Delaware
|
11-3516358
|
|
(State
or other jurisdiction of incorporation
|
(I.R.S.
Employer Identification Number) or
organization)
|
Large
Accelerated Filer q
|
Accelerated
Filer q
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Non-Accelerated
Filer q (Do
not check if a smaller reporting company)
|
Smaller
reporting company x
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PART
I FINANCIAL INFORMATION
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|||||
Page
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|||||
Item1
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Financial
Statements
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||||
1.
|
3
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||||
2.
|
4
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||||
3.
|
5
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||||
4.
|
6
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||||
5.
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7
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||||
Item
2
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19
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||||
Item
3
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28
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||||
Item
4T
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28
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||||
PART
II OTHER INFORMATION
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|||||
Item
1
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29
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||||
Item
2
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29
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||||
Item
3
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29
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Item
4
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29
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Item
5
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29
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Item
6
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29
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30
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September 30,
2008
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December 31,
2007
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|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 221,510 | $ | 3,809,571 | ||||
Short-term
investments
|
4,624,875 | 3,550,000 | ||||||
Prepaid
expenses and other
|
736,760 | 717,205 | ||||||
Total
Current Assets
|
5,583,145 | 8,076,776 | ||||||
Equipment,
Net
|
100,433 | 102,951 | ||||||
Intangible
Assets, Net
|
290,584 | 303,943 | ||||||
Total
Assets
|
$ | 5,974,162 | $ | 8,483,670 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 364,850 | $ | 606,832 | ||||
Total
Current Liabilities
|
364,850 | 606,832 | ||||||
Deferred
Revenue
|
1,068,750 | 1,125,000 | ||||||
Total
Liabilities
|
1,433,600 | 1,731,832 | ||||||
Commitment
and Contingencies
|
||||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock, par value $0.0001, 100,000 authorized shares, none issued and
outstanding
|
- | - | ||||||
Common
stock, par value $0.0001, 500,000,000 authorized shares, 56,039,854
(2007-55,306,996) issued and 56,025,649 (2007-55,292,791)
outstanding
|
5,604 | 5,530 | ||||||
Additional
paid-in capital
|
33,097,178 | 31,769,049 | ||||||
Accumulated
deficit during the development stage
|
(28,258,455 | ) | (24,994,331 | ) | ||||
Treasury
stock, 14,205 shares, at cost
|
(28,410 | ) | (28,410 | ) | ||||
