Apthera Acquisition

6 Months Ended

Jun. 30, 2011

Apthera Acquisition [Abstract]

Apthera Acquisition

2. Apthera Acquisition

     On April 13, 2011, the Company completed its acquisition of Apthera, Inc., a Delaware corporation (“Apthera”) under an Agreement and Plan of Merger entered into on March 31, 2011. Subject to the terms and conditions of the merger agreement, the Company’s wholly owned subsidiary formed for this purpose was merged with and into Apthera, with Apthera surviving as a wholly-owned subsidiary of the Company. Under the merger agreement, the Company issued to Apthera’s stockholders approximately 5.0 million shares of common stock of the Company and agreed to make future contingent payments of up to $32 million based on the achievement of certain development and commercial milestones relating to the Company’s NeuVax product candidate. The contingent consideration is payable, at the election of the Company, in either cash or additional shares of common stock, provided that the Company may not issue any shares in satisfaction of any contingent consideration unless it has first obtained approval of its stockholders in accordance with Rule 5635(a) of the NASDAQ Marketplace Rules.

     In connection with the merger, the Company deposited with a third-party escrow agent certificates representing 10% of the Aggregate Stock Consideration, which shares will be available to compensate the Company and related parties for certain indemnifiable losses as described in the merger agreement.

     The Company’s acquisition of Apthera was in concert with the decision by the Company’s Board of Directors to diversify its development programs and to become a late stage clinical development company. The Company believes that acquiring Apthera will enhance its long-term prospects by giving the Company access to a late stage product candidate, NeuVax, which is expected to enter a Phase 3 clinical trial under an FDA-approved Special Protocol Assessment (“SPA”) for the adjuvant treatment of early stage HER2 breast cancer in the first half of 2012. To do so, the Company must satisfy certain FDA information requirements to be released from a partial clinical hold to commence the Phase 3 trial. Based on Apthera’s prior clinical trials, the Company also believes that NeuVax has the potential to treat other cancers, including prostate, bladder and ovarian cancers. With the Company’s increasing focus on its cancer product candidates, the Company is assessing its strategic options with respect to its RNAi therapeutics technology platform.

The purchase price consideration and allocation of purchase price was as follows:

	(in 000’s)
Calculation of allocable purchase price(i):
Fair value of shares issued at closing including escrowed shares expected to be released	$	6,367	(ii)
Estimated value of earn-out		6,460
Total allocable purchase price	$	12,827
Estimated allocation of purchase price(i):
Cash	$	168
Prepaid expenses and other current assets		14
Equipment and furnishings		11
Goodwill		845
In-process research and development		12,864
Accounts payable		(931	)
Accrued expenses and other current liabilities		(143	)
Notes payable		(1	)
	$	12,827

(i)	The purchase price allocation has not been finalized and is subject to change upon completion of the valuation of intangible assets.
(ii)	The value of the Company’s common stock was based upon a per share value of $1.28, the closing price of the Company’s common

stock as of the close of business on April 13, 2011.

The following presents the pro forma net loss and net loss per common share for the three and six months ended June 30, 2011 and 2010 of the Company’s acquisition of Apthera assuming the acquisition occurred as of January 1, 2010:

	For the Three Months Ended June 30,
	2011			2010
Net loss	$	(1,824	)	$	(2,677	)
Net loss per common share	$	(0.05	)	$	(0.11	)
Weighted average shares outstanding		39,224,425			23,345,898

	For the Six Months Ended June 30,
	2011			2010
Net loss	$	(6,221	)	$	(7,104	)
Net loss per common share	$	(0.19	)	$	(0.32	)
Weighted average shares outstanding		32,295,834			22,358,696