# Vaxart, Inc.: Form 10-Q for the period ended Sep 30, 2014

- Company: [Vaxart, Inc.](/companies/vxrt.md) (CIK 72444)
- Form: 10-Q
- Filed: 2014-11-07
- Accepted by EDGAR: Nov 7, 2014, 16:04 ET
- Period: 2014-09-30
- Accession: 0001437749-14-020053
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/72444/000143774914020053/bota20140930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/72444/000143774914020053/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2014-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2014-07-01 to 2014-09-30 | $700.0k | us-gaap:Revenues |
| Research and development | 3 months, 2014-07-01 to 2014-09-30 | $4.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2014-07-01 to 2014-09-30 | −$7.0m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2014-07-01 to 2014-09-30 | −$6.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2014-07-01 to 2014-09-30 | −$0.20 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2014-07-01 to 2014-09-30 | −$0.20 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2014-07-01 to 2014-09-30 | 35,029,300 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2014-07-01 to 2014-09-30 | −$11.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2014-09-30 | $57.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2014-09-30 | $76.1m | us-gaap:AssetsCurrent |
| Total assets | at 2014-09-30 | $97.3m | us-gaap:Assets |
| Current liabilities | at 2014-09-30 | $19.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2014-09-30 | $19.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2014-09-30 | $77.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,156 characters.

### FORWARD LOOKING STATEMENTS

*This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In most cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “forecast,” “potential,” “likely” or “possible”, as well as the negative of such expressions, and similar expressions intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to:*

- *expenses we have incurred or may incur associated with the development of laninamivir octanoate that may not be reimbursed by U.S. Office of Biomedical Advanced Research and Development Authority (“BARDA”) as a result of the termination of our contract with BARDA for the convenience of the U.S. Government on May 7, 2014;*
- *the amount and the timing of reimbursements we may receive from BARDA for costs incurred to develop laninamivir octanoate prior to May 7, 2014 or as a final termination settlement from BARDA as result of the termination of our contract with BARDA;*
- *the timing of the final close-out of the BARDA contract and what the final termination settlement may be;*
- *the timeframe in which we anticipate recognizing the vast majority, if not all, of the revenue from the recent partial settlement agreement reached with ASPR/BARDA;*
- *the plan to progress BTA-C585 into clinical development in 2015;*
- *the timing of completing the assessment of the data from the Phase 2 IGLOO study and subsequent interactions with the FDA;*
- *the timing of the initiation of a Phase2 trial with vapendavir for the treatment of HRV infections in patients with moderate to severe asthma;*
- *our anticipation that we will generally incur net losses from operations in the future due to our intention to continue to support the preclinical and clinical development of our product candidates;*
- *our future financing requirements, the factors that may influence the timing and amount of those requirements and our ability to fund them;*
- *the number of months that our current cash, cash equivalents and anticipated future proceeds from existing royalty-bearing licenses and other existing license and collaboration agreements will allow us to operate; and*
- *our plan to continue to finance our operations with our existing cash, cash equivalents and proceeds from existing or potential future royalty-bearing licenses, government contracts, or collaborative research and development arrangements, or through future equity and/or debt financings or other financing vehicles.*

16

*These forward looking statements are subject to key risks and uncertainties including, without limitation: our ability to successfully negotiate a satisfactory final termination settlement with BARDA that appropriately reimburses us for costs incurred under our contract with BARDA associated with the development of laninamivir octanoate; we, the FDA or a similar foreign regulatory agency, a data safety monitoring board, or an institutional review board delaying, limiting, suspending or terminating the clinical development of any of our clinical development programs at any time for a lack of safety, tolerability, biologic activity, commercial viability, regulatory or manufacturing issues, or any other reason whatsoever; the safety or efficacy data from ongoing or future preclinical studies of any of our product candidates not supporting the clinical development of that product candidate; our ability to comply with applicable government regulations in various countries and regions in which we are conducting, or expect to conduct, clinical trials; our ability to manufacture and maintain sufficient quantities of preclinical and clinical trial material on hand to support and complete our preclinical studies or clinical trials on a timely basis; our ability to retain and recruit sufficient staff, including key executive management and employees, to manage our business; our ability to secure, manage and retain qualified third-party clinical research, preclinical research, data management, contract manufacturing and other similar vendors who we outsource many of our activities to and rely on to assist us in the design, development and implementation of the development of our product candidates; our third-party contract research, data management and manufacturing organizations fulfilling their contractual obligations on a timely basis or otherwise performing satisfactorily in the future; GlaxoSmithKline (“GSK”) and Daiichi Sankyo continuing to generate net sales from Relenza® and Inavir®, respectively, and otherwise continuing to fulfill their obligations under our royalty-bearing license agreements with them in the future; our ability to maintain, protect or defend our proprietary intellectual property rights from unauthorized use by others, or not infringe on the intellectual property rights of others; our ability to successfully manage our expenses, operating results and financial position in line with our plans and expectations; the condition of the equity and debt markets and our ability to raise sufficient funding in such markets; changes in general economic business or competitive conditions related to our industry or product candidates; and other statements contained elsewhere in this in this Quarterly Report on Form 10-Q and our 2014 Annual Report on Form 10-K.*

