posam
As filed with the Securities and Exchange
Commission on December 7, 2010
Registration
No. 333-165828
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Post-Effective Amendment
No. 1 to
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
GEOVAX LABS, INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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2834
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87-0455038
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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1900 Lake Park Dr., Suite 380, Smyrna Georgia 30080,
(678) 384-7220
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
Robert T. McNally, Ph.D.
President & Chief Executive Officer
GeoVax Labs, Inc.
1900 Lake Park Dr., Suite 380
Smyrna Georgia 30080
Telephone:
(678) 384-7220
Facsimile:
(678) 384-7281
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
registration statement.
With Copies To:
T. Clark Fitzgerald III, Esq.
Womble Carlyle Sandridge & Rice, PLLC
271 17th Street, NW, Suite 2400
Atlanta, Georgia 30363
Telephone:
(404) 879-2455
Facsimile:
(404) 870-4869
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the
following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller reporting
company o
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(Do not check if a smaller reporting company)
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until the Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to Section 8(a), may
determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. The prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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PROSPECTUS
PRELIMINARY
PROSPECTUS, SUBJECT TO COMPLETION DATED DECEMBER 7,
2010
GEOVAX LABS, INC.
FROM
TO
UNITS, EACH CONSISTING OF ONE SHARE OF
COMMON STOCK AND A WARRANT TO PURCHASE ONE ADDITIONAL
SHARE OF COMMON STOCK
This is a best efforts offering of a minimum of $5,000,000
( units) and a maximum of
$10,000,000 ( units) at a price of
$ per unit. Each unit consists of
one share of GeoVax Labs, Inc. common stock ($0.001 par
value) and a five-year callable warrant to purchase one
additional share of GeoVax Labs, Inc. common stock at an
exercise price of $ , or 20% above
the offering price of the units. The units will separate
immediately upon issuance and trade separately. Proceeds will be
deposited in an escrow account and returned to investors in
full, without interest or deduction, unless at
least units offered hereby are
sold during the offering period. Investors will have no right to
the return of their funds during the term of the escrow.
Our common stock is quoted on the OTC Bulletin Board under
the symbol GOVX. On December 6, 2010, the last
reported sale price for our common stock on the OTC
Bulletin Board was $1.01 per share. We do not intend to
apply for listing of the warrants on any securities exchange.
Investing in the common stock involves certain risks. See
Risk Factors beginning on page 5 for a
discussion of these risks.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Total
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Total
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Per Unit
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Minimum Offering
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Maximum Offering
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Public offering price
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$
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$
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5,000,000
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$
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10,000,000
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Placement agents commissions
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$
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$
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400,000
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$
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800,000
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Proceeds to us(1)
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$
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$
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4,600,000
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$
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9,200,000
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(1) |
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Before deducting expenses of this offering payable by us
estimated to be approximately $550,000. |
We have agreed to pay our placement agents an aggregate
commission of 8% of the price of each unit sold, and to
reimburse certain expenses, up to $174,999. See Plan of
Distribution. The placement agents are not required to
sell any specific number of units or dollar amount of units but
will use their best efforts to sell the units. Brokers or
dealers effecting transactions in these shares should confirm
that the units are registered under the applicable state law or
that an exemption from registration is available.
This offering will terminate
on ,
2011, unless the offering is fully subscribed before that date
or we decide to terminate the offering prior to that date. In
either event, the offering may be closed without further notice
to you. All costs associated with the registration will be borne
by us.
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Global Hunter Securities
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Gilford Securities Incorporated
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The date of this Prospectus is December , 2010
TABLE OF
CONTENTS
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Page
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1
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3
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4
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5
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66
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66
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F-1
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EX-23.1 |
EX-23.2 |
You should rely only on the information contained in this
prospectus and in any accompanying prospectus supplement. We
have not authorized anyone to provide you with different
information.
We have not authorized anyone to make an offer of these
shares of common stock in any jurisdiction where the offer is
not permitted.
You should not assume that the information in this prospectus
or prospectus is accurate as of any date other than the date on
the front of this prospectus.
PROSPECTUS
SUMMARY
This summary highlights information contained elsewhere in
this prospectus. It does not contain all of the information that
you should consider before investing in our securities. Please
read the entire prospectus carefully, including the section
entitled Risk Factors and our consolidated financial
statements and the related notes. We have not authorized anyone
else to provide you with different information, and if you
receive any unauthorized information you should not rely on it.
The information appearing in this prospectus is accurate only as
of its date. Our business, financial condition, results of
operations and prospects may have changed since that date.
You should not invest unless you can afford to lose your
entire investment.
Company
Overview
We are a biotechnology company dedicated to developing vaccines
that prevent and fight human immunodeficiency virus (commonly
known as HIV) infections that result in acquired
immunodeficiency syndrome, also known as AIDS. We have
preventative vaccines being evaluated in a Phase 2a human
clinical trial in individuals who are not HIV infected and are
currently enrolling prospective participants in a Phase 1 human
therapeutic clinical trial in individuals who are HIV infected.
Our preventative vaccines are designed to prevent or control
infection by HIV, reduce the rate of disease progression to AIDS
and reduce the risk of HIV transmission. Our therapeutic
vaccines target viral replication to reduce viral load in HIV
infected individuals with a goal of reducing or eliminating the
need for anti-HIV medications, and thereby reduce both the cost
of treatment and the occurrence of detrimental side effects
associated with current drug treatments.
Our vaccines are designed to function against the subtype, known
as clade B, of the HIV virus that is most prevalent in the
developed world. Our vaccines have been shown to induce
antibodies and T cells (a type of white blood cell) in Phase 1
human clinical trials. In non-human primate challenge models,
the antibodies and T cells elicited by a simian prototype of our
vaccine have been shown to protect against mucosal simian
immunodeficiency virus infection, the non-human primate version
of the HIV virus. Our goals include manufacturing and testing
these vaccines consistent with guidelines issued by the United
States Food and Drug Administration, or FDA, conducting human
trials for vaccine safety and effectiveness, and obtaining
regulatory approvals to advance the development and
commercialization of our vaccines.
Our preventative vaccine is one of only five vaccine candidates
out of more than 80 tested by the HIV Vaccine Trials Network,
which we refer to as the HVTN, in Phase 1 human clinical trials
to have progressed to Phase 2 testing. Based on current
enrollment progress, we expect the Phase 2a clinical trial to
have completed enrollment and inoculations during 2011.
The Investigational New Drug, or IND, application to test our
therapeutic vaccine in a Phase 1 human clinical trial is based
on promising data from three pilot studies we conducted using
therapeutic vaccination in simian immunodeficiency virus
infected non-human primates. We expect the Phase 1 trial to
begin generating vaccine safety and performance data during
2011, with trial completion in the 2012-2013 timeframe.
Our vaccine candidates incorporate two delivery components: a
recombinant deoxyribonucleic acid, or DNA, and a recombinant
poxvirus designated modified vaccinia Ankara, or MVA, which both
deliver genes that encode inactivated HIV-derived proteins and
provide them to the immune system. Both components are designed
to support production of non-infectious virus-like particles in
vaccinated individuals that prime and boost immune responses.
When properly administered in series, our vaccine candidates
induce strong T-cell and antibody responses in non-human
primates against multiple HIV proteins.
In uninfected people, both the DNA and MVA vaccines contain
sufficient HIV genes to support the production of non-infectious
virus-like particles which display forms of proteins that appear
authentic to the immune system. When used together, the
recombinant DNA component is used to prime immune responses
which are boosted by administration of the recombinant MVA
component. In certain settings, the recombinant
1
MVA alone may be sufficient for priming and boosting the immune
responses. We are testing use of the recombinant MVA component
alone in part two of our ongoing Phase 2a clinical trial.
Work on our vaccines began during the 1990s at Emory University
in Atlanta, Georgia, under the direction of Dr. Harriet L.
Robinson, who is now our Chief Scientific Officer. The vaccine
technology was developed in collaboration with researchers at
the United States National Institutes of Health, or the NIH,
National Institute of Allergy and Infectious Disease, or the
NIAID, and the United States Centers for Disease Control and
Prevention, or the CDC. The technology developed at Emory
University is exclusively licensed to us. We also have
nonexclusive rights through our license to certain patents owned
by the NIH and exclusive license rights to certain manufacturing
process patents of MFD, Inc.
In 2005, a Phase 1 human clinical trial to test our preventative
vaccine concluded successfully. After receiving Safe to
Proceed status for a new IND by the FDA, a Phase 1
clinical trial combining low doses of the DNA vaccine with the
MVA vaccine began in May 2006. An additional Phase 1 human
clinical trial began in September 2006 to test full doses of the
vaccines. In total, this Phase 1 testing included four clinical
trial stages. The different clinical trial stages were designed
to test various combinations and doses of our DNA and MVA
vaccines in human volunteers for their ability to induce
HIV-specific immune responses and to document safety. Successful
results from all stages of the Phase 1 clinical trial supported
the initiation of the first Phase 2 clinical trial which began
in January 2009 and will ultimately involve
300 participants at sites in the United States and South
America.
We are also conducting pre-clinical research on the impact of
adding adjuvants, which are immune system stimulants, to our
vaccine components to see if this can improve the effectiveness
of our vaccine candidates. This work is being funded by the NIH
through an Integrated Pre-clinical/Clinical AIDS Vaccine
Development Grant, or IPCAVD grant, to GeoVax. Pre-clinical
animal trials have been conducted with very encouraging results,
and we plan to pursue a second clinical program for the
development of the next generation of our HIV/AIDS vaccines. We
have completed preliminary discussions with the FDA and plan to
submit an Investigational New Drug (IND) application for this
vaccine during 2011. We intend to initiate a Phase 1 human
clinical trial for this vaccine as soon as practicable following
approval of our IND application by the FDA.
All of the human clinical testing completed to date on our
vaccines, except for the therapeutic trial, has been conducted
by the HVTN using funding from the NIH. Separately, in September
2007, we received a five-year IPCAVD grant from the NIH. The
total award of more than $18 million is limited to
meritorious HIV/AIDS prevention vaccine programs and subject to
annual renewal. The funds we are raising in this offering will
be used for general corporate purposes and to expand and
accelerate our ability to fund research and clinical trials in
hopes of accelerating the date our preventative and therapeutic
vaccines receive required regulatory approval for commercial
distribution.
Our common stock is quoted on the OTC Bulletin Board under
the symbol GOVX. On December 6, 2010, the last
reported sale price for our common stock on the OTC
Bulletin Board was $1.01 per share. We do not intend to
apply for listing of the warrants on any securities exchange.
As used herein, GeoVax, the Company,
we, our, and similar terms include
GeoVax Labs, Inc., and its operating subsidiary, GeoVax, Inc.,
unless the context indicates otherwise.
We are incorporated under the laws of the State of Delaware. Our
principal executive offices are located at 1900 Lake Park Drive,
Suite 380, Smyrna, Georgia 30080 (metropolitan Atlanta).
Our telephone number is
(678) 384-7220.
The address of our website is www.geovax.com. Information on our
website is not part of this prospectus.
2
SUMMARY
FINANCIAL INFORMATION
The following summary financial data are derived from our
consolidated financial statements. The historical results
presented below are not necessarily indicative of the results to
be expected for any future period. You should read the
information set forth below in conjunction with
Managements Discussion and Analysis of Financial
Condition and Results of Operations, and our consolidated
financial statements and the related notes, beginning on
page F-1
of this prospectus.
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Nine Months Ended
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September 30,
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Years Ended December 31,
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Statement of Operations Data
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2010
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2009
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2009
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2008
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2007
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2006
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2005
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Total revenues (grant income)
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$
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4,239,017
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$
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3,271,506
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$
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3,668,195
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$
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2,910,170
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$
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237,004
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$
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852,905
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$
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670,467
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Net loss
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$
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(2,268,544
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$
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(2,440,977
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$
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(3,284,252
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$
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(3,728,187
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$
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(4,241,796
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$
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(584,166
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$
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(1,611,086
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)
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Basic and diluted net loss per common share(1)
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$
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(0.14
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$
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(0.16
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$
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(0.22
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$
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(0.25
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$
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(0.30
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$
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(0.07
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$
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(0.26
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September 30,
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December 31,
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Balance Sheet Data:
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2010
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2009
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2009
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2008
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2007
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2006
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2005
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Total assets
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$
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2,992,798
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$
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4,274,906
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$
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4,315,597
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$
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3,056,241
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$
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3,246,404
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$
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2,396,330
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$
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1,685,218
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Redeemable convertible preferred stock
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$
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$
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$
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$
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$
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$
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$
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1,016,555
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Total stockholders equity (deficit)
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$
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2,145,779
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$
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3,926,132
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$
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3,744,232
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$
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2,709,819
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$
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2,647,866
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$
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2,203,216
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$
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(500,583
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3
THE
OFFERING
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Securities Offered |
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From
to units
representing an aggregate price of $5,000,000 to $10,000,000.
Each unit will consist of one share of our common stock and a
warrant to purchase another share of our common stock. |
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Number of Shares Outstanding Prior to the Offering |
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15,654,846 shares.
(1) |
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Number of Shares to be
Outstanding After the Offering |
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Minimum: shares(1)
Maximum: shares
(1) |
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Description of Unit Warrants: |
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The five-year callable warrants will have an exercise price of
$ per share, or 20% above the
offering price of the units. See Description of Capital
Stock and Unit Warrants. |
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Use of Proceeds |
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To have vaccines manufactured for our clinical trials; to
conduct a second human clinical trial for the therapeutic use of
our vaccine; toward conducting a Phase 1 human clinical
trial of an adjuvanted version of our vaccine, toward conducting
our planned Phase 2b human clinical trial for a preventative HIV
vaccine in the at risk population; and for working
capital and general corporate purposes. |
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OTC Bulletin Board Symbol for Our Common Stock |
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GOVX |
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Risk Factors |
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The securities offered by this prospectus are speculative and
involve a high degree of risk and investors purchasing
securities should not purchase the securities unless they can
afford the loss of their entire investment. See Risk
Factors beginning on page 5. |
(1) The
number of shares of our common stock to be outstanding after
this offering is based on the number of shares outstanding as of
November 30, 2010, and excludes:
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1,037,529 shares of common stock reserved for future
issuance under our equity incentive plans. As of
November 30, 2010, there were options to purchase
1,035,356 shares of our common stock outstanding under our
equity incentive plans with a weighted average exercise price of
$5.66 per share;
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907,594 shares of common stock issuable upon exercise of
currently outstanding warrants as of November 30, 2010,
with exercise prices ranging from $7.00 per share to $16.50 per
share; and
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From
to shares
of common stock that will be issuable upon exercise of the unit
warrants at an exercise price of $
per share (20% above the offering price per unit) sold as part
of the units in this offering.
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4
RISK
FACTORS
You should carefully consider the risks, uncertainties and
other factors described below before you decide whether to buy
units. Any of the factors could materially and adversely affect
our business, financial condition, operating results and
prospects and could negatively impact the market price of our
securities. Also, you should be aware that the risks and
uncertainties described below are not the only ones we face.
Additional risks and uncertainties, of which we are not yet
aware, or that we currently consider to be immaterial, may also
impair our business operations. You should also refer to the
other information contained in this prospectus, including our
financial statements and the related notes.
Risks
Related to Our Financial Results and Need for Additional
Financing
We
have a history of operating losses, and we expect losses to
continue for the foreseeable future.
We have had no product revenue to date and there can be no
assurance that we will ever generate any product revenue. We
have experienced operating losses since we began operations in
2001. As of September 30, 2010, we had an accumulated
deficit of approximately $19.8 million. We expect to incur
additional operating losses and expect cumulative losses to
increase as our research and development, pre-clinical,
clinical, manufacturing and marketing efforts expand. Our
ability to generate revenue and achieve profitability depends on
our ability to successfully complete the development of our
product candidates, conduct pre-clinical tests and clinical
trials, obtain the necessary regulatory approvals, and
manufacture and market the resulting products. Unless we are
able to successfully meet these challenges, we will not be
profitable and may not remain in business.
Our
business will require continued funding. If we do not receive
adequate funding, we will not be able to continue our
operations.
To date, we have financed our operations principally through the
private placement of equity securities and through NIH grants.
We will require substantial additional financing at various
intervals for our operations, including clinical trials,
operating expenses, intellectual property protection and
enforcement, for pursuit of regulatory approvals, and for
establishing or contracting out manufacturing, marketing and
sales functions. There is no assurance that such additional
funding will be available on terms acceptable to us or at all.
If we are not able to secure the significant funding that is
required to maintain and continue our operations at current
levels, or at levels that may be required in the future, we may
be required to delay clinical studies or clinical trials,
curtail operations, or obtain funds through collaborative
arrangements that may require us to relinquish rights to some of
our products or potential markets.
The costs of conducting all of our human clinical trials to date
have been borne by the HVTN, funded by the NIH, with GeoVax
incurring costs associated with manufacturing the clinical
vaccine supplies and other study support. This includes the cost
of conducting the ongoing Phase 2a human clinical study of our
preventative vaccine. We cannot predict the level of support we
will receive from the HVTN or the NIH for any additional
clinical trials. We are currently not receiving any governmental
support for our Phase 1 therapeutic vaccine human clinical trial.
Our operations are also partially supported by the IPCAVD grant
awarded to us to support our HIV/AIDS vaccine program. The
project period for the grant, which is renewable annually,
covers a five year period which commenced October 2007. The most
recent annual award under the grant is for the period from
September 1, 2010 through August 31, 2011 in the
amount of $3.7 million. We intend to pursue additional
grants from the federal government. However, as we progress to
the later stages of our vaccine development activities,
government financial support may be more difficult to obtain, or
may not be available at all. Therefore, it will be necessary for
us to look to other sources of funding in order to finance our
development activities.
We believe that our current working capital, combined with
proceeds from the IPCAVD grant awarded from the NIH, and without
consideration given to net proceeds from this offering will be
sufficient to support our planned level of operations through
the first quarter of 2011, with no changes to our current
business plan.
5
Assuming the minimum amount of units is sold, we expect to have
sufficient funding to support our planned operations through at
least the first quarter of 2012. Assuming the maximum amount of
units is sold, we expect to have sufficient funding to support
our planned and expanded operations at least through the end of
2012. Should the financing we require to sustain our working
capital needs be unavailable or prohibitively expensive when we
require it, the consequences could have a material adverse
effect on our business, operating results, financial condition
and prospects.
The
current economic downturn may adversely impact our ability to
raise capital.
The recession and adverse conditions in the national and global
markets may negatively affect both our ability to raise capital
and our operations in the future. The volatile equity markets
and adverse credit markets may make it difficult for us to raise
capital or procure credit in the future to fund the growth of
our business, which could have a negative impact on our business
and results of operations.
Risks
Related to Development and Commercialization of Product
Candidates and Dependence on Third Parties
Our
products are still being developed and are unproven. These
products may not be successful.
To become profitable, we must generate revenue through sales of
our products. However our products are in varying stages of
development and testing. Our products have not been proven in
human clinical trials and have not been approved by any
government agency for sale. If we cannot successfully develop
and prove our products and processes, or if we do not develop
other sources of revenue, we will not become profitable and at
some point we would discontinue operations.
Whether
we are successful will be dependent, in part, upon the
leadership provided by our management. If we were to lose the
services of any of these individuals, our business and
operations may be adversely affected. Further, we may not carry
key man insurance on our executive officers or
directors.
Whether our business will be successful will be dependent, in
part, upon the leadership provided by our officers, particularly
our President and Chief Executive Officer and our Chief
Scientific Officer. The loss of the services of these
individuals may have an adverse effect on our operations.
Although we carry some key man insurance on Dr. Harriet L.
Robinson, the amount of such coverage may not be sufficient to
offset any adverse economic effects on our operations and we do
not carry key man insurance on any of our other executive
officers or directors. Further, our employees, including our
executive officers and directors, are not subject to any
covenants not to compete against the Company, and our business
could be adversely affected if any of our employees or directors
engaged in an enterprise competitive with the Company.
Regulatory
and legal uncertainties could result in significant costs or
otherwise harm our business.
To manufacture and sell our products, we must comply with
extensive domestic and international regulation. In order to
sell our products in the United States, approval from the FDA is
required. Satisfaction of regulatory requirements, including FDA
requirements, typically takes many years, and if approval is
obtained at all, it is dependent upon the type, complexity and
novelty of the product, and requires the expenditure of
substantial resources. We cannot predict whether our products
will be approved by the FDA. Even if they are approved, we
cannot predict the time frame for approval. Foreign regulatory
requirements differ from jurisdiction to jurisdiction and may,
in some cases, be more stringent or difficult to meet than FDA
requirements. As with the FDA, we cannot predict if or when we
may obtain these regulatory approvals. If we cannot demonstrate
that our products can be used safely and successfully in a broad
segment of the patient population on a long-term basis, our
products would likely be denied approval by the FDA and the
regulatory agencies of foreign governments.
6
We
will face intense competition and rapid technological change
that could result in products that are superior to the products
we will be commercializing or developing.
The market for vaccines that protect against or treat HIV/AIDS
is intensely competitive and is subject to rapid and significant
technological change. We will have numerous competitors in the
United States and abroad, including, among others, large
companies with substantially greater resources than us. These
competitors may develop technologies and products that are more
effective or less costly than any of our future technology or
products or that could render our technology or products
obsolete or noncompetitive. If our technology or products are
not competitive, we may not be able to remain in business.
Our
product candidates are based on new medical technology and,
consequently, are inherently risky. Concerns about the safety
and efficacy of our products could limit our future
success.
We are subject to the risks of failure inherent in the
development of product candidates based on new medical
technologies. These risks include the possibility that the
products we create will not be effective, that our product
candidates will be unsafe or otherwise fail to receive the
necessary regulatory approvals, and that our product candidates
will be hard to manufacture on a large scale or will be
uneconomical to market.
Many pharmaceutical products cause multiple potential
complications and side effects, not all of which can be
predicted with accuracy and many of which may vary from patient
to patient. Long term
follow-up
data may reveal additional complications associated with our
products. The responses of potential physicians and others to
information about complications could materially affect the
market acceptance of our products, which in turn would
materially harm our business.
We may
experience delays in our clinical trials that could adversely
affect our financial results and our commercial
prospects.
We do not know whether planned clinical trials will begin on
time or whether we will complete any of our clinical trials on
schedule, if at all. Product development costs will increase if
we have delays in testing or approvals or if we need to perform
more or larger clinical trials than planned. Significant delays
may adversely affect our financial results and the commercial
prospects for our products, and delay our ability to become
profitable.
We rely heavily on the HVTN, independent clinical investigators,
and other third party service providers for successful execution
of our clinical trials, but do not control many aspects of their
activities. We are responsible for ensuring that each of our
clinical trials is conducted in accordance with the general
investigational plan and protocols for the trial. Moreover, the
FDA requires us to comply with standards, commonly referred to
as Good Clinical Practices, for conducting, recording, and
reporting the results of clinical trials to assure that data and
reported results are credible and accurate and that the rights,
integrity and confidentiality of trial participants are
protected. Our reliance on third parties that we do not control
does not relieve us of these responsibilities and requirements.
Third parties may not complete activities on schedule, or may
not conduct our clinical trials in accordance with regulatory
requirements or our stated protocols. The failure of these third
parties to carry out their obligations could delay or prevent
the development, approval and commercialization of our product
candidates.
Failure
to obtain timely regulatory approvals required to exploit the
commercial potential of our products could increase our future
development costs or impair our future sales.
None of our vaccines are approved by the FDA for sale in the
United States or by other regulatory authorities for sale in
foreign countries. To exploit the commercial potential of our
technologies, we are conducting and planning to conduct
additional pre-clinical studies and clinical trials. This
process is expensive and can require a significant amount of
time. Failure can occur at any stage of testing, even if the
results are favorable. Failure to adequately demonstrate safety
and efficacy in clinical trials could delay or preclude
regulatory approval and restrict our ability to commercialize
our technology or products. Any such failure may severely harm
our business. In addition, any approvals we obtain may not cover
all of the clinical indications for which approval is sought, or
may contain significant limitations in the form of narrow
indications,
7
warnings, precautions or contraindications with respect to
conditions of use, or in the form of onerous risk management
plans, restrictions on distribution, or post-approval study
requirements.
State
pharmaceutical marketing compliance and reporting requirements
may expose us to regulatory and legal action by state
governments or other government authorities.
In recent years, several states have enacted legislation
requiring pharmaceutical companies to establish marketing
compliance programs and file periodic reports on sales,
marketing, pricing and other activities. Similar legislation is
being considered in other states. Many of these requirements are
new and uncertain, and available guidance is limited. Unless we
are in full compliance with these laws, we could face
enforcement action and fines and other penalties and could
receive adverse publicity, all of which could harm our business.
We may
be subject to new federal and state legislation to submit
information on our open and completed clinical trials to public
registries and databases.
In 1997, a public registry of open clinical trials involving
drugs intended to treat serious or life-threatening diseases or
conditions was established under the FDA Modernization Act, or
the FDMA, to promote public awareness of and access to these
clinical trials. Under the FDMA, pharmaceutical manufacturers
and other trial sponsors are required to post the general
purpose of these trials, as well as the eligibility criteria,
location and contact information of the trials. Since the
establishment of this registry, there has been significant
public debate focused on broadening the types of trials included
in this or other registries, as well as providing for public
access to clinical trial results. A voluntary coalition of
medical journal editors has adopted a resolution to publish
results only from those trials that have been registered with a
no-cost, publicly accessible database, such as
www.clinicaltrials.gov. Federal legislation was introduced in
the fall of 2004 to expand www.clinicaltrials.gov and to require
the inclusion of trial results in this registry. The
Pharmaceutical Research and Manufacturers of America also issued
voluntary principles for its members to make results from
certain clinical trials publicly available and established a
website for this purpose. Other groups have adopted or are
considering similar proposals for clinical trial registration
and the posting of clinical trial results. Failure to comply
with any clinical trial posting requirements could expose us to
negative publicity, fines and other penalties, all of which
could materially harm our business.
We
will face uncertainty related to pricing and reimbursement and
health care reform.
In both domestic and foreign markets, sales of our products will
depend in part on the availability of reimbursement from
third-party payers such as government health administration
authorities, private health insurers, health maintenance
organizations and other health care-related organizations.
Reimbursement by such payers is presently undergoing reform and
there is significant uncertainty at this time how this will
affect sales of certain pharmaceutical products.
Medicare, Medicaid and other governmental healthcare programs
govern drug coverage and reimbursement levels in the United
States. Federal law requires all pharmaceutical manufacturers to
rebate a percentage of their revenue arising from
Medicaid-reimbursed drug sales to individual states. Generic
drug manufacturers agreements with federal and state
governments provide that the manufacturer will remit to each
state Medicaid agency, on a quarterly basis, 11% of the average
manufacturer price for generic products marketed and sold under
abbreviated new drug applications covered by the states
Medicaid program. For proprietary products, which are marketed
and sold under new drug applications, manufacturers are required
to rebate the greater of (a) 15.1% of the average
manufacturer price or (b) the difference between the
average manufacturer price and the lowest manufacturer price for
products sold during a specified period.
Both the federal and state governments in the United States, and
foreign governments, continue to propose and pass new
legislation, rules and regulations designed to contain or reduce
the cost of health care. Existing regulations that affect the
price of pharmaceutical and other medical products may also
change before any of our products are approved for marketing.
Cost control initiatives could decrease the price that we
receive for any product developed in the future. In addition,
third-party payers are increasingly challenging the price and
cost-effectiveness of medical products and services and
litigation has been filed against a number of
8
pharmaceutical companies in relation to these issues.
Additionally, some uncertainty may exist as to the reimbursement
status of newly approved injectable pharmaceutical products. Our
products may not be considered cost-effective or adequate
third-party reimbursement may not be available to enable us to
maintain price levels sufficient to realize an adequate return
on our investment.
We may
not be successful in establishing collaborations for product
candidates we may seek to commercialize, which could adversely
affect our ability to discover, develop, and commercialize
products.
We expect to seek collaborations for the development and
commercialization of product candidates in the future. The
timing and terms of any collaboration will depend on the
evaluation by prospective collaborators of the clinical trial
results and other aspects of our vaccines safety and
efficacy profile. If we are unable to reach agreements with
suitable collaborators for any product candidate, we will be
forced to fund the entire development and commercialization of
such product candidates, ourselves, and we may not have the
resources to do so. If resource constraints require us to enter
into a collaboration agreement early in the development of a
product candidate, we may be forced to accept a more limited
share of any revenues this product may eventually generate. We
face significant competition in seeking appropriate
collaborators. Moreover, these collaboration arrangements are
complex and time-consuming to negotiate and document. We may not
be successful in our efforts to establish collaborations or
other alternative arrangements for any product candidate. Even
if we are successful in establishing collaborations, we may not
be able to ensure fulfillment by collaborators of their
obligations or our expectations.
We do
not have manufacturing, sales or marketing experience and our
lack of experience may restrict our success in commercializing
our product candidates.
We do not have experience in manufacturing, marketing, or
selling vaccines. We may be unable to establish satisfactory
arrangements for manufacturing, marketing, sales, and
distribution capabilities necessary to commercialize and gain
market acceptance for our products. To obtain the expertise
necessary to successfully manufacture, market, and sell our
vaccines, we will require the development of our own commercial
infrastructure
and/or
collaborative commercial arrangements and partnerships. Our
ability to make that investment and also execute our current
operating plan is dependent on numerous factors, including, the
performance of third party collaborators with whom we may
contract. Accordingly, we may not have sufficient funds to
successfully commercialize our vaccines in the United States or
elsewhere.
Furthermore, our products may not gain market acceptance among
physicians, patients, healthcare payers and the medical
community. Significant factors in determining whether we will be
able to compete successfully include:
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the efficacy and safety of our vaccines;
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the time and scope of regulatory approval;
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reimbursement coverage from insurance companies and others;
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the price and cost-effectiveness of our products; and
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the ability to maintain patent protection.
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We may
be required to defend lawsuits or pay damages for product
liability claims.
Product liability is a major risk in testing and marketing
biotechnology and pharmaceutical products. We may face
substantial product liability exposure in human clinical trials
and for products that we sell after regulatory approval. We
carry product liability insurance and we expect to continue such
policies. However, product liability claims, regardless of their
merits, could exceed policy limits, divert managements
attention, and adversely affect our reputation and the demand
for our products.
9
Risks
Related to Our Intellectual Property
We
could lose our license rights to our important intellectual
property if we do not fulfill our contractual obligations to our
licensors.
Our rights to significant parts of the technology we use in our
vaccines are licensed from third parties and are subject to
termination if we do not fulfill our contractual obligations to
our licensors. Termination of intellectual property rights under
any of our license agreements could adversely impact our ability
to produce or protect our vaccines. Our obligations under our
license agreements include requirements that we make milestone
payments to our licensors upon the achievement of clinical
development and regulatory approval milestones, royalties as we
sell commercial products, and reimbursement of patent filing and
maintenance expenses. Should we become bankrupt or otherwise
unable to fulfill our contractual obligations, our licensors
could terminate our rights to critical technology that we rely
upon.
