Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
13-4087132
(I.R.S.
Employer
Identification
No.)
|
750
Lexington Avenue
New
York, New York
(Address
of principal executive offices)
|
10022
(Zip
Code)
|
|
Page
|
|
SPECIAL
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
|
||
PART
I
|
||
ITEM
1
|
Business
|
2
|
ITEM
1A
|
Risk
Factors
|
23
|
ITEM
1B
|
Unresolved
Staff Comments
|
32
|
ITEM
2
|
Properties
|
32
|
ITEM
3
|
Legal
Proceedings
|
32
|
ITEM
4
|
Submission
of Matters to a Vote of Security Holders
|
33
|
|
||
PART
II
|
||
|
||
ITEM
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
33
|
ITEM
6
|
Selected
Financial Data
|
36
|
ITEM
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
37
|
ITEM
7A
|
Quantitative
and Qualitative Disclosure About Market Risk
|
46
|
ITEM
8
|
Financial
Statements and Supplementary Data
|
46
|
ITEM
9
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosures
|
46
|
ITEM
9A
|
Controls
and Procedures
|
46
|
ITEM
9B
|
Other
Information
|
46
|
|
||
PART
III
|
||
|
||
ITEM
10
|
Directors,
Executive Officers and Corporate Governance
|
47
|
ITEM
11
|
Executive
Compensation
|
47
|
ITEM
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
47
|
ITEM
13
|
Certain
Relationships and Related Transactions and Director
Independence
|
47
|
ITEM
14
|
Principal
Accountant Fees and Services
|
47
|
|
||
PART
IV
|
||
|
||
ITEM
15
|
Exhibits
and Financial Statement Schedules
|
48
|
· |
expectations
for increases or decreases in expenses;
|
· |
expectations
for the development, manufacturing, regulatory approval, and
commercialization of SulonexTM,
ZerenexTM,
KRX-0401, and our additional product candidates or any other products
we
may acquire or in-license;
|
· |
expectations
for incurring capital expenditures to expand our research and development
and manufacturing capabilities;
|
· |
expectations
for generating revenue or becoming profitable on a sustained basis;
|
· |
expectations
or ability to enter into marketing and other partnership agreements;
|
· |
expectations
or ability to enter into product acquisition and in-licensing
transactions;
|
· |
expectations
or ability to build our own commercial infrastructure to manufacture,
market and sell our drug
candidates;
|
· |
estimates
of the sufficiency of our existing cash and cash equivalents and
investments to finance our business strategy;
|
· |
expected
losses; and
|
· |
expectations
for future capital requirements.
|
Product
candidate
|
Target
indication
|
Development
status
|
||
Endocrine/Renal
|
||||
Sulonex™
|
Diabetic
nephropathy
|
Phase
III & Phase IV
|
||
Zerenex™
|
Hyperphosphatemia
in patients with
end-stage
renal disease
|
Phase
II
|
||
Oncology
|
||||
KRX-0401
|
Multiple
forms of cancer
|
Phase
II
|
||
KRX-0402
|
Brain
cancer
|
Phase
II
|
||
KRX-0601
|
Multiple
forms of cancer
|
Phase
II
|
||
KRX-0404
|
Multiple
forms of cancer
|
Pre-clinical
|
||
Neurology
|
||||
KRX-0501
|
Neurological
disorders
|
Pre-clinical
|
· |
seek
to acquire medically important, novel drug candidates in late pre-clinical
or early clinical development;
|
·
|
utilize
our clinical development capabilities to manage and drive our drug
candidates through the clinical development process to approval;
and
|
·
|
commercialize
our drug candidates, either alone or in partnership, which we believe
is
important to provide maximal shareholder
value.
|
·
|
continue
our pivotal Phase III and Phase IV program for
Sulonex;
|
·
|
begin
to establish the commercial infrastructure required to manufacture,
market
and sell our drug candidates following approval, if any, by the
FDA;
|
·
|
continue
to build our clinical development and regulatory capabilities and
conduct
additional pre-clinical, toxicology and clinical trials for our portfolio
products, including Zerenex, KRX-0401, KRX-0402 and KRX-0601;
and
|
·
|
seek
to in-license or acquire additional compounds.
|
· |
The
delicate filtering membranes of the glomerular loops thicken and
their
crucial anionic glycosaminoglycan molecules are either depleted or
altered
and lose some or all of their negative charge. As the glycosaminoglycan
negative charge provides normal filtering selectivity to the glomerular
membranes, their loss of negative charge results in the release of
protein, usually albumin, from the blood into the filtrate and urine.
The
release of abnormal amounts of protein or albumin into the urine
is called
proteinuria or albuminuria,
respectively.
|
· |
In
addition, hyperglycemia induced overproduction of TGF beta, a regulatory
protein, by the kidney induces scar formation in the area surrounding
the
glomerular capillaries. Over time, the extrinsic pressure of this
scar
tissue causes collapse of individual glomeruli, loss of functionality
and
release of albumin into the filtrate and
urine.
|
(1) |
50%
reduction in albumin to creatinine ratio or ACR (ACR is a standard
measurement used to assess the level of kidney disease in these patients.
ACR measures the level of albumin protein in urine, also referred
to as
albuminuria), or
|
(2) |
Normalization
of ACR with at least a 25% reduction in ACR (in this study the normal
laboratory range for albuminuria was defined as less than 20mg of
albumin
to 1g of creatinine).
|
Number
of Patients
(Placebo/200mg)
|
Placebo
|
200mg
|
p
value
Fisher’s
Exact Test (2-sided)
|
||||||||||
Per
Protocol
|
36/36
|
11.0
|
%
|
33.0
|
%
|
P=.045
|
|||||||
Intent
to Treat
|
42/44
|
14.0
|
%
|
32.0
|
%
|
P=.074
|
Number
of Patients
(Placebo/Active)
|
Placebo
|
Active
(200mg
and 400mg)1
|
p
value
Fisher’s
Exact Test (2-sided)
|
||||||||||
Per
Protocol
|
36/81
|
11
|
%
|
25
|
%
|
P=.136
|
|||||||
Intent
to Treat
|
42/94
|
14
|
%
|
26
|
%
|
P=.180
|
Placebo
n=42
|
200mg
n=44
|
Active
(200mg
and 400mg1)
N=94
|
||||||||
>50
% reduction in ACR
|
12.0
|
%
|
27.0
|
%
|
22.0
|
%
|
||||
Normalization
of ACR
|
9.0
|
%
|
23.0
|
%
|
17.0
|
%
|
200mg
vs. Placebo
|
Placebo
vs. Baseline
|
200mg
vs. Baseline
|
||||||||
Two
months
|
-17.00
|
%
|
-4.0
|
%
|
-21.00
|
%
|
||||
Four
months
|
-25.78
|
%
|
7.5
|
%
|
-18.28
|
%
|
||||
Six
months
|
-28.03
|
%
|
12.57
|
%
|
-15.46
|
%
|
||||
Eight
months (Two
months off therapy)
|
-28.98
|
%
|
18.5
|
%
|
-10.48
|
%
|
Placebo
N=47
|
200
mg
N=50
|
400
mg
N=52
|
||||||||
No.
of SAEs
|
No.
of Patients
|
No.
of SAEs
|
No.
of Patients
|
No.
of SAEs
|
No.
of Patients
|
|||||
4
|
4
(8.5%)
|
23
|
16
(32%)
|
4
|
4
(7.7%)
|
Table
1: Changes in Serum Phosphorous Concentration (mg/dL) on day
28
compared
to day 0 (baseline) at Zerenex doses of 2, 4 and 6 g/day.
|
|||||||||||||
Placebo
(n=16)
|
2g/day
(n=31)
|
4g/day
(n=32)
|
6g/day
(n=32)
|
||||||||||
Day
0 (Baseline)*
|
7.2
(1.4
|
)
|
7.2
(1.2
|
)
|
7.1
(1.3
|
)
|
7.3
(1.3
|
)
|
|||||
Day
28 (End of Treatment Period)*
|
7.2
(1.2
|
)
|
6.9
(2.2
|
)
|
6.0
(1.3
|
)
|
5.8
(1.8
|
)
|
|||||
Placebo
Comparison:
|
|||||||||||||
Mean
Difference from Placebo
|
-0.02
|
-1.1
|
-1.5
|
||||||||||
P-value
|
NS
|
0.06
|
0.0119
|
||||||||||
Baseline
Comparison:
|
|||||||||||||
Mean
Difference from Baseline
|
-0.1
|
-0.3
|
-1.1
|
-1.5
|
|||||||||
P-value
|
NS
|
NS
|
NS
|
<0.01
|
|||||||||
*
mean (standard deviation)
|
Table
2: Changes in the Calcium x Phosphorous (mg/dL) on day 28
compared
to day 0 (baseline) at Zerenex doses of 2, 4 and 6 g/day.
|
|||||||||||||
Placebo
(n=16)
|
2g/day
(n=31)
|
4g/day
(n=32)
|
6g/day
(n=32)
|
||||||||||
Day
0 (Baseline)*
|
62.8
(13.9
|
)
|
62.9
(13.2
|
)
|
63.5
(10.7
|
)
|
65.8
(12.2
|
)
|
|||||
Day
28 (End of Treatment Period)*
|
63.2
(12.6
|
)
|
61.7
(21.3
|
)
|
55.4
(13.4
|
)
|
54.1
(17.7
|
)
|
|||||
Placebo
Comparison:
|
|||||||||||||
Mean
Difference from Placebo
|
-0.9
|
-7.91
|
-11.4
|
||||||||||
P-value
|
0.8950
|
0.1375
|
0.0378
|
||||||||||
Baseline
Comparison:
|
|||||||||||||
Mean
Difference from Baseline
|
-0.3
|
-1.1
|
-8.1
|
-11.7
|
|||||||||
P-value
|
NS
|
NS
|
NS
|
<0.01
|
|||||||||
*mean
(standard deviation)
|
Serum
Phosphate
|
||||||||||
Baseline
(mg/dL)
|
End-Point
(Four
Weeks) (mg/dL)
|
Change
from
Baseline
|
||||||||
Zerenex™
(4.5 g/day)
|
7.2
+/- 2.5
|
5.9
+/- 2.0
|
P<0.005
|
|||||||
Calcium
Acetate (PhosLo®)
(4 g/day)
(1)
|
7.2
+/- 2.0
|
5.6
+/- 1.7
|
P<0.005
|
Serum
Phosphate
|
||||||||||
Baseline
(mg/dL)
|
End-Point
(Four
Weeks) (mg/dL)
|
Change
from
Baseline
|
||||||||
Zerenex™
(3 g/day)
|
6.7
+/- 1.9
|
5.7
+/- 1.6
|
P<0.001
|
|||||||
Calcium
Carbonate (3 g/day)
(1)
|
7.2
+/- 1.9
|
5.2
+/- 1.5
|
P<0.001
|
Response
|
N
(%)
|
Duration
(months)
|
|||||
Partial
Response
|
3
(43
|
%)
|
4,
4+, 9
|
||||
Stable
Disease
|
2
(29
|
%)
|
8+,
11
|
||||
Progression
|
2
(29
|
%)
|
2,
3
|
||||
Too
Early
|
2
|
||||||
Not
Evaluable
|
4
|
Perifosine
+ Dex
|
N
(%)
|
|
Duration
(wks)
|
||||
PR
|
2
(9
|
%)
|
13+,
17+
|
||||
MR
|
4
(17
|
%)
|
4,
16+, 28+, 30+
|
||||
Stable
Disease
|
11
(48
|
%)
|
6
- 20+ (median 18)*
|
||||
*4
pts ongoing at 16, 18, 20 and 20
weeks
|
· |
that
the drug is intended to treat a serious or life-threatening
condition;
|
· |
that
the drug is intended to treat a serious aspect of the condition;
and
|
· |
that
the drug has the potential to address unmet medical needs, and this
potential is being evaluated in the planned drug development
program.
