UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities and Exchange Act of 1934
Date
of Report (date of earliest event reported):
September
17, 2007
NILE
THERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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333-55166
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88-0363465
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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2850
Telegraph Avenue, Suite #310
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Berkeley,
CA
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94705
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(510)
281-7700
(Former
name or former address, if changed since last report)
SMI
Products, Inc.
122
Ocean Park Blvd.
Suite
307
Santa
Monica, California 90405
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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SAFE
HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This
current report on Form 8-K (this Report) contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 (the Securities
Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act).
The
forward-looking statements are only predictions and provide our current
expectations or forecasts of future events and financial performance and may
be
identified by the use of forward-looking terminology, including the terms
“believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,”
“will” or “should” or, in each case, their negative, or other variations or
comparable terminology, though the absence of these words does not necessarily
mean that a statement is not forward-looking. Forward-looking statements include
all matters that are not historical facts and include, without limitation,
statements concerning our business strategy, outlook, objectives, future
milestones, plans, intentions, goals, future financial conditions, our research
and development programs and planning for and timing of any clinical trials,
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possibility, timing and outcome of submitting regulatory filings for our
products under development, potential investigational new drug applications,
or
INDs, and new drug applications, or NDAs, research and development of particular
drug products, the development of financial, clinical, manufacturing and
marketing plans related to the potential approval and commercialization of
our
drug products, and the period of time for which our existing resources will
enable us to fund our operations.
We
intend
that all forward-looking statements be subject to the safe-harbor provisions
of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are subject to many risks and uncertainties that could cause our actual results
to differ materially from any future results expressed or implied by the
forward-looking statements. Examples of the risks and uncertainties include,
but
are not limited to:
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the
risk that we may not successfully develop and market our products,
and
even if we do, we may not become
profitable;
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risks
relating to the progress of our research and
development;
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risks
relating to significant, time-consuming and costly research and
development efforts, including pre-clinical studies, clinical trials
and
testing, and the risk that clinical trials may be delayed, halted
or fail;
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risks
relating to the rigorous regulatory approval process required for
any
products that we may develop independently, with our development
partners
or in connection with our collaboration arrangements;
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the
risk that changes in the national or international political and
regulatory environment may make it more difficult to gain U.S. Food
and
Drug Administration,(FDA) or other regulatory approval of our drug
product
candidates;
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risks
that the FDA or other regulatory authorities may not accept any
applications we file;
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risks
that the FDA or other regulatory authorities may withhold or delay
consideration of any applications that we file or limit such applications
to particular indications or apply other label
limitations;
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risks
that, after acceptance and review of applications that we file, the
FDA or
other regulatory authorities will not approve the marketing and sale
of
our drug product candidates;
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risks
relating to our drug manufacturing operations, including those of
our
third-party suppliers and contract
manufacturers;
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risks
relating to the ability of our development partners and third-party
suppliers of materials, drug substance and related components to
provide
us with adequate supplies and expertise to support manufacture of
drug
product for initiation and completion of our clinical studies;
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risks
relating to the transfer of our manufacturing technology to third-party
contract manufacturers;
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the
risk that recurring losses, negative cash flows and the inability
to raise
additional capital could threaten our ability to continue as a going
concern;
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other
risks and uncertainties detailed in “Risk Factors” and in the documents
incorporated by reference in this
report.
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Pharmaceutical
and biotechnology companies have suffered significant setbacks in advanced
clinical trials, even after obtaining promising earlier trial results. Data
obtained from such clinical trials are susceptible to varying interpretations,
which could delay, limit or prevent regulatory approval. Except to the extent
required by applicable laws or rules, we do not undertake to update any
forward-looking statements or to publicly announce revisions to any of our
forward-looking statements, whether resulting from new information, future
events or otherwise.
ITEM
2.01
1. CHANGES
IN CONTROL OF REGISTRANT
The
disclosures set forth under Item 2 are incorporated by reference into this
Item 1.
2. COMPLETION
OF ACQUISITION OR DISPOSITION OF ASSETS
Closing
of Merger
Pursuant
to the merger agreement dated August 15, 2007 (Merger
Agreement),
between SMI Products, Inc. (SMI),
Nile
Merger Sub., Inc., a Delaware corporation and wholly-owned subsidiary of SMI
(Nile
Merger Sub),
and
Nile Therapeutics, Inc., a Delaware corporation (Old Nile),
on
September 17, 2007, Nile Merger Sub merged with and into Old Nile, with Old
Nile
remaining as the surviving entity and a wholly-owned operating subsidiary of
SMI. SMI’s entry into the Merger Agreement was disclosed on SMI’s Current Report
on Form 8-K filed with the SEC on August 17, 2007. On September 17, 2007, SMI
filed a Certificate of Ownership with the Secretary of State of the State of
Delaware pursuant to which Old Nile, SMI’s wholly-owned subsidiary by virtue of
the Merger, merged with and into SMI with SMI remaining as the surviving
corporation to that merger. In connection with that short-form merger, and
as
set forth in the Certificate of Ownership, we changed our corporate name to
“Nile Therapeutics, Inc.” (referred to throughout this Report as “Nile”). The
Certificate of Ownership is filed with the Secretary of State of the State
of
Delaware. These two transactions are referred to throughout this Report as
the
“Merger.”
Unless
the context otherwise requires, hereafter in this report the terms the
“Company,” “we,” “us,” or “our” refer to Nile, after giving effect to the
Merger.
Each
share of common stock, par value $0.001 per share of Old Nile (Old Nile
Common Stock),
that
was outstanding immediately prior to the Merger was cancelled or exchanged
for
2.758838 shares of SMI’s common stock, par value $0.001 per share (the SMI
Common
Stock),
and
one share of Old Nile Common Stock was issued to SMI. Simultaneously, SMI issued
to the former holders of Old Nile Common Stock in exchange for their shares
of
Old Nile Common Stock, an aggregate of 22,849,716 shares of SMI Common Stock,
making Old Nile a wholly-owned subsidiary of SMI. In addition, all securities
convertible into or exercisable for shares of Old Nile Common Stock outstanding
immediately prior to the Merger were cancelled, and the holders thereof received
similar securities for the purchase of an aggregate of 3,572,350 shares of
SMI
Common Stock. In addition to the 755,100 shares of SMI Common Stock that were
issued and outstanding prior to the effective time of the Merger, we also issued
494,900 shares of SMI Common Stock to Fountainhead Capital Partners Limited,
or
Fountainhead Capital, upon the conversion of $168,573 of convertible promissory
notes and accrued interest.
At
the
effective time of the Merger, our board of directors was reconstituted by the
resignation of Mr. Geoffrey Alison from his role as our sole director and the
appointment of Mr. Peter Strumph, Mr. Peter Kash, Mr. Joshua Kazam, Mr. David
Tanen, and Dr. Paul Mieyal as directors (all of whom were directors of Old
Nile
immediately prior to and after the Merger). Our executive management team also
was reconstituted following the resignation of Mr. Alison as SMI’s president,
and new officers were appointed in place of our former officers. See
“Directors
and Executive Officers, Promoters and Control Persons.”
The
former holders of Old Nile Common Stock now beneficially own approximately
95%
of the outstanding shares of our capital stock. Accordingly, the Merger
represents a change in control. As of the date of this report, there are
24,099,716 shares of SMI Common Stock outstanding. For accounting purposes,
the
Merger has been accounted for as an acquisition of SMI and a recapitalization
of
Old Nile, with Old Nile as the accounting acquirer (legal acquiree) and SMI
as
the accounting acquiree (legal acquiror). Unless the context otherwise requires,
we refer to the SMI Common Stock following the Merger as Nile Common
Stock.
Recent
Financings
On
March
28, 2006, Old Nile issued to certain qualified investors 6% Convertible
Promissory Notes in the aggregate principal amount of approximately $4,000,000
(the 6% Notes). The 6% Notes provided that upon the closing of any equity
financing in excess of $5,000,000 (a Qualified Financing), the 6% Notes would
automatically convert into the same securities issued by Old Nile in the
Qualified Financing (Conversion Shares), in an amount determined by dividing
the
principal amount of the 6% Notes, and all accrued interest thereon, by 90%
of
the price per share sold in the Offering (as such term is defined below) (the
Offering Price). In addition, upon conversion, Old Nile agreed to issue to
the
holders of the 6% Notes five-year warrants (Conversion Warrants), to purchase
a
number of shares of Nile Common Stock equal to 10% of the Conversion Shares
at
an exercise price equal to the Offering Price.
On July
24, 2007, Old Nile issued to Iota Investors, LLC an 8% Promissory Note (the
8%
Promissory Note) in the aggregate principal amount of $1,500,000, which has
been
repaid in full, together with a premium of $120,000. In addition, Old Nile
paid
the investor $30,000 (2%) out of the proceeds of that financing.
As
a
condition to the closing of the Merger, on September 11, 2007, Old Nile
completed a financing whereby it received gross proceeds of $19,974,747 through
the sale of 2,522,064 shares of Old Nile Common Stock in a private placement
to
certain qualified investors (the Offering). Contemporaneously with the Offering,
the 6% Notes converted into 610,433 Conversion Shares and the 6% Noteholders
received Conversion Warrants to purchase an aggregate of 61,028 shares of Old
Nile Common Stock.
The
issuance and sale of the promissory notes and other instruments described above
were made pursuant to privately negotiated transactions that did not involve
a
public offering of securities and, accordingly, we believe that these
transactions were exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) thereof and the rules promulgated thereunder.
In
addition, we believe that the 8% Promissory Note is commercial paper and is
exempt from the registration requirements of the Securities Act under Section
3(a)3 thereof. Each of the above-referenced investors represented to us that
they were “accredited investors” (as defined by Rule 501 under the Securities
Act) and were acquiring the shares for investment and not distribution, that
they could bear the risk of loss of the investment and could hold the securities
for an indefinite period of time. The investors received written disclosures
that the securities had not been registered under the Securities Act and that
any resale must be made pursuant to a registration or an available exemption
from such registration. All of the foregoing securities are deemed restricted
securities for purposes of the Securities Act.
The
issuance of the SMI Common Stock to the shareholders of Old Nile in the Merger
was exempt from registration under the Securities Act pursuant to
Section 4(2) thereof. We have made this determination based on the
representations of the Old Nile shareholders and investors which included,
in
pertinent part, that such persons were either “accredited investors” or were
acting through a “purchaser representative,” each within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act, that
such persons were acquiring the shares of SMI Common Stock issued to them
pursuant to the Merger, for investment purposes for their own respective
accounts and not as nominees or agents, and not with a view to the resale or
distribution thereof in violation of the Securities Act, and that each person
understood that the shares of the SMI Common Stock issued in the Merger may
not
be sold or otherwise disposed of without registration under the Securities
Act
or an applicable exemption therefrom.
INFORMATION
REQUIRED PURSUANT TO FORM 10-SB
See
the “Glossary of Terms” included in this Report for definitions of certain
technical terms used in this report that are commonly used in the pharmaceutical
and biotechnology industries.
PART
I
1.
DESCRIPTION
OF BUSINESS
Business
of SMI
SMI
was
incorporated in the State of Nevada on June 17, 1996. On October 16, 2006,
SMI
changed its domicile to the State of Delaware. From inception through August
11,
2006, SMI was a development stage company in the business of internet real
estate mortgage services. From and after August 11, 2006, SMI ceased its prior
business. Upon completion of the Merger, we adopted Nile’s business plan.
Employees
SMI
had
no employees at the time of the Merger.
Business
of Nile
Organization
and Corporate History
Old
Nile
was incorporated in the State of Delaware on August 1, 2005, under the name
Nile
Pharmaceuticals, Inc. Old Nile changed its name to Nile Therapeutics, Inc.
on
January 18, 2007.
Business
in General
Our
company develops and commercializes innovative products for the treatment of
cardiovascular and metabolic disease. Our lead compound is CD-NP, a chimeric
natriuretic peptide in Phase I clinical studies for the treatment of heart
failure. We are also developing 2NTX-99, a pre-clinical small molecule,
anti-atherothrombotic agent with nitric oxide-donating properties.
CD-NP
CD-NP
is
a rationally-designed synthetic peptide developed by researchers at The Mayo
Foundation for Medical Education and Research, or Mayo, to incorporate the
optimal components of naturally occurring natriuretic peptides. CD-NP is a
selective NPRB
agonist
that has shown potent renal enhancement and cardiac unloading properties
in
vivo. Importantly,
however, CD-NP
appears to do so with minimal hypotensive effects as compared with competitive
products. In multiple preclinical studies, including a large animal model of
congestive heart failure, CD-NP demonstrated potent therapeutic activity
compared to Natrecor®,
a
natriuretic peptide currently marketed by Scios Inc. (a Johnson & Johnson
company) to treat acute heart failure, including producing less hypotension
then
Natrecor®
and
improving fluid unloading at equimolar doses.
We
recently completed a Phase Ia study in healthy volunteers to examine the safety
and pharmacodynamic effects of various doses of CD-NP. The study placed
particular emphasis on the effects of CD-NP on blood pressure and renal
function, and identifying a dose for use in later stage studies. Data from
this
first in-human study confirmed several preclinical findings, including that
CD-NP potently activated its target receptor in humans, preserved renal function
and caused increases in natriuresis (sodium excretion) and diuresis (urine
excretion) at doses associated with a minimal effect on mean arterial pressure.
Two additional comprehensive Phase Ib studies to assess the safety and
pharmacodynamic profile of CD-NP in heart failure patients are planned for
initiation in the fourth quarter of 2007.
2NTX-99
The
second molecule in our pipeline is 2NTX-99, a novel small molecule that has
been
shown in
vivo
and
in
vitro
to
inhibit the synthesis and action of thromboxane (TXA2),
enhance the production of prostacyclin (PGI2)
and
supply pharmacological amounts of nitric oxide (NO) to the vasculature.
TXA2,
produced by activated platelets, is believed to have prothrombotic properties,
stimulating activation of new platelets as well as increasing platelet
aggregation. TXA2
is
implicated in a number of inflammatory and thrombotic conditions, particularly
in diabetic populations. PGI2
reverses
many of these inflammatory and thrombotic processes, and acts chiefly to prevent
platelet formation and clumping involved in blood clotting, and is also an
effective vasodilator. NO-donation is hypothesized to act synergistically with
PGI2 in
vivo
to relax
the vasculature and protect against atherosclerotic conditions.
We
believe that the unique activity profile of 2NTX-99 has potential utility in
a
range of atherosclerotic, thrombotic, and microvascular diseases, including
intermittent claudication and diabetic nephropathy. We intend to initiate
pre-clinical toxicology and manufacturing activities for 2NTX-99 in the third
quarter of 2007, and we plan to file an IND and enter human testing by the
end
of 2009.
Intellectual
Property
Our
goal
is to obtain, maintain and enforce patent protection for our products,
formulations, processes, methods and other proprietary technologies, preserve
our trade secrets, and operate without infringing on the proprietary rights
of
other parties, both in the U.S. and abroad. Our policy is to actively seek
to
obtain, where appropriate, the broadest intellectual property protection
possible for our current product candidates and any future product candidates,
proprietary information and proprietary technology through a combination of
contractual arrangements and patents, both in the U.S. and abroad. However,
even
patent protection may not always afford us with complete protection against
competitors who seek to circumvent our patents. If we fail to adequately protect
or enforce our intellectual property rights or secure rights to patents of
others, the value of our intellectual property rights would diminish. See
“Risk
Factors - If
we
fail to protect or enforce our intellectual property rights adequately or secure
rights to patents of others, the value of our intellectual property rights
would
diminish.”
