SECURITIES AND EXCHANGE COMMISSION
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO _____
COMMISSION FILE NUMBER 000-25132
(Exact name of Registrant as specified in its charter)
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DELAWARE
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25-1741849
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1066 Epalinges (Switzerland)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 011 41 21 653 4535
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
o No
x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
o No
x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed be Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
x No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
x No
o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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o Large accelerated filer
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o Accelerated filer
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o Non-accelerated filer
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x smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o No
x.
The aggregate market value of the voting common stock held by non-affiliates of the registrant (assuming officers and directors are affiliates) was approximately U.S. $4,292,809 as of December 31, 2013, computed on the basis of the closing price on such date.
As of March 28, 2014, there were 298,418,813 shares of the registrant's Common Stock outstanding.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements, which are identified by the words "believe," "expect," "anticipate," "intend," "plan" and similar expressions. The statements contained herein which are not based on historical facts are forward-looking statements that involve known and unknown risks and uncertainties that could significantly affect our actual results, performance or achievements in the future and, accordingly, such actual results, performance or achievements may materially differ from those expressed or implied in any forward-looking statements made by or on our behalf. These risks and uncertainties include, but are not limited to, risks associated with our ability to successfully develop and protect our intellectual property, our ability to raise additional capital to fund future operations and compliance with applicable laws and changes in such laws and the administration of such laws. These risks are described below and in "Item 1. Business," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" included in this Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date the statements were made.
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PART I
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ITEM 1.
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4
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ITEM 1A.
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13
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ITEM 1B.
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18
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ITEM 2.
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18
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ITEM 3.
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18
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ITEM 4.
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18
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PART II
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ITEM 5.
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19
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ITEM 6.
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20
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ITEM 7.
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20
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ITEM 7A.
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25
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ITEM 8.
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25
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ITEM 9.
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25
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ITEM 9A.
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25
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ITEM 9B.
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26
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PART III
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ITEM 10.
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27
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ITEM 11.
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29
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ITEM 12.
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32
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ITEM 13.
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33
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ITEM 14.
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33
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PART IV
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ITEM 15.
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34
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60
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PART I
We are a vaccine company developing unique vaccines that focus on the mucosal layer as a first line of defense against viruses entering the blood stream and the development of virosomes as a new vaccine delivery platform. We believe that virosomes are the most promising vaccine delivery systems since they do not use live attenuated or killed pathogens and increase the immunogenicity and stability of the vaccine.
We currently do not make, market or sell any products, but we generate some revenue through the licensing of our RSV vaccine and R&D services. We believe that our research and development activities will result in valuable intellectual property that can generate significant revenues for us in the future such as by licensing. Vaccines are one of the fastest growing markets in the pharmaceutical industry. Vaccines have evolved from being an exclusively low price sector to one where substantial prices may be paid for some vaccine products that address unmet medical needs.
HISTORY AND DEVELOPMENT OF THE COMPANY
We were incorporated in July 1994 pursuant to the laws of the Commonwealth of Pennsylvania under the name "PDG Remediation, Inc." In November 1996, we reincorporated under the laws of the State of Delaware and changed our name to "ICHOR Corporation." In July 2001, we changed our name to "Mymetics Corporation."
In March 2001, we acquired 99.9% of the outstanding shares of the French registered company Mymetics S.A. in consideration for shares of our common stock and shares of Class B Exchangeable Preferential Non-Voting Stock of 6543 Luxembourg S.A., which are convertible into shares of our common stock. In 2002, we acquired all but 0.01% of the remaining outstanding common stock of Mymetics S.A. pursuant to share exchanges with the remaining stockholders of Mymetics S.A. The terms of these share exchanges were substantially similar to the terms of the share exchange that occurred in March 2001. In 2004, all the remaining convertible shares of 6543 Luxembourg S.A. not already held by Mymetics Corporation were converted into shares of Mymetics Corporation. On February 7, 2006, the Tribunal de Commerce in Lyon, France placed the French subsidiary Mymetics S.A., under receivership ("Redressement Judiciaire") and this subsidiary was subsequently officially closed by the Tribunal de Commerce in Lyon on March 21, 2012.
We
own all of the outstanding voting stock of: (i) Mymetics S.A., a company originally organized as Mymetics Management Sаrl in 2007 under the laws of Switzerland, (ii) 6543 Luxembourg S.A., a joint stock company organized in 2001 under the laws of Luxembourg,(iii) Bestewil Holding B.V. and (vi) Bestewil Holding B.V’s subsidiary Mymetics B.V. (formerly Virosome Biologicals B.V.) both of which are organized under the laws of The Netherlands and were acquired in 2009. In this document, unless the context otherwise requires, "Mymetics" and the "Corporation" refer to Mymetics Corporation and its subsidiaries.
Our Swiss subsidiary Mymetics S.A. was founded in 2007 as Mymetics Management Sàrl to facilitate the conduct of our business in Switzerland. This includes managing our staff retirement and social security contributions, leasing our Swiss premises and other such local tasks which a U.S. registered company cannot easily conduct without significant legal and organizational costs. The change in name and bylaws affected in 2009, from “Société à Responsabilité Limitée » (SàRL) to “Société Anonyme” (SA) is indicative of the transition from a pure service company status of this unit to a development company in its own rights within Mymetics Corporation.
Our Luxembourg subsidiary, Luxembourg 6543 S.A., was founded in 2001 in connection with the acquisition of Mymetics S.A. of France (formerly Hippocampe S.A.) by Mymetics Corporation. Luxembourg 6543 S.A. is dormant.
BESTEWIL HOLDING B.V. and its subsidiary MYMETICS B.V.
On April 1, 2009 we entered into an agreement with Norwood Immunology Limited (“NIL”) for the acquisition of Bestewil Holding B.V. (“Bestewil”) from its parent, NIL, under a Share Purchase Agreement pursuant to which we agreed to purchase all issued and outstanding shares of capital stock (the “Bestewil Shares”) of Bestewil from its parent, NIL, and all issued and outstanding shares of capital stock of Virosome Biologicals B.V. which were held by Bestewil. Virosome Biologicals B.V., the name of which was subsequently changed to Mymetics B.V., continues to be engaged in research and development activities in its own facilities in Leiden (Netherlands) under the management of its founder, the original inventor of the virosome technology.
PRODUCTS UNDER DEVELOPMENT
Our current pipeline has five proprietary vaccines in development: HIV-1, malaria, herpes simplex virus type I and II (HSV-1 and HSV-II), respiratory syncytial virus (RSV) and intra-nasal influenza vaccine. The vaccines in our portfolio are primarily prophylactic. The current stage of development of these vaccines is shown in the table below:
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Vaccine
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Pre-Clinical
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Phase I
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Phase II
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HIV-1
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X
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RSV
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X
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HSV
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X
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Malaria
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X
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X (ended in 2007)
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Influenza
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X
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Note: The Phase II for the malaria vaccine was a different formulation than the current Mymetics malaria vaccine.
HIV-1 (human immunodeficiency virus type 1) is a retrovirus that gradually destroys the immune system and ultimately leads to AIDS. HIV-1 is among the pathogens harboring the highest genetic variation, leading to millions of variants, each rapidly mutating. Indeed, HIV-1 exists under many different versions (aka “clades”), like members of a large family; they are different from, but related to each other.
Our current prophylactic HIV-1 vaccine will be constituted of virosomes linked to conserved antigens (epitopes) derived from the HIV-1 gp41 proteins from the clade B, the dominant clade found in Europe and North America. Other conserved viral antigens are under investigation. The vaccine is designed to trigger blood and mucosal antibodies of both isotype IgG and IgA, for example in the vaginal and intestinal tracts. The rationale for the design of the vaccine was based on the observation that certain people who are repeatedly exposed to HIV-1 do not contract infection; they were shown to have mucosal antibodies in the semen or vaginal secretions against the HIV-1 gp41 that apparently protect them. Mymetics’ vaccine is trying to reproduce “Mother Nature”.
Key scientific results with the HIV vaccine to date:
2005:
“Proof of Concept” for inducing mucosal antibodies. Vaccination of rabbits with virosomes-P1 elicited mucosal antibodies in the vagina and intestinal mucosa. P1 is a synthetic peptide corresponding to the C-terminal end of the C-helix ectodomain of the gp41. In a laboratory test, these antibodies strongly inhibited HIV-1 passage through the mucosal tissues, also called trancytosis, confirming the potential of developing an HIV-1 vaccine that prevents infection at the mucosal layer.
2006/2007:
Mucosal antibodies in monkeys. Macaque monkeys (
Macaca Mulatta), from Chinese origin, showed after vaccination with virosomes-P1, specific mucosal antibodies, which were detected in more than 90% of the animals and harboring the potential to block
in-vitro HIV-1 trancytosis, confirming the rabbit data.
2008:
Full protection of monkeys against multiple vaginal challenges with live heterologous clade B virus. Macaque monkeys from Chinese origin were vaccinated with both virosomes-modified P1 and virosomes-rgp41 (vaccine MYM-V201.) One month after the last vaccination, animals received multiple intra-vaginal challenges with the live SHIV
SF162P3 virus. The vaccinated animals that developed mucosal antibodies with trancytosis inhibition activity were not infected with the virus, while the placebo vaccinated control group was fully infected.
Dec 2008:
Approval to start Phase I clinical trials. After the ground breaking results of the monkey study in 2006 and 2008, a Phase I study proposal (IMPD, IB, clinical protocol, etc) was submitted and approved by the Independent Ethics Committee (IEC)of the Ghent University Hospital. Mymetics received the approval and authorization from the Federal Agency for Medicines and Health Products (FAGG) in Belgium to conduct the clinical trial MYM-V101-CT08-101 (EudraCT number 2008-007306-10) for testing the drug product MYM-V101 (virosomes with the modified and lipidated P1).
Sep.- Oct. 2009:
Production of the GMP-grade vaccine (MYMV101: virosomes-modified P1) for a Phase I clinical trial in Belgium. European competent authorities require GMP-grade products for clinical phase I. Currently in the U.S., GLP-grade products are required at this stage, while GMP-grade products are required from Phase II onwards. GMP-grade products are notoriously more difficult and costly to produce than GLP-grade ones. Succeeding in the GMP production is considered a major achievement.
Dec. 2009 - Sep. 2010:
Phase I clinical trial –“proof of principle” with the final signed report in July 2011. The trial demonstrated that virosomes-modified P1 can induce mucosal antibodies in the genital tract of women, and confirmed the immunogenicity data previously obtained on monkeys. The drug product MYMV-101 was used as a vaccine in a double-blind, placebo-controlled Phase I study at CEVAC (Ghent, Belgium), involving 24 healthy women randomized in 2 Panels to monitor safety and mucosal immunogenicity: Panel 1: 10 microgram/dose and Panel 2: 50 microgram/dose. In each Panel, 8 subjects received the vaccine and 4 subjects received the placebo through intra-muscular (weeks 0 and 8) and intra-nasal (weeks 16 and 24) administrations. The Phase I clinical trial achieved its primary objective and showed that the HIV vaccine MYMV101 was safe and well tolerated by healthy women. The secondary objective was also met as the presence of IgG and IgA antibodies in the serum of all vaccinated women was detected. Further, samples showed that mucosal antibodies in the vaginal and rectal secretions were present. Tested vaginal secretions could block
in vitro the HIV-1 transcytosis, confirming the previous pre-clinical work. Mymetics could claim a shelf life of nine months for its MYM-V101 drug product.
Until now Mymetics has financed the development of the HIV-1 vaccine mainly through its own capital. Going forward, we continue to seek funding either through grants or through partnership agreements to perform the further development of the HIV-1 vaccine.
2014:
Further development of HIV-1 prophylactic vaccine. Following the Phase I clinical trial with only one out of two promising antigens, we intend to further develop and optimize the HIV-1 prophylactic vaccine formulation by adding an additional antigen and increasing its shelf life. This vaccine called MYM-V201 is expected to elicit a broader antibody immune response against other conserved regions of HIV-1 in order to minimize viral escape.
In 2014 Mymetics is preparing, contingent on funding through grants or through a partnership agreement, the bridge and toxicology studies for generating supportive data, which will lead to GMP production of the drug products MYM-V201 in 2014 if grants are obtained. A Phase I on women and men could start by 2016, with Phase II trials to follow in 2017, and an eventual market launch anticipated in 2025.
Respiratory Syncytial Virus (RSV)
Respiratory syncytial virus (RSV) is a disease that causes infections of the lower respiratory tract, mainly in infants and young children. The virus, which belongs to the Paramyxoviridae family, can cause symptoms similar to the common cold, but can also lead to otitis media (middle ear infection), pneumonia, and bronchiolitis (inflammation of the small airways in the lung). Infection with RSV early in life can increase the chances of developing recurrent wheezing and asthma. Globally, RSV is responsible for over 30 million new acute lower respiratory infection episodes annually and up to 199,000 deaths in children under five years old, with 99 percent of these deaths occurring in low-resource countries. It’s so widespread in the United States that nearly all children become infected with the virus before their second birthdays. The elderly population is also at risk of severe RSV disease.
Approach: The RSV vaccine consists of the reconstituted membrane of RSV containing the native viral proteins, which can be adjuvanted with a lipopeptide or other adjuvants. In mice, our RSV vaccine was shown to induce cellular and humoral immunity to the virus, with a balanced Th1/Th2 response, resulting in protection against a live virus challenge, and without inducing “enhanced disease” (a skewed Th1/Th2 response being the hallmark of enhanced disease). In cotton rats, a better model than mice for RSV, the vaccine protected against a live virus challenge, without inducing enhanced disease. In a direct comparison with the 1960’s vaccine of another pharmaceutical company that caused severe safety issues in infants, another group of cotton rats was immunized with formaldehyde-inactivated virus, and developed enhanced disease after vaccination and challenge. Mymetics focuses on developing an RSV vaccine for elderly followed by a vaccine for children.
2007: First pre-clinical research on our RSV vaccine.
2008 and 2009: MedImmune repeated key experiments in order to obtain their own validation of the results. Results were beyond their expectation but MedImmune decided not to continue the program.
2010: Conducting additional pre-clinical research and improving the manufacturing procedure of the RSV virosomes and publication of Mymetics RSV results in scientific journal “Vaccine.
2011: Improved the understanding of the adjuvant ratio in different formulations and continued further tests on cotton rats and mice at the University of Groningen, Netherlands, showing that a different adjuvant ratios still triggered protection and the absence of enhanced disease and the vaccine could trigger systemic and mucosal antibodies.
May 2012: Publication of Mymetics RSV vaccine results in scientific journal “PLOS ONE”.
2013: Improved up-scale capabilities and up and down stream process of vaccine production and tested different formulations.
March 2013: Publication of Mymetics RSV vaccine results in scientific journal “Vaccine”.
April 2013: Publication of Mymetics RSV vaccine results in scientific journal “Influenza Journal”
On December 27, 2013 Mymetics signed a License and Collaboration Agreement with RSV Corporation (RSVC), a dedicated entity specifically set-up for developing the Mymetics RSV vaccine. Under this agreement Astellas Pharma Inc. will fund RSVC’s development of the virosome vaccine technology, licensed from Mymetics for the respiratory syncytial virus (RSV) through completion of a Phase 2b human proof
‐of
‐concept study. Based on the strategic partnership, Astellas received exclusive rights to acquire RSVC as well as further develop and commercialize the vaccine product.
We will continue to provide research and development activities for the pre-clinical phases and prepare for the upscale production, assay developments and provide further scientific advice on the development of the RSV virosome vaccine.
Approach: The intranasal influenza vaccine consists of the reconstituted membrane of influenza virus, also containing a lipopeptide adjuvant. In mice, intranasal application of virosomes without adjuvant does not induce immunity to influenza; however, incorporation of the lipopeptide in the virosomes produces a candidate vaccine that does induce cellular immunity, as well as serum and mucosal antibodies to the virus. The vaccine was licensed to Solvay Pharmaceuticals, a major European pharmaceutical company, which was acquired by Abbott Laboratories. Since October 2011, Mymetics has been able to reclaim the intra-nasal influenza vaccine in its portfolio as Abbott decided not to continue the product due to strategic decisions.
2005:
The vaccine completed pre-clinical trials. A first milestone payment was received from Solvay in the same year.
2006:
Successful completion of Phase I trial. The vaccine was shown to be safe and well tolerated and induced an immune response which met and exceeded CHMP (European regulatory) criteria for an off-the-shelf injected vaccine. Subsequent milestone payment was received.
Mymetics will seek partners for its intra-nasal influenza vaccines and will thereby focus on mainly emerging market vaccine manufacturers.
Approach: The malaria vaccine design is based on optimized mimicry of the native parasite protein structure and eliciting antibodies against two stages of the parasite life cycle, unlike 70% of vaccine candidates, which target only one or the other parasite. It is today among the rare malaria vaccines able to also boost existing malaria immune responses (it has both prophylactic and therapeutic effects) in subjects that were previously exposed to malaria.
2007:
Mymetics acquired a Malaria vaccine project from Pevion Biotech (Ittigen, Switzerland). A human clinical trial Phase Ia for the vaccine with two antigens (AMA-1 and CSP-1) anchored to virosomes was successfully completed on adults in Switzerland. Results showed good safety and tolerability, and the induction of blood antibodies.
2008 - 2009:
Phase Ib in Tanzania on children and young adults. The clinical trial Phase Ib in Tanzania evaluated the safety of the same antigens with virosomes on children and young adults under “native” (endemic) conditions. The final report showed that the vaccine induced specific AMA and CSP antibodies in the majority of children and the CSP antibodies have remained up 12 months. The overall malaria clinical symptoms were reduced by 50% in vaccinated group compared to the placebo group.
Further development of the malaria vaccine will only be done based on grants or through an out-licensing agreement. If funds become thus available, the following projects are proposed:
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Investigating new malaria antigens |
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Launching antigen interference study with various combinations |
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Launching toxicology studies with the best formulation susceptible to offer an improved protection in human exposed to Plasmodium falciparum. |
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Launching a new Phase I trial with three or more antigens (peptides and proteins). |
Herpes Simplex Virus (HSV)
Approach: The current HSV vaccine candidate consists of the reconstituted membrane of HSV-1 or HSV-2, also containing a lipopeptide, or other adjuvant. In mice, the virosome vaccine induces better immunity than repeated near-lethal live virus infections, resulting in the induction of neutralizing antibodies, with predominantly a Th1 profile, cellular immunity, and vaginal IgA. Different routes of application are possible (intranasal, intramuscular).
We have identified the key elements of the vaccine that induce the protective immune response. In 2014 little funds will be allocated to this vaccine as the RSV vaccine is the priority.
Our strategy is to strengthen our virosome know-how and intellectual property and extend the application of our key scientific approaches to new vaccines by:
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Exploiting the results and knowledge of mucosal protection based vaccines |
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Leveraging the effective and safe virosome vaccine technology and know-how |
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Advancing existing vaccine candidates through Phase II clinical trials with our partners |
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Maintaining a comprehensive IP portfolio |
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Adopting a flexible cost model based on a combination of in-house expertise and best-in-class outsourcing |
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Entering into strategic partnerships with leading pharmaceutical companies |
Our vision is to become the market leader in the development of new generation mucosal and virosomes based vaccines. We develop preventative vaccines that generate an efficient mucosal protection through mucosal antibodies as first line of defense, while blood antibodies would act synergistically, as a second line of defense.
To date, our focus has been on achieving very favorable results from the development of a core vaccine pipeline of RSV, HIV-1 and malaria, while securing the IP and know-how for the virosome technology and the mucosal based approach.
By using a lean and flexible operational platform and contracting with best-in-class partners, we have avoided the upfront cost of in-house resources and gained access to the best existing know-how. This has maximized the return on development and research.
MATERIAL THIRD PARTY AGREEMENTS
For the development of its vaccines the Company has entered into several agreements in the form of license agreements, exploitation agreements or co-ownership agreements with third parties. These third parties provide specific experience and capabilities or provide access to specific know how, which are not the core competence of Mymetics. The Company believes that the following third party agreements are material. The following summaries of their material terms are qualified in their entirety by reference to the agreements filed as exhibits to prior SEC filings by the Company as set forth under Item 15 (Exhibits and Financial Statement Schedules).
The Co-Ownership Agreement dated January 8, 2008 for two patents PCT IB2005/001180 and PCT IB2005/001182, has been cancelled by Mymetics as it does not fit the strategic direction of the company.
Exploitation Agreement dated January 8, 2008 that allows Mymetics to have global rights to develop, promote, produce, co-produce, sell and distribute HIV products based on any of the following three patents: PCT IB2005/001180, PCT IB2005/001182 and PCT IB 2006/000466 has been amended on August 4, 2011 and now only includes the PCT IB 2006/000466 patent. On October 9, 2013 this agreement was renegotiated and amended to link the progress of the related technology to milestones, which was reflected in the following financial considerations:
By December 2013: E100,000
Start of a second phase I: E50,000
Positive results of second phase I: E100,000
Positive results of phase II: E310,000
Start of phase III: E1,000,000
Positive results of phase III: E740,000
Receipt of BLA Authorization: E1,000,000
Royalty payments in case of direct or indirect commercialization:
For sales below E250,000,000: 1%
For sales between E250,000,000 and E500,000,000: 2%
For sales more than E500,000,000: 3%
The Exploitation Agreement terminates upon the later of: the expiration date of the longest-lived patent, or, 10 years after the first date of commercialization of the product, unless terminated by INSERM following market approval of the HIV products in the event (i)Mymetics does not develop the product for a period more than six months, (ii) the exploitation of the product is interrupted for a period of more than twelve months, or (iii) there is an absence of sales for twelve months starting from the date of market approval.
License Agreement dated March 1, 2007 for the exclusive use by Mymetics of the Pevion virosomes for its HIV vaccine (HIV Agreement).
10% of all monetary consideration (excluding royalties) received from 3rd parties.
E400,000 if Mymetics starts phase I clinical trial.
10% of all monetary consideration received by Mymetics.