Other
parties may claim that we infringe their intellectual property
or proprietary rights, which could cause us to incur significant
expenses or prevent us from selling products.
Our success will depend in part on our ability to operate
without infringing the patents and proprietary rights of third
parties. The manufacture, use and sale of new products have been
subject to substantial patent rights litigation in the
pharmaceutical industry. These lawsuits generally relate to the
validity and infringement of patents or proprietary rights of
third parties. Infringement litigation is prevalent with respect
to generic versions of products for which the patent covering
the brand name product is expiring, particularly since many
companies that market generic products focus their development
efforts on products with expiring patents. Pharmaceutical
companies, biotechnology companies, universities, research
institutions or other third parties may have filed patent
applications or may have been granted patents that cover aspects
of our products or our licensors products, product
candidates or other technologies.
Future or existing patents issued to third parties may contain
patent claims that conflict with our products. We expect to be
subject to infringement claims from time to time in the ordinary
course of business, and third parties could assert infringement
claims against us in the future with respect to our current
products or with respect to products that we may develop or
license. Litigation or interference proceedings could force us
to:
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stop or delay selling, manufacturing or using products that
incorporate, or are made using, the challenged intellectual
property;
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pay damages; or
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enter into licensing or royalty agreements that may not be
available on acceptable terms, if at all.
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Any litigation or interference proceedings, regardless of their
outcome, would likely delay the regulatory approval process, be
costly and require significant time and attention of our key
management and technical personnel.
Any
inability to protect intellectual property rights in the United
States and foreign countries could limit our ability to
manufacture or sell products.
We will rely on trade secrets, unpatented proprietary know-how,
continuing technological innovation and, in some cases, patent
protection to preserve our competitive position. Our patents and
licensed patent rights may be challenged, invalidated, infringed
or circumvented, and the rights granted in those patents may not
provide proprietary protection or competitive advantages to us.
We and our licensors may not be able to develop patentable
products. Even if patent claims are allowed, the claims may not
issue, or in the event of issuance, may not be sufficient to
protect the technology owned by or licensed to us. If patents
containing competitive or conflicting claims are issued to third
parties, we may be prevented from commercializing the products
covered by such patents, or may be required to obtain or develop
alternate technology. In addition, other parties may duplicate,
design around or independently develop similar or alternative
technologies.
We may not be able to prevent third parties from infringing or
using our intellectual property, and the parties from whom we
may license intellectual property may not be able to prevent
third parties from
10
infringing or using the licensed intellectual property. We
generally will attempt to control and limit access to, and the
distribution of, our product documentation and other proprietary
information. Despite efforts to protect this proprietary
information, unauthorized parties may obtain and use information
that we may regard as proprietary. Other parties may
independently develop similar know-how or may even obtain access
to these technologies.
The laws of some foreign countries do not protect proprietary
information to the same extent as the laws of the United States,
and many companies have encountered significant problems and
costs in protecting their proprietary information in these
foreign countries.
Neither the U.S. Patent and Trademark Office nor the courts
have established a consistent policy regarding the breadth of
claims allowed in pharmaceutical patents. The allowance of
broader claims may increase the incidence and cost of patent
interference proceedings and the risk of infringement
litigation. On the other hand, the allowance of narrower claims
may limit the value of our proprietary rights.
Risks
Related to This Offering and Our Securities
We
will have broad discretion over the use of the net proceeds from
this offering.
We intend to use the proceeds as described in Use of
Proceeds. However, the allocation of proceeds will depend
in part upon how much money we raise and future developments in
our business. Our judgment as to such allocations may not result
in positive returns on your investment and you will not have an
opportunity to evaluate the economic, financial, or other
information upon which we base our decisions.
Future
sales by our stockholders may adversely affect our stock price
and our ability to raise funds in new stock
offerings.
Sales of substantial amounts of our common stock in the public
market following this offering, or the perception that these
sales could occur, could cause the market price of our common
stock to decline. These sales could also make it more difficult
for us to sell equity or equity-related securities in the future
at a time and price that we deem appropriate. Most of the
outstanding shares held by our affiliates will be eligible for
sale upon the expiration of
lock-up
agreements 180 days after the date of this prospectus,
subject in some cases to volume and other restrictions of
Rule 144 under the Securities Act. The
lock-up
period may be extended in certain cases for up to 18 additional
days.
There
is no public market for the warrants to purchase common stock
being offered in this offering.
There is no established public trading market for the warrants
being offered in this offering, and we do not expect a market to
develop. In addition, we do not intend to apply for listing the
warrants on any securities exchange. Without an active market,
the liquidity of the warrants will be limited.
If the registration statement covering the shares issuable upon
exercise of the warrants contained in the units is no longer
effective, the shares issuable upon exercise of the warrants
will be issued with restrictive legends unless such shares are
eligible for sale under Rule 144.
There
is no firm commitment to purchase units, and there can be no
assurance we will sell the minimum amount of
units.
The Company is offering the units through the placement agents
on a best efforts minimum/maximum basis. The
placement agents have made no commitment to purchase any units
offered hereby. Consequently, there can be no assurance that the
units offered hereby will be sold. In the event that the minimum
number of units offered hereby is not sold within thirty days of
the date of this prospectus, all proceeds received will be
refunded in full to investors without interest or deduction.
Therefore, investors subscribing to purchase the units offered
hereby may lose the use of their funds for the escrow period of
up to thirty days.
11
Investors
in this offering will experience immediate and substantial
dilution and may experience additional dilution in the
future.
Investors in this offering will incur immediate and substantial
dilution as a result of this offering. After giving effect to
the sale by us of all of units offered in this offering at a
public offering price of $ per
unit, and after deducting placement agent commissions and
estimated offering expenses payable by us, our net tangible book
value per share, as of September 30, 2010, would have been
$ , representing an immediate
dilution of $ per share,
or %, of the public offering price,
assuming no exercise of the warrants. In addition, in the past,
we issued options and warrants to acquire shares of common
stock. To the extent these options and warrants are ultimately
exercised at prices below the then-current market value,
investors in this offering will sustain future dilution.
The
market price of our common stock is highly
volatile.
The market price of our common stock has been, and is expected
to continue to be, highly volatile. Certain factors, including
announcements of new developments by us or other companies,
regulatory matters, new or existing medicines or procedures,
concerns about our financial position, operating results,
litigation, government regulation, developments or disputes
relating to agreements, patents or proprietary rights, may have
a significant impact on the market price of our stock. In
addition, potential dilutive effects of future sales of shares
of common stock by our stockholders and by us, including those
sold pursuant to this prospectus, and subsequent sales of common
stock by the holders of warrants and options could have an
adverse effect on the market price of our shares.
Our
common stock does not have a vigorous trading market and you may
not be able to sell your securities when desired.
We have a limited active public market for our common shares. A
more active public market, allowing you to sell large quantities
of our common stock, may never develop. Consequently, you may
not be able to liquidate your investment in the event of an
emergency or for any other reason.
We
have never paid dividends and have no plans to do
so.
Holders of shares of our common stock are entitled to receive
such dividends as may be declared by our Board of Directors. To
date, we have paid no cash dividends on our shares of common
stock and we do not expect to pay cash dividends on our common
stock in the foreseeable future. We intend to retain future
earnings, if any, to provide funds for operations of our
business. Therefore, any potential return investors in our
common stock may have will be in the form of appreciation, if
any, in the market value of their shares of common stock.
If we
fail to maintain an effective system of internal controls, we
may not be able to accurately report our financial results or
prevent fraud.
We are subject to reporting obligations under the United States
securities laws. The Securities and Exchange Commission, or the
SEC, as required by the Sarbanes-Oxley Act of 2002, adopted
rules requiring every public company to include a management
report on such companys internal controls over financial
reporting in its annual report. Effective internal controls are
necessary for us to produce reliable financial reports and are
important to help prevent fraud. As a result, our failure to
achieve and maintain effective internal controls over financial
reporting could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could
negatively impact the trading price of our stock.
If we
fail to remain current in our reporting requirements, our
securities could be removed from the OTC Bulletin Board,
which would limit the ability of broker-dealers to sell our
securities and the ability of stockholders to sell their
securities in the secondary market.
United States companies trading on the OTC Bulletin Board
must be reporting issuers under Section 12 of the Exchange
Act, and must be current in their reports under Section 13.
If we fail to remain current on our
12
reporting requirements, we could be removed from the OTC
Bulletin Board. As a result, the market liquidity for our
securities could be severely adversely affected by limiting the
ability of broker-dealers to sell our securities and the ability
of stockholders to sell their securities in the secondary market.
We may
need additional capital, and the sale of additional shares or
other equity securities could result in additional dilution to
our stockholders.
We believe that our current cash and cash equivalents,
anticipated cash flow from operations and the net proceeds from
this financing will be sufficient to meet our anticipated cash
needs through 2012. We may, however, require additional cash
resources. If our resources are insufficient to satisfy our cash
requirements, we may seek to sell additional equity securities
or borrow money. The sale of additional equity securities could
result in additional dilution to our stockholders. The
incurrence of indebtedness would result in debt service
obligations and could result in operating and financing
covenants that would restrict our operations. We cannot assure
you that financing will be available in amounts or on terms
acceptable to us, if at all.
Our
directors and executive officers beneficially own a significant
amount of our common stock and will be able to exercise
significant influence on matters requiring stockholder
approval.
Our directors and executive officers collectively beneficially
own approximately 18.3% of our common stock as of
November 30, 2010. After the offering and assuming all
units offered hereby are sold, our directors and executive
officers will collectively beneficially own
approximately % of our common
stock. Consequently, our directors and executive officers as a
group will continue to be able to exert significant influence
over the election of directors and the outcome of most corporate
actions requiring stockholder approval and our business, which
may have the effect of delaying or precluding a third party from
acquiring control of us. Furthermore, Emory University
beneficially owns 29.5% of our common stock as of
November 30, 2010, and will beneficially own
approximately % if all units
offered hereby are sold. If our directors and executive officers
move to act in concert with Emory University, their ability to
influence stockholder actions will be even more significant.
Certain
provisions of our certificate of incorporation may make it more
difficult for a third party to effect a change in
control.
Our certificate of incorporation authorizes our Board of
Directors to issue up to 10,000,000 shares of preferred
stock. The preferred stock may be issued in one or more series,
the terms of which may be determined at the time of issuance by
our Board of Directors without further action by the
stockholders. These terms may include voting rights including
the right to vote as a series on particular matters, preferences
as to dividends and liquidation, conversion rights, redemption
rights and sinking fund provisions. The issuance of any
preferred stock could diminish the rights of holders of our
common stock, and therefore could reduce the value of our common
stock. In addition, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge
with, or sell assets to, a third party. The ability of our Board
of Directors to issue preferred stock could make it more
difficult, delay, discourage, prevent or make it more costly to
acquire or effect a
change-in-control,
which in turn could prevent the stockholders from recognizing a
gain in the event that a favorable offer is extended and could
materially and negatively affect the market price of our common
stock.
13
FORWARD-LOOKING
STATEMENTS
The information contained in this prospectus, includes
forward-looking statements as defined in the Private Securities
Reform Act of 1995. These forward-looking statements are often
identified by words such as may, will,
expect, intend, anticipate,
believe, estimate, continue,
plan, their negatives, and similar expressions,
although not all forward-looking statements contain these
identifying words. These statements involve estimates,
assumptions and uncertainties that could cause actual results to
differ materially from those expressed for the reasons described
in this prospectus. You should not place undue reliance on these
forward-looking statements.
The forward-looking statements contained in this prospectus are
based on our expectations, which reflect estimates and
assumptions made by our management. These estimates and
assumptions reflect our best judgment based on currently known
industry developments, our scientific work, contractual
arrangements, and other factors. Although we believe such
estimates and assumptions to be reasonable, they are inherently
uncertain and involve a number of risks and uncertainties that
are beyond our control. In addition, our assumptions about
future events may prove to be inaccurate. We caution all readers
that the forward-looking statements contained in this prospectus
are not guarantees of future performance, and we cannot assure
any reader that such statements will be realized or the
forward-looking events and circumstances will occur. Actual
results may differ materially from those anticipated or implied
in the forward-looking statements due to the factors listed in
the Risk Factors section and elsewhere in this
prospectus. All forward-looking statements speak only as of the
date of this prospectus. We do not intend to publicly update or
revise any forward-looking statements as a result of new
information, future events or otherwise. These cautionary
statements qualify all forward-looking statements attributable
to us, or persons acting on our behalf. The risks, contingencies
and uncertainties relate to, among other matters, the following:
our history of operating losses, our need for continued funding,
the development stage of our vaccines, regulatory and legal
uncertainties, competition, the difficulty of obtaining timely
regulatory approvals, uncertainty as to third party
reimbursements, the impact of healthcare reform, difficulties
related to our intellectual property, and other factors
discussed under Risk Factors.
Other factors besides those described in this prospectus and any
prospectus supplement could also affect our actual results.
These forward-looking statements are largely based on our
expectations and beliefs concerning future events, which reflect
estimates and assumptions made by our management. These
estimates and assumptions reflect our best judgment based on
currently known market conditions and other factors relating to
our operations and business environment, all of which are
difficult to predict and many of which are beyond our control.
14
USE OF
PROCEEDS
We estimate that the net proceeds, after commissions of 8% and
after expenses estimated at $550,000, from the sale of the units
will be approximately $4.1 million assuming that we sell
the minimum number of such units, and $8.7 million assuming
we sell the maximum number of such units we are offering
pursuant to this prospectus. We will retain broad discretion
over the use of the net proceeds to us from any sale of the
units under this prospectus.
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Sources and
Uses
|
|
Minimum
Offering
|
|
|
Maximum
Offering
|
|
|
Sources:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Proceeds
|
|
$
|
5,000,000
|
|
|
|
(100.0
|
)%
|
|
$
|
10,000,000
|
|
|
|
(100.0
|
)%
|
Uses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
$
|
400,000
|
|
|
|
(8.0
|
)%
|
|
$
|
800,000
|
|
|
|
(8.0
|
)%
|
Offering expenses, other than commissions
|
|
$
|
550,000
|
|
|
|
(11.0
|
)%
|
|
$
|
550,000
|
|
|
|
(5.5
|
)%
|
Manufacture vaccine for clinical trials
|
|
$
|
1,500,000
|
|
|
|
(30.0
|
)%
|
|
$
|
1,500,000
|
|
|
|
(15.0
|
)%
|
Phase 1/2 clinical trials for therapeutic use of our HIV vaccine
|
|
$
|
1,000,000
|
|
|
|
(20.0
|
)%
|
|
$
|
1,500,000
|
|
|
|
(15.0
|
)%
|
Phase 2b clinical trial for preventative use of our HIV vaccine
|
|
$
|
|
|
|
|
(0.0
|
)%
|
|
$
|
2,500,000
|
|
|
|
(25.0
|
)%
|
Phase 1 clinical trial for preventative use of our HIV
adjuvanted vaccine
|
|
$
|
1,000,000
|
|
|
|
(20.0
|
)%
|
|
$
|
2,500,000
|
|
|
|
(25.0
|
)%
|
Working capital and general corporate purposes
|
|
$
|
550,000
|
|
|
|
(11.0
|
)%
|
|
$
|
650,000
|
|
|
|
(6.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
5,000,000
|
|
|
|
(100.0
|
)%
|
|
$
|
10,000,000
|
|
|
|
(100
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We plan to apply the proceeds in approximately the order listed
above. However, as our business develops, the amount to be
allocated to particular uses may change. For example, if a
clinical trial is extended or terminated, then a greater or
lesser amount of funds will be required.
We may receive proceeds from the exercise of warrants included
within the units sold pursuant to this offering. Since the
warrants may or may not be exercised and, if exercised, may be
exercised in whole or in part using a cashless exercise
mechanism, we cannot predict the amount or timing of sums we may
receive as a result of any warrant exercises.
15
MARKET
FOR REGISTRANTS COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Market
Information
Our common stock is currently traded on the OTC
Bulletin Board market under the symbol GOVX.
The following table sets forth the high and low bid prices for
our common stock for the periods indicated. The prices represent
quotations between dealers and do not include retail
mark-up,
markdown, or commission, and do not necessarily represent actual
transactions:
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
2010
|
|
|
|
|
|
|
|
|
Fourth Quarter (through December 6, 2010)
|
|
$
|
2.18
|
|
|
$
|
0.63
|
|
Third Quarter
|
|
$
|
3.35
|
|
|
$
|
1.52
|
|
Second Quarter
|
|
$
|
6.50
|
|
|
$
|
2.25
|
|
First Quarter
|
|
$
|
9.00
|
|
|
$
|
5.00
|
|
2009
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
12.50
|
|
|
$
|
7.00
|
|
Third Quarter
|
|
$
|
16.50
|
|
|
$
|
6.00
|
|
Second Quarter
|
|
$
|
19.00
|
|
|
$
|
5.00
|
|
First Quarter
|
|
$
|
10.00
|
|
|
$
|
4.50
|
|
2008
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
10.00
|
|
|
$
|
4.50
|
|
Third Quarter
|
|
$
|
10.00
|
|
|
$
|
6.50
|
|
Second Quarter
|
|
$
|
14.50
|
|
|
$
|
6.00
|
|
First Quarter
|
|
$
|
9.50
|
|
|
$
|
5.50
|
|
Holders
On November 30, 2010, there were approximately 1,200
holders of record of our common stock. The number of record
holders does not reflect the number of beneficial owners of our
common stock for whom shares are held by brokerage firms and
other institutions.
Dividends
We have not paid any dividends since our inception and do not
contemplate paying dividends in the foreseeable future.
16
CAPITALIZATION
The following table sets forth our capitalization as of
September 30, 2010:
|
|
|
|
|
on an actual basis; and
|
|
|
|
on a pro forma as adjusted basis giving effect to the sale of
units, each of which will include one share of common stock, in
this offering at an assumed public offering price of
$ per unit, after deducting the
estimated commissions and estimated offering expenses payable by
us, and application of net proceeds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
|
|
as Adjusted(1)
|
|
|
|
|
|
|
Minimum
|
|
|
Maximum
|
|
|
|
Actual
|
|
|
Offering
|
|
|
Offering
|
|
|
Common stock, $0.001 par value 40,000,000 shares
authorized, 15,654,846 shares outstanding at
September 30,
2010, shares
outstanding if the minimum number of units is
sold, shares
outstanding if the maximum number of units is sold
|
|
$
|
15,655
|
|
|
$
|
|
|
|
$
|
|
|
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, none outstanding
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Additional
paid-in-capital
|
|
$
|
21,936,516
|
|
|
$
|
|
|
|
$
|
|
|
Deficit accumulated during the development stage
|
|
$
|
(19,806,392
|
)
|
|
$
|
(19,806,392
|
)
|
|
$
|
(19,806,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
$
|
2,145,779
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These columns do not reflect the issuance or exercise of any
warrants included within the units sold as part of this offering. |
17
SELECTED
FINANCIAL DATA
The following selected financial data are derived from our
consolidated financial statements. The historical results
presented below are not necessarily indicative of the results to
be expected for any future period. You should read the
information set forth below in conjunction with the information
contained in Managements Discussion and Analysis of
Financial Condition and Results of Operations, and our
consolidated financial statements and the related notes,
beginning on
page F-1
of this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
Statement of
|
|
September 30,
|
|
Years Ended December 31,
|
Operations Data
|
|
2010
|
|
2009
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
Total revenues (grant income)
|
|
$
|
4,239,017
|
|
|
$
|
3,271,506
|
|
|
$
|
3,668,195
|
|
|
$
|
2,910,170
|
|
|
$
|
237,004
|
|
|
$
|
852,905
|
|
|
$
|
670,467
|
|
Net loss
|
|
$
|
(2,268,544
|
)
|
|
$
|
(2,440,977
|
)
|
|
$
|
(3,284,252
|
)
|
|
$
|
(3,728,187
|
)
|
|
$
|
(4,241,796
|
)
|
|
$
|
(584,166
|
)
|
|
$
|
(1,611,086
|
)
|
Basic and diluted net loss per common share(1)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
Balance Sheet Data:
|
|
2010
|
|
2009
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
Total assets
|
|
$
|
2,992,798
|
|
|
$
|
4,274,906
|
|
|
$
|
4,315,597
|
|
|
$
|
3,056,241
|
|
|
$
|
3,246,404
|
|
|
$
|
2,396,330
|
|
|
$
|
1,685,218
|
|
Redeemable convertible preferred stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,016,555
|
|
Total stockholders equity (deficit)
|
|
$
|
2,145,779
|
|
|
$
|
3,926,132
|
|
|
$
|
3,744,232
|
|
|
$
|
2,709,819
|
|
|
$
|
2,647,866
|
|
|
$
|
2,203,216
|
|
|
$
|
(500,583
|
)
|
18
MANAGEMENTS
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial
condition and results of operations should be read together with
the discussion under Selected Financial Data and our
consolidated financial statements included in this prospectus
beginning at
page F-1.
This discussion contains forward-looking statements that involve
risks and uncertainties because they are based on current
expectations and relate to future events and our future
financial performance. Our actual results may differ materially
from those anticipated in these forward-looking statements as a
result of many important factors, including those set forth
under Risk Factors and elsewhere in this
prospectus.
Overview
GeoVax, a biotechnology company, focuses on developing vaccines
to protect against or to treat diseases caused by HIV. We have
exclusively licensed vaccine technology from Emory University
that was developed at Emory University in collaboration with the
NIH and the CDC.
Our major ongoing research and development programs are focused
on the clinical development of our DNA and MVA vaccines designed
for use together in a prime-boost system for the prevention
and/or
treatment of HIV/AIDS. We are developing two clinical pathways
for our vaccine candidates (i) as a
preventative vaccine to prevent or control infection of
individuals who are exposed to the HIV virus, and (ii) as a
therapeutic vaccine to prevent development of AIDS in those
individuals who have already been infected with the HIV virus.
Our HIV vaccine candidates have successfully completed
pre-clinical efficacy testing in non-human primates and our
preventative HIV vaccine candidate has completed Phase 1
clinical testing trials in humans.
Our lead preventative vaccine candidate is currently in a Phase
2a clinical trial, being conducted by the HIV Vaccine Trials
Network, or the HVTN, with funding from the NIH. We
expect to complete this trial during 2011.
With regard to our therapeutic vaccine candidate, we recently
initiated a Phase 1 human clinical trial and are currently
recruiting patients. We expect the Phase 1 clinical trial to
begin generating vaccine safety and performance data during 2011
with trial completion in the 2012-2013 timeframe.
In addition to our clinical development program for our vaccine
candidates, we are conducting pre-clinical research on the
impact of adding adjuvants (immune system stimulants) to the DNA
priming component of our vaccine and have demonstrated improved
effectiveness of our vaccine candidates. This work is being
funded by the NIH through an Integrated
Pre-clinical / Clinical AIDS Vaccine Development
Grant, or the IPCAVD, grant to GeoVax. We are currently
formulating plans to begin Phase 1 human clinical testing of
this product, which may result in a second generation of our
preventative HIV vaccine.
Critical
Accounting Policies and Estimates
This discussion and analysis of our financial condition and
results of operations is based on our consolidated financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States.
The preparation of these financial statements requires
management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses
and related disclosure of contingent assets and liabilities. On
an ongoing basis, management evaluates its estimates and adjusts
the estimates as necessary. We base our estimates on historical
experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ materially from these
estimates under different assumptions or conditions.
19
Our significant accounting policies are summarized in
Note 2 to our consolidated financial statements for the
year ended December 31, 2009. We believe the following
critical accounting policies affect our more significant
judgments and estimates used in the preparation of our
consolidated financial statements:
Impairment
of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount
of the assets to the future net cash flows expected to be
generated by such assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
discounted expected future net cash flows from the assets.
Revenue
Recognition
We recognize revenue in accordance with the SECs Staff
Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, as amended by Staff Accounting
Bulletin No. 104, Revenue Recognition, or SAB 104
provides guidance in applying U.S. generally accepted
accounting principles to revenue recognition issues, and
specifically addresses revenue recognition for upfront,
non-refundable fees received in connection with research
collaboration agreements. Our revenue consists solely of grant
funding received from the NIH. Revenue from this arrangement is
approximately equal to the costs incurred and is recorded as
income as the related costs are incurred.
Stock-Based
Compensation
We account for stock-based transactions in which the Company
receives services from employees, directors or others in
exchange for equity instruments based on the fair value of the
award at the grant date. Compensation cost for awards of common
stock is estimated based on the price of the underlying common
stock on the date of issuance. Compensation cost for stock
options or warrants is estimated at the grant date based on each
instruments fair-value as calculated by the Black-Scholes
option pricing model. The Company recognizes stock-based
compensation cost as expense ratably on a straight-line basis
over the requisite service period for the award.
Liquidity
and Capital Resources
At September 30, 2010, we had cash and cash equivalents of
$1,426,342 and total assets of $2,992,798, as compared to
$3,515,784 and $4,315,597, respectively, at December 31,
2009. Working capital totaled $1,289,966 at September 30,
2010, compared to $3,309,355 at December 31, 2009.
Sources
and Uses of Cash
We are a development-stage company as defined by Financial
Accounting Standards Board, or FASB, Accounting Standards
Codification, or ASC, Topic 915, Development Stage
Entities and do not have any products approved for
sale. Due to our significant research and development
expenditures, we have not been profitable and have generated
operating losses since our inception in 2001. Our primary
sources of cash are from sales of our equity securities and from
government grant funding.
Cash
Flows from Operating Activities
Net cash used in operating activities was $1,832,269 for the
nine month period ended September 30, 2010, as compared to
$1,251,755 for the comparable period in 2009. Net cash used in
operating activities was $1,425,150, $2,367,886, and $3,265,743
for the years ended December 31, 2009, 2008 and 2007,
respectively. Generally, the differences between periods are due
to fluctuations in our net losses which, in turn, result from
fluctuations in expenditures from our research activities,
offset by net changes in our assets and liabilities. The
increase from the 2009 period to the 2010 period is also due, in
part, to higher legal and other costs associated with the
Companys financing efforts during 2010, including costs
associated with a special stockholders meeting to approve the
reverse split of our common stock.
20
The costs of conducting all of our human clinical trials to
date, except for the therapeutic trial, have been borne by the
HVTN, funded by the NIH, with GeoVax incurring costs associated
with manufacturing the clinical vaccine supplies and other study
support. The HVTN and the NIH are bearing the cost of conducting
our ongoing Phase 2a human clinical trial, but we cannot predict
the level of support we will receive from the HVTN or the NIH
for any additional clinical trials.
We are currently not receiving any governmental support for our
Phase 1 therapeutic vaccine trial, but in July 2010 we applied
for certification of our qualified expenditures during 2009 and
2010 (including expenditures for the Phase 1 trial) under the
Qualifying Therapeutic Discovery Project (QTDP) program enacted
as part of the Patient Protection and Affordable Care Act of
2010. The QTDP program was intended to provide incentive to
smaller companies who are focusing on innovative therapeutic
discoveries. QTDP grants or tax credits are awarded to companies
with fewer than 250 employees for projects related to the
treatment or prevention of diseases through the conduct of
pre-clinical or clinical studies. Among the determining factors
used by the U.S. Secretary of Health and Human Services in
allocating funds were those projects that show potential to
produce new therapies, address unmet medical needs, and reduce
the long-term growth of healthcare costs. Also taken into
consideration were the potential for projects to create and
sustain high-quality, high-paying U.S. jobs and to advance U.S.
competitiveness in the fields of life, biological and medical
sciences. The QTDP program was highly oversubscribed, and in
November 2010, we received a cash grant of $244,500 related to
our HIV/AIDS vaccine development activities, which is the
maximum level allowable per project under the program.
Our operations are also partially funded by the IPCAVD grant
awarded to us in September 2007 by the NIH to support our
HIV/AIDS vaccine program. The project period for the grant,
which is renewable annually, covers a five-year period which
commenced in October 2007, with an expected annual award of
generally between $3 and $4 million per year (approximately
$19.4 million in the aggregate). The most recent annual
award under the grant is for the period from September 1,
2010 through August 31, 2011 in the amount of
$4.9 million. We are utilizing this funding to further our
HIV/AIDS vaccine development, optimization and production for
human clinical trial testing, primarily with regard to our
research into vaccine adjuvants. The funding we receive pursuant
to this grant is recorded as revenue at the time the related
expenditures are incurred, and thus partially offsets our net
losses. As of September 30, 2010, there is approximately
$5.2 million remaining from the current and prior grant
years awards. Assuming that the remaining budgeted amounts
under the grant are awarded annually to us, there is an
additional $3.8 million available through the grant for the
remainder of the original five year project period ending
August 31, 2012. If the annual grant does not occur, we
will experience a shortfall in anticipated cash flow and will be
required to promptly seek other funds to address the shortfall.
We intend to pursue additional grants from the federal
government. However, as we progress to the later stages of our
vaccine development activities, government financial support may
be more difficult to obtain, or may not be available at all.
Therefore, it will be necessary for us to look to other sources
of funding in order to finance our development activities.
Cash
Flows from Investing Activities
Our investing activities have consisted predominantly of capital
expenditures. There were no capital expenditures during the nine
month period ended September 30, 2010. Capital expenditures
were $62,733 for the nine month period ended September 30,
2009. Capital expenditures for the years ended December 31,
2009, 2008 and 2007, were $270,246, $99,831, and $0,
respectively.
Cash
Flows from Financing Activities
Net cash used by financing activities was $257,173 for the nine
month period ended September 30, 2010, as compared to net
cash provided by financing activities of $2,540,000 for the
comparable period in 2009. The cash used by financing activities
during the 2010 period relates to costs associated with this
offering. The cash generated from financing activities during
the 2009 period includes $1,040,000 from the sale of our common
stock to an investor pursuant to a stock purchase agreement that
provided us the right to sell shares to the
21
investor through July 31, 2010, and $1,500,000 from the
exercise of a previously outstanding stock purchase warrant
which was to expire in September 2009.
Net cash provided by financing activities was $3,020,000,
$2,668,541, and $3,167,950 for the years ended December 31,
2009, 2008 and 2007, respectively. During 2009, we received
$1,500,000 from the exercise of a stock purchase warrant. During
2009 and 2008, we received $1,520,000 and $406,091,
respectively, net of associated costs, from the sale of our
common stock pursuant to the stock purchase agreement. The
remaining cash generated by our financing activities relates to
the sale of our common stock and warrants to individual
accredited investors.
Our capital requirements, particularly as they relate to product
research and development, have been and will continue to be
significant. We anticipate incurring additional losses for
several years as we expand our drug development and clinical
programs and proceed into higher cost human clinical trials.
Conducting clinical trials for our vaccine candidates in
development is a lengthy, time-consuming and expensive process.
