x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Delaware	1-32626	32-0064979
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

 

 

		Page
PART I
Item 1	Business	4
Item 1A	Risk Factors	18
Item 1B	Unresolved Staff Comments	31
Item 2	Properties	31
Item 3	Legal Proceedings	32
Item 4	Mine Safety Disclosures	32
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	33
Item 6	Selected Financial Data	33
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	39
Item 8	Financial Statements and Supplementary Data	39
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	39
Item 9A	Controls and Procedures	39
Item 9B	Other Information	40
PART III
Item 10	Directors, Executive Officers and Corporate Governance	41
Item 11	Executive Compensation	43
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48
Item 13	Certain Relationships and Related Transactions, and Director Independence	50
Item 14	Principal Accountant Fees and Services	51
PART IV
Item 15	Exhibits and Financial Statement Schedules	52
Signatures		56
Index to Financial Statements		F-1

·	the development of our drug candidates, including when we expect to undertake, initiate and complete clinical trials of our product candidates;

 

·	our ability to secure funding for our planned future operations;

 

·	our ability to obtain regulatory approval of our drug candidates;

 

·	our use of clinical research centers and other contractors;

 

·	our ability to find collaborative partners for research, development and commercialization of potential products;

 

·	acceptance of our products by doctors, patients or payors and the availability of reimbursement for our product candidates;

 

·	our ability to market any of our products;

 

·	our history of operating losses;

 

·	our ability to secure adequate protection for our intellectual property;

 

·	our ability to compete against other companies and research institutions;

 

·	the effect of potential strategic transactions on our business;

 

·	our ability to attract and retain key personnel;

 

·	the volatility of our stock price; and

 

·	other risks and uncertainties detailed in “Risk Factors” in this Form 10-K.

 

·

Marqibo® (vincristine sulfate liposomes injection), our lead product candidate, is a novel, targeted Optisome™ encapsulated formulation product candidate of the Food and Drug Administration (FDA)-approved anticancer drug vincristine, currently in development primarily for the treatment of adult acute lymphoblastic leukemia, or ALL, in second or greater relapse or that has progressed following two or more prior lines of anti-leukemia therapy.

·

Menadione Topical Lotion, a novel supportive care product candidate being developed for the prevention and/or treatment of the skin toxicities associated with the use of epidermal growth factor receptor inhibitors, or EGFRIs, a type of anti-cancer agent used in the treatment of lung, colon, head and neck, pancreatic and breast cancer.

·	Brakiva™ (topotecan liposome injection), a novel targeted Optisome™ encapsulated formulation product candidate of the FDA-approved anticancer drug topotecan.

·	Alocrest™ (vinorelbine liposome injection), a novel, targeted Optisome™ encapsulated formulation product candidate of the FDA-approved anticancer drug vinorelbine.

·

Chemotherapy. Cytotoxic chemotherapy refers to anticancer drugs that destroy cancer cells by stopping them from multiplying. Healthy cells can also be harmed with the use of cytotoxic chemotherapy, especially those that divide quickly. Cytotoxic agents act primarily on macromolecular synthesis, repair or activity, which affects the production or function of DNA, RNA or proteins. Our product candidates Marqibo, Alocrest and Brakiva are liposome encapsulated cytotoxic agents that we are currently evaluating for the treatment of solid tumor and hematological malignancies.

·

Supportive care. Cancer treatment can include the use of chemotherapy, radiation therapy, biologic response modifiers, surgery or some combination of these or other therapeutic options. All of these treatment options are directed at killing or eradicating the cancer that exists in the patient’s body. Unfortunately, the delivery of many cancer therapies adversely affects the body’s normal organs. These complications of treatment or side effects not only cause discomfort, but may also prevent the optimal delivery of therapy to a patient at its maximal dose and time.  Our product candidate Menadione Topical Lotion is a supportive care product candidate designed to treat and prevent skin toxicities associated with the use of EGFRIs, a class of anti-cancer agents.

·

Focus on developing innovative cancer therapies. We focus on oncology product candidates in order to capture efficiencies and economies of scale. We believe that drug development for cancer markets is particularly attractive because relatively small clinical trials can provide meaningful information regarding patient response and safety.  Our main focus is the development of Marqibo, our lead product candidate.

