative voting rights and other rights that accompany the common stock were not altered and the common stock continues to have a par value of $0.001 per share.
Reasons for, and the effect of, the Proposed Reverse Stock Split
Management undertook the Reverse Stock Split with three goals in mind: (i) reduce the Company’s debt by creating a capital structure that would be attractive enough to the then debt-holders of the Company to entice them to convert into shares of the Company; (ii) position the Company so that upon a successful capital raise it could up-list on a NASDAQ market; (iii) create a capital structure, by increasing the authorized number of shares, which would allow the Company to make acquisitions or raise additional capital or both. On the date of the written consent the company had essentially no shares available for issuance for any purpose as the remaining 5,000,000 (and more) were reserved for issuance to our debtors.
After the Reverse Stock Split, debt settlement conversions and amendment to the articles of incorporation, the common stock outstanding was approximately 16,000,000 shares, providing us with 484,000,000 authorized but unissued shares of common stock to proceed with a capital raise through the sale of common stock.
As a result of the Company’s recent restructure, approximately $5,000,000 of debt and bridge debt has been converted into common shares via of our preferred stock which, in turn, was converted into approximately 11,500,000 of our common shares upon the effectiveness of the Reverse Stock Split and the amendment to the articles of incorporation. While there was no guarantee of success in this effort, these efforts have allowed us to reduce the debt held on our books by approximately $5,000,000 (including recently added bridge funded convertible debt) and allow the prior shareholders to maintain an approximately 9.5% of the outstanding common stock upon the completion of the restructuring.
Debt conversions and stock issuances
In regard to the above explanation and pursuant to our articles of incorporation, we were authorized to issue up to 5,000,000 shares of preferred stock.
We greatly reduced the debt outstanding on our balance sheet by converting debt into shares of preferred stock, which in turn converted into shares of common stock upon the occurrence of the Reverse Stock Split pursuant to applicable certificates of designation. On January 7, 2014, we filed a certificate of designation to create up to 1,250,000 shares of Series A Convertible Preferred Stock. Between January 7, 2014 and February 18, 2014, we converted debt totaling approximately $3,497,570 into 874,393 shares of Series A Convertible Preferred Stock. Upon the occurrence of the Reverse Stock Split on February 18, 2014, the Series A Convertible Preferred Shares converted into approximately 4,371,964 shares of common stock. Also on February 18, 2014, approximately $1,376,946 of outstanding debt converted into 1,376,946 shares of Series B Convertible Preferred Stock, which in turn converted into approximately 8,512,900 shares of common stock. As a result of these issuances, we have approximately 15,647,422 shares of our common stock currently issued and outstanding. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as a transaction not involving any public offering. We issued a press release on February 25, 2014 discussing these and other matters and further details are available in the filed Form 14c and Form 8-Ks describing the corporate actions.
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Current State of the Company
The market and investment community have supported and applauded the restructuring effort undertaken. With the support of the creditors and their agreement to convert debt to new equity we have a significantly stronger balance sheet to present to the investor community and we expect to attract the financial backing of some of the most respected names in life science to aid us in executing our product development plans and to provide fuel for our growth. For 2014, we have ambitious plans to advance and deepen our pipeline as we expand operations and explore strategic business development opportunities. Following is a partial summary of the progress we made over the last six months, as well as an overview of our objectives for 2014.
In 2013, our Her2/neu clinical program continued with full recruitment of breast cancer patients, progression through initial safety checkpoint and demonstration of immune responses. We also saw a major advancement in technology development in our own laboratories with “proof of concept” that our new and novel expression vector technology (Polystart™) could provide a much greater signal for T-cells to kill abnormal cells and become a platform technology from which we can build out multiple applications and revenue streams. Additional data and information will be forthcoming as we attempt to further secure the intellectual property around this exciting technology advancement.
During 2013, results from our infectious disease program have opened several business development opportunities we expect to solidify by the end of 2014.
On March 3, 2014 the company announced positive interim data on the Phase I clinical trial in Her2/neu positive breast cancer. The TPIV vaccines address a significant unmet market need. They are applicable to a much larger and broader patient population than current ‘standard of care’ therapies like Herceptin by Roche, which is useful for only 15-20% of the Her2/neu Breast Cancer patient population. Herceptin is not designed to kill tumor cells; it slows tumor growth. It is a very large market as evidenced by Herceptin’s 2013 sales exceeding $6 Billion. By contrast, our vaccine is applicable to over 50% of the Her2neu patient population AND is also not limited to breast cancer as Her2/neu is also target in Colorectal and Ovarian cancer where there are very few therapeutic options.
Our Her2/neu vaccine combination is unique in that it is designed to stimulate killer T-Cells and the helper T-Cells that are needed to sustain the killer cells for a long lasting vaccine that kills tumor cells. Published data also supports a five-fold increase in killing efficacy compared to the development vaccine Neuvax by Galena.
