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 March 31, 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 68,720,622 shares issued and outstanding of the Common Stock
issued as of March 31, 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 March 31, 2003 2
Consolidated Statements of Operations for the period
from Inception (September 5, 1994) to March 31, 2003,
and for the Three Months Ended March 31, 2003 and 2002 3
Consolidated Statements of Stockholders' Equity (Deficit) for
the period from Inception (September 5, 1994) to
March 31, 2003 4-5
Consolidated Statements of Cash Flows for the period from
Inception (September 5, 1994) to March 31, 2003 and
for the Three Months Ended March 31, 2003 and 2002 6
Notes to Interim Financial Statements 7
Item 2. Management's Discussion and Analysis of Plan of Operations 8-13
Item 3. Controls and Procedures 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 14
Item 5. Other Information 14
Item 6. Exhibits 15
Signatures 16
PART I --- FINANCIAL INFORMATION
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31, 2003
ASSETS
CURRENT ASSETS:
Cash $ 288,525
Prepaid expense 7,350
-----------------
Total current assets 295,875
-----------------
FIXED ASSETS:
Furniture & equipment, at cost 90,219
Accumulated depreciation (53,154)
-----------------
37,065
-----------------
OTHER ASSETS:
Patent registration costs 199,776
Purchased technology rights, net of accumulated
amortization of $59,022 49,947
Deposits 15,720
-----------------
265,443
-----------------
TOTAL ASSETS $ 598,383
=================
LIABILITIES & SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 289,708
Accrued expenses, directors & officers 817,717
Common stock to be issued 214,700
Short-term borrowings 135,890
-----------------
Total current liabilities 1,458,015
LONG-TERM LIABILITIES
Deferred revenue 250,000
-----------------
1,708,015
-----------------
SHAREHOLDERS' DEFICIT:
Common stock, 100,000,000 share authorized at $.001
par value, 68,720,622 issued and outstanding 68,721
Additional paid in capital 17,253,569
Accumulated deficit (18,431,922)
-----------------
(1,109,632)
-----------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 598,383
=================
See accompanying notes to the consolidated 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 THREE MONTHS
ENDED MARCH 31, 2003 AND 2002
From For the Three
Inception Months Ended
(09/05/94) March 31,
To -----------------------------------
03/31/03 2003 2002
---------------- ---------------- ----------------
REVENUES: $ 50,000 $ - $ -
---------------- ---------------- ----------------
EXPENSES:
Research & development 4,089,036 187,695 161,014
Interest, net 47,619 3,947 6,369
General & administrative 13,379,870 439,998 406,569
Depreciation and amortization 1,103,177 6,337 129,029
Forgiveness of debt (137,780) - -
---------------- ---------------- ----------------
18,481,922 637,977 702,981
---------------- ---------------- ----------------
Net loss $ (18,431,922) $ (637,977) $ (702,981)
================ ================ ================
Earnings per share:
Basic & diluted $ (1.06) $ (0.01) $ (0.02)
================ ================ ================
Weighted average number of
shares outstanding:
Basic & diluted 17,379,383 66,635,265 40,527,334
See accompanying notes to the consolidated, financial statements (unaudited)
3
SAMARITAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION (SEPTEMBER 5, 1994) TO DECEMBER 31, 2002
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 3,010,000 3,010 - 297,990 - - - 301,000
Shares issued in cancellation
of accounts payable 1,160,714 1,161 - 161,339 - - - 162,500
Net loss - - - - - - (637,977) (637,977)
----------- -------- ---------- ---------- ----------- ------------ ----------- -----------
March 31, 2003 68,720,622 68,721 - $17,253,569 $ - $ - $(18,431,922) $(1,109,632)
=========== ======== ========== ========== =========== ============ =========== ===========
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 THREE MONTHS
ENDED MARCH 31, 2003 & 2002
From
Inception
(09/05/94)
CASH FLOWS FROM OPERATING ACTIVITIES: TO 3/31/2003 2003 2002
------------ ----- ----
Net loss $ (18,431,922) $ (637,977) $ (702,981)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 112,177 6,338 129,028
Expenses paid through issuance of stock 6,475,364 - 65,553
Stock options issued for services 664,544 - -
(Increase) decrease in assets: 990,072 - -
Prepaids & other current assets (20,591) (4,350) 13,667
Increase (decrease) in liabilities:
Deferred revenue 250,000 - -
Accounts payable & accrued expenses 1,815,537 79,937 (89,959)
--------------- ----------------- -----------------
NET CASH USED IN OPERATING ACTIVITIES (8,144,819) (556,052) (584,692)
--------------- ----------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology (108,969) - -
Purchase of furniture and equipment (90,219) (5,474) -
Patent registration costs (209,195) (2,410) (14,000)
--------------- ----------------- -----------------
