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MICROLIN BIO, INC.
|
S-1/A
Jul 15, 10:16 AM ET
MICROLIN BIO, INC. S-1/A
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Contents
383
Registration No.: 333-193315
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
AMENDMENT NO. 9 TO FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MICROLIN BIO, INC.
135 E. 57th St., 12th Floor New York, NY 10022 (646) 829-1281
Joseph Hernandez, Chief Executive Officer 302 W. 12th St., Suite 114 New York, NY 10014 (646) 829-1281
As soon as practicable after this registration statement becomes effective.
Calculation of Registration Fee
5,500,000 Units, each consisting of One (1) Share of Common Stock and a Warrant to Purchase One (1) Share of Common Stock
MICROLIN BIO, INC.
TABLE OF CONTENTS
Prospectus
PROSPECTUS SUMMARY
Our Company
Potential of microRNA Biology
Our microRNA Product Platform
Our Outsourcing-Based Product Development Strategy
Our Leadership
Risk Factors Associated with Our Business
Corporate Information
OFFERING SUMMARY
RISK FACTORS
Risks Related to Our Financial Condition and Capital Requirements
We have a very limited operating history, have minimal assets, have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.
We may be unable to fulfill our contractual commitments to OSIF. As a result, we may incur significant financial fees and may be required to terminate our license agreements with OSIF, which would have a material adverse effect on our business, results of operations and financial condition.
We have minimal assets and have never generated any revenue. As a result, our ability to reduce our losses and reach profitability is unproven, and we may never achieve or sustain profitability.
Even if this offering is successful, we will require additional funding, which may not be available on acceptable terms, or at all.
Our common stock could become diluted and the market price of our common stock could decline if we raise additional capital through equity or debt that converts into equity.
Our recurring losses from operations may raise substantial doubt regarding our ability to continue as a going concern.
Risks Related to Development of Our Product Candidates
We are highly dependent on the success of microRNA technology and we may not be able to develop the technology, successfully obtain regulatory or marketing approval for, or successfully commercialize, our therapeutic product candidates.
It is difficult to predict the time and cost of developing a viable microRNA-based product since it is a novel technology.
Our clinical diagnostics may never be validated.
If the FDA were to begin regulating our clinical diagnostics, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval, which would have a material adverse effect on our business, results of operations and financial condition.
All of our programs are still in preclinical development. Validation, preclinical testing and future clinical trials may not be successful or may experience delays, which would have a material adverse effect on our business, results of operation and financial condition.
We may fail to obtain orphan drug status for our product candidates.
We may fail to demonstrate the safety and efficacy of our therapeutic product candidates in accordance with regulatory standards and may incur delays and substantial costs in our clinical trials.
Any of our therapeutic product candidates may cause adverse effects or have properties that could delay or prevent their regulatory approval or limit the scope of any specific indications or market acceptance.
We cannot predict if or when we will receive regulatory approval to commercialize a therapeutic or diagnostic product candidate.
Even if we obtain regulatory approval for a product candidate, we will remain subject to extensive regulatory scrutiny.
Reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance. If there is not sufficient reimbursement for our product candidates, when and if developed and approved, we may not be able to successfully commercialize our product candidates.
Risks Related to Our Reliance on Third Parties
We plan to rely on third parties to conduct our preclinical testing and clinical trial design and management for our potential therapeutic products, and these third parties may not perform satisfactorily.
We intend to rely on third party manufacturers to produce the preclinical, clinical trial, and commercial supply of our product candidates.
Our reliance on third-party relationships will subject us to the downstream effects that any of our future partners’ may experience.
Interruptions in the supply of product or inventory loss may have a material adverse effect on our business, results of operations and financial condition.
We may never form any long-term partnership deals due to our clinical program results, the perceived value of our intellectual property or the competitive environment of therapeutics.
Risks Related to Our Intellectual Property
Our failure to comply with our obligations in the agreements under which we license intellectual property rights from third parties could cause us to lose license rights that are critical to our business.
We may not be successful in obtaining or maintaining the rights to microRNA intellectual property, which would have a material adverse effect on our business, results of operations and financial condition.
We may be involved in lawsuits relating to intellectual property, either to protect or enforce any future patents we may develop or the patents of our licensors, or to defend against third party claims of intellectual property infringement, which may prevent or delay our development and commercialization efforts and could be expensive, time consuming and unsuccessful.
