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
(State
or other jurisdiction of
incorporation
or organization)
|
13-4087132
(I.R.S.
Employer
Identification
No.)
|
750
Lexington Avenue
New
York, New York
(Address
of principal executive offices)
|
10022
(Zip
Code)
|
|
Page
|
||
SPECIAL
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
|
1
|
||
PART
I
|
|||
ITEM
1
|
Business
|
2
|
|
ITEM
1A
|
Risk
Factors
|
18
|
|
ITEM
1B
|
Unresolved
Staff Comments
|
27
|
|
ITEM
2
|
Properties
|
27
|
|
ITEM
3
|
Legal
Proceedings
|
27
|
|
ITEM
4
|
Submission
of Matters to a Vote of Security Holders
|
27
|
|
|
|||
PART
II
|
|||
ITEM
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
27
|
|
ITEM
6
|
Selected
Financial Data
|
28
|
|
ITEM
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
30
|
|
ITEM
7A
|
Quantitative
and Qualitative Disclosure About Market Risk
|
38
|
|
ITEM
8
|
Financial
Statements and Supplementary Data
|
38
|
|
ITEM
9
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosures
|
40
|
|
ITEM
9A
|
Controls
and Procedures
|
40
|
|
ITEM
9B
|
Other
Information
|
40
|
|
PART
III
|
|||
ITEM
10
|
Directors
and Executive Officers of the Registrant
|
40
|
|
ITEM
11
|
Executive
Compensation
|
40
|
|
ITEM
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
40
|
|
ITEM
13
|
Certain
Relationships and Related Transactions
|
40
|
|
ITEM
14
|
Principal
Accountant Fees and Services
|
40
|
|
PART
IV
|
|||
ITEM
15
|
Exhibits
and Financial Statement Schedules
|
41
|
|
·
|
expectations
for increases or decreases in expenses;
|
·
|
expectations
for the development, manufacturing, and approval of Sulonex, KRX-0401,
and
our additional product candidates or any other products we may acquire
or
in-license;
|
·
|
expectations
for incurring additional capital expenditures to expand our research
and
development and manufacturing capabilities;
|
·
|
expectations
for generating revenue or becoming profitable on a sustained basis;
|
·
|
expectations
or ability to enter into marketing and other partnership agreements;
|
·
|
expectations
or ability to enter into product acquisition and in-licensing
transactions;
|
·
|
expectations
or ability to build our own commercial infrastructure to manufacture,
market and sell our drug
candidates;
|
·
|
estimates
of the sufficiency of our existing cash and cash equivalents and
investments to finance our business strategy;
|
·
|
expected
losses; and
|
·
|
expectations
for future capital requirements.
|
Product
candidate
|
Target
indication
|
Development
status
|
Endocrine/Renal
|
||
Sulonex™
|
Diabetic
nephropathy
|
Phase
III & Phase IV
|
Zerenex™
|
Hyperphosphatemia
in patients with
end-stage
renal disease
|
Phase
II
|
Oncology
|
||
KRX-0401
|
Multiple
forms of cancer
|
Phase
II
|
KRX-0402
|
Brain
cancer
|
Phase
II
|
KRX-0404
|
Multiple
forms of cancer
|
Pre-clinical
|
Neurology
|
||
KRX-0501
|
Neurological
disorders
|
Pre-clinical
|
● |
continue
our pivotal Phase III and Phase IV program for
Sulonex;
|
● |
establish
the commercial infrastructure required to manufacture, market and
sell our
drug candidates following approval, if any, by the
FDA;
|
● |
continue
our company-sponsored Phase II clinical program for KRX-0401 exploring
the
use of KRX-0401 as a single-agent and in combination with other
anti-cancer therapies in multiple cancer
types;
|
● |
support
additional scientific collaborations for Sulonex and
KRX-0401;
|
● |
conduct
additional pre-clinical and clinical trials for our other drug candidates;
and
|
● |
seek
to in-license or acquire additional compounds.
|
· |
The
delicate filtering membranes of the glomerular loops thicken and
their
crucial anionic glycosaminoglycan molecules are either depleted or
altered
and lose some or all of their negative charge. As the glycosaminoglycan
negative charge provides normal filtering selectivity to the glomerular
membranes, their loss of negative charge results in the release of
protein, usually albumin, from the blood into the filtrate and urine.
The
releases of abnormal amounts of protein or albumin into the urine
are
called proteinuria and albuminuria,
respectively.
|
· |
In
addition, hyperglycemia induced overproduction of TGF beta, a regulatory
protein, by the kidney induces scar formation in the area surrounding
the
glomerular capillaries. Over time, the extrinsic pressure of this
scar
tissue causes collapse of individual glomeruli, loss of functionality
and
release of albumin into the filtrate and
urine.
|
(1) |
50%
reduction in albumin to creatinine ratio or ACR (ACR is a standard
measurement used to assess the level of kidney disease in these patients.
ACR measures the level of albumin protein in urine, also referred
to as
albuminuria,) or
|
(2) |
Normalization
of ACR with at least a 25% reduction in ACR (in this study the normal
laboratory range for albuminuria was defined as less than 20mg of
albumin
to 1g of creatinine).
|
Number
of Patients
(Placebo/200mg)
|
Placebo
|
200mg
|
p
value
Fisher’s
Exact Test (2-sided)
|
|
Per
Protocol
|
36/36
|
11.0%
|
33.0%
|
P=.045
|
Intent
to Treat
|
42/44
|
14.0%
|
32.0%
|
P=.074
|
Number
of Patients
(Placebo/Active)
|
Placebo
|
Active
(200mg
and 400mg)1
|
p
value
Fisher’s
Exact Test (2-sided)
|
|
Per
Protocol
|
36/81
|
11%
|
25%
|
P=.136
|
Intent
to Treat
|
42/94
|
14%
|
26%
|
P=.180
|
Placebo
n=42
|
200mg
n=44
|
Active
(200mg
and 400mg1)
n=94
|
|
>50
% reduction in ACR
|
12.0%
|
27.0%
|
22.0%
|
Normalization
of ACR
|
9.0%
|
23.0%
|
17.0%
|
200mg
vs. Placebo
|
Placebo
vs. Baseline
|
200mg
vs. Baseline
|
|
Two
months
|
-17.00%
|
-4.0%
|
-21.00%
|
Four
months
|
-25.78%
|
7.5%
|
-18.28%
|
Six
months
|
-28.03%
|
12.57%
|
-15.46%
|
Eight
months
(Two
months off therapy)
|
-28.98%
|
18.5%
|
-10.48%
|
Serum
Phosphate
|
|||
Baseline
(mg/dL)
|
End-Point
(Four
Weeks) (mg/dL)
|
Change
from
Baseline
|
|
Zerenex™
(4.5 g/day)
|
7.2
+/- 2.5
|
5.9
+/- 2.0
|
P<0.005
|
Calcium
Acetate (PhosLo®)
(4 g/day)
(1)
|
7.2
+/- 2.0
|
5.6
+/- 1.7
|
P<0.005
|
Serum
Phosphate
|
|||
Baseline
(mg/dL)
|
End-Point
(Four
Weeks) (mg/dL)
|
Change
from
Baseline
|
|
Zerenex™
(3 g/day)
|
6.7
+/- 1.9
|
5.7
+/- 1.6
|
P<0.001
|
Calcium
Carbonate (3 g/day)
(1)
|
7.2
+/- 1.9
|
5.2
+/- 1.5
|
P<0.001
|
· |
that
the drug is intended to treat a serious or life-threatening
condition;
|
· |
that
the drug is intended to treat a serious aspect of the condition;
and
|
· |
that
the drug has the potential to address unmet medical needs, and this
potential is being evaluated in the planned drug development
program.
|
· |
Phase
I:
The drug is administered to a small group of humans, either healthy
volunteers or patients, to test for safety, dosage tolerance, absorption,
metabolism, excretion, and clinical pharmacology.
|
· |
Phase
II:
Studies are conducted on a larger number of patients to assess the
efficacy of the product, to ascertain dose tolerance and the optimal
dose
range, and to gather additional data relating to safety and potential
adverse events.
|
· |
Phase
III:
Studies establish safety and efficacy in an expanded patient population.
|
· |
Phase
IV:
The FDA may require a Phase IV to conduct post-marketing studies
for
purposes of gathering additional evidence of safety and
efficacy.
|
· |
slow
patient enrollment due to the nature of the clinical trial plan,
the
proximity of patients to clinical sites, the eligibility criteria
for
participation in the study or other
factors;
|
· |
inadequately
trained or insufficient personnel at the study site to assist in
overseeing and monitoring clinical trials or delays in approvals
from a
study site’s review board;
|
· |
longer
treatment time required to demonstrate efficacy or determine the
appropriate product dose;
|
· |
insufficient
supply of the drug candidates;
|
· |
adverse
medical events or side effects in treated patients;
and
|
· |
ineffectiveness
of the drug candidates.
|
●
|
manufacture
our product candidates;
|
●
|
assist
us in developing, testing and obtaining regulatory approval for and
commercializing some of our compounds and technologies;
and
|
●
|
market
and distribute our drug products.
|
● |
perceptions
by members of the health care community, including physicians, of
the
safety and efficacy of our product
candidates;
|
● |
the
rates of adoption of our products by medical practitioners and the
target
populations for our products;
|
● |
the
potential advantages that our products offer over existing treatment
methods;
|
● |
the
cost-effectiveness of our products relative to competing
products;
|
● |
the
availability of government or third-party payor reimbursement for
our
products;
|
● |
the
side effects or unfavorable publicity concerning our products or
similar
products; and
|
● |
the
effectiveness of our sales, marketing and distribution efforts.
|
● |
difficulty
and expense of assimilating the operations, technology and personnel
of
the acquired business;
|
● |
our
inability to retain the management, key personnel and other employees
of
the acquired business;
|
● |
our
inability to maintain the acquired company's relationship with key
third
parties, such as alliance partners;
|
● |
exposure
to legal claims for activities of the acquired business prior to
the
acquisition;
|
● |
the
diversion of our management's attention from our core business;
and
|
● |
the
potential impairment of goodwill and write-off of in-process research
and
development costs, adversely affecting our reported results of
operations.
