Delaware
|
58-1486040
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Unaudited
Condensed Consolidated Financial Statements
|
1
|
Item
2.
|
Management’s
Discussion and Analysis
|
|
or
Plan of Operations
|
9
|
|
Item
3.
|
Controls
and Procedures
|
13
|
PART
II
|
OTHER
INFORMATION
|
|
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 14 |
Item
5.
|
Other
Information
|
14
|
Item
6.
|
Exhibits
|
14
|
Signatures
|
15
|
|
Index
To Exhibits Filed With This Report
|
16
|
·
|
the
possibility that the results of clinical trials will not be successful;
|
·
|
the
possibility that our development efforts relating to our product
candidates, including Lenocta™, VQD-002 and Xyfid™, will not be
successful;
|
·
|
the
inability to obtain regulatory approval of our product
candidates;
|
·
|
our
reliance on third-parties to develop our product
candidates;
|
·
|
our
lack of experience in developing and commercializing pharmaceutical
products;
|
·
|
the
possibility that our licenses to develop and commercialize our product
candidates may be terminated;
|
·
|
our
ability to seek strategic alternatives for our subsidiary Chiral
Quest,
which may include a sale;
|
·
|
our
ability to obtain additional financing;
|
·
|
our
ability to protect our proprietary technology.
|
|
March
31, 2007
(Unaudited)
|
December
31, 2006
(Note
1A)
|
|||||
ASSETS
|
|
|
|||||
CURRENT
ASSETS
|
|
|
|||||
Cash
and cash equivalents
|
$
|
1,141,227
|
$
|
2,931,265
|
|||
Prepaid
clinical research costs
|
255,957
|
273,172
|
|||||
Other
current assets
|
269,748
|
168,841
|
|||||
Current
assets associated with discontinued operations
|
824,128
|
1,056,808
|
|||||
Total
Current Assets
|
2,491,060
|
4,430,086
|
|||||
|
|||||||
NON-CURRENT
ASSETS ASSOCIATED WITH DISCONTINUED OPERATIONS
|
1,284,331
|
1,339,627
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
37,796
|
43,378
|
|||||
SECURITY
DEPOSITS
|
15,232
|
15,232
|
|||||
TOTAL
ASSETS
|
$
|
3,828,419
|
$
|
5,828,323
|
|||
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Accounts
payable
|
$
|
1,790,861
|
$
|
1,031,458
|
|||
Accrued
expenses
|
382,618
|
425,915
|
|||||
Note
payable - Paramount BioSciences, LLC
|
189,623
|
264,623
|
|||||
Current
liabilities associated with discontinued operations
|
794,681
|
1,265,568
|
|||||
TOTAL
LIABILITIES
|
3,157,783
|
2,987,564
|
|||||
|
|||||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock; $0.001 par value: 10,000,000 shares authorized, 0 shares
issued and
outstanding at March 31, 2007 and December 31, 2006
|
-
|
-
|
|||||
Common
stock; $0.001 par value: 100,000,000 shares authorized at March
31, 2007
and December 31, 2006, 54,621,119 shares issued and outstanding
at March
31, 2007 and December 31, 2006
|
54,621
|
54,621
|
|||||
Additional
paid-in capital
|
31,674,824
|
31,326,694
|
|||||
Accumulated
deficit
|
(31,058,809
|
)
|
(28,540,556
|
)
|
|||
Total
Stockholders' Equity
|
670,636
|
2,840,759
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
3,828,419
|
$
|
5,828,323
|
For
the Three Months Ended March 31, 2007
|
For
the Three Months Ended March 31, 2006
|
||||||
REVENUE
|
-
|
-
|
|||||
OPERATING
EXPENSES
|
|||||||
Research
and development
|
$
|
1,368,811
|
$
|
289,646
|
|||
Selling,
general and administrative
|
911,344
|
767,941
|
|||||
Depreciation
|
2,307
|
1,414
|
|||||
Total
Operating Expenses
|
2,282,462
|
1,059,001
|
|||||
LOSS
FROM OPERATIONS
|
(2,282,462
|
)
|
(1,059,001
|
)
|
|||
INTEREST
INCOME, NET
|
25,684
|
47,031
|
|||||
LOSS
FROM CONTINUING OPERATIONS
|
(2,256,778
|
)
|
(1,011,970
|
)
|
|||
LOSS
FROM DISCONTINUED OPERATIONS
|
(261,475
|
)
|
(849,777
|
)
|
|||
NET
LOSS
|
$
|
(2,518,253
|
)
|
$
|
(1,861,747
|
)
|
|
NET
LOSS PER COMMON SHARE:
|
|||||||
CONTINUING
OPERATIONS
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
|
DISCONTINUED
OPERATIONS
|
(0.00
|
)
|
(0.02
|
)
|
|||
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
46,056,724
|
38,165,124
|
Common
Stock
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
||||||||||
Balance,
January 1, 2007
|
|
|
54,621,119
|
|
$
|
54,621
|
|
$
|
31,326,694
|
|
$
|
(28,540,556
|
)
|
$
|
2,840,759
|
|
Stock-based
compensation to employees
|
|
|
-
|
|
|
-
|
|
|
294,577
|
|
|
-
|
|
|
294,577
|
|
Stock-based
compensation to consultants and finder