TPIV100 is completing Phase 1 with Phase lb/lla scheduled to start in Q4 2014.
On March 19, 2014, we announced the licensing of a late stage phase l clinical program in ovarian cancer (Folate Alpha). We are very excited about the opportunity this therapeutic presents. Folate receptor alpha is expressed in nearly 50% of breast cancers and in addition, over 95% of ovarian cancers, for which the only treatment options are surgery and chemotherapy, leaving a very important and urgent clinical need for a new therapeutic. Time to recurrence is relatively short for this type of cancer and survival prognosis is extremely poor after recurrence. In the US alone, there are approximately 30,000 ovarian cancer patients newly diagnosed every year. Importantly, this patient population has very few treatment options and as a result our plan is to present a Phase II advancement plan in late 2014 with an application for Orphan Drug Status. Orphan drug status is allowed by the FDA in cases where the disease affects fewer than 200,000 people in the USA and makes allowances for an accelerated regulatory process and sales of the drug for 7 years without competition.
On March 20, 2014, the Company announced the filing of new intellectual property for Polystart™. This is a unique vaccine platform Antigen Expression Systems that ‘boosts’ the presentation of the desired peptide on the surface of the cell for the Killer T-Cells to recognize and kill. This totally novel system creates a four-fold increase in antigen presentation and in current studies in smallpox has shown to be working very well. We own this technology exclusively and believe that it has unlimited application in oncology and infectious diseases not only in our own platforms but can be applied to many others via licensing. Ideal candidates include Provenge, Yervoy and many more.
Infectious Disease and National Preparedness is another very significant market and ideal therapeutic area for the TPIV vaccine conjugate. Along with novel peptides and the Polystart™ expression system the TPIV vaccine platform can address multiple infectious disease s as well as pandemic and biodefense threats. Our current Smallpox vaccine study at Mayo Clinic has already shown significant benefits over the current vaccine stockpile. The last DHHS/BARDA contract for a smallpox vaccine stockpile contract was worth $3 Billion. (http://www.dddmag.com/news/2011/02/siga-track-billion-dollar-smallpox-contract)
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Upcoming 2014 milestones include:
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·
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Additional interim data on immune responses in the Her2/neu trial.
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·
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Initial interim data on the Folate Alpha trial in breast and ovarian cancer.
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·
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Final data on pre-clinical small animal studies in smallpox at Mayo Clinic and decision on advancement to non-human primates and license deal and partnering opportunities.
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·
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Uplisting to NASDAQ in 2014
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The opening of our new laboratories and offices at 1551 Eastlake Avenue, Seattle, on January 23, 2012 represented a significant advance for the Company on several fronts. First, our sub-lease and service agreements with the Puget Sound Blood Center Research Institute enabled our scientific team to access a wide array of functioning core labs and shared equipment relevant to all aspects of development of our gene-based product candidates. Second, such an arrangement allowed TapImmune staff to discover and start the development of our Polystart™ nucleic acid-based expression vector technology and start to move it towards the clinic. Third, we now have the capabilities to produce and test a range of proprietary Polystart™ -based expression vectors for both cancer and infectious disease and to expand our external collaborations. Fourth, the development of Polystart™ allows us to significantly enhance our intellectual property portfolio.
In addition to the use of our facilities on Eastlake Avenue, we continue to leverage considerable resources through our external collaborations. In 2013 we had to downsize our in-house technical due to resource constraints. We plan to enhance our technical team in 2014 under the leadership of Dr. Bob Florkiewicz. Bob has held academic and biotech positions over a career spanning 25 years, including Scientific Founder of Ciblex Corporation, Bob is also a registered U.S. Patent Agent with previous in-house experience managing the Intellectual Property assets at ID Biomedical Corporation (Bothell, WA). Bob is the inventor of the Company’s Polystart™ technology. Mark Reddish is a member of the Company’s Board of Directors and serves as an Advisor in the area of product Development. Mark is a recognized leader in vaccine technology development with an impressive track record in taking leading immunotherapy products from early research through development, both in the areas of cancer vaccines and biodefense. He was formerly Vice President of Product Development and Principal Investigator, Biodefense at ID Biomedical, Bothell, WA, prior to the acquisition of the company by Glaxo SmithKline for $1.6 billion. At Biomira Inc, (renamed Oncothyreon) he was responsible for preclinical development of their cancer vaccines program.
Our collaborator Dr Keith Knutson joined the Vaccine and Gene Therapy Research Institute of Florida in 2013 as Research Program Director in Oncology and a Full Member of the Institute. He retains an adjunct position at the Mayo Clinic that maintains oversight and analysis of the Phase I clinical trial in Her2/neu breast cancer.