The HIV Agreement is subject to termination by either party in writing following a notice period of ninety days and in absence of such termination, will terminate in each country as of the expiration date of the longest-lived product patent rights on a country-by-country basis.
Acquisition and License agreement dated May 19, 2008 for the Pevion virosomes and peptides for the malaria vaccine (Malaria Agreement).
E2,000,000 start of phase II clinical trial in Africa.
Maximum of 15% on all income generated from markets in which the malaria vaccine is sold on a commercial basis.
The Malaria Agreement is subject to termination by either party in writing following a notice period of ninety days and, in the absence of such termination, will terminate in each country as of the expiration date of the longest-lived product patent rights on a country-by-country basis.
Mymetics terminated its agreements with Pevion Biotech in January 2014. Operations between Pevion Biotech and Mymetics had substantially ceased in 2013. Mymetics retained knowledge, rights and access to production and development of the HIV and malaria virosome vaccines by hiring key personnel.
Gp41 Manufacturing Technology Agreement dated January 26, 2009 between PX Therapeutics and Mymetics under which PX Therapeutics agrees to transfer the know-how to manufacture recombinant Gp41 for Mymetics’ HIV vaccine. The term of the agreement is for five years after the date of signature and renewable at the request of Mymetics. Mymetics is allowed to terminate the contract one month after the event of knowledge transfer has been confirmed by both parties.
Annual retainer of E200,000 until the earlier of five years or when the HIV vaccine is market approved.
E600,000 after knowledge transfer
E900,000 when Mymetics has deposited and received acceptance of the IMPD (or IND) with regulatory authorities, such as the FDA in the United States, to start a clinical trial.
1% on all income generated from the commercialization of the product.
Share Purchase Agreement dated March 5, 2009 pursuant to which Mymetics acquired Mymetics B.V. from Norwood Immunology Ltd. The renegotiated agreement and subsequent amendments to this agreement have eliminated the payments to Norwood for the intranasal influenza vaccine, Mymetics’ RSV vaccine and Mymetics’ HSV vaccine. On December 31, 2013 the remaining obligation for Mymetics to Norwood is to pay on March 31, 2014 the remaining E1,500,000 of the loan and accrued interest of E75,834 and issue shares to Norwood for USD 325,000 at the lower of (i) the average closing price of Mymetics common stock during 60 days immediately prior to the issue date or (ii) the lowest conversion price for any Mymetics shareholder loan that has been converted 60 days immediately prior or two months after the issue date or (iii) at the price at which any shares are issued to any new investors in Mymetics in the 60 days prior to the issue date.
On December 27, 2013 Mymetics signed a License and Collaboration Agreement with RSV Corporation (RSVC), a dedicated entity specifically set-up for developing the Mymetics RSV vaccine. Under this agreement Astellas Pharma Inc. will fund RSVC’s development of the virosome vaccine technology, licensed from Mymetics for the respiratory syncytial virus (RSV) through completion of a Phase 2b human proof
‐of
‐concept study. Based on the strategic partnership, Astellas received exclusive rights to acquire RSVC as well as further develop and commercialize the vaccine product.
We will continue to provide research and development activities for the pre-clinical phases and prepare for the upscale production, assay developments and provide further scientific advice on the development of the RSV virosome vaccine.
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WO/1999/025377 (GP41 mutee) Method for obtaining vaccines for preventing the pathogenic effects related to a retroviral infection Mymetics Corp. Expiration date: November 16, 2018 |
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WO/2005/010033 (GP41 ter) New soluble and stabilized trimeric form of GP 41 polypeptide Mymetics Corp. Expiration date: July 28, 2024 |
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WO/2007/099446 (Virosome-P1) Virosome-like vesicles comprising gp41 - derived antigens Mymetics Corp. + INSERM + Pevion Expiration date: January 3, 2027 |
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US/61/202 215 (GP41 4th gen) Mymetics Corp. Expiration date: February 5, 2029 |
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US/61/202 219 (Splitting GP41) Mymetics Corp. Expiration date: February 5, 2029 |
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WO/2004/106366 (UK39) Methods for synthetizing conformationally constrained peptides, peptidomimetics and use of such peptidomimetics as synthetic vaccines Mymetics Corp. Expiration date: June 1, 2024 |
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WO/2004/078099 (AMA49) Compositions and methods for the generation of immune response against Malaria Mymetics Corp. Expiration date: March 2, 2023 |
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WO/1995/032706 (INEX) Virosome-mediated intracellular delivery of therapeutic agents Bestewil BV Expiration date: May 31, 2015 |
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WO/2004/045641 (APRECS) Antigen-complexes Bestewil BV Expiration date: November 19, 2023 |
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· |
WO/2004/110486 (Lipopeptide) Functionally reconstituted viral membranes containing adjuvant Bestewil BV Expiration date: June 17, 2024 |
|
· |
WO/2004071492 (DCPC) Virosome-like particles Bestewil BV Expiration date: December 2, 2023 |
We have not yet developed an actual product. Our future competitive position depends on our ability to successfully develop our intellectual property, and to license or sell such intellectual property to third parties on financially favorable terms. Although we believe that the results of our research and development activities have been favorable, there are numerous entities and individuals conducting research and development activities in the area of human biology and medicine, all of which could be considered competitors.
The worldwide vaccine market is dominated by five large multinational companies: Sanofi Pasteur S.A. (formerly Aventis Pasteur S.A.), Merck & Co., GlaxoSmithKline Plc, Pfizer-Wyeth and Novartis. Smaller and mid-size companies such as Crucell (acquired by Johnson & Johnson) and Novavax are developing vaccines in the same area as Mymetics.
While many of these entities have greater financial and scientific capabilities, and greater experience in conducting pre-clinical and clinical trials, the Company believes that its innovative approach to vaccine development is very competitive.
Our strategy was crafted in part to minimize the risks usually associated with Phase III clinical trials, regulatory approvals and marketing, which are expected to be borne by one or more future partners.
We contract with third parties to perform research projects related to our business. These third parties are located in various countries and are subject to the applicable laws and regulations of their respective countries. Accordingly, regulation by government authorities in the United States, the European Union and other foreign countries is a significant factor in the development, manufacture and marketing of our proposed products by our future partners and therefore has a direct impact on our ongoing research and product development activities.
Any products that will be developed by our future partners based on our technology will require regulatory approval by government agencies prior to commercialization. In particular, like human therapeutic products, vaccines are subject to rigorous pre-clinical studies and clinical trials and other approval procedures of the FDA and similar regulatory authorities in foreign countries. In addition, various federal and state statutes and regulations will also govern, or influence testing, manufacturing, safety, labeling, storage and record keeping related to such products and their marketing. The process of obtaining these approvals and the subsequent substantial compliance with appropriate federal and state statutes and regulations require the expenditure of substantial time and financial resources. Obtaining royalties in the future will depend on our future partners' ability to obtain and maintain the necessary regulatory approvals.
Pre-clinical studies are generally conducted on laboratory animals to evaluate the imunogenicity (induction of antibodies of the cellular response), first proof of potential efficacy and safety of a product. In light of our limited financial resources, clinical trials of our vaccines are conducted first in Europe under the European Union (“EU”) guidelines, a quicker and less expensive approach than seeking FDA approval, which we intend to do after EU approval is granted and we expect our financial resources to be greater. There is however no certainty that such EU approval will be granted. The Phase I, II and III EU clinical trials are similar to those required for FDA approval. The FDA requirements are addressed in this discussion.
The process which is described below is therefore to be considered as generic background information which is relevant to the industry as a whole. As such process applies to drugs as well as vaccines, the term “drugs” as used hereafter refers also to vaccines.
In the United States, any company developing new drugs must submit the results of pre-clinical studies to the FDA as a part of an investigational new drug application, or IND, which application must become effective before it can begin clinical trials in the United States. An IND becomes effective 30 days after receipt by the FDA unless the FDA objects to it and the IND must be annually updated. Typically, clinical evaluation involves a time-consuming and costly three-phase process.
Phase I refers typically to closely monitored clinical trials and includes the initial introduction of an investigational new drug into human patients or normal healthy volunteer subjects. Phase I clinical trials are designed to determine the safety (metabolic and pharmacologic actions of a drug in humans), the side effects associated with increasing drug doses and, if possible, to gain early evidence on effectiveness (inductions of antibodies in our case). Phase I trials also include the study of structure-activity relationships and mechanism of action in humans, as well as studies in which investigational drugs are used as research tools to explore biological phenomena or disease processes. During Phase I clinical trials, sufficient information about a drug's pharmacokinetics and pharmacological effects should be obtained to permit the design of well-controlled, scientifically valid, Phase II studies. The total number of subjects and patients included in Phase I clinical trials varies but is generally in the range of 20 to 80 people. Bioanalyses on the clinical trial samples in different
in vitro assays must be conducted under good laboratory practice (GLP). At this stage, all techniques must be qualified according to standard operating procedures (SOPs) but it is not required to have the assays validated. Validating an assay consists of analyzing or verifying the 8 or 9 assay parameters as described in the US pharmacopeia or the ICH guidelines: 1) accuracy; 2) precision; 3) limit of detection; 4) limit of qualification; 5) specificity; 6) linearity and range; 7) robustness; and 8) system suitability.
Phase II refers to controlled clinical trials conducted to evaluate the safety and effectiveness of a drug for a particular indication or indications in patients with a disease or condition under study and to determine the common short-term side effects and risks associated with the drug. These clinical trials are typically well-controlled, closely monitored and conducted in a relatively small number of patients, usually involving no more than several hundred subjects. For prophylactic vaccines, a fraction of the enrolled subjects for the Phase II trials should ideally correspond to people at higher risk to contract the infection due to their social and/or sexual behaviors. At this stage, all identified and relevant techniques must be qualified and validation should be initiated prior starting the phase II and full validation must be achieved at the end of the phase II, prior launching Phase III. Completion of Phase II trials generally corresponds to the “stage of development” where big Pharma have a high interest for the drug product.
Phase III refers to expanded controlled clinical trials, which many times are designated as "pivotal trials" designed to reach end points that the FDA has agreed in advance, if met, would allow approval for marketing. These clinical trials are performed after preliminary evidence suggesting effectiveness of a drug has been obtained. Meanwhile, prophylactic vaccines are different because the true evidence of effectiveness is obtained during the Phase III trials involving an important fraction of the enrolled subjects with high risk of contracting the pathogen, providing more statistical power. Depending on the vaccine tested, vaccinated subjects are monitored over a period of few months to several years and the infection rate (protection) of this group is compared to the placebo treated group. Phase III trials are intended to gather additional information about the effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling. Phase III clinical trials can include from several hundred to tens of thousands of subjects depending on the specific indication being tested.
The FDA closely monitors the progress of each of the three phases of clinical trials that are conducted in the United States and may, at its discretion, re-evaluate, alter, suspend or terminate the testing based upon the data accumulated to that point and the FDA's assessment of the risk/benefit ratio to the patient. Once Phase III trials are completed, drug developers submit the results of pre-clinical studies and clinical trials to the FDA, in the form of a new drug application, or NDA, for approval to commence commercial sales. In response, the FDA may grant marketing approval, request additional information or deny the application if the FDA determines that the application does not meet the predetermined study goals and other regulatory approval criteria.
Furthermore, the FDA may prevent a drug developer from marketing a product under a label for its desired indications, which may impair commercialization of the product.
If the FDA approves the new drug application, the drug becomes available for physicians to prescribe in the United States. After approval, the drug developer must submit periodic reports to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional studies, known as Phase IV clinical trials to evaluate long-term effects.
We will be required to comply with similar regulatory procedures in countries other than the United States.
In addition to studies requested by the FDA after approval, a drug developer may conduct other trials and studies to explore use of the approved compound for treatment of new indications. The purpose of these trials and studies and related publications is to broaden the application and use of the drug and its acceptance in the medical community.
At this time, neither we nor any of our partners have submitted any of its pre-clinical results to the FDA. It is only in 2009 that the local Belgium Authority Approval to begin Phase I human clinical trials for our HIV vaccine was received.
Our partners and future partner(s) will have to complete an approval process, similar to the one required in the United States, in virtually every foreign target market in order to commercialize product candidates based on our technology in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. Approvals (both foreign and in the United States) may not be granted on a timely basis, or at all. In addition, regulatory approval of prices is required in most countries other than the United States. We face the risk that the resulting prices would be insufficient to generate an acceptable return to our partner(s).
Ronald Kempers is our President and Chief Executive Officer.
Additionally, there is one full-time employee of Mymetics Corporation: Dr. Sylvain Fleury, Ph.D., Chief Scientific Officer.
Our Swiss subsidiary, Mymetics S.A., has on its payroll one employee: Director of Finance
Mymetics B.V. has one full time executive officer (CSO) plus four full-time technicians.
As of December 31, 2013, our Luxembourg affiliate had no employees.
News and information about Mymetics Corporation are available on our web site, www.mymetics.com.
You should carefully consider the risks described below together with all of the other information included in this report on Form 10-K. An investment in our common stock is risky. If any of the following risks materialize, our business, financial condition or results of operations could be adversely affected. In such an event, the trading price of our common stock could decline, and you may lose part or all of your investment. When used in these risk factors, the terms "we" or "our" refer to Mymetics Corporation and its subsidiaries.
We are a company engaged exclusively in research and development activities, focusing primarily on vaccine development. Our strategy was crafted in part to minimize the risks usually associated with clinical trials, regulatory approvals and marketing, which we would expect to be borne by our future partner(s).
WE HISTORICALLY HAVE INCURRED NET LOSSES, EXPECT LOSSES TO CONTINUE FOR THE FORESEEABLE FUTURE AND MAY NEVER ACHIEVE PROFITABILITY.
We historically have incurred net losses. In the years ended December 31, 2013, and December 31, 2012, we generated net income of approximately E6,003,000 and sustained a net loss of E6,111,000, respectively. At December 31, 2013, we had an accumulated deficit of approximately E64,165,000. Total cash disbursed since 1990 for operating activities, including research and development, is E58,054,000.
The amount of these losses may vary significantly from year-to-year and quarter-to-quarter and will depend on, among other factors:
| - |
the timing and cost of product development; |
| - |
the progress and cost of preclinical and clinical development programs; |
| - |
the timing and cost of obtaining necessary regulatory approvals; |
| - |
the timing and cost of sales and marketing activities for future products; and |
| - |
the costs of pending and any future litigation of which we may be subject. |
We currently are engaged in research and development activities and do not have any commercially marketable products. The product research and development process requires significant capital expenditures, while the RSV vaccine activities are compensated by incoming revenue, we do not have any other sources of revenue to off-set such other vaccine research and development expenditures.
Accordingly, we expect to generate additional operating losses at least until such time as we are able to generate significant revenues.
To become profitable, we will need to generate revenues to offset our operating costs, including our general and administrative expenses. We may not achieve or, if achieved, sustain our revenue or profit objectives, and our losses may increase in the future, and, ultimately, we may have to cease operations.
In order to generate new and significant revenues, we must successfully develop and commercialize our proposed products or enter into collaborative agreements with others who can successfully develop and commercialize them. Our business plan is predicated on commercializing our products in collaboration with others. Even if our proposed products are commercially introduced, they may never achieve market acceptance and we may never generate significant revenues or achieve profitability.
WE NEED TO RAISE SUBSTANTIAL ADDITIONAL CAPITAL TO FUND OUR OPERATIONS AND WE MAY BE UNABLE TO RAISE SUCH FUNDS ON A TIMELY BASIS AND ON ACCEPTABLE TERMS.
We need to address our working capital needs to allow us to continue devoting our efforts to development of the business instead of raising needed capital. If we must devote a substantial amount of time to raising capital, it will delay our ability to achieve our business plan within the time frames that we now expect, which could increase the amount of capital we need and could threaten the success of our business if competitors are able to produce an effective vaccine and bring it to the market ahead of us.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OR PREDICT OUR FUTURE BUSINESS PROSPECTS.
We have no operating history, and our operating results are impossible to predict because we have not begun selling any products. We are in the development stage, and our proposed operations are subject to all of the risks inherent in establishing a new business enterprise, including:
| - |
the absence of an operating history; |
| - |
the lack of commercialized products; |
| - |
expected substantial and continual losses for the foreseeable future; |
| - |
limited experience in dealing with regulatory issues; |
| - |
limited marketing experience; |
| - |
an expected reliance on third parties for the commercialization of our proposed products; |
| - |
a competitive environment characterized by numerous, well-established and well-capitalized competitors; |
| - |
uncertain market acceptance of our proposed products; and |
| - |
reliance on key personnel. |
The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the formation of a new business, the development of new technology, and the competitive and regulatory environment in which we will operate. See "Description of the Business".
Because we are subject to these risks, you may have a difficult time evaluating our business and your investment in our company.
OUR PROPOSED VACCINES ARE IN THE DEVELOPMENT STAGES AND WILL LIKELY NOT BE COMMERCIALLY INTRODUCED BEFORE 2018, IF AT ALL.
Our proposed key products still are in the development stage and will require further development, preclinical and clinical testing and investment prior to commercialization in the United States and abroad. See "Description of the Business". While we are pleased about the progress made to date on these products, we cannot be sure that these products in development will:
| - |
be successfully developed; |
| - |
prove to be safe and efficacious in clinical trials; |
| - |
meet applicable regulatory standards or obtain required regulatory approvals; |
| - |
demonstrate substantial protective or therapeutic benefits in the prevention or treatment of any disease; |
| - |
be capable of being produced in commercial quantities at reasonable costs; |
| - |
obtain coverage and favorable reimbursement rates from insurers and other third-party payers; or |
| - |
be successfully marketed or achieve market acceptance by physicians and patients. |
We do not intend to undertake any product development beyond Phase II human clinical trials (i.e., Phase III clinical studies) or be responsible for obtaining regulatory approval or marketing the products. Nevertheless, even if we are successful in selling or licensing our products to another pharmaceutical company, it is likely that any revenues we may receive in connection with those arrangements will depend upon other companies’ sales, which will, in turn, depend upon the factors stated above.
THE LOSS OF KEY SCIENTIFIC OR INDUSTRIAL PARTNERS WOULD DIMINISH OUR ABILITY TO ACHIEVE OUR BUSINESS PLAN.
Certain components or know-how obtained from partners such as Protein eXpert S.A. and PX’Therapeutics, supplier of GMP grade engineered mutated gp41 protein, or Pevion Biotech Ltd., supplier and integrator of virosomes, are key components of our vaccines currently under development. Accordingly, the loss of any of these components or know-how might prevent us from achieving our business plan, despite the fact that contractual safeguards are in place.
In light of Pevion Biotech S.A. ceasing its business operations, we have taken steps to secure the know-how associated with their virosome production technology, including the hiring of one of their key scientists involved in virosome production. We cannot be assured, however, that we can replicate fully a replacement of their know-how of virosome production.
OUR BUSINESS MODEL IS PREDICATED ON OUR BELIEF THAT WE WILL BE ABLE TO ENGAGE LARGE PHARMACEUTICAL COMPANIES TO PARTNER WITH US IN THE DEVELOPMENT OF OUR PRODUCTS AND FAILURE TO DO SO WILL LIKELY MAKE US UNATTRACTIVE AS AN ACQUISITION TARGET.
We anticipate that we will need a large pharmaceutical company to assist us with human trials and financing. See "Funding Requirements". Our failure to succeed in this endeavor will have a dramatic adverse result regarding our financial needs and ability to successfully sell any products that we develop.
IF WE FAIL TO OBTAIN REGULATORY APPROVAL TO COMMERCIALLY MANUFACTURE OR SELL ANY OF OUR FUTURE PRODUCTS, OR IF APPROVAL IS DELAYED OR WITHDRAWN, WE WILL BE UNABLE TO GENERATE REVENUE FROM THE SALE OF OUR PRODUCTS.
We must obtain regulatory approval to sell any of our products in the United States and abroad. In the United States, we must obtain the approval of the FDA for each product or drug that we intend to commercialize. The FDA approval process is typically lengthy and expensive, and approval is never certain. Products to be commercialized abroad are subject to similar foreign government regulation.
Generally, only a very small percentage of newly discovered pharmaceutical products that enter preclinical development are approved for sale. Because of the risks and uncertainties in biopharmaceutical development, our proposed products could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. If regulatory approval is delayed or never obtained, our management's credibility, the value of our company and our operating results and liquidity would be adversely affected. Furthermore, even if a product gains regulatory approval, the product and the manufacturer of the product may be subject to continuing regulatory review. Even after obtaining regulatory approval, we may be restricted or prohibited from marketing or manufacturing a product if previously unknown problems with the product or its manufacture are subsequently discovered. The FDA may also require us to commit to perform lengthy post-approval studies, for which we would have to expend significant additional resources, which could have an adverse effect on our operating results and financial condition.
Although we have conducted pre-clinical studies, costly and lengthy human clinical trials are required to obtain regulatory approval to market our proposed vaccine, and the results of the trials are highly uncertain. In addition, the number of pre-clinical studies and human clinical trials that the FDA requires varies depending on the product, the disease or condition the product is being developed to address and regulations applicable to the particular product. Accordingly, we may need to perform additional pre-clinical studies using various doses and formulations before we can begin human clinical trials, which could result in delays in our ability to market any of our products. Furthermore, even if we obtain favorable results in pre-clinical studies on animals, the results in humans may be different.
After we have conducted pre-clinical studies in animals, we must demonstrate that our products are safe and effective for use on the target human patients in order to receive regulatory approval for commercial sale. The data obtained from pre-clinical and human clinical testing are subject to varying interpretations that could delay, limit or prevent regulatory approval. We face the risk that the results of our clinical trials in later phases of clinical trials may be inconsistent with those obtained in earlier phases. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after experiencing promising results in early animal or human testing. Adverse or inconclusive human clinical results would prevent us from filing for regulatory approval of our products. Additional factors that can cause delay or termination of our human clinical trials include:
| - |
slow patient enrollment; |
| - |
timely completion of clinical site protocol approval and obtaining informed consent from subjects; |
| - |
longer trial time than foreseen to demonstrate efficacy or safety; |
| - |
adverse medical events or side effects in immunized patients; and |
| - |
lack of effectiveness of the vaccines being tested. |
Delays in our clinical trials could allow our competitors additional time to develop or market competing products and thus can be extremely costly in terms of lost sales opportunities and increased clinical trial costs.