|
· |
Phase
I:
The drug is administered to a small group of humans, either healthy
volunteers or patients, to test for safety, dosage tolerance, absorption,
metabolism, excretion, and clinical pharmacology.
|
· |
Phase
II:
Studies are conducted on a larger number of patients to assess the
efficacy of the product, to ascertain dose tolerance and the optimal
dose
range, and to gather additional data relating to safety and potential
adverse events.
|
· |
Phase
III:
Studies establish safety and efficacy in an expanded patient population.
|
· |
Phase
IV:
The FDA may require Phase IV post-marketing studies to find out more
about
the drug’s long-term risks, benefits, and optimal use, or to test the drug
in different populations.
|
· |
slow
patient enrollment due to the nature of the clinical trial plan,
the
proximity of patients to clinical sites, the eligibility criteria
for
participation in the study or other
factors;
|
· |
inadequately
trained or insufficient personnel at the study site to assist in
overseeing and monitoring clinical trials or delays in approvals
from a
study site’s review board;
|
· |
longer
treatment time required to demonstrate efficacy or determine the
appropriate product dose;
|
· |
insufficient
supply of the drug candidates;
|
· |
adverse
medical events or side effects in treated patients;
and
|
· |
ineffectiveness
of the drug candidates.
|
· |
manufacture
our product candidates;
|
· |
assist
us in developing, testing and obtaining regulatory approval for and
commercializing some of our compounds and technologies;
and
|
· |
market
and distribute our drug products.
|
· |
perceptions
by members of the health care community, including physicians, of
the
safety and efficacy of our product
candidates;
|
· |
the
rates of adoption of our products by medical practitioners and the
target
populations for our products;
|
· |
the
potential advantages that our products offer over existing treatment
methods;
|
· |
the
cost-effectiveness of our products relative to competing
products;
|
· |
the
availability of government or third-party payor reimbursement for
our
products;
|
· |
the
side effects or unfavorable publicity concerning our products or
similar
products; and
|
· |
the
effectiveness of our sales, marketing and distribution efforts.
|
· |
difficulty
and expense of assimilating the operations, technology and personnel
of
the acquired business;
|
· |
our
inability to retain the management, key personnel and other employees
of
the acquired business;
|
· |
our
inability to maintain the acquired company's relationship with key
third
parties, such as alliance partners;
|
· |
exposure
to legal claims for activities of the acquired business prior to
the
acquisition;
|
· |
the
diversion of our management's attention from our core business;
and
|
· |
the
potential impairment of goodwill and write-off of in-process research
and
development costs, adversely affecting our reported results of
operations.
|
· |
government
and health administration authorities;
|
· |
private
health insurers;
|
· |
managed
care programs; and
|
· |
other
third-party payors.
|
· |
decreased
demand for a product;
|
· |
injury
to our reputation;
|
· |
our
inability to continue to develop a drug candidate;
|
· |
withdrawal
of clinical trial volunteers; and
|
· |
loss
of revenues.
|
· |
the
timing of completion and results from clinical trials for our drug
candidates, especially Sulonex;
|
· |
the
timing of expenses associated with manufacturing and product development
of the proprietary drug candidates within our portfolio and those
that may
be in-licensed, partnered or
acquired;
|
· |
the
timing of the in-licensing, partnering and acquisition of new product
opportunities;
|
· |
the
progress of the development efforts of parties with whom we have
entered,
or may enter, into research and development
agreements;
|
· |
our
ability to achieve our milestones under our licensing arrangements;
and
|
· |
the
costs involved in prosecuting and enforcing patent claims and other
intellectual property rights.
|
· |
the
timing of completion and results from clinical trials for our drug
candidates, especially Sulonex;
|
· |
the
progress of our development activities;
|
· |
the
progress of our research activities;
|
· |
the
number and scope of our development programs;
|
· |
the
costs associated with commercialization activities, including
manufacturing, marketing and sales;
|
· |
our
ability to establish and maintain current and new licensing or acquisition
arrangements;
|
· |
our
ability to achieve our milestones under our licensing
arrangements;
|
· |
the
costs involved in enforcing patent claims and other intellectual
property
rights; and
|
· |
the
costs and timing of regulatory approvals.
|
· |
developments
concerning our drug candidates;
|
· |
announcements
of technological innovations by us or our competitors;
|
· |
introductions
or announcements of new products by us or our
competitors;
|
· |
announcements
by us of significant acquisitions, strategic partnerships, joint
ventures
or capital commitments;
|
· |
changes
in financial estimates by securities analysts;
|
· |
actual
or anticipated variations in quarterly operating results;
|
· |
expiration
or termination of licenses, research contracts or other collaboration
agreements;
|
· |
conditions
or trends in the regulatory climate and the biotechnology and
pharmaceutical industries;
|
· |
changes
in the market valuations of similar companies; and
|
· |
additions
or departures of key personnel.
|
Fiscal
Year Ended December 31, 2006
|
High
|
Low
|
|||||
Fourth
Quarter
|
$
|
14.77
|
$
|
11.96
|
|||
Third
Quarter
|
$
|
14.84
|
$
|
9.60
|
|||
Second
Quarter
|
$
|
18.19
|
$
|
12.54
|
|||
First
Quarter
|
$
|
19.16
|
$
|
14.95
|
Fiscal
Year Ended December 31, 2005
|
High
|
Low
|
|||||
Fourth
Quarter
|
$
|
17.90
|
$
|
13.09
|
|||
Third
Quarter
|
$
|
17.71
|
$
|
13.23
|
|||
Second
Quarter
|
$
|
14.49
|
$
|
11.74
|
|||
First
Quarter
|
$
|
15.38
|
$
|
10.77
|
Equity
Compensation Plan
Information
|
||||||||||
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding
options
|
Weighted-average
exercise price of outstanding options
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|||||||
(a)
|
(b)
|
(c)
|
||||||||
Equity
compensation plans approved by security holders
|
7,187,056
|
$
|
9.09
|
152,158
|
||||||
Equity
compensation plans not approved by security holders
|
3,562,657
|
$
|
5.48
|
—
|
||||||
Total
|
10,749,713
|
$
|
7.90
|
152,158
|
Years
ended December 31,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||
Diagnostic
revenue
|
$
|
103
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Service
revenue
|
431
|
574
|
809
|
—
|
—
|
|||||||||||
Total
revenue
|
534
|
574
|
809
|
—
|
—
|
|||||||||||
Operating
expenses:
|
||||||||||||||||
Cost
of diagnostics sold
|
140
|
—
|
—
|
—
|
—
|
|||||||||||
Cost
of services
|
390
|
819
|
835
|
—
|
—
|
|||||||||||
Research
and development:
|
||||||||||||||||
Non-cash
compensation
|
6,504
|
594
|
413
|
(486
|
)
|
(1,382
|
)
|
|||||||||
Non-cash
acquired in-process research
and
development
|
—
|
—
|
18,800
|
—
|
—
|
|||||||||||
Other
research and development
|
56,139
|
24,182
|
9,805
|
5,996
|
9,523
|
|||||||||||
Total
research and development
|
62,643
|
24,776
|
29,018
|
5,510
|
8,141
|
|||||||||||
Selling,
general and administrative:
|
||||||||||||||||
Non-cash
compensation
|
8,408
|
775
|
1,087
|
188
|
(4
|
)
|
||||||||||
Other
selling, general and administrative
|
9,110
|
3,416
|
3,581
|
3,684
|
4,108
|
|||||||||||
Total
selling, general and administrative
|
17,518
|
4,191
|
4,668
|
3,872
|
4,104
|
|||||||||||
Total
operating expenses
|
80,691
|
29,786
|
34,521
|
9,382
|
12,245
|
|||||||||||
Operating
loss
|
(80,157
|
)
|
(29,212
|
)
|
(33,712
|
)
|
(9,382
|
)
|
(12,245
|
)
|
||||||
Other
income (expense):
|
||||||||||||||||
Interest
and other income, net
|
6,393
|
2,317
|
770
|
247
|
513
|
|||||||||||
Income
taxes
|
—
|
—
|
(1
|
)
|
27
|
(51
|
)
|
|||||||||
Net
loss
|
$
|
(73,764
|
)
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(9,108
|
)
|
$
|
(11,783
|
)
|
|
Net
loss per common share
|
||||||||||||||||
Basic
and diluted
|
$
|
(1.76
|
)
|
$
|
(0.78
|
)
|
$
|
(1.10
|
)
|
$
|
(0.43
|
)
|
$
|
(0.59
|
)
|
As
of December
31,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Cash,
cash equivalents, interest receivable
and
investment securities
|
$
|
125,610
|
$
|
100,733
|
$
|
49,878
|
$
|
31,414
|
$
|
24,131
|
||||||
Working
capital
|
102,774
|
83,890
|
46,538
|
30,982
|
22,350
|
|||||||||||
Total
assets
|
140,313
|
105,097
|
50,862
|
32,223
|
29,103
|
|||||||||||
Other
liabilities
|
294
|
322
|
92
|
—
|
256
|
|||||||||||
Contingent
equity rights
|
4,004
|
4,004
|
4,004
|
—
|
—
|
|||||||||||
Total
stockholders’ equity
|
123,821
|
94,678
|
42,804
|
31,226
|
26,330
|
Years
ended December 31,
|
|||||||||||||
2006
|
2005
|
2004
|
Amounts
accumulated during the
development
stage
|
||||||||||
Sulonex
|
$
|
41,533,000
|
$
|
16,075,000
|
$
|
6,064,000
|
$
|
71,812,000
|
|||||
KRX-0401
|
8,508,000
|
5,394,000
|
2,230,000
|
16,132,000
|
|||||||||
Other
clinical stage compounds
|
3,941,000
|
1,593,000
|
623,000
|
6,157,000
|
|||||||||
Other
|
2,157,000
|
1,120,000
|
888,000
|
25,932,000
|
|||||||||
Total
|
$
|
56,139,000
|
$
|
24,182,000
|
$
|
9,805,000
|
$
|
120,033,000
|
Payment
due by period
|
||||||||||||||||
Contractual
obligations
|
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
Research
and development agreements
|
$
|
70,530,000
|
$
|
31,205,000
|
$
|
39,183,000
|
$
|
142,000
|
$
|
—
|
||||||
Operating
leases
|
2,568,000
|
788,000
|
1,321,000
|
459,000
|
—
|
|||||||||||
Total
|
$
|
73,098,000
|
$
|
31,993,000
|
$
|
40,504,000
|
$
|
601,000
|
$
|
—
|
· |
revenue
that is likely to result from the asset, including estimated selling
price, estimated market share and year-over-year growth
rates;
|
· |
operating
margin; and
|
· |
sales
and marketing and general and administrative expenses using historical
and
industry or other sources of market
data;
|
· |
revenue
that is likely to result from specific in-process research and development
projects, including estimated patient populations, estimated selling
prices, estimated market penetration and estimated market share and
year-over-year growth rates over the product life
cycles;
|
· |
cost
of sales related to the potential products using industry data or
other
sources of market data;
|
· |
sales
and marketing expense using industry data or other market
data;
|
· |
general
and administrative expenses; and
|
· |
research
and development expenses.