With respect to the broader market, a major driver and positive influence on our activities has been the emergence and general acceptance of the potential of a new generation of immunotherapies that promise to change the standard of care for cancer. The immunotherapy sector has been greatly stimulated by the approval of Provenge® for prostate cancer and Yervoy™ for metastatic melanoma, progression of the areas of checkpoint inhibitors and adoptive T-cell therapy and multiple approaches reaching Phase II and Phase III status.
We believe that through our combination of technologies, we are well positioned to be a leading player in this emerging market. It is important to note that many of the late stage immunotherapies currently in development do not represent competition to our programs, but instead offer synergistic opportunities to partner our Polystart™ and/or TAP expression systems. Thus, the use of naturally processed T-cell antigens discovered using samples derived from cancer patients plus our Polystart™ expression technology to improve antigen presentation to T-cells could not only produce an effective cancer vaccines in its own right but also to enhance the efficacy of other immunotherapy approaches.
On the technology and product pipeline side, management believes that the company is fundamentally strong and poised to be a leading company in a highly attractive, multi-billion dollar and expanding market, a position reinforced by our recruitment of top-class managers, advisors and investors who all share our vision.
Results of Operations
Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012
In this discussion of the Company’s results of operations and financial condition, amounts, other than per-share amounts, have been rounded to the nearest thousand dollars.
We are a development stage company. We recorded a net loss of $5,533,000 during the Year Ended December 31, 2013 compared to $6,172,000 for the Year Ended December 31, 2012.
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Operating Expenses
Operating expenses incurred during the fiscal year ended December 31, 2013 were $3,310,000 compared to $6,229,000 in the prior year. Significant changes and expenditures are outlined as follows:
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Consulting fees were $185,000 during the fiscal year ended December 31, 2013 compared to $183,000 during the prior fiscal year. The decrease was due primarily to lower business development services that were entered into during the current year.
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·
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Stock-based consulting fees were $85,000 in the year ended December 31, 2013 compared to $2,316,000 in the prior year. The current and prior year charges result from the fair valuation of shares issued to consultants and options granted to or earned by consultants during such periods.
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·
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General and administrative expenses were $576,000 in the year ended December 31, 2013 compared to $1,012,000 in the prior year, with the decrease resulting primarily from lower payroll, investor relations and travel expenses.
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Interest and finance charges were $646,000 during the fiscal year ended December 31, 2013 compared to $745,000 during the prior fiscal year. Current and prior period interest charges are primarily accretion of interest and the fair value of warrants issued with convertible notes.
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Management fees were $264,000 in the year ended December 31, 2013 compared to $302,000 in the prior year, with the difference resulting primarily due to fewer management staff in the current year.
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Management compensation – stock-based were $47,000 in the year ended December 31, 2013 compared to $124,000 in the prior year. The current and prior year charges result from the fair valuation of options granted to management that were earned during the year.
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Professional fees were $845,000 in the year ended December 31, 2013 compared to $490,000 in the prior year. The increase from the prior year results due to higher legal fees incurred relating to debt issuance and settlements in the current year.
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Research and development costs during the fiscal year ended December 31, 2013 were $661,000 compared to $1,057,000 during the prior fiscal year. This was due to lower technology licensing fee accrued for payment due to Mayo clinic and decreased research activity in the current year.
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Our net loss for the year ended December 31, 2013 was $5,533,000 or ($4.87) per share, compared to a net loss of $6,172,000 or ($9.42) per share in the prior year. The weighted average number of shares outstanding was 1,136,115 for the year ended December 31, 2013 compared to 655,269 for the prior year.
Liquidity and Capital Resources
The following table sets forth our cash and working capital as of December 31, 2013 and 2012:
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December 31, 2013
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December 31, 2012
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Cash reserves
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$ | 49,000 | $ | 34,000 | ||||
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Working capital (deficit)
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$ | (8,768,003 | ) | $ | (6,042,521 | ) | ||
Subject to the availability of additional financing, we intend to spend approximately $7,500,000 over the next twelve months in carrying out our plan of operations. At December 31, 2013, we had $49,000 of cash on hand and a working capital deficit of $8,768,000. As such, our working capital at December 31, 2013 will not be sufficient to enable us to pay our general and administrative expenses, and to pursue our plan of operations over the next twelve months.
In an effort to address this deficiency, management undertook the Reverse Stock Split with three goals in mind: (i) reduce the company’s debt by creating a capital structure that would be attractive enough to the then debt-holders of the company to entice them to convert into shares of the company; (ii) position the company so that upon a successful capital raise it could up-list on a NASDAQ market; (iii) create a capital structure, by increasing the authorized number of shares, which would allow the company to make acquisitions or raise additional capital or both.