We will not generate revenues from the sale of our technology or
products for at least several years, if at all. For the
foreseeable future, we will be dependent on obtaining financing
from third parties in order to maintain our operations,
including our clinical program. Due to the existing uncertainty
in the capital and credit markets, and adverse regional and
national economic conditions that may persist or worsen, capital
may not be available on terms acceptable to the Company or at
all. If we fail to obtain additional funding when needed, we
would be forced to scale back or terminate our operations, or to
seek to merge with or to be acquired by another company.
In any event, we anticipate raising additional capital during
the remainder of 2010 or early 2011, although there can be no
assurance that we will be able to do so. While we believe that
we will be successful in obtaining the necessary financing to
fund our operations through grants, this offering, exercise of
options and warrants,
and/or other
sources, there can be no assurances that such additional funding
will be available to us on reasonable terms or at all.
The units sold in this offering will include only shares and
warrants offered by the Company. There can be no assurance that
we will be able to successfully complete the offering, or that
we will be able to sell all of the units offered.
We believe that our current working capital combined with the
proceeds from the IPCAVD grant awarded from the NIH, and without
consideration given to net proceeds from this offering will be
sufficient to support our planned level of operations into the
first quarter of 2011, with no changes to our current business
plan. Assuming the minimum amount of units is sold, we expect to
have sufficient funding to support our planned operations
through mid-2012. Assuming the maximum amount of units is sold,
we expect to have sufficient funding to support our planned and
expanded operations through at least the end of 2012. Should the
financing we require to sustain our working capital needs be
unavailable or prohibitively expensive when we require it, the
consequences could have a material adverse effect on our
business, operating results, financial condition and prospects.
We have no off-balance sheet arrangements that are likely or
reasonably likely to have a material effect on our financial
condition or results of operations.
Contractual
Obligations
As of September 30, 2010, we had firm purchase obligations
of approximately $501,000 as compared to less than $10,000 at
December 31, 2009; the increase relates primarily to
initiation of a vaccine manufacturing contract. We have no
committed lines of credit and no other committed funding or
long-term debt. We entered into a new employment agreement with
a newly employed executive officer in January 2010. There have
been no other material changes to our contractual obligations
since December 31, 2009.
22
The following table represents our contractual obligations as of
December 31, 2009, aggregated by type (in thousands):
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|
|
Payments Due by Period
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|
|
|
|
Less than
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|
|
|
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More than
|
Contractual Obligations
|
|
Total
|
|
1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
5 years
|
|
Operating Lease Obligations(1)
|
|
$
|
609
|
|
|
$
|
115
|
|
|
$
|
365
|
|
|
$
|
129
|
|
|
$
|
|
|
Emory University License Agreement(2)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
609
|
|
|
$
|
115
|
|
|
$
|
365
|
|
|
$
|
129
|
|
|
$
|
|
|
|
|
|
(1) |
|
Our operating lease obligations relate to the facility lease for
our 8,430 square foot facility in Smyrna, Georgia, which
houses our laboratory operations and our administrative offices.
The lease, which was effective November 1, 2009, expires on
December 31, 2014. |
|
(2) |
|
Pursuant to the Emory License, we have committed to make
potential future milestone and royalty payments which are
contingent upon the occurrence of future events. Such events
include development milestones, regulatory approvals and product
sales. Because the achievement of these milestones is currently
neither probable nor reasonably estimable, the contingent
payments have not been included in the table above or recorded
on our consolidated balance sheets. The aggregate total of all
potential milestone payments included in the Emory License
(excluding royalties on net sales) is approximately
$3.5 million. |
As of December 31, 2009, except as disclosed in the table
above, we had no other material firm purchase obligations or
commitments for capital expenditures and no committed lines of
credit or other committed funding or long-term debt. We have
employment agreements with our executive officers and a
consulting agreement with the Chairman of our Board of
Directors, each of which may be terminated with no more than
90 days advance written notice. The table also excludes
budgeted expenses under our two Research Agreements with Emory
University which are fully reimbursable to us pursuant to the
IPCAVD grant from the NIH and cover a period of less than one
year.
Net
Operating Loss Carryforwards
At December 31, 2009, we had consolidated net operating
loss carryforwards for income tax purposes of
$72.2 million, which will expire in 2010 through 2029 if
not utilized. Approximately $59.7 million of our net
operating loss carryforwards relate to the operations of our
predecessor, Dauphin Technology, Inc. prior to the 2006 merger
between Dauphin Technology, Inc. and GeoVax, Inc. We also have
research and development tax credits of $522,000 available to
reduce income taxes, if any, which will expire in 2022 through
2028 if not utilized. The amount of net operating loss
carryforwards and research tax credits available to reduce
income taxes in any particular year may be limited in certain
circumstances. Based on an assessment of all available evidence
including, but not limited to, our limited operating history in
our core business and lack of profitability, uncertainties of
the commercial viability of our technology, the impact of
government regulation and healthcare reform initiatives, and
other risks normally associated with biotechnology companies, we
have concluded that it is more likely than not that these net
operating loss carryforwards and credits will not be realized
and, as a result, a 100% deferred tax valuation allowance has
been recorded against these assets.
Results
of Operations Nine months ended September 30,
2010 compared to nine months ended September 30,
2009
Net
Loss
We recorded a net loss of $644,666 for the three months ended
September 30, 2010 as compared to a net loss of $230,815
for the three months ended September 30, 2009. For the
nine months ended September 30, 2010, we recorded a
net loss of $2,268,544, as compared to a net loss of $2,440,977
for the nine months ended September 30, 2009. Our net
losses typically fluctuate due to the timing of activities and
related costs associated with our vaccine research and
development activities and our general and administrative costs,
as described in more detail below.
23
Grant
Revenue
During the three and nine month periods ended September 30,
2010 we recorded grant revenue of $1,163,288 and $4,239,017,
respectively, as compared to $1,808,551 and $3,271,506,
respectively, during the comparable periods of 2009. During
2007, we were awarded the IPCAVD grant by the NIH to support our
HIV/AIDS vaccine program. The grant is subject to annual
renewal, with the latest grant award covering the period from
September 2010 through August 2011 in the amount of
$4.9 million.
Research
and Development
During the three month and nine month periods ended
September 30, 2010, we incurred $908,780 and $4,019,931,
respectively, of research and development expense as compared to
$1,470,200 and $3,530,329, respectively, during the three month
and nine month periods ended September 30, 2009. Research
and development expenses can vary considerably on a
period-to-period
basis, depending on our need for vaccine manufacturing by third
parties, and due to fluctuations in the timing of expenditures
related to our IPCAVD grant from the NIH. Research and
development expense for the three month and nine month periods
of 2010 includes stock-based compensation expense of $51,344 and
$154,235, respectively, while the comparable periods of 2009
include stock-based compensation expense of $85,439 and
$256,316, respectively (see discussion under Stock-Based
Compensation Expense below). Our research and development
costs do not include costs incurred by HVTN in conducting trials
of GeoVax vaccines.
The overall increase in research and development expense during
the nine month period ended September 30, 2010, as compared
to the same period in 2009, is due primarily to increased costs
associated with activities funded by our IPCAVD grant, vaccine
manufacturing costs, and costs associated with initiating a
Phase 1 clinical trial for our therapeutic vaccine candidate. We
expect that our research and development costs will continue to
increase during 2011 and beyond as we progress through the human
clinical trial process leading up to possible product approval
by the FDA.
Our vaccine candidates still require significant, time-consuming
and costly research and development, testing and regulatory
clearances. Completion of clinical development will take several
years or more, but the length of time generally varies
substantially according to the type, complexity, novelty and
intended use of a product candidate. The cost of the ongoing
Phase 2a clinical trial for our preventative vaccine is being
funded by the HVTN, but we cannot be certain whether the HVTN or
any other external source will provide funding for further
development. We intend to seek government and/or third party
support for future clinical human trials, but there can be no
assurance that we will be successful. The duration and the cost
of future clinical trials may vary significantly over the life
of the project as a result of differences arising during
development of the human clinical trial protocols, including,
among others:
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|
the number of patients that ultimately participate in the
clinical trial;
|
|
|
|
the duration of patient
follow-up
that seems appropriate in view of the results;
|
|
|
|
the number of clinical sites included in the clinical trials; and
|
|
|
|
the length of time required to enroll suitable patient subjects.
|
Due to the uncertainty regarding the timing and regulatory
approval of clinical trials and pre-clinical studies, our future
expenditures are likely to be highly volatile in future periods
depending on the outcomes of the trials and studies. From time
to time, we will make determinations as to how much funding to
direct to these programs in response to their scientific,
clinical and regulatory success, anticipated market opportunity
and the availability of capital to fund our programs.
In developing our product candidates, we are subject to a number
of risks that are inherent in the development of products based
on innovative technologies. For example, it is possible that our
vaccines may be ineffective or toxic, or will otherwise fail to
receive the necessary regulatory clearances, causing us to
delay, extend or terminate our product development efforts. Any
failure by us to obtain, or any delay in obtaining, regulatory
approvals could cause our research and development expenditures
to increase which, in turn, could have a material adverse effect
on our results of operations and cash flows. Because of the
24
uncertainties of clinical trials, estimating the completion
dates or cost to complete our research and development programs
is highly speculative and subjective. As a result of these
factors, we are unable to accurately estimate the nature, timing
and future costs necessary to complete the development of our
product candidates. In addition, we are unable to reasonably
estimate the period when material net cash inflows could
commence from the sale, licensing or commercialization of such
product candidates, if ever.
General
and Administrative Expense
During the three month and nine month periods ended
September 30, 2010, we incurred general and administrative
costs of $903,850 and $2,508,539, respectively, as compared to
$573,906 and $2,203,776, respectively, during the comparable
periods in 2009. General and administrative costs include
officers salaries, legal and accounting costs, patent
costs, amortization expense associated with intangible assets,
and other general corporate expenses. General and administrative
expense for the three month and nine month periods of 2010
include stock-based compensation expense of $115,972 and
$427,066, respectively; while the comparable periods of 2009
include stock-based compensation expense of $262,021 and
$860,974, respectively (see discussion under Stock-Based
Compensation Expense below). The overall increase in
general and administrative costs during the 2010 periods as
compared to the 2009 periods is due to higher legal and other
costs associated with the Companys financing efforts
during 2010, including costs associated with a special
stockholders meeting to approve the reverse split of our common
stock. We expect that our general and administrative costs will
increase in the future in support of expanded research and
development activities and other general corporate activities.
Stock-Based
Compensation Expense
We recorded stock-based compensation expense of $167,316 and
$581,301 during the three month and nine month periods ended
September 30, 2010, respectively, as compared to $347,460
and $1,117,290, respectively, during the comparable periods of
2009. In addition to amounts related to the issuance of stock
options to employees, the figures include amounts related to
common stock and stock purchase warrants issued to consultants.
We allocate stock-based compensation expense to research and
development expense or general and administrative expense
according to the classification of cash compensation paid to the
employee, consultant or director to whom the stock compensation
was granted. For the three month and nine month periods ended
September 30, 2010 and 2009, stock-based compensation
expense was allocated as follows:
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|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
Nine Months Ended September 30,
|
|
Expense Allocated to:
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
General and Administrative Expense
|
|
$
|
115,972
|
|
|
$
|
262,021
|
|
|
$
|
427,066
|
|
|
$
|
860,974
|
|
Research and Development Expense
|
|
|
51,344
|
|
|
|
85,439
|
|
|
|
154,235
|
|
|
|
256,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stock-Based Compensation Expense
|
|
$
|
167,316
|
|
|
$
|
347,460
|
|
|
$
|
581,301
|
|
|
$
|
1,117,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income
Interest income for the three month and nine month periods ended
September 30, 2010 was $4,676 and $20,909, respectively, as
compared to $4,740 and $21,622, respectively, for the three
months and nine months ended September 30, 2009. The
variances between periods are attributable to generally lower
interest rates, and lower incremental cash balances available
for investment during each respective period.
Results
of Operations Years ended December 31, 2009,
2008, and 2007
Net
Loss
We recorded net losses of $3,284,252, $3,728,187 and $4,241,796
for the years ended December 31, 2009, 2008 and 2007,
respectively. As noted, our operating results typically
fluctuate due to the timing of activities and related costs
associated with our vaccine research and development activities
and our general and administrative costs.
25
Grant
Revenue
We recorded grant revenues of $3,668,195, $2,910,170 and
$237,004 for the years ended December 31, 2009, 2008 and
2007, respectively. As of December 31, 2009, there was
approximately $4.0 million remaining from the current grant
years award and (assuming that the remaining budgeted
amounts under the grant are awarded annually to the Company)
there was an additional $8.6 million available through the
grant for the remainder of the original five-year project period
ending August 31, 2012.
Research
and Development
Our research and development expenses were $4,068,682,
$3,741,489 and $1,757,125 for the years ended December 31,
2009, 2008 and 2007, respectively. Research and development
expense for these periods includes stock-based compensation
expense of $304,654, $494,041 and $284,113 for 2009, 2008 and
2007, respectively.
The increase in research and development expense during each of
the periods is due primarily to increased costs associated with
our vaccine manufacturing activities in preparation for the
commencement of Phase 2 clinical trials, costs associated with
our activities funded by our NIH grant (especially from the 2007
to the 2008 period, as the grant was awarded to us in September
2007), and higher personnel costs associated with the addition
of new scientific personnel.
The table below summarizes our research and development expenses
for each of the years in the three year period ended
December 31, 2009. The amounts shown related to the IPCAVD
grant represent all direct costs associated with the grant
activities, including salaries and personnel-related expenses,
supplies, consulting, contract services and travel. The
remainder of our research and development expense is allocated
to our general HIV/AIDS vaccine program.
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D Project
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
IPCAVD Grant Vaccine Adjuvants
|
|
$
|
2,772,397
|
|
|
$
|
2,504,850
|
|
|
$
|
215,458
|
|
DNA/MVA Vaccines HIV/AIDS
|
|
|
1,296,285
|
|
|
|
1,236,639
|
|
|
|
1,541,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Research and Development Expense
|
|
$
|
4,068,682
|
|
|
$
|
3,741,489
|
|
|
$
|
1,757,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and Administrative Expense
Our general and administrative expenses were $2,914,845,
$2,970,068 and $2,784,182 for the years ended December 31,
2009, 2008 and 2007, respectively. General and administrative
expense includes stock-based compensation expense of $994,011,
$1,525,008 and $1,234,380 for 2009, 2008 and 2007, respectively
(see discussion below).
Stock-Based
Compensation Expense
We recorded total stock-based compensation expense of
$1,298,665, $2,019,049 and $1,518,496 during the years ended
December 31, 2009, 2008 and 2007, respectively, which was
allocated to research and development expense or general and
administrative expense according to the classification of cash
compensation paid to the employee, consultant or director to
whom the stock compensation was granted. In addition to amounts
related to the issuance of stock options to employees, the
figures include amounts related to common stock and stock
purchase warrants issued to consultants and non-employee
directors. For the three years ended December 31, 2009,
stock-based compensation expense was allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
General and administrative expense
|
|
$
|
994,011
|
|
|
$
|
1,525,008
|
|
|
$
|
1,234,383
|
|
Research and development expense
|
|
|
304,654
|
|
|
|
494,041
|
|
|
|
284,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
1,298,665
|
|
|
$
|
2,019,049
|
|
|
$
|
1,518,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Other
Income
Interest income was $31,080, $73,200 and $62,507 for the years
ended December 31, 2009, 2008 and 2007, respectively. The
variances between years are primarily attributable to the cash
available for investment and to interest rate fluctuations.
Impact of
Inflation
For the three year period ended December 31, 2009, we do
not believe that inflation and changing prices had a material
impact on our operations or on our financial results.
Quantitative
and Qualitative Disclosures about Market Risk
Our exposure to market risk is limited primarily to interest
income sensitivity, which is affected by changes in the general
level of U.S. interest rates, particularly because a
significant portion of our investments are in short-term bank
certificates of deposits and institutional money market funds.
The primary objective of our investment activities is to
preserve principal while at the same time maximizing the income
received without significantly increasing risk. Due to the
nature of our short-term investments, we believe that we are not
subject to any material market risk exposure. We do not have any
derivative financial instruments or foreign currency instruments.
Off-Balance
Sheet Arrangements
We have not entered into off-balance sheet financing
arrangements other than operating leases.
27
BUSINESS
Introduction
GeoVax is a biotechnology company dedicated to developing
vaccines that prevent and fight HIV infections that result in
AIDS. We have preventative vaccines being evaluated in a Phase
2a human clinical trial in individuals who are not HIV infected
and are currently screening prospective participants to conduct
a Phase 1 human therapeutic clinical trial in individuals who
are HIV infected.
Our preventative vaccines are designed to prevent or control
infection by HIV, reduce the rate of disease progression to AIDS
and reduce the risk of HIV transmission. Our therapeutic
vaccines target viral replication to reduce viral load in HIV
infected individuals with a goal of reducing or eliminating the
need for anti-HIV medications, and thereby reduce both the cost
of treatment and the occurrence of detrimental side effects
associated with current drug treatments.
Our vaccines are designed to function against the subtype, known
as clade B, of the HIV virus that is most prevalent in the
developed world. Our vaccines have been shown to induce
antibodies and T cells (a type of white blood cell) in Phase 1
human clinical trials. In non-human primate challenge models,
the antibodies and T cells elicited by a simian prototype of our
vaccine have been shown to protect against mucosal simian
immunodeficiency virus infection, the non-human primate version
of the HIV virus. Our goals include manufacturing and testing
these vaccines consistent with FDA guidelines, conducting human
trials for vaccine safety and effectiveness, and obtaining
regulatory approvals to advance the development and
commercialization of our vaccines.
Our preventative vaccine is one of only five vaccine candidates
out of more than 80 tested by the HVTN in Phase 1 human clinical
trials to have progressed to Phase 2 testing. Based on current
enrollment progress, we expect enrollment and inoculations in
the Phase 2a clinical trial to be completed during 2011.
The IND application we filed with the FDA in late February 2010
to support our request to test our therapeutic vaccine in a
Phase 1 human clinical trial is based on promising data from
three pilot studies we conducted using therapeutic vaccination
in simian immunodeficiency virus infected non-human primates. We
expect the Phase 1 clinical trial to begin generating vaccine
safety and performance data during 2011 with trial completion in
the 2012-2013 timeframe.
Our vaccine candidates incorporate two delivery components: a
recombinant deoxyribonucleic acid, or DNA, and a recombinant
poxvirus, or MVA, both of which deliver genes that encode
inactivated HIV derived proteins to the immune system. Both
components are designed to support production of non-infectious
virus-like particles in vaccinated individuals that prime and
boost immune responses. When properly administered in a series,
our vaccine candidates induce strong T-cell and antibody
responses in non-human primates against multiple HIV proteins.
Both the DNA and MVA vaccines contain sufficient HIV genes to
support the production of non-infectious virus-like particles in
vaccinated humans which display forms of proteins that appear
authentic to the immune system. When used together, the
recombinant DNA component is used to prime immune responses
which are boosted by administration of the recombinant MVA
component. In certain settings the recombinant MVA alone may be
sufficient for priming and boosting the immune responses.
We are also conducting pre-clinical research on the impact of
adding adjuvants, which are immune system stimulants, to our
vaccine components and have demonstrated improved effectiveness
of our vaccine candidates. This work is being funded by the NIH
through an IPCAVD grant to GeoVax. Pre-clinical animal trials
have been conducted, with very encouraging results. Based on
these results, we plan to pursue a second clinical program for
the development of the next generation of our HIV/AIDS vaccines.
Our primary business is conducted by our subsidiary, GeoVax,
Inc., which was incorporated under the laws of Georgia in June
2001. The predecessor of our parent company, GeoVax Labs, Inc.
(the reporting entity) was originally incorporated in June 1988
under the laws of Illinois as Dauphin Technology, Inc., or
Dauphin. In September 2006, Dauphin completed a merger with
GeoVax, Inc. As a result of that merger,
28
GeoVax, Inc. became a wholly-owned subsidiary of Dauphin, and
Dauphin changed its name to GeoVax Labs, Inc. Unless otherwise
indicated, information for periods prior to the September 2006
merger is that of GeoVax, Inc. In June 2008, the Company was
reincorporated under the laws of Delaware. We currently do not
conduct any business other than GeoVax, Inc.s business of
developing new products for the treatment or prevention of human
diseases.
Overview
of HIV/AIDS
What
is HIV?
HIV is a retrovirus that carries its genetic code in the form of
ribonucleic acid, or RNA. Retroviruses use RNA and the reverse
transcriptase enzyme to create DNA from the RNA template. The
HIV-1 virus invades a human cell and produces its viral DNA that
is subsequently inserted into the chromosomes, which are the
genetic material of a cell. HIV preferentially infects and
replicates T-cells, which are a type of white blood cell.
Infection of T-cells alters them from immunity mediating cells
to cells that produce and release HIV. This process results in
the destruction of the immune defense system of infected
individuals and ultimately, the development of AIDS.
There are several AIDS-causing HIV virus subtypes, or clades,
that are found in different regions of the world. These clades
are identified as clade A, clade B and so on. The predominant
clade found in Europe, North America, parts of South America,
Japan and Australia is clade B whereas the predominant clades in
Africa are clades A and C. In India the predominant clade is
clade C. Each clade differs by at least 20% with respect to its
genetic sequence from other clades. These differences may mean
that vaccines or treatments developed against HIV of one clade
may only be partially effective or ineffective against HIV of
other clades. Thus there is often a geographical focus to
designing and developing vaccines suited for the local clade.
HIV, even within clades, has a high rate of mutation that
supports a significant level of genetic variation. In drug
treatment programs, virus mutation can result in the development
of drug resistance, referred to as virus drug escape, thereby
rendering drug therapy ineffective. Hence, we believe that
multi-drug therapy is very important. If several drugs are
active against virus replication, the virus must undergo
multiple simultaneous mutations to escape, which is less likely.
The same is true for immune responses. HIV can escape single
targeted immune responses. However, our scientists believe if an
immune response is directed against multiple targets, which are
referred to as epitopes, virus escape is much less frequent.
Vaccination against more than one of the proteins found in HIV
increases the number of targets for the immune response as well
as the chance that HIV will not escape the vaccine-stimulated
immune response, thus resulting in protection against infection
or the development of clinical AIDS once infection occurs.
What
is AIDS?
AIDS is the final, life-threatening stage of infection with the
virus known as HIV. Infection with HIV severely damages the
immune system, the bodys defense against disease. HIV
infects and gradually destroys T-cells and macrophages, which
are white blood cells that play key roles in protecting humans
against infectious disease caused by viruses, bacteria, fungi
and other micro-organisms.
Opportunistic infections by organisms, normally posing no
problem for control by a healthy immune system, can ravage
persons with immune systems damaged by HIV infections.
Destruction of the immune system occurs over years. The average
onset of the clinical disease recognized as AIDS occurs after
three to ten years of HIV infection if the virus is not treated
effectively with drugs, but the time to developing AIDS is
highly variable.
AIDS in humans was first identified in the United States in
1981, but researchers believe that it was present in Central
Africa as early as 1959. AIDS is most often transmitted sexually
from one person to another but it is also transmitted by blood
in shared needles and through pregnancy and childbirth.
Heterosexual activity is the most frequent route of transmission
worldwide.
The level of virus in blood, known as viral load, is the best
indicator of the speed with which an individual will progress to
AIDS, as well as the frequency with which an individual will
spread infection. An
29
estimated 1% or fewer of those infected have low enough levels
of the virus to preclude progression to AIDS and to not transmit
the infection. These individuals are commonly called long-term
non-progressors.
AIDS is considered by many in the scientific and medical
community to be the most lethal infectious disease in the world.
According to the 2008 Report on the Global AIDS Epidemic
published by UNAIDS, the Joint United Nations Programme on
HIV/AIDS, the total number of people living with HIV is
33.4 million globally with approximately 2.7 million
newly infected in 2008 alone. Approximately 25 million
people infected with HIV have died since the start of the HIV
pandemic in 1981. The United States currently suffers about
56,000 infections per year with the highest rates found in
Washington, D.C., where an estimated 3% of the population
is infected, which is a prevalence rate higher than in some
developing countries. According to International AIDS Vaccine
Initiative, or the IAVI, in a model developed with Advanced
Marketing Commitment dated June 2005, the global market for a
safe and effective AIDS vaccine is estimated at approximately
$4 billion.
At present, the standard approach to treating HIV infection is
to decrease viral replication rates through the use of
combinations of drugs. Available drugs include reverse
transcriptase inhibitors, protease inhibitors, integration
inhibitors and inhibitors of cell entry to block multiple
essential steps in virus replication. However, HIV is prone to
genetic changes that can produce strains that are resistant to
currently approved drugs. When HIV acquires resistance to one
drug within a class, it can often become resistant to the entire
class, meaning that it may be impossible to re-establish control
of a genetically altered strain by substituting different drugs
in the same class. Furthermore, these treatments continue to
have significant limitations which include toxicity, patient
non-adherence to the treatment regimens and cost. As a result,
over time, many patients develop intolerance to these
medications or simply give up taking the medications due to the
side effects.
According to the IAVI, the cost and complexity of new treatment
advances for AIDS puts them out of reach for most people in the
countries where treatment is most needed, and as noted above, in
industrialized nations, where drugs are more readily available,
side effects and increased rates of viral resistance have raised
concerns about their long term use. AIDS vaccines, therefore,
are seen by many as the most promising way to end the HIV/AIDS
pandemic. It is expected that vaccines for HIV/AIDS, once
developed, will be used worldwide by any organization that
provides health care services, including hospitals, medical
clinics, the military, prisons and schools.
HIV/AIDS
Vaccines Being Developed by GeoVax
Our vaccines, initially developed by our Chief Scientific
Officer, Dr. Harriet L. Robinson at Emory University in
collaboration with scientists at the NIH, the NIAID and the CDC,
incorporate two vaccine delivery components: (1) a
recombinant DNA and (2) a recombinant poxvirus, known as
MVA, both of which deliver genes that encode inactivated HIV
derived proteins to the immune system. Both the DNA and MVA
vaccines contain sufficient HIV genes to support the production
of non-infectious virus-like particles in vaccinated humans
which display forms of proteins that appear authentic to the
immune system. When used together, the recombinant DNA component
is used to prime immune responses which are boosted by
administration of the recombinant MVA component. However, in
certain settings the recombinant MVA alone may be sufficient for
priming and boosting the immune responses.
Our initial work focused on the development of a preventative
vaccine for use in uninfected humans to limit infection, disease
and transmission should they be exposed to the virus. In 2008,
we undertook the development of a therapeutic vaccine for use in
HIV infected humans to supplement approved drug regimens. For
both preventative and therapeutic applications, our current
focus is on a vaccine for use against clade B, which is common
in the United States and the industrially developed world.
However, if efficacy is documented against clade B, we plan to
develop vaccines designed for use to combat the subtypes that
predominate in developing countries, including clades A, C and
AG recombinant.
Induction
of T-cell and Antibody Immune Responses
Our vaccines induce T-cell and antibody immune responses against
two major HIV proteins, the Gag protein and envelope
glycoprotein, or Env. The induction of both antibodies and
T-cells is beneficial because
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these immune responses work through different mechanisms.
Antibodies can block viruses from infecting cells. The avidity,
or tightness, of antibody binding to the Env of HIV correlates
with reduced levels of virus replication in experiments
completed using non-human primates. This result most likely
reflects a tightly bound antibody that is blocking HIV infection
as well as tagging the virus for destruction. The MVA vaccine
also induces HIV specific IgA, which functions to protect
mucosal surfaces and can be measured in rectal secretions. Both
vaccines elicit CD8 T-cells, a type of T-cell that can recognize
and kill cells that become infected by virus. CD8 T-cells are
important for the control of the virus that has established an
infection.
DNA
and MVA as Vaccine Vectors
The availability of DNA and MVA vaccine delivery vectors
provides GeoVax with the means to design combination vaccines to
induce different patterns of T-cell and antibody responses.
Specifically, the use of DNA to prime immune responses and MVA
to boost immune responses elicits higher levels of T-cells and
thus this format is well-suited for either preventative or
therapeutic uses. Alternatively, the use of MVA alone to both
prime and boost the immune response elicits higher levels of
antibodies and is therefore well-suited for use in prevention.
MVA was selected for use as a viral vaccine because of its well
established safety record and because of the ability of
recombinants of this vector to carry other viral proteins to
induce protective responses for a number of viral diseases.
These effects were demonstrated in pre-clinical animal models.
MVA was originally developed as a safer smallpox vaccine for use
in immune compromised humans by further attenuating the standard
smallpox vaccine. The attenuation, or loss of disease causing
ability, was accomplished by making over 500 passages of the
virus in chicken embryos or chick embryo fibroblasts which
resulted in large genomic deletions. These deletions affected
the ability of MVA to replicate in human cells, which is the
cause of safety problems, but did not compromise the ability of
MVA to grow on avian cells that are used for manufacturing the
virus. The deletions also resulted in the loss of immune evasion
genes which assist the spread of wild type smallpox infections,
even in the presence of human immune responses. MVA was safely
administered to over 120,000 people in the 1970s to protect
them against smallpox.
While GeoVaxs DNA and MVA vaccines express over 66% of the
HIV protein components and thus, are designed to stimulate
immune responses with significant breadth, the vaccines cannot
cause an HIV infection or AIDS because they do not produce the
complete virus. We believe that the vaccines could provide
multi-target protection against the AIDS virus, thus preventing
infection and in those that do become infected, limiting virus
escape, large scale viral replication and the onset of clinical
signs of AIDS.
Pre-clinical
Studies
During the development of our vaccines, multiple efficacy trials
were conducted using rhesus macaques, a species of non-human
primates, infected with experimental viruses that cause
AIDS-like disease in these animals. The experimental data
produced by these trials documented the ability of prototypes of
our vaccines to induce immune responses that can prevent
infection as well as reduce the levels of viral replication in
those animals that become infected, depending on the
experimental design of the trials. For example, challenge
studies completed by infecting animals using the rectal route
and a dose estimated to be 40 to 400 times the typical human
challenge dose were used to demonstrate that vaccination using
our adjuvant product can prevent, not just control, infections
in approximately 70% of the animals, even after 12 experimental
challenges. For therapeutic studies, rhesus macaques were
infected with the virus, placed on antiretroviral drugs, which
mimic those used in humans, and vaccinated prior to ceasing drug
therapy. Animals that were removed from drug therapy without
vaccination experienced viral rebounds to the levels found prior
to drug therapy whereas vaccinated animals had virus replication
at reduced levels, some of which approached 1000-fold reductions.
Based on the findings obtained from our preventative vaccination
studies in animals, the FDA allowed the vaccines to be tested in
Phase 1 clinical trials in HIV uninfected humans. The use of the
vaccines for a therapeutic in HIV infected humans has also
recently been allowed by the FDA, and this trial is ongoing.