We
will
continue to depend upon the skills, knowledge and experience of our scientific
and technical personnel, as well as that of our advisors, consultants and other
contractors, none of which is patentable. To help protect our proprietary
know-how, which is not patentable, and for inventions for which patents may
be
difficult to enforce, we currently rely and will in the future rely on trade
secret protection and confidentiality agreements to protect our interests.
To
this end, we require all of our employees, consultants, advisors and other
contractors to enter into confidentiality agreements that prohibit the
disclosure of confidential information and, where applicable, require disclosure
and assignment to us of the ideas, developments, discoveries and inventions
important to our business. See “Risk
Factors - If
any of our trade secrets, know-how or other proprietary information is
disclosed, the value of our trade secrets, know-how and other proprietary rights
would be significantly impaired and our business and competitive position would
suffer.”
License
Agreements
On
January 20, 2006, we entered into an exclusive, worldwide, royalty-bearing
license agreement, or the Mayo License Agreement, with Mayo for the rights
to
issued patents, patent applications and know-how relating to CD-NP for all
therapeutic uses. We also have the rights to improvements to CD-NP that arise
out of the laboratory of Dr. John Burnett, the inventor of CD-NP, until January
20, 2009. We intend to continue to expand our patent portfolio by filing to
protect any additional patents covering expanded uses for this technology.
Under
the
terms of the Mayo License Agreement, Old Nile made an up-front cash payment
to
Mayo and reimbursed it for past patent expenses. Old Nile also issued 500,000
shares of Old Nile Common Stock to Mayo. On August 31, 2007, Mayo transferred
200,000 shares to Miami Research Heart Institute (Miami Heart). Mayo’s shares
converted into 827,651 shares of Nile Common Stock and Miami Heart’s shares
converted into 551,767 shares of Nile Common Stock at the effective time of
the
Merger. Additionally, Mayo will receive performance-based cash payments upon
successful completion of clinical and regulatory milestones relating to CD-NP.
We will make the first milestone payment to Mayo when the first patient is
dosed
in the first Company-sponsored Phase II clinical trial of CD-NP. We also have
agreed to pay Mayo substantial milestone payments upon the receipt of regulatory
approval for each additional indication of CD-NP as well as for additional
compounds or analogues contained in the intellectual property. Pursuant to
the
Mayo License Agreement, we must also pay Mayo an annual maintenance fee and
a
percentage of net sales of licensed products. To the extent we enter into a
sublicensing agreement relating to CD-NP, we will be responsible for each
sub-licensee’s adherence to the terms of the Mayo License Agreement and a breach
of a sub-license agreement by a sub-licensee will constitute a breach of the
Mayo License Agreement by us. Under the terms of the Mayo License Agreement,
Dr.
Burnett has agreed to serve as chairman of our Scientific Advisory Board.
In
addition, we will pay Mayo $50,000 per year for the consulting services of
Dr.
Burnett. The Mayo
License
Agreement also contains other customary clauses and terms as are common in
similar agreements in the industry.
In
addition to the potential milestone payments discussed above, the Mayo License
Agreement requires us to issue shares of Nile Common Stock to Mayo for an
equivalent dollar amount of grant funding by Mayo of Dr. Burnett’s CD-NP
development program, above a threshold amount of grant funding not to exceed
a
specified amount of grant dollars. As of the date hereof, Mayo has funded a
substantial portion of this amount of grant funding for CD-NP. Accordingly,
following the closing of the Offering, Old Nile issued Mayo 23,009 shares of
Old
Nile Common Stock, which converted into 63,478 shares at the Merger. In
addition, to the extent that Mayo funds up to an additional $92,765 in grant
money, we are obligated to issue additional shares to Mayo contemporaneously
with the closing of the first equity financing thereafter. See “Risk
Factors - If
requirements under our license agreements are not met, we could suffer
significant harm, including rights to our products.”
On
August
6, 2007, Old Nile entered into an exclusive, worldwide, royalty-bearing license
agreement, or the 2NTX-99 License Agreement, with Dr. Cesare Casagrande for
the
rights to the intellectual property and know-how relating to 2NTX-99, and all
of
its human therapeutic or veterinary uses. The intellectual property portfolio
for 2NTX-99 includes an issued U.S. patent and a pending European
Patent
Cooperative Treaty submission
relating to its composition of matter, multiple methods of manufacturing, and
method of use in treating a variety of atheroclerotic-thrombotic pathological
conditions.
Under
the
2NTX-99 License Agreement, Old Nile made an up-front cash payment to Dr.
Casagrande and reimbursed him for past patent expenses. Old Nile also issued
to
Dr. Casagrande 126,904 shares of Old Nile Common Stock,
which
converted into 350,107 shares of Nile Common Stock at the effective time of
the
Merger. Additionally, the agreement provides for cumulative performance-based
milestone payments to Dr. Casagrande upon completion of clinical and regulatory
milestones relating to 2NTX-99 in the U.S., Europe and Japan. We will also
be
required to make certain milestones payments to Dr. Casagrande upon regulatory
approval for each additional indication of 2NTX-99 and upon achieving certain
annual sales milestones. The first milestone payment will be due when the first
patient is dosed in the first Company sponsored Phase I clinical trial of
2NTX-99 in the U.S. or the European Union. We also expect to be required to
make
quarterly royalty payments to Dr. Casagrande equal to a percentage of net sales
of licensed products by us and our sub-licensees. The
2NTX-99
License Agreement
also
contains other customary clauses and terms as are common in similar agreements
in the industry. See “Risk
Factors - If
requirements under our license agreements are not met, we could suffer
significant harm, including rights to our products.”
Competition
We
face
significant competition from companies with substantial financial, technical
and
marketing resources, which could limit our future revenues from sales of CD-NP
and 2NTX-99. Our
success will depend, in part, upon our ability to achieve market share at the
expense of existing established and future products in the relevant target
markets. Existing and future products, therapies, technologies, technological
innovations, and delivery systems will likely compete directly with our
products.
The
development and commercialization for new products to treat cardiovascular
and
metabolic diseases is highly competitive, and there will be considerable
competition from major pharmaceutical, biotechnology, and other companies.
With
respect to CD-NP, many
therapeutic options are available for patients with acute decompensated heart
failure including, without limitation, nitroglycerine, inotopes, diuretics,
as
well as Natrecor™.
Some of
our existing competitors include, without limitation Scios Inc. (a Johnson
&
Johnson company), Astellas Pharma, PDL Biopharma, Zealand Pharma, and
NovaCardia.
With
respect to 2NTX-99, many
therapeutic options are available for patients with atherosclerotic,
thrombotic, and microvascular
diseases
including, without limitation, antiplatlet agents (aspirin and clopidogrel),
angiotensin converting enzyme (ACE) inhibitors, angiotensin receptor blockers
(ARBs), beta-blockers, pentoxifylline and cilostazol. Some of our existing
competitors include, without limitation, Brystol Myers Squibb Inc., Eli Lilly
and Company, CardioVascular BioTherapeutics, Inc., and Keryx Biopharmaceuticals,
Inc.
Our
competitors generally have substantially more resources than we do, including
both financial and technical. In addition, many of these companies have more
experience than Nile in preclinical and clinical development, manufacturing,
regulatory, and global commercialization. We are also competing with academic
institutions, governmental agencies and private organizations that are
conducting research in the field of cardiovascular disease. Competition for
highly qualified employees is intense. See “Risk
Factors - Developments
by competitors may render our products or technologies obsolete or
non-competitive.”
Government
Regulation
The
research, development, testing, manufacture, labeling, promotion, advertising,
distribution, and marketing, among other things, of our products are extensively
regulated by governmental authorities in the U.S. and other countries. In the
U.S., the FDA, regulates drugs under the Federal Food, Drug, and Cosmetic Act,
or the FDCA, and its implementing regulations. Failure to comply with the
applicable U.S. requirements may subject us to administrative or judicial
sanctions, such as FDA refusal to approve a pending NDA, warning letters,
product recalls, product seizures, total or partial suspension of production
or
distribution, injunctions, and/or criminal prosecution.
Drug
Approval Process
None
of
our drugs may be marketed in the U.S. until the drug has received FDA approval.
The steps required before a drug may be marketed in the U.S.
include:
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preclinical
laboratory tests, animal studies, and formulation
studies;
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submission
to the FDA of an IND for human clinical testing, which must become
effective before human clinical trials may
begin;
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adequate
and well-controlled human clinical trials to establish the safety
and
efficacy of the drug for each
indication;
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submission
to the FDA of an NDA;
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satisfactory
completion of an FDA inspection of the manufacturing facility or
facilities at which the drug is produced to assess compliance with
current
good manufacturing practices, or cGMPs;
and
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FDA
review and approval of the NDA.
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Preclinical
tests include laboratory evaluation of product chemistry, toxicity, and
formulation, as well as animal studies. The conduct of the preclinical tests
and
formulation of the compounds for testing must comply with federal regulations
and requirements. The results of the preclinical tests, together with
manufacturing information and analytical data, are submitted to the FDA as
part
of an IND, which must become effective before human clinical trials may begin.
An IND will automatically become effective 30 days after receipt by the FDA,
unless before that time the FDA raises concerns or questions about issues such
as the conduct of the trials as outlined in the IND. In such a case, the IND
sponsor and the FDA must resolve any outstanding FDA concerns or questions
before clinical trials can proceed. The Company cannot be sure that submission
of an IND will result in the FDA allowing clinical trials to begin.
Clinical
trials involve the administration of the investigational drug to human subjects
under the supervision of qualified investigators. Clinical trials are conducted
under protocols detailing the objectives of the study, the parameters to be
used
in monitoring safety, and the effectiveness criteria to be evaluated. Each
protocol must be submitted to the FDA as part of the IND.
Clinical
trials are typically conducted in three sequential “Phases”, although the Phases
may overlap. The study protocol and informed consent information for study
subjects in clinical trials must also be approved by an Institutional Review
Board for each institution where the trials will be conducted. Study subjects
must sign an informed consent form before participating in a clinical trial.
Phase I usually involves the initial introduction of the investigational drug
into people to evaluate its short-term safety, dosage tolerance, metabolism,
pharmacokinetics and pharmacologic actions, and, if possible, to gain an early
indication of its effectiveness. Phase II usually involves trials in a limited
patient population to (i) evaluate dosage tolerance and appropriate dosage;
(ii)
identify possible adverse effects and safety risks; and (iii) evaluate
preliminarily the efficacy of the drug for specific indications. Phase III
trials usually further evaluate clinical efficacy and test further for safety
by
using the drug in its final form in an expanded patient population. There can
be
no assurance that Phase I, Phase II, or Phase III testing will be completed
successfully within any specified period of time, if at all. Furthermore, the
Company or the FDA may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.
The
FDCA
permits the FDA and the IND sponsor to agree in writing on the design and size
of clinical studies intended to form the primary basis of an effectiveness
claim
in an NDA application. This process is known as Special Protocol Assessment.
These agreements may not be changed after the clinical studies begin, except
in
limited circumstances.
Assuming
successful completion of the required clinical testing, the results of the
preclinical studies and of the clinical studies, together with other detailed
information, including information on the manufacture and composition of the
drug, are submitted to the FDA in the form of an NDA requesting approval to
market the product for one or more indications. The testing and approval process
requires substantial time, effort, and financial resources. The FDA reviews
the
application and may deem it to be inadequate to support the registration, and
companies cannot be sure that any approval will be granted on a timely basis,
if
at all. The FDA may also refer the application to the appropriate advisory
committee, typically a panel of clinicians, for review, evaluation and a
recommendation as to whether the application should be approved. The FDA is
not
bound by the recommendations of the advisory committee.
The
FDA
has various programs, including fast track, priority review, and accelerated
approval, that are intended to expedite or simplify the process for reviewing
drugs, and/or provide for approval on the basis of surrogate endpoints.
Generally, drugs that may be eligible for one or more of these programs are
those for serious or life-threatening conditions, those with the potential
to
address unmet medical needs, and those that provide meaningful benefit over
existing treatments. The Company cannot be sure that any of our drugs will
qualify for any of these programs, or that, if a drug does qualify, that the
review time will be reduced.
Section
505(b)(2) of the FDCA allows the FDA to approve a follow-on drug on the basis
of
data in the scientific literature or a prior FDA approval of an NDA for a
related drug. This procedure potentially makes it easier for generic drug
manufacturers to obtain rapid approval of new forms of drugs based on
proprietary data of the original drug manufacturer.
Before
approving an NDA, the FDA usually will inspect the facility or the facilities
at
which the drug is manufactured and will not approve the product unless cGMP
compliance is satisfactory. If the FDA evaluates the NDA and the manufacturing
facilities as acceptable, the FDA may issue an approval letter, or in some
cases, an approvable letter followed by an approval letter. Both letters usually
contain a number of conditions that must be met in order to secure final
approval of the NDA. When and if those conditions have been met to the FDA’s
satisfaction, the FDA will issue an approval letter. The approval letter
authorizes commercial marketing of the drug for specific indications. As a
condition of NDA approval, the FDA may require post-marketing testing and
surveillance to monitor the drug’s safety or efficacy, or impose other
conditions.
After
approval, certain changes to the approved product, such as adding new
indications, making certain manufacturing changes, or making certain additional
labeling claims, are subject to further FDA review and approval. Before a
company can market products for additional indications, it must obtain
additional approvals from the FDA. Obtaining approval for a new indication
generally requires that additional clinical studies be conducted. The Company
cannot be sure that any additional approval for new indications for any product
candidate will be approved on a timely basis, or at all.
Post-Approval
Requirements
Often
times, even after a drug has been approved by the FDA for sale, the FDA may
require that certain post-approval requirements be satisfied, including the
conduct of additional clinical studies. If such post-approval conditions are
not
satisfied, the FDA may withdraw its approval of the drug. In addition, holders
of an approved NDA are required to (i) report certain adverse reactions to
the
FDA; (ii) comply with certain requirements concerning advertising and
promotional labeling for their products; and (iii) continue to have quality
control and manufacturing procedures conform to cGMP after approval. The FDA
periodically inspects the sponsor’s records related to safety reporting and/or
manufacturing facilities; this latter effort includes assessment of compliance
with cGMP. Accordingly, manufacturers must continue to expend time, money,
and
effort in the area of production and quality control to maintain cGMP
compliance. We intend to use third-party manufacturers to produce our products
in clinical and commercial quantities, and future FDA inspections may identify
compliance issues at the facilities of our contract manufacturers that may
disrupt production or distribution, or require substantial resources to correct.
In addition, discovery of problems with a product after approval may result
in
restrictions on a product, manufacturer, or holder of an approved NDA, including
withdrawal of the product from the market.
Research
and Development
Our
research and development expenses consist primarily of salaries and related
personnel costs, fees paid to consultants and outside service providers for
regulatory and quality assurance support, licensing of drug compounds, and
other
expenses relating to the manufacture, development, testing and enhancement
of
our product candidates. We expense our research and development costs as they
are incurred.