After the Reverse Stock Split and debt settlement conversions in Q1 2014, there are approximately 16,000,000 shares, providing us with 484,000,000 authorized but unissued shares of common stock to proceed with a capital raise through the sale of common stock.
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Approximately $5,300,000 of debt and bridge debt has been converted into common shares.
The market and investment community have supported and applauded the restructuring effort undertaken. With the support of the creditors and their agreement to convert debt to new equity we have a significantly stronger balance sheet to present to the investor community and we expect to attract the financial backing of some of the most respected names in life science to aid us in executing our product development plans and to provide fuel for our growth. For 2014, we have ambitious plans to advance and deepen our pipeline as we expand operations, explore strategic business development opportunities and up-list to a NASDAQ Market if we meet the necessary criteria. If we are not able to obtain financing in the amounts required or on terms that are acceptable to us, we may be forced to scale back or abandon certain elements of our plan of operations.
Various conditions outside of our control may detract from our ability to raise the capital needed to execute our plan of operations, including overall market conditions in the international and local economies. We recognize that the United States economy has suffered through a period of uncertainty during which the capital markets have been depressed, and that there is no certainty that these levels will stabilize or reverse despite the optics of an improving economy. Any of these factors could have a material impact upon our ability to raise financing and, as a result, upon our short-term or long-term liquidity.
Going Concern
We have no sources of revenue to provide incoming cash flows to sustain our future operations. As outlined above, our ability to pursue our planned business activities is dependent upon our successful efforts to raise additional equity financing. These factors raise substantial doubt regarding our ability to continue as a going concern. Our consolidated financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. As at December 31, 2013, we had accumulated losses of $55,427,000 since inception. Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Net Cash Used in Operating Activities
Operating activities in the year ended December 31, 2013 used cash of $928,000 compared to $1,589,000 in the Year Ended December 31, 2012. Operating activities in the period from inception on July 27, 1999 to December 31, 2013 used cash of $17,371,000. Operating activities have primarily used cash as a result of the operating and organizational activities such as consulting fees, management fees, professional fees and research and development.
Net Cash Used in Investing Activities
In the year ended December 31, 2013, investing activities used cash of $Nil compared to $Nil in the Year Ended December 31, 2012. In the period from inception on July 27, 1999 to December 31, 2012 investing activities provided cash of $205,000.
Net Cash Provided by Financing Activities
As we have had no revenues since inception, we have financed our operations primarily through private placements of our stock and debt. Financing activities in the year ended December 31, 2013 provided cash of $943,000 compared to $1,372,000 in the year ended December 31, 2012. In the period from inception on July 27, 1999 to December 31, 2013, financing activities provided net cash of $17,215,000 primarily from the sale of our equity securities.
Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
18
We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
See Note 2 of our consolidated financial statements for our Year Ended December 31, 2013 for a summary of significant accounting policies.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
19
ITEM 8.FINANCIAL STATEMENTS
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statement of Stockholders’ Deficit
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
20
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of TapImmune Inc:
We have audited the accompanying consolidated balance sheets of TapImmune Inc. (the “Company”) as of December 31, 2013 and 2012 and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position the Company as at December 31, 2013 and 2012 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has an accumulated deficit of $55,426,635and reported a loss of $5,532,552 for the year ended December 31, 2013 raising substantial doubt about the Company’s ability to continue as a going concern. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
“DMCL”
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
April 14, 2014
F-1
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
|
December 31,
2013
|
December 31,
2012
|
|||||||
|
(As restated)
|
||||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
$ | 48,589 | $ | 33,839 | ||||
|
Due from government agency
|
- | 1,077 | ||||||
|
Prepaid expenses and deposits
|
15,004 | 15,004 | ||||||
|
Deferred financing costs (Note 5)
|
13,439 | 37,452 | ||||||
| $ | 77,032 | $ | 87,372 | |||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable and accrued liabilities (Note 13)
|
$ | 3,778,401 | $ | 1,941,716 | ||||
|
Research agreement obligations (Note 3)
|
492,365 | 415,998 | ||||||
|
Derivative liability – conversion option (Note 4)
|
582,300 | 867,575 | ||||||
|
Derivative liability – warrants (Note 4)
|
140,504 | 977,086 | ||||||
|
Convertible notes payable (Note 5)
|
3,161,977 | 1,476,230 | ||||||
|
Loans payable (Note 6)
|
42,200 | 10,000 | ||||||
|
Promissory notes (Note 7)
|
277,942 | 67,942 | ||||||
|
Due to related parties (Note 8)
|
369,346 | 373,346 | ||||||
| 8,845,035 | 6,129,893 | |||||||
|
Stockholders’ Deficit
|
||||||||
|
Capital stock (Note 9)
|
||||||||
|
Common stock, $0.001 par value, 500,000,000 shares authorized
|
||||||||
|
1,465,711 shares issued and outstanding (2012 – 764,030)
|
144,672 | 76,404 | ||||||
|
Additional paid-in capital
|
46,287,544 | 43,483,947 | ||||||
|
Shares to be issued (Note 9)
|
284,750 | 352,859 | ||||||
|
Deficit accumulated during the development stage
|
(55,426,635 | ) | (49,894,083 | ) | ||||
|
Accumulated other comprehensive loss
|
(58,334 | ) | (61,648 | ) | ||||
| (8,768,003 | ) | (6,042,521 | ) | |||||
| $ | 77,032 | $ | 87,372 | |||||
COMMITMENTS AND CONTINGENCIES (Notes 1, 3, 5 and 12)
SUBSEQUENT EVENTS (Note 15)
The accompanying notes are an integral part of these consolidated financial statements.