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Preventative
Vaccine Phase 1 Human Clinical Trials
All of our preventative vaccination trials in humans have been
conducted by the HVTN, a network that is funded and supported by
the NIH. The HVTN is the largest worldwide clinical trials
network focused on the development and testing of HIV/AIDS
vaccines. The GeoVax vaccine tested by the HVTN is designed for
use where clade B infections are most common, specifically in
North America, parts of South America and Western Europe. In our
first Phase 1 clinical trial, HVTN 045, our DNA vaccine was
tested alone to document its safety and immunogenicity. Our
second Phase 1 clinical trial, HVTN 065, was designed to test
the combined use of DNA and MVA and consisted of a dose
escalation for DNA delivered at 0 and 8 weeks and MVA
delivered at 16 and 24 weeks, a DDMM regimen. The low dose
consisted of 0.3 mg of DNA and
1x107
tissue culture infectious doses (TCID
50
) of MVA. Once safety was demonstrated for the low dose in 10
participants, the full dose (3 mg of DNA and
1x108
TCID
50
of MVA) was administered to 30 participants. A single dose of
DNA at time 0 followed by MVA at weeks 8 and 24, a DMM regimen,
and three doses of MVA administered at weeks 0, 8 and 24, an MMM
regimen, were also tested in 30 participants each. Participants
were followed for 12 months to assess vaccine safety and to
measure vaccine-induced immune responses measurements.
Data from the HVTN 065 trial again documented the safety of the
vaccine products but also showed that the DDMM and MMM regimens
induced different patterns of immune responses. The full dose
DDMM regimen induced higher response rates of CD4+ T-cells (77%)
and CD8+ T-cells (42%) compared to the MMM regimen (43% CD4+ and
17% CD8+ response rates). In contrast, the highest response
rates and highest titers of antibodies to the HIV Env protein
were induced in the group that received only the MVA using the
MMM regimen. Antibody response rates were documented to be
higher for the MMM group using three different assays designed
to measure total binding antibody levels for an immune dominant
portion of the Env protein (27% for DDMM and 75% for MMM),
binding of antibodies to the form of Env very similar to the
form in the vaccines, designated ADA gp140, (81% for DDMM and
86% for MMM) and neutralizing antibodies (7% for DDMM and
30% for MMM). The
1/10th dose
DDMM regimen induced overall similar T-cell responses but
reduced antibody responses while the response rates were
intermediate in the DMM group.
Preventative
Vaccine Phase 2 Human Clinical Trials
Based on the safety and the immunogenicity results in the HVTN
045 and HVTN 065 trials, the use of two full dose DNA priming
immunizations followed by two full dose MVA booster
immunizations was selected for initial testing by the HVTN in a
Phase 2a trial (designated HVTN 205) which commenced
patient enrollment in February 2009. While more than 80
experimental HIV vaccines have been completed by the HVTN in
Phase 1 clinical trials, only five vaccine candidates, including
the GeoVax vaccine candidate, have progressed to Phase 2
clinical trials since 1992. The Phase 2a clinical trial is
designed to produce a larger database of safety and
immunogenicity data in low risk individuals before proceeding to
a Phase 2b clinical trial in high risk individuals.
The HVTN 205 trial was originally designed to test only the DDMM
regimen, which consists of two DNA primes followed by two MVA
boosts, but has been amended to include testing the MVA priming
and boosting regimen, or MMM, using an additional 75
participants. The addition of an amendment to add the MMM arm
was triggered by two factors:
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the success of the U.S. Military-Thailand Phase 3 clinical
trial, the first successful HIV-1 vaccine efficacy trial, which
was completed with a vaccine component that did not elicit high
T-cell responses; and
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recent data from our ongoing studies in non-human primates
showing that the MMM vaccine protected as well as the more
complex DDMM regimen against infection by repeated challenge
using the rectal route.
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We expect the enrollment and inoculations for the expanded Phase
2a clinical trial to be completed in 2011.
Assuming the vaccine safety and immunogenicity profiles remain
promising, the next stage will be a Phase 2b
proof-of-concept
clinical trial in high-risk individuals for the purpose of
determining effectiveness of
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protecting people from HIV infection. GeoVax is currently
manufacturing vaccine material for this clinical trial so that
progression through the development path can proceed smoothly.
Therapeutic
Vaccine Phase 1 Human Clinical Trials
To help serve those people who are already infected with HIV,
the Company is testing its vaccine for the ability to
supplement, or even supplant, the need for antiretroviral
therapeutic drugs in HIV-infected individuals. Antiretroviral
therapeutic drugs, which are taken for life by individuals once
infected with HIV, have side effects and are expensive, costing
on average $18,000 per year. Thus the need for improved
therapies is well known.
In July 2008, we reported summary data from three pilot studies
on therapeutic vaccination in simian immunodeficiency virus, or
SIV, infected non-human primates. The vaccine used in these
pilot studies was specific for SIV but with the design features
of our HIV/AIDS vaccine. In these pilot studies, conducted at
Yerkes National Primate Research Center of Emory University, the
immune systems of a subset of the infected and then vaccinated
animals were able to control the infection; specifically 100 to
1000 fold reductions in viral levels post the cessation of drugs
were observed. Based on these results, in late February 2010, we
filed an IND with the FDA to support Phase 1 clinical trials in
HIV infected individuals. The Company received permission to
begin the clinical trial, initiated the study and we are
currently enrolling patients. This initial trial will be
conducted in Atlanta and will enroll individuals who began
successful antiretroviral therapeutic drug treatment within the
first year of HIV infection. The goal of this clinical trial is
to document the safety and immunogenicity of the vaccine using
the DDMM regimen in patients with well-controlled infections. We
expect the Phase 1 clinical trial to begin generating vaccine
safety and performance data during 2011, with trial completion
in the 2012-2013 timeframe.
Pre-clinical
preventative studies using Granulocyte/Monocyte-Colony
Stimulating Factor (GM-CSF)
GeoVaxs research pipeline includes the use of adjuvants,
which are agents that improve vaccine efficacy, together with
its DNA/MVA vaccine. One of these, GM-CSF, is a protein produced
as a normal function of immune responses. GM-CSF has been used
with success in non-human primate experiments wherein the rate
for preventing infection by a total of twelve moderate dose
challenges through the rectal site was increased. Specifically,
using the DDMM regimen and a DNA vaccine co-expressing GM-CSF
resulted in an increased protection rate from approximately 25%
to 70%. This work is being funded by the NIH through an IPCAVD
grant to GeoVax. Pre-clinical animal trials have been conducted
with very encouraging results and we plan to pursue a second
clinical program for the development of the next generation of
our HIV/AIDS vaccines. We have completed preliminary discussions
with the FDA and plan to submit an Investigational New Drug
(IND) application for this vaccine during 2011. We intend to
initiate a Phase 1 human clinical trial for this vaccine as
soon as practicable following approval of our IND application by
the FDA.
Support
from the Federal Government
All of our Phase 1 human clinical trials to date, and our
ongoing Phase 2a clinical trial, with the exception of the
therapeutic clinical trial, have been conducted by the HVTN and
funded by NIH-NIAID. Our responsibility for these clinical
trials has been to provide sufficient supplies of vaccine
materials and technical expertise when necessary.
In September 2007, we were the recipient of the IPCAVD grant to
support our HIV/AIDS vaccine program, which was subsequently
amended such that the total award now totals approximately
$19.4 million. This grant was awarded by the NIH-NIAID. The
project period for the grant is over the five-year period that
commenced in October 2007. The grant is subject to annual
renewal with the latest grant award covering the period from
2010 through August 2011. Only meritorious HIV/AIDS prevention
vaccine candidates are considered to receive an IPCAVD award.
Candidate companies are highly scrutinized and must supply
substantial positive AIDS vaccine data to support their
application. IPCAVD grants are awarded on a competitive basis
and are designed to support later stage vaccine research,
development and human trials. We are utilizing this funding to
further our HIV/AIDS vaccine development, optimization and
production, including the GM-CSF adjuvant program.
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Government
Regulation
Regulation by governmental authorities in the United States and
other countries is a significant factor in our ongoing research
and development activities and in the manufacture of our
products under development. Complying with these regulations
involves a considerable amount of time and expense.
In the United States, drugs are subject to rigorous federal and
state regulation. The Federal Food, Drug and Cosmetic Act, as
amended, or the FDC Act, and the regulations promulgated
thereunder, and other federal and state statutes and regulations
govern, among other things, the testing, manufacture, safety,
efficacy, labeling, storage, record keeping, approval,
advertising and promotion of medications and medical devices.
Product development and approval within this regulatory
framework is difficult to predict, takes a number of years and
involves great expense.
The steps required before a pharmaceutical agent may be marketed
in the United States include:
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pre-clinical laboratory tests, in vivo pre-clinical studies and
formulation studies;
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the submission to the FDA of an IND application for human
clinical testing which must become effective before human
clinical trials can commence;
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adequate and well-controlled human clinical trials to establish
the safety and efficacy of the product;
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the submission of a New Drug Application to the FDA; and
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FDA approval of the New Drug Application prior to any commercial
sale or shipment of the product.
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Each of these steps is described further below.
In addition to obtaining FDA approval for each product, each
domestic manufacturing establishment must be registered with,
and approved by, the FDA. Domestic manufacturing establishments
are subject to biennial inspections by the FDA and must comply
with the FDAs Good Manufacturing Practices for products,
drugs and devices.
Pre-Clinical
Testing
Pre-clinical testing includes laboratory evaluation of chemistry
and formulation, as well as cell culture and animal studies to
assess the safety and potential efficacy of the product.
Pre-clinical safety tests must be conducted by laboratories that
comply with the FDAs Good Laboratory Practices, or GLP.
The results of pre-clinical testing are submitted to the FDA as
part of the IND application and are reviewed by the FDA prior to
the commencement of human clinical trials. Unless the FDA
objects to an IND, the IND becomes effective 30 days
following its receipt by the FDA.
Clinical
Trials
Clinical trials involve the administration of the HIV vaccines
to volunteers or to patients under the supervision of a
qualified, medically trained principal investigator. Clinical
trials are conducted in accordance with the GCP under protocols
that detail the objectives of the trial, the parameters to be
used to monitor safety and the efficacy criteria to be
evaluated. Each protocol must be submitted to the FDA as part of
the IND. Further, each clinical trial must be conducted under
the auspices of an independent institutional review board at the
institution where the trial will be conducted. The institutional
review board will consider, among other things, ethical factors,
the safety of human subjects and the possible liability of the
institution.
Clinical trials are typically conducted in three sequential
phases, but the phases may overlap. In the Phase 1 clinical
trial, the initial introduction of the product into healthy
human subjects, the vaccine is tested for safety (including
adverse side effects) and dosage tolerance. The Phase 2 clinical
trial is the proof of principal stage and involves trials in a
limited patient population to determine whether the product
induces the desired effect (for vaccine this means immune
responses) and to better determine optimal dosage. The continued
identification of possible safety risks is also a focus. When
there is evidence that the product may be effective and has an
acceptable safety profile in Phase 2 clinical trials, Phase 3
clinical trials are undertaken to evaluate
34
clinical efficacy and to test for safety within an expanded
patient population. Phase 3 trials are completed using
multiple clinical study sites which are geographically
dispersed. The manufacturer or the FDA may suspend clinical
trials at any time if either believes that the individuals
participating in the trials are being exposed to unacceptable
health risks.
New
Drug Application and FDA Approval Process
The results and details of the pre-clinical studies and clinical
trials are submitted to the FDA in the form of a New Drug
Application. If the New Drug Application is approved, the
manufacturer may market the product in the United States.
International
Approval
Whether or not the FDA has approved the drug, approval of a
product by regulatory authorities in foreign countries must be
obtained prior to the commencement of commercial sales of the
drug in such countries. The requirements governing the conduct
of clinical trials and drug approvals vary widely from country
to country, and the time required for approval may be longer or
shorter than that required for FDA approval.
Other
Regulations
In addition to FDA regulations, our business activities may also
be regulated by the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act,
the Resource Conservation and Recovery Act and other present and
potential future federal, state or local regulations. Violations
of regulatory requirements at any stage may result in various
adverse consequences, including regulatory delay in approving or
refusal to approve a product, enforcement actions, including
withdrawal of approval, labeling restrictions, seizure of
products, fines, injunctions
and/or civil
or criminal penalties. Any product that we develop must receive
all relevant regulatory approvals or clearances before it may be
marketed.
Competition
There currently is no FDA licensed and commercialized HIV/AIDS
vaccine or competitive vaccine available in the world market.
There are several small and large biopharmaceutical companies
pursuing HIV/AIDS vaccine research and development, including
Novartis, Sanofi-Aventis, GlaxoSmithKline and the NIH Vaccine
Research Center. Other HIV/AIDS vaccines are in varying stages
of research, testing and clinical trials including those
supported by the IAVI, the European Vaccine Initiative, and the
South African AIDS Vaccine Initiative. Following the reported
failure of the vaccine developed by Merck & Co., Inc.
in September 2007, Merck & Co., Inc.s vaccine
program and the NIH Vaccine Research Center vaccine program,
both of which use Ad5 vectors, were placed on hold. Since then,
the NIH Vaccine Research Center product has moved into an
experimental Phase 2b clinical trial to learn more about immune
responses and AIDS control. This clinical trial has been
restricted to individuals who do not have high levels of
antibodies to the Ad5 vector used in the vaccine (approximately
50% of U.S. citizens) and to men who are circumcised.
In October 2009, the results from a Phase 3 community-based
clinical trial in Thailand using a recombinant canarypox
(designated ALVAC and produced by Sanofi Pasteur) as a priming
vaccine and a bivalent mixture of the gp120 subunit of Env from
HIV clades B and C (produced by Global Solutions for
Infectious Diseases) as a protein booster vaccine were reported.
In this clinical trial, protection against HIV infection at the
rate of 31% was reported. This level of protection was
significant in a modified intent to treat analysis
in which the seven participants in the 16,500 person trial
who had become infected by the day of the first inoculation were
excluded. The results of this clinical trial are encouraging
because they represent the first success of an AIDS vaccine in
humans and demonstrate that a vaccine can provide protection
against HIV infections.
To our knowledge, none of our competitors products have
been tested in large scale non-human primate trials that have
included experimental infection through the rectal site and
shown to induce levels of protection
35
or duration of protection comparable to that achieved using
experimental prototypes of GeoVaxs vaccines. Furthermore,
many of our competitors vaccine development programs
require vaccine compositions which are more complicated than
ours. For these reasons, we believe that it may be possible for
our vaccine to compete successfully in the marketplace if
licensed.
Overall, the biopharmaceutical industry is competitive and
subject to rapid and substantial technological change.
Developments by others may render our proposed vaccination
technologies noncompetitive or obsolete, or we may be unable to
keep pace with technological developments or other market
factors. Technological competition in the industry from
pharmaceutical and biotechnology companies, universities,
governmental entities and others diversifying into the field is
intense and is expected to increase. Many of the pharmaceutical
companies that compete with us have significantly greater
research and development capabilities than we have, as well as
substantially more marketing, manufacturing, and financial
resources. In addition, acquisitions of, or investments in,
small pharmaceutical or biotechnology companies by such large
corporations could increase their research, financial,
marketing, manufacturing and other resources. Competitor
technologies may ultimately prove to be safer, more effective or
less costly than any vaccine that we develop.
FDA and other regulatory approvals of our vaccines have not yet
been obtained and we have not yet generated any revenues from
product sales. Our future competitive position depends on our
ability to obtain FDA and other regulatory approvals of our
vaccines and to license or sell the vaccines to third parties on
favorable terms.
Intellectual
Property
We will be able to protect our proprietary rights from
unauthorized use by third parties only to the extent that our
proprietary rights are described by valid and enforceable
patents or are effectively maintained as trade secrets.
Accordingly, we are pursuing and will continue to pursue patent
protection for our proprietary technologies developed through
our collaborations with Emory University, the NIH, and the CDC,
or developed by us alone. Patent applications have been filed
with the U.S. Patent and Trademark Office and in specific
international markets (countries). Patent applications include
provisions to cover our DNA and MVA based HIV vaccines, their
genetic inserts expressing multiple HIV protein components,
composition, structure, claim of immunization against multiple
subtypes of HIV, routes of administration, safety and other
related factors. Patent claims filed for our vaccines include
provisions for their therapeutic and prophylactic use against
HIV and smallpox.
We are the exclusive, worldwide licensee of a number of patents
and patent applications, which we refer to as the Emory
Technology, owned, licensed or otherwise controlled by Emory
University for HIV or smallpox vaccines pursuant to a License
Agreement originally entered into on August 23, 2002 and
restated on June 23, 2004, which we refer to as the Emory
License. Through the Emory License we are also a non-exclusive
licensee of four issued United States patents owned by the NIH
related to the ability of our MVA vector vaccine to operate as a
vehicle to deliver HIV virus antigens, and also to induce an
immune response in humans. The four issued United States patents
owned by the NIH expire in 2023. All of our obligations with
respect to the NIH-owned MVA patents are covered by the Emory
License. In addition to the issued United States patents owned
by the NIH, and a recently issued patent owned by
Emory University, there are five pending United States
patent applications, 29 issued or pending patents in
countries other than the United States. The Emory License
expires on the expiration date of the last to expire of the
patents licensed thereunder including those that are issued on
patents currently pending. We will not know the final
termination date of the Emory License until such patents are
issued. The Company may terminate the Emory University License
upon 90 days written notice. The Emory License also
contains standard provisions allowing Emory University to
terminate upon breach of contract by the Company or upon the
Companys bankruptcy.
The Emory License, among other contractual obligations, requires
payments based on the following:
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Milestone Payments. An aggregate of $3,450,000
is potentially due to Emory University in the future upon the
achievement of clinical development and regulatory approval
milestones as defined in the Emory License. To date, we have
paid a nominal milestone fee upon entering Phase 2 clinical
trials for our preventative HIV/AIDS vaccine.
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Maintenance Fees. The Company has achieved the
specified milestones and met its obligations with regard to the
related payments, and no maintenance fees are (or will be) owed
to Emory University.
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Royalties. Upon commercialization of products
covered by the Emory License, we will owe royalties to Emory
University of between 5% and 7.5%, depending on annual sales
volume, of net sales made directly by GeoVax. The Emory License
also requires minimum annual royalty payments of $3 million
in the third year following product launch, increasing annually
to $12 million in the sixth year.
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Sublicense Royalties. In the event that we
sublicense a covered product to a third party, we will owe
royalties to Emory University based on all payments, cash or
noncash, that we receive from our sublicensees. Those royalties
will be 19% of all sublicensing consideration we receive prior
the first commercial sale of a related product. Commencing with
the first commercial sale, the royalty owed to Emory University
will be 27.5% of all sublicensing consideration we receive.
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Patent Reimbursements. During the term of the
Emory License we are obligated to reimburse Emory University for
ongoing third party costs in connection with the filing,
prosecution and maintenance of patent applications subject to
the Emory License. The expense associated with these ongoing
patent cost reimbursements to Emory University amounted to
$85,673, $102,141, and $243,653 for the years ended
December 31, 2009, 2008 and 2007, respectively.
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We may only use the Emory Technology for therapeutic or
prophylactic HIV or smallpox vaccines. Emory University also
reserved the right to use the Emory Technology for research,
educational and non-commercial clinical purposes. Due to the use
of federal funds in the development of the Emory Technology, the
U.S. Government has the irrevocable, royalty-free,
paid-up
right to practice and have practiced certain patents throughout
the world, should it choose to exercise such rights.
We are not a party to any litigation, opposition, interference,
or other potentially adverse proceeding with regard to our
patent positions. However, if we become involved in litigation,
interference proceedings, oppositions or other intellectual
property proceedings, for example as a result of an alleged
infringement or a third-party alleging an earlier date of
invention, we may have to spend significant amounts of money and
time and, in the event of an adverse ruling, we could be subject
to liability for damages, invalidation of our intellectual
property and injunctive relief that could prevent us from using
technologies or developing products, any of which could have a
significant adverse effect on our business, financial conditions
or results of operations. In addition, any claims relating to
the infringement of third-party proprietary rights, or earlier
date of invention, even if not meritorious, could result in
costly litigation, lengthy governmental proceedings, divert
managements attention and resources and require us to
enter royalty or license agreements which are not advantageous
if available at all.
We are also the exclusive licensee of five patents from MFD,
Inc., which we refer to as the MFD Patents, pursuant to a
license agreement dated December 26, 2004 with MFD, Inc.,
which we refer to as the MFD license agreement, related to
certain manufacturing processes used in the production of our
vaccines. Pursuant to the MFD license agreement, we obtained a
fully paid, worldwide, irrevocable, exclusive license in and to
the MFD Patents to use, market, offer for sale, sell, lease and
import any AIDS and smallpox vaccine made with GeoVax
Technology, as such term is defined in the MFD license
agreement, and non-exclusive rights for other products. The term
of the MFD license agreement ends on the expiration date of the
last to expire of the MFD Patents, one of which expires in 2017.
The license granted also extends to any and all current or
future customers of GeoVax the right to commercially practice
the GeoVax Technology, as such term is defined in the MFD
license agreement, or any portion thereof. The license also
extends to any and all current or future GeoVax Users, as such
term is defined in the MFD license agreement, the right to use
any GeoVax Technology, as such term is defined in the MFD
license agreement.
In addition to patent protection, we also attempt to protect our
proprietary products, processes and other information by relying
on trade secrets and non-disclosure agreements with our
employees, consultants and certain other persons who have access
to such products, processes and information. Under these
agreements, all inventions conceived by employees are our
exclusive property. Nevertheless, there can be no assurance that
37
these agreements will afford significant protection against
misappropriation or unauthorized disclosure of our trade secrets
and confidential information.
We cannot be certain that any of the current pending patent
applications we have licensed, or any new patent applications we
may file or license, will ever be issued in the United States or
any other country. Even if issued, there can be no assurance
that those patents will be sufficiently broad to prevent others
from using our products or processes. Furthermore, our patents,
as well as those we have licensed or may license in the future,
may be held invalid or unenforceable by a court, or third
parties could obtain patents that we would need to either
license or to design around, which we may be unable to do.
Current and future competitors may have licensed or filed patent
applications or received patents, and may acquire additional
patents or proprietary rights relating to products or processes
competitive to ours. In addition, any claims relating to the
infringement of third-party proprietary rights, or earlier date
of invention, even if not meritorious, could result in costly
litigation, lengthy governmental proceedings, divert
managements attention and resources and require us to
enter royalty or license agreements which are not advantageous
to us, if available at all.
Manufacturing
We do not have the facilities or expertise to manufacture any of
the clinical or commercial supplies of any of our products. To
be successful, our products must be manufactured in commercial
quantities in compliance with regulatory requirements and at an
acceptable cost. To date, we have not commercialized any
products, nor have we demonstrated that we can manufacture
commercial quantities of our product candidates in accordance
with regulatory requirements. If we cannot manufacture products
in suitable quantities and in accordance with regulatory
standards, either on our own or through contracts with third
parties, it may delay clinical trials, regulatory approvals and
marketing efforts for such products. Such delays could adversely
affect our competitive position and our chances of achieving
profitability. We cannot be sure that we can manufacture, either
on our own or through contracts with third parties, such
products at a cost or in quantities which are commercially
viable.
We currently rely and intend to continue to rely on third-party
contract manufacturers to produce vaccines needed for research
and clinical trials. We have entered into arrangements with
third party manufacturers for the supply of our DNA and MVA
vaccines for use in our planned clinical trials. These suppliers
operate under the FDAs Good Manufacturing Practices and
similar regulations of the European Medicines Agency. We
anticipate that these suppliers will be able to provide
sufficient vaccine supplies to complete our currently planned
clinical trials. Various contractors are generally available in
the United States and Europe for manufacture of vaccines for
clinical trial evaluation, however, it may be difficult to
replace existing contractors for certain manufacturing and
testing activities and costs for contracted services may
increase substantially if we switch to other contractors.
Research
and Development
Our expenditures for research and development activities were
approximately $4,069,000, $3,741,000 and $1,757,000 during the
years ended December 31, 2009, 2008 and 2007, respectively.
As our vaccines continue to go through the process to obtain
regulatory approval, we expect our research and development
costs to continue to increase significantly as even larger human
clinical trials proceed in the United States and foreign
countries. We have not yet formulated any plans for marketing
and sales of any vaccine candidate we may successfully develop.
Compliance with environmental protection laws and regulations
has not had a material effect on our capital expenditures,
earnings or competitive position to date.
Properties
We lease approximately 8,400 square feet of office and
laboratory space located at 1900 Lake Park Drive,
Suite 380, Smyrna, Georgia under a 62 month lease
agreement which began November 1, 2009.
38
Legal
Proceedings
We are not currently a party to any material legal proceedings.
We may from time to time become involved in various legal
proceedings arising in the ordinary course of business.
Employees
As of November 30, 2010, we had thirteen full-time and
two part-time employees. None of our employees are covered by
collective bargaining agreements and we believe that our
employee relations are good.
39
DIRECTORS
AND EXECUTIVE OFFICERS
Directors
and Executive Officers
The following table sets forth certain information with respect
to our directors and executive officers.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Current Position
|
|
Donald G. Hildebrand
|
|
|
69
|
|
|
Chairman of the Board of Directors
|
Robert T. McNally, Ph.D.
|
|
|
62
|
|
|
President and Chief Executive Officer, Director
|
Mark J. Newman, Ph.D.
|
|
|
55
|
|
|
Vice President, Research and Development
|
Mark W. Reynolds, CPA
|
|
|
49
|
|
|
Chief Financial Officer and Corporate Secretary
|
Harriet L. Robinson, Ph.D.
|
|
|
72
|
|
|
Chief Scientific Officer, Director
|
Steven S. Antebi(1)(2)
|
|
|
67
|
|
|
Director
|
David A. Dodd(1)(3)
|
|
|
61
|
|
|
Director
|
Dean G. Kollintzas(1)(2)(3)
|
|
|
37
|
|
|
Director
|
John N. Spencer, Jr., CPA(2)(3)
|
|
|
70
|
|
|
Director
|
|
|
|
(1) |
|
Member of the Compensation Committee of the Board of Directors. |
|
(2) |
|
Member of the Audit Committee of the Board of Directors. |
|
(3) |
|
Member of the Nominating and Governance Committee of the Board
of Directors. |
Donald G. Hildebrand. Mr. Hildebrand
joined the Board of Directors as Chairman and became our
President and Chief Executive Officer upon consummation of the
merger with GeoVax, Inc. in September 2006. Effective
April 1, 2008, upon the appointment of Dr. Robert T.
McNally as our President and Chief Executive Officer,
Mr. Hildebrand executed a consulting agreement with the
Company and remained as Chairman of the Board.
Mr. Hildebrand is a founder of GeoVax, Inc., our
wholly-owned subsidiary, and served as its President and Chief
Executive Officer and as a member of its Board of Directors from
its inception in 2001 to April 2008. Prior to founding GeoVax,
Mr. Hildebrand was North American President and Chief
Executive Officer of Rhone Merieux, Inc., a subsidiary of Rhone
Merieux, S.A., a world leader in the biopharmaceutical and
animal health industries. In 1997, Mr. Hildebrand also
became Global Vice President of Merial Limited, a position that
he held until retiring in 2000. Mr. Hildebrand received his
bachelor of science in microbiology from the University of
Wisconsin. The Board of Directors has concluded that
Mr. Hildebrand should serve on the Board of Directors by
virtue of his prior experience in the vaccine industry and his
intimate knowledge of the Companys history and technology
resulting from his prior service as its President and Chief
Executive Officer. Mr. Hildebrand has informed the Board of
Directors that he is resigning as Chairman, effective
January 1, 2011.
Robert T. McNally, Ph.D. Dr. McNally
joined the Board of Directors in December 2006 and was appointed
as our President and Chief Executive Officer effective
April 1, 2008. From 2000 to March 2008, Dr. McNally
served as Chief Executive Officer of Cell Dynamics LLC, a cGMP
laboratory services company. Previously, Dr. McNally was
Senior Vice President of Clinical Research for CryoLife, Inc., a
pioneering company in transplantable human tissues.
Dr. McNally is a Fellow of the American Institute for
Medical and Biological Engineering, serves on the advisory
boards of the Petit Institute for Bioengineering and Dupree
College of Management at the Georgia Institute of Technology,
and is a former Chairman of Georgia Bio, a trade association.
Dr. McNally graduated with a Ph.D. in biomedical
engineering from the University of Pennsylvania. The Board of
Directors has concluded that Dr. McNally should serve on
its Board of Directors by virtue of his prior business and
scientific experience, including his experience as Chief
Executive Officer of Cell Dynamics, LLC and as Senior Vice
President of Clinical Research for CryoLife, Inc., and due to
his intimate involvement with the Companys ongoing
operations as its President and Chief Executive Officer.
Mark J. Newman, Ph.D. Dr. Newman
joined the Company as Vice President, Research and Development
in January 2010. Prior to joining GeoVax, Dr. Newman served
in similar positions at PaxVax, Inc. (from March 2009 to
December 2009), Pharmexa A/S (from January 2006 to December
2008), and Epimmune, Inc. (from February 1999 to December 2005).
He has also served in senior scientific management roles at
Vaxcel,
40
Inc., Apollon, Inc. and Cambridge Biotech Corp.
Dr. Newmans experience includes directing research,
pre-clinical development and early stage clinical testing of
protein, peptide, plasmid DNA and viral vectored vaccines and
multiple vaccine adjuvants. He has co-authored more than 100
scientific papers, reviews and book chapters during his
professional career, and is a named co-inventor on six issued
U.S. patents and one European patent, all related to
vaccine technologies. He has also been awarded multiple federal
government and foundation grants and contracts to support
research and early stage clinical development in the field of
vaccines. Dr. Newman is a graduate of the Ohio State
University (B.Sc. and M.Sc.) and received his Ph.D. in
Immunology from the John Curtin School of Medical Research, the
Australian National University. He completed four years of
post-doctoral training at Cornell University, the National
Cancer Institute, and the NIH and served as a full time member
of the Louisiana State University faculty prior to joining the
biotech industry.
Mark W. Reynolds, CPA Mr. Reynolds joined
the Company on a part-time basis in October 2006 as Chief
Financial Officer and Corporate Secretary, becoming a full-time
employee in January 2010. From 2003 to 2006, before being named
Chief Financial Officer of GeoVax Labs, Inc., Mr. Reynolds
provided financial and accounting services to GeoVax, Inc. as an
independent contractor. From 2004 to 2008, Mr. Reynolds
served as Chief Financial Officer for Health Watch Systems, Inc.
a privately-held company in the consumer healthcare industry.
From 2004 to 2006, he served as Chief Financial Officer for
Duska Therapeutics, Inc., a publicly-held biotechnology company.
