UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended September 30, 2003
Or
TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to______
Commissions file number 000-26775
Samaritan Pharmaceuticals Inc.
(Name of small business issuer in its charter)
Nevada 88-0431538
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
101 Convention Center Drive, Suite 310, Las Vegas, Nevada 89109
(Address of Principal Executive Offices) (Zip Code)
(702) 735-7001
Issuer's telephone number
The company had 88,143,866 shares issued and outstanding of Common Stock issued
as of September 30, 2003.
Transitional Small Business Disclosure Format (Check one): Yes___ No X
--
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheet as of September 30, 2003 2
Consolidated Statements of Operations for the period
from Inception (September 5, 1994) to September 30, 2003,
and for the Three Months Ended September 30, 2003 and 2002 3
Consolidated Statements of Stockholders' Equity (Deficit)
for the period from Inception (September 5, 1994) to
September 30, 2003 4
Consolidated Statements of Cash Flows for the period
from Inception (September 5, 1994) to September 30, 2003
and for the Three Months Ended September 30, 2003 and 2002 6
Notes to Interim Financial Statements 7
Item 2. Management's Discussion and Analysis of Plan of Operations 7
Item 3. Controls and Procedures 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 6. Exhibits 23
Signatures 25
PART I --- FINANCIAL INFORMATION
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED, BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 2003
ASSETS
CURRENT ASSETS:
Cash $ 485,868
Prepaid expense 6,089
-------------------
TOTAL CURRENT ASSETS 491,957
-------------------
PROPERTY AND EQUIPMENT 29,840
OTHER ASSETS:
Patent registration costs 201,083
Purchased technology rights 44,499
Deposits 15,720
-------------------
261,302
-------------------
TOTAL ASSETS $ 783,099
===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 240,486
Accrued expenses 374,567
Common stock to be issued 117,600
Short-term borrowings 63,621
-------------------
TOTAL CURRENT LIABILITIES 796,274
DEFERRED REVENUE 250,000
-------------------
TOTAL LIABILITIES 1,046,274
-------------------
STOCKHOLDERS' DEFICIT:
Common stock, 100,000,000 share authorized at $.001
par value, 88,119,666 issued and outstanding 88,119
Additional paid-in capital 19,511,185
Deferred compensation (375,000)
Accumulated deficit (19,487,479)
-------------------
TOTAL STOCKHOLDERS' DEFICIT (263,175)
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 783,099
===================
See accompanying notes to the consolidated, interim financial statements
(unaudited).
-2-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994), AND FOR THE FOR THE NINE MONTHS
AND THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
For the Nine For the Three
From Months Ended Months Ended
Inception September 30, September 30,
(September 5, 1994) ----------------------------------------------------------
To ---------------------------- ---------------------------
September 30, 2003 2003 2002 2003 2002
------------------- ------------- ------------ ----------- -------------
REVENUES: $ 50,000 $ - $ - $ - $ -
------------------- ------------- ------------ ----------- -------------
EXPENSES:
Research and development 4,488,888 587,547 531,374 200,852 202,175
Interest, net 52,185 8,513 16,414 2,425 4,674
General and administrative 14,268,583 1,328,711 1,612,790 437,771 818,610
Depreciation and amortization 1,115,851 19,011 387,087 6,337 129,029
Forgiveness of debt (137,780) - - - -
------------------- ------------- ------------ ----------- -------------
19,925,507 1,943,782 2,547,665 647,385 1,154,488
------------------- ------------- ------------ ----------- -------------
NET LOSS $ (19,875,507) $ (1,943,782) $ (2,547,665) $ (647,385) $ (1,154,488)
=================== ============= ============ =========== =============
Loss per share, basic & diluted: $ (0.94) $ (0.03) $ (0.05) $ (0.01) $ (0.02)
Weighted average number of shares outstanding:
Basic and diluted 21,159,735 74,883,314 46,939,076 83,469,996 55,355,003
=================== ============= ============ =========== =============
See accompanying notes to the consolidated, interim financial statements
(unaudited).
-3-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION (SEPTEMBER 5, 1994) TO SEPTEMBER 30, 2003
Number Par Value Reserved Additional Total
of Common for Paid in Deferred Accumulated Shareholders'
Shares Stock Conversion Capital Warrants Compensation Deficit Deficit
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
Inception at September 5, 1994 - $ - $ - $ - $ - $ - $ - $ -
Shares issued for cash, net of
offering costs 6,085,386 609 - 635,481 - - - 636,090
Warrants issued for cash - - - - 5,000 - - 5,000
Shares issued as compensation
for services 714,500 71 - 1,428,929 - - - 1,429,000
Net loss - - - - - - (2,152,843) (2,152,843)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1996 6,799,886 680 - 2,064,410 5,000 - (2,152,843) (82,753)
Issuance of stock, prior to
acquisition 206,350 21 - 371,134 - - - 371,155
Acquisition of subsidiary for
stock 1,503,000 150 - 46,545 - - - 46,695
Shares of parent redeemed,
par value $.001 (8,509,236) (851) - 851 - - - -
Shares of public subsidiary
issued, par value $.001 7,689,690 7,690 820 (8,510) - - - -
Net loss - - - - - - (979,635) (979,635)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1997 7,689,690 7,690 820 2,474,430 5,000 - (3,132,478) (644,538)
Conversion of parent's shares 696,022 696 (696) - - - - -
Shares issued for cash, net of
offering costs 693,500 694 - 605,185 - - - 605,879
Shares issued in cancellation
of debt 525,000 525 - 524,475 - - - 525,000
Shares issued as compensation 400,000 400 - 349,600 - - - 350,000
Net loss - - - - - - (1,009,945) (1,009,945)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 1998 10,004,212 10,005 124 3,953,690 5,000 - (4,142,423) (173,604)
Conversion of parent's shares 13,000 13 (13) - - - - -
Shares issued in cancellation
of debt 30,000 30 - 29,970 - - - 30,000
Shares issued for cash, net
of offering costs 45,000 45 - 41,367 - - - 41,412
Shares issued as compensation 3,569,250 3,569 - 462,113 - - - 465,682
Detachable warrants issued - - - - 152,125 - - 152,125
Detachable warrants exercised 100,000 100 - 148,900 (149,000) - - -
Debentures converted to stock 1,682,447 1,682 - 640,438 - - - 642,120
Net loss - - - - - - (1,671,255) (1,671,255)
----------- -------- ---------- ---------- ----------- ------------ ----------- ----------
December 31, 1999 15,443,909 15,444 111 5,276,478 8,125 - (5,813,678) (513,520)
See accompanying notes to the consolidated financial statements.