|
● |
government
and health administration authorities;
|
● |
private
health insurers;
|
● |
managed
care programs; and
|
● |
other
third-party payors.
|
● |
decreased
demand for a product;
|
● |
injury
to our reputation;
|
● |
our
inability to continue to develop a drug candidate;
|
● |
withdrawal
of clinical trial volunteers; and
|
● |
loss
of revenues.
|
● |
the
timing of expenses associated with manufacturing and product development
of the proprietary drug candidates within our portfolio and those
that may
be in-licensed, partnered or
acquired;
|
● |
the
timing of the in-licensing, partnering and acquisition of new product
opportunities;
|
● |
the
progress of the development efforts of parties with whom we have
entered,
or may enter, into research and development
agreements;
|
● |
our
ability to achieve our milestones under our licensing arrangements;
and
|
● |
the
costs involved in prosecuting and enforcing patent claims and other
intellectual property rights.
|
● |
the
progress of our development activities;
|
● |
the
progress of our research activities;
|
● |
the
number and scope of our development programs;
|
● |
the
costs associated with commercialization activities, including
manufacturing, marketing and sales;
|
● |
our
ability to establish and maintain current and new licensing or acquisition
arrangements;
|
● |
our
ability to achieve our milestones under our licensing
arrangements;
|
● |
the
costs involved in enforcing patent claims and other intellectual
property
rights; and
|
● |
the
costs and timing of regulatory approvals.
|
● |
developments
concerning our drug candidates;
|
● |
announcements
of technological innovations by us or our competitors;
|
● |
introductions
or announcements of new products by us or our
competitors;
|
● |
announcements
by us of significant acquisitions, strategic partnerships, joint
ventures
or capital commitments;
|
● |
changes
in financial estimates by securities analysts;
|
● |
actual
or anticipated variations in quarterly operating results;
|
● |
expiration
or termination of licenses, research contracts or other collaboration
agreements;
|
● |
conditions
or trends in the regulatory climate and the biotechnology and
pharmaceutical industries;
|
● |
changes
in the market valuations of similar companies; and
|
● |
additions
or departures of key personnel.
|
Fiscal
Year Ended December 31, 2005
|
High
|
Low
|
|||||
Fourth
Quarter
|
$
|
17.90
|
$
|
13.09
|
|||
Third
Quarter
|
$
|
17.71
|
$
|
13.23
|
|||
Second
Quarter
|
$
|
14.49
|
$
|
11.74
|
|||
First
Quarter
|
$
|
15.38
|
$
|
10.77
|
Fiscal
Year Ended December 31, 2004
|
High
|
Low
|
|||||
Fourth
Quarter
|
$
|
13.80
|
$
|
9.65
|
|||
Third
Quarter
|
$
|
12.90
|
$
|
7.13
|
|||
Second
Quarter
|
$
|
19.07
|
$
|
10.57
|
|||
First
Quarter
|
$
|
15.42
|
$
|
4.59
|
Equity
Compensation Plan
Information
|
||||||||||
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|||||||
(a)
|
(b)
|
(c)
|
||||||||
Equity
compensation plans approved by security holders
|
4,961,995
|
$
|
4.51
|
3,361,822
|
||||||
Equity
compensation plans not approved by security holders
|
3,384,633
|
$
|
2.57
|
22,500
|
||||||
Total
|
8,346,628
|
$
|
3.72
|
3,384,322
|
Years
ended December 31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||
Service
revenue
|
$
|
574
|
$
|
809
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||
Operating
expenses:
|
||||||||||||||||
Cost
of services
|
819
|
835
|
--
|
--
|
--
|
|||||||||||
Research
and development:
|
||||||||||||||||
Non-cash
compensation
|
594
|
413
|
(486
|
)
|
(1,382
|
)
|
(17
|
)
|
||||||||
Non-cash
acquired in-process research
and
development
|
--
|
18,800
|
--
|
--
|
--
|
|||||||||||
Other
research and development
|
24,182
|
9,805
|
5,996
|
9,523
|
7,416
|
|||||||||||
Total
research and development
|
24,776
|
29,018
|
5,510
|
8,141
|
7,399
|
|||||||||||
General
and administrative:
|
||||||||||||||||
Non-cash
compensation
|
775
|
1,087
|
188
|
(4
|
)
|
139
|
||||||||||
Other
general and administrative
|
3,416
|
3,581
|
3,684
|
4,108
|
4,302
|
|||||||||||
Total
general and administrative
|
4,191
|
4,668
|
3,872
|
4,104
|
4,441
|
|||||||||||
Total
operating expenses
|
29,786
|
34,521
|
9,382
|
12,245
|
11,840
|
|||||||||||
Operating
loss
|
(29,212
|
)
|
(33,712
|
)
|
(9,382
|
)
|
(12,245
|
)
|
(11,840
|
)
|
||||||
Other
income (expense):
|
||||||||||||||||
Interest
and other income, net
|
2,317
|
770
|
247
|
513
|
2,231
|
|||||||||||
Income
taxes
|
--
|
(1
|
)
|
27
|
(51
|
)
|
(197
|
)
|
||||||||
Net
loss
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(9,108
|
)
|
$
|
(11,783
|
)
|
$
|
(9,806
|
)
|
|
Net
loss per common share
|
||||||||||||||||
Basic
and diluted
|
$
|
(0.78
|
)
|
$
|
(1.10
|
)
|
$
|
(0.43
|
)
|
$
|
(0.59
|
)
|
$
|
(0.50
|
)
|
As
of December
31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Cash,
cash equivalents, interest receivable
and
investment securities
|
$
|
100,733
|
$
|
49,878
|
$
|
31,414
|
$
|
24,131
|
$
|
37,856
|
||||||
Working
capital
|
83,890
|
46,538
|
30,982
|
22,350
|
35,235
|
|||||||||||
Total
assets
|
105,097
|
50,862
|
32,223
|
29,103
|
43,067
|
|||||||||||
Long-term
obligations
|
322
|
92
|
--
|
256
|
766
|
|||||||||||
Contingent
equity rights
|
4,004
|
4,004
|
--
|
--
|
--
|
|||||||||||
Total
stockholders’ equity
|
94,678
|
42,804
|
31,226
|
26,330
|
39,215
|
Years
ended December 31,
|
|||||||||||||
2005
|
2004
|
2003
|
Amounts
accumulated during the
development
stage
|
||||||||||
Sulonex
|
$
|
16,075,000
|
$
|
6,064,000
|
$
|
2,074,000
|
$
|
30,279,000
|
|||||
KRX-0401
|
5,394,000
|
2,230,000
|
N/A
|
7,624,000
|
|||||||||
Other
clinical stage compounds
|
1,593,000
|
623,000
|
N/A
|
2,216,000
|
|||||||||
Other
|
1,120,000
|
888,000
|
3,922,000
|
23,775,000
|
|||||||||
Total
|
$
|
24,182,000
|
$
|
9,805,000
|
$
|
5,996,000
|
$
|
63,894,000
|
(in thousands)
|
2003
|
|||
Other
research and development:
|
||||
Impairment
charge
|
$
|
2,358
|
||
Realization
of bank guarantee in connection with lease agreement
|
144
|
|||
Severance
charge
|
4
|
|||
Total
other research and development
|
2,506
|
|||
Other
general and administrative:
|
||||
Impairment
charge
|
124
|
|||
Realization
of bank guarantee in connection with lease agreement
|
78
|
|||
Severance
charge
|
--
|
|||
Accelerated
depreciation
|
561
|
|||
Total
other general and administrative
|
763
|
|||
Total
|
$
|
3,269
|
Payment
due by period
|
||||||||||||||||
Contractual
obligations
|
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
Research
and development agreements
|
$
|
85,457,000
|
$
|
31,051,000
|
$
|
40,751,000
|
$
|
13,655,000
|
$
|
--
|
||||||
Operating
leases
|
2,879,000
|
630,000
|
1,193,000
|
1,056,000
|
--
|
|||||||||||
Total
|
$
|
88,336,000
|
$
|
31,681,000
|
$
|
41,944,000
|
$
|
14,711,000
|
$
|
--
|
·
|
revenue
that is likely to result from specific in-process research and development
projects, including estimated patient populations, estimated selling
prices, estimated market penetration and estimated market share and
year-over-year growth rates over the product life
cycles;
|
·
|
cost
of sales related to the potential products using industry data or
other
sources of market data;
|
·
|
sales
and marketing expense using industry data or other market
data;
|
·
|
general
and administrative expenses; and
|
·
|
research
and development expenses.
|
·
|
if
the growth rate regarding the revenue assumptions for the three drugs
under development and included in the assumptions on future cash
flows
were increased by 10%, the result on the aggregate amount of the
charge
would have been approximately $4,500,000, yielding a total charge
of
approximately $23,300,000, or if the growth rate were decreased by
5%, the
result on the aggregate amount of the charge would have been approximately
$2,200,000, yielding a total charge of approximately
$16,600,000;
|
·
|
if
the discount rate used to bring the estimated future cash flows to
a
present value amount (which was based on a 55% rate) were reduced
by 10%,
the total charge would have increased to approximately $33,000,000,
and if
the discount rate were increased by 10%, the total charge would have
decreased to approximately $11,000,000.
|
2005
|
|||||||||||||
Mar.
31
|
June
30
|
Sept.
30
|
Dec.