Risks Related to Commercialization of Our Product Candidates
We face significant competition from other biotechnology and pharmaceutical companies and our business, results of operations and financial condition will suffer if we fail to compete effectively.
The commercial success of our product candidates will depend upon the degree of market acceptance by the medical community, including physicians, patients and third party payors.
If we are unable to establish sales and marketing capabilities to effectively sell our product candidates, we may be unable to generate any revenues.
We may not be able to produce our therapeutic and diagnostic product candidates within a viable cost structure.
Risk Related to Our Business Operations and Industry
Our future success depends on our ability to attract and retain talent for our management team, board of directors and staff.
As our business evolves and grows in scale, we will have to expand our organization and may face difficulties in managing this growth, which could slow or halt our operations.
Our employees, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading, which could have a material adverse effect on our business, results of operation and financial results.
We face potential product liability, and, if successful claims are brought against us, we may incur substantial litigation, costs and damage to our reputation.
Interruptions to our business could delay the development, validation, production and sale of our product candidates.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business, results of operations and financial condition.
We are subject to federal and state healthcare fraud and abuse laws and regulations and could face substantial penalties if we are unable to fully comply with such laws.
Our business, results of operations and financial condition would suffer in the event of system failures.
We may become subject to litigation, which could materially adversely affect us.
Risks Related to This Offering and Ownership of Our Common Stock
The market price of our common stock may be highly volatile, and you may not be able to resell your shares at or above the public offering price.
An active, liquid trading market for our common stock may not develop.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.
Our failure to meet the continued listing requirements of the NASDAQ could result in a de-listing of our common stock.
In the event that any holder of a warrant purchased in this offering decides to increase their beneficial ownership limitation above 4.99% or 9.99% and then subsequently transfers that warrant to a third party, that third party may not be aware of the increase in beneficial ownership limitation and may be required to file disclosure documents if such ownership would result in them beneficially owning greater than 5% or 10% of our common stock if that warrant is exercised in full.
There is no public market for the warrants to purchase common stock being offered in this offering.
Holders of our warrants will have no rights as a common stockholder until such holders exercise their warrants and acquire our common stock.
If our shares become subject to the penny stock rules, it would become more difficult to trade our shares.
Our shares are held by two principal stockholders who may be able to exert significant control over the company. Joseph Hernandez, our Chief Executive Officer and Executive Chairman, and OSIF currently hold all issued and outstanding shares of our common stock.
The volatility of our stock price can have a material adverse effect on our reported profit or loss due to operation of applicable accounting rules.
We are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.
If we are unable to establish and maintain effective disclosure controls and procedures, including an effective system of internal control over financial reporting, our business, results of operations and financial condition could be materially adversely affected.
We may be unable to complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
We may fail to use the net proceeds from this offering effectively.
We will face increased administrative costs as a public company.
If you purchase units in this offering, you will incur immediate and substantial dilution in the book value of your common shares.
Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution for our stockholders and could cause our stock price to fall.
We do not intend to pay cash dividends on our common stock so any returns on our common stock will be limited to an appreciation in the value of our common stock, if any.