Accumulated
other comprehensive (loss)
|
(275,355 | ) | - | |||||
Total
Stockholders' Equity
|
4,540,562 | 6,751,838 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 5,974,162 | $ | 8,483,670 |
Cumulative
|
||||||||||||||||||||
From
March 19,
|
||||||||||||||||||||
Three
Months
|
Nine
Months
|
2001
|
||||||||||||||||||
Ended September 30,
|
Ended September 30,
|
(Inception)
to
|
||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
September 30, 2008
|
||||||||||||||||
Revenues:
|
||||||||||||||||||||
Research
|
$ | 18,750 | $ | 18,750 | $ | 56,250 | $ | 56,250 | $ | 431,250 | ||||||||||
Expenses:
|
||||||||||||||||||||
General
and administrative
|
645,368 | 555,625 | 1,893,819 | 1,971,891 | 14,232,553 | |||||||||||||||
Research
and development
|
567,905 | 465,934 | 1,419,077 | 1,441,225 | 12,221,414 | |||||||||||||||
Patent
fees
|
57,574 | 45,698 | 163,778 | 120,536 | 869,251 | |||||||||||||||
Depreciation
and amortization
|
13,875 | 14,475 | 41,574 | 46,212 | 489,035 | |||||||||||||||
Total
Expenses
|
1,284,722 | 1,081,732 | 3,518,248 | 3,579,864 | 27,812,253 | |||||||||||||||
Loss
from Operations
|
(1,265,972 | ) | (1,062,982 | ) | (3,461,998 | ) | (3,523,614 | ) | (27,381,003 | ) | ||||||||||
Other
(Income) Expense
|
||||||||||||||||||||
Realized
loss on securities available-for-sale
|
- | - | 22,365 | - | 22,365 | |||||||||||||||
Interest
income
|
(52,122 | ) | (23,606 | ) | (220,239 | ) | (116,499 | ) | (1,071,060 | ) | ||||||||||
Interest
expense
|
- | - | - | - | 301,147 | |||||||||||||||
Beneficial
conversion feature
|
- | - | - | - | 1,625,000 | |||||||||||||||
(52,122 | ) | (23,606 | ) | (197,874 | ) | (116,499 | ) | 877,452 | ||||||||||||
Net
Loss Before Provision for Income Taxes
|
(1,213,850 | ) | (1,039,376 | ) | (3,264,124 | ) | (3,407,115 | ) | (28,258,455 | ) | ||||||||||
Provision
for Income Taxes
|
- | - | - | - | - | |||||||||||||||
Net
Loss
|
$ | (1,213,850 | ) | $ | (1,039,376 | ) | $ | (3,264,124 | ) | $ | (3,407,115 | ) | $ | (28,258,455 | ) | |||||
Net
Loss per share outstanding, basic and diluted
|
$ | (0.02 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.07 | ) | ||||||||
Weighted
average number of shares outstanding, basic and diluted
|
56,025,649 | 50,338,393 | 55,800,977 | 50,323,209 |
Common Stock
|
Additional paid-in Capital
|
Accumulated Deficit
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
Total Comprehensive Loss
|
||||||||||||||||||||||
Balances
at December 31, 2007
|
$ | 5,530 | $ | 31,769,049 | $ | (24,994,331 | ) | $ | (28,410 | ) | $ | - | $ | 6,751,838 | $ | - | ||||||||||||
Stock
compensation expense
|
- | 397,002 | - | - | - | 397,002 | - | |||||||||||||||||||||
Common
stock issued
|
65 | 899,936 | - | - | - | 900,001 | - | |||||||||||||||||||||
Exercise
of stock options
|
9 | 31,191 | - | - | - | 31,200 | - | |||||||||||||||||||||
Net
(loss)
|
- | - | (3,264,124 | ) | - | - | (3,264,124 | ) | (3,264,124 | ) | ||||||||||||||||||
Unrealized loss on securities available for
sale
|
- | - | - | - | (275,355 | ) | (275,355 | ) | (275,355 | ) | ||||||||||||||||||
Balances at September 30, 2008
|
$ | 5,604 | $ | 33,097,178 | $ | (28,258,455 | ) | $ | (28,410 | ) | $ | (275,355 | ) | $ | 4,540,562 | $ | (3,539,479 | ) |
Cumulative
|
||||||||||||
From
March 19,
|
||||||||||||
Nine
Months
|
2001
|
|||||||||||
Ended September 30,
|
(Inception)
to
|
|||||||||||
2008
|
2007
|
September 30, 2008
|
||||||||||
Cash
Flows from Operating Activities:
|
||||||||||||
Net
loss
|
$ | (3,264,124 | ) | $ | (3,407,115 | ) | $ | (28,258,455 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Beneficial