|
|
|
-
|
|
|
-
|
|
|
53,553
|
|
|
-
|
|
|
53,553
|
|
Net
loss
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,518,253
|
)
|
|
(2,518,253
|
)
|
Balance,
March 31, 2007
|
54,621,119
|
$
|
54,621
|
$
|
31,674,824
|
$
|
(31,058,809
|
)
|
$
|
670,636
|
For
the Three
Months
Ended
March
31, 2007
|
For
the Three
Months
Ended
March
31, 2006
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(2,518,253
|
)
|
$
|
(1,861,747
|
)
|
|
Loss
from discontinued operations
|
261,475 | 849,777 | |||||
Loss
from continuing operations
|
(2,256,778 | ) | (1,011,970 | ) | |||
Adjustments
to reconcile net loss from continuing operations to net cash used
in
continuing operating activities:
|
|||||||
Depreciation
|
2,307 | 1,414 | |||||
Stock-based
compensation to employees
|
221,771 | 223,994 | |||||
Stock-based
compensation to consultants and finder
|
53,178 | - | |||||
Changes
in operating assets and liabilities:
|
|||||||
Prepaid
clinical research costs
|
17,215 | (86,812 | ) | ||||
Other
assets
|
(100,907 | ) | (19,076 | ) | |||
Accounts
payable
|
759,403 | (25,693 | ) | ||||
Accrued
expenses
|
(43,297 | ) | (271,457 | ) | |||
Net
Cash Used in Continuing Operating Activities
|
(1,347,108 | ) | (1,189,600 | ) | |||
Net
Cash Used in Discontinued Operating Activities
|
(342,098 | ) | (1,536,177 | ) | |||
Net
Cash Used in Operating Activities
|
(1,689,206 | ) | (2,725,777 | ) | |||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Payments
for purchased equipment
|
(2,277 | ) | (7,851 | ) | |||
Net
Cash Used in Continuing Investing Activities
|
(2,277 | ) | (7,851 | ) | |||
Net
Cash Used in Discontinued Investing Activities
|
(23,555 | ) | (6,566 | ) | |||
Net
Cash Used in Investing Activities
|
(25,832 | ) | (14,417 | ) | |||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Payment
of note payable to Paramount BioSciences, LLC
|
(75,000 | ) | - | ||||
Net
Cash Used in Continuing Financing Activities
|
(75,000 | ) | - | ||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,790,038 | ) | (2,740,194 | ) | |||
CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
2,931,265 | 6,021,399 | |||||
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
1,141,227
|
$
|
3,281,205
|
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Term
|
7
years
|
7
years
|
|||||
Volatility
|
232-233
|
%
|
210-214
|
%
|
|||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
|||
Risk-free
interest rate
|
4.5-4.9
|
%
|
4.4-4.8
|
%
|
|||
Forfeiture
rate
|
22
|
%
|
22
|
%
|
Number
of Options
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Life (Years)
|
Aggregate
Intrinsic Value
|
||||||||||
Balance,
January 1, 2007
|
6,087,432
|
$
|
1.02
|
||||||||||
Options
granted
|
1,010,000
|
$
|
0.53
|
||||||||||
Options
cancelled or exercised
|
-
|
-
|
|||||||||||
Options
outstanding, March 31, 2007
|
7,097,432
|
$
|
0.95
|
6.9
|
-
|
||||||||
Options
exercisable, March 31, 2007
|
3,482,158
|
$
|
1.11
|
5.5
|
-
|
·
|
Lenocta™
- Sodium Stibogluconate (SSG).
Lenocta™ is a pentavalent antimonial drug that has been in use for over 50
years in parts of Africa and Asia for the treatment of leishmaniasis
(a
protozoan disease). According to the World Health Organization
leishmaniasis currently threatens 350 million men, women, and children
in
88 countries around the world. This drug is currently being used
to treat
military personnel serving in parts of the world where leishmaniasis
is
prevalent. In collaboration with the U.S. Army, we are pursuing
development of Lenocta™ in the treatment of leishmaniasis and anticipate
filing a new drug application, or NDA, with the U.S. Food and Drug
Administration, or FDA, in the second half of 2007. In December 2006,
Lenocta™ received orphan drug designation by the FDA for the treatment of
leishmaniasis. In addition to the treatment for leishmaniasis,
several preclinical studies, especially those conducted at the Cleveland
Clinic, have showed that Lenocta™ is an inhibitor of multiple protein
tyrosine phosphatases (PTPases), specifically the SRC homology PTPase
(SHP-1 & SHP-2) and PTB-1B. These intracellular enzymes are involved
in signaling pathways of many receptor-linked tyrosine kinases which
are
involved in growth, proliferation and differentiation of cancer cells.