31
|
||||||||||
(in
thousands, except per share data)
|
|||||||||||||
Service
revenue
|
$
|
157
|
$
|
126
|
$
|
82
|
$
|
209
|
|||||
Operating
expenses:
|
|||||||||||||
Cost
of services
|
181
|
161
|
197
|
280
|
|||||||||
Research
and development:
|
|||||||||||||
Non-cash
compensation
|
176
|
137
|
226
|
55
|
|||||||||
Non-cash
acquired in-process research
and
development
|
--
|
--
|
--
|
--
|
|||||||||
Other
research and development
|
4,042
|
5,180
|
6,501
|
8,459
|
|||||||||
Total
research and development
|
4,218
|
5,317
|
6,727
|
8,514
|
|||||||||
General
and administrative:
|
|||||||||||||
Non-cash
compensation
|
185
|
168
|
258
|
164
|
|||||||||
Other
general and administrative
|
645
|
699
|
671
|
1,401
|
|||||||||
Total
general and administrative
|
830
|
867
|
929
|
1,565
|
|||||||||
Total
operating expenses
|
5,229
|
6,345
|
7,853
|
10,359
|
|||||||||
Operating
loss
|
(5,072
|
)
|
(6,219
|
)
|
(7,771
|
)
|
(10,150
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
and other income, net
|
240
|
267
|
823
|
987
|
|||||||||
Income
taxes
|
--
|
--
|
--
|
--
|
|||||||||
Net
loss
|
$
|
(4,832
|
)
|
$
|
(5,952
|
)
|
$
|
(6,948
|
)
|
$
|
(9,163
|
)
|
|
Net
loss per common share
|
|||||||||||||
Basic
and diluted
|
$
|
(0.15
|
)
|
$
|
(0.19
|
)
|
$
|
(0.19
|
)
|
$
|
(0.24
|
)
|
2004
|
|||||||||||||
Mar.
31
|
June
30
|
Sept.
30
|
Dec.
31
|
||||||||||
(in
thousands, except per share data)
|
|||||||||||||
Service
revenue
|
$
|
95
|
$
|
150
|
$
|
397
|
$
|
167
|
|||||
Operating
expenses:
|
|||||||||||||
Cost
of services
|
80
|
123
|
416
|
216
|
|||||||||
Research
and development:
|
|||||||||||||
Non-cash
compensation
|
202
|
23
|
70
|
118
|
|||||||||
Non-cash
acquired in-process research
and
development
|
18,800
|
--
|
--
|
--
|
|||||||||
Other
research and development
|
1,652
|
2,067
|
2,594
|
3,492
|
|||||||||
Total
research and development
|
20,654
|
2,090
|
2,664
|
3,610
|
|||||||||
General
and administrative:
|
|||||||||||||
Non-cash
compensation
|
185
|
621
|
161
|
120
|
|||||||||
Other
general and administrative
|
1,093
|
745
|
596
|
1,147
|
|||||||||
Total
general and administrative
|
1,278
|
1,366
|
757
|
1,267
|
|||||||||
Total
operating expenses
|
22,012
|
3,579
|
3,837
|
5,093
|
|||||||||
Operating
loss
|
(21,917
|
)
|
(3,429
|
)
|
(3,440
|
)
|
(4,926
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
and other income, net
|
95
|
170
|
187
|
318
|
|||||||||
Income
taxes
|
(1
|
)
|
--
|
--
|
--
|
||||||||
Net
loss
|
$
|
(21,823
|
)
|
$
|
(3,259
|
)
|
$
|
(3,253
|
)
|
$
|
(4,608
|
)
|
|
Net
loss per common share
|
|||||||||||||
Basic
and diluted
|
$
|
(0.78
|
)
|
$
|
(0.11
|
)
|
$
|
(0.11
|
)
|
$
|
(0.15
|
)
|
Contents
|
Page
|
|
Reports
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Balance Sheets as of December 31, 2005 and 2004
|
F-3
|
|
Consolidated
Statements of Operations for the years ended December 31, 2005, 2004
and
2003, and the period from December 3, 1996 to December 31,
2005
|
F-4
|
|
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2005, 2004, and 2003, and the period from December 3, 1996 to
December
31, 2005
|
F-5
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2005, 2004
and
2003, and the period from December 3, 1996 to December 31,
2005
|
F-10
|
|
Notes
to the Consolidated Financial Statements
|
F-12
|
Exhibit
|
|
Number
|
Exhibit
Description
|
2.1
|
Agreement
and Plan of Merger by and among Keryx Biopharmaceuticals, Inc., AXO
Acquisition Corp., and ACCESS Oncology, Inc. dated as of January
7, 2004,
filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated
January 8, 2004 (File No. 000-30929), and incorporated herein by
reference.
|
|
|
2.2
|
First
Amendment to the Agreement and Plan of Merger by and among Keryx
Biopharmaceuticals, Inc., AXO Acquisition Corp., and ACCESS Oncology,
Inc.
dated as of February 5, 2004, filed as Exhibit 2.2 to the Registrant’s
Current Report on Form 8-K dated February 5, 2004 (File No. 000-30929),
and incorporated herein by reference.
|
3.1
|
Amended
and Restated Certificate of Incorporation of Keryx Biopharmaceuticals,
Inc., filed as Exhibit 3.1 to the Registrant's Annual Report on Form
10-Q
for the quarter ended June 30, 2004, filed on August 12, 2004 (File
No.
000-30929), and incorporated herein by reference.
|
3.2
|
Amended
and Restated Bylaws of Keryx Biopharmaceuticals, Inc., filed as Exhibit
3.2 to the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2001, filed on March 26, 2002 (File No. 000-30929),
and
incorporated herein by reference.
|
4.1
|
Specimen
Common Stock Certificate, filed as Exhibit 4.1 to the Registrant’s First
Amendment to the Registration Statement on Form S-1 filed on June
30, 2000
(File No. 333-37402), and incorporated herein by
reference.
|
4.2
|
Form
of Warrant for the Purchase of Shares of Common Stock between certain
holders of Series A Preferred Stock and Keryx Biopharmaceuticals,
Inc.,
dated as of December 14, 1999, filed as Exhibit 4.9 to the Registrant’s
Registration Statement on Form S-1 filed on May 19, 2000 (File No.
333-37402), and incorporated herein by reference.
|
4.3
|
Form
of Common Stock Purchase Warrant dated November 20, 2003, issued
to the
purchasers under the Securities Purchase Agreement, filed as Exhibit
10.3
to the Registrant’s Registration Statement on Form S-3 filed on December
12, 2003 (File No. 333-111143), and incorporated herein by
reference.
|
4.4
|
Securities
Purchase Agreement dated November 12, 2003 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.1 to the Company’s Registration Statement on Form S-3 filed
on December 12, 2003 (File No. 333-111143), and incorporated herein
by
reference.
|
|
|
4.5
|
Registration
Rights Agreement dated November 17, 2003 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-3
filed on December 12, 2003 (File No. 333-111143), and incorporated
herein
by reference.
|
4.6
|
Securities
Purchase Agreement dated February 12, 2004 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.1 to the Company’s Registration Statement on Form S-3 filed
on March 16, 2004 (File No. 333-113654), and incorporated herein
by
reference
|
|
|
4.7
|
Registration
Rights Agreement dated February 17, 2004 among Keryx Biopharmaceuticals,
Inc. and the Purchasers identified on the signature pages thereof,
filed
as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-3
filed on March 16, 2004 (File No. 333-113654), and incorporated herein
by
reference.
|
10.1†
|
Employment
Agreement with I. Craig Henderson, M.D., dated as of January 31,
2004.
filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q
for the quarter ended June 30, 2004, filed on August 12, 2004 (File
No.
000-30929), and incorporated herein by reference.
|
10.2!
|
License
Agreement between Alfa Wassermann S.p.A. and Partec Ltd., dated as
of
November 12, 1998, filed as Exhibit 10.7 to the Registrant’s Second
Amendment to the Registration Statement on Form S-1 filed on July
24, 2000
(File No. 333-37402), and incorporated by reference.
|
|
|
10.3!
|
License
Agreement between Opocrin S.p.A. and Keryx Biopharmaceuticals, Inc.,
dated
September 25, 2002, filed as Exhibit 10.9 to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002 filed
on
November 12, 2002 (File No. 000-30929), and incorporated herein by
reference.
|
|
|
10.4
|
Form
of Sulonex™ (KRX-101) Scientific Advisory Board Agreement, filed as
Exhibit 10.20 to the Registrant’s First Amendment to the Registration
Statement on Form S-1 filed on June 30, 2000 (File No. 333-37402),
and
incorporated herein be reference.
|
|
|
10.5†
|
Employment
Agreement between Ron Bentsur and Keryx Biopharmaceuticals, Inc.,
dated as
of June 23, 2003, filed as Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2003 filed on August
14, 2003
(File No. 000-30929), and incorporated herein by reference.
|
|
|
10.6†
|
Employment
Agreement between Keryx Biopharmaceuticals, Inc. and Michael S. Weiss
dated as of December 23, 2002, filed as Exhibit 10.1 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929), and incorporated herein by
reference.
|
|
|
10.7†
|
1999
Stock Option Plan, as amended, filed as Exhibit 10.2 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929) and incorporated herein by
reference.
|
|
|
10.8†
|
2000
Stock Option Plan, as amended, filed as Exhibit 10.3 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929) and incorporated herein by
reference.
|
|
|
10.9†
|
2002
CEO Incentive Stock Option Plan, filed as Exhibit 10.4 to the Registrant’s
Quarterly Report of Form 10-Q for the quarter ended March 31, 2003
filed
on May 15, 2003 (File No. 000-30929) and incorporated herein by
reference.
|
|
|
10.10
|
Sub-license
Agreement dated October 13, 2000 between Procept, Inc. and AOI
Pharmaceuticals, Inc.,
filed as Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.11
|
Amendment
to Sub-license agreement dated February 28, 2002 between AOI
Pharmaceuticals, Inc. and Procept, Inc.,
filed as Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.12
|
Patent
License Agreement dated February 28, 2002 between Procept, Inc. and
United
State Public Health Services, as amended,
filed as Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.13
|
Release
Agreement dated February 28, 2002 among AOI Pharmaceuticals, Inc.,
Procept, Inc., and United States Public Health Services,
filed as Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.14
|
Comprehensive
Release Agreement dated May 29, 2002 among AOI Pharmaceuticals, Inc.,
Procept, Inc., United States Public Health Services and the University
of
Chicago,
filed as Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.15!
|
Sub-license
Agreement between Prescient NeuroPharma, Inc. and ACCESS Oncology,
Inc.
dated December 24, 2001,
filed as Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference. .
|
|
|
10.16!
|
License
Agreement dated September 18, 2002 between Zentaris AG and AOI Pharma,
Inc,
filed as Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.17!
|
Addendum
Agreement to License and Cooperation Agreement for Perifosine dated
December 3, 2003 between Zentaris AG and AOI Pharma, Inc.,
filed as Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
|
|
10.18
|
Cooperative
Research and Development Agreement between the National Cancer Institute
and ASTA Medica Inc., as amended,
filed as Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2003, filed on March 30, 2004, and
incorporated herein by reference.
|
10.19
|
Keryx
Biopharmaceuticals, Inc. 2004 Long-Term Incentive Plan, filed with
the
Registrant’s Definitive Proxy Statement for the Annual Meeting of
Stockholders on June 10, 2004, filed on April 29, 2004, and incorporated
herein by reference.
|
10.20†
|
Employment
Agreement between Ronald C. Renaud, Jr. and Keryx Biopharmaceuticals,
Inc., dated as of February 14, 2006.
|
10.21*
|
License
Agreement between Keryx Biopharmaceuticals, Inc. and Panion & BF
Biotech, Inc. dated as of November 7, 2005.
|
21.1
|
List
of subsidiaries of Keryx Biopharmaceuticals, Inc.
|
|
|
23.1
|
Consent
of KPMG LLP.
|
24.1
|
Power
of Attorney of Director and Officers of Keryx Biopharmaceuticals,
Inc.