-4-
Conversion of parent's shares 128,954 129 (111) (18) - - - -
Shares issued for cash, net
of offering costs 1,575,192 1,575 - 858,460 - - - 860,035
Shares issued in cancellation
of debt 875,000 875 - 660,919 - - - 661,794
Shares issued in cancellation
of accounts payable 100,000 100 - 31,165 - - - 31,265
Shares issued as compensation 3,372,945 3,373 - 2,555,094 - (759,560) - 1,798,907
Warrants exercised 38,807 39 - 3,086 (3,125) - - -
Warrants expired - - - 5,000 (5,000) - - -
Net loss - - - - - - (3,843,308) (3,843,308)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 2000 21,534,807 21,535 - 9,390,184 - (759,560) (9,656,986) (1,004,827)
Shares issued for cash, net
of offering costs 6,497,088 6,497 - 1,257,758 - - - 1,264,255
Shares issued as compensation 9,162,197 9,162 - 1,558,599 - (230,512) - 1,337,249
Shares issued on previously
purchased shares 342,607 342 - 188,208 - - - 188,550
Shares issued in cancellation
of accounts payable 200,000 200 - 68,880 - - - 69,080
Amortization of deferred
compensation - - - - - 495,036 - 495,036
Stock options issued for services - - - 439,544 - - - 439,544
Net loss - - - - - - (4,079,806) (4,079,806)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 2001 37,736,699 37,736 - 12,903,173 - (495,036) (13,736,792) (1,290,919)
Shares issued for cash, net
of offering costs 18,657,500 18,658 - 2,077,641 - - - 2,096,299
Shares issued as compensation 3,840,525 3,841 - 1,044,185 - - - 1,048,026
Shares issued on previously
purchased shares 50,000 50 - 4,950 - - - 5,000
Shares issued in cancellation
of accounts payable 4,265,184 4,265 - 539,291 - - - 543,556
Amortization of deferred
compensation - - - - - 495,036 - 495,036
Stock options issued for services - - - 225,000 - - - 225,000
Net loss - - - - - - (4,057,153) (4,057,153)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
December 31, 2002 64,549,908 64,550 - 16,794,240 - - (17,793,945) (935,155)
Shares issued for cash, net
of offering costs 14,880,447 14,880 - 1,728,810 - - - 1,743,690
Shares issued as compensation 3,193,943 3,194 - 508,746 - (500,000) - 11,940
Shares issued in cancellation
of accounts payable 7,059,416 7,059 - 728,073 - - - 735,132
Amortization of deferred
compensation - - - - - 125,000 - 125,000
Shares reacquired in settlement
of judgement (1,564,048) (1,564) - (248,684) - - 250,248 -
Net loss (1,943,782) (1,943,782)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
September 30, 2003 88,119,666 $ 88,119 $ - $ 19,511,185 $ - $ (375,000)$(19,487,47) $ (263,175)
=========== ======== ========== ========== =========== ============ ========== ===========
See accompanying notes to the consolidated financial statements (unaudited)
-5-
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FROM INCEPTION (SEPTEMBER 5, 1994) AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2003 AND 2002
From For the Nine Months
Inception Ended
(September 5, 1994) September 30,
To -------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: September 30, 2003 2003 2002
------------------ ----- -----
Net loss $ (19,737,727) $ (1,943,782) $ (2,547,665)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,239,922 144,011 387,087
Expenses paid through issuance of stock 6,487,304 11,940 590,707
Stock options issued for services 664,544 - -
(Increase) decrease in assets:
Prepaids and other current assets (19,330) (3,089) 8,739
Increase (decrease) in liabilities:
Deferred revenue 250,000 - -
Accounts payable and accrued expenses 1,895,797 160,197 6,691
--------------------- ----------------- -----------------
NET CASH USED IN OPERATING ACTIVITIES (9,219,490) (1,630,723) (1,554,441)
--------------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology (108,969) 0 0
Purchase of furniture and equipment (90,219) (5,474) 0
Patent registration costs (210,502) (3,717) (15,700)
--------------------- ----------------- -----------------
NET CASH USED IN INVESTING ACTIVITIES (409,690) (9,191) (15,700)
--------------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrants 157,125 - -
Proceeds from debentures 642,120 - -
Proceeds from stock sales 7,627,603 1,743,690 1,094,306
Common stock to be issued 311,150 117,600 88,000
Offering costs (11,071) - -
Short-term loan repayments (387,301) (255,834) (91,141)
Short-term loan proceeds 1,775,422 162,500 593,673
--------------------- ----------------- -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,115,048 1,767,956 1,684,838
--------------------- ----------------- -----------------
CHANGE IN CASH 485,868 128,042 114,697
CASH AT BEGINNING OF PERIOD - 357,826 304,367
--------------------- ----------------- -----------------
CASH AT END OF PERIOD $ 485,868 $ 485,868 $ 419,064
===================== ================= =================
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ - $ -
Short-term debt retired through issuance
of stock $ 2,433,735 $ - $ 335,019
Issuance of common stock, previously subscribed $ 5,000 $ - $ 5,000
Reacquisition
See accompanying notes to the consolidated financial statements.
-6-
SAMARITAN PHARMACEUTICALS
Notes to Interim, Consolidated Financial Statements
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes for the year ended December 31, 2002, included in the
Form10-KSB/A for the year then ended.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of September 30, 2003, and the results of operations and cash flows
for the nine-month period ending September 30, 2003 and 2002 have been included.
The results of operations for the nine-month period ended September 30, 2003 are
not necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB/A as filed with the
Securities and Exchange Commission for the year ended December 31, 2002.
Management notes that stock was issued as follows during the three months ended
September 30, 2003:
No. of shares Issued Pursuant To Price/valuation
------------- ------------------ ---------------
4,152,500 Sale of restricted stock $661,350
599,998 Sale of common stock $100,000
188,000 Subscriptions due at September 30, 2003 $ 28,200
Management notes that in addition to the shares stated above, the Company, from
time to time, is involved in various legal proceedings in the ordinary course of
our business and are currently executing a settlement agreement to be signed by
all parties to resolve previously reported pending lawsuits. We believe based on
the settlement agreement that the resolution of any currently pending legal
proceedings, either individually or taken as a whole, will not have a material
adverse effect on our business, financial condition or results of operations.
This quarter report contains forward-looking statements. These statements relate
to future events or Samaritan Pharmaceutical's future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may," "will," "should," "expect," "plan," "intend," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue," the negative of these terms
or other comparable terminology. These statements are only predictions. Actual
events or results may differ materially. In evaluating these statements, you
should specifically consider various factors, including the risks outline in
"Risk Factors." These Factors may cause Samaritan Pharmaceuticals, Inc. actual
results, to differ materially from any forward-looking statement.
Although Samaritan Pharmaceuticals, Inc. believes that the expectations
reflected in the forward-looking statements are reasonable, Samaritan
Pharmaceuticals, Inc. cannot guarantee future results, events, levels of
activity, performance, or achievements. Moreover, neither Samaritan
Pharmaceuticals, Inc. nor any other person assumes responsibility for the
accuracy and completeness of these forward-looking statements. Samaritan
Pharmaceuticals, Inc. does not assume any obligation to update any of the
forward-looking statements after the date of this report to conform such
statements to actual results or to changes in Samaritan's expectations.
