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Liquidity and Going Concern
3 Months Ended
Mar. 31, 2012
Liquidity and Going Concern [Abstract]  
Liquidity and Going Concern Disclosure [Text Block]

5. Liquidity and Going Concern

 

The Company has experienced recurring losses from operations, and, as of March 31, 2012, had a working capital deficit of $23.8 million and a deficit accumulated during the development stage of $261.9 million.

 

Since 2004, Toucan Capital Fund II, L.P. (“Toucan Capital”), Toucan Partners LLC (“Toucan Partners”), entities controlled by Ms. Linda Powers, the managing director of Toucan Capital and managing member of Toucan Partners, and Ms. Linda Powers (collectively “Toucan”) have provided substantial funding to the Company. During the period from 2004 to 2007, the funding consisted of various loans and the purchase of common stock. Under a Conversion Agreement during 2007, all loans payable to Toucan outstanding at the time were converted to preferred stock and the preferred stock was subsequently converted to common stock. As a result of additional loans, as of March 31, 2012, notes payable include $4.6 million convertible notes payable to Toucan. The notes payable to Toucan outstanding as of March 31, 2012, are convertible at prices ranging from $0.20 to $0.57.

 

In addition, the Company utilizes the services of Cognate BioServices, Inc., an entity controlled by Toucan, for manufacturing DCVax product candidates, regulatory advice, research and development preclinical activities, and managing clinical trials. Accounts payable to Cognate BioServices, Inc. amounted to $0.8 million at March 31, 2012. As of March 31, 2012, the Company has a loan payable to Artecel, an entity also controlled by Toucan, amounting to $734,000. The Company and Artecel have not yet agreed to payment terms.

 

As a result of this financing activity, as of March 31, 2012, Toucan held 71,202,148 shares of common stock, representing approximately 44.7% of the common stock outstanding. Further, as of March 31, 2012, Toucan, beneficially owned (including unexercised warrants) 111,580,839 shares of common stock, representing a beneficial ownership interest of approximately 69.3%.

 

In addition to financing obtained from Toucan and related entities, the Company has raised additional capital by issuing common stock and debt securities. As of May 7, 2012 the Company had approximately $0.3 million of cash on hand. The Company will need to raise additional capital in the near future to continue to fund its clinical trials and other operating activities and there can be no assurance that its efforts to seek such funding will be successful. The Company may seek funding from Toucan Capital or Toucan Partners or their affiliates or other third parties. Such parties are under no obligation to provide the Company with any additional funds, and any such funding may be dilutive to stockholders and may contain restrictive covenants. The Company is currently exploring additional financings with several other parties; however, there can be no assurance that the Company will be able to complete any such financings or that the terms of such financings will be attractive to the Company. If the Company’s capital raising efforts are unsuccessful, its inability to obtain additional cash as needed could have a material adverse effect on the Company’s financial position, results of operations and the Company’s ability to continue its existence.