NET CASH USED IN INVESTING ACTIVITIES (408,383) (7,884) (14,000)
--------------- ----------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrants 157,125 - -
Proceeds from debentures 642,120 - -
Proceeds from stock issued for cash 6,184,913 301,000 314,500
Common stock to be issued 408,250 214,700 28,000
Offering costs (11,071) - -
Short-term borrowings repayments (152,532) (21,065) (50,000)
Short-term borrowings 1,612,922 - 212,500
--------------- ----------------- -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,841,727 494,635 505,000
--------------- ----------------- ------------------
CHANGE IN CASH 288,525 (69,301) (93,692)
CASH AT BEGINNING OF PERIOD - 357,826 304,367
--------------- ----------------- -----------------
CASH AT END OF PERIOD $ 288,525 $ 288,525 $ 210,675
=============== ================= =================
NON-CASH FINANCING & INVESTING ACTIVITIES:
Purchase of net, non-cash assets of subsidiary
for stock $ 195 $ - $ -
Short-term debt and accounts payable retired through issuance
of stock $ 2,596,235 $ 162,500 $ -
Issuance of common stock, previously subscribed $ - $ - 5,000
See accompanying notes to the consolidated, financial statements (unaudited)
6
Samaritan Pharmaceuticals, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2003
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and pursuant to the
rules and regulations of the Securities and Exchange Commission. Accordingly,
these financial statements do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements.
The interim unaudited consolidated financial statements contained
herein includes, in management's opinion, all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the company's
financial position, results of operations, and cash flows for the periods
presented.
The results of operations for the interim period shown on this report
are not necessarily indicative of results for a full year. These financial
statements should be read in conjunction with the Company's consolidated
financial statements and notes for the year ended December 31, 2002 included in
the Company's Annual Report on Form 10-KSB.
2. Net Loss Per Share
Basic and diluted net loss per share available to common stockholders
has been calculated by dividing net loss by the weighted average number of
common shares outstanding during the period. All potential common shares have
been excluded from the calculation of weighted average common shares outstanding
since their inclusion would be anti-dilutive.
Stock options and warrants to purchase shares of common stock were
outstanding at March 31, 2003, but were not included in the computation of
diluted net loss per common share because they were anti-dilutive. The exercise
of options and warrants outstanding as of March 31, 2003, could generate
proceeds to the Company and could potentially dilute earnings per share in the
future.
7
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis should be read in conjunction
with the Financial Statements appearing elsewhere in this Registration Statement
and in conjunction with the discussion responsive thereto under the caption
"Management's Discussion and Analysis or Plan of Operation" in our Form 10-KSB
filed April 15, 2003. The company undertakes no duty to update forward-looking
statements.
Plan of Operations
We are a research and development biopharmaceutical company. 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. 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 have funded our operations
through a series of private placements and through our agreement dated November
2, 2000 with Fusion Capital. The Company believes potential private placements,
the new agreement with Fusion Capital dated April 22, 2003 described below, and
an eventual registered public offering, if successful, will assist the Company
in meetings its cash needs, but there is no guarantee. Except for an agreement
to sell shares to Fusion Capital Fund II, LLC.("Fusion Capital"), discussed
below, no commitment exists for continued investments, or for any underwriting.
The company has thus far been able to meet its capital needs, and believes that
its extensive discussions with various potential sources of funding may
eventually lead to funding agreements.
On April 22, 2003, Samaritan Pharmaceuticals , Inc. and Fusion
Capital Fund II, LLC, a Chicago-based institutional investor and Samaritan's
long-term financial partner, entered into a new $10 million Common Stock
Purchase Agreement. The previous Common Stock Purchase Agreement between
Samaritan and Fusion Capital dated November 2, 2000 expired by its original
terms.
Under the new Common Stock Purchase Agreement, Fusion Capital shall
buy from time to time over twenty-five months up to $10 million of Samaritan's
common stock. Samaritan has the right to control the timing and the amount of
stock sold to Fusion Capital with the purchase price based upon the market price
of Samaritan's common stock at the time of each sale without any discount.