conversion feature
|
- | - | 1,625,000 | |||||||||
Compensatory
stock
|
- | - | 21,877 | |||||||||
Depreciation
and amortization
|
41,574 | 46,212 | 489,035 | |||||||||
Stock
option compensation expense
|
397,002 | 786,094 | 3,769,153 | |||||||||
Amortization
of deferred revenue
|
(56,250 | ) | (56,250 | ) | (431,250 | ) | ||||||
Realized
losses on securities available-for-sale
|
22,365 | - | 22,365 | |||||||||
Changes
in assets and liabilities:
|
||||||||||||
Prepaid
expenses and other
|
(19,555 | ) | 65,856 | (736,760 | ) | |||||||
Accounts
payable and accrued expenses
|
(241,982 | ) | (143,056 | ) | 364,850 | |||||||
Net
Cash Used in Operating Activities
|
(3,120,970 | ) | (2,708,259 | ) | (23,134,185 | ) | ||||||
Cash
Flows from Investing Activities:
|
||||||||||||
Purchase
of equipment
|
(25,697 | ) | - | (523,836 | ) | |||||||
Purchase
of securities available-for-sale
|
(5,848,176 | ) | - | (9,398,176 | ) | |||||||
Proceeds
from sales of securities available-for-sale
|
4,475,581 | - | 4,475,581 | |||||||||
Net
Cash Used in Investing Activities
|
(1,398,292 | ) | - | (5,446,431 | ) | |||||||
Cash
Flows from Financing Activities:
|
||||||||||||
Issuance
of common stock
|
931,201 | 42,000 | 22,536,752 | |||||||||
Proceeds
from long-term debt
|
- | - | 5,150,000 | |||||||||
Proceeds
from research contribution
|
- | - | 1,500,000 | |||||||||
Payment
of licensing fees
|
- | - | (356,216 | ) | ||||||||
Principal
payments on long-term debt
|
- | - | (28,410 | ) | ||||||||
Net
Cash Provided by Financing Activities
|
931,201 | 42,000 | 28,802,126 | |||||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(3,588,061 | ) | (2,666,259 | ) | 221,510 | |||||||
Cash
and Cash Equivalents - beginning of period
|
3,809,571 | 4,034,060 | - | |||||||||
Cash
and Cash Equivalents - end of period
|
$ | 221,510 | $ | 1,367,801 | $ | 221,510 |
1.
|
Operations
and Organization
|
2.
|
Summary
of Significant Accounting Policies
|
|
a)
|
Basis
of Accounting
|
|
b)
|
Short-term
investments
|
c)
|
Recent
Accounting Pronouncements Affecting the
Company
|
|
d)
|
Earnings
Per Share
|
For the three months ended
|
For the nine months ended
|
|||||||||||||||
September 30,
2008
|
September 30,
2007
|
September 30,
2008
|
September 30,
2007
|
|||||||||||||
Basic
|
56,025,649 | 50,338,393 | 55,800,977 | 50,323,209 | ||||||||||||
Diluted
|
56,025,649 | 50,338,393 | 55,800,977 | 50,323,209 |
For the three months ended
|
For the nine months ended
|
|||||||||||||||
September 30, 2008
|
September 30, 2007
|
September 30, 2008
|
September 30,
2007
|
|||||||||||||
Stock
Options
|
5,086,795 | 3,093,420 | 5,086,795 | 3,093,420 | ||||||||||||
Warrants
|
1,207,151 | - | 1,207,151 | - | ||||||||||||
3.
|
Equipment,
Net
|
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Furniture
and fixtures
|
$ | 31,713 | $ | 31,713 | ||||
Office
equipment
|
69,345 | 43,648 | ||||||
Lab
and computer equipment
|
423,159 | 423,159 | ||||||
|
524,217 | 498,520 | ||||||
|
||||||||
Less:
Accumulated depreciation
|
423,784 | 395,569 | ||||||
|
||||||||
Net
carrying amount
|
$ | 100,433 | $ | 102,951 |
4.
|
Intangible
Assets, Net
|
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Revaax
license, original cost
|
$ | 356,216 | $ | 356,216 | ||||
Less:
Accumulated amortization
|
65,632 | 52,273 | ||||||
Balance
|
$ | 290,584 | $ | 303,943 |
2008
|
$ | 4,453 | ||
2009
|
17,811 | |||
2010
|
17,811 | |||
2011
|
17,811 | |||
2012
|
17,811 | |||
Thereafter
|
214,887 | |||
$ | 290,584 |
5.
|
Deferred
Revenue
|
6.
|
Common
Stock
|
|
i)
|
1,208,332
shares of common stock to the directors of the Company for cash of
$1,450,000.