*There may be events in the future that we are unable to predict accurately, or over which we have no control. You should read this Form 10-Q and the documents that we reference herein and which been filed or incorporated by reference as exhibits completely and with the understanding that our actual future results may be materially different from what we expect. Our business, financial condition, results of operations, and prospects may change. We may not update these forward-looking statements, even though our situation may change in the future, unless we have an obligation under the federal securities laws to update and disclose material developments related to previously disclosed information. We qualify all of the information presented in this Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.*

*Biota is a registered trademark of Biota Pharmaceuticals, Inc., Relenza® is a registered trademark of GlaxoSmithKline plc, and Inavir® is a registered trademark of Daiichi Sankyo Company, Ltd.*

*References to “we,” “us,” and “our” refer to Biota Pharmaceuticals, Inc. and its subsidiaries.*

*The following is a discussion and analysis of the major factors contributing to our results of operations for the three months ended September 30, 2014, and our financial condition at that date, and should be read in conjunction with the financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.*

### Company Overview

We are currently focused on developing oral, small molecule compounds to treat a number of respiratory-related viral infections. Our most advanced clinical-stage program is laninamivir octanoate, a long-acting neuraminidase inhibitor (“NI”) that we have been developing for the treatment of influenza A and B. On August 1, 2014 we reported top-line safety and efficacy results from a randomized, double-blind, placebo-controlled, parallel-arm Phase 2 clinical trial comparing the safety and efficacy of a 40 mg and an 80 mg dose of laninamivir octanoate to placebo. We refer to this trial as IGLOO. As compared to placebo, neither the 40 mg nor the 80 mg cohort achieved a statistically significant reduction in the median time to alleviation of influenza symptoms, the primary endpoint, as measured by the Flu-iiQ patient-recorded outcome questionnaire. Certain important secondary endpoints, including quantitative viral shedding, and secondary bacterial infections, as well as the time to alleviation of influenza symptoms for a number of subcomponents, did achieve statistically significant results for laninamivir octanoate treated cohorts compared to placebo. We intend to complete our analyses of the data from this trial and to discuss the results of this trial with the FDA to determine the appropriate primary endpoint for, and which patient reported outcome tools would be acceptable for use in, any prospective registration trials of laninamivir octanoate to treat uncomplicated influenza.

We are also developing BTA-798, also known as vapendavir. We have successfully completed two Phase 2 trials of vapendavir to date and recently completed additional Phase 1 bioavailability and drug-drug interaction studies of vapendavir in healthy volunteers. We plan to initiate a randomized, double-blind, placebo-controlled dose-ranging Phase 2 trial in moderate and severe asthmatic patients at risk of loss of asthma control due to presumptive human rhinovirus (“HRV”) infection in the first quarter of 2015.

In addition to these Phase 2 clinical-stage development programs, we are also developing orally bioavailable F and non-F protein compounds for the treatment of RSV infections in children, the elderly and immune-compromised patients. We are currently conducting IND-enabling studies with *BTA-C585*, the lead compound from our F-protein inhibitor program.