EVEN IF OUR PROPOSED PRODUCTS RECEIVE EU AND FDA APPROVAL, THEY MAY NOT ACHIEVE EXPECTED LEVELS OF MARKET ACCEPTANCE, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND OPERATING RESULTS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.
Even if we are able to obtain required regulatory approvals for our proposed products, the success of those products is dependent upon market acceptance by physicians and patients. Levels of market acceptance for our new products could be impacted by several factors, including:
| - |
the availability of alternative products from competitors; |
| - |
the price of our products relative to that of our competitors; |
| - |
the timing of our market entry; and |
| - |
the ability to market our products effectively. |
Some of these factors are not within our control. Our proposed products may not achieve expected levels of market acceptance. Additionally, continuing studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted by the industry, government agencies and others. Such studies, which increasingly employ sophisticated methods and techniques, can call into question the utilization, safety and efficacy of previously marketed products. In some cases, these studies have resulted, and may in the future result, in the discontinuance of product marketing. These situations, should they occur, could have a material adverse effect on our business, financial position and results of operations, and the market value of our common stock could decline.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WE MAY NOT BE ABLE TO COMPETE AS EFFECTIVELY.
The pharmaceutical industry places considerable importance on obtaining patent and trade secret protection for new technologies, products and processes. Our success will depend, in part, upon our ability to obtain, enjoy and enforce protection for any products we develop or acquire under United States and foreign patent laws and other intellectual property laws, preserve the confidentiality of our trade secrets and operate without infringing the proprietary rights of third parties.
Where appropriate, we seek patent protection for certain aspects of our technology. However, our owned and licensed patents and patent applications may not ensure the protection of our intellectual property for a number of other reasons:
- Competitors may interfere with our patents and patent process in a variety of ways. Competitors may claim that they invented the claimed invention before us or may claim that we are infringing on their patents and therefore we cannot use our technology as claimed under our patent. Competitors may also have our patents reexamined by showing the patent examiner that the invention was not original or novel or was obvious.
- We are in the development stage and are in the process of developing proposed products. Even if we receive a patent, it may not provide much practical protection. If we receive a patent with a narrow scope, then it will be easier for competitors to design products that do not infringe on our patent. Even if the development of our proposed products is successful and approval for sale is obtained, there can be no assurance that applicable patent coverage, if any, will not have expired or will not expire shortly after this approval. Any expiration of the applicable patent could have a material adverse effect on the sales and profitability of our proposed product.
- Enforcing patents is expensive and may require significant time by our management. In litigation, a competitor could claim that our issued patents are not valid for a number of reasons. If the court agrees, we would lose protection on products covered by those patents.
- We also may support and collaborate in research conducted by government organizations or universities. We cannot guarantee that we will be able to acquire any exclusive rights to technology or products derived from these collaborations. If we do not obtain required licenses or rights, we could encounter delays in product development while we attempt to design around other patents or we may be prohibited from developing, manufacturing or selling products requiring these licenses. There is also a risk that disputes may arise as to the rights to technology or products developed in collaboration with other parties.
It also is unclear whether efforts to secure our trade secrets will provide useful protection. While we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our proprietary information to competitors resulting in a loss of protection. Enforcing a claim that someone else illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Finally, our competitors may independently develop equivalent knowledge, methods and know-how.
CLAIMS BY OTHERS THAT OUR PRODUCTS INFRINGE THEIR PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights. Patent applications are maintained in secrecy in the United States and also are maintained in secrecy outside the United States until the application is published. Accordingly, we can conduct only limited searches to determine whether our technology infringes the patents or patent applications of others. Any claims of patent infringement asserted by third parties would be time-consuming and could likely:
| - |
result in costly litigation; |
| - |
divert the time and attention of our technical personnel and management; |
| - |
cause product development delays; |
| - |
require us to develop non-infringing technology; or |
| - |
require us to enter into royalty or licensing agreements. |
Although patent and intellectual property disputes in the pharmaceutical industry often have been settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and often require the payment of ongoing royalties, which could hurt our gross margins. In addition, we cannot be sure that the necessary licenses would be available to us on satisfactory terms, or that we could redesign our products or processes to avoid infringement, if necessary. Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing, manufacturing and selling some of our products, which could harm our business, financial condition and operating results.
WE HAVE ANTI-TAKEOVER PROVISIONS IN OUR BYLAWS THAT MAY DISCOURAGE A CHANGE OF CONTROL.
Our bylaws contain provisions that could discourage, delay or prevent a change in control of our Company or changes in our management that the stockholders of our company may deem advantageous. These provisions
| - |
limit the ability of our stockholders to call special meetings of stockholders; |
| - |
provide for a staggered board; |
| - |
provide that our board of directors is expressly authorized to make, alter or repeal the bylaws; and |
|
-
|
establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
|
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
Since March 1, 2009, we leased new office space in a campus recently established near Lausanne (40 miles from Geneva) by the local state government to attract promising biotech companies. This houses our executive and scientific management and administrative operations.
Bestewil Holding B.V. and its subsidiary Mymetics B.V operate from a similar biotechnology campus near Leiden in the Netherlands, where they occupy about 100 square meters for office and laboratory use.
We also conduct research operations at the properties of various third parties, worldwide.
ITEM 3. LEGAL PROCEEDINGS
Neither we, nor our wholly owned subsidiaries 6543 Luxembourg S.A., Mymetics S.A., Bestewil Holding B.V. nor its subsidiary Mymetics B.V. are presently involved in any litigation incident to our business.
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES
|
(a) |
Market Information. The Corporation's common stock is quoted on the OTC Bulletin Board under the trading symbol "MYMX" |
The following table sets forth the quarterly high and low sales price per share of our common stock for the periods indicated. The prices represent inter-dealer quotations, which do not include retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
|
FISCAL QUARTER ENDED
|
|
HIGH
|
|
|
LOW
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
March 31
|
|
$
|
0.100
|
|
|
$
|
0.026
|
|
|
June 30
|
|
|
0.090
|
|
|
|
0.040
|
|
|
September 30
|
|
|
0.045
|
|
|
|
0.033
|
|
|
December 31
|
|
|
0.050
|
|
|
|
0.020
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
March 31
|
|
$
|
0.045
|
|
|
$
|
0.020
|
|
|
June 30
|
|
|
0.040
|
|
|
|
0.015
|
|
|
September 30
|
|
|
0.025
|
|
|
|
0.010
|
|
|
December 31
|
|
|
0.025
|
|
|
|
0.010
|
|
|
(b) |
Stockholders. At March 28, 2014, we had approximately 650 holders of record of our common stock, some of which are securities clearing agencies and intermediaries. |
|
(c) |
Dividends. We have not paid any dividends on our common stock and do not intend to pay any dividends in the foreseeable future. |
|
(d) |
Securities Authorized for Issuance under Equity Compensation Plans. |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans as of December 31, 2013.
|
|
|
Number of Securities to be
issued upon exercise of
Options, Warrants and Rights
|
|
|
Weighted Average Exercise
Price of Outstanding
Options, Warrants and
Rights
|
|
Number of Securities
remaining available for
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
|
|
Plan
|
|
|
|
|
|
|
|
|
Category
|
|
(a)
|
|
|
(b)
|
|
(c)
|
|
Equity Compensation Plans (1)
|
|
|
|
|
|
|
|
|
Approved by Security Holders
|
|
|
|
|
|
|
|
|
2001 Plan
|
|
|
|
--
|
(2)
|
|
|
$
|
--
|
|
|
|
2009 Plan
|
|
|
|
3,350,000
|
(3)
|
|
|
$U.S. 0.15
|
|
|
|
2013 Plan
|
|
|
|
17,500,000
|
(4)
|
|
|
$U.S. 0.02
|
|
|
|
Total
|
|
|
|
20,850,000
|
|
|
|
$U.S. 0.04
|
|
9,150,000
|
(1) Equity compensation plans approved by security holders include (i) our 1994 Amended and Restated Stock
Option Plan, (ii) our 1995 Qualified Incentive Stock Option Plan and (iii) our 2001 Stock Option Plan.
(2) (i) All of the 442,500 shares of common stock underlying options granted under the registrant’s 2001 Stock Option Plan have expired as of December 31, 2013.
(3)
In June 2010 our Board of Directors approved a 2009 Stock Incentive Plan that will need authorization by our stockholders. We have granted 4,350,000 options under that Plan out of which 1,000,000 have been forfeited.
(4) On October 4, 2013 our Board of Directors and a majority of our shareholders approved a 2013 Stock Incentive Plan and granted a total of 20,600,000 options under that Plan, out of which 3,100,000 have been exercised by December 31, 2013.
Further, on July 1, 2010, Mymetics issued a warrant to Round Enterprises providing the right to buy 32 million shares of Mymetics common stock at a price of US$ 0.25 per share. This warrant expired on June 30, 2013.
ISSUANCES OF UNREGISTERED SECURITIES
During the period commencing on January 1, 2013 and ending on March 28, 2014, no issuance of unregistered securities was made.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial condition of the Company for the years ended December 31, 2013 and 2012 should be read in conjunction with our audited consolidated financial statements and related notes and the description of our business and properties included elsewhere herein.
RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2013 COMPARED TO YEAR ENDED DECEMBER 31, 2012:
We reached E4,381 in revenue for the year ending December 31, 2013 related to an exclusive negotiation fee received on September 9, 2013 of USD 1 million, and the upfront payment related to the license and collaboration agreement signed on December 27, 2013 for our RSV vaccine candidate of USD 5 million. We received no grant income for the years ended December 31, 2013 and 2012, respectively. Future revenues will be linked to research and development activities related to the RSV vaccine and possible milestone payments and these could be affected by local and other economic conditions, technology, competitive forces, and/or challenges to our intellectual property.
Research and development expenses decreased to E657,000 in the current period from E1,616,000 in the comparative period of 2012, a decrease of 59.3%. The decrease of R&D was mainly related to the INSERM E400 milestone payment which was negotiated and reduced to E100. Research and development expenses of E1,616,000 in 2012 include E790,000 of scientific staff expenses and fees of our scientific consultants, E226,000 paid to scientific partners and suppliers of scientific services, and E600,000 for know-how annuity and milestone payment.
General and administrative expenses decreased by 0.4% to E1,366,000 in the year ended December 31, 2013 from E1,371,000 in the comparable period of 2012.
Interest expense increased by 12.2% to E2,589,000 in the year ended December 31, 2013 from E2,307,000 in the comparable period of 2012.
The fair value of acquisition-related contingent consideration was reduced due to the renegotiated Norwood agreement, whereby the contingent liability related to the RSV, HSV and Influenza vaccines has been cancelled and this generated a gain of E6,297,000 for the year ending December 31, 2013 while it generated a loss of E780,000 in the year ended December 31, 2012.
REVENUE RECOGNITION AND RECEIVABLES
We have not generated any material revenues since we commenced our current line of business in 2001. On December 27, 2013, Mymetics has entered in to a License and Collaboration Agreement (“LCA”) with RSV Corporation (“RSVC”) on December 27, 2013 to license Bestewil Holding BV, a 100% subsidiary of Mymetics’ Corporation (“Mymetics”) virosome technology related to developing, commercializing respiratory syncytial virus (RSV) virosome vaccines for the purpose of development and eventual commercialization.
In addition to Mymetics providing a license to use its technology with respect to an RSV vaccine, the Company will participate on a joint collaboration steering committee and will provide services under an R&D plan throughout the development and commercialization process.
As consideration Mymetics has received an irrevocable and non-refundable upfront fee for the license of USD 5 million and will receive fixed monthly Collaboration and R&D fees, milestone payments for specific milestones during development and double digit royalties at the time of commercialization.
Under the model in Subtopic 605-25, a delivered item or items shall be considered a separate element for accounting purposes if both of the following conditions are met:
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The delivered item or items have value to the customer on a stand-alone basis. The delivered item or items have value on a stand-alone basis if it is sold separately by any vendor or the customer could resell the delivered item or items on a stand-alone basis. |
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If the arrangement includes a general right of return related to the delivered item, delivery or performance of the undelivered item or items is considered probable and substantially in the control of the vendor. |
If the separation conditions are met, the delivered item(s) must be treated separately for accounting purposes.
The “units of accounting” / deliverables in the transaction for Mymetics are:
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License to use Mymetics RSV virosome vaccine technology |
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Mymetics to provide R&D services and participate in the joint steering committee |
Mymetics has invested
approximately USD 4 million in the RSV vaccine candidate in the past 4 years on top of the acquisition price for Bestewil Holding paid by Mymetics in April 2009. Considering the units of accounting, we have recognized the full (non-refundable, irrevocable, non creditable) upfront license fee of USD 5 million in December 2013 as it has a standalone value. RSVC can sublicense as long as such sublicense is subordinate and consists with the terms in the License Contract Agreement (LCA).
With respect to the R&D services provided by Mymetics, RSVC could find third parties to perform the R&D services
for which
Mymetics is contracted
. The R&D services, which includes participation in the JCSC will be invoiced at the budgeted amounts to RSVC on a monthly basis in arrears.
In general, revenue related to the sale of products is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. Receivables are stated at their outstanding principal balances. Management reviews the collectability of receivables on a periodic basis and determines the appropriate amount of any allowance. Based on this review procedure, management has determined that the allowances at December 31, 2013 and 2012 are sufficient. We charge off receivables to the allowance when management determines that a receivable is not collectible. We may retain a security interest in the products sold.
Research and development costs are expensed as incurred.
Our reporting currency is the Euro because substantially all of our activities are conducted in Europe. Non-Euro assets and liabilities of our subsidiaries are translated at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the year. Unrealized gains or losses from these translations are reported as a separate component of comprehensive income. Transaction gains or losses are included in general and administrative expenses in the consolidated statements of operations. The translation adjustments do not recognize the effect of income tax because we expect to reinvest the amounts indefinitely in operations.
IN-PROCESS RESEARCH AND DEVELOPMENT
In-Process research and development (referred to as IPR&D) represents the estimated fair value assigned to research and development projects acquired in a purchased business combination that have not been completed at the date of acquisition and which have no alternative future use. IPR&D assets acquired in a business combination are capitalized as indefinite-lived intangible assets. These assets remain indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period prior to completion or abandonment, those acquired indefinite-lived assets are not amortized but are tested for impairment annually, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, which include property and equipment, and the license contract, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The impairment testing involves comparing the carrying amount to the forecasted undiscounted future cash flows generated by that asset. In the event the carrying value of the assets exceeds the undiscounted future cash flows generated by that asset and the carrying value is not considered recoverable, impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. An impairment loss would be recognized in net income in the period that the impairment occurs.
Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. Goodwill is assessed for impairment on an annual basis as of April 1 of each year, unless events or circumstances indicate impairment may have occurred before that time. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. After assessing qualitative factors, the Company determined that no further testing was necessary. If further testing was necessary, the Company would have performed a two-step impairment test for goodwill. The first step requires the Company to determine the fair value of each reporting unit. To the extent a reporting unit’s carrying amount exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform a second more detailed impairment assessment. The second impairment assessment involves allocating the reporting unit’s fair value to all of its recognized and unrecognized assets and liabilities in order to determine the implied fair value of the reporting unit’s goodwill as of the assessment date. The implied fair value of the reporting unit’s goodwill is then compared to the carrying amount of goodwill to quantify an impairment charge as of the assessment date.
The Company has conducted its impairment testing as of April 1, of 2013 and 2012 of its goodwill recognized in connection to the acquisition of Bestewil. In conclusion of this impairment testing, the carrying amount of the reporting unit was lower than the estimated fair value of the reporting unit. As the fair value of the reporting unit is higher than the carrying amount, Step 2 of the goodwill impairment test did not need to be completed. As of December 31, 2013, management believes there are no indications of impairment.
We account for contingent consideration in a purchase business combination in accordance with applicable guidance provided within the business combination rules. As per the amendment dated March 28, 2012, related to the Share Purchase Agreement of the Bestewil acquisition, the obligation of the Company to pay additional purchase price consideration upon achievement of certain commercial milestones has been deleted and settled with issuance of shares for a total of US$325 upon certain events but no later than March 31, 2014. Despite the fact that this new liability is significantly less, it is not dependent on future revenue and will not be paid in cash.
STOCK BASED COMPENSATION POLICY
Compensation cost for all share-based payments is based on the estimated grant-date fair value. The Company amortizes stock compensation cost ratably over the requisite service period.
We aim to be a lean and effective research and development company, focused on virosome based vaccines. Our core value lies in the know-how and intellectual property related to virosome based vaccines and the mucosal immune response. We have in-house laboratory facilities and expertise and we subcontract some of our research project modules to best of class research teams. We pay for and coordinate the work, consolidate the results, and retain all associated intellectual property. On rare occasions, we execute partnership agreements with companies offering technologies that can enhance our products.
We will continue in the foreseeable future to outsource to specialized third parties all human clinical trials of our vaccines, such process being complex and highly regulated. Further, we will continue to seek partnerships with leading vaccine development groups, pharma companies and grant providing organizations for the vaccines we are developing.
Our business plan is predicated by the size and availability of our resources. The short term focus of our research team is aimed on the execution on the R&D plan related to the license and collaboration agreement for our RSV vaccine candidate. In parallel, we are eager to advance our promising Malaria and HIV-1 vaccine candidates by working closely with non-for-profit organizations and academic institutions like the Bill and Melinda Gates Foundation, the NIH, and the PATH Malaria Vaccine Initiative. We aim to find a strategic partner for our promising intra-nasal influenza vaccine that successfully finished a phase I with 110 people, For the longer term we will be working on new vaccine candidates based on our virosome technology that address a clear medical need.
Depending on the situation, we would not pursue human clinical trials for our vaccine beyond phase II, which normally involves no more than 250-300 volunteers and a cost in the range of $5-10 million per phase I and II trial cycle. In contrast, phase III trial for a prophylactic vaccine involves up to 30,000 patients and several testing centers spread over two or more continents. The high number of volunteers, as well as the logistical complexity of such an undertaking, implies a cost-per-volunteer in the $10,000 to $12,000 range, or up to $360 million per phase III trial. Similarly, the cost and complexity of the vaccine registration procedure with the relevant European agencies can be very expensive. The cost of registration with the U.S. Food and Drug Administration (FDA) is generally significantly higher due to a variety of factors, including, potential product liability claims.
We will enter into negotiations with potential pharmaceutical partners as soon as positive intermediary results will be observed in view of a partnership agreement as described above.
LIQUIDITY AND CAPITAL RESOURCES
We had E297,000 cash at December 31, 2013, compared to E286,000 at December 31, 2012.
As a development stage company, we have not generated significant material revenues since the current line of business was commenced in 2001. Our first significant revenue has been generated through the exclusive negotiation fee recorded in September 9, 2013 and the license and collaboration agreement for our RSV vaccine signed on December 27, 2013. As consideration Mymetics has received an irrevocable and non-refundable upfront fee for the license of USD 5 million and we will receive fixed monthly collaboration and R&D fees, possible milestone payments for specific milestones during development and double digit royalties at the time of commercialization.
For 2014 we anticipate to generate small revenues related to the research and development activities. New significant revenues will not be expected, before reaching a successful Phase II clinical stage milestone for the RSV vaccine, unless and until a second major licensing agreement or other commercial arrangement is entered into with respect to our technology.
As of December 31, 2013, we had an accumulated deficit of approximately E64.2 million and generated net income of E6,003,000 in the year ended December 31, 2013. This compares with losses of E6,111,000 in the year ended December 31, 2012. The net income in 2013 was generated mainly through the cancellation of the contingent liability of E6,217,000 due to the renegotiated agreement with Norwood.The accumulated losses are principally associated with the research and development of our HIV vaccine and RSV vaccine technologies, the acquisition of a malaria project from Pevion Biotech Ltd. We expect to continue to incur expenses in the future for research, development and activities related to the future licensing of our technologies.
Net cash used in operating activities was E4,344,000 for the year ended December 31, 2013, compared to E4,959,000 for the year ended December 31, 2012. The major factor in 2013 was costs incurred in connection with our the further development of our RSV vaccine and preparing it for GMP manufacturing for a human clinical trial Phase I, continued efforts of the Company to reduce expenses until it secures additional financing to allow it to enter into the clinical trials for its RSV and HIV.
Investing activities used cash of E109,000 for the year ended December 31, 2013 and E1,000 for the year ended December 31, 2012, both for the purchase of equipment in the Netherlands.
Financing activities provided cash of E4,445,000 for the year ended December 31, 2013, which includes new debt of E5,551,000 needed to fund 2013 operations and payment of interests and E1,000,000 of the principal related to the Norwood Immunology loan, compared to E4,846,000 for the year ended December 31, 2012, which includes new debt needed to fund 2012 operations.
Our major shareholder, a member of our Board of Directors and another previous investor have made available an aggregate E32,222,000 in the form of notes payable including interest, the details of which are described in
Note 2 of our financial statements.
The Company’s budgeted cash outflow, or cash burn rate, for 2014 is approximately E2,000,000 for research and fixed and normal recurring expenses, assuming the ability to obtain the necessary financing and without taking into account any grants that may be obtained. We have budgeted for the repayment of the remaining Norwood loan including accrued interest of E1,576,000.
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2014 budget
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12 Months
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Revenue from R&D services for RSV vaccine
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E
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1,750,000
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HIV related IP costs
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E
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300,000
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RSVR&D
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1,750,000
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Further Virosome R&D
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400,000
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Repayment of loan and accrued interest Norwood Immunology
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1,576,000
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Administration
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1,300,000
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Total
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E
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3,576,000
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Management expects the cash outflow on R&D to stay minimal as the main focus will be on the RSV vaccine R&D activities, which will be offset by incoming related revenue, while keeping administrative costs relatively stable.
Included in the E1,300,000 administration costs are E300,000 of legal and patent fees to outside corporate counsel, E90,000 audit and review fees to the Company’s independent accountants, and E50,000 in finance and acquisition expenses.