Employees
As
of the
date of this Report, we have four employees, all of whom are full-time. We
also
retain several consultants who serve in various operational capacities. We
expect to hire a full-time controller, as well as additional research and
development and administrative staff in support of our existing product
development.
RISK
FACTORS
You
should carefully consider the following risk factors and all other information
contained in this report before purchasing shares of Nile Common Stock.
Investing in Nile Common Stock involves a high degree of risk. If any of the
following events or outcomes actually occurs, our business, operating results
and financial condition could be materially and adversely affected. As a result,
the trading price of Nile Common Stock could decline and you may lose all or
part of the money you paid to purchase Nile Common Stock.
On
September 17, 2007, the Merger was completed, and the business of Old Nile
was
adopted as our business. As such, the following Risk Factors are focused on
the
current and historical operations of Nile, and generally exclude the risks
associated with the prior operations of SMI.
We
currently have no product revenues and will need to raise substantial additional
capital to operate our business.
To
date,
we have generated no product revenues, and do not expect to generate any
revenues until, and only if, we receive approval to sell our drugs from the
FDA
and other regulatory authorities for our product candidates. Therefore, for
the
foreseeable future, we will have to fund all of our operations and capital
expenditures from the net proceeds of the Offering, cash on hand, licensing
fees
and grants.
The
use
of the proceeds from the Offering will depend on many factors, including among
other things the course of the clinical and regulatory development of CD-NP
and
2NTX-99 and the acquisition of new technologies and personnel. Based on our
current development plans, we expect that our current resources will be
sufficient to fund our operations until the first quarter of 2009. We will
need
to seek substantial additional financing in order to continue developing our
current and any future product candidates, which additional financing may not
be
available on favorable terms, if at all.
If
we do
not succeed in raising additional funds on acceptable terms, we may be unable
to
complete planned pre-clinical testing and human clinical trials or obtain
approval of our product candidates from the FDA and other regulatory
authorities. In addition, we could be forced to discontinue product development,
reduce or forego attractive business opportunities. Any additional sources
of
financing will likely involve the issuance of our equity securities, which
will
have a dilutive effect on our stockholders.
We
are not currently profitable and may never become
profitable.
We
expect
to incur substantial losses and negative operating cash flow for the foreseeable
future, and we may never achieve or maintain profitability. For the six months
ended June 30, 2007, we had a net loss of $2,237,825 and for the period from
our
inception on August 1, 2005, through the year ended December 31, 2006, we had
a
net loss of $2,592,015. Since our inception through June 30, 2007, we have
an
accumulated deficit of $4,829,840 and stockholders’ equity (deficit) of
($4,817,673). Even if we succeed in developing and commercializing one or more
of our product candidates, we expect to incur substantial losses for the
foreseeable future, as we:
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·
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continue
to undertake pre-clinical development and clinical trials for our
product
candidates;
|
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·
|
seek
regulatory approvals for our product
candidates;
|
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·
|
in-license
or otherwise acquire additional products or product
candidates;
|
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·
|
implement
additional internal systems and infrastructure;
and
|
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·
|
hire
additional personnel.
|
We
also
expect to experience negative cash flow for the foreseeable future as we fund
our operating losses and capital expenditures. As a result, we will need to
generate significant revenues in order to achieve and maintain profitability.
We
may not be able to generate these revenues or achieve profitability in the
future. Our failure to achieve or maintain profitability could negatively impact
the value of Nile Common Stock.
We
have a limited operating history upon which to base an investment decision.
We
are a
development-stage company and have not demonstrated our ability to perform
the
functions necessary for the successful commercialization of any of our product
candidates. The successful commercialization of our product candidates will
require us to perform a variety of functions, including:
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·
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continuing
to undertake pre-clinical development and clinical trials for our
product
candidates;
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·
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participating
in regulatory approval processes;
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·
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formulating
and manufacturing products; and
|
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·
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conducting
sales and marketing activities.
|
Our
operations have been limited to organizing our Company, acquiring, developing
and securing our proprietary technology and preparing for pre-clinical and
clinical trials of our lead product candidate, CD-NP. These operations provide
a
limited basis for you to assess our ability to commercialize our product
candidates and the advisability of investing in our securities.
We
may not obtain the necessary U.S. or worldwide regulatory approvals to
commercialize our product candidates.
We
will
need FDA approval to commercialize our product candidates in the U.S. and
approvals from the FDA equivalent regulatory authorities in foreign
jurisdictions to commercialize our product candidates in those jurisdictions.
In
order to obtain FDA approval of any of our product candidates, we must submit
to
the FDA a NDA demonstrating that the product candidate is safe for humans and
effective for its intended use. This demonstration requires significant research
and animal tests, which are referred to as pre-clinical studies, as well as
human tests, which are referred to as clinical trials. Satisfaction of the
FDA’s
regulatory requirements typically takes many years, depends upon the type,
complexity and novelty of the product candidate and requires substantial
resources for research, development and testing. We cannot predict whether
our
research and clinical approaches will result in drugs that the FDA considers
safe for humans and effective for indicated uses. The FDA has substantial
discretion in the drug approval process and may require us to conduct additional
pre-clinical and clinical testing or to perform post-marketing studies. The
approval process may also be delayed by changes in government regulation, future
legislation or administrative action or changes in FDA policy that occur prior
to or during our regulatory review. Delays in obtaining regulatory approvals
may:
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·
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delay
commercialization of, and our ability to derive product revenues
from, our
product candidates;
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·
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impose
costly procedures on us; or
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·
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diminish
any competitive advantages that we may otherwise
enjoy.
|
Even
if
we comply with all FDA requests, the FDA may ultimately reject one or more
of
our NDAs. We cannot be sure that we will ever obtain regulatory clearance for
our product candidates. Failure to obtain FDA approval of any of our product
candidates will severely undermine our business by reducing our number of
salable products and, therefore, corresponding product revenues.
In
foreign jurisdictions, we must receive approval from the appropriate regulatory
authorities before we can commercialize our drugs. Foreign regulatory approval
processes generally include all of the risks associated with the FDA approval
procedures described above. We cannot assure that we will receive the approvals
necessary to commercialize our product candidate for sale outside the
U.S.
Each
of our product candidates is in early stages of
development.
Each
of
our product candidates, CD-NP and 2NTX-99, is in an early stage of development
and requires extensive clinical testing before it will be approved by the FDA
or
another regulatory authority in a jurisdiction outside the U.S. We cannot
predict with any certainty the results of such clinical testing. We cannot
predict with any certainty if, or when, we might commence any such clinical
trials or whether such trials will yield sufficient data to permit us to proceed
with additional clinical development and ultimately submit an application for
regulatory approval of our product candidates in the U.S. or abroad, or whether
such applications will be accepted by the appropriate regulatory
agency.
Our
products use novel alternative technologies and therapeutic approaches, which
have not been widely studied.
Our
product development efforts focus on novel therapeutic approaches and
technologies that have not been widely studied. These approaches and
technologies may not be successful. We are applying these approaches and
technologies in our attempt to discover new treatments for conditions that
are
also the subject of research and development efforts of many other
companies.
The
results of our clinical trials may not support our product candidate
claims.
Even
if
our clinical trials are completed as planned, we cannot be certain that their
results will support the claims of our product candidates. Success in
pre-clinical testing and early clinical trials does not ensure that later
clinical trials will be successful, and we cannot be sure that the results
of
later clinical trials will replicate the results of prior clinical trials and
pre-clinical testing. The clinical trial process may fail to demonstrate that
our product candidates are safe for humans and effective for indicated uses.
This failure would cause us to abandon a product candidate and may delay
development of other product candidates. Any delay in, or termination of, our
clinical trials will delay the filing of our NDAs with the FDA and, ultimately,
our ability to commercialize our product candidates and generate product
revenues. In addition, our clinical trials involve a small patient population.
Because of the small sample size, the results of these clinical trials may
not
be indicative of future results.
Physicians
and patients may not accept and use our drugs.
Even
if
the FDA approves our product candidates, physicians and patients may not accept
and use them. Acceptance and use of our product will depend upon a number of
factors including:
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·
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perceptions
by members of the health care community, including physicians, about
the
safety and effectiveness of our
drugs;
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cost-effectiveness
of our products relative to competing
products;
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·
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availability
of reimbursement for our products from government or other healthcare
payers; and
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·
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effectiveness
of marketing and distribution efforts by us and our licensees and
distributors, if any.
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Because
we expect sales of our current product candidates, if approved, to generate
substantially all of our product revenues for the foreseeable future, the
failure of any of these drugs to find market acceptance would harm our business
and could require us to seek additional financing.
Our
drug-development program depends upon third-party researchers who are outside
our control.
We
will
depend upon independent investigators and collaborators, such as universities
and medical institutions, to conduct our pre-clinical and clinical trials under
agreements with us. These collaborators are not our employees and we cannot
control the amount or timing of resources that they devote to our programs.
These investigators may not assign as great a priority to our programs or pursue
them as diligently as we would if we were undertaking such programs ourselves.
If outside collaborators fail to devote sufficient time and resources to our
drug-development programs, or if their performance is substandard, the approval
of our FDA applications, if any, and our introduction of new drugs, if any,
will
be delayed. These collaborators may also have relationships with other
commercial entities, some of whom may compete with us. If our collaborators
assist our competitors at our expense, our competitive position would be
harmed.
We
rely exclusively on third parties to formulate and manufacture our product
candidates.
We
have
no experience in drug formulation or manufacturing and do not intend to
establish our own manufacturing facilities. We lack the resources and expertise
to formulate or manufacture our own product candidates. We currently, and intend
in the future, to contract with one or more manufacturers to manufacture,
supply, store and distribute drug supplies for our clinical trials. If
any of
our product candidates receive FDA approval, we will rely on one or more
third-party contractors to manufacture our drugs. Our anticipated future
reliance on a limited number of third-party manufacturers exposes us to the
following risks:
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We
may be unable to identify manufacturers on acceptable terms or at
all,
because the number of potential manufacturers is limited and subsequent
to
NDA approval, the FDA must approve any replacement contractor. This
approval would require new testing and compliance inspections. In
addition, a new manufacturer may have to be educated in, or develop
substantially equivalent processes for, production of our products
after
receipt of FDA approval, if any.
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Our
third-party manufacturers might be unable to formulate and manufacture
our
drugs in the volume and of the quality required to meet our clinical
needs
and commercial needs, if any.
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Our
future contract manufacturers may not perform as agreed or may not
remain
in the contract manufacturing business for the time required to supply
our
clinical trials or to successfully produce, store and distribute
our
products.
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Drug
manufacturers are subject to ongoing periodic unannounced inspection
by
the FDA, the Drug Enforcement Agency, and corresponding state agencies
to
ensure strict compliance with good manufacturing practice and other
government regulations and corresponding foreign standards. We do
not have
control over third-party manufacturers’ compliance with these regulations
and standards.
|
Each
of
these risks could delay our clinical trials, the approval, if any of our product
candidates by the FDA or the commercialization of our product candidates or
result in higher costs or deprive us of potential product revenues.
We
have no experience selling, marketing or distributing products and no internal
capability to do so.
We
currently have no sales, marketing or distribution capabilities. We do not
anticipate having resources in the foreseeable future to allocate to the sales
and marketing of our proposed products. Our future success depends, in part,
on
our ability to enter into and maintain sales and marketing collaborative
relationships, the collaborator’s strategic interest in the products under
development and such collaborator’s ability to successfully market and sell any
such products. We intend to pursue collaborative arrangements regarding the
sales and marketing of our products, however, there can be no assurance that
we
will be able to establish or maintain such collaborative arrangements, or if
able to do so, that they will have effective sales forces. To the extent that
we
decide not to, or are unable to, enter into collaborative arrangements with
respect to the sales and marketing of our proposed products, significant capital
expenditures, management resources and time will be required to establish and
develop an in-house marketing and sales force with technical expertise. There
can also be no assurance that we will be able to establish or maintain
relationships with third-party collaborators or develop in-house sales and
distribution capabilities. To the extent that we depend on third parties for
marketing and distribution, any revenues we receive will depend upon the efforts
of such third parties, and there can be no assurance that such efforts will
be
successful. In addition, there can also be no assurance that we will be able
to
market and sell our product in the U.S. or overseas.
If
we cannot compete successfully for market share against other drug companies,
we
may not achieve sufficient product revenues and our business will suffer.
The
market for our product candidates is characterized by intense competition and
rapid technological advances. If our product candidates receive FDA approval,
they will compete with a number of existing and future drugs and therapies
developed, manufactured and marketed by others. Existing or future competing
products may provide greater therapeutic convenience or clinical or other
benefits for a specific indication than our products, or may offer comparable
performance at a lower cost. If our products fail to capture and maintain market
share, we may not achieve sufficient product revenues and our business will
suffer.
We
will
compete against fully integrated pharmaceutical companies and smaller companies
that are collaborating with larger pharmaceutical companies, academic
institutions, government agencies and other public and private research
organizations. Many of these competitors have technologies already approved
or
in development. In addition, many of these competitors, either alone or together
with their collaborative partners, operate larger research and development
programs and have substantially greater financial resources than we do, as
well
as significantly greater experience in:
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undertaking
pre-clinical testing and human clinical
trials;
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obtaining
FDA and other regulatory approvals of
drugs;
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formulating
and manufacturing drugs; and
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launching,
marketing and selling drugs.
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Developments
by competitors may render our products or technologies obsolete or
non-competitive.
The
biotechnology and pharmaceutical industries are intensely competitive and
subject to rapid and significant technological change. The drugs that we are
attempting to develop will have to compete with existing therapies. In addition,
a large number of companies are pursuing the development of pharmaceuticals
that
target the same diseases and conditions that we are targeting. We face
competition from pharmaceutical and biotechnology companies in the U.S. and
abroad. In addition, companies pursuing different but related fields represent
substantial competition. Many of these organizations competing with us have
substantially greater capital resources, larger research and development staffs
and facilities, longer drug development history in obtaining regulatory
approvals and greater manufacturing and marketing capabilities than we do.
These
organizations also compete with us to attract qualified personnel and parties
for acquisitions, joint ventures or other collaborations.
If
we fail to protect or enforce our intellectual property rights adequately or
secure rights to patents of others, the value of our intellectual property
rights would diminish.
Our
success, competitive position and future revenues will depend in part on our
ability and the abilities of our licensors to obtain and maintain patent
protection for our products, methods, processes and other technologies, to
preserve our trade secrets, to prevent third parties from infringing on our
proprietary rights and to operate without infringing upon the proprietary rights
of third parties. Additionally, if any third-party manufacturer makes
improvements in the manufacturing process for our products, we may not own,
or
may have to share, the intellectual property rights to the
innovation.
To
date,
we hold certain exclusive rights under U.S. patents and patent applications
as
well as rights under foreign patent applications. We anticipate filing
additional patent applications both in the U.S. and in other countries, as
appropriate. However, we cannot predict:
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·
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the
degree and range of protection any patents will afford us against
competitors including whether third parties will find ways to invalidate
or otherwise circumvent our
patents;
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if
and when patents will issue;
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whether
or not others will obtain patents claiming aspects similar to those
covered by our patents and patent applications;
or
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whether
we will need to initiate litigation or administrative proceedings
which
may be costly whether we win or
lose.
|
If
any of our trade secrets, know-how or other proprietary information is
disclosed, the value of our trade secrets, know-how and other proprietary rights
would be significantly impaired and our business and competitive position would
suffer.