We previously developed zanamivir, a neuraminidase inhibitor that is marketed worldwide by GSK as Relenza®, for the prevention and treatment of influenza A and B. GSK markets Relenza® pursuant to a royalty-bearing research and license agreement we entered into with GSK in 1990. In 2003, we entered into a collaboration and license agreement with Daiichi Sankyo, under which each party cross-licensed its intellectual property related to second-generation, long-acting neuraminidase inhibitors, including FLUNET and laninamivir octanoate. In 2009, we entered into a commercialization agreement with Daiichi Sankyo that provided Daiichi Sankyo with an exclusive license to commercialize laninamivir octanoate in Japan and entitled us to a royalty on net sales of laninamivir octanoate in Japan. Laninamivir octanoate, which is marketed in Japan by Daiichi Sankyo as Inavir®, was approved for sale by the Japanese Ministry of Health and Welfare for the treatment of influenza A and B in adults and children in September 2010 and for the prevention of influenza A and B in December 2013. In 2009, we filed an IND with the FDA to develop laninamivir octanoate in the U.S.

In March 2011, we were awarded a contract from BARDA designed to provide up to $231 million in support of the development of and submission for a New Drug Application (“NDA”) of laninamivir octanoate for the treatment of influenza A and B infections in the U.S. On April 23, 2014 the U.S. Department of Health and Human Services (“HHS”) office of the Assistant Secretary for Preparedness and Response (“ASPR”) and BARDA issued us a Stop Work Order, indicating that we should discontinue work on a number of activities under the contract pending a decision regarding the outcome of an In-Process Review (“IPR”) of the contract. On May 7, 2014 ASPR/BARDA further notified us of its decision to terminate this contract for the convenience of the U.S. Government based upon the results of the IPR. We continue to work with ASPR/BARDA to close out this contract, which involves finalizing invoices and billings, determining the nature and extent of any equitable adjustments, and negotiating a final termination settlement.

Although several of our influenza product candidates have been successfully developed and commercialized to date by other larger pharmaceutical companies under license, collaboration or commercialization agreements with us, we have not independently developed or received regulatory approval for any product candidate, and we do not currently have any sales, marketing or commercial capabilities. Therefore, it is possible that we may not successfully derive any significant product revenues from any product candidates that we are developing now, or may develop in the future. We expect to incur losses for the foreseeable future as we intend to support the clinical and preclinical development of our product candidates. Also, due to the recent termination of our contract with BARDA, we anticipate that our revenue from service and cost of revenue will decline substantially in the future as compared to recent historical levels.

We plan to continue to finance our operations with (i) our existing cash, cash equivalents and investments, (ii) proceeds from existing or potential future royalty-bearing licenses, government contracts, or collaborative research and development arrangements, (iii) future equity and/or debt financings, or (iv) other financing arrangements. Our ability to continue to support our operations is dependent, in the near-term, upon us managing our cash resources, our receipt of reimbursements and settlement proceeds from BARDA, receipt of royalty revenue under our exiting licensees, entering into future collaboration, license or commercialization agreements, successfully developing our product candidates, executing future financings and ultimately, upon obtaining of our products for sale and achieving positive cash flows from operations on a consistent basis. There can be no assurance that additional capital or funds will be available on terms acceptable to us, if at all, or we will be able to enter into collaboration, license or commercialization agreements in the future, or that we will ever generate significant product revenue and become operationally profitable on a consistent basis.

### Recent Corporate Developments

*Changes to the Company’s Management and Board of Directors -* On September 26, 2014, we announced that the Board of Directors appointed Joseph M. Patti, PhD to the position of President and Chief Executive Officer, replacing Russell H. Plumb, who was appointed Executive Chairman of the Board of Directors. James Fox, PhD resigned as Chairman of the Board of Directors, but remains on the Board as its Lead Director. These changes became effective on October 1, 2014.

*BARDA Contract Termination -* As of September 30, 2014, we had $16.3 million in accounts receivable due from BARDA, which did not include a total of $4.9 million of cumulative contract service revenue and accounts receivable that we had not recognized as of that date for costs that we believe we are entitled to be reimbursed under our terminated contract with BARDA and pursuant to applicable government regulations, but for which it potentially may not be fully reimbursed. All of the costs associated with the $4.9 million in unrecognized revenue have been expensed in our financial statements as of September 30, 2014.