Funding of the $10.0 million shall commence at Samaritan's discretion after
the Securities & Exchange Commission has declared effective a registration
statement covering the shares of common stock to be purchased by Fusion Capital.
The Board of Directors has directed the officers to file a Form SB-2
registration statement and are in the process of filing said registration
statement with the hope to have the SEC declared such registration statement
effective after it is filed. Given the Company has been able to substantially
meet its cash needs during the past 12 months, and management's estimation of
what may occur in the months ahead, the company believes it will be able to
continue to find avenues to obtain the capital needed for operations.
Summary of Research and Development
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. During the quarter ended March 31, 2003, we concentrated our efforts on
Samaritan Research Laboratories, our research collaboration with Georgetown
University, 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
patents, intellectual property. Our central 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.
8
The process of developing therapeutic drugs requires significant
research and product development, as well as, pre-clinical testing and clinical
human trials in order to gain FDA regulatory approval. These activities are
expected to result in continuing cash outflows. Furthermore we do not expect to
generate any meaningful product revenues from our biopharmaceutical programs
unless we partner a technology, receiving up-front payments and milestone
royalty payments and/or until a clinical candidate completes its clinical
trials, obtains regulatory approval for commercialization and is successfully
marketed. The risks of developing therapeutic products extend beyond technical
and clinical development. In particular, it involves intellectual property
rights, the need for substantial capital, competitive and medical economic
factors, all of which are continually changing. Any one or more of these factors
could cause us to fail to develop any commercially successful products.
We are seeking additional equity funding. If additional funds are
raised through the issuance of equity or convertible debt securities, the
percentage ownership of our stockholders will be reduced and our stockholders
may experience dilution. Samaritan Pharmaceuticals will also seek additional,
non-dilutive funding via grants and other similar sources; although to date,
Samaritan Pharmaceuticals has not been granted any monies from such funding
sources. As a small, newcomer to the biotech industry and as part of the several
thousand companies that constitute the public biotech industry, we are not well
known. We have initiated efforts to improve the awareness and understanding of
our company. We believe, despite the external market conditions, we will be able
to successfully accomplish this goal in the long run.
Press Release Highlights
On April 8, 2003, Samaritan Pharmaceuticals Inc., Samaritan Research
Labs and Georgetown University, announced they strengthened its scientific
technology pipeline by expanding its Georgetown University seven year Sponsored
Research Agreement with an additional financial commitment this year. These
funds shall be used by Samaritan Laboratories/Georgetown to screen for
additional new drug compounds, their binding capabilities to specific receptors
and their direct effects on mitochondrial function. Mitochondria are the key to
life and death. Quite possibly, the process of aging itself may be intimately
linked to mitochondria. A sampling of some major health disorders where
mitochondrial dysfunction may be linked to large segments of a diseased
population are Alzheimer's, Lou Gehrig's, Cancer, Heart disease, Parkinson's and
Type II Diabetes.
On April 3, 2003 Samaritan Pharmaceuticals Inc. announced it obtained
the services of Octagon Research Solutions, a regulatory consulting service
specializing in electronic regulatory submissions, clinical information
management, technical writing and dossier preparation. Samaritan hopes to
expedite its HIV drug time-to-market by using FDA preferred fully electronic
submissions which are FDA reviewer friendly. E-Submissions are increasingly
becoming a key component of the regulatory approval process and save both money
and precious time to regulatory approval.
On March 31, 2003 Samaritan Pharmaceuticals Inc., Samaritan Research
Labs and Georgetown University, announced today that its Chief Scientific
Officer, Dr. Vassilios Papadopoulos was interviewed and featured in BioPeople
Magazine-Therapy Focus, written by Allis Kane. In the article, Allis Kane
investigates current research approaches in the search for a cure of
Alzheimer's. Alzheimer's is a progressive, degenerative disease of the brain,
and is the most common form of dementia.
BioPeople Spring 2003 Excerpt regarding Samaritan and Stem Cells:
"The team of Dr. Vassilios Papadopoulos made a fortuitous discovery
that could potentially regenerate dormant stem cells in the brain. He is CSO of
Samaritan Pharmaceuticals and professor of cell biology, pharmacology and
neuroscience at Georgetown University, both based in Washington, DC. The
discovery was made while his group was investigating the effect of a series of
cholesterol derivatives on neural stem cells. 'We used the cells as a human
model for beta-amyloid neuroprotection and we found that some of the compounds
are not only neuroprotective in terms of beta-amyloid toxicity but in two weeks
will induce the differentiation of stem cells into adult neurons.'