Our
success also depends upon the skills, knowledge and experience of our scientific
and technical personnel, our consultants and advisors as well as our licensors
and contractors. To help protect our proprietary know-how and our inventions
for
which patents may be unobtainable or difficult to obtain, we rely on trade
secret protection and confidentiality agreements. To this end, we require all
of
our employees, consultants, advisors and contractors to enter into agreements
which prohibit the disclosure of confidential information and, where applicable,
require disclosure and assignment to us of the ideas, developments, discoveries
and inventions important to our business. These agreements may not provide
adequate protection for our trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure or the lawful
development by others of such information. If any of our trade secrets, know-how
or other proprietary information is disclosed, the value of our trade secrets,
know-how and other proprietary rights would be significantly impaired and our
business and competitive position would suffer.
If
we infringe upon the rights of third parties we could be prevented from selling
products, forced to pay damages, and defend against litigation.
If
our
products, methods, processes and other technologies infringe upon the
proprietary rights of other parties, we could incur substantial costs and we
may
have to:
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obtain
licenses, which may not be available on commercially reasonable terms,
if
at all;
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redesign
our products or processes to avoid
infringement;
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stop
using the subject matter claimed in the patents held by
others;
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defend
litigation or administrative proceedings which may be costly whether
we
win or lose, and which could result in a substantial diversion of
our
valuable management resources.
|
If
requirements under our license agreements are not met, we could suffer
significant harm, including losing rights to our
products.
We
depend
on licensing agreements with third parties to maintain the intellectual property
rights to our products under development. Presently, we have licensed rights
from Mayo and Dr. Casagrande. These agreements require us and our licensors
to
perform certain obligations that affect our rights under these licensing
agreements. All of these agreements last either throughout the life of the
patents, or with respect to other licensed technology, for a number of years
after the first commercial sale of the relevant product.
In
addition, we are responsible for the cost of filing and prosecuting certain
patent applications and maintaining certain issued patents licensed to us.
If we
do not meet our obligations under our license agreements in a timely manner,
we
could lose the rights to our proprietary technology.
Finally,
we may be required to obtain licenses to patents or other proprietary rights
of
third parties in connection with the development and use of our products and
technologies. Licenses required under any such patents or proprietary rights
might not be made available on terms acceptable to us, if at all.
Our
ability to generate product revenues will be diminished if our drugs sell for
inadequate prices or patients are unable to obtain adequate levels of
reimbursement.
Our
ability to commercialize our drugs, alone or with collaborators, will depend
in
part on the extent to which reimbursement will be available from:
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government
and health administration
authorities;
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private
health maintenance organizations and health insurers;
and
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other
healthcare payers.
|
Significant
uncertainty exists as to the reimbursement status of newly approved healthcare
products. Healthcare payers, including Medicare, are challenging the prices
charged for medical products and services. Government and other healthcare
payers increasingly attempt to contain healthcare costs by limiting both
coverage and the level of reimbursement for drugs. Even if our product
candidates are approved by the FDA, insurance coverage may not be available,
and
reimbursement levels may be inadequate, to cover our drugs. If government and
other healthcare payers do not provide adequate coverage and reimbursement
levels for any of our products, once approved, market acceptance of our products
could be reduced.
We
may not successfully manage our growth.
Our
success will depend upon the expansion of our operations and the effective
management of our growth, which will place a significant strain on our
management and on our administrative, operational and financial resources.
To
manage this growth, we may need to expand our facilities, augment our
operational, financial and management systems and hire and train qualified
personnel. If we are unable to manage our growth effectively, our business
would
be harmed.
We
may be exposed to liability claims associated with the use of hazardous
materials and chemicals.
Our
research and development activities may involve the controlled use of hazardous
materials and chemicals. Although we believe that our safety procedures for
using, storing, handling and disposing of these materials comply with federal,
state and local laws and regulations, we cannot completely eliminate the risk
of
accidental injury or contamination from these materials. In the event of such
an
accident, we could be held liable for any resulting damages and any liability
could materially adversely effect our business, financial condition and results
of operations. In addition, the federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
or
radioactive materials and waste products may require us to incur substantial
compliance costs that could materially adversely affect our business, financial
condition and results of operations.
We
will rely on key executive officers and scientific and medical advisors, whose
knowledge of our business and technical expertise would be difficult to replace.
We
currently rely on certain key executive officers, the loss of any one or more
of
whom could delay our development program. We are and will be highly dependent
on
our principal scientific, regulatory and medical advisors. We do not have “key
person” life insurance policies for any of our officers. The loss of the
technical knowledge and management and industry expertise of any of our key
personnel could result in delays in product development, loss of customers
and
sales and diversion of management resources, which could adversely affect our
operating results.
If
we are unable to hire additional qualified personnel, our ability to grow our
business may be harmed.
Attracting
and retaining qualified personnel will be critical to our success. Our success
is
highly
dependent on the hiring and retention of key personnel and scientific staff.
While
we
are actively recruiting additional experienced members for the management team,
there is intense competition and demand for qualified personnel in our area
of
business and no assurances can be made that we will be able to retain the
personnel necessary for the development of our business on commercially
reasonable terms, if at all. Certain
of our current officers, directors, scientific advisors and/or consultants
or
certain of the officers, directors, scientific advisors and/or consultants
hereafter appointed may from time to time serve as officers, directors,
scientific advisors and/or consultants of other biopharmaceutical or
biotechnology companies. We rely, in substantial part, and for the foreseeable
future will rely, on certain independent organizations, advisors and consultants
to provide certain services, including substantially all aspects of regulatory
approval, clinical management, and manufacturing. There can be no assurance
that
the services of independent organizations, advisors and consultants will
continue to be available to us on a timely basis when needed, or that we can
find qualified replacements.
We
may incur substantial liabilities and may be required to limit commercialization
of our products in response to product liability lawsuits.
The
testing and marketing of medical products entail an inherent risk of product
liability. If we cannot successfully defend ourselves against product liability
claims, we may incur substantial liabilities or be required to limit
commercialization of our products. Our inability to obtain sufficient product
liability insurance at an acceptable cost to protect against potential product
liability claims could prevent or inhibit the commercialization of
pharmaceutical products we develop, alone or with corporate collaborators.
Even
if our agreements with any future corporate collaborators entitle us to
indemnification against losses, such indemnification may not be available or
adequate should any claim arise.
There
are certain interlocking relationships among us and certain affiliates of Two
River Group Holdings, LLC, which may present potential conflicts of
interest.
Peter
M.
Kash, Joshua A. Kazam and David M. Tanen, each a director and substantial
stockholder of our Company, are the managing members of Two River Group
Holdings, LLC, or Two River, a venture capital firm specializing in
biotechnology companies, and are officers and directors of Riverbank Capital
Securities, Inc., or Riverbank, a broker dealer registered with the Financial
Industry Regulatory Authority (FINRA, formerly NASD). Mr. Tanen also serves
as
our Secretary and Scott Navins, the Vice President of Finance for Two River,
serves as our Treasurer. Additionally, certain employees of Two River, who
are
also our stockholders, perform substantial operational activity for us,
including without limitation financial, clinical and regulatory activities.
Generally, Delaware corporate law requires that any transactions between us
and
any of our affiliates be on terms that, when taken as a whole, are substantially
as favorable to us as those then reasonably obtainable from a person who is
not
an affiliate in an arms-length transaction. Nevertheless, none of our affiliates
or Two River is obligated pursuant to any agreement or understanding with us
to
make any additional products or technologies available to us, nor can there
be
any assurance, and the investors should not expect, that any biomedical or
pharmaceutical product or technology identified by such affiliates or Two River
in the future will be made available to us. In addition, certain of our current
officers and directors or certain of any officers or directors hereafter
appointed may from time to time serve as officers or directors of other
biopharmaceutical or biotechnology companies. There can be no assurance that
such other companies will not have interests in conflict with our own.
We
are controlled by current directors and principal
stockholders.
After
the
Merger, our directors and principal stockholders beneficially owned
approximately 34.51% of our outstanding voting securities. Accordingly, our
executive officers, directors, principal stockholders and certain of their
affiliates will have the ability to exert substantial influence over the
election of our board of directors and the outcome of issues submitted to our
stockholders.
We
are required to file a registration statement for shares of Nile Common Stock
received by stockholders who purchased shares of Old Nile Common Stock in the
Offering.
We
have
agreed, at our expense, to prepare within 60 days of the closing of the Merger,
a Securities Act registration statement covering the resale of shares of Nile
Common Stock received by stockholders who purchased shares of Old Nile Common
Stock in the Offering. In the event that such registration statement is not
filed within 60 days after the Merger, we will be required to pay to each
investor holding securities to be registered, as liquidated damages and not
as a
penalty, an amount, for each month (or portion of a month) in which such delay
shall occur, equal to 1 percent of the purchase price paid by such investor,
until we have cured the delay. Our financial condition and operating results
will be harmed if we are required to pay such liquidated damages. Our obligation
to register the shares of Nile Common Stock is subject to any limitation on
our
ability to register the full complement of such shares in accordance with Rule
415 under the Securities Act or other regulatory limitations. To the extent
the
number of such shares that can be registered is so limited, the Company will
be
obligated to use its commercially reasonable efforts to register additional
tranches of registrable securities as soon as permissible thereafter under
applicable laws, rules and regulations so that all of such registrable
securities are registered as soon as reasonably practicable. The filing of
a
registration statement with the SEC can be costly and time-consuming, which
could materially and adversely affect Nile.
We
will be required to implement additional finance and accounting systems,
procedures and controls in order to satisfy requirements under the securities
laws, including the Sarbanes-Oxley Act of 2002, which will increase our costs
and divert management’s time and attention.
We
are in
a continuing process of establishing controls and procedures that will allow
our
management to report on, and our independent registered public accounting firm
to attest to, our internal control over financial reporting when required to
do
so under Section 404 of the Sarbanes-Oxley Act of 2002. As a company with
limited capital and human resources, we anticipate that more of management’s
time and attention will be diverted from our business to ensure compliance
with
these regulatory requirements than would be the case with a company that has
well established controls and procedures. This diversion of management’s time
and attention may have a material adverse effect on our business, financial
condition and results of operations.
In
the
event we identify significant deficiencies or material weaknesses in our
internal control over financial reporting that we cannot remediate in a timely
manner, or if we are unable to receive a positive attestation from our
independent registered public accounting firm with respect to our internal
control over financial reporting when we are required to do so, investors and
others may lose confidence in the reliability of our financial statements.
If
this occurs, the trading price of Nile Common Stock, if any, and ability to
obtain any necessary equity or debt financing could suffer. In addition, in
the
event that our independent registered public accounting firm is unable to rely
on our internal control over financial reporting in connection with its audit
of
our financial statements, and in the further event that it is unable to devise
alternative procedures in order to satisfy itself as to the material accuracy
of
our financial statements and related disclosures, we may be unable to file
our
Annual Report on Form 10-K with the SEC. This would likely have an adverse
affect on the trading price of Nile Common Stock, if any, and our ability to
secure any necessary additional financing, and could result in the delisting
of
Nile Common Stock if we are listed on an exchange in the future. In such event,
the liquidity of Nile Common Stock would be severely limited and the market
price of Nile Common Stock would likely decline significantly.
Our
internal controls over financial reporting do not currently meet all of the
standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure
to
achieve and maintain effective internal controls over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act could have a material
adverse effect on our business and common stock price.
Our
internal controls over financial reporting do not currently meet all of the
standards contemplated by Section 404 of the Sarbanes-Oxley Act that we will
eventually be required to meet. We are in the process of addressing our internal
controls over financial reporting and are establishing formal policies,
processes and practices related to financial reporting and to the identification
of key financial reporting risks, assessment of their potential impact and
linkage of those risks to specific areas and activities within our organization.
Additionally,
we expect to begin the process of documenting our internal control procedures
to
satisfy the requirements of Section 404, which requires annual management
assessments of the effectiveness of our internal controls over financial
reporting and a report by our independent registered public accounting firm
addressing these assessments. Because we do not currently have comprehensive
documentation of our internal controls and have not yet tested our internal
controls in accordance with Section 404, we cannot conclude in accordance with
Section 404 that we do not have a material weakness in our internal controls
or
a combination of significant deficiencies that could result in the conclusion
that we have a material weakness in our internal controls. As a public entity,
we will be required to complete our initial assessment in a timely manner.
If we
are not able to implement the requirements of Section 404 in a timely manner
or
with adequate compliance, our independent registered public accounting firm
may
not be able to certify as to the adequacy of our internal controls over
financial reporting. Matters impacting our internal controls may cause us to
be
unable to report our financial information on a timely basis and thereby subject
us to adverse regulatory consequences, including sanctions by the SEC or
violations of applicable stock exchange listing rules. There could also be
a
negative reaction in the financial markets due to a loss of investor confidence
in us and the reliability of our financial statements. Confidence in the
reliability of our financial statements could also suffer if our independent
registered public accounting firm were to report a material weakness in our
internal controls over financial reporting. This could materially adversely
affect us and lead to a decline in the market price of Nile Common Stock.
Nile
Common Stock is considered “a penny stock.”
The
SEC
has adopted regulations which generally define “penny stock” to be an equity
security that has a market price of less than $5.00 per share, subject to
specific exemptions. Following the Merger, the market price of Nile Common
Stock
is likely to be less than $5.00 per share and therefore may be a “penny stock”
according to SEC rules. This designation requires any broker or dealer selling
these securities to disclose certain information concerning the transaction,
obtain a written agreement from the purchaser and determine that the purchaser
is reasonably suitable to purchase the securities. These rules may restrict
the
ability of brokers or dealers to sell Nile Common Stock.
We
have never paid dividends.
We
have
never paid dividends on our capital stock and do not anticipate paying any
dividends for the foreseeable future.
There
may be additional issuances of shares of blank check preferred stock in the
future.
Our
certificate of incorporation authorizes the issuance of up to 10,000,000 shares
of preferred stock, none of which are issued or currently outstanding. The
board
of directors will have the authority to fix and determine the relative rights
and preferences of preferred shares, as well as the authority to issue such
shares, without further stockholder approval. As a result, the board of
directors could authorize the issuance of a series of preferred stock that
is
senior to the Nile Common Stock and that would grant to holders preferred rights
to our assets upon liquidation, the right to receive dividends, additional
registration rights, anti-dilution protection, the right to the redemption
to
such shares, together with other rights, none of which will be afforded holders
of Nile Common Stock.
Upon
the effective date of our next registration statement, there will be a
significant number of shares of Nile Common Stock eligible for sale, which
could
depress the market price of Nile Common Stock.
Following
the effective date of our next registration statement, up to 8,810,336 shares
of
Nile Common Stock will become available for sale in the public market, which
could harm the market price. Further, following the holding period prescribed
under SEC regulations, some or all of our shares may be offered from time to
time in the open market pursuant to Rule 144, and these sales may have a
depressive effect on the market for Nile Common Stock. In general, a person
who
has held restricted shares for a period of one year may, upon filing with the
SEC a notification on Form 144, sell into the market common stock in an amount
equal to the greater of 1% of the outstanding shares or the average weekly
number of shares sold in the last four weeks prior to such sale. Such sales
may
be repeated once every three months, and any of the restricted shares may be
sold by a non-affiliate after they have been held two years.