|
|
ii)
|
958,334
shares of common stock to Rexgene for cash of
$550,000.
|
|
iii)
|
360,000
shares of common stock in a private placement to individual investors for
cash of $1,080,000.
|
7.
|
Stock-Based
Compensation
|
For the three months ended
|
For the nine months ended
|
Cumulative
from March 19, 2001
|
||||||||||||||||||
September 30,
2008
|
September 30,
2007
|
September 30,
2008
|
September 30,
2007
|
(Inception) to
September 30, 2008
|
||||||||||||||||
Income
statement line item:
|
||||||||||||||||||||
General
and administrative
|
||||||||||||||||||||
Payroll
|
$ | 9,200 | $ | 100,331 | $ | 27,600 | $ | 308,400 | $ | 1,124,328 | ||||||||||
Consulting
and other professional fees
|
17,402 | 15,230 | 134,448 | 113,083 | 731,552 | |||||||||||||||
Research
and development:
|
||||||||||||||||||||
Payroll
|
50,125 | 44,552 | 146,523 | 139,596 | 630,893 | |||||||||||||||
Consulting
and other professional fees
|
2,364 | 53,956 | 88,431 | 225,015 | 1,282,380 | |||||||||||||||
Total
|
$ | 79,091 | $ | 214,069 | $ | 397,002 | $ | 786,094 | $ | 3,769,153 |
Nine Months Ended September
30,
|
||||||
|
2008
|
2007
|
||||
Black-Scholes
weighted average assumptions:
|
||||||
Expected
dividend yield
|
0
|
0
|
||||
Expected
volatility
|
100% - 114%
|
100%
|
||||
Risk
free interest rate
|
1.60%
- 4.99%
|
2.67%
- 4.99%
|
||||
Expected
term (in years)
|
0.52-5
years
|
0.3-5
years
|
2008
|
2007
|
|||||||||||||||
Shares
Subject to Options
|
Weighted
Avg.Option Prices
|
Shares
Subject to Options
|
Weighted
Avg.Option Prices
|
|||||||||||||
Outstanding
at January 1
|
6,045,795 | $ | 0.97 | 6,123,295 | $ | 0.94 | ||||||||||
Granted
|
750,000 | 1.71 | 425,000 | 1.44 | ||||||||||||
Exercised
|
(90,000 | ) | 0.35 | (52,500 | ) | 0.80 | ||||||||||
Cancelled
|
(50,000 | ) | 1.34 | (352,500 | ) | 1.35 | ||||||||||
Outstanding
at September 30
|
6,655,795 | $ | 1.05 | 6,143,295 | $ | 0.95 |
Shares
Subject to Options
|
Weighted
Avg. Option Prices
|
Weighted
Average Remaining Contractual
Term
|
Aggregate
Intrinsic Value
|
|||||||||||||
Outstanding
at September 30, 2008
|
6,655,795 | $ | 1.05 |
7.0 years
|
$ | 2,655,485 | ||||||||||
Exercisable
at September 30, 2008
|
4,996,795 | $ | 1.11 |
6.5 years
|
$ | 2,486,567 |
Shares
Subject to Options
|
Weighted
Avg. Option Prices
|
Weighted
Average Remaining Contractual
Term
|
Aggregate
Intrinsic Value
|
|||||||||||||
Outstanding
at September 30, 2007
|
6,143,295 | $ | 0.95 |
7.1 years
|
$ | 3,415,622 | ||||||||||
Exercisable
at September 30, 2007
|
3,093,420 | $ | 0.84 |
6.9 years
|
$ | 2,621,822 |
8.
|
Commitments
and Contingencies
|
Remainder
of 2008
|
$ | 56,414 | ||
2009
|
112,972 | |||
$ | 169,386 |
9.