(included herein).
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 7, 2006.
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 7, 2006.
|
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 7,
2006.
|
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 7,
2006.
|
! |
Confidential
treatment has been granted with respect to the omitted portions of
this
exhibit.
|
† |
Indicates
management contract or compensatory plan or
arrangement.
|
* |
Confidential
treatment has been requested with respect to the omitted portions
of this
exhibit.
|
Contents
|
Page
|
|
Reports
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Balance Sheets as of December 31, 2005 and 2004
|
F-3
|
|
Consolidated
Statements of Operations for the years ended December 31, 2005, 2004
and
2003, and the period from December 3, 1996 to December 31,
2005
|
F-4
|
|
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2005, 2004, and 2003, and the period from December 3, 1996 to
December
31, 2005
|
F-5
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2005, 2004
and
2003, and the period from December 3, 1996 to December 31,
2005
|
F-10
|
|
Notes
to the Consolidated Financial Statements
|
F-12
|
2005
|
2004
|
||||||
Assets
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
68,175
|
$
|
29,699
|
|||
Short-term
investment securities
|
18,272
|
20,035
|
|||||
Accrued
interest receivable
|
336
|
144
|
|||||
Other
receivables and prepaid expenses
|
3,200
|
622
|
|||||
Total
current assets
|
89,983
|
50,500
|
|||||
Long-term
investment securities
|
13,950
|
--
|
|||||
Property,
plant and equipment, net
|
1,004
|
145
|
|||||
Other
assets (primarily intangible assets), net
|
160
|
217
|
|||||
Total
assets
|
$
|
105,097
|
$
|
50,862
|
|||
Liabilities
and stockholders’ equity
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable and accrued expenses
|
$
|
5,054
|
$
|
3,079
|
|||
Accrued
compensation and related liabilities
|
936
|
743
|
|||||
Deferred
revenue
|
103
|
140
|
|||||
Total
current liabilities
|
6,093
|
3,962
|
|||||
Contingent
equity rights
|
4,004
|
4,004
|
|||||
Other
liabilities
|
322
|
92
|
|||||
Total
liabilities
|
10,419
|
8,058
|
|||||
Stockholders’
equity
|
|||||||
Common
stock, $0.001 par value per share (60,000,000 and 60,000,000 shares
authorized, 37,831,896 and 31,373,280 shares issued, 37,775,796 and
31,317,180 shares outstanding at December 31, 2005, and 2004,
respectively)
|
38
|
31
|
|||||
Additional
paid-in capital
|
210,758
|
132,643
|
|||||
Treasury
stock, at cost, 56,100 shares at December 31, 2005, and 2004,
respectively
|
(89
|
)
|
(89
|
)
|
|||
Unearned
compensation
|
(1,581
|
)
|
(2,228
|
)
|
|||
Deficit
accumulated during the development stage
|
(114,448
|
)
|
(87,553
|
)
|
|||
Total
stockholders’ equity
|
94,678
|
42,804
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
105,097
|
$
|
50,862
|
2005
|
2004
|
2003
|
Amounts
accumulated during the development
stage
|
||||||||||
Revenue:
|
|||||||||||||
Service
revenue
|
$
|
574
|
$
|
809
|
$
|
--
|
$
|
1,383
|
|||||
Management
fees from related party
|
--
|
--
|
--
|
300
|
|||||||||
Total
revenue
|
574
|
809
|
--
|
1,683
|
|||||||||
Operating
expenses:
|
|||||||||||||
Cost
of services
|
819
|
835
|
--
|
1,654
|
|||||||||
Research
and development:
|
|||||||||||||
Non-cash
compensation
|
594
|
413
|
(486
|
)
|
7,734
|
||||||||
Non-cash
acquired in-process research and development
|
--
|
18,800
|
--
|
18,800
|
|||||||||
Other
research and development
|
24,182
|
9,805
|
5,996
|
63,894
|
|||||||||
Total
research and development expenses
|
24,776
|
29,018
|
5,510
|
90,428
|
|||||||||
General
and administrative:
|
|||||||||||||
Non-cash
compensation
|
775
|
1,087
|
188
|
5,441
|
|||||||||
Other
general and administrative
|
3,416
|
3,581
|
3,684
|
25,086
|
|||||||||
Total
general and administrative expenses
|
4,191
|
4,668
|
3,872
|
30,527
|
|||||||||
Total
operating expenses
|
29,786
|
34,521
|
9,382
|
122,609
|
|||||||||
Operating
loss
|
(29,212
|
)
|
(33,712
|
)
|
(9,382
|
)
|
(120,926
|
)
|
|||||
Interest
and other income, net
|
2,317
|
770
|
247
|
6,969
|
|||||||||
Net
loss before income taxes
|
(26,895
|
)
|
(32,942
|
)
|
(9,135
|
)
|
(113,957
|
)
|
|||||
Income
taxes
|
--
|
1
|
(27
|
)
|
491
|
||||||||
Net
loss
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(9,108
|
)
|
$
|
(114,448
|
)
|
|
Basic
and diluted loss per common share
|
$
|
(0.78
|
)
|
$
|
(1.10
|
)
|
$
|
(0.43
|
)
|
$
|
(6.34
|
)
|
|
Weighted
average shares used in computing basic and diluted net loss per common
share
|
34,384,576
|
30,053,647
|
21,367,088
|
18,055,463
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Balance
at December 31, 2002
|
--
|
$
|
--
|
19,913,185
|
$
|
20
|
$
|
72,067
|
||||||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$867)
|
--
|
--
|
3,529,412
|
3
|
14,130
|
|||||||||||
Purchase
of common stock
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Exercise
of options
|
--
|
--
|
1,574,276
|
2
|
179
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
--
|
--
|
(334
|
)
|
||||||||||
Net
loss
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Balance
at December 31, 2003
|
--
|
$
|
--
|
25,016,873
|
$
|
25
|
$
|
86,042
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Balance
at December 31, 2002
|
46,300
|
$
|
(77
|
)
|
$
|
(178
|
)
|
$
|
(45,502
|
)
|
$
|
26,330
|
||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$867)
|
--
|
--
|
--
|
--
|
14,133
|
|||||||||||
Purchase
of common stock
|
9,800
|
(12
|
)
|
--
|
--
|
(12
|
)
|
|||||||||
Exercise
of options
|
--
|
--
|
--
|
--
|
181
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
36
|
--
|
(298
|
)
|
||||||||||
Net
loss
|
--
|
--
|
--
|
(9,108
|
)
|
(9,108
|
)
|
|||||||||
Balance
at December 31, 2003
|
56,100
|
$
|
(89
|
)
|
$
|
(142
|
)
|
$
|
(54,610
|
)
|
$
|
31,226
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Balance
at December 31, 2003
|
--
|
$
|
--
|
25,016,873
|
$
|
25
|
$
|
86,042
|
||||||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$338)
|
--
|
--
|
3,200,000
|
3
|
31,659
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
--
|
--
|
623,145
|
1
|
6,324
|
|||||||||||
Exercise
of warrants
|
--
|
--
|
348,824
|
--*
|
2,093
|
|||||||||||
Exercise
of options
|
--
|
--
|
2,184,438
|
2
|
2,939
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
--
|
--
|
3,586
|
|||||||||||
Net
loss
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Balance
at December 31, 2004
|
--
|
$
|
--
|
31,373,280
|
$
|
31
|
$
|
132,643
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Balance
at December 31, 2003
|
56,100
|
$
|
(89
|
)
|
$
|
(142
|
)
|
$
|
(54,610
|
)
|
$
|
31,226
|
||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$338)
|
--
|
--
|
--
|
--
|
31,662
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
--
|
--
|
--
|
--
|
6,325
|
|||||||||||
Exercise
of warrants
|
--
|
--
|
--
|
--
|
2,093
|
|||||||||||
Exercise
of options
|
--
|
--
|
--
|
--
|
2,941
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
(2,086
|
)
|
--
|
1,500
|
||||||||||
Net
loss
|
--
|
--
|
--
|
(32,943
|
)
|
(32,943
|
)
|
|||||||||
Balance
at December 31, 2004
|
56,100
|
$
|
(89
|
)
|
$
|
(2,228
|
)
|
$
|
(87,553
|
)
|
$
|
42,804
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Balance
at December 31, 2004
|
--
|
$
|
--
|
31,373,280
|
$
|
31
|
$
|
132,643
|
||||||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,419)
|
--
|
--
|
5,780,000
|
6
|
75,784
|
|||||||||||
Exercise
of warrants
|
--
|
--
|
157,647
|
1
|
946
|
|||||||||||
Exercise
of options
|
--
|
--
|
520,969
|
--*
|
663
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
--
|
--
|
722
|
|||||||||||
Net
loss
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Balance
at December 31, 2005
|
--
|
$
|
--
|
37,831,896
|
$
|
38
|
$
|
210,758
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Balance
at December 31, 2004
|
56,100
|
$
|
(89
|
)
|
$
|
(2,228