From 1988 to 2002, Mr. Reynolds was first Controller and
later Chief Financial Officer and Corporate Secretary of CytRx
Corporation, a publicly-held biopharmaceutical company.
Mr. Reynolds began his career as an auditor with Arthur
Andersen & Co. from 1985 to 1988. He is a certified
public accountant and earned a masters of accountancy degree
from the University of Georgia.
Harriet L.
Robinson, Ph.D. Dr. Robinson joined the
Company as Senior Vice President, Research and Development on a
part-time basis in November 2007 and on a full-time basis in
February 2008, and was elected to the Board of Directors in June
2008. She is a co-founder of GeoVax, Inc. and has served as
chief of its scientific advisory board since formation of the
company in 2001. From 1999 to February 2008, Dr. Robinson
served as the Asa Griggs Candler Professor of Microbiology and
Immunology at Emory University in Atlanta, Georgia, and from
1998 to February 2008 as Chief, Division of Microbiology and
Immunology, Yerkes National Primate Center and Professor at the
Emory University School of Medicine. She was Professor,
Department of Microbiology & Immunology, at the
University of Massachusetts Medical Center from 1988 to 1997 and
Staff, then Senior, then Principal Scientist at the University
of Massachusetts Worcester Foundation for Experimental Biology
from 1977 to 1987. She was also a National Science Foundation
Postdoctoral Fellow at the Virus Laboratory, University of
California, Berkeley, from 1965 to 1967. Dr. Robinson
received a bachelor of arts degree from Swarthmore College and
M.S. and Ph.D. degrees from the Massachusetts Institute of
Technology. The Board of Directors has concluded that
Dr. Robinson should serve on its Board of Directors by
virtue of her extensive knowledge of the Companys
technology as its scientific founder.
Steven S. Antebi. Mr. Antebi joined the
Board of Directors in March 2010. During the last five years, he
has served as President of Maple Capital Management, a fund
focusing on debt and equity investments in North America (May
2007 to present), President and Chief Executive Officer of
Galileo Partners LLC (2006 to present), and President of Blue
and Gold Enterprises Inc.
(2002-2009),
funds that invest in registered direct investments, PIPE
transactions, private placements, and open market equity
transactions. Prior to that, he served for twenty years in
various senior positions at Bear Stearns and Company, including
institutional sales, trading the firms capital in the over
the counter market, syndicate distribution, and outside
investment banking. He has served as a member of the Board of
Governors of Cedars Sinai Medical Center in Los Angeles,
California, one of the largest hospital/research centers in the
world, for over ten years. He serves as Chairman of the Board of
Epinex Diagnostic Inc., a late stage development company,
creating a rapid diagnostic system for testing glycated albumen
in diabetics. Mr. Antebi is also the Chairman of the Board
of the Royalty Review Council, a company doing royalty
accounting for web casting and digital media, covering all five
major record labels. The Board of Directors concluded that
Mr. Antebi should serve on the Board of Directors because
of his substantial experience in finance and his experience in
healthcare and technology.
41
David A. Dodd. Mr. Dodd joined the Board
of Directors in March 2010 and has been appointed Chairman of
our Board of Directors, effective January 1, 2011. He is
the Chief Executive Officer of RiversEdge BioVentures, an
investment and advisory firm focused on the life sciences and
pharmaceuticals industries, which he founded in 2009. He has
more than 35 years of executive experience in the
healthcare industry. From December 2007 to June 2009,
Mr. Dodd was President, Chief Executive officer and
Chairman of BioReliance Corporation, an organization that
provided biological safety testing, viral clearance testing,
genetic and mammalian technology testing and laboratory animal
diagnostic services testing. From October 2006 to April 2009, he
served as non-executive chairman of Stem Cell Sciences Plc.
Before that, Mr. Dodd served as President, Chief Executive
Officer and Director of Serologicals Corporation (Nasdaq: SERO)
before it was sold to Millipore Corporation in July 2006 for
$1.5 billion. For five years prior to this, Mr. Dodd
served as President and Chief Executive Officer of Solvay
Pharmaceuticals, Inc. and Chairman of its subsidiary Unimed
Pharmaceuticals, Inc. The Board of Directors concluded
Mr. Dodd should serve on the Board of Directors due to his
experience in the pharmaceutical industry, as well as his
background in general management, business transformation,
corporate partnering, and mergers and acquisitions.
Dean G. Kollintzas. Mr. Kollintzas joined
the Board of Directors upon consummation of the merger with
GeoVax, Inc. in September 2006. Since 2001 Mr. Kollintzas
has been an intellectual property attorney specializing in
biotechnology and pharmaceutical licensing, FDA regulation, and
corporate/international transactions. Mr. Kollintzas
received a microbiology degree from the University of Illinois
and a J.D. from Franklin Pierce Law Center. He is a member of
the Wisconsin and American Bar Associations. Since 2004,
Mr. Kollintzas has owned and operated a restaurant in
Joliet, Illinois called The Metro Grill. The Board of Directors
has concluded that Mr. Kollintzas should serve on the Board
of Directors by virtue of his experience with intellectual
property matters, biotechnology and pharmaceutical licensing,
and FDA regulation.
John N. (Jack) Spencer, Jr.,
CPA Mr. Spencer joined the Board of
Directors upon consummation of the merger with GeoVax, Inc. in
September 2006. Mr. Spencer is a certified public
accountant and was a partner of Ernst & Young where he
spent more than 38 years until he retired in 2000.
Mr. Spencer also serves as a director SurgiVigon, Inc., a
medical device company, where he also chairs the audit
committee, and served as a director of Firstwave Technologies
(Nasdaq:FSTW) from November 2003 until April of 2009. He also
serves as a consultant to various companies primarily relating
to financial accounting and reporting matters. Mr. Spencer
received a bachelor of science degree from Syracuse University,
and he earned an M.B.A. degree from Babson College. He also
attended the Harvard Business School advanced management
program. The Board of Directors has concluded that
Mr. Spencer should serve on the Board of Directors by
virtue of his experience at Ernst & Young where he was
the partner in charge of that firms life sciences practice
for the southeastern United States, and his clients included a
large number of publicly-owned and privately-held medical
technology companies, together with his continuing expertise as
a director of, and a consultant to, other publicly owned and
privately held companies.
Compensation
Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 2009,
Mr. Kollintzas, Mr. Spencer and Mr. Tsolinas (a
former director) served on our Compensation Committee. None of
these individuals were officers or employees of the Company or
any of its subsidiaries during the fiscal year ended
December 31, 2009, nor at any time prior thereto. During
the fiscal year ended December 31, 2009, none of the
members of the Compensation Committee had any relationship with
the Company requiring disclosure under Item 404 of
Regulation S-K,
and none of the Companys executive officers served on the
compensation committee (or equivalent), or the Board of
Directors, of another entity whose executive officer(s) served
on our Board of Directors or Compensation Committee.
COMPENSATION
DISCUSSION AND ANALYSIS
In the paragraphs that follow, the Compensation Committee
provides an overview and analysis of our compensation program
and policies, the material compensation decisions made under
those programs and policies with respect to our executive
officers, and the material factors considered in making those
decisions.
42
The Compensation Committee reviews, analyzes and approves the
compensation of our senior executive officers, including the
Named Executive Officers listed in the tables that
follow this Compensation Discussion and Analysis. The Named
Executive Officers for 2009 include our chief executive officer,
our chief financial officer, and the two other individuals who
served as executive officers during 2009 and whose total
compensation for 2009 exceeded $100,000, calculated in
accordance with the rules and regulations of the SEC. Our Named
Executive Officers for 2009 were:
|
|
|
|
|
Robert T. McNally, President and Chief Executive Officer
|
|
|
|
Mark W. Reynolds, Chief Financial Officer
|
|
|
|
Harriet L. Robinson, Chief Scientific Officer
|
|
|
|
Andrew Kandalepas, our former Senior Vice-President
|
The tables that follow this Compensation Discussion and Analysis
contain specific data about the compensation earned or paid in
2009 to the Named Executive Officers. The discussion below is
intended to help you understand the detailed information
provided in the compensation tables and put that information
into the context of our overall compensation program.
Objectives
of Our Compensation Program
In general, we operate in a marketplace where competition for
talented executives is significant. The biopharmaceutical
industry is highly competitive and includes companies with far
greater resources than ours. We are engaged in the long-term
development of drug candidates without the benefit of
significant current revenues, and therefore our operations
involve a high degree of risk and uncertainty. This level of
risk and uncertainty may make it difficult to retain talented
executives. Nevertheless, continuity of personnel across
multi-disciplinary functions is critical to the success of our
business. Furthermore, since we have relatively few employees,
each must perform a broad scope of functions, and there is very
little redundancy in skills.
The objectives of our compensation program for our executive
officers and other employees are to provide competitive cash
compensation, health, and retirement benefits, as well as
long-term equity incentives that offer significant reward
potential for the risks assumed and for each individuals
contribution to our long-term performance. Although the
Compensation Committee seeks to pay salaries and bonuses
sufficient to hire and retain talented individuals, the
Compensation Committee also believes, based on its subjective
perception of their skills, that many of its employees could
earn somewhat higher cash compensation at other companies, and
seeks to address this concern by making stock option grants at a
somewhat higher level than it would if the salaries and bonuses
were higher. Individual performance is measured subjectively
taking into account Company and individual progress toward
overall corporate goals, as well as each individuals
skills, experience, and responsibilities, together with
corporate and individual progress in the areas of scientific
innovation, regulatory compliance, business development,
employee development, and other values designed to build a
culture of high performance. No particular weight is assigned to
these measures, and the Compensation Committee is of the view
that much of the Companys progress results from team
effort. These policies and practices are based on the principle
that total compensation should serve to attract and retain those
executives and employees critical to our overall success and are
designed to reward executives for their contributions toward
business performance that enhances stockholder value.
Role of
the Compensation Committee
Our Compensation Committee assists our Board of Directors in
discharging its responsibilities relating to the compensation of
our executive officers. As such, the Compensation Committee has
responsibility over certain matters relating to the fair and
competitive compensation of our executives, employees and
directors (only non-employee directors are compensated as
directors) as well as matters relating to equity-based benefit
plans. Each of the members of our Compensation Committee is
independent in accordance with the criteria of independence set
forth in Rule 5605(a)(2) of the Nasdaq Listing Rules and
Rule 803(A)(2) of the NYSE Amex Listing Requirements. We
believe that their independence from management allows the
members of the Compensation Committee to provide unbiased
consideration of various elements that could be included in an
43
executive compensation program and apply independent judgment
about which elements best achieve our compensation objectives.
Pursuant to its charter as in effect prior to March 2010, the
Compensation Committee was charged specifically with reviewing
and determining annually the compensation of our Chief Executive
Officer, approving special bonus payments and perquisites paid
to and other special compensation or benefit arrangements with
executive officers, and approving (subject to approval of the
Board of Directors) recommendations by the Chief Executive
Officer with respect to grants under our stock option plan and
any other equity-based plan we might adopt in the future.
Subject to approval of the Board of Directors, the Compensation
Committee also set salaries and determines bonuses, sometimes
referred to as cash incentive awards, for the Companys
employees. The Compensation Committee gave due consideration to
the Chief Executive Officers recommendations and could
change them prior to recommending them to the Board of
Directors. The Compensation Committee did not exercise the
authority granted to it by its charter to approve a pool of
options and other discretionary awards to be used by the Chief
Executive Officer.
In March 2010, the Compensation Committee and the Board of
Directors approved a new charter for the Compensation Committee.
Pursuant to the new charter, the Compensation Committee is
responsible for, among other things:
|
|
|
|
|
reviewing the Companys overall compensation philosophy and
strategy;
|
|
|
|
evaluating and determining the compensation of the Chief
Executive Officer;
|
|
|
|
evaluating and setting, in conjunction with the Chief Executive
Officer, the compensation of other officers;
|
|
|
|
reviewing and approving the annual Compensation Discussion and
Analysis;
|
|
|
|
evaluating and approving the components and amounts of
compensation of the Companys employees;
|
|
|
|
evaluating, considering and approving, in its discretion, the
Companys equity-based compensation plans, as well as
grants and awards made under any such plans to persons other
than the Chief Executive Officer and submitting them to the
Board of Directors for its consideration and approval;
|
|
|
|
approving, with sole and exclusive authority, grants and awards
made to the Companys Chief Executive Officer under the
Companys equity-based compensation plans;
|
|
|
|
evaluating, considering and approving, in its discretion,
compensation for non-employee members of the Board of
Directors; and
|
|
|
|
managing and controlling the operation and administration of the
Companys stock option plans.
|
Elements
of Compensation
To achieve the objectives described above, the three primary
compensation elements used for executive officers are base
salary, cash bonus, and stock option awards. We believe that
these three elements are the most effective combination in
motivating and retaining our executive officers at this stage in
our development. The Compensation Committee has not utilized
other companies for benchmarking purposes because it believes
that those businesses which would be most comparable to GeoVax
are either privately held or divisions of very large medical
products companies.
Base
Salary
Our philosophy is to maintain executive base salary at a
competitive level sufficient to recruit and retain individuals
possessing the skills and capabilities necessary to achieve our
goals over the long term. Base salaries provide our executive
officers with a degree of financial certainty and stability and
also reward individual achievements and contributions.
44
Cash
Bonus
Annual cash incentive awards motivate our executive officers to
contribute toward the achievement of corporate goals and
objectives. Generally, every employee is eligible to earn an
annual cash incentive award, promoting alignment and
pay-for-performance
at all levels of the organization. The Company does not have a
formalized cash incentive award plan, and awards are based on
the subjective recommendation of the President and Chief
Executive Officer (except as to the Chief Executive
Officers cash bonus) and on the Compensation
Committees subjective judgment.
Stock
Option Awards
Stock option awards are a fundamental element in our executive
compensation program because they emphasize our long-term
performance, as measured by creation of stockholder value, and
align the interests of our stockholders and management. In
addition, the Compensation Committee believes they are crucial
to a competitive compensation program for executive officers,
and they act as a powerful retention tool. In our current
pre-commercial state, we view the Company as still facing a
significant level of risk, but with the potential for a high
reward over a period of time, and therefore we believe that
stock incentive awards are appropriate for executive officers.
These awards are provided through initial grants at or near the
date of hire and through subsequent, periodic grants. The
initial grant is typically larger than subsequent, periodic
grants and is intended to motivate the officer to make the kind
of decisions and implement strategies and programs that will
contribute to an increase in our stock price over time.
Subsequent periodic stock option awards may be granted to
reflect each executive officers ongoing contributions to
the Company, to create an incentive to remain at the Company,
and to provide a long-term incentive to achieve or exceed our
corporate goals and objectives. The Company does not have a
formula for determining stock option awards. Awards are
generally based on the subjective recommendation of the
President and Chief Executive Officer and on the Compensation
Committees subjective judgment. The Compensation Committee
does not typically give much weight to the overall levels of
stock and stock options owned by the Companys executive
officers and directors.
Accounting
and Tax Considerations
The accounting and tax treatment of compensation generally has
not been a factor in determining the amounts of compensation for
the Companys executive officers.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, limits tax deductions of public companies on
compensation paid to certain executive officers in excess of
$1 million. The Compensation Committee considers the impact
of Section 162(m) on its compensation decisions, but has no
formal policy to structure executive compensation so that it
complies with the requirements of Section 162(m) due to the
overall level of compensation paid. In general, stock options
granted under the Companys 2006 Equity Incentive Plan, or
the Plan, are intended to qualify under and comply with the
performance based compensation exemption provided
under Section 162(m), thus excluding from the
Section 162(m) compensation limitation any income
recognized by executives at the time of exercise of such stock
options.
Accounting principles generally accepted in the United States
require us to recognize an expense for the fair value of
equity-based compensation awards. The Compensation Committee is
informed of the accounting implications of significant
compensation decisions, especially in connection with decisions
that relate to our equity incentive award plans, but has no
formal policy to structure executive compensation to align
accounting expenses of our equity awards with our overall
executive compensation philosophy and objectives. The
Compensation Committee has considered the impact of cash
payments to its employees as compared to the costs it recognizes
on an accrual basis when stock options are granted.
Setting
Executive Compensation
Historically, we have not used quantitative methods or
mathematical formulae in setting any element of executive
compensation. We use discretion, guided in large part by the
concept of
pay-for-performance,
and we consider all elements of an executives compensation
package when setting each portion of compensation. There is no
pre-established policy or target for the allocation between cash
and equity incentive compensation,
45
although the Compensation Committee believes its stock option
grants are at a level that permits it to retain talented
personnel at somewhat lower levels of cash compensation than
these individuals might otherwise receive.
Year-to-year
changes in base salary have usually been relatively modest, and
executive officer base salaries are within a relatively narrow
range. The Compensation Committee considers relative levels of
compensation among its various executive officers. Our annual
cash incentive awards have generally been modest. When made at
all, the individual cash incentive awards have ranged from
$10,000 to $15,000 over the last three years. Bonuses have
usually been paid to all Named Executive Officers when they were
paid at all. We may choose other compensation approaches if
circumstances warrant.
When determining compensation for a new executive officer, and
when annually reviewing the compensation for our executive
officers, factors taken into consideration are the
individuals skills, knowledge and experience, the
individuals past and potential future impact on our
short-term and long-term success, the individuals recent
compensation levels in other positions, and any present and
expected compensation information obtained from other
prospective candidates interviewed during the recruitment
process. In setting our executive compensation for 2009, no
specific benchmarking activities were undertaken. We will
generally make a grant of stock options when an executive
officer joins us. Options are granted at no less than 100% of
the fair market value on the date of grant. In determining the
size of an initial stock option grant to an executive officer,
we primarily consider company performance and the
individuals scope of responsibility. For periodic grants,
we also consider the Companys and the individuals
continuing performance and the recommendations of the Chief
Executive Officer, all on a subjective basis. Since the stock
option grant is meant to be a retention tool, we also consider
the importance to stockholders of that persons continued
service. Stock option grants to executives generally vest over a
period of three years.
The Compensation Committee annually reviews and determines the
compensation for our Chief Executive Officer. Each year,
recommendations for the compensation for other executive
officers (other than himself) are prepared by the Chief
Executive Officer and are reviewed with the Compensation
Committee and modified by it where appropriate.
In order to assess the performance of a full calendar year,
annual cash incentive and stock option awards are generally
determined in December of each year. We do not currently have
any program, plan or practice in place to time stock option
grants to our executives or other employees in coordination with
the release of material non-public information.
As part of our executive compensation review conducted annually
in December, we review a tally sheet prepared by the President
and Chief Executive Officer setting forth all components of
total compensation to our Named Executive Officers and all other
employees. The tally sheet includes current and proposed base
salary, proposed annual cash incentive awards and historical, as
well as proposed, stock option awards. Post-termination pay
under employment agreements to which our executive officers are
parties is not considered to be material at the present time.
These tools are employed by the Compensation Committee both in
reviewing individual compensation awards and as a useful check
on total compensation. These tools also show the effect of
compensation decisions made over time on the total annual
compensation to a Named Executive Officer and allow the
Compensation Committee to review historical amounts for
comparative purposes.
We considered whether our compensation policies and practices
create risks that are reasonably likely to have a material
adverse effect on GeoVax, and concluded that they do not.
2009
Executive Compensation
In December 2008, using its subjective judgment as to the
overall progress of the Company, skills, experience,
responsibilities, achievements and historical compensation of
each of the Named Executive Officers, the Compensation Committee
established their salaries for 2009. At that time,
Dr. McNally recommended that none of the Named Executive
Officers receive a cash bonus for 2008 or salary increases for
2009, except that Mr. Reynolds should receive a salary
increase in proportion to his increased time commitment to the
business of the Company. Dr. McNally made this
recommendation, and the Compensation Committee accepted it,
partially in the interest of preserving the Companys
overall cash flow to the extent reasonably possible. Stock
option grants were made at that time. The amount of compensation
earned by each
46
of the Named Executive Officers during fiscal 2009, 2008 and
2007 is shown in the Summary Compensation Table below.
In December 2009, the Compensation Committee considered 2009
stock option grants and cash incentive awards as well as base
salaries for 2010. The Compensation Committee considered the
same factors it considered in 2008, the overall progress of the
Company, the skills, experience, responsibilities, achievements
and historical compensation of each of the Named Executive
Officers, in determining the award of cash bonuses and stock
option grants for 2009 and salary levels for 2010. In its
deliberations on executive compensation at its meeting in
December 2009, the Compensation Committee considered the fact
that, during the preceding year (at its meeting in December
2008) the Compensation Committee had accepted the
recommendation from Dr. McNally that none of the Named
Executive Officers receive a cash bonus for 2008 and that no
salary increases would be effective for 2009, except as related
to Mr. Reynolds with respect to a proportionate increase
relative to his time commitment to the business of the Company.
The Compensation Committee felt that, under the circumstances,
it should increase the salaries of the Companys executive
officers, and decided to increase the salaries of the
Companys executive officers. The Compensation Committee
reviewed the salary increases it had approved for the other
employees of the Company and determined the average of the
increases was approximately 6.3%. The Compensation Committee
then increased executive officer salaries by 6.3%, with the
exception of Dr. McNally, who received a 10% increase in
salary. The Compensation Committee provided a higher salary to
Dr. McNally because it felt that the Chief Executive
Officer should be the most highly compensated executive.
Robert T. McNally. Dr. McNally serves as
our President and Chief Executive Officer pursuant to an
employment agreement executed in April, 2008. In December 2009,
the Compensation Committee awarded Dr. McNally a cash bonus
of $15,000 and a stock option grant for 10,000 shares at an
exercise price of $7.00 per share. The Compensation Committee
also increased Dr. McNallys annual base salary from
$250,000 to $275,000 (a 10% increase), effective January 1,
2010.
Mark W. Reynolds. Mr. Reynolds serves as
our Chief Financial Officer pursuant to an employment agreement
amended and restated effective January 2010. Pursuant to this
agreement, and its predecessor agreement, during 2009,
Mr. Reynolds provided services to the Company on a
part-time basis (approximately 75%) and was paid an annualized
salary of $150,000. In December 2009, the Compensation Committee
awarded Mr. Reynolds a cash bonus of $10,000 and a stock
option grant for 10,000 shares at an exercise price of
$7.00 per share. The Compensation Committee also increased
Mr. Reynolds annual base salary from $150,000 to
$212,600 effective January 1, 2010. The increase in
Mr. Reynolds base salary was determined based on
(a) a proportional increase of $50,000 (33.3%) based on
Mr. Reynolds increased time commitment from 75% to 100%,
and (b) a merit increase of $12,600 (6.3%).
Harriet L. Robinson. Dr. Robinson serves
as our Chief Scientific Officer pursuant to an employment
agreement executed in November 2008. In December 2009, the
Compensation Committee awarded Dr. Robinson a cash bonus of
$10,000 and a stock option grant for 10,000 shares at an
exercise price of $7.00 per share. The Compensation Committee
also increased Dr. Robinsons annual base salary from
$250,000 to $265,750 (a 6.3% increase), effective
January 1, 2010.
Andrew Kandalepas. Mr. Kandalepas served
as our Senior Vice President until his resignation in July 2009.
During 2009, he received an annualized base salary of $225,000
pursuant to his employment agreement. During 2009, the
Compensation Committee made no decisions with regard to
Mr. Kandalepas compensation.
Benefits
Provided to Executive Officers
We provide our executive officers with certain benefits that the
Compensation Committee believes are reasonable and consistent
with our overall compensation program. The Compensation
Committee will periodically review the levels of benefits
provided to our executive officers.
Dr. McNally, Mr. Reynolds and Dr. Robinson are
eligible for health insurance and 401(k) benefits at the same
level and subject to the same conditions as provided to all
other employees. The amounts shown in the Summary Compensation
Table under the heading Other Compensation represent
the value of the Companys
47
matching contributions to the 401(k) accounts of these executive
officers. Executive officers did not receive any other
perquisites or other personal benefits or property from the
Company or any other source.
Employment
Agreements
Robert T. McNally. On March 20, 2008,
GeoVax entered into an employment agreement with Robert T.
McNally, Ph.D. to become our President and Chief Executive
Officer effective April 1, 2008. The employment agreement
has no specified term. The employment agreement provided for an
initial annual salary of $200,000 to Dr. McNally, subject
to periodic increases as determined by the Compensation
Committee. The Board of Directors may also approve the payment
of a discretionary bonus annually. Dr. McNally is eligible
for grants of awards from the Plan and is entitled to
participate in any and all benefits in effect from
time-to-time
for employees generally. We may terminate the employment
agreement, with or without cause. If we terminate the employment
agreement without cause, we will be required to provide
Dr. McNally at least 60 days prior notice of the
termination and one week of severance pay for each full year of
service as President and Chief Executive Officer ($10,577 if
terminated in fiscal 2010, paid as salary continuance).
Dr. McNally may terminate the employment agreement at any
time by giving us 60 days notice. In that event, he would
not receive severance.
Mark W. Reynolds. On February 1, 2008,
GeoVax entered into an amended and restated employment agreement
with Mark W. Reynolds, our Chief Financial Officer. The
employment agreement has no specified term. The employment
agreement provided for an initial annual salary of $115,000 to
Mr. Reynolds, which was increased to $150,000 by the
Compensation Committee and the Board of Directors effective
January 1, 2009, commensurate with an increased time
commitment provided by Mr. Reynolds (50% to 75%). The
employment agreement was again amended and restated, effective
January 1, 2010, to reflect a further adjustment for
Mr. Reynolds time commitment (from 75% to 100%) together
with a base salary increase to $212,600. The Board of Directors
may also approve the payment of a discretionary bonus annually.
Mr. Reynolds is eligible for grants of awards from the Plan
and is entitled to participate in any and all benefits in effect
from
time-to-time
for employees generally. We may terminate the employment
agreement, with or without cause. If we terminate the employment
agreement without cause, we will be required to provide
Mr. Reynolds at least 60 days prior notice of the
termination and one week of severance pay for each full year of
service as Chief Financial Officer ($16,354 if terminated in
fiscal 2010, paid as salary continuance). Mr. Reynolds may
terminate the employment agreement at any time by giving us
60 days notice. In that event, he would not receive
severance.
Harriet L. Robinson. On November 19,
2007, GeoVax entered into an employment agreement with Harriet
L. Robinson, our Chief Scientific Officer. The employment
agreement has no specified term. The employment agreement
provided for an initial base salary of $250,000 to
Dr. Robinson, subject to periodic increases as determined
by the Compensation Committee. Dr. Robinson initially
worked part-time for the Company, and became a full-time
employee in February 2008. The Board of Directors may also
approve the payment of a discretionary bonus annually.
Dr. Robinson is eligible for grants of awards from the Plan
and is entitled to participate in any and all benefits in effect
from
time-to-time
for employees generally. We may terminate the employment
agreement, with or without cause. If we terminate the employment
agreement without cause, we will be required to provide
Dr. Robinson at least 90 days prior notice of the
termination and one week of severance pay for each full year of
service ($15,332 if terminated in fiscal 2010, paid as salary
continuance). Dr. Robinson may terminate the employment
agreement at any time by giving us 60 days notice. In that
event, she would not receive severance.
Andrew Kandalepas. On February 1, 2007,
GeoVax entered into an employment agreement with Andrew
Kandalepas, our Senior Vice President. The employment agreement
had no specified term. The employment agreement provided for an
initial annual salary of $210,000 to Mr. Kandalepas,
subject to periodic increases as determined by the Compensation
Committee. Mr. Kandalepas was also eligible for
discretionary cash bonuses, grants of awards from the Plan and
participation in any and all benefits in effect from
time-to-time
for employees generally. We could terminate the employment
agreement, with or without cause. Effective June 30, 2009,
Mr. Kandalepas resigned from our Board of Directors, and
effective July 1, 2009, he resigned his position as Senior
Vice President. We paid Mr. Kandalepas severance of $18,750.
48
Indemnification
Agreements
In October 2006 GeoVax Labs, Inc. and our subsidiary, GeoVax,
Inc. entered into indemnification agreements with
Messrs. McNally, Reynolds, Hildebrand, Kollintzas and
Spencer. Pursuant to these agreements, we have agreed to
indemnify them to the full extent permitted by Illinois and
Georgia law against certain liabilities incurred by these
individuals in connection with specified proceedings if they
acted in a manner they believed in good faith to be in or not
opposed to the best interests of the Company and, with respect
to any criminal proceeding, had no reasonable cause to believe
that such conduct was unlawful. The agreements also provide for
the advancement of expenses to these individuals subject to
specified conditions.
49
SUMMARY
COMPENSATION TABLE
The following table sets forth information concerning the
compensation earned during the fiscal years ended
December 31, 2009, 2008 and 2007 by our Named Executive
Officers.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
All Other
|
|
|
Name and Principal
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Total
|
Position(1)
|
|
Year
|
|
($)
|
|
($)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
Robert T. McNally
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|
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2009
|
|
|
$
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250,000
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|
|
$
|
15,000
|
|
|
$
|
61,500
|
|
|
$
|
3,675
|
|
|
$
|
330,175
|
|
President and
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|
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2008
|
|
|
|
175,000
|
|
|
|
|
|
|
|
391,100
|
|
|
|
1,250
|
|
|
|
567,350
|
|
Chief Executive Officer
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|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Mark W. Reynolds
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2009
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|
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150,000
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|
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10,000
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|
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61,500
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|
|
|
94
|
|
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221,594
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|
Chief Financial Officer
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2008
|
|
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|
120,740
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|
|
|
|
|
|
|
45,500
|
|
|
|
|
|
|
|
166,240
|
|
|
|
|
2007
|
|
|
|
92,102
|
|
|
|
10,000
|
|
|
|
674,800
|
|
|
|
|
|
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776,902
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Harriet L. Robinson
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2009
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250,000
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10,000
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61,500
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|
|
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3,675
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|
|
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325,175
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|
Chief Scientific Officer
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2008
|
|
|
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234,375
|
|
|
|
|
|
|
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204,220
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|
|
|
313
|
|
|
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438,908
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|
|
|
|
2007
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|
|
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14,904
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10,000
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|
|
|
|
|
|
|
|
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24,904
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Andrew J. Kandalepas
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2009
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|
|
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119,230
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|
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|
|
|
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|
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18,750
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|
|
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137,980
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|
Former Senior Vice President
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2008
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225,000
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|
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|
|
|
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45,500
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|
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|
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|
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270,500
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(through July 1, 2009)
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2007
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205,288
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10,000
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|
|
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604,800
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|
|
|
|
|
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820,088
|
|
|
|
|
(1) |
|
This table excludes Mark Newman, who joined GeoVax as Vice
President, Research and Development in January 2010. |
|
(2) |
|
Amounts shown in the Option Awards column represent
the aggregate grant date fair value of awards computed in
accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718, Compensation
Stock Compensation or FASB ASC Topic 718. For a discussion
of the various assumptions made and methods used for determining
such amounts, see footnotes 2 and 7 to our 2009 consolidated
financial statements contained in this prospectus. For 2008, the
amount reported for Dr. Robinson includes $158,720, related
to the extension of the exercise period of stock options granted
in prior years. These stock options were originally granted with
an exercise period of five to seven years and were to expire
beginning in 2009. The extensions were made to adjust the
exercise period to ten years from the original grant date,
consistent with the current stock option grant policies of the
Company. The extensions did not affect the vesting schedule of
the grants because they were all fully vested at the time of the
extensions. |
|
(3) |
|
Amounts shown in the All Other Compensation column
represent employer contributions to the Companys 401(k)
retirement plan for Dr. McNally, Mr. Reynolds and
Dr. Robinson, and for Mr. Kandalepas, the amount in
this column represents the severance paid to him during the year
ended December 31, 2009. |
GRANTS OF
PLAN-BASED AWARDS
The following table sets forth option awards. No stock awards or
non-equity incentive awards were granted to the Named Executive
Officers for the year ended December 31, 2009.