F-2
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
Year Ended
December 31,
2013
|
Year Ended
December 31,
2012
|
Period from
July 27, 1999
(inception) to
December 31,
2013
|
||||||||||
|
(As restated)
|
||||||||||||
|
EXPENSES
|
||||||||||||
|
Consulting
|
$ | 185,067 | $ | 182,813 | $ | 2,406,567 | ||||||
|
Consulting - stock-based (Note 9)
|
85,104 | 2,316,019 | 8,123,476 | |||||||||
|
Depreciation
|
- | - | 213,227 | |||||||||
|
General and administrative
|
576,195 | 1,012,116 | 4,505,547 | |||||||||
|
Interest and financing charges (Note 5)
|
645,562 | 745,074 | 7,221,649 | |||||||||
|
Management fees (Note 8)
|
264,000 | 302,249 | 3,338,303 | |||||||||
|
Management fees - stock-based (Notes 8 and 9)
|
46,989 | 124,209 | 4,495,987 | |||||||||
|
Professional fees
|
845,328 | 489,537 | 6,261,437 | |||||||||
|
Research and development (Note 8)
|
661,634 | 1,057,430 | 7,595,229 | |||||||||
|
Research and development - stock-based
|
- | - | 612,000 | |||||||||
|
LOSS BEFORE OTHER ITEMS
|
(3,309,879 | ) | (6,229,447 | ) | (44,808,422 | ) | ||||||
|
OTHER ITEMS
|
||||||||||||
|
Foreign exchange (loss) gain
|
5,896 | (7,903 | ) | 51,583 | ||||||||
|
Changes in fair value of derivative liabilities (Note 4)
|
1,546,257 | 229,252 | 5,850,649 | |||||||||
|
Accretion of discount on convertible notes (Note 5)
|
(1,110,831 | ) | - | (1,110,831 | ) | |||||||
|
Loss on debt financing (Note 5)
|
- | (104,550 | ) | (1,373,263 | ) | |||||||
|
Loss on settlement of debt (Notes 5 and 9)
|
(2,560,045 | ) | (59,219 | ) | (14,250,846 | ) | ||||||
|
Loss on lawsuit
|
(103,950 | ) | - | (103,950 | ) | |||||||
|
Gain on extinguishment of derivative liabilities - warrants
|
- | - | 290,500 | |||||||||
|
Interest income
|
- | - | 33,344 | |||||||||
|
Loss on disposal of assets
|
- | - | (5,399 | ) | ||||||||
|
NET LOSS
|
(5,532,552 | ) | (6,171,867 | ) | (55,426,635 | ) | ||||||
|
Other comprehensive income (loss)
|
||||||||||||
|
Foreign exchange translation adjustment
|
3,314 | (1,120 | ) | (58,334 | ) | |||||||
|
TOTAL COMPREHENSIVE LOSS
|
$ | (5,529,238 | ) | $ | (6,172,987 | ) | $ | (55,484,969 | ) | |||
|
BASIC AND DILUTED NET LOSS PER SHARE
|
$ | (4.87 | ) | $ | (9.42 | ) | ||||||
|
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING,
BASIC AND DILUTED
|
1,136,115 | 655,269 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2013
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
Shares*
|
Amount
|
Paid in
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
|
Issued on incorporation - July 27, 1999
|
- | - | - | - | - | - | - | |||||||||||||||||||||
|
Issued to the founders for:
|
||||||||||||||||||||||||||||
|
- cash
|
740 | 740 | 1,110 | - | - | - | 1,850 | |||||||||||||||||||||
|
- consulting services
|
860 | 860 | 1,290 | - | - | - | 2,150 | |||||||||||||||||||||
|
Common stock subscriptions
|
- | - | - | 177,100 | - | - | 177,100 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (80,733 | ) | - | (80,733 | ) | |||||||||||||||||||
|
Balance, December 31, 1999
|
1600 | 1,600 | 2,400 | 177,100 | (80,733 | ) | - | 100,367 | ||||||||||||||||||||
|
Issued for:
|
||||||||||||||||||||||||||||
|
- consulting services
|
1,440 | 1,440 | 2,160 | - | - | - | 3,600 | |||||||||||||||||||||
|
- for license fees
|
200 | 200 | 300 | - | - | - | 500 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $15.00 per share, net of finders’ fees of $95,570
|
564 | 564 | 749,166 | (177,100 | ) | - | - | 572,630 | ||||||||||||||||||||
|
- at $15.00 per share
|
341 | 342 | 512,058 | - | - | - | 512,400 | |||||||||||||||||||||
|
Issued for finders’ fees
|
50 | 50 | (50 | ) | - | - | - | - | ||||||||||||||||||||
|
Net loss
|
- | - | - | - | (935,332 | ) | - | (935,332 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (1,937 | ) | (1,937 | ) | |||||||||||||||||||
|
Balance, December 31, 2000
|