·

Build a sustainable pipeline by employing multiple therapeutic approaches and disciplined decision criteria based on clearly defined proof of principle goals. We seek to build a sustainable product pipeline by employing multiple therapeutic approaches and by acquiring product candidates belonging to known drug classes. In addition, we employ disciplined decision criteria to assess product candidates. By pursuing this strategy, we seek to minimize our clinical development risk and accelerate the potential commercialization of current and future product candidates.  For a majority of our product candidates, we intend to pursue regulatory approval in multiple indications.

·

Develop strategic partnerships, through licensing agreements, joint venture or merger and acquisition, to develop and commercialize our lead product candidates in the United States, Europe, and other international regions. We intend to explore partnership opportunities with pharmaceutical, biotechnology, or other companies to develop and commercialize our current product candidates, particularly in Europe and other international regions.  We believe that this strategy will help us to mitigate our development and commercialization risk, reduce our capital expenditure requirements, and broaden the scope of our sales and marketing activities within domestic and international markets.

·

Targeted delivery with improved pharmacokinetics. In normal tissues, a continuous endothelial (blood vessel) lining constrains liposomes within capillaries, limiting accumulation of the drug in the healthy tissues. In contrast, the immature blood vessel system within tumors is created during tumor growth and has numerous gaps up to 800 nanometers in size. With an average diameter of approximately 100 nanometers, Optisomes can pass through these gaps.  Once lodged within the tumor interstitial space, these Optisomes gradually release the encapsulated drug. We believe that gradual release of the drug from Optisomes increases drug levels within the tumor, extends drug exposure through multiple cell cycles, and increases tumor cell killing. A limited fraction of a patient’s tumor cells are in a particular drug-sensitive phase at any point in time, which we believe indicates that duration of drug exposure is critical to increased drug efficacy.

·

Increased drug concentration. The link between drug exposure and anti-tumor efficacy is especially pronounced for cell cycle-specific agents such as vincristine, vinorelbine and topotecan, which destroy tumor cells by interfering in one specific phase in cell division (e.g., the mitosis, synthesis and/or rapid growth phases).

·	Prolonged exposure. The advanced liposomal technology of the capsule that protects the active drug increases the circulating half-life and is designed to extend the duration of drug release within cancerous tissues.

·	an exclusive license under certain patents held by Tekmira to commercialize the Optisome products for all uses throughout the world;

·	an exclusive license under certain patents held by Tekmira to commercialize the Optisome products for all uses throughout the world under the terms of certain research agreements between Tekmira and the British Columbia Cancer Agency; and

·

an exclusive license to all technical information and know-how relating to the technology claimed in the patents held exclusively by Tekmira and to all confidential information possessed by Tekmira relating to the Optisome products, including all data, know-how, manufacturing information, specifications and trade secrets, collectively called the Tekmira Technology, to commercialize the Optisome products for all uses throughout the world.

·	As amended, the amount of the milestone payment that we are required to make to Tekmira upon the FDA’s approval of a Marqibo NDA was increased.

·

The original license agreement previously required us to make milestone payments upon the dosing of the first patient in any clinical trial of each of Alocrest and Brakiva.  Following the June 2009 amendment, such milestones are payable following the FDA’s acceptance for review of an NDA for such product candidates.  In addition, the milestone payments payable under the license agreement upon the FDA’s approval of an NDA for Alocrest and Brakiva were both increased in amount.

·	Tekmira’s share of any payments received by us from third parties in consideration of sublicenses granted to such third parties or for royalties received by us from such third parties was reduced.

·	The maximum aggregate amount of milestone payments for all product candidates was increased from $30.5 million to $37.0 million.

 
 

·	Our maximum aggregate obligation for milestone payments to Tekmira for all three product candidates was decreased from $37.0 million to $19.0 million.  All of the affected milestone payment obligations relate to amounts triggered by the achievement of regulatory milestones for Marqibo.

·

The royalty rates payable by us to Tekmira for net sales of Marqibo were modified by eliminating a tiered royalty rate structure based upon the amount of net sales and instead now provide for a single royalty rate without regard to the amount of net sales.  With respect to Alocrest and Brakiva, the license agreement continues to provide that we will pay royalties to Tekmira in the range of 5% to 10% of net sales, against which we may offset a portion of the research and development expenses we incur in connection with the development of those product candidates.

·	In consideration of the foregoing, we made a one-time payment to Tekmira of $5.75 million.