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All Other Option
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Awards: Number
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Exercise or
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|
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of Securities
|
|
Base Price of
|
|
Grant Date Fair
|
|
|
Grant
|
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Underlying Options
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Option Awards
|
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Value of Stock and
|
Name
|
|
Date
|
|
(#)
|
|
($/Sh)(1)
|
|
Option Awards(2)
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Robert T. McNally
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12/2/09
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10,000
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$
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7.00
|
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$
|
61,500
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Mark W. Reynolds
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12/2/09
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10,000
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|
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7.00
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61,500
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Harriet L. Robinson
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12/2/09
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10,000
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|
|
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7.00
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61,500
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(1) |
|
The exercise price for options is the closing trading price of
the common stock of the Company on the grant date. The grant
date is determined by the Compensation Committee. All stock
option grants during 2009 will vest and become exercisable in
three equal annual installments on the first three anniversary
dates of the grant date. |
50
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(2) |
|
Compensation expense is recognized for all share-based payments
based on the grant date fair value estimated for financial
reporting purposes. For a discussion of the various assumptions
made and methods used for determining such amounts, see
footnotes 2 and 7 to our 2009 consolidated financial statements
contained in this prospectus. |
Additional discussion regarding material factors that may be
helpful in understanding the information included in the Summary
Compensation Table and Grants of Plan-Based Awards table is
included above under Compensation Discussion and
Analysis.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth certain information with respect
to unexercised options previously awarded to our Named Executive
Officers as of December 31, 2009. There were no stock
awards outstanding as of December 31, 2009.
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Option Awards
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Number of Securities
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|
Number of Securities
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Underlying Unexercised
|
|
Underlying Unexercised
|
|
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|
|
Options(#)
|
|
Options (#)
|
|
Option Exercise
|
|
Option Expiration
|
Name
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Exercisable
|
|
Exercisable
|
|
Price ($)
|
|
Date
|
|
Robert T. McNally
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|
|
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10,000
|
(1)
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$
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7.00
|
|
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12/2/19
|
|
|
|
|
3,333
|
|
|
|
6,667
|
(2)
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|
|
5.50
|
|
|
|
12/11/18
|
|
|
|
|
16,000
|
|
|
|
32,000
|
(3)
|
|
|
8.50
|
|
|
|
6/17/18
|
|
|
|
|
6,667
|
|
|
|
3,333
|
(4)
|
|
|
8.05
|
|
|
|
12/5/17
|
|
|
|
|
26,400
|
|
|
|
|
|
|
|
17.75
|
|
|
|
3/14/17
|
|
Mark W. Reynolds
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|
|
|
|
|
|
10,000
|
(1)
|
|
|
7.00
|
|
|
|
12/2/19
|
|
|
|
|
3,333
|
|
|
|
6,667
|
(2)
|
|
|
5.50
|
|
|
|
12/11/18
|
|
|
|
|
6,667
|
|
|
|
3,333
|
(4)
|
|
|
8.05
|
|
|
|
12/5/17
|
|
|
|
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36,000
|
|
|
|
|
|
|
|
17.75
|
|
|
|
3/14/17
|
|
Harriet L. Robinson
|
|
|
|
|
|
|
10,000
|
(1)
|
|
|
7.00
|
|
|
|
12/2/19
|
|
|
|
|
3,333
|
|
|
|
6,667
|
(2)
|
|
|
5.50
|
|
|
|
12/11/18
|
|
|
|
|
177,913
|
|
|
|
|
|
|
|
2.004
|
|
|
|
2/5/14
|
|
|
|
|
(1) |
|
These stock options vest and become exercisable in three equal
installments on December 2, 2010, 2011 and 2012. |
|
(2) |
|
These stock options vest and become exercisable in two equal
installments on December 11, 2010 and 2011. |
|
(3) |
|
These stock options vest and become exercisable in two equal
installments on June 17, 2010 and 2011. |
|
(4) |
|
These stock options vest and become exercisable on
December 5, 2010. |
Potential
Payments Upon Termination or
Change-in-Control
Under SEC rules, we are required to estimate and quantify the
payment that would be payable at, following, or in connection
with any termination, including without limitation resignation,
severance, retirement or a constructive termination of each
Named Executive Officer, or a
change-in-control
of the Company or a change in the Named Executive Officers
responsibilities, with respect to each Named Executive Officer,
as if the triggering event had occurred as of the last business
day of the last fiscal year.
The Plan contains provisions that could lead to an accelerated
vesting of options or other awards. In the event of certain
change-in-control
transactions described in the Plan, (i) outstanding options
or other awards under the Plan may be assumed, converted or
replaced; (ii) the successor corporation may substitute
equivalent options or other awards or provide substantially
similar consideration to Plan participants as were provided to
51
stockholders (after taking into account the existing provisions
of the options or other awards); or (iii) the successor
corporation may replace options or awards with substantially
similar shares or other property.
In the event the successor corporation (if any) refuses to
assume or substitute options or other awards as described
(i) the vesting of any or all options or awards granted
pursuant to the Plan will accelerate upon the
change-in-control
transaction, and (ii) any or all options granted pursuant
to the Plan will become exercisable in full prior to the
consummation of the
change-in-control
transaction at such time and on such conditions as the
Compensation Committee determines. If the options are not
exercised prior to the consummation of the
change-in-control
transaction, they shall terminate at such time as determined by
the Compensation Committee. Subject to any greater rights
granted to Plan participants under the Plan, in the event of the
occurrence of a
change-in-control
transaction any outstanding options or other awards will be
treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, or sale of
assets.
If the Company experienced a
change-in-control
transaction described in the Plan on December 31, 2009, the
value of accelerated options for each Named Executive Officer,
based on the difference between $9.00, the closing price of our
common stock on the OTC Bulletin Board on December 31,
2009, and, if lower, the exercise price per share of each option
for which vesting would be accelerated for each Named Executive
Officer, would be as follows: Dr. McNally
$62,500; Mr. Reynolds $46,500 and
Dr. Robinson $43,333. Mr. Kandalepas
resigned effective July 1, 2009 and held no outstanding
options as of December 31, 2009.
Additionally, our employment agreements with each Named
Executive Officer provide for payment to each Named Executive
Officer if we terminate such Named Executive Officers
employment without cause. If each Named Executive Officer was
terminated without cause on December 31, 2009, the
following amounts, which represent one week of pay for each full
year of service to the Company, would be payable to each Named
Executive Officer as salary continuance under the terms of such
Named Executive Officers employment agreement:
Dr. McNally $10,577;
Mr. Reynolds $16,354 and
Dr. Robinson $15,332. Mr. Kandalepas
resigned from our Board of Directors effective June 30,
2009 and resigned his position as Senior Vice President
effective July 1, 2009. Mr. Kandalepas was paid
severance of $18,750.
Risk
Assessment
We considered whether our compensation policies and practices
create risks that are reasonably likely to have a material
adverse effect on GeoVax and concluded that they do not. We do
not tie compensation to specific stock prices or milestones that
might encourage risk taking to increase stock prices or meet
specific milestones. When we have granted cash incentive awards,
they have been retrospective or in relatively modest amounts so
that they do not encourage inappropriate short-term risk taking.
We give consideration to subjective elements when we determine
salaries, bonuses, and option grants that help us evaluate
employee productivity and contribution to the welfare of GeoVax
and place less emphasis on short-term metrics or milestones that
might encourage undue risk taking. When we use stock options, we
require them to vest over a period of years so that their
increase in value will be more closely associated with the
long-term success of the Company.
52
DIRECTOR
COMPENSATION
The following table sets forth information concerning the
compensation earned for service on our Board of Directors during
the fiscal year ended December 31, 2009 by each individual
who served as a director at any time during the fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Pension
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
Non-Equity
|
|
Value and
|
|
|
|
|
|
|
Earned or
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|
|
|
|
|
Incentive
|
|
Non-Qualified
|
|
All
|
|
|
|
|
Paid in
|
|
Stock
|
|
Option
|
|
Plan
|
|
Deferred
|
|
Other
|
|
|
|
|
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name
|
|
($)
|
|
($)
|
|
($)(3)(4)
|
|
($)
|
|
Earnings
|
|
($)
|
|
($)
|
|
Donald Hildebrand(1)
|
|
$
|
30,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
57,600
|
|
|
$
|
87,600
|
|
Andrew Kandalepas(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean Kollintzas
|
|
|
14,100
|
|
|
|
|
|
|
|
61,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,600
|
|
Robert T. McNally(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harriet L. Robinson(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Spencer
|
|
|
28,500
|
|
|
|
|
|
|
|
61,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
Peter Tsolinas(5)
|
|
|
12,400
|
|
|
|
|
|
|
|
61,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,900
|
|
|
|
|
(1) |
|
The amount shown in the All Other Compensation
column represents the amount paid to Mr. Hildebrand for the
year ended December 31, 2009 pursuant to his consulting
agreement with the Company. See Certain Relationships and
Related Transactions Consulting Agreement with
Donald Hildebrand. |
|
(2) |
|
Dr. McNally, Dr. Robinson, and Mr. Kandalepas,
who were employees of the Company during the fiscal year ended
December 31, 2009, received no compensation for their
service as directors. All amounts related to their compensation
as Named Executive Officers during the fiscal year ended
December 31, 2009 and prior years are included in the
Summary Compensation Table. Mr. Kandalepas
resigned as a director effective June 30, 2009 and resigned
his position as Senior Vice President effective July 1,
2009. |
|
(3) |
|
Amounts shown in the Option Awards column represent
the aggregate grant date fair value of awards computed in
accordance with FASB ASC Topic 718. For a discussion of the
various assumptions made and methods used for determining such
amounts, see footnotes 2 and 7 to our 2009 consolidated
financial statements contained in this prospectus. On
December 2, 2009, Mr. Kollintzas, Mr. Spencer,
and Mr. Tsolinas were each granted options to purchase
10,000 shares of our common stock, with an exercise price
of $7.00 per share. |
|
(4) |
|
The table below shows the aggregate numbers of option awards
outstanding for each non-employee director as of
December 31, 2009. There were no stock awards outstanding
for the non-employee directors as of December 31, 2009. |
|
|
|
|
|
|
|
Aggregate Option Awards
|
|
|
Outstanding
|
|
|
as of December 31, 2009
|
Name
|
|
(#)
|
|
Donald Hildebrand
|
|
|
355,825
|
|
Dean Kollintzas
|
|
|
56,400
|
|
John Spencer
|
|
|
56,400
|
|
Peter Tsolinas
|
|
|
36,400
|
|
|
|
|
(5) |
|
Mr. Tsolinas resigned as a director in June 2010. |
Director
Compensation Plan
In March 2007, the Board of Directors approved a recommendation
from the Compensation Committee for director compensation, which
we refer to as the Director Compensation Plan. It
was subsequently amended in March 2008 and again in December
2009. The Director Compensation Plan applies only to non-
53
employee directors. Directors who are employees of the Company
receive no compensation for their service as directors or as
members of committees.
Cash
Fees
For 2009, each non-employee director received an annual retainer
of $2,000 (paid quarterly) for service as a member of the Audit
Committee and $1,250 for service as a member of the Compensation
Committee. The Chairman of the Audit Committee received an
annual retainer of $9,000, and the Chairman of the Compensation
Committee received an annual retainer of $6,000, which retainers
were also paid quarterly. Non-employee directors also received
fees for each Board of Directors or Committee meeting attended
as follows: $1,500 per Board of Directors meeting, $1,000 per
Committee meeting chaired, and $500 per Committee meeting
attended as a non-chair member. Meetings attended telephonically
were paid at lower rates ($750, $750 and $400, respectively).
The non-employee Chairman of the Board received an annual
retainer of $30,000 (paid quarterly) and was not entitled to
additional fees for meetings attended.
Effective January 1, 2010, the fees paid to non-employee
directors for attending meetings of the Board of Directors were
increased to $3,000 for in person meetings and $1,500 for
telephonic meetings. Also, the annual cash retainer for members
(non-chairman) of the Audit Committee was increased to $5,000,
and the annual cash retainer for members (non-chairman) of the
Compensation Committee was increased to $3,300. No changes were
made to the annual cash retainer for the chairman of the Audit
Committee or the Compensation Committee, nor were any changes
made to the fees paid for attending committee meetings. The
members and chairman of the newly formed Nominating and
Governance Committee will receive the same compensation as
members of the Compensation Committee.
Stock
Option Grants
Non-employee directors each receive an automatic grant of
options to purchase 26,400 shares of common stock on the
date that such non-employee director is first elected or
appointed. We currently do not have a formula for determining
annual stock option grants to directors (upon their re-election
to the Board of Directors, or otherwise). Such option grants are
currently determined by the Board of Directors, upon
recommendation by the Compensation Committee based on the
Compensation Committees annual deliberations and review of
the director compensation structure of similar companies. At its
meeting in December 2009, upon a recommendation of the
Compensation Committee, the Board of Directors determined an
annual stock option grant of 10,000 shares to its
non-employee members, with the exception of Mr. Hildebrand,
who declined the stock option grant.
In April 2010, at the recommendation of the Compensation
Committee, the Board of Directors approved a 20,000 share
increase in the number of shares authorized to be issued
pursuant to the Plan in order to cover an over issuance arising
from the automatic grants of options to Mr. Antebi and
Mr. Dodd when they were appointed as directors.
Expense
Reimbursement
All directors are reimbursed for expenses incurred in connection
with attending meetings of the Board of Directors and committees.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Policies
and Procedures for Approval of Related Party
Transactions
Our Audit Committee is responsible for reviewing and approving
all transactions or arrangements between the Company and any of
our directors, officers, principal stockholders or any of their
respective affiliates, associates or related parties, other than
transactions with officers which are covered by the duties of
the Compensation Committee. In determining whether to approve or
ratify a related party transaction, the Audit
54
Committee will discuss the transaction with management and will
consider all relevant facts and circumstances available to it
including:
|
|
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|
|
whether the terms of the transaction are fair to the Company and
at least as favorable to the Company as would apply if the
transaction did not involve a related party;
|
|
|
|
whether there are demonstrable business reasons for the Company
to enter into the transaction;
|
|
|
|
whether the transaction would impair the independence of a
non-employee director; and
|
|
|
|
whether the transaction would present an improper conflict of
interest for any director or executive officer, taking into
account the size of the transaction, the direct or indirect
nature of the related partys interest in the transaction
and the ongoing nature of any proposed relationship, and any
other factors the Audit Committee deems relevant.
|
In August 2010 our Board of Directors made the following
findings and adopted the following policies regarding related
party transactions:
|
|
|
|
|
The Company has not made and will not make loans or loan
guarantees on behalf of any director, officer, beneficially
owner of more than 5% of our common stock, or other person
constituting a Promoter, as such term is defined in the NASAA
Statement of Policy Regarding Corporate Securities Definitions.
|
|
|
|
The Company has not engaged and will not engage in material
transactions with any director, officer, beneficial owner of
more than 5% of our common stock, or other person constituting a
Promoter, as such term is defined in the NASAA Statement of
Policy Regarding Corporate Securities Definitions, except as
described below or as otherwise approved by our Audit Committee
consistent with the policies and procedures described below.
|
|
|
|
The Company will make any future material affiliated
transactions on terms that are no less favorable to the Company
than those that can be obtained from unaffiliated third parties.
|
|
|
|
A majority of the Companys Audit Committee will approve
all future material transactions.
|
|
|
|
The Companys officers, directors, and counsel will:
|
|
|
|
|
|
consider their due diligence and assure that there is a
reasonable basis for these representations, and
|
|
|
|
consider whether to embody the representations in the
issuers charter or bylaws.
|
Consulting
Agreement with Donald Hildebrand
In March 2008, we entered into a consulting agreement with
Donald Hildebrand, Chairman of our Board of Directors and our
former President and Chief Executive Officer, pursuant to which
Mr. Hildebrand provides business and technical advisory
services to the Company. The term of the consulting agreement
began on April 1, 2008 with an original termination date of
December 31, 2009. In December 2009, the Company and
Mr. Hildebrand extended the term of the consulting
agreement for an additional year. During 2009 and 2008,
Mr. Hildebrand received $57,600 and $64,000, respectively,
for his services pursuant to the consulting agreement. During
the remaining term of the consulting agreement,
Mr. Hildebrand will provide us with at least 16 hours
of service per month and will be paid at the rate of $4,800 per
month. We also pay Mr. Hildebrands medical and dental
coverage through the term of the consulting agreement. We may
terminate the consulting agreement, with or without cause. If we
terminate the consulting agreement without cause, we must give
Mr. Hildebrand at least 30 days notice and we will be
required to pay him, as a severance payment, three months
compensation, which is equal to $14,400. Likewise, if the
consulting agreement is terminated due to the death of
Mr. Hildebrand, we will be required to pay his estate three
months compensation. If Mr. Hildebrand wishes to terminate
the consulting agreement, he must provide us with at least
30 days notice. No severance payments will be due to
Mr. Hildebrand upon termination with cause or upon his
voluntary termination.
55
Transactions
with Emory University
Emory University is a significant stockholder of the Company,
and our primary product candidates are based on technology
rights subject to a license agreement with Emory University,
which we refer to as the Emory License. The Emory License, among
other contractual obligations, requires payments based on
milestone achievements, royalties on sales by the Company or on
payments to the Company by our sublicensees, and payment of
maintenance fees in the event certain milestones are not met
within the time periods specified in the Emory License. We may
terminate the Emory License upon 90 days prior written
notice. In any event, the Emory License expires on the date of
the latest expiration date of the underlying patents. We are
also obligated to reimburse Emory University for certain ongoing
costs in connection with the filing, prosecution and maintenance
of patent applications subject to the Emory License. Such
reimbursements to Emory University amounted to $85,673, $102,141
and $243,653 for the years ended December 31, 2009, 2008
and 2007, respectively and approximately $143,000 during the
nine month period ending September 30, 2010.
Through November 2009, we leased office and laboratory space on
a
month-to-month
basis from Emtech Biotechnology Development, Inc., a related
party associated with Emory University. Rent expense associated
with this lease totaled $43,112, $47,041 and $36,588 for the
years ended December 31, 2009, 2008 and 2007, respectively.
We have entered into two research agreements with Emory
University for the purpose of conducting research and
development activities associated with our IPCAVD grant from the
NIH. During the nine month period ending September 30, 2010
and the years ended 2009 and 2008, we recorded approximately
$1,231,000, $817,000 and $724,000, respectively, of expense
associated with these contracts. All amounts paid to Emory under
these agreements are reimbursable to us pursuant to the IPCAVD
grant from the NIH.
Director
Independence
The Board of Directors has determined that Messrs. Antebi,
Dodd, Kollintzas, and Spencer are the members of our Board of
Directors who are independent, as that term is
defined by Section 301(3)(B) of the Sarbanes-Oxley Act of
2002. The Board of Directors has also determined that these four
individuals meet the definition of independent
director set forth in Rule 5605(a)(2) of the Nasdaq
Listing Rules and Rule 803(A)(2) of the NYSE Amex Listing
Requirements. As independent directors, Messrs. Antebi,
Kollintzas and Spencer serve as the members of our Audit
Committee, Messrs. Antebi, Dodd and Kollintzas serve as the
members of our Compensation Committee, and Messrs. Dodd,
Kollintzas and Spencer serve as the members of our Nominating
and Governance Committee.
56
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND
OFFICERS
Based solely upon information made available to us, the
following table sets forth information with respect to the
beneficial ownership of our common stock as of November 30,
2010 by (1) each director; (2) each of our Named
Executive Officers; (3) all executive officers and
directors as a group; and (4) each additional person who is
known by us to beneficially own more than 5% of our common
stock. Except as otherwise indicated, the holders listed below
have sole voting and investment power with respect to all shares
of common stock beneficially owned by them.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
Beneficially
|
|
Percent
|
Name and Address of Beneficial Owner(1)
|
|
Owned
|
|
of Class(2)
|
|
Directors and Executive Officers:
|
|
|
|
|
|
|
|
|
Steven S. Antebi(3)
|
|
|
|
|
|
|
|
*
|
David A. Dodd(4)
|
|
|
15,725
|
|
|
|
|
*
|
Donald G. Hildebrand(5)
|
|
|
1,427,225
|
|
|
|
8.9
|
%
|
Dean G. Kollintzas(6)
|
|
|
46,399
|
|
|
|
|
*
|
Robert T. McNally(7)
|
|
|
90,754
|
|
|
|
|
*
|
Mark W. Reynolds(8)
|
|
|
61,999
|
|
|
|
|
*
|
Harriet L. Robinson(9)
|
|
|
1,290,352
|
|
|
|
8.1
|
%
|
John N. Spencer, Jr.(10)
|
|
|
60,099
|
|
|
|
|
*
|
All executive officers and directors as a group
(9 persons)(11)
|
|
|
2,995,553
|
|
|
|
18.3
|
%
|
Andrew J. Kandalepas(12)
|
|
|
49,800
|
|
|
|
|
*
|
Other 5% Stockholders:
|
|
|
|
|
|
|
|
|
Emory University(13)
|
|
|
4,621,405
|
|
|
|
29.5
|
%
|
Stavros Papageorgiou(14)
|
|
|
1,111,857
|
|
|
|
7.1
|
%
|
Welch & Forbes LLC(15)
|
|
|
1,591,073
|
|
|
|
10.2
|
%
|
|
|
|
* |
|
Less than 1% |
|
(1) |
|
Except as otherwise indicated, the business address of each
director and executive officer listed is
c/o GeoVax
Labs, Inc., 1900 Lake Park Drive, Suite 380, Smyrna,
Georgia 30080. |
|
(2) |
|
This table is based upon information supplied by our executive
officers and directors, and with respect to principal
stockholders, Schedule 13G filed with the SEC. Beneficial
ownership is determined in accordance with the rules of the SEC.
Applicable percentage ownership is based on
15,654,846 shares of common stock outstanding as of
November 30, 2010. In computing the number of shares
beneficially owned by a person and the percentage ownership of
that person, shares of common stock subject to options currently
exercisable, or exercisable within 60 days of
November 30, 2010, are deemed outstanding. |
|
(3) |
|
Mr. Antebi has options to acquire 26,400 shares, which
will vest in equal amounts over the next three anniversaries of
his appointment to the Board of Directors, beginning in March
2011. |
|
(4) |
|
Mr. Dodd has options to acquire 26,400 shares, which
will vest in equal amounts over the next three anniversaries of
his appointment to the Board of Directors, beginning in March
2011. |
|
(5) |
|
Includes options to purchase 355,825 shares of common stock
exercisable within 60 days of November 30, 2010. |
|
(6) |
|
Includes options to purchase 46,399 shares of common stock
exercisable within 60 days of November 30, 2010. |
|
(7) |
|
Includes options to purchase 78,399 shares of common stock
exercisable within 60 days of November 30, 2010. |
|
(8) |
|
Includes options to purchase 55,999 shares of common stock
exercisable within 60 days of November 30, 2010. |
57
|
|
|
(9) |
|
Dr. Robinson shares voting and investment power over
1,102,441 shares with Welch & Forbes LLC, whose
ownership is described below. Includes options to purchase
187,911 shares of common stock exercisable within
60 days of November 30, 2010. |
|
(10) |
|
Includes options to purchase 46,399 shares of common stock
exercisable within 60 days of November 30, 2010. |
|
(11) |
|
Includes options to purchase 770,932 shares of common stock
exercisable within 60 days of November 30, 2010. |
|
(12) |
|
Mr. Kandalepas resigned as an executive officer of the
Company on July 1, 2009. Ownership information has been
derived from our stock records, which show Mr. Kandalepas
owns these shares of record as of November 30, 2010. This
information is for shares held in certificate form only
(excluding any shares Mr. Kandalepas may hold in brokerage
accounts). |
|
(13) |
|
The address for this stockholder is Administration Building, 201
Dowman Drive, Atlanta, Georgia 30322. Ownership information has
been derived from this stockholders SEC filing on
Form 4 filed on January 29, 2010. |
|
(14) |
|
The address for this stockholder is
c/o Morse,
Zelnick, Rose & Lander LLP, 405 Park Avenue,
Suite 1401, New York, New York 10022. Includes
91,854 shares subject to warrants and 503,840 shares
as to which Mr. Papageorgiou shares voting and investment
power. Ownership information has been derived from this
stockholders SEC filing on Schedule 13G filed on
October 1, 2009. |
|
(15) |
|
The address for this stockholder is 45 School Street, Boston,
Massachusetts 02108. This stockholder shares voting and
investment power with respect to all of these shares. Includes
1,102,441 shares held by Dr. Robinson. Ownership
information has been derived from this stockholders
Schedule 13G filed February 12, 2010. |
58
PLAN OF
DISTRIBUTION
We are offering up to $10,000,000 in units, each consisting of
one share of common stock and warrants to purchase
another of a share of
common stock for $ per unit.
Global Hunter Securities LLC and Gilford Securities
Incorporated, referred to collectively as the placement agents,
have entered into a placement agency agreement with us in which
they have agreed to act as placement agents in connection with
the offering, with Global Hunter Securities LLC, or Global
Hunter, serving as the lead placement agent. Subject to the
terms and conditions contained in the placement agency
agreement, the placement agents are using their best efforts to
introduce us to selected institutional and retail investors who
will purchase the units.
The placement agents have no obligation to buy any of the units
from us nor are they required to arrange the purchase or sale of
any specific number or dollar amount of the units, but have
agreed to use their best efforts to arrange for the sale of a
minimum of $5,000,000 in units and a maximum of $10,000,000 in
units to be sold by the Company. Therefore, we may not sell the
entire amount of units being offered. We may enter into
subscription agreements with investors for the purchase of units
in this offering. The terms of this offering will be subject to
market conditions and negotiations between us, the placement
agents and prospective investors.
The Companys officers and directors may participate in the
offering on the same terms and conditions, including the same
purchase price per unit, and subject to the same limitations and
restrictions, as the other investors in the offering. The units
purchased by our officers and directors in the offering will be
counted toward the minimum offering size of $5,000,000.
Investors wishing to participate in the offering will be
required to deliver immediately available funds via wire
transfer or check payable to Wells Fargo Bank, National
Association, which is the escrow agent. All of the proceeds from
the sale of the units offered hereby will be deposited into an
escrow account at the escrow agent in Atlanta, Georgia. If the
minimum number of units offered has not been sold within thirty
days from the date of this prospectus, all monies will be
refunded promptly to the subscribers, with any earned interest
on a pro rata basis, and without deduction for commissions or
expenses, including costs of the escrow agent. No units will be
issued to the subscribers until such time as the funds are
released from the escrow account to the Company within the time
period described above.
The Company has filed to register this offering in several
states. Some of those states have noted that the estimated total
selling expenses, which includes commissions paid to
the placement agents and expenses incurred by us, exceed the
percentage they permit for registrations such as ours, if we
only sell $5,000,000 of units. Accordingly, we will not accept
subscriptions from residents of those states, absent an
exemption, unless we have previously accepted subscriptions for
a sufficient number of units in excess of $5,000,000 to permit
our selling expenses to meet the applicable state
threshold.
Before the closing date, the escrow agent will notify the
placement agents when funds to pay for the units have been
received. We will deposit the shares with the Depository
Trust Company upon receiving notice from the placement
agents that funds to pay for the units have been received. At
the closing, Depository Trust Company will credit the
shares to the respective accounts of the investors and the
Company will issue the unit warrants. If the conditions to this
offering are not satisfied or waived, then all investor funds
that were deposited into escrow will be returned promptly to
investors and this offering will terminate. We will pay the
escrow agent a fee in connection with the escrow services.
Confirmations and definitive prospectuses will be distributed to
all investors who agree to purchase units, informing investors
of the closing date as to such units. Investors will also be
informed of the date on which they must transmit the purchase
price into the designated account.
The placement agency agreement provides that the obligations of
the placement agents and the investors are subject to certain
conditions precedent, including the absence of any material
adverse changes in our business and the receipt of customary
legal opinions, letters and certificates.
We have agreed to indemnify the placement agents and certain
other persons against certain liabilities under the Securities
Act of 1933, as amended. The placement agents have informed us
that they will not engage in overallotment, stabilizing
transactions or syndicate covering transactions in connection
with this offering.
59
We have agreed to pay the placement agents an aggregate cash
transaction fee of 8% of the gross proceeds of this offering and
we have agreed to reimburse Global Hunter, as lead placement
agent for reasonable expenses that it incurs in connection with
the offering, but in no event greater than $125,000, all of
which will be paid by the Company. Global Hunter has received an
advance of $25,000 against its expenses, which advance will be
returned to us to the extent expenses are not actually incurred
by such placement agent and this offering is terminated prior to
closing. We have also agreed to reimburse Global Hunter for the
fees, disbursements and other charges of counsel for Global
Hunter in connection with any filings to be made by the
placement agents with FINRA, up to a maximum of $49,999.
We have also previously paid a $50,000 non-refundable advisory
fee to Global Hunter for general advisory services, including
advice as to timing, structure and pricing of a proposed
offering of securities. This $50,000 advisory fee will be
credited toward and deducted from the cash compensation fee
otherwise due to Global Hunter in connection with this offering.
The estimated offering expenses payable by us, in addition to
the placement agents cash fee, are approximately $550,000.
These amounts include our legal and accounting costs and various
other fees associated with registering and listing the
securities offered hereby.
The following table shows the per unit and total maximum fees we
will pay to the placement agents, assuming a maximum
reimbursement of $174,999 to Global Hunter in accountable
expenses and reimbursable legal fees and the sale of the minimum
number and maximum number of units offered pursuant to this
prospectus:
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Minimum
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Maximum
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Per unit
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$
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$
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Total
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$
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$
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Because the offering may not be fully subscribed, the actual
total may be less than the maximum amount set forth above.
This is a brief summary of the material provisions of the
placement agency agreement and does not purport to be a complete
statement of its terms and conditions. A copy of the placement
agency agreement has been filed as an exhibit to the
registration statement of which this prospectus forms a part.
See Where You Can Find More Information on
page 61 of this prospectus.