4,195 | 4,195 | 1,266,034 | - | (1,016,065 | ) | (1,937 | ) | 252,228 | |||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $18.80 per share
|
44 | 44 | 82,706 | - | - | - | 82,750 | |||||||||||||||||||||
|
- at $25.00 per share
|
106 | 106 | 264,894 | - | - | - | 265,000 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (671,986 | ) | - | (671,986 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (2,041 | ) | (2,041 | ) | |||||||||||||||||||
|
Balance, December 31, 2001
|
4,345 | 4,345 | 1,613,635 | - | (1,688,051 | ) | (3,978 | ) | (74,049 | ) | ||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $25.00 per share, net of finders’ fees of $17,000
|
75 | 75 | 170,425 | - | - | - | 170,500 | |||||||||||||||||||||
|
Issued on settlement of debt
|
73 | 73 | 136,172 | - | - | - | 136,245 | |||||||||||||||||||||
|
GPI balance, July 15, 2002
|
4,493 | 4,493 | 1,920,232 | - | (1,688,051 | ) | (3,978 | ) | 232,696 | |||||||||||||||||||
|
GMC balance, July 15, 2002
|
6,128 | 6,128 | 7,180,164 | (85,000 | ) | (6,607,580 | ) | - | 493,712 | |||||||||||||||||||
|
Reverse acquisition recapitalization adjustment
|
(4,493 | ) | (4,493 | ) | (6,603,087 | ) | - | 6,607,580 | - | - | ||||||||||||||||||
*The number of shares reflected are after the reverse 100 to 1 stock split completed by the Company on January 10, 2014.
The accompanying notes are an integral part of these consolidated financial statements.
F-4
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2013
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
|
Balance post reverse acquisition
|
6,128 | 6,128 | 2,497,309 | (85,000 | ) | (1,688,051 | ) | (3,978 | ) | 726,408 | ||||||||||||||||||
|
GMC subscription proceeds received
|
- | - | - | 285,000 | - | - | 285,000 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $62.50 per share
|
170 | 170 | 1,063,330 | - | - | - | 1,063,500 | |||||||||||||||||||||
|
Exercise of stock options
|
41 | 41 | 50,959 | - | - | - | 51,000 | |||||||||||||||||||||
|
Stock-based compensation
|
- | - | 630,275 | - | - | - | 630,275 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (2,284,709 | ) | - | (2,284,709 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (5,645 | ) | (5,645 | ) | |||||||||||||||||||
|
Balance, December 31, 2002
|
6,339 | 6,339 | 4,241,873 | 200,000 | (3,972,760 | ) | (9,623 | ) | 465,829 | |||||||||||||||||||
|
Exercise of stock options
|
928 | 927 | 1,420,888 | - | - | - | 1,421,815 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $125.00 per share
|
17 | 17 | 214,983 | (185,000 | ) | - | - | 30,000 | ||||||||||||||||||||
|
- at $25.00 per share, net of finders’ fees
|
222 | 222 | 521,593 | - | - | - | 521,815 | |||||||||||||||||||||
|
Issued as finders’ fees
|
13 | 13 | (13 | ) | - | - | - | - | ||||||||||||||||||||
|
Issued for license agreement
|
4 | 4 | 9,996 | - | - | - | 10,000 | |||||||||||||||||||||
|
Subscriptions repaid
|
- | - | 5,000 | (15,000 | ) | - | - | (10,000 | ) | |||||||||||||||||||
|
Stock-based compensation
|
- | - | 2,733,000 | - | - | - | 2,733,000 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (5,778,905 | ) | - | (5,778,905 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (37,299 | ) | (37,299 | ) | |||||||||||||||||||
|
Balance, December 31, 2003
|
7,523 | 7,523 | 9,147,319 | - | (9,751,665 | ) | (46,922 | ) | (643,745 | ) | ||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $17.50 per share, net of finders’ fees of $50,000
|
343 | 343 | 549,657 | - | - | - | 550,000 | |||||||||||||||||||||
|
Issued as finders’ fees
|
29 | 29 | (29 | ) | - | - | - | - | ||||||||||||||||||||
|
Fair value of warrants issued in connection
with convertible notes
|
- | - | 65,000 | - | - | - | 65,000 | |||||||||||||||||||||
|
Exercise of stock options
|
143 | 143 | 204,942 | - | - | - | 205,085 | |||||||||||||||||||||
|
Settlement of debt
|
4 | 4 | 9,996 | - | - | - | 10,000 | |||||||||||||||||||||
|
Stock-based compensation
|