|
)
|
$
|
(87,553
|
)
|
$
|
42,804
|
||||
Changes
during the year:
|
||||||||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,419)
|
--
|
--
|
--
|
--
|
75,790
|
|||||||||||
Exercise
of warrants
|
--
|
--
|
--
|
--
|
947
|
|||||||||||
Exercise
of options
|
--
|
--
|
--
|
--
|
663
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
647
|
--
|
1,369
|
|||||||||||
Net
loss
|
--
|
--
|
--
|
(26,895
|
)
|
(26,895
|
)
|
|||||||||
Balance
at December 31, 2005
|
56,100
|
$
|
(89
|
)
|
$
|
(1,581
|
)
|
$
|
(114,448
|
)
|
$
|
94,678
|
Series
A convertible
preferred
stock
|
Common
stock
|
Additional
paid-in
|
||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
||||||||||||
Amounts
accumulated during the development stage (December 3, 1996 to December
31,
2005):
|
||||||||||||||||
Contributed
capital
|
--
|
$
|
--
|
--
|
$
|
--
|
$
|
3,181
|
||||||||
Conversion
of convertible notes of Partec into stock in Keryx
|
--
|
--
|
--
|
--
|
2,973
|
|||||||||||
Issuance
of Series A convertible preferred stock to investors at $100 per
share for
cash (net of issuance expenses of $552)
|
89,180
|
--*
|
--
|
--
|
8,338
|
|||||||||||
Issuance
of Series A convertible preferred stock at $0.001 par value to note
holders in exchange for note of predecessor
|
29,465
|
--*
|
--
|
--
|
--
|
|||||||||||
Issuance
of common stock to technology licensors for technology
license
|
--
|
--
|
1,256,797
|
2
|
358
|
|||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,419)
|
--
|
--
|
5,780,000
|
6
|
75,784
|
|||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$1,205)
|
--
|
--
|
6,729,412
|
6
|
45,789
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
--
|
--
|
623,145
|
1
|
6,324
|
|||||||||||
Receipt
on account of shares issued in prior years
|
--
|
--
|
6,900,000
|
7
|
--
|
|||||||||||
Conversion
of Series A convertible preferred stock to common stock
|
(118,645
|
)
|
(--)*
|
6,114,962
|
6
|
(6
|
)
|
|||||||||
Issuance
of common stock in initial public offering, including exercise of
overallotment (net of issuance expenses of $5,702)
|
--
|
--
|
5,200,000
|
5
|
46,293
|
|||||||||||
Purchase
of common stock
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Exercise
of warrants
|
--
|
--
|
753,897
|
1
|
3,050
|
|||||||||||
Exercise
of options
|
--
|
--
|
4,473,683
|
4
|
3,806
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
--
|
--
|
14,166
|
|||||||||||
Warrants
of common stock issued to related party as finder’s fee in private
placement
|
--
|
--
|
--
|
--
|
114
|
|||||||||||
Warrants
for common stock issued to note holders in exchange for note of
predecessor
|
--
|
--
|
--
|
--
|
588
|
|||||||||||
Net
loss
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Balance
at December 31, 2005
|
--
|
$
|
--
|
37,831,896
|
$
|
38
|
$
|
210,758
|
Treasury
stock
|
Unearned
|
Deficit
accumulated during the development
|
||||||||||||||
Shares
|
Amount
|
compensation
|
stage
|
Total
|
||||||||||||
Amounts
accumulated during the development stage (December 3, 1996 to December
31,
2005):
|
||||||||||||||||
Contributed
capital
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
3,181
|
|||||||
Conversion
of convertible notes of Partec into stock in Keryx
|
--
|
--
|
--
|
--
|
2,973
|
|||||||||||
Issuance
of Series A convertible preferred stock to investors at $100 per
share for
cash (net of issuance expenses of $552)
|
--
|
--
|
--
|
--
|
8,338
|
|||||||||||
Issuance
of Series A convertible preferred stock at $0.001 par value to note
holders in exchange for note of predecessor
|
--
|
--
|
--
|
--
|
--*
|
|||||||||||
Issuance
of common stock to technology licensors for technology
license
|
--
|
--
|
--
|
--
|
360
|
|||||||||||
Issuance
of common stock in public offering (net of issuance expenses of
$5,419)
|
--
|
--
|
--
|
--
|
75,790
|
|||||||||||
Issuance
of common stock in private placement (net of issuance expenses of
$1,205)
|
--
|
--
|
--
|
--
|
45,795
|
|||||||||||
Issuance
of common stock in connection with acquisition
|
--
|
--
|
--
|
--
|
6,325
|
|||||||||||
Receipt
on account of shares issued in prior years
|
--
|
--
|
--
|
--
|
7
|
|||||||||||
Conversion
of Series A convertible preferred stock to common stock
|
--
|
--
|
--
|
--
|
(--)*
|
|||||||||||
Issuance
of common stock in initial public offering, including exercise of
overallotment (net of issuance expenses of $5,702)
|
--
|
--
|
--
|
--
|
46,298
|
|||||||||||
Purchase
of common stock
|
56,100
|
(89
|
)
|
--
|
--
|
(89
|
)
|
|||||||||
Exercise
of warrants
|
--
|
--
|
--
|
--
|
3,051
|
|||||||||||
Exercise
of options
|
--
|
--
|
--
|
--
|
3,810
|
|||||||||||
Compensation
in respect of options and warrants granted to employees, directors
and
third-parties
|
--
|
--
|
(1,581
|
)
|
--
|
12,585
|
||||||||||
Warrants
of common stock issued to related party as finder’s fee in private
placement
|
--
|
--
|
--
|
--
|
114
|
|||||||||||
Warrants
for common stock issued to note holders in exchange for note of
predecessor
|
--
|
--
|
--
|
--
|
588
|
|||||||||||
Net
loss
|
--
|
--
|
--
|
(114,448
|
)
|
(114,448
|
)
|
|||||||||
Balance
at December 31, 2005
|
56,100
|
$
|
(89
|
)
|
$
|
(1,581
|
)
|
$
|
(114,448
|
)
|
$
|
94,678
|
2005
|
2004
|
2003
|
Amounts
accumulated
during
the
development
stage
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||||||||
Net
loss
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(9,108
|
)
|
$
|
(114,448
|
)
|
|
Adjustments
to reconcile cash flows used in operating activities:
|
|||||||||||||
Acquired
in-process research and development
|
--
|
18,800
|
--
|
18,800
|
|||||||||
Stock
compensation expense (gain)
|
1,369
|
1,500
|
(298
|
)
|
13,175
|
||||||||
Issuance
of common stock to technology licensor
|
--
|
--
|
--
|
359
|
|||||||||
Interest
on convertible notes settled through issuance of preferred
shares
|
--
|
--
|
--
|
253
|
|||||||||
Depreciation
and amortization
|
190
|
155
|
940
|
2,611
|
|||||||||
Loss
on disposal of property, plant and equipment
|
2
|
--
|
86
|
172
|
|||||||||
Impairment
charges
|
--
|
--
|
2,482
|
2,482
|
|||||||||
Exchange
rate differences
|
--
|
(3
|
)
|
13
|
94
|
||||||||
Changes
in assets and liabilities, net of effects of acquisitions:
|
|||||||||||||
Decrease
(increase) in other receivables and prepaid expenses
|
(2,578
|
)
|
(43
|
)
|
54
|
(2,829
|
)
|
||||||
Decrease
(increase) in accrued interest receivable
|
(192
|
)
|
(33
|
)
|
95
|
(336
|
)
|
||||||
Decrease
(increase) in security deposits
|
(8
|
)
|
--
|
--
|
(8
|
)
|
|||||||
Changes
in deferred tax provisions and valuation allowance
|
--
|
--
|
102
|
--
|
|||||||||
Increase
(decrease) in accounts payable and accrued expenses
|
1,975
|
874
|
22
|
3,741
|
|||||||||
Increase
(decrease) in income taxes payable
|
--
|
--
|
(177
|
)
|
--
|
||||||||
Increase
(decrease) in accrued compensation and related liabilities
|
193
|
68
|
(1,317
|
)
|
364
|
||||||||
(Decrease)
in liability in respect of employee severance obligations
|
--
|
--
|
(188
|
)
|
--
|
||||||||
Increase
(decrease) in other liabilities
|
230
|
(63
|
)
|
--
|
167
|
||||||||
Increase
(decrease) in deferred revenue
|
(37
|
)
|
(316
|
)
|
--
|
(353
|
)
|
||||||
Net
cash used in operating activities
|
(25,751
|
)
|
(12,004
|
)
|
(7,294
|
)
|
(75,756
|
)
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||||||||
Purchases
of property, plant and equipment
|
(964
|
)
|
(24
|
)
|
(3
|
)
|
(5,391
|
)
|
|||||
Proceeds
from disposals of property, plant and equipment
|
1
|
--
|
387
|
425
|
|||||||||
(Increase)
in note and accrued interest receivable from related party
|
--
|
(4
|
)
|
(352
|
)
|
(356
|
)
|
||||||
(Increase)
in other assets
|
(23
|
)
|
(8
|
)
|
(65
|
)
|
(1,219
|
)
|
|||||
Proceeds
from deposits in respect of employee severance obligations
|
--
|
--
|
416
|
--
|
|||||||||
(Investment
in) held-to-maturity short-term securities
|
(1,122
|
)
|
(16,838
|
)
|
(16,298
|
)
|
(44,833
|
)
|
|||||
Proceeds