|
· |
if
the growth rate regarding the revenue assumptions for the three drugs
under development and included in the assumptions on future cash
flows
were increased by 10%, the result on the aggregate amount of the
charge
would have been approximately $4,500,000, yielding a total charge
of
approximately $23,300,000, or if the growth rate were decreased by
5%, the
result on the aggregate amount of the charge would have been approximately
$2,200,000, yielding a total charge of approximately
$16,600,000;
|
· |
if
the discount rate used to bring the estimated future cash flows to
a
present value amount (which was based on a 55% rate) were reduced
by 10%,
the total charge would have increased to approximately $33,000,000,
and if
the discount rate were increased by 10%, the total charge would have
decreased to approximately $11,000,000.
|
Contents
|
Page
|
|||
Reports
of Independent Registered Public Accounting Firm
|
F-1
|
|||
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
F-3
|
|||
Consolidated
Statements of Operations for the years ended December 31, 2006, 2005
and
2004, and the period from December 3, 1996 to December 31,
2006
|
F-4
|
|||
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2006, 2005, and 2004, and the period from December 3, 1996 to
December
31, 2006
|
F-5
|
|||
Consolidated
Statements of Cash Flows for the years ended December 31, 2006, 2005
and
2004, and the period from December 3, 1996 to December 31,
2006
|
F-10
|
|||
Notes
to the Consolidated Financial Statements
|
F-12
|
Exhibit
|
||
Number
|
Exhibit
Description
|
|
2.1
|
Agreement
and Plan of Merger by and among Keryx Biopharmaceuticals, Inc., AXO
Acquisition Corp., and ACCESS Oncology, Inc. dated as of January
7, 2004,
filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated
January 8, 2004 (File No. 000-30929), and incorporated herein by
reference.
|
|
|
|
|
2.2
|
First
Amendment to the Agreement and Plan of Merger by and among Keryx
Biopharmaceuticals, Inc., AXO Acquisition Corp., and ACCESS Oncology,
Inc.
dated as of February 5, 2004, filed as Exhibit 2.2 to the Registrant’s
Current Report on Form 8-K dated February 5, 2004 (File No. 000-30929),
and incorporated herein by reference.
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of Keryx Biopharmaceuticals,
Inc., filed as Exhibit 3.1 to the Registrant's Quarterly Report on
Form
10-Q for the quarter ended June 30, 2004, filed on August 12, 2004
(File
No. 000-30929), and incorporated herein by reference.
|
|
3.2
|
Amended
and Restated Bylaws of Keryx Biopharmaceuticals, Inc., filed as Exhibit
3.2 to the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2001, filed on March 26, 2002 (File No. 000-30929),
and
incorporated herein by reference.
|
|
4.1
|
Specimen
Common Stock Certificate, filed as Exhibit 4.1 to the Registrant’s First
Amendment to the Registration Statement on Form S-1 filed on June
30, 2000
(File No. 333-37402), and incorporated herein by
reference.
|
|
4.2
|
Form
of Warrant for the Purchase of Shares of Common Stock between certain
holders of Series A Preferred Stock and Keryx Biopharmaceuticals,
Inc.,
dated as of December 14, 1999, filed as Exhibit 4.9 to the Registrant’s
Registration Statement on Form S-1 filed on May 19, 2000 (File No.
333-37402), and incorporated herein by reference.
|
4.3
|
Form
of Common Stock Purchase Warrant dated November 20, 2003, issued
to the
purchasers under the Securities Purchase Agreement, filed as Exhibit
10.3
to the Registrant’s Registration Statement on Form S-3 filed on December
12, 2003 (File No. 333-111143), and incorporated herein by
reference.
|
|
4.4
|
Securities
Purchase Agreement dated November 12, 2003 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.1 to the Company’s Registration Statement on Form S-3 filed
on December 12, 2003 (File No. 333-111143), and incorporated herein
by
reference.
|
|
|
|
|
4.5
|
Registration
Rights Agreement dated November 17, 2003 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-3
filed on December 12, 2003 (File No. 333-111143), and incorporated
herein
by reference.
|
|
4.6
|
Securities
Purchase Agreement dated February 12, 2004 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.1 to the Company’s Registration Statement on Form S-3 filed
on March 16, 2004 (File No. 333-113654), and incorporated herein
by
reference
|
|
|
|
|
4.7
|
Registration
Rights Agreement dated February 17, 2004 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-3
filed on March 16, 2004 (File No. 333-113654), and incorporated herein
by
reference.
|
|
10.1†
|
Employment
Agreement with I. Craig Henderson, M.D., dated as of January 31,
2004.
filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q
for the quarter ended March 31, 2004, filed on May 14, 2004 (File
No.
000-30929), and incorporated herein by reference.
|
|
10.2!
|
License
Agreement between Alfa Wassermann S.p.A. and Partec Ltd., dated as
of
November 12, 1998, filed as Exhibit 10.7 to the Registrant’s Second
Amendment to the Registration Statement on Form S-1 filed on July
24, 2000
(File No. 333-37402), and incorporated by reference.
|
|
|
|
|
10.3!
|
License
Agreement between Opocrin S.p.A. and Keryx Biopharmaceuticals, Inc.,
dated
September 25, 2002, filed as Exhibit 10.9 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002 filed
on
November 12, 2002 (File No. 000-30929), and incorporated herein by
reference.
|
|
|
|
|
10.4
|
Form
of Sulonex™ (KRX-101) Scientific Advisory Board Agreement, filed as
Exhibit 10.20 to the Registrant’s First Amendment to the Registration
Statement on Form S-1 filed on June 30, 2000 (File No. 333-37402),
and
incorporated herein be reference.
|
|
|
|
|
10.5†
|
Employment
Agreement between Ron Bentsur and Keryx Biopharmaceuticals, Inc.,
dated as
of June 23, 2003, filed as Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2003 filed on August
14, 2003
(File No. 000-30929), and incorporated herein by reference.
|
|
|
|
|
10.6†
|
Employment
Agreement between Keryx Biopharmaceuticals, Inc. and Michael S. Weiss
dated as of December 23, 2002, filed as Exhibit 10.1 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929), and incorporated herein by
reference.
|
|
|
|
|
10.7†
|
1999
Stock Option Plan, as amended, filed as Exhibit 10.2 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929) and incorporated herein by
reference.
|
|
|
|
|
10.8†
|
2000
Stock Option Plan, as amended, filed as Exhibit 10.3 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929) and incorporated herein by
reference.
|
|
|
|
|
10.9†
|
2002
CEO Incentive Stock Option Plan, filed as Exhibit 10.4 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929) and incorporated herein by
reference.
|
10.10
|
Sub-license
Agreement dated October 13, 2000 between Procept, Inc. and AOI
Pharmaceuticals, Inc.,
filed as Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.11
|
Amendment
to Sub-license agreement dated February 28, 2002 between AOI
Pharmaceuticals, Inc. and Procept, Inc.,
filed as Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.12
|
Patent
License Agreement dated February 28, 2002 between Procept, Inc. and
United
State Public Health Services, as amended,
filed as Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.13
|
Release
Agreement dated February 28, 2002 among AOI Pharmaceuticals, Inc.,
Procept, Inc., and United States Public Health Services,
filed as Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.14
|
Comprehensive
Release Agreement dated May 29, 2002 among AOI Pharmaceuticals, Inc.,
Procept, Inc., United States Public Health Services and the University
of
Chicago,
filed as Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.15!
|
Sub-license
Agreement between Prescient NeuroPharma, Inc. and ACCESS Oncology,
Inc.
dated December 24, 2001,
filed as Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference. .
|
|
|
|
|
10.16!
|
License
Agreement dated September 18, 2002 between Zentaris AG and AOI Pharma,
Inc,
filed as Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.17!
|
Addendum
Agreement to License and Cooperation Agreement for Perifosine dated
December 3, 2003 between Zentaris AG and AOI Pharma, Inc.,
filed as Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
|
|
10.18
|
Cooperative
Research and Development Agreement between the National Cancer Institute
and ASTA Medica Inc., as amended,
filed as Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
10.19
|
Keryx
Biopharmaceuticals, Inc. 2004 Long-Term Incentive Plan, filed with
the
Registrant’s Definitive Proxy Statement for the Annual Meeting of
Stockholders on June 10, 2004, filed on April 29, 2004, and incorporated
herein by reference.
|
|
10.20†
|
Employment
Agreement between Ronald C. Renaud, Jr. and Keryx Biopharmaceuticals,
Inc., dated as of February 14, 2006, filed
as Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2005, filed on March 8, 2006, and incorporated
herein by reference.
|
|
10.21!
|
License
Agreement between Keryx Biopharmaceuticals, Inc. and Panion & BF
Biotech, Inc. dated as of November 7, 2005, filed
as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2005, filed on March 8, 2005, and incorporated
herein by reference.
|
|
10.22*
|
License
Agreement by and between Kyowa Hakko Kogyo Co., Ltd. and Keryx
Biopharmaceuticals, Inc. dated as of September 29, 2006,
filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006, filed on November 8, 2006,
and
incorporated herein by reference.
|
10.23
|
Assignment
and Assumption Agreement (related to the License Agreement by and
between
Kyowa Hakko Kogyo Co., Ltd. and Keryx Biopharmaceuticals, Inc. dated
as of
September 29, 2006) by and among Keryx Biopharmaceuticals, Inc. and
AOI
Pharmaceuticals, Inc. dated as of October 25, 2006, filed
as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2006, filed on November 8, 2006, and
incorporated herein by reference.
|
|
10.24†
|
Amendment
to the Keryx Biopharmaceuticals, Inc. 2004 Long-Term Incentive Plan
dated
April 11, 2006, filed
as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006, filed on August 9, 2006, and incorporated
herein by reference.
|
|
10.25†
|
CFO
Incentive Stock Option Agreement dated February 14, 2006.
|
|
10.26†
|
President
Incentive Stock Option Agreement dated February 5, 2004.
|
|
21.1
|
List
of subsidiaries of Keryx Biopharmaceuticals, Inc.
|
|
|
|
|
23.1
|
Consent
of KPMG LLP.
|
|
24.1
|
Power
of Attorney of Director and Officers of Keryx Biopharmaceuticals,
Inc.