·	completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies, all performed in accordance with the FDA’s good laboratory practice regulations and other regulations;

·	submission to the FDA of an investigational new drug, or IND, application which must become effective before clinical trials may begin;

·	performance of multiple adequate and well-controlled clinical trials meeting FDA requirements to establish the safety and efficacy of the product candidate for each proposed indication;

·	submission of an NDA to the FDA;

·

satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the product candidate is produced, and potentially other involved facilities as well, to assess compliance with current good manufacturing practice, or cGMP, regulations and other applicable regulations; and

·	the FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.

·

Phase 1 clinical trials are initially conducted in a limited population to test the drug candidate for safety, dose tolerance, absorption, metabolism, distribution and excretion in healthy humans or, on occasion, in patients, such as cancer patients. In some cases, particularly in cancer trials, a sponsor may decide to conduct what is referred to as a “Phase 1b” evaluation, which is a second safety-focused Phase 1 clinical trial typically designed to evaluate the impact of the drug candidate in combination with currently FDA-approved drugs.

·

Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, to determine the efficacy of the drug candidate for specific targeted indications and to determine dose tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase 3 clinical trials. In some cases, a sponsor may decide to conduct what is referred to as a “Phase 2b” evaluation, which is a second, confirmatory Phase 2 clinical trial that could, if positive and accepted by the FDA, serve as a pivotal clinical trial in the approval of a drug candidate.

·

Phase 3 clinical trials are commonly referred to as pivotal trials. When Phase 2 clinical trials demonstrate that a dose range of the drug candidate is effective and has an acceptable safety profile, Phase 3 clinical trials are undertaken in large patient populations to further evaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites.

·

Priority Review.  As explained above, a drug candidate may be eligible for a six-month priority review. The FDA assigns priority review status to an application if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease. A fast track drug would ordinarily meet the FDA’s criteria for priority review, but may also be assigned a standard review. Our NDA for Marqibo that we submitted in 2011 was not granted priority review and do not know whether any of our other drug candidates will be assigned priority review status or, if priority review status is assigned, whether that review or approval will be faster than conventional FDA procedures, or that the FDA will ultimately approve the drug.

·

Accelerated Approval.  Under the FDA’s accelerated approval regulations, the FDA is authorized to approve drug candidates that have been studied for their safety and efficacy in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit to patients over existing treatments based upon either a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than patient survival or irreversible morbidity. In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV or post-approval clinical trials to validate the surrogate endpoint or confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies with due diligence, or to validate a surrogate endpoint or confirm a clinical benefit during post-marketing studies, may cause the FDA to seek to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.

·	our ability to develop novel compounds with attractive pharmaceutical properties and to secure and protect intellectual property rights based on our innovations;

·	the efficacy, safety and reliability of our product candidates;

·	the speed at which we develop our product candidates;

·	our ability to design and successfully complete appropriate clinical trials;

·	our ability to maintain a good relationship with regulatory authorities;

·	the timing and scope of regulatory approvals;

·	our ability to manufacture and sell commercial quantities of future products to the market or enter into strategic partnership agreements with others; and

·	acceptance of future products by physicians and other healthcare providers.

 

 

 

 

·	any delays in the FDA’s review of our NDA for Marqibo beyond the May 13, 2012 PDUFA date;

 

·	the outcome of the FDA’s review of our NDA for Marqibo;

 

·	costs associated with conducting our ongoing and planned clinical trials and regulatory development activities;

 

·	costs of establishing arrangements for manufacturing our product candidates;

 

·	costs associated with commercializing our Marqibo program, including establishing sales and marketing functions;

 

·	payments required under our current and any future license agreements and collaborations;

 

·	costs of obtaining, maintaining and defending patents on our product candidates; and

 

·	costs of acquiring any new drug candidates.

 

 

 

 

 

 

 

·	additional expenditures and the utilization of increased clinical, regulatory, and manufacturing resources to satisfy obligations pursuant to any strategic partnership arrangement;

 

·	a lack of control over the amount of timing of resources committed by any potential strategic partner to promote the continued development and commercialization of our product candidates;

·	strategic partners may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs; and

·	disputes may arise between us and our strategic partners that could result in the delay or termination of the research, development or commercialization of our product candidates.

 

 

·	continue to undertake clinical development of our current product candidates;

 

·	seek regulatory approvals for Marqibo and our other product candidates at the appropriate time in the future;

 

·	implement additional internal systems and infrastructure;

 

·	seek to acquire additional technologies to develop; and

 

·	hire additional personnel.

 

 

·	decreased demand for our product candidates;

·	injury to our reputation;

·	withdrawal of clinical trial participants;

·	withdrawal of prior governmental approvals;

·	costs of related litigation;

·	substantial monetary awards to patients;

·	product recalls;

·	loss of revenue; and

·	the inability to commercialize our product candidates.