- | - | 73,500 | - | - | - | 73,500 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (2,683,105 | ) | - | (2,683,105 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (16,865 | ) | (16,865 | ) | |||||||||||||||||||
|
Balance, December 31, 2004
|
8,042 | 8,042 | 10,050,385 | - | (12,434,770 | ) | (63,787 | ) | (2,440,130 | ) | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2013
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
|
Balance, December 31, 2004
|
8,042 | 8,042 | 10,050,385 | - | (12,434,770 | ) | (63,787 | ) | (2,440,130 | ) | ||||||||||||||||||
|
Warrant component of convertible note
|
- | - | 46,250 | - | - | - | 46,250 | |||||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $3.80 per share, net of finders’ fees
of $97,620 and legal fees of $100,561
|
3,627 | 3,627 | 1,158,437 | - | - | - | 1,162,064 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (985,599 | ) | - | (985,599 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (2,333 | ) | (2,333 | ) | |||||||||||||||||||
|
Balance, December 31, 2005
|
11,669 | 11,669 | 11,255,072 | - | (13,420,369 | ) | (66,120 | ) | (2,219,748 | ) | ||||||||||||||||||
|
Fair value of beneficial feature on
convertible notes
|
- | - | 205,579 | - | - | - | 205,579 | |||||||||||||||||||||
|
Fair value of warrants issued with
convertible notes
|
- | - | 288,921 | - | - | - | 288,921 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (1,304,387 | ) | - | (1,304,387 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | 29,555 | 29,555 | |||||||||||||||||||||
|
Balance, December 31, 2006
|
11,669 | 11,669 | 11,749,572 | - | (14,724,756 | ) | (36,565 | ) | (3,000,080 | ) | ||||||||||||||||||
|
Issued for cash:
|
||||||||||||||||||||||||||||
|
- at $2.50 per share
|
2,180 | 2,180 | 542,820 | - | - | - | 545,000 | |||||||||||||||||||||
|
Issued on the conversion of notes:
|
||||||||||||||||||||||||||||
|
- 2006 convertible notes at $2.50 per share
|
1,978 | 1,978 | 492,522 | - | - | - | 494,500 | |||||||||||||||||||||
|
- 2007 convertible notes at $2.50 per share
|
4,064 | 4,064 | 1,011,936 | - | - | - | 1,016,000 | |||||||||||||||||||||
|
Issued on the conversion of accounts payable
and related party debt at $2.50 per share
|
2,912 | 2,912 | 725,040 | - | - | - | 727,952 | |||||||||||||||||||||
|
Issued for finance charges on the 2007
convertible notes $2.50 per share
|
600 | 600 | 149,400 | - | - | - | 150,000 | |||||||||||||||||||||
|
Issued pursuant to service agreements at a
fair value of $3.60 per share
|
100 | 100 | 35,900 | - | - | - | 36,000 | |||||||||||||||||||||
|
Financing charges
|
- | - | (167,500 | ) | - | - | - | (167,500 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2013
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
|
Fair value of beneficial conversion feature on
the 2007 convertible notes
|
- | - | 358,906 | - | - | - | 358,906 | |||||||||||||||||||||
|
Fair value of warrants issued in connection
with the 2007 convertible notes
|
- | - | 657,095 | - | - | - | 657,095 | |||||||||||||||||||||
|
Fair value of warrants issued in connection
with the 2007 promissory notes
|
- | - | 374,104 | - | - | - | 374,104 | |||||||||||||||||||||
|
Fair value of warrants issued as finders’ fees
for the 2007 promissory notes
|
- | - | 35,600 | - | - | - | 35,600 | |||||||||||||||||||||
|
Re-pricing and extension of warrants
|
- | - | 40,000 | - | - | - | 40,000 | |||||||||||||||||||||
|
Stock based compensation
|
- | - | 904,822 | - | - | - | 904,822 | |||||||||||||||||||||
|
Obligation to issue warrants at fair value pursuant
to promissory note extension
|
- | - | - | 44,000 | - | - | 44,000 | |||||||||||||||||||||
|
Obligation to issue shares at fair value pursuant
to service agreements
|
- | - | - | 23,400 | - | - | 23,400 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (3,891,411 | ) | - | (3,891,411 | ) | |||||||||||||||||||
|
Currency translation adjustment