(included herein).
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 16, 2007.
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 16, 2007.
|
|
|
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 16,
2007.
|
|
|
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated March 16,
2007.
|
|
Contents
|
Page
|
|
Reports
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
F-3
|
|
Consolidated
Statements of Operations for the years ended December 31, 2006, 2005
and
2004, and the period from December 3, 1996 to December 31,
2006
|
F-4
|
|
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2006, 2005, and 2004, and the period from December 3, 1996 to
December
31, 2006
|
F-5
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2006, 2005
and
2004, and the period from December 3, 1996 to December 31,
2006
|
F-10
|
|
Notes
to the Consolidated Financial Statements
|
F-12
|
2006
|
2005
|
||||||
Assets
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
48,736
|
$
|
68,175
|
|||
Short-term
investment securities
|
63,659
|
18,272
|
|||||
Accrued
interest receivable
|
525
|
336
|
|||||
Other
receivables, inventory and prepaid expenses
|
2,048
|
3,200
|
|||||
Total
current assets
|
114,968
|
89,983
|
|||||
Long-term
investment securities
|
12,690
|
13,950
|
|||||
Property,
plant and equipment, net
|
8,489
|
1,004
|
|||||
Goodwill
|
3,208
|
—
|
|||||
Other
assets (primarily intangible assets), net
|
958
|
160
|
|||||
Total
assets
|
$
|
140,313
|
$
|
105,097
|
|||
Liabilities
and stockholders’ equity
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable and accrued expenses
|
$
|
10,460
|
$
|
5,054
|
|||
Accrued
compensation and related liabilities
|
1,534
|
936
|
|||||
Deferred
revenue
|
200
|
103
|
|||||
Total
current liabilities
|
12,194
|
6,093
|
|||||
Contingent
equity rights
|
4,004
|
4,004
|
|||||
Other
liabilities
|
294
|
322
|
|||||
Total
liabilities
|
16,492
|
10,419
|
|||||
Stockholders’
equity
|
|||||||
Common
stock, $0.001 par value per share (60,000,000 and 60,000,000 shares
authorized,
43,516,669
and 37,831,896 shares issued, 43,460,569 and 37,775,796 shares
outstanding
at
December 31, 2006, and 2005, respectively)
|
44
|
38
|
|||||
Additional
paid-in capital
|
312,078
|
209,177
|
|||||
Treasury
stock, at cost, 56,100 shares at December 31, 2006, and 2005,
respectively
|
(89
|
)
|
(89
|
)
|
|||
Deficit
accumulated during the development stage
|
(188,212
|
)
|
(114,448
|
)
|
|||
Total
stockholders’ equity
|
123,821
|
94,678
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
140,313
|
$
|
105,097
|
2006
|
2005
|
2004
|
Amounts
accumulated during the development
stage
|
||||||||||
Revenue:
|
|||||||||||||
Diagnostic
revenue
|
$
|
103
|
$
|
—
|
$
|
—
|
$
|
103
|
|||||
Service
revenue
|
431
|
574
|
809
|
1,814
|
|||||||||
Management
fees from related party
|
—
|
—
|
—
|
300
|
|||||||||
Total
revenue
|
534
|
574
|
809
|
2,217
|
|||||||||
Operating
expenses:
|
|||||||||||||
Cost
of diagnostics sold
|
140
|
—
|
—
|
140
|
|||||||||
Cost
of services
|
390
|
819
|
835
|
2,044
|
|||||||||
Research
and development:
|
|||||||||||||
Non-cash
compensation
|
6,504
|
594
|
413
|
14,238
|
|||||||||
Non-cash
acquired in-process research and development
|
—
|
—
|
18,800
|
18,800
|
|||||||||
Other
research and development
|
56,139
|
24,182
|
9,805
|
120,033
|
|||||||||
Total
research and development
|
62,643
|
24,776
|
29,018
|
153,071
|
|||||||||
Selling,
general and administrative:
|
|||||||||||||
Non-cash
compensation
|
8,408
|
775
|
1,087
|
13,849
|
|||||||||
Other
selling, general and administrative
|
9,110
|
3,416
|
3,581
|
34,196
|
|||||||||
Total
selling, general and administrative
|
17,518
|
4,191
|
4,668
|
48,045
|
|||||||||
Total
operating expenses
|
80,691
|
29,786
|
34,521
|
203,300
|
|||||||||
Operating
loss
|
(80,157
|
)
|
(29,212
|
)
|
(33,712
|
)
|
(201,083
|
)
|
|||||
Interest
and other income, net
|
6,393
|
2,317
|
770
|
13,362
|
|||||||||
Net
loss before income taxes
|
(73,764
|
)
|
(26,895
|
)
|
(32,942
|
)
|
(187,721
|
)
|
|||||
Income
taxes
|
—
|
—
|
1
|
491
|
|||||||||
Net
loss
|
$
|
(73,764
|
)
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(188,212
|
)
|
|
Basic
and diluted loss per common share
|
$
|
(1.76
|
)
|
$
|
(0.78
|
)
|
$
|
(1.10
|
)
|
$
|
(9.21
|
)
|
|
Weighted
average shares used in computing basic and diluted net loss per common
share
|
41,919,741
|
34,384,576
|
30,053,647
|
20,440,585
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Balance
at December 31, 2003
|
—
|
$
|
—
|
25,016,873
|
$
|
25
|
$
|
86,042
|
||||||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$338)
|
—
|
—
|
3,200,000
|
3
|
31,659
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
—
|
—
|
623,145
|
1
|
6,324
|
|||||||||||
Exercise
of warrants
|
—
|
—
|
348,824
|
—*
|
2,093
|
|||||||||||
Exercise
of options
|
—
|
—
|
2,184,438
|
2
|
2,939
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
—
|
—
|
3,586
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Balance
at December 31, 2004
|
—
|
$
|
—
|
31,373,280
|
$
|
31
|
$
|
132,643
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Balance
at December 31, 2003
|
56,100
|
$
|
(89
|
)
|
$
|
(142
|
)
|
$
|
(54,610
|
)
|
$
|
31,226
|
||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$338)
|
—
|
—
|
—
|
—
|
31,662
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
—
|
—
|
—
|
—
|
6,325
|
|||||||||||
Exercise
of warrants
|
—
|
—
|
—
|
—
|
2,093
|
|||||||||||
Exercise
of options
|
—
|
—
|
—
|
—
|
2,941
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
(2,086
|
)
|
—
|
1,500
|
||||||||||
Net
loss
|
—
|
—
|
—
|
(32,943
|
)
|
(32,943
|
)
|
|||||||||
Balance
at December 31, 2004
|
56,100
|
$
|
(89
|
)
|
$
|
(2,228
|
)
|
$
|
(87,553
|
)
|
$
|
42,804
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Balance
at December 31, 2004
|
—
|
$
|
—
|
31,373,280
|
$
|
31
|
$
|
132,643
|
||||||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,419)
|
—
|
—
|
5,780,000
|
6
|
75,784
|
|||||||||||
Exercise
of warrants
|
—
|
—
|
157,647
|
1
|
946
|
|||||||||||
Exercise
of options
|
—
|
—
|
520,969
|
—*
|
663
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
—
|
—
|
722
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Balance
at December 31, 2005
|
—
|
$
|
—
|
37,831,896
|
$
|
38
|
$
|
210,758
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Balance
at December 31, 2004
|
56,100
|
$
|
(89
|
)
|
$
|
(2,228
|
)
|
$
|
(87,553
|
)
|
$
|
42,804
|
||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,419)
|
—
|
—
|
—
|
—
|
75,790
|
|||||||||||
Exercise
of warrants
|
—
|
—
|
—
|
—
|
947
|
|||||||||||
Exercise
of options
|
—
|
—
|
—
|
—
|
663
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
647
|
—
|
1,369
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
(26,895
|
)
|
(26,895
|
)
|
|||||||||
Balance
at December 31, 2005
|
56,100
|
$
|
(89
|
)
|
$
|
(1,581
|
)
|
$
|
(114,448
|
)
|
$
|
94,678
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Balance
at December 31, 2005
|
—
|
$
|
—
|
37,831,896
|
$
|
38
|
$
|
210,758
|
||||||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$104)
|
—
|
—
|
4,500,000
|
5
|
82,692
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
—
|
—
|
245,024
|
—
|
* |
3,310
|
||||||||||
Issuance
of common stock held in escrow
|
—
|
—
|
15,646
|
—
|
* |
—
|
||||||||||
Issuance
of restricted stock
|
—
|
—
|
100,000
|
—
|
* |
—
|
||||||||||
Exercise
of options
|
—
|
—
|
824,103
|
1
|
1,987
|
|||||||||||
Reclassification
of unearned compensation upon adoption of SFAS No. 123R
|
—
|
—
|
—
|
—
|
(1,581
|
)
|
||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
—
|
—
|
14,912
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Balance
at December 31, 2006
|
—
|
$
|
—
|
43,516,669
|
$
|
44
|
$
|
312,078
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Balance
at December 31, 2005
|
56,100
|
$
|
(89
|
)
|
$
|
(1,581
|
)
|
$
|
(114,448
|
)
|
$
|
94,678
|