·	that clinical or other experience, tests, or other scientific data show that the drug is unsafe for use;

·	that new evidence of clinical experience or evidence from new tests, evaluated together with the evidence available to the FDA when the NDA was approved, shows that the drug is not shown to be safe for use under the approved conditions of use;

·	that on the basis of new information presented to the FDA, there is a lack of substantial evidence that the drug will have the effect it purports or is represented to have under the approved conditions of use;

·	that an NDA contains any untrue statement of a material fact; or

·	for a drug approved under the FDA’s accelerated approval regulations or as a fast track drug, if any required post-approval study is not conducted with due diligence or if such study fails to verify the clinical benefit of the drug.

·	delays in patient enrollment, and variability in the number and types of patients available for clinical trials;

·	difficulty in maintaining contact with patients after treatment, resulting in incomplete data;

·	poor effectiveness of product candidates during clinical trials;

·	safety issues, side effects, or other adverse events;

·	an inability to provide sufficient drug supply to the clinical trial sites;

·	results that do not demonstrate the safety or effectiveness of the product candidates; and

·	governmental or regulatory delays and changes in regulatory requirements, policy and guidelines.

 

·	delay or prevent commercialization of, and our ability to derive product revenues from, our product candidates;

·	impose costly procedures on us;

·	reduce the potential prices we may be able to charge for our product candidates, assuming they are approved for sale; and

·	diminish any competitive advantages that we may otherwise enjoy.

·	restrictions on the products, manufacturers or manufacturing process;

·	warning letters or untitled letters;

·	civil or criminal penalties or fines;

·	injunctions;

·	product seizures, detentions or import bans;

·	voluntary or mandatory product recalls and publicity requirements;

·	suspension or withdrawal of regulatory approvals;

·	total or partial suspension of production and/or sale; and

·	refusal to approve pending applications for marketing approval of new drugs or supplements to approved applications.

·

In connection with the manufacture of our Marqibo product candidate, we are dependent on a single source for many of the materials involved in its manufacture.  To the extent there are any technical, regulatory, labor, capacity or other issues affecting such suppliers, our ability to manufacture adequate supplies of Marqibo may be severely and adversely affected.

·

Some of our other product candidates, including Marqibo, require complex materials to make saleable goods.  As a result, our suppliers may have difficulty consistently meeting the applicable specifications for our product candidates, which could cause disruptions in our ability to produce an adequate supply of our drug products.

·

We may be unable to identify manufacturers on acceptable terms or at all because the number of potential manufacturers is limited and the FDA must approve any replacement contractor. This approval would require new testing and compliance inspections. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our products after receipt of FDA approval, if any.

·	Our third-party manufacturers might be unable to formulate and manufacture our drugs in the volume and of the quality required to meet our clinical and/or commercial needs, if any.

·	Our future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products.

·

Drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with good manufacturing practice and other government regulations and corresponding foreign standards. We do not have control over third-party manufacturers’ compliance with these regulations and standards, but we will be ultimately responsible for any of their failures.

·	If any third-party manufacturer makes improvements in the manufacturing process for our products, we may not own, or may have to share, the intellectual property rights to the innovation. This may prohibit us from seeking alternative or additional manufacturers for our products.

·	Regulatory authorities outside the United States may request an independent body conduct compliance audits of our manufacturers.  There can be no assurance of successful outcomes of these audits.

·	do not demonstrate acceptable safety and efficacy in preclinical studies or clinical trials or otherwise do not meet applicable regulatory standards for approval;

·	do not offer therapeutic or other improvements over existing or future therapies used to treat the same conditions;

·	are not capable of being produced in commercial quantities at acceptable costs or pursuant to applicable rules and regulations; or

·	are not accepted in the medical community and by third-party payors.

·	our inability to recruit and retain adequate numbers of effective sales and marketing personnel;

·	the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our products;

·	the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

·	unforeseen costs and expenses associated with creating an independent sales and marketing organization.

·	perceptions by members of the health care community, including physicians, about the safety and effectiveness of our drugs;

·	pharmacological benefit and cost-effectiveness of our products relative to competing products;

·	availability of reimbursement for our products from government or other healthcare payors;

·	effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any; and

·	the price at which we sell our products.