|
- | - | - | - | - | (23,161 | ) | (23,161 | ) | |||||||||||||||||||
|
Balance, December 31, 2007
|
23,503 | 23,503 | 16,910,218 | 67,400 | (18,616,167 | ) | (59,726 | ) | (1,674,772 | ) | ||||||||||||||||||
|
Issued for cash
|
||||||||||||||||||||||||||||
|
- at $2.50 per share in July 2008
|
140 | 140 | 34,860 | - | - | - | 35,000 | |||||||||||||||||||||
|
Issued on the exercise of warrants in June 2008
|
207 | 207 | 24,793 | - | - | - | 25,000 | |||||||||||||||||||||
|
Issued pursuant to service agreements
at a fair value of $3.00 per share in April 2008
|
300 | 300 | 89,700 | - | - | - | 90,000 | |||||||||||||||||||||
|
Fair value of warrants issued in connection
with the 2008 promissory notes in May 2008
|
- | - | 206,820 | - | - | - | 206,820 | |||||||||||||||||||||
|
Fair value of warrants to be issued in
connection with notes payable in October 2008
|
- | - | - | 256,350 | - | - | 256,350 | |||||||||||||||||||||
|
Stock based compensation in January to December 2008
|
- | - | 234,168 | - | - | - | 234,168 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (2,195,939 | ) | - | (2,195,939 | ) | |||||||||||||||||||
|
Balance, December 31, 2008
|
24,150 | 24,150 | 17,500,559 | 323,750 | (20,812,106 | ) | (59,726 | ) | (3,023,373 | ) | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2013
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
||||||||||||||||||||||||
|
Number of
shares
|
Amount
|
Paid In
Capital
|
Shares and
Warrants
|
Development
Stage
|
Comprehensive
Loss
|
Total
|
||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
|
Balance, December 31, 2008
|
24,150 | 24,150 | 17,500,559 | 323,750 | (20,812,106 | ) | (59,726 | ) | (3,023,373 | ) | ||||||||||||||||||
|
Reverse split recapitalization adjustment (rounding) in July 2009
|
1 | (21,735 | ) | 21,735 | - | - | - | - | ||||||||||||||||||||
|
Issued for cash
|
||||||||||||||||||||||||||||
|
- at $0.80 per share in November 2009
|
8,750 | 875 | - | - | - | - | 875 | |||||||||||||||||||||
|
Issued at fair value pursuant to service agreements in August 2009
|
250 | 25 | 27,475 | - | - | - | 27,500 | |||||||||||||||||||||
|
Issued at fair value pursuant to
debt settlement agreements in July 2009 (Note 3)
|
338,121 | 33,812 | 15,181,618 | - | - | - | 15,215,430 | |||||||||||||||||||||
|
Issued on the exercise of warrants in August and November 2009
|
12,345 | 1,235 | 241,515 | - | - | - | 242,750 | |||||||||||||||||||||
|
Stock based compensation in October 2009
|
- | - | 2,091,900 | - | - | - | 2,091,900 | |||||||||||||||||||||
|
Fair value of warrants issued in February , May and June 2009 in connection with promissory notes
|
- | - | 725,669 | (300,350 | ) | - | - | 425,319 | ||||||||||||||||||||
|
Beneficial conversion feature on August and October 2009 convertible notes
|
- | - | 75,491 | - | - | - | 75,491 | |||||||||||||||||||||
|
Obligation to issue warrants pursuant to service agreements in December 2009
|
- | - | 19,270 | - | - | - | 19,270 | |||||||||||||||||||||
|
Obligation to issue shares at fair value pursuant to service agreements in December 2009
|
- | - | - | 246,533 | - | - | 246,533 | |||||||||||||||||||||
|
Obligation to issue shares at fair value pursuant to debt settlement agreements in September 2009
|
- | - | - | 243,800 | - | - | 243,800 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | (17,348,546 | ) | - | (17,348,546 | ) | |||||||||||||||||||
|
Balance, December 31, 2009
|
383,617 | 38,362 | 35,885,232 | 513,733 | (38,160,652 | ) | (59,726 | ) | (1,783,051 | ) | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
TAPIMMUNE INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM JULY 27, 1999 (INCEPTION) TO DECEMBER 31, 2013
|
Common Stock
|
Additional
|
Obligation
to Issue
|
Deferred
|
Deficit
Accumulated
During the
|
Accumulated
Other
|
|||||||||||||||||||||||||||
|
Number of
shares
|
||||||||||||||||||||||||||||||||