x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
Delaware
|
91-1689591
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company x
|
Title
|
Shares
outstanding as of August 1, 2008
|
Common
Stock, par value $0.001
|
41,130,270
|
3
|
|
|
|
3
|
|
3
|
|
4
|
|
5
|
|
6
|
|
9
|
|
13
|
|
13
|
|
13
|
|
13
|
|
13
|
|
20
|
|
22
|
|
23
|
Financial
Statements
|
June
30, 2008
(Unaudited)
|
December 31,
2007
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$
|
8,024,052
|
$
|
11,825,371
|
||||
Accounts
receivable
|
276,848
|
225,900
|
||||||
Interest
and other receivables
|
1,295
|
16
|
||||||
Prepaid
expenses and other assets
|
576,176
|
423,213
|
||||||
Total
current assets
|
8,878,371
|
12,474,500
|
||||||
Property
and Equipment — net of accumulated amortization of $1,132,711 and
$964,738, respectively
|
580,958
|
748,931
|
||||||
Intangible
assets — net of accumulated amortization of $422,087 and $385,452,
respectively
|
515,663
|
464,023
|
||||||
Restricted
cash
|
564,000
|
—
|
||||||
$
|
10,538,992
|
$
|
13,687,454
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$
|
230,320
|
$
|
757,420
|
||||
Accrued
liabilities
|
454,956
|
586,849
|
||||||
Deferred
gain on lease termination
|
1,000,000
|
—
|
||||||
Current
portion of term loan
|
83,858
|
80,047
|
||||||
Total
current liabilities
|
1,769,134
|
1,424,316
|
||||||
Long-term
portion of term loan
|
68,216
|
111,119
|
||||||
Total
liabilities
|
1,837,350
|
1,535,435
|
||||||
Commitments
and Contingencies (Note 9)
|
||||||||
Stockholders’
Equity
|
||||||||
Preferred
stock, authorized 5,000,000 shares, $.01 par value, none issued or
outstanding
|
—
|
—
|
||||||
Common
stock, authorized 100,000,000 shares, $.001 par value 41,130,270 and
40,991,385 issued and outstanding as of June 30, 2008, and
December 31, 2007, respectively
|
41,130
|
40,991
|
||||||
Additional
paid-in capital
|
70,601,489
|
69,945,666
|
||||||
Accumulated
deficit
|
(61,940,977
|
)
|
(57,834,638
|
)
|
||||
Total
stockholders’ equity
|
8,701,642
|
12,152,019
|
||||||
$
|
10,538,992
|
$
|
13,687,454
|
Three
months ended
June 30,
|
Six
months ended
June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenues
|
||||||||||||||||
Licensing
fees
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
173,077
|
||||||||
Royalty
income
|
279,571
|
422,056
|
545,126
|
747,676
|
||||||||||||
Research
and development income
|
—
|
—
|
—
|
621,222
|
||||||||||||
Total
revenues
|
279,571
|
422,056
|
545,126
|
1,541,975
|
||||||||||||
Operating
expenses
|
||||||||||||||||
Marketing
and selling
|
191,047
|
225,374
|
428,739
|
475,256
|
||||||||||||
Research
and development
|
1,197,321
|
1,377,499
|
2,080,533
|
3,173,374
|
||||||||||||
General
and administrative
|
1,062,646
|
1,112,244
|
2,294,930
|
2,288,742
|
||||||||||||
Total
operating expenses
|
2,451,014
|
2,715,117
|
4,804,202
|
5,937,372
|
||||||||||||
Loss
from operations
|
(2,171,443
|
)
|
(2,293,061
|
)
|
(4,259,076
|
)
|
(4,395,397
|
)
|
||||||||
Other
income (expense)
|
||||||||||||||||
Interest
income
|
59,353
|
185,345
|
159,671
|
390,321
|
||||||||||||
Interest
expense
|
(3,859
|
)
|
(5,615
|
)
|
(8,172
|
)
|
(5,775
|
)
|
||||||||
Other
|
1,238
|
—
|
1,238
|
2,941
|
||||||||||||
Total
other income (expense)
|
56,732
|
179,730
|
152,737
|
387,487
|
||||||||||||
Net
loss
|
$
|
(2,114,711
|
)
|
$
|
(2,113,331
|
)
|
$
|
(4,106,339
|
)
|
$
|