We
cannot assure you that Nile Common Stock will ever be listed on NASDAQ or any
other securities exchange.
We
plan
in the future to seek listing on NASDAQ or the American Stock Exchange. However,
we cannot assure you that we will be able to meet the initial listing standards
of either of those or any other stock exchange, or that we will be able to
maintain a listing of Nile Common Stock on either of those or any other stock
exchange.
2.
MANAGEMENT’S
DISCUSSION AND PLAN OF OPERATION
The
following discussion and plan of operations should read in conjunction with
the
financial statements and the notes to those statements included in this 8-K.
This discussion includes forward-looking statements that involve risk and
uncertainties. As a result of many factors, such as those set forth under
“Risk
Factors,”
actual
results may differ materially from those anticipated in these forward-looking
statements.
Acquisition
and Reorganization
On
September 17, 2007, the Merger was completed, and the business of Old Nile
was
adopted as our business. As such, the following Management Discussion is focused
on the current and historical operations of Nile, and excludes the prior
operations of SMI.
Overview
Our
company
develops
and commercializes innovative products for the treatment of cardiovascular
and
metabolic disease. Our efforts and resources are focused on acquiring and
developing our pharmaceutical product candidates, raising capital and recruiting
personnel. Our lead compound is CD-NP, a chimeric natriuretic peptide in Phase
I
clinical studies for the treatment of heart failure. We believe CD-NP may be
useful in several cardiovascular and renal indications, and is initially being
developed as a treatment for heart failure. We are also developing 2NTX-99,
a
pre-clinical, small molecule, anti-atherothrombotic agent with NO-donating
properties.
We
have
no product sales to date and we will not receive any product revenue until
we
receive approval from the FDA or equivalent foreign regulatory bodies to begin
selling our pharmaceutical candidates. Developing pharmaceutical products,
however, is a lengthy and very expensive process. Assuming we do not encounter
any unforeseen safety issues during the course of developing our product
candidates, we do not expect to complete the development of a product candidate
for several years, if ever. Currently, nearly all of our development expenses
have related to our lead product candidate, CD-NP.
As
we
proceed with the clinical development of CD-NP and as we further develop
2NTX-99, our second product candidate, our research and development expenses
will further increase. To the extent we are successful in acquiring additional
product candidates for our development pipeline, our need to finance further
research and development will continue increasing. Accordingly, our success
depends not only on the safety and efficacy of our product candidates, but
also
on our ability to finance the development of the products. Our major sources
of
working capital have been proceeds from various private financings, primarily
private sales of Old Nile Common Stock and other equity securities and debt
financings.
Our
results include non-cash compensation expense as a result of the issuance of
stock and stock option grants. Effective August 2005, we adopted Statement
of
Financial Accounting Standards No. 123R, Share
Based Payment,
or SFAS
123R. SFAS 123R requires us to expense the fair value of stock options over
the
vesting period. We determine the fair value of stock options using the
Black-Scholes options pricing model. The terms and vesting schedules for
share-based awards vary by type of grant and the employment status of the
grantee. Generally, the awards vest based upon time-based or performance-based
conditions. Performance-based conditions generally include the attainment of
goals related to our financial and development performance. See “Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
Stock-based compensation expense is included in the respective categories of
expense in the statement of operations. We expect to record additional non-cash
compensation expense in the future, which may be significant.
Plan
of Operation
We
expect
our principal expenditures during the next 12 months to include, among other
things:
· operating
expenses, including expanded general and administrative expenses; and
· research
and development expenses, including the costs incurred with respect to
applications to conduct clinical trials in the U.S. for our lead product, CD-NP,
and pre-clinical testing of 2NTX-99.
Our
plan
of operation for the year ending December 31, 2007 is to continue implementing
our business strategy, including the clinical development of our product
candidates. We also intend to expand our drug candidate portfolio by acquiring
additional drug technologies for development.
As
part
of our planned expansion, we anticipate hiring up to four (4) additional
full-time employees devoted to research and development activities and one
or
more additional full-time employees for general and administrative activities.
In addition, we intend to use clinical research organizations and third parties
to perform our clinical studies and manufacturing. During 2007, we expect to
spend approximately $4.5 million on clinical research and development
activities, and approximately $1.5 million on general and administrative
expenses.
Research
and Development Projects; Related Expenses
CD-NP
We
plan
to initiate a Phase Ib study of CD-NP in heart failure patients in the fourth
quarter of 2007. The purpose of the study is to examine the safety,
pharmacokinetics and pharmacologic activity of varying doses of CD-NP in
patients with heart failure. In parallel, Mayo plans to initiate a Phase Ib
study in cooperation with us, which is being sponsored by the National Institute
of Health, or the NIH, to comprehensively evaluate the effects of CD-NP on
renal
hemodynamics and renal function in chronic heart failure patients.
2NTX-99
On
August
6, 2007, Old Nile exclusively licensed the worldwide rights to 2NTX-99, a small
molecule compound designed to improve on the efficacy and potency of picotamide,
a generic anti-platelet therapy marketed in Italy. 2NTX-99 is in the
pre-clinical stage of development and Nile expects to complete pre-clinical
toxicology studies and manufacturing by the end of 2009. To date, we have not
incurred any expenses in connection with the research and development of 2NTX-99
other than the initial licensing fees described herein.
Off
Balance Sheet Arrangements
There
were no off-balance sheet arrangements as of September 17, 2007.
3.
DESCRIPTION OF PROPERTY
Following
the Merger, our principal offices are located at 2850 Telegraph Avenue, Suite
310, Berkeley, CA 94705. Under the terms of a three-year lease with Seagate
Telegraph Associates, LLC, the monthly base rent is $6,087 per month through
April 30, 2008, $6,320 per month effective May 1, 2008 and $6,553 per month
effective May 1, 2009. We are also responsible for payment of our share of
certain
pro
rata common
charges such as operating costs and taxes in excess of the base year and
additional rent. In connection with this lease, we have made a $14,000 cash
deposit. The lease expires on April 30, 2010. As our operations expand, we
expect our space requirements and related expenses to increase.
4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table summarizes certain information regarding the beneficial
ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of outstanding Nile Common Stock as of September 17, 2007 (after
giving effect to the Merger) by (i) each person known by us to be the beneficial
owner of more than 5% of the outstanding Nile Common Stock, (ii) each of our
directors, (iii) each of our named executive officers (as defined in Item
402(a)(3) of Regulation S-B under the Securities Act), and (iv) all executive
officers and directors as a group. Except as indicated in the footnotes below,
the security and stockholders listed below possess sole voting and investment
power with respect to their shares.
|
|
|
|
|
Name
of Beneficial Owner
|
Shares
of Nile
Common
Stock
Beneficially
Owned
(#)(1)
|
Percentage
of
Nile
Common
Stock
Beneficially
Owned
(%)(1)
|
|
Peter
M. Strumph (2)
2850
Telegraph Avenue, Suite #310
Berkeley,
CA 94705
|
0
|
*
|
|
Daron
Evans (3)
2850
Telegraph Avenue, Suite #310
Berkeley,
CA 94705
|
0
|
*
|
|
Wexford
Capital LLC (4)
411
West Putnam Avenue
Greenwich,
CT 06830
|
2,623,619
|
10.88%
|
|
RIT
Capital Partners, Plc
27
St. James Place
London,
UK SW1A 1NR
|
1,741,690
|
7.23%
|
|
David
M. Tanen (5)
689
Fifth Avenue, 14th Floor
New
York, NY 10022
|
1,507,705
|
6.26%
|
|
Peter
M. Kash (6)
689
Fifth Avenue, 14th Floor
New
York, NY 10022
|
1,492,796
|
6.19%
|
|
Joshua
A. Kazam (7)
689
Fifth Avenue, 14th Floor
New
York, NY 10022
|
1,231,820
|
5.11%
|
|
Scott
L. Navins
689
Fifth Avenue, 14th Floor
New
York, NY 10022
|
206,912
|
*
|
|
Paul
Mieyal
411
West Putnam Avenue
Greenwich,
CT 06830
|
0
|
*
|
|
Dr.
Allan Gordon (8)
6936
Bristol Dr.
Berkeley,
CA 94705
|
593,743
|
2.46%
|
|
Directors
and named executive officers as a group, 8 individuals (9)
|
4,827,114
|
19.55%
|
*
represents less than 1%.
(1)
Assumes 24,099,716 shares of Nile Common Stock are outstanding. Beneficial
ownership is determined in accordance with Rule 13d-3 under the Securities
Act,
and includes any shares as to which the security or stockholder has sole or
shared voting power or investment power, and also any shares which the security
or stockholder has the right to acquire within 60 days of the date hereof,
whether through the exercise or conversion of any stock option, convertible
security, warrant or other right. The indication herein that shares are
beneficially owned is not an admission on the part of the security or
stockholder that he, she or it is a direct or indirect beneficial owner of
those
shares.
(2)
Excludes issued and outstanding options to purchase up to 1,876,491 shares
of
Nile Common Stock which are not exercisable within 60 days of the date hereof.
See “Employment
Agreements, Termination of Employment and Change-in-Control
Agreements.”
(3)
Excludes issued and outstanding options to purchase 528,354 shares of Nile
Common Stock which are not exercisable within 60 days of the date
hereof. See
“Employment
Agreements, Termination of Employment and Change-in-Control
Agreements.”
(4)
Includes (i) 1,910,103 shares of Nile Common Stock held by Iota Investors LLC,
a
Delaware limited liability company ("Iota Investors"); (ii) five year warrants
to purchase 16,841 shares of Nile Common Stock at an exercise price of $2.71
per
share held by Iota Investors; and (iii) 696,675 shares of Nile Common Stock
held
by Wexford Spectrum Investors LLC, a Delaware limited liability company
("Wexford Spectrum"). Wexford Capital LLC, a Connecticut limited liability
company ("Wexford Capital") is a registered Investment Advisor and also serves
as an investment advisor or sub-advisor to the members of Iota Investors and
Wexford Spectrum. Mr. Charles E. Davidson is chairman, a managing member and
a
controlling member of Wexford Capital and Mr. Joseph M. Jacobs is chairman,
a
managing member and a controlling member of Wexford Capital.
(5)
Excludes 137,941 shares of Common Stock held by Mr. Tanen’s wife as custodian
for the benefit of their minor daughter under the Uniform Gift to Minors Act
(UGMA).
(6)
Excludes 496,589 shares of Nile Common Stock held by Mr. Kash’s wife as
custodian for the benefit of each of their four minor children under the UGMA
and 165,530 shares of Nile Common Stock held by the Kash Family Foundation.
Includes five year warrants to purchase 1,051 shares of Nile Common Stock at
an
exercise price equal to $2.71 per share
(7)
Includes 165,530 shares of Nile Common Stock held by the Kash Family Foundation,
for which Mr. Kazam serves as Trustee. Mr. Kazam controls the right to vote
and
dispose of the shares held by the Kash Family Foundation, but has no pecuniary
interest therein. Excludes 613,841 shares of Nile Common Stock held by the
Kazam
Family Trust and 165,530 shares of Nile Common Stock held by Mr. Kazam’s wife as
custodian for the benefit of their minor daughter under the UGMA. Mr. Kazam
disclaims beneficial ownership of these shares, as well.
(8)
Represents options to purchase 593,743 shares of Nile Common Stock. See
“Severance
and Change-in-Control Agreements.”
(9)
Includes 4,232,320 shares of common stock beneficially held by directors and
officers, warrants to purchase 1,051 shares of common stock held by certain
directors and officers, and options to purchase 593,743 shares of common stock
held by certain directors and officers.
5.
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Changes
in Control and Management
At
the
effective time of the Merger, our board of directors was reconstituted by the
appointment of Mr. Peter Strumph, Mr. Peter Kash, Mr. Joshua Kazam, Mr. David
Tanen and Mr. Paul Mieyal as directors (all of whom were directors of Old Nile
immediately prior to and after the Merger), and the resignation of Geoffrey
Alison from his role as our sole director. Our executive management team was
also reconstituted following the resignation of Mr. Geoffrey Alison as SMI’s
president. The following table sets forth the name, age and position of each
of
our directors and executive officers after the Merger.
Executive
Officers and Directors
|
Name
|
Age
|
Positions
|
|
Peter
M. Strumph
|
42
|
Chief
Executive Officer and Director
|
|
Daron
Evans
|
34
|
Chief
Financial Officer
|
|
Peter
M. Kash
|
46
|
Director
|
|
Joshua
A. Kazam
|
30
|
Director
|
|
Paul
Mieyal
|
37
|
Director
|
|
David
M. Tanen
|
36
|
Secretary
and Director
|
|
Scott
L. Navins
|
36
|
Treasurer
|
|
Jennifer
Hodge
|
39
|
Vice
President, Development
|
Peter
M. Strumph. Mr.
Strumph has served as Old Nile’s Chief Executive Officer since June 4, 2007, and
possesses over 10 years of cardiovascular drug development experience. Following
the Merger, Mr. Strumph was elected a director of the Company and appointed
Chief Executive Officer of the Company. Prior to joining Nile, from 1997 to
2007
Mr. Strumph worked for CV Therapeutics, Inc., or CVT, which discovers, develops,
commercializes and sells cardiovascular therapeutic products. His latest
position at CVT was Senior Vice President of Operations. At CVT, at various
times, Mr. Strumph had responsibility for several functions including,
pharmaceutical development and manufacturing, marketing, quality
assurance/control, clinical trial operations, project management and alliance
management. Additionally, Mr. Strumph was a member of the CEO Executive Staff,
was the Project Team Leader for RanexaTM
and
served as the Chair of the Product Development Committee. Prior to joining
CVT
in 1997, Mr. Strumph served as Manager, Operations Planning and Development
at
Biogen, Inc. where he played an active role in Biogen’s transition from a
research based company to a fully integrated profitable biotechnology company.
Mr.
Strumph received his M.B.A. in Finance and Healthcare Management from The
Wharton School at the University of Pennsylvania and his B.S. in Systems Science
and Engineering from The University of Pennsylvania.
He also
served as a Lieutenant in the United States Navy.
Daron
Evans. Mr.
Evans
served as Old Nile’s Chief Operating Officer since January 15, 2007. Following
the Merger, Mr. Evans was appointed Chief Financial Officer of the Company.
Mr.
Evans has over 10 years of professional experience in drug development financial
analysis and fiscal control. Prior to joining Nile, from 2006 to 2007, Mr.
Evans
served as Director of Business Assessment at Vistakon, a Johnson & Johnson
company, where he led efforts to improve R&D efficiency and speed to market.
Prior to that, from 2004 to 2006, he was a Director of Portfolio & Business
Analytics for Scios R&D, a Johnson & Johnson company, where he was
responsible for financial controls and reporting for portfolio of six clinical
stage programs and five preclinical stage programs. While at Scios, Mr. Evans
also served as Project Manager for the European registration trial of
nesiritide. Mr. Evans also has experience as co-founder of a biotechnology
diagnostic company, and has worked as a Management Consultant in the
pharmaceutical industry with Booz Allen Hamilton. Mr. Evans received his M.B.A.
from The Fuqua School of Business at the Duke University, his M.S. in Biomedical
Engineering from Southwestern Medical School & University of Texas at
Arlington and his B.S. in Chemical Engineering from Rice University.