On November 4, 2014, we reached a partial settlement agreement with the U.S. Department of Health and Human Services office of Assistant Secretary for Preparedness and Response (“ASPR”) and BARDA pursuant to which ASPR/BARDA agreed to reimburse us an amount of $4.7 million for all costs associated with the completion of the Phase 2 IGLOO clinical trial of laninamivir octanoate in adults that were incurred after the termination date of our contract with BARDA. Based on this agreement with ASPR/BARDA, we now expect to recognize this amount as revenue in the quarter ending December 31, 2014. Further, as of September 30, 2014, approximately $3.4 million of this this $4.7 million settlement amount was included as a component of the total $4.9 million of contract service revenue and accounts receivable that we had not recognized as of that date.

Other discussions between us and ASPR/BARDA with respect to finalizing invoices for activities undertaken prior to the termination date as well as those activities undertaken after the termination date other than in association with the Phase 2 IGLOO trial, determining the nature and extent of any other equitable adjustments, and negotiating a final termination settlement remain ongoing. At this time, we cannot determine when and to what extent our other outstanding invoices will be approved and reimbursed by, or when a final termination settlement on all costs may be finalized with, ASPR/BARDA.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Results of Operations discusses our financial results, which (except to the extent described in the Notes thereto) have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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.

We base our estimates and judgments on historical experience, current economic and industry conditions, and various other factors that we believe to be reasonable under the circumstances. This forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies require significant judgment and estimates:

- Use of Estimates
- Revenue Recognition
- Accrued Expenses
- Share-Based Compensation

In August 2014, the Financial Accounting Standards Board issued authoritative accounting guidance related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. This guidance is effective for public and nonpublic entities for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently assessing the expected impact, if any, that this ASU will have on our consolidated financial statements.

In May 2014, the Financial Accounting Standards Board issued authoritative accounting guidance related to revenue from contracts with customers. This guidance is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. We will adopt this guidance on January 1, 2017. We may use either a full retrospective or a modified retrospective approach to adopt this guidance. We are evaluating which transition approach to use and its impact, if any, on our consolidated financial statements.

### Results of Operations

### Three Months Ended September 30, 2014 and September 30, 2013

*Summary.* For the three months ended September 30, 2014, we reported a net loss of $6.9 million, as compared to a net loss of $3.9 million in the same period of 2013. The $3.0 million increase in net loss in 2014 was primarily due to a $11.6 million decrease in revenue, a $1.9 million increase in research and development expense and $0.1 million reduction in income tax benefit, offset in part by a $9.0 million decrease in cost of revenue and a $1.6 million change from a foreign exchange loss in 2013 to a foreign exchange gain in 2014. Basic and diluted net loss per share was $0.20 for the three month period ended September 30, 2014, as compared to a basic and diluted net loss per share of $0.14 in the same period of 2013.

*Revenue.* Revenue decreased to $0.7 million for the three months ended September 30, 2014 from $12.3 million for the same period in 2013. The following table summarizes the key components of our revenue for the three months ended September 30, 2014 and 2013:

*(in millions)*

|  | Three Months Ended September 30 2014 | 2013 |
| --- | ---: | ---: |
| Royalty revenue– Relenza® | $- | $- |
| – Inavir® | - | - |
| Revenue from services | 0.7 | 12.2 |
| Revenue grants and other | - | 0.1 |
| Total revenue | $0.7 | $12.3 |

Revenue from services decreased due to a decrease in contract service revenue related to the cancellation of our contract with BARDA in May 2014. Revenue from grants and other decreased due to a decrease in grant-related research activities.

*Cost of Revenue.* Cost of revenue decreased to $1.7 million for the three months ended September 30, 2014 from $10.7 million for the same period in 2013. The following table summarizes the components of our cost of revenue for the three months ended September 30, 2014 and 2013.

*(in millions)*

|  | Three Months Ended September 30 2014 | 2013 |
| --- | ---: | ---: |
| Direct preclinical, clinical and product development expenses | $1.4 | $9.4 |
| Salaries, benefits and share-based compensation expenses | 0.2 | 1.2 |
| Other expenses | 0.1 | 0.1 |
| Total cost of revenue expense | $1.7 | $10.7 |

Direct preclinical, clinical and product development expense decreased due to the lower direct third-party clinical costs incurred associated with Phase 1 and 2 clinical trials and manufacturing activities for the laninamivir octanoate program under the recently terminated BARDA contract. Salaries, benefits and share-based compensation expense decreased primarily as a result of fewer personnel being allocated to work under the BARDA contract.