Item 2. Management's Discussion and Analysis or Plan of Operation
PLAN OF OPERATION
Overview
Samaritan Pharmaceuticals, Inc. is a development stage biotechnology company
engaged in the research and development of novel therapeutic and diagnostic
products to treat chronic debilitating diseases such as AIDS, Alzheimer's,
Central Nervous System ("CNS") Disorders, Cancer, and Cardiovascular Disease.
-7-
Our overall corporate strategy is to build a robust technology pipeline by (1)
In-licensing early-stage patented technologies from Academic Research Centers,
and (2) Focus on the discovery and the development of new drug compounds and
technology to add to our pipeline at Samaritan Laboratories, in collaboration
with Georgetown University.
Samaritan's principal executive offices are located at 101 Convention Center
Drive, Suite 310, Las Vegas, NV 89109, and our telephone number is
(702)735-7001.
Business Model
Our business model is primarily focused on the commercialization of our product
pipeline and patent portfolio. We seek potential products, and then focus on the
continual development of these products. Our first development objective for a
potential drug candidate is to file for an Investigational New Drug (IND)
application, to conduct human clinical trials, with the eventual goal of
obtaining marketing approval for each of the selected technologies.
We currently have several technologies in our product pipeline: SP001 and its
bioequivalents for HIV; an animal (rat) model for Alzheimer's disease;
Alzheimer's drug compounds; a Peptide to bind cholesterol; an Alzheimer's and
Breast Cancer Diagnostic/Theranostic; and a series of novel compounds.
Business Value
We believe what separates Samaritan and the promise of Samaritan is predicated
on generating the best value through the development of true medical advances
based on the insights, intuition and creativity of its scientists at Samaritan
Research Laboratories, Georgetown University Medical Center.
Samaritan believes its collaboration fosters scientific creativity and will
advance drug leads more rapidly, thereby, decreasing the average travel time
from lab to patients. Currently, the average drug discovery and preclinical
testing time is six and a half years, with Phase I being one and a half years
and Phase II averaging two years. Samaritan believes it can reduce the average
time to commercialization and produce attractive later-stage licensing
opportunities.
Samaritan plans to license its drug candidate's late stage, after the technology
is validated with "proof of concept" FDA Phase I and II science, thereby
capturing the greater portion of the potential value of its drug candidates. The
closer the technology is to "proof of concept" corporate marketing and/or
development partnerships are sought, in a manner that strategically fits with
the Company's overall goal of building shareholder value. In certain disease
categories, Samaritan may process its drug candidates through all human clinical
trials.
-8-
Summary Of Research And Development
We are a biopharmaceutical company engaged in the research and development of
novel therapeutics and diagnostic products to treat chronic debilitating
diseases such as AIDS, Alzheimer's, Central Nervous System ("CNS") Disorders,
Cancer, and Cardiovascular Disease. At the present time, the research
collaboration between Georgetown University and Samaritan is the only research
and development project for Samaritan. Under the collaboration agreement,
Samaritan pays Georgetown $650,000 per year, which is used by Georgetown to fund
its efforts in the collaboration in respect of research which is based on
balancing and modulating the stress hormone cortisol, counteracting cortisol's
neurodegenerative and immunosuppressive properties. The fee is paid quarterly
and is unallocated and covers the general research and development effort. In
addition, we have incurred direct research and development expenses of
approximately $350,000 for each of the last two fiscal years related primarily
to clinical trials and the retention of consultants to assist in the FDA
process.
We do not know and cannot reasonably estimate when the research and development
efforts will be completed, when these efforts will be completed or when drugs or
other products will be available for sale because of the early stage of our
research and development efforts. Further, the research and development efforts
will be determined in part based on the responses to our applications for
regulatory approval submitted to the Food and Drug Administration. These
responses are expected to direct the amount of clinical trials necessary for a
particular drug.
Under the Georgetown collaboration, we have a series of therapeutic projects
either in "discovery research," "preclinical trials,""product development" or
"clinical development"; and we utilize these formal stages of product
progression to track progress, performance, competition, and cost for each
project. Our research programs are aimed at satisfying defined medical needs in
the areas of Alzheimer's, Cancer, Cardiovascular, Infectious Diseases, and
Neurology and are based on an intellectual property position that, we believe,
is both broad and strong. We expect to apply to the U.S. FDA for and receive IND
status (Investigational New Drug) for certain technologies to initiate human
trials that may commence in the future. We have concentrated our efforts on
Samaritan Research Laboratories, our research collaboration with Georgetown
University, setting up operations, increasing efficiencies, and streamlining
structure.
Samaritan Pharmaceuticals
Product Pipeline
xxx = Completed x = In Progress
Drug Candidates Patent Pre-Clinical IND Phase I Phase II Phase III
-----------------------------------------------------------------------------------------------------------------------------------
HIV.......................................... (SP-01) xxx xxx xxx xxx xxx
HIV...........................................(SP-10) xxx x
HIV.....................................(SP-02 to 50) xxx x
CNS - Alzheimer's (AD).......................(SP-222) xxx xxx xxx x
CNS - AD.....................................(SP-233) xxx x
CNS - AD..............................(SP-234 to 250) xxx
CNS - AD .....................................(SP-04) xxx x
CNS - AD/Stem Cell Therapy...................(SP-sc2) xxx x
CNS - AD/Stem Cell Therapy...................(SP-sc4) xxx x
CNS - AD/Stem Cell Therapy...................(SP-sc7) xxx x
Cancer............................(SP-222c to SP250c) xxx x
Cardio/Cholesterol Drug.....................(SP-1000) xxx xxx
In Vitro In Vivo
Pharmacologic AD Rat Mode Testing Testing
------------------------- -------- ----------
Alzheimer's Rat Model (New Drug Test) xxx xxx
Diagnostics
------------
Breast Cancer (BC Tumor Agress-Analysis) xxx xxx x
Alzheimer's ....(AD Blood Test Diagnostic) xxx xxx x
Alzheimer's Generation I........................ xxx xxx
Alzheimer's Generation II...................... xxx xxx
-9-
We have a series of therapeutic projects either in "discovery research",
"preclinical trials", "product development" or "clinical development"; and we
utilize these formal stages of product progression to track progress,
performance, competition, and cost for each project. Our research programs are
aimed at satisfying defined medical needs in the areas of Alzheimer's, Cancer,
Cardiovascular, Infectious Diseases, and Neurology and are based on an
intellectual property position that, we believe, is both broad and strong.
Several of our development programs involve ex vivo technologies in which
patients' tissues are manipulated outside the body and, as such, may be less
costly to investigate and quicker to develop than in vivo agents. We expect to
apply to the U.S. FDA for and receive IND status (Investigational New Drug) for
certain technologies to initiate human trials that may commence in the future.