9
Papadopoulos explains that this is a significant advantage over
retinoic acid, currently used for the maturation of stem cells, which is toxic
in vivo, and takes several months. 'Now we have a tool that not only protects
against beta-amyloid toxicity in the brain, but also switches on a mechanism in
the few stem cells that exist in the human brain to make them differentiate into
adult cells to replace, potentially, the neurons which have died,' he says.
Similar to Rhoades' suggestion that manipulation of neurotrophin
targets could promote both survival and regeneration, Samaritan's discovery has
a two-fold potential. When testing the steroid series, Papadopoulos came across
an important problem facing researchers in the field. Animal models of the
disease, such as the transgenic mouse model of Alzheimer's, are not accurate
analogues of the human disease. Papadopoulos says: 'Transgenic mice for
Alzheimer's disease have a few problems. First of all you need a year to two
years to develop the plaques, secondly (the mice) don't really lose their
memory, and thirdly their neurons never die.' Research on the drug series was
shelved temporarily while the teams looked for alternative animal models. They
believe that they have now got a rat model that is much more representative of
the human disease and the company is currently looking to secure the
intellectual property rights to the discovery. With this hurdle overcome,
Papadopoulos says his group has begun to assess the efficacy of its potential
treatments."
On March 7, 2003 Samaritan Pharmaceuticals Inc., Samaritan Research
Labs and Georgetown University, announced that its HIV Phase Ib/IIa clinical
trial data and analysis, conducted at, and led by Dr. Steven J. Brown, of the
AIDS Research Alliance, Los Angeles, CA, has been provided to Samaritan. These
clinical trial results will be submitted for publication to several medical
journals. To prevent denial of publication for reasons of "pre-publication," and
to preserve Samaritan's rights under our patent applications, the results will
be kept confidential, pending publication.
Phase II is a dose finding and "proof of concept" study conducted in a
relatively small number of carefully selected HIV patients, plus a
placebo-controlled group. In the Clinical trial, patients received several doses
of the test drug (dose finding) and the resulting data allowed researchers and
statisticians to make a quantitative assessment of drug effects. Samaritan
believes our HIV drug has future potential and is developing its strategy for
further development in Phase III.
On January 17, 2003 Samaritan Pharmaceuticals Inc., Samaritan Research
Labs and Georgetown University, announced the addition of Dr. Julio Garcia to
its highly esteemed Scientific Advisory Board. Dr. Garcia joins chair Dr.
Papadopoulos, of Georgetown University, Dr. Tillement of University of Paris,
France, Dr. Saldi of Fremont Clinics, Nevada, Dr. Varese, International
anti-aging pioneer, and various informal scientific advisors. Samaritan's
Scientific Advisory Board is involved in both new drug discovery and the
clinical aspects of patient trials.
Dr. Garcia is a graduate of the University of Illinois, Chicago School
of Medicine, and is a well regarded board certified plastic surgeon and
anti-aging expert in Las Vegas, NV. His scientific publications related to
Samaritan's work include "Reconstructive Surgery for Immuno-suppressed
Organ-Transplant Recipients" and "Cancer Immunology Immunotherapy."
Dr. Garcia has focused on anti-aging for numerous years and has gained
media attention with interesting topics, such as, "Just Say No, Joe - Coffee and
Its Effect on Aging", "Does Body Weight Affect Our Cancer Risk?" and "Don't Let
the Sands of Time Drop Through Your Hands, Anti-Aging Medicine - A Preventative
Approach."
Highlights of the main products or technologies closest to or ready for
out-licensing or commercialization:
(1) An HIV Drug with promising Phase II results.
----------------------------------------------------------
Early data suggest no serious side effects and (CD4) immune system
improvement. The analysis of data is presently being prepared for FDA
submission.
(2) A Pharmacological (rat) model for Alzheimer's disease.
---------------------------------------------------------------------
Four weeks treatment of a rat results in its loss of memory and
Alzheimer's disease-like brain pathology. This model is ideal for pharmaceutical
companies and scientists to screen their Alzheimer's drugs for prevention,
stabilization of the disease and cures for Alzheimer's disease.
(3) Alzheimer's disease compounds.
-----------------------------------------
Compounds offer protection against beta-amyloid neurotoxicity, a
condition associated with Alzheimer's disease.
10
(4) A Peptide therapeutic that binds cholesterol.
-------------------------------------------------------
Peptide can be used to clean the blood of excessive cholesterol in
acute high cholesterol conditions.