from maturity of held-to-maturity short-term securities
|
15,045
|
11,459
|
17,242
|
43,746
|
|||||||||
(Investment
in) available-for-sale short-term securities
|
(13,700
|
)
|
(6,025
|
)
|
--
|
(19,725
|
)
|
||||||
Proceeds
from sale of available-for-sale short-term securities
|
8,675
|
1,000
|
--
|
9,675
|
|||||||||
(Investment
in) held-to-maturity long-term securities
|
(21,270
|
)
|
--
|
--
|
(21,270
|
)
|
|||||||
Proceeds
from maturity of held-to-maturity long-term securities
|
185
|
--
|
--
|
185
|
|||||||||
Net
cash provided by (used in) investing activities
|
(13,173
|
)
|
(10,440
|
)
|
1,327
|
(38,763
|
)
|
2005
|
2004
|
2003
|
Amounts
accumulated
during
the
development
stage
|
||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||||||||
Proceeds
from short-term loans
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
500
|
|||||
Proceeds
from long-term loans
|
--
|
--
|
--
|
3,251
|
|||||||||
Payment
of assumed notes payable and accrued interest in connection with
the
ACCESS Oncology acquisition
|
--
|
(6,322
|
)
|
--
|
(6,322
|
)
|
|||||||
Issuance
of convertible note, net
|
--
|
--
|
--
|
2,150
|
|||||||||
Issuance
of preferred shares, net
|
--
|
--
|
--
|
8,453
|
|||||||||
Receipts
on account of shares previously issued
|
--
|
--
|
--
|
7
|
|||||||||
Proceeds
from initial public offering, net
|
--
|
--
|
--
|
46,298
|
|||||||||
Proceeds
from secondary public offering, net
|
75,790
|
--
|
--
|
75,790
|
|||||||||
Proceeds
from private placements, net
|
--
|
31,662
|
14,133
|
45,795
|
|||||||||
Proceeds
from exercise of options and warrants
|
1,610
|
5,034
|
181
|
6,861
|
|||||||||
Purchase
of treasury stock
|
--
|
--
|
(12
|
)
|
(89
|
)
|
|||||||
Net
cash provided by (used in) financing activities
|
77,400
|
30,374
|
14,302
|
182,694
|
|||||||||
Cash
acquired in acquisition
|
--
|
94
|
--
|
94
|
|||||||||
Effect
of exchange rate on cash
|
--
|
3
|
(13
|
)
|
(94
|
)
|
|||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
38,476
|
8,027
|
8,322
|
68,175
|
|||||||||
Cash
and cash equivalents at beginning of year
|
29,699
|
21,672
|
13,350
|
--
|
|||||||||
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
68,175
|
$
|
29,699
|
$
|
21,672
|
$
|
68,175
|
|||||
NON
- CASH TRANSACTIONS
|
|||||||||||||
Issuance
of common stock in connection with acquisition
|
$
|
--
|
$
|
6,325
|
$
|
--
|
$
|
6,325
|
|||||
Issuance
of contingent equity rights in connection with acquisition
|
--
|
4,004
|
--
|
4,004
|
|||||||||
Assumption
of liabilities in connection with acquisition
|
--
|
8,723
|
--
|
8,723
|
|||||||||
Conversion
of short-term loans into contributed capital
|
--
|
--
|
--
|
500
|
|||||||||
Conversion
of long-term loans into contributed capital
|
--
|
--
|
--
|
2,681
|
|||||||||
Conversion
of long-term loans into convertible notes of Partec
|
--
|
--
|
--
|
570
|
|||||||||
Conversion
of convertible notes of Partec and accrued interest into stock in
Keryx
|
--
|
--
|
--
|
2,973
|
|||||||||
Issuance
of warrants to related party as finder’s fee in private
placement
|
--
|
--
|
--
|
114
|
|||||||||
Declaration
of stock dividend
|
--
|
--
|
--
|
3
|
|||||||||
SUPPLEMENTARY
DISCLOSURES OF CASH FLOW INFORMATION
|
|||||||||||||
Cash
paid for interest
|
$
|
--
|
$
|
1,026
|
$
|
1
|
$
|
1,166
|
|||||
Cash
paid for income taxes
|
$
|
--
|
$
|
1
|
$
|
60
|
$
|
432
|
|
Estimated
useful
life
(years)
|
Office
furniture and equipment
|
3-7
|
Computers,
software and related equipment
|
3
|
For
the year ended December 31
|
Amounts
accumulated during the development
|
||||||||||||
(in
thousands, except per share amounts)
|
2005
|
2004
|
2003
|
stage
|
|||||||||
Net
loss, as reported
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(9,108
|
)
|
$
|
(114,448
|
)
|
|
Add:
Stock-based compensation expense to employees and directors determined
under the intrinsic value-based method, as included in reported net
loss
|
445
|
667
|
80
|
10,179
|
|||||||||
Deduct:
Stock-based compensation expense to employees and directors determined
under fair value based method
|
(3,797
|
)
|
(3,770
|
)
|
(1,286
|
)
|
(20,216
|
)
|
|||||
Pro
forma net loss
|
$
|
(30,247
|
)
|
$
|
(36,046
|
)
|
$
|
(10,314
|
)
|
$
|
(124,485
|
)
|
|
Basic
and diluted loss per common share:
|
|||||||||||||
As
reported
|
$
|
(0.78
|
)
|
$
|
(1.10
|
)
|
$
|
(0.43
|
)
|
$
|
(6.34
|
)
|
|
Pro
forma
|
$
|
(0.88
|
)
|
$
|
(1.20
|
)
|
$
|
(0.48
|
)
|
$
|
(6.89
|
)
|
(in
thousands)
|
December
31, 2005
|
December
31, 2004
|
|||||
Money
market funds
|
$
|
13,383
|
$
|
12,904
|
|||
Securities
(original maturity less than 90 days)
|
--
|
1,249
|
|||||
Checking
and bank deposits
|
54,792
|
15,546
|
|||||
Total
|
$
|
68,175
|
$
|
29,699
|
December
31, 2005
|
|||||||||||||
(in
thousands)
|
Amortized
cost
|
Gross
unrealized
holding
gains
|
Gross
unrealized
holding
losses
|
Estimated
fair
value
|
|||||||||
Short-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between July and October
2006)
|
$
|
7,150
|
$
|
--
|
$
|
(49
|
)
|
$
|
7,101
|
||||
Auction
notes **
|
10,050
|
--
|
--
|
10,050
|
|||||||||
US
corporate debt securities (mature between March and May
2006)
|
1,072
|
--
|
(4
|
)
|
1,068
|
||||||||
$
|
18,272
|
$
|
--
|
$
|
(53
|
)
|
$
|
18,219
|
|||||
Long-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between January and July
2007)
|
$
|
13,950
|
$
|
--
|
$
|
(90
|
)
|
$
|
13,860
|
||||
US
corporate debt securities
|
--
|
--
|
--
|
--
|
|||||||||
$
|
13,950
|
$
|
--
|
$
|
(90
|
)
|
$
|
13,860
|
December
31, 2004
|
|||||||||||||
(in
thousands)
|
Amortized
cost
|
Gross
unrealized
holding
gains
|
Gross
unrealized
holding
losses
|
Estimated
fair
value
|
|||||||||
Short-term
investments:
|
|||||||||||||
Obligations
of domestic governmental agencies (mature between February and September
2005)
|
$
|
12,911
|
$
|
--
|
$
|
(66
|
)
|
$
|
12,845
|
||||
Auction
notes **
|
5,025
|
--
|
--
|
5,025
|
|||||||||
US
corporate debt securities (mature between January and April
2005)
|
2,099
|
--*
|
(2
|
)
|
2,097
|
||||||||
$
|
20,035
|
$
|
--*
|
$
|
(68
|
)
|
$
|
19,967
|
* |
Amount
less than one thousand dollars.
|
** |
Amortized
cost approximates fair value. Unrealized gains and losses are not
material.
|
(in
thousands)
|
December
31, 2005
|
December
31, 2004
|
|||||
Manufacturing
equipment
|
$
|
663
|
$
|
--
|
|||
Leasehold
improvements
|
16
|
--
|
|||||
Office
furniture and equipment
|
308
|
104
|
|||||
Computers,
software and related equipment
|
234
|
158
|
|||||
1,221
|
262
|
||||||
Accumulated
depreciation and amortization
|
(217
|
)
|
(117
|
)
|
|||
Net
book value
|
$
|
1,004
|
$
|
145
|
For
the year ended December 31
|
||||||||||
(in thousands)
|
2005
|
|
2004
|
|
2003
|
|||||
Depreciation
expense:
|
||||||||||
Cost
of services
|
$
|
4
|
$
|
7
|
$
|
--
|
||||
Research
and development
|
72
|
44
|
188
|
|||||||
General
and administrative
|
26
|
16
|
653
|
|||||||
Total
|
$
|
102
|
$
|
67
|
$
|
841
|
(in
thousands)
|
December
31, 2005
|
December
31, 2004
|
|||||
Patents
and other intangible assets
|
$
|
352
|
$
|
352
|
|||
Long-term
deposits
|
67
|
59
|
|||||
Deferred
registration fees
|
49
|
26
|
|||||
468
|
437
|
||||||
Accumulated
patent amortization
|
(308
|
)
|
(220
|
)
|
|||
$
|
160
|
$
|
217
|
· |
500,000
shares of the Company’s common stock upon enrollment of the first patient
in a Keryx-sponsored Phase III (or other pivotal) clinical trial
for any
of the acquired ACCESS Oncology drug
candidates;
|
· |
750,000
shares of the Company’s common stock upon the first new drug application
acceptance by the Food and Drug Administration, or FDA, for any of
the
acquired ACCESS Oncology drug candidates;
|
· |
1,750,000
shares of the Company’s common stock upon the first FDA approval of any of
the acquired ACCESS Oncology drug candidates;
and
|
· |
372,422
shares of the Company’s common stock following the first 12-month period
that sales of all of the acquired ACCESS Oncology drug candidates
combined
exceeds $100 million.