We have concentrated our efforts on, setting up the operations, increasing
efficiencies, and streamlining structure. We have an impressive portfolio of
technology and opportunities, each of which must compete for resources and
priority status.
A key currency, in the biotechnology and pharmaceutical market, is intellectual
property. Our intellectual property activity has been, and continues to be, the
acquisition of patents, development and patent maintenance, directly in support
of our product development. We continue to expend significant funds and efforts
on licensed technology and patent protection. In addition, we are continually
examining our intellectual property positions in relation to competitive
activities and our ability to operate and defend our patent positions in
relation to products. We believe that this is a key value element for our
continued development.
Research Agreement
On June 8, 2001, Samaritan Pharmaceuticals signed a seven-year research
collaboration agreement with Georgetown University. The objectives of the
Georgetown University Samaritan Pharmaceuticals research collaboration are (1)
to develop "one molecule" drugs and extend clinical studies to in vivo
experiments in animal models simulating Alzheimer's disease, (2) to develop an
accurate, reliable diagnostic for nuero-degeneration (Alzheimer's), and (3) to
focus on new drug development in Oncology and Neurology with the ability to
protect the brain from neuronal damage and tumor growth.
Under the agreement, Samaritan receives worldwide exclusive rights to any novel
therapeutic agents or diagnostic technologies that may result from the research
collaboration directed by Dr. Janet Greeson and Dr. Vassilios Papadopoulos with
their team research professionals (including five Ph.D. level research
scientists) who have expertise in the fields of endocrinology, pharmacology,
cell biology, organic and steroid chemistry and computer modeling. In
consideration, Samaritan shall pay to Georgetown University royalties for said
technology but in connection with the calculation of the amount of any royalty
payments due hereunder, Samaritan is required to receive credit for any and all
costs, expenses and/or fees related to patent prosecution, maintenance and
enforcement, paid by Samaritan or its affiliates including any such amounts paid
by Samaritan to Georgetown University as a reimbursement therefore pursuant to
the Master Agreement; and costs, expenses and fees relating to product
development, clinical trials and the FDA approval process and/or any other
Regulatory Approval process but only to the extent that a sublicensee expressly
reimburses Samaritan for such costs, expenses and fees. It should also be noted
that each party shall have the right to terminate the Sponsored Research in the
event Dr. Greeson ceases to be the Chief Executive Officer of Samaritan or Dr.
Papadopoulos ceases to be the Principal Investigator and that each license
granted shall not be terminated or in any way effected if the sponsored research
is terminated. Each such license shall have its own termination provisions as
set forth in the respective license.
-10-
SP001 and its bioequivalent HIV drugs with promising Phase II results -- Early
data suggest it may act as an immunoregulator with improvement in viral load.
The analysis of data has been submitted to the FDA.
A Pharmacological (rat)model for Alzheimer's disease - Designed to be used by
pharmaceuticals and scientists, in which a four week treatment of a rat results
in its loss of memory and Alzheimer's disease-like brain pathology. This model
is ideal to screen Alzheimer's drugs for prevention, stabilization of the
disease and cures for Alzheimer's disease.
Alzheimer's disease compounds -- Compounds offer protection against beta-amyloid
neurotoxicity, a condition associated with Alzheimer's disease.
A peptide therapeutic that binds cholesterol -- Peptide can be used to clean the
blood of excessive cholesterol in acute high cholesterol conditions.
An Alzheimer's diagnostic kit -- A simple blood test that identifies specific
circulating brain steroids that have been oxidized in the brains of Alzheimer's
patients.
A breast cancer theranostic kit. -- A biopsy test that predicts the
aggressiveness of a breast cancer tumor which allows a physician, in a timely
manner, to recommend the best and possibly the least invasive treatment for a
patient.
Promising Alzheimer's Drug Candidates
Background for Alzheimer's thesis: Cortisol, the stress hormone, is the main
hormone associated with immunity, memorization and learning. Excessive cortisol
is well known to produce cognitive impairment.
Why do we care: It is estimated that 16 million Americans will be diagnosed with
Alzheimer's by 2050. Early diagnosis and treatment with Cortisol modulating
drugs before the onset of symptoms could possibly lengthen the progression of
Alzheimer's whereas a patient might die of natural causes rather than
Alzheimer's.
-11-
Promising Alzheimer's Drug Candidates:
-- SP001
-- SP010
-- SP222
-- SP223
-- SP232
-- SP238
Alzheimer's Related Patent Application Titles:
-- Neuroprotective spirostenol pharmaceutical compositions.
-- Methods and compositions for modulating serum cortisol levels.
Journals:
-- Journal of Neurochemistry, 2002, 83:1110-1119
-- Endocrine Society 2003, abstract.
Stem Cell Therapy for Alzheimer's, Neuron Differentiation
Background: Stem cell therapy, the manipulation of stem cells to combat disease,
is on the threshold of a new era in medicine. Neuronal stem cells can be induced
to rapidly differentiate to adult neuron cells as a novel treatment for
Alzheimer's.
Promising Stem Cell Drug Candidates:
-- SP222b
-- SP237
New Alzheimer's Pharmacologic (Rat) Model Tool:
Brand New Tool-Used by pharmaceuticals companies to test their preventive,
stabilizing or curative therapies under development for Alzheimer's. Advantage:
Pharmacologic. Only four weeks to induce full blown Alzheimer's disease compared
to lengthy transgenics.
Alzheimer's Predictive Diagnostic:
----------------------------------
Advantage: Simple blood test with 70% success rate.
Patent Title:
-- Neurosteroids: Markers of Alzheimer's disease pathology
Journals:
-- Neurobiology of Aging, 2003, 24:57-65.
-12-
AIDS Related Dementia Research and Drug Candidates
Background: Elevated cortisol levels are associated with many disease states of
which AIDS Related Dementia is included. SP001 and its bioequivalents could
change the way patients are treated, either as a single agent or in combination
with other conventional therapies for AIDS.
Promising AIDS and Related Dementia Drug Candidates:
-- SP001
-- SP010
-- SP014
-- SP016
-- SP017
Patent and Patent Application Titles:
-- Protected Complex of Procaine...
-- Composition of Anti-HIV Drugs and Anticortisol Compounds...
-- Methods and Compositions for Modulating Serum Cortisol Levels...
Proof of Concept HIV FDA Phase II Study Results
-- Tolerable, Immunoregulator with a decrease in viral load.