Anti-takeover provisions of Delaware law and our charter documents may make potential acquisitions more difficult and could result in the entrenchment of management.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Financial Overview
Revenues
Research and Development Expenses
General and Administrative Expenses
Critical Accounting Policies and Estimates
Revenue Policy
Fair Value of Financial Instruments
Research and Development Costs
Stock-Based Compensation
Common Stock Valuation
September 30, 2013 valuation
March 31, 2014 valuation
Net Operating Loss Carryforwards
JOBS Act
Plan of Operations
Results of Operations
Liquidity and Capital Resources
Sources of Liquidity
Cash Flows
Future Funding Requirements
License Agreements
OFF-BALANCE SHEET ARRANGEMENTS
RELATED PARTY TRANSACTIONS
RECENT ACCOUNTING PRONOUNCEMENTS
BUSINESS
OVERVIEW
OUR STRATEGY
AN OVERVIEW OF microRNA
The Biology of microRNA
Figure 1. Mechanism of gene regulation by miRNA
The Role of microRNA in Cancer
microRNAs as Biomarkers for Diagnosis and Prognosis of Cancer
Our microRNA Product Platform
Delivery Technology for miR-Based Therapeutics
Cell Viability (% of untreated cells)
Our miR-BASED THERAPEUTIC AND DIAGNOSTIC PRODUCT CANDIDATES
Lung
Market Opportunity
Diagnosis and Current Treatment
LumiralinTM AMT and LumiraTM MPT
Ovarian Cancer
Market Opportunity
Diagnosis and Current Treatment
OmiralinTM MRT and OmiraTM MPT
Colorectal Cancer
Market Opportunity
Diagnosis and Current Treatment
ColomiralinTM AMT and ColomiraTM MPT
Prostate Cancer
Market Opportunity
Diagnosis and Current Treatment
PromiralinTM MRT and PromiraTM MPT
OUR miR-BASED THERAPEUTIC PRODUCT PIPELINE
OUR OUTSOURCING-BASED PRODUCT DEVELOPMENT STRATEGY
Outsourcing
Preclinical Research: Relationship with OSU
Manufacturing of the Active Pharmaceutical Ingredient and the Therapeutic Product
Sourcing of API
Sourcing of Excipients
Drug Product Manufacturing
Toxicology Testing
IND Filing with the FDA
Phase I Clinical Trials on Lumiralin in Lung Cancer and Ovarian Cancer Patients
Lumira Diagnostic Development in a CLIA Lab
OUR RELATIONSHIP WITH OSU
OUR INTELLECTUAL PROPERTY
COMPETITION
GOVERNMENT REGULATION AND PRODUCT APPROVAL
Diagnostic Regulations
Clinical Laboratory Improvement Amendments of 1988 and State Regulation
U.S. Therapeutic Regulations
U.S. Drug Development Process
U.S. Review and Approval Processes
U.S. Foreign Corrupt Practices Act
Federal and State Fraud and Abuse Laws
EMPLOYEES
FACILITIES
LEGAL PROCEEDINGS
MANAGEMENT
Board of Directors
Executive Officers
Other Key Management
Other Consulting Arrangements
Scientific Advisory Board
Board Composition and Independence
Board Leadership Structure
Role of the Board in Risk Oversight
Board Committees
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
Code of Business Conduct and Ethics
EXECUTIVE AND DIRECTOR COMPENSATION
Summary Compensation Table
Annual Base Salary
Long-Term Incentive Compensation
Perquisites, Health, Welfare and Retirement Benefits
Outstanding Equity Awards at September 30, 2013
Employment and Consulting Agreements
Employment Agreement with Joseph Hernandez
Employment Agreement with Dr. Eric Marcusson
Consulting Agreement with Dr. Nicholas Dean
Consulting Agreement with Mr. Jeffrey Jensen
2013 Equity Incentive Plan
Stock Awards
Share Reserve
Administration
Stock Options
Tax Limitations on Incentive Stock Options
Restricted Stock Awards
Restricted Stock Unit Awards
Stock Appreciation Rights
Other Stock Award
Changes to Capital Structure
Change in Control
Amendment and Termination
Director Compensation
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
PRINCIPAL STOCKHOLDERS
DESCRIPTION OF CAPITAL STOCK
General
Common Stock
Outstanding Shares
Voting
Dividends
Liquidation
Rights and Preferences
Fully Paid and Nonassessable
Preferred Stock
Unit Warrants
Representatives’ Warrants
Anti-Takeover Effects of Provisions of Our Amended and Restated Certificate of Incorporation, Our Bylaws and Delaware Law
Delaware Anti-Takeover Law
Amended and Restated Certificate of Incorporation and Bylaws
Authorized and Unissued Shares
NASDAQ LISTING
TRANSFER AGENT, REGISTRAR AND WARRANT AGENT
SHARES ELIGIBLE FOR FUTURE SALE
Rule 144
Affiliate Resales of Shares
Non-Affiliate Resales of Restricted Shares
Rule 701
Lock-Up Agreements
2013 Equity Incentive Plan
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
U.S. Holders
Distributions on Shares of Our Common Stock
Sale or Other Taxable Dispositions of Shares of Our Common Stock
Backup Withholding and Information Reporting
Medicare Tax
Non-U.S. Holders
Distributions on Shares of Our Common Stock
Sale or Other Taxable Dispositions of Shares of Our Common Stock
Backup Withholding Tax and Information Reporting
Additional Withholding Tax Relating to Foreign Accounts
UNDERWRITING
Discounts and Commissions
Representatives’ Warrants
Expenses
Over-Allotment Option
Determination of Offering Price
Lock-Up Agreements