(4,007,910
|
)
|
||||
Net
loss per share, basic and diluted
|
$
|
(0.05
|
)
|
$
|
(0.06
|
)
|
$
|
(0.10
|
)
|
$
|
(0.11
|
)
|
||||
Shares
used in computing basic and diluted net loss per share
|
41,042,090
|
38,130,640
|
41,033,770
|
38,107,698
|
Six
months ended
June 30,
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$
|
(4,106,339
|
)
|
$
|
(4,007,910
|
)
|
||
Reconciliation
of net loss to net cash used in operating activities
|
||||||||
Depreciation
and amortization
|
209,614
|
194,081
|
||||||
Write-off
of intangible assets
|
36,073
|
15,283
|
||||||
Loss
on the disposal of equipment
|
—
|
5,700
|
||||||
Share-based
compensation for non-employee services
|
—
|
26,932
|
||||||
Share-based
compensation for employee services
|
615,876
|
841,369
|
||||||
Increase
(decrease) in cash resulting from changes in assets and
liabilities
|
||||||||
Accounts
and other receivables
|
(52,227
|
)
|
439,511
|
|||||
Prepaid
expenses and other current assets
|
(152,963
|
)
|
(185,057
|
)
|
||||
Accounts
payable and accrued expenses
|
(658,993
|
)
|
177,954
|
|||||
Deferred
gain on lease termination
|
1,000,000
|
—
|
||||||
Deferred
revenue
|
—
|
(185,577
|
)
|
|||||
Net
(cash used) in operating activities
|
(3,108,959
|
)
|
(2,677,714
|
)
|
||||
Cash
flows from investing activities:
|
||||||||
Purchase
of equipment and furniture
|
—
|
(333,312
|
)
|
|||||
Patent
and technology rights payments
|
(129,354
|
)
|
(130,473
|
)
|
||||
Purchase
of short-term investments
|
—
|
(346,152
|
)
|
|||||
Maturities
and sales of short-term investments
|
—
|
443,378
|
||||||
Restricted
cash
|
(564,000
|
)
|
—
|
|||||
Net
(cash used) by investing activities
|
(693,354
|
)
|
(366,559
|
)
|
||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from term loan
|
—
|
246,500
|
||||||
Payments
on term loan
|
(39,092
|
)
|
(18,018
|
)
|
||||
Proceeds
from exercise of common stock options and warrants
|
40,086
|
115,969
|
||||||
Net
cash provided by financing activities
|
994
|
344,451
|
||||||
Net
(decrease) in cash
|
(3,801,319
|
)
|
(2,699,822
|
)
|
||||
Cash
at beginning of period
|
11,825,371
|
15,217,946
|
||||||
Cash
at end of period
|
$
|
8,024,052
|
$
|
12,518,124
|
||||
Cash
paid during the period for interest
|
$
|
7,414
|
$
|
5,615
|
||||
Non-cash
investing and financing activities:
|
||||||||
Unrealized
loss on short-term investments
|
$
|
—
|
$
|
(56
|
)
|
|||
Reclassification
of fair value of warrant liability to equity
|
$
|
—
|
$
|
1,171,045
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
Functions
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Marketing
and selling
|
$
|
17,690
|
$
|
32,111
|
$
|
43,080
|
$
|
64,872
|
||||||||
Research
and development
|
84,827
|
162,742
|
171,720
|
344,591
|
||||||||||||
General
and administrative
|
171,137
|
243,051
|
401,076
|
458,837
|
||||||||||||
Total
|
$
|
273,654
|
$
|
437,904
|
$
|
615,876
|
$
|
868,300
|
Common
shares from:
|
2008
|
2007
|
||||||
Assumed
exercise of stock options
|
4,379,179
|
3,369,496
|
||||||
Assumed
conversion of warrants
|
3,171,399
|
2,368,792
|
||||||
Assumed
vesting of restricted stock
|
86,500
|
—
|
||||||
Total
|
7,637,078
|
5,738,288
|
Issue
Date
|
Issued
Warrants
|
Exercise
Price
|
Term
|
Outstanding
Warrants
|
Expiration
Date
|
|||||||||
September 30, 2002
|
750,000
|
$
|
0.50
|
10 years
|
750,000
|
September 30, 2012
|
||||||||
February 24, 2004