*Research and Development Expense.* Research and development expense increased to $4.9 million for the three months ended September 30, 2014 from $3.0 million for the same period in 2013. The following table summarizes the components of our research and development expense for the three months ended September 30, 2014 and 2013.

*(in millions)*

|  | Three Months Ended September 30 2014 | 2013 |
| --- | ---: | ---: |
| Direct preclinical, clinical and product development expenses | $2.3 | $0.4 |
| Salaries, benefits and share-based compensation expenses | 1.6 | 1.5 |
| Other expenses | 0.3 | 0.4 |
| Depreciation and facility related expenses | 0.7 | 0.7 |
| Total research and development expense | $4.9 | $3.0 |

Direct preclinical, clinical and product development expense increased in the three months ended September 30, 2014 compared to the same period in 2013 due largely to an increase in direct clinical expenses associated with the startup of the pending Phase 2 clinical trial of vapendavir and preclinical expenses related to the ongoing IND-enabling studies associated with BTA-C585, our RSV fusion inhibitor. Salaries, benefits and share-based compensation slightly increased in the three months ended September 30, 2014 compared to the same period in 2013 due to a reallocation of personnel resources to the vapendavir and RSV programs from the BARDA program, offset in part by reductions in personnel.

*General and Administrative Expense.* General and administrative expense was $2.4 million for each of the three month periods ended September 30, 2013 and 2014. The following table summarizes the components of our general and administrative expense for the three months ended September 30, 2014 and 2013.

*(in millions)*

|  | Three Months Ended September 30 2014 | 2013 |
| --- | ---: | ---: |
| Salaries, benefits and share-based compensation expenses | $1.4 | $1.3 |
| Professional and legal fees expenses | 0.3 | 0.4 |
| Other expenses | 0.7 | 0.7 |
| Total general and administrative expense | $2.4 | $2.4 |

Salaries, benefits and share-based compensation expense increased in the three months ended September 30, 2014 compared to the same period in 2013 largely due to a slight increase in non-cash share-based compensation expense. Professional and legal fees expense decreased in the three months ended September 30, 2014 compared to the same period in 2013 primarily due to lower professional and legal expenses related to corporate matters.

*Foreign Exchange Gain, (Loss) net.* Foreign exchange gain increased by $1.6 million to $1.3 million for the three months ended September 30, 2014 from a foreign exchange loss of $0.3 million for the same period in 2013 due to the increase in the value of the U.S. dollar as compared to the Australian dollar during the three month period ended September 30, 2014 and the related translation of foreign currency transactions in our subsidiaries that have a different functional currency than the reporting currency on our statement of operations. We translate all of the assets and liabilities of our non-U.S. subsidiaries at the period-end exchange rate and the net effect of these translation adjustments is shown on our condensed consolidated balance sheet as a component of stockholders’ equity.

*Interest Income.* Interest income increased in the three months ended September 30, 2014 compared to the same period in 2013 due to the Company having a greater amount of investments in 2014 as compared to 2013.

### LIQUIDITY AND CAPITAL RESOURCES

For the three months ended September 30, 2014, cash and cash equivalents decreased by $24.0 million, from $81.7 million to $57.7 million. This decrease was primarily the result of cash being used to purchase additional liquid short-term and long-term investments and operating activities during the period.

Net cash used in operating activities was $11.6 million for the three months ended September 30, 2014, which reflected our net loss for the period of $6.9 million and a net decrease in operating liabilities of $6.3 million, offset in part by a decrease in net operating assets of $0.8 million and non-cash charges for share-based compensation and depreciation of $0.8 million.

Our net loss resulted largely from our funding of research and development activities including basic research, conducting preclinical studies, manufacturing and formulation of our product candidates, and ongoing general and administrative expenses, partially offset by contract service revenue and interest income. The net change in operating assets and liabilities reflects a $5.7 million decrease in accounts payable and accrued expenses and a decrease of $0.6 million in accrued severance obligations, offset in part by a $0.6 million decrease in accounts receivable due to contract revenue received and a $0.2 million decrease in prepaid expenses.