|
(in
thousands, except share and per share amounts)
|
|||||||
Assumed
liabilities
|
$
|
8,723
|
|||||
Number
of shares of Keryx common stock issued
|
623,145
|
||||||
Multiplied
by Keryx’s volume-adjusted weighted average closing price per share
measured over the last seven trading days immediately preceding the
closing
|
$
|
10.15
|
6,325
|
||||
Contingent
equity rights
|
4,004
|
||||||
Other
transaction costs
|
450
|
||||||
Total
purchase price
|
$
|
19,502
|
(in
thousands)
|
|||||
Allocation
of purchase price:
|
|||||
Net
assets acquired
|
$
|
725
|
|||
Adjusted
for write-off of existing intangible assets
|
23
|
||||
Net
tangible assets acquired
|
702
|
||||
Acquired
in-process research and development charge
|
18,800
|
||||
Purchase
price
|
$
|
19,502
|
(in
thousands, except per share amounts)
|
2004
|
2003
|
|||||
Revenue
|
$
|
911
|
$
|
786
|
|||
Net
loss
|
$
|
(14,086
|
)
|
$
|
(12,113
|
)
|
|
Basic
and diluted loss per common share
|
$
|
(0.47
|
)
|
$
|
(0.55
|
)
|
a.
|
The
“1999 Stock Option Plan” adopted in November 1999, pursuant to which the
Company’s board of directors could grant stock-based awards to directors,
consultants and employees. The plan authorizes grants to purchase
up to
4,230,000 shares of authorized but unissued common stock. The plan
limits
the term of each option, to a term of no more than twenty-five (25)
years
from the date of the grant, unless authorized by the board. The plan
allows for administration by the board of directors or a committee
appointed by the Board, which has the authority, in its discretion,
to
determine the terms and conditions of any option granted to a Company
service provider, including the vesting
schedule.
|
b. |
The
“2000 Stock Option Plan” adopted in June 2000, pursuant to which the
compensation committee of the Company’s board of directors could grant
stock-based awards to directors, consultants and employees. The 2000
plan
authorizes grants to purchase up to 4,455,000 shares of authorized
but
unissued common stock. The plan limits the term of each option, to
a term
of no more than 10 years from the date of the grant, unless authorized
by
the board.
|
c. |
The
“Non-Plan” adopted in February 2000, pursuant to which the Company’s board
of directors granted options, which are not part of any plan, to
non-employee directors of the Company to purchase up to 240,000 shares
of
authorized but unissued common stock. The options issued by the board
of
directors pursuant to the Non-Plan have a life of 10 years from the
date
of their grant.
|
d.
|
The
“2002 CEO Incentive Stock Option Plan” adopted in December 2002, pursuant
to which the Company’s board of directors granted an option to the
newly-appointed Chief Executive Officer of the Company to purchase
up to
2,002,657 shares of authorized but unissued common stock. The option
has a
term of no more than 10 years plus one day from the date of the grant,
unless otherwise authorized by the Company’s board of directors. The
option granted to the newly appointed Chief Executive Officer was
part of
a total grant of options issued pursuant to the 1999 Stock Option
Plan,
the 2000 Stock Option Plan and the 2002 CEO Incentive Stock Option
Plan,
to purchase a total of 4,050,000 shares of the Company’s common stock. Of
these options, one-third (or 1,350,000) vest over a three-year period
and
two-thirds (or 2,700,000) vest upon the earlier of the achievement
of
certain performance-based milestones or December 23, 2012. In addition,
in
the event of a merger, acquisition or other change of control or
in the
event that the Company terminates the Chief Executive Officer’s
employment, either without cause or as a result of his death or
disability, or he terminates his employment for good reason, the
exercisability of any of the options described in this paragraph
that are
unexercisable at the time of such event or termination shall accelerate
and the time period during which he shall be allowed to exercise
such
options shall be extended to the shorter of two years from the date
of the
termination of his employment or December 24, 2012. Additionally,
the
Company’s board of directors shall have the discretion to accelerate all
or a portion of these options at any
time.
|
e. |
The
“2004 President Incentive Stock Option Plan” adopted in February 2004,
pursuant to which the Company’s board of directors granted an option to
the newly-appointed President of the Company to purchase up to 1,000,000
shares of authorized but unissued common stock. The option has a
term of
no more than 10 years plus one day from the date of the grant, unless
otherwise authorized by the Company’s board of directors. The option
granted to the newly appointed President was made pursuant to an
employment following the acquisition of ACCESS Oncology, Inc. in
February
2004. Of these options, 166,667 vest over a three-year period and
833,333
vest upon the earlier of the achievement of certain performance-based
milestones or January 2, 2014. In addition, in the event of a merger,
acquisition or other change of control or in the event that the Company
terminates the President’s employment, either without cause or as a result
of his death or disability, or he terminates his employment for good
reason, the exercisability of any of the options described in this
paragraph that are unexercisable at the time of such event or termination
shall accelerate and the time period during which he shall be allowed
to
exercise such options shall be extended to the shorter of two years
from
the date of the termination of his employment or January 2, 2014.
Additionally, the Company’s board of directors shall have the discretion
to accelerate all or a portion of these options at any time.
|
f. |
The
“2004 Long-Term Incentive Plan” adopted in June 2004, pursuant to which
the compensation committee of the Company’s board of directors could grant
stock-based awards to directors, consultants and employees. The 2004
plan
authorizes grants to purchase up to 4,000,000 shares of authorized
but
unissued common stock. The plan limits the term of each option, to
a term
of no more than 10 years from the date of their grant.
|
Stock
option plan
|
Exercise
price
per
share
|
Authorized
|
Outstanding
|
Exercised
|
Exercisable
|
Available
for
grant
|
|||||||||||||
1999
Stock Option Plan
|
$
|
0.10
- 1.30
|
4,230,000
|
681,095
|
3,503,905
|
507,424
|
--
|
||||||||||||
2000
Stock Option Plan
|
1.07
- 19.00
|
4,455,000
|
2,757,400
|
807,278
|
2,219,369
|
890,322
|
|||||||||||||
Non
Plan
|
0.33
|
240,000
|
60,000
|
157,500
|
60,000
|
22,500
|
|||||||||||||
2002
CEO Incentive Stock Option Plan
|
1.30
|
2,002,657
|
2,002,657
|
--
|
1,001,329
|
--
|
|||||||||||||
2004
President Incentive Plan
|
4.59
|
1,000,000
|
1,000,000
|
--
|
263,889
|
--
|
|||||||||||||
2004
Long-Term Incentive Plan
|
1.92
- 16.67
|
4,000,000
|
1,523,500
|
5,000
|
308,125
|
2,471,500
|
|||||||||||||
|
15,927,657
|
8,024,652
|
4,473,683
|
4,360,135
|
3,384,322
|
Outstanding
stock options
|
||||||||||
Shares
available
|
Number
of
shares
|
Weighted-
average
exercise
price
|
||||||||
Balance,
December 31, 2002
|
1,388,630
|
9,345,027
|
1.51
|
|||||||
Restatement
|
(45,000
|
)
|
||||||||
Authorized
|
--
|
|||||||||
Granted
|
(1,005,000
|
)
|
1,005,000
|
1.35
|
||||||
Exercised
|
--
|
(1,574,276
|
)
|
0.12
|
||||||
Canceled
|
771,442
|
(771,442
|
)
|
5.10
|
||||||
Balance,
December 31, 2003
|
1,110,072
|
8,004,309
|
1.42
|
|||||||
Authorized
|
5,000,000
|
|||||||||
Granted
|
(1,870,000
|
)
|
1,870,000
|
6.42
|
||||||
Exercised
|
--
|
(2,184,438
|
)
|
1.35
|
||||||
Canceled
|
15,250
|
(15,250
|
)
|
8.15
|
||||||
Balance,
December 31, 2004
|
4,255,322
|
7,674,621
|
2.64
|
|||||||
Authorized
|
--
|
|||||||||
Granted
|
(952,500
|
)
|
952,500
|
11.50
|
||||||
Exercised
|
--
|
(520,969
|
)
|
1.27
|
||||||
Canceled
|
81,500
|
(81,500
|
)
|
11.96
|
||||||
Balance,
December 31, 2005
|
3,384,322
|
8,024,652
|
3.69
|
|||||||
Exercisable
at December 31, 2003
|
3,510,230
|
1.54
|
||||||||
Exercisable
at December 31, 2004
|
3,807,576
|
1.75
|
||||||||
Exercisable
at December 31, 2005
|
4,360,135
|
2.37
|
For
the year ended December 31
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Weighted-average
fair value of options granted during the period at an exercise price
equal
to market price at issue date
|
$
|
7.84
|
$
|
4.37
|
$
|
0.83
|
||||
Weighted-average
exercise price of options granted during the period at an exercise
price
equal to market price at issue date
|
$
|
11.50
|
$
|
6.42
|
$
|
1.35
|
||||