 

 

 

 

 

 

 

 

·	developing drugs;

·	undertaking preclinical testing and human clinical trials;

·	obtaining FDA and other regulatory approvals of drugs;

·	formulating and manufacturing drugs; and

·	launching, marketing and selling drugs.

 

 

 

 

 

 

·	we or our licensors or collaborators were the first to make the inventions described in patent applications;

·	we or our licensors or collaborators were the first to file patent applications for inventions;

·	others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

·	any of our pending patent applications will result in issued patents;

·	any patents licensed or issued to us will provide a basis for commercially viable products or will provide us with any competitive advantages or will not be challenged by third parties;

·	we will ultimately be able to enforce our owned or licensed patent rights pertaining to our products;

·	any patents licensed or issued to us will not be challenged, invalidated, held unenforceable or circumvented;

·	we will develop or license proprietary technologies that are patentable; or

·	the patents of others will not have an adverse effect on our ability to do business.

·	announcements by us or our competitors of regulatory developments, clinical trial results, clinical trial enrollment, regulatory filings, product development updates, new products and product launches, significant acquisitions, strategic partnerships or joint ventures;

·	any intellectual property infringement, product liability or any other litigation involving us;

·	developments or disputes concerning patents or other proprietary rights;

·	regulatory developments in the United States and foreign countries;

·	market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;

·	economic or other crises and other external factors;

·	actual or anticipated period-to-period fluctuations in our results of operations;

·	departure of any of our key management personnel; or

·	sales of our common stock.

 

 

		Price Range
Quarter Ended		High				Low
March 31, 2010			1.12				0.60
June 30, 2010			1.40				0.56
September 30, 2010			0.76				0.30
December 31, 2010			0.75				0.39
March 31, 2011			0.90				0.45
June 30, 2011			1.65				0.70
September 30, 2011			1.10				0.50
December 31, 2011			0.72				0.40

 

·	Marqibo® (vincristine sulfate liposomes injection), our lead product candidate, is a novel, targeted Optisome™ encapsulated formulation product candidate of the Food and Drug Administration (FDA)-approved anticancer drug vincristine, currently in development primarily for the treatment of adult acute lymphoblastic leukemia, or ALL, in second or greater relapse or that has progressed following two or more prior lines of anti-leukemia therapy.  We submitted a new drug application, or NDA, relating to Marqibo in July 2011, which was accepted for filing in September 2011.  Our NDA seeks accelerated approval of Marqibo in adult relapsed ALL.  On March 21, 2012, our Marqibo NDA was considered by a panel of the FDA’s Oncologic Drugs Advisory Committee, or ODAC.  By a vote of seven to four (with two abstentions), the ODAC panel determined that Marqibo has demonstrated a favorable risk/benefit ratio for the treatment of adult ALL.  The PDUFA action date for our NDA is May 13, 2012.  However, while the ODAC provides the FDA with independent expert advice and non-binding recommendations, the final decision regarding approval of our NDA will be made by the FDA and there is no assurance it will approve our NDA even following the ODAC panel’s positive determination.
·	Menadione Topical Lotion, a novel supportive care product candidate being developed for the prevention and/or treatment of the skin toxicities associated with the use of epidermal growth factor receptor inhibitors, or EGFRIs, a type of anti-cancer agent used in the treatment of lung, colon, head and neck, pancreatic and breast cancer.  MTL is currently being studied in a Phase 2 placebo-controlled clinical trial sponsored and conducted by Mayo Clinic.
·	Brakiva™ (topotecan liposome injection), a novel targeted Optisome™ encapsulated formulation product candidate of the FDA-approved anticancer drug topotecan.
·	Alocrest™ (vinorelbine liposome injection), a novel, targeted Optisome™ encapsulated formulation product candidate of the FDA-approved anticancer drug vinorelbine.

·

the number of trials and studies in a clinical program;

·

the number of patients who participate in the trials;

·

the number of sites included in the trials;

·

the rates of patient recruitment and enrollment;

·

the duration of patient treatment and follow-up;

·

the costs of manufacturing our drug candidates; and

·

the costs, requirements, timing of, and the ability to secure regulatory approvals.