||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$104)
|
—
|
—
|
—
|
—
|
82,697
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
—
|
—
|
—
|
—
|
3,310
|
|||||||||||
Issuance
of common stock held in escrow
|
—
|
—
|
—
|
—
|
—*
|
|||||||||||
Issuance
of restricted stock
|
—
|
—
|
—
|
—
|
—*
|
|||||||||||
Exercise
of options
|
—
|
—
|
—
|
—
|
1,988
|
|||||||||||
Reclassification
of unearned compensation upon adoption of SFAS No. 123R
|
—
|
—
|
1,581
|
—
|
—
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
—
|
—
|
14,912
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
(73,764
|
)
|
(73,764
|
)
|
|||||||||
Balance
at December 31, 2006
|
56,100
|
$
|
(89
|
)
|
$
|
—
|
$
|
(188,212
|
)
|
$
|
123,821
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Amounts
accumulated during the development stage (December 3, 1996 to December
31,
2006):
|
||||||||||||||||
Contributed
capital
|
—
|
$
|
—
|
—
|
$
|
—
|
$
|
3,181
|
||||||||
Conversion
of convertible notes of Partec into stock in Keryx
|
—
|
—
|
—
|
—
|
2,973
|
|||||||||||
Issuance
of Series A convertible preferred stock to investors at $100 per
share for
cash (net of issuance expenses of $552)
|
89,180
|
—
|
* |
—
|
—
|
8,338
|
||||||||||
Issuance
of Series A convertible preferred stock at $0.001 par value to
note
holders in exchange for note of predecessor
|
29,465
|
—
|
* |
—
|
—
|
—
|
||||||||||
Issuance
of common stock to technology licensors for technology
license
|
—
|
—
|
1,256,797
|
2
|
358
|
|||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,523)
|
—
|
—
|
10,280,000
|
11
|
158,476
|
|||||||||||
Issuance
of common stock in private placement (net of issuance expenses
of
$1,205)
|
—
|
—
|
6,729,412
|
6
|
45,789
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
—
|
—
|
868,169
|
1
|
9,634
|
|||||||||||
Issuance
of common stock held in escrow
|
—
|
—
|
15,646
|
—
|
* |
—
|
||||||||||
Issuance
of restricted stock
|
—
|
—
|
100,000
|
—
|
* |
—
|
||||||||||
Receipt
on account of shares issued in prior years
|
—
|
—
|
6,900,000
|
7
|
—
|
|||||||||||
Conversion
of Series A convertible preferred stock to common stock
|
(118,645
|
)
|
(—
|
)* |
6,114,962
|
6
|
(6
|
)
|
||||||||
Issuance
of common stock in initial public offering, including exercise
of
overallotment (net of issuance expenses of $5,702)
|
—
|
—
|
5,200,000
|
5
|
46,293
|
|||||||||||
Purchase
of common stock
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Exercise
of warrants
|
—
|
—
|
753,897
|
1
|
3,050
|
|||||||||||
Exercise
of options
|
—
|
—
|
5,297,786
|
5
|
5,793
|
|||||||||||
Reclassification
of unearned compensation upon adoption of SFAS No. 123R
|
—
|
—
|
—
|
—
|
(1,581
|
)
|
||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
—
|
—
|
29,078
|
|||||||||||
Warrants
of common stock issued to related party as finder’s fee in private
placement
|
—
|
—
|
—
|
—
|
114
|
|||||||||||
Warrants
for common stock issued to note holders in exchange for note of
predecessor
|
—
|
—
|
—
|
—
|
588
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Balance
at December 31, 2006
|
—
|
$
|
—
|
43,516,669
|
$
|
44
|
$
|
312,078
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Amounts
accumulated during the development stage (December 3, 1996 to December
31,
2006):
|
||||||||||||||||
Contributed
capital
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
3,181
|
|||||||
Conversion
of convertible notes of Partec into stock in Keryx
|
—
|
—
|
—
|
—
|
2,973
|
|||||||||||
Issuance
of Series A convertible preferred stock to investors at $100 per
share for
cash (net of issuance expenses of $552)
|
—
|
—
|
—
|
—
|
8,338
|
|||||||||||
Issuance
of Series A convertible preferred stock at $0.001 par value to
note
holders in exchange for note of predecessor
|
—
|
—
|
—
|
—
|
—
|
* | ||||||||||
Issuance
of common stock to technology licensors for technology
license
|
—
|
—
|
—
|
—
|
360
|
|||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,523)
|
—
|
—
|
—
|
—
|
158,487
|
|||||||||||
Issuance
of common stock in private placement (net of issuance expenses
of
$1,205)
|
—
|
—
|
—
|
—
|
45,795
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
—
|
—
|
—
|
—
|
9,635
|
|||||||||||
Issuance
of common stock held in escrow
|
—
|
—
|
—
|
—
|
—
|
* | ||||||||||
Issuance
of restricted stock
|
—
|
—
|
—
|
—
|
—
|
* | ||||||||||
Receipt
on account of shares issued in prior years
|
—
|
—
|
—
|
—
|
7
|
|||||||||||
Conversion
of Series A convertible preferred stock to common stock
|
—
|
—
|
—
|
—
|
(—
|
)* | ||||||||||
Issuance
of common stock in initial public offering, including exercise
of
overallotment (net of issuance expenses of $5,702)
|
—
|
—
|
—
|
—
|
46,298
|
|||||||||||
Purchase
of common stock
|
56,100
|
(89
|
)
|
—
|
—
|
(89
|
)
|
|||||||||
Exercise
of warrants
|
—
|
—
|
—
|
—
|
3,051
|
|||||||||||
Exercise
of options
|
—
|
—
|
—
|
—
|
5,798
|
|||||||||||
Reclassification
of unearned compensation upon adoption of SFAS No. 123R
|
—
|
—
|
1,581
|
—
|
—
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
—
|
—
|
(1,581
|
)
|
—
|
27,497
|
||||||||||
Warrants
of common stock issued to related party as finder’s fee in private
placement
|
—
|
—
|
—
|
—
|
114
|
|||||||||||
Warrants
for common stock issued to note holders in exchange for note of
predecessor
|
—
|
—
|
—
|
—
|
588
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
(188,212
|
)
|
(188,212
|
)
|
|||||||||
Balance
at December 31, 2006
|
56,100
|
$
|
(89
|
)
|
$
|
—
|
$
|
(188,212
|
)
|
$
|
123,821
|
2006
|
2005
|
2004
|
Amounts
accumulated
during
the
development
stage
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||||||||
Net
loss
|
$
|
(73,764
|
)
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(188,212
|
)
|
|
Adjustments
to reconcile cash flows used in operating activities:
|
|||||||||||||
Acquired
in-process research and development
|
—
|
—
|
18,800
|
18,800
|
|||||||||
Stock
compensation expense
|
14,912
|
1,369
|
1,500
|
28,087
|
|||||||||
Issuance
of common stock to technology licensor
|
—
|
—
|
—
|
359
|
|||||||||
Interest
on convertible notes settled through issuance of preferred
shares
|
—
|
—
|
—
|
253
|
|||||||||
Depreciation
and amortization
|
224
|
190
|
155
|
2,835
|
|||||||||
Loss
on disposal of property, plant and equipment
|
—
|
2
|
—
|
172
|
|||||||||
Impairment
charges
|
—
|
—
|
—
|
2,482
|
|||||||||
Exchange
rate differences
|
—
|
—
|
(3
|
)
|
94
|
||||||||
Changes
in assets and liabilities, net of effects of acquisitions:
|
|||||||||||||
Decrease
(increase) in other receivables, inventory and
prepaid
expenses
|
1,253
|
(2,578
|
)
|
(43
|
)
|
(1,576
|
)
|
||||||
(Increase)
in accrued interest receivable
|
(189
|
)
|
(192
|
)
|
(33
|
)
|
(525
|
)
|
|||||
(Increase)
in security deposits
|
(255
|
)
|
(8
|
)
|
—
|
(263
|
)
|
||||||
Increase
in accounts payable and accrued expenses
|
4,974
|
1,975
|
874
|
8,715
|
|||||||||
Increase
in accrued compensation and related liabilities
|
575
|
193
|
68
|
939
|
|||||||||
(Decrease)
increase in other liabilities
|
(28
|
)
|
230
|
(63
|
)
|
139
|
|||||||
Increase
(decrease) in deferred revenue
|
97
|
(37
|
)
|
(316
|
)
|
(256
|
)
|
||||||
Net
cash used in operating activities
|
(52,201
|
)
|
(25,751
|
)
|
(12,004
|
)
|
(127,957
|
)
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||||||||
Purchases
of property, plant and equipment
|
(7,597
|
)
|
(964
|
)
|
(24
|
)
|
(12,988
|
)
|
|||||
Proceeds
from disposals of property, plant and equipment
|
—
|
1
|
—
|
425
|
|||||||||
(Increase)
in note and accrued interest receivable from related party
|
—
|
—
|
(4
|
)
|
(356
|
)
|
|||||||
Payments
of transaction costs
|
(231
|
)
|
—
|
—
|
(231
|
)
|
|||||||
Decrease
(increase) in other assets
|
27
|
(23
|
)
|
(8
|
)
|
(1,192
|
)
|
||||||
Investment
in held-to-maturity short-term securities
|
(4,080
|
)
|
(1,122
|
)
|
(16,838
|
)
|
(48,913
|
)
|
|||||
Proceeds
from maturity of held-to-maturity short-term securities
|
8,275