Jennifer
Hodge.
Beginning August 31, 2007, Ms. Hodge has served as our Vice President,
Development. Following the Merger, Ms. Hodge was appointed as Vice President,
Development of the Company. Ms. Hodge has 18 years of international drug
development experience spanning discovery through commercialization. Prior
to
joining Nile, from 2000 to 2007, Ms. Hodge worked at CVT where she most recently
served as the Director of Project Management. While at CVT, Ms. Hodge held
a
variety of assignments of increasing scope and responsibility including;
management of clinical trial operations staff, leadership of the project
management function, starting and running CVT’s alliance management function,
Project Team Leader for two development projects, and membership on the CVT
Product Development Committee. In addition, Ms. Hodge was responsible for
critical special assignments to support CVT’s commercial launch, to improve
financial reporting and forecasting accuracy for development projects and to
plan for the study start up for CVT’s largest clinical trial. Prior to CVT, Ms
Hodge was a Global Clinical Team Leader at Quintiles, had Clinical Research
Associate positions at Otsuka and Solvay, and had pharmacologist and development
management responsibilities at the James Black Foundation in London. Ms. Hodge
received her B.S. in Biology with Honors in Pharmacology from the University
of
Edinburgh, UK. .
Peter
M. Kash. In September
2004, Mr. Kash co-founded Two River, a venture capital firm that specializes
in
the creation of new companies to acquire rights to commercially develop early
stage biotechnology products. He serves the President and Chairman of Two
River’s managing member, Two River Group Management, LLC. Mr. Kash is also the
President and Chairman of Riverbank, a broker dealer registered with the
Financial Industry Regulatory Authority (FINRA (formerly NASD) broker dealer.
From 1992 until 2004, Mr. Kash was a Senior Managing Director of Paramount
BioCapital, Inc., a FINRA (formerly NASD) member broker dealer, specializing
in
conducting private financings for public and private development stage
biotechnology companies as well as Paramount BioCapital Investments, LLC, a
venture capital company. Mr. Kash also served as Director of Paramount Capital
Asset Management, Inc. (the Paramount companies are collectively referred to
as
Paramount), the general partner of several biotechnology-related hedge funds
and
as member of the General Partner of the Orion Biomedical Fund, LP, a private
equity fund. Mr. Kash currently serves as a member of the board of directors
of
several privately held biotechnology companies. Mr. Kash received his B.S.
in
Management Science from SUNY Binghamton and his M.B.A. in Banking and
International Finance from Pace University. Mr. Kash is currently seeking his
doctorate in Jewish education at Yeshiva University. Mr. Kash will devote only
a
portion of his time to the business of the Company.
Joshua
A. Kazam. In
September 2004, Mr. Kazam co-founded Two River and currently serves as Vice
President and Director of Two River’s managing member, Two River Group
Management, LLC. Mr. Kazam also serves as an Officer and Director of Riverbank.
From 1999 to 2004, Mr. Kazam was a Managing Director of Paramount, where he
was
responsible for ongoing operations of venture investments, and as the Director
of Investment for the Orion Biomedical Fund, LP. Mr. Kazam currently serves
as a director of Velcera, Inc. a publicly reporting company, and an officer
or
director of several privately held companies. Mr. Kazam is a graduate of the
Wharton School of the University of Pennsylvania. He will devote only a portion
of his time to the business of the Company.
Paul
Mieyal, Ph.D., CFA
Dr.
Mieyal was appointed to serve as a member of the board of directors on September
11, 2007. Since 2006 Dr. Mieyal has served as a Vice President of Wexford
Capital LLC, or Wexford, an SEC registered investment advisor with over $5
billion of assets under management located in Greenwich, CT. Prior to that,
from
2000 to 2006 he was Vice President in charge of healthcare investments for
Wechsler & Co., Inc., a private investment firm and registered
broker-dealer. Dr. Mieyal serves as a Director of Danube Pharmaceuticals, Inc.,
Tigris Pharmaceuticals, Inc., Epiphany Biosciences, Inc., Interventional Spine,
Inc., GlobeImmune, Inc. and Microbiogen Pty Ltd. Dr. Mieyal received his Ph.D.
in pharmacology from New York Medical College, a B.A. in chemistry and
psychology from Case Western Reserve University, and is a Chartered Financial
Analyst.
David
M. Tanen. In
September 2004, Mr. Tanen co-founded Two River and currently serves as Vice
President and Director of Two River’s managing member, Two River Group
Management, LLC. Mr. Tanen also serves as an Officer and Director of Riverbank.
Prior to founding Two River, from October 1996 to September 2004, Mr. Tanen
was
served as a Director of Paramount. Mr. Tanen also served as member of the
General Partner of the Orion Biomedical Fund, LP. Mr. Tanen currently serves
as
an officer or director of several privately held biotechnology companies. Mr.
Tanen received his B.A. from The George Washington University and his J.D.
from
Fordham University School of Law. He will devote only a portion of his time
to
the business of the Company.
Scott
L. Navins. Mr.
Navins served as Treasurer of Old Nile since its inception. Mr. Navins is the
Vice President of Finance at Two River Group, where he is responsible for all
accounting, finance and control activities. Mr. Navins joined Two River Group
in
2005. Prior to joining Two River, from 2004 to 2005 Mr. Navins was the Senior
Controller at Westbrook Partners, where he managed the accounting for a $560
million real estate private equity fund, including financial and partner
reporting, tax coordination, maintaining internal controls and overseeing a
$300
million credit facility, among other things. Before that, from 2002 to 2004
Mr.
Navins was a Senior Manager at Morgan Stanley, where he managed the accounting
for a $2.4 billion real estate private equity fund. Prior to that Mr. Navins
was
an Associate in the Finance Group at BlackRock, Inc. and the controller for a
high-tech venture capital fund. Mr. Navins graduated with honors from The George
Washington University in 1993, where he earned a Bachelor of Accountancy degree.
Mr. Navins passed the Uniform Certified Public Accounting examination in 1993.
Mr. Navins will devote only a portion of his business time to the Company’s
business. Effective as of the closing of the Merger, Mr. Navins has been elected
Treasurer of the Company.
Audit
Committee
We
do not
currently have a separate Audit Committee. Our full board performs the functions
normally designated to an Audit Committee. When acting in this capacity, the
Board does not have a charter.
Compensation
Committee
Our
board
of directors does not have a standing compensation committee responsible for
determining executive and director compensation. Instead, the entire board
of directors fulfills this function, and each member of the Board participates
in the determination. Given the small size of the Company and its Board
and the Company's limited resources, locating, obtaining and retaining
additional independent directors is extremely difficult. In the absence of
independent directors, the Board does not believe that creating a separate
compensation committee would result in any improvement in the compensation
determination process. Accordingly, the board of directors has concluded
that the Company and its stockholders would be best served by having the entire
board of directors act in place of a compensation committee. When acting
in this capacity, the Board does not have a charter.
In
considering and determining executive and director compensation, our board
of
directors reviews compensation that is paid by other similar public companies
to
its officers and takes that into consideration in determining the compensation
to be paid to the Company’s officers. The board of directors also
determines and approves any non-cash compensation to any employee. The Company
does not engage any compensation consultants to assist in determining or
recommending the compensation to the Company’s officers or employees.
6.
EXECUTIVE COMPENSATION
Summary
Compensation Table
The
following table sets forth all of the compensation awarded to, earned by or
paid
to (i) each individual serving as our principal executive officer during our
last completed fiscal year; and (ii) each other individual that served as an
executive officer at the conclusion of the fiscal year ended December 31, 2006
and who received in excess of $100,000 in the form of salary and bonus during
such fiscal year (collectively, the Named
Executives).
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
(1)
|
|
|
Option
Awards (2)
|
|
Non-Equity
Incentive
Plan Compensation
|
|
All
Other Compensation
|
|
Total
|
|
|
Peter
M. Strumph
Chief
Executive Officer
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
(3)
|
|
$
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
Daron
Evans
Chief
Financial Officer
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
(4)
|
|
$
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
Jennifer
Hodge
Vice
President, Development
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
(5)
|
|
$
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
Allan
Gordon (6)
Chief
Executive Officer
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
Joshua
Kazam (7)
President
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
Geoffrey
Alison (8)
President
|
|
|
2006
|
|
$
|
-0-
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
|
-0-
|
|
$
|
-0-
|
|
$
|
-0-
|
|
(1)
Our Named Executives are eligible for annual bonuses upon the successful
achievement of agreed upon corporate and individual performance based
milestones.
(2)
Amount reflects the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2006 in accordance with SFAS
123R of stock option awards, and may include amounts from awards granted in
and
prior to fiscal year 2006.
(3)
Mr.
Strumph is entitled to an annual performance based bonus of up to $150,000
upon
the successful completion of annual corporate and individual performance based
milestones. See “Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
(4)
Mr. Evans is entitled to an annual performance based bonus of up to $38,344
upon
the successful completion of annual corporate and individual performance based
milestones. See “Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
(5)
Ms. Hodge is entitled to an annual performance based bonus of up to $51,000
upon
the successful completion of annual corporate and individual performance based
milestones. See “Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
(6)
Pursuant to the terms of the Separation Agreement, the Company will continue
to
pay Dr. Gordon his base salary, performance bonus and benefits until May 21,
2008. In addition, Old Nile granted Dr. Gordon options to purchase approximately
215,217 shares of Old Nile Common Stock following the closing of the Offering,
which were exchanged at the effective time of the Merger into options to
purchase 593,750 shares of Nile Common Stock. See “Executive
Compensation - Severance and Change of Control Agreements.”
(7)
Joshua Kazam served as President of Old Nile until January 15, 2007. During
this
time, he did not receive any compensation.
(8)
Geoffrey Alison served as President of SMI Products, Inc. until September
17,
2007,
when he resigned and was replaced by Mr. Strumph, in connection with the Merger.
During this time, Mr. Alison did not receive any compensation.
Compensation
Policy.
Our
Company’s executive compensation plan is based on attracting and retaining
qualified professionals who possess the skills and leadership necessary to
enable our Company to achieve earnings and profitability growth to satisfy
our
stockholders. We must, therefore, create incentives for these executives to
achieve both Company and individual performance objectives through the use
of
performance-based compensation programs. No one component is considered by
itself, but all forms of the compensation package are considered in total.
Wherever possible, objective measurements will be utilized to quantify
performance, but many subjective factors still come into play when determining
performance.
Compensation
Components.
As an
early-stage development company, the main elements of our compensation package
consist of base salary, stock options and bonus.
Base
Salary.
As we
continue to grow and financial conditions improve, these base salaries, bonuses
and incentive compensation will be reviewed for possible adjustments. Base
salary adjustments will be based on both individual and Company performance
and
will include both objective and subjective criteria specific to each executive’s
role and responsibility with the Company.
Executive
Compensation under the Amended and Restated 2005 Stock Option
Plan
Following
the Merger, we have outstanding 3,404,013 stock options issued under our Amended
and Restated 2005 Stock Option Plan at exercise prices ranging from $0.09 to
$2.71 per share, of which 3,238,484 have been issued to the Named Executives.
Compensation
of Directors
We
currently do not compensate any non-employee member of our board of directors
for serving as a board member, although we may, in our sole discretion, decide
to compensate certain of our non-employee members of our board of directors
in
the future. No fees are paid to Peter Strumph, our Chief Executive Officer,
for
serving on our board of directors.
Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements
Peter
M. Strumph
Chief
Executive Officer
On
May
16, 2007, Old Nile entered into a three-year employment agreement with Mr.
Strumph to serve as Old Nile’s Chief Executive Officer, which agreement was
assumed by SMI, and later by Nile, pursuant to the Merger. Effective as of
the
closing of the Merger, Mr. Strumph was appointed a director and Chief Executive
Officer of the Company. Mr. Strumph will receive a base salary equal to $310,000
per annum. In addition, Mr. Strumph is eligible to receive an annual performance
based bonus, or the Strumph Performance Bonus, of up to $150,000 upon the
successful completion of annual corporate and individual milestones at an
exemplary metric (i.e.,
ahead of schedule, under budget, etc.). Mr.
Strumph is also entitled to a cash bonus upon the successful completion of
a
merger or acquisition transaction. Mr. Strumph may also receive a variable
cash
bonus upon
a
change of control depending upon the valuation ascribed to the company at the
change of control. We have also agreed to pay for up to $1,000,000 of life
insurance for Mr. Strumph. He will be entitled to up to four weeks of vacation
per year and may participate in Company sponsored benefit plans (i.e., health,
dental, etc.).
We
have
granted to Mr. Strumph stock options or the Strumph Employment Options, to
purchase 1,876,491 shares of Nile Common Stock. Of the Strumph Employment
Options, 989,572 shall vest, if at all, and become exercisable in three equal
installments on the day before each anniversary of Mr. Strumph’s employment
agreement.
In
addition, up to 886,919 options, or the Strumph Performance Options, shall
vest,
if at all, and become exercisable upon the successful completion of annual
corporate and individual milestones in an exemplary manner (e.g., ahead of
schedule, under budget, etc.). The options shall be governed by the Company’s
2005 Stock Option Plan and are exercisable at a $2.71 per share.
Additionally, in the event that the Company acquires by license, acquisition
or
otherwise, an additional biotechnology product or series of biotechnology
products for development that is first identified by Mr. Strumph, then we shall
grant to Mr. Strumph options, or the Strumph Technology Options, to purchase
additional shares of Nile Common Stock based
upon the stage of development of the licensed technology.
The
Strumph Technology Options shall be exercisable for five years at an exercise
price equal to the fair market value of the Nile Common Stock on the date of
the
grant.
In
the
event that Mr. Strumph’s employment is terminated as a result of his death or
disability, the Company will pay him or his estate (a) his
base salary for a period of six months thereafter; (b) expense reimbursement
amounts through the date of his death or disability, (c) any accrued but unpaid
performance bonus for a year prior to the year in which the Executive’s
employment is terminated; (d) a pro
rata performance
bonus for the year in which the Executive’s employment is terminated; and (e)
all Strumph Employment Options shall vest immediately and become
exercisable. In
the
event that Mr. Strumph’s employment is terminated by the Company for cause or by
Mr. Strumph other than for good reason, then the Company shall pay to him his
base salary, accrued but unpaid Performance Bonus and expense reimbursement
through the date of his termination. He shall have no further entitlement to
any
other compensation or benefits from the Company except as provided in the
Company’s compensation and benefit plans. All stock options, other than any
Strumph Technology Options, that have not previously vested shall expire
immediately. In
the
event that Mr. Strumph’s employment is terminated upon a change of control, by
Mr. Strumph for good reason, or by the Company for any other reason then the
Company will (a) continue to pay to Mr. Strumph his base salary, Performance
Bonus (based on the assumption that a realistic metric is achieved) and benefits
for a period of one year following such termination; (b) pay Mr. Strumph any
accrued but unpaid Performance Bonus for the year in which the Executive’s
employment is terminated; (c) pay Mr. Strumph any expense reimbursement amounts
owed through the date of termination; and (d) all unvested Strumph Employment
Options shall vest and become exercisable immediately and shall remain
exercisable for a period of not less than five years.