Product candidates ($ in thousands)		2011				2010(1)				Annual % Change				Product candidate costs (5 years) Jan. 1, 2007 to Dec. 31, 2011
Marqibo		$	7,743			$	12,897				-40	%		$	33,206
Menadione Topical Lotion			158				172				-8.1	%			6,724
Brakiva			30				4				650	%			2,846
Alocrest			30				21				42.9	%			2,630
QTDP grants			--				(704)				-100	%
Total third party costs			742				2,047				-63.8	%
Allocable costs and overhead			513				710				-27.8	%
Personnel related expense			3,883				4,813				-19.3	%
Share-based compensation expense			288				235				22.6	%
Total research and development expense		$	13,387			$	20,195				-33.7	%

 

 

·	costs associated with conducting preclinical and clinical testing;
·	costs of establishing arrangements for manufacturing our product candidates;
·	payments required under our current and any future license agreements and collaborations;
·	costs, timing and outcome of regulatory reviews;
·	costs of obtaining, maintaining and defending patents on our product candidates; and
·	costs of increased general and administrative expenses.

 

 

 

 

Name		Age		Position(s) Held
Steven R. Deitcher, M.D.		47		President, Chief Executive Officer and Director
Craig W. Carlson		64		Senior Vice President, Chief Financial Officer
Samir M. Gharib		29		Controller, Director of Finance
Andrew Ferrer		32		Director
Howard P. Furst, M.D.		43		Director
Cecilia Gonzalo		37		Director
Jonathan S. Leff		43		Director
Paul V. Maier		64		Director
Leon E. Rosenberg, M.D.		78		Chairman of the Board
Robert J. Spiegel, M.D.		62		Director

 

Name and Principal Position		Year			Salary			Bonus			Option Awards (1)			Non-Equity Incentive Plan Compensation(2)			All Other Compensation (3)			Total
Steven R. Deitcher President & CEO		2011 2010		$	454,230 441,000		$	136,269 (4) –		$	– 900,125		$	90,846 308,700 (6)		$	26,438 (5) 20,655 (5)		$	707,783 1,670,480
Craig W. Carlson (7) Sr. VP, CFO		2011 2010		$	323,850 245,833		$	25,908 (8) 11,500 (10)		$	–  377,791		$	51,816 88,500		$	44,573 (9) ­   46,493 (9)		$	446,147 770,117
Anne E. Hagey (11) Former VP, Chief Medical Officer		2011 2010		$	86,250 345,000		$	– –		$	–  78,626		$	– –		$	30,331 (12) 26,576 (12)		$	116,581 450,202
Tyler M. Nielsen (13) Former Controller		2011 2010		$	102,240 145,600		$	– –		$	–  35,798		$	– 30,000		$	24,562 (14) 28,950 (14)		$	126,802 240,348

 

 

 

 

 

 

 

 

Name		Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price ($)		Option Expiration Date
Steven R. Deitcher		100,000 25,000 162,500 50,000 152,778 38,194 43,750 408,750		– – – 25,000 97,222 24,306 43,750 1,226,250		6.60 6.96 4.48 0.56 0.76 0.76 0.92 0.495		05/21/2017 08/24/2017 12/14/2017 02/24/2019 02/16/2020 02/16/2020 06/07/2020 12/21/2020	(1) (2) (3) (4) (5) (6) (7) (8)
Craig W. Carlson		53,472 31,250 176,250		34,028 31,250 528,750		0.76 0.92 0.495		03/01/2020 06/07/2020 12/21/2020	(9) (7) (8)

___________________________

(1)

Option granted May 21, 2007, and which vested in three equal annual installments commencing on the first anniversary of the grant.

(2)

Option granted August 24, 2007, and which vested in three equal annual installments commencing on the first anniversary of the grant.

(3)

Option granted December 14, 2007, and which vested in three equal annual installments commencing on the first anniversary of the grant.

(4)

Option granted February 24, 2009, and which vests in three equal annual installments commencing on the first anniversary of the grant.

(5)

Option granted February 16, 2010, one-third of which is exercisable on the first anniversary of the grant and the remaining two-thirds becomes exercisable in 24 equal monthly installments beginning March 2011.

(6)

Option granted February 16, 2010, the exercisability of which was subject to both continued employment and the achievement of a regulatory milestone relating to Marqibo, which was satisfied in 2010. Exercisability of the option is also subject to continued employment, one-third of which vests on the first anniversary of the grant date and the remaining two-thirds vest in 24 equal monthly installments beginning in March 2011.

(7)

Option granted June 7, 2010, one-third of which vests on the first anniversary of the grant and the remaining two-third vest in 24 equal monthly installments beginning July 2011.

(8)

Option granted December 21, 2010 and which vests in 48 equal monthly installments commencing January 21, 2011.

(9)

Option granted March 1, 2010 upon the commencement of Mr. Carlson’s employment, one-third of which vests on the first anniversary of the grant and the remaining two-third vest in 24 equal monthly installments beginning April 2011.