|
15,045
|
11,459
|
52,021
|
|||||||||
Investment
in available-for-sale short-term securities
|
(38,375
|
)
|
(13,700
|
)
|
(6,025
|
)
|
(58,100
|
)
|
|||||
Proceeds
from sale of available-for-sale short-term securities
|
6,725
|
8,675
|
1,000
|
16,400
|
|||||||||
Investment
in held-to-maturity long-term securities
|
(16,677
|
)
|
(21,270
|
)
|
—
|
(37,947
|
)
|
||||||
Proceeds
from maturity of held-to-maturity long-term securities
|
5
|
185
|
—
|
190
|
|||||||||
Net
cash used in investing activities
|
(51,928
|
)
|
(13,173
|
)
|
(10,440
|
)
|
(90,691
|
)
|
2006
|
2005
|
2004
|
Amounts
accumulated
during
the
development
stage
|
||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||||||||
Proceeds
from short-term loans
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
500
|
|||||
Proceeds
from long-term loans
|
—
|
—
|
—
|
3,251
|
|||||||||
Payment
of assumed notes payable and accrued interest in connection with
the
ACCESS Oncology acquisition
|
—
|
—
|
(6,322
|
)
|
(6,322
|
)
|
|||||||
Issuance
of convertible note, net
|
—
|
—
|
—
|
2,150
|
|||||||||
Issuance
of preferred shares, net
|
—
|
—
|
—
|
8,453
|
|||||||||
Receipts
on account of shares previously issued
|
—
|
—
|
—
|
7
|
|||||||||
Proceeds
from initial public offering, net
|
—
|
—
|
—
|
46,298
|
|||||||||
Proceeds
from subsequent public offerings, net
|
82,697
|
75,790
|
—
|
158,487
|
|||||||||
Proceeds
from private placements, net
|
—
|
—
|
31,662
|
45,795
|
|||||||||
Proceeds
from exercise of options and warrants
|
1,988
|
1,610
|
5,034
|
8,849
|
|||||||||
Purchase
of treasury stock
|
—
|
—
|
—
|
(89
|
)
|
||||||||
Net
cash provided by financing activities
|
84,685
|
77,400
|
30,374
|
267,379
|
|||||||||
Cash
acquired in acquisition
|
5
|
—
|
94
|
99
|
|||||||||
Effect
of exchange rate on cash
|
—
|
—
|
3
|
(94
|
)
|
||||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(19,439
|
)
|
38,476
|
8,027
|
48,736
|
||||||||
Cash
and cash equivalents at beginning of year
|
68,175
|
29,699
|
21,672
|
—
|
|||||||||
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
48,736
|
$
|
68,175
|
$
|
29,699
|
$
|
48,736
|
|||||
NON
- CASH TRANSACTIONS
|
|||||||||||||
Issuance
of common stock in connection with acquisition
|
$
|
3,310
|
$
|
—
|
$
|
6,325
|
$
|
9,635
|
|||||
Contingent
equity rights in connection with acquisition
|
—
|
—
|
4,004
|
4,004
|
|||||||||
Assumption
of liabilities in connection with acquisition
|
345
|
—
|
8,723
|
9,068
|
|||||||||
Conversion
of short-term loans into contributed capital
|
—
|
—
|
—
|
500
|
|||||||||
Conversion
of long-term loans into contributed capital
|
—
|
—
|
—
|
2,681
|
|||||||||
Conversion
of long-term loans into convertible notes of Partec
|
—
|
—
|
—
|
570
|
|||||||||
Conversion
of convertible notes of Partec and accrued interest into stock in
Keryx
|
—
|
—
|
—
|
2,973
|
|||||||||
Issuance
of warrants to related party as finder’s fee in private
placement
|
—
|
—
|
—
|
114
|
|||||||||
Declaration
of stock dividend
|
—
|
—
|
—
|
3
|
|||||||||
SUPPLEMENTARY
DISCLOSURES OF CASH FLOW INFORMATION
|
|||||||||||||
Cash
paid for interest
|
$
|
—
|
$
|
—
|
$
|
1,026
|
$
|
1,166
|
|||||
Cash
paid for income taxes
|
$
|
—
|
$
|
—
|
$
|
1
|
$
|
432
|
|
Estimated
useful
life
(years)
|
|
Lab
equipment
|
4
|
|
Office
furniture and equipment
|
3-7
|
|
Computers,
software and related equipment
|
3
|
(in
thousands)
|
December
31, 2006
|
|
December
31, 2005
|
||||
Money
market funds
|
$
|
14,733
|
$
|
13,383
|
|||
Checking
and bank deposits
|
34,003
|
54,792
|
|||||
Total
|
$
|
48,736
|
$
|
68,175
|
December
31,
2006
|
|||||||||||||
(in
thousands)
|
Amortized
cost
|
Gross
unrealized
holding
gains
|
Gross
unrealized
holding
losses
|
Estimated
fair
value
|
|||||||||
Short-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between January and October
2007) (Held-to-maturity)
|
$
|
21,959
|
$
|
—
|
$
|
(73
|
)
|
$
|
21,886
|
||||
Auction
notes (Available-for-sale) *
|
41,700
|
—
|
—
|
41,700
|
|||||||||
$
|
63,659
|
$
|
—
|
$
|
(73
|
)
|
$
|
63,586
|
|||||
Long-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between April and May 2008)
(Held-to-maturity)
|
$
|
12,690
|
$
|
2
|
$
|
(19
|
)
|
$
|
12,673
|
||||
$
|
12,690
|
$
|
2
|
$
|
(19
|
)
|
$
|
12,673
|
December
31,
2005
|
|||||||||||||
(in
thousands)
|
Amortized
cost
|
Gross
unrealized
holding
gains
|
Gross
unrealized
holding
losses
|
Estimated
fair
value
|
|||||||||
Short-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between July and October
2006)
(Held-to-maturity)
|
$
|
7,150
|
$
|
—
|
$
|
(49
|
)
|
$
|
7,101
|
||||
Auction
notes (Available-for-sale) *
|
10,050
|
—
|
—
|
10,050
|
|||||||||
US
corporate debt securities (mature between March and May 2006)
(Held-to-maturity)
|
1,072
|
—
|
(4
|
)
|
1,068
|
||||||||
$
|
18,272
|
$
|
—
|
$
|
(53
|
)
|
$
|
18,219
|
|||||
Long-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between January and July
2007)
(Held-to-maturity)
|
$
|
13,950
|
$
|
—
|
$
|
(90
|
)
|
$
|
13,860
|
||||
US
corporate debt securities (Held-to-maturity)
|
—
|
—
|
—
|
—
|
|||||||||
$
|
13,950
|
$
|
—
|
$
|
(90
|
)
|
$
|
13,860
|
(in
thousands)
|
December
31, 2006
|
|
December
31, 2005
|
||||
Manufacturing
suite and equipment
|
$
|
8,162
|
$
|
663
|
|||
Lab
equipment
|
38
|
—
|
|||||
Leasehold
improvements
|
16
|
16
|
|||||
Office
furniture and equipment
|
311
|
308
|
|||||
Computers,
software and related equipment
|
318
|
234
|
|||||
8,845
|
1,221
|
||||||
Accumulated
depreciation and amortization
|
(356
|
)
|
(217
|
)
|
|||
Net
book value
|
$
|
8,489
|
$
|
1,004
|
For
the year ended December
31
|
||||||||||
(in
thousands)
|
2006
|
2005
|
2004
|
|||||||
Depreciation
expense:
|
||||||||||
Cost
of services
|
$
|
2
|
$
|
4
|
$
|
7
|
||||
Research
and development
|
90
|
72
|
44
|
|||||||
General
and administrative
|
47
|
26
|
16
|
|||||||
Total
|
$
|
139
|
$
|
102
|
$
|
67
|
||||
(in
thousands)
|
December
31, 2006
|
|
December
31, 2005
|
||||
Patents
and other intangible assets
|
$
|
1,007
|
$
|
352
|
|||
Long-term
deposits
|
322
|
67
|
|||||
Deferred
registration fees
|
22
|
49
|
|||||
1,351
|
468
|
||||||
Accumulated
amortization
|
(393
|
)
|
(308
|
)
|
|||
$
|
958
|
$
|
160
|
(in
thousands, except share and per share amounts)
|
|||||||
Assumed
liabilities
|
$
|
345
|
|||||
Number
of shares of Keryx common stock issued
|
245,024
|
||||||
Multiplied
by Keryx’s average closing bid price per share as quoted on NASDAQ over a
period of 5 trading days (2 days prior to the Effective Date, the
Effective Date, and 2 days after the Effective Date)
|
$
|
13.51
|
3,310
|
||||
Other
transaction costs and accrued cash settlement costs
|
341
|
||||||
Total
purchase price
|
$
|
3,996
|
(in
thousands)
|
||||
Allocation
of purchase price:
|
||||
Tangible
assets acquired
|
$
|
132
|
||
Amortizable
intangibles (over 12 years - patent life)
|
656
|
|||
Goodwill
|
3,208
|
|||
Purchase
price
|
$
|
3,996
|
· |
revenue
that is likely to result from the asset, including estimated selling
price, estimated market share and year-over-year growth
rates;
|
· |
operating
margin; and
|
· |
sales
and marketing and general and administrative expenses using historical
and
industry or other sources of market
data;
|
· |
500,000
shares of the Company’s common stock upon enrollment of the first patient
in a Keryx-sponsored Phase III (or other pivotal) clinical trial
for any
of the acquired ACCESS Oncology drug candidates;
|
· |
750,000
shares of the Company’s common stock upon the first new drug application
acceptance by the Food and Drug Administration, or FDA, for any of
the
acquired ACCESS Oncology drug candidates;
|
· |
1,750,000
shares of the Company’s common stock upon the first FDA approval of any of
the acquired ACCESS Oncology drug candidates;
and
|
· |
372,422
shares of the Company’s common stock following the first 12-month period
that sales of all of the acquired ACCESS Oncology drug candidates
combined
exceeds $100 million.