Additional funding requirements during the next 12 months are needed to advance our HIV and Malaria vaccines, which we will try to seek through collaborations with not-for-profit organizations.
In the past, we have financed our research and development activities primarily through debt and equity financings from various parties.
We anticipate that our normal operations will require approximately E2,000,000 in the year ending December 31, 2014, which is covered by the cash provided by the upfront payment related to the RSV vaccine license and collaboration agreement. We will seek to raise the additional capital from equity or debt financings, and grants through donors and potential partnerships with major international pharmaceutical and biotechnology firms. However, there can be no assurance that it will be able to raise additional capital on satisfactory terms, or at all, to finance its operations on the longer term. In the event that we are not able to obtain such additional capital, we will be required to further restrict or even cease our operations.
RECENT FINANCING ACTIVITIES
During 2013, the two main investors provided five and six loans respectively to the Company for a total of E3,000,000. (See table in
Note 2 of the consolidated financial statements)
We have filed or are in the process of filing several new grant applications with European as well as U.S. institutions in relation to our HIV-1 and malaria vaccines.
We anticipate using our current funds and those we receive in the future both to meet our working capital needs and for funding the ongoing vaccines pre-clinical research costs for new virosome vaccine.
On December 27, 2013, we concluded a license and collaboration agreement for our RSV vaccine candidate which has generated revenue of USD 5 million. In relation to this agreement, we will receive revenue for our R&D activities for the RSV vaccine during 2014, but these will not be sufficient to fund the full operations. We are unable to predict when or if we will be able to generate more revenues from licensing our technology or the amounts expected from such activities. These revenue streams may be generated by us or in conjunction with collaborative partners or third party licensing arrangements, and may include provisions for one-time, lump sum payments in addition to ongoing royalty payments or other revenue sharing arrangements.
Management anticipates that our existing capital resources will be sufficient to fund our cash requirements through the next twelve months. We have enough cash presently on hand in conjunction with the collection of receivables, based upon our current levels of expenditures and anticipated needs during this period. For 2015 we will need additional funding through future collaborative arrangements, licensing arrangements, and debt and equity financings under Regulation D and Regulation S under the Securities Act of 1933. We do not know whether additional financing will be available on commercially acceptable terms when needed.
If management cannot raise funds on acceptable terms when needed, we may not be able to successfully commercialize our technologies, take advantage of future opportunities, or respond to unanticipated requirements. If unable to secure such additional financing when needed, we will have to curtail or suspend all or a portion of our business activities and could be required to cease operations entirely. Further, if new equity securities are issued, our shareholders may experience severe dilution of their ownership percentage.
The extent and timing of our future capital requirements will depend primarily upon the rate of our progress in the research and development of our technologies, our ability to enter into a partnership agreement with a major pharmaceutical company, and the results of our present and future clinical trials.
OFF-BALANCE SHEET ARRANGMENTS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required with respect to this Item 8, and as identified in Item 14 of this annual report, are included in this annual report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a−15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this annual report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2013 that the Company’s disclosure controls and procedures were effective such that the information required to be disclosed in the Company’s United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, currently the same person to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Based on its evaluation under the framework in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission as of December 31, 2013, the Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, concluded that its internal control over financial reporting were effective as of December 31, 2013.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts non-accelerated filers from complying with Section 404(b) of the Sarbanes-Oxley Act of 2002.
Attached as exhibits to this Form 10-K are certifications of Mymetics’ Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications.
Material Weakness Identified
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including the CEO/CFO, does not expect that the Disclosure Controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions of deterioration in the degree of compliance with policies or procedures.
ITEM 9B. OTHER INFORMATION
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our number of directors is established at three, divided into three classes, designated as Class I, Class II and Class III. The term of the Class I directors will expire at the Company’s 2016 annual meeting of stockholders, the term of the Class II directors will expire at the 2014 annual meeting of stockholders, and the term of the Class III directors will expire at the 2015 annual meeting of stockholders. A plurality of the votes of the shares of the registrant’s common stock present in person or represented by proxy at the annual meeting and entitled to vote on the election of directors are required to elect the directors. The Board members have three year terms and in the absence of a vote at an annual meeting of stockholders, they continue for successive three year terms until they are replaced or resign.
The following table sets forth information regarding each of our current directors and executive officers:
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EXPIRATION
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OF TERM AS
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NAME
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CURRENT POSITION WITH THE COMPANY
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AGE
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A DIRECTOR
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Ronald Kempers
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Chief Financial Officer (appointed August 1, 2010), Chief Executive Officer (appointed November 19, 2012)
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46
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n/a
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Thomas Staehelin (Class II)
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Director
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65
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2014
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Ernest M. Stern (Class II)
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Director
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63
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2014
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Ulrich Burkhard (Class III)
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Director
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52
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2015
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Ronald Kempers is the President and CEO. He started as Chief Operating Officer in July 1, 2009, and was appointed Chief Financial Officer on August 1, 2010. Effective November 19, 2012, Ronald Kempers was appointed President and Chief Executive Officer.
Mr. Kempers is a senior business leader and entrepreneur, having over 20 years of international business management, business development and finance experience with leading global corporations (Hewlett Packard, Oracle) and medical and IT start-ups. Mr. Kempers has a M.Sc. in Business Administration from the Erasmus University, Rotterdam School of Management and has continued further education with various executive courses, including IMD, Lausanne.
Dr. Staehelin is Senior Managing Partner of Fromer, Schultheiss and Staehelin, a law firm located in Basel, Switzerland. Dr. Staehelin focuses primarily on corporate and tax law. Dr. Staehelin has served as a member of this law firm since 1975. Dr. Staehelin also serves on the boards of various Swiss companies and is Chairman of the Chamber of Commerce of the Basel region. In addition, Dr. Staehelin is Managing Director of the "Swiss Association of privately held Swiss Companies” and is a member of the Board of "economie suisse," The Swiss Business Federation. Dr. Staehelin received his Ph.D. degree in Law from the University of Basel. He formerly served as a member of the cantonal parliament of Basel.
We benefit from Dr. Staehelin’s significant international business experience, financial expertise through his role as a lawyer and board member of many companies conducting business on a global basis and knowledge of the Swiss legal system to assist the Company with its Swiss subsidiaries.
Ernest M. Stern was appointed as a Director in January 2008. Mr. Stern is a partner in the law firm of Akerman Senterfitt LLP, which serves as outside U.S. counsel of Mymetics, where he specializes in securities and corporate law, representing public companies, investment banks and venture funds, and is the engagement partner for Mymetics. Mr. Stern received his undergraduate degree from Bowdoin College (Phi Beta Kappa,
summa cum laude), and his J.D and LL.M (Taxation) degrees from Georgetown University Law Center (Case and Note Editor,
Law and Policy in International Business).
Mr. Stern assists us through his extensive international business experience and contacts through his representation as a U.S. lawyer of many companies engaged in international business, knowledge of state and federal laws applicable to the Company and finance knowledge.
Ulrich Burkhard is Co-Founder, Managing Partner and Director of Marcuard Family Office, a multi-client family office founded in 1998 and located in Zurich, Switzerland, providing asset management advice. From 1994 to 1998, Mr. Burkhard held overall responsibility for Latin American marketing and relationship management at Bank J. Vontobel & Co. Ltd., Zurich, and was appointed First Vice President in 1995. From 1989 to 1994, Mr. Burkhard was Head of Private Banking Latin America at Vontobel USA Inc., New York, and was appointed Vice President in 1990. From 1987 to 1989, he worked at Bank J. Vontobel & Co. Ltd. as Head of Staff of the CEO’s office. Mr. Burkhard began his career at Bank J. Vontobel & Co. Ltd., Zurich in 1978, focusing on global investment management and private banking. Mr. Burkhard holds a Bachelor of Science and Business Administration degree from the University of Applied Sciences, Zurich. Mymetics believes that it benefits from the significant financial expertise of Mr. Burkhard as it seeks to attract capital for its future growth.
SCIENTIFIC ADVISORY BOARD
In 2009, a member Scientific Advisory Board (SAB) was created made up of eminent intellectuals from around the world with expertise related to the Company’s products as follows:
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Chairman of the Scientific Advisory Board - Dr. Stanley Plotkin, Emeritus Professor Wistar Institute, University of Pennsylvania, consultant to Sanofi Pasteur, developed the rubella vaccine in 1960s; worked extensively on the development and application of other vaccines including polio, rabies, varicella, rotavirus and cytomegalovirus as well as senior roles at the Epidemic Intelligence Service, U.S. Public Health Service; Aventis Pasteur (medical and scientific director); and Sanofi Pasteur (executive advisor). |
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Vice Chairman of the Scientific Advisory Board - Dr. Marc Girard, has over 20 years of experience in the HIV-1 research field, past Director of the Merieux Foundation and a consultant to the WHO and former Chairman of EuroVac (European Consortium for HIV vaccine). |
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Dr. Ruth Ruprecht, Harvard University, Dana Farber Cancer Institute, Boston USA |
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Dr. George Kemble, Former Senior Vice President of R&D at MedImmune and Head of Research at MedImmune. He is one of the world’s authorities on vaccine development and in particular the development of vaccines and therapeutics for RSV. |
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Dr. Juliana McElrath, University of Washington, Seattle, USA |
The Company’s board of directors has appointed Ernest M. Stern and Dr. Thomas Staehelin to serve as members of its Audit Committee. The board of directors has determined that Dr. Staehelin qualifies as our "audit committee financial expert" and is independent as that term is defined under NASDAQ Rule 4200(a)(15).
The registrant has adopted a Code of Ethics that applies to its executive officers, including its chief executive officer, as well as to the entire staff of the Company. A copy of the Code of Ethics is filed as an exhibit to Form 10-K annual report for the year ended December 31, 2013, hereby incorporated by reference.
MEETINGS OF THE BOARD OF DIRECTORS
In 2013, our Board of Directors held 26 meetings, 25 of which were conducted by telephone conference call, and acted by unanimous written consent three times. All directors attended at least 95% of the total number of Board meetings. The Board of Directors has determined that Mr. Stern is independent within the meaning of Section 10A and Rule 10A-3 of the Exchange Act. The Company does not have a formal policy regarding attendance by members of the board of directors at our annual meetings of stockholders since we did not hold an annual meeting in 2013.
Shareholders may contact our Board of Directors by mail addressed to the entire board of directors, or to one or more individual directors, at c/o Mymetics S.A., Biopole, Route de la Corniche 4, CH-1066 Epalinges, Switzerland, Attn: Secretary. All communications directed to our board of directors or individual directors in this manner will be relayed to the intended recipients.
We do not have a separate nominating committee and do not believe that such a committee is required at this time given our emphasis on research and development rather than active revenue generating business and our limited shareholder base.
Our non-executive directors became eligible for compensation of E10,000 each for their services as directors in 2013.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires that executive officers, directors and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes of ownership with the SEC within specified due dates. These persons are required by SEC regulations to furnish the Company with copies of all such reports they file. Based solely on the review of the copies of such reports furnished, we believe that, with respect to our fiscal year ended December 31, 2013, all of our executive officers, directors and 10% stockholders filed all required reports under Section 16(a) in a timely manner, except as follows: Dr Fleury due to incompatibility between the respectively Swiss and French legal procedures with the electronic filing procedure of the SEC.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee of the Board of Directors (the “Committee”) is composed of three non-Executive directors, Ulrich Burkhard, Ernst M. Stern and Thomas Staehelin. The Compensation Committee does not have a charter.
The Committee met with management to review and discuss the Compensation Discussion and Analysis disclosures that follow. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K, and the Board has approved that recommendation.
Compensation Discussion and Analysis
The Committee is responsible for reviewing and approving the compensation paid to executive officers of the Company, including salaries, bonuses, stock grants and stock options. Following review and approval by the Committee, action pertaining to executive compensation is reported to the full Board of Directors for further consideration.
The Company’s compensation of executive officers and its philosophy regarding executive compensation is comprised of the following characteristics:
|
(i) |
Competitive base salary; |
|
(ii) |
Granting stock awards as a portion of the total compensation, which vest over a certain number of years; and |
|
(iii) |
Granting performance-based bonuses either in cash or common stock. |
We believe our executive compensation should be designed to allow us to attract, motivate and retain executives of a high caliber to permit us to remain competitive in our industry. We desire to maintain for now a uniformity of base salary compensation in light of the contributions each of the two principal executives has either made, or is expected to make, to our ability to remain in business and achieve the level of success that we have reached in meeting scientific results, primarily to date the vaccines in our portfolio. We take into account the compensation paid at similarly situated companies, both within and outside of our industry, when determining executive compensation. We believe that by granting shares of our Common Stock to our executives, which vest over a certain number of years, we will be able to encourage executives to remain with us.
Additionally, individual performance of the executive is considered as a factor in determining executive compensation, as well as the overall performance of the Company, which, since we are pre-revenue and primarily involved in research and development, includes, but is not limited to, fund raising and meeting our business plan milestones on time and within budget, including successful conclusion of strategic partner agreements and achieving the regulatory approvals to commercialize our vaccines, rather than earnings, revenue growth, cash flow and earnings per share which would be more typical for a company generating revenues and earnings. The Committee also uses subjective criteria it deems relevant in its reasonable discretion.
Compensation of Chief Executive Officer and Chief Financial Officer
As Chief Executive Officer and Chief Financial Officer, Mr. Kempers was paid a salary of CHF300,000 for the twelve months ending December 31, 2013.
Compensation of Chief Scientific Officer
Dr. Fleury was the Company’s Scientific Consultant from July 31, 2003 until November 3, 2003 when he was appointed Chief Scientific Officer. Dr. Fleury was paid a base salary of E96,000 in calendar year 2004, the first full year of his employment by the Company. The Company had very little cash and Mr. Fleury deferred a significant portion of his salary in 2004, 2005, and 2006. As a result of Mr. Fleury’s efforts, the Company achieved important scientific goals for its HIV-AIDS vaccine that encouraged investment in the Company. Dr. Fleury’s salary was first increased to E120,000 in 2005, then E180,000 in 2006 and E216,000 in 2007 based upon his success in the animal studies leading to the Company’s ability to commence Phase I clinical trials for its HIV-AIDS vaccine in addition to his role in the negotiations in concluding an agreement with Pevion Biotech Ltd. to acquire the malaria vaccine. As of January 1, 2010, Dr. Fleury’s salary has been converted into CHF300,000, which is approximately equal to his previous salary of E216,000 at the exchange rate at that time and included also the employer’s share of social contributions. A contractual clause allowing for a 3% success fee upon sale of the Company to, or licensing of technology to, a major partner was deleted in favor of stock options.
SUMMARY COMPENSATION TABLE
The following table sets forth for the last three fiscal years information on the annual compensation earned by our directors and officers.
|
Name and Principal Position
|
|
|
Year
|
|
|
Salary
(E)
|
|
|
Bonus
(E)
|
|
|
Awards
(E)
|
|
|
Stock
Awards
(E)
|
|
|
Option Plan
(E)
|
|
|
Non-Equity
Incentive Earnings
(E)
|
|
|
Change in Pension Value and
Nonqualified
Deferred
Compensation
(E)
|
|
|
Total
Annual
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald Kempers
|
(6
|
)
|
|
2013
|
|
|
|
216,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
184,796
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
400,796
|
(1
|
)
|
|
(CEO)
|
|
|
|
2012
|
|
|
|
216,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
216,000
|
(1
|
)
|
|
|
|
|
|
2011
|
|
|
|
216,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
216,000
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sylvain Fleury, Ph. D.
|
(6
|
)
|
|
2013
|
|
|
|
216,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,903
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
215,903
|
(2
|
)
|
|
|
|
|
|
2012
|
|
|
|
216,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
216,000
|
(2
|
)
|
|
|
|
|
|
2011
|
|
|
|
216,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
216,000
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Staehelin, Dr.
|
|
|
|
2013
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
10,000
|
(3
|
)
|
|
|
|
|
|
2012
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
10,000
|
(3
|
)
|
|
|
|
|
|
2011
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
10,000
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ernest Stern
|
|
|
|
2013
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
10,000
|
(4
|
)
|
|
|
|
|
|
2012
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
10,000
|
(4
|
)
|
|
|
|
|
|
2011
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
10,000
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ulrich Burkhard
|
|
|
|
2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
-
|
(5
|
)
|
|
|
|
|
|
2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
-
|
(5
|
)
|
|
|
|
|
|
2011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E
|
|
-
|
(5
|
)
|
| (1) |
Mr. Kempers has been Mymetics’ Chief Operating Officer since July 1st, 2009, Chief Financial Officer since August 1, 2010, and was appointed Chief Executive Officer on November 23, 2012. |
| (2) |
Dr. Fleury has been appointed as Mymetics’ Chief Scientific Officer on November 3, 2003. |
| (3) |
Dr. Staehelin is a member of the Board of Directors and of the Audit Committee of the Company. He was elected on July 2nd, 2007as non-executive director and eligible for annual compensation of E10,000 for attendance at the Board meetings, whether in person or by telephone. |
| (4) |
Ernest Stern is a member of the Board of Directors and of the Audit Committee of the Company. He was elected on January 21st, 2008 as non-executive director and eligible for annual compensation of E10,000 for attendance at the Board meetings, whether in person or by telephone. |
| (5) |
Ulrich Burkhard is a member of the Board of Directors of the Company. He was elected on March 23rd, 2012 as non-executive director for attendance at the Board meetings, whether in person or by telephone. |
| (6) |
See below “Employment Agreements”. |
The tables entitled," "PENSION BENEFITS," "NONQUALIFIED DEFERRED COMPENSATION" and "DIRECTOR COMPENSATION" and the respective discussions related to those tables have been omitted because no compensation required to be reported in those tables was awarded to, earned by or paid to any of the named executive officers or directors in any of the covered fiscal years.
Under the Executive Employment Agreement for Sylvain Fleury Ph.D., he is employed as CSO since July 1, 2006 with a contract ending June 30, 2013. Dr. Fleury receives an annual salary of E216,000. During the employment period, at the discretion of the Board and the Compensation Committee and based on the company’s performance and individual achievements, the executive shall be eligible for an annual bonus to be paid in cash, stock or stock options. If Dr. Fleury is terminated without cause or he terminates for good reason, he is entitled nine months of his salary. Retroactive to January 1, 2010, Dr. Fleury’s salary has been converted into CHF300,000, which is approximately equal to his previous salary of E216,000, which included also the employer’s share of social contributions.
Under the Executive Employment Agreement for Ronald Kempers, he is employed as COO for five years commencing July 1, 2009. Mr. Kempers receives an annual salary of CHF300,000, which is approximately equal to E216,000 and is entitled to participate in the stock incentive plan. If Mr. Kempers is terminated without cause or he terminates for good reason, he is entitled to a lump-sum payment equal to 12 months of his salary.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information about the beneficial ownership of our common stock as of December 31, 2013, by: (a) each of our named executive officers; (b) each of our directors; (c) each person known to the management to be the beneficial owner of more than 5% of our outstanding voting securities; and (d) all of our current executive officers and directors as a group. The following is based solely on statements and reports filed with the Securities and Exchange Commission or other information we believe to be reliable.
There were 298,418,813 shares of our common stock outstanding on
March 28, 2014. Beneficial ownership has been determined in accordance with the rules of the Securities and Exchange Commission. Except as indicated by the footnotes below, we believe, based on the information furnished, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of
March 28, 2014, are deemed outstanding. These shares of common stock, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.
|
NAME AND ADDRESS OF BENEFICIAL OWNER
|
|
TITLE
OF CLASS
|
|
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP
|
|
|
PERCENT
OF CLASS
|
|
|
Ulrich Burkhard (1) Director
|
|
Common
|
|
|
--
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Thomas Staehelin (1) Director
|
|
Common
|
|
|
12,479,907
|
|
|
|
4.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Sylvain Fleury (1) Chief Scientific Officer
|
|
Common
|
|
|
6,500,000
|
(2
|
)
|
|
2.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ernest M. Stern (1) Director
|
|
Common
|
|
|
1,500,000
|
(3
|
)
|
|
0.50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald Kempers (1) CEO, CFO and Director
|
|
Common
|
|
|
3,100,000
|
(5
|
)
|
|
1.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Round Enterprises Ltd. (1)
|
|
Common
|
|
|
141,006,552
|
(4
|
)
|
|
47.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All current executive officers and directors as a group (4 persons)
|
|
Common
|
|
|
164,586,459
|
|
|
|
55.15
|
%
|
| (1) |
Address is Mymetics Corporation, Biopole, Route de la Corniche 4, CH-1066 Epalinges (Switzerland). |
| (2) |
Of which 500,000 were issued for services, 1,000,000 were acquired through conversion of unpaid salary and expenses and 5,000,000 were acquired as a bonus. |
| (3) |
500,000 were issued for services rendered. |
| (4) |
As stated in the Form 13-D filed by Round Enterprises Ltd. all its shares are held through Anglo Irish Bank, SA, as nominee which, as a fiduciary, cannot take any action without the prior consent of Round Enterprises Ltd. |
| (5) |
Of which 3,000,000 were issued through exercise of stock options. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During 2013, there were no transactions, and there are currently no proposed transactions, to which we were, are or will be a party in which the amount involved exceeds $120,000 and in which any of our directors, executive officers or holders of more than 5% of our common stock, or an immediate family member of any of the foregoing, had or will have a direct or indirect interest.
Furthermore, it is our intention to ensure that all future transactions, including loans, between us and our officers, directors and principal stockholders and their affiliates are on terms no less favorable to us than those that could be obtained from unaffiliated third parties.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table provides information about the fees billed to us for professional services rendered by Peterson Sullivan LLP during fiscal years 2013 and 2012:
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
49,268
|
|
|
$
|
55,146
|
|
|
Audit-Related Fees
|
|
|
-
|
|
|
|
-
|
|
|
Tax Fees
|
|
|
12,815
|
|
|
|
10,425
|
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,083
|
|
|
$
|
65,571
|
|
Audit Fees. Audit fees consist of fees for the audit of our annual financial statements or services that are normally provided in connection with statutory and regulatory annual and quarterly filings or engagements.