Net cash used in investing activities during the three months ended September 30, 2014 consisted of $9.9 million for purchase of short-term and long-term investments.

At September 30, 2014, our cash and cash equivalents totaled $57.7 million. Our cash and cash equivalents are currently held in the form of short-term deposits with large U.S. and Australian banks. Our investments totaling $19.9 million consist primarily of U.S. treasury securities and U.S. government agency securities.

Our future funding requirements are difficult to determine and will depend on a number of factors, including:

- the variability of future royalty revenue we may receive from existing royalty-bearing license agreements;
- whether or not we continue to receive reimbursements and can negotiate an appropriate final termination settlements in the future, and the timing of those payments, under our recently-terminated contract with BARDA;
- the development timelines and plans for our product candidates, including any changes to those timelines, plans or our strategy;
- the variability, timing and costs associated with conducting clinical trials for our product candidates, the rate of enrollment in such clinical trials, and the results of these clinical trials:
- the variability, timing and costs associated with conducting preclinical studies, and the results of those studies;
- the cost of scaling up, formulating and manufacturing preclinical and clinical trial materials to evaluate our product candidates;
- whether we receive regulatory approval to advance or begin the clinical development of our product candidates in a timely manner, if at all;
- the cost and time to obtain regulatory approvals required to advance the development of our product candidates;
- the scope and size of our research and development efforts;
- our pursuit, timing and the terms of any in-licensing, acquisition, co-development, and other similar collaborative clinical-stage development opportunities we may pursue in the future to better balance our pipeline;
- the size and cost of our general and administrative function we may need to manage our operations, including the infrastructure to support being a publicly-traded company; and
- the cost of filing, prosecuting, and enforcing patent and other intellectual property claims.

Based on our current strategy and operating plan, and considering the potential costs associated with advancing the clinical development and preclinical development of our product candidates, we believe that our existing cash, cash equivalents of $57.7 million and our liquid investments of $19.9 million as of September 30, 2014, along with the anticipated proceeds from existing royalty-bearing licenses and proceeds from the close-out of our contract with BARDA, will enable us to operate for a period of at least 12 months from September 30, 2014.

We currently do not have any commitments for future funding, nor do we anticipate that we will generate significant revenue, aside from existing revenue from royalty-bearing arrangements, and contract services. Therefore, in order to meet our anticipated liquidity needs beyond 12 months to support the development of our product candidates, or possibly sooner in the event we enter into other transactions or revise our strategy or development plans, we may need to raise or secure additional capital. We would expect to do so primarily through the sale of additional common stock or other equity securities, as well as through proceeds from future licensing agreements, strategic collaborations, forms of debt financing, or any other financing vehicle. Funds from these sources may not be available to us on acceptable terms, if at all, and our failure to raise such funds could have a material adverse impact on our future business strategy and plans, financial condition and results of operations. If adequate funds are not available to us on acceptable terms in the future, we may be required to delay, reduce the scope of, or eliminate one or more of our research and development programs, or delay or curtail our preclinical studies and clinical trials, or reduce our internal cost structure. If additional capital is not available to us on acceptable terms, we may need to obtain funds through license agreements, or collaborative or partner arrangements pursuant to which we will likely relinquish rights to certain product candidates that we might otherwise choose to develop or commercialize independently, or be forced to enter into such arrangements earlier than we would prefer, which would likely result in less favorable transaction terms. Additional equity financings may be dilutive to holders of our common stock, and debt financing, if available, may involve significant payment obligations and covenants that restrict how we operate our business.

### Contractual and Commercial Commitments

There have been no material changes from the information included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4) (ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

## Market risk

As filed, 291 characters.

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item 7A “Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report filed on Form 10-K for the fiscal year ended June 30, 2014.

## Controls and procedures

As filed, 866 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

### Changes in Internal Controls over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 182 characters.

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

Filed Nov 7, 2014.
Source: SEC EDGAR, the filing index for accession 0001437749-14-020053. Last ingested by Listed: Nov 5, 2026, 18:48 ET. No prices; not investment advice.