-- Statistically Significant
1. Decreased HIV symptoms (Whalen Scale-Quality of Life)
2. Decreased viral load.
Our Financial Position And Our Need To Raise Additional Capital
We are a biopharmaceutical company in a research and development stage. Since
our inception, we have primarily focused our resources on research and
development. To date, none of our proprietary products have reached a commercial
stage, and hence, we do not have, nor do we anticipate revenue in the near
future. As is normal for a biotechnology company, we have been unprofitable
since our inception and have incurred significant losses. These losses consist
primarily of research and related expenditures, marketing costs, consulting, and
administrative overhead and expenses, incurred while the Company seeks to
complete development of its products, which includes studies to obtain FDA final
approval. No significant revenues have been earned by the Company, or cash flow
from operations, to help pay these operating needs.
We will continue to have significant general and administrative expenses,
including expenses related to clinical studies, our collaboration with
Georgetown University, and patent prosecution. We plan to fund our operations
through a series of private placements and through our agreement with Fusion
Capital dated April 22, 2003, described below which should assist the Company in
meetings its cash needs, but there is no guarantee. Except for an agreement to
sell shares to Fusion Capital, discussed below, no commitment exists for
continued investments, or for any underwriting.
We have the right to receive $20,000 per trading day under the agreement with
Fusion Capital unless our stock price equals or exceeds $0.45, in which case the
daily amount may be increased at our option. Generally, Fusion Capital shall not
be obligated to purchase any shares of our common stock on any trading days that
the market price of our common stock is less than $0.10. Since we initially
registered 15,000,000 shares for sale by Fusion Capital pursuant to a prospectus
(excluding the total of 3,125,000 shares issuable to Fusion Capital as a
commitment fee), the selling price of our common stock to Fusion Capital will
have to average at least $0.67 per share for us to receive the maximum proceeds
of $10.0 million without registering additional shares of common stock. Assuming
a purchase price of $0.42 per share (the closing sale price of the common stock
on October 31, 2003) and the purchase by Fusion Capital of the full 15,000,000
shares under the common stock purchase agreement, proceeds to us would be
$6,300,000.
-13-
Even with our financing arrangement with Fusion Capital, we may require
substantial additional funds to sustain our operations and to grow our business.
The amount of which will depend, among other things, on the rate of progress and
the cost of our research and product development programs and clinical trial
activities, the cost of preparing, filing, prosecuting, maintaining and
enforcing patent claims and other intellectual property rights, and the cost of
developing manufacturing and marketing capabilities, if we decide to undertake
those activities. The clinical development of a therapeutic product is a very
expensive and lengthy process and may be expected to utilize $5 to $20 million
over a three to six year development cycle. We currently do not have available
the financial resources to complete the clinical development of any of our
therapeutic products without a strategic partner. Although we believe we could
license the manufacturing and marketing rights to our products in return for
up-front licensing and other fees and royalties on any sales, there can be no
assurance that we will be able to do so in the event we seek to do so. We need
to obtain additional funds to develop our therapeutics products and our future
access to capital is uncertain. The allocation of limited resources is an
ongoing issue for us as we move from research activities into the more costly
clinical investigations required to bring therapeutic products to market.
The extent we rely on Fusion Capital as a source of funding will depend on a
number of factors including, the prevailing market price of our common stock and
the extent to which we are able to secure working capital from other sources. If
obtaining sufficient financing from Fusion Capital were to prove prohibitively
expensive, we will need to secure another source of funding in order to satisfy
our working capital needs. Even if we are able to access the full $10.0 million
under the common stock purchase agreement with Fusion Capital, we may still need
additional capital to fully implement our business, operating and development
plans. Other than the agreement with Fusion Capital, we do not have any
commitments or arrangements to obtain any such funds and there can be no
assurance that any additional funds, whether through exercise of warrants and
stock options, additional sales of securities or collaborative or other
arrangements with corporate partners or from other sources, will be available to
us upon terms acceptable to us or at all. If we are unable to obtain additional
financing we might be required to delay, scale back or eliminate certain of our
research and product development programs or clinical trials, or be required to
license third parties to commercialize products or technologies that we would
otherwise undertake ourselves, or cease certain operations all together, any of
which might have a material adverse effect upon us. If we raise additional funds
by issuing equity securities, dilution to stockholders may result, and new
investors could have rights superior to holders of shares purchased in previous
offerings Should the financing we require to sustain our working capital needs
be unavailable or prohibitively expensive when we require it, the consequences
would be a material adverse effect on our business, operating results, financial
condition and prospects.
-14-
We have been able to substantially meet our cash needs during the past 12
months. We believe we will be able to continue to find avenues to obtain the
capital needed for our operations through private placements and by sale of our
shares to Fusion Capital.
On Oct. 28, 2003
Samaritan Pharmaceuticals Inc. (OTCBB:SPHC) and Samaritan Research Labs,
Georgetown University announced, it has submitted its Phase II clinical study
report, with positive data demonstrating statistical significance, for viral
load and quality of life, to the FDA.
Based on the encouraging results, Samaritan is in the process of developing a
Phase III clinical study regimen designed to attack the virus in new ways. Dr.
Janet Greeson, CEO of Samaritan Pharmaceuticals, stated "While AIDS related
deaths have declined; the number of people living with HIV still continues to
grow. We are attempting to design a Phase III trial that focuses on the most
pressing unmet medical needs in HIV therapeutics today." Dr. Greeson continued,
"When we complete the trial design, we intend to request an `End of Phase II
meeting' with the FDA which is normally granted within sixty days."
In addition to clinical advances, Samaritan, in collaboration with
Georgetown University, is making progress with its second HIV drug. It is
progressing through pharmacology and pharmacokinetic preclinicals trials,
with encouraging results. Samaritan's next step is to accomplish animal
studies to demonstrate safety and then file for an IND with the FDA in 2004
Proof of Concept (Phase I/II Clinical Study Report) Submitted to FDA
Phase III Study Design Being Prepared to Submit to FDA for End of Phase II
Meeting
Newly Identified Second HIV Drug Being IND Readied to Submit to FDA
On Oct. 7, 2003
Samaritan Pharmaceuticals Inc. and Samaritan Research Labs, Georgetown
University, announced, it has amended its research collaboration with Georgetown
University, to expand its scope of research to include a series of preclinical
studies to develop a simple diagnostic blood test for breast cancer. The
diagnostic blood test would potentially measure whether a breast cancer tumor is
aggressive in nature, that is, the likelihood of a cancerous tumor to
metastasize and spread cancer throughout the body. Samaritan, through its
collaboration with Georgetown University, currently has the exclusive license
for a breast cancer diagnostic that measures the aggressive behavior of breast
cancer cells in breast biopsies.
-15-
Why It Matters
To date, an invasive biopsy is the only way to determine if a potential trouble
spot is cancerous or benign. A non invasive blood test could be the first,
preferred, diagnostic tool; to predict whether a breast tumor is cancerous,
possibly being able to detect one single aggressive cancer cell, out of millions
of blood cells. Also, maybe just as importantly, it could be used as a measuring
tool to monitor the success of chemotherapy, radiation and other drug treatments
for aggressive cancer.