Audit-Related Fees. Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported as Audit Fees. During fiscal 2013 and 2012, no services were provided in this category.
Tax Fees. Tax fees consist of fees for tax compliance services, tax advice and tax planning. During fiscal 2013 and 2012, the services provided in this category included assistance and advice in relation to the preparation of corporate income tax returns.
All Other Fees. Any other fees not included in Audit Fees, Audit-Related Fees or Tax Fees.
Pre-Approval Policies and Procedures.
Our audit Committee pre-approved all services to be provided by Peterson Sullivan LLP.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
(a)
|
(1)
|
Index to Financial Statements
|
|
|
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations and Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
(a)
|
(2)
|
ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR NOTES THERETO.
|
|
|
|
|
|
|
|
|
(3)
|
List of Exhibits
|
|
|
|
|
|
|
|
2.1
|
|
Share Exchange Agreement dated December 13, 2001 between the Company and the stockholders of Mymetics S.A. listed on the signature page thereto (1)
|
|
|
|
|
|
|
|
2.2
|
|
Share Exchange Agreement dated December 13, 2001 between the Company and the stockholders of Mymetics S.A. listed on the signature page thereto (1)
|
|
|
|
|
|
|
|
2.3
|
|
Purchase Agreement dated October 17, 1998 between the Company and the majority stockholders of Nazca Holdings Ltd. (2)
|
|
|
|
|
|
|
|
2.4
|
|
Amendment to the Purchase Agreement dated October 17, 1998 between the Company and the majority stockholders of Nazca Holdings Ltd. (3)
|
|
|
|
|
|
|
|
2.5
|
|
Revised Purchase Agreement dated July 28, 1999 between the Company and the majority stockholders of Nazca Holdings Ltd. (4)
|
|
|
|
|
|
|
|
2.6
|
|
Share Exchange Agreement dated July 30, 2002 between the Company and the stockholders of Mymetics S.A. listed on the signature page thereto (5)
|
|
|
|
|
|
|
|
3 (i)
|
|
Articles of Incorporation of the Company (as amended through May 10, 2002) (6)
|
|
|
|
|
|
|
|
3 (ii)
|
|
Bylaws (7)
|
|
|
|
|
|
|
|
4.1
|
|
Form of Specimen Stock Certificate (8)
|
|
|
|
|
|
|
|
4.2
|
|
Form of letter regarding Warrant (8)
|
|
|
|
|
|
|
|
4.3
|
|
Form of Share Exchange Agreement (8)
|
|
|
|
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9.1
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Voting and Exchange Trust Agreement dated March 19, 2001, among the Company, 6543 Luxembourg S.A. and MFC Merchant Bank S.A. (8)
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10.1
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Services Agreement dated May 31, 2001, between the Company and MFC Merchant Bank, S.A.(7)
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10.2
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Employment Agreement dated May 3, 2001, between Pierre-Francois Serres and the Company (7)
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10.3
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Indemnification Agreement dated March 19, 2001, between the Company and MFC Bancorp Ltd. (7)
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10.4
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Agreement dated for reference May 15, 2000, between the Company and Maarten Reidel (7)
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10.5
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Preferred Stock Redemption and Conversion Agreement dated for reference December 21, 2000, between the Company and Sutton Park International Ltd. (10)
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10.6
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Preferred Stock Conversion Agreement dated for reference December 21, 2000, between the Company and Med Net International Ltd. (11)
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10.7
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Preferred Stock Conversion Agreement dated December 21, 2000, between the Company and Dresden Papier GmbH (11)
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10.8
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Assignment Agreement dated December 29, 2000, among the Company, Mymetics S.A. and MFC Merchant Bank S.A. (1)
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10.9
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Credit Facility Agreement dated July 27, 2000, between MFC Merchant Bank, S.A. and the Company (1)
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10.10
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Amended Credit Facility Agreement dated for reference August 13, 2001, between MFC Merchant Bank, S.A. and the Company (16)
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10.11
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Second Amended Credit Facility Agreement dated for reference February 27, 2002, between MFC Merchant Bank, S.A. and the Company (16)
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10.12
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Amended and Restated Credit Facility Agreement dated for reference February 28, 2003, among MFC Merchant Bank, S.A., MFC Bancorp Ltd., and the Company (16)
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10.13
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Guarantee dated for reference February 28, 2003, by MFC Bancorp Ltd. to MFC Merchant Bank S.A. (16)
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10.14
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Shareholder Agreement dated March 19, 2001, among the Company, the Holders of Class B Exchangeable Preferential Non-Voting Shares of 6543 Luxembourg S.A. signatory thereto and6543 Luxembourg S.A.(8)
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10.15
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Support Agreement dated March 19, 2001, between the Company and 6543 Luxembourg S.A. (8)
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10.16
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1995 Qualified Incentive Stock Option Plan (12)
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10.17
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Amended 1994 Stock Option Plan (13)
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10.18
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2001 ICHOR Company Stock Option Plan (7)
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10.19
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Employment Agreement dated March 18, 2002, between the Company and Peter P. McCann (14)
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10.20
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Consulting Agreement dated August 31, 2001, between the Company and Michael K. Allio (8)
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10.21
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Amendment to Consulting Agreement dated August 21, 2002, between the Company and Michael K. Allio (16)
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10.22
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Employment Agreement dated March 18, 2002, between the Company and Dr. Joseph D. Mosca (15)
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10.23
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Separation Agreement and Release dated January 31, 2003,between the Company and Peter P. McCann (16)
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10.24
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Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Robert Demers (8)
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10.25
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Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Michael K. Allio (8)
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10.26
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Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and John M. Musacchio (8)
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10.27
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Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Patrice Pactol (8)
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10.2
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Director and Non-Employee Stock Option Agreement dated July 19, 2001, between the Company and Pierre-Francois Serres (8)
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10.29
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Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Pierre-Francois Serres (16)
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10.30
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Director and Non-Employee Stock Option Agreement dated July 23 2002, between the Company and Patrice Pactol (16)
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10.31
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Director and Non-Employee Stock Option Agreement dated July 23,2002, between the Company and Robert Demers (16)
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10.32
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Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and John M. Musacchio (16)
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10.33
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Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Michael K. Allio (16)
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10.34
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Director and Non-Employee Stock Option Agreement dated August 21, 2002, between the Company and Michael K. Allio (16)
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10.35
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Director and Non-Employee Stock Option Agreement dated June 20, 2002, between the Company and Peter P. McCann (16)
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10.36
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Director and Non-Employee Stock Option Agreement dated July 23, 2002, between the Company and Peter P. McCann (16)
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10.37
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Director and Non-Employee Stock Option Agreement dated February 6, 2003, between the Company and Peter P. McCann (16)
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10.38
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Patent Pledge Agreement dated November __, 2002 among Mymetics S.A., Mymetics Deutschland GmbH, the Company and MFC Merchant Bank S.A. (16)
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10.39
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Third Amendment to the Credit Facility Agreement dated for Reference December 31, 2006, between MFC Merchant Bank, S.A. and the Company (17)
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10.40
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Fourth Amendment to the Credit Facility Agreement dated for Reference February 16, 2005, between MFC Merchant Bank, S.A. and the Company (17)
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10.41
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Consulting Agreement dated for reference January 1, 2004, between the Centre Hospitalier Universitaire Vaudois (CHUV), the Company and Dr. Sylvain Fleury, Ph.D. (18)
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10.42
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Consulting Agreement dated for reference January 1, 2004, between the Company and Professor Marc Girard, DVM, D.Sc. (18)
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10.43
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Cooperation and Option Agreement dated March 10, 2005, between the Company and Pevion A.G. (18)
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10.44
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Consulting Agreement dated March 23, 2005, between the Company and Northern Light International. (18)
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10.45
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Sixth Amended Credit Facility Agreement dated for reference December 31, 2005, between MFC Merchant Bank, S.A. and the Company (19)
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10.46
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Employment Agreement dated July 1, 2006, between the Company and Dr. Sylvain Fleury (20)
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10.47
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Employment Agreement dated July 1, 2006, between the Company and Christian Rochet (20)
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10.48
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Employment Agreement dated July 1, 2006, between the Company and Ernst Luebke (20)
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10.49
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License Agreement dated March 1, 2007, between the Company and Pevion Biotech Ltd. (21)
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10.50
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Settlement Agreement dated March 19, 2007 between the Company and MFC Merchant Bank S.A. (22)
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10.51
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Co-ownership Agreement dated January 8, 2008 between the Company, INSERM and Pevion Biotech Ltd. (23)
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10.52
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Co-ownership Agreement dated January 8, 2008 between the Company and INSERM (23)
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10.53
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Exploitation Agreement dated January 8, 2008 between the Company and INSERM (23)
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10.54
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Non-Executive Director Agreement dated 21 January between the Company and Mr. Ernest M Stern.(24)
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10.55
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NGIN Material Transfer Agreement dated 11 February 2008 between the Company, Institute Cochin, Universite Paris Descartes and Pevion Biotech.(25)
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10.56
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Acquisition & License Agreement dated 19 May 2008 between the Company and Pevion Biotech Ltd. (26)
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10.57
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Extension of Convertible Note Maturity Date Agreement dated 22 August 2008 between the Company, Anglo Irish Bank and Round Enterprises Ltd. (27)
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10.58
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Gp41 Manufacturing Technology Agreement dated 26 January 2009 between the Company and PX Therapeutics (28)
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10.59
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Share Purchase Agreement pursuant to which the Company purchased all issued and outstanding shares of capital stock of Bestewil Holding B.V. (“Bestewil”) from its parent, Norwood Immunology Limited (“NIL”), and all issued and outstanding shares of capital stock of Virosome Biologicals B.V. now held by Bestewil. (29)
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10.60
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Resignation of Prof Marc Girard as Head of vaccine development for reasons of personal health. (30)
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10.61
|
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Completion of Share Purchase Agreement pursuant to which Mymetics purchased all issued and outstanding shares of capital stock of Bestewil Holding B.V. and Virosome Biologicals B.V. including Unregistered Sales of Equity Securities, Financial Statements and Exhibits. (31)
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10.62
|
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Completion of Share Purchase Agreement pursuant to which Mymetics purchased all issued and outstanding shares of capital stock of Bestewil Holding B.V. and Virosome Biologicals B.V. including Statements and Exhibits. (32)
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10.63
|
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Election of Jacques-Francois Martin as a member of the Board of Directors and Chairman of the Board, resignation of Christian Rochet as President and CEO and agreement of Jacques-Francois Martin to serve as President and CEO. (33)
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10.64
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Consulting Agreement dated September 1, 2009, between the Company and Mr. Christian Rochet.
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10.65
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Resignation of Ernest Luebke as Chief Finance Officer and Board member. (37)
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10.66
|
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Press release on partial funding by the National Institutes of Health of a new preclinical trial to test the effectiveness of a candidate HIV vaccine in a nonhuman primate model. (38)
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| |
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10.67
|
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Amendment of Exploitation Agreement dated January 8, 2008 with INSERM-TRANSFERT. (43)
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10.67
|
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Amendment of License and Cooperation Agreements for Intranasal Delivery of APRECS based Vaccines and Virosomes between Mymetics B.V. and Abbott Biologicals B.V (44)
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10.68
|
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Election of Martine Reindle to the Board of Directors. (45)
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10.68
|
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Resignation of Jacques-François Martin as President and CEO. (46)
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10.69
|
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Election of Dr. Christopher S. Henney, Ulrich Burkhard and Grant Pickering to the Board of Directors. Resignation of Jacques-François Martin, Martine Reindle, Christian Rochet and Sylvain Fleury from the Board of Directors. (47)
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10.70
|
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Second Amended and Restated Executive Employment Agreement of Dr. Sylvain Fleury. (49)
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10.71
|
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Amendment of convertible secured notes issued to Round Enterprises Ltd., Eardley Holding A.G. and Anglo Irish Bank. (50)
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10.72
|
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Election of Ronald Kempers as President and Chief Executive Officer. , Departure of Dr. Christopher S. Henney and Grant Pickering from the Board of Directors. (51)
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11.1
|
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Statement Regarding Calculation of Per Share Earnings.
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Code of Ethics.
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List of Subsidiaries
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24.1
|
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Powers of Attorney (included on the signature page hereto)
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
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Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
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101.INS
|
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Instance Document
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101.SCH
|
|
XBRL Taxonomy Extension Schema Document
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101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
|
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
|
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XBRL Taxonomy Extension Presentation Linkbase Document
|
| (1) |
Incorporated by reference to the Company's Schedule 14C filed with the Securities and Exchange Commission on April 26, 2001. |
| (2) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on October 22, 1998. |
| (3) |
Incorporated by reference to the Company's report on Form 8-K/A filed with the Securities and Exchange Commission on April 15, 1999. |
| (4) |
Incorporated by reference to the Company's report on Form 8-K/A filed with the Securities and Exchange Commission on August 13, 1999. |
| (5) |
Incorporated by reference to the Company's Amendment No. 1 to Form S-1 filed with the Securities and Exchange Commission on August 8, 2002. |
| (6) |
Incorporated by reference to the Company's report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002. |
| (7) |
Incorporated by reference to the Company's report on Form 10-Q for the quarter ended June 30, 2001, filed with the Securities and Exchange Commission on August 14, 2001. |
| (8) |
Incorporated by reference to the Company’s Registration Statement onForm S-1, File No. 333-88782, filed with the Securities and Exchange Commission on May 22, 2002. |
| (9) |
Incorporated by reference to the Company's report on Form 8-K/A filed with the Securities and Exchange Commission on August 9, 2000. |
| (10) |
Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd. With the Securities and Exchange Commission on dated January 2, 2001. |
| (11) |
Incorporated by reference to the Company's report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on March 14, 2001. |
| (12) |
Incorporate by reference to the Company's Registration Statement on Form S-8, File No. 333-15831, filed with the Securities and Exchange Commission on November 8, 1996. |
| (13) |
Incorporated by reference to the Company's Registration Statement on Form S-8, File No. 333-15829, filed with the Securities and Exchange Commission on November 8, 1996. |
| (14) |
Incorporated by reference to the Company's report on Form 10-K for the fiscal year ended December 31, 2004, and filed with the Securities and Exchange Commission on March 29, 2002. |
| (15) |
Incorporated by reference to the Company's report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002. |
| (16) |
Incorporated by reference to the Company's report on Form 10-K for the fiscal year ended December 31, 2005, and filed with the Securities and Exchange Commission on March 27, 2003. |
| (17) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2005. |
| (18) |
Incorporated by reference to the Company's report on Form 10-K for the fiscal year ended December 31, 2004, filed with the Securities and Exchange Commission on March 30, 2005. |
| (19) |
Incorporated by reference to the Company's report on Form 10-K for the fiscal year ended December 31, 2005, filed with the Securities and Exchange Commission on April 17, 2006. |
| (20) |
Incorporated by reference to the Company's report on Form 10-Q for the period ended June 30, 2006, and filed with the Securities and Exchange Commission on August 21, 2006. |
| (21) |
Incorporated by reference to the Company's report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Securities and Exchange Commission on April 17, 2007. |
| (22) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2007. |
| (23) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2008. |
| (24) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2008. |
| (25) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on February 19, 2008. |
| (26) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2008. |
| (27) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2008. |
| (28) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on January 30, 2009. |
| (29) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2009. |
| (30) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2009. |
| (31) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on June 16, 2009. |
| (32) |
Incorporated by reference to the Company's report on Form 8-K/A filed with the Securities and Exchange Commission on June 22, 2009. |
| (33) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on June 23, 2009. |
| (34) |
Incorporated by reference to the Company's Statement on Form 4, filed with the Securities and Exchange Commission on July 28, 2009. |
| (35) |
Incorporated by reference to the Company's Statement on Form 3 filed with the Securities and Exchange Commission on July 14, 2010. |
| (36) |
Incorporated by reference to the Company's Statement on Form 3 filed with the Securities and Exchange Commission on August 9, 2010. |
| (37) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on August 10, 2010. |
| (38) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on September 13, 2010. |
| (39) |
Incorporated by reference to the Company's Statement on Form 4 filed with the Securities and Exchange Commission on December 2, 2010. |
| (40) |
Incorporated by reference to the Company's Statement on Form 3 filed with the Securities and Exchange Commission on December 20, 2010. |
| (41) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on March 7, 2011. |
| (42) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on March 16, 2011. |
| (43) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on August 12, 2011. |
| (44) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on October 4, 2011. |
| (45) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2011. |
| (46) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on February 03, 2012. |
| (47) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on March 23, 2012. |
| (48) |
Incorporated by reference to the Company's Statement on Form 13D filed with the Securities and Exchange Commission on April 05, 2012. |
| (49) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on July 02, 2012. |
| (50) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on September 21, 2012. |
| (51) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012. |
| (52) |
Incorporated by reference to the Company's report on Form 8-K filed with the Securities and Exchange Commission on April 15, 2013. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders
Mymetics Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Mymetics Corporation (a development stage company) and Subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity (deficit), and cash flows for the years ended December 31, 2013 and 2012, and for the period from May 2, 1990 (inception) to December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mymetics Corporation (a development stage company) and Subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for the years ended December 31, 2013 and 2012, and for the period from May 2, 1990 (inception) to December 31, 2013, in conformity with accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has not developed a commercially viable product and, therefore, has not been able to generate ongoing revenue, which has resulted in significant losses. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/S/ PETERSON SULLIVAN LLP
Seattle, Washington
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 2013 and 2012
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2013
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2012
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
E
|
297
|
|
|
E
|
286
|
|
|
Receivables
|
|
|
3,712
|
|
|
|
43
|
|
|
Prepaid expenses
|
|
|
57
|
|
|
|
52
|
|
|
Total current assets
|
|
|
4,066
|
|
|
|
381
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of E281 and E261 at December 31, 2013 and 2012, respectively
|
|
|
117
|
|
|
|
28
|
|
|
In-process research and development
|
|
|
2,266
|
|
|
|
2,266
|
|
|
Goodwill
|
|
|
6,671
|
|
|
|
6,671
|
|
|
|
|
E
|
13,120
|
|
|
E
|
9,346
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
E
|
858
|
|
|
E
|
1,325
|
|
|
Acquisition-related contingent consideration
|
|
|
236
|
|
|
|
--
|
|
|
Convertible notes payable to related parties
|
|
|
39,123
|
|
|
|
34,723
|
|
|
Total current liabilities
|
|
|
40,217
|
|
|
|
36,048
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related contingent consideration
|
|
|
--
|
|
|
|
6,533
|
|
|
Total liabilities
|
|
|
40,217
|
|
|
|
42,581
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
Common stock, U.S. $.01 par value; 850,000,000 shares authorized; issued 298,418,813 at December 31, 2013 and 295,318,813 at December 31, 2012
|
|
|
2,491
|
|
|
|
2,468
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, U.S. $.01 par value; 5,000,000 shares authorized; none issued or outstanding
|
|
|
--
|
|
|
|
--
|
|
|
Additional paid-in capital
|
|
|
33,876
|
|
|
|
33,783
|
|
|
Deficit accumulated during the development stage
|
|
|
(64,165
|
)
|
|
|
(70,168
|
)
|
|
Accumulated other comprehensive income
|
|
|
701
|
|
|
|
682
|
|
|
|
|
|
(27,097
|
)
|
|
|
(33,235
|
)
|
|
|
|
E
|
13,120
|
|
|
E
|
9,346
|
|
The accompanying notes are an integral part of these consolidated financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31, 2013 and 2012 and
the Period from May 2, 1990 (Inception) to December 31, 2013
(In Thousands of Euros, Except Per Share Data)
|
|
|
|
|
|
|
|
|
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
2013)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
E
|
--
|
|
|
E
|
--
|
|
|
E
|
660
|
|
|
License fees
|
|
|
4,381
|
|
|
|
--
|
|
|
|
4,381
|
|
|
Interest
|
|
|
2
|
|
|
|
3
|
|
|
|
47
|
|
|
Gain on extinguishment of debt
|
|
|
--
|
|
|
|
--
|
|
|
|
774
|
|
|
Gain on sales of equipment
|
|
|
--
|
|
|
|
--
|
|
|
|
69
|
|
|
Government grants
|
|
|
--
|
|
|
|
--
|
|
|
|
107
|
|
|
|
|
|
4,383
|
|
|
|
3
|
|
|
|
6,038
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
657
|
|
|
|
1,616
|
|
|
|
27,365
|
|
|
General and administrative
|
|
|
1,370
|
|
|
|
1,371
|
|
|
|
25,586
|
|
|
Bank fee
|
|
|
3
|
|
|
|
3
|
|
|
|
947
|
|
|
Induced conversion cost
|
|
|
--
|
|
|
|
--
|
|
|
|
807
|
|
|
Interest
|
|
|
2,589
|
|
|
|
2,307
|
|
|
|
14,523
|
|
|
Change in the fair value of acquisition-related contingent consideration
|
|
|
(6,297
|
)
|
|
|
780
|
|
|
|
(3,314
|
)
|
|
Goodwill impairment
|
|
|
--
|
|
|
|
--
|
|
|
|
209
|
|
|
Depreciation
|
|
|
20
|
|
|
|
22
|
|
|
|
826
|
|
|
Amortization of intangibles
|
|
|
--
|
|
|
|
--
|
|
|
|
481
|
|
|
Impairment of license contract
|
|
|
--
|
|
|
|
--
|
|
|
|
2,213
|
|
|
Directors' fees
|
|
|
20
|
|
|
|
12
|
|
|
|
396
|
|
|
Other
|
|
|
(30
|
)
|
|
|
--
|
|
|
|
90
|
|
|
|
|
|
(1,668
|
)
|
|
|
6,111
|
|
|
|
70,129
|
|
|
Income (loss) before income tax provision
|
|
|
6,051
|
|
|
|
(6,108
|
)
|
|
|
(64,091
|
)
|
|
Income tax provision
|
|
|
(48
|
)
|
|
|
(3
|
)
|
|
|
(74
|
)
|
|
Net income (loss)
|
|
|
6,003
|
|
|
|
(6,111
|
)
|
|
|
(64,165
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
19
|
|
|
|
18
|
|
|
|
701
|
|
|
Comprehensive income (loss)
|
|
E
|
6,022
|
|
|
E
|
(6,093
|
)
|
|
E
|
(63,464
|
)
|
|
Basic and diluted income (loss) per share
|
|
E
|
0.02
|
|
|
E
|
(0.02
|
)
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Period from May 2, 1990 (Inception) to December 31, 2013
| |
Date of
Transaction
|
|
Number of
Shares
|
|
|
Par
Value
|
|
|
APIC
|
|
|
Deficit
Accumulated
during the
Development
Stage
|
|
|
Accumulated
Other
Comprehensive
Income-foreign
currency
translation
adjustment
|
|
|
Total
|
|
|
Balance at May 2, 1990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
June 1990
|
|
|
33,311,361
|
|
|
E
|
119
|
|
|
E
|
-
|
|
|
E
|
-
|
|
|
E
|
-
|
|
|
E
|
119
|
|
|
Net losses to December 31, 1999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(376
|
)
|
|
|
-
|
|
|
|
(376
|
)
|
|
Balance at December 31, 1999
|
|
|
|
33,311,361
|
|
|
|
119
|
|
|
|
-
|
|
|
|
(376
|
)
|
|
|
-
|
|
|
|
(257
|
)
|
|
Bank fee
|
|
|
|
-
|
|
|
|
-
|
|
|
|
806
|
|
|
|
-
|
|
|
|
-
|
|
|
|
806
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,314
|
)
|
|
|
-
|
|
|
|
(1,314
|
)
|
|
Balance at December 31, 2000
|
|
|
|
33,311,361
|
|
|
|
119
|
|
|
|
806
|
|
|
|
(1,690
|
)
|
|
|
-
|
|
|
|
(765
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on capital structure resulting from a business combination
|
March 2001
|
|
|
8,165,830
|
|
|
|
354
|
|
|
|
(354
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance of stock purchase warrants in connection with credit facility
|
March 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
210
|
|
|
|
-
|
|
|
|
-
|
|
|
|
210
|
|
|
Issuance of shares for bank fee
|
March 2001
|
|
|
1,800,000
|
|
|
|
21
|
|
|
|
(21
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance of shares for bank fee
|
June 2001
|
|
|
225,144
|
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance of shares for cash
|
June 2001
|
|
|
1,333,333
|
|
|
|
15
|
|
|
|
2,109
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,124
|
|
|
Exercise of stock purchase warrants in repayment of debt
|
June 2001
|
|
|
1,176,294
|
|
|
|
13
|
|
|
|
259
|
|
|
|
-
|
|
|
|
-
|
|
|
|
272
|
|
|
Exercise of stock purchase warrants for cash
|
December 2001
|
|
|
3,250,000
|
|
|
|
37
|
|
|
|
563
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,848
|
)
|
|
|
-
|
|
|
|
(1,848
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
100
|
|
|
Balance at December 31, 2001
|
|
|
|
49,261,962
|
|
|
|
562
|
|
|
|
3,569
|
|
|
|
(3,538
|
)
|
|
|
100
|
|
|
|
693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
March 2002
|
|
|
10,000
|
|
|
|
-
|
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
|
Issuance of stock purchase warrants for bank fee
|
June 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
63
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63
|
|
|
Exercise of stock purchase warrants in repayment of debt
|
July 2002
|
|
|
1,625,567
|
|
|
|
16
|
|
|
|
396
|
|
|
|
-
|
|
|
|
-
|
|
|
|
412
|
|
|
Issuance of remaining shares from 2001 business combination
|
August 2002
|
|
|
46,976
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,622
|
)
|
|
|
-
|
|
|
|
(3,622
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97
|
|
|
|
97
|
|
|
Balance at December 31, 2002
|
|
|
|
50,944,505
|
|
|
|
579
|
|
|
|
4,035
|
|
|
|
(7,160
|
)
|
|
|
197
|
|
|
|
(2,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
September 2003
|
|
|
400,000
|
|
|
|
4
|
|
|
|
29
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
|
|
Shares retired
|
October 2003
|
|
|
(51
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance of shares for services
|
November 2003
|
|
|
1,500,000
|
|
|
|
12
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
112
|
|
|
Issuance of shares for cash
|
December 2003
|
|
|
1,500,000
|
|
|
|
12
|
|
|
|
113
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125
|
|
|
Issuance of stock purchase warrants for financing fee
|
December 2003
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,786
|
)
|
|
|
-
|
|
|
|
(2,786
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
453
|
|
|
|
453
|
|
|
Balance at December 31, 2003
|
|
|
|
54,344,454
|
|
|
|
607
|
|
|
|
4,289
|
|
|
|
(9,946
|
)
|
|
|
650
|
|
|
|
(4,400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
January 2004
|
|
|
550,000
|
|
|
|
5
|
|
|
|
27
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32
|
|
|
Issuance of shares for cash
|
January 2004
|
|
|
2,000,000
|
|
|
|
17
|
|
|
|
150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
167
|
|
|
Issuance of stock purchase warrants for financing fee
|
January 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
40
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40
|
|
|
Issuance of shares for cash
|
February 2004
|
|
|
2,500,000
|
|
|
|
21
|
|
|
|
187
|
|
|
|
-
|
|
|
|
-
|
|
|
|
208
|
|
|
Issuance of stock purchase warrants for financing fee
|
February 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
62
|
|
|
|
-
|
|
|
|
-
|
|
|
|
62
|
|
|
Issuance of shares for services
|
April 2004
|
|
|
120,000
|
|
|
|
1
|
|
|
|
11
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
|
Issuance of shares for bank fee
|
May 2004
|
|
|
500,000
|
|
|
|
4
|
|
|
|
62
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66
|
|
|
Issuance of shares for cash
|
May 2004
|
|
|
2,000,000
|
|
|
|
16
|
|
|
|
148
|
|
|
|
-
|
|
|
|
-
|
|
|
|
164
|
|
|
Issuance of shares for services
|
August 2004
|
|
|
250,000
|
|
|
|
2
|
|
|
|
26
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28
|
|
|
Issuance of shares for cash
|
August 2004
|
|
|
1,466,667
|
|
|
|
12
|
|
|
|
128
|
|
|
|
-
|
|
|
|
-
|
|
|
|
140
|
|
|
Issuance of stock purchase warrants for financing fee
|
August 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
46
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46
|
|
|
Issuance of shares for services
|
September 2004
|
|
|
520,000
|
|
|
|
4
|
|
|
|
29
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
|
|
Issuance of shares for cash
|
September 2004
|
|
|
50,000
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
Issuance of shares for services
|
October 2004
|
|
|
2,106,743
|
|
|
|
16
|
|
|
|
132
|
|
|
|
-
|
|
|
|
-
|
|
|
|
148
|
|
|
Issuance of shares for services
|
November 2004
|
|
|
2,000,000
|
|
|
|
15
|
|
|
|
177
|
|
|
|
-
|
|
|
|
-
|
|
|
|
192
|
|
|
Issuance of shares for cash
|
November 2004
|
|
|
40,000
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,202
|
)
|
|
|
-
|
|
|
|
(2,202
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
191
|
|
|
|
191
|
|
|
Balance at December 31, 2004
|
|
|
|
68,447,864
|
|
|
|
720
|
|
|
|
5,522
|
|
|
|
(12,148
|
)
|
|
|
841
|
|
|
|
(5,065
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
January 2005
|
|
|
500,000
|
|
|
|
4
|
|
|
|
83
|
|
|
|
-
|
|
|
|
-
|
|
|
|
87
|
|
|
Issuance of shares for services
|
March 2005
|
|
|
1,700,000
|
|
|
|
13
|
|
|
|
280
|
|
|
|
-
|
|
|
|
-
|
|
|
|
293
|
|
|
Issuance of shares for services
|
April 2005
|
|
|
60,000
|
|
|
|
1
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11
|
|
|
Issuance of shares for cash
|
May 2005
|
|
|
52,000
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
Issuance of shares for cash
|
June 2005
|
|
|
626,800
|
|
|
|
5
|
|
|
|
27
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32
|
|
|
Issuance of shares for cash
|
July 2005
|
|
|
433,548
|
|
|
|
3
|
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21
|
|
|
Issuance of shares for cash
|
August 2005
|
|
|
256,452
|
|
|
|
2
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
|
Issuance of shares for services
|
September 2005
|
|
|
2,041,200
|
|
|
|
17
|
|
|
|
33
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50
|
|
|
Issuance of shares for services
|
October 2005
|
|
|
185,000
|
|
|
|
2
|
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
|
Issuance of shares for cash
|
October 2005
|
|
|
378,989
|
|
|
|
3
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13
|
|
|
Issuance of shares for services
|
November 2005
|
|
|
560,000
|
|
|
|
5
|
|
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14
|
|
|
Issuance of shares for cash
|
November 2005
|
|
|
507,278
|
|
|
|
4
|
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10
|
|
|
Issuance of shares for services
|
December 2005
|
|
|
140,000
|
|
|
|
2
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
Issuance of shares for cash
|
December 2005
|
|
|
6,781,333
|
|
|
|
56
|
|
|
|
206
|
|
|
|
-
|
|
|
|
-
|
|
|
|
262
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,939
|
)
|
|
|
-
|
|
|
|
(1,939
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(98
|
)
|
|
|
(98
|
)
|
|
Balance at December 31, 2005
|
|
|
|
82,670,464
|
|
|
|
837
|
|
|
|
6,227
|
|
|
|
(14,087
|
)
|
|
|
743
|
|
|
|
(6,280
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
January 2006
|
|
|
2,600,000
|
|
|
|
22
|
|
|
|
33
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55
|
|
|
Issuance of shares for cash
|
January 2006
|
|
|
4,000,000
|
|
|
|
33
|
|
|
|
132
|
|
|
|
-
|
|
|
|
-
|
|
|
|
165
|
|
|
Issuance of shares for cash
|
March 2006
|
|
|
5,750,000
|
|
|
|
47
|
|
|
|
144
|
|
|
|
-
|
|
|
|
-
|
|
|
|
191
|
|
|
Issuance of shares for services
|
April 2006
|
|
|
100,000
|
|
|
|
1
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
Issuance of shares for cash
|
May 2006
|
|
|
2,950,000
|
|
|
|
23
|
|
|
|
92
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115
|
|
|
Debt Conversion – non cash
|
May 2006
|
|
|
1,000,000
|
|
|
|
8
|
|
|
|
31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39
|
|
|
Issuance of shares for cash
|
June 2006
|
|
|
2,600,000
|
|
|
|
20
|
|
|
|
80
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
Debt Conversion – non cash
|
July 2006
|
|
|
3,500,000
|
|
|
|
28
|
|
|
|
252
|
|
|
|
-
|
|
|
|
-
|
|
|
|
280
|
|
|
Issuance of shares for services
|
November 2006
|
|
|
300,000
|
|
|
|
2
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
Issuance of shares for cash
|
November 2006
|
|
|
2,580,000
|
|
|
|
20
|
|
|
|
180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200
|
|
|
Issuance of shares for cash
|
December 2006
|
|
|
2,970,000
|
|
|
|
23
|
|
|
|
202
|
|
|
|
-
|
|
|
|
-
|
|
|
|
225
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,585
|
)
|
|
|
-
|
|
|
|
(1,585
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
4
|
|
|
Balance at December 31, 2006
|
|
|
|
111,020,464
|
|
|
|
1,064
|
|
|
|
7,381
|
|
|
|
(15,672
|
)
|
|
|
747
|
|
|
|
(6,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for cash
|
January 2007
|
|
|
650,000
|
|
|
|
5
|
|
|
|
45
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50
|
|
|
Issuance of shares for services
|
January 2007
|
|
|
750,000
|
|
|
|
6
|
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21
|
|
|
Issuance of shares for services
|
February 2007
|
|
|
250,000
|
|
|
|
2
|
|
|
|
5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
Issuance of shares for cash
|
February 2007
|
|
|
1,745,000
|
|
|
|
13
|
|
|
|
121
|
|
|
|
-
|
|
|
|
-
|
|
|
|
134
|
|
|
Issuance of shares for cash
|
March 2007
|
|
|
9,362,000
|
|
|
|
120
|
|
|
|
920
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,040
|
|
|
Debt Conversion – non cash
|
March 2007
|
|
|
12,500,000
|
|
|
|
94
|
|
|
|
2,505
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,599
|
|
|
Issuance of shares for services
|
April 2007
|
|
|
1,300,000
|
|
|
|
9
|
|
|
|
105
|
|
|
|
-
|
|
|
|
-
|
|
|
|
114
|
|
|
Issuance of shares for cash
|
May 2007
|
|
|
1,750,000
|
|
|
|
13
|
|
|
|
245
|
|
|
|
-
|
|
|
|
-
|
|
|
|
258
|
|
|
Debt Cancellation – non cash
|
May 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
242
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242
|
|
|
Debt Conversion – non cash
|
June 2007
|
|
|
9,469,000
|
|
|
|
70
|
|
|
|
891
|
|
|
|
-
|
|
|
|
-
|
|
|
|
961
|
|
|
Issuance of shares for services
|
June 2007
|
|
|
657,500
|
|
|
|
5
|
|
|
|
62
|
|
|
|
-
|
|
|
|
-
|
|
|
|
67
|
|
|
Issuance of shares for cash
|
June 2007
|
|
|
7,643,000
|
|
|
|
57
|
|
|
|
772
|
|
|
|
-
|
|
|
|
-
|
|
|
|
829
|
|
|
Issuance of shares for officer compensation
|
June 2007
|
|
|
16,000,000
|
|
|
|
120
|
|
|
|
2,033
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,153
|
|
|
Issuance of shares for cash
|
July 2007
|
|
|
5,550,000
|
|
|
|
42
|
|
|
|
1,208
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,250
|
|
|
Issuance of shares for cash
|
August 2007
|
|
|
933,333
|
|
|
|
7
|
|
|
|
193
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200
|
|
|
Issuance of shares for services
|
August 2007
|
|
|
2,100,000
|
|
|
|
15
|
|
|
|
139
|
|
|
|
-
|
|
|
|
-
|
|
|
|
154
|
|
|
Issuance of shares for services
|
September 2007
|
|
|
300,000
|
|
|
|
2
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23
|
|
|
Issuance of shares for cash
|
September 2007
|
|
|
1,666,667
|
|
|
|
12
|
|
|
|
344
|
|
|
|
-
|
|
|
|
-
|
|
|
|
356
|
|
|
Cancellation of shares for collateral
|
September 2007
|
|
|
(2,000,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance of shares for cash
|
October 2007
|
|
|
2,350,000
|
|
|
|
17
|
|
|
|
483
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500
|
|
|
Issuance of shares for cash
|
November 2007
|
|
|
2,966,666
|
|
|
|
21
|
|
|
|
623
|
|
|
|
-
|
|
|
|
-
|
|
|
|
644
|
|
|
Issuance of shares for services
|
December 2007
|
|
|
500,000
|
|
|
|
3
|
|
|
|
48
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,294
|
)
|
|
|
-
|
|
|
|
(9,294
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(75
|
)
|
|
|
(75
|
)
|
|
Balance at December 31, 2007
|
|
|
|
187,463,630
|
|
|
|
1,697
|
|
|
|
18,401
|
|
|
|
(24,966
|
)
|
|
|
672
|
|
|
|
(4,196
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
January 2008
|
|
|
1,000,000
|
|
|
|
7
|
|
|
|
99
|
|
|
|
-
|
|
|
|
-
|
|
|
|
106
|
|
|
Issuance of shares for cash
|
February 2008
|
|
|
1,000,000
|
|
|
|
7
|
|
|
|
326
|
|
|
|
-
|
|
|
|
-
|
|
|
|
333
|
|
|
Issuance of shares for services
|
March 2008
|
|
|
1,000,000
|
|
|
|
6
|
|
|
|
146
|
|
|
|
-
|
|
|
|
-
|
|
|
|
152
|
|
|
Issuance of shares for cash
|
June 2008
|
|
|
1,600,000
|
|
|
|
10
|
|
|
|
586
|
|
|
|
-
|
|
|
|
-
|
|
|
|
596
|
|
|
Issuance of shares for services
|
July 2008
|
|
|
2,000,000
|
|
|
|
13
|
|
|
|
239
|
|
|
|
-
|
|
|
|
-
|
|
|
|
252
|
|
|
Issuance of shares for services
|
August 2008
|
|
|
250,000
|
|
|
|
2
|
|
|
|
39
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41
|
|
|
Issuance of shares for cash
|
December 2008
|
|
|
1,000,000
|
|
|
|
7
|
|
|
|
319
|
|
|
|
-
|
|
|
|
-
|
|
|
|
326
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,938
|
)
|
|
|
-
|
|
|
|
(6,938
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13
|
|
|
|
13
|
|
|
Balance at December 31, 2008
|
|
|
|
195,313,630
|
|
|
|
1,749
|
|
|
|
20,155
|
|
|
|
(31,904
|
)
|
|
|
685
|
|
|
|
(9,315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
March 2009
|
|
|
250,000
|
|
|
|
2
|
|
|
|
36
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38
|
|
|
Issuance of stock options for acquisition
|
April 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
601
|
|
|
|
-
|
|
|
|
-
|
|
|
|
601
|
|
|
Issuance of shares for services
|
May 2009
|
|
|
250,000
|
|
|
|
1
|
|
|
|
27
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28
|
|
|
Issuance of shares for services
|
September 2009
|
|
|
250,000
|
|
|
|
2
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,186
|
)
|
|
|
-
|
|
|
|
(10,186
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Balance at December 31, 2009
|
|
|
|
196,063,630
|
|
|
|
1,754
|
|
|
|
20,840
|
|
|
|
(42,090
|
)
|
|
|
681
|
|
|
|
(18,815
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
March 2010
|
|
|
200,000
|
|
|
|
2
|
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
Issuance of warrant with debt
|
July 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200
|
|
|
Induced conversion cost
|
September 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
807
|
|
|
|
-
|
|
|
|
-
|
|
|
|
807
|
|
|
Warrant modification cost
|
September 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
484
|
|
|
|
-
|
|
|
|
-
|
|
|
|
484
|
|
|
Issuance of shares for services
|
September 2010
|
|
|
1,550,000
|
|
|
|
12
|
|
|
|
147
|
|
|
|
-
|
|
|
|
-
|
|
|
|
159
|
|
|
Issuance of shares on conversion of debt
|
September 2010
|
|
|
16,149,536
|
|
|
|
120
|
|
|
|
5,868
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,988
|
|
|
Stock compensation expense – options
|
|
|
|
-
|
|
|
|
-
|
|
|
|
238
|
|
|
|
-
|
|
|
|
-
|
|
|
|
238
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,428
|
)
|
|
|
-
|
|
|
|
(11,428
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|
Balance at December 31, 2010
|
|
|
|
213,963,166
|
|
|
|
1,888
|
|
|
|
29,602
|
|
|
|
(53,518
|
)
|
|
|
661
|
|
|
|
(21,367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares on conversion of debt
|
September 2011
|
|
|
41,542,722
|
|
|
|
289
|
|
|
|
2,029
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,318
|
|
|
Issuance of shares on conversion of debt
|
December 2011
|
|
|
20,511,451
|
|
|
|
145
|
|
|
|
1,015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,160
|
|
|
Stock compensation expense – options
|
|
|
|
-
|
|
|
|
-
|
|
|
|
86
|
|
|
|
-
|
|
|
|
-
|
|
|
|
86
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,539
|
)
|
|
|
-
|
|
|
|
(10,539
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
3
|
|
|
Balance at December 31, 2011
|
|
|
|
276,017,339
|
|
|
|
2,322
|
|
|
|
32,732
|
|
|
|
(64,057
|
)
|
|
|
664
|
|
|
|
(28,339
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares on conversion of debt
|
February 2012
|
|
|
19,301,474
|
|
|
|
146
|
|
|
|
1,019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,165
|
|
|
Stock compensation expense – options
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32
|
|
|
Net loss for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,111
|
)
|
|
|
-
|
|
|
|
(6,111
|
)
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18
|
|
|
|
18
|
|
|
Balance at December 31, 2012
|
|
|
|
295,318,813
|
|
|
|
2,468
|
|
|
|
33,783
|
|
|
|
(70,168
|
)
|
|
|
682
|
|
|
|
(33,235
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
November 2013
|
|
|
100,000
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
Exercise of stock options
|
December 2013
|
|
|
3,000,000
|
|
|
|
22
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43
|
|
|
Stock compensation expense – options
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71
|
|
|
Net income for the year
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,003
|
|
|
|
-
|
|
|
|
6,003
|
|
|
Translation adjustment
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19
|
|
|
|
19
|
|
|
Balance at December 31, 2013
|
|
|
|
298,418,813
|
|
|
E
|
2,491
|
|
|
E
|
33,876
|
|
|
E
|
(64,165
|
)
|
|
E
|
701
|
|
|
E
|
(27,097
|
)
|
The accompanying notes are an integral part of these consolidated financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2013 and 2011 and
the Period from May 2, 1990 (Inception) to December 31, 2013
|
|
|
|
|
|
|
|
|
Total
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
2013)
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
E
|
6,003
|
|
|
E
|
(6,111
|
)
|
|
E
|
(64,165
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in the fair value of acquisition-related contingent consideration
|
|
|
(6,297
|
)
|
|
|
780
|
|
|
|
(3,314
|
)
|
|
Depreciation
|
|
|
20
|
|
|
|
22
|
|
|
|
826
|
|
|
Amortization of intangibles
|
|
|
-
|
|
|
|
-
|
|
|
|
481
|
|
|
Impairment of license contract
|
|
|
-
|
|
|
|
-
|
|
|
|
2,213
|
|
|
Goodwill impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
209
|
|
|
Fees paid in warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
223
|
|
|
Gain on sales of equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
(69
|
)
|
|
Gain on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
(774
|
)
|
|
Services and fees paid in common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
5,403
|
|
|
Stock compensation expense-options
|
|
|
71
|
|
|
|
32
|
|
|
|
427
|
|
|
Amortization of debt discount
|
|
|
-
|
|
|
|
-
|
|
|
|
1,410
|
|
|
Induced conversion cost
|
|
|
-
|
|
|
|
-
|
|
|
|
807
|
|
|
Warrant modification cost
|
|
|
-
|
|
|
|
-
|
|
|
|
484
|
|
|
Changes in operating assets and liabilities,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(3,669
|
)
|
|
|
18
|
|
|
|
(3,642
|
)
|
|
Accounts payable
|
|
|
(467
|
)
|
|
|
298
|
|
|
|
1,439
|
|
|
Other
|
|
|
(5
|
)
|
|
|
2
|
|
|
|
(12
|
)
|
|
Net cash used in operating activities
|
|
|
(4,344
|
)
|
|
|
(4,959
|
)
|
|
|
(58,054
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents and other
|
|
|
-
|
|
|
|
-
|
|
|
|
(393
|
)
|
|
Proceeds from sale of equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
137
|
|
|
Purchase of property and equipment
|
|
|
(109
|
)
|
|
|
(1
|
)
|
|
|
(390
|
)
|
|
Acquisition of subsidiary, net of cash acquired of E58
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,942
|
)
|
|
Cash acquired in reverse purchase
|
|
|
-
|
|
|
|
-
|
|
|
|
13
|
|
|
Net cash used in investing activities
|
|
|
(109
|
)
|
|
|
(1
|
)
|
|
|
(5,575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of common stock options
|
|
|
45
|
|
|
|
-
|
|
|
|
45
|
|
|
Proceeds from the issuance of common stock and warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
11,630
|
|
|
Borrowings from shareholders
|
|
|
-
|
|
|
|
-
|
|
|
|
972
|
|
|
Increase in notes payable and other short-term advances
|
|
|
5,551
|
|
|
|
4,846
|
|
|
|
53,349
|
|
|
Decrease in notes payable and other short-term advances
|
|
|
(1,151
|
)
|
|
|
-
|
|
|
|
(2,641
|
)
|
|
Loan fees
|
|
|
-
|
|
|
|
-
|
|
|
|
(130
|
)
|
|
Net cash provided by financing activities
|
|
|
4,445
|
|
|
|
4,846
|
|
|
|
63,225
|
|
|
Effect of foreign exchange rate on cash
|
|
|
19
|
|
|
|
18
|
|
|
|
701
|
|
|
Net increase (decrease) in cash
|
|
|
11
|
|
|
|
(96
|
)
|
|
|
297
|
|
|
Cash, beginning of period
|
|
|
286
|
|
|
|
382
|
|
|
|
-
|
|
|
Cash, end of period
|
|
E
|
297
|
|
|
E
|
286
|
|
|
E
|
297
|
|
|
Non-cash investing and financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares on conversion of notes payable
|
|
E
|
--
|
|
|
E
|
1,165
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
E
|
151
|
|
|
E
|
511
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
The amounts in the notes are rounded to the nearest thousand except for share and per share amounts.