Name (1)		Fees Earned or Paid in Cash				Option Awards (2)				Total
Nishan de Silva (3)		$	32,500			$	21,667			$	54,167
Andrew Ferrer			32,500				21,667				54,167
Howard P. Furst			32,500				21,667				54,167
Cecilia Gonzalo (3)			2,500				--				2,500
Jonathan S. Leff			32,500				21,667				54,167
Paul V. Maier			32,500				29,095				61,595
Leon E. Rosenberg			70,000				40,238				110,238
Robert J. Spiegel			32,500				21,667				54,167

 

(1)

Steven R. Deitcher, our President and Chief Executive Officer, has been omitted from this table since he receives no additional compensation for serving on our Board; his compensation is described above under “Management and Board of Directors – Executive Compensation.”

(2)

Amounts reflect the grant date fair value of stock option awards granted in April 2011, computed pursuant to Financial Accounting Standards Board’s Accounting Standards Codification 718 “Compensation – Stock Compensation,” excluding the effect of estimated forfeitures. Refer to the assumptions used in applying the Black-Scholes-Merton option pricing model to determine the fair value of awards granted in Note 5, “Stockholders’ Deficit” to financial statements for years ended December 31, 2011 and 2010.

(3)

Dr. Nishan de Silva resigned from the Board effective as of December 14, 2011. Upon the resignation of Dr. de Silva, Warburg Pincus designated Cecilia Gonzalo, a Managing Director at Warburg Pincus, for appointment to the Board pursuant to the terms of the June 2010 Investment Agreement between the Company and Warburg Pincus.  The stock option award relating to 50,000 shares of common stock to which Ms. Gonzalo became entitled upon her initial appointment to the Board on December 14, 2011 was not granted until February 17, 2012, and is thus omitted from this table.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Name

Shares of Common Stock Beneficially Owned

Percent of Class

Shares of Series A-1 Preferred Beneficially Owned

Percent of Class

Shares of Series A-2 Preferred Beneficially Owned

Percent of Class

Steven R. Deitcher (1)

1,478,532

6.4

–

–

–

–

Craig W. Carlson (2)

377,812

*

–

–

–

–

Anne E. Hagey

72,395

*

–

–

–

–

Tyler M. Nielsen

372

*

–

–

–

–

Jonathan S. Leff (3)(4)

91,631,227

80.8

371,307

90

99,000

84.7

Cecilia Gonzalo (4)

91,586,227

80.7

371,307

90

99,000

84.7

Andrew Ferrer (2)(4)

45,000

*

–

–

–

–

Howard P. Furst (2)

45,000

*

–

–

–

–

Paul V. Maier (5)

86,250

*

–

–

–

–

Leon E. Rosenberg (6)

167,300

*

–

–

–

–

Robert J. Spiegel (2)

45,000

*

–

–

–

–

All directors and officers as a group (10 persons)

93,882,371

81.2

371,307

90

99,000

84.7

Warburg Pincus & Co. (7)(8)

91,586,227

80.7

371,307

90

99,000

84.7

450 Lexington Avenue

New York, NY 10017

James E. Flynn (8)(9)

15,265,616

43.9

41,255

10

17,826

15.3

780 Third Avenue, 37th Floor

New York, NY 10017

 

 

(1)	Includes 1,294,340 shares issuable upon the exercise of stock options.

 

(2)	Represents shares issuable upon the exercise of stock options.

 

(3)	Includes 45,000 shares issuable upon the exercise of stock options.

 

 

(5)	Includes 84,500 shares issuable upon the exercise of stock options.

 

(6)	Includes 167,050 shares issuable upon the exercise of stock options.

 

(7)