The transfer agent for the GeoVax common stock to be issued in
this offering is American Stock Transfer &
Trust Company.
Our common stock is quoted on the OTC Bulletin Board under
the symbol GOVX. On December 6, 2010, the last
reported sale price for our common stock on the OTC
Bulletin Board was $1.01 per share. We do not intend to
apply for listing of the warrants on any securities exchange.
A prospectus in electronic format may be made available on the
web site maintained by the placement agents and the placement
agents may distribute the prospectus electronically.
We, our executive officers and directors and Emory University
have entered into
lock-up
agreements pursuant to which we and they have agreed that, for a
period of 180 days from the date of this prospectus, we and
they will not, without the prior written consent of the
placement agents, offer, sell or otherwise transfer or dispose
of, directly or indirectly, or enter into any swap agreement
with respect to, any shares of common stock or securities
convertible into or exchangeable or exercisable for shares of
common stock, subject to certain exceptions.
If:
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during the last 17 days of the
180-day
lock-up
period, we issue an earnings release, or material news or a
material event relating to us occurs; or
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prior to the expiration of the
180-day
lock-up
period, we announce that we will release earnings results during
the 16-day
period beginning on the last day of the
10-day
lock-up
period.
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then the
180-day
lock-up
period will be extended until the expiration of the
18-day
period that begins on the date the earnings release is issued,
the public announcement of the material news or the material
event occurs.
60
Suitability
Standards
In certain states, including Kansas, Massachusetts, Michigan,
New Jersey, Pennsylvania, Virginia and Washington, individuals
or other persons who wish to acquire units generally must
qualify as accredited investors within the meaning
of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended. However, although we reserve
the right to offer units to other classes of investors if
permitted by applicable state, such as institutional investors,
in any of those states if such offer is exempt from registration
under that states securities laws.
The placement agents will make every reasonable effort to
determine that the purchase of shares is a suitable and
appropriate investment for each investor based on information
provided by such investor, including such investors age,
investment objectives, income, net worth, financial situation
and other investments held by such investors, and maintain
records for at least six years of the information used to
determine that an investment in the shares is suitable and
appropriate for each investor.
61
DESCRIPTION
OF CAPITAL STOCK AND UNIT WARRANTS
Capital
Stock
The following description of our capital stock is summarized
from, and qualified in its entirety by reference to, our
certificate of incorporation, which has been previously filed
with the SEC and is incorporated herein by reference. This
summary is not intended to give full effect to provisions of
statutory or common law. We urge you to review the following
documents because they, and not this summary, define your rights
as a holder of shares of common stock or preferred stock:
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the General Corporation Law of the State of Delaware, or the
DGCL, as it may be amended from time to time;
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our certificate of incorporation, as it may be amended or
restated from time to time, and
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our bylaws, as they may be amended or restated from time to time.
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General
Our authorized capital stock currently consists of
50,000,000 shares, which are divided into two classes
consisting of 40,000,000 shares of common stock, par value
$0.001 per share, and 10,000,000 shares of preferred stock,
par value $0.01 per share. As of November 30, 2010, there
were issued and outstanding 15,654,846 shares of common
stock, options to purchase 1,035,756 shares of common stock
and warrants to purchase 907,594 shares of common stock. No
shares of preferred stock were outstanding.
Common
Stock
Holders of our common stock are entitled to one vote for each
share held in the election of directors and in all other matters
to be voted on by the stockholders. There is no cumulative
voting in the election of directors. Holders of common stock are
entitled to receive dividends as may be declared from time to
time by our Board of Directors out of funds legally available
therefor. In the event of liquidation, dissolution or winding up
of the Company, holders of common stock are to share in all
assets remaining after the payment of liabilities. Holders of
common stock have no pre-emptive or conversion rights and are
not subject to further calls or assessments. There are no
redemption or sinking fund provisions applicable to the common
stock. The rights of the holders of the common stock are subject
to any rights that may be fixed for holders of preferred stock.
All of the outstanding shares of common stock are fully paid and
non-assessable.
Preferred
Stock
We are also authorized to issue 10,000,000 shares of
preferred stock. Under our certificate of incorporation, the
Board of Directors has the power, without further action by the
holders of common stock, to designate the relative rights and
preferences of the preferred stock, and to issue the preferred
stock in one or more series as designated by the Board of
Directors. The designation of rights and preferences could
include preferences as to liquidation, redemption and conversion
rights, voting rights, dividends or other preferences, any of
which may be dilutive of the interest of the holders of the
common stock or the preferred stock of any other series. The
ability of directors, without stockholder approval, to issue
additional shares of preferred stock could be used as an
anti-takeover measure. Anti-takeover measures may result in you
receiving less for your stock than you otherwise might. The
issuance of preferred stock creates additional securities with
dividend and liquidation preferences over common stock, and may
have the effect of delaying or preventing a change in control
without further stockholder action and may adversely affect the
rights and powers, including voting rights, of the holders of
common stock. In certain circumstances, the issuance of
preferred stock could depress the market price of the common
stock.
We will not offer preferred stock unless the offering is
approved by a majority of our independent directors. The
independent directors will have access, at our expense, to our
counsel or independent counsel.
62
Unit
Warrants
In connection with the sale of units by the Company and the sale
of units by the selling stockholder in this offering, we will
issue with each such unit a five-year callable warrant to
purchase another share of common stock at an exercise price of
$ per share, or 20.0% above the
offering price of the units. After the expiration of the
exercise period, unit warrant holders will have no further
rights to exercise the unit warrants.
The unit warrants may be exercised only for full shares of
common stock and may be exercised on a cashless
basis. If the registration statement covering the shares
issuable upon exercise of the warrants contained in the units is
no longer effective, the unit warrants may only be exercised on
a cashless basis. We will not issue fractional
shares of common stock or cash in lieu of fractional shares of
common stock. Unit warrant holders do not have any voting or
other rights as a stockholder of our company. The exercise price
and the number of shares of common stock purchasable upon the
exercise of each unit warrant are subject to adjustment upon the
happening of certain events, such as stock dividends,
distributions, and splits. In addition, the unit warrants have a
callable feature whereby, commencing at any time
after the date of issuance of the unit warrants, if the average
closing sale price of the common stock for 30 consecutive
trading days exceeds $ , or 225% of
the offering price of the units, then we shall have the right,
upon 30 days prior written notice, to redeem all of
the then- issuable shares of common stock subject to the unit
warrant at a price of $0.01 per share of common stock subject to
the unit warrant.
Delaware
Anti-Takeover Law
We have elected not to be subject to certain provisions of
Delaware law that could make it more difficult to acquire us by
means of a tender offer, a proxy contest, open market purchases,
removal of incumbent directors and otherwise. These provisions,
summarized below, are expected to discourage types of coercive
takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of us to first negotiate with
our Board of Directors.
In general, Section 203 of the DGCL prohibits a publicly
held Delaware corporation from engaging in various
business combination transactions with any
interested stockholder for a period of three years after the
date of the transaction in which the person became an interested
stockholder, unless:
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the transaction is approved by the corporations board of
directors prior to the date the interested stockholder obtained
interested stockholder status;
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upon consummation of the transaction that resulted in the
stockholders becoming an interested stockholder, the
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned by (a) persons who are
directors and also officers and (b) employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
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on or subsequent to the date the business combination is
approved by the corporations board of directors and
authorized at an annual or special meeting of stockholders by
the affirmative vote of at least
662/3%
of the outstanding voting stock that is not owned by the
interested stockholder.
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A business combination is defined to include
mergers, asset sales and other transactions resulting in
financial benefit to a stockholder. In general, an
interested stockholder is a person who, together
with affiliates and associates, owns or within three years, did
own, 15% or more of a corporations voting stock.
Section 203 applies to Delaware corporations that have a
class of voting stock that is listed on a national securities
exchange or held of record by more than 2,000 stockholders;
provided, however, the restrictions of this statute will not
apply to a corporation if:
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the corporations original charter contains a provision
expressly electing not to be governed by the statute;
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63
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the corporations board of directors adopts an amendment to
the corporations bylaws within 90 days of the
effective date of the statute expressly electing not to be
governed by it;
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the stockholders of the corporation adopt an amendment to its
charter or bylaws expressly electing not to be governed by the
statute (so long as such amendment is approved by the
affirmative vote of a majority of the shares entitled to vote);
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a stockholder becomes an interested stockholder inadvertently
and as soon as practicable divests himself of ownership of a
sufficient number of shares so that he ceases to be an
interested stockholder, and during the three year period
immediately prior to a business combination, would not have been
an interested stockholder but for the inadvertent acquisition;
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the business combination is proposed prior to the consummation
or abandonment of a merger or consolidation, a sale, lease,
exchange, mortgage, pledge, transfer or other disposition of
assets of the corporation or a proposed tender or exchange offer
for 50% or more of the outstanding voting shares of the
corporation; or
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the business combination is with an interested stockholder who
became an interested stockholder at a time when the restrictions
contained in the statutes did not apply.
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Our certificate of incorporation includes a provision electing
not to be governed by Section 203 of the DCGL. Accordingly,
our board of directors does not have the power to reject certain
business combinations with interested stockholders based on
Section 203 of the DCGL.
Indemnification
Section 145 of the Delaware General Corporation Law, or
DGCL, provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to an
action, suit or proceeding (other than an action by or in the
right of the corporation) by reason of the fact that the person
is or was a director, officer, employee or agent of the
corporation, or is or was serving at the corporations
request in such a capacity for another entity against expenses
(including attorneys fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the
person in connection with the action, suit or proceeding. The
power to indemnify applies (i) if such person is successful
on the merits or otherwise in defense of any action, suit or
proceeding or (ii) if such person acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The power to indemnify applies
to actions brought by or in the right of the corporation as
well, but only to the extent of defense expenses (including
attorneys fees but excluding amounts paid in settlement),
actually and reasonably incurred and not to any satisfaction of
judgment or settlement of the claim itself, and with the further
limitation that in such actions no indemnification shall be made
in the event of any adjudication of negligence or misconduct in
the performance of his duties to the corporation, unless a court
believes that in light of all the circumstances indemnification
should apply.
Our bylaws provide that we may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) by reason of
the fact that the person is or was a director, officer, employee
or agent of the Company, or is or was serving at the request of
the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such
action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe the persons conduct was unlawful. Our bylaws also
provide that we may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Company to
procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company
64
as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
Company and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company unless and
only to the extent that the Delaware Court of Chancery or the
court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
which the Delaware Court of Chancery or such other court shall
deem proper.
Under our bylaws, expenses (including attorneys fees)
incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or
proceeding may be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Company. Such
expenses (including attorneys fees) incurred by former
directors and officers or other employees and agents may be so
paid upon such terms and conditions, if any, as we deem
appropriate.
The indemnification and advancement of expenses provided by our
bylaws is not exclusive, both as to action in such persons
official capacity and as to action in another capacity while
holding such office.
Our bylaws also provide that we may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or
arising out of such persons status as such, whether or not
the Company would have the power to indemnify such person
against such liability under our bylaws. The Company maintains
an insurance policy providing for indemnification of its
officers, directors and certain other persons against
liabilities and expenses incurred by any of them in certain
stated proceedings and under certain stated conditions.
In October 2006, GeoVax and our subsidiary, GeoVax, Inc. entered
into indemnification agreements with Messrs. McNally,
Reynolds, Hildebrand, Kollintzas and Spencer. Pursuant to these
agreements, we have agreed to hold harmless and indemnify these
directors and officers to the full extent authorized or
permitted by applicable Illinois and Georgia law against certain
expenses and other liabilities actually and reasonably incurred
by these individuals in connection with certain proceedings if
they acted in a manner they believed in good faith to be in or
not opposed to the best interests of the Company and, with
respect to any criminal proceeding, had no reasonable cause to
believe that such conduct was unlawful. The agreements also
provide for the advancement of expenses to these individuals
subject to specified conditions. Under these agreements, we will
not indemnify these individuals for expenses or other amounts
for which applicable Illinois and Georgia law prohibit
indemnification. The obligations under these agreements continue
during the period in which these individuals are our directors
or officers and continue thereafter so long as these individuals
shall be subject to any proceeding by reason of their service to
the Company, whether or not they are serving in any such
capacity at the time the liability or expense incurred for which
indemnification can be provided under the agreements.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion
of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
65
In the event that a claims for indemnification against such
liabilities (other than our payment of expenses incurred or paid
by a director, officer or controlling person in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of
our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by us is against public
policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
WHERE YOU
CAN FIND MORE INFORMATION
We are subject to the informational reporting requirements of
the Exchange Act, which requires us to file annual, quarterly,
and current reports, proxy statements and other information with
the SEC. The SEC maintains a website that contains such
information regarding issuers that file electronically, such as
GeoVax Labs, Inc. The public may inspect our filings over the
Internet at the SECs home page at www.sec.gov. The public
may also read and copy any document we file at the Public
Reference Room of the SEC at 100 F Street, NE,
Washington, DC 20549. Information on the operation of the
Public Reference Room may be obtained by the public by calling
the SEC at
1-800-SEC-0330.
Our website address is www.geovax.com. Information contained on
our website does not constitute a part of this prospectus.
EXPERTS
The audited consolidated financial statements of GeoVax, Labs,
Inc. and subsidiary for the years ended December 31, 2009,
2008 and 2007 and for the period of time considered part of the
development stage from January 1, 2006 to December 31,
2009, included in this prospectus, have been audited by Porter
Keadle Moore LLP, an independent registered public accounting
firm, as set forth in its report appearing herein. Such
financial statements have been so included in reliance upon the
reports of such firm given upon its authority as an expert in
accounting and auditing.
The statements of operations, stockholders deficiency and
cash flows of GeoVax, Inc. (a Georgia corporation in the
development stage) for the period from inception (June 27,
2001) to December 31, 2005, included in this
prospectus, have been audited by Tripp, Chafin &
Company, LLC, an independent registered public accounting firm,
as set forth in its report appearing herein. Such financial
statements have been so included in reliance upon the reports of
such firm given upon its authority as an expert in accounting
and auditing.
LEGAL
MATTERS
The validity of the common stock will be passed upon for us by
Womble Carlyle Sandridge & Rice, PLLC, Atlanta,
Georgia. As of the date of this prospectus, attorneys with
Womble Carlyle Sandridge & Rice, PLLC beneficially own
an aggregate of approximately 37,500 shares of our common
stock. Certain legal matters in connection with this offering
will be passed upon for Global Hunter by Stradling Yocca
Carlson & Rauth, P.C., Newport Beach, California.
66
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2009 Audited Financial Statements:
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F-2
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F-4
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F-5
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F-6
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F-7
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F-8
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F-19
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Interim Financial Statements for the Nine Months Ended
September 30, 2010:
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F-20
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F-21
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F-22
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F-23
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F-24
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F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENTS
To the Board of Directors
GeoVax Labs, Inc.
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of
GeoVax Labs, Inc. and subsidiary (a development stage
company) (the Company) as of December 31, 2009
and 2008, and the related consolidated statements of operations,
stockholders equity, and cash flows for each of the three
years in the period ended December 31, 2009, and for the
period of time considered part of the development stage from
June 27, 2001 to December 31, 2009, except we did not
audit the Companys financial statements for the period
from June 27, 2001 to December 31, 2005 which were
audited by other auditors. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of GeoVax Labs, Inc. and subsidiary as of
December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.
Our audits of the consolidated financial statements and internal
controls over financial reporting also included the financial
statement schedule of the Company, Schedule II, on
page F-18.
This schedule is the responsibility of the Companys
management. Our responsibility is to express an opinion based on
our audits of the consolidated financial statements. In our
opinion, the financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the
information set forth therein.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
GeoVax Labs, Inc. and subsidiarys internal control over
financial reporting as of December 31, 2009, based on
criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report
dated February 22, 2010, expressed an unqualified opinion
on the effectiveness of GeoVax Labs, Inc.s internal
control over financial reporting.
/s/ PORTER
KEADLE MOORE LLP
Atlanta, Georgia
February 22, 2010, except for the twelfth paragraph
of Note 2, as to which the date is April 27, 2010
F-2
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENTS
Board of Directors
GeoVax, Inc.
Atlanta, Georgia
We have audited the statements of operations, stockholders
deficiency and cash flows of GeoVax, Inc. (a Georgia
corporation in the development stage) for the period from
inception (June 27, 2001) to December 31, 2005.
These financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements of GeoVax, Inc.
referred to above present fairly, in all material respects, the
results of its operations, changes in stockholders
deficiency and cash flows for the period from inception
(June 27, 2001) to December 31, 2005, in
conformity with accounting principles generally accepted in the
United States of America.
/s/ TRIPP,
CHAFIN & COMPANY, LLC
Marietta, Georgia
February 8, 2006, except for the twelfth paragraph
of Note 2, as to which the date is April 27, 2010
F-3
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
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December 31,
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2009
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2008
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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3,515,784
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$
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2,191,180
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Grant funds receivable
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320,321
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311,368
|
|
Prepaid expenses and other
|
|
|
44,615
|
|
|
|
299,286
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
3,880,720
|
|
|
|
2,801,834
|
|
Property and equipment, net of accumulated depreciation and
amortization
|
|
|
344,202
|
|
|
|
138,847
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Licenses, net of accumulated amortization of $159,161 and
$134,276
|
|
|
|
|
|
|
|
|
at December 31, 2009 and 2008 respectively
|
|
|
89,695
|
|
|
|
114,580
|
|
Deposits and other
|
|
|
980
|
|
|
|
980
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
90,675
|
|
|
|
115,560
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,315,597
|
|
|
$
|
3,056,241
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
408,344
|
|
|
$
|
176,260
|
|
Amounts payable to Emory University (a related party)
|
|
|
163,021
|
|
|
|
170,162
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
571,365
|
|
|
|
346,422
|
|
Commitments (Note 5)
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 900,000,000 shares
authorized
|
|
|
|
|
|
|
|
|
15,632,564 and 14,948,977 shares outstanding at
|
|
|
|
|
|
|
|
|
December 31, 2009 and 2008, respectively
|
|
|
15,633
|
|
|
|
14,949
|
|
Additional paid-in capital
|
|
|
21,266,447
|
|
|
|
16,948,466
|
|
Deficit accumulated during the development stage
|
|
|
(17,537,848
|
)
|
|
|
(14,253,596
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,744,232
|
|
|
|
2,709,819
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
4,315,597
|
|
|
$
|
3,056,241
|
|
|
|
|
|
|
|
|
|
|
See accompanying reports of independent registered public
accounting firms and notes to financial statements.
F-4
GEOVAX
LABS. INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
Years Ended December 31,
|
|
|
(June 27, 2001) to
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
December 31, 2009
|
|
|
Grant revenue
|
|
$
|
3,668,195
|
|
|
$
|
2,910,170
|
|
|
$
|
237,004
|
|
|
$
|
10,226,550
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
4,068,682
|
|
|
|
3,741,489
|
|
|
|
1,757,125
|
|
|
|
16,560,345
|
|
General and administrative
|
|
|
2,914,845
|
|
|
|
2,970,068
|
|
|
|
2,784,182
|
|
|
|
11,512,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,983,527
|
|
|
|
6,711,557
|
|
|
|
4,541,307
|
|
|
|
28,073,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(3,315,332
|
)
|
|
|
(3,801,387
|
)
|
|
|
(4,304,303
|
)
|
|
|
(17,846,765
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
31,080
|
|
|
|
73,200
|
|
|
|
62,507
|
|
|
|
314,586
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,080
|
|
|
|
73,200
|
|
|
|
62,507
|
|
|
|
308,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,284,252
|
)
|
|
$
|
(3,728,187
|
)
|
|
$
|
(4,241,796
|
)
|
|
$
|
(17,537,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share
|
|
$
|
(0.22
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(1.87
|
)
|
Weighted average shares
|
|
|
15,191,278
|
|
|
|
14,802,868
|
|
|
|
14,282,046
|
|
|
|
9,385,351
|
|
See accompanying reports of independent registered public
accounting firms and notes to financial statements.
F-5
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
During the
|
|
|
Stockholders
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Subscription
|
|
|
Development
|
|
|
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid In Capital
|
|
|
Receivable
|
|
|
Stage
|
|
|
(Deficiency)
|
|
|
Capital contribution at inception (June 27, 2001)
|
|
|
|
|
|
$
|
|
|
|
$
|
10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10
|
|
Net loss for the year ended December 31, 2001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(170,592
|
)
|
|
|
(170,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2001
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
(170,592
|
)
|
|
|
(170,582
|
)
|
Sale of common stock for cash
|
|
|
2,789,954
|
|
|
|
2,790
|
|
|
|
(2,320
|
)
|
|
|
|
|
|
|
|
|
|
|
470
|
|
Issuance of common stock for technology license
|
|
|
704,534
|
|
|
|
705
|
|
|
|
148,151
|
|
|
|
|
|
|
|
|
|
|
|
148,856
|
|
Net loss for the year ended December 31, 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(618,137
|
)
|
|
|
(618,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2002
|
|
|
3,494,488
|
|
|
|
3,495
|
|
|
|
145,841
|
|
|
|
|
|
|
|
(788,729
|
)
|
|
|
(639,393
|
)
|
Sale of common stock for cash
|
|
|
1,229,278
|
|
|
|
1,229
|
|
|
|
2,458,380
|
|
|
|
|
|
|
|
|
|
|
|
2,459,609
|
|
Net loss for the year ended December 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(947,804
|
)
|
|
|
(947,804
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2003
|
|
|
4,723,766
|
|
|
|
4,724
|
|
|
|
2,604,221
|
|
|
|
|
|
|
|
(1,736,533
|
)
|
|
|
872,412
|
|
Sale of common stock for cash and stock subscription receivable
|
|
|
1,482,605
|
|
|
|
1,483
|
|
|
|
2,988,436
|
|
|
|
(2,750,000
|
)
|
|
|
|
|
|
|
239,919
|
|
Cash payments received on stock subscription receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
750,000
|
|
Issuance of common stock for technology license
|
|
|
49,420
|
|
|
|
49
|
|
|
|
99,951
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
Net loss for the year ended December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,351,828
|
)
|
|
|
(2,351,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004
|
|
|
6,255,791
|
|
|
|
6,256
|
|
|
|
5,692,608
|
|
|
|
(2,000,000
|
)
|
|
|
(4,088,361
|
)
|
|
|
(389,497
|
)
|
Cash payments received on stock subscription receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
1,500,000
|
|
Net loss for the year ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,611,086
|
)
|
|
|
(1,611,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
6,255,791
|
|
|
|
6,256
|
|
|
|
5,692,608
|
|
|
|
(500,000
|
)
|
|
|
(5,699,447
|
)
|
|
|
(500,583
|
)
|
Cash payments received on stock subscription receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
500,000
|
|
Conversion of preferred stock to common stock
|
|
|
3,550,851
|
|
|
|
3,551
|
|
|
|
1,071,565
|
|
|
|
|
|
|
|
|
|
|
|
1,075,116
|
|
Common stock issued in connection with merger
|
|
|
4,359,891
|
|
|
|
4,360
|
|
|
|
1,708,489
|
|
|
|
|
|
|
|
|
|
|
|
1,712,849
|
|
Issuance of common stock for cashless warrant exercise
|
|
|
56,825
|
|
|
|
57
|
|
|
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(584,166
|
)
|
|
|
(584,166
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
14,223,358
|
|
|
|
14,224
|
|
|
|
8,472,605
|
|
|
|
|
|
|
|
(6,283,613
|
)
|
|
|
2,203,216
|
|
Sale of common stock for cash
|
|
|
406,729
|
|
|
|
407
|
|
|
|
3,162,543
|
|
|
|
|
|
|
|
|
|
|
|
3,162,950
|
|
Issuance of common stock upon stock option exercise
|
|
|
2,471
|
|
|
|
2
|
|
|
|
4,998
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
1,518,496
|
|
|
|
|
|
|
|
|
|
|
|
1,518,496
|
|
Net loss for the year ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,241,796
|
)
|
|
|
(4,241,796
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
14,632,558
|
|
|
|
14,633
|
|
|
|
13,158,642
|
|
|
|
|
|
|
|
(10,525,409
|
)
|
|
|
2,647,866
|
|
Sale of common stock for cash in private placement transactions
|
|
|
176,129
|
|
|
|
176
|
|
|
|
1,364,824
|
|
|
|
|
|
|
|
|
|
|
|
1,365,000
|
|
Transactions related to common stock purchase agreement with
Fusion Capital
|
|
|
130,290
|
|
|
|
130
|
|
|
|
405,961
|
|
|
|
|
|
|
|
|
|
|
|
406,091
|
|
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
|
|
|
|
|
|
|
|
1,798,169
|
|
|
|
|
|
|
|
|
|
|
|
1,798,169
|
|
Consultant warrants
|
|
|
|
|
|
|
|
|
|
|
146,880
|
|
|
|
|
|
|
|
|
|
|
|
146,880
|
|
Issuance of common stock for consulting services
|
|
|
10,000
|
|
|
|
10
|
|
|
|
73,990
|
|
|
|
|
|
|
|
|
|
|
|
74,000
|
|
Net loss for the year ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,728,187
|
)
|
|
|
(3,728,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
14,948,977
|
|
|
|
14,949
|
|
|
|
16,948,466
|
|
|
|
|
|
|
|
(14,253,596
|
)
|
|
|
2,709,819
|
|
Transactions related to common stock purchase agreement with
Fusion Capital
|
|
|
216,261
|
|
|
|
216
|
|
|
|
1,519,784
|
|
|
|
|
|
|
|
|
|
|
|
1,520,000
|
|
Sale of common stock for cash upon exercise of stock purchase
warrant
|
|
|
462,826
|
|
|
|
463
|
|
|
|
1,499,537
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000
|
|
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
|
|
|
|
|
|
|
|
1,221,764
|
|
|
|
|
|
|
|
|
|
|
|
1,221,764
|
|
Consultant warrants
|
|
|
|
|
|
|
|
|
|
|
45,401
|
|
|
|
|
|
|
|
|
|
|
|
45,401
|
|
Issuance of common stock for consulting services
|
|
|
4,500
|
|
|
|
5
|
|
|
|
31,495
|
|
|
|
|
|
|
|
|
|
|
|
31,500
|
|
Net loss for the year ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,284,252
|
)
|
|
|
(3,284,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
15,632,564
|
|
|
$
|
15,633
|
|
|
$
|
21,266,447
|
|
|
$
|
|
|
|
$
|
(17,537,848
|
)
|
|
$
|
3,744,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying reports of independent registered public
accounting firms and notes to financial statements.
F-6
GEOVAX
LABS. INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
Years Ended December 31,
|
|
|
(June 27, 2001) to
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
December 31, 2009
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,284,252
|
)
|
|
$
|
(3,728,187
|
)
|
|
$
|
(4,241,796
|
)
|
|
$
|
(17,537,848
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
89,776
|
|
|
|
61,014
|
|
|
|
54,461
|
|
|
|
336,847
|
|
Accretion of preferred stock redemption value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
346,673
|
|
Stock-based compensation expense
|
|
|
1,298,665
|
|
|
|
2,019,049
|
|
|
|
1,518,496
|
|
|
|
4,836,210
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant funds receivable
|
|
|
(8,953
|
)
|
|
|
(218,108
|
)
|
|
|
(93,260
|
)
|
|
|
(320,321
|
)
|
Stock subscriptions receivable
|
|
|
|
|
|
|
|
|
|
|
(897,450
|
)
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
254,671
|
|
|
|
(249,538
|
)
|
|
|
(11,618
|
)
|
|
|
(44,615
|
)
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(980
|
)
|
Accounts payable and accrued expenses
|
|
|
224,943
|
|
|
|
(252,116
|
)
|
|
|
405,424
|
|
|
|
571,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
1,859,102
|
|
|
|
1,360,301
|
|
|
|
976,053
|
|
|
|
5,725,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(1,425,150
|
)
|
|
|
(2,367,886
|
)
|
|
|
(3,265,743
|
)
|
|
|
(11,812,669
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(270,246
|
)
|
|
|
(99,831
|
)
|
|
|
|
|
|
|
(521,888
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(270,246
|
)
|
|
|
(99,831
|
)
|
|
|
|
|
|
|
(521,888
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from sale of common stock
|
|
|
3,020,000
|
|
|
|
2,668,541
|
|
|
|
3,167,950
|
|
|
|
15,121,898
|
|
Net proceeds from sale of preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
728,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
3,020,000
|
|
|
|
2,668,541
|
|
|
|
3,167,950
|
|
|
|
15,850,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
1,324,604
|
|
|
|
200,824
|
|
|
|
(97,793
|
)
|
|
|
3,515,784
|
|
Cash and cash equivalents at beginning of period
|
|
|
2,191,180
|
|
|
|
1,990,356
|
|
|
|
2,088,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
3,515,784
|
|
|
$
|
2,191,180
|
|
|
$
|
1,990,356
|
|
|
$
|
3,515,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,669
|
|
Supplemental
disclosure of non-cash investing and financing activities:
In connection with the Merger discussed in Note 6, all of
the outstanding shares of the Companys mandatory
redeemable convertible preferred stock were converted into
shares of common stock as of September 28, 2006.
See accompanying reports of independent registered public
accounting firms and notes to financial statements.
F-7
Years Ended December 31, 2009, 2008 and 2007 and
Period from Inception (June 27, 2001) to
December 31, 2009
GeoVax Labs, Inc. (GeoVax or the
Company), is a biotechnology company focused on
developing human vaccines for diseases caused by Human
Immunodeficiency Virus (HIV). The Company has exclusively
licensed from Emory University (Emory) vaccine
technology which was developed in collaboration with the
National Institutes of Health (NIH) and the Centers
for Disease Control and Prevention (CDC). The
Company is incorporated under the laws of the State of Delaware
and its principal offices are located in Smyrna, Georgia
(metropolitan Atlanta area).
The Company is devoting all of its present efforts to research
and development. We have funded our activities to date almost
exclusively from equity financings and government grants, and we
will continue to require substantial funds to continue these
activities. We expect that our existing cash resources, combined
with the proceeds from the NIH grant discussed in Note 4
and our anticipated use of the common stock purchase agreement
discussed in Note 7, will be sufficient to fund our planned
activities at least through 2010. The extent to which we rely on
the common stock purchase agreement as a source of funding will
depend on a number of factors including the prevailing market
price of our common stock and the extent to which we choose to
secure working capital from other sources, if available.
|
|
2.
|
Summary
of Significant Accounting Policies
|
Basis
of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of GeoVax, Inc. from inception together with those of
GeoVax Labs, Inc. from September 28, 2006 (see
Note 6). All intercompany transactions have been eliminated
in consolidation.
Development-Stage
Enterprise
GeoVax is devoting all of its present efforts to research and
development and is a development stage enterprise as defined by
Financial Accounting Standards Board (FASB)
Accounting Standard Codification (ASC) Topic 915,
Development Stage Entities. All losses
accumulated since inception (June 27, 2001) have been
considered as part of the Companys development stage
activities.