Daron
Evans
Chief
Financial Officer
On
January 19, 2007, Old Nile entered into a three-year employment agreement with
Daron Evans, to serve as our Chief Operating Officer, which agreement was
assumed by SMI, and later by Nile, pursuant to the Merger. Mr. Evans received
a
$25,000 signing bonus and Nile agreed to reimburse him for qualified moving
expenses incurred in connection with his relocation to California. Mr. Evans’s
employment agreement was amended on August 28, 2007. Effective as of the closing
of the Merger, Mr. Evans was appointed as Chief Financial Officer of the
Company. Mr. Evans will receive a base salary equal to $175,000 per annum.
In
addition, Mr. Evans is eligible to receive an annual performance based bonus,
or
the Evans Performance Bonus, of up to $38,344 based upon the successful
completion of annual corporate and individual milestones at an exemplary metric
(i.e., ahead of schedule, under budget, etc.). The
Company has also agreed to pay for up to $1,000,000 of life insurance for Mr.
Evans. He will be entitled to up to three weeks of vacation per year and may
participate in Company sponsored benefit plans (i.e., health, dental,
etc.).
Pursuant
to the amendment to Mr. Evans’ employment contract, Old Nile paid Mr. Evans a
bonus in the amount of $64,969. A portion of this bonus, $47,785, was used
to
satisfy a loan from Old Nile to Mr. Evans.
We
have
granted to Mr. Evans stock options, or the Evans Employment Options, to purchase
528,354 shares of Nile Common Stock. Of the Evans Employment Options, 239,896
shall vest, if at all, and become exercisable in three equal installments on
the
day before each anniversary of Mr. Evans’s employment agreement. In addition, up
to 288,458 options, or the Evans Performance Options, shall vest, if at all,
and
become exercisable upon the successful completion of annual corporate and
individual milestones in an exemplary manner (e.g., ahead of schedule, under
budget, etc.). The options granted to Mr. Evans shall be governed by the
Company’s 2005 Stock Option Plan and are exercisable at a $2.71 per share.
Additionally, in the event that the Company acquires by license, acquisition
or
otherwise, an additional biotechnology product or series of biotechnology
products for development that is first identified by Mr. Evans, then we shall
grant to Mr. Evans options, or the Evans Technology Options, to purchase
additional shares of Nile Common Stock based upon the stage of development
of
the licensed technology. The
Evans
Technology Options shall be exercisable for five years at an exercise price
equal to the fair market value of the Nile Common Stock on the date of the
grant.
In
the
event that Mr. Evans’ employment is terminated as a result of his death or
disability, the Company will pay him or his estate (a) his
base salary for a period of six months thereafter; (b) expense reimbursement
amounts through the date of his death or disability, (c) any accrued but unpaid
Performance Bonus for a year prior to the year in which the Executive’s
employment is terminated; (d) a pro
rata
performance bonus for the year in which the Executive’s employment is
terminated; and (e) all Evans Employee Options shall vest immediately and become
exercisable.
In the
event that Mr.
Evans’
employment is terminated by the Company for cause or by Mr.
Evans
other
that for good reason, then the Company shall pay to him his base salary, accrued
but unpaid Performance Bonus and expense reimbursement through the date of
his
termination. He shall have no further entitlement to any other compensation
or
benefits from the Company except as provided in the Company’s compensation and
benefit plans. All Evans Employee Options and Evans Performance Options that
have not previously vested shall expire immediately.
In the
event that Mr.
Evans
employment
is terminated upon a change of control, by Mr.
Evans
for
good
reason (which shall include relocation outside of the San Francisco metropolitan
area), or by the Company for any other reason then that the Company will (a)
continue to pay to Mr.
Evans
his
base
salary, performance bonus and benefits for a period of one year following such
termination; (b) pay Mr.
Evans
any
accrued but unpaid performance bonus for the year prior to the year in which
the
Executive’s employment is terminated; (c) pay Mr.
Evans
any
expense reimbursement amounts owed through the date of termination; and (d)
all
unvested stock options shall vest and become exercisable immediately and shall
remain exercisable for a period of not less than five years.
Jennifer
Hodge
Vice
President, Development
On
August
8, 2007, Old Nile entered into a Letter Agreement,
or
the
Hodge
Letter, with Ms. Jennifer Hodge to serve as our Vice President, Development,
which
Letter Agreement was assumed by SMI, and later by Nile, pursuant to the
Merger.
Ms.
Hodge commenced her employment on August 30, 2007. Effective as of the closing
of the Merger, Ms. Hodge was appointed Vice President, Development. Ms. Hodge
will be employed at-will and will receive an annual base salary equal to
$170,000, and will be eligible to receive an annual discretionary bonus of
up to
30% of her base salary
based
upon the successful accomplishment of individual and corporate performance
goals
to be agreed upon annually between Ms. Hodge and our Chief Executive Officer,
which amount shall be pro-rated for the year 2007. Ms.
Hodge
will also be entitled to up to four weeks of vacation per year and may
participate in company sponsored benefit plans (i.e., health, dental,
etc.).
We
also
granted Ms. Hodge stock options pursuant to the Company’s 2005 Stock Option
Plan,
or
the
Hodge
Employment Options, to purchase 239,896 shares of Nile Common Stock at an
exercise price equal to $2.71. One
quarter of the Hodge Employment Options shall vest and become
exercisable on the first anniversary of the Hodge Letter. Thereafter, the Hodge
Employment Options shall vest in equal amounts and become exercisable on the
last day of each calendar month until all remaining Hodge Employment Options
are
fully vested and exercisable. Additionally, in the event that the Company
acquires by license, acquisition or otherwise, an additional biotechnology
product or series of biotechnology products for development that is first
identified by Ms. Hodge, then Nile shall grant to Ms. Hodge options, or the
Hodge Technology Options, to purchase additional shares of Nile Common Stock
based upon the stage of development of the licensed technology. The
Hodge
Technology Options shall be exercisable for five years at an exercise price
equal to the fair market value of the Nile Common Stock on the date of the
grant.
Executive
Bonus Compensation
As
described above, Mr. Strumph and Mr. Evans are annually eligible for a
proportionate
share of their respective Performance
Bonuses based
upon the assigned weight of agreed upon annual corporate or individual
performance milestones ,
or
the
Performance Milestones, to be granted upon completion of such Performance
Milestones. These executives will receive 100% of their contractual Performance
Bonus for Performance Milestones achieved at a “Baseline” metric and 120% of
such contractual Performance Bonus for Performance Milestones achieved at an
“Exemplary” metric. If Performance Milestones are achieved at a “Pessimistic”
metric, the executives will receive 80% of such contractual Performance Bonus.
The Performance Milestones shall be amended each subsequent year during the
term
of their respective employment agreements upon the mutual agreement of our
board
of directors and the executive no later than 30 days following the beginning
of
such year.
Separately,
Ms. Hodge will
be
eligible to receive an annual discretionary bonus of up to 30% of her base
salary
based
upon the successful accomplishment of individual and corporate performance
goals
to be agreed upon annually between Ms. Hodge and our Chief Executive Officer,
which amount shall be pro-rated for the year 2007.
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
No
options to purchase shares of Nile Common Stock were exercised by any of the
Named Executives during the fiscal year ended December 31, 2006. For a
discussion of option arrangements relating to our Named Executive Officers,
see
“Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
Severance
and Change of Control Arrangements
See
“Employment
Agreements”
above
for a description of the severance and change of control arrangement with
members of management.
On
August
10, 2007, Old Nile entered into a Separation Agreement with Dr. Allan Gordon,
a
former executive of Nile. Pursuant to the terms of the Separation Agreement,
the
Company will continue to pay Dr. Gordon his base salary, performance bonus
and
benefits until May 21, 2008. In addition, Old Nile granted options to Dr. Gordon
to purchase 215,215 shares of Old Nile Common Stock following the closing of
the
Offering, which converted at the time of the Merger into options to purchase
593,743 Nile Shares at an exercise price equal to $2.71 per share. The Company
will also provide the executive with limited “piggy-back” registration rights
and will reimburse Dr. Gordon for attorney’s fees in an amount up to $12,500. In
addition, Dr. Gordon agreed to release Old Nile from any claims arising out
of
Dr. Gordon’s employment with Nile.
Our
board
of directors, or a committee thereof, serving as plan administrator of our
2005
Stock Option Plan, has the authority pursuant to Section 6.3 of the Plan to
provide for accelerated vesting of the options granted to our named executive
officers and any other person in connection with changes of control.
7.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Old
Nile
was incorporated in August 2005 by Two River. Messrs. Peter M. Kash, Joshua
A.
Kazam and David M. Tanen, each a director and substantial stockholder of Nile,
are the managing members of Two River. Mr. Tanen also serves as our Secretary,
and Mr. Scott Navins, the Vice President of Finance for Two River, serves as
our
Treasurer. Additionally, certain employees of Two River, who are also
stockholders of Nile, perform substantial operational activity for us, including
without limitation, financial, clinical and regulatory activities.
Messrs.
Kash, Kazam and Tanen are also officers and directors of Riverbank. Riverbank
acted as placement agent on a best-efforts basis for Old Nile in connection
with
the sale of shares of Old Nile Common Stock on September 11, 2007. Riverbank
did
not receive any selling commission for its services in connection with such
services, but received a non-accountable expense allowance of $100,000 for
its
expenses incurred in connection with its service. Nile also agreed to indemnify
Riverbank against any claims that may arise out of the services provided in
connection with the Offering.
On July
24, 2007, Old Nile issued an 8% Promissory Note in the aggregate principal
amount of $1.5 million to Iota Investors LLC, an affiliate of Wexford Capital
LLC, which note was repaid in full on September 11, 2007. See “Item
2.01—Recent Financings.”
Wexford
is a substantial stockholder of Nile, and Dr. Paul Mieyal, one of our directors,
is a Vice President of Wexford.
8.
DESCRIPTION OF SECURITIES
The
certificate of incorporation of Nile authorizes it to issue 110 million shares
of capital stock, par value $0.001 per share comprised of 100 million shares
of
Nile Common Stock, and 10 million shares of preferred stock, par value $0.001
per share.
Following
the Merger, we will have approximately: (i) 24,099,716 shares of Nile Common
Stock issued, (ii) options to purchase 3,404,103 shares of Nile Common Stock
at
exercise prices ranging from $0.09 to $2.71 per share, and (iii) warrants to
purchase 168,337 shares of Nile Common Stock. There are no shares of preferred
stock issued or outstanding.
The
holders of Nile Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders and do not have
cumulative voting rights. Upon our liquidation, dissolution or winding, holders
of Nile Common Stock will be entitled to share ratably in all of our assets
that
are legally available for distribution, after payment of all debts and other
liabilities. The holders of Nile Common Stock have no preemptive, subscription,
redemption or conversion rights.
Holders
of Nile Common Stock are entitled to receive such dividends, as the board of
directors may from time to time declare out of funds legally available for
the
payment of dividends. The Company seeks growth and expansion of its business
through the reinvestment of profits, if any, and does not anticipate that it
will pay dividends in the foreseeable future.
Authority
to Issue Stock
Our
board
of directors has the authority to issue the authorized but unissued shares
of
Nile Common Stock without action by the shareholders. The issuance of such
shares would reduce the percentage ownership held by current shareholders.
Our
board
of directors also has the authority to issue up to 10 million shares of
preferred stock, none of which are issued or currently outstanding. The board
of
directors has the authority to fix and determine the relative rights and
preferences of preferred shares, as well as the authority to issue such shares,
without further stockholder approval. As a result, the board of directors could
authorize the issuance of a series of preferred stock that is senior to the
Nile
Common Stock and that would grant to holders preferred rights to our assets
upon
liquidation, the right to receive dividend, additional registration rights,
anti-dilution protection, the right to the redemption to such shares, together
with other rights, none of which will be afforded holders of Nile Common Stock.
See “Risk
Factors - There may be additional issuances of shares of blank check preferred
stock in the future.”
PART
II.
1.
MARKET INFORMATION
Nile
Common Stock is quoted on the OTC Bulletin Board, or the OTCBB, under
the
symbol “SPDU.OB.” We expect to change our symbol. Set forth below are the high
and low bid prices for Nile Common Stock for the fiscal years ended December
31,
2005 and December 31, 2006, and the period ended June 30, 2007. Although Nile
Common Stock is quoted on the OTCBB, it has traded sporadically with no real
volume. Consequently, the information provided below my not be indicative of
Nile Common Stock price under different conditions.
SMI
HISTORICAL SHARE PRICE CHART
|
Quarter
ended
|
High
Bid
|
Low
Bid
|
|
March
31, 2005
|
6.00
|
5.10
|
|
June
30, 2005
|
6.00
|
5.00
|
|
September
30, 2005
|
NA
|
NA
|
|
December
30, 2005
|
6.50
|
4.10
|
|
March
31, 2006
|
6.90
|
3.50
|
|
June
30, 2006
|
NA
|
NA
|
|
September
29, 2006
|
7.50
|
3.50
|
|
December
29, 2006
|
6.50
|
3.50
|
|
March
30, 2007
|
3.50
|
0.77
|
|
June
29, 2007
|
2.05
|
2.00
|
All
prices listed herein reflect inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not represent actual
transactions.
Since
our
inception, we have not paid any dividends on the Nile Common Stock, and we
do
not anticipate that we will pay any dividends in the foreseeable future. We
intend to retain any future earnings for use in our business. At September
17,
2007, we had approximately 215 shareholders of record.
2.
LEGAL PROCEEDINGS
We
are
not currently involved in any material legal proceedings.
3.
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On
or
about October 31, 2006, SMI dismissed its former accountant, Amisano Hanson
Chartered Accountants, Vancouver, Canada, as our principal accountant effective
October 31, 2006. Amisano Hanson had served SMI since 1996.
On
or
about September 21,
2007,
and effective upon the completion of the Merger, Old Nile dismissed Paritz
&
Co., Hackensack, New Jersey, as the our principal accountants effective as
of
September 21,
2007.
Under
Item 304 of Regulation S-K, the reasons for the changes in the accountants
listed above is dismissal, not resignation or declining to stand for
re-election. During the two most recent fiscal years and the interim period
through the date of the dismissal, there were no disagreements with any of
the
accountants listed above on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to these accountants satisfaction, would have
caused the accountants to make reference to the subject matter of the
disagreements in connection with its reports. During the two most recent fiscal
years through the date of dismissal, the reports of these accountants did not
contain any adverse opinion or disclaimer of opinion, or were modified as to
uncertainty, audit scope, or accounting principles other than the issuance
of a
“going concern” opinion with respect to its reports issued with respect to the
Company’s financial statements dated December 31, 2006, and December 31, 2005,
respectively.
The
decision to change principal accountants was approved by the board of directors.