(5) 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.
(6) 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.
A. Drug Candidates
Drug Indication Synthesis & Biological Toxicity Mechanism Metabolism
Candidates Purification Testing Testing of Action
-----------------------------------------------------------------------
SP-10 HIV, xxxx xxxx xxxx xxxx In
Alzheimer's Progress
Cortisol
Disease
-----------------------------------------------------------------------
SP-02 HIV xxxx xxxx xxxx
to Alzhhemer's
SP-25
-----------------------------------------------------------------------
SP-26 HIV xxxx In
to Alzheimer's Progress
SP-50
-----------------------------------------------------------------------
SP-222 Alzheimer's, xxxx xxxx xxxx xxxx In
Neurode- Progress
generation
-----------------------------------------------------------------------
SP-222b Stem Cell xxxx xxxx xxxx xxxx In
Therapy Progress
-----------------------------------------------------------------------
SP-222c Cancer xxxx xxxx xxxx xxxx In
Progress
-----------------------------------------------------------------------
SP-233 Alzheimer's, xxxx xxxx xxxx xxxx In
Progress
-----------------------------------------------------------------------
SP-234 Alzheimer's xxxx In
To Neurode- Progress
SP-250 generation
-----------------------------------------------------------------------
SP-1000 Cholesterol xxxx xxxx
Reducer
-----------------------------------------------------------------------
SP-5000 Cancer xxxx In
Diagnosis, Progress
Treatment
-----------------------------------------------------------------------
HIV Drug
On March 7, 2003, Samaritan Pharmaceuticals Inc. and Samaritan
Research Labs, Georgetown University, announced that its HIV Phase Ib/IIa
clinical trial data and analysis, conducted at, and led by Dr. Steven J. Brown,
of the AIDS Research Alliance, Los Angeles, CA, has been provided to Samaritan.
These clinical trial results will be submitted for publication to
several medical journals. To prevent denial of publication for reasons of
"pre-publication," and to preserve Samaritan's rights under our patent
applications, the results will be kept confidential, pending publication.
Phase II is a dose finding and "proof of concept" study conducted in
a relatively small number of carefully selected HIV patients, plus a
placebo-controlled group. In the Clinical trial, patients received several doses
of the test drug (dose finding) and the resulting data allowed researchers and
statisticians to make a quantitative assessment of drug effects. Samaritan
believes our HIV drug has future potential and is developing its strategy for
further development in Phase III. In evaluating the company's statements about
Samaritan's HIV drug, you should specifically consider various factors,
including the risks outlined in "Risk Factors."
11
B. Animal Testing Models for Alzheimer's
Samaritan is conducting research and development of pharmacologic
rat models for Acute Alzheimer' and Chronic Alzheimer's. We are currently doing
in-vitro validation and in-vivo testing with animal models. The models, if
successful, will allow efficacy testing for new therapies.
C. Diagnostics/Theranostics
One of the major problems with the diagnosis and treatment of
diseases is the inability of clinicians to determine the onset of disease,
thereby enhancing a doctor's ability to prescribe therapy. Samaritan is
conducting research and development of diagnostic kits whereby the onset of
diseases can be detected. Our diagnostics also requires FDA approval before we
can market them to the public. We are applying to the FDA for IDE's in the near
future. The following is a chart of our progress to date.
In Vitro Human Testing Human Testing
Test Testing (Small Test Group) (Large Sample Size)
---------------- -------- ---------------- ------------------
Breast Cancer Completed Completed Completed
(BC Aggress-Analysis)
Alzheimer's
(AD Predict-Analysis) Completed Completed In Progress
Alzheimer's In Progress
Generation II
Alzheimer's In Progress In Progress
Generation III
As normal for a biotechnology company, we have incurred research and
development stage losses since our inception. 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 product, 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.
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 filed April 15, 2003.
FORWARD-LOOKING STATEMENTS
This report and other oral and written statements made by us to the
public 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.
12
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 Form
10-QSB, 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. As a result of the
foregoing and other factors, we may experience material fluctuations in future
operating results on a quarterly or annual basis which could materially and
adversely affect our business, financial condition, operating results and stock
price. We are not under any duty to update any of the forward-looking statements
in this report to conform these statements to actual results, unless required by
law. For further information, refer to the more specific risks and uncertainties
discussed above and throughout this report.
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.
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.
13
Item 2. Changes in Securities.