Pursuant to the Investment Agreement, the Warburg Pincus Purchasers purchased an aggregate of 99,000 shares of Series A-2 Preferred on January 9, 2012. Of this amount, Warburg Pincus Private Equity X, L.P. (“WPX”) purchased 95,931 shares, which are convertible into 32,613,918 shares of common stock as of March 29, 2012, and Warburg Pincus X Partners, L.P. (“WPPX”) purchased 3,069 shares, which are convertible into 1,043,376 shares as of March 29, 2012.  Pursuant to the 2010 Investment Agreement, the Warburg Pincus Purchasers purchased an aggregate of 371,370 shares of Series A-1 Preferred in two closings held on June 7, 2010 and September 10, 2010. Of this amount, WPX purchased 359,797 shares, which are convertible into 56,133,218 shares of common stock as of March 29, 2012, and WPPX purchased 11,510 shares, which are convertible into 1,795,715 shares as of March 29, 2012. Warburg Pincus X, L.P. (“WP X LP”) is a Delaware limited partnership and the sole general partner of each of the Warburg Pincus Purchasers. Warburg Pincus X LLC (“WP X LLC”) is a Delaware limited liability company and the sole general partner of WP X LP. Warburg Pincus Partners, LLC (“WPP LLC”) is a New York limited liability company and the sole member of WP X LLC. Warburg Pincus LLC (“WP LLC”) is a New York limited liability company that manages each of the Warburg Pincus Purchasers. Warburg Pincus & Co. (“WP”) is a New York general partnership and the managing member of WPP LLC. Each of WPX, WPPX, WP X LP, WP X LLC, WPP LLC, WP LLC and WP may be deemed to share the power to (a) dispose or to direct the disposition of the 91,586,227 shares of common stock the Warburg Pincus Purchasers may be deemed to beneficially own (and convert into) as of March 29, 2012, and (b) vote or direct the vote of the 91,586,227 shares of common stock the Warburg Pincus Purchasers may be deemed to beneficially own for voting purposes as of March 29, 2012. Charles R. Kaye and Joseph P. Landy are Managing General Partners of WP and Co-Presidents and Managing Members of WP LLC and may be deemed to control the Warburg Pincus Purchasers. Messrs. Kaye and Landy disclaim beneficial ownership of all shares held by the Warburg Pincus Purchasers. Beneficial ownership information is based on information known to the Company and a Schedule 13D/A filed with the SEC on January 10, 2012, by WPX, WPPX, WP X LP, WP X LLC, WPP LLC, WP LLC, WP, Mr. Kaye and Mr. Landy.

 

(8)	Beneficial ownership of the Purchasers has not been adjusted for accretion beyond March 29, 2012, and does not reflect the contractual right to purchase additional capital stock pursuant to the Investment Agreement.

 

(9)

Pursuant to the Investment Agreement, the Deerfield Purchasers purchased an aggregate of 11,000 shares of Series A-2 Preferred on January 9, 2012.  Of this amount, Deerfield Private Design Fund, L.P. purchased 3,511 shares, Deerfield Private Design International, L.P. purchased 5,656 shares, Deerfield Special Situations Fund International Limited purchased 1,186 shares, and Deerfield Special Situations Fund, L.P. purchased 647 shares.  Also on January 9, 2012, pursuant to the Amendment to Facility Agreement (see “Interests of Certain Persons in Matters to be Acted Upon”), the Deerfield Purchasers were issued an aggregate of 6,826 shares of Series A-2 Preferred in satisfaction of interest accrued under the Facility Agreement for the quarter ended December 31, 2011.  Of this amount, Deerfield Private Design Fund, L.P. was issued 2,179 shares, Deerfield Private Design International, L.P. was issued 3,510 shares, Deerfield Special Situations Fund International Limited was issued 736 shares, and Deerfield Special Situations Fund, L.P. was issued 401 shares.  Pursuant to the 2010 Investment Agreement, the Deerfield Purchasers purchased an aggregate of 41,255 shares of Series A-1 Preferred in two closings held on June 7, 2010 and September 10, 2010. Of this amount, Deerfield Private Design Fund, L.P. purchased 13,168 shares, Deerfield Private Design International, L.P. purchased 21,213 shares, Deerfield Special Situations Fund International Limited purchased 4,448 shares, and Deerfield Special Situations Fund, L.P. purchased 2,426 shares.

 

 

Plan category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuance (excluding securities reflected in column (a)) (c)
Equity compensation plans not approved by stockholders:
Awards issued outside of any plan (1)			59,927			$	2.58				–
2010 Equity Incentive Plan			5,193,207				0.56				3,080,205
Equity compensation plans approved by stockholders:
2003 Stock Option Plan			64,916				6.83				0
2004 Stock Incentive Plan			712,624				5.25				0
2006 Employee Stock Purchase Plan			10,751				0.35				157,649
Total			6,041,425								3,237,854

 

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Fee Category		2011 Fees				2010 Fees
Audit Fees		$	205,504			$	284,222
Audit-Related Fees (1)			41,105				5,805
Tax Fees (2)			38,636				59,184
All Other Fees (3)			-				-
Total Fees		$	285,245			$	349,211