On September 17, 2007, the Company engaged Hays & Company, LLP as successor
to Partitz & Co. Hays & Company, LLP was Old Nile’s principal
accountants for its fiscal year ending December 31, 2006 and the six months
ended June 30, 2007. During the Company’s two most recent fiscal years or
subsequent interim period, the Company has not consulted with the entity of
Hays
& Company LLP regarding the application of accounting principles to a
specific transaction, either completed or proposed, or the type of audit opinion
that might be rendered on the Nile’s financial statements, nor did the entity of
Hays & Company, L.L.P. provide advice to Nile, either written or oral, that
was an important factor considered by Nile in reaching a decision as to the
accounting, auditing or financial reporting issue. Further, during Nile’s two
most recent fiscal years or subsequent interim period, the Company has not
consulted the entity of Hays & Company, L.L.P. on any matter that was the
subject of a disagreement or a reportable event.
4.
RECENT ISSUANCES OF UNREGISTERED SECURITIES BY NILE
The
following summarizes all sales of unregistered securities by Old Nile since
inception in August 2005. Each issued and outstanding share of Old Nile Common
Stock converted to 2.758838 shares of Nile Common Stock as of the Closing of
the
Merger.
In
August
2005, in connection with Old Nile’s incorporation, Old Nile issued an aggregate
of 5,000,000 shares of Old Nile Common Stock for aggregate consideration of
$5,000. 500,000 shares were returned to treasury and subsequently issued to
Mayo
in January 2006, as partial consideration for the Mayo License Agreement
granting us rights to commercially develop CD-NP.
In
February 2006, Old Nile issued options to purchase 25,000 shares of Old Nile
Common Stock at an exercise price of $0.25 per share to each of two members
of
Old Nile’s Scientific Advisory Board. The options expire in February 2011.
On
March
28, 2006, Old Nile issued the 6% Notes to certain qualified investors. See
“Item
2.01—Recent Financings.”
On July
24, 2007, Old Nile issued $1,500,000 in face amount of an 8% Promissory Note,
which note was repaid on September 11, 2007. See “Item
2.01—Recent Financings.”
On
August
6, 2007, Old Nile issued 126,904 shares of Old Nile Common Stock to Dr. Cesare
Casagrande as partial payment for the 2NTX-99
License Agreement.
See
“Item
2.01—Recent Financings.”
As
a
condition to the closing of the Merger, on September 11, 2007, Old Nile
completed a private placement offering whereby it received gross proceeds of
approximately $19,974,747 through the sale of 2,522,064 shares of Old Nile
Common Stock in a private placement to certain qualified investors. Old Nile
also issued 23,009 shares of Nile Common Stock to Mayo pursuant to the terms
of
the Mayo License Agreement. See “Item
2.01—Recent Financings.”
On
September 17, 2007, we granted to Mr. Peter Strumph stock options to purchase
1,876,491 shares of Nile Common Stock. See “Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
On
September 17, 2007, we granted to Mr. Daron Evans stock options to purchase
528,354 shares of Nile Common Stock. See “Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
On
September 17, 2007, we granted
to Ms.
Jennifer Hodge stock options to purchase
239,896
shares
of
Nile Common Stock.
See
“Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
On
September 17, 2007, we granted
to Dr.
Allan Gordon stock options to purchase
593,743
shares
of
Nile Common Stock. .
See
“Employment
Agreements, Termination of Employment and Change-in-Control
Arrangements.”
On
September 17, 2007, we also issued 494,900 shares of Nile Common Stock to
Fountainhead Capital, upon the conversion of $168,573 of convertible promissory
notes, and accrued interest. See “Item
2.01-
Completion
of Acquisition or Disposition of Assets.”
Except
as
noted above, the sales of the securities identified above were made pursuant
to
privately negotiated transactions that did not involve a public offering of
securities and, accordingly, we believe that these transactions were exempt
from
the registration requirements of the Securities Act pursuant to Section 4(2)
thereof and rules promulgated thereunder. In addition, we believe that the
8%
Promissory Note is commercial paper and is exempt from the registration
requirements of the Securities Act under Section 3(a)3 thereof. Each of the
above-referenced investors in our stock represented to us in connection with
their investment that they were “accredited investors” (as defined by Rule 501
under the Securities Act) and were acquiring the shares for investment and
not
distribution, that they could bear the risks of the investment and could hold
the securities for an indefinite period of time. The investors received written
disclosures that the securities had not been registered under the Securities
Act
and that any resale must be made pursuant to a registration or an available
exemption from such registration. All of the foregoing securities are deemed
restricted securities for purposes of the Securities Act.
Recent
Issuances of Securities by SMI
The
issuance of the SMI Common Stock to the shareholders of Old Nile in the Merger
was exempt from registration under the Securities Act pursuant to
Section 4(2) thereof. Nile has made this determination based on the
representations of the Old Nile shareholders and investors which included,
in
pertinent part, that such persons were either “accredited investors” or
represented by a purchaser representative, within the meaning of Rule 501
of Regulation D promulgated under the Securities Act, that such persons
were acquiring the Nile Common Stock, and the shares of SMI Common Stock issued
to them pursuant to the Merger, for investment purposes for their own respective
accounts and not as nominees or agents, and not with a view to the resale or
distribution thereof in violation of the Securities Act, and that each person
understood that the shares of the SMI Common Stock issued in the Merger, may
not
be sold or otherwise disposed of without registration under the Securities
Act
or an applicable exemption therefrom.
5.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pursuant
to our certificate of incorporation and bylaws, we may indemnify an officer
or
director who is made a party to any proceeding, because of his position as
such,
to the fullest extent authorized by Delaware General Corporation Law, as the
same exists or may hereafter be amended. In certain cases, we may advance
expenses incurred in defending any such proceeding.
To
the
extent that indemnification for liabilities arising under the Securities Act
may
be permitted to directors, officers or persons controlling our company pursuant
to the foregoing provisions, we have been informed that, in the opinion of
the
SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. If a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred
or
paid by a director, officer or controlling person of our company in the
successful defense of any action, suit or proceeding) is asserted by any of
our
directors, officers or controlling persons in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter
has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of that issue.
ITEM
4.01 CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.
See
“Information Required Pursuant to Form 10-SB” II(3) “Changes
In and Disagreements with Accountants,”
which
discussion is incorporated herein by reference.
Please
see the discussion of “Closing
of Merger”
and
“Recent
Financings”
in
Item 2.01, which discussion is incorporated herein by reference.
ITEM
5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
See
“Information Required Pursuant to Form 10-SB” item 5 “Directors
and Executive Officers, Promoters and Control Persons,”
which
discussion is incorporated herein by reference.
ITEM
5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
On
September 17, 2007, the Company filed a Certificate of Ownership with the
Secretary of State of the State of Delaware pursuant to which Old Nile, a
wholly-owned subsidiary of SMI by virtue of the Merger, merged with and into
SMI
with SMI remaining as the surviving corporation to the merger (the “Short-Form
Merger”). In connection with the Short-Form Merger, and as set forth in the
Certificate of Ownership, SMI changed its corporate name to “Nile Therapeutics,
Inc.” The Certificate of Ownership is filed as Exhibit 3.1 to this current
report.
ITEM
5.06 CHANGE IN SHELL COMPANY STATUS.
As
described in Item 2.01 above, which is incorporated by reference into this
Item
5.06, we ceased being a shell company (as defined in Rule 12b-2 under the
Exchange Act of 1934, as amended) upon completion of the Merger.
PART
III.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) As
a
result of the Merger described in Item 2.01, the registrant is filing Nile’s
audited financial information as Exhibit 99.2 to this current
report.
(b) Pro
forma
financial information has not been included, as it would not be materially
different from the financial information of Nile as referenced above.
(c) Exhibits.
|
2.1
|
|
Agreement
and Plan of Merger, by and among SMI Products, Inc., Nile Merger
Sub,
Inc., and Nile Therapeutics, Inc. dated as of August 15, 2007.
1
|
|
|
|
|
|
3.1
|
|
Articles
of Incorporation of SMI Products, Inc.2
|
| |
|
|
|
3.2
|
|
By-laws
of SMI Products, Inc.2
|
| |
|
|
|
4.1
|
|
Specimen
Common Stock Certificate.
|
|
|
|
|
|
10.1
|
|
Form
of Nile Therapeutics, Inc. Common Stock Purchase Warrant.
|
| |
|
|
|
10.2
|
|
Employment
Agreement between Nile Therapeutics, Inc. and Peter M. Strumph dated
May
11, 2007.
|
|
|
|
|
|
10.3
|
|
Employment
Agreement between Nile Therapeutics, Inc. and Daron Evans dated January
19, 2007.
|
|
|
|
|
|
10.4
|
|
Amendment
No. 1 to Employment Agreement between Nile Therapeutics, Inc. and
Daron
Evans dated August 19, 2007.
|
| |
|
|
|
10.5
|
|
Letter
Agreement between Nile Therapeutics, Inc. and Jennifer L. Hodge,
dated
August 31, 2007.
|
|
|
|
|
|
10.6
|
|
License
Agreement between The Mayo Foundation for Medical Education and Research
and Nile Therapeutics, Inc., dated January 20, 2006.*
|
|
|
|
|
|
10.7
|
|
License
Agreement between Nile Therapeutics, Inc. and Dr. Cesare Casagrande,
dated
August 6, 2007.*
|
| |
|
|
|
10.8
|
|
Lease
Agreement between Nile Therapeutics, Inc. and Seagate Telegraph
Associates, LLC for office space located at 2850 Telegraph Avenue,
Suite
#310, Berkeley, CA 94705 dated March 21, 2007.
|
| |
|
|
|
10.9
|
|
Amended
and Restated 2005 Stock Option Plan.
|
| |
|
|
|
10.10
|
|
Form
of Stock Option Agreement.
|
| |
|
|
|
10.11
|
|
Form
of Incentive Stock Option Agreement.
|
| |
|
|
|
10.12
|
|
Separation
Agreement and General Release between Nile Therapeutics, Inc. and
Allan
Gordon dated August 10, 2007.
|
| |
|
|
|
16.1
|
|
Letter
from Paritz & Co dated September 20, 2007 regarding change in
certifying accountants.
|
| |
|
|
|
16.2
|
|
Letter
from Amisano Hanson Chartered Accountants dated February 5, 2007,
regarding change in certifying accountants.3
|
| |
|
|
|
23.1
|
|
Consent
from Hays & Company LLP. |
| |
|
|
|
99.1
|
|
Press
Release dated September 17, 2007.
|
| |
|
|
|
99.2
|
|
Audited
financial statements of Nile Therapeutics, Inc. for the period ended
June
30, 2007 (pro forma financial information is not included, as the
pro-forma information would not be materially different from Nile’s
historical financial statements).
|
1
Incorporated by reference from SMI’s current report on Form 8-K filed with the
Commission dated August 18, 2007, SEC file no. 333-55166.
2 Incorporated
by reference from SMI’s current report on Form 8-K filed with the Commission
dated February 9, 2007, SEC file no. 333-55166.
3
Incorporated
by reference from SMI’s current report on Form 8-K filed with the Commission
dated December 8, 2006, SEC file no. 333-55166.
*
Confidential treatment requested as to certain portions of this exhibit.
Such
portions have been redacted and filed separately with the
SEC.
GLOSSARY
OF TERMS
The
following are definitions of certain technical terms used in this report and
commonly used in the pharmaceutical and biotechnology
industries.
|
agonist
|
A
drug that can combine with a receptor on a cell to produce a physiological
reaction.
|
|
atherothromboticg
|
The
formation of a clot in an artery that is characterized by a thickening
and
fatty degeneration of that vessel's inner coat.
|
|
|
A
thickening and hardening of the artery walls characterized by fatty
deposits in and the formation of scar-like tissue (fibrosis) of the
inner
layer of the arteries.
|
|
cardiovascular
|
Of,
relating to, or involving the heart and blood vessels.
|
|
chimeric
|
Of
or related to an individual, organ, or part consisting of pieces
of
diverse genetic constitution.
|
|
claudication
|
Cramping
pain and weakness in the legs and especially the calves on walking
that
disappears after rest and is usually associated with inadequate blood
supply to the muscles.
|
|
natriuretic
|
Of
or related to the excretion of sodium in the urine.
|
|
congestive
heart failure
|
Heart
failure in which the heart is unable to maintain adequate circulation
of
blood in the tissues of the body or to pump out the venous blood
returned
to it by the venous circulation resulting in an accumulation of blood
in
the vessels and fluid in the body tissues.
|
|
diabetic
nephropathy
|
Kidney
disease and resultant kidney function impairment due to the long-standing
effects of diabetes on the glomeruli (capillary blood vessels in
the
kidney which are actively involved in the filtration of the blood).
Features include increased urine protein and declining kidney function.
Severe diabetic nephropathy can lead to kidney failure and end-stage
renal
disease.
|
|
equimolar
|
Of
or relating to an equal number of moles. A mole is a unit of measurement
that is determined as "6.2 x 1023
atoms or molecules of a substance.
|
|
hypotension
|
Abnormally
low pressure of the blood.
|
|
in
vitro
|
Outside
the living body and in an artificial environment.
|
|
in
vivo
|
In
the living body of a plant or animal.
|
|
mean
arterial pressure
|
A
measurement that takes account of pumped blood flow in the arteries
and is
the best measure of the pressure of blood pumped to an
organ.
|
|
metabolic
disease
|
An
illness resulting from the body's malfunction in the chemical changes
in
living cells by which energy is provided for vital processes and
activities and new material is assimilated.
|
|
microvascular
disease
|
An
illness related to or constituting the part of the circulatory system
made
up of minute vessels.
|
|
nitric
oxide
|
Synthesized
within cells by NO synthase, NO relaxes smooth muscles and has been
implicated almost universally in the functioning of a variety of cellular
processes.
|
|
nitric
oxide-donating properties
|
The
ability to release nitric oxide.
|
|
pathological
|
Altered
or caused by disease
|
|
peptide
|
Two
or more amino acids formed by combination of the amino group of one
acid
with the carboxyl group of another.
|
|
pharmacodynamics
|
A
branch of pharmacology dealing with the reactions between drugs and
living
systems.
|
|
pharmacokinetics
|
The
study of the bodily absorption, distribution, metabolism, and excretion
of
drugs.
|
|
pharmacologic
actions
|
The
properties and reactions of drugs especially with relation to their
therapeutic value.
|
|
platelet
aggregation
|
The
clumping of many small blood-based bodies that generally assists
in blood
clotting by adhering to each other and the tissues lining the blood
vessels (epithelium).
|
|
prostacyclin
|
A
cyclic fatty acid that inhibits aggregation of platelets, and dilates
blood vessels.
|
|
prothrombotic
|
Of
or related to the promotion of blood clot formation.
|
|
renal
|
Relating
to, involving, affecting, or located in the region of the kidneys.
|
|
synthetic
|
Of,
relating to, or produced by chemical or biochemical synthesis; produced
artificially.
|
|
thrombotic
|
Of
or related to blood clot formation.
|
|
thromboxane
|
A
substance that is produced by platelets, causes constriction of vascular
and bronchial smooth muscle, and promotes blood
clotting.
|
|
vasculature
|
The
disposition or arrangement of blood vessels in an organ or part of
the
body.
|
|
vasodilator
|
An
agent that widens the cavity of the blood
vessels.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
|
|
|
NILE
THERAPEUTICS, INC.
|
|
|
|
|
|
Date:
September 17, 2007
|
By:
|
/s/
Peter M. Strumph
|
|
|
Peter
M. Strumph
|
|
|
Chief
Executive Officer
|