Securities, unregistered, were sold by the Company in the first
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 an 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
March 31, 2003
No. of shares Issued Pursuant To Price/valuation
------------- ------------------ ---------------
1,160,714 In settlement of accounts payable $ 162,500
3,010,000 Sale of restricted stock $ 301,000
The total offering price, during the first quarter as to these shares, was
$463,500, less expenses, estimated to be a total of $9,500 for printing, legal,
postage, and other expenses related to respective offering.
On April 3, 2003, the Company's registration statement on Form SB-2,
Commission Registration No. 333-52296 effective on December 20, 2000 (as amended
and supplemented from time to time, "Registration Statement" expired by its
original terms. The Company's net proceeds from said registration statement was
$609,747.34.
Item 5. Other Information.
Samaritan Pharmaceuticals Inc., will host its Annual Meeting of
shareholders at 10 a.m. on Friday, June 27, 2003 at the Sterling Club, Turnberry
Towers, 2827 Paradise Rd., Las Vegas, Nevada. Also, Scientists from Samaritan
Research Labs, Georgetown University will make a presentation "Targeting
Innovative Therapies to Treat and Prevent Memory Loss and Alzheimer's."
14
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K.
On April 22, 2003, Samaritan Pharmaceuticals , Inc. and Fusion
Capital Fund II, LLC, a Chicago-based institutional investor and Samaritan's
long-term financial partner, entered into a new $10 million Common Stock
Purchase Agreement. The previous Common Stock Purchase Agreement between
Samaritan and Fusion Capital dated November 2, 2000 by its original terms
expired.
Under the new Common Stock Purchase Agreement, Fusion Capital shall
buy from time to time over twenty-five months up to $10 million of Samaritan's
common stock. Samaritan has the right to control the timing and the amount of
stock sold to Fusion Capital with the purchase price based upon the market price
of Samaritan's common stock at the time of each sale without any discount.
Funding of the $10 million shall commence at the Samaritan's discretion after
the Securities & Exchange Commission has declared effective a registration
statement covering the shares of common stock to be purchased by Fusion Capital.
(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 (5)
3.2 By-Laws (3)
4.1 Form of common stock certificate (1)
4.2 1997 Stock Option Plan (1)
4.3 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 Agreement between AIDS Research Alliance Agreement and the
Company dated March 5, 1999 (1)
10.5 Common Stock Purchase Agreement between Company and Fusion
Capital Fund II, LLC, dated April 22, 2003 (2)
10.6 Registration Rights Agreement between Company and
Fusion Capital Fund II, LLC, dated April 22, 2003 (2)
10.7 Agreement between Samaritan Pharmaceuticals, Inc. and Doug Bessert (5)
10.8 Agreement between Samaritan Pharmaceuticals, Inc. and Eugene Boyle (5)
10.9 Agreement between Samaritan Pharmaceuticals, Inc and Janet Greeson (5)
14.1 Code of Ethics (7)
16.1 Letter on change in certifying accountant (6)
21.1 List of Subsidiaries (1)
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
99.3 Certification of Vice President
(1) Filed as an exhibit to Form 10-SB, including any amendments, on July 21,
1999 and incorporated herein by reference.
(2) Filed as an exhibit to Form 8-K, including any amendments, on April 25,
2003, and incorporated herein by reference.
(3) Filed as an exhibit to Form 10KSB, including any amendments, on April 3,
2001 and incorporated herein by reference.
(4) Filed as an exhibit to DEF 14 A, including any amendments, on April 3, 2001
and incorporated herein by reference
(5) Filed as an exhibit to 10-QSB, including any amendments, on August 14, 2002
and incorporated herein by reference.
(6) Filed as an exhibit to Form 8-K, on September 27, 2002 and incorporated
herein by reference
(7) Filed as an exhibit to 10-KSB, including any amendments, on April 15, 2003
and incorporated herein by reference
15
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: 15 May 2003 By: /s/ Eugene Boyle
---------------------------------
Eugene Boyle, CFO, COO, Director
16
CERTIFICATIONS
I, Janet Greeson CEO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Samaritan
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: 15 May 2003
/s/ Janet Greeson C.E.O
-----------------------
Janet Greeson C.E.O
CERTIFICATIONS
I, Eugene Boyle CFO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Samaritan
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: 15 May 2003
/s/Eugene Boyle CFO
Eugene Boyle CFO
CERTIFICATION
I, Doug Bessert, Vice President, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Samaritan
Pharmaceuticals, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: 15 May 2003
/s/ Doug Bessert
Doug Bessert VP