|
(in
thousands, except share and per share amounts)
|
|||||||
Assumed
liabilities
|
$
|
8,723
|
|||||
Number
of shares of Keryx common stock issued
|
623,145
|
||||||
Multiplied
by Keryx’s volume-adjusted weighted average closing price per share
measured over the last seven trading days immediately preceding the
closing
|
$
|
10.15
|
6,325
|
||||
Contingent
equity rights
|
4,004
|
||||||
Other
transaction costs
|
450
|
||||||
Total
purchase price
|
$
|
19,502
|
(in
thousands)
|
||||
Allocation
of purchase price:
|
||||
Net
assets acquired
|
$
|
725
|
||
Adjusted
for write-off of existing intangible assets
|
23
|
|||
Net
tangible assets acquired
|
702
|
|||
Acquired
in-process research and development charge
|
18,800
|
|||
Purchase
price
|
$
|
19,502
|
(in
thousands, except per share amounts)
|
2004
|
|||
Revenue
|
$
|
911
|
||
Net
loss
|
$
|
(14,086
|
)
|
|
Basic
and diluted loss per common share
|
$
|
(0.47
|
)
|
Plan
|
Exercise
price
|
Authorized
|
Outstanding
|
Exercised
|
Exercisable
|
Available
for
grant
|
|||||||||||||
1999
Stock Option Plan
|
$
|
0.10
- 1.30
|
4,230,000
|
619,195
|
3,505,305
|
619,195
|
—
|
||||||||||||
2000
Stock Option Plan
|
1.10
- 14.64
|
4,455,000
|
2,937,925
|
1,503,944
|
2,033,456
|
13,131
|
|||||||||||||
Non
Plan
|
0.33
|
240,000
|
60,000
|
157,500
|
60,000
|
—
|
|||||||||||||
2002
CEO Incentive Stock Option Plan
|
1.30
|
2,002,657
|
2,002,657
|
—
|
2,002,657
|
—
|
|||||||||||||
2004
President Incentive Plan
|
9.25
|
1,000,000
|
1,000,000
|
—
|
486,111
|
—
|
|||||||||||||
2004
Long-Term Incentive Plan
|
7.13
- 18.06
|
* |
4,000,000
|
3,729,936
|
131,037
|
866,464
|
139,027
|
||||||||||||
2006
CFO Incentive Plan
|
15.30
|
500,000
|
500,000
|
—
|
111,111
|
—
|
|||||||||||||
16,427,657
|
10,849,713
|
5,297,786
|
6,178,994
|
152,158
|
Outstanding
equity awards
|
||||||||||
Shares
available
|
Number
of
shares
|
Weighted-
average
exercise
price
|
||||||||
Balance,
December 31, 2003
|
1,110,072
|
8,004,309
|
1.42
|
|||||||
Authorized
|
5,000,000
|
|||||||||
Granted
|
(1,870,000
|
)
|
1,870,000
|
8.86
|
||||||
Exercised
|
—
|
(2,184,438
|
)
|
1.35
|
||||||
Forfeited
and expired
|
15,250
|
(15,250
|
)
|
8.15
|
||||||
Balance,
December 31, 2004
|
4,255,322
|
7,674,621
|
3.24
|
|||||||
Authorized
|
—
|
|||||||||
Granted
|
(952,500
|
)
|
952,500
|
11.50
|
||||||
Exercised
|
—
|
(520,969
|
)
|
1.27
|
||||||
Forfeited
and expired
|
81,500
|
(81,500
|
)
|
11.96
|
||||||
Balance,
December 31, 2005
|
3,384,322
|
8,024,652
|
4.26
|
|||||||
Authorized
|
500,000
|
|||||||||
Granted
|
(3,799,660
|
)
|
3,799,660
|
14.11
|
||||||
Exercised
|
—
|
(824,103
|
)
|
2.41
|
||||||
Canceled
|
(83,000
|
)
|
||||||||
Forfeited
and expired
|
150,496
|
(150,496
|
)
|
6.09
|
||||||
Balance,
December 31, 2006
|
152,158
|
10,849,713
|
7.82
|
|||||||
Exercisable
at December 31, 2004
|
3,807,576
|
1.75
|
||||||||
Exercisable
at December 31, 2005
|
4,360,135
|
2.37
|
||||||||
Exercisable
at December 31, 2006
|
6,178,994
|
3.92
|
Number
of Options
|
Exercise
price
per
share
|
Weighted-average
exercise
price
|
Weighted-average
remaining
contractual term
(years)
|
Aggregate
intrinsic value
|
||||||||||||
Outstanding
at January 1, 2006
|
8,024,652
|
$
|
0.10
- $16.67
|
$
|
4.26
|
7.2
|
$
|
83,296,000
|
||||||||
Granted
|
3,699,660
|
10.51
- 18.06
|
14.49
|
|||||||||||||
Exercised
|
(824,103
|
)
|
0.10
- 12.19
|
2.41
|
||||||||||||
Forfeited
and expired
|
(150,496
|
)
|
0.10
- 17.16
|
6.09
|
||||||||||||
Outstanding
at December 31, 2006
|
10,749,713
|
0.10
- 18.06
|
7.90
|
7.6
|
58,048,000
|
|||||||||||
Vested
and expected to vest at December 31, 2006
|
10,706,853
|
0.10
- 18.06
|
7.88
|
7.6
|
58,031,000
|
|||||||||||
Exercisable
at December 31, 2006
|
6,178,994
|
0.10
- 16.67
|
3.92
|
6.7
|
57,959,000
|
For
the year ended December
31
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Weighted-average
fair value of options granted during the period at an exercise price
equal
to market price at issue date
|
$
|
7.79
|
$
|
7.84
|
$
|
5.87
|
||||
Weighted-average
exercise price of options granted during the period at an exercise
price
equal to market price at issue date
|
14.49
|
11.50
|
8.91
|
|||||||
Weighted-average
fair value of options granted during the period at an exercise price
greater than market price at issue date
|
N/A
|
N/A
|
N/A
|
|||||||
Weighted-average
exercise price of options granted during the period at an exercise
price
greater than market price at issue date
|
N/A
|
N/A
|
N/A
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.10
|
271,852
|
17.9
|
$
|
0.10
|
271,852
|
$
|
0.10
|
|||||||||
0.11
- 0.50
|
60,000
|
3.1
|
$
|
0.33
|
60,000
|
$
|
0.33
|
|||||||||
0.51
- 3.00
|
4,014,735
|
5.9
|
$
|
1.30
|
4,014,735
|
$
|
1.30
|
|||||||||
3.01
- 5.75
|
329,190
|
6.8
|
$
|
4.55
|
248,721
|
$
|
4.54
|
|||||||||
5.76
- 10.00
|
1,146,000
|
7.1
|
$
|
9.15
|
581,799
|
$
|
9.12
|
|||||||||
10.01
- 19.00
|
4,927,936
|
8.6
|
$
|
13.73
|
1,001,887
|
$
|
12.52
|
|||||||||
10,749,713
|
6,178,994
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.10
|
261,852
|
17.9
|
$
|
0.10
|
261,852
|
$
|
0.10
|
|||||||||
0.11
- 0.50
|
60,000
|
3.1
|
0.33
|
60,000
|
0.33
|
|||||||||||
0.51
- 3.00
|
3,823,735
|
5.9
|
1.30
|
3,832,485
|
1.30
|
|||||||||||
3.01
- 5.75
|
213,936
|
7.1
|
4.70
|
153,571
|
4.44
|
|||||||||||
5.76
- 10.00
|
1,116,000
|
7.0
|
9.20
|
558,924
|
9.20
|
|||||||||||
10.01
- 19.00
|
4,507,436
|
8.6
|
13.86
|
858,137
|
12.70
|
|||||||||||
9,982,959
|
5,724,969
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.10
|
10,000
|
17.9
|
$
|
0.10
|
10,000
|
$
|
0.10
|
|||||||||
0.11
- 0.50
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
0.51
- 3.00
|
191,000
|
6.2
|
1.14
|
182,250
|
1.14
|
|||||||||||
3.01
- 5.75
|
115,254
|
6.1
|
4.28
|
95,150
|
4.70
|
|||||||||||
5.76
- 10.00
|
30,000
|
7.6
|
7.13
|
22,875
|
7.32
|
|||||||||||
10.01
- 19.00
|
420,500
|
7.7
|
12.30
|
143,750
|
11.42
|
|||||||||||
766,754
|
454,025
|
Number
of Shares
|
Average
Grant Date Fair
Value
|
||||||
Nonvested,
January 1, 2006
|
—
|
—
|
|||||
Granted
|
100,000
|
$
|
15.30
|
||||
Vested
|
—
|
—
|
|||||
Forfeited
|
—
|
—
|
|||||
Nonvested,
December 31, 2006
|
100,000
|
$
|
15.30
|
Warrants
|
Weighted-
average
exercise
price
|
||||||
Balance,
December 31, 2003
|
1,242,377
|
3.71
|
|||||
Issued
|
—
|
—
|
|||||
Exercised
|
(348,824
|
)
|
6.00
|
||||
Canceled
|
(375,000
|
)
|
0.01
|
||||
Balance,
December 31, 2004
|
518,553
|
$
|
4.86
|
||||
Issued
|
—
|
—
|
|||||
Exercised
|
(157,647
|
)
|
6.00
|
||||
Canceled
|
(38,930
|
)
|
1.94
|
||||
Balance,
December 31, 2005
|
321,976
|
$
|
4.65
|
||||
Issued
|
—
|
—
|
|||||
Exercised
|
—
|
—
|
|||||
Canceled
|
—
|
—
|
|||||
Balance,
December 31, 2006
|
321,976
|
$
|
4.65
|
Warrants
outstanding
|
Warrants
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.01
|
72,564
|
3.0
|
$
|
0.01
|
72,564
|
$
|
0.01
|
|||||||||
6.00
|
249,412
|
1.9
|
6.00
|
249,412
|
6.00
|
|||||||||||
321,976
|
2.1
|
$
|
4.65
|
321,976
|
$
|
4.65
|
Year
ended
|
||||
(in
thousands, except per share amounts)
|
December
31,
2006 |
|||
Net
loss, using previous accounting method
|
$
|
(62,097
|
)
|
|
Basic
and diluted loss per ordinary share, using previous method
|
(1.48
|
)
|
||
Impact
of the adoption of SFAS No. 123R
|
(11,667
|
)
|
||
Net
loss, as reported
|
(73,764
|
)
|
||
Basic
and diluted loss per ordinary share, as reported
|
$
|
(1.76
|
)
|
Year
ended
|
||||
(in
thousands)
|
December
31,
2006 |
|||
Stock-based
compensation expenses associated with restricted stock
|
$
|
189
|
||
Stock-based
compensation expense associated with option grants to employee and
directors+
|
12,536
|
|||
Stock-based
compensation expense associated with option grants to
consultants
|
2,187
|
|||
Stock-based
compensation expense associated with warrants
|
—
|
|||
14,912
|
+
|
Includes
additional non-cash compensation expense during the year ended
December
31, 2006 of $106,000, relating to a previous grant made to a former
director. The Company also incurred additional non-cash compensation
expense during the year ended December 31, 2006, of $1,697,000,
relating
to previous grants made to a former officer and two additional
former
directors. The Board of Directors agreed to modify their option
agreements such that their vesting and exercisability has been
extended
beyond the terms of their original
agreements.