|
1,046,773
|
4.75
|
5
years
|
944,849
|
February
23, 2009
|
|||||||||
February 8, 2005
|
75,000
|
5.00
|
5
years
|
75,000
|
February
7, 2010
|
|||||||||
April
21, 2006
|
11,000
|
7.50
|
5
years
|
11,000
|
April
20, 2011
|
|||||||||
December
4, 2007
|
1,390,550
|
2.10
|
5
years
|
1,390,550
|
December
3, 2012
|
|||||||||
Grand
Total
|
3,273,323
|
3,171,399
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
Controls
and Procedures
|
Legal
Proceedings
|
Risk
Factors
|
|
•
|
the
structure and timing of collaborations with strategic partners and
licensees;
|
|
•
|
our
timetable and costs for the development of marketing operations and other
activities related to the commercialization of our product
candidates;
|
|
•
|
the
progress of our research and development programs and expansion of such
programs;
|
|
•
|
the
emergence of competing technologies and other adverse market developments;
and,
|
|
•
|
the
prosecution, defense and enforcement of potential patent claims and other
intellectual property rights.
|
|
•
|
unexpected
delays in the initiation of clinical
sites;
|
|
•
|
slower
than projected enrollment of eligible
patients;
|
|
•
|
competition
with other ongoing clinical trials for clinical investigators or eligible
patients;
|
|
•
|
scheduling
conflicts with participating
clinicians;
|
|
•
|
limits
on manufacturing capacity, including delays of clinical supplies;
and,
|
|
•
|
the
failure of our products to meet required
standards.
|
|
•
|
our
collaborators may have insufficient economic motivation to continue their
funding, research, development, and commercialization
activities;
|
|
•
|
our
collaborators may discontinue funding any particular program, which could
delay or halt the development or commercialization of any product
candidates arising out of the
program;
|
|
•
|
our
collaborators may choose to pursue alternative technologies or products,
either on their own or in collaboration with others, including our
competitors;
|
|
•
|
our
collaborators may lack sufficient financial, technical or other
capabilities to develop these product
candidates;
|
|
•
|
we
may underestimate the length of time that it takes for our collaborators
to achieve various clinical development and regulatory approval
milestones; or,
|
|
•
|
our
collaborators may be unable to successfully address any regulatory or
technical challenges they may
encounter.
|
|
•
|
our
patents or any future patents will prevent other companies from developing
similar or functionally equivalent products or from successfully
challenging the validity of our
patents;
|
|
•
|
any
of our future processes or products will be
patentable;
|
|
•
|
any
pending or additional patents will be issued in any or all appropriate
jurisdictions;
|
|
•
|
our
processes or products will not infringe upon the patents of third parties;
or,
|
|
•
|
we
will have the resources to defend against charges of patent infringement
by third parties or to protect our own patent rights against infringement
by third parties.
|
|
•
|
the
reformulation of certain products to meet new
standards;
|
|
•
|
the
recall or discontinuance of certain products unable to be
reformulated;
|
|
•
|
imposition
of additional record keeping
requirements;
|
|
•
|
expanded
documentation of the properties of certain products;
or,
|
|
•
|
expanded
or different labeling, or scientific
substantiation.