Dr. Janet Greeson, CEO of Samaritan Pharmaceuticals, stated, "We have the
highest regard for creativity of the Scientists at Georgetown U. and
enthusiastically support new innovative technologies that could potentially
affect all of our lives. If we increase our throughput in certain defined areas,
we're going to have more shots on the goal and increase our probability of
success."
What is Breast Cancer?
Click Here:
http://my.webmd.com/content/Article/45/1662_52434.htm?1662_00000_0000_f1_06#3
Cells in the body normally divide (reproduce) only when new cells are needed.
Sometimes, cells in a part of the body grow and divide out of control, which
creates a mass of tissue called a tumor. If the cells that are growing out of
control are normal cells, the tumor is called benign (not cancerous.) If
however, the cells that are growing out of control are abnormal and don't
function like the body's normal cells, the tumor is called malignant
(cancerous).
Cancers are named after the part of the body from which they originate. Breast
cancer originates in the breast tissue. Like other cancers, breast cancer can
invade and grow into the tissue surrounding the breast. It can also travel to
other parts of the body and form new tumors, a process called metastasis.
Basis for Research Expansion-Peer Reviewed Journals
Hardwick M, Fertikh D, Culty M, Li H, Vidic B, Papadopoulos V (1999)
Peripheral-type benzodiazepine receptor (PBR) in human breast cancer:
correlation of breast cancer cell aggressive phenotype with PBR expression,
nuclear localization, and PBR-mediated cell proliferation and nuclear transport
of cholesterol. Cancer Research, 59:831-842.
http://cancerres.aacrjournals.org/cgi/content/full/59/4/831
Papadopoulos V, Kapsis A, Li H, Amri A, Hardwick M, Culty M, Kasprzyk PG,
Carlson M, Moreau J-P, Drieu K (2000) Drug-induced inhibition of the
peripheral-type benzodiazepine receptor expression and cell proliferation in
human breast cancer cells. AntiCancer Research, 20:2835-2848.
http://www.ncbi.nlm.nih.gov/
(From this URL select 'PubMed' in the Search box and type '11062691' in the for
box and click on Go)
-16-
Hardwick M, Rone J, Han J, Haddad B, Papadopoulos V (2001) Peripheral-type
benzodiazepine receptor levels correlate with the ability of human breast cancer
MDA-MB-231 cell line ability to grow in SCID mice. International Journal of
Cancer, 94:322-327.
http://www3.interscience.wiley.com/cgi-bin/abstract/85007747/ABSTRACT
Hardwick M, Rone J, Barlow K, Haddad B, Papadopoulos V (2002) Peripheral-type
benzodiazepine receptor (PBR) gene amplification in MDA-231 aggressive breast
cancer cells. Cancer Genetics & Cytogenetics, 139:48-51.
http://www.sciencedirect.com/science...
Han Z, Slack SR, Li W, Papadopoulos V (2003) Expression of peripheral
benzodiazepine receptor (PBR) in human tumors: relationship to breast, colon and
prostate tumor progression. Journal of Receptor Research and Signal
Transduction, in press. Li W, Hardwick M, Papadopoulos V. Peripheral-type
benzodiazepine receptor (PBR) over expression and knock down in human breast
cancer cells indicate a role in tumor cell proliferation mediated by activation
of p21WAF1/CIP1 expression. Molecular Carcinogenesis, Submitted
On Sept. 17, 2003
Samaritan Pharmaceuticals Inc. and Samaritan Research Labs, Georgetown
University, announced it has engineered a scientific tool, a pharmacologic Rat
Model, for the testing of new Alzheimer's (AD) drugs. The model moves swiftly
through Alzheimer's disease, starting with the onset of AD symptoms and
finishing with Alzheimer's-like memory loss, in four weeks.
Why It Matters
New techniques and methodologies to produce animal models provide researchers
with ways to more efficiently study human disease, and the therapeutics that
hold promise for those diseases. The use of engineered animal models to explore
the selection of appropriate drug targets holds great promise in speeding the
development of valuable therapies. These models provide effective ways to test
new drug compounds, as well as aid in the weeding out of drug failures; 75
percent of the cost of drug development, is lost on drugs that fail late in the
research process.
Dr. Janet Greeson, CEO of Samaritan Pharmaceuticals, stated, "Rats serve as one
of the most important experimental animals, and provide more physiological data
than perhaps any other experimental animal." Dr. Greeson further stated,
"Companies need to get drugs to market faster; competitive pressures coupled
with the increasing costs of drug development, are forcing drug companies to
find new ways to rapidly screen drugs."
-17-
About Alzheimer's - www.Alzforum.org
Alzheimer disease is the leading cause of dementia among older people. An
estimated 10 percent of Americans over the age of 65 and half of those over age
85 have Alzheimer's. More than four million Americans currently suffer from the
disease, and the number is projected to balloon to 10-15 million over the next
several decades. Alzheimer's is now the third most expensive disease to treat in
the U.S., costing society close to $100 billion annually.
On Sept. 12, 2003
Samaritan Pharmaceuticals Inc. (OTCBB:SPHC), announced the formation of a
collaboration to provide free drugs to children with AIDS in Africa. Its
philanthropic arm, the Samaritan innovative Science Foundation (SISF), and A
Harvest Biotech Foundation International, Africa (AHBFI) today Why It Matters
UNICEF noted that while Africa accounts for only 12 per cent of the world's
population, it claims 43 per cent of the world's child deaths, 50 per cent of
maternal deaths in childbirth, 70 per cent of people living with HIV/AIDS, and a
staggering 90 percent of all children orphaned by AIDS.
Strategic Links to Africa
Dr. Wambugu, Executive Director of AHBFI is networked with numerous
organizations, one being, New Partnerships for Africa Development (NEPAD). Dr.
Wambugu, as a passionate believer in service to humankind, also serves on the
board of the Bill & Melinda Gates Foundation: Global Health Challenge and the
United Nations: Hunger Task Force, providing the collaboration with an
incredible strategic link to Africa.
Dr. Janet Greeson, CEO of Samaritan Pharmaceuticals and Chairman and Founder of
SIS Foundation stated, "Dr. Wambugu is awesome. Immediately, you sense her
passion for Africa, and it becomes contagious."
Humanitarian Purpose
The purpose of the collaboration is to concentrate on alleviating the
life-and-death challenges facing children and adults with AIDS in Africa.
Samaritan's HIV drug has proved promising, safe and effective through proof of
concept Phase II clinical human trials. Samaritan hopes to be able to offer this
drug, upon FDA approval, at a very low cost to suffering patients. SIS
Foundation Humanitarian Plan SISF proposes to work with Kenya, AHBFI Africa,
WHO, the UN, IntegriHeatlh, and NBC Africa Ltd. to conduct clinical trials first
in Kenya and then Johannesburg, Africa. Should these trials prove successful,
SISF will continue to work with its collaborative partners to make the drug
available to all sub-Saharan Africans with HIV.