Inhibition of these enzymes with Lenocta™ can trigger apoptosis, or cell
death, of cancerous tumors. This cytotoxic effect, coupled with its
potential ability to enhance the body’s immune system, through improved
cytokine signaling and t-cell formation, suggest that Lenocta™ has
potential as an anti-cancer agent. It is well known that one major
mechanism of regulating the proliferation, growth and apoptosis of
cancer
cells involves activation of cellular pathways, especially protein
tyrosine kinase pathways; the Jak/Stat pathway is a particularly
important
protein tyrosine kinase pathway. It is also known that interferon
and
other cytokines exert their anti-cancer effects via the Jak/Stat
pathway.
We filed with the FDA an IND for Lenocta™, which the FDA accepted in
August 2006, allowing us to commence clinical trials of Lenocta™. Lenocta™
is currently being evaluated in combination with IFN a-2b
in a 24-patient investigator-sponsored Phase I clinical trial at
the
Cleveland Clinic Taussig Cancer Center in refractory solid tumors,
lymphoma and myeloma. We are also currently evaluating the safety,
tolerability and activity of Lenocta™ in a separate, company-sponsored
study of up to a 54-patient Phase I/IIa clinical trial at M.D. Anderson
Cancer Center in patients with advanced malignancies and solid tumors
that
have been non-responsive in previous cytokine
therapy.
|
·
|
VQD-002
- Triciribine-Phosphate (TCN-P). VQD-002,
a nucleoside analog, was previously advanced into clinical trials
by the
National Cancer Institute in the 1980s and early 1990s, and showed
compelling anti-cancer activities. More recently, investigators at
the
Moffitt Cancer Center of the University of South Florida were able
to
demonstrate from preclinical studies that VQD-002’s mechanism of action is
the inhibition of Akt phosphorylation (protein kinase - B), which
is found
to be over activated and over-expressed in various malignancies including
breast, ovarian, colorectal, and pancreatic and leukemias. Clinically,
the
over expression of phosphorylated Akt is associated with poor prognosis,
resistance to chemotherapy and shortened survival time of cancer
patients.
We filed with the FDA an IND relating to VQD-002, which was accepted
in
April 2006. Pursuant to this IND, we are currently evaluating the
safety,
tolerability and activity of VQD-002 and its ability to reduce Akt
phosphorylaion in two Phase I/IIa clinical trials, including one
at the
Moffitt Cancer Center in up to 42 patients with hyper-activated,
phosphorylated Akt in colorectal, pancreatic, breast and ovarian
tumors
and a second clinical trial, with up to 40 patients, at the M.D.
Anderson
Cancer Center in hematological tumors, with particular attention
in
leukemia.
|
·
|
Xyfid™. Xyfid™
is a topical, adjunctive therapy which has shown early clinical promise
in
the treatment and prevention of Hand-Foot Syndrome (HFS), a common,
often
dose-limiting and potentially life-threatening complication of several
drug regimens, commonly used in the treatment of patients with breast,
colon, and other cancers. HFS, also known as palmar-plantar
erythrodysesthesia syndrome (PPES), is commonly seen in patients
receiving
capecitabine (Xeloda™) and has been associated with other
fluoropyrimidines (5-FU) and anthracyclines. In addition, HFS is
being
seen in patients receiving some of the newer tyrosine kinase class
of
therapies sorafenib (Nexavar™). Incidence of HFS can be as high as 50% in
patients receiving initial chemotherapy with higher dose regimens
of
capecitabine.
|
Exhibit
No.
|
Description
|
||
10.1
|
Letter
Agreement between VioQuest Pharmaceuticals, Inc. and Edward C. Bradley,
dated January 31, 2007 (incorporated by reference to Exhibit 10.1
of the
Company’s Form 8-K filed February 6, 2007.
|
||
10.2
|
Amended
and Restated License Agreement dated December 29, 2006 (the “License
Agreement”), among, Onc Res, Inc., Assymetric Therapeutics, LLC, Fiordland
Pharmaceuticals, Inc. and Stason Pharmaceuticals, Inc., as assigned
to the
Company on March 29, 2007.*
|
||
31.1
|
Certification
of Chief Executive Officer
|
||
31.2
|
Certification
of Chief Financial Officer
|
||
32.1
|
Certifications
of Chief Executive and Chief Financial Officer pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|
*
|
Confidential
treatment has been requested as to certain omitted portions of this
exhibits pursuant to Rule 24b-2 of the Exchange
Act.
|
VIOQUEST
PHARMACEUTICALS, INC.
|
||
|
|
|
Date:
May 14, 2007
|
By: |
/s/
Daniel Greenleaf
|
Daniel
Greenleaf
President
& Chief Executive Officer
|
||
Date:
May 14, 2007
|
By: |
/s/
Brian Lenz
|
Brian
Lenz
Chief
Financial Officer
|
Exhibit
No.
|
Description
|
|
10.2
|
Amended
and Restated License Agreement dated December 29, 2006 (the “License
Agreement”), among, Onc Res, Inc., Assymetric Therapeutics, LLC, Fiordland
Pharmaceuticals, Inc. and Stason Pharmaceuticals, Inc., as assigned
to the
Company on March 29, 2007.*
|
|
31.1
|
Certification
of Chief Executive Officer
|
|
31.2
|
Certification
of Chief Financial Officer
|
|
32.1
|
Certifications
of Chief Executive and Chief Financial Officer pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|