|
For
the year ended
December
31,
|
Amounts
accumulated during the development
|
|||||||||
(in
thousands, except per share amounts)
|
2005
|
2004
|
stage
|
|||||||
Net
loss, as reported
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(114,448
|
)
|
|
Add:
Stock-based compensation expense to employees and directors determined
under the intrinsic value-based method, as included in reported net
loss
|
445
|
667
|
10,179
|
|||||||
Deduct:
Stock-based compensation expense to employees and directors determined
under fair value based method
|
(3,797
|
)
|
(3,770
|
)
|
(20,216
|
)
|
||||
Pro
forma net loss
|
$
|
(30,247
|
)
|
$
|
(36,046
|
)
|
$
|
(124,485
|
)
|
|
Basic
and diluted loss per common share:
|
||||||||||
As
reported
|
$
|
(0.78
|
)
|
$
|
(1.10
|
)
|
$
|
(6.34
|
)
|
|
Pro
forma
|
$
|
(0.88
|
)
|
$
|
(1.20
|
)
|
$
|
(6.89
|
)
|
For
the year ended December 31,
|
||||||||||
(in thousands)
|
2006
|
2005
|
2004
|
|||||||
Losses
before taxes on income, as reported in the consolidated statements
of
operations
|
$
|
(73,764
|
)
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
|
Computed
“expected” tax benefit
|
(25,817
|
)
|
(9,413
|
)
|
(11,530
|
)
|
||||
Increase
(decrease) in income taxes resulting from:
|
||||||||||
Expected
benefit from state & local taxes
|
(8,154
|
)
|
(3,379
|
)
|
(2,853
|
)
|
||||
Change
in state and local effective tax rate
|
(831
|
)
|
(3,130
|
)
|
—
|
|||||
Permanent
differences, including IPR&D of $6,580 in 2004
|
1,067
|
(571
|
)
|
6,586
|
||||||
Effect
of foreign operations
|
—
|
—
|
143
|
|||||||
Change
in the balance of the valuation allowance for deferred tax assets
allocated to income tax expense
|
33,735
|
16,493
|
7,654
|
|||||||
|
$ | — |
$
|
—
|
$
|
—
|
For
the year ended December 31,
|
||||||||||
(in
thousands)
|
2006
|
2005
|
2004
|
|||||||
Deferred
tax benefit
|
$
|
(37,129
|
)
|
$
|
(18,931
|
)
|
$
|
(19,104
|
)
|
|
Federal
deferred tax benefit relating to the exercise of stock
options
|
3,394
|
2,438
|
5,926
|
|||||||
Federal
deferred tax benefit relating to ACCESS Oncology
|
—
|
—
|
5,524
|
|||||||
Increase
in the valuation allowance for deferred tax assets
|
33,735
|
16,493
|
7,654
|
|||||||
|
$ | — |
$
|
—
|
$
|
—
|
(in
thousands)
|
December
31, 2006
|
December
31, 2005
|
|||||
Deferred
tax assets/(liabilities):
|
|||||||
Net
operating loss carryforwards
|
$
|
78,235
|
$
|
45,697
|
|||
Net
operating loss carryforwards (ACCESS Oncology)
|
6,128
|
6,128
|
|||||
Non-cash
compensation
|
7,843
|
2,298
|
|||||
Research
and development
|
1,977
|
2,457
|
|||||
Intangible
assets due to different amortization methods
|
730
|
870
|
|||||
Accrued
compensation
|
19
|
357
|
|||||
Other
temporary differences
|
72
|
68
|
|||||
Net
deferred tax asset, excluding valuation allowance
|
95,004
|
57,875
|
|||||
Less
valuation allowance
|
(95,004
|
)
|
(57,875
|
)
|
|||
Net
deferred tax assets
|
$
|
—
|
$
|
—
|
For
the year ended December 31,
|
||||||||||
(in
thousands)
|
2006
|
2005
|
2004
|
|||||||
Interest
income
|
$
|
6,378
|
$
|
2,317
|
$
|
690
|
||||
Interest
expense and other bank charges
|
—
|
—
|
(27
|
)
|
||||||
Other
income
|
15
|
—
|
107
|
|||||||
$
|
6,393
|
$
|
2,317
|
$
|
770
|
(in
thousands)
|
2007
|
2008
|
2009
|
2010
|
2011
|
|||||||||||
Research
and development agreements
|
$
|
31,205
|
$
|
23,086
|
$
|
16,097
|
$
|
142
|
—
|
(in
thousands)
|
2007
|
2008
|
2009
|
2010
|
2011
|
|||||||||||
Operating
leases
|
$
|
788
|
$
|
724
|
$
|
597
|
$
|
459
|
—
|
Revenue
|
|||||||||||||
Amounts
accumulated during the development
|
|||||||||||||
(in
thousands)
|
2006
|
2005
|
2004
|
Stage
|
|||||||||
Diagnostics
|
$
|
103
|
$
|
—
|
$
|
—
|
$
|
103
|
|||||
Services
|
431
|
574
|
809
|
1,814
|
|||||||||
Products
|
—
|
—
|
—
|
—
|
|||||||||
Total
|
$
|
534
|
$
|
574
|
$
|
809
|
$
|
1,917
|
Operating
loss
|
|||||||||||||
Amounts
accumulated during the development
|
|||||||||||||
(in
thousands)
|
2006
|
2005
|
2004
|
Stage
|
|||||||||
Diagnostics
|
$
|
(1,016
|
)
|
$
|
—
|
$
|
—
|
$
|
(1,016
|
)
|
|||
Services
|
41
|
(245
|
)
|
(26
|
)
|
(230
|
)
|
||||||
Products
|
(79,182
|
)
|
(28,967
|
)
|
(33,686)
|
)
|
(199,837
|
)
|
|||||
Total
|
$
|
(80,157
|
)
|
$
|
(29,212
|
)
|
$
|
(33,712
|
)
|
$
|
(201,083
|
)
|
Net
loss
|
|||||||||||||
Amounts
accumulated during the development
|
|||||||||||||
(in
thousands)
|
2006
|
2005
|
2004
|
Stage
|
|||||||||
Operating
losses of reportable segments
|
$
|
(80,157
|
)
|
$
|
(29,212
|
)
|
$
|
(33,712
|
)
|
$
|
(201,083
|
)
|
|
Interest
and other income
|
6,393
|
2,317
|
770
|
13,362
|
|||||||||
Income
taxes
|
—
|
—
|
(1
|
)
|
(491
|
)
|
|||||||
Consolidated
net loss
|
$
|
(73,764
|
)
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(188,212
|
)
|
Goodwill
|
|||||||
(in
thousands)
|
December
31, 2006
|
December
31, 2005
|
|||||
Diagnostics
|
—
|
—
|
|||||
Services
|
—
|
—
|
|||||
Products
|
$
|
3,208
|
—
|
||||
Total
|
$
|
3,208
|
—
|
2006
|
|||||||||||||
Mar.
31
|
June
30
|
Sept.
30
|
Dec.
31
|
||||||||||
(in
thousands, except per share data)
|
|||||||||||||
Revenue:
|
|||||||||||||
Diagnostic
revenue
|
$
|
—
|
$
|
23
|
$
|
35
|
$
|
45
|
|||||
Service
revenue
|
112
|
224
|
39
|
56
|
|||||||||
Total
revenue
|
112
|
247
|
74
|
101
|
|||||||||
Operating
expenses:
|
|||||||||||||
Cost
of diagnostics sold
|
—
|
19
|
50
|
71
|
|||||||||
Cost
of services
|
171
|
98
|
29
|
92
|
|||||||||
Research
and development:
|
|||||||||||||
Non-cash
compensation
|
2,724
|
2,104
|
1,378
|
298
|
|||||||||
Other
research and development
|
12,333
|
12,352
|
14,950
|
16,504
|
|||||||||
Total
research and development
|
15,057
|
14,456
|
16,328
|
16,802
|
|||||||||
Selling,
general and administrative:
|
|||||||||||||
Non-cash
compensation
|
2,817
|
3,541
|
1,481
|
569
|
|||||||||
Other
selling, general and administrative
|
2,645
|
1,860
|
2,041
|
2,564
|
|||||||||
Total
selling, general and administrative
|
5,462
|
5,401
|
3,522
|
3,133
|
|||||||||
Total
operating expenses
|
20,690
|
19,974
|
19,929
|
20,098
|
|||||||||
Operating
loss
|
(20,578
|
)
|
(19,727
|
)
|
(19,855
|
)
|
(19,997
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
and other income, net
|
982
|
1,899
|
1,862
|
1,650
|
|||||||||
Net
loss
|
$
|
(19,596
|
)
|
$
|
(17,828
|
)
|
$
|
(17,993
|
)
|
$
|
(18,347
|
)
|
|
Net
loss per common share
|
|||||||||||||
Basic
and diluted
|
$
|
(0.51
|
)
|
$
|
(0.41
|
)
|
$
|
(0.42
|
)
|
$
|
(0.42
|
)
|
2005
|
|||||||||||||
Mar.
31
|
June
30
|
Sept.
30
|
Dec.
31
|
||||||||||
(in
thousands, except per share data)
|
|||||||||||||
Diagnostic
revenue
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||
Service
revenue
|
157
|
126
|
82
|
209
|
|||||||||
Total
revenue
|
157
|
126
|
82
|
209
|
|||||||||
Operating
expenses:
|
|||||||||||||
Cost
of diagnostics sold
|
—
|
—
|
—
|
—
|
|||||||||
Cost
of services
|
181
|
161
|
197
|
280
|
|||||||||
Research
and development:
|
|||||||||||||
Non-cash
compensation
|
176
|
137
|
226
|
55
|
|||||||||
Other
research and development
|
4,042
|
5,180
|
6,501
|
8,459
|
|||||||||
Total
research and development
|
4,218
|
5,317
|
6,727
|
8,514
|
|||||||||
Selling,
general and administrative:
|
|||||||||||||
Non-cash
compensation
|
185
|
168
|
258
|
164
|
|||||||||
Other
selling, general and administrative
|
645
|
699
|
671
|
1,401
|
|||||||||
Total
selling, general and administrative
|
830
|
867
|
929
|
1,565
|
|||||||||
Total
operating expenses
|
5,229
|
6,345
|
7,853
|
10,359
|
|||||||||
Operating
loss
|
(5,072
|
)
|
(6,219
|
)
|
(7,771
|
)
|
(10,150
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
and other income, net
|
240
|
267
|
823
|
987
|
|||||||||
Net
loss
|
$
|
(4,832
|
)
|
$
|
(5,952
|
)
|
$
|
(6,948
|
)
|
$
|
(9,163
|
)
|
|
Net
loss per common share
|
|||||||||||||
Basic
and diluted
|
$
|
(0.15
|
)
|
$
|
(0.19
|
)
|
$
|
(0.19
|
)
|
$
|
(0.24
|
)
|
KERYX
BIOPHARMACEUTICALS, INC.
|
||
|
|
|
By: |
/s/
Michael S. Weiss
|
|
Michael S. Weiss |
||
Chairman
and Chief Executive
Officer
|
Signatures
|
Title
|
|
/s/
Michael S. Weiss
|
Chairman
and Chief Executive Officer
|
|
Michael
S. Weiss
|
(principal
executive officer)
|
|
|
||
/s/
Ronald C. Renaud, Jr.
|
Senior
Vice President, Chief Financial Officer, Secretary and
Treasurer
|
|
Ronald
C. Renaud, Jr.
|
(principal
financial and accounting officer)
|
|
/s/
I. Craig Henderson, M.D.
|
President
and Director
|
|
I.
Craig Henderson, M.D.
|
||
/s/
Senator Wyche Fowler, Jr.
|
Director
|
|
Senator
Wyche Fowler, Jr.
|
||
/s/
Malcolm Hoenlein
|
Director
|
|
Malcolm
Hoenlein
|
||
|
||
/s/
Jack Kaye, CPA
|
Director
|
|
Jack
Kaye, CPA
|
||
|
||
/s/
Eric A. Rose, M.D.
|
Director
|
|
Eric
A. Rose, M.D.
|
Exhibit
|
||
Number
|
Exhibit
Description
|
|
10.25
|
CFO
Incentive Stock Option Agreement dated February 14, 2006.
|
|
10.26
|
President
Incentive Stock Option Agreement dated February 5, 2004.
|
|
21.1
|
List
of subsidiaries of Keryx Biopharmaceuticals, Inc.
|
|
|
|
|
23.1
|
Consent
of KPMG LLP.
|
|
24.1
|
Power
of Attorney of Director and Officers of Keryx Biopharmaceuticals,
Inc.
(included herein).
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 16, 2007.
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 16, 2007.
|
|
|
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 16,
2007.
|
|
|
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 16,
2007.
|