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results may
differ from those estimates.
Cash
and Cash Equivalents
We consider all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Our
cash and cash equivalents consist primarily of bank deposits and
money market accounts. The recorded values approximate fair
market values due to the short maturities.
F-8
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Fair
Value of Financial Instruments and Concentration of Credit
Risk
Financial instruments that subject us to concentration of credit
risk consist primarily of cash and cash equivalents, which are
maintained by a high credit quality financial institution. The
carrying values reported in the balance sheets for cash and cash
equivalents approximate fair values.
Property
and Equipment
Property and equipment are stated at cost. The components of
property and equipment as of December 31, 2009 and 2008 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Laboratory equipment
|
|
$
|
389,494
|
|
|
$
|
243,663
|
|
Leasehold improvements
|
|
|
115,605
|
|
|
|
|
|
Other furniture, fixtures & equipment
|
|
|
16,789
|
|
|
|
7,979
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
521,888
|
|
|
|
251,642
|
|
Accumulated depreciation and amortization
|
|
|
(177,686
|
)
|
|
|
(112,795
|
)
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
344,202
|
|
|
$
|
138,847
|
|
|
|
|
|
|
|
|
|
|
Expenditures for maintenance and repairs are charged to
operations as incurred, while additions and improvements are
capitalized. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which range
from three to five years. Amortization of leasehold improvements
is computed using the straight-line method over the remaining
term of the related lease. Depreciation and amortization expense
was $64,891, $36,128, and $29,575 during the years ended
December 31, 2009, 2008 and 2007, respectively.
Other
Assets
Other assets consist principally of license agreements for the
use of technology obtained through the issuance of the
Companys common stock. These license agreements are
amortized on a straight line basis over ten years. Amortization
expense related to these agreements was $24,886 during each of
the years ended December 31, 2009, 2008 and 2007,
respectively, and is expected to be $24,886, $24,886, $19,923,
$10,000 and $10,000 for each of the next five years,
respectively.
Impairment
of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount
of the assets to the future net cash flows expected to be
generated by such assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
discounted expected future net cash flows from the assets.
Accrued
Liabilities
As part of the process of preparing our financial statements, we
estimate expenses that we believe we have incurred, but have not
yet been billed by our third party vendors. This process
involves identifying services and activities that have been
performed by such vendors on our behalf and estimating the level
to which they have been performed and the associated cost
incurred for such service as of each balance sheet date in our
financial statements. Examples of expenses for which we accrue
include fees for professional services and fees owed to contract
manufacturers in conjunction with the manufacture of vaccines
for our clinical trials. We make these estimates based upon
progress of activities related to contractual obligations and
information received from vendors.
F-9
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Restatement
for Recapitalization and Reverse Stock Split
All share amounts and per share figures in the accompanying
consolidated financial statements and the related footnotes have
been restated for the 2006 recapitalization discussed in
Note 6.
Effective April 27, 2010, the Company enacted a
one-for-fifty
reverse stock split of its common stock. The accompanying
consolidated financial statements, and all share and per share
information contained herein, have been retroactively restated
to reflect the reverse stock split.
Net
Loss Per Share
Basic and diluted loss per common share are computed based on
the weighted average number of common shares outstanding. All
common share equivalents (which consist of options and warrants)
are excluded from the computation of diluted loss per share
since the effect would be anti-dilutive. Common share
equivalents which could potentially dilute basic earnings per
share in the future, and which were excluded from the
computation of diluted loss per share, totaled: 1,866,550,
2,296,582; and 1,872,752 shares at December 31, 2009,
2008 and 2007, respectively.
Revenue
Recognition
We recognize revenue in accordance with the SECs Staff
Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, as amended by Staff Accounting
Bulletin No. 104, Revenue Recognition,
(SAB 104). SAB 104 provides guidance
in applying U.S. generally accepted accounting principles
to revenue recognition issues, and specifically addresses
revenue recognition for upfront, nonrefundable fees received in
connection with research collaboration agreements. During 2009,
2008 and 2007, our revenue consisted of grant funding received
from the National Institutes of Health (see Note 4).
Revenue from this arrangement is approximately equal to the
costs incurred and is recorded as income as the related costs
are incurred.
Research
and Development Expense
Research and development expense primarily consists of costs
incurred in the discovery, development, testing and
manufacturing of our product candidates. These expenses consist
primarily of (i) fees paid to third-party service providers
to perform, monitor and accumulate data related to the
Companys preclinical studies and clinical trials,
(ii) costs related to sponsored research agreements,
(iii) the costs to procure and manufacture materials used
in clinical trials, (iv) laboratory supplies and
facility-related expenses to conduct development, and
(v) salaries, benefits, and share-based compensation for
personnel. These costs are charged to expense as incurred.
Patent
Costs
Our expenditures relating to obtaining and protecting patents
are charged to expense when incurred, and are included in
general and administrative expense.
Period
to Period Comparisons
Our operating results are expected to fluctuate for the
foreseeable future. Therefore,
period-to-period
comparisons should not be relied upon as predictive of the
results for future periods.
Income
Taxes
We account for income taxes using the liability method. Under
this method, deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities
F-10
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
are measured using enacted rates in effect for the year in which
temporary differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance unless,
in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will be realized.
Stock-Based
Compensation
We account for stock-based transactions in which the Company
receives services from employees, directors or others in
exchange for equity instruments based on the fair value of the
award at the grant date. Compensation cost for awards of common
stock is estimated based on the price of the underlying common
stock on the date of issuance. Compensation cost for stock
options or warrants is estimated at the grant date based on each
instruments fair-value as calculated by the Black-Scholes-
option-pricing model. The Company recognizes stock-based
compensation cost as expense ratably on a straight-line basis
over the requisite service period for the award. See Note 7
for additional stock-based compensation information.
Recent
Accounting Pronouncements
In June 2009, the FASB issued guidance now codified as ASC Topic
105, Generally Accepted Accounting
Principles, as the single source of authoritative
nongovernmental U.S. generally accepted accounting
principles (GAAP). ASC Topic 105 does not change
current U.S. GAAP, but is intended to simplify user access
to all authoritative GAAP by providing all authoritative
literature related to a particular topic in one place (the
Codification). The Codification became the source of
authoritative GAAP recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. On the effective date of
ASC Topic 105, the Codification superseded all then-existing
non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in
the Codification became non-authoritative. The provisions of ASC
Topic 105 are effective for interim and annual periods ending
after September 15, 2009 and, accordingly, are effective
for the Company for the current fiscal reporting period. The
adoption of ASC Topic 105 did not have an impact on our results
of operations, financial position, or cash flows, but will
impact our financial reporting process by eliminating all
references to pre-codification standards. All references to
accounting literature included in the notes to our financial
statements have been changed to reference the appropriate
sections of the Codification.
Following ASC Topic 105, the FASB will not issue new standards
in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts. Instead, it will issue Accounting
Standards Updates. The FASB does not consider Accounting
Standards Updates as authoritative in their own right.
Accounting Standards Updates serve only to update the
Codification, provide background information about the guidance,
and provide the bases for conclusions on changes in the
Codification.
In September 2006, the FASB issued guidance now codified under
ASC Topic 820, Fair Value Measurements and
Disclosures, which provides enhanced guidance for
using fair value to measure assets and liabilities, provides a
common definition of fair value, and establishes a framework to
make the measurement of fair value under GAAP more consistent
and comparable. The pronouncement also requires expanded
disclosures to provide information about the extent to which
fair value is used to measure assets and liabilities, the
methods and assumptions used to measure fair value, and the
effect of fair value measures on earnings. In February 2008, the
FASB released additional guidance also now codified under ASC
Topic 820, which delayed the January 1, 2008 effective date
for application of certain guidance related to non-financial
assets and non-financial liabilities, except for items that are
recognized or disclosed at fair value in the financial
statements on a recurring basis, until January 1, 2009. The
implementation of this pronouncement did not have a material
effect on our results of operations, financial position, or cash
flows.
F-11
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In March 2008, the FASB issued guidance now codified under ASC
Topic 815, Derivatives and Hedging, which
amends and expands the disclosure requirements previously
required for derivative instruments and hedging activities. We
adopted this pronouncement effective January 1, 2009 and it
did not have a material effect on our results of operations,
financial position, or cash flows.
In April 2008, the FASB issued guidance now codified under ASC
Topic 350, Intangibles Goodwill and
Other, which amends the factors that should be
considered in developing renewal or extension assumptions used
to determine the useful life of a recognized intangible asset.
We adopted the provisions of this pronouncement effective
January 1, 2009, and it did not have a material effect on
our results of operations, financial position, or cash flows.
In June 2008, the FASB issued guidance now codified under ASC
Topic 260, Earnings Per Share. This
pronouncement addresses whether instruments granted in
share-based payment transactions are participating securities
prior to vesting, and therefore, need to be included in the
earnings allocation in calculating earnings per share under the
two-class method of computing earnings per share. This
pronouncement requires companies to treat unvested share-based
payment awards that have non-forfeitable rights to dividend or
dividend equivalents as a separate class of securities in
calculating earnings per share. We adopted this pronouncement
effective January 1, 2009 and it did not have a material
effect on our results of operations, financial position, or cash
flows.
In April 2009, the FASB issued guidance now codified under ASC
Topic 825, Financial Instruments, which
amends previous Topic 825 guidance to require disclosures about
fair value of financial instruments in interim as well as annual
financial statements. We adopted this pronouncement effective
April 1, 2009 and it did not have a material effect on our
results of operations, financial position, or cash flows.
In May 2009, the FASB issued guidance now codified under ASC
Topic 855, Subsequent Events, which
establishes general standards of accounting for, and disclosures
of, events that occur after the balance sheet date but before
financial statements are issued or are available to be issued.
We adopted this pronouncement effective June 30, 2009 and
it did not have a material effect on our results of operations,
financial position, or cash flows. We have performed an
evaluation of subsequent events through February 22, 2010 ,
which is the date these financial statements were issued.
We do not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have
a material effect on our financial statements.
Emory License During 2002, we entered into a
license agreement with Emory University (the Emory
License), a related party, for technology required in
conjunction with certain products under development by us in
exchange for 704,534 shares of our common stock valued at
$148,856. The Emory License, among other contractual
obligations, requires payments based on milestone achievements,
royalties on our sales or on payments to us by our sublicensees,
and payment of maintenance fees in the event certain milestones
are not met within the time periods specified in the agreement.
The Emory License expires on the date of the latest expiration
date of the underlying patents.
MFD License During 2004, we entered into a
license agreement with MFD, Inc. in exchange for
49,420 shares of our common stock valued at $100,000.
Pursuant to this agreement, we obtained a fully paid, worldwide,
irrevocable exclusive license to certain patents covering
technology that may be employed by our products.
F-12
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In September 2007, the National Institutes of Health (NIH)
awarded us an Integrated Preclinical/Clinical AIDS Vaccine
Development (IPCAVD) grant to support our HIV/AIDS vaccine
program. The project period for the grant, which is renewable
annually, covers a five-year period which commenced October
2007, with an expected annual award of generally between $3 and
$4 million per year (approximately $18.3 million in
the aggregate). The most recent award is for the period
September 1, 2009 through August 31, 2010 in the
amount of $4.7 million. We are utilizing this funding to
further our HIV/AIDS vaccine development, optimization and
production. We record revenue associated with the grant as the
related costs and expenses are incurred and such revenue is
reported as a separate line item in our statements of
operations. During 2009, 2008 and 2007, we recorded $3,668,195,
$2,910,170 and $237,004, respectively, of revenue associated
with the grant.
Lease
Agreements
In September 2009, we executed a lease agreement, effective
November 1, 2009, for approximately 8400 square feet
of office and laboratory space located in Smyrna, Georgia
(metropolitan Atlanta). Future minimum lease payments pursuant
to the 62 month lease total $114,570 in 2010, $118,010 in
2011, $121,560 in 2012, $125,180 in 2013 and $128,920 in 2014.
Other
Commitments
In the normal course of business, we may enter into various firm
purchase commitments related to production and testing of our
vaccine material, and other research-related activities. As of
December 31, 2009, there were less than $10,000 of
unrecorded outstanding purchase commitments to our vendors and
subcontractors, which will be due in less than one year.
|
|
6.
|
2006
Merger and Recapitalization
|
The Company was originally incorporated in June 1988 under the
laws of Illinois as Dauphin Technology, Inc.
(Dauphin). Dauphin was unsuccessful and its
operations were terminated in December 2003. In September 2006,
Dauphin completed a merger (the Merger) with GeoVax,
Inc. which was incorporated under the laws of Georgia in June
2001. As a result of the Merger, the shareholders of GeoVax,
Inc. exchanged their shares of common stock for Dauphin common
stock and GeoVax, Inc. became a wholly-owned subsidiary of
Dauphin. Dauphin then changed its name to GeoVax Labs, Inc. and
replaced its officers and directors with those of GeoVax, Inc.
Subsequent to the Merger, the Company has not conducted any
business other than GeoVax, Inc.s business of developing
human vaccines. The Merger was accounted for under the purchase
method of accounting as a reverse acquisition in accordance with
U.S. generally accepted accounting principles. Under this
method of accounting, Dauphin was treated as the acquired
company and, accordingly, all financial information prior to the
date of Merger presented in the accompanying consolidated
financial statements, or in the notes herein, as well as any
references to prior operations, are those of GeoVax, Inc. In
June 2008, the Company was reincorporated under the laws of the
State of Delaware.
Common
Stock Transactions
During April and May 2008, we sold an aggregate of
176,129 shares of our common stock to 16 individual
accredited investors for an aggregate purchase price of
$1,365,000. We also issued to the investors warrants to purchase
an aggregate of 282,097 shares of common stock at a price
of $16.50 per share, 165,161 of which expire in May 2013, with
the remainder expiring in April/May 2012.
F-13
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In September 2009, we issued 462,826 shares of our common
stock for an aggregate purchase price of $1,500,000 upon the
exercise of a previously issued stock purchase warrant.
We may, from time to time, issue shares of our common stock to
consultants or others in exchange for services. During 2009 and
2008 we issued 4,500 and 10,000 shares, respectively, for
consulting services; and we recorded general and administrative
expense of $31,500 and $74,000 during each respective period
related to these issuances.
Common
Stock Purchase Agreement
In May 2008, we signed a common stock purchase agreement (the
Purchase Agreement) with Fusion Capital
Fund II, LLC (Fusion Capital). The Purchase
Agreement allows us to require Fusion Capital to purchase up to
$10 million of our common stock in amounts ranging from
$80,000 to $1.0 million per purchase transaction, depending
on certain conditions, from time to time over a
25-month
period beginning July 1, 2008, the date on which the SEC
declared effective the registration statement related to the
transaction.
The purchase price of the shares relating to the Purchase
Agreement is based on the prevailing market prices of our shares
at the times of the sales without any fixed discount, and we
control the timing and amounts of any sales of shares to Fusion
Capital. Fusion Capital does not have the right or the
obligation to purchase any shares of our common stock on any
business day that the purchase price of our common stock is
below $2.50 per share. As primary consideration for entering
into the Purchase Agreement, and upon the execution of the
Purchase Agreement we issued to Fusion Capital
49,610 shares of our common stock as a commitment fee, and
we agreed to issue to Fusion Capital up to an additional 49,610
commitment fee shares, on a pro rata basis, as we receive the
$10 million of future funding. The Purchase Agreement may
be terminated by us at any time at our discretion without any
additional cost to us. There are no negative covenants,
restrictions on future financings, penalties or liquidated
damages in the agreement.
During 2008 we sold 74,199 shares to Fusion under the terms
of the Purchase Agreement for an aggregate purchase price of
$500,000, and issued 2,481 shares to Fusion pursuant to our
deferred commitment fee arrangement. During 2009, we sold
208,720 shares to Fusion for an aggregate purchase price of
$1,520,000, and issued 7,541 shares pursuant to our
deferred commitment fee arrangement.
Stock
Options
In 2006 we adopted the GeoVax Labs, Inc. 2006 Equity Incentive
Plan (the Stock Option Plan) for the granting of
qualified incentive stock options (ISOs),
nonqualified stock options, restricted stock awards or
restricted stock bonuses to employees, officers, directors,
consultants and advisors of the Company. The exercise price for
any option granted may not be less than fair value (110% of fair
value for ISOs granted to certain employees). Options
granted under the Stock Option Plan have a maximum ten-year term
and generally vest over three years. The Company has reserved
1,020,000 shares of its common stock for issuance under the
Stock Option Plan.
F-14
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A summary of activity under the Stock Option Plan as of
December 31, 2009, and changes during the year then ended
is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
of Shares
|
|
|
Price
|
|
|
Term (yrs)
|
|
|
Value
|
|
|
Outstanding at January 1, 2009
|
|
|
938,955
|
|
|
$
|
6.24
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
68,500
|
|
|
|
7.00
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(48,500
|
)
|
|
|
14.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
958,955
|
|
|
$
|
5.87
|
|
|
|
5.5
|
|
|
$
|
4,292,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009
|
|
|
788,188
|
|
|
$
|
5.57
|
|
|
|
4.8
|
|
|
$
|
3,984,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional information concerning our stock options for the
years ended December 31, 2009, 2008 and 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Weighted average fair value of options granted during the period
|
|
$
|
6.15
|
|
|
$
|
5.93
|
|
|
$
|
14.84
|
|
Intrinsic value of options exercised during the period
|
|
|
|
|
|
|
|
|
|
|
22,181
|
|
Total fair value of options vested during the period
|
|
|
1,143,326
|
|
|
|
1,074,454
|
|
|
|
1,156,020
|
|
We use a Black-Scholes model for determining the grant date fair
value of our stock option grants. This model utilizes certain
information, such as the interest rate on a risk-free security
with a term generally equivalent to the expected life of the
option being valued and requires certain other assumptions, such
as the expected amount of time an option will be outstanding
until it is exercised or expired, to calculate the fair value of
stock options granted. The significant assumptions we used in
our fair value calculations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Weighted average risk-free interest rates
|
|
|
2.8
|
%
|
|
|
2.9
|
%
|
|
|
4.5
|
%
|
Expected dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Expected life of option
|
|
|
7 yrs
|
|
|
|
7 yrs
|
|
|
|
6.8 yrs
|
|
Expected volatility
|
|
|
112.3
|
%
|
|
|
100.5
|
%
|
|
|
135
|
%
|
Stock-based compensation expense related to the Stock Option
Plan was $1,221,764, $1,798,169 and $1,296,196 during the years
ended December 31, 2009, 2008 and 2007, respectively. The
2008 and 2007 expense includes $425,725 and $242,113,
respectively, associated with extensions of previously issued
stock option grants (accounted for as reissuances) which were
due to expire in 2007 to 2011. Stock option expense is allocated
to research and development expense or to general and
administrative expense based on the related employee
classifications and corresponds to the allocation of employee
salaries. For the three years ended December 31, 2009,
stock option expense was allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
General and administrative expense
|
|
$
|
917,110
|
|
|
$
|
1,304,128
|
|
|
$
|
1,012,083
|
|
Research and development expense
|
|
|
304,654
|
|
|
|
494,041
|
|
|
|
284,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock option expense
|
|
$
|
1,221,764
|
|
|
$
|
1,798,169
|
|
|
$
|
1,296,196
|
|
F-15
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of December 31, 2009, there was $943,295 of unrecognized
compensation expense related to stock-based compensation
arrangements. The unrecognized compensation expense is expected
to be recognized over a weighted average remaining period of
2.2 years.
Compensatory
Warrants
We may, from time to time, issue stock purchase warrants to
consultants or others in exchange for services. A summary of our
compensatory warrant activity as of December 31, 2009, and
changes during the year then ended is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
of Shares
|
|
|
Price
|
|
|
Term (yrs)
|
|
|
Value
|
|
|
Outstanding at January 1, 2008
|
|
|
54,000
|
|
|
$
|
16.50
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
59,400
|
|
|
|
7.00
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(54,000
|
)
|
|
|
16.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
59,400
|
|
|
$
|
7.00
|
|
|
|
2.7
|
|
|
$
|
118,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009
|
|
|
55,350
|
|
|
$
|
7.00
|
|
|
|
2.7
|
|
|
$
|
110,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional information concerning our compensatory warrants for
the years ended December 31, 2009, 2008 and 2007 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
Weighted average fair value of warrants granted during the period
|
|
$
|
4.75
|
|
|
$
|
2.72
|
|
|
$
|
12.35
|
|
Intrinsic value of warrants exercised during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value of warrants vested during the period
|
|
|
6,413
|
|
|
|
146,880
|
|
|
|
266,760
|
|
We use a Black-Scholes model for determining the grant date fair
value of our compensatory warrants. The significant assumptions
we used in our fair value calculations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
Weighted average risk-free interest rates
|
|
|
1.54
|
%
|
|
|
2.01
|
%
|
|
|
4.6
|
%
|
Expected dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Expected life of warrant
|
|
|
3 yrs
|
|
|
|
2.5 yrs
|
|
|
|
3 yrs
|
|
Expected volatility
|
|
|
112.1
|
%
|
|
|
99.0
|
%
|
|
|
113.6
|
%
|
Expense associated with compensatory warrants was $45,401,
$146,880 and $222,300 during the years ended December 31,
2009, 2008 and 2007, respectively. All such expense was
allocated to general and administrative expense. As of
December 31, 2009, there was $121,058 of unrecognized
compensation expense related to compensatory warrant
arrangements. The unrecognized compensation expense is expected
to be recognized over a weighted average remaining period of
1 year.
Investment
Warrants
In addition to outstanding stock options and compensatory
warrants, as of December 31, 2009 we have a total of
848,195 outstanding stock purchase warrants issued to investors
in connection with previous financing
F-16
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
transactions. These warrants have a weighted-average exercise
price of $16.50 per share and a weighted-average remaining
contractual life of 2.6 years.
We participate in a multi-employer defined contribution
retirement plan (the 401k Plan) administered by a
third party service provider; and the Company contributes to the
401k Plan on behalf of its employees based upon a matching
formula. During the years ended December 31, 2009, 2008 and
2007 our contributions to the 401k Plan were $25,057, $11,691
and $6,535, respectively.
At December 31, 2009, we have a consolidated federal net
operating loss (NOL) carryforward of approximately
$72.2 million, available to offset against future taxable
income which expires in varying amounts in 2010 through 2029.
Additionally, we have approximately $522,000 in research and
development (R&D) tax credits that expire in
2022 through 2028 unless utilized earlier. No income taxes have
been paid to date.
As a result of the Merger discussed in Note 6, our NOL
carryforward increased substantially due to the addition of
approximately $59.7 million of historical NOL carryforwards
for Dauphin Technology, Inc. However, Section 382 of the
Internal Revenue Code contains provisions that may limit our
utilization of NOL and R&D tax credit carryforwards in any
given year as a result of significant changes in ownership
interests that have occurred in past periods or may occur in
future periods.
Deferred income taxes reflect the net effect of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. Significant components of our
deferred tax assets and liabilities included the following at
December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
$
|
25,035,390
|
|
|
$
|
24,217,858
|
|
Research and development tax credit carryforward
|
|
|
522,322
|
|
|
|
354,581
|
|
Stock-based compensation expense
|
|
|
1,569,212
|
|
|
|
1,127,665
|
|
Other
|
|
|
32,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
27,159,224
|
|
|
|
25,700,104
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(31,091
|
)
|
|
|
(25,222
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(31,091
|
)
|
|
|
(25,222
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
27,128,132
|
|
|
|
25,674,882
|
|
Valuation allowance
|
|
|
(27,128,132
|
)
|
|
|
(25,674,882
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
We have established a full valuation allowance equal to the
amount of our net deferred tax assets due to uncertainties with
respect to our ability to generate sufficient taxable income to
realize these assets in the future.
F-17
GEOVAX
LABS, INC.
(A DEVELOPMENT-STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A reconciliation of the income tax benefit on losses at the
U.S. federal statutory rate to the reported income tax
expense is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
U.S. federal statutory rate applied to pretax loss
|
|
$
|
(1,116,646
|
)
|
|
$
|
(1,267,584
|
)
|
|
$
|
(1,442,211
|
)
|
Permanent differences
|
|
|
3,223
|
|
|
|
3,054
|
|
|
|
4,719
|
|
Research and development credits
|
|
|
|
|
|
|
167,741
|
|
|
|
100,296
|
|
Change in valuation allowance (excluding impact of the Merger
discussed in Note 6)
|
|
|
1,113,423
|
|
|
|
1,096,789
|
|
|
|
1,337,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported income tax expense
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.
|
Related
Party Transactions
|
We are obligated to reimburse Emory University (a significant
stockholder of the Company) for certain prior and ongoing costs
in connection with the filing, prosecution and maintenance of
patent applications subject to the Emory License (see
Note 3). The expense associated with these ongoing patent
cost reimbursements to Emory amounted to $85,673, $102,141 and
$243,653 for the years ended December 31, 2009, 2008 and
2007, respectively.
In June 2008, we entered into two subcontracts with Emory for
the purpose of conducting research and development activities
associated with our grant from the NIH (see Note 4). During
2009 and 2008, we recorded $816,651 and $723,887, respectively,
of expense associated with these subcontracts. All amounts paid
to Emory under these subcontracts are reimbursable to us
pursuant to the NIH grant.
Through November 2009, we leased office and laboratory space on
a
month-to-month
basis from Emtech Biotechnology Development, Inc., a related
party associated with Emory. Rent expense associated with this
lease totaled $43,112, $47,041 and $36,588 for the years ended
December 31, 2009, 2008 and 2007, respectively.
In March 2008, we entered into a consulting agreement with
Donald Hildebrand, the Chairman of our Board of Directors and
our former President & Chief Executive Officer,
pursuant to which Mr. Hildebrand provides business and
technical advisory services to the Company. The term of the
consulting agreement began on April 1, 2008 and originally
was to end on December 31, 2009; in December 2009 the
consulting agreement was extended for an additional year. During
2009 and 2008, we recorded $57,600 and $64,000, respectively, of
expense associated with the consulting agreement.
|
|
11.
|
Selected
Quarterly Financial Data (unaudited)
|
A summary of selected quarterly financial data for 2009 and 2008
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Quarter Ended
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Revenue from grants
|
|
$
|
710,155
|
|
|
$
|
752,800
|
|
|
$
|
1,808,551
|
|
|
$
|
396,689
|
|
Net loss
|
|
|
(861,509
|
)
|
|
|
(1,348,653
|
)
|
|
|
(230,815
|
)
|
|
|
(843,275
|
)
|
Net loss per share
|
|
|
(0.06
|
)
|
|
|
(0.09
|
)
|
|
|
(0.02
|
)
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Quarter Ended
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Revenue from grants
|
|
$
|
599,991
|
|
|
$
|
376,078
|
|
|
$
|
1,322,502
|
|
|
$
|
611,599
|
|
Net loss
|
|
|
(682,510
|
)
|
|
|
(1,284,352
|
)
|
|
|
(722,108
|
)
|
|
|
(1,039,217
|
)
|
Net loss per share
|
|
|
(0.05
|
)
|
|
|
(0.09
|
)
|
|
|
(0.05
|
)
|
|
|
(0.07
|
)
|
F-18
GEOVAX
LABS, INC.
For the
Years Ended December 31, 2009, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
Balance at
|
|
Charged to
|
|
Charged to
|
|
|
|
Balance at
|
|
|
Beginning
|
|
Costs and
|
|
Other
|
|
|
|
End
|
Description
|
|
of Period
|
|
Expenses
|
|
Accounts
|
|
Deductions
|
|
of Period
|
|
Reserve Deducted in the Balance Sheet From the Asset to Which it
Applies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Deferred Tax Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2009
|
|
$
|
25,674,882
|
|
|
$
|
1,453,250
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
27,128,132
|
|
Year ended December 31, 2008
|
|
$
|
24,436,911
|
|
|
$
|
1,237,971
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
25,674,882
|
|
Year ended December 31, 2007
|
|
$
|
22,792,303
|
|
|
$
|
1,644,608
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
24,436,911
|
|
F-19
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,426,342
|
|
|
$
|
3,515,784
|
|
Grant funds receivable
|
|
|
694,994
|
|
|
|
320,321
|
|
Prepaid expenses and other
|
|
|
15,649
|
|
|
|
44,615
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
2,136,985
|
|
|
|
3,880,720
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation and
amortization of $266,269 and $177,686 at September 30, 2010
and December, 31, 2009, respectively
|
|
|
255,619
|
|
|
|
344,202
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Licenses, net of accumulated amortization of $177,825 and
$159,161 at September 30, 2010 and December 31, 2009,
respectively
|
|
|
71,031
|
|
|
|
89,695
|
|
Deferred offering costs
|
|
|
517,173
|
|
|
|
|
|
Deposits and other
|
|
|
11,990
|
|
|
|
980
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
600,194
|
|
|
|
90,675
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,992,798
|
|
|
$
|
4,315,597
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
354,502
|
|
|
$
|
408,344
|
|
Amounts payable to Emory University (a related party)
|
|
|
492,517
|
|
|
|
163,021
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
847,019
|
|
|
|
571,365
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 40,000,000 shares
authorized; 15,654,846 and 15,632,564 shares issued and
outstanding at September 30, 2010 and December 31,
2009, respectively
|
|
|
15,655
|
|
|
|
15,633
|
|
Additional paid-in capital
|
|
|
21,936,516
|
|
|
|
21,266,447
|
|
Deficit accumulated during the development stage
|
|
|
(19,806,392
|
)
|
|
|
(17,537,848
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,145,779
|
|
|
|
3,744,232
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
2,992,798
|
|
|
$
|
4,315,597
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
(June 27, 2001) to
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
Grant revenue
|
|
$
|
1,163,288
|
|
|
$
|
1,808,551
|
|
|
$
|
4,239,017
|
|
|
$
|
3,271,506
|
|
|
$
|
14,465,567
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
908,780
|
|
|
|
1,470,200
|
|
|
|
4,019,931
|
|
|
|
3,530,329
|
|
|
|
20,580,276
|
|
General and administrative
|
|
|
903,850
|
|
|
|
573,906
|
|
|
|
2,508,539
|
|
|
|
2,203,776
|
|
|
|
14,021,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,812,630
|
|
|
|
2,044,106
|
|
|
|
6,528,470
|
|
|
|
5,734,105
|
|
|
|
34,601,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(649,342
|
)
|
|
|
(235,555
|
)
|
|
|
(2,289,453
|
)
|
|
|
(2,462,599
|
)
|
|
|
(20,136,218
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
4,676
|
|
|
|
4,740
|
|
|
|
20,909
|
|
|
|
21,622
|
|
|
|
335,495
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
4,676
|
|
|
|
4,740
|
|
|
|
20,909
|
|
|
|
21,622
|
|
|
|
329,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(644,666
|
)
|
|
$
|
|