Indemnification
NASDAQ Listing
Price Stabilization, Short Positions and Penalty Bids
Electronic Offer, Sale and Distribution of Shares
Other Relationships
Offer Restrictions Outside the United States
Australia
China
European Economic Area — Belgium, Germany, Luxembourg and Netherlands
France
Ireland
Israel
Italy
Japan
Portugal
Sweden
Switzerland
United Arab Emirates
United Kingdom
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
MICROLIN BIO, INC(a Development Stage Company)
Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
MICROLIN BIO, INC. (A Development Stage Company) Balance Sheet
MICROLIN BIO, INC. (A Development Stage Company) Statement of Operations
MICROLIN BIO, INC. (A Development Stage Company) Statement of Stockholders' Deficiency
MICROLIN BIO, INC. (A Development Stage Company) Statement of Cash Flows
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note A — Company Information
Note B — Liquidity And Plan Of Operation
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note C — Summary Of Significant Accounting Policies
[1] Use of estimates:
[2] Loss per common share:
[3] Equity-based compensation:
[4] Revenue recognition:
[5] Research and development:
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note C — Summary Of Significant Accounting Policies – (continued)
[6] Income taxes:
[7] Fair Value Estimate:
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note C — Summary Of Significant Accounting Policies – (continued)
[8] Fair Value of Financial Instruments
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note C — Summary Of Significant Accounting Policies – (continued)
[9] Recent accounting pronouncements:
Note D — License Agreements
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note D — License Agreements – (continued)
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note E — Related Party Transactions
Note F — Income Taxes
Note G — Commitments and Contingencies
[1] Compensation of Scientific Advisory Board members:
[2] Minimum Lease Commitments
Note H — Accrued Expenses
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note I — Equity
[1] Stock Issued to Founder
[2] Stock Options
[3] Forward Stock Split
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note J — Subsequent Events
MICROLIN BIO, INC (A Development Stage Company) Notes to Financial Statements Period from July 30, 2013 (Inception) to September 30, 2013
Note J — Subsequent Events – (continued)
MICROLIN BIO, INC. (A Development Stage Company) Condensed Balance Sheets
MICROLIN BIO, INC. (A Development Stage Company) Condensed Statement of Operations (unaudited)
MICROLIN BIO, INC. (A Development Stage Company) Condensed Statements of Stockholders' Deficiency
MICROLIN BIO, INC. (A Development Stage Company) Condensed Statements of Cash Flows (unaudited)
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note A — Company Information
Note B — Liquidity And Plan Of Operation
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note B — Liquidity And Plan Of Operation – (continued)
Note C — Summary Of Significant Accounting Policies
[1] Use of estimates:
[2] Loss per common share:
[3] Equity-based compensation:
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note C — Summary Of Significant Accounting Policies – (continued)
[4] Revenue recognition:
[5] Research and development:
[6] Income taxes:
[7] Fair Value Estimate:
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note C — Summary Of Significant Accounting Policies – (continued)
September 30, 2013 valuation:
March 31, 2014 valuation:
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note C — Summary Of Significant Accounting Policies – (continued)
[8] Fair Value of Financial Instruments
[9] Deferred issuance costs
Note D — License Agreements
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note D — License Agreements – (continued)
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note D — License Agreements – (continued)
Note E — Related Party Transactions
Note F — Commitments and Contingencies
[1] Compensation of Scientific Advisory Board members and Board of Directors:
[2] Minimum Lease Commitments
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note F — Commitments and Contingencies – (continued)
[3] Employment Agreements
Note G — Accrued Expenses
Note H — Equity
[1] Stock Issued to Founder
[2] Stock Options
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note H — Equity – (continued)
MICROLIN BIO, INC(a development stage company) Notes to Financial StatementsPeriod from July 30, 2013 (Inception) to March 31, 2014
Note H — Equity – (continued)
[3] Forward Stock Split
[4] Increase in number of shares
Note I — Subsequent Events
PROSPECTUS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
ITEM 14. INDEMNIFICATION OF DIRECTORS.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
ITEM 17. UNDERTAKINGS.
SIGNATURES
INDEX TO EXHIBITS