About Samaritan Innovative Science Foundation
The SIS Foundation is an independent charitable foundation established by
Samaritan Pharmaceuticals, Inc. The Foundation's primary mission is, to
demonstrate a Samaritan love of humankind by relieving human misery and
suffering. SISF focuses on improving "quality of life" for the underserved and
the underprivileged, with a special emphasis on the children of the world with
AIDS. http://www.samaritanpharma.org
-18-
About A Harvest Biotech Foundation International
"A Harvest" is a non-profit organization incorporated in California, USA. It is
registered in Kenya and South Africa as a non-profit organization (NGO) and has
operational offices in the three countries. The Foundation is governed by a
Board of Directors with local, African and international experience.
http://www.ahbfi.org/biotech/
On Sept. 9, 2003
Samaritan Pharmaceuticals Inc. announced the launching of its philanthropic arm,
the Samaritan Innovative Science Foundation (SISF), an independent charitable
foundation. SISF defines its philanthropy, first, by striving to take action for
the public good; second, by demonstrating a Samaritan love of humankind,
pursuing efforts to enhance the well-being of humanity through acts of practical
kindness, or financial support of causes; and lastly, taking efforts to relieve
human misery and suffering, by focusing on improving the quality of life for the
underserved and the underprivileged children of the world. The United States
Internal Revenue Service has, recently informed SISF , that it has determined,
under section 501(a) of the Internal Revenue Code, it qualifies for
501(c)(3)(non-profit organization) status under section 509(a)(1) and 170
(b)(1)(A) (vi). This means that all contributions made to the SIS Foundation and
its supported projects are tax deductible for the donor. Dr. Janet Greeson, CEO
of Samaritan Pharmaceuticals and Chairman and Founder of SIS Foundation stated,
"This project is close to all of our hearts, here at Samaritan. Right from the
beginning, the board and the team, had a real desire to make a real difference,
with life saving drugs for children with AIDS." Eugene Boyle, CFO of Samaritan
Pharmaceuticals and Secretary and Founder of the SIS Foundation stated, "We are
really grateful to George Weaver in helping the Foundation receive its "Letter
of Determination" from the IRS. He has already filed for several Foundation
grants and plans to file for many more."
On Aug. 11, 2003
Samaritan Pharmaceuticals Inc. and Samaritan Research Labs, Georgetown
University, announced Georgetown University Medical Center has named Vassilios
Papadopoulos the new chair of the department of biochemistry and molecular
biology. Dr. Papadopoulos, Samaritan Pharmaceutical's Chief Scientific Officer,
currently is a professor of cell biology at Georgetown University. He is a
member of Georgetown's Lombardi Cancer Center and Center for Neural Injury and
Recovery, and also serves as the head of the Division of Hormone Research in the
Department of Cell Biology. Papadopoulos joined Georgetown in 1988 as a research
assistant professor of cell biology, and had advanced into three professorship
positions at Georgetown -- in the Departments of Biochemistry, Pharmacology,
Neuroscience -- over the course of 15 years before being appointed chair of
biochemistry. Papadopoulos studies the mechanisms of underlying steroid
biosynthesis. His work focuses on the mechanisms mediating the movement of
cholesterol across membranes in health and disease with direct application in
environmental toxicology, reproductive biology, endocrinology, aging,
Alzheimer's disease and breast cancer. Dr. Papadopoulos has published more than
120 peer-reviewed papers and given more than 100 invited presentations of his
work in academia, industry and national and international meetings. He has
served as an ad hoc peer reviewer for 50 scientific journals, numerous NIH study
sections, National and International review committees and is a member of
several professional societies including the American Society of Cell Biology,
the Endocrine Society, and the Society for the Study of Reproduction. A native
of Greece, Papadopoulos has studied in Greece, France, Australia and America,
and received his Ph.D. from the University Pierre and Marie Curie in Paris,
France. He is trilingual, speaking French, Greek, and English, has three
children, and is married to another Georgetown researcher, assistant professor
of Cell Biology Martine Culty, Ph.D.
-19-
On July 2, 2003
Samaritan Pharmaceuticals Inc., Samaritan Research Labs, Georgetown University,
announced it has completed licensing of several new discoveries for Alzheimer's,
under its Georgetown University collaboration with Samaritan Labs. Samaritan is
well-positioned to become a "force" in the treatment of Alzheimer's with
breakthrough compounds that could change the way patients are treated today,
Chairman and Chief Executive Officer, Dr. Janet Greeson, said at the company's
2003 Annual Meeting of Shareholders. Speaking to shareholders at one of the
largest shareholders meeting to date, Greeson noted that the combination of
Samaritan Pharmaceuticals and Georgetown University brings more than seven
technologies into Samaritan, rapidly moving along "a continuum of development"
to drive valuation and increase shareholder value. The continuum for value
begins with "in vitro" studies and ends with the more advanced "proof of
concept" Phase II studies in humans, to test a drug's safety and its ability to
prolong lives. "The research collaboration with Georgetown University has not
only given us a chance to dramatically increase our technology valuation but
also strengthened every aspect of, an already strong expertise with business
development, intellectual property, regulatory affairs, and governmental
grants," Greeson continued, "We are dedicated to driving valuation and will
continue to aggressively 'bridge' technology from Georgetown University to
potential pharmaceutical partners throughout the year
RISK FACTORS
The response to this item is incorporated by reference from the discussion
responsive thereto under the caption "Risk Factors" in our Form 10-KSB/A filed
October 9, 2003 and in our Form SB-2/A filed October 9, 2003.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based upon management's current expectations that are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in our forward-looking statements.
Such statements address the following subjects: our need for and ability to
obtain additional capital, including from the sale of equity and/or from federal
or other grant sources; our expected future losses; the sufficiency of cash and
cash equivalents; our ability to generate revenues; our ability to develop
commercially successful products, including our ability to obtain FDA approval
to initiate further studies of our potential products and our technologies; the
high cost and uncertainty of the research and development of pharmaceutical
products; the unpredictability of the duration and results of the U.S. Food and
Drug Administration's review of new drug applications; the possible impairment
of our existing, and the inability to obtain new, intellectual property rights
and the cost of protecting such rights as well as the cost of obtaining rights
from third parties when needed on acceptable terms; our ability to enter into
successful partnering relationships with respect to the development and/or
commercialization of our product candidates; our dependence on third parties to
research, develop, manufacture and commercialize and sell any products
developed; our ability to improve awareness and understanding of our company,
our technology and our business objectives; whether our predictions about market
size and market acceptability of our products will prove true; and our
understandings and predictions regarding the utility of our potential products
and our technology.