|
Fair
Value Measurements
|
Level 1 Inputs
|
—
|
Unadjusted
quoted prices in active markets for identical assets or liabilities that
is accessible by the Company;
|
||
Level
2 Inputs
|
—
|
Quoted
prices in markets that are not active or financial instruments for which
all significant inputs are observable, either directly or
indirectly;
|
||
Level
3 Inputs
|
—
|
Unobservable
inputs for the asset or liability including significant assumptions of the
Company and other market
participants.
|
Fair Value Measurements at Reporting Date
Using
|
||||||||||||||||
Description
|
Book/
Carrying
Value
September 30, 2008
|
Quoted Prices in Active Markets for Identical
Assets
(Level 1)
|
Significant Other Observable
Inputs
(Level 2)
|
Significant Unobservable
Inputs
(Level 3)
|
||||||||||||
Assets:
|
||||||||||||||||
Equity
Investments
|
$ | 1,350,000 | $ | 1,350,000 | $ | - - | $ | - | ||||||||
Government
Obligations
|
3,274,875 | 3,274,875 | - | - | ||||||||||||
Total
Assets
|
$ | 4,624,875 | $ | 4,624,875 | $ | - - | $ | - |
·
|
our
lack of profitability and the need for additional capital to operate our
business;
|
·
|
our
ability to obtain the necessary U.S. and worldwide regulatory approvals
for our drug candidates;
|
·
|
successful
and timely completion of clinical trials for our drug
candidates;
|
·
|
demand
for and market acceptance of our drug
candidates;
|
·
|
the
availability of qualified third-party researchers and manufacturers for
our drug development programs;
|
·
|
our
ability to develop and obtain protection of our intellectual property;
and
|
·
|
other
risks and uncertainties, including those detailed from time to time in our
filings with the Securities and Exchange
Commission.
|
|
(1)
|
RX-0201-Nano:
Nanoliposomal anti-cancer Akt-1
inhibitor
|
|
(2)
|
RX-0047-Nano:
Nanoliposomal anti-cancer HIF-la
inhibitor
|
|
(3)
|
Nano-polymer
Anticancer Drugs- HPMA-docetaxel and
HPMA-gemcitabine
|
Remainder
of 2008
|
$ | 56,414 | ||
2009
|
$ | 112,972 | ||
$ | 169,386 |
|
·
|
the
progress of our product development
activities;
|
|
·
|
the
number and scope of our product development
programs;
|
|
·
|
the
progress of our pre-clinical and clinical trial
activities;
|
|
·
|
the
progress of the development efforts of parties with whom we have entered
into collaboration agreements;
|
|
·
|
our
ability to maintain current collaboration programs and to establish new
collaboration arrangements;
|
|
·
|
the
costs involved in prosecuting and enforcing patent claims and other
intellectual property rights; and
|
|
·
|
the
costs and timing of regulatory
approvals.
|
Exhibit No.
|
Description
|
Location
|
||
10.1 | Employment Agreement with Rakesh Soni dated July 14, 2008 | Incorporated by reference to Registrant's Current Report on Form 8-K filed July 16, 2008 | ||
31.1
|
Rule
13a-14(a)/15d-14(a) Certification (Principal Executive
Officer)
|
Filed
herewith
|
||
31.2
|
Rule
13a-14(a)/15d-14(a) Certification (Principal Financial
Officer)
|
Filed
herewith
|
||
32.0*
|
Section
1350 Certificate
|
Filed
herewith
|
||
*
|
This
exhibit is furnished rather than filed, and shall not be incorporated by
reference into any filing of the registrant in accordance with Item 601 of
Registration
S-K
|
REXAHN PHARMACEUTICALS, INC. | ||
(Registrant)
|
||
Date: November
14, 2008
|
By: /s/
Chang H. Ahn
|
|
Chang
H. Ahn
|
||
Chairman
and Chief Executive Officer
|
||
Date: November
14, 2008
|
By: /s/ Ted
T.H. Jeong
|
|
Ted
T.H. Jeong
|
||
Chief
Financial Officer and
Secretary
|