Weighted-average
fair value of options granted during the period at an exercise price
greater than market price at issue date
|
N/A
|
N/A
|
$
|
2.46
|
||||||
Weighted-average
exercise price of options granted during the period at an exercise
price
greater than market price at issue date
|
N/A
|
N/A
|
$
|
1.38
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.10
|
267,752
|
13.0
|
$
|
0.10
|
267,752
|
$
|
0.10
|
|||||||||
0.11
- 0.50
|
60,000
|
4.0
|
0.33
|
60,000
|
0.33
|
|||||||||||
0.51
- 3.00
|
4,749,340
|
7.1
|
1.31
|
3,181,840
|
1.32
|
|||||||||||
3.01
- 5.75
|
1,438,060
|
7.8
|
4.61
|
519,292
|
4.65
|
|||||||||||
5.76
- 10.00
|
164,000
|
7.6
|
8.52
|
84,563
|
8.62
|
|||||||||||
10.01
- 19.00
|
1,345,500
|
8.7
|
11.51
|
246,688
|
11.96
|
|||||||||||
8,024,652
|
4,360,135
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.10
|
252,819
|
13.0
|
$
|
0.10
|
252,819
|
$
|
0.10
|
|||||||||
0.11
- 0.50
|
60,000
|
4.0
|
0.33
|
60,000
|
0.33
|
|||||||||||
0.51
- 3.00
|
4,708,668
|
7.1
|
1.31
|
3,141,168
|
1.31
|
|||||||||||
3.01
- 5.75
|
1,335,312
|
7.9
|
4.60
|
444,513
|
4.63
|
|||||||||||
5.76
- 10.00
|
109,000
|
7.9
|
8.76
|
50,563
|
8.61
|
|||||||||||
10.01
- 19.00
|
1,123,000
|
8.7
|
11.56
|
185,125
|
11.94
|
|||||||||||
7,588,799
|
4,134,188
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.10
|
14,933
|
13.0
|
$
|
0.10
|
14,933
|
$
|
0.10
|
|||||||||
0.11
- 0.50
|
--
|
N/A
|
N/A
|
--
|
N/A
|
|||||||||||
0.51
- 3.00
|
40,672
|
7.5
|
2.05
|
40,672
|
2.05
|
|||||||||||
3.01
- 5.75
|
102,748
|
7.1
|
4.72
|
74,779
|
4.77
|
|||||||||||
5.76
- 10.00
|
55,000
|
7.1
|
8.06
|
34,000
|
8.63
|
|||||||||||
10.01
- 19.00
|
222,500
|
8.8
|
11.25
|
61,563
|
12.00
|
|||||||||||
435,853
|
225,947
|
Warrants
|
Weighted-
average
exercise
price
|
||||||
Balance,
December 31, 2002
|
1,044,801
|
3.15
|
|||||
Issued
|
755,883
|
6.00
|
|||||
Exercised
|
--
|
--
|
|||||
Canceled
|
(558,307
|
)
|
5.75
|
||||
Balance,
December 31, 2003
|
1,242,377
|
3.71
|
|||||
Issued
|
--
|
--
|
|||||
Exercised
|
(348,824
|
)
|
6.00
|
||||
Canceled
|
(375,000
|
)
|
0.01
|
||||
Balance,
December 31, 2004
|
518,553
|
$
|
4.86
|
||||
Issued
|
--
|
--
|
|||||
Exercised
|
(157,647
|
)
|
6.00
|
||||
Canceled
|
(38,930
|
)
|
1.94
|
||||
Balance,
December 31, 2005
|
321,976
|
$
|
4.65
|
For
the year ended December
31
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Weighted-average
fair value of warrants granted during the period at an exercise price
equal to market price at issue date
|
N/A
|
N/A
|
N/A
|
|||||||
Weighted-average
exercise price of warrants granted during the period at an exercise
price
equal to market price at issue date
|
N/A
|
N/A
|
N/A
|
|||||||
Weighted-average
fair value of warrants granted during the period at an exercise price
greater than market price at issue date
|
N/A
|
N/A
|
$
|
3.45
|
||||||
Weighted-average
exercise price of warrants granted during the period at an exercise
price
greater than market price at issue date
|
N/A
|
N/A
|
$
|
6.00
|
Warrants
outstanding
|
Warrants
exercisable
|
|||||||||||||||
Range
of
exercise
prices
|
Number
outstanding
|
Weighted-
average
remaining
contractual
life
(years)
|
Weighed-
average
exercise
price
|
Number
exercisable
|
Weighed-average
exercise
price
|
|||||||||||
$
0.01
|
72,564
|
3.2
|
$
|
0.01
|
72,564
|
$
|
0.01
|
|||||||||
6.00
|
249,412
|
3.0
|
6.00
|
249,412
|
6.00
|
|||||||||||
321,976
|
3.1
|
$
|
4.65
|
321,976
|
$
|
4.65
|
For
the year ended December 31,
|
||||||||||
(in
thousands)
|
2005
|
2004
|
2003
|
|||||||
Losses
before taxes on income, as reported in the consolidated statements
of
operations
|
$
|
(26,895
|
)
|
$
|
(32,943
|
)
|
$
|
(9,135
|
)
|
|
Computed
“expected” tax benefit
|
(9,413
|
)
|
(11,530
|
)
|
(3,197
|
)
|
||||
Increase
(decrease) in income taxes resulting from:
|
||||||||||
Expected
benefit from state & local taxes
|
(3,379
|
)
|
(2,853
|
)
|
(868
|
)
|
||||
Change
in state and local effective tax rate
|
(3,130
|
)
|
--
|
1,601
|
||||||
Permanent
differences, including IPR&D of $6,580 in 2004
|
(571
|
)
|
6,586
|
1
|
||||||
Effect
of foreign operations
|
--
|
143
|
901
|
|||||||
Change
in the balance of the valuation allowance for deferred tax assets
allocated to income tax expense
|
16,493
|
7,654
|
1,535
|
|||||||
|
$
|
--
|
$
|
--
|
$
|
(27
|
)
|
For
the year ended December 31,
|
||||||||||
(in
thousands)
|
2005
|
2004
|
2003
|
|||||||
Deferred
tax benefit
|
$
|
(18,931
|
)
|
$
|
(19,104
|
)
|
$
|
(1,433
|
)
|
|
Federal
deferred tax benefit relating to the exercise of stock
options
|
2,438
|
5,926
|
--
|
|||||||
Federal
deferred tax benefit relating to ACCESS Oncology
|
--
|
5,524
|
--
|
|||||||
Increase
in the valuation allowance for deferred tax assets
|
16,493
|
7,654
|
1,535
|
|||||||
|
$
|
--
|
$
|
--
|
$
|
102
|
(in
thousands)
|
December
31, 2005
|
December
31, 2004
|
|||||
Deferred
tax assets/(liabilities):
|
|||||||
Net
operating loss carryforwards
|
$
|
45,697
|
$
|
26,903
|
|||
Net
operating loss carryforwards (ACCESS Oncology)
|
6,128
|
6,128
|
|||||
Non-cash
compensation
|
2,298
|
2,281
|
|||||
Research
and development
|
2,457
|
2,748
|
|||||
Depreciation
and amortization
|
870
|
538
|
|||||
Accrued
compensation
|
357
|
278
|
|||||
Other
temporary differences
|
68
|
68
|
|||||
Net
deferred tax asset, excluding valuation allowance
|
57,875
|
38,944
|
|||||
Less
valuation allowance
|
(57,875
|
)
|
(38,944
|
)
|
|||
Net
deferred tax assets
|
$
|
--
|
$
|
--
|
For
the year ended December 31,
|
||||||||||
(in
thousands)
|
2005
|
2004
|
2003
|
|||||||
Interest
income
|
$
|
2,317
|
$
|
690
|
$
|
272
|
||||
Interest
expense and other bank charges
|
--
|
(27
|
)
|
(25
|
)
|
|||||
Other
income
|
--
|
107
|
--
|
|||||||
$
|
2,317
|
$
|
770
|
$
|
247
|
(in
thousands)
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||
Research
and development agreements
|
$
|
31,051
|
$
|
24,321
|
$
|
16,430
|
$
|
13,514
|
$
|
141
|
(in
thousands)
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||
Operating
leases
|
$
|
630
|
$
|
597
|
$
|
596
|
$
|
597
|
$
|
459
|
(in
thousands)
|
2003
|
|||
Other
research and development:
|
||||
Impairment
charge
|
$
|
2,358
|
||
Realization
of bank guarantee in connection with lease agreement
|
144
|
|||
Severance
charge
|
4
|
|||
Total
other research and development
|
2,506
|
|||
Other
general and administrative:
|
||||
Impairment
charge
|
124
|
|||
Realization
of bank guarantee in connection with lease agreement
|
78
|
|||
Severance
charge
|
--
|
|||
Accelerated
depreciation
|
561
|
|||
Total
other general and administrative
|
763
|
|||
Total
|
$
|
3,269
|
KERYX
BIOPHARMACEUTICALS, INC.
|
||
|
|
|
By: |
/s/
Michael S. Weiss
|
|
Michael S. Weiss |
||
Chairman
and Chief Executive
Officer
|
Signatures
|
Title
|
|
/s/
Michael S. Weiss
Michael
S. Weiss
|
Chairman
and Chief Executive Officer
(principal
executive officer)
|
|
|
||
/s/
Ronald C. Renaud, Jr.
Ronald
C. Renaud, Jr.
|
Senior
Vice President, Chief Financial Officer, Secretary and
Treasurer
(principal
financial officer)
|
|
|
||
/s/
Ron Bentsur
Ron
Bentsur
|
Principal
Accounting Officer
|
|
|
||
/s/
I. Craig Henderson, M.D.
I.
Craig Henderson, M.D.
|
President
and Director
|
|
|
||
/s/
Malcolm Hoenlein
Malcolm
Hoenlein
|
Director
|
|
|
||
/s/
Lawrence Jay Kessel, M.D.
Lawrence
Jay Kessel, M.D.
|
Director
|
|
|
||
/s/
Peter Salomon, M.D.
Peter
Salomon, M.D.
|
Director
|
|
|
||
/s/
Eric A. Rose, M.D.
Eric
A. Rose, M.D.
|
Director
|
|
|
||
/s/
Lindsay A. Rosenwald, M.D.
Lindsay
A. Rosenwald, M.D.
|
Director
|
|
|
||
/s/
Jonathan Spicehandler, M.D.
Jonathan
Spicehandler, M.D.
|
Director
|
Exhibit
|
|
Number
|
Exhibit
Description
|
10.20†
|
Employment
Agreement between Ronald C. Renaud, Jr. and Keryx Biopharmaceuticals,
Inc., dated as of February 14, 2006.
|
10.21*
|
License
Agreement between Keryx Biopharmaceuticals, Inc. and Panion & BF
Biotech, Inc. dated as of November 7, 2005.
|
21.1
|
List
of subsidiaries of Keryx Biopharmaceuticals, Inc.
|
|
|
23.1
|
Consent
of KPMG LLP.
|
24.1
|
Power
of Attorney of Director and Officers of Keryx Biopharmaceuticals,
Inc.
(included herein).
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 7, 2006.
|
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated
March 7, 2006.
|
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 7,
2006.
|
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
March 7,
2006.
|
* |
Confidential
treatment has been requested with respect to the omitted portions
of this
exhibit.
|
† |
Indicates
management contract or compensation plan or
arrangement.
|