Mymetics Corporation (the "Company" or "Mymetics") was created for the purpose of engaging in vaccine research and development. Its main research efforts have been concentrated in the prevention and treatment of the AIDS virus and malaria. The Company has established a network which enables it to work with education centers, research centers, pharmaceutical laboratories and biotechnology companies. On April 1, 2009 the Company successfully closed its acquisition of Bestewil Holding BV and Mymetics BV (previously Virosome Biologicals BV) and, as a result, has further increased the pipeline of vaccines under development to include (i) Herpes Simplex which is at the pre-clinical stage, (ii) influenza for elderly which has finished a clinical trial Phase I, and (iii) Respiratory Syncytial Virus (RSV) which is at the pre-clinical stage. On December 27, 2013 Mymetics signed a License and Collaboration Agreement with RSV Corporation (RSVC), a dedicated entity specifically set-up for developing the Mymetics RSV vaccine. Under this agreement Astellas Pharma Inc. will fund RSVC’s development of the virosome vaccine technology, licensed from Mymetics for the respiratory syncytial virus (RSV) through completion of a Phase 2b human proof
‐of
‐concept study. Based on the strategic partnership, Astellas received exclusive rights to acquire RSVC as well as further develop and commercialize the vaccine product.
Mymetics will continue to provide research and development activities for the pre-clinical phases and prepare for the upscale production, assay developments and provide further scientific advice on the development of the RSV virosome vaccine. As consideration Mymetics has received an irrevocable and non-refundable upfront fee for the license of USD 5 million and will receive monthly Collaboration and R&D fees, milestone payments for specific milestones during development and royalties at the time of commercialization (see Note 6).
These consolidated financial statements have been prepared treating the Company as a development stage company. As of December 31, 2013, the Company is in the initial stages of clinical testing and a commercially viable product is not expected for several more years. As such, the Company has not generated significant outgoing revenues. For the purpose of these consolidated financial statements, the development stage started May 2, 1990.
These consolidated financial statements have also been prepared assuming the Company will continue as a going concern. The Company has experienced significant losses since inception resulting in a deficit accumulated during the development stage of E64,165 at December 31, 2013. Further, the Company's current liabilities exceed its current assets by E35,915 as of December 31, 2013, and there is no assurance that cash will become available to pay current liabilities in the near term. These conditions raise substantial doubt about our ability to continue as a going concern.
In order for us to continue as a going concern, management intends to seek additional funding through debt and equity sources. The Company also plans to seek funding through grants or through a partnership agreement. There can be no assurance that management will be successful in any of those efforts.
Critical Accounting Policies and Management Estimates
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Certain of the estimates and assumptions required to be made relate to matters that are inherently uncertain as they pertain to future events. While management believes that the estimates and assumptions used were the most appropriate, actual results could differ significantly from those estimates under different assumptions and conditions. The following is a description of those accounting policies believed by management to require subjective and complex judgments which could potentially affect reported results.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated.
Foreign Currency Translation
The Company translates non-Euro assets and liabilities of its subsidiaries at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the year. Unrealized gains or losses from these translations are reported as a separate component of comprehensive loss. Transaction gains or losses are included in general and administrative expenses in the consolidated statements of operations. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. The Company's reporting currency is the Euro because substantially all of the Company's activities are conducted in Europe.
Cash deposits are occasionally in excess of insured amounts.
The deliverables under an exclusive license agreement generally include the exclusive license to the Company’s technology, and may also include deliverables related to research activities to be performed on behalf of the collaborative collaborator and the manufacture of preclinical or clinical materials for the collaborative collaborator.
Generally, exclusive license agreements contain non-refundable terms for payments and, depending on the terms of the agreement, provide that the Company will (i) provide research services which are reimbursed at a contractually determined rate which includes margin for the Company, (ii) participate in a joint steering committee to monitor the progress of the research and development which will be reimbursed at a contractually determined rate which includes margin for the Company, (iii) earn payments upon the achievement of certain milestones and (iv) earn royalty payments at the time of commercialization until the later of expiration of the last to expire valid patent rights expire or 10 years after the first commercial sale. The Company may provide technical assistance and share any technology improvements with its collaborators during the term of the collaboration agreements. The Company does not directly control when any collaborator will request research or manufacturing services, achieve milestones or become liable for royalty payments. As a result, the Company cannot predict when it will recognize revenues in connection with any of the foregoing.
The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 605-25, "Revenue Recognition—Multiple-Element Arrangements," and ASC Topic 605-28, "Revenue Recognition—Milestone Method," in accounting for these agreements. In order to account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the collaborator. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units.
Factors considered in this determination include the research and manufacturing capabilities of the collaborator and the availability of technology research expertise in the general marketplace.
RSV Corporation
In December 2013, the Company entered into an agreement with RSV Corporation. The agreement provides RSV Corporation with an exclusive license to the Company’s RSV technology in order to develop and commercialize respiratory syncytial virus virosome vaccines. The Company received a US$5 million upfront payment in connection with the execution of the agreement and the Company is entitled to receive milestone payments potentially totaling $62 million plus royalties on product sales, if any. The Company also is entitled to receive payments for research and development activities performed on behalf of RSV Corporation. RSV Corporation is responsible for the development, manufacturing, and marketing of any products resulting from this agreement.
In accordance with ASC 605-25, the Company identified all of the deliverables at the inception of the agreement. The significant deliverables were determined to be the RSV technology license and the research and development services including participation on the JCSC. The Company has determined that the RSV technology license does have standalone value from the research services. As a result, the research services are considered a separate units of accounting. The estimated selling prices for these units of accounting were determined based on market conditions and entity-specific factors such as the terms of the collaborators’ previous collaborative agreements, recent preclinical and clinical testing results of therapeutic products that use the Company’s RSV technology, the Company’s pricing practices and pricing objectives, and the nature of the research services to be performed for RSV Corporation and market rates for similar services. The arrangement consideration was allocated to the deliverables based on the relative selling price method. The Company recognized license revenue when the exclusive license was delivered pursuant to the terms of the agreement which was upon execution of the agreement. The Company does not control when RSV Corporation will reach certain development and commercialization’s milestones related to the RSV technology. As a result, the Company cannot predict when or if it will recognize the related milestone and royalty revenue. The Company will recognize research services revenue as the related services are delivered.
Receivables are stated at their outstanding principal balances. Management reviews the collectability of receivables on a periodic basis and determines the appropriate amount of any allowance. There was no allowance necessary at December 31, 2013 or 2012. The Company charges off receivables to the allowance when management determines that a receivable is not collectible. The Company may retain a security interest in the products sold.
Property and equipment is recorded at cost and is depreciated over its estimated useful life on straight-line basis from the date placed in service. Estimated useful lives are usually taken as three years.
In-Process Research and Development
In-Process research and development (referred to as IPR&D) represents the estimated fair value assigned to research and development projects acquired in a purchased business combination that have not been completed at the date of acquisition and which have no alternative future use. IPR&D assets acquired in a business combination are capitalized as indefinite-lived intangible assets. These assets remain indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period prior to completion or abandonment, those acquired indefinite-lived assets are not amortized but are tested for impairment annually, or more frequently, if events or changes in circumstances indicate that the asset might be impaired.
Impairment of Long Lived Assets
Long-lived assets, which include property and equipment, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The impairment testing involves comparing the carrying amount to the forecasted undiscounted future cash flows generated by that asset. In the event the carrying value of the assets exceeds the undiscounted future cash flows generated by that asset and the carrying value is not considered recoverable, impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. An impairment loss would be recognized in net income in the period that the impairment occurs.
Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. Goodwill is assessed for impairment on an annual basis as of April 1 of each year, unless events or circumstances indicate impairment may have occurred before that time. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. After assessing qualitative factors, the Company determined that no further testing was necessary. If further testing was necessary, the Company would have performed a two-step impairment test for goodwill. The first step requires the Company to determine the fair value of each reporting unit. To the extent a reporting unit’s carrying amount exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform a second more detailed impairment assessment. The second impairment assessment involves allocating the reporting unit’s fair value to all of its recognized and unrecognized assets and liabilities in order to determine the implied fair value of the reporting unit’s goodwill as of the assessment date. The implied fair value of the reporting unit’s goodwill is then compared to the carrying amount of goodwill to quantify an impairment charge as of the assessment date.
The Company has conducted its impairment testing as of April 1, of 2013 and 2012 of its goodwill recognized in connection to the acquisition of Bestewil. In conclusion of this impairment testing, the carrying amount of the reporting unit was lower than the estimated fair value of the reporting unit. As the fair value of the reporting unit is higher than the carrying amount, Step 2 of the goodwill impairment test did not need to be completed. As of December 31, 2013, management believes there are no indications of impairment.
The Company accounts for contingent consideration in a purchase business combination in accordance with applicable guidance provided within the business combination rules. As per the amendment dated in 2013, related to the Share Purchase Agreement of the Bestewil acquisition, the obligation of the Company to pay additional purchase price consideration upon achievement of certain commercial milestones has been deleted and settled with issuance of shares for a total of US$325 upon certain events but no later than March 31, 2014. Despite the fact that this new liability is significantly less, it is not dependent on future revenue and will not be paid in cash.
Research and development costs are expensed as incurred.
The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax laws or rates.
The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties, if any, are recorded as a component of interest expense and other expense, respectively.
The Company has not recorded any liabilities for uncertain tax positions or any related interest and penalties at December 31, 2013 or 2012. The Company’s United States tax returns are open to audit for the years ended December 31, 2009 to 2013. The returns for the Luxembourg subsidiary LUXEMBOURG 6543 S.A., are open to audit for the year ended December 31, 2013. The returns for the Swiss subsidiary, Mymetics S.A., are open to audit for the years ended December 31, 2009 to 2013. The returns for the Netherlands subsidiaries, Bestewil B.V. and Mymetics B.V., are open to audit for the year ended December 31, 2013.
Basic earnings per share is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding in the common period. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities. For the year ended December 31, 2013, options, warrants and convertible debt were not included in the computation of diluted earnings per share under the treasury stock method because their effect would be anti-dilutive due to strike and conversion prices being above market value.
For the year ended December 31, 2012, the weighted average number of shares was 293,959,795. For the same periods, the weighted total potential number of shares issuable of 121,884,529 includes 86,202,029 potential issuable shares related to convertible loans, 32,000,000 potential issuable shares related to warrants, and 3,692,500 potential issuable shares related to outstanding not expired options granted to employees.
For the year ended December 31, 2013, the weighted average number of shares was 295,384,566. For the same period, the total potential number of shares issuable of 487,547,813 includes 466,697,813 potential issuable shares related to convertible loans and 20,850,000 potential issuable shares related to outstanding not expired options granted to employees. The 32,000,000 potential issuable shares related to warrants expired on July 1
st, 2013.
The Company has authorized 5,000,000 shares of preferred stock. No shares are issued or outstanding at December 31, 2013 or 2012. The preferred stock is issuable in several series with varying dividend, conversion and voting rights. The specific series and rights will be determined upon any issuance of preferred stock.
Compensation cost for all share-based payments is based on the estimated grant-date fair value. The Company amortizes stock compensation cost ratably over the requisite service period.
The issuance of common shares for services is recorded at the quoted price of the shares on the date the services are rendered.
For the year ended December 31 2013, the Board of Directors of Mymetics awarded 20,600,000 incentive stock options to the employees and officers of the Company which were awarded on October 4, 2013 with an exercise price of USD 0.02 per share. 3,300,000 incentive stock options vested immediately, of which 3,100,000 were exercised as of December 31, 2013, and 17,300,000 vest in equal quantities over the next four years.
Mymetics didn’t grant any stock options to employees in 2012. See Note 4.
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
| |
Level 1 - |
Quoted prices in active markets for identical assets or liabilities. |
| |
Level 2 - |
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| |
Level 3 - |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Fair Values of Financial Instruments
The Company generally has the following financial instruments: cash, receivables, accounts payable, acquisition-related contingent consideration, and notes payable. The carrying value of cash, receivables and accounts payable, approximates their fair value based on the short-term nature of these financial instruments. The carrying value of acquisition-related contingent consideration is equal to fair value since this liability is required to be reported at fair value. Management believes that it is not practicable to estimate the fair value of the notes payable due to the unique nature of these instruments.
The Company enters into scientific collaboration agreements with selected partners such as Pevion Biotech Ltd., a Swiss company that granted Mymetics exclusive licenses to use their virosome vaccine delivery technology in conjunction with the Company’s AIDS and malaria preventive vaccines under development. Under this agreement, Pevion Biotech is committed to supply the actual Virosomes and perform their integration with the Company’s antigens, which requires proprietary know-how, at Pevion’s premises. The agreement includes specific mechanisms to mitigate the risk of losing a key component of Mymetics’ vaccines should Pevion become unable to meet its commitment.
During the year ended December 31, 2013, Pevion has initiated a process of winding down and communicated their inability to continue to supply the virosomes needed for the HIV and malaria vaccines. Mymetics has taken the necessary steps to ensure the continuing supply of virosomes needed for the HIV and malaria vaccines. Mymetics terminated its agreements with Pevion Biotech in January 2014. Operations between Pevion Biotech and Mymetics had substantially ceased in 2013. Mymetics retained knowledge, tights and access to production and development of the HIV and malaria virosome vaccines by hiring key personnel.
In 2013, the Company derived all licensing revenue from its relationship with one collaborative partner. Furthermore, that same collaborative partner accounted for 98% of the receivables balance at December 31, 2013.
Recently Issued Accounting Standards
No new accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements.
Note 2. Transactions with Affiliates
Mr. Ernest M. Stern, the Company’s outside U.S. counsel, is both a director of the Company and a partner in Akerman Senterfit LLP, the firm retained as legal counsel by the Company. Fees paid to the law firm in the years ended December 31, 2013 and 2012, amounted to E164 and E52, respectively.
Two of the Company’s major shareholders have made available an aggregate E37,297 in the form of notes payable including interest. Conversion prices on the Euro-denominated convertible debt have been fixed to a fixed Euro/US dollar exchange rate.
The details of these notes and other loans and contingent liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
|
|
Rate
|
|
|
Lender
|
|
1st-Issue
|
|
|
Principal
|
|
Duration
|
|
Interest
|
|
Price
|
|
EUR/USD
|
|
|
Price
|
|
Date
|
|
|
Amount
|
|
(Note)
|
|
Rate
|
|
(stated)
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Norwood Secured Loan
|
|
04/03/2009
|
|
|
E
|
1,500
|
|
(5
|
)
|
10% pa
|
|
$
|
None
|
|
N/A
|
|
|
Eardley Holding A.G. (1)
|
|
06/23/2006
|
|
|
E
|
138
|
|
(2
|
)
|
10% pa
|
|
$
|
0.10
|
|
N/A
|
|
|
Anglo Irish Bank S.A.(3)
|
|
10/21/2007
|
|
|
E
|
500
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.4090
|
|
|
Round Enterprises Ltd.
|
|
12/10/2007
|
|
|
E
|
1,500
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.4429
|
|
|
Round Enterprises Ltd.
|
|
01/22/2008
|
|
|
E
|
1,500
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.4629
|
|
|
Round Enterprises Ltd.
|
|
04/25/2008
|
|
|
E
|
2,000
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.5889
|
|
|
Round Enterprises Ltd.
|
|
06/30/2008
|
|
|
E
|
1,500
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.5380
|
|
|
Round Enterprises Ltd.
|
|
11/18/2008
|
|
|
E
|
1,200
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.2650
|
|
|
Round Enterprises Ltd.
|
|
02/09/2009
|
|
|
E
|
1,500
|
|
(2
|
)
|
10% pa
|
|
$
|
0.50
|
|
1.2940
|
|
|
Round Enterprises Ltd.
|
|
06/15/2009
|
|
|
E
|
5,500
|
|
(2,4
|
)
|
10% pa
|
|
$
|
0.80
|
|
1.4045
|
|
|
Eardley Holding A.G.
|
|
06/15/2009
|
|
|
E
|
100
|
|
(2,4
|
)
|
10% pa
|
|
$
|
0.80
|
|
1.4300
|
|
|
Von Meyenburg
|
|
08/03/2009
|
|
|
E
|
200
|
|
(2
|
)
|
10% pa
|
|
$
|
0.80
|
|
1.4400
|
|
|
Round Enterprises Ltd.
|
|
10/13/2009
|
|
|
E
|
2,000
|
|
(2
|
)
|
5% pa
|
|
$
|
0.25
|
|
1.4854
|
|
|
Round Enterprises Ltd.
|
|
12/18/2009
|
|
|
E
|
2,200
|
|
(2
|
)
|
5% pa
|
|
$
|
0.25
|
|
1.4338
|
|
|
Round Enterprises Ltd.
|
|
08/04/2011
|
|
|
E
|
872
|
|
(6,7
|
)
|
10% pa
|
|
$
|
0.034
|
|
N/A
|
|
|
Eardley Holding A.G.
|
|
08/04/2011
|
|
|
E
|
218
|
|
(6,7
|
)
|
10% pa
|
|
$
|
0.034
|
|
N/A
|
|
|
Round Enterprises Ltd.
|
|
11/08/2011
|
|
|
E
|
400
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3787
|
|
|
Eardley Holding A.G.
|
|
11/08/2011
|
|
|
E
|
100
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3787
|
|
|
Round Enterprises Ltd.
|
|
02/10/2012
|
|
|
E
|
1,000
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3260
|
|
|
Eardley Holding A.G.
|
|
02/14/2012
|
|
|
E
|
200
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3260
|
|
|
Round Enterprises Ltd.
|
|
04/19/2012
|
|
|
E
|
321
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3100
|
|
|
Eardley Holding A.G.
|
|
04/19/2012
|
|
|
E
|
81
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3100
|
|
|
Round Enterprises Ltd.
|
|
05/04/2012
|
|
|
E
|
480
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3152
|
|
|
Eardley Holding A.G.
|
|
05/04/2012
|
|
|
E
|
120
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3152
|
|
|
Round Enterprises Ltd.
|
|
09/03/2012
|
|
|
E
|
200
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.2576
|
|
|
Eardley Holding A.G.
|
|
09/03/2012
|
|
|
E
|
50
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.2576
|
|
|
Round Enterprises Ltd.
|
|
11/14/2012
|
|
|
E
|
500
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.2718
|
|
|
Eardley Holding A.G.
|
|
12/06/2012
|
|
|
E
|
125
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3070
|
|
|
Round Enterprises Ltd.
|
|
01/16/2013
|
|
|
E
|
240
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3318
|
|
|
Eardley Holding A.G.
|
|
01/16/2013
|
|
|
E
|
60
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3318
|
|
|
Round Enterprises Ltd.
|
|
03/25/2013
|
|
|
E
|
400
|
|
(7
|
)
|
10% pa
|
|
$
|
0.037
|
|
1.2915
|
|
|
Eardley Holding A.G.
|
|
04/14/2013
|
|
|
E
|
150
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3056
|
|
|
Round Enterprises Ltd.
|
|
04/14/2013
|
|
|
E
|
600
|
|
(7
|
)
|
10% pa
|
|
$
|
0.034
|
|
1.3056
|
|
|
Eardley Holding A.G.
|
|
05/15/2013
|
|
|
E
|
170
|
|
(7
|
)
|
10% pa
|
|
$
|
0.037
|
|
1.2938
|
|
|
Round Enterprises Ltd.
|
|
05/15/2013
|
|
|
E
|
680
|
|
(7
|
)
|
10% pa
|
|
$
|
0.037
|
|
1.2938
|
|
|
Eardley Holding A.G.
|
|
06/24/2013
|
|
|
E
|
60
|
|
(7
|
)
|
10% pa
|
|
$
|
0.025
|
|
1.3340
|
|
|
Round Enterprises Ltd.
|
|
06/24/2013
|
|
|
E
|
240
|
|
(7
|
)
|
10% pa
|
|
$
|
0.025
|
|
1.3340
|
|
|
Eardley Holding A.G.
|
|
08/05/2013
|
|
|
E
|
80
|
|
(7
|
)
|
10% pa
|
|
$
|
0.018
|
|
1.3283
|
|
|
Round Enterprises Ltd.
|
|
08/05/2013
|
|
|
E
|
320
|
|
(7
|
)
|
10% pa
|
|
$
|
0.018
|
|
1.3283
|
|
|
Total Short Term Principal Amounts
|
|
|
|
|
E
|
29,005
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Interest
|
|
|
|
|
E
|
10,118
|
|
|
|
|
|
|
|
|
|
|
|
Total Convertible Notes to Related Parties
|
|
|
|
|
E
|
39,123
|
|
|
|
|
|
|
|
|
|
|
|
Norwood Contingent Liability
|
|
|
|
|
E
|
236
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LOANS, NOTES,AND CONTINGENT LIABILITY
|
|
|
|
|
E
|
39,359
|
|
|
|
|
|
|
|
|
|
|
(1) Private investment company of Dr. Thomas Staehelin, member of the Board of Directors and of the Audit Committee of the Company. Face value is stated in U.S. dollars at $190.