|
|
•
|
general
conditions in the healthcare
industry;
|
|
•
|
general
conditions in the financial
markets;
|
|
•
|
our
failure or the failure of our collaborative partners, for any reason, to
obtain FDA approval for any of our products or products we
license;
|
|
•
|
for
those products that are ultimately approved by the FDA, the failure of the
FDA to approve such products in a timely manner consistent with the FDA’s
historical approval process;
|
|
•
|
our
failure, or the failure of our third-party partners, to successfully
commercialize products approved by the
FDA;
|
|
•
|
our
failure to generate product revenues anticipated by
investors;
|
|
•
|
problems
with our sole contract
manufacturer;
|
|
•
|
the
exercise of our right to redeem certain outstanding warrants to purchase
our common stock;
|
|
•
|
the
sale of additional debt and/or equity securities by
us;
|
|
•
|
announcements
by us or others of the results of preclinical testing and clinical trials
and regulatory actions, technological innovations or new commercial
therapeutic products; and,
|
|
•
|
developments
or disputes concerning patent or any other proprietary
rights.
|
Submission
of Matters to a Vote of Security
Holders
|
Yes
|
No
|
Abstain
|
||||||||||
Randall
L-W Caudill
|
31,895,784
|
0
|
4,229,963
|
|||||||||
Reza
Fassihi
|
34,060,147
|
0
|
2,065,500
|
|||||||||
Herbert
L. Lucas, Jr.
|
33,438,858
|
0
|
2,686,789
|
|||||||||
Wayne
L. Pines
|
34,525,445
|
0
|
1,600,202
|
|||||||||
Bruce
S. Morra
|
34,098,668
|
0
|
2,026,979
|
|||||||||
Jeffrey
B. Reich
|
34,516,305
|
0
|
1,609,342
|
|||||||||
Michael
N. Taglich
|
34,343,291
|
0
|
1,782,356
|
|||||||||
Gregory
L. Weaver
|
34,514,965
|
0
|
1,610,682
|
|||||||||
Daniel
O. Wilds
|
32,251,735
|
0
|
3,873,912
|
Yes
|
No
|
Abstain
|
||||||||||
Grant
Thornton LLP
|
35,072,508
|
948,376
|
104,763
|
Exhibits
|
Filed
|
Incorporated
by Reference
|
|||||||||||||||||||
Exhibit No.
|
Description
|
Herewith
|
Form
|
Exhibit No.
|
File No.
|
Filing Date
|
||||||||||||||
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of. 2002
|
X
|
||||||||||||||||||
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||||||||||
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||||||||||
32.2
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||||||||||
10.1
|
Standard
Multi-Tenant Lease dated as of June 19, 2008, by and between Arden Realty
Limited Partnership and SCOLR Pharma, Inc.
|
8-K
|
10.1
|
001-31982
|
6/24/2008
|
|||||||||||||||
10.2
|
Lease
Termination and Separation Agreement dated as of April 30, 2008, by and
between Newport Corporate Center LLC and SCOLR Pharma,
Inc.
|
X
|
SCOLR
Pharma, Inc.
|
||
Date:
August 6, 2008
|
By:
|
/s/
Daniel O. Wilds
|
Daniel
O. Wilds
Chief
Executive Officer and President
(Principal
Executive Officer)
|
||
Date:
August 6, 2008
|
By:
|
/s/
Richard M. Levy
|
Richard
M. Levy
Chief Financial Officer and Vice President - Finance
(Principal
Financial Officer)
|
Filed
|
Incorporated
by Reference
|
|||||||||||||||||||
Exhibit No.
|
Description
|
Herewith
|
Form
|
Exhibit No.
|
File No.
|
Filing Date
|
||||||||||||||
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of. 2002
|
X
|
||||||||||||||||||
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||||||||||
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||||||||||
32.2
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
X
|
||||||||||||||||||
10.1
|
Standard
Multi-Tenant Lease dated as of June 19, 2008, by and between Arden Realty
Limited Partnership and SCOLR Pharma, Inc.
|
8-K
|
10.1
|
001-31982
|
6/24/2008
|
|||||||||||||||
10.2
|
Lease
Termination and Separation Agreement dated as of April 30, 2008, by and
between Newport Corporate Center LLC and SCOLR Pharma,
Inc.
|
X
|