-20-
Statements in this report expressing our expectations and beliefs regarding our
future results or performance are forward-looking statements that involve a
number of substantial risks and uncertainties. When used in this quarterly
report the words "anticipate," "believe," "estimate," "expect," "intend," may
be," "seek," "plan," "focus," and "potential" and similar expressions as they
relate to the Company or its management are intended to identify such
forward-looking statements. Our actual future results may differ significantly
from those stated in any forward-looking statements. The company also undertakes
no duty to update forward-looking statements.
Item 3. Controls and Procedures
(a) Under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, we conducted an evaluation of our disclosure controls and procedures,
as such term is defined under Rule 13a-14(c) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), within 90 days of the
filing date of this report. Based on their evaluation, our principal executive
officer and principal accounting officer concluded that Samaritan's disclosure
controls and procedures are effective.
(b) There have been no significant changes (including corrective
actions with regard to significant deficiencies or material weaknesses) in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation referenced in paragraph (a)
above.
-21-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are, from time to time, involved in various legal proceedings in the ordinary
course of our business and are currently executing a settlement agreement signed
by all parties to resolve previously reported pending lawsuits. We believe based
on the settlement agreement that the resolution of any currently pending legal
proceedings, either individually or taken as a whole, will not have a material
adverse effect on our business, financial condition or results of operations.
Item 2. Changes in Securities.
Securities, unregistered, were sold by the Company in the third quarter of 2003
under an exemption from registration. The title of these securities was the
Common Stock of the Company. They were sold for cash unless otherwise noted in
this section. They were sold in private transactions to persons believed to be
of a class of private investors acting on their own comprised of "accredited
investors" (as such term is defined in Regulation D of the U.S. Securities and
Exchange Commission or "SEC") and a limited number of non-accredited investors.
All investors, to the best knowledge of the Company, not affiliated with the
Company, purchased the shares with a apparent investment intent. The Company
relied upon, among other possible exemptions, Section 4(2) of the Securities Act
of 1933, as amended. It's reliance on said exemption was based upon the fact
that no public solicitation was used by the Company in the offer or sale, and
that the securities were legended shares, along with a notation at the
respective transfer agent, restricting the shares from sale or transfer as is
customary with reference to Rule 144 of the SEC.
Management notes that stock was issued as follows during the three months ended
September 30, 2003
No. of shares Issued Pursuant To Price/valuation
------------- ------------------ ------------------
4,152,500 Sale of restricted stock $661,350
599,998 Sale of common stock $100,000
188,000 Subscriptions due at September 30, 2003 $ 28,200
The total offering price, during the third quarter as to these shares, was
$789,550 less expenses, estimated the total to be $12,227 for printing, legal,
postage, and other expenses related to respective offering.
The SEC declared effective the Company's registration statement on Form SB2,
Commission Registration No. 333-105818, on October 14, 2003 (as amended and
supplemented from time to time, "Registration Statement"). Under the
Registration Statement, certain selling shareholders may sell shares of Common
Stock, acquired from the Company. The Company will not receive any proceeds from
the sale of securities being offered by the selling shareholders under the
Registration Statement. The Company registered the shares for sale to provide
the selling shareholders with freely tradable securities, but the registration
of the shares does not necessarily mean that any of the shares will be offered
or sold by the selling shareholders. However, we may receive payments under
agreements relating to the shares and may receive proceeds from the exercise of
warrants. Such proceeds are intended for use as to working capital and other
corporate purposes. The Registration Statement registered a total of 15,000,000
shares (exclusive of the 3,125,000 shares issued to Fusion Capital as a
commitment fee) assuming Fusion Capital purchases all $10.0 million of common
stock. The amount of shares sold by the selling shareholders during this quarter
is believed to be 599,998 for aggregate proceeds of $100,000. The Company
received, under its agreements as noted above, proceeds of $100,000 and
incurred, in connection with the registration, estimated expenses of $12,227 for
legal, printing, and related offering expenses, with net proceeds to the Company
of approximately $87,773 used primarily for working capital, legal fees and for
payments to Georgetown University (again not from the sale of the securities
under the Registration Statement, but from agreements with the selling
shareholders).
-22-
Item 6. Exhibits and Reports on Form 8-K.
(b) Exhibits
Listed below are all exhibits filed as part of this report. Some exhibits are
filed by the Registrant with the Securities and Exchange Commission pursuant to
Rule 12b-32 under the Securities Exchange Act of 1934, as amended.
Exhibits
No. Description
----------------------------------------------------------------------
2.1......Agreement and Plan of Reorganization (1)
3.1......Articles of Incorporation, as amended and restated (6)
3.2......By-laws (3)
4.1......Form of common stock certificate (1)
4.2......2001 Stock Option Plan (4)
10.1.....Assignment between Linda Johnson and the Company dated September 6,
2000. (5)
10.2.....Assignment between Linda Johnson and Spectrum Pharmaceuticals
Corporation dated May 14, 1999. (5)
10.3.....Agreement containing the assignment of U.S. Patent Application
07/233,247 with improvements dated May 22, 1990. (5)
10.4.....Common Stock Purchase Agreement between Company and Fusion Capital
Fund II, LLC, dated April 22, 2003 (2)
10.5.....Registration Rights Agreement between Company and Fusion Capital
Fund II, LLC dated April 22, 2003. (2)
10.6 ....Agreement between Samaritan Pharmaceuticals, Inc. and Doug Bessert (5)
10.7.....Agreement between Samaritan Pharmaceuticals, Inc. and Eugene Boyle (5)
10.8.....Agreement between Samaritan Pharmaceuticals, Inc and Janet Greeson (5)
10.9.....Research Collaboration and Licensing Agreement between Georgetown
University and Samaritan Pharmaceuticals, Inc., dated June 8, 2001 (6)
-23-
10.9....Research Collaboration and Licensing Agreement between Georgetown
University and Samaritan Pharmaceuticals, Inc., dated June 8, 2001 (6)
------------------------------------------
(1)......Filed as an exhibit to Samaritan Pharmaceutical's Form 10-SB, filed on
July 21, 1999, and incorporated herein by reference.
(2)......Filed as an exhibit to Samaritan Pharmaceutical's Report on Form 8-K
filed on April 25, 2003, and incorporated herein by reference.
(3)......Filed as an exhibit to Samaritan Pharmaceutical's Annual Report on Form
10K- SB, filed on April 3, 2001, and incorporated herein by reference.
(4)......Filed as an exhibit to Samaritan Pharmaceutical's Schedule 14A filed on
April 3, 2001, and incorporated herein by reference
(5)......Filed as an exhibit to Samaritan Pharmaceutical's Quarterly Report on
Form 10- QSB filed on August 14, 2002, and incorporated herein by
reference.
(6)......Filed as an exhibit to Samaritan Pharmaceutical's Registration
Statement on Form SB-2 (SEC file number 333-105818) an incorporated
herein by reference.
-24-
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SAMARITAN PHARMACEUTICAL, INC
Dated: November 14, 2003 By: /s/Eugene Boyle
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Eugene Boyle, CFO, COO, Director
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