(2) This maturity date is automatically prolonged for periods of three months, unless called for repayment.
(3) Renamed Hyposwiss Private Bank Geneve S.A. and acting on behalf of Round Enterprises Ltd. which is a major shareholder.
(4) The loan is secured against 2/3rds of the IP assets of Bestewil Holding BV and against all property of the Company.
(5) Under the terms of the acquisition of Bestewil BV, as part of the consideration, the Company issued to Norwood Immunology Limited (“NIL”) a convertible redeemable note (the “Note”) in the principal amount of E2,500 with a maturity date of June 30, 2014 and bearing interest at 10% per annum. The note is secured against 1/3rd of Bestewil common stock. On March 28, 2013, Mymetics agreed with Norwood Immunology Ltd (NIL) to amend the terms and conditions of the E2,500 loan that expired on June 30, 2013. Under the terms of the Amendment, Mymetics agreed to make a series of payments as follows to release it from any obligation to share revenues from the sale of Mymetics' intranasal influenza vaccine, RSV vaccine and HSV vaccine: (i) by April 30, 2013 E521 consisting of E500 of principal under the Loan Note and E21 of accrued interest for the month of April 2013 on the outstanding principal balance of E2,500, (ii) by May 31, 2013 E517 consisting of E500 of principal under the Loan Note and E17 of accrued interest for the month of May 2013 on the outstanding principal balance of E2,000, (iii) by September 30, 2013 accrued interest of E51 on the outstanding principal balance of E1,500 under the Loan Note and (iv) by June 30, 2014 E1,576 consisting of E1,500 to extinguish the outstanding principal balance of the Loan Note and E76 to extinguish the remaining unpaid accrued interest owed on the outstanding principal balance of the Loan Note. Upon payment by Mymetics of E500 of the principal under the Loan Note, the number of shares of Bestewil Holding B.V. pledged by Mymetics is reduced from 33% (6,290 shares) to 26.7% (5,032 shares). Upon payment by Mymetics of E1,000 of principal under the Loan Note the number of shares of Bestewil Holding B.V. pledged by Mymetics is reduced from 33% (6,290 shares) to 20% (3,774 shares). In addition, Mymetics shall issue, within twenty days of receipt of the first tranche of the investment but no later than March 31, 2014, US$325 in shares of the Company’s common stock at the lower of (i) the average closing price of the last two months prior to the repayment date or (ii) the lowest conversion price for any Mymetics shareholder loan that has been converted two months prior or two months after such repayment or (iii) Investor Price.
In the event that Mymetics raises financing greater than US$20,000 earlier than completing the payment schedule above, it will (i) pay half the remaining unpaid principal and interest in cash, (ii) issue shares of its common stock to Norwood for the remaining half of the unpaid principal and interest at the same price and with the same rights as the shares purchased by the investors in such financing and (iii) issue US$325 in shares of Mymetics common stock at the lower of (a) the average closing price of the last two months prior to the repayment date or (b) the lowest conversion price for any Mymetics shareholder loan that has been converted two months prior or two months after such repayment or (c) the new investor price (the "Conversion Price").
If Mymetics raises financing over US$5,000 and less than US$20,000, Norwood has the option to convert half of the remaining unpaid principal and interest under the Loan Note into cash and half of the remaining unpaid principal and interest under the Loan Note into those shares of Mymetics purchased by the investors and at the price at which the shares are issued to the investors and Norwood will receive US$325 in shares of Mymetics common stock at the Conversion Price. In both financings described above, half the shares received by Norwood shall be subject to a six month lock-up and half of the shares shall be subject to a 12 month lock-up.
In the event Mymetics is not able to make any of the above payments to Norwood, the Loan Note will be immediately due and payable and Mymetics will issue US$325 in shares of its common stock at the lower of the Conversion Price or the market closing price the day before the default.
(6) The face values of the loans are stated in U.S. dollars at $1,200 and $300, respectively.
(7) This maturity date is automatically prolonged for periods of three months, unless called for repayment. The conversion price per share is determined by the lower of (i) reducing by 10% the price per share of the Company’s common stock paid by the investors in connection with an investment in the Company of not less than US$20,000, or (ii) at the stated conversion price using a fixed exchange rate which are noted in the table above.
Required future payments on debt are as follows as of December 31, 2013:
|
2014
|
|
E
|
39,123
|
|
|
Contingent liability to Norwood (milestones and royalties)
|
|
|
236
|
|
|
|
|
E
|
39,359
|
|
Note 3. Income Taxes
The reconciliation of income tax on income computed at the federal statutory rates to income tax expense is as follows:
|
|
|
2013
|
|
|
2012
|
|
|
U.S. Federal statutory rates on loss from operations
|
|
E
|
2,057
|
|
|
E
|
(2,077
|
)
|
|
Effect of foreign statutory rate differences
|
|
|
(228
|
)
|
|
|
99
|
|
|
Effect of exchange rate changes
|
|
|
805
|
|
|
|
(212
|
)
|
|
Expiration/disallowance of net operating loss carry forwards
|
|
|
566
|
|
|
|
638
|
|
|
Permanent differences
|
|
|
(2,141
|
)
|
|
|
(265
|
)
|
|
Change in valuation allowance
|
|
|
(1,026
|
)
|
|
|
1,815
|
|
|
Other
|
|
|
15
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
E
|
48
|
|
|
E
|
3
|
|
Deferred tax asset is composed of the following:
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Licenses capitalized for United States tax purposes
|
|
E
|
928
|
|
|
E
|
1,080
|
|
|
IPR&D basis difference
|
|
|
(770
|
)
|
|
|
(615
|
)
|
|
Stock options
|
|
|
145
|
|
|
|
125
|
|
|
Foreign tax credit carry over
|
|
|
193
|
|
|
|
--
|
|
|
Net operating loss carry forwards
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
16,710
|
|
|
|
17,020
|
|
|
Switzerland
|
|
|
884
|
|
|
|
897
|
|
|
The Netherlands
|
|
|
--
|
|
|
|
611
|
|
|
Luxembourg
|
|
|
182
|
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,272
|
|
|
|
19,298
|
|
|
Less valuation allowance for deferred tax asset
|
|
|
(18,272
|
)
|
|
|
(19,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
E
|
--
|
|
|
E
|
--
|
|
The Company's provision for income taxes was derived from U.S., Swiss, Netherlands and Luxembourg operations. At December 31, 2013, the Company had estimated net operating loss carry forwards which expire as follows (the Luxembourg losses do not expire):
|
|
|
|
United States
|
|
|
Luxembourg
|
|
|
Switzerland
|
|
|
The Netherlands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
2015
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
2016
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,367
|
|
|
|
--
|
|
|
2017
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,267
|
|
|
|
--
|
|
|
2018
|
|
|
|
570
|
|
|
|
|
|
|
|
469
|
|
|
|
--
|
|
| 2019-2033 |
|
|
|
48,575
|
|
|
|
--
|
|
|
|
448
|
|
|
|
--
|
|
|
Perpetual
|
|
|
|
--
|
|
|
|
827
|
|
|
|
--
|
|
|
|
--
|
|
| |
|
|
|
E
|
49,145
|
|
|
E
|
827
|
|
|
E
|
3,551
|
|
|
E
|
--
|
|
2001 Qualified Incentive Stock Option Plan:
The Company's board of directors approved a Stock Option Plan on June 15, 2001, which provides for the issuance of up to 5,000,000 shares of the Company's common stock to employees and non-employee directors.
2009 Qualified Incentive Stock Option Plan:
During the year 2010, the Board of Directors of Mymetics awarded 4,350,000 incentive stock options to the employees and officers of the Company. Incentive stock options were awarded on June 30, 2010, for a total of 3,350,000 shares with an exercise price of USD 0.14 per share, of which 2,3500,000 are vested and 1,000,000 are forfeited as of December 31, 2013. As part of the employment contract with the CFO of Mymetics, 1,000,000 employee incentive stock options were issued on July 1, 2010 with an exercise price of USD 0.19 per share, which are fully vested as of December 31, 2013.
No options were issued in the year ended December 31, 2012.
2013 Qualified Incentive Stock Option Plan:
For the year ended December 31 2013, the Board of Directors of Mymetics approved 30,000,000 incentive stock options to the employees and officers of the Company. Incentive stock options were awarded on October 4, 2013, for a total of 20,600,000 shares with an exercise price of USD 0.02 per share, of which 3,300,000 vested immediately and 1,250,000 vest in equal quantities over the next four years.
The Company recognized compensation expense related to the issued option grants of E71 and E32 for the years ended December 31, 2013 and 2012, respectively. These amounts were recognized as research and development expense and general and administrative expense based on the specific recipient of the award for the years ended December 31, 2013. As of December 31, 2013, a total of 17,300,000 shares of common stock with unrecognized compensation cost of E186 are unvested. The cost is expected to be recognized ratably through August 2017.
A summary of activity related to stock options under the 2001, 2009 and 2013 Stock Option Plans is represented below:
|
|
|
Number of
Shares
|
|
|
Exercise Price
Range
|
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining Contractual Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2011
|
|
|
4,742,500
|
|
|
$
|
0.12 to $3.50
|
|
|
$
|
0.20
|
|
|
|
|
|
|
Granted
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
Expired/forfeited
|
|
|
(1,060,000
|
)
|
|
$
|
0.14 to $3.50
|
|
|
$
|
3.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2012
|
|
|
3,682,500
|
|
|
$
|
0.12 to $3.50
|
|
|
$
|
0.17
|
|
|
|
|
|
|
Granted
|
|
|
20,600,000
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
|
|
|
Exercised
|
|
|
(3,100,000
|
)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
|
|
|
Expired/forfeited
|
|
|
(332,500
|
)
|
|
$
|
0.12 to $3.50
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2013
|
|
|
20,850,000
|
|
|
$
|
0.02 to $3.50
|
|
|
$
|
0.04
|
|
|
|
9.21
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2013
|
|
|
3,550,000
|
|
|
$
|
0.02 to $0.19
|
|
|
$
|
0.15
|
|
|
|
6.36
|
|
|
$
|
--
|
|
The aggregate intrinsic value of the stock options fluctuates in relation to the market price of the Company’s common stock. There was no intrinsic value associated with option exercised during the year at the time of exercise.
Outstanding and exercisable options by price range as of December 31, 2013, were as follows:
|
|
|
|
Outstanding options
|
|
|
Exercisable Options
|
|
|
|
|
|
|
|
|
Weighted
|
|
Weighted
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
Average
|
|
|
|
|
Average
|
|
|
Range of Exercise
|
|
|
Number
|
|
|
Remaining
|
|
Exercise
|
|
|
Number
|
|
Exercise
|
|
|
Prices per Share
|
|
|
Outstanding
|
|
|
Life (Years)
|
|
Price
|
|
|
Exercisable
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.14
|
|
|
|
2,350,000
|
|
|
|
6.0
|
|
|
$
|
0.14
|
|
|
|
2,350,000
|
|
|
$
|
0.14
|
|
|
$
|
0.19
|
|
|
|
1,000,000
|
|
|
|
6.5
|
|
|
$
|
0.19
|
|
|
|
1,000,000
|
|
|
$
|
0.19
|
|
|
$
|
0.02
|
|
|
|
17,500,000
|
|
|
|
9.8
|
|
|
$
|
0.02
|
|
|
|
200,000
|
|
|
$
|
0.02
|
|
|
$
|
0.02 - $ 0.19
|
|
|
|
20,850,000
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
3,550,000
|
|
|
$
|
0.15
|
|
The fair value of the options at the grant date is determined under the Black Scholes option pricing model. The weighted-average grant-date fair value of options granted during the year ended December 31, 2013 was E0.02 per share. During the year ended December 31, 2013, the following wighted-average assumptions were used:
|
Estimated volatility
|
|
|
157.63
|
%
|
|
Risk free interest rate
|
|
|
0.32
|
%
|
|
Expected dividend rate
|
|
|
--
|
|
|
|
|
6 years
|
|
As of December 31, 2013, the 2013 Stock Option Plan has 8,400,500 shares available for future grants of stock options.
The Company will issue new shares upon the exercise of any options.
Note 5. Commitments and Contingencies
Total rent expense per year was E117 for 2013 and E112 for 2012. The lease of the Company’s Lausanne, Switzerland facilities and the lease of the Company’s facilities in Leiden, the Netherlands, can be terminated in 2014.
Future lease payments expected on the above office leases are as follows for the years ending December 31:
|
Office Rent Expected
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAUSANNE
|
|
E
|
47
|
|
|
E
|
9
|
|
|
E
|
--
|
|
|
E
|
--
|
|
|
E
|
--
|
|
|
LEIDEN
|
|
E
|
88
|
|
|
E
|
104
|
|
|
E
|
--
|
|
|
E
|
--
|
|
|
E
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
E
|
135
|
|
|
E
|
113
|
|
|
E
|
--
|
|
|
E
|
--
|
|
|
E
|
--
|
|
Note 6. Acquisition of Bestewil
On April 1, 2009 Mymetics and Norwood Immunology Limited (NIL) closed the acquisition of Bestewil Holding B.V. (“Bestewil”) from its parent, NIL, under a Share Purchase Agreement pursuant to which Mymetics agreed to purchase all issued and outstanding shares of capital stock (the “Bestewil Shares”) of Bestewil from its parent, NIL, and all issued and outstanding shares of capital stock of Virosome Biologicals B.V. which were held by Bestewil. Mymetics paid NIL E5,000 (the “Cash Consideration”) raised from bridge financing (the “Bridge Loan”) and issued to NIL a convertible redeemable note (the “Note”) in the principal amount of E2,500 due 36 months after the closing date, bearing interest at 5% per annum, convertible into shares of the Company’s common stock at a conversion rate of $0.50 (“the Conversion Price” since September 2010) and secured by the Company’s pledge of 1/3rd of the Bestewil Shares. The reduction of the Conversion price from $0.80 to $0.50 in September 2010 did not result in an extinguishment and reissuance of the note, nor did it result in a material adjustment in the consolidated financial statements. In addition, Mymetics granted NIL an option to acquire shares of Mymetics common stock equal to the result obtained by dividing $9,609 by the Conversion Price. As part of the Share Purchase Agreement, if Mymetics had issued shares of capital stock in connection with a financing to repay the Bridge Loan that had more favorable financial rights and preferences than the original conversion price or other terms, NIL had the right, at its election, to acquire those shares at the better terms. The advantage of this lower conversion price for the providers of the Bridge Loan has been treated in accordance with ASC Subtopic 470-20-40. The difference in the fair value of the shares issuable based on the terms of the original conversion price and the fair value of the shares actually issued based on the inducement terms was recorded as an expense of E807 in September 2010.
Since the Company reduced the conversion price of the Bridge Loan to finance the acquisition from $0.80 to $0.50 in September 2010, the result is that the option allowed NIL to acquire 19,218,450 shares of common stock. Prior to this, the option allowed NIL to acquire 12,011,531 shares of common stock at $0.80 per share. The difference between the fair value calculation of the option at the original exercise price of $0.80 and the now established $0.50 per share is E484 and has been recorded as a general and administrative expense and an increase in additional paid-in capital. The fair values were calculated with Black Scholes methodology using the following assumptions:
|
Risk free interest rate
|
|
|
0.38
|
%
|
|
Expected dividends
|
|
|
0
|
%
|
|
Expected term
|
1.5 years
|
|
|
Volatility
|
|
|
131.92
|
%
|
This option expired on April 1, 2012.
During the first quarter of year 2013, Mymetics agreed with Norwood Immunology Ltd (NIL) to amend the terms and conditions of the E2,500 loan that expired on March 31, 2013. Under the terms of the Amendment, Mymetics agreed to make a series of payments as follows to release it from any obligation to share future revenues from the sale of Mymetics' intranasal influenza vaccine, RSV vaccine and HSV vaccine: (i) by April 30, 2013 E521 consisting of E500 of principal under the Loan Note and E21 of accrued interest for the month of April 2013 on the outstanding principal balance of E2,500 (ii) by May 31, 2013 E517 consisting of E500 of principal under the Loan Note and E17 of accrued interest for the month of May 2013 on the outstanding principal balance of E2,000, (iii) by September 30, 2013 accrued interest of E51 on the outstanding principal balance of E1,500 under the Loan Note and (iv) by March 31, 2014 E1,576 consisting of E1,500 to extinguish the outstanding principal balance of the Loan Note and E76 to extinguish the remaining unpaid accrued interest owed on the outstanding principal balance of the Loan Note.
In addition, Mymetics shall issue, within twenty days of receipt of the first tranche of the investment but no later than March 31, 2014, US$325 in shares of the Company’s common stock at the lower of (i) the average closing price of the last two months prior to the repayment date or (ii) the lowest conversion price for any Mymetics shareholder loan that has been converted two months prior or two months after such repayment or (iii) Investor Price.
Note 7. Fair Value Measurements
As of December 31, 2013, the Company held a liability for acquisition-related contingent consideration that is required to be measured at fair value on a recurring basis.
The Company’s acquisition-related contingent consideration is measured at fair value on a recurring basis using Level 3 inputs.
The following table presents changes to the Company’s acquisition-related contingent consideration for the years ended December 31, 2013 and 2012:
| |
|
Fair Value Measurements Using Significant
|
|
| |
|
Unobservable Inputs(Level 3)
|
|
| |
|
Acquisition-related Contingent Consideration
|
|
| |
|
|
|
|
|
|
|
| |
|
2013
|
|
|
|
2012
|
|
| |
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
E
|
6,533
|
|
|
E
|
5,753
|
|
|
Change in fair value
|
|
|
(6,297
|
)
|
|
|
780
|
|
|
Balance at December 31
|
|
E
|
236
|
|
|
E
|
6,533
|
|
The fair value recorded as of December 31, 2012 was determined based on a projection period ending in 2023, which corresponds to the lifetime of the underlying patents.
Note 8. Subsequent Events
Due to the halt of operations and restructuring of Pevion Biotech during mid 2013, Mymetics has negotiated an agreed on January 9, 2014 with Pevion Biotech for the termination of both agreements and Mymetics retained knowledge, rights and access to production and development of the HIV and malaria virosome vaccines by hiring key personnel.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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|
Mymetics Corporation
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By:
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/s/ Ronald Kempers
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|
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|
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Name: Ronald Kempers
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|
|
|
Title: Chief Executive Officer / Chief Financial Officer
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|
|
|
March 28, 2014
|
|
|
|
|
|
|
|
By:
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/s/ Ulrich Burkhard
|
|
|
|
|
|
|
|
Name: Ulrich Burkhard
|
|
|
|
Title: Director
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|
|
|
March 28, 2014
|
|
|
|
|
|
|
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By:
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/s/ Ernest Stern
|
|
|
|
|
|
|
|
Name: Ernest Stern
|
|
|
|
Title: Director
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|
|
|
March 28, 2014
|
|
|
|
|
|
|
|
By:
|
/s/ Thomas Staehelin
|
|
|
|
|
|
|
|
Name: Thomas Staehelin
|
|
|
|
Title: Director
|
|
|
|
March 28, 2014
|
|
Each person whose signature appears below constitutes and appoints Ronald Kempers as his true and lawful attorney-in-fact and agents, with full power of substitution and re substitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
Mymetics Corporation
|
|
|
|
|
|
|
|
By:
|
/s/ Ronald Kempers
|
|
|
|
|
|
|
|
Name: Ronald Kempers
|
|
|
|
Title: Chief Executive Officer / Chief Financial Officer
|
|
|
|
March 28, 2014
|
|
|
|
|
|
|
|
By:
|
/s/ Ulrich Burkhard
|
|
|
|
|
|
|
|
Name: Ulrich Burkhard
|
|
|
|
Title: Director
|
|
|
|
March 28, 2014
|
|
|
|
|
|
|
|
By:
|
/s/ Ernest Stern
|
|
|
|
|
|
|
|
Name: Ernest Stern
|
|
|
|
Title: Director
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|
|
|
March 28, 2014
|
|
|
|
|
|
|
|
By:
|
/s/ Thomas Staehelin
|
|
|
|
|
|
|
|
Name: Thomas Staehelin
|
|
|
|
Title: Director
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|
|
|
March 28, 2014
|
|